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A PROJECT REPORT

FINANCIAL PERFORMANCE ANALYSIS


OF ADITYA BIRLA GROUP SYNOPSIS REPORT

ON

Submitted in partial fulfillment of The requirement for the award degree of MASTER OF BUSINESS ADMINISTRATION TO
DEPARTMENT OF COMMERCE AND BUSINEESS MANAGEMENT JNT UNIVERSITY, HYDERABAD.
SUBMITTED BY

SREE DATTHA INSTITUTE OF ENGINEERING AND SCIENCE

K.B. KRANTHI KUMAR HT. NO. 07E41E0022

(Affiliated to JNT University) IBRAHIMPATNAM, R.R.DIST. (2007-2009)

PROJECT REPORT ON

FINANCIAL PERFORMANCE ANALYSIS


OF

ADITYA BIRLA GROUP SYNOPSIS REPORT


SUBMITTED TO DEPORTMENT OF BUSINESS MANAGEMENT

SREE DATTHA COLLEGE OF ENG& SCIENCE


In partial fulfillment of the award degree in Business Administration (MBA) By

K.B. KRANTHI KUMAR HT. NO. 07E41E0022


Under the super vision of Dr. Mrs. USHARANI

SREE DATTHA INSTITUTE OF ENGINEERING AND SCIENCE IBRAHIMPATNAM, R.R.DIST. DEPARTMENT OF COMMERCE AND BUSINEES MANAGEMENT JNT UNIVERSITY, HYDERABAD.

(2007-2009)

ACKNOWLDGEMENT

Behind every successful achievement lies great contribution by those without whom that could have been achieved to them, although more words of gratitude is insufficient for their unlimited contribution. I take this opportunity to revel my heartfelt gratitude imprinted deep within me. I am very much thankful to the finance manager K.B.KRANTHI KUMAR and the staff of ADITYA BIRLA GROUP SYNOPSIS REPORT for giving encouragement and their kind cooperation. I would like to thanks to my college principal Mr RAM REDDY lecturers especially Mrs C USHA RANI (HOD) and every one and apologies to those I have missed upon, who helped me in successful completion of this project.

By (K.B.KRANTHI KUMAR )

DECLARATION

hereby

declare

that

the

enclosed

project

entitled

FINANCIAL

PERFERMANCE & ANALYSIS done in ADITYA BIRLA GROUP SYNOPSIS REPORT is submitted to JNT UNIVERSITY, HYDERABAD in partial fulfillment of MASTER OF BUSINESS ADMINISTRATION, the project is an original work done by me and to the best of my knowledge this work is not submitted to any other university or college for award of any other degree, diploma or Fellowship.

K.B.KRANTHI KUMAR (07E41E0022)

CONTENTS
TOPIC 1.CHAPTER -1 EXCUTIVE SYNOPSIS 2. CHAPTER II INTRODUCTION 3. CHAPTER III INDUSTRY PROFILE 4. CHAPTER IV COMPANY POROFILE 5. CHAPTER V RESEARCH AND METHODOLOGY 6. CHAPTER- VI CONCEPTUAL FRAMEWORK 7. CHAPTER- VII DATA ANALYSIS & INTERPRETATION 8. CHAPTER- VIII FINDINGS&SUGETIONS BIBILOGRAPHY 92-96 97 45-91 31-44 28 -30 14-27
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CHAPTER -I

EXECUTIVE SYNOPSIS

EXECUTIVE SYNOPSIS
COMPANY PROFILE:The Aditya Birla GroupLtd. Established in 1984 as a manufacturing organization. The Aditya Birla Group limited is now on its stride of completing its 25th year in the history of manufacturing & infrastructure markets serving the cause of industrial development & economy. The group has made its beginning in 1984 and today occupies a prominent place among the leading manufacturing industry in India. The Aditya Birla Group has been promoting the mobilization of funds in the industrial for the development of industrialization in the state of Andhra Pradesh.

NEED FOR THE STUDY:

The main motto behind starting of any business is to gain profits. We can say the company is running in healthy position by observing its past and present financial position. Aditya Birla Group. The Company started in the year 1984, now the company management wants to assess the financial position of the company. Hence the present study has been under taken with the help of Ratio Analysis.

SCOPE OF THE STUDY:


The scope of the study is confined to the following aspects. To carry out the present study, a period of three years is taken from 2006 to 2009 in the context, some selected ratios like liquidity ratios, activity ratios, leverage ratios and profitability ratios are examined to test the financial position of the company.

OBJECTIVES OF THE STUDY:

Keeping in view of above-mentioned facts, the following are the objectives of the study. Primary objective: To analyze the financial performance of the company through the calculation of various ratios. Secondary objectives To study the financial strengths and weakness of the company. To examine the short-term solvency of the company.

Research methodology:
Research Design : Analytical

Analytical tools

: Ratio Analysis

Data Sources

: The data is collected from secondary data Like company annual reports, Brochures etc.

sources.

Period of the study:


The present study has been undertaken for a period of three years i.e., from 200607 to 2008-09.

CHAPTER -II

INTRODUCTION

INTRODUCTION
A financial statement that measures a company's financial performance over a specific accounting period. Financial performance is assessed by giving a summary of how the business incurs its revenues and expenses through both operating and nonoperating activities. It also shows the net profit or loss incurred over a specific accounting period, typically over a fiscal quarter or year.

Also known as the "profit and loss statement" or "statement of revenue and expense". The income statement is the one of the three major financial statements. The other two are the balance sheet and the statement of cash flows. The income statement is divided into two parts: the operating and non-operating sections.

The portion of the income statement that deals with operating items is interesting to investors and analysts alike because this section discloses information about revenues and expenses that are a direct result of the regular business operations. For example, if a business creates sports equipment, then the operating items section would talk about the revenues and expenses involved with the production of sports equipment.

The non-operating items section discloses revenue and expense information about activities that are not tied directly to a company's regular operations. For example, if the sport equipment company sold a factory and some old plant equipment, then this information would be in the non-operating items section.

A financial statement that summarizes a company's assets, liabilities and shareholders' equity at a specific point in time. These three balance sheet segments give investors an idea as to what the company owns and owes, as well as the amount invested by the shareholders.

Assets = Liabilities + Shareholders' Equity

Each of the three segments of the balance sheet will have many accounts within it that document the value of each. Accounts such as cash, inventory and property are on the asset side of the balance sheet, while on the liability side there are accounts such as accounts payable or long-term debt. The exact accounts on a balance sheet will differ by company and by industry, as there is no one set template that accurately accommodates for the differences between different types of businesses.

It's called a balance sheet because the two sides balance out. This makes sense: a company has to pay for all the things it has (assets) by either borrowing money (liabilities) or getting it from shareholders (shareholders' equity).

The balance sheet is one of the most important pieces of financial information issued by a company. It is a snapshot of what a company owns and owes at that point in time. The income statement, on the other hand, shows how much revenue and profit a company has generated over a certain period. Neither statement is better than the other - rather, the financial statements are built to be used together to present a complete picture of a company's finances.

CHAPTER III

INDUSTRY pROFILE

Manufacturing industry refers to those industries which involve in the manufacturing and processing of items and indulge in either creation of new commodities or in value

addition. The manufacturing industry accounts for a significant share of the industrial sector in developed countries. The final products can either serves as a finished good for sale to customers or as intermediate goods used in the production process.

Evolution of the manufacturing industry:

Manufacturing industries came into being with the occurrence of technological and socioeconomic transformations in the Western countries in the 18th-19th century. This was widely known as industrial revolution. It began in Britain and replaced the labor intensive textile production with mechanization and use of fuels.

Working of manufacturing industry:

Manufacturing industries are the chief wealth producing sectors of an economy. These industries use various technologies and methods widely known as manufacturing process management. Manufacturing industries are broadly categorized into engineering industries, construction industries, electronics industries, chemical industries, energy industries, textile industries, food and beverage industries, metalworking industries, plastic industries, transport and telecommunication industries.

Manufacturing industries are important for an economy as they employ a huge share of the labor force and produce materials required by sectors of strategic importance such as national infrastructure and defense. However, not all manufacturing industries are beneficial to the nation as some of them generate negative externalities with huge social costs. The cost of letting such industries flourish may even exceed the benefits generated by them.

Manufacturing industry analysis suggests that the manufacturing industry has served as the pivotal factor in the economic development of a country. The same applies for the United States Of America, whose economy has been growing rapidly owing to the successful manufacturing industry. Manufacturing industry analysis also indicates that the manufacturing industry provides employment to many thereby contributing to the gross domestic product and per capita income of the country. Approximately 75% of the engineers as well as the scientists get employed in the manufacturing industry as recorded by a manufacturing industry analysis. The Census bureau categorizes a particular manufactured product depending on the primary goods produced by the manufacturing industry.

Statistical data showing the impact of the manufacturing industry on economy:

In the year 1992, the expenditure incurred on the research and development by the manufacturing establishments was USD$91.2 billion in the United States Of America. Out of this Non Governmental manufacturing establishments registered 79.4% of USD$91.2 billion.

18% of GDP or gross domestic product in the year 1993 was due to revenues generated by the manufacturing industry, established according to reports of manufacturing industry analysis.

46.4 was the result obtained in order to find out the number of workers employed in every establishment. This figure was registered in the year 1992. 15% of shipments in the manufacturing segment were due to the material industry. Capital stock has registered a steady rise for all the sectors of the manufacturing industry since 1982.

Employment opportunities in the manufacturing industry have declined comparatively. Manufacturing industry analysis also suggests that in some countries like China, technological know how has to be developed. Despite the fact that China is ranked fourth in the manufacturing productivity, due to technological lacunae, it is not being able to compete in the world market. Also needed are professionals well versed in the technological know how.

Owing to the emerging technologies world wide, the world manufacturing industry has geared up and has incorporated several new technologies within it's purview. Economists consider the World manufacturing industry as a sector which generates a lot of wealth. Generating employment, introducing latest techniques, real earnings from shipments etc., have put the world manufacturing industry in a favorable position.

With the implementation of the concept of eco friendly environment, world manufacturing industry has taken several measures to ensure that the manufacturing industries worldwide abide by the eco friendly norms. World manufacturing industry also plays an important role in the defense of a country. By manufacturing aircrafts which play a vital role in the country's defense, the aerospace manufacturing industry acts as a shield. Other industries in the manufacturing sector manufactures products which are indispensable in our daily lives. With regard to the GDP or gross domestic product, world manufacturing industry contributes to the global economy as well as the global GDP. World manufacturing industry and type of economy:

Capitalist economy: Manufacturing industry in a capitalist economy indulge in mass production and make them available to the customers by earning profits.

Collectivist economy:

Manufacturing industry in a collectivist economy is guided by a state run agency for making available the manufactured goods depending on the requirement.

Modern economy: Manufacturing industry in a modern economy operates under regulations framed by the Government. The manufacturing industry in India has all the qualities which enhance economic development, increase the productivity of the manufacturing industry and face competition from the global markets. The Manufacturing industry in India is believed to have the potential of improving the economic condition of India.

Indian manufacturing industry: Research findings

Studies conducted on the manufacturing industry have concluded that India has a working population of 75%. Out of this, only 600 million have acquired education till middle school. Due to this reason, the manufacturing industry in India, which is labor intensive, can provide the requisite number of employment units in the country. Studies have indicated that the productivity of the manufacturing industry in India is approximately 1/5th of the productivity in the manufacturing industry of United States Of America. It is about as compared to the productivity levels in South Korea as well as Taiwan. Labor productivity has escalated only to a small extent in case of India in comparison to United States of America, on the contrary, labor productivity has increased manifold in countries like Taiwan and Korea.

Manufacturing industry in India and exports:

Exports of manufactured goods in India accounted for 75% in comparison to exports of manufactured goods all over the world. Owing to the performance manifested by the export sector in India, the scenario indicates that there is less competition in the

manufacturing segment. Absence of competition is also established by the fact that in spite of reducing the tariff in the early and mid 90s, India continued to be one of the protected economies of the world. Contribution of India's export towards international market grew from 05% to 0.7% during 1990 to 2000. During the same period, Malaysia, China, Thailand and South Korea, registered almost double increase in exports.

CHAPTER IV

COMPANY PROFILE

A US $29.2 billion corporation, the Aditya Birla Group is in the league of Fortune 500. It is anchored by an extraordinary force of 130,000 employees, belonging to 30 different nationalities. In India, the Group has been adjudged "The Best Employer in India and among the top 20 in Asia" by the Hewitt-Economic Times and Wall Street Journal Study 2007. Over 50 per cent of its revenues flow from its overseas operations. The Group operates in 25 countries India, UK, Germany, Hungary, Brazil, Italy, France, Luxembourg, Switzerland, Australia, USA, Canada, Egypt, China, Thailand, Laos, Indonesia, Philippines, Dubai, Singapore, Myanmar, Bangladesh, Vietnam, Malaysia and Korea. Globally the Aditya Birla Group is: A metals powerhouse, among the world's most cost-efficient aluminium and copper producers. Hindalco-Novelis is the largest aluminium rolling company. It is one of the three biggest producers of primary aluminium in Asia, with the largest single location copper smelter No.1 in viscose staple fiber

In India: A premier branded garments player The second largest player in viscose filament yarn The second largest in the chlor-alkali sector Among the top five mobile telephony companies A leading player in life insurance and asset management Among the top three supermarket chains in the retail business Rock solid in fundamentals, the Aditya Birla Group nurtures a culture where success does not come in the way of the need to keep learning afresh, to keep experimenting.

Beyond business the Aditya Birla Group is:

Working in 3,700 villages Reaching out to seven million people annually through the Aditya Birla Centre for Community Initiatives and Rural Development, spearheaded by Mrs. Rajashree Birla

Focusing on:

Health care, education, sustainable livelihood, infrastructure and

espousing social causes Running 41 schools and 18 hospitals Transcending the conventional barriers of business to send out a message that "We care".

Vision: To be a premium global conglomerate with a clear focus on each business. Mission To deliver superior value to our customers, Shareholders, employees and Society at large. Values Integrity, Commitment, Passion, Seamlessness, Speed.

LOGO

The name Aditya Birla evokes all that is positive in business and in life. It exemplifies integrity, quality, performance, perfection and above all character. Logo is the symbolic reflection of these traits. It is the cornerstone of our corporate identity. It helps us leverage the unique Aditya Birla brand and endows us with a distinctive visual image. Depicted in vibrant, earthy colours, it is very arresting and shows the sun rising over two circles. An inner circle symbolizing the internal universe of the Aditya Birla Group, an

outer circle symbolizing the external universe, and a dynamic meeting of rays converging and diverging between the two. Through its wide usage, we create a consistent, impact-oriented Group image. This undoubtedly enhances our profile among our internal and external stakeholders. Corporate logo thus serves as an umbrella for our Group. It signals the common values and beliefs that guide our behaviour in all our entrepreneurial activities. It embeds a sense of pride, unity and belonging in all of our 130,000 colleagues spanning 25 countries and 30 nationalities across the globe. Our logo is our best calling card that opens the gateway to the world. Dr. Pragnya Ram as the Chief Custodian of the Aditya Birla logo

OVERVIEW The Aditya Birla Group, India's first multinational corporation, traces its origins back to the tiny village of Pilani in the Rajasthan desert, where Seth Shiv Narayan Birla started cotton trading operations in 1857. Today, the Group's footprint extends to 25 countries and its revenues are US$ 29.2 billion. We retrace the highlights of this remarkable journey, starting from the present: 2009 In recognition of work that truly exemplifies the highest values of society and corporate leadership for social responsibility and sustainable development initiatives, the Reader's Digest Pegasus Star Award has been conferred on Hindalco. Mrs. Rajashree Birla who spearheads all the Group's social projects received this much coveted award on behalf of Hindalco from Mr. Arun Jaitley, MP, Rajya Sabha, on 21 January 2009 in Delhi. 2008 The President of India, Mrs. Pratibha Patil conferred the much coveted Rotary International Polio Eradication Champion Award on Mrs. Rajashree Birla in an elegant function at the Rashtrapati Bhavan (Delhi), attended by the Chairman, select Rotarians and WHO officials.

2007 The Aditya Birla Group was honoured with the India Today Group's Readers Digest Gold award in recognition of the work that truly exemplifies the highest values of society as well as those of Reader's Digest. The award was received by Mrs. Rajashree Birla, Chairperson, Aditya Birla Center for Community Initiatives and Rural Development, at the Pegasus Corporate Social Responsibility Awards 2007 function.

Hindalco awarded the CII - Sorabji Green Business Centre "National Award for Excellence in Water Management 2007". In May 2007, Novelis became a Hindalco subsidiary with the completion of the acquisition process. The transaction makes Hindalco the world's largest aluminum rolling company and one of the biggest producers of primary aluminum in Asia, as well as being India's leading copper producer. 2006 Hindalco in a joint venture with Almex USA Inc. TransWorks Information Services announces success of bid to acquire Minacs Worldwide. Grasim Industries Limited, India; Thai Rayon Public Company Limited, Thailand and P.T. Indo Bharat Rayon, Indonesia form a JV with Hubei Jing Wei Chemical Fibre Company, China, for VSF. Hindalco awarded the Greentech Safety Silver Award for its outstanding safety performance during 2005-06. 2005 Indian Rayon re-christened as Aditya Birla Nuvo. Aditya Birla Group to set up a world-class aluminium project in Orissa. The Aditya Birla Group signs a framework agreement to acquire St Anne Nackawic Pulp Mill, Canada. 2004

Board reconstituted with Mr. Kumar Mangalam Birla taking over as Chairman. Completion of the implementation process to demerge the cement business of L&T and completion of open offer by Grasim, with the latter acquiring controlling stake in the newly formed company UltraTech. Grasim, Nagda, received the FICCI Annual Award 2003-2004 in recognition of corporate initiaitve in rural development. Bihar Caustic and Chemicals Ltd., Rehla, Jharkhand, has received the FICCI Annual Award 2003-2004 in recognition of corporate initiative in family welfare.

Hindalco recieves India CFO Award 2004 for excellence in finance in a large corporate. Scheme of Arrangement announced to merge Indal with Hindalco. Indian Rayon completes its brownfield expansion of 40,000 TPA at Hi-Tech Carbon, Gummidipundi, taking total capacity to 1,60,000 TPA. 2003 Mr. Kumar Mangalam Birla, Chairman of the Group, is selected as Business India's Businessman of the Year - 2003. Mr. Kumar Mangalam Birla is selected as The Economic Times' Business Leader of the year. The Group is ranked 16th in India's first ever survey of 'Great places to work in', published in Business World magazine. The Group's joint venture concern, Birla Sun Life Insurance, is ranked 9th in the same study. The Group is ranked 20th in a study on the 'Best Employers in India', conducted by Hewitt Associates and Business Today. Hindalco receives the Asian CSR Award for its "Rural Poverty Alleviation Programme". The Asian CSR Awards are Asia's premier awards programme on Corporate Social Responsibility.

The Group acquires the Mount Gordon Copper mines in Australia, another strategic step in becoming a globally competitive copper player. Liaoning Birla Carbon, the Group's first carbon black company in China, is incorporated. The board of engineering major Larsen & Toubro Ltd (L&T) decides to demerge its cement business into a separate cement company (CemCo), in which L&T will retain 20 per cent of its equity with the balance to be distributed to their shareholders in proportion to their shareholding in L&T. As a consequence, Grasim to acquire an 8.5 per cent equity stake from L&T and then make an open offer for 30 per cent of the equity of CemCo, to acquire management control of CemCo. The Group divests its entire 37.38 per cent equity stake in Mangalore Refineries and Petrochemicals Ltd (MRPL) to the Oil and Natural Gas Corporation (ONGC).

MANAGEMENT TEAM The Aditya Birla Management Corporation Private Limited, is the Group's apex decision making body and provides strategic direction to Group companies. Its Board of Directors comprises: :: Mr. Kumar Mangalam Birla, Chairman :: Mr. S. Aga :: Mr. D. Bhattacharya :: Mr. S. K. Jain : Dr. S. Misra : Mr. S. Misra :: Dr. B. K. Singh :: Mr. K. K. Maheshwari :: Mr. Vikram Rao :: Mr. Ajay Srinivasan

HERITAGE

The roots of the Aditya Birla Group date back to the 19th century in the picturesque town of Pilani, set amidst the Rajasthan desert. It was here that Seth Shiv Narayan Birla started trading in cotton, laying the foundation for the House of Birlas. Through India's arduous times of the 1850s, the Birla business expanded rapidly. In the early part of the 20th century, our Group's founding father, Ghanshyamdas Birla, set up industries in critical sectors such as textiles and fibre, aluminium, cement and chemicals. As a close confidante of Mahatma Gandhi, he played an active role in the Indian freedom struggle. He represented India at the first and second round-table conference in London, along with Gandhiji. It was at "Birla House" in Delhi that the luminaries of the Indian freedom struggle often met to plot the downfall of the British Raj Ghanshyamdas Birla found no contradiction in pursuing business goals with the dedication of a saint, emerging as one of the foremost industrialists of pre-independence India. The principles by which he lived were soaked up by his grandson, Aditya Vikram Birla, our Group's legendary leader.

Aditya Vikram Birla: putting India on the world map A formidable force in Indian industry, Mr. Aditya Birla dared to dream of setting up a global business empire at the age of 24. He was the first to put Indian business on the world map, as far back as 1969, long before globalization became a buzzword in India. In the then vibrant and free market South East Asian countries, he ventured to set up world-class production bases. He had foreseen the winds of change and staked the

future of his business on a competitive, free market driven economy order. He put Indian business on the globe, 22 years before economic liberalisation was formally introduced by the former Prime Minister, Mr. Narasimha Rao and the former Union Finance Minister, Dr. Manmohan Singh. He set up 19 companies outside India, in Thailand, Malaysia, Indonesia, the Philippines and Egypt. Interestingly, for Mr. Aditya Birla, globalisation meant more than just geographic reach. He believed that a business could be global even whilst being based in India. Therefore, back in his home-territory, he drove single-mindedly to put together the building blocks to make our Indian business a global force. Under his stewardship, his companies rose to be the world's largest producer of viscose staple fibre, the largest refiner of palm oil, the third largest producer of insulators and the sixth largest producer of carbon black. In India, they attained the status of the largest single producer of viscose filament yarn, apart from being a producer of cement, grey cement and rayon grade pulp. The Group is also the largest producer of aluminium in the private sector, the lowest first cost producers in the world and the only producer of linen in the textile industry in India.

At the time of his untimely demise, the Group's revenues crossed Rs.8,000 crore globally, with assets of over Rs.9,000 crore, comprising of 55 benchmark quality plants, an employee strength of 75,000 and a shareholder community of 600,000. Most importantly, his companies earned respect and admiration of the people, as one of India's finest business houses, and the first Indian International Group globally. Through this outstanding record of enterprise, he helped create enormous wealth for the nation, and respect for Indian entrepreneurship in South East Asia. In his time, his success was unmatched by any other industrialist in India. That India attains respectable rank among the developed nations, was a dream he forever cherished. He was proud of India and took equal pride in being an Indian. Under the leadership of our Chairman, Mr. Kumar Mangalam Birla, the Group has sustained and established a leadership position in its key businesses through

continuous value-creation. Spearheaded by Grasim, Hindalco, Aditya Birla Nuvo, Indo Gulf Fertilisers and companies in Thailand, Malaysia, Indonesia, the Philippines and Egypt, the Aditya Birla Group is a leader in a swathe of products viscose staple fibre, aluminium, cement, copper, carbon black, palm oil, insulators, garments. And with successful forays into financial services, telecom, software and BPO, the Group is today one of Asia's most diversified business groups.

GROUP COMPANIES :: Grasim Industries Ltd. :: Hindalco Industries Ltd. :: Aditya Birla Nuvo Ltd. :: UltraTech Cement Ltd.

INDIAN COMPANIES :: PSI Data Systems :: Aditya Birla Minacs Worldwide Limited :: Essel Mining & Industries Ltd :: Idea Cellular Ltd. :: Aditya Birla Insulators :: Aditya Birla Retail Limited :: Bihar Caustic and Chemicals Ltd.

INTERNATIONAL COMPANIES Thailand :: Thai Rayon :: Indo Thai Synthetics :: Thai Acrylic Fibre :: Thai Carbon Black :: Aditya Birla Chemicals (Thailand) Ltd.

:: Thai Peroxide Philippines :: Indo Phil Group of companies :: Pan Century Surfactants Inc.

Indonesia :: PT Indo Bharat Rayon :: PT Elegant Textile Industry :: PT Sunrise Bumi Textiles :: PT Indo Liberty Textiles :: PT Indo Raya Kimia

Egypt :: Alexandria Carbon Black Company S.A.E :: Alexandria Fiber Company S.A.E

China :: Liaoning Birla Carbon :: Birla Jingwei Fibres Company Limited :: Aditya Birla Grasun Chemicals (Fangchenggang) Ltd.

Canada :: A.V. Group

Australia :: Aditya Birla Minerals Ltd.

Laos :: Birla Laos Pulp & Plantations Company Limited

North and South America, Europe and Asia :: Novelis Inc.

Singapore :: Swiss Singapore Overseas Enterprises Pte Ltd. (SSOE)

Joint ventures :: Birla Sun Life Insurance Company :: Birla Sun Life Asset Management Company :: Birla Sun Life Distribution Company Limited :: Tanfac Industries Limited

PRODUCTS COMPANY: HINDALCO :: Everlast aluminium roofing sheets :: Freshwrapp aluminium foil :: Freshpakk semi-rigid containers :: Permashield waterproofing :: Aluminium foil :: Aura alloy wheels :: Hindalco extrusions

COMPANY: HINDALCO :: Birla Copper :: Birla Gold :: Birla Silver

COMPANY: GRASIM :: Birla Super :: UltraTech Cement (formerly Birla Plus) :: Birla White

COMPANY: ULTRATECH :: UltraTech cement :: UltraTech Concrete

COMPANY: GRASIM :: Birla Cellulose

COMPANY: INDO GULF :: Birla Shaktiman Urea

COMPANY: HINDALCO :: Birla Balwan

COMPANY: ADITYA BIRLA NUVO :: Linen Club :: Pyroguard :: Ray One :: Kolorone

COMPANY: GRASIM :: Ice Touch :: Uncrushables :: Purista

:: Clean Fab

COMPANY: THAI ACRYLIC FIBRE :: Texlan

CHAPTER V

RESEARCH METHODOLOGY

NEED FOR THE STUDY:


The main motto behind starting of any business is to gain profits. We can say the company is running in healthy position by observing its past and present financial position. Aditya Birla Group. The Company started in the year 1984, now the company management wants to assess the financial position of the company. Hence the present study has been under taken with the help of Ratio Analysis.

Objectives of the study


To study to study the existing financial of the company. To study the operating cycle analysis of the company. To analyze future financial position of the company To analyze the financial performance of the company with reference to the cash flows.

Analyzing profit & loss account for the next four years with the help of last five years data available.

Research Methodology
Research design Analytical tools Analytical Ratio analysis, schedule of change in Working capital, operating cycle analysis. Data Sources Secondary data has been collected from Company records, annual reports Period of study 2005-06 to 2008-09

Source of data
1. The data required for the study is mainly based on secondary data. 2. Five year annual report of Aditya Birla Group from 2005-2009 comprising of balance sheets, P&L accounts. 3. Interaction with the related finance departments. 4. Past five years profit & loss account.

5. The related data is obtained from the printed and published journals and financial statement of the corporation.

Tools for data analysis:


Some selected ratios like liquidity ratios, activity ratios, leverage ratios, Operating cycle analysis and profitability ratios are examined to test the financial position of the company.

Period of study:
Data for a period of 5 years has been taken for the study i.e. starting from 2005-2009

Scope of the study


The scope of the study is confined to the following aspects. To carry out the present study, a period of five years is taken from 2005 to 2009 in the context, some selected ratios like liquidity ratios, activity ratios, leverage ratios and profitability ratios are examined to test the financial position of the company.

Objectives of the study


Keeping in view of above-mentioned facts, the following are the objectives of the study.

CHAPTER VI

CONCEPTUAL
FRAMEWORK

Financial statements: (Or financial reports) are formal records of a business' financial activities. These statements provide an overview of a business' profitability and financial condition in both short and long term. There are four basic financial statements: 1. Balance Sheet Is also referred to as statement of financial condition, reports on a company's assets, liabilities and net equity as of a given point in time. 2. Income Statement - Is also referred to as Profit or loss statement, reports on a company's results of operations over a period of time. 3. Cash Flow Statement reports on a company's cash flow activities, particularly its operating, investing and financing activities. 4. Statement of Retained Earnings It explains the changes in a company's retained earnings over the reporting period. Because these statements are often complex, an extensive set of Notes to the Financial Statements and management discussion and analysis is usually included. The notes will typically describe each item on the Balance sheet, Income statement and Cash flow statement in further details. Notes to Financial Statements are considered an integral part of the Financial Statements. Income statements is a financial statement for companies that indicate how net revenue (money received from the sale of products and services before expenses are taken out, also known as the "top line") is transformed into net income (the result after all revenues and expenses have been accounted for, also known as the "bottom line"). The purpose of the income statement is to show managers and investors whether the company made or lost money during the period being reported. Also called Profit and Loss Statement (P&L) outside the USA or Statement of Activities and Changes in Net Assets in reference to charitable organizations.

Usefulness and limitations of income statement Income statements should help investors and creditors determine the past performance of the enterprise; predict future performance; and assess the risk of achieving future cash flows. However, information in an income statement has several limitations:

items that might be relevant but cannot be reliably measured are not reported (e.g. brand recognition and loyalty)

some numbers depend on accounting methods used (e.g. using FIFO or LIFO accounting to measure inventory level)

Some numbers depend on judgments and estimates (e.g. depreciation expense depends on estimated useful life and salvage value).

Single-step income statement In the single-step statement, just two groups exist: revenues and expenses. Expenses are deducted from revenues to get net income (single step). Its main advantage is simplicity, but more and more companies choose multiple-step statements. The basic format is shown below. Example: Revenue Net sales ____________________ Rent revenue _________________ Interest revenue _____________ Total revenue ______________ Expenses (usually sorted by amount) Cost of goods sold ___________

Selling expenses _____________ Administrative expenses ______ Interest expense _____________ Total expenses _____________ Income before taxes ____________ Income taxes ___________________ Net income _____________________ Earnings per share _____________ Items on income statement
Operating section

Net Revenue Inflows or other enhancements of assets of an entity or settlements of its

liabilities during a period from delivering or producing goods, rendering services, or other activities that constitute the entity's ongoing major or central operations. Usually presented as sales minus sales discounts, returns, and allowances.

Expenses Outflows or other using-up of assets or incurrence of liabilities during a

period from delivering or producing goods, rendering services, or carrying out other activities that constitute the entity's ongoing major or central operations.
o o

Cost of goods sold - represents the amount a product costs to produce General and administrative expenses (G & A) - represent expenses to manage the business (officer salaries, legal and professional fees, utilities, insurance, depreciation of office building and equipment, stationery, supplies)

Selling expenses - represent expenses needed to sell products (e.g., sales salaries and commissions, advertising, freight, shipping, depreciation of sales equipment)

o o

R & D expenses - represent expenses included in research and development Depreciation - represents costs associated with depreciated assets

Non-operating section

Other revenues or gains revenues and gains from other than primary business activities (e.g. rent,

patents). It also includes unusual gains and losses that are either unusual or infrequent, but not both (e.g. sale of securities or fixed assets).

Other expenses or losses expenses or losses not related to primary business operations.

Irregular items

They are reported separately because this way users can better predict future cash flows - irregular items most likely won't happen next year. These are reported net of taxes.

Discontinued operations is the most common type of irregular items. Shifting business location, stopping

production temporarily, or changes due to technological improvement do not qualify as discontinued operations.

Extraordinary items are both unusual (abnormal) and infrequent, for example, unexpected nature

disaster, expropriation, prohibitions under new regulations. Note: natural disaster

might not qualify depending on location (e.g. frost damage would not qualify in Canada but would in the tropics). Changes in accounting principle is, for example, changing method of computing depreciation from straight-line to sum-of-the-years'-digits. However, changes in estimates (e.g. estimated useful life of a fixed asset) do not qualify.
Earnings per share

Because of its importance, earnings per share (EPS) are required to be disclosed on the face of the income statement. A company which reports any of the irregular items must also report EPS for these items either in the statement or in the notes.

There are two forms of EPS reported:

Basic: in this case "weighted average of shares outstanding" includes only actual

stocks outstanding.

Diluted: in this case "weighted average of shares outstanding" is calculated as if all stock

options, convertible bonds, and other securities that could be transformed into shares are transformed. This way number of shares increases and EPS decreases. Diluted EPS is considered to be a more accurate way to measure EPS. Alternative setup of multiple-step income statement Setups of income statements come in many shapes and forms. Below is an alternative definition which carries a direct relationship to terminology commonly used in financial analysis. On the right hand side of the table several alternative suggestions for

terminology are listed - economics and accounting is by no means a discipline with a single standard definition of terms used. Hence, part of the skill in understanding income statements and balance sheets is to see through the words Income statement item Revenues -CoGS Acronym spelled out Alternative terminology

Sales, Income, Turnover Cost of Goods Sold Cost of sales

-----------------------------------------------------------------------------------------------EBITDA margin - Depreciation - Amortization ---------------------------------------------------------------------------------------------EBIT Earnings before I+T Financial items, Financial income, Earnings before I+T+D+A Gross margin, Gross profit, operating

Financial expense

----------------------------------------------------------------------------------------------EBT Earnings before Taxes Pretax net income - Taxes

------------------------------------------------------------------------------------------------E Earnings Net income

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.

Some examples of profitability ratios are profit margin, return on assets and return on equity. It is important to note that a little t of background knowledge is necessary in order to make relevant comparisons when analyzing these ratios. For instances, some industries experience seasonality in their operations. The retail industry, for example, typically experiences higher revenues and earnings for the Christmas season. Therefore, it would not be too useful to compare a retailer's 4th quarter profit margin with its 1st quarter profit margin. On the other hand, comparing a retailer's 4th quarter profit margin with the profit margin from the same period a year before would be far more informative. Profit Margin A ratio of profitability calculated as net income divided by revenues, or net profits divided by sales. It measures how much out of every dollar of sales a company actually keeps in earnings.

Profit margin is very useful when comparing companies in similar industries. A higher profit margin indicates a more profitable company that has better control over its costs compared to its competitors. Profit margin is displayed as a percentage; a 20% profit margin, for example, means the company has a net income of $0.20 for each dollar of sales. .Looking at the earnings of a company often doesn't tell the entire story. Increased earnings are good, but an increase does not mean that the profit margin of a company is improving. For instance, if a company has costs that have increased at a greater rate than sales, it leads to a lower profit margin. This is an indication that costs need to be under better control.

Imagine a company has a net income of $10 million from sales of $100 million, giving it a profit margin of 10% ($10 million/$100 million). If in the next year net income rose to $15 million on sales of $200 million, its profit margin would fall to 7.5%. So while the company increased its net income, it has done so with diminishing profit margins.

Gross profit ratio: Gross Profit ratio is one of the most commonly used ratios. It reveals the result of trading operations of business. In other words, it indicates to us the profitability of the core activity of the business. Gross profit Net sales Net profit ratio: It indicates the result of overall operations of the firm. The higher the ratio, the more profitable is the business.

Net profit after tax Net sales


Net Profit Margin: The net profit margin, sometimes known as the trading profit margin measures trading profit relative to sales revenue. Thus a trading profit margin of 10% means that every 1.00 of sales revenue generates .10 (10p) in profit before interest and taxes. Some industries tend to have relatively low margins, which are compensated for by high volumes. Conversely, high margin industries may be low volume. Higher than average net profit margins for the industry may be an indicator or good management.

Earnings before interest and tax Net sales EXPENSES RATIO: Expenses Ratios are the ratios that supplement the information given by the operating ratio. Each of the expenses ratios highlights the relationship between the particular expenses and net sales. For example, factory expenses ratio is the ratio of factory

expenses to net sales. Any expenditure can be shown as a ratio to sales. All such ratios fall under the broad head of Expenses ratio.

Operating expenses ratio: Administrative expenses + Selling expenses Net sales Administrative expenses ratio

Administrative expenses Net sales

Selling expenses ratio: Selling expenses Net sales Operating ratio: Cost of goods sold + operating expenses Net sales Net present value Net present value (NPV) is a standard method for the financial appraisal of long-term projects. Used for capital budgeting, and widely throughout economics, it measures the excess or shortfall of cash flows, in present value (PV) terms, once financing charges are met. By definition, Formula NPV = PVCI-PVCO

The discount rate

Choosing an appropriate discount rate is crucial to the NPV calculation. A good practice of choosing the discount rate is to decide the rate which the capital needed for the project could return if invested in an alternative venture. If, for example, the capital required for Project A can earn five percent elsewhere, use this discount rate in the NPV calculation to allow a direct comparison to be made between Project A and the alternative. Obviously, NPV value obtained using variable discount rates with the years of the investment duration is more reflecting to the real situation than that calculated from a constant discount rate for the entire investment duration. Refer to the tutorial article written by Samuel Baker for more detailed relationship between the NPV value and the discount rate. For some professional investors, their investment funds are committed to target a specified rate of return. In such cases, that rate of return should be selected as the discount rate for the NPV calculation. In this way, a direct comparison can be made between the profitability of the project and the desired rate of return. The rate used to discount future cash flows to their present values is a key input of this process. Most firms have a well defined policy regarding their capital structure. So the weighted average cost of capital (after tax) is appropriate for use with all projects. Alternately, higher discount rates can be used for more risky projects. Another method is to apply higher discount rates to cash flows occurring further along the time span, to reflect the yield curve premium for long-term debt.
Reinvestment rate

There are assumptions made about what rate of return is realized on cash that is freed-up before the end of the project. In the NPV model it is assumed to be reinvested at the discount rate used. This is appropriate in the absence of capital rationing. In the IRR model, no assumption is made about the reinvestment rate of free cash, which tends to exaggerate the calculated values. Some people believe that if the firm's reinvestment rate

is higher than the Weighted Average Cost of Capital, it becomes, in effect, an opportunity cost and should be used as the discount rate.
What NPV tells

With a particular project, if Ct is a positive value, the project is in the status of cash inflow in the time of t. If Ct is a negative value, the project is in the status of cash outflow in the time of t. Appropriately risked projects with a positive NPV should be accepted. This does not necessarily mean that they should be undertaken since NPV at the cost of capital may not account for opportunity cost, i.e. comparison with other available investments. In financial theory, if there is a choice between two mutually exclusive alternatives, the one yielding the higher NPV should be selected. The following sums up the NPV's various situations.

If...

It means... the investment

Then...

NPV >0

would add value to the project should be accepted the firm the investment

NPV <0

would subtract value the project should be rejected from the firm

the

investment

the project could be accepted because shareholders obtain required rate of return. This project adds no monetary value. Decision should be based on other criteria, e.g. strategic positioning or other factors not explicitly included in the calculation.

NPV would neither gain =0 nor lose value for the firm

PROFITABILITY INDEX: The profitability Index is a variant of the NPV method. While NPV states whether a proposal is viable, the profitable index expresses the cost or benefit relationship between initial cash outlay and the NPV of the proposal. This approach is very helpful when one is faced with a choice involving several alternative investments of different size. FORMULA: PVCI / PVCO

THE DECISION RULE: Under the profitability index method, the decision rule is to Accept the proposal if its PI is more than 1 and to reject the same if the PI is less than 1. If the PI is equal to 1, then the firm may be indifferent.

ACCOUNTING RATE OF RETURN: The ARR is based on the concept of rate of return. It measures the return on a project with regard to the investment required for the project . The return is measured in terms of

the average profit earned by the project over the duration of the project. The investment considered for calculation of this ratio is the average amount blocked in the project.

FORMULA: Average annual profit after tax x 100 Average investment

THE DECISION RULE:

The ARR is compared with a pre-specified rate of return. If the ARR is greater than the pre-specified rate of return, then the project is accepted. If the ARR is less than the pre-specified rate, then the project is rejected.

CHAPTER VII

DATA ANALYSIS & INTERPRETATION

BALANCE SHEET OF ADITYA BIRLA GROUP FOR THE PERIOD OF 2005 TO 2009
Balance Sheet Rs. Cr Period & months SOURCES OF FUNDS Owned Funds Equity Share Capital Share Application Money Preferential Share Capital Reserves & Surplus Loan Funds Secured Loans Unsecured Loans TOTAL USES OF FUNDS Fixed Assets Gross Block Accumulated Depreciation Less: Revaluation Reserve Net Block Capital Work-in-progress Investments Net Current Assets Current Assets, Loans & Advances Less: Current Liabilities & Provisions Total Net Current Assets Miscellaneous Expenses not written off TOTAL 164.19 56.58 107.61 0.25 443.25 136.25 47.67 88.58 0.34 407.53 92.9 41.29 51.61 0.09 309.93 83.64 45.2 38.45 0.25 278.09 74.9 47.62 27.28 0.42 227.04 469.23 144.28 0 324.95 7.43 3.01 425.28 129 0 296.28 19.32 3 349.31 112.68 0 236.63 18.59 3 303.71 96.1 0 207.6 28.78 3.01 271.07 81.71 0 189.36 6.98 3 142.3 56.87 443.25 135.63 55 407.53 119.13 13.55 309.93 103.38 17.45 278.09 89.4 11.29 227.04 17.51 0 0 226.57 15.01 0 31.01 170.88 15.01 0 16 146.25 15.01 0 16 126.25 15.01 0 0 111.33 2008/09 2007/08 2006/07 2005/06 2005/05

PROFIT AND LOSS ACCOUNT OF ADITYA BIRLA GROUOP FOR THE PERIOD OF 2005 TO 2009

Profit and Loss

Rs. cr Period & months INCOME Net Operating Income EXPENSES Material Consumption Manufacturing Expenses Personal Expenses Selling Expenses Administrative Expenses Capitalized Expenses Cost of Sales Reported PBDIT Other Recurring Income Adjusted PBDIT Depreciation Other Write-offs Adjusted PBIT Financial Expenses Adjusted PBT Tax Charges Adjusted PAT Non-recurring Items Other Non-cash Adjustments REPORTED PAT PAT % COGS TO SALES % sum of per&admin&selling expense P.S.A.Exp to SALES INTEREST TO SALES % NO.OF EQUITY SHARES EPS NET WORTH BOOK VALUE PER SHARE P/E RATIO DIFF BET RESERVES OF PR YRS DIVIDEND PAID DPS DPR RETENTION RATIO

2008/09 235.4

2007/08 191.12

2006/07 167.42

2005/06 140.17

2005/05 113.53

52.88 61.46 13.72 20.28 11.5 0 159.85 75.56 0.53 76.08 22.06 0.08 53.94 17.78 36.16 6.6 29.56 0.44 -0.27 29.73 12.63 67.91 45.50 19.33 7.55 5.84 40.33 244.08 41.82 55.69 -25.96 -4.45 -87.32 187.32

43.23 51.99 10.99 12.9 10.58 0 129.69 61.44 0.61 62.04 18.24 0.18 43.62 15.7 27.93 4.23 23.7 0.12 0 23.83 12.47 67.86 34.47 18.04 8.21 5.00 38.20 216.90 43.35 24.63 -0.80 -0.16 -3.36 103.36

46.09 42.95 9.04 10.25 9.25 0 117.58 49.84 0.33 50.17 16.58 0.16 33.43 14.2 19.24 2.79 16.45 0 -0.02 16.43 9.81 70.23 28.54 17.05 8.48 5.00 33.46 177.25 35.43 20.00 -3.57 -0.71 -21.73 121.73

33.6 44.04 5.8 7.75 10.06 0 101.26 38.91 0.39 39.31 14.45 0.16 24.7 11.59 13.12 2.1 11.02 0 0 11.02 7.86 72.24 23.61 16.84 8.27 5.00 28.02 157.26 31.43 14.92 -3.90 -0.78 -35.39 135.39

28.04 33.57 4.78 7.75 7 0 81.12 32.41 14.54 33.01 13.09 0.27 19.65 14.54 5.11 1.37 3.74 0 0 3.74 3.29 71.45 19.53 17.20 12.81 5.00 22.69 126.35 25.25

3.74 0.75 100.00 0.00

Table 2 Showing growth rate of cost of goods sold for the period 2005-2009
YEAR COGS TO SALES 2005 2006 2007 2008 2009 GROWTH% 71.45 72.24 70.23 67.86 67.91 1.10 -2.78 -3.38 0.07 AVERAGE

-1.25

COGS TO SALES 73 72 71

GROWTH

70 69 68 67 66 65 2005 2006 2007 YEAR 2008 2009

Chart 2 Showing growth rates of COGS for the period 2005-09 In the year 2005-09 the cost of goods sold declined for three years 2005-2006 and increased only in 2007.thus the annual cost of sales in every was also decreasing.

Table 1 Showing growth rate of PAT for the period 2005-2009


YEAR 2005 2005 2005 2006 2007 PAT% 3.29 7.86 9.81 14.23 12.63 138.65 24.83 45.04 -11.27 49.31 GROWTH % AVERAGE

Cha rt 1 Sho win g gro

wth rate of profit after tax for the period 2005-09


PROFIT AFTER TAX
16 14 12 GROWTH 10 8 6 4 2 0 2005 2006 2007 YEAR 2008 2009

In the year 2005 the profit after tax was very high then in year 2005 it declined to a large extent, then in year 2006 it increased, in 2007 in declined to negative. Thus there was increase in pat% every year.

Table3 Showing growth rate of Sum of PER, ADMIN & SELLING EXP for the period 2005-09
SUM OF PER,ADMINI&SELLING YEAR EXP GROWTH% AVERAGE 2005 19.53 2006 23.61 20.89 2007 28.54 20.88 2008 34.47 20.78 2009 45.5 32 23.64

Chart 3 Showing growth rate of Sum of PER, ADMIN & SELLING EXP for the period 2005-09

SUM OF PER,ADMIN & SELLING EXP


50 40

GROWTH

30 20 10 0 2005 2006 2007 YEAR 2008 2009

In the year 2005-09 the Sum of personal, administration and selling exp was almost common for three years 2005-2006 and increased only in 2007 by 12%. But annual personal administration and selling exp increased in every year.

Table 4 Showing growth rate of P.S.A EXP for the period 2005-09
YEAR P.S.A.EXP TO SALES 2005 2006 2007 2008 2009 GROWTH% AVERAGE 17.2 16.84 17.05 18.04 19.33 -2.08 1.21 5.8 7.17

3.02

Chart 4 Showing growth rate of P.S.A EXP for the period 2005-09

PER,SELLING & ADMIN EXP


20 19.5 19 18.5 18 17.5 17 16.5 16 15.5 2005 2006 2007 YEAR 2008 2009

The personal selling and administration exp to sales was negative in the first year 2005 then there after there is continuous increase in personal administration and selling exp on sales.

GROWTH

Table 5 Showing growth rate of interest to sales% for the period 2005-09

YEAR INTEREST TO SALES% 2005 2006 2007 2008 2009

GROWTH% AVERAGE 12.81 8.27 8.48 8.21 7.55 -35.44 2.58 -3.15 -8.05

-11.02

Chart 5 Showing growth rate of interest to sales% for the period 2005-09
INTEREST TO SALES %
14 12

GROWTH

10 8 6 4 2 0 2005 2006 2007 YEAR 2008 2009

From the chart 5, it can be seen that during the period 2005-09 there is gradual negativity in the growth rate of interest to sales%, but 2005-2006 there is increasing in the growth rate of interest to sales%.

Table 6 Showing growth rate of NO.OF EQUITY SHARES for the period 2005-09
YEAR NO.OF EQUITY SHARES 2005 2006 2007 2008 2009 GROWTH% AVERAGE 5 5 5 5 5.84 0 0 0 16.66

4.16

Chart 6 Showing growth rates of NO.OF EQUITY SHARES for the period 2005-09

NO.OF EQUITY SHARES


6 5.8 5.6

GROWTH

5.4 5.2 5 4.8 4.6 4.4 2005 2006 2007 YEAR 2008 2009

From the chart 6, it can be seen that during the period 2005-2006 there is no increasing in the growth rate of No .Of Equity Shares of the company, but 20062007 it has increased with nearly 17% growth rate.

Table 7 Showing growth rate of EARNING PER SHARE for the period 200509
YEAR 2005 2006 2007 2008 2009 EARNING PER SHARE 22.69 28.02 33.46 38.2 40.33 23.47 19.44 14.16 5.58 15.66 GROWTH% AVERAGE

Chart 7 Showing growth rate of EARNING PER SHARE for the period 200509

EARNINGS PER SHARE


45 40 35 30 25 20 15 10 5 0 2005 2006 2007 YEAR 2008 2009

From the chart 7, it can be seen that during the period 2005-09 there is gradual decreasing in the growth rate of earning per share of the company.eventhough there is an increase in the earning per share of the company.

GROWTH

Table 8 Showing growth rate of NET WORTH for the period 2005-09
YEAR 2005 2006 2007 2008 2009 NET WORTH 126.35 157.26 177.25 216.9 244.08 24.46 12.71 22.37 12.53 18.02 GROWTH% AVERAGE

Chart 8 Showing growth rate of NET WORTH for the period 2005-09
NETWORTH
300 250

GROWTH

200 150 100 50 0 2005 2006 2007 YEAR 2008 2009

From the chart 8, it can be seen that during the period 2005-09 there is gradual increase and decrease in the growth rate of NET WORTH of the company .2005, 2007 it has decreased nearly half of its previous year.

Table 9 Showing growth rate of BOOK VALUE PER SHARE for the period 2005-09

YEAR BOOK VALUE PER SHARE 2005 2006 2007 2008 2009 25.25 31.43 35.43 43.35 41.82

GROWTH% 24.46 12.71 22.37 -3.54

AVERAGE

14

Chart 9 Showing growth rate of BOOK VALUE PER SHARE for the period 2005-09

BOOK VALUE PER SHARE


50 40

GROWTH

30 20 10 0 2005 2006 2007 YEAR 2008 2009

In the year 2005 the book value per share increasing every year and then in the year 2005 percentage of growth rate is declined double and then year 2006 there increase in double percentage of growth and sudden fall of growth percentage in the year 2007 even though there is continuously increase in book value of share of the company.

Table 10 Showing growth rate of diff b/w reserves of pr ysr for the period 2005-09
YEAR 2005 2006 2007 2008 2009 14.92 20 24.63 55.69 34.05 23.15 126.11 61.1 DIFF B/W RESERVES OF PR YSR GROWTH% AVERAGE

Chart 10 Showing growth rates of diff b/w reserves of pr yrs for the period 2005-09

DIFFERENCE OF RESERES
60 50

GROWTH

40 30 20 10 0 2005 2006 YEAR 2007 2008

In the year 2005 the difference between reserves of pr ysr is increasing every year and then in the year 2006 percentage of growth rate is decreased and sudden rise of growth percentage in year 2007.

Table 11 Showing growth rate of DIVIDEND PAID for the period 2005-09

YEAR 2005 2006 2007 2008 2009

DIVIDEND PAID 3.74 -3.9 -3.57 -0.8 -25.96

GROWTH%

AVERAGE

-204.28 -8.46 -77.59 3145 713.67

Chart 11 Showing growth rate of DIVIDEND PAID for the period 2005-09

DIVIDENDS PAID
10 5 0

GROWTH

-5 -10 -15 -20 -25 -30

2005

2006

2007

2008

2009

YEAR

In the year 2005 the dividend paid is decrease and there is also decrease in growth percentage and every year there is fall of dividend paid, at the same time there is continuously increase in fall of growth percentage.

Table 12 Showing growth rate of Dividend per share for the period 2005-09
YEAR 2005 2006 2007 2008 2009 DPS 0.75 -0.78 -0.71 -0.16 -4.45 -204.28 -8.46 -77.59 2681.69 597.84 GROWTH% AVERAGE

Chart 12 Showing growth rate of Dividend per share for the period 2005-09
DIVIDEND PER SHARE
2 1 0

GROWTH

-1 -2 -3 -4 -5

2005

2006

2007

2008

2009

YEAR

In the year 2005 the dividend per share is decrease and there is also decrease in growth percentage and every year there is fall of dividend per share, at the same time there is continuously increase in fall of growth percentage

Table 13 Showing growth rate of DPS for the period 2005-09

YEAR 2005 2006 2007 2008 2009

DPR 100 -35.39 -21.73 -3.36 -87.32

GROWTH%

AVERAGE

-135.39 -38.6 -84.55 2501.02 560.62

Chart 13 Showing growth rates of DPS for the period 2005-09

DIVIDEND PAYOUT RATIO


150 100

GROWTH

50 0 2005 -50 -100 YEAR 2006 2007 2008 2009

In the year 2005 the dividend per rate is decrease and there is also decrease in growth percentage but from 2005 to 2007 there is recover in growth percentage and finally there is lot of increase in growth percentage of dividend per rate in year 2007.

Table 14 showing growth rate of RENT RATIO for the period 2005-09
YEAR 2005 2006 2007 2008 2009 RENT RATIO 0 135.39 121.73 103.36 187.32 #DIV/0! -10.09 -15.09 81.23 18.68 GROWTH% AVERAGE

Chart 14 showing growth rate of RENT RATIO for the period 2005-09
RETENTION RATIO
200 150

GROWTH

100 50 0 2005 2006 2007 YEAR 2008 2009

In the year 2005 the rent ratio is 135.39 and in the year 2005 to 2006 there is decrease in rent ration along with growth percentage, but in the year 2007 there is lot of increase in rent ratio along with growth percentage.

Table 1 Showing growth rate of net operating income for the period 2005-09
YEAR 2005 2006 2007 2008 2009 NET OPERATING INCOME 113.53 140.17 167.42 191.12 235.4 GROWTH% 0 23.47 19.44 14.16 23.17 20.06 AVERAGE

Chart 1 Showing growth rate of net operating income for the period 2005-09
NET OPERATING INCOME
25 20

GROWTH

15 10 5 0 2005 2006 2007 YEAR 2008 2009

From the chart 1, it can be seen that during the period 2005-07 there is a decrease in the operating profit for first three years and suddenly growth rate increases in 2007. Even though there is an increase in the net operating income, the growth rate is decreasing. This mean there may be a gradual increase in the operating expenses.

Table 2 Showing growth rate of material consumption for the period 2005-09
YEAR 2005 2006 2007 2008 2009 METERIAL CONSUMPTION 28.04 33.6 46.09 43.23 52.88 GROWTH% 0 19.83 37.17 -6.21 22.32 18.28 AVERAGE

Chart 2 Showing growth rate of material consumption for the period 2005-09
MATERIAL CONSUMPTION
40 30

GROWTH

20 10 0 2005 -10 YEAR 2006 2007 2008 2009

From chart 2 it can be seen that during the period from 2005-09 there is gradual increase in the rate of material consumption but growth rate of the company declined in the year 2006, also it can be seen that from the period 2005-2005 the growth rate increased slightly and from the period 2005-2006 the growth rate plunged to negativity. In the same process there are ups and downs in the material consumption also. Table 3 Showing growth rates of manufacturing expenses for the period 200509

YEAR 2005 2006 2007 2008 2009

MANUFACTURING EXPENSES 33.57 44.04 42.95 51.99 61.46

GROWTH% 0 31.19 -2.48 21.05 18.22

AVERAGE

16.99

Chart 3 Showing growth rates of manufacturing expenses for the period 200509
MANUFACTURING EXPENSES
35 30 25

GROWTH

20 15 10 5 0 -5 2005 2006 2007 YEAR 2008 2009

From chart 3 it can be seen that during the period from 2005-09 the growth rate of manufacturing expenses have slightly increased, but from the period 2005-2006 has plunged to negativity and then after from the period 2005-2007 the growth rate has slightly increased and decreased.

Table 4 showing growth rate of personnel expenses for the period 2005-09

YEAR 2005 2006 2007 2008 2009

PERSONAL EXPENSES 4.78 5.8 9.04 10.99 13.72

GROWTH% 0 21.34 55.86 21.57 24.84

AVERAGE

30.9

Chart 4 showing growth rates of personnel expenses for the period 2005-09
PERSONAL EXPENSES
60 50

GROWTH

40 30 20 10 0 2005 2006 2007 YEAR 2008 2009

From chart 4 it can be seen that during the period 2005-09 there has been gradual increase and decrease in the growth rate of personal expenses of the company. Even though there is an increase in the personnel expenses of the company.

Table 5 Showing growth rate of selling expenses for the period 2005-09
YEAR 2005 2006 2007 2008 2009 SELLING EXPENSES 7.75 7.75 10.25 12.9 20.28 GROWTH% 0 0 32.26 25.85 57.21 28.83 AVERAGE

Chart 5 Showing growth rate of selling expenses for the period 2005-09
SELLING EXPENSES
70 60

GROWTH

50 40 30 20 10 0 2005 2006 2007 YEAR 2008 2009

From chart 5 it can be seen that during the period 2005-09 there has been gradual increase and decrease in the growth rate of selling expenses of the company. Even though there is an increase in the selling expenses of the company.

Table 6 Showing growth rate of administrative expenses for the period 200509
YEAR 2005 2006 2007 2008 2009 ADMINISTRATIVE EXPENSES 7 10.06 9.25 10.58 11.5 GROWTH% 0 43.71 -8.05 14.38 8.7 14.68 AVERAGE

Chart 6 Showing growth rates of administrative expenses for the period 200509
ADMINISTRATIVE EXPENSES
50 40 30

GROWTH

20 10 0 -10 -20 YEAR 2005 2006 2007 2008 2009

From chart 6 it can be seen that during the period 2005-2005 the growth rate of administrative expenses have slightly increased, and from the period 2005-2005 the growth rate plunged to negativity, and from the period 2005-2006 there has been slightly increased, and from the period 2006-2007 there has decrease in the growth rate of the company.

Table 7 Showing growth rate of cost of sales for the period 2005-09
YEAR 2005 2006 2007 2008 2009 COST OF SALES 81.12 101.26 117.58 129.69 159.85 GROWTH% 0 24.83 16.12 10.3 23.26 18.62 AVERAGE

Chart 7 Showing growth rate of cost of sales for the period 2005-09
COST OF SALES
30 25

GROWTH

20 15 10 5 0 2005 2006 2007 YEAR 2008 2009

From chart 7 it can be seen that during the period 2005-2006 there has been a gradual decrease in the growth rate of cost of sales of the company, and from the period 2006-2007 the growth rate has slightly increased. Even though there is an increase in the cost of sales of the company.

Table 8 Showing growth rate of reported PBDIT for the period 2005-09
YEAR 2005 2006 2007 2008 2009 REPORTED PBDIT 32.41 38.91 49.84 61.44 75.56 GROWTH% 0 20.06 28.09 23.27 22.98 23.6 AVERAGE

Chart 8 Showing growth rate of reported PBDIT for the period 2005-09
REPORTED PBDIT
30 25

GROWTH

20 15 10 5 0 2005 2006 2007 YEAR 2008 2009

From chart 8 it can be seen that during the period 2005-09 there has been gradual decrease in the growth rate of reported PBDIT of the company, but from the period 2005-2005 the growth rate has slightly increased. Even though there is an increase in the reported PBDIT of the company.

Table 9 Showing growth rate of other recurring income for the period 2005-09
YEAR 2005 2006 2007 2008 2009 OTHER RECORING INCOME 14.54 0.39 0.33 0.61 0.53 GROWTH% 0 -97.32 -15.38 84.85 -13.11 -10.24 AVERAGE

Chart 9 Showing growth rate of other recurring income for the period 200509
OTHER RECORING INCOME
100 50

GROWTH

0 2005 -50 -100 -150 YEAR 2006 2007 2008 2009

From chart 9 it can be seen that during the period 2005-09 there has

been a

gradual increase in the growth rate of other recurring income of the company.

Table 10 Showing growth rate of adjusted PBDIT for the period 2005-09
YEAR 2005 2006 2007 2008 2009 ADJUSTED PBDIT 33.01 39.31 50.17 62.04 76.08 GROWTH% 0 19.09 27.63 23.66 22.63 23.25 AVERAGE

Chart 10 Showing growth rate of adjusted PBDIT for the period 2005-09
ADJUSTED PBDIT
30 25

GROWTH

20 15 10 5 0 2005 2006 2007 YEAR 2008 2009

From chart 10 it can be seen that during the period 2005-2005 there has been increase in the growth rate of adjusted PBDIT, from the period 2005-2005 there is slightly increase in the growth rate and from the period 2005-2007 there has been a gradual decrease in the growth rate of adjusted PBDIT of the company. Even though there is an increase in the adjusted PBDIT of the company.

Table 11 Showing growth rate of depreciation for the period 2005-09


YEAR 2005 2006 2007 2008 2009 DEPRECIATION 13.09 14.45 16.58 18.24 22.06 GROWTH% 0 10.39 14.74 10.01 20.94 14.02 AVERAGE

Chart 11 Showing growth rate of depreciation for the period 2005-09


DEPRECIATION
25 20

GROWTH

15 10 5 0 2005 2006 2007 YEAR 2008 2009

From chart 11 it cab be seen that during the period 2005-09 there has

been

gradual decrease and increase in the growth rate of depreciation of the company. Even though there is an increase in the depreciation of the company.

Table 12 Showing growth rate of other write-offs for the period 20052007
YEAR 2005 2006 2007 2008 2009 OTHER WRITE-OFFS 0.27 0.16 0.16 0.18 0.08 GROWTH% 0 -40.74 0 12.5 -55.56 -20.95 AVERAGE

Chart 12 Showing growth rates of other write-offs for the period 2005-09
OTHER WRITE OFFs
20 10 0

GROWTH

-10 -20 -30 -40 -50 -60

2005

2006

2007

2008

2009

YEAR

From chart 12 it can be seen that during the period 2005-2005 the growth rate of other write-offs is negative and is below zero, in the period 2006 the growth rate of other write-offs has slightly increased, and in the period 2007 the growth rate plunged to negativity.

Table 13 Showing growth rate of adjusted PAT for the period 2005-09
YEAR 2005 2006 2007 2008 2009 ADJUSTED PAT 3.74 11.02 16.45 23.7 29.56 GROWTH% 0 194.65 49.27 44.07 24.73 78.18 AVERAGE

Chart 13 Showing growth rate of adjusted PAT for the period 2005-09
ADJUSTED PAT
250 200

GROWTH

150 100 50 0 2005 2006 2007 YEAR 2008 2009

From chart 13 it can be seen that during the period 2005-2005 the growth rate of adjusted PAT has slightly increased and during the period 2005-2007 the growth rate of adjusted PAT has gradually decreased. Even though there is an increase in the adjusted PAT of the company.

Table 14 Showing growth rate of reported PAT for the period 2005-09
YEAR 2005 2006 2007 2008 2009 REPORTED PAT 3.74 11.02 16.43 23.83 29.73 GROWTH% 0 194.65 49.09 45.04 24.76 78.39 AVERAGE

Chart 14 Showing growth rate of reported PAT for the period 2005-09
REPORTED PAT
250 200

GROWTH

150 100 50 0 2005 2006 2007 YEAR 2008 2009

From chart 14 it can be seen that during the period 2005-2006 the growth rate of reported PAT has slightly increased and during the period 2005-2007 the growth rate of reported PAT has gradually decreased. Even though there is an increase in the reported PAT of the company.

Table 15 Showing growth rate of equity divided for the period 2005-09
YEAR 2005 2006 2007 2008 2009 EQUITY DIVIDEND 1.5 1.5 2.25 3 3.5 GROWTH% 0 0 50 33.33 16.67 25 AVERAGE

Chart 15 Showing growth rate of equity divided for the period 2005-09

EUITY DIVIDENDS
60 50

GROWTH

40 30 20 10 0 2005 2006 2007 YEAR 2008 2009

From chart 15 it can be seen that during the period 2005-2006 the growth rate of equity dividend has zero value, during the period 2005-2009 the growth rate of equity dividend has slightly increased and during the period 2005-2007 the growth rate of equity dividend has gradually decreased.Eventhough there is an increase in Equity Dividend.

Table 16 Showing growth rate of Retained Earnings for the period 2005-09

Reported PAT YEAR 2005 2006 2007 2008 2009 RETAINED EARNINGS

78.39

29.73

53.03

94.6 AVERAGE

168.75

301.03

GROWTH% 111.33 126.25 146.25 170.88 226.57 0 13.4 15.84 16.84 32.59

19.67

Chart 16 Showing growth rates of Retained Earnings for the period 2005-09
RETAINED EARNINGS
35 30

GROWTH

25 20 15 10 5 0 2005 2006 2007 YEAR 2008 2009

From chart 16 it can be seen that during the period 2005-09 growth rate of retained earnings have increased continuously, from 2005-06 there is normal increase in growth % but in the last year in has increased almost double. Thus it shows that the earning potential of company has increased a lot in the last year.

FORECASTED PROFIT&LOSS ACCOUNT FOR THE NEXT FOUR YEARS 2008-2011

Period & months INCOME Net operating income EXPENSES Materials consumption Manufacturing expenses Personnel expenses Selling expenses Administrative expenses Cost of sales Reported PBDIT Other recurring income Adjusted PBDIT Depreciation Other write-offs Adjusted PAT Reported PAT

2008

2009

2010

2011

282.62

339.31

407.37

489.09

62.55 71.9 17.96 34.13 13.19 189.61 93.39 0.48 93.77 25.15 0.06 52.67 53.03

73.98 84.11 23.5 43.97 15.12 224.91 115.43 0.43 115.57 28.67 0.05 93.85 94.6

87.5 98.4 30.76 56.64 17.34 266.78 142.67 0.39 142.44 32.69 0.04 167.22 168.75

103.5 115.12 40.26 72.96 19.88 316.45 176.34 0.35 175.55 37.27 0.03 297.95 301.03

Table 17 Showing Gross Profit Margin for the period 2008-2011


YAER 2008 2009 2010 2011 GROSS PROFIT 93.01 114.4 140.59 172.64 SALES 189.61 224.91 266.78 316.45 GROSS PROFIT MARGIN 49.05 50.86 52.70 54.56

Chart 17 Showing Gross Profit Margins for the period 2008-2011


GROSS PROFIT MARGIN 55.00 54.00 53.00 52.00 51.00 50.00 49.00 48.00 47.00 46.00 2008 2009 2010 2011

GROSS PROFIT MARGIN

From chart 17 it can be seen during the period 2008-2011 that the gross profit margin is more or less constant ranging between 49% to 54%. The gross profit margin of the company is increasing every year.But gross profit margin in last four has increased less than 10%.

Table 18 Showing operating profit ratio for the period 2008-2011


YEAR 2008 2009 2010 2011 EBIT 68.62 86.9 109.75 138.28 SALES 189.61 224.91 266.78 316.45 OPERATING PROFIT RATIO 36.19 38.64 41.14 43.70

Chart 18 Showing operating profit ratio for the period 2008-2011


OPERATING PROFIT RATIO 50.00 40.00 30.00 20.00 10.00 0.00 2008 2009 2010 2011 OPERATING PROFIT RATIO

From chart 18 it can be seen that during the period 2008-2011 the operating profit of the company is increasing constantly. It can be said that this ratio can be accepted by the company.

TABLE 19 Showing Net Operating Ratio for the period 2008-2011


YEAR 2008 2009 2010 2011 ADJUSTED EAT 52.67 93.85 167.22 297.95 SALES 189.61 224.91 266.78 316.45 NET OPERATING RATIO 27.78 41.73 62.68 94.15

Chart 19 Showing Net Operating Ratio for the period 2008-2011


NET OPERATING RATIO 100.00 80.00 60.00 NET OPERATING RATIO 40.00 20.00 0.00 2008 2009 2010 2011

From chart 19 it can be seen that during the period 2008-2010 the net operating ratio of the company is increasing with a difference of 20% but from the period 2009-2010 the net operating ratio has increased with a difference of nearly 35% .Which is almost doubled with compared to previous years.

Table 20 Showing Net Operating Income for the period 2008-2011


YEAR 2008 2009 2010 2011 REPORTED EAT 53.03 94.6 168.75 301.03 SALES 189.61 224.91 266.78 316.45 NET OPERATING RATIO 27.97 42.06 63.25 95.13

Chart 20 Showing Net Operating Income for the period 2008-2011


NET OPERATING RATIO 100.00 80.00 60.00 NET OPERATING RATIO 40.00 20.00 0.00 2008 2009 2010 2011

From chart 20 it can be seen that during the period 2009-2010 the net operating ratio of the company is increasing with a difference of 20% but from the period 2010-2011 the net operating ratio has increased with a difference of nearly 33%.Which is almost doubled while compared to previous years. Table 21 Showing Operating Expenses Ratio for the period 2008-2011

YEAR 2008 2009 2010 2011

ADMINISTRATIVE EXPENSES 13.19 15.12 17.34 19.88

SELLINGEXPENSES TOTAL 34.13 43.97 56.64 72.96 47.32 59.09 73.98 92.84 SALES 189.61 224.91 266.78 316.45

OPERATING EXPENSES RATIO 24.96 26.27 27.73 29.34

Chart 21 Showing Operating Expenses Ratio for the period 2008-2011


OPERATING EXPENSES RATIO 30.00 29.00 28.00 27.00 26.00 25.00 24.00 23.00 22.00 2008 2009 2010 2011 OPERATING EXPENSES RATIO

From chart 21 it can be seen that operating expenses ratio of the company is increasing constantly. There is slowing incremental in the operating expenses ratio.

Table 22 Showing Administrative Expenses ratio for the period 2008-2011


YEAR 2008 2009 2010 2011 ADMINISTRATIVE EXPENSES 13.19 15.12 17.34 19.88 SALES 189.61 224.91 266.78 316.45 ADMINISTRATIVE EXP RATIO 6.96 6.72 6.50 6.28

Chart 22 Showing Administrative Expenses ratio for the period 2008-2011


ADMINISTRATIVE EXP RATIO 7.20 7.00 6.80 6.60 6.40 6.20 6.00 5.80 2008 2009 2010 2011 ADMINISTRATIVE EXP RATIO

From chart 22 it can be seen that during the period 2008-2011 the administrative expenses of the company are decreasing gradually. The administrative expenses may not be accepted by the company

Table 23 Showing Selling Expenses ratio for the period 2008-2011


YEAR 2008 2009 2010 2011 SELLING EXPENSES 34.13 43.97 56.64 72.96 SALES 189.61 224.91 266.78 316.45 SELLING EXPENSES RATIO 18.00 19.55 21.23 23.06

Chart 23 Showing Selling Expenses ratio for the period 2008-2011


SELLING EXPENSES RATIO 25.00 20.00 15.00 10.00 5.00 0.00 2008 2009 2010 2011 SELLING EXPENSES RATIO

From chart 23 it can be seen that during the period 2008-2011 the selling expenses of the company are increasing gradually with more or less a difference of nearly 2.The selling expenses ratio can be accepted by the company.

Table 24 Showing Operating Ratio for the period 2008-2011


YEAR 2008 2009 2010 2011 OPERATING EXPENSES 199.73 240.68 290.64 351.72 SALES 189.61 224.91 266.78 316.45 OPERATING RATIO 105.34 107.01 108.94 111.15

Chart 24 Showing Operating Ratio for the period 2008-2011


OPERATING RATIO 112.00 111.00 110.00 109.00 108.00 107.00 106.00 105.00 104.00 103.00 102.00 2008 2009 2010 2011

OPERATING RATIO

From chart 24T it can be seen that during the period 2008-2010 the operating ratio of the company is increasing gradually. With in four years the operating ratio has increased from 105 to 111. Which is a very healthy sign.

PROFIT AND LOSS ACCOUNT


Profit and Loss Rs. cr Period & months INCOME Net Operating Income EXPENSES Material Consumption Manufacturing Expenses Personal Expenses Selling Expenses Administrative Expenses Capitalized Expenses Cost of Sales Reported PBDIT Other Recurring Income Adjusted PBDIT Depreciation Other Write-offs Adjusted PBIT Financial Expenses Adjusted PBT Tax Charges Adjusted PAT Non-recurring Items Other Non-cash Adjustments REPORTED PAT APPROPRIATION Equity dividend preference dividend retained earnings

2009/08 235.4

2008/07 191.12

2007/06 167.42

2006/05 140.17

2005/04 113.53

52.88 61.46 13.72 20.28 11.5 0 159.85 75.56 0.53 76.08 22.06 0.08 53.94 17.78 36.16 6.6 29.56 0.44 -0.27 29.73 3.5 2.06 26.35

43.23 51.99 10.99 12.9 10.58 0 129.69 61.44 0.61 62.04 18.24 0.18 43.62 15.7 27.93 4.23 23.7 0.12 0 23.83 3 2.22 22.06

46.09 42.95 9.04 10.25 9.25 0 117.58 49.84 0.33 50.17 16.58 0.16 33.43 14.2 19.24 2.79 16.45 0 -0.02 16.43 2.25 1.6 16.14

33.6 44.04 5.8 7.75 10.06 0 101.26 38.91 0.39 39.31 14.45 0.16 24.7 11.59 13.12 2.1 11.02 0 0 11.02 1.5 0.59 12.1

28.04 33.57 4.78 7.75 7 0 81.12 32.41 14.54 33.01 13.09 0.27 19.65 14.54 5.11 1.37 3.74 0 0 3.74 1.5 0 5.44

Table 25 Showing cash inflows for the period 2008-2011


YEAR 2008 2009 2010 2011 GRAND TOTAL NET OPERATING INCOME 282.62 339.31 407.37 489.09 COST OF SALES 189.61 224.91 266.78 316.45 CASH INFLOWS 77.82 122.52 199.91 335.22 TOTAL OF CASH INFLOWS 550.05 686.74 874.06 1140.76 3251.61

CHART 25 Showing cash inflows for the period 2008-2011

CASH INFLOWS
1200 1000 800 600 400 200 0 2008 2009 2010 2011 Series1

PROFITABILITY INDEX

CALCULATION OF PROFITABILITY INDEX

PROFITABILITY INDEX = PVCI/PVCO

3.00

Table 26 Showing Cash Outflows for the period 2008-2011

YEAR 2008 2009 2010 2011

MATERIAL CONSUMPTION 62.55 73.98 87.5 103.5

MANUFACTURING EXPENSES 71.9 84.11 98.4 115.12

PERSONEL EXPENSES 17.96 23.5 30.76 40.26

SELLING EXPENSES 34.13 43.97 56.64 72.96

ADMINISRTATIVE EXPENSES 13.19 15.12 17.34 19.88

TOTAL OF CASH OUTFLOWS 199.73 240.68 290.64 351.72 1082.77

GRAND TOTAL

Chart 26 Showing Cash Outflows for the period 2008-2011

CASH OUTFLOWS
400 300 200 100 0 2008 2009 2010 2011 TOTAL OF CASH OUTFLOWS

From chart 26 it can be seen that during the period 2008-2011 the cash flows of the company are increasing in the same manner.

Table 29 showing average rate of return for the period 2008-2011


Calculation of AVERAGE RATE OF RETURN YEAR 2008 2009 2010 2011 TOTAL PAT 53.03 94.6 168.75 301.03 617.41

AVERAGE RATE OF RETURN Average annual profit after tax = ____________________________ *100 Average investments

= 154.3525 / 221.625 *100 =69.64

Chart 27 Showing profit after tax for the period 2008-2011


PAT 350 300 250 200 150 100 50 0 2008 2009 2010 2011 PAT

From chart 27 it can be seen that during the period 2008-2009 the earnings after tax or profit after tax are increasing slowly, but in the year 2011 the earnings after tax of the company increased to a great extent. In the period 2008-2009 the earnings after tax increased nearly with forty differences, and in the period 20092010 it increased with seventy two difference, but in the year 2011 it increased nearly with the difference of hundred. Even though there is an increase in the Profit after Tax of the company.

CHAPTER VIII

FINDINGS & SUGGESTIONS

FINDINGS
1. The current ratio is gradually increasing year after year.

2.

The cash ratio (or) absolute liquid ratio of the company is not at liquid level during 2006-2007 it was below standard ratio and increasing during 2007-08 and 2008-2009

3.

The liquidity of the company is in a poor condition but it has been improving in the year 2008-2009 compare to the earlier years.

4.

Debtors turnover ratio of the company is in increasing trend during the study period.

5.

The net assets turnover ratio is decreasing from 2008-09. The company is becoming efficient in asset utilization.

6.

The working capital turnover ratio of the company has been increased in 200809 and reduced duly the ie., 2008-09 which shows the company improper utilization of working capital funds.

SUGGESTIONS:

-The expenses towards salaries, dated and taxes etc., should be reduced so that the net profit doesnt fall into negative.

-The cash and Bank Balances should be maintained towards the standards in order to meet its short term obligations.

-The establishment and administrative expenses are needed to be reduced in order to improve profitability.

-The company should reduce its current assets position especially debtors, which is higher so that the net working capital will reduced.

CONCLUSIONS
1. During the period 2005-07 there is a gradual decrease in the operating profit growth rate of the company. Even though there is an increase in the net operating income, the growth rate is decreasing.
2. During the period from 2005-09 there is increase in the rate of material

consumption growth rate of the company, also it can be seen that from the period 2005-2005 the growth rate increased slightly and from the period from 2005-2006 the growth rate plunged to negativity. 3. During the period from 2005-09 the growth rate of manufacturing Expenses have slightly increased, but from the period 2005-2005 has plunged to negativity and then after from the period 2005-2006 the Growth rate has slightly increased. 4. During the period 2005-09 the growth rate of personnel expenses has gradually increased & decreased. 5. During the period 2005-09 there has been gradual increase and decrease in the growth rate of selling expenses of the company. Even though there is an increase in the selling expenses. 6. During the period 2005-2005 there has been gradual increase in the growth rate of administrative expenses and from the period 2005-2005 the growth rate plunged to negativity, and from the period 2005-2006 there has been a gradual increase in the growth rate of the company, in 2006-2007 it slightly decreased. 7. During the period 2005-2006 there has been a gradual decrease in the growth rate of cost of sales of the company. Even though there is an increase in the cost of sales. In 2006-2007 there is slight increase in growth rate. 8. During the period 2005-09 there has been gradual decrease and increase in the growth rate of reported PBDIT of the company. Even though there is an increase in the reported PBDIT in 2005-2005 it increased slightly. 9. During the period 2005-09 there has been a gradual increase in the growth rate of other recurring income of the company.

10.During the period 2005-2005 there has been a gradual increase in the growth rate of adjusted PBDIT, from the period 2005-2005 there is slight increase in the growth rate and from period 2005-2007 there is slight decrease in the growth rate of the company. Even though there is an increase in the adjusted PBDIT. 11.During the period 2005-09 there has been gradual decrease and Increase in the growth rate of depreciation of the company. Even though there is an increase in the depreciation of the company. 12.During the period 2005-2005 the growth rate of other write-offs is Negative and is below zero, in the period 2006 the growth rate of other Write-offs has slightly increased.2007 it again was negative. 13.During the period 2005-2005 the growth rate of adjusted PAT has gradually increased and during the period 2005-2007 the growth rate of adjusted PAT has gradually decreased and during the period 2005-2006 the growth rate of adjusted PAT has further decreased. 14.During the period 2005-2005 the growth rate of reported PAT has gradually increased and during the period 2005-2007 the growth rate of reported PAT has gradually decreased. 15. During the period 2005-2005 the growth rate of equity dividend has zero value, during the period 2005-2005 the growth rate of equity dividend has slightly increased and during the period 2005-2007 the growth rate of equity dividend has gradually decreased.Eventhough there is an increase in Equity Dividend. 16. During the period 2005-09 growth rate of retained earnings was in positive value, during the period 2005-2006 the growth rate of retained earnings has decreased.

BIBLIOGRAPHY

1. FINANCIAL MANAGEMENT -KHAN&JAIN

2. SELF ASSESEMENT

3. 4.

www.icicidirect.com

www.adityabirlagroup.com

5. BUSINESS LINES

6. TIMES OF INDIA

7. ECONOMIC TIMES

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