A STUDY ON FINANCIAL PERFORMANCE ANALYSIS OF AURUM JEWELS

LTD CHENNAI, TAMILNADU

Submitted in partial fulfillment of the requirements for the award of

Master of Business Administration

by

MAHALAKSHMI D
(39410105)

DEPARTMENT OF BUSINESS ADMINISTRATION

SCHOOL OF MANAGEMENT STUDIES

SATHYABAMA
INSTITUTE OF SCIENCE AND TECHNOLOGY
(DEEMED TO BE UNIVERSITY)
Accredited with Grade “A” by NAAC
JEPPIAAR NAGAR, RAJIV GANDHI SALAI,
CHENNAI - 600 119

APRIL 2021
 SATHYABAMA
INSTITUTE OF SCIENCE AND TECHNOLOGY
(DEEMED TO BE UNIVERSITY)
Accredited with “A” grade by NAAC I 12B Status by UGC I Approved by AICTE

Jeppiaar Nagar, Rajiv Gandhi Salai, Chennai – 600 119

www.sathyabama.ac.in
SCHOOL OF BUSINESS ADMINISTRATION
BONAFIDE CERTIFICATE

This is to certify that this Project Report is the Bona fide work of D.MAHALAKSHMI

(39410105) who have done the Project work entitled A Study on Financial

performance analysis of Aurum Jewels ltd, Chennai, Tamil Nadu under my

supervision from January 2021 to march 2021.

Dr.R.THAMILSELVAN,M.Com,MBA,M.Phill,.B.Ed.,Ph.D M.NAVEEN,MBA

Internal Guide External Guide

Dr. BHUVANESWARI G.
Dean – School of Business Administration

Submitted for Viva voce Examination held on _______________.

Internal Examiner External Examiner

 DECLARATION

I MAHALAKSHMI D (39410105) hereby declare that the Project Report entitled “ A

STUDY ON FINANCIAL PERFORMANCE ANALYSIS OF AURUM JEWELS LTD”
done by me under the guidance of Dr.R.THAMILSELVAN,
M.Com,MBA,M.Phill,B.Ed.,Ph.D (Internal) and MR.NAVEEN.M MBA(External) at
AURUM JEWELS LTD CHENNAI is submitted in partial fulfillment of the requirements
for the award of Master of Business Administration degree.

DATE:

PLACE: CHENNAI
D.MAHALAKSHMI
 ACKNOWLEDGEMENT

I am pleased to acknowledge my sincere thanks to Board of Management of

SATHYABAMA for their kind encouragement in doing this project and for
completing it successfully. I am grateful to them.

I convey my thanks to Dr. G. Bhuvaneswari, MBA., Ph.D., Dean - School of

Management Studies and Dr. A. Palani, M.Com., M.Phil., M.B.A., Ph.D., Head
of the Department, Dept. of Management Studies for providing me necessary
support and details at the right time during the progressive reviews.

I would like to express my sincere and deep sense of gratitude to my Project Guide
Dr.R. THAMILSELVAN, M.Com,MBA,M.Phill,B.Ed.,Ph.D for his/her valuable
guidance, suggestions and constant encouragement paved way for the successful
completion of my project work.

I wish to express my thanks to all Teaching and Non-teaching staff members of the
Department of Business Administration who were helpful in many ways for the
completion of the project.

MAHALAKSHMI D
 ABSTRACT

The project titled’’ A Study on Financial Performance analysis of Aurum jewels ltd”
deals with the financial statement analysis refers to an assessment of the viability,
stability and profitability of a business, project. The main aim of financial
performance analysis is to judge the financial health undertaking and to judge the
earning capacity of the organisation and to provide the company with appraise for
investment opportunity or potentially. The idea behind this study is to analyse the
financial operating position of the company. This research is done with help of
secondary data which is gathered from the annual report of past five years the
company. The financial performance can be measured by using various financial
tools such as profitability ratio, solvency ratio, comparative statement, common
size, trend analysis are the tools to analyse the financial performance of the
company etc. Based on the analysis, findings have been arrived that the company
has got enough funds to meet its debts & liabilities.

The study reveals the financial performance of the company has been better. But
the company’s profit over the last two years has been decreasing when compared
to previous years. So, the management should take necessary steps to improve
their financials.

i
TABLE OF CONTENT:

CHAPTER TITLE PAGE NO

NO
ABSTRACT I
LIST OF TABLES Ii
LIST OF CHARTS iii
1 INTRODUCTION 1
1.1 Introduction of Study 1
1.2 Industry Profile 8
1.3 Company Profile 9
1.4 Need for Study 14
1.5 Statement of Problem 14
1.6 Objectives of Study 15
1.7 Scope of Study 15
1.8 Limitations of Study 15
1.9 Chapter Framework 16
2 REVIEW OF LITERATURE 17
2.1 Review of Literature 17
2.2 Theoretical Review 25
3 RESEARCH METHODOLOGY 33
3.1 Research Design 33
3.2 Sources of Data 33
3.3 Period of Study 33
3.4 Tools Used for Analysis 33
4 DATA ANALYSIS AND 34
INTERPRETATIONS
4.1Ratio analysis 34
4.2Comparative Balance sheet 48
4.3Common size Balance sheet 53
4.4Trend analysis 58
5 FINDINGS SUGGESTIONS AND 62
CONCLUSIONS
5.1 Findings 62
5.2 Suggestions 63
5.3 Conclusions 64
REFERENCE 65
APPENDIX (Annual reports) 66
LIST OF TABLES:

TABLE NO PARTICULARS PAGE NO

4.1 Current Ratio 34
4.2 Quick Ratio 35
4.3 Return on Equity 36
4.4 Return on Asset 37
4.5 Fixed Asset to Net worth Ratio 38
4.6 Share Holder Equity Ratio 39
4.7 Debt Equity Ratio 40
4.8 Proprietary Ratio 41
4.9 Asset Turnover Ratio 42
4.10 Gross Profit Ratio 43
4.11 Net profit Ratio 44
4.12 Earnings Per Share 45
4.13 Debt to net worth Ratio 46
4.14 Capital Turnover Ratio 47
4.15 Comparative balance sheet of (2015- 48
2016 to 2019-2020)
4.16 Common size balance sheet 2015- 53
2016 to 2019-2020)
4.17 Trend analysis of current asset 58
4.18 Trend analysis of current liability 60

ii
LIST OF CHARTS:

CHART NO PARTICULARS PAGE NO

4.1 Current Ratio 34
4.2 Quick Ratio 35
4.3 Return on Equity 36
4.4 Return on Asset 37
4.5 Fixed Asset to Net worth Ratio 38
4.6 Share Holder Equity Ratio 39
4.7 Debt Equity Ratio 40
4.8 Proprietary Ratio 41
4.9 Asset Turnover Ratio 42
4.10 Gross Profit Ratio 43
4.11 Net profit Ratio 44
4.12 Earnings Per Share 45
4.13 Debt to net worth Ratio 46
4.14 Capital Turnover Ratio 47
4.17 Trend analysis of current asset 59
4.18 Trend analysis of current liability 61

iii
 CHAPTER- I

1.1 INTRODUCTION OF STUDY:

A Study of financial performance analysis with reference to AURUM jewels limited

is based on understanding the past present and future of the company. The study
explains in brief about the financial position of the company. The objectives of the
study is to analyze the performance and regulations of the company to meet its
current obligations. Financial statement analyze is a technique of revising and
analyzing an organization accounting reports or financial reports as to consider its
previous present or upcoming execution. It ensures the firms policies and operations
in monetary terms. Financial performance analysis is mainly for decision making
purpose.

The information given in financial statement is of immense use in decision

through analyses and interpretation of financial statement. Financial analysis is the
process of identifying financial strength and weakness of firm by properly
establishing the relationship between the items of balance sheet and profit and loss
account.

FINANCIAL PERFORMANCE ANALYSIS:

Financial Performance in broader sense refers to the degree to which financial

objectives being or has been accomplished and is an important aspect of finance
risk management. It is the process of measuring the results of a firm's policies and
operations in monetary terms. It is used to measure firm's overall financial health
over a given period of time and can also be used to compare similar firms across
the same industry or to compare industries or sectors in aggregation.

1
MEANING OF FINANCIAL STATEMENT ANALYSIS

The term ‘financial analysis’, also known as analysis and interpretation of financial
statements’, refers to the process of determining financial strengths and
weaknesses of the firm by establishing strategic relationship between the items of
the balance sheet, profit and loss account and other operative data.

“Analysing financial statements,” according to Metcalf and Titard, “is a process of

evaluating the relationship between component parts of a financial statement to
obtain a better understanding of a firm’s position and performance.”

In the words of Myers, “Financial statement analysis is largely a study of relationship

among the various financial factors in a business as disclosed by a single set-of
statements and a study of the trend of these factors as shown in a series of
statements.”

The analysis and interpretation of financial statements is essential to bring out the
mystery behind the figures in financial statements., ability to pay interest and debt
maturities (both current and long-term) and profitability of a sound dividend policy.

The term ‘financial statement analysis’ includes both ‘analysis’, and ‘interpretation’.
A distinction should, therefore, be made between the two terms. While the term
‘analysis’ is used to mean the simplification of financial data by methodical
classification of the data given in the financial statements, ‘interpretation’ means,
‘explaining the meaning and significance of the data so simplified.’

2
DEFINITION:

Financial analysis is the process of identifying the financial strengths and weakness
of firm by properly establishing relationship between the items of the balance sheet
and profit and loss account. The purpose of financial analysis is to diagnose the
information contained in the financial statements so as to judge the profitability and
financial soundness of the firm. A financial analyst, analyses the financial
statements with various tools of analysis before commenting upon the financial
position of the enterprises

Significance of Financial Performance Measurement:

• Assessing the operational efficiency and managerial effectiveness of the

company.
• Analysing the financial strengths and weaknesses and creditworthiness of the
company.
• Analysing the current position of financial analysis, Assessing the types of
assets owned by a business enterprise and the liabilities which are due to the
enterprise.
• Providing information about the cash position company is holding and how
much debt the company has in relation to equity.
• Studying the reasonability of stock and debtors held by the company.

The parties involved:

• Trade creditors: interested in the liquidity of the firm (appraisal of firm’s

liquidity)
• Bond holders: interested in the cash-flow ability of the firm (appraisal of
firm’s capital structure, the major sources and uses of funds, profitability over
time, and projection of future profitability)
• Investors: interested in present and expected future earnings as well as
stability of these earnings (appraisal of firm’s profitability and financial
condition)

3
OBJECTIVES OF FINANCIAL ANALYSIS

However, the following purposes or objectives of financial statements analysis may

be stated to bring out the significance of such analysis:
i) To assess the earning capacity or profitability of the firm.

ii) To assess the operational efficiency and managerial effectiveness.

iii) To assess the short term as well as long term solvency position of the firm.

iv) To identify the reasons for change in profitability and financial position of the firm.

v) To make inter-firm comparison.

vi) To make forecasts about future prospects of the firm.

vii) To assess the progress of the firm over a period of time .

viii) To help in decision making and control.

The operational efficiency of the concern as a whole as well as department wise can
be assessed. Hence the management can easily locate the areas of efficiency and
inefficiency. The solvency of the firm, both short-term and long-term, can be
determined with the help of financial statement analysis which is beneficial to trade
creditors and debenture holders. The comparative study in regard to one firm with
another firm or one department with another department is possible by the analysis
of financial statements. Analysis of past results in respects of earning and financial
position of the enterprise is of great help in forecasting the future results. Hence it
helps in preparing budgets. It facilitates the assessments of financial stability of the
concern. The long-term liquidity position of funds can be assessed by the analysis
of financial statements.

4
Parties interested in financial analysis:

The following parties are interested in the analysis of financial statements:

(1) Investors or potential investors.

(2) Management.

(3) Creditors or suppliers.

(4) Bankers and financial institutions.

(5) Employees.

(6) Government.

(7) Trade associations.

(8) Stock exchanges.

(9) Economists and researchers.

(10) Taxation authorities

Limitations of financial analysis:

Financial analysis is a powerful mechanism of determining financial strengths and

weaknesses of a firm. But, the analysis is based on the information available in the
financial statements. Thus, the financial analysis suffers from serious inherent
limitations of financial statements.

The financial analyst has also to be careful about the impact of price level changes,
window-dressing of financial statements, changes in accounting policies of a firm,
accounting concepts and conventions, and personal judgments, etc.

5
Some of the important limitations of financial analysis are, however, summed
up as below:

(i) It is only a study of interim reports

(ii) Financial analysis is based upon only monetary information and non-monetary
factors are ignored.

(iii) It does not consider changes in price levels.

(iv) As the financial statements are prepared on the basis of a going concern, it does
not give exact position. Thus accounting concepts and conventions cause a serious
limitation to financial analysis.

(v) Changes in accounting procedure by a firm may often make financial analysis
misleading.

(vi) Analysis is only a means and not an end in itself. The analyst has to make
interpretation and draw his own conclusions. Different people may interpret the
same analysis in different ways.

Types of Financial Analysis:

Financial analysis can be both internal and external.

Internal financial analysis:

Internal financial analysis (also known as managerial financial analysis) is

necessary for meeting the own requirements of a company. It is aimed on
determination of liquidity or results estimation of a last fiscal period. Usual output of
internal analysis is a set of administrative decisions - combination of various
measures intended for optimization of certain issue within the business. The internal
analysis is typically performed inside a company by its financial department and
constantly revised because of changes in macro- and microeconomic environment.
Due to the nature of data sources using for the internal analysis (internal accounting
books and reports), its results are always precise.

6
External financial analysis:

An external analyst does not have access to internal financial data and, hence, has
to carry out so-called external financial analysis, when initiative does not belong to
a company’s management, but to a third party. The main goal and objectives of
external analysis may differ from its managerial analogue. The defining a
creditworthiness and investment possibilities by an investor, may serve purposes of
an external financial analysis. In similar way, financial liquidity or solvency can be of
interest for a bank. To make a better decision, potential business partners wish to
know maximum available information about a firm and amount of risk involved in
respect of investments profitability and possible gains and losses. External financial
analysis is based on published accounting statements and aimed on prediction of a
possible bankruptcy, assessment of business performance and financial
sustainability of a company. Irrespective of type of the analysis, its methods are very
similar in their determination and interpretation of various financial ratios, studying
of changes over time and structural changes of articles. Correct application of
financial analysis allows answering many questions concerning financial health of a
business.

7
1.1 INDUSTRY PROFILE:

In a jewellery industry, the value of gold would always be lesser than what its price
rate. And hence if a customer wished to sell gold jewellery, it would often deprive of
its worth as a jewellery devised immunerable ways to detect heavily on gold weight
thereby giving the customer amount, below expectations. Aurum introduced a
revolutionary policy of giving back 100% market value of a gold to a customer so as
to increase and sustain faith in the gold jewellery industry. Quality leaders, still – in
the new millennium. Today under the leadership of dimple Chaudury she has carved
niche for itself and its one of the few jewellery organisations where the operations
are run by team of hardworking, dedicated, and qualified professionals.
The Aurum sector plays a significant role in the Indian economy, contributing around
7% to country’s GDP and 15% to India’s total merchandise export. It employs over
4.64 million people, which is expected to reach 8.23 million by 2022. One of the
fastest growing sectors, it is extremely export oriented and labour intensive.
Based on its potential for growth and value addition, the Government declared gems
and jewellery sector as a focus area for export promotion. The Government has
undertaken various measures recently to promote investment and upgrade
technology and skills to promote ‘Brand India’ in the international market.
India is deemed to be the hub of the global jewellery market because of its low costs
and availability of high-skilled labour. India is the world’s largest cutting and
polishing centre for diamonds, with the cutting and polishing industry being well
supported by Government policies. Moreover, India exports 75% of the world’s
polished diamonds as per statistics from aurum. India's Gems and Jewellery sector
has been contributing in a big way to the country's foreign exchange earnings
(FEEs). Government has viewed this sector as a thrust area for export promotion.
The Indian Government presently allows 100% Foreign Direct Investment (FDI) in
the sector through the automatic route.

8
1.2 COMPANY PROFILE:

Aurum Jewels Limited is a Non-govt company, incorporated on 14 Mar, 2007. It's a

public unlisted company and is classified as’Company limited by shares'.

Company's authorized capital stands at Rs 1000.0 lakhs and has 33.4902% paid-
up capital which is Rs 334.9 lakhs. Aurum Jewels Limited last annual general meet
(AGM) happened on 30 Sep, 2017. The company last updated its financials on 31
Mar, 2017 as per Ministry of Corporate Affairs (MCA).

Aurum Jewels Limited is majorly in Manufacturing (Metals & Chemicals, and

products thereof) business from last 13 years and currently, company operations
are active.

Aurum Jewels Limited Company's main objective is Manufacture of basic precious

and non-ferrous metals and work to be done under the same is Manufacture of basic
precious and non-ferrous metals. The latest Annual General Meeting of AURUM
JEWELS LIMITED COMPANY was last held on 30 September 2017 and the
Balance sheet was last updated on 31 March 2017.

Directors are basically the people or the force running the Entity i.e. the Decision
makers of the concerned organization and the Directors of AURUM JEWELS
LIMITED COMPANY are Dimple Chaudhury, Sheik SamsuAlam, Rupsona Begam
Shekh, Hajra Bibi Shahalam, JakariaMohdNurulhSekh& Mehta Sujathaa. As per the
Contact information with the MCA, the email address in the Registrar of Companies
(R.O.C)

9
1.2.1Company details:

CIN U27205TN2007PLC062706

Company Name AURUM JEWELS LIMITED

Company Status ACTIVE

ROC ROC-Chennai

Registration Number 62706

Company Category Company limited by Shares

Company Sub Category Non-govt company

Class of Company Public

Date of Incorporation 14 March 2007

Age of Company 13 years, 9 month, 12 days

10
1.2.2 Area of Operations:
• Chennai

• Kolkata

• Cuttack

• Bangalore

• Hyderabad

• Lucknow

• Varanasi

• Patna

1.2.3 Vision, Mission and Quality Policy:

Our Mission:

AURUM aims to be the world’s largest jewellery manufacturer and timeless jewellery
creator, delivering innovative designs of finest quality to everyone of the customers
delight.

Our Vision:

AURUM Will achieve the world’s largest jewellery manufacturer status through art
infrastructure, product research & development, dedicated team involvement, lean
management practices, ethical business approach, better value for money,
customer focus, continuous improvement of processes and the products to
penetrate into newer market.

Quality Policy:

We at AURUM committed to ensures quality in our jewellery by building systems

and procedures at all stages in order to enhance Customer Satisfaction and make
them delight. We review, measure and continually improve through product,
process, quality and system objectives related to our business

11
History of Company:

AURUM JEWELS LIMITED is a public company. It was incorporated in 14/03/2007.

This company is registered under Registrar of Companies (ROC-Chennai) and it is
classified as the Indian Non-Government Company.
Its authorized capital is Rs. 100,000,000 and its Paid up capital is Rs. 33,490,200.
Aurum Jewels Limited Annual General Meeting (AGM) was last held on 2013-09-30
and its balance sheet date is 2013-03-31...
Aurum Jewels Limited was involved in Basic precious metal & bye products of gold,
manufacturing, Basic precious metal & bye products of silver, manufacturing, Basic
precious metals & bye products of platinum group, manufacturing, Manufacture of
basic precious metals and by products

Gold Purity Analyser:

It is accepted method of chemistry analysis and determination of purity and fineness

of precious metals. XRF analysis is a Multi Elemental testing alternative

Given the current high value of gold, quantifying its fineness and purity is more
critical than ever. Whether you buy gold, sell or produce jewellery, fabricate metal,
or recycle scrap metal, you need a fast, highly accurate method to determine
karatage (gold content) for quality control and pricing.

The Innov-X GoldXpert XRF analyser is an easy-to-use, cost-effective method to

obtain alloy chemistry and karat classification with one Non Destructive and
nonintrusive test. Additionally, an exclusive GoldXpert software feature helps
identify gold-plated objects and sends an alert to the screen.

12
Gold Tester:

Karat meter is a scientific instrument which uses X-rays to give an exact

reading of the purity of gold. Due to its very high precision and fast result, X-ray
analysis has been adopted by international agencies in India as part of the
certification process used to hallmark gold. It is an accurate, non-destructive
means of testing the purity of gold and other related elements. X-Ray method of
Gold analysis gives the purity of gold up to 10-12 microns and hence it gives the
analysis of coating only.

Using this technique, the precise percentage or karat (of karat) in a solid piece of
jewellery can be determined in 30 seconds. It also accurately determines the
element composition of all types of gold, white
gold, platinum, silver, palladium, rhodium and related alloys.

13
1.3 Need for study:

Financial analysis is a powerful mechanism which helps in ascertaining the

strengths and weakness in the operation and financial position of an
enterprise. Financial analysis is the starting point for making plans, before
using any Shophistical forecasting and planning procedures. This study helps
to understand financial position of the company. This study suggests possible
solution to overcome working capital problem. The financial statements need
to evaluate a company's profitability, liquidity, and solvency. The most
common methods used for financial statement analysis are trend analysis,
common‐size statements, and ratio analysis. These methods include
calculations and comparisons of the results to historical company data,
competitors, or industry averages to determine the relative strength and
performance of the company being analysed.

1.4 Statement of the problem

The problem faced is to control the inventory and is absolutely necessary to run the
efficient business and make into progress. We take look at common inventory
management problem causes like stocks in Godowns, lack of knowledge of
employees in using of chemicals, high cost of inventory, low rate of inventory
turnover, high cost of storage. And being unaware of inventory levels has large
negative impact on supply chain. Inefficient process is with the availability of
technology many companies still be outdated of inventory management system.
Moreover, the competitions are increasing drastically, so that the need of the
customers are constantly changing and now they are looking to distributors to more
flexible with their orders. Because of inventory rises and falls, the financial position
and turnover of the company is decreasing.

14
1.5 Objectives of Study:

• To study the earning capacity or profitability of the Aurum jewels ltd.

• To analyse and compare the financial position of the company under study
• To measure the short term as well as long term credit worthiness position of
the company under study
• To determine liquidity position of the company based on turnover of the
company under study

1.6 Scope of study:

The study covers almost the entire area of financials operations covered by “Aurum
Jewels Limited”. The study has been conducted with the help of data obtained from
auditing financial records. The auditing financial records of the company pertaining
to past 5 years of auditing financial records are obtained from the company annual
report. the Conclusions are drawn from the analysis done with the ratios,
comparative, common size study. The study elucidates the financial position of the
company with respect to the past five years. It helps the company to place itself
among various other competitive companies.

The study through the analysis reveals the pros and cons of the company’s financial
status. It enables the reader to understand the various financial aspects of a
company through uncomplicated interpretation and findings for study purpose.

1.7 Limitations of the study:

Here the study is based on past five years data. Only past data of accounting
information is included in the financial statements, which are analysed. The future
cannot be just like past. Hence, the analysis of financial data. cannot provide a basis
for future estimation.

15
1.8 Chapter Framework:

Financial Performance Analysis Organised into Five Chapters Namely:

Chapter-1

This Chapter Deals with Introduction, Industry Profile, Company Profile, Objectives
of Study, Need for Study, theoretical Study, Statement of Problem and Limitations
of Study.

Chapter-2

This Chapter Deals with Review of Literature

Chapter-3

This Chapter Deals with Research Methodology, Research Design, Data Collection,
Sample Size and Period Of Study.

Chapter-4

It Deals with Data Analysis and Interpretations.

Chapter-5

This Chapter Deals with Findings, Suggestions and Conclusions.

16
 CHAPTER II

2.1 REVIEW OF LITERATURE

“Jagannadha Rao (1998):” “Financial performance of the company is the

cumulative result”. Pg. no 33. This study states that there is poor condition of
financial performance of the corporation is the cumulative result of unfavourable
factors such as continuous low capacity utilization of the units, fall in sugar recovery
in some of the units, poor operational performance, high cane price advised by the
State Government and paid up by the company, low levy price of sugar.

“Pai, Vadivel & Kamala (1998)” have studied about the diversified companies and
financial performance. Main purpose of research was found out the relationship
between diversified firms and their financial performance. For the purpose of
research, they have selected seven large firms and analysed those firm which
having different products-both related and otherwise-in their portfolio and operating
in diverse industries. In this study, a set of performance measures / ratios was
employed to determine the level of financial performance and variation in
performance from one firm to another has been observed and statistically
established. They revealed that the diversified firms studied have been healthy
financial performance.

“Hitchings (1999)”: “ratio checked is a complex and valued tool”. journal of the
operative Research Society 1-17. In this study realized that ratio examination is a
complex and valued tool in credit assessment which is to estimate the capability of
a mortgagor to meet its debt obligations.

“Bollen (1999)”: “Ratio Variables in info analysis”. This study describes the ratios
as indices of concepts; a problem can arise if it is retreated on other indices or variables
that hold a common component.

“Shukla, M. S. 7 (2000)” highlighted the financial performance analysis of gems

and jewellery in the Indian historical perspective. He told that pearls and precious
stones were known as specialty of India at a very remote epoch. India was indeed

17
the first and for a long time the only source of diamonds and pearls known to the
European nations.

“Aggarwal & Singla (2001)” have studied about developed a single index of
financial performance through the technique of Multiple Discriminate Analysis
(MDA), by selecting 11 ratios and selected ratios used as inputs. For the purpose of
analysis they selected only those ratios, which was relevant in distinguish between
profit making units and loss making units in Indian paper industry. They concluded
that, the model has correctly classified 82.14 percent of units selected as profit
making and loss marking. They mentioned in their study the inventory turnover ratio,
interest coverage ratio, net profit to total assets and earnings per share are the most
important indicators of financial performance. Also they suggested suggests that the
results of Multiple Discriminate Analysis could be used as predictor of future
profitability

“Loundes (2001)” analyzed ‘The Financial performance of Australian Government

Trading Enterprises Pre &Post-Reform’ revealed that during the 1990's. Main
objectives of the study was to discover whether there had been any change in the
financial performance of government trading enterprises operating in electricity, gas,
water, railways and ports industries as a result of these changes. He had concluded
that that it did not appear to have been a noticeable enhancement in the financial
performance of most of this business, although railways have improved slightly, from
a low base. He has suggested several measures introduced to improve the
efficiency and financial performance of government trading enterprises in Australia.

“ Ramamrutham, Usha B. K., Meera Sushil Kumar 10 (2001)” explained that the
jewellery of India is a vital expression of the country s aesthetic and cultural history.
They presented factual information with many fascinating tales recorded in historical
chronicles. The jewellery of India represents one of the greatest traditions of human
craftsmanship in the world. It has been worn by women as adornment and by men
as a proclamation of the power and as a symbol of rank and religious loyalty.

“Garga, Pawan Kumar 11 (2002)” studied the various aspects of financial needs
to export promotion activities besides highlighting the hidden potential of India s
major products and how India can increase its share in the world exports.

18
“ Bhandari, Vandana 12 (2004)” found in his study that costumes, textiles and
jewellery of India unravels the beautiful and sophisticated language of traditional
Indian costumes. In this detailed study of the complex role played by clothing and
ornamentation in Indian society. It focuses on the state of Rajasthan, one of India s
most celebrated and historically rich regions. She explored that how Indian
costumes and jewellery reflects the wearer s marital status, occupation, seasonal
changes and religious commitment, serving as an essential symbol of their identity.
Bhandari demonstrated in his study the cultural, social, historic and technical
aspects of textiles, costumes and jewellery.

“Mukherjee, Arpita and Nitisha Patel 13 (2005)” stated that the Indian gems and
jewellery sector offers huge potential for growth and exports and government
provides various incentives for promoting exports. They reported that India is the
largest consumer of the gold. Indian gems and jewellery sector is leading foreign
exchange earner and employment provider.

“Kala, Alok 15 (2005)” discussed the various financial performance there to

Product wise, Year-wise and port-wise data of gems and jewellery have been
presented during the period to Latest tools and technology for gems and jewellery
sector have been discussed and various types of information regarding gems and
jewellery trade have been presented in this year book. It is an essential for traders
of gems and jewellery products.

“Sur & Chakraborty (2006)” have discussed about financial performance of Indian
Pharmaceutical industry. They have been made the comparative analysis the
financial performance of Indian Pharmaceutical industry for the period 1993 to 2002
by selecting six notable companies of the industry. They explained that the Indian
Pharmaceutical industry has been playing a very significant role in increasing the
life expectancy and in decreasing the mortality rate and it is the 5th largest in terms
of volume and the 14th largest in value terms in the world. The comparison has been
made from almost all points of view regarding financial performance using relevant
mathematical programming methodology tool DEA (Data envelopment analysis).

19
“Dietrich Berger (2007)” told that, recently, selling gold jewelry and jewelry with
gemstones have grown to be extremely popular because of the escalating gold and
rare metal prices.

“Gaabalwe(2007)” has done descriptive studies on “financial performance

measurement of South Africa’s top companies: an exploratory investigation” he has
made study on the base of empirical, he applied accounting tools like ratio and
applied statistical tools like mean, standard deviation, and z test. For the purpose of
analysis he has facilitated the analysis and interpretation; the ZScores of the
sampled companies were expediently used to classify the companies into three
categories like high, medium and low. Results also implied significant differences
for the current ratio, liquidity ratio, return on capital employed ratio, debts-equity
ratio, whereas insignificant differences for inventory ratio, debtors ratio, total assets
turnover ratio, current assets turnover ratio, gross profit margin ratio, net profit ratio.

“Paul newton &Helon (2007)” has done descriptive studies on “financial

performance measurement “: an exploratory investigation” he has made study on
the base of empirical, he applied accounting tools like ratio and applied statistical
tools like mean, standard deviation, and z test. For the purpose of analysis he has
facilitated the analysis and interpretation; the ZScores of the sampled companies
were expediently used to classify the companies into three categories like high,
medium and low. Results also implied significant differences for the current ratio,
liquidity ratio, return on capital employed ratio, debts-equity ratio, whereas
insignificant differences for inventory ratio, debtors ratio, total assets turnover ratio,
current assets turnover ratio, gross profit margin ratio, net profit ratio.

“Jhala (2007)” discussed in her Ph. D thesis about “An Analytical Study of Financial
Performance of Refinery Industry of India” and for the purpose of analysis, seven
units have taken for the period 1998-2003 for the analytical study of performance of
the selected units. In this research, she has covered the financial aspects of these
7 units and has been analyzed by performance analysis. She had tried to get most
significant and viscous finance related data of the selected units and Z-score, Anova
test, various ratio analysis, correlation matrix trend analysis.

“Mathur, Asha Rani 16 (2007)” identified the fabled wealth of India. For centuries,
her gold and gems brought to her land both merchants and invaders. She told about

20
the tradition, ranges, varieties, best known techniques and manifestations and an
overview of contemporary jewellery. Mathur s study is a glimpse of Indian jewellery
in its totality.

“Toby (2007)” did research on “Financial management modelling of the

performance of Nigerian Quoted Small and medium-sized Enterprises. He has
concluded that the sustained growth, adequate liquidity and requisite profitability in
the Small and Medium sized Enterprise sector is significantly related to their
investment and financing decisions.

“Mukherjee, Ishita 18 (2008)” dealt with an emerging global industry the gems and
jewellery industry, which is on the way to a huge information. This industry is
extremely global in nature. She told that gems and jewellery industry can be
classified into various sub-sectors such as gemstones, jewellery and pearls. Over
the years, the global gems and jewellery markets have been impacted by various
developments like falling trade barriers, increasing competition, changing customer
preferences and developments in technology in various areas.

“GJEPC 19 (2008)” highlighted that financial statement of the current global

economic meltdown has hit the Indian gems and jewellery industry. Update on the
diamond industry and reduction in the value addition norms for gems and jewellery
industry has also been discussed. Export and import data of gems and jewellery
products have also been displayed in this newsletter.

“Neumann and Roberts (2008)”: “financial occasions are indicated more esteem",
This investigation portrays money related measures are given additional incentive
over nonbudgetary measures and ROI is the single execution gauge to which
directors give more weightage

“Pan, Albert 21 (2008)” presented a full view of Chinese gems and jewellery market
and suitable suggestions for sales jewellery products in China. Albert discussed and
analysed China market competition, market size, sale channel, consumer
characteristic, import and export process, market trend and potential forecast etc.

“GJEPC 22 (2009)” discussed the major highlights of the Foreign Trade Policy
(FTP) for gems and jewellery sector. It studied the contribution of various gems and
jewellery products in India s exports of last ten years. It also discussed the

21
objectives, functions and facilities provided by Gem and Jewellery Export Promotion
Council (GJEPC) to boost the trade of gems and jewellery products.

“ Siegel, Dina 23 (2009)” highlighted the presence of Indian dealers, community

and Indian market in Antwerp. In his study, Siegel stated that most of the families
involved in the diamond sector in Antwerp came from the region of Gujarat, a region
with a longstanding tradition of migration all over the world.

“Government of India (2009), The Sparkle of Success”: The Indian Gem and
Jewellery Industry, Gem and Jewellery Export Promotion Council, Ministry of
Commerce and Industry, Government of India, New Delhi.

“Siegel, Dina (2009)”, The Mazzel Ritual: Culture, Customs and Crime in the
Diamond Trade, Springer Science+Bussiness Media, New York. 24.

“Kala, Alok (2009”), Journal of Gem and Jewellery Industry, International Journal
House, Jaipur, Vol. 47, No. 4, April, pp Simoni, Christian and Samuel Rabino (2010),
Italian and Indian Gold and Jewellery SMEs, Marketing Practices in the USA: A
Comparative Case Study Published in Journal of Small Bussiness and Enterprise
Development, Vol. 17, Issue 3, pp Online at emeraldinsight.com. 2

“Simoni, Christian and Samuel Rabino 25 (2010)” examined current patterns of

international marketing activities of Italian gold firms with a special emphasis on the
USA market and juxtaposed them with those adopted 339 by Indian gold firms. They
evaluated small companies based in two regions (Arezzo and Hyderabad, India).
They told that competitive behaviour of Italian Small and Medium Enterprises
(SMEs) is primarily reactive, whereas Indian companies strategically focus on the
expending Indian immigrant community.

“Gaur jighyasu (2010)” focuses on the measurement of financial performance of

business group companies of Non metallic mineral products industries of India. This

22
study uses the 57 business group companies’ financial data of Non metallic mineral
products industries of India such as glass, cement, jewellery and gems etc.

“AmalenduBhunia (2010)” took the analysis of pharmaceutical company’s

financial performance to understand how the management of finance playing a
crucial role in the growth. For a period of twelve years the study has undertaken
from 1997-98 to 2008-09.

“Kuriyan, Vinod 26 (2010)” reported that the Indian diamond industry stands
clearly above most of the competition. He told that the single easiest way to check
on how the Indian diamond industry is doing today is to look at all the online diamond
trading systems such as index online, etc. He also reported that the industry should
push harder to ensure that its products get to more markets around the world if it
wants to sustain value growth.

“Bijlani, Shanoo and Regan Luis 27 (2010)” reported that gems and jewellery
industry has the potential to grow at an estimate of $ 45 billion to $100 billion by
They stated that the jewellery industry featured two major sub-segments gold and
diamonds with the former constituting 80 per cent of the jewellery market. Gems and
Jewellery Products (GJPs) are expected to grow at compounded annual growth rate
of 15 per cent. However, the Indian gems and jewellery market is unregulated and
pricing is mostly based on the value of gold and labour charges. Most purchases in
jewellery are investment oriented and so, they get commoditized. The integration of
jewellery, luxury and fashion should be the next step for the ever-growing gems and
jewellery sector.

“Shynmalie and Dhamika Abeysinghe 29 (2010)” observed that the gems and
jewellery industry in Sri Lanka has been capable enough to develop a competitive
product base but has been positioned to experience a reduction in market value.
This reduction has resulted in the disintegration of the industry value system, forcing
the firms to work in isolation. They stated that the industry value system is handled
by private sector entrepreneurship without state interference.

“Kala, Alok 30 (2010)” reported that gems and jewellery industry has registered a
16 per cent increase in the total gems and jewellery exports in The industry

23
contributes 13 per cent to India s total merchandise exports. The figure stated that
India s diamond share in world market witnessed an increase from 60 to 70 per cent
in value terms. The USA remained India s largest consumer of jewellery. He stated
that Indian diamond industry has now come out of recession. 35

“Kuriyan, Vinod (2010),” Indian Diamond Industry Stands Above the Others,
Published in Solitaire International, MeneckDavar Publication, Mumbai, March, pp
Online at

“Bijlani, Shanoo and Regan Luis (2010)”,Study Thinks Indian Industry could
Reach $ 100 Bn by 2015, Published in Solitaire International, MeneckDavar
Publication, Mumbai, February, pp Available from Export Import Bank (2010), Indian
Gems and jewellery: A Sector Study, Occasional Paper no. 138, Quest Publications,
Mumbai. Online from Ekanayake,

“Shynmalie and Dhamika Abeysinghe (2010”), Entrepreneurial Strategic

Innovation Model for Attaining Premium Value for the Sri Lankan Gem and Jewellery
Industry.

“Sharma Nishi (2011)”studied the financial performance of passenger and

commercial vehicle segment of the automobile industry in the terms of four financial
parameters namely liquidity, profitability, leverage and managerial efficiency
analysis for the period of decade from 2001-02 to 2010-11. The study concludes
that profitability and managerial efficiency of Tata motors as well as Mahindra &
Mahindra ltd are satisfactory but their liquidity position is not satisfactory. The
liquidity position of commercial vehicle is much better than passenger vehicle
segment.

24
2.2 THEORITICAL ANALYSIS:

Ratio Analysis

Ratio analysis is the comparison of line items in the financial statements of a

business. Ratio analysis is used to evaluate a number of issues with an entity, such
as its liquidity, efficiency of operations, and profitability. This type of analysis is
particularly useful to analysts outside of a business, since their primary source of
information about an organization is its financial statements. Ratio analysis is
particularly useful when used in the following two ways:

1. Current Ratio:

The current ratio is a liquidity ratio that measures a company's ability to pay short-
term obligations or those due within one year. ... The current ratio is called “current”
because, unlike some other liquidity ratios, it incorporates all current assets
and current liabilities.
Formula: Current Ratio = Current asset / Current liabilities

2. Quick Ratio

The quick ratio is an indicator of a company's short-term liquidity position and

measures a company's ability to meet its short-term obligations with its most liquid
assets. ... An "acid test" is a slang term for a quick test designed to produce instant
result.

Formula: Quick ratio= Current assets-inventory/current liabilities

3.Cash Ratio: The cash ratio is a measure of the liquidity of a firm, namely
the ratio of the total assets and cash equivalents of a firm to its current liabilities.
The metric calculates the ability of a company to repay its short-term debt
with cash or near-cash resources, such as securities which are easily marketable.

Formula: Cash Ratio= cash+ cash &cash equivalents/ current liabilities

25
4. Gross Profit Ratio:

Gross profit ratio (GP ratio) is a financial ratio that measures the performance and
efficiency of a business by dividing its gross profit figure by the total net sales. ... It
is then called gross profit percentage or gross profit margin.

Formula: Gross Profit Ratio=Gross profit/ sales*100

5.Net Profit Ratio:

The Net profit percentage is the ratio of profits to net sales. It reveals the
remaining profit after all costs of production, administration, and financing have
been deducted from sales, and income tax recognized

Formula: Net profit ratio= Net profit / sales*100

6. Operating Profit Ratio:

Operating ratio (also known as operating cost ratio or operating expense ratio) is
computed by dividing operating expenses of a particular period by net sales made
during that period. Like expense ratio, it is expressed in percentage.

Formula: operating Profit Ratio=Operating profit/ sales*100

7.Debt to Net Worth Ratio:

If you have no debt, your net worth is simply the sum of all of your assets. Then, to
find your debt-to-net-worth ratio, divide your total debt by your total net worth and
multiply by 100 to get a percentage.

Formula: Debt to Net Worth Ratio=Total liabilities/ Net worth.

26
8.Inventory Turnover Ratio:

Inventory turnover is a ratio that measures the number of times inventory is sold or
consumed in a given time period. Also known as inventory turns, stock turn, and
stock turnover, the inventory turnover formula is calculated by dividing the cost of
goods sold (COGS) by average inventory.

Formula: Inventory Turnover Ratio=Cost of goods sold/ average inventory.

9.Capitalturnover Ratio:

The capital turnover ratio is calculated by dividing net annual sales by the average
amount of working capital—Total assets minus current liabilities—during the same
12-month period.

Formula: Capital Turnover Ratio=Sales/ capital employed

10.Return on Equity

Return on equity (ROE) is a measure of financial performance calculated by dividing

net income by shareholders' equity. Because shareholders' equity is equal to a
company's assets minus its debt, ROE is considered the return on net assets.

Formula: Return on Equity=Net income/shareholder equity

11.Earning Per Share:

Earning per share is a small variation of return on equity capital. It provides a view
of the comparative earnings when it compares with that of similar other companies.
Thus, the earnings per share are a good measure of profitability.

Formula: Earning Per Share= Net profit after preference dividend/ No of equity
shares

27
12.Return on Asset:

Return on asset is an indicator of how profitable a company is relative better to its

total assets. ROA gives a manager, investor, or analyst an idea as to how efficient
a company management is at using its assets to generate earnings.

Formula: Return on asset=Net income/ total assets

13. Fixed Assets to Net worth Ratio:

This ratio is relationship between fixed assets and share capital fund. This ratio is
also called fixed assets to net worth ratio.

Formula: Fixed assets to worth Ratio= Fixed Assets / Net worth

14.Share Holder Equity Ratio:

Shareholders' equity (or business net worth) shows how much the owners of a
company have invested in the business—either by investing money in it or by
retaining earnings over time. On the balance sheet, shareholders' equity is broken
down into three categories: common shares, preferred shares and retained
earnings.

Formula: Shareholder Equity Ratio= Total Asset-Total liabilities

15.Debt-Equity Ratio

This ratio helps to ascertain the soundness of the long term financial position of the
Company. It indicates the proportion between total long term debt and the
shareholder funds. This also indicates the extent to which the firm depends upon
outsiders for its existence.

Formula: Debt Equity Ratio= Total Long Term debt / Shareholders funds

28
16. Proprietary Ratio:

Proprietary Ratio shows the relationship between shareholders’ funds to total assets
of the concern. The shareholders’ funds are equity share capital, preference share
capital, undistributed profits, reserves and surpluses.

Formula: Proprietary Ratio= Share Holders funds / total assets

17.Asset Turnover Ratio:

Asset turnover, total asset turnover, or asset turns is a financial ratio that measures
the efficiency of a company's use of its assets in generating sales revenue or sales
income to the company.

Formula: Asset Turnover Ratio= Net sales/ Average total asset

29
2.2.2 Importance of ratio analysis

• Financial statement analysis:

Understanding financial statements are important for stakeholders of the company.

Ratio analysis helps in understanding the comparison of these numbers;
furthermore, it helps in estimating numbers from income statements and balance
sheets for the future. For e.g. Equity shareholder looks into the P/E dividend Payout
ratio, etc. while creditors, Gross margin ratio, Debt to asset ratio, etc.

• Efficiency of Company

Ratio analysis is important in understanding the company’s ability to generate profit.

Return on Asset, Returns on Equity tell us how much profit the company is able to
generate over assets of the firm and equity investments in the firm, while gross
margin and operating margin ratios tell us the company’s ability to generate profit
from sales and operating efficiency.

• Planning and forecasting:

From a Management and investor point of view, ratio analysis helps to understand
and estimate the company’s future financials and operations. Ratios formed from
past financial statement analysis helps in estimating future financials, budgeting,
and planning for the future operations of the company.

• Identifying risk and taking corrective actions:

The company operates under various business, market, operations related risks.
Ratio analysis helps in understanding these risks and helps management to prepare
and take necessary actions. Leverage ratios help in performing sensitivity analysis
of various factors affecting the company’s profitability like sales, cost, debt. Financial
leverage ratios like Interest Coverage ratio and Debt Coverage ratio tell how much
the company is dependent on external capital sources and the company’s ability to
repay debt.

30
 • Peers comparision:

Investor, as well as the company’s management, makes a comparison with

Competitors Company to understand efficiency, profitability and market share. Ratio
analysis is helpful for companies to perform SWOT (Strengths, Weakness,
Opportunities, and Threats) analysis in the market. It also tells whether the company
is able to perform growth or not over a period from past financials and whether the
company’s financial position is improving or not.

• A Better source of communication:

Ratio analysis is important while presenting the financials of the company to its
stakeholders. Ratios make it easy to understand than complex and huge numbers.
Sometimes numbers can be deceitful which leads to investors losing confidence,
but ratio analysis helps the investor to understand the situation of the company after
comparison and helps them to keep investing in the business.

• Financial solvency

The company’s ability to pay short-term debt is determined by liquidity. Current

Ratio, Acid-test ratio tells us whether a company is able to pay its short-term
obligation within a year. The company continuously runs analysis on past financial
statements to understand and prepare for payment of short-term obligations.

• Decision making:

Ratios provide important information on the operational efficiency of the company,

and the utilization of resources by the company. It helps management to forecast
and planning for future, new goals, concentrate on the different markets, etc.

• Trend line:

Ratio analysis gives us the trend line, which indicates whether a company is able to
perform over a period or not. Companies gather data from past reporting periods

31
trend line formed can be used to understand and judge future performance and any
possible issue which cannot be found from just one-year ratio analysis.

• Important tool:

Financial analysis of the company cannot be done without ratio analysis. Ratio
analysis is an important tool that is required to perform all actions whether the
comparison with peer companies, measuring the efficiency of the company in
various aspects of creating a financial model of the company to forecast future
performance.

• All in one package:

Ratio analysis includes ratios, which measure various aspects of business like
liquidity, efficiency, solvency, leverage, profitability and market value. It gives
reliable information to investors and management from all perspectives to make
their own decisions. An investor should not depend on just one ratio to make
investment decisions but should perform a thorough analysis of various ratios and
understand its meaning related to the company’s future performance.

2.2.3 Trend line:

Trendlines are easily recognizable lines that traders draw on charts to connect a
series of prices together or show some data's best fit. The resulting line is then used
to give the trader a good idea of the direction in which an investment's value might
move.

A trendline is a line drawn over pivot highs or under pivot lows to show the prevailing
direction of price. Trendlines are a visual representation of support and resistance
in any time frame. They show direction and speed of price, and also describe
patterns during periods of price control.

32
 CHAPTER III

3. RESEACH METHODOLOGY:
Research methodology is a way to systematically solve the research problem. It
may be understood as a science of study how research is done scientifically. In this
study the various steps that are generally adopted by the researcher in studying his
research problem along with the logic behind them.

3.1 Research design

The proposed study is of Descriptive in Nature. Research design is needed because

it facilitates the smooth sailing of the various research operations, thereby making
research as efficient as possible. A research design for a particular problem usually
involves the consideration of the following factors.

3.2 Source of Data

The Secondary data was collected from company annual reports (Balance sheet,
income statement etc) books, websites.

3.3 Period of Study

The period of study is 3 months.

3.4 Tools Used for Analysis

The following are major tools used in analysis and interpretation.

1. Ratio analysis
2. Comparative balance sheet statement:
3. Common size Balance sheet.
4. Trend analysis

33
 CHAPTER IV

DATA INTERPRETATION AND ANALYSIS

TABLE:4.1 CURRENT RATIO:

(In Lakhs)

CURRENT
PARTICULARS CURRENT ASSET LIABILITY RATIO (Times)
2015-2016 1042.34 729.0 1.42
2016-2017 3512.5 2270.8 1.55
2017-2018 3291.9 1097.6 2.99
2018-2019 6615.6 1346.9 4.91
2019-2020 5502.1 482.7 11.4
source: company annual reports (2015-2016 to 2019-2020)

INTERPRETATION:

The current ratio was found highest in the year 2019-2020 with 11.4 whereas it was
lowest in the year 2015-2016 with 1.42. From this comparing to 2015-2016 the
current ratio increased in 2019-2020.

CURRENT RATIO
12

10

0
2015-2016 2016-2017 2017-2018 2018-2019 2019-2020

Chart:4.1.Current ratio

34
TABLE:4.2 QUICK RATIO: (In Lakhs)

CURRENT QUICK
PARTICULARS QUICK ASSET LIABILITY RATIO(Times)
2015-2016 529.1 729.0 0.72
2016-2017 1105.1 2270.8 0.49
2017-2018 813.4 1097.6 0.74
2018-2019 2915.6 1346.9 2.16
2019-2020 363.2 482.7 0.75
source: company annual reports (2015-2016 to 2019-2020)

INTERPRETATIONS:

The quick ratio was found to be highest in the year 2018-2019 with 2.16 whereas it
was lowest in the year 2016-2017 with 0.049.

QUICK RATIO
2.5

1.5

0.5

0
2015-2016 2016-2017 2017-2018 2018-2019 2019-2020

QUICK RATIO(Times)

Chart 4.2 quick ratio

35
TABLE 4.3 RETURN ON EQUITY (In Lakhs)

SHARE
YEAR NET INCOME HOLDERFUNDS RATIO (Times)
2015-2016 10.6 361.1 0.03
2016-2017 27.6 379.3 0.07
2017-2018 130.3 2227.6 0.06
2018-2019 151.7 2378.9 0.06
2019-2020 117.8 2444.2 0.05
source: company annual reports (2015-2016 to 2019-2020)

INTERPRETATION:

Here, Return on equity (ROE) states that in the year 2016-2017 it is increased with
0.07 whereas it decreased in the year2015-2016 with0.03.

RETURN ON EQUITY
0.08

0.07

0.06

0.05

0.04

0.03

0.02

0.01

0
2016 2017 2018 2019 2020

RATIO

CHART:4.3Return on Equity

36
4.4 RETURN ON ASSETS: (In Lakhs)

PARTICULARS NET INCOME TOTAL ASSETS ROA (Times)

2015-2016 10.6 2117.2 0.01
2016-2017 27.6 3983.0 0.01
2017-2018 130.3 4580.6 0.03
2018-2019 151.7 8152.6 0.02
2019-2020 117.8 6963.6 0.02
source: Company annual reports (2015-2016 to 2019-2020)

INTERPRETATION:

If 2018 is highly generated with 0.02 and 2015-2016 is generated with 0.005 only,
2017-2018 was more efficient since it has made more income on assets. Also the
return on assets becomes more useful when it is compared to the industry average
or other benchmarks such as historical performance or a target return

RETURN ON ASSETS
0.035

0.03

0.025

0.02

0.015

0.01

0.005

0
2015-2016 2016-2017 2017-2018 2018-2019 2019-2020

ROA

Chart 4.4 Return on assets

37
TABLE:4.5 FIXED ASSETS TO NETWORTH RATIO: (In Lakhs)

PARTICULARS FIXED ASSET NET WORTH RATIO (Times)

2015-2016 62.0 361.1 0.17
2016-2017 58.8 379.3 0.16
2017-2018 1106.3 2227.6 0.5
2018-2019 1204.5 2378.9 0.51
2019-2020 1089.2 2444.2 0.45
Source: Company annual reports (2015-2016 to 2019-2020)

INTERPRETATION:

Fixed assets to net worth ratio was higher in 2018-2019 with 0.51 which is usually
undesirable, as it indicates that the firm is vulnerable to unexpected events and
changes in the business climate.

This ratio indicates the extent to which the owners' cash is frozen in the form of fixed
assets, such as property, plant, and equipment, and the extent to which funds are
available for the company's operations

FIXED ASSET TO NETWORTH RATIO

0.6

0.5

0.4

0.3

0.2

0.1

0
2015-2016 2016-2017 2017-2018 2018-2019 2019-2020

Chart 4.5Fixed assets to net worth ratio

38
TABLE:4.6 SHARE HOLDERS EQUITY RATIO (In Lakhs)

TOTALL
PARTICULARS TOTALL ASSET LIABILITIES RATIO (Times)
2015-2016 2117.2 1756.1 1.21
2016-2017 3983.0 3603.8 1.11
2017-2018 4580.6 2353.0 1.95
2018-2019 8152.6 5773.7 1.41
2019-2020 6963.6 4519.3 1.54
source: company annual reports (2015-2016 to 2019-2020)

INTERPRETATIONS:

Here, we state that the Shareholder equity is higher in 2017-2018 with 1.94 whereas
it is lower in 2016-2017 with 1.10, Since this ratio calculates the proportion of
owners’ investment in total assets of the company, therefore, a higher ratio is
considered to be favourable for higher level of investment by the shareholders
attracts more investment by the potential shareholders as they think that the
company is safe for investing as already, the level of investment by the investor is
higher

SHAREHOLDERS EQUITY RATIO

2.5

1.5

0.5

0
2015-2016 2016-2017 2017-2018 2018-2019 2019-2020

RATIO

Chart 4.6 Shareholder equity

39
TABLE:4.7 DEBT-EQUITY RATIO (In Lakhs’)

SHAREHOLDERS DEBT EQUITY

PARTICULARS TOTAL DEBT FUND RATIO (Time)
2015-2016 1756.1 361.1 4.86
2016-2017 3603.8 379.3 9.5
2017-2018 2353.0 2227.6 1.06
2018-2019 5773.7 2378.9 2.43
2019-2020 4519.3 2444.2 1.85
source: company annual reports (2015-2016 to 2019-2020)

INTERPRETATIONS:

The debt-equity ratio is another leverage ratio that compares a Company's total
liabilities to its total shareholders' equity. In the debt ratio, a lower the percentage
means that a Company is using less leverage and has a stronger equity position.
In the year2016- 2017 the debt equity ratio is higher which means that the Company
is having a higher leverage.

DEBT EQUITY RATIO

10
9
8
7
6
5
4
3
2
1
0
2015-2016 2016-2017 2017-2018 2018-2019 2019-2020

DEBT EQUITY RATIO

Chart 4.7 Debt equity ratio

40
TABLE 4.8 PROPRIETARY RATIO:

(In Lakhs)

SHAREHOLDERS
PARTICULAR FUND TOTAL ASSET RATIO (Times)
2015-2016 361.1 2117.2 0.17
2016-2017 379.3 3983.0 0.1
2017-2018 2227.6 4580.6 0.49
20182019 2378.9 8152.6 0.29
2019-2020 2444.2 6963.6 0.35
source: company annual reports (2015-2016 to 2019-2020)

INTERPRETATIONS:

It shows that proprietary ratio was high in the year 2017-2018 with 0.49 and low in
the year 2016-2017 with 0.10. Thus, it can be said that the Company is maintaining
the Long Term solvency.

PROPRIETARY RATIO
0.50

0.40

0.30

0.20

0.10

-
2016
2017
2018
2019
2020

Chart 4.8 Proprietary ratio

41
TABLE 4.9 ASSET TURNOVER RATIO: (In Lakhs)

AVG OF TOTALL
PARTICULAR SALES ASSET RATIO (Times)
2015-2016 535.8 1088.9 1.94
2016-2017 6281.7 3050.1 1.3
2017-2018 12854.2 4281.8 1.06
2018-2019 27817.2 6366.6 1.28
2019-2020 36382.1 7558.1 0.92
source: company annual reports (2015-2016 to 2019-2020)

INTERPRETATION:

A higher ratio (2015-2016 with 1.94) is favourable, as it indicates a more efficient

use of assets. Conversely, a lower ratio (2019-2020 with 0.92) indicates the
company is not using its assets as efficiently. This might be due to excess
production capacity, poor collection methods, or poor inventory management.

ASSET TURNOVER RATIO

2.5

1.5

0.5

0
2015-2016 2016-2017 2017-2018 2018-2019 2019-2020

RATIO

Chart 4.9 Assets turnover ratio

42
TABLE: 4.10 GROSS PROFIT RATIO: (In Lakhs)

YEARS GROSS PROFIT NET SALES RATIO*100(%)

2015-2016 392.2 535.8 73.2
2016-2017 4867.7 6281.7 77.5
2017-2018 8927.9 12854.2 69.5
2018-2019 10885.5 27817.2 39.1
2019-2020 13243.8 36382.1 36.4
source: company annual reports (2015-2016 to 2019-2020)

INTERPRETATION:

Generally, the higher the gross profit margin the better. A high gross profit margin
means that the company did well in managing its cost of sales. It also shows that
the company has more to cover for operating, financing, and other costs. The gross
profit margin may be improved by increasing sales price or decreasing cost of sales.
It states that gross profit ratio is increased in the year 2016-2017 with 77.49 and it
is decreased in the year 2019-2020 with 36.48

GROSS PROFIT RATIO

80
70
60
50
40
30
20
10
0
2015-2016 2016-2017 2017-2018 2018-2019 2019-2020

Chart 4.10 Gross profit ratio

43
TABLE 4.11NET PROFIT RATIO: (In Lakhs)

YEARS NET PROFIT SALES RATIOS *100(%)

2015-2016 10.61 535.79 1.97
2016-2017 27.6 6,281.73 0.43
2017-2018 130.25 12,854.24 1.01
2018-2019 19.64 27,817.23 0.07
2019-2020 152.00 36,382.07 0.41
source: Company annual reports (2015-2016 to 2019-2020)

INTERPRETATIONS:

Here, Net profit ratio increased with the year 2015-16 with 1.97% and it is decreased
in the year 2018-2019 with 0.07.

NET PROFIT RATIO

2
1.8
1.6
1.4
1.2
1
0.8
0.6
0.4
0.2
0
2015-2016 2016-2017 2017-2018 2018-2019 2019-2020

Chart 4.11 Net profit ratio

44
TABLE 4.12 EARNING PER SHARE: (In Lakhs)

YEARS NETPROFIT
AFTERPRI NO OF EQUITY
DIVIDEND SHARES RATIOS (Times)
2015-2016 10.61 17.91 0.59
2016-2017 27.60 17.91 1.54
2017-2018 130.25 37.91 3.44
2018-2019 151.70 37.91 4
2019-2020 117.80 49.87 2.36
source: company annual reports (2015-2016 to 2019-2020)

INTERPRETATIONS:

The earning per share shows was found to be high in the year 2018-2019 with 4.00
and low in the year 2015-2016 with 0.59. the current year (2020) EPS is 2.36 and
previous year with 4.00. thus it is decrease in net profit.

EARNING PER SHARE

4
3.5
3
2.5
2
1.5
1
0.5
0
2015-2016 2016-2017 2017-2018 2018-2019 2019-2020

CHART:4.12 Earning per share

45
TABLE 4.13 DEBT TO NET WORTH RATIO: (In Lakhs)

TOTAL
YEAR LIABILITIES NET WORTH RATIO (Times)

2015-2016 1,756.09 361.09 4.86

2016-2017 3,603.77 379.27 9.5

2017-2018 2,352.98 2,227.61 1.06

2018-2019 5,773.73 2,378.92 2.43

2019-2020 4,519.33 2,444.22 1.85

source: company annual reports (2015-2016 to 2019-2020)

INTERPRETATIONS:

Here, debt to net worth ratio is increased in the year 2016-2017 with 9.50 and it is
decreased in the year 2017-2018 with 1.06.Higher debt included in the capital
employed means higher risk of insolvency. This shows that the Company’s debts
are very high and involves higher risk of insolvency

DEBT TO NETWORTH RATIO

10
9
8
7
6
5
4
3
2
1
0
2015-2016 2016-2017 2017-2018 2018-2019 2019-2020

RATIO

Chart:4.13 Debt to net worth

46
TABLE 4.14 CAPITALTURNOVER RATIO: (In Lakhs)

YEARS SALES CAPITAL RATIOS (Times)

EMPLOYED
2015-2016 535.79 388.18 1.38
2016-2017 6,281.73 1,712.19 3.66
2017-2018 12,854.24 3,482.96 3.69
2018-2019 27,817.23 6,805.74 4.08
2019-2020 36,382.07 6,480.89 5.61
Source: Company annual reports (2015-2016 to 2019-2020)

INTERPRETATIONS:

Generally, a high working capital turnover ratio is better. A low ratio indicates
inefficient utilization of working capital during the period. The ratio should be
compared with the previous years’ ratio, competitors’ or industry’s average ratio to
have a meaningful idea of the company’s efficiency in using its working capital. It
states that, in 2019-2020 it is increased with 5.61 whereas it is decreased in the
year 2015-2016 with 1.38.

Capital turnover ratio(Times)

6
5
4
3 5.61
2 3.66 3.69 4.08

1 1.38
0
2015-2016 2016-2017 2017-2018 2018-2019 2019-2020

Chart:4.14 Capital turnover ratio

47
4.15 COMPARITIVE BALANCESHEET FOR THE YEAR 2015-2016 (In Lakhs)

PARTICULARS 2016 2015 INC/DEC %

I.Equities and
liabilities
Share holders
funds
Share capital 334.90 10.08 324.82 96.99
Reserves & surplus 26.18 21.77 4.41 16.84
Other non current
liability
Long term 9.74
borrowings 1026.00 926.00 100
Deferred tax 91.74
Liabilities 1.09 0.09 1.00
Current liabilities
Trade payables 15.65 10.82 4.83 30.86
Other current 84.21
liabilities 640.00 101.10 538.90
Short term provisions 73.35 4.04 69.31 94.49
2,117.18 1074.07 1043.11 49.26
II.ASSETS
Non current Assets
Fixed assets 62.05 16.40 45.65 73.56
Investments 364.90 24.00 340.90 93.42
Other non current (41.76)
Assets 647.89 918.48 (270.59)
Current Assets
Inventory 513.25 80.00 433.25 84.41
Trade Receivables 510.00 31.19 479.81 94.08
Cash and Cash 79.04
Equivalents 19.09 4.00 15.09
2,117.18 1074.07 1043.11 49.26

48
COMPARITIVE BALANCESHEET FOR THE YEAR 2016-2017 (In Lakhs)

PARTICULARS 2017 2016 INC/DEC %

I.Equities and
liabilities
Share holders funds
Share capital 334.90 334.90 -
Reserves & surplus 44.37 26.18 18.18 4.97
Non current liabilities

Long term borrowings 1,331.95 1026.00 305.95 22.97

Deffered tax liability 0.98 1.09 8.09 825.51
Current Liabilities

Trade payables 2,094.37 15.65 2,078.72 99.25

Other current liabilities 136.05 640.00 (503.95) (370.41)
Short term provisions 40.42 73.35 (32.93) (81.46)
3,983.04 2,117.18 1865.86 46.84
II.ASSETS
Non current Assets
Fixed Assets 58.84 62.05 (3.21) (5.45)
Investments 365.68 364.90 0.78 0.21
Other non current 46.00 1,647.89 (1,601.89) (3482)
assets

Current assets

Inventory 2,407.45 513.25 1894.2 78.69

Trade Receivables 1,073.24 510.00 563 52.45
Cash and Cash 31.82 19.09 12.73 40.006
Equivalents
3,983.04 2,117.18 1865.86 46.84

49
COMPARITIVE BALANCESHEET FOR THE YEAR 2017-2018 (In Lakhs)

PARTICULARS 2018 2017 INC/DEC %

I.Equities and
liabilities

Share holders funds 2,059.07 334.90 1,724.17 84.97

Share capital 168.54 44.37 124.18 73.67
Reserves & surplus

Other non current

liability 1,253.26 1,331.95 (78.69) (6.27)
Long term borrowings 2.08 0.98 1.10 52.88
Deferred tax Liabilities
Current liabilities 643.20 2,094.37 (1,451.18) (225.61)
Trade payables 222.55 136.05 86.50 38.86
Other current liabilities 231.88 40.42 191.47 82.57
Short term provisions 4,580.59 3,983.04 597.55 13.04

II.ASSETS

Non current Assets 1,106.32 58.84 1047.48 94.68

Fixed assets 40.86 365.68 (324.82) (794.9)
Investments 141.50 46.00 95.5 67.49
Other non current
Assets

Current Assets 2,478.53 2,407.45 71.00 2.86

Inventory 713.35 1,073.24 (359.89) (50.45)
Trade Receivables 100.03 31.82 68.21 68.21
Cash and Cash 3,983.04
Equivalents 4,580.59 597.55 13.04

50
COMPARITIVE BALANCESHEET FOR THE YEAR 2018-2019 (In Lakhs)

PARTICULARS 2019 2018 Inc/Dec %

I.Equities and liabilities

Share holders funds
Share capital 2,059.07 2,059.07 -
Reserves & surplus 319.84 168.54 151.30 47.30
Other non current
liability
Long term borrowings 4,420.99 1,253.26 3,167.73 71.65
Deferred tax Liabilities 5.84 2.08 3.75 64.21
Current liabilities
Trade payables 859.05 643.20 215.85 25.12
Other current liabilities 13.55 222.55 (209.00) (1542)
Short term provisions 474.30 231.88 242.42 51.11
8,152.65 4,580.59 3572.06 43.81
II.ASSETS

Non current Assets

Fixed assets 1,204.55 1,106.32 98.22 8.154
Investments 19.95 40.86 (20.91) (104.81)
Other non current Assets 312.56 141.50 171.06 54.72
Current Assets
Inventory 3,699.95 2,478.53 1,221.42 33.01
Trade Receivables 2,226.77 713.35 1,513.43 67.96
Cash and Cash
Equivalents 688.86 100.03 588.83 85.47
8,152.65 4,580.59 3572.06 43.81

51
COMAPARITIVE BALANCESHEET FOR THE YEAR 2019-2020 (In Lakhs)

PARTICULARS 2020 2019 INC/DEC %

I.Equities and
liabilities
Share holders funds
Share capital (171.41)
758.66 2,059.07 (1,300.42)
Reserves & surplus 1,685.56 319.84 1,365.72 81.02
Other non current
liability
Long term borrowings 4,025.56 4,420.99 (395.43) (9.82)
Deferred tax
Liabilities 11.11 5.84 5.28 47.52
Current liabilities
Trade payables 327.41 859.05 (531.64) (162.37)
Other current
liabilities 9.94 13.55 (3.61) (36.31)
Short term provisions 145.30 474.30 (329.00) (226.42)

6,963.55 8,152.65 (1162.65) (16.69)

II.ASSETS

Non current Assets

Fixed assets 1,089.15 1,204.55 (115.39) (10.59)
Investments 19.95 19.95 -
Other non current
Assets 352.37 312.56 39.80 11.29
Current Assets
Inventory 5,138.88 3,699.95 1,438.93 28.00
Trade Receivables 304.93 2,226.77 (1,921.84) (630.25)
Cash and Cash
Equivalents 58.27 688.86 (630.59) (1063)

6,963.55 8,152.65 (1162.65) (16.69)

52
4.16 COMMON SIZE BALANCESHEET

SHOWING BALANCESHEET FOR THE YEAR 2015-2016 (In Lakhs)

PARTICULARS 2016 % 2015 %

I.Equities and Liabilities

Share holders funds

Share capital 334.9 15.84 10.08 0.93

Reserves and surplus 26.18 1.23 21.77 2.02

Non current Liabilities

Long term borrowings 1026.00 48.46 926.00 86.21

Deferred Tax Liabilities 1.09 0.05 0.09 0.12

Current liabilities

Trade payables 15.65 0.73 10.82 1.00

Other current liabilities 640.00 30.23 101.10 9.41

Short Term Provisions 73.35 3.46 4.04 0.37

2,117.18 100 1074.07 100

II. ASSETS

Non current Assets

Fixed assets 62.05 2.93 16.40 1.52

Investments 364.9 17.2 24.00 2.2

Other non current assets 647.89 30.56 918.48 85.51

Current Assets

Inventory 513.25 24.2 80.00 7.44

Trade receivables 510.00 24.09 31.19 1.6

Cash and Cash Equivalents 19.09 0.9 4.00 1.48

2,117.18 100 1074.07 100

53
SHOWING BALANCESHEET FOR THE YEAR 2016-2017 (In Lakhs)

PARTICULARS 2017 PERCENTAGE 2016 PERCENTAGE

I.Equities and
Liabilities
Share holders funds
Share capital 334.9 8.4 334.9 15.84
Reserves and
44.37 1.11 26.18 1.23
surplus
Non current
Liabilities
Long term
1331.95 33.44 1026 48.46
borrowings
Deferred Tax
0.98 0.02 1.09 0.05
Liabilities

Current liabilities

Trade payables 2,094.37 52.58 15.65 0.73

Other current
136.05 3.41 640 30.23
liabilities
Short Term
40.42 1.01 73.35 3.46
Provisions
3983.04 100 2117.2 100

II. ASSETS

Non current Assets

Fixed assets 58.84 1.47 62.05 2.93

Investments 365.68 9.18 364.9 17.2
Other non current
46 1.15 647.9 30.56
assets

Current Assets - -
- -
Inventory 2407.45 60.44 513.25 24.2
Trade receivables 1073.24 26.94 510 24.09
Cash and Cash
31.82 0.79 19.09 0.9
Equivalents
3983.04 100 2117.2 100

54
SHOWING BALANCESHEET FOR THE YEAR 2017-2018 (In Lakhs)

PARTICULARS 2018 PERCENTAGE 2017 PERCENTAGE

I.Equities and
Liabilities
Share holders funds
Share capital 2059.1 44.95 334.9 8.4
Reserves and surplus 168.54 3.67 44.37 1.11
Noncurrent
Liabilities
Long term borrowings 1253.3 27.36 1332 33.44
Deferred Tax
2.08 0.04 0.98 0.02
Liabilities

Current liabilities

Trade payables 643.2 14.04 2094.4 52.58

Other current liabilities 222.55 4.85 136.05 3.41
Short Term Provisions 231.88 5.06 40.42 1.01
4580.6 100 3983 100

II. ASSETS

Non current Assets

Fixed assets 1106.3 24.15 58.84 1.47

Investments 40.86 0.89 365.68 9.18
Other non current
141.5 3.08 46 1.15
assets

Current Assets

Inventory 2478.5 54.1 2407.5 60.44

Trade receivables 713.35 15.57 1073.2 26.94
Cash and Cash
100.03 2.18 31.82 0.79
Equivalents
4580.6 100 3983 100

55
SHOWING BALANCESHEET FOR THE YEAR 2018-2019 (In Lakhs)

PARTICULARS 2019 PERCENTAGE 2018 PERCENTAGE

I.Equities and Liabilities

Shareholders funds
Share capital 2059.1 25.25 2059.1 44.95
Reserves & surplus 319.84 3.92 168.54 3.67

Non-current liabilities

Long term borrowing 4421 54.22 1253.3 27.36

Deferred tax liability 5.84 0.07 2.08 0.04

Current Liabilities

Trade payables 859.05 10.53 643.2 14.04

Other current liabilities 13.55 0.16 222.55 4.85
Short term provisions 474.3 5.81 231.88 5.06
8152.7 100 4580.6 100

II. ASSETS

Non current assets

Fixed assets 1204.6 14.77 1106.3 24.15

Investments 19.95 0.24 40.86 0.89
Other non current assets 312.56 3.83 141.5 3.08

Current Assets

Inventory 3700 45.38 2478.5 54.1

Trade receivables 2226.8 27.31 713.35 15.57
Cash and Cash equivalents 688.86 8.44 100.03 0
8152.7 100 4580.6 100

56
SHOWING BALANCESHEET FOR THE YEAR 2019-2020 (In Lakhs)

PARTICULARS 2020 PERCENTAGE 2019 PERCENTAGE

I.Equities and Liabilities
Shareholders funds
Share capital 758.66 10.89 2,059.07 25.25
Reserves & surplus 1,685.56 24.20 319.84 3.92

Non-current liabilities

Long term borrowing 4,025.56 57.80 4,420.99 54.22

Deferred tax liability 11.11 0.15 5.84 0.07

Current Liabilities

Trade payables 327.41 4.70 859.05 10.53

Other current liabilities 9.94 0.14 13.55 0.16
Short term provisions 145.30 2.08 474.30 5.81
6,963.55 100.00 8,152.65 100.00

II. ASSETS

Non current assets

Fixed assets 1,089.15 15.64 1,204.55 14.77

Investments 19.95 0.28 19.95 0.24
Other non current assets 352.37 5.06 312.56 3.83
Current Assets
Inventory 5,138.88 73.00 3,699.95 45.38
Trade Receivables 304.93 4.00 2,226.77 27.31
Cash and cash
58.27 0.83 688.86 8.44
equivalents
6,963.55 100.00 8,152.65 100.00

57
 TREND ANALYSIS

4.17 TABLE Showing trend analysis of current Assets

(In Lakhs)

YEARS X Y X2 XY TREND DEVIATIONS

2015-2016 -2 1042.3 4 4169.4 32668 -31625
2016-2017 -1 3512.5 1 3512.5 36298 -32786
2017-2018 0 3291.9 0 0 39929 -36637
2018-2019 1 6615.6 1 6615.6 43559 -36944
2019-2020 2 5502.1 4 22008 47190 -41688
19964 10 36306

Where, Deviation = y – Trend value

Y = a + b(x)

Where, a = Σ y / n

b = Σ xy \ Σ x2

a = Σ y / n = 19964.4 / 5 = 39928.88

b = Σ xy \ Σ x2 = 13922.7 / 10 = 3630.586

2015-2016 = 39928.88+ 3630.586 (-2) =32667.71

2016-2017 = 39928.88 + 3630.586(-1=36298.29

2017-2018 = 39928.88 + 3630.586(0)= 39928.88

2018-2019 = 39928.88 + 3630.586(1) =43559.47

2019-2020 = 39928.88+ 3630.586(2) =47190.05

58
60000

50000

40000

30000

20000

10000

0
2015-2016 2016-2017 2017-2018 2018-2019 2019-2020
-10000

-20000

-30000

-40000

-50000

TREND DEVIATIONS

4.17 Chart showing trend analysis of current asset.

59
4.18 Table Showing trend analysis of current Liabilities

(In Lakhs)

YEARS X Y X2 XY TREND DEVIATIONS

2015-2016 -2 729 4 2916 -507.5 1236.5
2016-2017 -1 2270.8 1 2270.8 338.95 1931.9
2017-2018 0 1097.6 0 0 1185.4 -87.8
2018-2019 1 1346.9 1 1346.9 2031.9 -684.95
2019-2020 2 482.7 4 1930.8 2878.3 -2395.6
5927 10 8464.5

Where, Deviation = y – Trend value

Y = a + b(x)

Where, a = Σ y / n

b = Σ xy \ Σ x2

a = Σ y / n = 5927/ 5 = 1185.4

b = Σ xy \ Σ x2 = 8464.5/ 10 = 846.45

2015-2016 = 1185.4+ 846.45 (-2) = -507.5

2016-2017 = 1185.4 + 846.45(-1) =338.95

2017-2018 = 1185.4 + 846.45(0) = 1185.4

2018-2019 = 1185.4 + 846.45(1) =2031.85

2019-2020 = 1185.4+ 846.45(2) =2878.3

60
4000

3000

2000

1000

0
2015-2016 2016-2017 2017-2018 2018-2019 2019-2020
-1000

-2000

-3000

TREND DEVIATIONS

4.18 chart showing trend analysis of current liability.

61
 CHAPTER V

FINDINGS, SUGGESTIONS, CONCLUSIONS

5.1 FINDINGS:
• In the year 2020 the return on asset was 0.016 whereas it is increased in the
year2018 with 0.02 and it is decreased in the year 2016 with 0.005

• In the year 2020 the fixed asset to net worth ratio was 0.45 whereas it is increased
in the year 2019 with 0.51 and decreased in the year 2017 with 0.16

• The proprietary ratio was increased in the year 2017-2018 with 0.49 whereas it is
decreased in the year 2016-2017 with 0.10

• The asset turnover ratio was decreased in the year 2019-2020 with 0.92 whereas it
is increased in the year 2015-2016 with 1.944

• The gross profit ratio was decreased in the year 2019-2020 with 36.40 whereas it is
increased in the year 2016-2017 with 77.49

• The Net profit ratio was increased in the year 2015-2016 with 1.97% whereas it is
decreased in the year 2018-2019 with 0.07

• The debt equity ratio for current year was 1.85 whereas it is increased in the year
2016-2017 with 9.50 and decreased in the year 2017-2018 with 1.06

• The trend analysis shows that the current asset and current liabilities of past five
years have drastically changed and thus the company’s debt, turnover is much lower
comparing to year by year.

62
5.2 SUGGESTIONS:

❖ Company must achieve the targets by utilizing the current assets and
reducing current liabilities.

❖ The company may keep better liquidity position to meet its obligations and to
maintain sufficient working capital.

❖ The company should focus on the financial plans and to create strategic
partnership and to enhance the ideas for future predictions.

❖ Management should give more importance towards the raise in investments

in fixed assets by way of acquiring from the available excessive cash and
bank balance and other working capital assets.

❖ Company need to improve their present stock turnover ratio by way of

conducting more promotional activities for their products and need to give
effective training and development program to their sales executives and
staffs.

❖ Management needs to improve their income generating capacity by way of

discarding the old assets which are not giving any income and to acquire the
new assets and technology which are having high potentiality in production.

63
5.3 CONCLUSION

The following some important conclusions arc drawn from the available data of the
company.

The company has increasing cash and bank balances, which in incline with the
increase requirement of working capital for increasing as the percentages of cash
and bank balances.it reveals the strength and weakness of the firm. It has to know
that investing in a company involves lot of risk, so before putting into a company
they have to check the past records and based on that they have to act accordingly.
According, to this project I came to know, by comparing to the previous years the
current year was incurred some losses and the Company’s liquidity position has to
increase so that they can compensate future losses so that it cannot face financial
stress in the future. To proper maintain of financial performance to achieve the
Company goal. By analysing the financial performance of the company, it is inferred
that the Company’s financial position is found to be moderate. The ratios of the
Company are not much satisfactory comparing to previous years. The profitability
of the Company is not much satisfactory.

Management should take the corrective action towards the reduction of operating
activities cost and indirect expenses of the company they are burdening the
operating and financial risk of the company. The company have to make optimum
utilization of the funds there is a rise in reserves and surplus to satisfy future and
uncertainties.

64
REFERENCE:

• Fabozzi, and Peterson F.J, (2003), “Financial Management and Analysis”,

Second Edition, S. l, John Wiley and Sons, Inc,
• Gitman, L.J., (2004), “Principles of Managerial Finance”, 10th Edition. S. l,
Pearson Education, Australia.
• Islam,&Semeen (2013). A short history of financial ratio analysis. The
Accounting Review, 43(2), 284-294.
• Jami, M., &Bahar, M. N. (2016). Analysis of Profitability Ratios to Evaluation
of Performance of Indian Automobile Industry. Journal of Current Research
in Science, (1), 747.
• Lawrence D.Sand Charles W. H, (1991), “Introduction to Financial
Management”, 6th Edition, McGraw-Hill.
• Mondal, & Roy (2013). Some empirical bases of financial ratio analysis. The
Accounting Review, 40(3), 558.
• FINANCIAL MANAGEMENT, Author PAUL NEWTON & HELON
• FINANCIAL MANAGEMENT Author CHANDRA PRASANA 6th ED TMH
• FINANCIAL MANAGEMENT Author KHAN M.Y/JAIN P.K 5th ED
• www.wikepedia.com

65
 APPENDIX

CONSOLIDATED BALANCESHEET 2015-2016 TO 2019-2020 (in rupees)

PARTICULARS 2016 2017 2018 2019 2020

I.Equities and
liabilities

Share holders
funds
Share capital 3,34,90,200 3,34,90,200 20,59,07,160 20,59,07,160 75,865,500
Reserves & surplus 26,18,440 44,36,600 1,68,54,264 3,19,84,410 168,556,435

Non
currentLiabilties
Long term 1026,00,000 13,31,94,600 12,53,26,000 44,20,99,186 402,556,220
borrowings
Deferred tax 1,09,218 97,967 2,08,352 5,83,666 1,111,218
Liabilities

Current liabilities
Trade payables 15,65,006 20,94,37,271 6,43,19,591 8,59,05,038 32,741,375
Other current 6,40,00,000 1,36,05,400 2,22,55,400 13,55,400 994,355
liabilities
Short term 73,34,891 40,41,535 2,31,88,278 4,74,30,117 14,529,940
provisions
21,17,17,755 39,83,03,573 45,80,59,045 81,52,64,979 696,355,042
II.ASSETS

Non current
Assets

Fixed assets 62,04,867 58,83,930 11,06,32,328 12,04,54,812 108,915,419

Investments 3,64,89,832 3,65,67,971 40,85,771 19,95,000 1,995,000
Other non current 6,47,89,044 46,00,000 1,41,50,000 3,12,56,457 35,236,919
Assets

Current Assets
Inventory 513,25,000 24,07,45,477 24,78,53,138 36,99,95,319 513,887,978
Trade Receivables 510,00,000 10,73,24,120 7,13,34,767 22,26,77,361 30,493,080
Cash and Cash 19,09,012 31,82,075 1,00,03,041 6,88,86,030 5,826,646
Equivalents
21,17,17,755 39,83,03,573 45,80,59,045 81,52,64,979 696,355,042

66
Statement of Profit And Loss For The Year 2015-2016 (in rupees)

INCOME As on
Note No. As on 31.03.2016 31.03.2015
Revenue from
I operations 11 5,35,78,565 6,35,93,782.00

II Other income 12 20,52,138 21,06,184.76

III Total revenue (I + II) 5,56,30,703.13 6,56,99,966.76

IV Expenses
Cost of Material
consumed 13 1,43,57,048.00 1,51,52,565.00
Depreciation and
Amortisation 6 8,63,033.46 2,62,803.85
Employee Benefit
Expenses 14 2,50,04,575.00 3,30,81,860.00

Finance Cost 15 2,508.74 2,038.36

Other Expenses 16 1,43,42,439.00 1,58,80,753.00

Total expenditure 5,45,69,604.20 6,43,80,020.21

Profit /(loss) for the

V period 10,61,098.93 13,19,946.55

VI Extraordinary items - -

VII Profit before tax 10,61,099 13,19,946.55

VIII Tax Expense

Current Tax 2,60,681 3,79,976.88

Deferred Tax 1,09,218 9,163.00

IX Profit after taxes 6,91,200.00 9,30,807.00

Earnings per share

X (Rs.)
(a) Basic 6.86 9.23
(b) Diluted 6.86 9.23

67
Statement of Profit And Loss For The Year 2016-2017 (in rupees)

As on As on
INCOME NOTE NO 31.3.2017 31.3.2016
Revenue from
I operations 12 62,81,72,732 5,35,78,565.00

II Other income 13 1,58,184 20,52,138.13

III Total revenue (I + II) 62,83,30,915.54 5,56,30,703.13

IV Expenses
Cost of Material
consumed 14 57,94,95,232.57 1,43,57,048.00
Depreciation and
Amortisation 6 10,88,456.17 8,63,033.46
Employee Benefit
Expenses 15 2,66,57,156.00 2,50,04,575.00

Finance Cost 16 3,380.98 2,508.74

Other Expenses 17 1,83,26,602.00 1,43,42,439.00

Total expenditure 62,55,70,827.71 5,45,69,604.20

Profit /(loss) for the

V period 27,60,087.83 10,61,098.93

VI Extraordinary items - -

VII Profit before tax 27,60,088 10,61,098.93

VIII Tax Expense

Current tax 8,43,961 2,60,680.72

Deferred tax 97,967 1,09,218.00

IX Profit after taxes 18,18,160.00 6,91,200.00

Earnings per share

X (Rs.)

(a) basic 0.54 0.21

(b) Diluted 0.54 0.21

68
Statement of profit and loss for the year 2017-2018 (in rupees)
NOTE
INCOME NO 31.3.2018 31.3.2017

I Revenue from operation 12 1,28,54,23,551 62,81,72,731.54

II Other income 13 1,24,12,090 1,58,184.00

III Total revenue (I + II) 1,29,78,35,641.18 62,83,30,915.54

IV Expenses
Cost of Material 14
consumed 1,19,96,44,756.24 57,94,95,232.57
Depreciation and 6
Amortisation 1,95,24,787.00 10,88,456.17
Employee Benefit 15
Expenses 1,34,47,156.00 2,66,57,156.00

Finance Cost 16 83,016.00 3,380.98

Other Expenses 17 5,21,10,564.78 1,83,26,602.00

Total Expenditure 1,28,48,10,280.02 62,55,70,827.71

Profit /(loss) for the

V period 1,30,25,361.16 27,60,087.83

VI Extraordinary items - -

VII Profit before tax 1,30,25,361 27,60,087.83

VIII Tax Expense

- Current Tax 43,39,218 8,43,960.97

- Deferred Tax 1,10,385 97,967.00

IX Profit after taxes 85,75,758.28 18,18,160.00

X Earnings per share (Rs.)

Basic 2.26 0.48

0.48
Diluted 2.26

69
Statement of profit and loss for the year 2018-2019 (in rupees)
NOTE As on
INCOME NO 31.03.2019 As on 31.03.2018

Revenue from 12
I operations 2,78,17,22,876 1,28,54,23,551

II Other income 13 3,06,47,119 1,24,12,090

III Total revenue (I + II) 2,81,23,69,995 1,29,78,35,641

IV Expenses
Cost of Material
consumed 14 2,67,28,67,740 1,19,61,44,756
Depreciation and 6
Amortisation 1,78,57,116 1,95,24,787
Employee Benefit 15
Expenses 5,83,33,779 3,78,84,235
16
Finance Cost 52,84,652 83,016

Other Expenses 17 3,83,80,147 2,76,73,486

Total Expenditure 2,79,27,23,434 1,28,13,10,280

Profit /(loss) for the

V period 1,96,46,561 1,65,25,361

VI Extraordinary items - -

VII Profit before tax 1,96,46,561 1,65,25,361

VIII Tax Expense

- Current Tax 41,41,100 45,80,352

- Deferred Tax 3,75,314 1,10,385

IX Profit after taxes 1,51,30,146 1,18,34,624

Earnings per share

X (Rs.)

Basic 3.99 3.12

Diluted 3.99 3.12

70
Statement of profit and loss account for the year 2019-2020 (in rupees)
As on As on
INCOME Note No. 31.03.2020 31.03.2019

Revenue from
I operations 12 3,63,82,07,145 2,78,17,22,876

II Other income 13 6,94,625 3,06,47,119

III Total revenue (I + II) 3,63,89,01,770 2,81,23,69,995

IV Expenses
Cost of Material
consumed 14 3,50,57,69,021 2,67,28,67,740
Depreciation and
Amortisation 6 1,59,26,536 1,78,57,116
Employee Benefit
Expenses 15 80,95,376 5,83,33,779

Finance Cost 16 2,14,06,989 52,84,652

Other Expenses 17 7,25,44,417 3,83,80,147

Total Expenditure 3,62,37,42,338 2,79,27,23,434

Profit /(loss) for the

V period 1,51,59,431 1,96,46,561

VI Extraordinary items - -

VII Profit before tax 1,51,59,431 1,96,46,561

VIII Tax Expense

- Current Tax 40,10,400 41,01,100

- Deferred Tax 2,75,000 3,75,314

IX Profit after taxes 1,20,55,560 1,51,70,146

Earnings per share

X (Rs.)

Basic 3.00 4.00

Diluted 3.00 4.00

71
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