CONTENTS

COMPANY PROFILE
02-15
THEORETICAL ASPECT
16-20
PRACTICAL ASPECT
21-29
RESEARCH METHODOLOGY
30
DATA ANALYSIS & GRAPHICAL
31-48
PRESENTATION
FINDINGS
49
CONCLUSION
50
SUGGESTION
51
BIBLIOGRAPHY
52
QUESTIONNAIRE
40-42
1|P age
COMPANY PROFILE
OUR VISION
TO BE AMONGST THE MOST ADMIRED COMPANIES IN INDIA COMMITED
TO
EXCELLENCE.
OUR MISSION

BE A CUSTOMER OBSESSED COMPANY

NO.1 TYRE BRAND IN INDIA

DELIVER ENHANCED VALUE TO ALL STAKEHOLDERS

MOST PROFITABLE TYRE COMPANY IN INDIA

ENCHANCE GLOBAL PRESENCE THROUGH ACQUISITION

MOTIVATED
AND
COMMITTED
TEAM
DEVELOPMENT
FOR
HIGH
PERFORMANCE ORGANIZATION
JK ORGANISATION - A CENTURY OF TRUST
Innovation and passion to perform have always been the driving forces at J K Org
anization.
JK Organization, is one of the leading Private Sector Groups in India, was found
ed over 100
years ago - it's been a century of multi-business, multi-product and multi-locat
ion business
operation.
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CUSTOMER SATISFACTION - OUR CREDO
Customer Satisfaction has always been our prime focus. We are indeed proud of ou
r highly
experienced and professional team for winning the trust of customers and buildin
g strong
relationships with them.
Our 115 company owned stocking points serve over 4000 dealers across the country
.
We have set up 130 JK Tyre Steel Wheels - a unique concept in car tyre retailing
which
provides value added services like wheel balancing, alignment and tyre care to c
ustomers.
Our Truck Radial Care Centers offer after-sales service for Truck/Bus Radials, w
hich operate
on 365 days / 24 hours basis. A large number of such centers have been set up al
ong all major
National Highways.
JK Tyre has been among the top two tyre companies in respect of Customer Satisfa
ction, as per
JK Power Asia Pacific Study, for many years.
First Indian tyre company to introduce All Steel Truck & Bus Radials in India in
1999
Pioneered Radial technology in India by introducing passenger radials in 1977
First Indian tyre company to be recognized as 'SUPERBRAND' by Global Advertising
Professionals
R & D - TECHNOLOGY OUR DRIVING FORCE
We have always been pushing the limits of possibilities. Our research centers ha
ve been our
nerve
centers
for
extensive
research
and
development.
These
are:
Mr. Hari Shankar Singhania Elastomer and Tyre Research Institute (HASETRI) - Jay
kaygram,
Kankroli
(Rajasthan)
and
Faridabad
(Haryana)
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Dr. Raghupati Singhania Center of Excellence for Tyre and Vehicle Mechanics - Ch
ennai (Tamil
Nadu)
FUTURE PLANS
India is fast emerging as a global automobile hub particularly for small cars. I
t offers immense
opportunities for JK Tyre to grow its business both organically and inorganicall
y.
We have been constantly exploring ways of increasing our presence in different w
orld markets,
through alliances and acquisitions in tyre and related business. In all our Ende
avours, our core
focus is on customer delight. Enlarging the customer base, providing them with b
etter quality of
services and more value added products, will continue to be the key areas of our
thrust.
4|P age
OUR FIRSTS - LEADING THE WAY
BACKGROUND AND INCEPTION OF THE COMPANY
1933
First in India to manufacture calico prints- {Juggilal Kamlapat cottons spinning
and
weaving mills company, Kanpur.}
1940
First in India to manufacture steel bailing Hoops for jute and cotton and to mak
e the
country self sufficient by meeting the entire demand-
J.K Iron and Steel Co. Ltd.,
Kanpur.
1944
First in India to produce Aluminum Virgin Metal for Indian Bauxite-Aluminum
Corporation of India Ltd., Jaykayanagar.
1949
First in India to manufacture Engineering files- J.K. Engineers files Bombay.
1959
First in India to set up a continuous process Rayon plant.
1960
First in India to set up a Hydraulically operated Cane Crushing Mill for Kandsar
i Sugar
Plant and completed 100 ton plant.
1961
First in world to set up a plant for production of Hydrosulphite of soda by Sodi
um
Amalagam process- J.K. Chemicals Ltd., Bombay.
1962
First in India to produce Nylon-6 with its own polymerized raw material- J.K. Sy
nthetics
Ltd., Kota.
1965
First to produce sodium Sulphoxylate Formaldehyde [Rangolite C of Formosul] in I
ndiaJ.K. Chemicals Ltd., Bombay.
1968
First to manufacture TV sets in India- J.K. Electronics, Kanpur.
1976
First in India to produce steel belted Radial tyres for passenger car, trucks an
d busesJ.K. Tyre plant, Kankroli.
1980
First in the world to make steel belted radial tyres for 3 wheelers.
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1984
First in India to produce white cement through dry process.
1985
First in India to produce cathonic Dye able Polyester Fiber.
1989
First in India to produce magnetic tapes with cobalt technology.
1991
Banmore tyre plant {BTP} set up with the capacity of 5.7 lacks tyres per annum.
1992
R&D centre setup at HASTERI.
1994
Indias first T-rated tyre launched Banmore Tyre Plant {BTP} Crossed 100 TPD.
1995
Mercedes Benz launched on JK STEEL RADIALS first tyre manufacturer in the world
to get ISO 9001.
1996
Indias first dual contact high tractions steel radial- aqua sonic launched. {Intr
oduce steel
wheels}.
1998
First tyre manufacturer in the world to get QS 9000. Awarded CAPEXILS highest
export award for 1997-98.
1999
Synergy with VTL in procurement, marketing and production flexibility.
Completion of states of the art modernizations of truck radials
J.K. Tyres ranked 16th largest tyre company in the world
ISO- 14001 accreditation for environment and safety.
2000
J.K. introduced national Go- carting championships.
2001
J.K. industries received FOCUS LAC EXPORT award for the year 1999-2000.
Commendation certification of CII ND National exam. Go- carting championships he
ld.
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1.3 J K GROUP DIVERSIFICATION
JK ORGANISATION
J.K. Organization, founded over 100 years ago, is an eminent
industrial group in India. The Group has multi-business,
multi-product and multi-location operations
JK PAPER LTD.
JK Paper Limited is one of the leading manufacturers of
reading and writing paper
JK LAKSHMI CEMENT LTD.
JK Lakshmi Cement Limited is a well respected name in the
cement industry in India
7|P age
FENNER (I) LTD.
Fenner (I) Limited is a leading manufacturer of Industrial and
Automotive Belts, Oil Seals, Power Transmission Accessories
and Textile Yarn
UMANG DAIRIES LTD.
The Creme de la creme of dairy foods
JK AGRI-GENETICS LTD.
At JK Agri-genetics limited, concentrates on Research and
Development, production, processing and marketing of hybrid
seeds.
JK SUGAR LTD.
The company s principle activity is to manufacture Sugar.
However, the company currently operates in two segments.
Power and Sugar
JK RISK MANAGERS AND INSURANCE BROKERS
LTD.
Services rendered to various clients for all facets of Insurance
both life & non-life.
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CLINIRX RESEARCH PRIVATE LTD.
Full Service Contract Research Organization (CRO)
JK Tyres Plants
Mysore plant- 1 {VTP}
-
Karnataka
Mysore plant- 2 {VTP Radial}
-
Karnataka
Kankroli
-
Rajasthan
Banmore
-
Madhya Pradesh
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COMPANY HISTORY
JK ORGANISATION
JK Organisation owes its name to Late Lala Juggilal Singhania, a dynamic persona
lity, with
a broad vision. Inspired by the cause of the Swadeshi movement of Mahatma Gandhi
, and
driven by the zeal to set up an indian enterprise, Late Lala Kamlapat Singhania
founded
J.K. Organisation in the 19th century ushering in a new industrial era in India.
The name JK Organisation, which today is one of the leading Private Sector Group
s in India,
was founded over 100 years ago. For J.K. Organisation it s been a century of mul
ti-business,
multi-product and multi-location business operation. The companies in the Group
have a
diverse portfolio, including Automotive Tyres & Tubes, Paper & Pulp, Cement, V-B
elts, Oil
Seals, Power Transmission Systems, Hybrid Seeds, Woolen Textiles, Readymade Appa
rels,
Sugar, Food & Dairy Products, Cosmetics, etc.
10 | P a g e
VARIOUS DIMENSIONS:

JK SEEDS

JK SUGAR

JK PAPER LTD

JK LAKSHMI CEMENT

UMANG DAIRIES

CliniRX RESEARCH

FENNER(INDIA) Ltd.
11
JK ORGANISATION AT A GLANCE:-
YEAR EVENTS 1951 - The Comp. was incorporated as a private limited Comp. in West
Bengal in 14th February, 1951. Until 31st March 1970, the Comp. was engaged in t
he
managing agency business. Thereafter, the Comp. decided to undertake manufacturi
ng
activities and obtained a letter of intent in February 1972 for manufacture of a
utomobile
of & tubes.
The letter of intent was converted into an industrial license in February 1974 f
or
manufacture of 4 lakh nos. each automobile tyre & tubes per annum. The Comp. was
converted into a public limited Comp. on 1st April 1974. The manufacturing proje
ct was
promoted
by
Straw
Products
Ltd
&
J.K.
Synthetics
Ltd.
The Comp. entered into technical collaboration with General Tire International C
o.,
U.S.A., [a subsidiary of General Tire & Rubber Co., U.S.A.s] for technical servi
ces for a
period of 5 years & sales agreement for supply of technical know-how, engineerin
g &
documentation for operational facilities [for a period of 8 years from 23.8.73s]
.
Under the collaboration agreement, the Comp. has the right to use on its product
s the
wording Made in collaboration with General Tire International Co., USA .
YEAR EVENTS 1982 - The company technical collaboration agreement with General
Tire
International
Co.,
was
renewed
for
a
further
period
of
5
years.
YEAR EVENTS 1987 - The overall working resulted in substantial profits despite a
51days strike as well as go-slow from 14th October. The strike had since then b
een resolved
& amicable settlement was reached. Efforts were on to launch a new pattern in st
eel
belted radial tyre.
YEAR EVENTS 1988 - New steel radial tyres for Maruti Gypsy & Tata mobile were
12
introduced. The Comp. proposed to incur an expenditure of Rs 300 lakhs for insta
llation
of latest & sophisticated R&D equipment.
YEAR EVENTS 1989 - Several new patterns & sizes of tyre were introduced includin
g
a semi-lug Nylon Truck tyre, all of which were well received in the market. 1991
Handeep Investment, Ltd., Hidrive Finance Ltd., Panchanan Investment Ltd., & Ra
dial
Finance Ltd., J. K. International Ltd., Shivdham Properties Ltd., & J. K. Asia P
acific,
Ltd., are subsidiaries of Company.
YEAR EVENTS 1992 The J.K. International division expanded its activities by
opening its office in Moscow besides starting Company s subsidiaries in U.K. and
Honkong. The radial tyre for tractors & business launched in the previous year w
ere well
received.
YEAR EVENTS 1993 - New radial tyre `Brute & `Ultima were introduced. The Comp.
was in the process of developing steel belted radial tyre for prestigious cars i
n the
Mercedes Benz, Peugeot, Daewoo race & Opel Astra. A new pattern developed for bu
s
and trucks `PE-T8 was well received in the market.
YEAR EVENTS 1994 - The Comp. maintained its pace of growth, despite steep rise i
n
raw material & input costs & competition. The Company effected an all round cost
reduction & attained higher capacity utilization at both the tyre plants at Jayk
aygram and
Banmore.
The T-rated Ultima tyre launched for new generation cars found its acceptance in
DCM
Daewoo `Ceilo . Also J.K. Steel radial was chosen for Mercedes Benz India.
- The Comp. undertook to develop steel radials for GM `Astra . PAL `Peugekot FI
AT s,
`UNO & M and M `Ford .
- The Comp. launched a premium truck tyre `Jet Trak - 39 which was introduced t
o meet
13
the need of the heavy load market. The new tractor rear tyre `SONA was well rec
eived in
the market.
YEAR EVENTS 1996 - During this period, a new Car tyre Jet Drive XS , the widest
nylon car tyre for Maruti 800 was launched. Along with new semi-lug & heavy duty
lug
tyre for trucks, a new lug tyre for super heavy load applications Jet Trak 39
was also
introduced. In the Radial category, Ultima XR Radial , a terrain tyre was intro
duced. All
these products were well received in the market.
Both the tyre plants operated to full capacity. In line with JK tyre, the radial
s unit
introduced the dual contact high traction & high performance Aquasonic steel rad
ial car
tyre. The unit also developed India first & only H-rated ultima Xs especially f
or
Mercedes - Benz Cars.
YEAR EVENTS 2000 - The Comp. proposes to reduce its debt by Rs 125 crore in the
current fiscal from the current level of Rs 635 crore by way of
loan repayment.
The Comp. & Indian Oil Corporation have entered into a marketing alliance for in
stalling
digital air pressure gauges and setting up sales & services outlets at IOC petro
l stations
throughout the country.
YEAR EVENTS 2001 - Raghupati Singhania managing director of J. K. Industries has
been appointed the 19th Chairman of Automotive Tyre Manufacturers Association, t
he
representative body of tyre industry in India.
YEAR EVENTS 2002- J. K. Industries Ltd has informed BSE that CRISIL has assigned
a P1+ rating to the Commercial Paper programme of company.
YEAR EVENTS 2003 - J. K. Industries Ltd [JKIs] has a new Marketing Director in M
r.
Ajay Kapila. Before joining JKI, Mr Kapila was Senior Vice-President [Sales &
14
Marketings] at Kinetic Engineering limited He was also Director on board & operat
ional
head of Kinetic direct selling arm - Kinetic Marketing Services Ltd.
Completes its comprehensive restructuring exercise of
businesses that leads to its
emergence as a pure automotive tyre company. Along with the de-merger of its non
-tyre
business, Sugar & Agri Seeds, into separate companies namely J. K. Sugar Ltd & J
. K.
Agri-Genetics Ltd, JKI also completes the merger of Vikrant Tyre Ltd with itself
.
J.
K.
Industries
delists
from
Jaipur
Stock
Exchange
divested its wholly-owned subsidiary called J. K. Drugs & Pharmaceuticals Ltd to
TEVA
Pharmaceuticals of Israel.
YEAR EVENTS 2004 -J. K. Industries Ltd has informed that its securities are deli
sted
from Delhi Stock Exchange Association Ltd [DSEs] w.e.f. January 29, 2004.
YEAR EVENTS 2007 - J. K. Industries Ltd has informed that the name of Comp. has
been changed from J. K. Industries Ltd to J. K. Tyre and Industries Ltd w.e.f
. April 02,
2007.
Comp. name has been changed from J. K. Industries Ltd to J. K. Tyre and Industri
es
Ltd.
YEAR EVENTS 2008 - The Comp. has issued rights in the ratio of 1:3 at a premium
of
Rs.75 per Share.
15
THEORETICAL ASPECT
INTRODUCTION OF RATIO ANALYSIS
There are various methods or techniques used in analyzing financial statements
such as comparative statements, trend analysis, common size statements, schedule
of
changes in working capital, funds flow and cash flow analysis, cost-volume-profi
t
analysis and ratio analysis. The ratio analysis is one of the most powerful tool
s of
financial analysis. It is the process of establishing and interpreting various r
atios
(quantitative relationship between figures and group figures). It is with the he
lp of ratios
that the financial statements can be analyzed more clearly and decision made fro
m such
analysis.
MEANING OF RATIO:
A ratio is a simple arithmetic expression of relationship of one to other. It ma
y be
defined as the indicated quotient of two mathematical expressions.
According to Accountants Handbook by Wixon, Kell and Bedford, a ratio is
an expression of the quantitative relationship between two numbers.
According to Myers, Ratio analysis is a study of relationship among the various
financial factors in a business.
FINANCIAL RATIO ANALYSIS:
Ratio analysis is a powerful tool of financial analysis. A
ratio is defined as the indicated quotient of two mathematical expressions and as t
he
relationship between two or more things. In financial analysis a ratio is used as
a
benchmark for evaluating the financial position and performance of a firm. The a
bsolute
accounting figures reported in the financial statement do not provide a meaningf
ul
understand of the performance and financial position of a firm. An accounting fi
gure
conveys meaning when it is related to some other relevant information.
16
The relation between two accounting figures, expressed
mathematically is known as a financial ratio (or simply as a ratio) ratio help t
o summarize
large quantities of financial data and to make qualitative judgment about the fi
rms
financial performance.
The point to note is that a ratio reflecting a quantitative
relationship helps to form a qualitative judgment.
NATURE OF RATIO ANALYSIS
Standards of comparison
A single ratio in itself does not indicate favorable or
unfavorable condition. It should be compared with some standards. Standard of
comparison may consist of.
Past ratio i.e. ratio calculated from the financial statement of the some firm.
Competitors ratios, i.e. ratios of same selected firms, especially the most
progressive and successful competitor, at the same point in time.
Industry ratios i.e. ratios or the industry to which the firm belongs and
Projected ratios, i.e. ratios developed using the projected or Performa, financi
al
statements of the same firm.
There are four types of ratios to be calculated to know the status of the firm.
They are,
1. Liquidity ratio
2. Leverage ratio
3. Activity ratio
4. Profitability ratio
17
I. Liquidity ratio
Liquidity ratios measure the ability of the form to meet its current obligation.
In
fact, analysis of liquidity needs the preparation of cash budgets and cash and f
und flow
statement, but liquidity ratios by establishing a relationship between cash and
other
current assets to currents obligations, provide a quick measure of liquidity. A
firm
ensures that it does not suffer from lack of liquidity, and also that it does no
t have excess
liquidity, therefore it is necessary to strike a proper balance between high liq
uidity and
lack of liquidity.
The most common ratios indicate the extent of liquidity or lack of it is:

Current ratio

Quick ratio

Absolute liquidity ratio

II.LEVERAGE RATIOS
Leverage ratios are calculated t analyze the long-term financial position of the
firm. These indicate mix of funds provided by owners and lenders. As a general r
ule,
there should be an appropriate mix be debt and owners equity in financing the fi
rms
assets. The process of magnifying the shareholders return through the use of deb
t is
called financial gearing or trading on equity. Leverage ratios calculated to measure
the financial risk and firms ability of using debt to share holders advantages.

Interest coverage ratio

Capital equity ratio

18
III.ACTIVITY (OR) TURNOVER RATIOS
The turnover ratios indicate the efficiency with which the capital employed is
rotated in the business. The ratios are employed to evaluate the efficiency with
which the
firm manages and utilizes its assets to indicate the speed with which assets are
being
converted on turned over into sales. A proper balance sales and generally reflec
ts that
assets are managed well.

Debtors turnover ratio.

Total assets turnover ratio.

Fixed assets turnover ratio.

Current assets turnover ratio.

IV.PROFITABILITY RATIO
Profitability is an indication of the efficiency with which the operations of th
e
business are carried on. Bankers, financial institutions and other creditors loo
k at the
profitability ratios as an indicator whether or not the firm earns substantially
more than it
pays interest for the use of borrowed finds and whether the ultimate repayment o
f their
debt appears reasonably certain. Owners are interested to know the profitability
as it
indicates the return, which they can get their investments.

Gross profit ratio

Net profit ratio

Operating profit ratio

Operating ratio

Return on investment ratio

Return on equity

EPS

DPS

Pay out
19
OBJECTIVES

To know, whether the company is able to pay debt promptly or not.

To study the current financial position of the company.

To know the ability of the firm to meet fixed interest and the cost and repaymen
t
schedules associated with the long term borrowings.

To know about the general profitability of the firm in relation to the sales.

To know about the overall profitability of the firm in relation to its investmen
t.

To find ability of the company in utilizing of its assets.

To find companies long term solvency and survival.

20
PRACTICAL ASPECT
1. Current ratio:
This ratio relates current assets to current liabilities. The current ratio indi
cates
the ability of the organization to meet its current obligations. It measures sho
rt-term
solvency of the concern.
The current ratio is calculated by dividing current assets by current liabilitie
s.
Current assets
Current ratio=
Current liabilities
years
Current assets
Current liabilities
Current ratio
2004
335.21
126.20
2.66:1
2005
363.31
172.53
2.11:1
2006
525.04
398.06
1.32:1
2007
984
638.12
1.54:1
2008
1488
892.6
1.66:1
21
2.Interest coverage:-
The interest coverage ratio or the times-interest-earned is one of the most
conventional coverage ratios used to test the firms debt-servicing capacity.it c
an be
calculated by dividing EBIT with interest
EBIT
Interest coverage=
INTEREST
years
EBIT
INTEREST
Interest coverage
(in.Rs.Cr)
(in.Rs.Cr)
ratio
2004
132.59
9.92
13.37
2005
125.89
11.85
10.62
2006
283.64
10.12
28.03
2007
127.52
28.09
4.54
2008
441.32
28.30
15.59
22
3.Capital equity ratio:-
This is the ratio which expressing the basic relationship between debt and equit
y.
Calculating the ratio of Net assets to Net worth can find this ratio.
Capital employed
Capital equity ratio =
Net worth
Capital employed = Total debt + Net worth
years
Capital employed
Net worth
(in.Rs.Cr)
(in.Rs.Cr)
2004
435.34
435.34
1.00
2005
482.82
482.83
0.99
2006
597.86
597.86
1.00
2007
930.78
878.12
1.06
2008
1323.40
1228.40
1.08
23
Capital equity ratio
4. Debtors turnover ratio:-
Debtors turnover ratio can be calculated by dividing total sales by dividing deb
tors.
Sales
Debtors turn over =
Debtors
years
Sales
Debtors
Debtors turnover
ratio
2004
711.50
276.21
2.58times
2005
922.34
217.42
4.24times
2006
1197.14
412.72
2.90times
2007
2753.22
792.02
3.48times
2008
3604.7
1057.40
3.41times
24
5. Total assets turnover ratio:-
This ratio shows the firms ability in ngenerating sales from all financial resou
rces
committed ton total assets.
Sales
Total assets turnover=
Total assets
years
sales
Total assets
Total assets turnover
ratio
2004
711.50
435.34
1.63
2005
922.34
482.82
1.91
2006
1197.14
597.86
2.00
2007
2753.22
930.78
2.96
2008
3604.7
1323.40
2.72
25
6.Fixed assets turnover ratio:-
Fixed assets turnover ratio can be calculated by dividing of sales with net fixe
d
assets.
Sales
Fixed assets turn over ratio=
Net fixed assets
Years
sales
Net fixed assets
Fixed assets
turnover ratio
2004
711.50
133.24
5.34
2005
922.34
170.05
5.42
2006
1197.14
156.79
7.64
2007
2753.22
247.03
11.15
2008
3604.7
290.9
12.39
26
7.Curent assets turnover ratio:-
Current assets turnover ratio can be calculated by dividing of sales with net
current assets.
Sales
Current assets turnover ratio=
Net current assets
Years
sales
Net current assets
Current assets
turnover ratio
2004
711.50
209.01
3.40
2005
922.34
190.79
4.83
2006
1197.14
126.99
9.42
2007
2753.22
345.89
7.96
2008
3604.7
595.40
6.05
27
8. Gross profit ratio:This ratio expresses relationship between gross profit and
net sales. It relates the
efficiency with which management produces each unit of product. It indicates the
degree
to which the selling price of goods per unit may decline without resulting in lo
sses from
operations to the firm.
The first profitability ratio n relation to sales is the gross profit ratio it i
s
calculated by dividing the gross profit by sales.
Gross profit
Gross profit ratio =
X 100
Sales
Gross profit = Net sales cost of goods sold
Cost of goods sold = power & fuel + other manufacturing expenses
Year
Gross Profit
Sales
Gross profit Ratio
(in.Rs.Cr)
(in.Rs.Cr)
(%)
2004
655.38
711.50
92.11
2005
819.88
922.34
88.89
2006
994.86
1197.14
83.10
2007
2178.53
2753.22
79.12
2008
2887.40
3604.7
80.11
28
9.Net profit ratio:-
Net profit ratio is obtained when operating expenses; interest and taxes subtrac
ted
from the gross profit. Net profit ratio helps in determining efficiency with whi
ch affairs
of the business are being managed. This ratio is the overall measure of the firms
ability
to turn each rupee sales into net profit. The ratio is thus an effective measure
to check the
profitability of business.
The net profit margin ratio is measured by dividing profit after tax by sales.
Profit after tax
Net profit margin=
100
Net sales
Years
Profit after tax
Net Sales
(in.Rs.Cr)
(in.Rs.Cr)
2004
94.13
711.50
13.23%
2005
71.09
922.34
7.71%
2006
220.12
1197.14
18.39%
2007
65.23
2753.22
2.37%
2008
325.70
3604.7
9.04%
29
Net profit margin
RESEARCH METHODOLOGY
Research methodology is a way to systematically solve the research problem. It d
eals
with the objective of a research study, the method of defining the research prob
lem, the
type of hypothesis formulated, the type of data collected, method used for data
collecting
and analyzing the data etc. The methodology includes collection of primary and
secondary data.
TYPE OF RESEARCH
DESCRIPTIVE RESEARCH
The study follows descriptive research method. Descriptive studies aims at portr
aying
accurately the characteristics of a particular group or situation. Descriptive r
esearch is
concerned with describing the characteristics of a particular individual or a gr
oup. Here
the researcher attempts to present the existing facts by collecting data.
5.2 RESEARCH DESIGN
A research design is a basis of framework, which provides guidelines for the res
t
of research process. It is the map of blueprint according to which, the research
is to be
conducted. The research design specifies the method of study. Research design is
prepared after formulating the research problem.
5.3 SOURCES OF DATA
Data are the raw materials in which marketing research works. The task of data c
ollection
begins after research problem has been defined and research design chalked out.
Data
collected are classified into primary data and secondary data
PRIMARY DATA
Questionnaires were used for collecting primary data
SECONDARY DATA
Secondary data were collected from the companys annual publications,
memorandums of settlements, newspapers, journals, websites, and from library
books
SAMPLE SIZE: NIL
30
DATA ANALYSIS & GRAPHICAL PRESENTATION
1. Current ratio:
This ratio relates current assets to current liabilities. The current ratio indi
cates
the ability of the organization to meet its current obligations. It measures sho
rt-term
solvency of the concern.
The current ratio is calculated by dividing current assets by current liabilitie
s.
Current assets
Current ratio=
Current liabilities
years
Current assets
Current liabilities
Current ratio
2004
335.21
126.20
2.66:1
2005
363.31
172.53
2.11:1
2006
525.04
398.06
1.32:1
2007
984
638.12
1.54:1
2008
1488
892.6
1.66:1
Analysis:
The current ratio of the company is decreased from 2004 to 2006 as 2.66:1,
2.11:1, 1.32:1, later it is increased from 2006 to 2008 as 1.32:1, 1.54:1, and 1
.66:1.
31
The graph between Years and Current ratio shows as below
CURRENT RATIO
3
CURRENT RATIO
2.5
2
1.5
CURRENT RATIO
1
0.5
0
2004
2005
2006
2007
2008
YEARS
Interpretation:
In the year of 2004, 2005 the current ratio of TechJK TYRE maintains the
standards of 2:1. After the situation is less than 2:1 it shows the margin of sa
fety for
creditors is low and company may be struggling to meet their obligations to pay.
32
2.Interest coverage:-
The interest coverage ratio or the times-interest-earned is one of the most
conventional coverage ratios used to test the firms debt-servicing capacity.it c
an be
calculated by dividing EBIT with interest
EBIT
Interest coverage=
INTEREST
years
EBIT
INTEREST
Interest coverage
(in.Rs.Cr)
(in.Rs.Cr)
ratio
2004
132.59
9.92
13.37
2005
125.89
11.85
10.62
2006
283.64
10.12
28.03
2007
127.52
28.09
4.54
2008
441.32
28.30
15.59
Analysis:The interest coverage ratio of the firm for 2004 is 13.37 after the
year it decraesed to 10.62 in the year 2005. Again it increased to 28.03 later y
ears it
decreased to 4.54 & it finally reached to 15.59.
33
The graph between Years and Interest coverage ratio shows as below
Interest coverage ratio
30
interest coverage ratio
25
20
15
Interest coverage ratio
10
5
0
2004
2005
2006
2007
2008
years
Interpretation:-
The interest coverage ratio of higher ratio is desirable.the analysis indicates
that
the firm using debt in conservatively.It is higher in the year 2006 i.e.28.03, i
t is low in the
year 2007 i.e.4.54.
34
3.Capital equity ratio:-
This is the ratio which expressing the basic relationship between debt and equit
y.
Calculating the ratio of Net assets to Net worth can find this ratio.
Capital employed
Capital equity ratio =
Net worth
Capital employed = Total debt + Net worth
years
Capital employed
Net worth
Capital equity ratio
(in.Rs.Cr)
(in.Rs.Cr)
2004
435.34
435.34
1.00
2005
482.82
482.83
0.99
2006
597.86
597.86
1.00
2007
930.78
878.12
1.06
2008
1323.40
1228.40
1.08
Analysis:Capital equity ratio of the firm for 2004 to 2008 are 1, 0.99, 1, 1.03,
1.08.it is
decreased from 2004 to 2005 after the years it raised to 1.08.
35
The graph between Years and Capital equity ratios ratio shows as below
CAPITAL EQUITY RATIO
1.1
1.08
CAPITAL EQUITY RATIO
1.06
1.04
1.02
CAPITAL EQUITY RATIO
1
0.98
0.96
0.94
2004
2005
2006
2007
2008
YEARS
Iterpretation:-
The funds being contributed by the lenders and owners for each rupee is almost
i.e. Rs.1/-.It indicates that the firm maintained the constant capital and equit
y in the equal
proportion change.
36
4. Debtors turnover ratio:-
Debtors turnover ratio can be calculated by dividing total sales by dividing deb
tors.
Sales
Debtors turn over =
Debtors
years
Sales
Debtors
Debtors turnover
ratio
2004
711.50
276.21
2.58times
2005
922.34
217.42
4.24times
2006
1197.14
412.72
2.90times
2007
2753.22
792.02
3.48times
2008
3604.7
1057.40
3.41times
Analysis:Debtors turnover ratio for the years 2004, 2005, 2006, 2007 and 2008 are
2.58,
4.24, 2.90, 3.48 and 3.41 respectively. It is raised to 4.24 for the year 2005 a
fter it
decreased to 3.41 in the year 2008.
37
The graph between Years and Debtors turnover ratios shows as below
DEBTORS TURNOVER RATIO
4.5
4
3.5
CURRENT RATIO
3
2.5
DEBTORS TURNOVER
RATIO
2
1.5
1
0.5
0
2004
2005
2006
2007
2008
YEARS
Interpretation:The ratios are more than 2, this indicates the firm is good at th
e management of
credit. It is high in the year 2005 and least in the year 2004. The firm maintai
ned
conversion of the debtors funds to sales is sufficiently.
38
5. Total assets turnover ratio:-
This ratio shows the firms ability in ngenerating sales from all financial resou
rces
committed ton total assets.
Sales
Total assets turnover=
Total assets
years
sales
Total assets
Total assets turnover
ratio
2004
711.50
435.34
1.63
2005
922.34
482.82
1.91
2006
1197.14
597.86
2.00
2007
2753.22
930.78
2.96
2008
3604.7
1323.40
2.72
Analysis:Total assets turnover ratio of the year 2004 to 2008 are 1.63, 1.91, 2.
00, 2.96 and
2.72 times respectively.it is gradually increased year by year.
39
The graph between Years and total assets turnover ratio shows as below
TOTAL ASSETS TURNOVER RATIO
3.5
TOTAL ASSETS TURN OVER RATIOS
3
2.5
2
TOTAL ASSETS TURNOVER
RATIO
1.5
1
0.5
0
2004
2005
2006
2007
2008
YEARS
Interpretaion:The total assets turnover ratio of the firm are 1.63, 1.91, 2, 2.9
6 and 2.72 times it
implies that the firm generate a sales more than one for one rupee investment on
total
assets.
40
6.Fixed assets turnover ratio:-
Fixed assets turnover ratio can be calculated by dividing of sales with net fixe
d
assets.
Sales
Fixed assets turn over ratio=
Net fixed assets
Years
sales
Net fixed assets
Fixed assets
turnover ratio
2004
711.50
133.24
5.34
2005
922.34
170.05
5.42
2006
1197.14
156.79
7.64
2007
2753.22
247.03
11.15
2008
3604.7
290.9
12.39
Analysis:The fixed assets turnover ratios for 2004 to 2008 are 5.34, 5.42, 7.64,
11.15 and
12.39 times respectively. It was increased from 2004 to2008.
41
The graph between Years and Fixed assets turnover ratio shows as below
Fixed assets turn over ratio
14
FIXED ASSETS TURN OVER RATIOS
12
10
8
Fixed assets turn over ratio
6
4
2
0
2004
2005
2006
2007
2008
YEARS
Interpretation:Increasing fixed assets turnover ratio implies that the firms uti
lization of fixed
assets is increased.
42
7.Curent assets turnover ratio:-
Current assets turnover ratio can be calculated by dividing of sales with net
current assets.
Sales
Current assets turnover ratio=
Net current assets
Years
sales
Net current assets
Current assets
turnover ratio
2004
711.50
209.01
3.40
2005
922.34
190.79
4.83
2006
1197.14
126.99
9.42
2007
2753.22
345.89
7.96
2008
3604.7
595.40
6.05
Analysis:The current assets turnover ratios for the years from 2004 to 2008 are
3.40, 4.83,
9.42, 7.96 and 6.05 times.
43
The graph between Years and current assets turnover ratio shows as below
Current assets turnover ratio
10
9
CURRENT ASSETS TURN OVER RATIOS
8
7
6
5
Current assets turnover ratio
4
3
2
1
0
2004
2005
2006
2007
2008
YEARS
Interpretation:-
It is increased from 2004 to 2006 and then decreased to 6.05 times for the year
2008.it indicates that the usage of current assets is more than its investments.
44
8. Gross profit ratio:This ratio expresses relationship between gross profit and
net sales. It relates the
efficiency with which management produces each unit of product. It indicates the
degree
to which the selling price of goods per unit may decline without resulting in lo
sses from
operations to the firm.
The first profitability ratio n relation to sales is the gross profit ratio it i
s
calculated by dividing the gross profit by sales.
Gross profit
Gross profit ratio =
X 100
Sales
Gross profit = Net sales cost of goods sold
Cost of goods sold = power & fuel + other manufacturing expenses
Year
Gross Profit
Sales
Gross profit Ratio
(in.Rs.Cr)
(in.Rs.Cr)
(%)
2004
655.38
711.50
92.11
2005
819.88
922.34
88.89
2006
994.86
1197.14
83.10
2007
2178.53
2753.22
79.12
2008
2887.40
3604.7
80.11
Analysis:
The calculated gross profit ratio indicates that the proportion of gross profit
to
sales shows decreased figures from year 2004 i.e. 92.11 to79.12 in the year 2007
later
year it increased to 80.11
45
The graph between Years and Gross profit ratio shows as below
Gross profit ratio (%)
95
gross profit ratio
90
85
Series1
80
75
70
2004
2005
2006
2007
2008
year
Interpretation:
Gross profit ratio of the firm is highest in the year 2004 is 92.11% it indicate
s that
firm got more sales for attaining more profit. Firms performance is good in the
year 2008
i.e. 80.11%.
46
9.Net profit ratio:-
Net profit ratio is obtained when operating expenses; interest and taxes subtrac
ted
from the gross profit. Net profit ratio helps in determining efficiency with whi
ch affairs
of the business are being managed. This ratio is the overall measure of the firms
ability
to turn each rupee sales into net profit. The ratio is thus an effective measure
to check the
profitability of business.
The net profit margin ratio is measured by dividing profit
after tax by sales.
Profit after tax
Net profit margin=
100
Net sales
Years
Profit after tax
Net Sales
Net profit margin
(in.Rs.Cr)
(in.Rs.Cr)
2004
94.13
711.50
13.23%
2005
71.09
922.34
7.71%
2006
220.12
1197.14
18.39%
2007
65.23
2753.22
2.37%
2008
325.70
3604.7
9.04%
Analysis:Net profit margin ratio for the years from 2004 to 2008 are 13.25%, 7.7
1%,
18.39%, 2.37% and 9.04%.it is highest in the year 2006 i.e. 18.39% and the least
in the
year 2007 i.e. 2.37%.
47
The graph between Years and Net profit ratio shows as below
Net profit margin
20.00%
18.00%
NET PROFIT RATIOS
(%)
16.00%
14.00%
12.00%
10.00%
Net profit margin
8.00%
6.00%
4.00%
2.00%
0.00%
2004
2005
2006
2007
2008
YEARS
Interpretation:-
Through this ratio overall profitability can be measured after adjusting nonoper
ating income & non-operating expenses. Firm showing best performance in the year
2006.in the year 2008 it is good.
48
FINDINGS

Firm maintained liquidity ratio indicates that it is in standards in the years 2

004 &
2005. In the next years it is below the standards.

Debt of the firm is almost equal to its net worth.

Turnover ratios indicate that the firm is in good at conversion assets to sales.

Current assets turnover is very high when compare to the fixed assets turnover.

Gross profit is high in the years 2004 after the years firm gets fluctuations fi
nally
it is in good position.

In the 2004 & 2005 years it is having more operating expenses than to sales it i
s
well for next years.

Returns is not in preferable way it is below 25% on average.

Earnings on each share are good condition for the firm.

But the payment to the share holders is below 50%.

49
CONCLUSION
The companys overall position is at a good position. Particularly the
current years position is well due to raise in the profit level from the last yea
r position. It
is better for the organization to diversify the funds to different sectors in th
e present
market scenario.
Financial Analysis is the process of evaluating businesses and other
finance-related entities to determine their suitability for investment. Typicall
y, financial
analysis is used to analyze whether an entity is stable, solvent, liquid, or pro
fitable
enough to be invested in. One of the most common ways of analyzing financial dat
a is to
calculate ratios from the data to compare against those of other comparable comp
anies. In
Infinancials, financial ratios are categorized according to the financial aspect
of the
business which the ratio measures: Profitability, Asset Utilization, Capital Str
ucture on a
specific tab, Financial Ratios. Financial analysis allows for comparisons betwee
n
companies, between industries and also between a single company and its industry
average or peer group average.
50
SUGGESTIONS

Although firm maintains sufficient liquidity, it is needed to increase, in order

to
attain future demand.

Because of being a soft solutions JK TYRE ltd need to raise their turnovers to g
et
good impression on the maintenance.

Firm needed to decrease the operating expenses, in order to sustain in this

rescission period.

Returns are of below 25% there is necessary to increase it. By getting more
projects it will happens.

Although the earnings on each share is good payment to the share holders is belo
w
50%.it is better to maintain 50% to 75%, it will helps attracting share holders
towards invest.
51
BIBLIOGRAPHY
REFFERED BOOKS

FINANCIAL MANAGEMENT - I. M. PANDEY

MANAGEMENT ACCOUNTANCY - PILLAI & BAGAVATI

MANAGEMENT ACCOUNTING SHARMA & GUPTA

INTERNET SITE
www.ercap.org
www.wikipedia.com
www.nwda.gov.in
52
Key Financial Ratios of JK Tyre and
Industries
Mar 13
Investment Valuation Ratios
Face Value
10.00
Dividend Per Share
3.50
Operating Profit Per Share (Rs)
118.70
Net Operating Profit Per Share (Rs) 1,288.69
Free Reserves Per Share (Rs)
-Bonus in Equity Capital
0.09
Profitability Ratios
Operating Profit Margin(%)
9.21
Profit Before Interest And Tax
7.06
Margin(%)
Gross Profit Margin(%)
7.08
Cash Profit Margin(%)
4.69
Adjusted Cash Margin(%)
4.69
Net Profit Margin(%)
1.98
Adjusted Net Profit Margin(%)
1.98
Return On Capital Employed(%)
13.09
Return On Net Worth(%)
14.22
Adjusted Return on Net Worth(%)
18.39
Return on Assets Excluding
180.70
Revaluations
Return on Assets Including
180.70
Revaluations
Return on Long Term Funds(%)
20.70
Liquidity And Solvency Ratios
Current Ratio
0.60
Quick Ratio
0.84
Debt Equity Ratio
2.99
Long Term Debt Equity Ratio
1.52
Debt Coverage Ratios
Interest Cover
1.88
Total Debt to Owners Fund
2.99
Financial Charges Coverage Ratio
2.42
Financial Charges Coverage Ratio
2.06
Post Tax
Management Efficiency Ratios
Inventory Turnover Ratio
7.41
Debtors Turnover Ratio
5.93
Investments Turnover Ratio
7.41
Fixed Assets Turnover Ratio
1.43
Total Assets Turnover Ratio
1.79
Asset Turnover Ratio
1.99
Average Raw Material Holding
-Average Finished Goods Held
-Number of Days In Working Capital 36.02
Profit & Loss Account Ratios
Material Cost Composition
74.87
Imported Composition of Raw
37.64
Mar 12
Mar 11
Mar 10
Mar 09
10.00
2.50
68.12
1,375.10
141.64
0.09
10.00
3.00
81.40
1,168.60
141.79
0.09
10.00
3.50
117.50
895.56
130.02
0.09
10.00
2.70
92.93
1,201.70
93.27
0.09
4.95
6.96
13.12
7.73
3.15
4.55
10.09
4.70
3.15
1.96
1.96
0.19
0.19
7.74
1.64
1.42
4.57
3.15
3.15
1.27
1.27
11.99
8.57
5.27
10.14
6.87
6.87
4.42
4.42
24.84
23.57
20.11
4.72
2.76
2.76
0.38
0.38
14.94
3.33
-2.86
163.32
174.07
168.88
138.97
163.32
174.07
168.88
138.97
10.99
19.92
30.48
21.94
0.63
0.68
2.50
1.47
0.64
0.69
1.84
0.71
0.79
0.61
1.24
0.83
0.60
0.72
1.91
0.98
1.07
2.50
1.66
2.49
1.84
2.04
4.17
1.24
3.05
1.55
1.91
1.65
1.66
2.00
2.69
1.71
9.78
7.14
9.78
2.04
2.41
2.58
29.89
15.58
7.41
7.91
7.99
7.91
1.76
2.37
2.68
29.11
26.62
28.87
9.11
7.91
9.11
1.44
2.38
2.28
39.19
18.69
-2.10
14.03
11.24
14.03
2.18
2.95
-20.71
27.88
19.00
74.61
33.22
77.93
28.84
63.38
34.21
70.44
33.56
53
Materials Consumed
Selling Distribution Cost
Composition
Expenses as Composition of Total
Sales
Cash Flow Indicator Ratios
Dividend Payout Ratio Net Profit
Dividend Payout Ratio Cash Profit
Earning Retention Ratio
Cash Earning Retention Ratio
AdjustedCash Flow Times
Earnings Per Share
Book Value
--
3.63
7.21
8.03
7.24
16.34
10.54
8.86
9.82
15.24
15.92
7.70
87.69
93.26
8.91
93.27
9.12
-7.32
90.76
15.12
20.09
7.00
67.35
91.91
8.66
10.25
6.02
87.99
93.41
3.38
68.08
7.52
179.42
90.54
8.04
Mar 13
Mar 12
Mar 11
Mar 10
Mar 09
25.70
180.70
2.68
163.32
14.93
174.07
39.81
168.88
4.64
140.24
54