A Project Report on

FINANCIAL STATEMENT ANALYSIS OF MRF LTD

Submitted to: Gandhinagar Institute of Technology (A Centre for Management Studies)

(AICTE approved & Affiliated to Gujarat Technological University)

Prepared by: Name: Rushang Patel Enrollment No. 127150592031 Under the Guidance of Prof. Milan S. Shah Year- 2012-2013

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Declaration
I, PATEL RUSHANG AMARISHBHAI, hereby declare that the Project Report entitled FINANCIAL STATEMENT ANALYSIS OF MRF. is a result of our own work based on secondary data collected by us and our indebtedness to other work publications, references, if any, have been duly acknowledged.

Place: Motibhoyan Date: 4TH DECEMBER, 2012

PATEL RUSHANG A. En. No.: 127150592031

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Certificate
It is certified that the work presented in this report entitled FINANCIAL STATEMENT ANALYSIS OF MRF has been carried out for partial fulfillment of curriculum for the degree of Master of Business Administration. I further certified that this report has not been submitted elsewhere for a degree. The Information obtained from various sources to present the report has been summarized and acknowledged.

PATEL RUSHANG A. En. No.: 127150592031

Counter signed by

Milan S. Shah HOD, MBA, GIT

Gandhinagar Institute of Technology

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Preface
As an aspirant of MBA, it is of utmost importance to gain practical exposure to the external environment along with the theoretical knowledge. It facilitates better understanding of the theoretical concepts and implications of the same. The subject of Accounting for Managers (AFM) - 2810001, therefore, includes preparation of a project report on the financial statement analysis of a company applying a practical perspective apart from the academics. In competitive corporate world it is very essential for any company to continuously evaluate its performance with the help of financial statements. It is here that the role of financial statement analysis becomes important. The prime object of companys financial reporting is to help its various stakeholders such as present and potential investors, creditors, financial institutions and others in making rational investment, credit and other decisions. Effective decision-making requires accurate evaluation of past performance as well as financial position and assessment of future performance. The purpose of such an analysis is to assess a companys financial health. Financial statement analysis is of different significance to a variety of persons and institutions. Keeping in mind the need of all the concerning parties an attempt has been made to understand, analyze and interpret the past two years financial statements of MRF Limited. The report also includes tables and graphs wherever necessary.

PATEL RUSHANG A En. No.: 127150592031

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Acknowledgements
It gives me immeasurable pleasure, to acknowledge the help and advice given by all the concern people. It is matter of great pleasure for me to get this opportunity of expressing my/our deep and sincere of gratitude to all the faculty members of the Gandhinagar Institute of Technology (Center for Management Studies) for their guidance & generous support that gave me sufficient strength to prepare this project report. I am grateful to Milan S. Shah (HOD-MBA) for help and inspiring guidance without which I would not have successfully completed this report. We also convey our sincere thanks to other employees of the company & staff of the college who have directly or indirectly helped us in getting the required information for preparation of this project report. Place: Motibhoyan Date: 4TH DECEMBER 2012 PATEL RUSHANG A En. No.: 127150592031

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Table of Contents
Title page.............................................................................................................................. 1 Declaration .......................................................................................................................... 2 Certificate ............................................................................................................................ 3 Preface .............................................................................................................................. 4 Acknowledgements ............................................................................................................ 5 Companys background ....................................................................................................... 7 Companys structure...10 P&l Analysis11 Balance sheet Analysis..13 Ratio Analysis.16 Bibliography...25

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COMPANYS BACK GROUND

A young entrepreneur, K. M. Mammen Mappillai, opened a small toy balloon manufacturing unit in a shed at Tiruvottiyur, Madras (now Chennai). MRF ventured into the manufacture of tread rubber. And with that, the first machine, a rubber mill, was installed at the factory. This step into tread-rubber manufacture was later to catapult MRF into a league that few had imagined possible. The quality of the product manufactured was of such a high standard that by the close of 1956, MRF had become the market leader with a 50% share of the tread-rubber market in India. So effective was MRF's hold on the market, that the large multinationals had no other option but to gradually withdraw from the tread rubber business in India. With the success achieved in tread rubber, MRF entered into the manufacture of tyres. MRF established a technical collaboration with the Mansfield Tire & Rubber Company of USA. Around the same time, it also became a public company On June 12, 1963, India's first Prime Minister, Late Pandit Jawaharlal Nehru laid the foundation stone for the Rubber

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Contd
Research Centre at Tiruvottiyur to commemorate the inauguration of the Tiruvottiyur factory.

HISTORY : 1967 1986

MRF became the first Indian company to export tyres to USA - the
very birthplace of tyre technology

MRF inaugurates its Kottayam unit MRF

entered into a technical collaboration with the B.F. Goodrich

Tyre Company of USA, which was involved with the development of tyres for the NASA space-shuttle. With this began a significant exercise in quality improvement and new product development.

MRF tyres were the first tyres selected for fitment onto the Maruti Suzuki 800 - India's first small, modern car.

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Contd
HISTORY : 1987 2008

The MRF Pace Foundation was set up, with international pace bowler, Dennis Lillee as its Director. Not long thereafter, pace bowlers trained at the Foundation were selected for the Indian Cricket Team. The MRF Nylogrip Zapper for two-wheelers is launched

MRF launches the Super Lug 505 - A premium mileage, rear fitment truck tyre for national highway operations on rated roads.

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STRUCTURE

Madras Rubber Factory

Type

Public

Founded

1946

Founder(s)

K.M.Mammen Mappillai

Headquarters

Chennai, India

Key people

Arun Mammen (MD)

Products

Tyres, Toys, Sports Goods,Conveyor belt, Paints & Coats

Revenue

10,670 crore (US$1.94 billion)(2011)

Operating income

893 crore (US$162.53 million)(2011)

Net income

619 crore (US$112.66 million)(2011)

Subsidiaries

Funskool, MRF Pace Foundation, MRF Racing

Website

www.mrftyres.com

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PROFIT AND LOSS ACCOUNT

Income
Operating income 11,850.68 9,716.54

Expenses
Material consumed Manufacturing expenses Personnel expenses Selling expenses Adminstrative expenses Expenses capitalized Cost of sales Operating profit Other recurring income Adjusted PBDIT Financial expenses Depreciation Other write offs Adjusted PBT Tax charges Adjusted PAT Non recurring items Other non cash adjustments Reported net profit Earnigs before appropriation Equity dividend Preference dividend Dividend tax Retained earnings 8,553.26 668.98 513.69 853.75 10,589.68 1,261.00 32.01 1,293.01 158.78 301.11 833.12 260.86 572.26 0.10 572.36 572.36 10.60 1.73 560.03 7,283.46 570.57 446.75 465.30 136.72 8,902.80 813.74 14.10 827.84 93.02 247.63 487.19 274.90 212.29 2.23 404.90 619.42 619.42 10.60 1.73 607.09

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ANALYSIS
From the above profit and loss accounts. we can say that company is earning in good amount In the year 2012 the companies total income is high as compared to the year 2011. The income increased by 2134.14crore in year 2012 as compared to 2011. Even the expense was also the high as compared to the year 2011.

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BALANCE SHEET
Sep ' 12(Rs crore) Sources of funds Owner's fund Equity share capital Share application money Preference share capital Reserves & surplus Loan funds Secured loans Unsecured loans Total Uses of funds Fixed assets Gross block Less : revaluation reserve Less : accumulated depreciation 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 Total Notes: Book value of unquoted investments Market value of quoted investments Contingent liabilities Number of equity sharesoutstanding (Lacs) 424.62 2.83 404.11 42.41 77.49 2.35 551.10 42.41 3,459.11 2,723.04 736.07 4,489.23 3,160.49 2,525.78 634.71 3,814.03 5,062.51 2,148.71 2,913.80 414.65 424.71 3,831.82 1,860.44 1,971.38 1,135.25 72.69 1,433.34 198.09 4,489.23 1,209.30 306.96 3,814.03 4.24 2,853.56 4.24 2,293.53 Sep ' 11(Rs crore)

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ANALYSIS
According to the balance sheet for the year 2011-2012 the liabilities has increased by 197.26crores. In the asset also the companys profit was good so asset also increased and even in fixed deposit also company earns deposit in year 2012.

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RATIO ANALYSIS
Ratio Analysis involves establishing financial relationship between components of financial statements Ratios can be classified into the following categories: i. ii. iii. Profitability Ratios Liquidity Ratios Solvency Ratios

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PROFITABILITY RATIOS
1. Profit Margin Ratio/ Net Profit Ratio/ Return on Sales Ratio: 2011 5.82 % 2012 8.09 %

2011 2012

The profit of the company has been increased as compared to last year.

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2. Assets Turnover Ratio: 2011 2.55 2012 2.85

2011 2012

The company has more assets than it really needs for its operations last year.

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3. Return on Net Worth: 2011 26.95 % 2012 20.02 %

30

25

20

15

10

0 2011 2012

The net profit earned on the equity shareholders funds is low as compared to last year.

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4. Earning Per Share: 2011 97.32 Rs 2012 98.59 Rs

2011 2012

The overall profitability in terms of per share of capital contributed by owners is high as compared to last year.

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LIQUIDITY RATIOS
1. Current Ratio: 2011 0.91 2012 1.47

o The companys current ratio is higher than the ideal ratio 1.33:1 in the year 2012.

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2. Quick Ratio: 2011 0.64 2012 0.66

2011 2012

The companys quick ratio is higher than the ideal ratio 1:1 in the last year.

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SOLVENCY RATIOS

1. Debt-Equity Ratio: 20110.48

20120.38

2011 2012

The debt-equity ratio is lower than the ideal ratio 1.5:1 in the year 2012

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2. Interest Coverage Ratio: 2011 105.39 2012 126.04

The interest coverage ratio is very high in the last year.

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Bibliography

WWW.WIKIPEDIA.COM WWW.MONEYCONTROL.COM WWW.MONEYREDDIF.COM WWW.GOOGLE.COM WWW.BSEINDIA.COM WWW.MRFINDIA.COM

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