Professional Documents
Culture Documents
ON
SUBMITTED BY:-
MONIKA GUPTA
ROLL NO. 231
MBA 3RD SEM.
ACKNOWLEDGEMENT
It is my proud privilege to put on record my gratitude to all those who
have been the source of guidance, cooperation & help during my
summer training at LAKSHMI PRECISION SCREWS LTD.
MONIKA GUPTA
Table of Contents
Declaration
Preface
Acknowledgement
Chapters
1. Project Formulation
2. Research Methodology
3. Analysis & Findings
4. Conclusion & Recommendations
Annexure
CHAPTER -1
Project Formulation
• Significance of Problem
• Review of Existing Literature
• Conceptualization & Operationalization
• Objectives of the Study
• Limitation of the Study
• Organization of Study
Significance of the Study
The significance of this study lies in the thing that it reveals some of
the hidden information from the accounts of the LPS Ltd. and also it
contains the Recommendations which if taken into considerations by the
management could prove useful for the company.
Apart from the organization point of view this study is also significant
for me as it gives me a chance to under and the corporate environment
& increases my analytical abilities to draw references.
So lot of books, and reports already prepared were consulted for this
purpose and adequate help is taken from them to do this study.
But for the purpose of my study I have taken the meaning of financial
analysis by the following :-
Objectives
• The main objective of the study was to analyze the financial
statements prepared by LPS Ltd and also to understand and
analyze the cash flow statement.
• Another objective was to identify the deficiencies or the weak
points of the company, if found during the analysis phase.
• And then finally to draw conclusion and make recommendations
for the company so that corrective actions should be taken to
improve the position of the company.
• Limitations
• Access to some information was denied by the company
officials that affected the findings to some extent.
• The sample size was limited over just four years, which may not
be fully representative of the universe. A large sample size could
not be taken due to time & cost constraints.
• Some accounts are manipulated so that the financial statements
may disclose a more favorable position than the actual position.
• Company provides only secondary data so certain type of bias
is in study.
• Lack of experience in this field may have incorporated some
shortfalls.
• The greatest limitation of the study was the time constraint,
limited to 8 weeks which hinders the progress of study.
• Audited accounts for the year ending 2005-2006 were not
available. There may be some changes in financial statements
after the accounts are audited.
Research Methodology
The procedure adopted for conducting the research requires a lot of
attention as it has direct bearing on accuracy, reliability and adequacy of
results obtained. It is due to this reason that the research methodology,
which I used at the time of conducting the research, needs to be
elaborated upon. Research methodology is a way to systematically
study & solve the research problems. If a researcher wants to claim his
study as a goods study, he must clearly state the methodology adopted
in conducting the research so that it may be judged by the reader
whether the methodology of work done is sound or not.
Research problem here was to analyze the financial data of LPS Ltd.
to come out with some underlying facts behind the financial statements
of the company.
Sample Universe:
Information Collection:
COMPANY PROFILE
2009
BRIEF INTRODUCTION OF COMPANY
LPS Limited was promoted by Late Sh. Bimal Prasad Jain. LPS was
incorporated as a Pvt. Limited Company on 27th Dec., 1968. It was
converted into a Public Limited Company in August 1971. At present it
is operating as LPS Limited.
Company has covered 23500 sq. yards. The screws, nuts and bolts
range from 3mm to 24mm in diameter. The products are marked under
name and style of LPS.
BOARD OF DIRECTORS
L.K. Jain Chairman & Managing Director
MANAGEMENT TEAM
S.K. Jain
Gagan Jain
Gautam Jain
Amit Jain
Niklesh Jain
B. B. Chhabra
R. K. Aggarwal
S. P. Arya
Sanjay Narula
R. P. Khanna
R.K. Rawat
Pardeep Dhawan
Sanjeev Sharma
DGM (FINANCE) & COMPANY SECRETARY
S.N. Grover
AUDITORS
V.R. Bansal $ Associates
Chartered Accountants
Noida.
OUTLINE
Haryana (India)
8. Employees
9. Factory
(Unit : m x m)
COMPANY ORGANISATION
Board of Directors
Quality Management
Corporate Strategy
D S D L C P P P PP F H E
E A E A E R L L LU I R D
V L V B N O A A AR N D P
E E E O T D N N NC A
L S L R R U N T TH N
O O A A C I A C
P P T L T N I II S E
M M O I E
G
E E R O
N N Y N
T T
CHRONOLOGICAL HISTORY
OF LPS
1959. Established Nav Bharat Industries as small
parts
manufacturer.
1972 Established Lakshmi Precision Screws Pvt
Ltd as
MAIN PRODUCTS
Division Products
Precision Cold Forming parts for Automobile
Engine Parts ( Con Rod, Cylinder Studs,
Automobiles
Washer Assemblies Bolts
The other critical & safety parts bolts
Construction parts (Friction Grip)
Bolts & Nuts for Agriculture Industry
FASTENERS Bolts & Nuts for Industrial Machinery
Cold formed parts for Automobile (Piston Pins, Switch Body, Ball
Joints, Gear Blanks, Rocket Shaft, Ball Pins, Plunger etc.)
Pins for Hydraulics & Pumps
Bolt for Refrigeration Compressor
Friction Grip Bolts & Nuts for Construction Industry
Socket Head Cap Screw
Low Head Socket Bolt
Shoulder Bolt
Button Head
CSK
Standard Set Screws
VISION 2010
“Make LPS a ‘Most Sought After’ Brand”.
Achieve Rs.500 Crores in Sales
Become a Deming Organization
Improve EBIDTA to 25%
Expand Manufacturing to 2 more locations
CORE VALUES :
Customer Obsession
Continuous Improvement
Respect for people
MISSION OF LPS
JOINT VENTURES
LPS-Bossard Pvt. Ltd. is a joint venture
company of LPS and Bossard. AG of
Switzerland. This venture gives state of the
art fastening solution/ technology to
customer in India. The latest inventory
management technique through logistic
support is also provided by this company.
Recoil Business Division of 'LPS'
This division of LPS is sole master distributor
of fastening solutions from Alcoa Fastening
Systems, USA. Alcoa This company ensures
global consistency of quality design
standards in manufacturing wire thread,
Inserts, STI Taps, Thread Repair Kits etc.
Textron Inc. U.S.A.
'LPS' has entered into a licensing agreement
with Textron Inc, USA for manufacturing and
marketing 'Torx®' brand of proprietary
products. Textron is 10 billion USD multi-
specialty company, with 1.8 billion USD as
revenue from fastening division.
Torx® drive systems improve assembly line
productivity thereby reducing cost
MAJOR CLIENTS
Heavy Commercial Vehicles
Tractors
Cars
Two Wheelers
Earthmoving Equipment
Textile Machinery
Machine Tools
Hydraulic Equipment
Others
Chapter – 3
Analysis And Findings
Meaning of financial statements
Analysis of financial Data of LPS Ltd.
Comparative Statements
Common size Statement
Cash Flow Statement
Ratio Analysis
FINANCIAL ANALYSIS
Finance is defined as the provision of money at the time when it is required.
Enterprises whether big or small needs to carry on and expand its operations.
Finance holds the key to all the business activities and a company services,
• Reliability
• Comparability
• Easily understandable
• Relevant to purpose
• Consistency
• Promptness
• Compliance with legal requirements
Various parties are interested in the financial statements of the business due
& the capital structure of the enterprises. They want to make short that
the business must be insolvent position to pay the debts as and when
between the dividend paid by the company and the market value of
shares.
With the help of financial analysis to know whether the company will
have sufficient current assets & cash to pay their debts or not.
the true profits of the business enterprises. On the basis they can
ascertain as to how much bonus & increase in their wages is possible
want to know the profit earning capacity of the business & its long
term solvency. They want to access not only the present position of
the business enterprise but also its likely position in the future.
of that company.
ANALYSIS OF FINANCIAL
STATEMENT
Financial statements present a mass of complex data in absolute terms and
and loss account & balance sheet. Actually the figure given in financial
statements do not speak anything themselves. The process of giving tongue
financial statements. The term analysis means to select the data given in the
simplified. However both analysis and interpretation are inter linked and
COMPARATIVE FINANCIAL
STATEMENTS
When financial statements figure for two or more years are placed side-by-
statements. Such statements not only show the absolute figures of various
years but also provide for columns to indicate the increase or decrease in
these figures from one year to another. In addition, these statements may
also show the change from one year to another in percentage form. Such
progress of enterprise.
IMPORTANCE OF COMPARATIVE STATEMENT
• To make the data simpler and more understandable.
• To indicate the strong points and weak points of the firm.
• To indicate the trend.
• To compare the firm’s performance with the average performance of the
industry.
• To help the management in forecasting the profitability and financial
Comparison.
For the purpose of analysis. Out of these the most important financial
Statements are:
Show the increase or decrease in various assets, liabilities & capital. Such a
Comparative balance sheet is useful in studying the trends in business
Enterprises.
SOURCES OF
FUNDS:
A. Shareholders'
fund
Share Capital 109416670 109416670 0 0
Reserves & Surplus 702763197 640930298 61832899 8.79
B. Loan funds
Secured Loans 1013165757 646382561 366783193 36.2
Unsecured Loans 80788070 40807011 39981059 49.4
APPLICATIONS OF
FUNDS
A. Fixed Assets
Gross Block 1232340039 1076319572 156020467 12.6
less: Depreciation 718647794 634387452 84260342 11.7
Net Block 513692245 441932120 71760125 13.9
Add: Capital Work in 26090174 826717 25263457 96.8
Progress
comparative profit & loss a/c for a number of a number of years provides the
following information:-
A. INCOME
Sales 2070161481 1934209608 135951873 6.57
Job Work Receipts 896690 1433953 (537263) (59.9)
Other Income 35722340 17239550 18482790 51.7
Deferred Tax Liability 0 5716029 5716029
Written Back
2106780511 1958599140 148181371 7.03
B. EXPENDITURE
Materials & Finished 782790261 703008396 79781865 10.19
Goods
Manufacturing 453189913 508370762 55180849 (12.18)
Personnel 305977039 252345754 53631285 17.53
Office &Administration 128662294 114713258 13949036 10.84
Selling & Distribution 94127990 84136507 9991483 10.61
Interest & Financial 117325714 83924902 33400812 28.47
Charges
Managerial 15837200 11836800 4000400 25.26
Remuneration
Appropriations:
Transfer To General 2000000 5200000 (3200000) (160)
Reserve
Proposed Dividend 13130000 19695001 (6565001) (50)
Corporate Dividend 2231444 3347165 (1115721) (49.9)
Tax
Total 17361444 28242166 (10880722) (62.6)
Net Profits for the 59832899 40939647 18893252 31.58
Year
31.03.09 31.03.08
A . Cash flow from operating activities
Net Profit after tax 93549390 89435514
Adjustment for
Tax 56644900 55117554
systematic use of ratio to interpret the financial statement so that the strength
financial condition can be determined. The term ratio refers to the numerical
o Helpful in forecasting.
CLASSIFICATION OF RATIOS
• Liquidity Ratios
Current ratio
Quick ratio
Proprietary ratio
• Activity ratio
LIQUIDITY RATIOS
The liquidity ratios are the ability of the firm to meet
its current obligation and reflect short – term financial strength of a firm.
• Quick ratio
Current Ratio
This ratio explains the relationship between the current assets and current
Liabilities. The higher ratio, the better it is, because the firm will be able to
Pay its current liabilities more easily. But much higher ratio, even it is
Quick ratio
Quick ratio indicates whether the company is in position to pay its current
CURRENT LIABILITIES
LIQUID ASSETS = CURRENT ASSETS –
INVENTORIES
LEVERAGE OR CAPITAL
STRUCTURE RATIO
This ratio indicates the ability of a company to pay the interest regularly as
well as repay the principal when due.
• Proprietary ratio
Equity
3. Proprietary Ratio =
Total Assets
Fixed Assets
Proprietary funds
Activity Ratios
Net Sales
Inventory
Debtors
Purchases
Creditors
Turnover
Fixed Assets
Net Sales
Working Capital
Turnover
Capital Employed
Net Sales
Interpretation
1. Current Ratio : Generally a current ratio of 2 : 1 is
considered satisfactory. In earlier years ratio was much
higher i.e. 3.64 : 1 but now there is improvement in current
ratio as it is decreasing over the years & shows good policy.
2. Quick Ratio : 1 : 1 satisfactory.
Activity Ratio :
Profitability Ratios :
Conclusion
• Liquidity position of the company is good as its current ratio and
quick ratio for the year 2009 are 3.03:1 and .98:1 respectively
which meets the standard.
• Solvency position of the company is also satisfactory.
• Debtors are converted very quickly. Average collection period of
the company is very good as it is decreasing over the years.
• Fixed assets are utilized efficiently as fixed asset turnover ratio is
increasing.
• Overall cash flow position of the company is not satisfactory as
both opening and closing cash balances are in negative. And
reasons for the same have been explained in the preceding
chapter.
• Net sales and profits of the company have increased by 6.37%
and 31.58% respectively mainly due to increase in job work
receipts.
• Overall financial position of the company is good. There is need to
improve the working capital management only.
• As company is diluting its share capital by issuing right shares so
if company is not being able to increase the earning in that case
EPS will be decreased.
Suggestions
• Since the competition is increasing the company must come up
with new cost saving techniques to reduce the cost and further
increase the profit margin.
• The old machinery which need constant repair should be replaced
with the new one as it would decrease the cost further.
• In future company should not dilute the share capital further.
• Company should increase its operating margins so that debt can
be paid easily.