A SUMMER INTERNSHIP PROJECT REPORT ON RATIO ANALYSIS OF ANUPAM INDUSTRIES LTD.

ANAND Submitted for the partial fulfillment of Master of Business Administration (MBA) (2010-12) Gujarat Technological University- Ahmedabad

Submitted By: Ankit B. Patel MBA-II (2010-2012) Enrolment No.:107550592024

Internal Guide: Dr. H.N.Misra

Associate Professor

External Guide:
Ms. Bhavika madam (HR Assistant)

Submitted to
SARDAR PATEL COLLEGE OF ADMINISTRATION & MANAGEMENT (SPCAM-MBA) Approved by All India Council for Technical Education (AICTE), New Delhi AFFILIATED WITH GUJARAT TECHNOLOGIACAL UNIVERSITY, AHMEDABAD SPEC Campus, Vidhyanagar- Vadtal Road-388315, Anand (Gujarat)

July-2011

PREFACE
It is true that Experience is the best teacher. The M.B.A. Program is a well structured and integrated course of business management. The rapid growth of IT

industry and the blooming of related industries need the executives with the knowledge, information and practical training in management and IT. The main objective of practical training at M.B.A. level is to develop skills in students by supplementing the theoretical study of business management in general. Industrial training helps to gain real knowledge about the industrial environment and business practices. The M.B.A. programmed provides student with a fundamental knowledge of business and organizational functions and activities as well as an exposure to strategic thinking of management.

In every professional course training is an important factor, students gain theoretical knowledge of various subjects in their respective college but they are practically exposed to such subjects only when they get the training in any

organization. It is only through training that I came to know what an industry is and how it works. I learnt about various departmental operations and how each department plays important role in aiming for the general goal of the company in the industry.

During the whole training, I got a lot of experience and came to know about the management practices in real world and how it differs from the theoretical knowledge that we have studied in our classes.

In today globalize world where cutthroat competition is

prevailing in the

market theoretical knowledge is necessary which would help the individual in his/her carrier activities.

Declaration

I, Ankit B. Patel student of Sadder Patel college of Administration & Management, Bakrol, affiliated to Gujarat Technological University hereby declare that this summer internship project report is a result of my sincere efforts and to the best of my knowledge; no such work has been submitted by any other person for the award of any degree in India or aboard.

Ankit B. Patel MBA- II SEM. 107550592024

ACKNOWLEDGEMENT
It will be my great pleasure to thanks to ANUPAM INDUSTRIES LIMITED for providing a training to carry out the project work. I am also thankful to FINANCIAL DEPARTMENT of ANUPAM INDUSTRIES LTD., who continuously guided and provides training in our concern topic (Ratio Analysis). And I am also thankful to all staff of the industry for their co-operation. It will be a great pleasure and thankful to Mr. T.D. Tiwari sir (Director General of SPEC). I am thankful to the Ms.Bhavika madam (HR Assistant), who continuously guided me during the training as well as supports me for acquiring all the necessary information for the completion of the project. I am also thankful to the Dr. H.N.Misra (Associate Professor) who guides me during the project. Who is allowing me to do the project report. I am thankful to all my friends for providing motivation and support during the project. I am thankful to all who directly or indirectly help to me during my training and making the project.

Submitted By:
Ankit B.Patel. Enrollment no.-107550592024 SIP For year- 2010-2011

EXECUTIVE SUMMARY
During the training of six weeks in ANUPAM INDUSTRIES LTD. which are situated at Anand - Sojitra road. Basically they produced the products related to port industry like Crane. At time of training we find that company can do better profit from last three years. They have lots of competitor in market and as they have quality production, the customers remain for long time as their loyal customers. The other important thing which I believe is that Ratio analysis provides better information about companys financial stand. So from that, the company can make decisions related to future. After completing SIP training, we can define that company position is better as compared to previous two years. Now company profit has increased but its operating expense has also increased because of inflation in market and hike in salary & wages. Now company ratio saw that decrease in their debt and market share price all time increase which is 1440.98.From the data, it can also be concluded that in the last three years PEL also expanded its asset to increase its product and thus compete with its competitor. Company has one minus point and that is collection of payment is done late than the required period. Ration analysis are very important in organization. It will help to make decision regarding future and helping organization to avoid uncertainty. Ratio also classifies all the data in such manner on the financial basis. Ratio Analysis is used in every organization and Ratio has broad scope. It helps Finance Management, Asset Management, and Inventory Control and also helps to build strong financial position of the organization. Ratio has one limit. Sometimes interpretation may be wrong because of lack of information or lack of knowledge of interpreter. At the time of training, some required information was not provided by the company because of their policy. So, it was difficult to calculate the ratios as all the data was not available and hence assumption was taken. The other difficulty is that we have not been provided the Annual report of 2010-11.

INDEX
Chapter No Preface Declaration Certificate from Company Certificate from College Acknowledgement Executive summary 1 1.1 1.2 1.3 2 3 3.1 3.2 3.3 3.4 3.5 3.6 4 4.1 4.2 4.3 5 6 Introduction History and developments General Information of company Finance Department Literature Review Research Methodology Problems Objectives Research Design. Limitations Scope Tools & Techniques Data Analysis & Interpretation Steps Advantages & Limitation Interpretation SWOT Analysis Findings Conclusion & Suggestions Bibliography Annexure 4 5 9 10 11 30 38 40 42 42 43 45 46 47 48 50 51 54 83 86 87 89 90 6 Particular Page No. 2 3

LIST OF TABLES

Table No
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18

Page Particular
Profit & loss Account Balance Sheet Cash flow Statement Current Ratio Description Liquid Ratio Description Quick Ratio Description Debt Equity Ratio Description Total Debt Equity Ratio Description Gross Profit Ratio Description Net Profit Ratio Description Operating Profit Ratio Description Debtors Turnover Ratio Description Creditors Turnover Ratio Description Return on Equity Ratio Description Return on Long-term Fund Ratio Description List of Rato Common size Statement Financial Results

No
31 33 37 55 57 59 62 64 66 68 70 73 75 77 79 81 95 96

LIST OF GRAPHS Graph No

1 2 3 4 5 6 7 8 9 10 11 12 Current Ratio Liquid Ratio Quick Ratio Debt Equity Ratio Total Debt Equity Ratio Gross Profit Ratio Net Profit Ratio Operating Profit Ratio Debtors Turnover Ratio Creditors Turnover Ratio Return on Equity Ratio Return on Long-term Fund Ratio

Page Particular No
56 58 60 63 65 67 69 71 74 76 78 80

1.1 HISTORY AND DEVELOPNMENT

The foundation of Anupam was laid in 1973 by entrepreneur techno craft- shri, J.C.Patel., who had gained rich experience of a decade in crude designing at heavy engineering corporation, Ranchi.

The main trust of company all along has been its proficiency in its design capacity, research, development and satisfaction of its customer.

Anupam Industries Ltd. Having enriched experience of 37 years is one of the market leaders in crude manufacturing in India. In a span of 37 years the company has a satisfied customer base of more than 3500 installation across the globe.

Through its 37 decades long history, Anupam has grown strength to strength and is now a front runner in the crane manufacturing industries.

The company headed by J.C.Patel founder chairman, who is a sound technocrat with a total experience of 4 decades under his leadership a team of young technocrat Mr. Mehul Patel who is managing director and Mrs. Shreya Patel who is executive director both with rich experience are holding different operations of the company. They are backed by a team of professors having experience of more than 3 decades of various functions like designing, engineering, marketing, contracts, finance and operations. Since the Anupam Industry Ltd. has gradually developed its capabilities and have flourished in all horizon. Today Anupam has one of the foremost.

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1.2 General information of company:

Name Registered Office `

: ANUPAM INDUSTRIES LTD

: 138, G.I.D.C. Vitthal udyognagar, Anand. 388121

Telephone no Fax no

: (02692) 236118, 235210, 236324.

: (02692) 236324

E-mail

: [email protected] [email protected] [email protected]

Web-site Year of establishment

: http//www.anupamgroup.com

: 1973

Promoters

: Mr.Jagdishchandra G. Patel.

Board of Directors

:Chairman: Mr. Jagdishchandra Patel Managing Director: Mr. Mehul Patel Executive Director: Mrs. Sherya Patel.

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 Auditors

: Ms. Deloitte Haskins & sells (Chartered accountant) Ahmedabad

CEO Company secretary Bankers

: Mr.N.Nagrajan

: Mr.Dattanand Heranjale : HDFC Bank Ltd. ICICI Bank Ltd. AXIS Bank Ltd. Standard chartered Bank Ltd

Size of the unit Main Product

: Anupam Industry is a medium scale unit.

1) Overhead travelling sot crane up to 500t capacity. 2) Gantry/ Goliath cranes up to 500t capacity. 3) Four glider/ double girder ladle crane up to 500t capacity. 4) Magnet cranes with rotating trolley or rotating spreader beam. 5) Steel plant equipment viz., Coil/ slag pot transfer car, ladle car, ladle. 6) Tower crane. 7) Level puffing crane. 8) Container handling port cranes viz., RMQC, RTGC & RMGC. 9) Heavy duty transfer trolleys.

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 Clients

1. Jindal steel & power ltd. 2. Steel authority of India ltd. 3. L&T special steel & heavy forgings ltd. 4. Ad-hydro power ltd. 5. Alston projects ltd. 6. Hindalco industries ltd. 7. Mahajan co ltd. 8. Nagarjuna construction 9. Maytas infrastructure ltd. 10. L&T ltd. 11. Pipapav shipyard ltd. 12. Abg shipyard ltd. 13. L&T ltd(ship building division) Vision

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

Mission
the globe.

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

Quality policy

Anupam Industries is committed to provide quality products to the customers requirements. Anupam Industries based in the customaries services. Upgrading quality through continuous improvement in all areas of our operation in our mission. Customers satisfaction shall remain our motto & there in our assets. 13

ORGANISATION STRUCTURE

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UNIT - I SHOP AREA ASSEMBLY SHOP 1 : 4300 SQ. M : Span 10M X Ht 6M X L 56.3M : Span 12M X Ht 8M X L 56.3M : 25T - 1 no. & 10T - 2 nos. cranes : Span 14.5M X Ht 6M X L 40M : 10T - 2 nos. cranes : 250 T 1 No. LOAD PIT : 4 to 6 CRANES PER MONTH : 50T

ASSEMBLY SHOP 2

EQUIPPED WITH

STORAGE SHOP 1&2

EQUIPPED WITH LOAD TESTING FACILITY MANUFACTURING CAPACITY LARGEST COMPONENT HANDLING CAPACITY

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UNIT - II SHOP AREA FABRICATION SHOP : 6000 SQ. M : Span 17.5M X Ht 12M X L 100M : 20T -2 nos. & 5T -1 no. cranes : Span 19M X Ht 12M X L 100M : 40/10T -2 nos. & 20T -1 no. cranes : 350 T 2 Nos. LOAD PITS : 8 to 10 CRANES PER MONTH : 100T

EQUIPPED WITH

ASSEMBLY SHOP

EQUIPPED WITH

LOAD TESTING FACILITY

MANUFACTURING CAPACITY LARGEST COMPONENT HANDLING CAPACITY

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UNIT - III SHOP AREA FABRICATION SHOP : 5000 SQ. M : Span 20.0m X H 8.5m X L 78m : 20T - 2 nos. cranes : Span 20.5m X H 8.5m X L 78m : 40/10T - 2 nos. cranes : 350 T 1 No. LOAD PIT : 8 to 10 CRANES PER MONTH : 100T

EQUIPPED WITH ASSEMBLY SHOP

EQUIPPED WITH LOAD TESTING FACILITY MFG./ASSEMBLY CAPACITY

LARGEST COMPONENT HANDLING CAPACITY

17

UNIT - IV (NADIAD) SHOP AREA OPEN AREA FABRICATION/ASSEMBLY BAY-I : 8000 SQ. M : 1500 SQ. M : Span 25M X Ht 7M X L 120M : 20T - 2 nos cranes : Span 17M X Ht 10M X L 120M : 40T - 2 nos. EOT cranes : Span 25M X Ht 12M X L 120M : 10T - 2 nos. EOT cranes : 250T 1 No. and 100T 2 Nos. LOAD PITS : 10 to 15 CRANES PER MONTH : 100T

EQUIPPED WITH FABRICATION/ASSEMBLY BAY-II

EQUIPPED WITH FABRICATION/ASSEMBLY BAY-III

EQUIPPED WITH LOAD TESTING FACILITY

MANUFACTURING CAPACITY

LARGEST COMPONENT HANDLING CAPACITY

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UNIT - V SHOP AREA : 8000 SQ. M + 7000 SQ. M Open Area, Office and Store : Span 13.2M X Ht 6M X L 100M : 10T - 2 nos. & 5T 1 no. cranes : Span 13.2M X Ht 7M X L 100M : 30/5T & 7.5T - 1 no. each cranes : Span 26M X Ht 15M X L 102M : 75/10T - 2 nos. EOT cranes : Span 19.5M X Ht 6M X L 100M : 3T - 4 nos. EOT cranes : 450T 1 No. LOAD PIT :10 to 15 CRANES PER MONTH : 150T

FABRICATION BAY

EQUIPPED WITH

FABRICATION BAY-II

EQUIPPED WITH

ASSEMBLY BAY I

EQUIPPED WITH

ASSEMBLY BAY II

EQUIPPED WITH

LOAD TESTING FACILITY

MFG./ASSEMBLY CAPACITY

LARGEST COMPONENT HANDLING CAPACITY

19

UNIT - VI (ACEPL) SHOP AREA FABRICATION SHOP : 1800 SQ. M : Span 22M X Ht 15M X L 80M : 40/10T - 2 nos. cranes : 4 to 6 CRANES PER MONTH : 100T

EQUIPPED WITH MANUFACTURING CAPACITY

LARGEST COMPONENT HANDLING CAPACITY

STORAGE YARD :YARD-I, YARD-II & YARD-III Aggregated 15000 SQ. M open & close area for raw material, finish products and heavy components storage

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MANUFACTURING PROCES:
Different companies have different types of product and different product has different manufacturing process. Anupam industry limited produces different types of crane. Crane is just widely used in various material handling applications and are highly durable.

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

1. E.O.T. crane 2. Gentry crane 3. Semi portal crane

Every input raw material is inspected tested as per our quality assurance plan. Heat nos. Are allotted to all about raw materials and are transferred even the smallest part of the crane and the same can be co-related with relevant test certificates.

Every manufacturing operation is inspected and build dimensions are recorded in our history and sheet which engages supply of spare as per as build dimensions at any time during the life span of our cranes.

Assembly stand load testing by and handling facilities for manufacturing crane up to 200 tones capacity. Latest sophisticated machines for critical machining operations like gear, hobbling, boring, milling, planning etc... Are available. The company produce different types of product also like:

1. ELECTRICAL PANEL:

Modular design, case to install and maintain, reliable operation baseless circulatory, ducted wiring and compact terminals motor overload protection to prevent over loading.

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2. BRAKES:

Single/dual disc/ shoe electromagnetic/EHT brinks with features like automatic braking on power failure.

3. GEAR BOX

The entire gear boxes are made of accurate hob cut helical/spur gears and pinions having hardness 250 to 350 BHN made from carbon ally steel. All gears and pinions running on antifriction types ball giving constant splash lubrication. The helical/spur gear designed for adequate strength and optimum wear resistance for smooth operation and long life.

4. PAINTING:

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

5. LIMIT SWITCH:

Safety limit switches for shoppers will be provided to prevent over travelling in all motions. CT &LT DRIVE WIRE HOPE HOIST HOSTING GEM BOX FOR CLUCH INVERTOR DAVES

Anupam industry have different department for the work carried out effectively and efficiently. The entire department maintains good interaction with one another. Following are the departments; 22

 Marketing & Sales Department :

Anupam has well organized marketing department. It has enough number of marketing agents & salesmen. Its most important function is to bring orders as without having an order no one will think of producing items. Marketing Department fetches orders from various industries through advertisement, discounts, etc. It brings details depicting clients requirements. The details include technical specifications, terms & conditions, price, delivery date. It also receives payment Design Department :

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

main

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

Copy of the work order is released by marketing department. This copy is given to the design department. Design department released set of part drawing and assembly drawings to the planning department as per design.

Design department maintains drawings of part assemblies, Part and update their drawings if any change occurs in the design. Production Planning & Control :

Once design department prepared the design according to specification requirements, the marketing people show design to customer & make changes if require then the final design comes to ppc department. Now the function of planning starts. 23

They first list out bill of materials in which they decide about make or buy policy. They check whether the material is available or not. If not then they put order to a purchase department. They draw out activity chart for all activity, time for each activity & man hours availability. According to activity chart, they fix the completion date & show it to marketing department. During manufacturing of the product they continuously remain in contact with people & note if the production is carried out as per planning or not.

Purchase department :

Purchase department is involved in purchasing items from the suppliers and selecting & registering the supplier on the basis of their ability to meet specified requirements. It is also responsible for establishing & maintaining the record of acceptable suppliers & evaluation of suppliers. Quality Control Department :

Purchased raw materials and finished items are first inspected by quality control department and after certified by quality control department as flawless, they are taken to the store.

Quality Control Department is also involved in stage inspection and final inspection of product.

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 Maintenance Department :

Maintenance department is responsible for repairing the breakdown machines as soon as possible to reduce machine down time cost. It is also responsible for maintaining data of available machines and equipments.

Store Department :

The function of store is to document a procedure for receipt & issue of material from store & to maintain sufficient inventory level of items to ensure availability of material for production process. Dispatch Department :

Function of dispatch department is to dispatch the product to the client. Human resource management :

respective

Human resource department take care of the employees and as well as the worker. HRD take care of the payment salary as well as the wages to the concern employees or worker on time. And the wages and salary fixed on the basis of the merit of the work and which position employee work. HRD make transfer or promotion of the employees base on the performance system.

HRD arranged the training to the employees time to time for the better improvements of the employee.

HRD also take of the allowances to the employees like travelling, etc. which is fixed by the management of the company. 25

I. TIME KEEPING SYSTEM:

In the industrial would success largely depend upon the business organized time keeping system? Time keeping system helps in knowing about the regularly of worker or employees.

The time keeping system includes work timing of managerial persons, workers and visitors time as well as dinner and lunch time.

In any business organization are need the facility of time keeping system. It is one of the most important in any industry. In Anupam industry limited there are total 370 workers. The time of those workers for working in plant is divided in two shifts. The one is 8:00 am to 4:30 pm and second shift is 4:30 pm to 12:30am. Generally the time of working for official workers is 9:00 am to 6:00pm.

In different industries there is a different time keeping system. In Anupam there is a computerized attendance system. There is a one machine installed in the entrance of the industry. Every employee of the industry had a magnetic card and keep with him/her during the job timing. The magnetic identify card based on the employee number allot to them. At the time of joining the card tank at the entrance and it is not taken into machine. The attendance from the machines is transferred at regular internal to the main computer system available in the company.

There are mainly two shifts.

Shift-1 Shift-2

8:00 am to 4:30 pm 4:30 pm to 12:30am.

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

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II. EMPLOYEE SEVICES:

Employee service is necessary for all industries because by providing service to the employee work efficiency and take interest in work. In different industrial units employee are given different kind of service. According to employee welfare act 1948. Anupam industry limited provides much service to the employee like:

1. Medical facility is given to the employees ensured by the major or minor accident in organization. Medical claims policy given to the family members.

2. Industry also provides incentive for family planning.

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

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

5. The workers of Anupam industry limited. get a financial service from the company they are as follows: Loan and advance at the time of two or three day in replace of land and building. Vehicle loan The worker also get a workmen compensation fund.

Finance Department:

The finance department take care of the all the financial matter of the company. From acquiring fund to proper utilization of the fund and many more which is in terms of finance, the department takes care of all the finance related stuff of the company. We see in detail on some topic of the finance. 27

Finance is regarded as the lifeblood of a business organization. The financial management is concern with procuring of financial resources and its judicious utilization with a view to maximize the shareholders wealth. The finance function is more vital and crucial to organization. Hence there is need for sound and efficient organization for the finance function. A firm should give proper and due attention to organization of its finance department. Organization of finance function differs from firm to firm. It will depend on various factories such as size and nature of firms business capability of the person handling the finance and financial philosophy of the organization. The designation of finance also differs from firm to firm. ANUPAMs organizational structure for finance department is as under:

FUND MANAGEMENT
1. Fund forecasting monthly & weekly. 2. Follow up & arrangement of funds. 3. Handling of petty cash. 4. Ensuring timely legal payment & to vendors.

TAXATION
1. Payment of taxes. 2. Filling monthly, quarterly, annual reports. 3. Audit of reports. 4. Proper deductions of TDS from vendors & payments.

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 COSTING
1. Deciding cost of product

BUDGETING
1. Preparation of budget as per market forecasting 2. Comparing actual with budgeted i.e. variance analysis

AUDITING
1. 2. Filling monthly, quarterly, annual reports. Audit of reports.

OBJECTIVES:

ANUPAM INDUSTRIES LTD believes in themselves and thus has set a few objectives for them which they thrive on: To delight our customers by supplying the required product in time. To attempt continuous improvement in efficiencies and environmental protection. To constantly carry out improvements in our product processes and method. To built relationship with our sub-contractor business associates.

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1.3 INTRODUCTION OF FINANCE Meaning and types of financial statement:

A financial statement to an organized collection of data according to logical and consists accounting procedures. Its purpose is to convey an understanding of some financial of aspects business of a firm. Thus the term financial statement generally refers to two basic statements.

1. The income statement 2. The balance sheet

Financial statement provides information of value of company officials as well as to various outsiders, such as investors and lenders of fund publicity owned companies are required to periodically publish general purpose financial statements that include a balance sheet an income statement issued for external distribution are prepared according to generally accepted accounting principles, which are the guidelines for the content and format of the statements.

Financial statement
Income Balance Sheet Statement of retained Statement earning change of in

(P& L Appropriation financial A/c) (cash fund statement) flow & flow

30

 Income statement (P&L a/c):

It represents the details of earnings achieved for the details periods. It separately amazes revenue and expenses, which result from the companys outgoing major or central. This statement is useful to investors, creditors and other users in determining the profit ability of operations. The income statement must also show earning per share (eps).

ANUPAM INDUSTRIES LIMITED PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31,2011 Schedule Year ended march 31,2011(in rupees) INCOME: Sales Less : Excise duty recovered on sales 3124060857 241560394 2882500463 Erection and Other charges [T.D.S. Rs. 20,77,850/-(P.Y. Rs. 2602744/-)] Other income 12 6934603 2119900 142998477 2135838282 196228750 1939609532 94050651 Year ended march 31,2010(in rupees)

TOTAL : EXPENDITURE: Increased in stock Materials Consumed Manufacturing Expenses Employee Costs Administration & General Expenses Selling & Distribution Expenses Interest & Finance Charges Depreciation/Amortization 13 14 15 16 17 18 19 5

3032433543

2035780083

(167,754,199) 1,969,680,757 66,565,737 109,858,432 94,370,936 84,367,276 139,012,450 40,644,270

(1,376,656) 1,307,620,591 63,564,635 78,957,623 62,317,975 67,077,635 105,345,308 9,061,845

TOTAL:

2,336,745,659

1,692,568,956

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Profit Before Tax: Provision for: Current Tax {Including RS. 36,492/-for Wealth Tax (P.Y.Rs. NIL)} Tax for earlier years Deferred tax Fringe Benefit Tax

695,687,884

343,211,127

238,036,492

105,000,000

4,088,906 13,004,106 ---

318,329 10,676,712 820,760

Profit After Tax: Add: Balance brought forward from p.y Amount available for Appropriations: APPROPRIATIONS: Dividend on Preference Shares Tax on Dividend Transfer to General Reserve

440,558,380 1,866,080 442,424,460

226,395,326 470,754 226,866,080

4,930 819 425,000,000 425,005,749

----------225,000,000 225,000,000

Balance Carried to Balance Sheet: Earnings Per Share Basic Diluted (refer Note-21 of Schedule 21) 115.80 ----Significant Accounting Policies Notes on Accounts 20 21 59.51 59.51 17,418,711 1,866,080

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 Balance Sheet [ statement of financial position ]:

It represents the assets & liabilities, the owners equity of the company at a specific point in time. It is prepared on a particular data while income statement is for a particular period, here the total assets equal (balance) the sources of finding for those resources. Balance Sheet as at 31st March, 2010 Sources Schedule As at 31st March 2010 As at 31st March 2009

SOURCES OF FUNDS Share capital Reserves &surplus 1 2 437943260 969573146 1407516406 LOANS Secured Loans Unsecured Loans 3 4 647716697 32536000 680252697 Differed tax liabilities 29385923 38042260 528949393 566991653 802087357 7713069 809800426 16345194

Total APPLICATION OF FUNDS Fixed Assets Gross Block (-) depreciation Net Block 5

2117155026

1393137273

633108667 65497560 567611107

397098514 24980092 372118422

33

Capital work in progress Investment Current assets Loans & advances Inventories Sundry Debtors 7 8 6

339615

32912948

19900000

1218950

600169056 1668520305 197011292

274038795 1112394029 111869851

Cash & Bank Balance 9

Loans & Advances

10

301733690 2767434343

115392662 1613695337

Less:- Current Liabilities & Provisions

11

Current Liabilities Provisions

1019753303 239965622 1259718925

521808384 105000000 626808384 986886953

Net current assets Miscellaneous expenditure (to the extent not written off or adjusted) Share issue expenses incurred during the year (less) adjusted against share premium account Total

1259718418

21687886

99000

21588886 2117155026

1393137273

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 Statement of changes in financial position

For a better understanding of the affairs of a business, it is essential to identify the movement of working capital or cash in and out of the business. This information is available in the statement of changes in financial position of the business.

Change in working capital position ( fund flow statement ) Change in cash position ( cash flow statement ) Change in overall financial position ( cash flow statement )

The details of the above statement are given below:

1. Fund flow statement

Fund flow statement is a statement depicting change in working capital. It is also termed as statement of sources and application of funds.

It deals with the financial resources required for running the business activities. It explains how the funds were applied during a particular period.

Fund flow statement helps the financial analyst in having more detailed analysis and distribution of resources between two balance sheet dates. Such study is required regarding the future working capital position of the company a projected funds flow statement can be prepared.

2. Cash flow statement

An analysis of cash flows is useful for short-run planning. A firm needs sufficient cash to pay debts maturing in the near future, to pay interest and other expenses and to pay dividends to shareholders. The firm can make projections of cash inflows and outflows for the near future to determine the availability of cash. This cash balance can be matched with firms need for cash during the period, and accordingly arrangements can be made to

35

meet the deficit or invest the surplus cash temporarily. A historical analysis of cash flows provides insight to prepare reliable cash flow projections for the immediate future.

A statement of charges in financial position on cash basis, commonly known as the cash flow statement, summarizes the causes of charges in cash position between dates of the two balance sheets. It indicates the sources and uses of cash. Sources and Uses of Cash

The following are the sources of cash: o The profitable operations of the firm, o Decrease in assets(except cash) o Increase in liabilities(including debentures or bonds), and o Sale proceeds from an ordinary or preference share issue.

The uses of cash are: o The loss from operations, o Increase in assets(except cash), o Decrease in liabilities(including redemption of debentures or bonds), o Redemption of redeemable preference shares and o Cash dividends.

36

Cash Flow Statement for the year ended March 31st, 2010
Particulars Cash flow from operating activities Profit before taxation and extraordinary items: Adjusted for: Depreciation/ Amortization Interest & Finance charges Interest Income Loss on derivatives Loss on sale of fixed assets(net) Bad debts written off Investment written off Unrealized gain on foreign exchange Sub Total Operating Profit before working capital charges Adjusted for: Inventories Trade receivables Loans & Advances Trade Payable and Other Liabilities Sub Total Cash generated from operation activities Less: Taxes paid Net cash from operating activities Cash flow from investing activities Purchase of fixed assets Sale proceeds from fixed assets Investment Net cash used in investing activities Cash flow for financing activities Proceeds from issue of shares Long term borrowings Cash credit & short term borrowings Unsecured loans Loss on derivatives Share issue expenditure Interest & Finance charges paid Interest received Net cash used in financing activities Net Increase / (Decrease) in cash & cash equivalents Cash and cash equivalents as at April 01, 2009 Cash and cash equivalents as at march 31, 2010 March 31, 2010 695687884 40644270 159055183 (20042733) 12652445 68427 12652445 818950 (3835277) 201516884 897204768 (326130261) (568778721) (38662653) 489480202 (444091433) 453113335 (256 767 281) 196346054 (203956549) 324500 (19500000) (223132049) 400000000 (61967307) (89750028) 24822931 (12155619) (21687886) (147377388) 20042733 111927436 85141441 111869851 197011292 March 31. 2009

343211127 9061845 105345303 (6229358) 14264 1274050 109466109 452677236 (57815183) (449689756) (15148781) 164762390 (357891330) 94785906 (86523718) 8262188 (165067077) 218194 (164848883)

59898728 242106646 4727069 (105345308) 6229358 207616493 51029798 60840053 111869851

37

38

Literature Review
Discussion and analysis concerning our future growth perspective are forward looking. In the future number of risk are involved thats why Ratio analysis helps to clarify our future path. There is various way we can analyzed the data among them one of technique is Ratio analysis. The risk and uncertainties regarding fluctuations in earning is only analyzed by ratio analyst. There are number of ratio found by various annalists according to their co. requirement.

Management of Anupam Industries Ltd. Analyze whole data using various Ratio and graph so they can interpret all financial data and identified the company position as well as they also clarified some data in annual report.

39

40

Research Methodology
The basic concept of research methodology refers to the way in which companies conduct their research and how they collect the data they need. Whenever a company or organization needs to investigate a particular area of their business dealings, they need to adapt the most suitable research methodology for the job.

Research methodology typically involves a full breakdown of all the options that have been chosen by a company in order to investigate something. This would include the procedures and techniques used to perform the research; as well as any of the terminology and explanations of how these methods will be applied effectively. A company may need to decide what format of research they want to use before the investigation begins. For example, if a company that sells a particular product needs to launch research to find out how effective or desirable a new product is, they will need to conduct what is known as primary research. This method means that the company will collect data and information themselves first hand.

Alternatively, a company many only require figures or statistical findings that can be located from an external source to themselves. This is known as secondary research, and this area of research methodology typically involves reading published journals, newspapers and other materials to give companies the information they need second hand.

However, research methodology is not always pin-point specific. Many areas of research methodology may simply be referring to a generic path or method that a company will apply in order to retrieve the information they need. Research methodology is the way in which researchers specify how they are going to retrieve the all-important data and information that companies will need to make vital decisions.

41

3.1 Problems:

During the training due to PEL Policy. Some data of company not provided us for analysis so lack of proper information we cannot reach at point decision.

Some data like investment strategy, allocation of fund their depth which are provided but lack transparency we can accept which are provided by him

At the time of training because of work load and meeting they are not respond us and it will take long time for their response

The most important thing is that which we studied in theory some application is different Practical Operation.

3.2 Objectives of Research:

1. 2. 3. To gain familiarity with the presents status of the business. To measure the frequency of occurrences of various parameters/indicators. To reveal the trend and tendencies in the business, i.e., to assess the growth or expansion potential of the business. 4. 5. To identify the influencing factor or determinants of business parameters. To test the significance and validity and reliability of the results.

42

3.3 RESEARCH DESIGN:

Research design or model indicates a plan of action to be carried out in connection with a proposed research work. It provides a guideline f or the researcher to enable him to keep track of his actions and to know that he is moving in the right direction in order to achieve his goal. The purpose of research is to provide information that will aid in management decision making.

TYPES OF RESEARCH DESIGN:

On the basis of the objectives of the marketing research can be classified into:-

I. II.

Exploratory Research Conclusive Research

The research design for exploratory research is best characterized by its lack of structure and flexibility. It is generally used for the development of hypothesis regarding potential opportunities and problems.

Exploratory Research is further subdivided into;

Search of secondary data Case study Survey of experts

Conclusive research which is use to provide information for the evaluation of the alternative courses of action can be sub-divided into : Descriptive research. Causal or experimental research. 43

3.3 LIMITATIONS:
1. The study is based on analytical tools which have their own limitations This applies to this project.

2. The reliability and accuracy of the calculations depends very much in The information found in the balance sheet & its reliability. 3. Absolute reality cant be found in the financial statement.

4. The entire study is based on secondary data.

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

6. The external factors such as fiscal policies, bank rate, government Policies etc. are as applicable in the previous year for the current Trends and their impact is to be professionally changed.

44

3.4 Scope of research:

1. National innovative capacity : modeling, measuring and comparing national capacities 2. Designing efficient incentive systems for invention and innovation : intellectual property rights, prizes, public subsidies 3. Research in EPFL labs : new economics of science 4. New R&D methods and the production of reliable knowledge in sectors which lagged behind 5. New models of innovation: open, distributed systems and the role of users. 6. Other issues to be developed.

Source of secondary data: Most of the calculations are made on the financial statement of the company provided statement. Referring standard text and refer book collected some of the information regarding theoretical aspect. Method to access the performance of the company method of observation of the work in finance department in followed.

ADVANTAGES OF SECONDARY DATA:

-

The major advantage of secondary data is economy. As the data are already available, they can be obtained at a relatively low cost. The secondary data can be obtained quickly. The secondary data enable the researchers to identify the deficiencies in the data.

They are useful in the case of exploratory researches as they provide increased understanding of the problem. 45

 LIMITATIONS OF SECONDARY DATA :

The available data may not suit the current purpose of research, due to incompleteness, generalities and so on. Informat ion may be outdated or obsolete.

The methodology used in collecting the data such as the sample size, date of the research, etc., may be unknown.

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

Conflicting data may exist.

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

46

3.5 TOOLS AND TECHNIQUES OF ANALYSIS

The following tools and techniques have been used for analyzing the collected data. In this project report, I have used ratio analysis to make the financial analysis of the various companies.

1. RATIO TECHNIQUE:

Financial ratio analysis refers to the mathematical expression of relationship between two accounting figures drawn either from balance sheet or from profit and loss account or both.

2. STATISTICAL TOOLS USED

The statistical tools used in this project are different formulas. Different kinds of graphs are used in making this project.

3. PROCESSING AND ANALYZING DATA

Once all the information was available from the financial report, I started processing data by way of various tables & graphs showing the results. The analysis of a data helps a person to come on conclusion and serve the purpose for him. With the help of this analysis the management can know regarding the level of management being run in the company.

4. PREPARING THE REPORT

After the above data was tabulated, interpreted and analyzed the report was prepared embodying the findings of research. Modest attempts were made to keep objectivity coherence and clarity in presentation of ideas and use charts and graphs.

47

48

Data Analysis & Interpretation

RATIO ANALYSIS:
Ratio analysis is one of the techniques of financial analysis where ratios are used as a yardstick for evaluating the financial condition and performance of a company. The analysis and interpretation of various accounting ratios gives a skilled and experienced analyst, a better understanding of the financial condition and performance of the firm than what could have obtain only through a pleural financial statement.

The most important task of a financial manager is to interpret the financial information in such a manner, that it can be well understood by the people, who are not well versed in financial information figures. The technique, by which it is to be calculated, is known as Ratio Analysis

1) Percentage. 2) Rate. 3) Proportion

Ratio analysis is an important technique of financial analysis. It depicts the efficiency or shortfall of the organization in the form of trend Analysis. Different ratio appeal to different people managements, having the task of running business efficiency, will interest in all ratio. A supplier of goods on credit will be partially in liquidity ratios, which indicate the ability of business to purchase. Existing and future shareholders will interest in investment ratios, which indicate the level of return that can be expected on an investment in business. Major customers, intent on having a continuing source of supply, will be interested in the financial stability, as reveled by the capital structure, liquidity, and profitability ratios. Debentures and loan stockholders will be interested in ability of a business will be interested in the ability of a business to pay interest, and ultimately to repay capital. A banker, gibing only short-term loans, will be interested mainly in the liquidity of the business, and its ability to repay those loans.

49

4.1 STEPS IN RATIO ANALYSIS

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

II.

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

III.

Interpretation, drawing of the inference and report writing.

50

4.2 ADVANTAGES OF RATIO ANALYSIS

Ratio analysis is a very important and useful tool for financial analysis. It serves much purpose and is useful not only for internal management but for prospective investors, creditors and other outsiders. The following are the important uses (advantages) of Ratio Analysis.

It is important and useful to check upon the efficiency with which the Working capital is being used (managed) in a business enterprise. It helps the management of business concern in evaluating its financial position and efficiency of performance. It serves as a sort of health test of business firm, because with the help of these analyses financial managers can determine whether the firm is financially healthy or not. A Ratio Analysis covering a number of past accounting (financial), periods clearly shows the trend of changes in the business position. It helps in making financial estimates for the future. It helps the task of managerial control largely. It helps the credit suppliers and investors in evaluating a business firm as a desirable debtor or as a potential investment outlet. With the help of this analysis standard ratios can be established and these can be used for the purpose the comparison of a firms progress and performance.

This analysis communicates important information regarding financial strength and standing, earning capacity, debt capacity, liquidity position, capacity to meet fixed commitments.

This analysis may be employed for comparing the working result and efficiency of performance of a business enterprise with that of other enterprises engaged in the same industry. It helps the management or business concern to discharge their basic functions of planning, coordinating, controlling, etc. It serves as an instrument for testing management efficiency. It sometimes provides a useful tool for decisions on certain policy matters.

51

 LIMITATIONS OF RATIO ANALYSIS

Accounting ratios (calculated under the system of the ratio analysis) will be correct only if the accounting data (figures), on which their based is correct. It is mainly a historical analyses or an analysis of the post financial date. About profits of a business concern, ratio analysis may be misleading in certain circumstances. Continuously changes in price levels (or purchasing power of money) seriously affect the validity of comparison of accounting (financial) periods and make such comparisons very difficult. The comparison become difficult also because of difference in the definition of several financial accounting terms like gross profit, operating profit, net profit, and account of considerable diversity in practice as regards their measurement. The validity of comparison is also seriously affected by window dressing in the basic financial statements and by differences in accounting methods used by different business concerns. A single ratio will not be able to convey much information required for Proper decisionmaking. This analysis gives only a part of the total information required for Proper decision-making. Ratio analysis should not be taken as substitute for sound judgment. It should not be overlooked that business problem cannot be solved simple mechanically through ratio analysis or other types of financial analysis.

52

DIFFERENT TYPES OF RATIO

LIQUIDITY RATIOS 1. Current ratios
2. Liquid ratio 3. Quick ratio PROFITABILITY RATIOS

1. Gross Profit to Sales Ratio

2. Net Profit to Sales Ratio 3. Operating Profit Ratio 4. Operating Earnings Ratio 5. Administrative Expense Ratio 6. Selling Expense Ratio 7. Return on Total Asset Ratio 8. Operating Ratio 9. Return on Capital Employed Ratio 10. Return on Shareholders Ratio SOLVANCY RATIOS 1. Debt Equity Ratio 2. Interest Coverage Ratio 3. Dividend Coverage Ratio ACTIVITY RATIOS 1. Debtors Ratio 2. Creditors Ratio VALUATION RATIOS 1. Earnings per Share Ratio 2. Dividend per Share Ratio 3. Payout Ratio 4. Price Earnings Ratio 5. Yield Ratio

53

4.3 Analysis and interpretation of ratio

LIQUIDITY RATIO :-

The importance of adequate liquidity in the sense of the ability of a firm to meet current or short-term obligation when they become due for payment can hardly be overstressed. In fact, liquidity is a prerequisite for the very survival of a firm. The short term creditors of the firm are interested in the short term solvency or liquidity of the firm, but liquidity implies , from the view point of utilization of the funds of the firm, the funds are idle or they earn very little. A proper balance between the two contradictory requirements that is liquidity and profitability is required for efficient financial management. The important liquidity ratios are as under.

1) CURRENT RATIO: 2) LIQUID RATIO: 3) QUICK RATIO:

54

4.1.1 CURRENT RATIO :Formula: C.R. = CURRENT ASSETS CURRRENT LIABILIES RATIO DISCRIPTION:Table 1: Current ratio of Anupam Industries Ltd PARTICULARS 2009-10 Rupees CURRENT ASSETS Inventories Sundry debtors Cash & Bank Loans and Advances CURRENT LIABILIES Other creditors Advances from customers Other liabilities Provision Total Source: 2767434343 600169056 1668520305 197011292 301733690 1259718925 756104295 165775479 97873529 239965622 1507715418 2008-09 Rupees 1613695337 274038795 1112394029 111869851 115392662 1571808384 320753976 166182942 34871466 1050000000 41886953

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

2009-10

2767434343 1259718925

= 2008-09 =

2.20:1 1613695337 1571808384

2.57:1
55

Graph: Current ratio of Anupam Industries Ltd.

ITERPRETATION: This ratio is an indicator of the firms commitment to meet its shortterm liabilities. It is expressed as in the formula. Current assets means assets means that will either be used up or converted into cash within a year time or during the normal operating cycle of the business, whichever is longer. Current liabilities mean liabilities payable within a year or during the operating cycle whichever is longer.

The ideal current ratio is 2:1. The ratio of two is considered as safe margin of solvency because if the current assets are reduced to half i.e. one their payment in full. From the above table of current ratio, it is clear that the companys current is more than the ideal ratio. Therefore, it can be said that creditors are safe in the company. The companys current ratio has remained satisfactory for the last two years.

56

4.1.2 Formula:

LIQUID RATIO current assets stock

Liquid ratio

Current: liability bank borrowings

RATIO DISCRIPTION Table 2: Liquid ratio of Anupam Industries Ltd PARTICULARS Current Assets Stock Current Liability 2009-10 2767434343 167754199 1259718925 2008-09 1613695337 1376656 1571808384

Source:

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

2009-10

2767434343-167754199 1259718925

1.72:1

2008-09

1613695337-1376656 1571808384

2.14:1

57

Graph: Liquid ratio of Anupam Industries Ltd.

INTERPRETATION:

The liquid ratio can be improved by, Increasing equity share capital Retaining profits in business Issue of debentures Increasing long term loan Increase long term fund as invested in all current assets except inventories By increasing proportion of bank borrowings for working capital in current liabilities

58

4.1.3 Formula:

QUICK RATIO:-

Quick ratio

Quick assets

Current liabilities RATIO DISCRIPTION Table 3: Quick ratio of Anupam Industries Ltd YEAR QUICK ASSETS CURRENT LIABILITES Source: 2009-10 197011292 1259718925 2008-09 111869851 1571808384

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

2009-10

197011292 1259718925 = 0.16:1

2008-09

111869851 1571808384

0.17:1

59

Graph: Quick ratio of Anupam Industries Ltd.

INTERPRETATION:

Quick ratio is also called acid test ratio. It is the ratio between quick current assets and current liabilities. It is calculated by dividing the quick assets by current claim. Quick ratio is the measurement of firms ability to convert its current assets quickly into cash in order to meet its current claim. The term quick assets refer to current assets, which can be converted into, cash immediately or at a short notice without reduction in value of quick ratio.

Quick assets =stock, due from societies, advances, trade and sundry Debtors cash and bank balance

The ideal quick ratio is 1:1. In ANUPAM INDUSTRIES ltd., the quick ratio is less than one in both years. The reason is continuous increase in the current liability.

60

4.2

LEVERAGE RATIO

In the short term creditors like bankers and suppliers of raw material; are more concerned with firms current debt-paying ability, on the other hand, long-term creditors like debenture holders, financial institution are more concerned with the firms long term financial strength in fact a firm should have short as well as long term financial position. To judge the long term financial position of the firm is financial leverage or capital structure ratios are calculated. These ratios indicated funds provided by owners and lenders. As a rule, there should be an appropriate mix of debt and owners equity in financing the firms assets. The important liquidity ratios are as under,

4.2.1 DEBT TO EQUITY RATIO 4.2.2 TOTAL DEBT TO EQUITY RATIO

61

4.2.1 DEBT TO EQUITY RATIO Formula: D.T.E. = DEBT EQUIT RATIO DISCRIPTION Table 4: Debt Equity ratio of Anupam Industries Ltd. Particular DEBT Secured Loan Unsecured Loan Equity Equity Share Capital Reserves And Surplus Source: 437943260 969573146 38042260 528949393 647746697 32536000 802087357 7713069 2009-10 2008-09

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

2009-10

680282697 1407516406

0.48:1

2008-09

809800426 566991653

1.43:1

62

Graph: Debt Equity ratio of Anupam Industries Ltd.

INTERPRETATION:

High ratio indicates higher stake of outsiders in business compare to stake of owners.

Debt equity ratio can be increase by, Increasing debenture or long term loans or deferred payment liability decreasing equity losses. The ratio can be reduced by reverse of above three measures. It can also be reduced by conversion of loan/debenture into equity. It can also be reduced by retaining of profits.

63

4.2.2 TOTAL DEBT TO EQUITY RATIO Formula: T.D.T.E. = TOTAL DEBT EQUITY RATIO DISCRIPTION Table 5: Total Debt Equity ratio of Anupam Industries Ltd PARTICULARS TOTAL DEBT Secured loan Unsecured loan Current Liability EQUITY Equity Share Capital Reserves And Surplus Source: 437943260 969573146 38042260 528949393 647746697 32536000 1019753303 802087357 7713069 521808384 2009-10 2008-09

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

2009-10

1700036000 1013367466

1.68:1

2008-09

1331608810 566991653

2.35:1

64

Graph: Total Debt Equity ratio of Anupam Industries Ltd.

INTERPRETATION: The high total debt to equity ratio indicates higher stake of outsiders in business compare to stake of owners. Total debt to equity ratio can be decrease by, Reduction in term borrowings Reduction in funds by utilizing fresh equity proceeds Reduction in retain profits Reducing level of credit given to customers & by availing lesser credit period from suppliers By increase of equity due to fresh issue or due to retain profits By conversion of debentures/loans into equity

65

4.3 PROFITIBILITY RATIO

A company should earn profit to survive and grow over a long period. Profit are essential but it would be wrong to assume that every action initiated by management of a company should be aimed at maximizing profits irrespective of social consequences and profits is looked upon as a term of above since some firms always want to maximize profits at due cost of employees , customers, and society. Except such infrequent cases, it is fact profit must be earned to sustain the operation of the business to be able to obtain funds from investors for expansion and growth and to contribute towards the social overhead for the welfare of society. Profit is the difference between revenues and expenses over a period. Profit is the ultimate output of the company; and it will have no future if it fails to make sufficient profits. Therefore financial manager should continuously evaluate the efficiency of its company in term of profits. Generally, two types of profitability ratios are calculated. Profitability in relation to sales Profitability in relation to investment.

The important profitability ratios are as under, 4.3.1 GROSS PROFIT TO SALES RATIO 4.3.2 NET PROFIT TO SALES RATIO 4.3.3 OPERATING PROFIT RATIO

66

4.3.1 GROSS PROFIT RATIO Formula: G.P. = GROSS PROFIT 100 SALES RATIO DISCRIPTION Table 6: Gross Profit ratio of Anupam Industries Ltd PARTICULARS SALES LESS: COST OF SALES Add: employee cost Manufacturing exp. Material consume Increase/(decrease) in stock Gross profit Source: 109858432 66565737 1969680757 (167754199) 1157006645 78957623 63564635 1307620591 (1376656) 663851613 2009-10 2882500463 2008-09 1939609532

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

2009-10

115700645 100 2882500463

40%

2008-09

663851613 100 1939609532

34.23%

67

Graph: Gross Profit ratio of Anupam Industries Ltd.

INTERPRETATION: Improvements in G.P. to sales ratio can be due to following, Sales price has been increase due to better market condition/better competitive position. Reduction in raw material cost per unit of production due to use of lower quality of raw material. Reduction in wages cost can be due to voluntary wages cut or change in labor reward policy leading to higher efficiency. Reduction in cost of power and fuel due to reduction in rate per unit charged. Reduction in gross profit can be due to following reasons, Reduction in administrative cost to sales ratio Reduction in interest cost to sales ratio Reduction selling & distribution cost to sales ratio

68

4.3.1 NET PROFIT RATIO Formula: N.P = NET PROFIT 100 SALES RATIO DISCRIPTION: Table 7: Net Profit ratio of Anupam Industries Ltd PARTICULARS 2009-10 2008-09

Sales

2882500463

1939609532

Net Profit

440558680

226395326

Source:

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

2009-10

440558680 100 2882500463

15.28%

2008-09

226395326 100 1939609532

11.67%

69

Graph: Net Profit ratio of Anupam Industries Ltd.

INTERPRETATION: Favorable change in Net profit ratio can be due to, Reduction in tax rate Obtaining of some relief/allowance/reduction in tax liability. Unfavorable change could take place due to reverse of above situation. Reduction in profitability may not conclusively establish inefficiency of management since when market conditions are bad even most efficient person may not be able to make profits. In very bad conditions, a business concern may able to manage break even or only marginal losses can be termed as efficient. Low profit in teething period, due to introduction of new product, depression/recession period can be justified. Losses/low profits due to accident/mishap can be excused.

70

4.3.1 OPERATING PROFIT RATIO Formula: O.P. Ratio = NET PROFIT + TAX SALES

RATIO DISCRIPTION Table 8: Operating Profit ratio of Anupam Industries Ltd PARTICULARS Sales Net Profit Tax Source: 2009-10 2882500463 440558680 255129504 2008-09 1939609532 226395326 107205801

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

2009-10

440558680+255129504100 2882500463

24.13%

2008-09

226395326+107205801 100 1939609532

17.20%

71

Graph: Operating Profit ratio of Anupam Industries Ltd.

INTERPRETATION: Change in operating profit ratio can be due to following reasons apart from the reasons of change in gross profit ratio. The ratio can be improved due to reduction in administrative cost to sales ratio Reduction in interest cost to sales ratio Reduction in selling & distribution cost to sales ratio Increase in miscellaneous income, income from investment, rent income from rented portion of premises The increase can also be due to abnormal gains, refund of expenses paid in previous year due to favorable court judgment By improvement in sales with expenses constant/rise it a low percentage compare to percentage increase in sales

72

4.4 MANAGEMENT EFFICIENCY RATIO:

These ratios are concerned with measuring the efficiency in assets management. These ratios are also called asset utilization ratios. The efficiency with which the assets are used would be reflected in the speed and rapidly with which assets are converted into sales. The greater is the rate of turnover or conversion the more efficient is the utilization of assets, other thing being equal. For this reason, such ratios are also designed as turnover ratios. An activity ratio may therefore be defined as a test of the relationship between sales and various assets of the firm. Depending upon the various types of assets

The important management efficiency ratios are as under,

4.4.1 DEBTORS TURNOVER RATIO 4.4.2 CREDITORS TURNOVER RATIO

73

4.4.1 DEBTORS TURN OVER RAIO Formula:

D.T.R. = CREDIT SALES DEBTORS + BILLS RECEIVABLES

Debtors velocity ratio = DEBTORS + BILLS RECEIVABLES 365 CREDIT SALES

RATIO DISCRIPTION Table 9: Debtors Turnover ratio of Anupam Industries Ltd PARTICULARS DEBTORS BILLS RECIVABLES CREDIT SALES Source: 2009-10 1668520305 2882500463 2008-09 1112394029 1939609532

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

PARTICULARS

2009-10

2008-09

D.T.R

2882500463 1668520305+0 = 1.73 times

1939609532 1112394029+0 = 1.74 times

D.V.R

= 1668520305+0 *365 = 1112394029+0 *365 2882500463 1939609532

= 211 days

= 209 days

74

Graph: Debtors Turnover ratio of Anupam Industries Ltd.

INTERPRETATION:

The ratio gives number of days the receivables are outstanding. Another ratio to see reasonableness of receivables is to see turnover of receivables. The ratio is calculated as above. The higher the turnover & lower the turnover days receivables better it is. However higher turnover/lesser number of receivables days should not be at cost of sales/profitability. If period of credit is reduced by offering high cash discount, the same is not a matter to be appreciated.

75

4.4.2 CREDITORS TURNOVER RATIO Formula:

C.T.R. = CREDIT PURCHASE CREDITORS + BILLS PAYABLES

Creditors Velocity Ratio = CREDITORS + BILLS PAYABLES 365 CREDIT PURCHASE

RATIO DISCRIPTION Table 10: Creditors Turnover ratio of Anupam Industries Ltd PARTICULARS CREDITORS BILLS PAYABLES CREDIT PURCHASE Source: 2009-10 756104295 1969680757 2008-09 320753976 1307620591

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

PARTICULARS C.T.R

2009-10 = 1969680757 756104295+0

2008-09 = 1307620591 320753976+0

= 2.61 times C.V.R = 756104295+0 365 1969680757

= 4.08 times = 320753976+0 365 1307620591

= 140 days

= 90 days

76

Graph: Debtors Turnover ratio of Anupam Industries Ltd.

INTERPRETATION:

The ratio gives credit obtains from suppliers in number of days. The adequacy of credit obtained is also measured by credit purchased creditors for goods bills payable. Higher the numbers of days credit obtain or lesser the turnover of the creditors better is ability to obtain credit. However higher credit obtain should not be at cost of high purchase cost, low quality, spoiling goodwill amongst suppliers. If credit period is reduced by availing substantial cash discount, the same is appreciable.

77

4.5

RETURN RATIOS

The important return ratios are as under,

4.5.1 RETURN ON EQUITY 4.5.2 RETURN ON LONG TERM FUND

4.5.1 RETURN ON EQUITY Formula: R.O.E. = NET PROFIT 100 EQUITY RATIO DISCRIPTION Table 11: Return on Equity ratio of Anupam Industries Ltd PARTICULARS NET PROFIT EQUITY RESERVR & SURPLUS Source: 2009-10 440558380 437943260 969573146 2008-09 226395326 38042260 528949393

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

2009-10

440558380100 437943260+969573146

43.92%

2008-09

226395326 100 38042260+528949393

39.93%

78

Graph: Return on Equity ratio of Anupam Industries Ltd

INTERPRETATION:

The ratio is broken up in three parts, NET PROFIT SALES SALES ASSETS ASSETS EQUITY

The improvement in the ratio can be brought about by increasing ratio of net profit to sales. By increase in sales with better utilization of assets & by reducing share of equity in financing assets. i.e. trading on equity- only if rate of earning is higher than net cost of funds (after tax) The reduction ratio could come due to reverse situation than above. Justification for low rate of return on equity; 1. troubles of a new business concern 2. New product development period 3. Interest cost has gone up due to hike in interest rate reduction in tax rate.

79

4.5.2 RETURN ON LONG TERM FUND Formula: R.O.L.F. = PROFIT BEFORE TAX+INTEREST (1-TAX RATE) 100 EQUITY+LONG TERM FUND RATIO DISCRIPTION Table 12: Return on Long term ratio of Anupam Industries Ltd PARTICULARS Profit Before Tax Interest Tax Rate Equity Long Term Fund Source: 2009-10 695687884 139012450 30% 437943260 2008-09 343211127 105345308 30% 38042260 -

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

2009-10

695687884+139012450 (1-30%) 100 437943260+0

11.51%

2008-09

343211127+105345308 (1-30%) 100 38042260+0

5.98%

80

Graph: Return on Long term ratio of Anupam Industries Ltd

INTERPRETATION:

The improvement in the ratio can be brought about by, Improving profit before tax Reduction in tax rate Reduction in long term funds including equity

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CHART OF RATIOS

Ratios
Gross Profit Ratio Net Profit Ratio Operating Ratio Operating Profit Ratio Current Ratio Liquid Ratio Quick Ratio Debtors Ratio Debtors collection period Creditors Ratio Creditors payment period Debt- Equity Ratio Total Debt-Equity Ratio Return on Equity Earnings Per Share 40.14% 15.28% 75.83% 24.13% 2.20:1 1.72:1 0.16:1

2009-10

2008-09
34.23% 11.67% 80.77% 17.20% 2.57:1 2.14:1 0.18:1 1.74 Times 209.33 Days 4.08 Times 89.53 Days 1.43:1 2.34:1 39.93% 59.51 Per share

1.73 Times 211.28 Days 2.61 Times 140.11 Days 0.48:1 1.28:1 31.30% 115.81 Per share

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SWOT ANALYSIS OF ANUPAM INDUSTRIES LTD.

STRENGTH

WEAKNESS

Highly equipped production shop.

Prices vary through competition in these segments, Law margins.

Better infrastructure. Customer expectations in terms of delivery, discount and customization are very high.

Reputation in manufacturing crane lined equipment

Provide better quality in accordance with customer requirement. By taking just in time delivery approach

No focus from regional offices. All enquires and subsequent follow up divert to HEAD OFFICE.

Delivery adherence Product caters to all requirements in all fields

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OPPORTUNITY

THREATS

Vast potential in the market. Pneumatic valves are increasingly becoming a part of every process module as the market moves towards automation.

Small scale , low cost competitors are thronging in the market and eroding our share with product of comparable performance

After sales services and complaint management

Different competitors for different segments.

Market driven by prices and delivery. Establishing a dealer network shall enable better focus on these products. Cheap Chinese/ South East Asian imports.

Competition from various competitors, especially Elicon.

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Findings
1. Through the study I found that awareness regarding companys financial information. 2. It is found that company position is well than past year because their management is good.

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

4. Anupam group has developed the think tank who continuously updates strategy in the right direction. Think win-win & Stay ahead with us. 5. Companys profit is more than past year.

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

7. Company has no need to give any advertisement for their increase in profit because mostly the other company knows this company.

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

9. Assets are expected to produce higher future revenues.

10. Recently company has acquired more space where its entire production and storage unit will be shifted.

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Conclusion
Financial term and Operation of that company that is manufacturing is very important for the company. We know that financial statement of a business organization are very useful to different parties such as management, shareholders, creditors, investors, banks, financial institution, government authorities etc. Information provided in the financial statements serves no purpose unless it is analyzed and interpreted in some comparable terms. To obtain the data analysis and interpretation of the data, it can be done with the help of working capital and ratio analysis. It is important tool for financial analysis and it is used as yardstick for examine the financial position of any business organization. An Anupam industry limited is a well established organization in the field of CRANE manufacturing since last 3 decades. It has an enormous popularity in this field. The profitability ratio of the company indicates a good position. Anupam industries limiteds liquid position is also good. This shows that company is capable of meeting its short term resources. The position of the solvency ratio of the company is also good at the composition of a capital of a business and proportion of owners capital. Operating ratio decrease from 80% to near 75% which is very good sign for the company it shows the how efficiency increases of the management. And the operating profit ratio increase almost by 7% it is good for the company. In 2009-10 the companys unsecured loan increase its show the companys market reputation. On the basis of the data analysis and interpretation we can say that the companys management is very efficient and active. Thus overall position of the company is satisfactory and up to the standard.

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Suggestions
Company should reduce its administration expenses because gross profit is around the 40% and the net profit is around the 15% of the net sales. Company should increase its net profit by reducing the administration expenses. Companys current ratio showing decreasing trend but still in year 2009-10 the ratio is 2.20:1 which is high. Company have much current assets as compare to the current liability company should find out the investment proposal for the short period which is generate the income and also the that investment is flexible so it easily convert in the benefit of the company. Company should maintain a standard level and other current assets should not remain idle in company. Company should improve its quick ratio. Company should maintain 0.5:1 as per the standard or around there. Because company quick ratio is almost 0.16:1. That is not good. Company should maintain its cash level or increase cash holding in bank. Companys debtors ratio and debtors collection period is need to improve. For that company should need to improve the credit policy of the company. Company need to improve its Return on equity ratio. In the year 2009-10, the ratio is around 31%. And in the year 2008-09, the ratio around 39%. It is show that company return on equity ratio is decreasing trend. Company need to improve ratio. Return on equity attract the investors I the company and such decreasing trend investor may hesitate in investing in the company.

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Bibliography References:

Pandey, I.M. (2010), Financial Management, 10th edition, Vikas publishing house pvt. Ltd, Delhi Amrish Gupta (2008), Financial Accounting for Management, 3rd edition, Kindersley (India) pvt. Ltd, licensees of Pearson education in south Asia.

Websites:
www.anupangroup.com

Other Reference:

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

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ANNEXURE DIRECTORS REPORT

Information required the under Section 217(1) (e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Directors) Rules, 1988:

1. CONSERVATION OF ENERGY:

a) Energy Conservation measures taken:Constant improvements are being effected in the manufacturing process to aid energy conservation and this has been taken up, as an ongoing exercise

b) Additional investment and proposals, if any, being implemented for reduction of consumption of energy: No major specific investments were made during the year under review and there are no plans for additional investment for reduction of power in the coming year.

c) Impact of the measures at (a) & (b) above for reduction of energy consumption and consequent impact on the cost of production of goods: Implementation of the above referred measures taken of energy conservation has resulted in reducing consumption of power and fuel.

2. TECHNOLOGY ABSORPTION:

I. RESEARCH & DEVELOPMENT:

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

The company has started a new vertical namely standard Crane kits and Hoists. This activity requires development of designs and specifications and validation of design by continuous testing.

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

Benefits are expected to flow on commencement of marketing of standard Cranes Kits and Hoists. The Company will also be in a position to incorporate in house designed modular cranes in their supplies to customers, besides setting up an independent marketing arrangement for this segment.

c) Future plan of action:

The Company has no specific plans on R&D

d) Expenditure on Research & development:

Since the company does not have separate R&D Cell, there is no distinct expenditure under the head Research and Development.

II. TECHNOLOGY ABSORPTION:

a) The technology absorption from the Russian partner in respect of Salem steel Plant, Salem order execution was put into use and concludes successfully with erection of 7 cranes out of the total 11 cranes at Salem steel plant site.

Likewise, the design assistance from TM Crane-Export Limited, Cyprus was converted into the manufacturing drawings and all crane suppliers to Steel Authority of India Limited, IISCO, and Burnpur completed before 31-03-2010

b) Benefits derived as a result of the above efforts: Improvement in quality of product and climb up in value chain has been achieved besides registering a solid presence in the important ladle crane segment.

The company now has emerged as one of the very few Indian manufacturers for supply of large ladle cranes for steel plants and in general, melting shops. This will enable the

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company to continue to remain one of the prequalified vendors for supply of large ladle cranes. c) Technology imported during the last five years: During the year under review all the design and manufacturing drawing from ALFA, S.R.L., and Italy for two types of Tower cranes was put into use and 1st batch of Tower cranes made with the imported licensed drawings/technology.

III. FOREIGN EXCHANGE EARNING AND OUTGO:

Foreign exchange earned by the company during the year amounted to current years Rs. NIL (Previous years Rs.1, 38, 05,534/-). Expenditure in foreign currency during current year amounted to Rs. 23, 14, 66,108 (previous years Rs.7, 30, 23,773/-), including remittances for design help and capital imports, details of which are given in Notes to Accounts.

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AUDITORS REPORT
1. The auditors have audited the attached balance sheet of Anupam Industries Limited as at 31st March 2010, the profit and loss account and the cash flow statement of the company for the year ended on that date, both annexed thereto. These financial statements are the responsibility of the companys management.

2. They conducted their audit in accordance with the auditing standard generally accepted in India. Those standards require that they plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and the disclosures in the financial statement. An audit also includes assessing the accounting principles used and the significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that their audit provides a reasonable basis for their opinion.

3. As required by the companies (Auditors Report) order, 2003 issued by the Central Government of India in terms of section 227(4A) of the Companies Act, 1956, they give in the annexure, a statement on the matters specified in paragraphs 4 and 5 of the said order.

4. Further to our comments in the Annexure referred to above, they report that: i. They have obtained all the information and explanation which to the best of our knowledge and belief were necessary for the purpose of our audit; ii. In their opinion, proper books of account as required by law have been kept by the company as far as appears from their examination of those books. iii. The Balance Sheet, the Profit and Loss account and the Cash Flow Statement dealt with by this report are in agreement with the books of accounts;

In their opinion, the Balance Sheet, the Profit and Loss account and the Cash Flow Statement dealt with by this report are in compliance with the accounting standards referred to in section 211(3C) of the Companies Act,1956;In their opinion and to the best of our information and according to the explanations given to us, they said accounts give 93

the information required by the Companies Act,11956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India. i. In the case of the Balance Sheet, of the state of affairs of the Company as at 31st March 2010. ii. In the case of the Profit and Loss account, of the profit for the year ended on that date; and iii. In the case of the Cash Flow Statement, of the cash flows for the year ended on that date. 5. On the basis of written representations received from the Directors, as on 31st March 2010 and taken on record by the Board of Directors, we report that none of the Directors is disqualified as on 31st March 2010 from being appointed as a director in terms of section 274(1)(g) of the Companies Act, 1956.

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COMMON SIZE STATEMENT

Table: 16
Particulars SOURCES OF FUNDS Share Capital Reserves &surplus Secured Loans Unsecured Loans Differed tax liabilities Liabilities: Current Liabilities Provisions Total APPLICATION OF FUNDS Fixed Assets Capital work in progress Investment Inventories Sundry Debtors Cash & Bank Balance Loans & Advances Miscellaneous expenditure (to the extent not written off or adjusted) P & L( debit) Total 2009- 2010 437943260 969573146 647716697 32536000 29385923 1019753303 239965622 3376873951 In% 12.96 28.71 19.18 0.96 0.87 30.20 7.11 100 2008-2009 38042260 528949393 802087357 7713069 16345194 521808384 105000000 2019945657 In % 18.83 26.19 39.71 0.38 0.81 25.83 5.20 100

567611107 339615 19900000 600169056 1668520305 197011292 301733690 21588886

16.81 0.010 0.59 17.77 49.41 5.83 8.94 0.64

372118422 32912948 1218950 274038795 1112394029 111869851 115392662 -

18.42 1.63 0.06 13.57 55.07 5.54 5.71

177300000 3376873951

5.25 100

2019945657

100

Source:

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

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Financial Results:
Table: 17
Particulars Net Sales and Erection & other Charges Other Income Operational Expenditure Profit before tax, interest & depreciation Less: interest & financial Charges( Net) Depreciation Profit before tax Less: Provision for tax including FBT Profit after tax Less: Short provision for tax in earlier year Add: Balance B/F from previous year Amount available from appropriation Proposed dividend on preference share included dividend tax Transfer to General Reserve Balance carried forward 2009-10 30254.99 69.35 21570.90 8753.44 1390.12 406.44 6956.88 2510.40 4446.48 40.89 18.66 4424.25 0.06 4250.00 174.19 2008-09 20336.60 21.20 15781.62 4576.18 1053.45 90.62 3432.11 1164.98 2267.13 3.18 4.71 2268.66

2250.00 18.66

Source:

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

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