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CHAPTER 1
INTRODUCTION














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CHAPTER 1: INTRODUCTION

1.1 About the Topic

The project undertaken is on RATIO ANALYSIS IN ALSTOM T&D INDIA
LIMITED.
Financial Analysis describes about the liquidity position of the company.
Financial analysis is the process of identifying the financial strengths and weaknesses
of the firm and establishing relationship between the items of the balance sheet and
profit & loss account. Financial ratio analysis is the calculation and comparison of
ratios, which are derived from the information in a companys financial statements.
Liquidity refers to the ability of a concern to meet its current obligations as & when
there becomes due. The short term obligations of a firm can be met only when there
are sufficient liquid assets.
Solvency ratio of any company is worked out for knowing the repay capacity of any
company of long term borrowings. While making of repayment of borrowing the two
component principle as well as interest is to be repaid.
This project describes about the profit of ALSTOM T&D INDIA LIMITED.
The primary objectives of business undertaking are to earn profits. Because profit is
the engine, that drives the business enterprise.














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1.2 Scope of the Study
Ratio analysis is necessary to establish the relationship between two accounting figures to
highlight the significant information to the management or users who can analyse the
business situation and to monitor their performance in a meaningful way.
This research is useful for the various users of accounting information and for the researcher
for further research. Here the scope of the study is to analyse the financial ratios:-current
ratio, quick ratio, cash ratio, debt equity ratio etc, of ALSTOM T&D INDIA LTD.














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1.3 Objectives of Study
The major objectives of the study are to know about financial strengths and weaknesses of
ALSTOM T&D INDIA LTD. through FINANCIAL RATIO ANALYSIS.
The main objectives of the study are as under:

To know the overall trends of financial position of the company.
To analyze the liquidity position of the company.
To analyze the long term solvency of the company.
To know the profitability of the company over the years.



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1.4 Research Methodology
Research Design
A research design is the specification of method and procedure for accruing the information
needed. It is overall operational pattern of frame work of project that stipulates what
information is to be collected for source by that procedures
Descriptive Research design is appropriate for this study.
Descriptive study is used to study the situation. This study helps to describe the situation. A
detail descriptive about present and past situation can be found out by the descriptive study.
In this involves the analysis of the situation using the secondary data.

Data Collection
This research study is based on secondary data, means data that are already available i.e. the
data which have been already collected and analyzed by someone else.
Secondary data are used for the study of Ratio analysis of this company. To collect the data I
have referred Company Annual Report, last 3 year balance sheet, and .
The information is collected through secondary sources during the project. That information
is utilized for calculating performance evaluation and based on that, interpretations are made.
Sources of secondary data:
1. Most of the calculations are made on the financial statements of the company provided
statements.
2. Referring standard texts and referred books collected some of the information regarding
theoretical aspects.



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1.5 Limitations of the Study
Lack of sufficient time to study of the above topic became a hindering factor in my
research.
Different accounting procedures may make results misleading.
Non monetary aspects are not considered making the results unreliable.
In spite of precautions taken there are certain procedural and technical limitations.
Accounting concepts and conventions cause serious limitation to financial analysis.
The latest financial data could not be reported as the companys websites have not
been updated.



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CHAPTER-2
COMPANY PROFILE









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CHAPTER 2: COMPANY PROFILE

2.1 ALSTOM T&D India Limited
With a 100 years of presence in India, Alstom T&D India is a leading player in the Power
Transmission business with a product portfolio ranging from Medium Voltage to Extra High
Voltage (765 kV) for the Utility, Industry and Infrastructure markets. Alstom T&D India has
a predominant presence in all stages of the power supply chain, with a wide range of products
that include Power Transformers, Circuit Breakers, Gas Insulated Switchgears, Instrument
Transformers, Protection Relays and Power System Automation equipments.
Over the years it has become the leading turnkey solution provider for Transmission Projects,
hvdc, e-BOP projects, facts, Network Management System and Power Line Carrier
Communication. Alstom Grid Indias widely expanded and highly skilled Service business
helps its customers to install commission and maintain its equipments and offerings to
achieve the best results.
With 3500+ employees and 8 manufacturing units, Alstom T&D India is clearly the
undisputed market leader in India and is future ready to meet the demands for equipments
and services even at Ultra High Voltage levels (1200 kV).
With an increased demand for energy worldwide, and consumption forecasts predicting
energy production increases of around 80% between 2006 and 2030*, Alstom T&D Indias
dedicated teams combine their skills to deliver customer-valued solutions to build smarter,
more stable, more efficient and environmentally friendly electricity grids worldwide.

Alstom T&D India, as one of the three global players in electrical transmission, boasts
technologies and expertise which have always ensured higher safety, reliability, capacity of
power grids around the world and well-positioned to meet the energy challenges of today and
tomorrow.


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Alstom T&D India is the first company in India to successfully manufacture India's first 1200
kV Capacitor Voltage Transformer and invest in manufacturing of all transmission products
upto 765 kV and above. It is also the first company to manufacture fully localized 765 kV
Power Transformer and Instrument Transformer and commission Indias first indigenously
developed 765 kV Substation for LANCO Infratech. Alstom T&D India is the first company
tomanufacture 800 kV Circuit Breaker for NTPC Sipat and deliver first 765 kV substation in
India.
2.2 History of Alstom
YEAR EVENTS
2000 - The Scheme of Amalgamation, under which the Kerala-based Alstom T&D Distribution
Transformers Ltd. would merge with Alstom Ltd. has been duly sanctioned by the High Courts at
Calcutta and Ernakulam.

- Alstom Ltd, the domestic outfit of Franc's $20-billion Alstom is considering a merger with ABB
Alstom Power India, another group company, to create the country's largest power and energy
equipment maker.

- Alstom Ltd has informed that at the meeting of the Board of Directors of the company held on
June 21, 2002 Mr K KMoradian, Managing Director submitted his resignation and requested to
be relieved from the close of business on June 30, 2002. The Board has accepted the same, the
Board appointed Dr Krishna Pillai, Managing Director of Alstom Power India Ltd and already a
member of the Board, as the Deputy Chairman and Joint Managing Director of the company. The
Board has also co-opted Mr Ajay Dhagat, who is presently heading the company's T&D segment,
as an Additional Director was appointed as Joint Managing Director.

2002

-Board co-opted Mr Ajay Dhagat as the Additional Director on the Board of the company, Mr K
KMoradian MD submits his resignation, Dr Krishna Pillai appointed as MD.



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2003

-Promoters of the company offload 4.15% of the equity to persons acting in concert.
-Signs a 50mn Euro contract with Jayaprakash Power Ventures Ltd India, for the supply of major
hydro-generating plant equipment for 400MW.
-Bags Rs.87cr contract from Hindalco Industries.
-Sells its Transmission & Distribution activities to Areva for 950 mn Euros.
-Members approve for delisting of shares from Madra Stock Exchange.
-Arevabuyes Alstom's worldwide Transmission & Distribution business

2004

-Alstom bags order worth Rs 500 Cr from GVK Industries

2005

- HSBC Securities & Capital Markets (India) Pvt Ltd ("Manager to the Offer") for and on behalf
of Areva T&DSA ("Acquirer) and Areva T&D Holding SA ("Person Acting in Concert"),
pursuant to Regulation 10 and 12 and other applicable provision and as required under the
Securities and Exchange Board of India (Substantial Acquisition of Shares & Takeovers)
Regulation, 1997 and subsequent amendments thereto ("Takeover Regulations") has announced
the following to the shareholders of Alstom Ltd ("Target Company"):
Pursuant to Regulation 10 and 12 and other applicable provision of Chapter III of the Takeover
Regulations the Acquirer is making an Open Offer to the shareholders of the Target Company to
acquire up to 7,977,495 fully paid up equity shares of Rs 10/- each of the Target Company
representing up to 20% of the present fully paid up equity share capital of the Target Company at
Rs 75.03/- per equity share ("Offer Price") to all the shareholders of the Target Company who
tender their equity shares and whose equity shares are acquired by the Acquirer.
2005
-Company has changed its name from Alstom Ltd. to Areva T&D India Ltd.

2012
-Company has changed its name from Areva T&D India Ltd. to Alstom T&D India Ltd.
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History of Alstom in India

1911:
First factory built in Kolkata.
1950:
Participated in setting up the first major manufacturing unit of BHEL, Bhopal
1959:
Power Boilers facility established in Durgapur
1963:
Boiler/Mill facility established in Shahabad
1992:
Asea Brown Boveri Management Limited (ABBML) established in Bombay
1999:
Asea Brown Boveri Management Limited (ABBML) became ABB ALSTOM Power India
Limited (ABBPL)
2000:
ABB ALSTOM Power India Limited (ABBPL) became ALSTOM Power India Limited
2002:
ALSTOM Power India Limited became ALSTOM Projects India Ltd.
2004:
Hydro manufacturing facility established in Vadodara
2005:
Strategic partnership with Infosys in the areas of Global R&D, Engineering and Engineering
services.
2008:
Global Technological Centre (GTC) established in Vadodara
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2009:
- Foundation stone laid of power equipment manufacturing plant at Mundari in Gujarat.
- Three Green Field manufacturing units were setup in Hosur, Padappai and Vadodara
2012: Areva T&D became Alstom T&D India Limited
ALSTOM Projects India Limited became ALSTOM India Limited

Board of Directors:

T.S. Vishwanath,

RathindraNathBasu, Managing Director

S.M. Momaya, Whole-time Director & Chief Financial Officer2

Michel Augonnet3

Pierre Laporte

Michel Serra4

Chandan Roy

Ravi Kumar Krishnamurthy (Alternate Director)

Company Secretary:-
Manoj Prasad Singh
Auditors:-
M/s. S.N. Dhawan& Co.
Chartered Accountants
Cost Auditors:-
M/s. Shome and Banerjee
Cost Accountants
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Bankers:-
Axis Bank Limited
Citibank N.A.
Credit Agricole CIB
HDFC Bank Limited
HSBC
ICICI Bank Limited
IDBI Bank Limited
Standard Chartered Bank
State Bank of India
Committees of Directors:-

Audit Committee:-

T.S. Vishwanath, Chairman
Pierre Laporte
Chandan Roy

Stakeholders Relationship Committee:-

T.S. Vishwanath, Chairman
RathindraNathBasu
Chandan Roy

Corporate Social Responsibility Committee:-

Chandan Roy, Chairman
RathindraNathBasu
S.M. Momaya
Nomination and Remuneration Committee:-

Chandan Roy, Chairman
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T.S. Vishwanath
Michel Augonnet

Registered Office:-

A-18, First Floor, Okhla Industrial Area,
Phase II, New Delhi - 110 020.
Tel. No. 91 11 41610660
Fax No. 91 11 41610659

Website:-
www.alstom.com/india

Corporate Identity Number
L31102DL1957PLC193993
Registrars and Share Transfer Agents

C B Management Services (P) Limited
P-22, Bondel Road, Kolkata - 700 019
Tel. No. 91 33 40116700 (100 lines)
Fax No. 91 33 40116739
Email: rta@cbmsl.com






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2.3 Products and Services Offered by the Company

Areva T&D provides comprehensive electrical solutions for utilities and electrointensive
industries. It builds high and mediumvoltage substations and develops technologies to
manage power grids worldwide
Transmission It offers an extensive range of safe, topperforming equipment, turnkey
systems and integrated services for optimum network management and highvoltage
substation operation.
Distribution It offers Quality, costefficient equipment and services that guarantee the
secure development and enhancement of your distribution network.
Power Generation AREVA T&D offers solutions for the internal electrical distribution
and grid connection of all types of power plant and renewable energies.
Oil & Gas Areva T&D offers safe, reliable electrical products, packages and systems put
AREVA T&D at the forefront of solutions adapted to demanding oil and gas industry
applications.
Mining & Metal For mining its product packages and turnkey solutions cover main
receiving substations, MV switching substations, power and distribution transformers, LV
panels, monitoring & control centers and automation systems.
Railways From the National Grid to rails OCS (Overhead Catenaries System) or third
rail applications, AREVA T&D offers a wide range of equipment and engineering solutions
for track power supply of trains, metros and light rail.
Industries & Buildings It offers comprehensive advanced, mediumvoltage solutions for
safe, reliable electrical distribution of major industrial, commercial and public
infrastructures.

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2.4 Company Structure, Products, and Services
Alstom operates in three main business areas: Power generation, rail transport, and
transmission.
Power Generation:-
Alstom power activities, collectively called Alstom Power Systems, include the design,
manufacturing, services and supply of products and systems for the power generation sector
and industrial markets. The group covers most energy sources, including gas, coal, nuclear,
hydro, wind. Power Systems provides components for power generation including: boilers,
steam turbines and gas turbines, wind turbines, generators, air quality control systems and
monitoring and control systems for power plants, as well as related products. It has a special
focus on boilers and emissions control equipment.
Power Systems also provides services such as product retrofitting for nuclear and fossil steam
turbines and refurbishment of existing power plants. It performs maintenance and servicing
under long-term agreements for its own turbines, as well as those manufactured by GE and
Siemens. In Russia, the company services nuclear equipment under a join agreement
with Atomenergomash. In Brazil, Alstom, together with Bardella, run a joint venture
called IndstriaMetalrgica e Mecnica da Amaznia to build hydroelectic power plants
throughout the Amazon and Latin American regions. In India, Alstom has a joint venture
with Bharat Forge to manage power production from start to finish.
Transport
Alstom Transport develops and markets a complete range of systems, equipment and service
in the railway industry. The division has annual sales of 5.5 billion as of 2013. It is one of
the world's largest manufacturers of high-speed trains, tramways and metros, electrical and
diesel trains, information systems, traction systems, power supply systems and track
work. The company also operates in the rail infrastructure market, designing, producing and
installing infrastructure for the rail network. These includes information solutions,
electrification, communication systems, track laying, station utilities, as well as workshops
and depots. Maintenance, rebuilding, and renovation services are also provided by the
company. Alstom Transport operates in 70 countries and employs 26,000 people.
Notable products includes series production of the TGV high-speed trains with over 650
trainsets sold over 25 years, as well as the AGV (Automotrice Grande Vitesse) unveiled in
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February 2008 and which entered service with NTV in Italy in 2012.
[71]
The company also
produces Citadis trams; as of 2007, over 1100 Citadis trams are in use by 28 cities
including Dublin, Algiers, Barcelona, Melbourne and Paris. Since 2002, Alstom has
manufactured the Pendolino tilting train, following the acquisition of Fiat Ferroviaria.
Alstom Grid
A third business section based on power transmission was formed on 7 June 2010 with the
acquisition of the transmission business of Areva SA.The division manufactures equipment
for the entire chain of electrical power transmission, including ultra-high voltage transmission
lines (both AC and DC). Alstom Grid is headquartered at La Defence, the business district
west of Paris, and has four main businesses: electrical transmission system products, power
electric system, automation, and service. Alstom Grid has roughly 10% of the global market
sharer in the world
Alstom Renewable Power
Offers the most comprehensive range of renewable power generation solutions for integrated
Power plants covering hydroelectricity, wind, geothermal, biomass, solar(concentrated
thermal and photovoltaic) as well as wave and tidal stream energies. In addition, it provides
individual components including all types of turbines and generators, and has a full range of
services, including plant modernisation, maintenance and operational support. Renewable
Power has aworkforce of 9,200 andbooked orders of 2.5 billionin 2013-14.

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2.5 Financial Analysis
Financial analysis is the process of identifying the financial strengths and weaknesses of the
firm and establishing relationship between the items of the balance sheet and profit & loss
account. Financial ratio analysis is the calculation and comparison of ratios, which are
derived from the information in a companys financial statements. The level and historical
trends of these ratios can be used to make inferences about a companys financial condition,
its operations and attractiveness as an investment. The information in the statements is used
by
Trade creditors, to identify the firms ability to meet their claims i.e. liquidity position
of the company.
Investors, to know about the present and future profitability of the company and its
financial structure.
Management, in every aspect of the financial analysis. It is the responsibility of the
management to maintain sound financial condition in the company.

Ratio Analysis -
The term Ratio refers to the numerical and quantitative relationship between two items or
variables. This relationship can be exposed as-
Percentages
Fractions
Proportion of numbers
Ratio analysis is defined as the systematic use of the ratio to interpret the financial
statements. So that the strengths and weaknesses of a firm, as well as its historical
performance and current financial condition can be determined Ratio reflects a quantitative
relationship helps to form a quantitative judgment.




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Steps in Ratio Analysis
The first task of the financial analysis is to select the information relevant to the
decision under consideration from the statements and calculates appropriate ratios.
To compare the calculated ratios with the ratios of the same firm relating to the past or
with the industry ratios. It facilitates in assessing success or failure of the firm.
Third step is to interpretation, drawing of inferences and report writing conclusions
are drawn after comparison in the shape of report or recommended courses of action.

Basis or Standards of Comparison
Ratios are relative figures reflecting the relation between variables. They enable analyst to
draw conclusions regarding financial operations. They use of ratios as a tool of financial
analysis involves the comparison with related facts. This is the basis of ratio analysis. The
basis of ratio analysis is of four types.

ratio, of the sum most progressive and successful competitor firm at the same point of
time.
Industry ratio, the industry ratios to which the firm belongs to Projected ratios, ratios
of the future developed from the projected or pro forma financial statements

Nature of Ratio Analysis
Ratio analysis is a technique of analysis and interpretation of financial statements. It is the
process of establishing and interpreting various ratios for helping in making certain decisions.
It is only a means of understanding of financial strengths and weaknesses of a firm. There are
a number of ratios which can be calculated from the information given in the financial
statements, but the analyst has to select the appropriate data and calculate only a few
appropriate ratios. The following are the four steps involved in the ratio analysis.
Selection of relevant data from the financial statements depending upon the objective
of the analysis.
Calculation of appropriate ratios from the above data.
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Comparison of the calculated ratios with the ratios of the same firm in the past, or the
ratios developed from projected financial statements or the ratios of some other firms
or the comparison with ratios of the industry to which the firm belongs.
Guidelines or Precautions for Use of Ratios
The calculation of ratios may not be a difficult task but their use is not easy. Following
guidelines or factors may be kept in mind while interpreting various ratios is-
Accuracy of financial statements
Objective or purpose of analysis
Selection of ratios
Use of standards
Caliber of the analysis

Importance of Ratio Analysis
Ratio analysis is necessary to establish the relationship between two accounting figures to
highlight the significant information to the management or users who can analyse the
business situation and to monitor their performance in a meaningful way. The following are
the advantages of ratio analysis:
(1) It facilitates the accounting information to be summarized and simplified in a required
form.
(2) It highlights the inter-relationship between the facts and figures of various segments of
business.
(3) Ratio analysis helps to remove all type of wastages and inefficiencies.
(4) It provides necessary information to the management to take prompt decision relating to
business.
(5) It helps to the management for effectively discharge its functions such as planning,
organizing, controlling, directing and forecasting.
(6) Ratio analysis reveals profitable and unprofitable activities. Thus, the management is able
to concentrate on unprofitable activities and consider to improve the efficiency.
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(7) Ratio analysis is used as a measuring rod for effective control of performance of business
activities.
(8) Ratios are an effective means of communication and informing about financial soundness
made by the business concern to the proprietors, investors, creditors and other parties.
(9) Ratio analysis is an effective tool which is used for measuring the operating results of the
enterprises.
(10) It facilitates control over the operation as well as resources of the business.
(11) Effective co-operation can be achieved through ratio analysis.
(12) Ratio analysis provides all assistance to the management to fix responsibilities.
(13) Ratio analysis helps to determine the performance of liquidity, profitability and solvency
position of the business concern.
Limitations of Ratio Analysis
Ratio analysis is one of the important techniques of determining the performance of financial
strength and weakness of a firm. Though ratio analysis is relevant and useful technique for
the business concern, the analysis is based on the information available in the financial
statements. There are some situations, where ratios are misused, it may lead the management
to wrong direction. The ratio analysis suffers from the following limitations:
(1) Ratio analysis is used on the basis of financial statements. Number of limitations of
financial statements may affect the accuracy or quality of ratio analysis.
(2) Ratio analysis heavily depends on quantitative facts and figures and it ignores qualitative
data. I Therefore this may limit accuracy.
(3) Ratio analysis is a poor measure of a firm's performance due to lack of adequate standards
laid for ideal ratios.
(4) It is not a substitute for analysis of financial statements. It is merely used as a tool for
measuring the performance of business activities.
(5) Ratio analysis clearly has some latitude for window dressing.
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(6) It makes comparison of ratios between companies which is questionable due to
differences in methods of accounting operation and financing.

2.6 Classifications of Ratios
Liquidity ratio
Solvency ratio
Activity ratio
Profitability ratio
2.6.1. Liquidity Ratios:
Liquidity refers to the ability of a concern to meet its current obligations as & when there
becomes due. The short term obligations of a firm can be met only when there are sufficient
liquid assets. The short term obligations are met by realizing amounts from current, floating
or circulating assets The current assets should either be calculated liquid or near liquidity.
They should be convertible into cash for paying obligations of short term nature. The
sufficiency or insufficiency of current assets should be assessed by comparing them with
short- term current liabilities. If current assets can pay off current liabilities, then liquidity
position will be satisfactory.
To measure the liquidity of a firm the following ratios can be calculated
Current ratio
Quick (or) Acid-test (or) Liquid ratio
Absolute liquid ratio (or) Cash position ratio






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(A) Current Ratio:
Current ratio may be defined as the relationship between current assets and current
liabilities. This ratio also known as Working capital ratio is a measure of general liquidity and
is most widely used to make the analysis of a short-term financial position (or) liquidity of a
firm.
Current Ratio = Current Assets / Current Liabilities
Components of Current Ratio
Current Assets-
1. Cash in hand 2. Bills receivable
3. Cash at bank 4. Sundry debtors
5. Prepaid expenses 6. Marketable securities
7. Stock
Current Liabilities-
1. Outstanding or accrued expenses 2. Bank overdraft
3. Bills payable 4. Sundry creditors
5. Dividend payable 6. Income-tax payable
7. Short-term advances
Interpretation of Current Ratio: The ideal current ratio is 2: 1. It indicates that current
assets double the current liabilities is considered to be satisfactory. Higher value of current
ratio indicates more liquid of the firm's ability to pay its current obligation in time. On the
other hand, a low value of current ratio means that the firm may find it difficult to pay its
current ratio as one which is generally recognize.


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(b) Quick Ratio:-
Quick ratio is a test of liquidity than the current ratio. The term liquidity refers to the ability
of a firm to pay its short-term obligations as & when they become due. Quick ratio may be
defined as the relationship between quick or liquid assets and current liabilities. An asset is
said to be liquid if it is converted into cash within a short period without loss of value.

Quick Ratio = Quick Assets / Current Liabilities
Quick Assets =Current Assets Slow Moving Assets
Components of Quick or Liquid Ratio
Quick Assets
1. Cash in hand 2. Cash at bank
3. Bills receivable 4. Sundry debtors
5. Marketable securities

Current Liabilities-
1. Outstanding or accrued expenses 2. Bank over draft
3. Bills payable 4. Sundry creditors
5. Dividend payable 6. Income-tax payable
7. Short-term advances
The ideal Quick Ratio of I: I is considered to be satisfactory. High Acid Test Ratio is an
indication that the firm has relatively better position to meet its current obligation in time. On
the other hand, a low value of quick ratio exhibiting that the firm's liquidity position is not
good.


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(c) Absolute Liquid Ratio or Cash Ratio-
Although receivable, debtors and bills receivable are generally more liquid than inventories,
yet there may be doubts regarding their realization into cash immediately or in time. Hence,
absolute liquid ratio should also be calculated together with current ratio and quick ratio so as
to exclude even receivables from the current assets and find out the absolute liquid assets.

Cash Ratio =Cash, Cash at Bank or Other Cash Equivalent / Current Liabilities

Absolute liquid assets include cash in hand, cash at bank or other cash equivalent. The
acceptable forms for this ratio is 50% (or) 0.5:1 (or) 1:2 i.e., Rs.1 worth absolute liquid assets
are considered to pay Rs.2 worth current liabilities in time as all the creditors are nor
accepted to demand cash at the same time and then cash may also be realized from debtors
and inventories.
Components of Absolute Liquid Ratio
Absolute Liquid Assets-
1. Cash in hand
2. Cash at bank
3. Other cash equivalent
Current Liabilities-
1. Outstanding or accrued expenses 2. Bank over draft
3. Bills payable 4. Sundry creditors
5. Dividend payable 6. Income-tax payable
7. Short-term advances


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2.6.2. Solvency Ratios-
Solvency ratio of any company is worked out for knowing the repay capacity of any
company of long term borrowings. While making of repayment of borrowing the two
component principle as well as interest is to be repaid. There are various solvency ratios are
as follow:
Debt equity ratio
Interest coverage ratio
(a) Debt Equity Ratio:-
Debt equity ratio establishes the relationship between long term debts and share holders
funds of the company. The objective of working out debts equity ratio is access whether the
company will be in a position to repay the principle as well as interest to the creditors on
instalment basis, long term loan provider or not.
Debt Equity Ratio =Long Term Debts / Share Holders Funds

Components of Debts Equity Ratio
Long Term Debts-
1. Long term loan from bank
2. Long term loan from financial institution
3. Bonds and debentures
Share Holders Fund-
1. Shares (equity & preference)
2. Reserve & surplus
3. Profit
(Less) fictitious assets
Ideal ratio for debt equity ratio is 2:1
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(a) Interest Coverage Ratio:-
Interest coverage ratio establishing the relationship between profit before interest & tax and
the fixed annual interest payble by the company. The objective of interest coverage ratio is to
know whether the company will be in a position to services the borrowed fund or to pay off
its annual income occurring from time to time.

I nterest coverage Ratio =Profit before I nterest & Tax / Annual
Fixed I nterest

Components of Debts Equity Ratio
1. Profit before interest & tax
2. Interest on term loan, mortgage loan, debentures.

Ideal ratio for interest coverage ratio is 5 times.















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2.6.3. Activity Ratios:
Funds are invested in various assets in business to make sales and earn profits. The efficiency
with which assets are managed directly affect the volume of sales. Activity ratios measure the
efficiency (or) effectiveness with which a firm manages its resources (or) assets. These ratios
are also called Turn over ratios because they indicate the speed with which assets are
converted or turned over into sales.
Working capital turnover ratio
Fixed assets turnover ratio
Capital turnover ratio
Current assets to fixed assets ratio

(a) Working Capital Turnover Ratio
Working capital of a concern is directly related to sales.
Working capital =Current assets - Current liabilities
It indicates the velocity of the utilization of net working capital. This indicates the no. of
times the working capital is turned over in the course of a year. A higher ratio indicates
efficient utilization of working capital and a lower ratio indicates inefficient utilization.
Working capital turnover ratio=cost of goods sold/working Capital.
Components of Working Capital Ratio
Current Assets-
1. Cash in hand 2. Bills receivable
3. Cash at bank 4. Sundry debtors
5. Prepaid expenses 6. Marketable securities
7. Stock

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Current Liabilities-
1. Outstanding or accrued expenses 2. Bank over draft
3. Bills payable 4. Sundry creditors
5. Dividend payable 6. Income-tax payable
7. Short-term advances

(b) Fixed Assets Turnover Ratio:
It is also known as sales to fixed assets ratio. This ratio measures the efficiency and profit
earning capacity of the firm. Higher the ratio, greater is the intensive utilization of fixed
assets. Lower ratio means under-utilization of fixed assets.

Fixed assets turnover ratio = Cost of Sales / Net fixed assets
Cost of Sales =I ncome from Services
Net Fixed Assets =Fixed Assets Depreciation

(c) Capital Turnover Ratio -
Sometimes the efficiency and effectiveness of the operations are judged by comparing the
cost of sales or sales with amount of capital invested in the business and not with assets held
in the business, though in both cases the same result is expected. Capital invested in the
business may be classified as long-term and short-term capital or as fixed capital and working
capital or Owned Capital and Loaned Capital. All Capital Turnovers are calculated to study
the uses of various types of capital.


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Capital turnover ratio = Cost of goods sold / Capital employed
Cost of Goods Sold =I ncome from Services
Capital Employed =Capital +Reserves & Surplus

(d) Current Assets to Fixed Assets Ratio -
This ratio differs from industry to industry. The increase in the ratio means that trading is
slack or mechanization has been used. A decline in the ratio means that debtors and stocks
are increased too much or fixed assets are more intensively used. If current assets increase
with the corresponding increase in profit, it will show that the business is expanding.
Current Assets to Fixed Assets Ratio = Current Assets / Fixed Assets

Component of Current Assets to Fixed Assets Ratio
Current Assets-
1. Cash in hand 2. Bills receivable
3. Cash at bank 4. Sundry debtors
5. Prepaid expenses 6. Marketable securities
7. Stock
Fixed Assets-
1 Machinery 2. Buildings
3. Vehicles 4. Plant
5. Land



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2.6.4. Profitability Ratios
The primary objectives of business undertaking are to earn profits. Because profit is the
engine, that drives the business enterprise.
Net profit ratio
Gross profit ratio
Earnings per share
Operating profit ratio

(a) Net Profit Ratio -
Net profit ratio establishes a relationship between net profit (after tax) and sales and indicates
the efficiency of the management in manufacturing, selling administrative and other activities
of the firm.
Net profit ratio= Net profit after tax / Net sales
Net Profit after Tax =Net Profit () Depreciation () I nterest () I ncome Tax
Net Sales =I ncome from Services
It also indicates the firms capacity to face adverse economic conditions such as price
competitors, low demand etc. Obviously higher the ratio, the better is the profitability.
(c) Earnings Per Share -
Earnings per share is a small verification of return of equity and is calculated by dividing the
net profits earned by the company and those profits after taxes and preference dividend by
total no. of equity shares.
Earnings per share = Net profit after tax / Number of Equity shares
The Earnings per share is a good measure of profitability when compared with EPS of similar
other components (or) companies, it gives a view of the comparative earnings of a firm.

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(d) Operating Profit Ratio -
Operating ratio establishes the relationship between cost of goods sold and other operating
expenses on the one hand and the sales on the other.

Operating ratio = Operating cost / Net sales
However 75 to 85% may be considered to be a good ratio in case of a manufacturing under
taking. Operating profit ratio is calculated by dividing operating profit by sales.
Operating profit =Net sales - Operating cost
Operating Profit ratio = Operating Profit / Sales


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CHAPTER-3
DATA ANALYSIS














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CHAPTER 3: DATA ANALYSIS & INTERPRETATION

3.1.1 Current Ratio

FORMULA-





( Amount in millions Rs.)
Years 2012 2013 2014
Current Assets:-

Inventories 5,553.53 6,941.8 6,829.8
Trade receivable 18,023.04 17,146.4 22,960.8
Cash and bank 331.05 781.2 364.4
Other current assets 3,875.21 6056.7 5718.90
Loans & advances 7491.10 8604.9 9003.10

Total current assets 35273.93

39531 44877.0

Current liabilities

Short term borrowings 5935.01 3516.1 4151.6
Trade payables 15568.12 18154.3 19772.8
Short term provisions 5545.24 6368.8 7270.20
Other current liabilities 5924.71 8239.4 8473.6

Total current liabilities 32973.08

36278.6 39668.2

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For Year 2012

1.07:1
For Year 2013

1.09:1
For Year 2014

1.13:1


Chart 3.2.1

Interpretation:- The ideal current ratio is 2: 1. It indicates that current assets double the
current liabilities are considered to be satisfactory. In this analysis the current for 2012 is
1.07:1, and in 2013 it is 1.09:1, and in 2014 the current is 1.13:1.










1.07
1.09
1.13
1.04
1.05
1.06
1.07
1.08
1.09
1.1
1.11
1.12
1.13
1.14
2012 2013 2014
current ratio
current ratio
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3.1.2 Quick Ratio:-






( Amount in millions Rs.)
Years 2012 2013 2014
Current Assets:-

Inventories 5,553.53 6,941.8 6,829.8
Trade receivable 18,023.04 17,146.4 22,960.8
Cash and bank 331.05 781.2 364.4
Other current assets 3,875.21 6056.7 5718.90
Loans & advances 7491.10 8604.9 9003.10

Total current assets 35273.93

39531 44877.0

Current liabilities

Short term borrowings 5935.01 3516.1 4151.6
Trade payables 15568.12 18154.3 19772.8
Short term provisions 5545.24 6368.8 7270.20
Other current liabilities 5924.71 8239.4 8473.6

Total current liabilities 32973.08

36278.6 39668.2






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ForYear2012

0.90:1
ForYear2013 0.89:1
ForYear2014 0.95:1

Chart 3.2.2


Interpretation:- quick ratio is an indicator of companys short term liquidity. The ideal quick
ratio is 1:1. So the ratio indicates that the business can meets its financial obligation with the
available quick funds on hand. The quick ratio for the year 2012 is .09:1, and in 2013 it is
.89:1, and in 2014 it is .95:1.
0.9
0.89
0.95
0.86
0.87
0.88
0.89
0.9
0.91
0.92
0.93
0.94
0.95
0.96
2012 2013 2014
quick ratio
quick ratio
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3.1.3 Debt Equity Ratio:-





ForYear2012 0.68
ForYear2013 0.46
ForYear2014 0.33


Chart 3.2.3










Interpretation:- it establish the relationship between the long term liabilities and share holder funds.
The ideal ratio is 2:1. It is the long term solvency ratio. In this graph debts is on decline and the share
holder funds is increases. The debt equity ratio for 2012 is 0.68:1, and in 2013 it is 0.46:1, and in
2014 it is 0.33.


0.68
0.46
0.33
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
2012 2013 2014
debt equity ratio
debt equity ratio
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3.1.4 Net Profit Ratio:-




( Amount in millions Rs.)
Years 2012 2013 2014

Profit after Tax 1624.05 841.10 1170.20

Net Sale 41390.70 31518.70 35235.40

ForYear2012 3.92 %
ForYear2013 2.66 %
ForYear2014 3.32 %

Chart 3.2.4


Interpretation:-Net profit ratio is a useful tool to measure the overall profitability of the business.
the profit for year 2012is 3.92% ,and for the year of 2013 is 2.66%, and in 2014 it is 3.32%.

3.92%
2.66%
3.32%
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
3.50%
4.00%
4.50%
2012 2013 2014
net profit ratio
net profit ratio
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3.1.5. Gross Profit Ratio:-







ForYear2012 8.36 %
ForYear2013 5.27 %
ForYear2014 6.03 %

Chart 3.2.5


Interpretation: Gross profit of the company for year 2012 is 8.36%, and for 2013 is 5.27%, and in
2014 it is 6.03%.


8.36%
5.27%
6.03%
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
7.00%
8.00%
9.00%
2012 2013 2014
gross profit
gross profit
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3.1.6 Operating Profit Ratio:-





( Amount in millions Rs.)
Years 2012 2013 2014

Operating profit 4492.89 2785.30 3561.60

Net Sale 41390.70 31518.70 35235.40

ForYear2012

10.85%
ForYear2013 8.83%
ForYear2014 10.11%

Chart 3.2.6

Interpretation: operating profit for the year 2013 is 8.83%, And in the year of 2012 it is 10.85%, and
in 2014 it is 10.11%.
10.85%
8.83%
10.11%
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
2012 2013 2014
operating profit ratio
operating profit ratio


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CHAPTER-4
FINDINGS













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CHAPTER:4 FINDINGS

The ideal current ratio is 2: 1. In the above analysis the current ratio for 2012 is 1.07:1,
and in 2013 it is 1.09:1, and in 2014 the current is 1.13:1. This shows that companys
liquidity position is average or insufficiently liquid. Its current assets are more than its
current liabilities. But the company is not meeting the ideal ratio.
Quick ratio is an indicator of companys short term liquidity. The ideal quick ratio is 1:1.
The quick ratio for the year 2012 is .09:1, and in 2013 it is .89:1, and in 2014 it is .95:1.
So the ratios indicates that the business can meets its financial obligation with the
available quick funds on hand.
Debt equity ratio establish the relationship between the long term debts and share holder
funds. The ideal ratio is 2:1. The debt equity ratio for 2012 is 0.68:1, and in 2013 it is
0.46:1, and in 2014 it is 0.33. it is the long term solvency ratio. Company is not meeting
the ideal debt equity ratio.
Net profit ratio is a useful tool to measure the overall profitability of the business.The net
profit for year 2012is 3.92% ,and for the year of 2013 is 2.66%, and in 2014 it is 3.32%.
the net profit of the company decrease in 2013 due to decrease in the sale or due to fall in
price.
Gross profit of the company for year 2012 is 8.36%, and for 2013 is 5.27%, and in 2014 it
is 6.03%. The gross profit of the company is decrease in 2013 by 3.09% and then again
increase in 2014 by 0.76% so the profit of the company is increase or decrease due to the
sale or higher cost of goods sold.
Operating profit for the year 2013 is 8.83%, And in the year of 2012 it is 10.85%, and in
2014 it is 10.11%.





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CHAPTER-5
SUGGESTIONS
&
CONCLUSION





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CHAPTER:5
SUGGESTIONS & CONCLUSION

5.1 SUGGESTIONS

After analysing the above report of the Alstom t&d india ltd I want to give some suggestions to
the company.
The profit of the company is not in the good position for that the company has take
alternative actions.
The company has to inrease the sale for increasing the profit.
The company should maintain the cash in the company.
The company has low current ratio so it should increase its current assets upto an ideal
level where it can meet its short term obligation smoothly.
Liquidity position of the firm is not better over three years. So I suggest that the firm
maintain proper liquid funds like cash and bank balance.









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5.2 CONCLUSION


Companys liquidity position is not sound. The current ratio of the company is not
meeting the ideal current ratio.

The various ratios calculated are an indicator as to the fact that the profitability of the
company and sales are on a slowly rise.

Debt equity ratio of the company is very less. It is not meet the ideal debt equity
ratio.

The company is not maintain the cash properly.

Quick ratio is an indicator of companys short term liquidity the company can meets
its financial obligation with the available quick funds on hand.

Debt equity ratio of the company is decline continously.











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