vardhman textiles.pdf

Upload: satyajeet-suman

Post on 04-Jun-2018

233 views

Category:

Documents


1 download

TRANSCRIPT

  • 8/14/2019 VARDHMAN TEXTILES.pdf

    1/39

    E c o n o m i c A s s i g n m e n t

    S u b m i t t e d t o :

    D r . M a n o j K u m a r S h a r m a

    9 / 6 / 2 0 1 2

    Ravinder Singh Atwal

  • 8/14/2019 VARDHMAN TEXTILES.pdf

    2/39

    1

    VARDHMAN TEXTILES

    The industrial city of Ludhiana, located in the fertile Malwa region of Central Punjab is otherwise known

    as the "Manchester of India". Within the precincts of this city is located the Corporate headquarters of

    the Vardhman Group, a household name in Northern India. The Vardhman Group, founded in 1965,

    under the entrepreneurship of Late Lala Rattan Chand Oswal has today blossomed into one of the

    largest Textile Business houses in India.

    At its inception, Vardhman had an installed capacity of 14,000 spindles, today; its capacity has increasedmultifold to over 8 lacs spindles. In 1982 the Group entered the sewing thread market in the country

    which was a forward integration of the business. Today Vardhman Threads is the second largest

    producer of sewing thread in India. In 1990, it undertook yet another diversification - this time into the

    weaving business. The grey fabric weaving unit at Baddi (HP), commissioned in 1990 with a capacity of

    20,000 meters per day, has already made its mark as a quality producer of Grey poplin, sheeting, shirting

    in the domestic as well as foreign market. This was followed by entry into fabric processing by setting up

    Auro Textiles at Baddi and Vardhman Fabric at Budhni, Madhya Pradesh. Today the group has 900

    shuttle less looms and has processing capacity of 90mn meters fabrics/annum.

    In the year 1999 the Group has added yet another feather to its cap with the setting up of Vardhman

    Acrylics Ltd., Bharuch (Gujarat) which is a joint venture in Acrylic Fibre production undertaken with

    Marubeni and Exlan of Japan. The company also has a strong presence in the markets of Japan, Hong

    Kong, Korea, UK and EU in addition to the domestic market. Adherence to systems and a true dedication

    to quality has resulted in obtaining the coveted ISO 9002/ ISO 14002 quality award which is the first in

    Textile industry in India and yet another laurel to its credit.

  • 8/14/2019 VARDHMAN TEXTILES.pdf

    3/39

    2

    ACHIEVEMENTS OF VARDHMAN TEXTILE

    Vardhman Group became India's first textile company to be awarded ICO9002/ ISO 14002 Certification.

    It is the largest producer and exporter of yarns and Grey woven fabrics from India. Vardhman is also the

    largest producer of tyercord yarns and the second largest producer of sewing threads in India. The

    Vardhman Group vision of excellence is matched by a dedication and sincerity to be the best and excel

    in every industry it has a presence.

    Textile Export Promotion Council 2007-08

    Special Achievement Award in Yarn Category

    Textile Export Promotion Council 2007-08

    Silver Top Exporter Award in Yarn Category

    Textile Export Promotion Council 2007-08

    Bronze Trophy in Processed Yarn Category

    Textile Export Promotion Council 2005-06

    World Trophy in highest export in Yarn Category

    Textile Export Promotion Council 2005-06

    Bronze Trophy for Highest Global Export Category (Overall)

    Textile Export Promotion Council 2004-05

    World Trophy in highest export in Yarn Category

    Textile Export Promotion Council 2004-05

    Silver Trophy for Highest Global Export Category (Overall)

    Textile Export Promotion Council 2003-04

    Gold trophy in EOU/EPZ for export of cotton yarn

    Textile Export Promotion Council 2003-04

    Bronze trophy in mill fabric exporter category

    Textile Export Promotion Council 2002-03Gold Trophy in EOU/EPZ for export of cotton yarn

    Textile Export Promotion Council 1998-99

    Silver Trophy

    Textile Export Promotion Council 1997-98

    Bronze Trophy

  • 8/14/2019 VARDHMAN TEXTILES.pdf

    4/39

    3

    Textile Export Promotion Council 1996-97

    Silver Trophy

    Govt. of India Award 1994-5, 1995-96

    Award of Merit

    Textile Export Promotion Council 1993-94

    (Merchant Export Category for Fabrics)

    Bronze Trophy

    Textile Export Promotion Council 1993-94

    (Merchant Export Category for Fabrics)

    Gold Trophy

    Textile Export Promotion Council 1990-00

    Trophy

    Products

    Yarns

    Cotton Yarn Special Blended YarnOrganic Cotton Yarn Core Spun YarnFair Trade cotton Yarn MelangesOrganic Fair Trade Cotton Yarn Gassed MercerisedEllitwist Modal YarnVortex Yarn Tencel YarnSlub Yarn Viscose YarnAcrylic Yarn Hand Knitting YarnPoly -Cotton Yarn Speciality YarnAcrylic - Cotton yarn

    Fabrics

    ShirtingCount range Ring spun Ne 20's to 80's Ring spun Blends 2/40's to 2/210's

    100% cotton, Polyester cotton, Cotton stretch DowXLA,Cotton Tencel, Cotton Modal, Cotton Bamboo, Cotton silk,Cotton Nylon, Cotton Nylon stretch, Cotton Linen.

    Weave Yarn Dyed: Chambray, fil-a-fil, checks, stripes, Oxford, HBTOthers (yarn dyed & piece dyed) Plain, twill, satin, oxford,dobby, herringbone, Pique Cord.

    Fabric weight 2-5.6 oz/yd'2Finished width 58"

  • 8/14/2019 VARDHMAN TEXTILES.pdf

    5/39

    4

    Bottom weights

    Count range Ring spun Ne 20's to Ne 2/80's Open end Ne 6's to Ne 16's100% cotton, Polyester cotton, Cotton stretch DowXLA,Cotton Tencel, Cotton Modal, Cotton Bamboo, Cotton silk,Cotton Nylon, Cotton Nylon stretch, Cotton Linen Coolmax.

    Weave Chambray, fil-a-fil, checks, stripes, Oxford, HBT Others (yarndyed & piece dyed) Plain, twill, Drill, satin, oxford, dobby,herringbone, Pique Cord, Honey comb

    Fabric weight 6.00 to 12.00 Oz.yd'2Finished width 58" to 60

    Finishes Soft, Peach, Mechanical stretch, Microsand, Easy to iron,Water resistant, Stain Release, Stiff finish, Airo finish, Carbonfinish, Diamond finish, Airo enzyme, Soft Easy Care, Soilresistant, Thirsty finish, Feather touch, Banana Peel and toadd Ammonia finish.

    Eco-Friendly Blends Bamboo, Organic Cotton, LinenAlso certified by FLO, OEKOTEX, SKAL.

    GarmentsVardhman Group has Just started manufacturing garments and they have planned to start the

    factory in Punjab.

    ThreadVardhman manufactures variety of threads for embroidery, industrial use and consumer

    products

    Fibre

    Acrylic Bright & Semi-dull Non shrinkable fibre in 1.2,1.5,2,3,5,7,10,15 deniers in a wide range of cut

    lenghts.

    Acrylic Bright & Semi-dull Shrinkable fibre with different shrinage levels in 2,3,5 deniers in a wide range

    of cut lengths

    Acrylic Tow endless Bright & Semi dull in 2,3 denier.

    Specialty acrylic fibres suitable for Open end spinning; Soft handle, Water absorbent applications etc.

    SteelVardhman Special Steels incorporates some of the most advanced manufacturing facilities with

    equally reliable support facilities. The plant has well conceived layout plan with modern material

    handling facilities-all designed for economic processing of materials and human skills.

  • 8/14/2019 VARDHMAN TEXTILES.pdf

    6/39

    5

    Vardhman's ability to adopt changes in technology is evident in its extensive use of automation

    and contemporary concepts.

    DETERMINANTS OF DEMAND

    Vardhman Textiles manufactures a lot of products like yarns, fibre, garments and steel. If we talk about

    the Vardhman Textiles , it is the major producer of wool in India.

    Demand of the yarns is determined by following factors:

    1. Price of the commodity is one of the most important factor of demand.

    2. Income of consumer : The income of the consumers has a really strong effect on the demand,

    and so is In the case of Real juice, the consumers can be divided into 3 classeslower class,

    middle class and high class. The demand of juice is more in middle and high class of the society.

    3. Season: As wool is a seasonal product the demand is high duringthe winter season or just

    before the arrival of winters.

    4. Advertisement: Advertisement is used to inform, persuade and retain the consumers, so to

    make a consumer aware about the product advertisement is most important and with that it

    also become as a determinant of demand for the product.

    5. Competition: Vardhman Textiles being a reputed and old company in India is now facing tough

    competition from Phoenix Mills, Jindal Cotex and Trident and they are taking away the sales of

    the Vardhman and its demand is decreasing.

  • 8/14/2019 VARDHMAN TEXTILES.pdf

    7/39

    6

    CONCLUSION

    Vardhman is facing a tough competition from its competitors

    Advertisement is very important factor for a product, and Vardhman need to look at its

    advertisement strategy. Seasons also play important role in selling a product.

    REGRESSION ANALYSIS

    YEAR SALES (X) in crores

    2001 773.06

    2002 768.60

    2003 781.60

    2004 908.50

    2005 1159.28

    2006 1938.81

    2007 1961.81

    2008 2159.24

    2009 2346.36

    2010 2495.38

    2011 2767.22

    2012 3636.96

  • 8/14/2019 VARDHMAN TEXTILES.pdf

    8/39

    7

    SALES (X) ADVERTISEMENT (Y)

    773.06 14.6

    768.60 15.4

    781.60 15.9

    908.50 15.4

    1159.28 17.2

    1938.81 15.1

    1961.81 19.7

    2159.24 24.8

    2346.36 39.0

    2495.38 39.1

    2767.22 41.4

    3636.96 45.5

  • 8/14/2019 VARDHMAN TEXTILES.pdf

    9/39

    8

    SALES (X) ADVERTISEMENT

    EXPENSE (Y)

    X2 Y2

    773.06 14.6 597621.8 213.16

    768.60 15.4 590746 237.16

    781.60 15.9 610898.6 252.81

    908.50 15.4 825372.3 237.16

    1159.28 17.2 1343930 295.84

    1938.81 15.1 3758984 228.01

    1961.81 19.7 3848698 388.09

    2159.24 24.8 4662317 615.04

    2346.36 39.0 5505405 1521

    2495.38 39.1 6226921 1528.81

    2767.22 41.4 7657507 1713.96

    3636.96 45.5 13227478 2070.25

    X Y X2

    Y2

    21696.82 303.1 48855879.89 9301.29

    Y = aN + X

    XY = a X + b X2

    303.1=10a+21696.82

  • 8/14/2019 VARDHMAN TEXTILES.pdf

    10/39

    9

    Cost Analysis

    Distribution analysis

    Year Distribution Expense Sales Distribution per Sales

    1989 1.72 88.4 1.945701357

    1990 2.75 149.19 1.843287084

    1991 3.8 189.87 2.001369358

    1992 5.41 244.79 2.2100576

    1993 5.96 256.96 2.319427148

    1994 7.18 317.17 2.263770218

    1995 9.31 405.66 2.295025391

    1996 11.72 564.07 2.077756307

    1997 15.08 707.77 2.130635658

    1998 16.82 813.4 2.06786329

    1999 19.06 918.62 2.0748514082000 22.49 1046.83 2.148390856

    2001 24 1173.79 2.044658755

    2002 25.26 1168.14 2.16241204

    2003 30.68 1236.37 2.481457816

    2004 27.15 1152.32 2.356116357

    2005 32.88 1273.78 2.581293473

    2006 40.5 1372.52 2.950776674

    2007 48.5 1641.57 2.9544886912008 52.42 2128.17 2.463149091

    2009 50.07 2435.93 2.055477785

    2010 52.88 2891.51 1.828802252

    2011 62.87 3311.37 1.898609941

  • 8/14/2019 VARDHMAN TEXTILES.pdf

    11/39

    10

    Analysis:

    The distribution expense per sales has a regular graph and its value lies between

    13 , it can be seen that the value of it is highest in the year 2006 and 2007 andthat is 2.9 , in those 2 years the distribution expense was the most as compared to

    the other years.

    0

    0.5

    1

    1.5

    2

    2.5

    3

    3.5

    1989

    1990

    1991

    1992

    1993

    1994

    1995

    1996

    1997

    1998

    1999

    2000

    2001

    2002

    2003

    2004

    2005

    2006

    2007

    2008

    2009

    2010

    2011

    Distribution expence per Sales

    Total

  • 8/14/2019 VARDHMAN TEXTILES.pdf

    12/39

    11

    Rent

    Year Rent Sales Rent per Sales

    1989 0.29 88.4 0.3280542991990 0.41 149.19 0.274817347

    1991 0.56 189.87 0.294938642

    1992 0.74 244.79 0.302299931

    1993 1.17 256.96 0.455323786

    1994 1.92 317.17 0.605353596

    1995 2.13 405.66 0.5250702561996 3.56 564.07 0.631127342

    1997 2.44 707.77 0.344744762

    1998 2.31 813.4 0.283993115

    1999 3.15 918.62 0.342905663

    2000 3.61 1046.83 0.344850644

    2001 3.81 1173.79 0.3245895772002 4.59 1168.14 0.392932354

    2003 4.79 1236.37 0.387424476

    2004 4.37 1152.32 0.379234935

    2005 5.07 1273.78 0.398027917

    2006 6.29 1372.52 0.458281118

    2007 6.38 1641.57 0.3886523272008 10.67 2128.17 0.501369721

    2009 14.1 2435.93 0.578834367

    2010 17.14 2891.51 0.592769868

  • 8/14/2019 VARDHMAN TEXTILES.pdf

    13/39

    12

    0

    0.1

    0.2

    0.3

    0.4

    0.5

    0.6

    0.7

    1989

    1990

    19

    91

    19

    92

    19

    93

    19

    94

    19

    95

    1996

    1997

    1998

    1999

    2000

    2001

    2002

    2003

    2004

    2005

    2006

    2007

    2008

    2009

    2010

    2011

    Rent per Sales

    Total

  • 8/14/2019 VARDHMAN TEXTILES.pdf

    14/39

    13

    Advertisement Expense

    year Advertisement expense Sales Advertisement expense per Sales

    1989 4.58 88.4 5.180995475

    1990 7.57 149.19 5.074066626

    1991 9 189.87 4.740085322

    1992 12.05 244.79 4.922586707

    1993 13.01 256.96 5.063044832

    1994 21.21 317.17 6.687265504

    1995 25.92 405.66 6.389587339

    1996 41.75 564.07 7.401563636

    1997 39.52 707.77 5.583734829

    1998 69 813.4 8.482911237

    1999 114.12 918.62 12.4229823

    2000 120.02 1046.83 11.465089842001 146.07 1173.79 12.44430435

    2002 154.45 1168.14 13.22187409

    2003 159.97 1236.37 12.9386834

    2004 154.95 1152.32 13.44678562

    2005 171.79 1273.78 13.48663034

    2006 151.66 1372.52 11.04974791

    2007 197.6 1641.57 12.03725702

    2008 248.1 2128.17 11.65790327

    2009 284.93 2435.93 11.69696995

    2010 390.03 2891.51 13.48879997

    2011 390.19 3311.37 11.78334043

    0

    2

    4

    6

    8

    10

    12

    14

    16

    1989

    1990

    1991

    1992

    1993

    1994

    1995

    1996

    1997

    1998

    1999

    2000

    2001

    2002

    2003

    2004

    2005

    2006

    2007

    2008

    2009

    2010

    2011

    Advertisement per sales

    Total

  • 8/14/2019 VARDHMAN TEXTILES.pdf

    15/39

    14

    Power and Fuel Charges

    Year Power and fuel Charges Sales Power per Sales

    1989 1.03 88.4 1.165158371

    1990 1.54 149.19 1.032240767

    1991 2.15 189.87 1.132353716

    1992 2.38 244.79 0.972261939

    1993 3.31 256.96 1.288138232

    1994 4.2 317.17 1.324210991

    1995 5.86 405.66 1.444559483

    1996 7.53 564.07 1.334940699

    1997 8.59 707.77 1.213671108

    1998 10.8 813.4 1.32776002

    1999 12.37 918.62 1.346585095

    2000 15.49 1046.83 1.479705396

    2001 18.66 1173.79 1.589722182

    2002 18.31 1168.14 1.567449107

    2003 19.84 1236.37 1.604697623

    2004 17.12 1152.32 1.485698417

    2005 21.69 1273.78 1.702805822

    2006 26.28 1372.52 1.914726197

    2007 30.59 1641.57 1.86345998

    2008 38.42 2128.17 1.805306907

    2009 36.63 2435.93 1.503737792

    2010 35.43 2891.51 1.225311343

    2011 42.39 3311.37 1.280134808

  • 8/14/2019 VARDHMAN TEXTILES.pdf

    16/39

    15

    Analysis:

    The power and fuel charges were highest in the year 2006 and 2007 in which the

    distribution expenses were highest.

    0

    0.5

    1

    1.5

    2

    2.5

    1989

    1990

    1991

    1992

    1993

    1994

    1995

    1996

    1997

    1998

    1999

    2000

    2001

    2002

    2003

    2004

    2005

    2006

    2007

    2008

    2009

    2010

    2011

    Power and fuel charges per Sales

    Total

  • 8/14/2019 VARDHMAN TEXTILES.pdf

    17/39

    16

    Wages

    Year Wages Sales Wages per Sales

    1989 3.1 88.4 3.506787331990 4.42 149.19 2.962665058

    1991 5.7 189.87 3.002054037

    1992 8.07 244.79 3.296703297

    1993 10.04 256.96 3.907222914

    1994 12.03 317.17 3.792918624

    1995 17.02 405.66 4.19563181

    1996 24.39 564.07 4.323931427

    1997 31.42 707.77 4.439295251

    1998 43.57 813.4 5.356528153

    1999 54.88 918.62 5.974178659

    2000 63.14 1046.83 6.031542848

    2001 77.69 1173.79 6.618730778

    2002 83.15 1168.14 7.118153646

    2003 93.22 1236.37 7.539814133

    2004 77.49 1152.32 6.724694529

    2005 79.81 1273.78 6.265603165

    2006 98.31 1372.52 7.162737155

    2007 128.87 1641.57 7.850411496

    2008 154.89 2128.17 7.278083988

    2009 171.17 2435.93 7.026885009

    2010 218 2891.51 7.539313369

    2011 247.44 3311.37 7.47243588

  • 8/14/2019 VARDHMAN TEXTILES.pdf

    18/39

    17

    t

    Analysis:The wages per sales are highest in the year 2007, this can be due to the strict rules

    and labor acts.

  • 8/14/2019 VARDHMAN TEXTILES.pdf

    19/39

    18

    Raw Material

    Year Raw Material Sales Raw Material per Sales

    1989 23.51 88.4 26.595022621990 62.06 149.19 41.59796233

    1991 74.48 189.87 39.22683942

    1992 87.41 244.79 35.70815801

    1993 78.65 256.96 30.60787671

    1994 56.91 317.17 17.94305893

    1995 80.29 405.66 19.79243702

    1996 105.1 564.07 18.63243924

    1997 128.76 707.77 18.19235062

    1998 148.71 813.4 18.28251783

    1999 158.72 918.62 17.27809105

    2000 165.3 1046.83 15.7905295

    2001 161.62 1173.79 13.76907283

    2002 161.43 1168.14 13.81940521

    2003 172.1 1236.37 13.9197813

    2004 147.41 1152.32 12.79245349

    2005 225.7 1273.78 17.71891535

    2006 266.66 1372.52 19.42849649

    2007 374.13 1641.57 22.79098668

    2008 463.18 2128.17 21.76423876

    2009 578.36 2435.93 23.7428826

    2010 607.06 2891.51 20.994566852011 785.06 3311.37 23.70801209

    0

    5

    10

    15

    20

    25

    30

    35

    40

    45

    1989

    1990

    1991

    1992

    1993

    1994

    1995

    1996

    1997

    1998

    1999

    2000

    2001

    2002

    2003

    2004

    2005

    2006

    2007

    2008

    2009

    2010

    2011

    Raw material per sales for different years

    Total

  • 8/14/2019 VARDHMAN TEXTILES.pdf

    20/39

  • 8/14/2019 VARDHMAN TEXTILES.pdf

    21/39

    20

    0

    0.2

    0.4

    0.6

    0.8

    1

    1.2

    0

    5

    10

    15

    20

    25

    30

    35

    40

    19

    89

    19

    90

    19

    91

    19

    92

    19

    93

    19

    94

    19

    95

    19

    96

    19

    97

    19

    98

    19

    99

    20

    00

    20

    01

    20

    02

    20

    03

    20

    04

    20

    05

    20

    06

    20

    07

    20

    08

    20

    09

    20

    10

    20

    11

    Sum of Average

    Count of Marginal

  • 8/14/2019 VARDHMAN TEXTILES.pdf

    22/39

    21

    Ratio Analysis

    The term Ratio refers to the numerical and quantitative relationship between two

    items or variables. This relationship can be exposed as

    Percentages

    Fractions

    Proportion of numbers

    Ratio analysis is defined as the systematic use of the ratio to interpret the financial

    statements. So that the strengths and weaknesses of a firm, as well as its historical

    performance and current financial condition can be determined. Ratio reflects a

    quantitative relationship helps to form a quantitative judgment.

    Liquidity Ratio

    Liquidity refers to the ability of a concern to meet its current obligations as &

    when there becomes due. The short term obligations of a firm can be met only

    when there are sufficient liquid assets. The short term obligations are met by

    realizing amounts from current, floating (or)circulating assets The current assets

    should either be calculated liquid (or)near liquidity. They should be convertible

    into cash for paying obligations of short term nature. The sufficiency (or)

    insufficiency of current assets should be assessed by comparing them with short-

    term current liabilities. If current assets can pay off current liabilities, then liquidity

    position will be satisfactory.

  • 8/14/2019 VARDHMAN TEXTILES.pdf

    23/39

    22

    A)Current Ratio

    Current ratio may be defined as the relationship between current assets andcurrent liabilities. This ratio also known as Working capital ratio as it is a

    measure of general liquidity and is most widely used to make the analysis of

    a short-term financial position (or) liquidity of a firm

    Current ratio = Current assets/ Current liabilities

    YEAR

    CURRENT

    ASSET CURRENT LIABILITY CURRENT RATIO

    2010 129,598 49,628 2.611388732

    2009 91,795 43,206 2.124589177

    2008 55,281.33 31,722.51 1.742653088

    2007 39,641.22 27,859.39 1.422903373

    2006 28,436.22 19,342.06 1.470175359

    2005 25,197.18 23,838.05 1.05701515

    2004 21,932.21 16,452.07 1.333097294

    2003 40,611.07 15,986.42 2.540347995

    2002 40757.06 12885.67 3.162975616

    2001 39285.09 11285.72 3.480955579

  • 8/14/2019 VARDHMAN TEXTILES.pdf

    24/39

    23

    B)Quick Ratio

    Quick ratio is a test of liquidity than the current ratio. The term liquidity refers to

    the ability of a firm to pay its short-term obligations as &when they become due.

    Quick ratio may be defined as the relationship between quick or liquid assets and

    current liabilities. An asset is said to be liquid if it is converted into cash within a

    short period without loss of value.

    Quick or liquid assets Quick ratio = Quick or liquid assets

    __________________

    Current liabilities

    YEAR QUICK ASSET CURRENT LIABILITY QUICK RATIO

    2010 83,540 49,628 1.68332393

    2009 61,951 43,206 1.43385178

    2008 35,167 31,722.51 1.108570539

    2007 23,904 27,859.39 0.8580331442006 16,875 19,342.06 0.872467566

    2005 12,395 23,838.05 0.519950667

    2004 10,782 16,452.07 0.655384398

    2003 22,746 15,986.42 1.422824497

    2002 24,904 12885.67 1.932668616

    2001 25,360 11285.72 2.247083039

  • 8/14/2019 VARDHMAN TEXTILES.pdf

    25/39

    24

    C)Cash Ratio

    The ratio of a company's total cash and cash equivalents to its current

    liabilities. The cash ratio is most commonly used as a measure of company

    liquidity. It can therefore determine if, and how quickly, the company can repay its

    short-term debt. A strong cash ratio is useful to creditors when deciding how much

    debt, if any, they would be willing to extend to the asking party.

    YEAR CASH CURRENT LIABILITY CASH RATIO

    2010 19,241 49,628 0.387704522

    2009 16,391 43,206 0.379368606

    2008 6,826.46 31,722.51 0.215192934

    2007 5,024.75 27,859.39 0.180361092

    2006 3,804.41 19,342.06 0.196691045

    2005 1,065.38 23,838.05 0.044692414

    2004 1,188.72 16,452.07 0.072253522

    2003 3,758.25 15,986.42 0.235090158

    2002 2177.15 12885.67 0.168959006

    2001 2343.7 11285.72 0.207669515

  • 8/14/2019 VARDHMAN TEXTILES.pdf

    26/39

    25

    D)Debtor Turnover Ratio

    It is a component of current assets and as such has direct influence on working

    capital position (liquidity) of the business. Perhaps, no business can afford to make

    cash sales only thus extending credit to the customers is a necessary evil. But care

    must be taken to collect book debts quickly and within the period of credit allowed.

    Otherwise chances of debts becoming bad and unrealizable will increase. How

    effective or efficient is the credit collection? To provide answer debtors turnover

    ratio or debtor turnover ratio is calculated.

    YEAR SALES AVERAGE DEBTORSDEBTOR TURNOVERRATIO

    2010 331,383 20,246 16.36782574

    2009 288971 13,048 22.14676579

    2008 211,130.46 10,046.43 21.01547117

    2007 179,453.60 6,097.87 29.42889894

    2006 137,503.31 2,694.25 51.03583929

    2005 128,021.83 4,928.27 25.97703251

    2004 115,902.32 4,207.22 27.54843341

    2003 124,059.41 11,665.84 10.63441724

    2002 117706.53 11996.57 9.8116820062001 118533.61 13768.46 8.609068117

  • 8/14/2019 VARDHMAN TEXTILES.pdf

    27/39

  • 8/14/2019 VARDHMAN TEXTILES.pdf

    28/39

    27

    Profitability Ratio

    A class of financial metrics that are used to assess a business's ability to

    generate earnings as compared to its expenses and other relevant costs incurred

    during a specific period of time. For most of these ratios, having a higher value

    relative to a competitor's ratio or the same ratio from a previous period is indicative

    that the company is doing well.

    The primary objectives of business undertaking are to earn profits. Because profit

    is the engine, that drives the business enterprise.

    Net profit ratio

    Return on total assets

    Reserves and surplus to capital ratio

    Earnings per share

    Operating profit ratio

    Price earnings ratio

    Return on investments

    A)Asset Turnover

    This ratio is useful to determine the amount of sales that are generated from each

    dollar of assets. As noted above, companies with low profit margins tend to have

    high asset turnover, those with high profit margins have low asset turnover. Cory'sTequila Co.'s asset turnover seems to be relatively low, meaning that it makes a

    high profit margin on its products. For companies in the retail industry you would

    expect a very high turnover ratio - mainly because of cutthroat and competitive

    pricing.

  • 8/14/2019 VARDHMAN TEXTILES.pdf

    29/39

    28

    YEAR SALES

    AVERAGE TOTAL

    ASSET ASSET TURNOVER

    2010 326437 129,598 2.5188428832009 285687 91,795 3.112228335

    2008 211130 55,281.33 3.81919176

    2007 179453 39,641.22 4.526929292

    2006 137503 28,436.22 4.83548798

    2005 128021 25,197.18 5.080766975

    2004 115902 21,932.21 5.284556367

    2003 124059 40,611.07 3.05480747

    2002 117706 40757.06 2.887990449

    2001 118533 39285.09 3.017251583

    B)Profit Margin

    A profit margin of 17% means that for each dollar of sales that Cory's Tequila Co.

    generates it is contributing 17 cents to itsbottom line(net income). These ties in

    with gross profit margin, Cory's Tequila Co. has a healthy pricing strategy which is

    evident in both ratios. In cutthroat pricing industries such as retail and gasoline you

    would expect the profit margin much lower because of the heavy competition. We

    can interpret that Cory's Tequila Co. either has exceptional products which

    customers are willing to pay a substantial premium for, or Cory's Tequila Co.

    really doesn't have much competition therefore they can charge what they wish.

    YEAR SALES PROFIT AFTER TAX PROFIT MARGIN

    2010 326437 47,141 14.44107132

    2009 285687 43333 15.16799854

    2008 211130 31,677.21 15.003651782007 179453 25,207.63 14.04692594

    2006 137503 18,908.37 13.75124179

    2005 128021 14,801.99 11.56215777

    2004 115902 11,344.03 9.787605046

    2003 124059 9,553.00 7.700368373

    2002 117706 7551 6.415136017

    http://www.investopedia.com/terms/b/bottomline.asphttp://www.investopedia.com/terms/b/bottomline.asphttp://www.investopedia.com/terms/b/bottomline.asphttp://www.investopedia.com/terms/b/bottomline.asp
  • 8/14/2019 VARDHMAN TEXTILES.pdf

    30/39

    29

    2001 118533 7763 6.549231016

    C)Return on Asset

    An indicator of how profitable a company is relative to its total assets. ROA givesan idea as to how efficient management is at using its assets to generate

    earnings. Calculated by dividing a company's annual earnings by its total assets,

    ROA is displayed as a percentage. Sometimes this is referred to as "return on

    investment".

    YEAR

    PROFIT AFTER

    TAX

    SHAREHOLDER

    EQUITY RETURN ON EQUITY2010 47,141 17,407 270.8163383

    2009 43333 8,690 498.6536249

    2008 31,677.21 8,640.23 366.6246153

    2007 25,207.63 8,628.84 292.1323144

    2006 18,908.37 5,733.03 329.8146007

    2005 14,801.99 2,864.20 516.7931709

    2004 11,344.03 2,862.49 396.2993757

    2003 9,553.00 2,857.50 334.3132108

    2002 7551 2855.94 264.3963108

    2001 7763 2852.13 272.1825443

  • 8/14/2019 VARDHMAN TEXTILES.pdf

    31/39

    30

    D)Earnings per Share Ratio

    Earnings per share is a small verification of return of equity and is calculated by

    dividing the net profits earned by the company and those profits after taxes and

    preference dividend by total no. of equity shares

    YEAR

    PROFIT AFTER

    TAX(IN

    RUPEE)

    AVERAGE NO EQUITY

    SHARE EARNING PER SHARE

    2010 4714100000 4548000 1036.521548

    2009 433330000 4548000 95.27924362

    2008 3167700000 4548000 696.50395782007 2520700000 4548000 554.2436236

    2006 1890800000 4548000 415.7431838

    2005 1480100000 4548000 325.4397537

    2004 1134400000 4548000 249.4283201

    2003 955300000 4548000 210.0483729

    2002 755100000 4548000 166.0290237

    2001 776300000 4548000 170.6904134

  • 8/14/2019 VARDHMAN TEXTILES.pdf

    32/39

    31

    E)Cash Return Asset

    A ratio used to compare a businesss performance among other industry members.

    The ratio can be used internally by the company's analysts, or by potential and

    current investors. The ratio does not however include any future commitments

    regarding assets, nor does it include the cost of replacing older ones.

    A high cash return on assets ratio can indicate that a higher return is to be

    expected. This is because the higher the ratio, the more cash the company hasavailable for reintegration into the company, whether it be in upgrades,

    replacements or other areas.

    YEAR

    AVERAGE

    TOTAL ASSET

    CASH FLOW

    OPERTIONS

    CASH RETURN ON

    ASSET

    2010 129,598 46,615 0.359689193

    2009 91,795 60,587 0.660025056

    2008 55,281.33 38,098.68 0.689178064

    2007 39,641.22 30,274.23 0.763705809

    2006 28,436.22 23,391.16 0.822583311

    2005 25,197.18 23,302.80 0.924817777

    2004 21,932.21 21,973.60 1.001887179

    2003 40,611.07 15,174.18 0.3736463972002 40757.06 16597.87 0.407239138

    2001 39285.09 15,054.78 0.383218672

  • 8/14/2019 VARDHMAN TEXTILES.pdf

    33/39

    32

    F)Return on Sales

    Profitability can be measured in terms of relationship between net profit and

    assets. This ratio is also known as profit-to-assets ratio. It measures the

    profitability of investments. The overall profitability can be known.

    YEAR NET PROFIT SALES RETURN ON SALES

    2010 47,141 326437 0.144410713

    2009 43333 285687 0.1516799852008 31,677.21 211130 0.150036518

    2007 25,207.63 179453 0.140469259

    2006 18,908.37 137503 0.137512418

    2005 14,801.99 128021 0.115621578

    2004 11,344.03 115902 0.09787605

    2003 9,553.00 124059 0.077003684

    2002 7551 117706 0.06415136

    2001 7763 118533 0.06549231

  • 8/14/2019 VARDHMAN TEXTILES.pdf

    34/39

    33

    G)Operating Margin Ratio

    Operating margin is a measurement of what proportion of a company's revenue is

    left over after paying for variable costs of production such as wages, raw materials,

    etc. A healthy operating margin is required for a company to be able to pay for its

    fixed costs, such as interest on debt

    YEAR SALES

    NET FLOW FROM

    OPERATIONS OPERATING MARGIN

    2010 326437 46,615 0.142799376

    2009 285687 60,587 0.212074753

    2008 211130 38,098.68 0.180451286

    2007 179453 30,274.23 0.168702836

    2006 137503 23,391.16 0.170113816

    2005 128021 23,302.80 0.182023262

    2004 115902 21,973.60 0.189587755

    2003 124059 15,174.18 0.122314221

    2002 117706 16597.87 0.141011248

    2001 118533 15,054.78 0.127009187

  • 8/14/2019 VARDHMAN TEXTILES.pdf

    35/39

    34

    H)Return on Investment

    Return on share holders investment, popularly known as Return on investments

    (or) return on share holders or proprietors funds is therelationship between net

    profit (after interest and tax) and the proprietors funds

    YEAR

    NET PROFIT

    BEFORE TAX

    SHAREHOLDER

    EQUITY

    RETURN ON

    INVESTMENT

    2010 59,626 17,407 3.425403573

    2009 52703 8,690 6.0647871122008 36,517.59 8,640.23 4.226460407

    2007 28,422.30 8,628.84 3.293872641

    2006 21,435.53 5,733.03 3.738953049

    2005 16,501.82 2,864.20 5.761406326

    2004 115,020.00 2,862.49 40.18179976

    2003 123,327.00 2,857.50 43.15905512

    2002 14020.78 2855.94 4.909339832

    2001 8517.34 2852.13 2.986308478

  • 8/14/2019 VARDHMAN TEXTILES.pdf

    36/39

    35

    I) Cash Return to Shareholder Ratio

    YEAR

    CASH FLOW

    OPERTIONS

    SHAREHOLDER

    EQUITY

    CASH RETURN TO

    SHAREHOLDER RATIO

    2010 46,615 17,407 2.677945654

    2009 60,587 8,690 6.972036824

    2008 38,098.68 8,640.23 4.409452063

    2007 30,274.23 8,628.84 3.50849361

    2006 23,391.16 5,733.03 4.080069353

    2005 23,302.80 2,864.20 8.135884366

    2004 21,973.60 2,862.49 7.676393629

    2003 15,174.18 2,857.50 5.310299213

    2002 16597.87 2855.94 5.811701226

    2001 15,054.78 2852.13 5.278434012

  • 8/14/2019 VARDHMAN TEXTILES.pdf

    37/39

    36

    Solvency Ratio

    One of many ratios used to measure a company's ability to meet long-term

    obligations. The solvency ratio measures the size of a company's after-tax income;

    excluding non-cash depreciation expenses, as compared to the firm's total debt

    obligations. It provides a measurement of how likely a company will be to

    continue meeting its debt obligations.

    A) Liquidity to Equity Ratio

    YEAR

    ALL

    LIABILITY

    SHAREHOLDER

    EQUITY

    LIQUIDITY

    TO EQUITY

    RATIO

    2010 103,164 17,407 5.92658126

    2009 87,216 8,690 10.0363636

    2008 58,263.48 8,640.23 6.74327882

    2007 35,608.47 8,628.84 4.126680992006 30,731.00 5,733.03 5.36034174

    2005 32,222.99 2,864.20 11.2502584

    2004 23,621.88 2,862.49 8.25221398

    2003 21,224.43 2,857.50 7.42762205

    2002 14629.02 2855.94 5.12231349

    2001 15753.48 2852.13 5.52340882

  • 8/14/2019 VARDHMAN TEXTILES.pdf

    38/39

    37

    B) Current Liability to Net Worth

    YEAR

    CURRENT

    LIABILITY NET WORTH

    CURRENT

    LIABILITY

    TO NET

    WORTH

    RATIO

    2010 49,628 103,164 0.48105928

    2009 43,206 87,216 0.49539075

    2008 31,722.51 58,263.48 0.54446645

    2007 27,859.39 35,608.47 0.78238099

    2006 19,342.06 30,731.00 0.62939898

    2005 23,838.05 32,222.99 0.73978392

    2004 16,452.07 23,621.88 0.69647589

    2003 15,986.42 21,224.43 0.75320845

    2002 12885.67 14629.02 0.88082934

    2001 11285.72 15753.48 0.71639536

    C) Current Liability to Inventory Ratio

    YEAR

    CURRENT

    LIABILITY INVENTORIES

    CURRENT

    LIABILITY TO

    INVENTORY

    RATIO

    2010 49,628 46,058 1.07751096

    2009 43,206 29,844 1.44772819

    2008 31,722.51 20,114.69 1.57708172

    2007 27,859.39 15,736.94 1.77031812

    2006 19,342.06 11,560.90 1.67305833

    2005 23,838.05 12,802.57 1.86197381

    2004 16,452.07 11,149.78 1.47555109

    2003 15,986.42 17,865.20 0.89483577

    2002 12885.67 15853.33 0.81280526

    2001 11285.72 13925.14 0.81045648

  • 8/14/2019 VARDHMAN TEXTILES.pdf

    39/39

    D) Fixed Asset to Net worth Ratio

    YEAR FIXED ASSET NET WORTH

    FIXED ASSET

    TO NET

    WORTH

    RATIO

    2010 49,756 103,164 0.48230003

    2009 45,095 87,216 0.51704962

    2008 29,443.01 58,263.48 0.50534245

    2007 23,904.05 35,608.47 0.67130236

    2006 19,883.68 30,731.00 0.64702353

    2005 19,160.61 32,222.99 0.594625452004 15,494.33 23,621.88 0.65593128

    2003 20,465.64 21,224.43 0.96424922

    2002 24442.4 14629.02 1.67081595

    2001 24286.93 15753.48 1.54168666

    Structure Performance and Conduct

    MISSION

    Vardhmanaims to be world class textile organization producing

    diverse range of products for the global textile

    market.Vardhmanseeks to achieve customer delight through

    excellence in manufacturing and customer service based on creative

    combination of state-of-the-art technology and human

    resources. Vardhmanis committed to be responsible corporatecitizen.