ankit patel 107550592024

A SUMMER INTERNSHIP PROJECT REPORT

ON

RATIO ANALYSIS

OF ANUPAM INDUSTRIES LTD.ANAND

Submitted for the partial fulfillment of

Master of Business Administration (MBA) (2010-12)

Gujarat Technological University- Ahmedabad

Submitted By:

Ankit B. Patel

MBA-II (2010-2012)

Enrolment No.:107550592024

Internal Guide: External Guide:

Dr. H.N.Misra Ms. Bhavika madam

Associate Professor (HR Assistant)

Submitted to

SARDAR PATEL COLLEGE OF ADMINISTRATION & MANAGEMENT (SPCAM-MBA)

Approved by All India Council for Technical Education (AICTE), New Delhi

AFFILIATED WITH GUJARAT TECHNOLOGIACAL UNIVERSITY, AHMEDABAD

SPEC Campus, Vidhyanagar- Vadtal Road-388315, Anand (Gujarat)

July-2011

2

PREFACE

It is true that “Experience is the best teacher”. The M.B.A. Program is a well

structured and integrated course of business management. The rapid growth of IT

industry and the blooming of related industries need the executives with the

knowledge, information and practical training in management and IT. The main

objective of practical training at M.B.A. level is to develop skills in students by

supplementing the theoretical study of business management in general. Industrial

training helps to gain real knowledge about the industrial environment and business

practices. The M.B.A. programmed provides student with a fundamental knowledge

of business and organizational functions and activities as well as an exposure to

strategic thinking of management.

In every professional course training is an important factor, students gain

theoretical knowledge of various subjects in their respective college but they are

practically exposed to such subjects only when they get the training in any

organization. It is only through training that I came to know what an industry is

and how it works. I learnt about various departmental operations and how each

department plays important role in aiming for the general goal of the company in

the industry.

During the whole training, I got a lot of experience and came to know about

the management practices in real world and how it differs from the theoretical

knowledge that we have studied in our classes.

In today globalize world where cutthroat competition is prevailing in the

market theoretical knowledge is necessary which would help the individual in

his/her carrier activities.

3

Declaration

I, Ankit B. Patel student of Sadder Patel college of Administration & Management,

Bakrol, affiliated to Gujarat Technological University hereby declare that this summer

internship project report is a result of my sincere efforts and to the best of my knowledge;

no such work has been submitted by any other person for the award of any degree in India

or aboard.

Ankit B. Patel

MBA- II SEM.

107550592024

4

ACKNOWLEDGEMENT

It will be my great pleasure to thanks to ANUPAM INDUSTRIES LIMITED for

providing a training to carry out the project work. I am also thankful to FINANCIAL

DEPARTMENT of ANUPAM INDUSTRIES LTD., who continuously guided and

provides training in our concern topic (Ratio Analysis). And I am also thankful to all staff

of the industry for their co-operation.

It will be a great pleasure and thankful to Mr. T.D. Tiwari sir (Director General of

SPEC).

I am thankful to the Ms.Bhavika madam (HR Assistant), who continuously guided

me during the training as well as supports me for acquiring all the necessary information

for the completion of the project.

I am also thankful to the Dr. H.N.Misra (Associate Professor) who guides me

during the project. Who is allowing me to do the project report.

I am thankful to all my friends for providing motivation and support during the

project. I am thankful to all who directly or indirectly help to me during my training and

making the project.

Submitted By:

Ankit B.Patel.

Enrollment no.-107550592024

SIP For year- 2010-2011

5

EXECUTIVE SUMMARY

During the training of six weeks in ANUPAM INDUSTRIES LTD. which are

situated at Anand - Sojitra road. Basically they produced the products related to port

industry like Crane. At time of training –we find that company can do better profit from

last three years. They have lots of competitor in market and as they have quality

production, the customers remain for long time as their loyal customers. The other

important thing which I believe is that Ratio analysis provides better information about

company‟s financial stand. So from that, the company can make decisions related to

future.

After completing SIP training, we can define that company position is better as

compared to previous two years. Now company profit has increased but its operating

expense has also increased because of inflation in market and hike in salary & wages.

Now company ratio saw that decrease in their debt and market share price all time increase

which is 1440.98.From the data, it can also be concluded that in the last three years „PEL‟

also expanded its asset to increase its product and thus compete with its competitor.

Company has one minus point and that is collection of payment is done late than the

required period.

Ration analysis are very important in organization. It will help to make decision

regarding future and helping organization to avoid uncertainty. Ratio also classifies all the

data in such manner on the financial basis.

Ratio Analysis is used in every organization and Ratio has broad scope. It helps

Finance Management, Asset Management, and Inventory Control and also helps to build

strong financial position of the organization.

Ratio has one limit. Sometimes interpretation may be wrong because of lack of

information or lack of knowledge of interpreter. At the time of training, some required

information was not provided by the company because of their policy. So, it was difficult

to calculate the ratios as all the data was not available and hence assumption was taken.

The other difficulty is that we have not been provided the Annual report of 2010-11.

6

INDEX

Chapter

No

Particular

Page

No.

Preface 2

Declaration 3

Certificate from Company

Certificate from College

Acknowledgement 4

Executive summary 5

1 Introduction 9

1.1 History and developments 10

1.2 General Information of company 11

1.3 Finance Department 30

2 Literature Review 38

3 Research Methodology 40

3.1 Problems 42

3.2 Objectives 42

3.3 Research Design. 43

3.4 Limitations 45

3.5 Scope 46

3.6 Tools & Techniques 47

4 Data Analysis & Interpretation 48

4.1 Steps 50

4.2 Advantages & Limitation 51

4.3 Interpretation 54

5 SWOT Analysis 83

6 Findings 86

Conclusion & Suggestions 87

Bibliography 89

Annexure 90

7

LIST OF TABLES

Table

No

Particular

Page

No

1 Profit & loss Account 31

2 Balance Sheet 33

3 Cash flow Statement 37

4 Current Ratio Description 55

5 Liquid Ratio Description 57

6 Quick Ratio Description 59

7 Debt Equity Ratio Description 62

8 Total Debt Equity Ratio Description 64

9 Gross Profit Ratio Description 66

10 Net Profit Ratio Description 68

11 Operating Profit Ratio Description 70

12 Debtors Turnover Ratio Description 73

13 Creditors Turnover Ratio Description 75

14 Return on Equity Ratio Description 77

15 Return on Long-term Fund Ratio Description 79

16 List of Rato 81

17 Common size Statement 95

18 Financial Results 96

8

LIST OF GRAPHS

Graph

No

Particular

Page

No

1 Current Ratio 56

2 Liquid Ratio 58

3 Quick Ratio 60

4 Debt Equity Ratio 63

5 Total Debt Equity Ratio 65

6 Gross Profit Ratio 67

7 Net Profit Ratio 69

8 Operating Profit Ratio 71

9 Debtors Turnover Ratio 74

10 Creditors Turnover Ratio 76

11 Return on Equity Ratio 78

12 Return on Long-term Fund Ratio 80

10

1.1 HISTORY AND DEVELOPNMENT

The foundation of Anupam was laid in 1973 by entrepreneur techno craft- shri,

J.C.Patel., who had gained rich experience of a decade in crude designing at heavy

engineering corporation, Ranchi.

The main trust of company all along has been its proficiency in its design capacity,

research, development and satisfaction of its customer.

Anupam Industries Ltd. Having enriched experience of 37 years is one of the market

leaders in crude manufacturing in India. In a span of 37 years the company has a satisfied

customer base of more than 3500 installation across the globe.

Through its 37 decades long history, Anupam has grown strength to strength and is

now a front runner in the crane manufacturing industries.

The company headed by J.C.Patel founder chairman, who is a sound technocrat with

a total experience of 4 decades under his leadership a team of young technocrat Mr. Mehul

Patel who is managing director and Mrs. Shreya Patel who is executive director both with

rich experience are holding different operations of the company. They are backed by a

team of professors having experience of more than 3 decades of various functions like

designing, engineering, marketing, contracts, finance and operations.

Since the “Anupam Industry Ltd.” has gradually developed its capabilities and have

flourished in all horizon. Today Anupam has one of the foremost.

11

1.2 General information of company:

Name : “ANUPAM INDUSTRIES LTD”

Registered Office : 138, G.I.D.C.

` Vitthal udyognagar,

Anand. 388121

Telephone no : (02692) 236118, 235210, 236324.

Fax no : (02692) 236324

E-mail : [email protected]

[email protected]

[email protected]

Web-site : http//www.anupamgroup.com

Year of establishment : 1973

Promoters : Mr.Jagdishchandra G. Patel.

Board of Directors :Chairman: Mr. Jagdishchandra Patel

Managing Director: Mr. Mehul Patel

Executive Director: Mrs. Sherya Patel.

mailto:[email protected]

mailto:[email protected]

12

Auditors : Ms. Deloitte Haskins & sells

(Chartered accountant)

Ahmedabad

CEO : Mr.N.Nagrajan

Company secretary : Mr.Dattanand Heranjale–

Bankers :

HDFC Bank Ltd.

ICICI Bank Ltd.

AXIS Bank Ltd.

Standard chartered Bank Ltd

Size of the unit : Anupam Industry is a medium scale unit.

Main Product :

1) Overhead travelling sot crane up to 500t capacity.

2) Gantry/ Goliath cranes up to 500t capacity.

3) Four glider/ double girder ladle crane up to 500t capacity.

4) Magnet cranes with rotating trolley or rotating spreader beam.

5) Steel plant equipment viz., Coil/ slag pot transfer car, ladle car, ladle.

6) Tower crane.

7) Level puffing crane.

8) Container handling port cranes viz., RMQC, RTGC & RMGC.

9) Heavy duty transfer trolleys.

13

Clients :

1. Jindal steel & power ltd.

2. Steel authority of India ltd.

3. L&T special steel & heavy forgings ltd.

4. Ad-hydro power ltd.

5. Alston projects ltd.

6. Hindalco industries ltd.

7. Mahajan co ltd.

8. Nagarjuna construction

9. Maytas infrastructure ltd.

10. L&T ltd.

11. Pipapav shipyard ltd.

12. Abg shipyard ltd.

13. L&T ltd(ship building division)

Vision :

To view growth as a way of life and make Anupam Industries the foremost venture to

invest in and prosper.

Mission :

To establish ourselves as a dominant player in crane manufacturing industries across

the globe.

Quality policy :

Anupam Industries is committed to provide quality products to the

customer‟s requirements. Anupam Industries based in the customaries services.

Upgrading quality through continuous improvement in all areas of our operation in

our mission. Customers satisfaction shall remain our motto & there in our assets.

14

ORGANISATION STRUCTURE

15

UNIT - I

SHOP AREA : 4300 SQ. M

ASSEMBLY SHOP 1 : Span 10M X Ht 6M

X L 56.3M

ASSEMBLY SHOP 2 : Span 12M X Ht 8M

X L 56.3M

EQUIPPED WITH : 25T - 1 no. & 10T - 2

nos. cranes

STORAGE SHOP 1&2 : Span 14.5M X Ht

6M X L 40M

EQUIPPED WITH : 10T - 2 nos. cranes

LOAD TESTING

FACILITY

: 250 T 1 No. LOAD

PIT

MANUFACTURING

CAPACITY

: 4 to 6 CRANES PER

MONTH

LARGEST

COMPONENT

HANDLING

CAPACITY

: 50T

16

UNIT - II


FABRICATION SHOP : Span 17.5M X Ht 12M X

L 100M

EQUIPPED WITH : 20T -2 nos. & 5T -1 no.

cranes

ASSEMBLY SHOP : Span 19M X Ht 12M X

L 100M

EQUIPPED WITH : 40/10T -2 nos. & 20T -1

no. cranes

LOAD TESTING FACILITY : 350 T 2 Nos. LOAD

PITS

MANUFACTURING

CAPACITY

: 8 to 10 CRANES PER

MONTH

LARGEST COMPONENT

HANDLING CAPACITY

: 100T

17

UNIT - III


FABRICATION SHOP : Span 20.0m X H 8.5m X L

78m

EQUIPPED WITH : 20T - 2 nos. cranes

ASSEMBLY SHOP : Span 20.5m X H 8.5m X L

78m

EQUIPPED WITH : 40/10T - 2 nos. cranes

LOAD TESTING FACILITY : 350 T 1 No. LOAD PIT

MFG./ASSEMBLY CAPACITY : 8 to 10 CRANES PER

MONTH

LARGEST COMPONENT

HANDLING CAPACITY

: 100T

18

UNIT - IV (NADIAD)


OPEN AREA : 1500 SQ. M

FABRICATION/ASSEMBLY BAY-I : Span 25M X Ht 7M X L

120M

EQUIPPED WITH : 20T - 2 nos cranes

FABRICATION/ASSEMBLY BAY-II : Span 17M X Ht 10M X L

120M

EQUIPPED WITH : 40T - 2 nos. EOT cranes

FABRICATION/ASSEMBLY BAY-III : Span 25M X Ht 12M X L

120M

EQUIPPED WITH : 10T - 2 nos. EOT cranes

LOAD TESTING FACILITY : 250T 1 No. and 100T 2

Nos. LOAD PITS

MANUFACTURING CAPACITY : 10 to 15 CRANES PER

MONTH

LARGEST COMPONENT HANDLING

CAPACITY

: 100T

19

UNIT - V

SHOP AREA : 8000 SQ. M + 7000

SQ. M Open Area,

Office and Store

FABRICATION BAY : Span 13.2M X Ht 6M

X L 100M

EQUIPPED WITH : 10T - 2 nos. & 5T – 1

no. cranes

FABRICATION BAY-II : Span 13.2M X Ht 7M

X L 100M

EQUIPPED WITH : 30/5T & 7.5T - 1 no.

each cranes

ASSEMBLY BAY – I : Span 26M X Ht 15M

X L 102M

EQUIPPED WITH : 75/10T - 2 nos. EOT

cranes

ASSEMBLY BAY – II : Span 19.5M X Ht 6M

X L 100M

EQUIPPED WITH : 3T - 4 nos. EOT

cranes

LOAD TESTING FACILITY : 450T 1 No. LOAD

PIT

MFG./ASSEMBLY CAPACITY :10 to 15 CRANES

PER MONTH

LARGEST COMPONENT

HANDLING CAPACITY

: 150T

20

UNIT - VI (ACEPL)


FABRICATION SHOP : Span 22M X Ht 15M X L

80M

EQUIPPED WITH : 40/10T - 2 nos. cranes

MANUFACTURING CAPACITY : 4 to 6 CRANES PER

MONTH

LARGEST COMPONENT

HANDLING CAPACITY

: 100T

STORAGE

YARD :-

YARD-I, YARD-II & YARD-III

Aggregated 15000 SQ. M open & close area for raw material, finish products

and heavy components storage

21

MANUFACTURING PROCES:

Different companies have different types of product and different product has

different manufacturing process. Anupam industry limited produces different types of

crane. Crane is just widely used in various material handling applications and are highly

durable.

The company produces three types of cranes which are as under:

1. E.O.T. crane

2. Gentry crane

3. Semi portal crane

Every input raw material is inspected tested as per our quality assurance plan. Heat

nos. Are allotted to all about raw materials and are transferred even the smallest part of the

crane and the same can be co-related with relevant test certificates.

Every manufacturing operation is inspected and build dimensions are recorded in

our history and sheet which engages supply of spare as per as build dimensions‟ at any

time during the life span of our cranes.

Assembly stand load testing by and handling facilities for manufacturing crane up to

200 tones capacity.

Latest sophisticated machines for critical machining operations like gear, hobbling,

boring, milling, planning etc... Are available. The company produce different types of

product also like:

1. ELECTRICAL PANEL:

Modular design, case to install and maintain, reliable operation baseless circulatory,

ducted wiring and compact terminals motor overload protection to prevent over

loading.

22

2. BRAKES:

Single/dual disc/ shoe electromagnetic/EHT brinks with features like automatic

braking on power failure.

3. GEAR BOX

The entire gear boxes are made of accurate hob cut helical/spur gears and pinions

having hardness 250 to 350 BHN made from carbon ally steel. All gears and pinions

running on antifriction types ball giving constant splash lubrication. The helical/spur

gear designed for adequate strength and optimum wear resistance for smooth

operation and long life.

4. PAINTING:

Two coats of primary before assembly and two coats of synthetic after testing.

5. LIMIT SWITCH:

Safety limit switches for shoppers will be provided to prevent over travelling in all

motions.

CT &LT DRIVE

WIRE HOPE HOIST

HOSTING GEM BOX FOR CLUCH

INVERTOR DAVES

Anupam industry have different department for the work carried out effectively and

efficiently. The entire department maintains good interaction with one another. Following

are the departments;

23

Marketing & Sales Department :

Anupam has well organized marketing department. It has enough number of

marketing agents & salesmen.

It‟s most important function is to bring orders as without having an order no

one will think of producing items. Marketing Department fetches orders from

various industries through advertisement, discounts, etc. It brings details depicting

client‟s requirements. The details include technical specifications, terms &

conditions, price, delivery date. It also receives payment

Design Department :

It is the one of the most important function of any organization. The main

Function of this department is to design as per the technical detail provided by the

marketing department.

Copy of the work order is released by marketing department. This copy is given to

the design department. Design department released set of part drawing and assembly

drawings to the planning department as per design.

Design department maintains drawings of part assemblies, Part and update their

drawings if any change occurs in the design.

Production Planning & Control :

Once design department prepared the design according to specification

requirements, the marketing people show design to customer & make changes if require

then the final design comes to ppc department. Now the function of planning starts.

24

They first list out bill of materials in which they decide about make or buy policy.

They check whether the material is available or not. If not then they put order to a

purchase department.

They draw out activity chart for all activity, time for each activity & man hour‟s

availability. According to activity chart, they fix the completion date & show it to

marketing department. During manufacturing of the product they continuously remain in

contact with people & note if the production is carried out as per planning or not.

Purchase department :

Purchase department is involved in purchasing items from the suppliers and

selecting & registering the supplier on the basis of their ability to meet specified

requirements. It is also responsible for establishing & maintaining the record of acceptable

suppliers & evaluation of suppliers.

Quality Control Department :

Purchased raw materials and finished items are first inspected by quality control

department and after certified by quality control department as flawless, they are taken to

the store.

Quality Control Department is also involved in stage inspection and final

inspection of product.

25

Maintenance Department :

Maintenance department is responsible for repairing the breakdown machines as

soon as possible to reduce machine down time cost. It is also responsible for

maintaining data of available machines and equipments.

Store Department :

The function of store is to document a procedure for receipt & issue of material

from store & to maintain sufficient inventory level of items to ensure availability of

material for production process.

Dispatch Department :

Function of dispatch department is to dispatch the product to the respective

client.

Human resource management :

Human resource department take care of the employees and as well as the worker.

HRD take care of the payment salary as well as the wages to the concern employees or

worker on time. And the wages and salary fixed on the basis of the merit of the work and

which position employee work.

HRD make transfer or promotion of the employees‟ base on the performance

system.

HRD arranged the training to the employees time to time for the better

improvements of the employee.

HRD also take of the allowances to the employees like travelling, etc. which is

fixed by the management of the company.

26

I. TIME KEEPING SYSTEM:

In the industrial would success largely depend upon the business organized time

keeping system? Time keeping system helps in knowing about the regularly of worker or

employees.

The time keeping system includes work timing of managerial persons, workers and

visitors time as well as dinner and lunch time.

In any business organization are need the facility of time keeping system. It is one of

the most important in any industry. In Anupam industry limited there are total 370

workers. The time of those workers for working in plant is divided in two shifts. The one

is 8:00 am to 4:30 pm and second shift is 4:30 pm to 12:30am. Generally the time of

working for official workers is 9:00 am to 6:00pm.

In different industries there is a different time keeping system. In Anupam there is

a computerized attendance system. There is a one machine installed in the entrance of the

industry. Every employee of the industry had a magnetic card and keep with him/her

during the job timing. The magnetic identify card based on the employee number allot to

them. At the time of joining the card tank at the entrance and it is not taken into machine.

The attendance from the machines is transferred at regular internal to the main computer

system available in the company.

There are mainly two shifts.

Shift-1 8:00 am to 4:30 pm

Shift-2 4:30 pm to 12:30am.

Generally the time of working for official workers is 9:00 am to 6:00pm.

27

II. EMPLOYEE SEVICES:

Employee service is necessary for all industries because by providing service to the

employee work efficiency and take interest in work. In different industrial unit‟s employee

are given different kind of service.

According to employee welfare act 1948. Anupam industry limited provides much

service to the employee like:

1. Medical facility is given to the employees ensured by the major or minor accident in

organization. Medical claims policy given to the family members.

2. Industry also provides incentive for family planning.

3. Company provides uniform to the poem and to the gatekeeper and watchman.

4. Company provide helmet to the employee who work in manufacturing department for

their safety.

5. The workers of Anupam industry limited. get a financial service from the company

they are as follows:

Loan and advance at the time of two or three day in replace of land and building.

Vehicle loan

The worker also get a workmen compensation fund.

Finance Department:

The finance department take care of the all the financial matter of the

company. From acquiring fund to proper utilization of the fund and many more

which is in terms of finance, the department takes care of all the finance related stuff

of the company. We see in detail on some topic of the finance.

28

Finance is regarded as the lifeblood of a business organization. The financial

management is concern with procuring of financial resources and its judicious utilization

with a view to maximize the shareholder‟s wealth. The finance function is more vital and

crucial to organization. Hence there is need for sound and efficient organization for the

finance function. A firm should give proper and due attention to organization of its finance

department. Organization of finance function differs from firm to firm. It will depend on

various factories such as size and nature of firm‟s business capability of the person

handling the finance and financial philosophy of the organization. The designation of

finance also differs from firm to firm.

ANUPAM‟s organizational structure for finance department is as under:

FUND MANAGEMENT

1. Fund forecasting monthly & weekly.

2. Follow up & arrangement of funds.

3. Handling of petty cash.

4. Ensuring timely legal payment & to vendors.

TAXATION

1. Payment of taxes.

2. Filling monthly, quarterly, annual reports.

3. Audit of reports.

4. Proper deductions of TDS from vendors & payments.

29

COSTING

1. Deciding cost of product

BUDGETING

1. Preparation of budget as per market forecasting

2. Comparing actual with budgeted i.e. variance analysis

AUDITING

1. Filling monthly, quarterly, annual reports.

2. Audit of reports.

OBJECTIVES:

ANUPAM INDUSTRIES LTD believes in themselves and thus has set a

few objectives for them which they thrive on:-

To delight our customers by supplying the required product in time.

To attempt continuous improvement in efficiencies and environmental protection.

To constantly carry out improvements in our product processes and method.

To built relationship with our sub-contractor business associates.

30

1.3 INTRODUCTION OF FINANCE

Meaning and types of financial statement:

A financial statement to an organized collection of data

according to logical and consists accounting procedures. Its purpose is to

convey an understanding of some financial of aspects business of a

firm.

Thus the term financial statement generally refers to two

basic statements.

1. The income statement

2. The balance sheet

Financial statement provides information of value of company

officials as well as to various outsiders, such as investors and lenders of

fund publicity owned companies are required to periodically publish

general purpose financial statements that include a balance sheet an

income statement issued for external distribution are prepared according

to generally accepted accounting principles, which are the guidelines for

the content and format of the statements.

Financial statement

Income Balance Sheet Statement of retained

earning

(P& L Appropriation

A/c)

Statement of

change in

financial

(cash flow &

fund flow

statement)

31

Income statement (P&L a/c):

It represents the details of earnings achieved for the details periods. It separately

amazes revenue and expenses, which result from the company‟s outgoing major or central.

This statement is useful to investors, creditors and other users in determining the

profit ability of operations. The income statement must also show earning per share (eps).

ANUPAM INDUSTRIES LIMITED

PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31,2011

Schedule Year ended march

31,2011(in rupees)

Year ended march

31,2010(in rupees)

INCOME:

Sales

Less : Excise duty recovered on sales

Erection and Other charges

[T.D.S. Rs. 20,77,850/-(P.Y. Rs. 2602744/-)]

Other income

12

3124060857

241560394

2135838282

196228750

2882500463

142998477

6934603

1939609532

94050651

2119900

TOTAL : 3032433543 2035780083

EXPENDITURE:

Increased in stock

Materials Consumed

Manufacturing Expenses

Employee Costs

Administration & General Expenses

Selling & Distribution Expenses

Interest & Finance Charges

Depreciation/Amortization

13

14

15

16

17

18

19

5

(167,754,199)

1,969,680,757

66,565,737

109,858,432

94,370,936

84,367,276

139,012,450

40,644,270

(1,376,656)

1,307,620,591

63,564,635

78,957,623

62,317,975

67,077,635

105,345,308

9,061,845

TOTAL: 2,336,745,659 1,692,568,956

32

Profit Before Tax:

Provision for:

Current Tax

{Including RS. 36,492/-for Wealth Tax

(P.Y.Rs. NIL)}

Tax for earlier years

Deferred tax

Fringe Benefit Tax

695,687,884

238,036,492

4,088,906

13,004,106

---

343,211,127

105,000,000

318,329

10,676,712

820,760

Profit After Tax:

Add: Balance brought forward from p.y

440,558,380

1,866,080

226,395,326

470,754

Amount available for Appropriations: 442,424,460 226,866,080

APPROPRIATIONS:

Dividend on Preference Shares

Tax on Dividend

Transfer to General Reserve

Balance Carried to Balance Sheet:

Earnings Per Share

Basic

Diluted

(refer Note-21 of Schedule 21)

Significant Accounting Policies

Notes on Accounts

20

21

4,930

819

425,000,000

------

------

225,000,000

425,005,749 225,000,000

17,418,711 1,866,080

115.80

-----

59.51

59.51

33

Balance Sheet [ statement of financial position ]:

It represents the assets & liabilities, the owner‟s equity of the company at a specific

point in time. It is prepared on a particular data while income statement is for a particular

period, here the total assets equal (balance) the sources of finding for those resources.

Balance Sheet as at 31st March, 2010

Sources Schedule As at 31st March 2010 As at 31

st March

2009

SOURCES OF

FUNDS

Share capital 1 437943260 38042260

Reserves &surplus 2 969573146 528949393

1407516406 566991653

LOANS

Secured Loans 3 647716697 802087357

Unsecured Loans 4 32536000 7713069

680252697 809800426

Differed tax liabilities 29385923 16345194

Total 2117155026 1393137273

APPLICATION OF

FUNDS

Fixed Assets

Gross Block 5 633108667 397098514

(-) depreciation 65497560 24980092

Net Block 567611107 372118422

34

Capital work in

progress

339615 32912948

Investment 6 19900000 1218950

Current assets Loans

& advances

Inventories 7 600169056 274038795

Sundry Debtors 8 1668520305 1112394029

Cash & Bank Balance 9 197011292 111869851

Loans & Advances 10 301733690 115392662

2767434343 1613695337

Less:- Current

Liabilities &

Provisions

11

Current Liabilities 1019753303 521808384

Provisions 239965622 105000000

1259718925 626808384

Net current assets 1259718418 986886953

Miscellaneous

expenditure

(to the extent not

written off or

adjusted)

Share issue expenses

incurred during the

year

21687886

(less) adjusted against

share premium

account

99000

21588886

Total 2117155026 1393137273

35

Statement of changes in financial position

For a better understanding of the affairs of a business, it is essential to identify the

movement of working capital or cash in and out of the business. This information is

available in the statement of changes in financial position of the business.

Change in working capital position ( fund flow statement )

Change in cash position ( cash flow statement )

Change in overall financial position ( cash flow statement )

The details of the above statement are given below:

1. Fund flow statement

Fund flow statement is a statement depicting change in working capital. It is also

termed as statement of sources and application of funds.

It deals with the financial resources required for running the business activities. It

explains how the funds were applied during a particular period.

Fund flow statement helps the financial analyst in having more detailed analysis

and distribution of resources between two balance sheet dates. Such study is required

regarding the future working capital position of the company a projected funds flow

statement can be prepared.

2. Cash flow statement

An analysis of cash flows is useful for short-run planning. A firm needs sufficient

cash to pay debts maturing in the near future, to pay interest and other expenses and to pay

dividends to shareholders. The firm can make projections of cash inflows and outflows for

the near future to determine the availability of cash. This cash balance can be matched

with firm‟s need for cash during the period, and accordingly arrangements can be made to

36

meet the deficit or invest the surplus cash temporarily. A historical analysis of cash flows

provides insight to prepare reliable cash flow projections for the immediate future.

A statement of charges in financial position on cash basis, commonly known as the

cash flow statement, summarizes the causes of charges in cash position between dates of

the two balance sheets. It indicates the sources and uses of cash.

Sources and Uses of Cash

The following are the sources of cash:

o The profitable operations of the firm,

o Decrease in assets(except cash)

o Increase in liabilities(including debentures or bonds), and

o Sale proceeds from an ordinary or preference share issue.

The uses of cash are:

o The loss from operations,

o Increase in assets(except cash),

o Decrease in liabilities(including redemption of debentures or bonds),

o Redemption of redeemable preference shares and

o Cash dividends.

37

Cash Flow Statement for the year ended March 31st, 2010

Particulars March 31,

2010

March 31. 2009

Cash flow from operating activities

Profit before taxation and extraordinary items: 695687884 343211127

Adjusted for:

Depreciation/ Amortization 40644270 9061845

Interest & Finance charges 159055183 105345303

Interest Income (20042733) (6229358)

Loss on derivatives 12652445 -

Loss on sale of fixed assets(net) 68427 14264

Bad debts written off 12652445 1274050

Investment written off 818950 -

Unrealized gain on foreign exchange (3835277) -

Sub Total 201516884 109466109

Operating Profit before working capital charges 897204768 452677236

Adjusted for:

Inventories (326130261) (57815183)

Trade receivables (568778721) (449689756)

Loans & Advances (38662653) (15148781)

Trade Payable and Other Liabilities 489480202 164762390

Sub Total (444091433) (357891330)

Cash generated from operation activities 453113335 94785906

Less: Taxes paid (256 767

281)

(86523718)

Net cash from operating activities 196346054 8262188

Cash flow from investing activities

Purchase of fixed assets (203956549) (165067077)

Sale proceeds from fixed assets 324500 218194

Investment (19500000) -

Net cash used in investing activities (223132049) (164848883)

Cash flow for financing activities

Proceeds from issue of shares 400000000

Long term borrowings (61967307) 59898728

Cash credit & short term borrowings (89750028) 242106646

Unsecured loans 24822931 4727069

Loss on derivatives (12155619) -

Share issue expenditure (21687886) -

Interest & Finance charges paid (147377388) (105345308)

Interest received 20042733 6229358

Net cash used in financing activities 111927436 207616493

Net Increase / (Decrease) in cash & cash

equivalents

85141441 51029798

Cash and cash equivalents as at April 01, 2009 111869851 60840053

Cash and cash equivalents as at march 31, 2010 197011292 111869851

39

Literature Review

Discussion and analysis concerning our future growth perspective are forward

looking. In the future number of risk are involved that‟s why Ratio analysis helps to

clarify our future path. There is various way we can analyzed the data among them one of

technique is Ratio analysis. The risk and uncertainties regarding fluctuations in earning is

only analyzed by ratio analyst. There are number of ratio found by various annalists

according to their co. requirement.

Management of Anupam Industries Ltd. Analyze whole data using various Ratio

and graph so they can interpret all financial data and identified the company position as

well as they also clarified some data in annual report.

41

Research Methodology

The basic concept of research methodology refers to the way in which

companies conduct their research and how they collect the data they need. Whenever a

company or organization needs to investigate a particular area of their business dealings,

they need to adapt the most suitable research methodology for the job.

Research methodology typically involves a full breakdown of all the options

that have been chosen by a company in order to investigate something. This would include

the procedures and techniques used to perform the research; as well as any of the

terminology and explanations of how these methods will be applied effectively.

A company may need to decide what format of research they want to use before the

investigation begins. For example, if a company that sells a particular product needs to

launch research to find out how effective or desirable a new product is, they will need to

conduct what is known as primary research. This method means that the company will

collect data and information themselves first hand.

Alternatively, a company many only require figures or statistical findings

that can be located from an external source to themselves. This is known as secondary

research, and this area of research methodology typically involves reading published

journals, newspapers and other materials to give companies the information they need

second hand.

However, research methodology is not always pin-point specific. Many areas

of research methodology may simply be referring to a generic path or method that a

company will apply in order to retrieve the information they need.

Research methodology is the way in which researchers specify how they are going to

retrieve the all-important data and information that companies will need to make vital

decisions.

42

3.1 Problems:

During the training due to „PEL‟ Policy. Some data of company not provided

us for analysis so lack of proper information we cannot reach at point decision.

Some data like investment strategy, allocation of fund their depth which are

provided but lack transparency we can accept which are provided by him

At the time of training because of work load and meeting they are not respond

us and it will take long time for their response

The most important thing is that which we studied in theory some application

is different Practical Operation.

3.2 Objectives of Research:

1. To gain familiarity with the present‟s status of the business.

2. To measure the frequency of occurrences of various parameters/indicators.

3. To reveal the trend and tendencies in the business, i.e., to assess the growth or

expansion potential of the business.

4. To identify the influencing factor or determinants of business parameters.

5. To test the significance and validity and reliability of the results.

43

3.3 RESEARCH DESIGN:

Research design or model indicates a plan of action to be carried out in

connection with a proposed research work. It provides a guideline f or the

researcher to enable him to keep track of his actions and to know that he is

moving in the right direction in order to achieve his goal. The purpose of

research is to provide information that will aid in management decision

making.

TYPES OF RESEARCH DESIGN:

On the basis of the objectives of the marketing research can be classified

into:-

I. Exploratory Research

II. Conclusive Research

The research design for exploratory research is best characterized by its

lack of structure and flexibility. It is generally used for the development of

hypothesis regarding potential opportunities and problems.

Exploratory Research is further subdivided into;

Search of secondary data

Case study

Survey of experts

Conclusive research which is use to provide information for the evaluation of

the alternative courses of action can be sub-divided into :

Descriptive research.

Causal or experimental research.

44

3.3 LIMITATIONS:

1. The study is based on analytical tools which have their own limitations

This applies to this project.

2. The reliability and accuracy of the calculations depends very much in

The information found in the balance sheet & its reliability.

3. Absolute reality can‟t be found in the financial statement.

4. The entire study is based on secondary data.

5. The study is based on only one company i.e. ANUPAM industries ltd.

6. The external factors such as fiscal policies, bank rate, government

Policies etc. are as applicable in the previous year for the current Trends and their

impact is to be professionally changed.

45

3.4 Scope of research:

1. National innovative capacity : modeling, measuring and comparing national capacities

2. Designing efficient incentive systems for invention and innovation : intellectual property

rights, prizes, public subsidies

3. Research in EPFL labs : new economics of science

4. New R&D methods and the production of reliable knowledge in sectors which lagged

behind

5. New models of innovation: open, distributed systems and the role of users.

6. Other issues to be developed.

Source of secondary data:

Most of the calculations are made on the financial statement of the company provided

statement.

Referring standard text and refer book collected some of the information regarding

theoretical aspect.

Method to access the performance of the company method of observation of the work in

finance department in followed.

ADVANTAGES OF SECONDARY DATA:

-

The major advantage of secondary data is economy. As the data are already

available, they can be obtained at a relatively low cost.

The secondary data can be obtained quickly.

The secondary data enable the researchers to identify the deficiencies in the

data.

They are useful in the case of exploratory researches as they provide

increased understanding of the problem.

http://cemi.epfl.ch/page-30714-en.html#1








46

LIMITATIONS OF SECONDARY DATA:

The available data may not suit the current purpose of research, due to

incompleteness, generalities and so on. Information may be outdated or

obsolete.

The methodology used in collecting the data such as the sample size,

date of the research, etc., may be unknown.

All the findings of a research study may not be made public.

Conflicting data may exist.

It may be difficult to determine the accuracy of secondary data.

47

3.5 TOOLS AND TECHNIQUES OF ANALYSIS

The following tools and techniques have been used for analyzing the collected data. In this

project report, I have used ratio analysis to make the financial analysis of the various

companies.

1. RATIO TECHNIQUE:

Financial ratio analysis refers to the mathematical expression of relationship

between two accounting figures drawn either from balance sheet or from profit and loss

account or both.

2. STATISTICAL TOOLS USED

The statistical tools used in this project are different formulas. Different

kinds of graphs are used in making this project.

3. PROCESSING AND ANALYZING DATA

Once all the information was available from the financial report, I started

processing data by way of various tables & graphs showing the results. The analysis of a

data helps a person to come on conclusion and serve the purpose for him. With the help of

this analysis the management can know regarding the level of management being run in

the company.

4. PREPARING THE REPORT

After the above data was tabulated, interpreted and analyzed the report was

prepared embodying the findings of research. Modest attempts were made to keep

objectivity coherence and clarity in presentation of ideas and use charts and graphs.

49

Data Analysis & Interpretation

RATIO ANALYSIS:

Ratio analysis is one of the techniques of financial analysis where ratios are used as

a yardstick for evaluating the financial condition and performance of a company. The

analysis and interpretation of various accounting ratios gives a skilled and experienced

analyst, a better understanding of the financial condition and performance of the firm than

what could have obtain only through a pleural financial statement.

The most important task of a financial manager is to interpret the financial

information in such a manner, that it can be well understood by the people, who are not

well versed in financial information figures. The technique, by which it is to be calculated,

is known as “Ratio Analysis”

1) Percentage.

2) Rate.

3) Proportion

Ratio analysis is an important technique of financial analysis. It depicts the

efficiency or shortfall of the organization in the form of trend Analysis. Different ratio

appeal to different people managements, having the task of running business efficiency,

will interest in all ratio. A supplier of goods on credit will be partially in liquidity ratios,

which indicate the ability of business to purchase.

Existing and future shareholders will interest in investment ratios, which indicate the

level of return that can be expected on an investment in business.

Major customers, intent on having a continuing source of supply, will be interested

in the financial stability, as reveled by the capital structure, liquidity, and profitability

ratios. Debentures and loan stockholders will be interested in ability of a business will be

interested in the ability of a business to pay interest, and ultimately to repay capital.

A banker, gibing only short-term loans, will be interested mainly in the liquidity of the

business, and its ability to repay those loans.

50

4.1 STEPS IN RATIO ANALYSIS

I. Collection of information, which are relevant from the financial statements and then to

calculate different ratios accordingly.

II. Comparison of computed ratios of the same organization or with the industry ratios.

III. Interpretation, drawing of the inference and report writing.

51

4.2 ADVANTAGES OF RATIO ANALYSIS

Ratio analysis is a very important and useful tool for financial analysis. It serves much

purpose and is useful not only for internal management but for prospective investors,

creditors and other outsiders. The following are the important uses (advantages) of Ratio

Analysis.

It is important and useful to check upon the efficiency with which the Working capital is

being used (managed) in a business enterprise.

It helps the management of business concern in evaluating its financial position and

efficiency of performance.

It serves as a sort of health test of business firm, because with the help of these analyses

financial managers can determine whether the firm is financially healthy or not.

A Ratio Analysis covering a number of past accounting (financial), periods clearly shows

the trend of changes in the business position.

It helps in making financial estimates for the future.

It helps the task of managerial control largely.

It helps the credit suppliers and investors in evaluating a business firm as a desirable debtor

or as a potential investment outlet. With the help of this analysis standard ratios can be

established and these can be used for the purpose the comparison of a firm‟s progress and

performance.

This analysis communicates important information regarding financial strength and

standing, earning capacity, debt capacity, liquidity position, capacity to meet fixed

commitments.

This analysis may be employed for comparing the working result and efficiency of

performance of a business enterprise with that of other enterprises engaged in the same

industry.

It helps the management or business concern to discharge their basic functions of planning,

coordinating, controlling, etc.

It serves as an instrument for testing management efficiency.

It sometimes provides a useful tool for decisions on certain policy matters.

52

LIMITATIONS OF RATIO ANALYSIS

Accounting ratios (calculated under the system of the ratio analysis) will be correct only if

the accounting data (figures), on which their based is correct.

It is mainly a historical analyses or an analysis of the post financial date.

About profits of a business concern, ratio analysis may be misleading in certain

circumstances.

Continuously changes in price levels (or purchasing power of money) seriously affect the

validity of comparison of accounting (financial) periods and make such comparisons very

difficult.

The comparison become difficult also because of difference in the definition of several

financial accounting terms like gross profit, operating profit, net profit, and account of

considerable diversity in practice as regards their measurement.

The validity of comparison is also seriously affected by window dressing in the basic

financial statements and by differences in accounting methods used by different business

concerns.

A single ratio will not be able to convey much information required for Proper decision-

making.

This analysis gives only a part of the total information required for Proper decision-making.

Ratio analysis should not be taken as substitute for sound judgment.

It should not be overlooked that business problem cannot be solved simple mechanically

through ratio analysis or other types of financial analysis.

53

DIFFERENT TYPES OF RATIO

LIQUIDITY RATIOS

1. Current ratios

2. Liquid ratio

3. Quick ratio

PROFITABILITY RATIOS

1. Gross Profit to Sales Ratio

2. Net Profit to Sales Ratio

3. Operating Profit Ratio

4. Operating Earnings Ratio

5. Administrative Expense Ratio

6. Selling Expense Ratio

7. Return on Total Asset Ratio

8. Operating Ratio

9. Return on Capital Employed Ratio

10. Return on Shareholders Ratio

SOLVANCY RATIOS

1. Debt Equity Ratio

2. Interest Coverage Ratio

3. Dividend Coverage Ratio

ACTIVITY RATIOS

1. Debtors Ratio

2. Creditors Ratio

VALUATION RATIOS

1. Earnings per Share Ratio

2. Dividend per Share Ratio

3. Payout Ratio

4. Price Earnings Ratio

5. Yield Ratio

54

4.3 Analysis and interpretation of ratio

LIQUIDITY RATIO :-

The importance of adequate liquidity in the sense of the ability of a firm to meet

current or short-term obligation when they become due for payment can hardly be

overstressed. In fact, liquidity is a prerequisite for the very survival of a firm. The short

term creditors of the firm are interested in the short term solvency or liquidity of the firm,

but liquidity implies , from the view point of utilization of the funds of the firm, the funds

are idle or they earn very little. A proper balance between the two contradictory

requirements that is liquidity and profitability is required for efficient financial

management.

The important liquidity ratios are as under.

1) CURRENT RATIO:

2) LIQUID RATIO:

3) QUICK RATIO:

55

4.1.1 CURRENT RATIO :-

Formula:

C.R. = CURRENT ASSETS

CURRRENT LIABILIES

RATIO DISCRIPTION:-

Table 1: Current ratio of Anupam Industries Ltd

PARTICULARS

2009-10

Rupees

2008-09

Rupees

CURRENT ASSETS 2767434343 1613695337

Inventories 600169056 274038795

Sundry debtors 1668520305 1112394029

Cash & Bank 197011292 111869851

Loans and Advances 301733690 115392662

CURRENT LIABILIES 1259718925 1571808384

Other creditors 756104295 320753976

Advances from customers 165775479 166182942

Other liabilities 97873529 34871466

Provision 239965622 1050000000

Total 1507715418 41886953

Source: Annual Report-2008-09, 2009-10 of Anupam Industry

2009-10 = 2767434343

1259718925

= 2.20:1

2008-09 = 1613695337

1571808384

= 2.57:1

56

Graph: Current ratio of Anupam Industries Ltd.

ITERPRETATION:

This ratio is an indicator of the firm‟s commitment to meet its short-

term liabilities. It is expressed as in the formula. Current assets means assets

means that will either be used up or converted into cash within a year time or

during the normal operating cycle of the business, whichever is longer.

Current liabilities mean liabilities payable within a year or during the

operating cycle whichever is longer.

The ideal current ratio is 2:1. The ratio of two is considered as safe

margin of solvency because if the current assets are reduced to half i.e. one

their payment in full.

From the above table of current ratio, it is clear that the company‟s

current is more than the ideal ratio. Therefore, it can be said that creditors are

safe in the company. The company‟s current ratio has remained satisfactory

for the last two years.

57

4.1.2 LIQUID RATIO

Formula:

Liquid ratio = current assets – stock

Current: liability –bank borrowings

RATIO DISCRIPTION

Table 2: Liquid ratio of Anupam Industries Ltd

PARTICULARS 2009-10 2008-09

Current Assets 2767434343 1613695337

Stock 167754199 1376656

Current Liability 1259718925 1571808384


2009-10 = 2767434343-167754199

1259718925

= 1.72:1

2008-09 = 1613695337-1376656

1571808384

= 2.14:1

58

Graph: Liquid ratio of Anupam Industries Ltd.

INTERPRETATION:

The liquid ratio can be improved by,

Increasing equity share capital

Retaining profits in business

Issue of debentures

Increasing long term loan

Increase long term fund as invested in all current assets except inventories

By increasing proportion of bank borrowings for working capital in current

liabilities

59

4.1.3 QUICK RATIO:-

Formula:

Quick ratio = Quick assets

Current liabilities

RATIO DISCRIPTION

Table 3: Quick ratio of Anupam Industries Ltd

YEAR 2009-10 2008-09

QUICK ASSETS 197011292 111869851

CURRENT LIABILITES 1259718925 1571808384


2009-10 = 197011292

1259718925

= 0.16:1

2008-09 = 111869851

1571808384

= 0.17:1

60

Graph: Quick ratio of Anupam Industries Ltd.

INTERPRETATION:

Quick ratio is also called acid test ratio. It is the ratio between quick

current assets and current liabilities. It is calculated by dividing the quick

assets by current claim. Quick ratio is the measurement of firm‟s ability to

convert its current assets quickly into cash in order to meet its current claim.

The term quick assets refer to current assets, which can be converted into,

cash immediately or at a short notice without reduction in value of quick

ratio.

Quick assets =stock, due from societies, advances, trade and sundry

Debtors‟ cash and bank balance

The ideal quick ratio is 1:1. In ANUPAM INDUSTRIES ltd., the quick

ratio is less than one in both years. The reason is continuous increase in the

current liability.

61

4.2 LEVERAGE RATIO

In the short term creditors like bankers and suppliers of raw material;

are more concerned with firm‟s current debt-paying ability, on the other

hand, long-term creditors like debenture holders, financial institution are

more concerned with the firm‟s long term financial strength in fact a firm

should have short as well as long term financial position. To judge the long

term financial position of the firm is financial leverage or capital structure

ratios are calculated. These ratios indicated funds provided by owners and

lenders. As a rule, there should be an appropriate mix of debt and owner‟s

equity in financing the firm‟s assets.

The important liquidity ratios are as under,

4.2.1 DEBT TO EQUITY RATIO

4.2.2 TOTAL DEBT TO EQUITY RATIO

62

4.2.1 DEBT TO EQUITY RATIO

Formula:

D.T.E. = DEBT

EQUIT

RATIO DISCRIPTION

Table 4: Debt Equity ratio of Anupam Industries Ltd.

Particular 2009-10 2008-09

DEBT

Secured Loan 647746697 802087357

Unsecured Loan 32536000 7713069

Equity

Equity Share Capital 437943260 38042260

Reserves And Surplus 969573146 528949393


2009-10 = 680282697

1407516406

= 0.48:1

2008-09 = 809800426

566991653

= 1.43:1

63

Graph: Debt Equity ratio of Anupam Industries Ltd.

INTERPRETATION:

High ratio indicates higher stake of outsiders in business compare to

stake of owners.

Debt equity ratio can be increase by, Increasing debenture or long term

loans or deferred payment liability decreasing equity losses.

The ratio can be reduced by reverse of above three measures. It can also be

reduced by conversion of loan/debenture into equity. It can also be reduced

by retaining of profits.

64

4.2.2 TOTAL DEBT TO EQUITY RATIO

Formula:

T.D.T.E. = TOTAL DEBT

EQUITY

RATIO DISCRIPTION

Table 5: Total Debt Equity ratio of Anupam Industries Ltd


TOTAL DEBT

Secured loan 647746697 802087357

Unsecured loan 32536000 7713069

Current Liability 1019753303 521808384

EQUITY

Equity Share Capital 437943260 38042260

Reserves And Surplus 969573146 528949393


2009-10 = 1700036000

1013367466

= 1.68:1

2008-09 = 1331608810

566991653

= 2.35:1

65

Graph: Total Debt Equity ratio of Anupam Industries Ltd.

INTERPRETATION:

The high total debt to equity ratio indicates higher stake of outsiders in

business compare to stake of owners.

Total debt to equity ratio can be decrease by,

Reduction in term borrowings

Reduction in funds by utilizing fresh equity proceeds

Reduction in retain profits

Reducing level of credit given to customers & by availing lesser credit period

from suppliers

By increase of equity due to fresh issue or due to retain profits

By conversion of debentures/loans into equity

66

4.3 PROFITIBILITY RATIO

A company should earn profit to survive and grow over a long period.

Profit are essential but it would be wrong to assume that every action initiated

by management of a company should be aimed at maximizing profits

irrespective of social consequences and profits is looked upon as a term of

above since some firms always want to maximize profits at due cost of

employees , customers, and society. Except such infrequent cases, it is fact

profit must be earned to sustain the operation of the business to be able to

obtain funds from investors for expansion and growth and to contribute

towards the social overhead for the welfare of society.

Profit is the difference between revenues and expenses over a period.

Profit is the ultimate output of the company; and it will have no future if it

fails to make sufficient profits. Therefore financial manager should

continuously evaluate the efficiency of its company in term of profits.

Generally, two types of profitability ratios are calculated.

Profitability in relation to sales Profitability in relation to investment.

The important profitability ratios are as under,

4.3.1 GROSS PROFIT TO SALES RATIO

4.3.2 NET PROFIT TO SALES RATIO

4.3.3 OPERATING PROFIT RATIO

67

4.3.1 GROSS PROFIT RATIO

Formula:

G.P. = GROSS PROFIT × 100

SALES

RATIO DISCRIPTION

Table 6: Gross Profit ratio of Anupam Industries Ltd


SALES 2882500463 1939609532

LESS: COST OF SALES

Add: employee cost 109858432 78957623

Manufacturing exp. 66565737 63564635

Material consume 1969680757 1307620591

Increase/(decrease) in stock (167754199) (1376656)

Gross profit 1157006645 663851613


2009-10 = 115700645 ×100

2882500463

= 40%

2008-09 = 663851613 ×100

1939609532

= 34.23%

68

Graph: Gross Profit ratio of Anupam Industries Ltd.

INTERPRETATION:

Improvements in G.P. to sales ratio can be due to following,

Sales price has been increase due to better market condition/better competitive

position.

Reduction in raw material cost per unit of production due to use of lower

quality of raw material.

Reduction in wages cost can be due to voluntary wages cut or change in labor

reward policy leading to higher efficiency.

Reduction in cost of power and fuel due to reduction in rate per unit charged.

Reduction in gross profit can be due to following reasons,

Reduction in administrative cost to sales ratio

Reduction in interest cost to sales ratio

Reduction selling & distribution cost to sales ratio

69

4.3.1 NET PROFIT RATIO

Formula:

N.P = NET PROFIT × 100

SALES

RATIO DISCRIPTION:

Table 7: Net Profit ratio of Anupam Industries Ltd

PARTICULARS

2009-10 2008-09

Sales

2882500463 1939609532

Net Profit

440558680 226395326


2009-10 = 440558680 ×100

2882500463

= 15.28%

2008-09 = 226395326 ×100

1939609532

= 11.67%

70

Graph: Net Profit ratio of Anupam Industries Ltd.

INTERPRETATION:

Favorable change in Net profit ratio can be due to,

Reduction in tax rate

Obtaining of some relief/allowance/reduction in tax liability.

Unfavorable change could take place due to reverse of above situation.

Reduction in profitability may not conclusively establish inefficiency of

management since when market conditions are bad even most efficient

person may not be able to make profits. In very bad conditions, a business

concern may able to manage break even or only marginal losses can be

termed as efficient. Low profit in teething period, due to introduction of new

product, depression/recession period can be justified. Losses/low profits due

to accident/mishap can be excused.

71

4.3.1 OPERATING PROFIT RATIO

Formula:

O.P. Ratio = NET PROFIT + TAX

SALES

RATIO DISCRIPTION

Table 8: Operating Profit ratio of Anupam Industries Ltd


Sales 2882500463 1939609532

Net Profit 440558680 226395326

Tax 255129504 107205801


2009-10 = 440558680+255129504×100

2882500463

= 24.13%

2008-09 = 226395326+107205801 ×100

1939609532

= 17.20%

72

Graph: Operating Profit ratio of Anupam Industries Ltd.

INTERPRETATION:

Change in operating profit ratio can be due to following reasons apart from

the reasons of change in gross profit ratio.

The ratio can be improved due to reduction in administrative cost to sales

ratio

Reduction in interest cost to sales ratio

Reduction in selling & distribution cost to sales ratio

Increase in miscellaneous income, income from investment, rent income from

rented portion of premises

The increase can also be due to abnormal gains, refund of expenses paid in

previous year due to favorable court judgment

By improvement in sales with expenses constant/rise it a low percentage

compare to percentage increase in sales

73

4.4 MANAGEMENT EFFICIENCY RATIO:

These ratios are concerned with measuring the efficiency in assets

management. These ratios are also called asset utilization ratios. The

efficiency with which the assets are used would be reflected in the speed and

rapidly with which assets are converted into sales. The greater is the rate of

turnover or conversion the more efficient is the utilization of assets, other

thing being equal. For this reason, such ratios are also designed as turnover

ratios. An activity ratio may therefore be defined as a test of the relationship

between sales and various assets of the firm.

Depending upon the various types of assets

The important management efficiency ratios are as under,

4.4.1 DEBTORS TURNOVER RATIO

4.4.2 CREDITORS TURNOVER RATIO

74

4.4.1 DEBTORS TURN OVER RAIO

Formula:

D.T.R. = CREDIT SALES

DEBTORS + BILLS RECEIVABLES

Debtors velocity ratio = DEBTORS + BILLS RECEIVABLES × 365

CREDIT SALES

RATIO DISCRIPTION

Table 9: Debtors Turnover ratio of Anupam Industries Ltd


DEBTORS 1668520305 1112394029

BILLS RECIVABLES - -

CREDIT SALES 2882500463 1939609532


PARTICULARS

2009-10 2008-09

D.T.R = 2882500463

1668520305+0

= 1939609532

1112394029+0

= 1.73 times = 1.74 times

D.V.R = 1668520305+0 *365

2882500463

= 1112394029+0 *365

1939609532

= 211 days = 209 days

75

Graph: Debtors Turnover ratio of Anupam Industries Ltd.

INTERPRETATION:

The ratio gives number of days the receivables are outstanding.

Another ratio to see reasonableness of receivables is to see turnover of

receivables. The ratio is calculated as above.

The higher the turnover & lower the turnover day‟s receivables better it is.

However higher turnover/lesser number of receivables days should not be at

cost of sales/profitability. If period of credit is reduced by offering high cash

discount, the same is not a matter to be appreciated.

76

4.4.2 CREDITORS TURNOVER RATIO

Formula:

C.T.R. = CREDIT PURCHASE

CREDITORS + BILLS PAYABLES

Creditors Velocity Ratio = CREDITORS + BILLS PAYABLES × 365

CREDIT PURCHASE

RATIO DISCRIPTION

Table 10: Creditors Turnover ratio of Anupam Industries Ltd


CREDITORS 756104295 320753976

BILLS PAYABLES - -

CREDIT PURCHASE 1969680757 1307620591



C.T.R = 1969680757

756104295+0

= 1307620591

320753976+0

= 2.61 times = 4.08 times

C.V.R = 756104295+0 ×365

1969680757

= 320753976+0 ×365

1307620591

= 140 days = 90 days

77

Graph: Debtors Turnover ratio of Anupam Industries Ltd.

INTERPRETATION:

The ratio gives credit obtains from suppliers in number of days.

The adequacy of credit obtained is also measured by credit purchased

creditors for goods× bills payable.

Higher the numbers of day‟s credit obtain or lesser the turnover of the

creditors better is ability to obtain credit.

However higher credit obtain should not be at cost of high purchase cost, low

quality, spoiling goodwill amongst suppliers.

If credit period is reduced by availing substantial cash discount, the same is

appreciable.

78

4.5 RETURN RATIOS

The important return ratios are as under,

4.5.1 RETURN ON EQUITY

4.5.2 RETURN ON LONG TERM FUND

4.5.1 RETURN ON EQUITY

Formula:

R.O.E. = NET PROFIT ×100

EQUITY

RATIO DISCRIPTION

Table 11: Return on Equity ratio of Anupam Industries Ltd


NET PROFIT 440558380 226395326

EQUITY 437943260 38042260

RESERVR & SURPLUS 969573146 528949393


2009-10 = 440558380×100

437943260+969573146

= 43.92%

2008-09 = 226395326 ×100

38042260+528949393

= 39.93%

79

Graph: Return on Equity ratio of Anupam Industries Ltd

INTERPRETATION:

The ratio is broken up in three parts,

NET PROFIT × SALES × ASSETS

SALES ASSETS EQUITY

The improvement in the ratio can be brought about by increasing ratio

of net profit to sales.

By increase in sales with better utilization of assets & by reducing share

of equity in financing assets. i.e. trading on equity- only if rate of earning is

higher than net cost of funds (after tax)

The reduction ratio could come due to reverse situation than above.

Justification for low rate of return on equity;

1. troubles of a new business concern

2. New product development period

3. Interest cost has gone up due to hike in interest rate reduction in tax rate.

80

4.5.2 RETURN ON LONG TERM FUND

Formula:

R.O.L.F. = PROFIT BEFORE TAX+INTEREST (1-TAX RATE) ×100

EQUITY+LONG TERM FUND

RATIO DISCRIPTION

Table 12: Return on Long term ratio of Anupam Industries Ltd


Profit Before Tax 695687884 343211127

Interest 139012450 105345308

Tax Rate 30% 30%

Equity 437943260 38042260

Long Term Fund - -


2009-10 = 695687884+139012450 (1-30%) ×100

437943260+0

= 11.51%

2008-09 = 343211127+105345308 (1-30%) ×100

38042260+0

= 5.98%

81

Graph: Return on Long term ratio of Anupam Industries Ltd

INTERPRETATION:

The improvement in the ratio can be brought about by,

Improving profit before tax

Reduction in tax rate

Reduction in long term funds including equity

82

CHART OF RATIOS

Ratios 2009-10 2008-09

Gross Profit Ratio

40.14%

34.23%

Net Profit Ratio

15.28%

11.67%

Operating Ratio

75.83%

80.77%

Operating Profit Ratio

24.13%

17.20%

Current Ratio

2.20:1

2.57:1

Liquid Ratio

1.72:1

2.14:1

Quick Ratio

0.16:1

0.18:1

Debtors‟ Ratio

1.73 Times

1.74 Times

Debtor‟s collection period

211.28 Days

209.33 Days

Creditors‟ Ratio

2.61 Times

4.08 Times

Creditor‟s payment period

140.11 Days

89.53 Days

Debt- Equity Ratio

0.48:1

1.43:1

Total Debt-Equity Ratio

1.28:1

2.34:1

Return on Equity

31.30%

39.93%

Earnings Per Share

115.81 Per share

59.51 Per share

84

SWOT ANALYSIS OF ANUPAM INDUSTRIES LTD.

STRENGTH WEAKNESS

Highly equipped production shop.

Better infrastructure.

Reputation in manufacturing crane

lined equipment

Provide better quality in accordance

with customer requirement. By taking

just in time delivery approach

Product caters to all requirements in

all fields

Prices vary through competition in

these segments, Law margins.

Customer expectations in terms of

delivery, discount and customization

are very high.

No focus from regional offices. All

enquires and subsequent follow up

divert to HEAD OFFICE.

Delivery adherence

85

OPPORTUNITY

THREATS

Vast potential in the market.

Pneumatic valves are increasingly

becoming a part of every process

module as the market moves towards

automation.

After sales services and complaint

management

Establishing a dealer network shall

enable better focus on these products.

Small scale , low cost competitors are

thronging in the market and eroding

our share with product of comparable

performance

Different competitors for different

segments.

Market driven by prices and delivery.

Cheap Chinese/ South East Asian

imports.

Competition from various

competitors, especially Elicon.

86

Findings

1. Through the study I found that awareness regarding company‟s financial information.

2. It is found that company‟ position is well than past year because their management is

good.

3. Winning the heart by quality product to the final user who have order according to

demanded.

4. Anupam group has developed the think tank who continuously updates strategy in the

right direction. Think win-win & Stay ahead with us.

5. Company‟s profit is more than past year.

6. Mostly company produce these products only for the pulling a heavy bugs to change

its place safely.

7. Company has no need to give any advertisement for their increase in profit because

mostly the other company knows this company.

8. The market is not available in all over India so they try to deliver their product slowly

in all over India.

9. Assets are expected to produce higher future revenues.

10. Recently company has acquired more space where it‟s entire production `

and storage unit will be shifted.

87

Conclusion

Financial term and Operation of that company that is manufacturing is very

important for the company. We know that financial statement of a business organization

are very useful to different parties such as management, shareholders, creditors, investors,

banks, financial institution, government authorities etc. Information provided in the

financial statements serves no purpose unless it is analyzed and interpreted in some

comparable terms. To obtain the data analysis and interpretation of the data, it can be done

with the help of working capital and ratio analysis. It is important tool for financial

analysis and it is used as yardstick for examine the financial position of any business

organization.

An Anupam industry limited is a well established organization in the field of

CRANE manufacturing since last 3 decades. It has an enormous popularity in this field.

The profitability ratio of the company indicates a good position. Anupam

industries limited‟s liquid position is also good. This shows that company is capable of

meeting its short term resources.

The position of the solvency ratio of the company is also good at the composition

of a capital of a business and proportion of owner‟s capital.

Operating ratio decrease from 80% to near 75% which is very good sign for the

company it shows the how efficiency increases of the management. And the operating

profit ratio increase almost by 7% it is good for the company.

In 2009-10 the company„s unsecured loan increase its show the company‟s market

reputation. On the basis of the data analysis and interpretation we can say that the

company‟s management is very efficient and active.

Thus overall position of the company is satisfactory and up to the standard.

88

Suggestions

Company should reduce its administration expenses because gross profit is around the

40% and the net profit is around the 15% of the net sales. Company should increase

its net profit by reducing the administration expenses.

Company‟s current ratio showing decreasing trend but still in year 2009-10 the ratio is

2.20:1 which is high. Company have much current assets as compare to the current

liability company should find out the investment proposal for the short period which

is generate the income and also the that investment is flexible so it easily convert in

the benefit of the company. Company should maintain a standard level and other

current assets should not remain idle in company.

Company should improve its quick ratio. Company should maintain 0.5:1 as per the

standard or around there. Because company quick ratio is almost 0.16:1. That is not

good. Company should maintain its cash level or increase cash holding in bank.

Company‟s debtor‟s ratio and debtor‟s collection period is need to improve. For that

company should need to improve the credit policy of the company.

Company need to improve its Return on equity ratio. In the year 2009-10, the ratio is

around 31%. And in the year 2008-09, the ratio around 39%. It is show that

company return on equity ratio is decreasing trend. Company need to improve ratio.

Return on equity attract the investors I the company and such decreasing trend

investor may hesitate in investing in the company.

89

Bibliography

References:

Pandey, I.M. (2010), “Financial Management”, 10th edition, Vikas publishing house

pvt. Ltd, Delhi

Amrish Gupta (2008), “Financial Accounting for Management”, 3rd

edition, Kindersley

(India) pvt. Ltd, licensees of Pearson education in south Asia.

Websites:

www.anupangroup.com

Other Reference:

Annual report of the Anupam industry year 2009-10 & 2008-09

http://www.anupangroup.com/

90

ANNEXURE

DIRECTOR‟S REPORT

Information required the under Section 217(1) (e) of the Companies Act, 1956 read with

the Companies (Disclosure of Particulars in the Report of Directors) Rules, 1988:

1. CONSERVATION OF ENERGY:

a) Energy Conservation measures taken:-

Constant improvements are being effected in the manufacturing process to aid

energy conservation and this has been taken up, as an ongoing exercise

b) Additional investment and proposals, if any, being implemented for reduction of

consumption of energy:

No major specific investments were made during the year under review and there are

no plans for additional investment for reduction of power in the coming year.

c) Impact of the measures at (a) & (b) above for reduction of energy consumption and

consequent impact on the cost of production of goods:

Implementation of the above referred measures taken of energy conservation has

resulted in reducing consumption of power and fuel.

2. TECHNOLOGY ABSORPTION:

I. RESEARCH & DEVELOPMENT:

a) Specific areas in which R&D carried out by the Company:

The company has started a new vertical namely standard Crane kits and Hoists. This

activity requires development of designs and specifications and validation of design

by continuous testing.

91

b) Benefits derived as a result of above R&D:

Benefits are expected to flow on commencement of marketing of standard Cranes

Kits and Hoists. The Company will also be in a position to incorporate in –house

designed modular cranes in their supplies to customers, besides setting up an

independent marketing arrangement for this segment.

c) Future plan of action:

The Company has no specific plans on R&D

d) Expenditure on Research & development:

Since the company does not have separate R&D Cell, there is no distinct expenditure

under the head Research and Development.

II. TECHNOLOGY ABSORPTION:

a) The technology absorption from the Russian partner in respect of Salem steel Plant,

Salem order execution was put into use and concludes successfully with erection of 7

cranes out of the total 11 cranes at Salem steel plant site.

Likewise, the design assistance from TM Crane-Export Limited, Cyprus was

converted into the manufacturing drawings and all crane suppliers to Steel Authority

of India Limited, IISCO, and Burnpur completed before 31-03-2010

b) Benefits derived as a result of the above efforts:

Improvement in quality of product and climb up in value chain has been achieved

besides registering a solid presence in the important ladle crane segment.

The company now has emerged as one of the very few Indian manufacturers for supply of

large ladle cranes for steel plants and in general, melting shops. This will enable the

92

company to continue to remain one of the prequalified vendors for supply of large ladle

cranes.

c) Technology imported during the last five years: During the year under review all the

design and manufacturing drawing from ALFA, S.R.L., and Italy for two types of

Tower cranes was put into use and 1st batch of Tower cranes made with the imported

licensed drawings/technology.

III. FOREIGN EXCHANGE EARNING AND OUTGO:

Foreign exchange earned by the company during the year amounted to current years

Rs. NIL (Previous years Rs.1, 38, 05,534/-). Expenditure in foreign currency during

current year amounted to Rs. 23, 14, 66,108 (previous years Rs.7, 30, 23,773/-),

including remittances for design help and capital imports, details of which are given

in Notes to Accounts.

93

AUDITOR‟S REPORT

1. The auditors have audited the attached balance sheet of Anupam Industries Limited as at

31st March 2010, the profit and loss account and the cash flow statement of the company

for the year ended on that date, both annexed thereto. These financial statements are the

responsibility of the company‟s management.

2. They conducted their audit in accordance with the auditing standard generally accepted in

India. Those standards require that they plan and perform the audit to obtain reasonable

assurance about whether the financial statements are free of material misstatement. An

audit includes examining, on a test basis, evidence supporting the amounts and the

disclosures in the financial statement. An audit also includes assessing the accounting

principles used and the significant estimates made by management, as well as evaluating

the overall financial statement presentation. We believe that their audit provides a

reasonable basis for their opinion.

3. As required by the companies (Auditors Report) order, 2003 issued by the Central

Government of India in terms of section 227(4A) of the Companies Act, 1956, they give in

the annexure, a statement on the matters specified in paragraphs 4 and 5 of the said order.

4. Further to our comments in the Annexure referred to above, they report that:

i. They have obtained all the information and explanation which to the best of our

knowledge and belief were necessary for the purpose of our audit;

ii. In their opinion, proper books of account as required by law have been kept by the

company as far as appears from their examination of those books.

iii. The Balance Sheet, the Profit and Loss account and the Cash Flow Statement dealt

with by this report are in agreement with the books of accounts;

In their opinion, the Balance Sheet, the Profit and Loss account and the Cash Flow

Statement dealt with by this report are in compliance with the accounting standards

referred to in section 211(3C) of the Companies Act,1956;In their opinion and to the best

of our information and according to the explanations given to us, they said accounts give

94

the information required by the Companies Act,11956, in the manner so required and give

a true and fair view in conformity with the accounting principles generally accepted in

India.

i. In the case of the Balance Sheet, of the state of affairs of the Company as at 31st

March 2010.

ii. In the case of the Profit and Loss account, of the profit for the year ended on that

date; and

iii. In the case of the Cash Flow Statement, of the cash flows for the year ended on that

date.

5. On the basis of written representations received from the Directors, as on 31st March

2010 and taken on record by the Board of Directors, we report that none of the

Directors is disqualified as on 31st March 2010 from being appointed as a director in

terms of section 274(1)(g) of the Companies Act, 1956.

95

COMMON SIZE STATEMENT

Table: 16

Particulars 2009- 2010 In% 2008-2009 In %

SOURCES OF FUNDS

Share Capital 437943260 12.96 38042260 18.83

Reserves &surplus 969573146 28.71 528949393 26.19

Secured Loans 647716697 19.18 802087357 39.71

Unsecured Loans 32536000 0.96 7713069 0.38

Differed tax liabilities 29385923 0.87 16345194 0.81

Liabilities:

Current Liabilities 1019753303 30.20 521808384 25.83

Provisions 239965622 7.11 105000000 5.20

Total 3376873951 100 2019945657 100

APPLICATION OF

FUNDS

Fixed Assets 567611107 16.81 372118422 18.42

Capital work in progress 339615 0.010 32912948 1.63

Investment 19900000 0.59 1218950 0.06

Inventories 600169056 17.77 274038795 13.57

Sundry Debtors 1668520305 49.41 1112394029 55.07

Cash & Bank Balance 197011292 5.83 111869851 5.54

Loans & Advances 301733690 8.94 115392662 5.71

Miscellaneous

expenditure

(to the extent not written

off or adjusted)

21588886 0.64 -

P & L( debit) 177300000 5.25 -

Total 3376873951 100 2019945657 100


.

96

Financial Results:

Table: 17

Particulars 2009-10 2008-09

Net Sales and Erection & other Charges 30254.99 20336.60

Other Income 69.35 21.20

Operational Expenditure 21570.90 15781.62

Profit before tax, interest & depreciation 8753.44 4576.18

Less: interest & financial Charges( Net) 1390.12 1053.45

Depreciation 406.44 90.62

Profit before tax 6956.88 3432.11

Less: Provision for tax including FBT 2510.40 1164.98

Profit after tax 4446.48 2267.13

Less: Short provision for tax in earlier year 40.89 3.18

Add: Balance B/F from previous year 18.66 4.71

Amount available from appropriation 4424.25 2268.66

Proposed dividend on preference share included

dividend tax

0.06

Transfer to General Reserve 4250.00 2250.00

Balance carried forward 174.19 18.66


ankit patel 107550592024

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