FINANCIAL PERFORMANCE ANALYSIS OF

A Project report submitted to AICTE in partial fulfillment of the Requirements For the award of the diploma of
POST GRADUAGE DIPLOMA IN MANAGEMENT Submitted By

Girish Vishwakarma
Under the guidance of Miss. Vibha Mittal (Faculty Of Finance (PGDM) IMR)

INSTITUTE OF MANAGEMENT & RESEARCH

(Affiliated to AICTE)
8TH MILESTONE, DELHI-MEERUT ROAD, DUHAI, GHAZIABAD (U.P.) 2010 - 2012
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DECLARATION

I hereby declare that this project report titled FINANCIAL PERFORMANCE ANALYSIS OF SAMTEL COLOR LTD. is submitted by me to AICTE is a bonafide work undertaken by me and it is not submitted to any other University or Institute for the award of any Certificate or published any time before. Diploma /

Place: Ghaziabad Signature

Date: VISHWAKARMA) (GIRISH

ACKNOWLEDGEMENTS

At the out set, I wish to express my sincere thanks to almighty for showering his blessing on me to develop this project. I would like to acknowledge my sincere thanks to Mr. RISHI TAPARIA, Faculty of Finance & H.O.D, Institute Of Management & Research for his excellent guidance and supervision for the completion of this project successfully. I am deeply indebted to the Dr. UMESH SHARMA, Ph.D., Director General, Institute of Management & Research for enabling me to do this project. I express my sincere thanks to Mr. Amitabh Ranjan Sinha, General Manager of Samtel Color Ltd, Ghaziabad for according permission to carry out this study in his esteemed organization & under the guidance Miss. VIBHA MITTAL Faculty of Finance, Institute Of Management & Research. Last but not the least I wish to thank my Parents who always believed me and have faith in me in whatever I wished to do.
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GIRISH VISHWAKARMA

CONTENTS
CHAPTER CHAPTER I PROFILE 1.1 Industry Profile 1.2 Company Profile INTRODUCTION AND DESIGN OF THE STUDY 2.1 Introduction of the Study 2.2 Objective of the Study CHAPTER II 2.3 Research Methodology 2.3.1 Research Design 2.3.2 Nature of Data 2.3.3 Methods Data Collection 2.3.4 Research Tools CHAPTER III CHAPTER IV DATA ANALYSIS AND INTERPRETATION FINDINGS AND SUGGESTIONS 4.1 Findings 4.2 Suggestions CONCLUSION AND BIBLIOGRAPHY CHAPTER V 5.1 Conclusion 5.2 Limitations of the Study 5.3 Bibliography CHAPTER VI ANNEXURE
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PARTICULARS

PAGE NO 1-18

19-31

32-81 82-87

88-91

92-94

LIST OF TABLE SL.NO

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Current ratio Liquid ratio Absolute liquidity ratio Debt equity ratio Proprietary ratio Stock turnover ratio Fixed assets turnover ratio Working capital turnover ratio Total assets turnover ratio Capital turnover ratio Return on total assets Gross profit ratio Net profit ratio Expenses ratio Common Size Income Statement (2006, 2007) Common 2008) Common 2009) Size Size Income Income
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PARTICULRS

PAGE NO
34 36 38 40 42 44 46 48 50 52 54 56 58 60 62 63 64

Statement Statement

(2007, (2008,

18 19 20 21 22 23 24 25 26 27 28 29 30 31 32

Common Size Income Statement (2009, 2010) Common Size Balance Sheet (2006, 2007) Common Size Balance Sheet (2007, 2008) Common Size Balance Sheet (2008, 2009) Common Size Balance Sheet (2009, 2010) Comparative 2007) income Statement (2006,

65 66 67 68 69 70 71 72 73 74 75 76 77 78 79

Comparative income Statement (2007, 2008) Comparative income Statement (2008, 2009) Comparative income Statement (2009, 2010) Comparative Balance Sheet (2006, 2007) Comparative Balance Sheet (2007, 2008) Comparative Balance Sheet (2008, 2009) Comparative Balance Sheet (2009, 2010) Trend income statement Trend Balance sheet

LIST OF CHARTS SL.NO

1 2 3 4 5 6 7 8 9 10 11 12 13 14

PARTICULRS Current ratio Liquid ratio Absolute liquidity ratio Debt equity ratio Proprietary ratio Stock turnover ratio Fixed assets turnover ratio Working capital turnover ratio Total assets turnover ratio Capital turnover ratio Return on total assets Gross profit ratio Net profit ratio Expenses ratio

PAGE NO
34 36 38 40 42 44 46 48 50 52 54 56 58 60

EXECUTIVE SUMMARY
Samtel Group's journey began in 1973, with a vision to create a world-class organization. Today, Samtel Group is Indias largest integrated manufacturer of a wide range of displays for television, avionics, industrial, medical and professional applications, TV glass, components for displays, machinery and engineering services. The group employs 6000 people in nine world-class factories and has an annual turnover of Rs 12 billion (USD 300M) Samtel Group has strong design and development skills and is a dependable player with excellent technological capabilities and a long-term commitment to the display industry. Its products are known for ruggedness and reliability and conform to the latest relevant quality standards. The group has excellent relationships with suppliers of key components and the ability to design new products as well as set up hi-tech manufacturing facilities. Samtel has registered many patents for developments in display technology and also developed its own technology for automation.

FINANCIAL PERFORMANCE ANALYSIS OF SAMTEL COLOR LTD.

My Project is The project was of 45 Days duration. During the project I interviewed the executives & staff to collect the data, & also made use of company records & annual reports. The data collected were then compiled, tabulated and analyzed. Some the points to be studied under this topic are: How much total assets a firms hold? What should be the firms working capital?
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 How much firms stock turnover ratio? How much capital turnover ratio in firms? How to & when to pay the creditors of the firm? How much to invest in inventories?

CHAPTER- I PROFILE Contents: 1.1 Industry Profile 1.2 Company Profile

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1.1 INDUSTRY PROFILE Samtel Display Industry- an Overview: Samtel Display Systems bags the Hot Investment Opportunity award by Frost & Sullivan:
The first Indian company to be acknowledged in the aerospace segment SDS awarded for its outstanding business model and for providing a significant cost benefit to its clients vis--vis its competitors London, September 24: The Indian avionics leader, Samtel Display Systems (SDS), has been awarded the Frost & Sullivan Hot Investment Opportunity Award 2009 in the Indian Aviation Suppliers Market. This award recognizes the Companys outstanding business model based on unique and differentiated products, continuous upgrades of systems, long-term client contracts and industry certifications such as SAE/AS 9100 Rev-B. This is the first time that Business Financial Services (BFS) at Frost & Sullivan is awarding an Indian participant in Aerospace Sector. Speaking at the award ceremony organized at The Marriott Marble Arch Hotel (London), Gary Jeffery, Partner & Director, UK Operations for Frost & Sullivan, congratulated all the award recipients including SDS for their excellence. A delighted Puneet Kaura Executive Director, Samtel Display Systems said- The Indian defense and aviation industry is extremely dynamic and has tremendous business potential, while Samtel Display Systems is the only privately owned company manufacturing high-end avionics products in the country. We are extremely honored to receive
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the Frost & Sullivan Hot Investment Opportunities Award as it is an acknowledgement of the accomplishments and potential of Samtel Display Systems, and also gives the Indian Aerospace industry the global recognition it truly deserves. The company has a differentiated product portfolio and commands a very high market share (more than 85.0 per cent) in the segments in which it operates, remarks Frost & Sullivan Research Analyst Madusudanan Ramani. SDS offers a significant cost benefit to customers as compared to its competitors from developed economies such as the United States and Europe. The offset policy in the defense segment (according to which companies that get a defense contract from the Indian Government have to invest 30 per cent back into the country, either by way of purchases from the local participants or as investment into the sector) coupled with intensifying pressure on OEMs to source more from lowcost destinations such as India is expected to strongly drive revenues for SDS in the future., concludes Frost & Sullivan Research Analyst Madusudanan Ramani. The major challenges faced by companies in the Indian aviation suppliers market are inconsistent order flow, long gestation period of projects, and lack of competitive technology. SDS has addressed these challenges by signing long-term contracts with its customers ranging from a period of eight years to a lifetime to ensure consistent supply. SDS has forged partnerships with many large companies for the development and supply of key parts, such as Hindustan Aeronautics Limited (HAL), Thales Aerospace, Honeywell Aerospace and Defense Research and Development Organization (DRDO). SDS is currently a
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tier 2 supplier to many global participants, and Tier 1 supplier to the only significant Indian player HAL. The sales contracts with foreign clients are for a 20-year period and the Indian sales contracts are for a period ranging from eight to ten years, notes Ramani. The deal between Samtel and HAL for Sukhoi runs for the entire lifetime. The repeat business ratio for SDS is expected to be very high because of the company's differentiated product line and substantial order book.

About the award

The Frost & Sullivan Hot Investment Opportunity Award in the Indian Aviation Suppliers Market is bestowed each year upon the private company that has demonstrated excellence in managing its growth, attracting venture capital funding, maintaining a strong management team, and establishing a sustainable competitive advantage in an attractive market. The Award recipient must be well positioned in a growing market and have demonstrated the potential to obtain market leadership in the near-term. Finally, clear exit paths must exist, along with the potential for exceptional investment returns at an acceptable risk level for potential investors. Frost & Sullivan Best Practices Awards recognize companies in a variety of regional and global markets for demonstrating outstanding achievement and superior performance in areas such as leadership, technological innovation, customer service, and strategic product development. Industry analysts compare market participants and measure performance through in-depth interviews, analysis, and extensive secondary research in order to identify best practices in the industry.
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About Samtel Display Systems

Samtel Display Systems (SDS) is a key Indian player in hightechnology products for avionics and military applications in both domestic and international markets. SDS straddles the entire value chain from design, development, manufacture, testing, qualification, repair & maintenance and obsolescence management of avionics products and equipment for military as well as commercial aircraft. Its products include Color Avionic Tubes (CAT), Multi Function Displays (MFD), Head Up Displays (HUD), Helmet Mounted Displays (HMD), Automated Test Equipments (ATE) and IADS, as well as Control Displays for Armored Military Vehicles. SDS is a part of the Samtel Group, Indias largest integrated manufacturer of a wide range of displays for television, avionics, industrial, medical and professional applications, TV glass, components for displays, machinery and engineering services.

1.2 COMPANY PROFILE

SAMTEL GROUP
Samtel Group's journey began in 1973, with a vision to create a world-class organization. Today, Samtel Group is Indias largest integrated manufacturer of a wide range of displays for television, avionics, industrial, medical and professional applications, TV glass, components for displays, machinery and engineering services. The group employs 6000 people in nine world-class factories and has an annual turnover of Rs 12 billion (USD 300M) Samtel Group has strong design and development skills and is a dependable player with excellent technological capabilities and a longterm commitment to the display industry. Its products are known for ruggedness and reliability and conform to the latest relevant quality standards. The group has excellent relationships with suppliers of key components and the ability to design new products as well as set up hi12

tech manufacturing facilities. Samtel has registered many patents for developments in display technology and also developed its own technology for automation.

Group Companies
SAMTEL COLOR LTD
Samtel Color, the flagship company of the group manufactures the widest range of Colour TV tubes in India from 14 inches to 29 inches, and has a capacity of over 10 million picture tubes per annum. Integrated backwards with its component divisions at Ghaziabad and Parwanoo, it also manufactures electron guns and deflection yokes for colour picture tubes. With a market share of over 60%, it is the largest tube manufacturer and exporter in the country. Its clients include leading domestic and international TV manufacturers.

SAMTEL GLASS LTD

Originally formed as a JV between Corning Inc., USA and Samtel in 1989, Samtel Glass manufactures glass parts for color picture tubes through its plant in Kota, Rajasthan. Samtel Glass is now owned fully by Samtel and is one of the leading manufacturers of glass for color picture tubes

SAMTEL DISPLAY SYSTEMS LTD

Samtel Display Systems (SDS) is a key Indian player in high-technology products for avionics and military applications in both domestic and international markets. SDS straddles the entire value chain from design, development, manufacture, testing, qualification, repair & maintenance and obsolescence management of avionics products and equipment for military as well as commercial aircraft. Its products include Color Avionic Tubes (CAT), Multi Function Displays (MFD), Head Up
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Displays (HUD), Helmet Mounted Displays (HMD), Automated Test Equipments (ATE) and IADS, as well as Control Displays for Armored Military Vehicles.

SAMTEL HAL DISPLAY SYSTEMS LTD

Samtel HAL Display Systems (SHDS), a joint venture between Hindustan Aeronautics Limited (HAL) and Samtel, was created to address the avionics requirements of HAL, especially cockpit displays of all kinds. SHDS is responsible for system design, development, manufacturing, MRO and obsolescence management of display systems, ATE and IADS for all Indian platforms.

SAMTEL THALES AVIONICS LTD

Samtel Thales Avionics is a joint venture between Samtel and Thales, and brings Thales' technological expertise to India through Thales' multi-domestic strategy of partnering with leading industry players across the world. The JV will work towards the local development, production, sale and maintenance of Helmets Mounted Sight & Display (HMSD) and other Avionics Systems destined for the Indian market. Samtel Thales Avionics will become the design authority for products and equipment developed and manage them through their entire life cycle.

SAMTEL ELECTRON DEVICES, GmbH

SAMTEL ELECTRON DEVICES GmbH, with its core competencies in the design and manufacturing of high technology Electron Guns and high efficiency Phosphor Screens, is dedicated to professional applications of Cathode Ray Tubes (CRT), scientific instruments (RHEED), X-Ray Guns, Phosphor screens for TEM and other related technologies.
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SAMTEL MACHINES
Samtel Machines is a key player in the domain of Industrial Automation and Special Purpose Machines manufacturing in India. Samtel Machines is a consequence of Samtels inhouse expertise in internal automation for various inhouse automation requirements, focusing on Automation, Material handling, Special Purpose Machines and Assembly lines, which set the foundation for a full-fledged division catering to Machine building called Samtel Machines.

SAMTEL USA
Samtel USA is a US Company, wholly owned by Samtel Group of New Delhi, India with offices in San Jose, CA and Princeton, NJ. Samtel USA will facilitate close liaison with Samtel Display Systems existing and potential North American customers, while helping to pursue Business Development activities in the region.

Management
The Group is headed by Mr. Satish K. Kaura, designated as the Chairman and Managing director. He has three decades of rich experience in the picture tube industry at various levels. Mr. Satish K. Kaura is ably supported by a team of talented and dedicated professionals from the picture tube industries. The Groups progressive HR policies and welfare programmes ensure a transparent, productive and growth oriented environment to the 1300 plus employees who play a key role to the success enjoyed by the organization as a prominent exporter of picture tubes.

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Social accountability
The Samtel Group was founded with a vision of building an institution which would achieve business excellence while contributing to nation building by caring for the society and environment. In its desire to play a significant role beyond the boundaries of its factories in the communities that reside around its plants, the Group founded the Samtel Achrumal Medical Aid Trust (SAMA) in 1988. Through SAMA, Samtel has provided mobile medical vans with trained medical staff, which are dedicated to providing healthcare services to the communities around its plants in Ghaziabad, Kota and Parwanoo. SAMA has also held a number of medical camps on maternal and child health, immunization, blood donation and eye care in the last few years because of which many people have benefited. In collaboration with I Care Hospital, NOIDA and Lion's Eye Hospital, Ghaziabad, the trust has been conducting eye camps for the detection and surgery of cataracts in patients. In these camps, patients are also given IOL implants free of cost. In addition to this, SAMA has also arranged First Aid Camps for Kavad Yatris since 2001. Our work continues and we plan to focus our efforts further in the areas of maternal and child health as well as launch vocational training and income generation programs in the areas in which we operate in the coming days.

Environmental Accountability
Samtel Color Ltd maintains high safely standards, and not to forget the Effluent treatment plant, which plays a big role in their commitment to preserving the delicate eco-system.

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RESEARCH AND TECHNOLOGY

Samtel's strong R&D capability has helped us to always remain the first movers in the domestic market with customized, innovative and competitive new products and retain our leadership position in the market. Over the years, our in-house team has been responsible for the design and launch of CPTs in various sizes, setting-up assembly lines with completely indigenous technology, apart from development of several types of Deflection Yokes and Electron Guns.

Through the Samtel Center for Display Technologies at IIT Kanpur, we plan to set new standards in next-generation display technologies.

Samtel Center for Display Technology, IIT-Kanpur

Samtel, in Partnership with IIT Kanpur and Department of Science and Technology, has set up a "Samtel Centre for Display Technologies", located at the Indian Institute for Technology at Kanpur. The Centre is doing extensive research in the area of emerging technologies like Organic Light Emitting Diodes (OLED), and is working towards improving and commercially exploiting this technology.

VISION, MISSION, CORE VALUES Our Vision

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Our Vision is to build a mega corporation - An institution with business excellence impacting nation building & caring for the environment and society. Our culture will be self-driven, self-searching & exploring to develop a mind of our own.

Our Mission
Our Mission is to be globally the best value provider of video display and other chosen products, through leveraging technology and competencies. We shall achieve it by creating a culture of self-striving with focus on total employee involvement towards customer satisfaction. Our approach shall be value based as a responsible member of the society, contributing to its growth and development.

Our Values
TRUST TRANSPARENCY RESPECT CARING RISK-TAKING AUTONOMY

PARTNERSHIPS AND ALLIANCES

We, at Samtel, believe in the power of enhanced expertise as we extend our business and knowledge capabilities by partnering with some of the best-known names in the industry. Long before globalization became a corporate buzzword, we were collaborating with some of the leaders in the industry be it setting up our first assembly line for manufacturing color picture tubes in technical collaboration
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with Mitsubishi Electric, Japan; or partnering with Corning, USA and Samsung Corning, Korea to set-up our glass component manufacturing plant; or joining hands with IIT-Kanpur and Department of Science and Technology for OLED research. Today, we are proud to have some of the leading names in industry and academia as our alliance partners:

Hindustan Aeronautics Limited

HAL is a major player in the global aviation arena and is currently ranked 34th among the world's top 100 defense companies. The Company has proven capabilities in R&D, manufacturing and maintenance of fighters, trainers, transport aircraft, helicopters, their engines and associated systems. As our JV partners in Samtel HAL Display Systems Limited, HAL will help us in developing indigenous next-generation avionic display systems for HAL's star programmes.

Thales Aerospace
Thales is a leading international electronics and systems group addressing defense, aerospace and security markets worldwide. The group builds its growth on its unique multidomestic strategy based on trusted partnerships with national customers and market players, while leveraging its global expertise to support local technology and industrial development. Thales and Samtel have a joint venture in Samtel Thales Avionics, which will work towards the local development, production, sale and maintenance of
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Helmets Mounted Sight & Display (HMSD) and other Avionics Systems destined for the Indian market.

IIT-Kanpur, and Department of Science and Technology, Govt. of India

Samtel, in Partnership with IIT Kanpur and Department of Science and Technology, has set up a "Samtel Centre for Display Technologies", located at the Indian Institute for Technology at Kanpur. The Centre is doing extensive research in the area of emerging technologies like Organic Light Emitting Diodes (OLED), and is working towards improving and commercially exploiting this technology.

DRDO (Defense Research Organization, Govt. of India)

and

Development

Samtel Display Systems has signed a Mo U with Defense Avionic Research Establishment (DARE) to indigenize cockpit displays under the aegis of DRDO Lab's DARE (Defense Avionics Research Establishment) program.

Infrastructure Machinery: SPECIAL PURPOSE MACHINES

In response to customer specific needs, Samtel Machines has developed certain Special Purpose Machines such as Continuous motion assembly equipments, Packaging Equipments, Automatic Taping machines, Indexing machine, Pick and Place machines, and Chemical Processing Equipment.

Some typical case studies include: Testing and Inspection Automation Gauging / Leak Testing Application:
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Leak testing of manifolds, oil cases, engine covers, plastic moulds, Aluminum die castings

General Description:
Leak testing is the branch of nondestructive testing that is concerned with the escape of liquids, vacuum or gases from sealed components or systems. Leak testing has a great impact on the safety or performance of a product. Reliable leak testing saves costs by reducing the number of reworked products, warranty repairs and liability claims to the customer. Generally a leak is a hole or porosity in an enclosure capable of passing a fluid from the higher-pressure side to the lower pressure side. However, capillary effects can also be causes of leakage flows. The flow characteristics of a leak are often depending upon the geometry of the leak, the nature of the leaking fluid, the pressure differential, and the prevailing temperature. Leak testing in itself is a challenge to be built as it is playing with the fluids (air/water/oil). The controlling of fluid in itself is a difficult task to be carried out but here we are not less in doing so. Our vast knowledge of subject over fluids and expertise in this field has brought us wellsatisfied and repeated customers orders, covering 50% of market in India.

Assembly Automation & Semi automatic assembly stations Application:

Assembly of connector pins

General Description:
The design for an assembly line is determined by analyzing the steps necessary to manufacture each product component as well as the final product. All movement of material is simplified, with no cross flow, backtracking, or
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repetitious procedure. Work assignments, numbers of machines, and production rates are programmed so that all operations along the line are compatible. Automated assembly lines consist entirely of machines run by machines, with little or no human supervision. In such continuousprocess industries as petroleum refining and chemical manufacture and in many modern automobile-engine plants, assembly lines are completely mechanized and consist almost entirely of automatic, selfregulating equipment. Many products however are still assembled by hand because many component parts are not easily handled by machines, as they been expensive and somewhat inflexible, as such semi-automatic assembly machines are economical to produce a high level of output in that case. As this is the case of building assembly automations Samtel Machines has well expertise in the field with much competency and has executed many projects to our valuable customers giving them the best automation assembly machines for the execution of their target in stipulated time period.

Welding Automations Application:

Welding of wheel rims, body frames

General Description:
Welding is a fabrication process that joins materials, usually metals or thermoplastics, by causing coalescence. This is often done by melting the work pieces and adding a filler material to form a pool of molten material (the weld pool) that cools to become a strong joint, with pressure sometimes used in conjunction with heat, or by itself, to produce the weld. This is in contrast with soldering and brazing, which involve melting a lower-melting-point material between the work pieces to form a bond between them, without melting the work pieces.

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Many different energy sources can be used for welding, including a gas flame, an electric arc, a laser, an electron beam, friction, and ultrasound. While often an industrial process, welding can be done in many different environments, including open air, under water and in outer space. However, welding remains dangerous, and precautions must be taken to avoid burns, electric shock, eye damage, poisonous fumes, and overexposure to ultraviolet light. Samtel Machines has a vast experience of welding automations as it mastered the technology

Floor Conveyors (Idle Roller, Power Roller, Chain, Belt, Slat etc.) Application:
Transfer of materials

General Description:
A conveyor system is a common piece of mechanical handling equipment that moves materials from one location to another. Conveyors are especially useful in applications involving the transportation of heavy or bulky materials. Conveyor systems allow quick and efficient transportation for a wide variety of materials, which make them very popular in the material handling and packaging industries. Many kinds of conveying systems are available, and are used according to the various needs of different industries.

Warehouse
The company has a centralized warehousing, cutting and packing facilities installed at one of its units. Standard processes, strict adherence to quality norms and regular maintenance is carried out at the warehousing end as well
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PRODUCTS & SERVICES Special Purpose Machines:

Design Engineering and Manufacturing of Special purpose Machines.

Automation solutions:
Design and build production and assembly lines and custom automation machines of any size or capability specializing in highspeed processes and assembly equipment.

Robot integration:
Articulate robots and gantries. Design of end effectors for hot and fragile applications, SCADA and central control rooms for small to medium lines.

Contract manufacturing:
Component level and sub-assembly system manufacturing services.

Control engineering solutions:

Design of control panels, PLC, CNC software and dedicated controller

Purchase procedure:
A systematic procedure for purchase of raw materials helps in buying materials quickly with consistency. In general, purchase procedure of an organization includes the following aspects.

RECEIVING PURDHASE REQUISITION:

The purchase department cannot buy the materials on its own as it will not be aware of what materials are required, their quantity, quality and other details. Therefore, it will have to be intimated about the materials required by those departments which are in need of materials. This is done through purchase requisition. The purchase manager comes to know the details of materials required by the concern through the purchase requisitions. Purchase requisition is prepared by the store keeper for materials requirements which are not
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available in the store. This requisition has to be approved by head of the department in addition to the head of department in person who is originating the requisition.

STUDUING SUPPLIER

THE

MARKET

AND

CHOOSING

THE

The purchase department generally maintains a list of suppliers and other details for each type or group of materials. Tenders / quotations may be invited from these suppliers. The comparative statement of various quotations is to be prepared and the best supplier offering most favorable terms should be selected. When selecting a particular supplier, the purchase departments supply of required quantity. Reliability for supply of quantity Price quoted Financial position of the supplier Terms of payment Reputation of the supplier Discounts offered

ISSUING PURCHASE ORDER AND FOLLOWING UP OF DELIVERY SCHEDULES:

Once the supplier is selected the purchase order is to be prepared. The purchase order is the written commitment from purchase department to buy the materials and authorization to the supplier to supply materials. It is the contract between the buyer and seller for stated terms and condition. The supplier is committed to supply and make payment. It is also an authorization to goods receiving departments to accept the invoice for payment to the supplier. Generally, five copies of the purchase order are prepared and used as follows: One copy is sent to the supplier. The purchase department retains one copy.
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 One copy is sent to the store keeper/department, which has requisition materials. One copy is sent to the receiving department. One copy is sent to the accounts department. The purchase order provides detailed information to the supplier regarding price, quantity, delivery terms, etc. It reduces the purchasing and clerical work into a routine.

RECEIVING AND INSPECTION OF MATERIALS:

In large organization there may be a separate department for receiving the materials. But in this organization, this may be entrusted to the store keeper.

FUNCTION OF RECEIVING DEPARTMENT:

Keeping purchase order files in a systematic way. Receiving and unpacking of materials sent by supplier under various challans. Verifying the materials received by comparing with purchase orders. This includes checking quantity, quality, and physical condition of material.

GOODS RECEIVED NOTE:

Preparing a goods received note (GRN), entering the details of materials received for the information of all those concerned with materials. Generally, five copies of goods received are purchase and used as given below: One copy is retained by the goods receiving department. Four copies are to the store keeper along with materials. The store keeper will verify the entries with actual goods Countersign them and will send one copy to the purchase department; one copy to the account department; one copy to be department which initiated the requisition and one copy is retained by the store keeper.

VERIFYING AND PASSING SUPPLIERS INVOICE FOR PAYMENT AND DEDUCTION OF TDS:
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Based on goods received note, purchases are verified and a payment is made to supplier. When the invoice is received from the supplier, it is sent to the accounting department to check the authenticity as well as accuracy. The quantity, price and amount received are checked with reference to purchase order and goods received note. If everything is found in order, the accounting section approves the invoice for payment and the cashier makes the payment as per the agreed.

TAX DEDUCTED AT SOURCE (TDS):

In certain specified case of income, tax should deduce at source by the person responsible for making payment of such income. As per rule, while making payment to the supplier TDS is deducted from the payment at a certain rate and the actual amount is only paid to the concerned supplier. Payment to contractors Tax deduction at source on commission and brokerage Tax deduction at sources on rent Tax deduction at sources on fees for technical or professionals services

SALES DEPARTMENTS:
Selling is most characteristic feature of the modern marketing system. It is important not only for increasing the profits of businessman but also for making the goods and services available to the consumers. The main object of production is to sell the goods produces. The efficiency of marketing efforts can be measured only from the volume of sales affected y a businessman. According to the sec (1) of the sale of goods act, a contract of sale is a contract where by the seller transfers or agrees to transfer the property in goods to the buyer for a price. In simple sense, sale means any transfer of property in goods by one person to another cash deferred payment for any other valuable consideration.

BRANCHES OF SAMTEL COLOR LTD:

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These are the concerned branches of Samtel Group (picture tubes) in the following countries namely, 1. Ulm (Germany) 2. Ghaziabad 6.Kanpur 7. Parwanoo (H.P.) 3.Kota (Rajasthan) 4.Gurgaon 5.Delhi

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CHAPTER- II INTRODUCTION Contents: 2.1 Introduction of Study 2.2 Objective of the Study 2.3 Research Methodology 2.3.1 Research Design 2.3.2 Nature of Data 2.3.3 Methods Data Collection 2.3.4 Research Tools

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2.1 INTRODUCTION
Financial statement:
A financial statement is an organized collection of data according to logical and consistent accounting procedures. Its purpose is to convey an understanding of some financial aspects of a business firm. It may show a position at a moment of time as in the case of a balance sheet, or may reveal a series of activities over a given period of time, as in the case of an income statement. Thus, the term financial statement generally refers to the basis statements; i) ii) iii) iv) The income statement The balance sheet A statement of retained earnings A statement of charge in financial position in addition to the above two statement.

Financial statement analysis:

It is the process of identifying the financial strength and weakness of a firm from the available accounting data and financial statement. The analysis is done by properly establishing the relationship between the items of balance sheet and profit and loss account the first task of financial analyst is to determine the information relevant to the decision under consideration from the total information contained in the financial statement. The second step is to arrange information in a way to highlight significant relationship. The final step is interpretation and drawing of inferences and conclusion. Thus
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financial analysis is the process of selection relating and evaluation of the accounting data/information.

This studying contain following analysis:

1) comparative analysis statement 2) common-size analysis statement 3) Ratio analysis 4) Trend analysis.

1)

Comparative financial statement:

Comparative financial statement is those statements which have been designed in a way so as to provide time perspective to the consideration of various elements of financial position embodied in such statements. In these statements, figures for two or more periods are placed side by side to facilitate comparison. But the income statement and balance sheet can be prepared in the form of comparative financial statement.

i) Comparative income statement:

The income statement discloses net profit or net loss on account of operations. A comparative income statement will show the absolute figures for two or more periods. The absolute change from one period to another and if desired. The change in terms of percentages. Since,
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the figures for two or more periods are shown side by side; the reader can quickly ascertain whether sales have increased or decreased, whether cost of sales has increased or decreased etc.

ii) Comparative balance sheet:

Comparative balance sheet as on two or more different dates can be used for comparing assets and liabilities and finding out any increase or decrease in those items. Thus, while in a single balance sheet the emphasis is on present position, it is on change in the comparative balance sheet. Such a balance sheet is very useful in studying the trends in an enterprise.

2) Common-Size Financial Statement:

Common-size financial statement are those in which figures reported are converted into percentages to some common base in the income statement the sales figure is assumed to be 100 and all figures are expressed as a percentage of sales. Similarly, in the balance sheet, the total of assets or liabilities is taken as 100 and all the figures are expressed as a percentage of this total.

3) Ratio analysis:
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Ratio analysis is a widely used tool of financial analysis. The term ratio in it refers to the relationship expressed in mathematical terms between two individual figures or group of figures connected with each other in some logical manner and are selected from financial statements of the concern. The ratio analysis is based on the fact that a single accounting figure by it self may not communicate any meaningful information but when expressed as a relative to some other figure, it may definitely provide some significant information the relationship between two or more accounting figure/groups is called a financial ratio helps to express the relationship between two accounting figures in such a way that users can draw conclusions about the performance, strengths and weakness of a firm.

Classification of ratios:
A) Liquidity ratios B) Leverage ratios C) Activity ratios D) Profitability ratios

A) LIQUIDITY RATIOS: These ratios portray the capacity of the business unit to meet its short term obligation from its short-term resources (e.g.) current ratio, quick ratio.
33

i) Current ratio: Current ratio may be defined as the relation ship between current assets and current liabilities it is the most common ratio for measuring liquidity. It is calculated by dividing current assets and current liabilities. Current assets are those, the amount of which can be realized with in a period of one year. Current liabilities are those amounts which are payable with in a period of one year. Current assets Current assets = ------------------------Current liabilities

ii) Liquid Ratio: The term liquidity refers to the ability of a firm to pay its short-term obligation as and when they become due. The term quick assets or liquid assets refers current assets which can be converted into cash immediately it comprises all current assets except stock and prepaid expenses it is determined by dividing quick assets by quick liabilities.

Liquid assets Liquid ratio = ------------------------Liquid liabilities

34

iii) Absolute liquidity ratio: Absolute liquid assets include cash, bank, and marketable securities. This ratio obtained by dividing cash and bank and marketable securities by current liabilities. Cash + bank +marketable securities Absolute liquidity ratio = ---------------------------------------------Current liabilities B) LEVERAGE RATIOS: Many financial analyses are interested in the relative use of debt and equity in the firm. The term solvency refers to the ability of a concern to meet its long-term obligation. Accordingly, long-term solvency ratios indicate a firms ability to meet the fixed interest and costs and repayment schedules associated with its long-term borrowings. (E.g.) debt equity ratio, proprietary ratio, etc.

i) Debt Equity ratio: It expresses the relationship between the external equities and internal equities or the relationship between borrowed funds and owners capital. It is a popular measure of the long-term financial solvency of a firm. This relationship is shown by the debt equity ratio.
35

This ratio indicates the relative proportion of dept and equity in financing the assets of a firm. This ratio is computed by dividing the total debt of the firm by its equity (i.e.) net worth.

Outsiders funds Debt equity ratio = -----------------------------Proprietors funds

ii) Proprietary ratio: Proprietary ratio relates to the proprietors funds to total assets. It reveals the owners contribution to the total value of assets. This ratio shows the long-time solvency of the business it is calculated by dividing proprietors funds by the total tangible assets. Proprietors funds Proprietary ratio = --------------------------Total tangible assets C) ACTIVITY RATIOS: These ratios evaluate the use of the total resources of the business concern along with the use of the components of total assets. They are intended to measure the effectiveness of the assets management the efficiency with which the assts are used would be reflected in the speed and rapidity with which the assets are converted into sales. The greater the rate of turnover, the more efficient the management would be (E.g.) stock turnover ratio, fixed assets turnover ratios etc.
36

i) Stock turnover ratio: This ratio indicates whether investment is inventory is efficiently used or not it explains whether investment in inventories in with in proper limits or not. It also measures the effectiveness of the firms sales efforts the ratio is calculated as follows. Cost of goods sold Stock turnover ratio = ----------------------------Average stock Opening Stock + Closing Stock Average ----------------------------------------2 stock =

ii) Fixed assets turnover ratio: The ratio indicates the extent to which the investments in fixed assets contribute towards sales. If compared with a pervious year. It indicates whether the investment infixed assets has been judies or not the ratio is calculated as follows.

Net sales Fixed assets turnover ratio

37

= -------------------

Fixed assets

iii) Working capital turnover ratio: Working capital turnover ratio indicates the velocity of the utilization of net working capital. This ratio indicates the number of times the working capital is turned over in the course of a year. It is a good measure over trading and under-trading.

Net sales Working capital turnover ratio = capital ---------------------------Net working

iv)Return on total assets: Profitability can be measured in terms of relationship between net profit and total assets. It measures the profitability of investment. The overall profitability can be known by applying this ratio. Net profit Return on total assets x100
38

-----------------------------

Total assets

D) PROFITABILITY RATIOS: The profitability ratios of a business concern can be measured by the profitability ratios. These ratios highlight the end result of business activities by which alone the over all efficiency of a business unit can be judged, (E.g.) gross ratios, Net profit ratio.

i) Gross profit ratio: This ratio expresses the relationship between Gross profit and sales. It indicated the efficiency of production or trading operation. A high gross profit ratio is a good management as it implies that cost of production is relatively low.

Gross profit Gross profit ratio = ----------------------------------- x 100 Net sales i) Net profit ratio: Net profit ratio establishes a relationship between net profit (after taxes) and sales. It is determined by dividing the net income after tax to the net sales for the period and measures the profit per rupee of sales.
39

Net profit Net profit sales = ----------------- x 100 Net sales iii) Expenses ratio: This ratio establishes the relationship between various indirect expenses to net sales. a) ADMINISTRATIVE
EXPENSES RATIO:

Administr ative expenses Administrative expenses ratio = ------------------------------- x 100 Sales

b) SELLING &DISTRIBUTION

EXPENSES RATIO:

Selling &distribution expenses Selling &distribution expenses ratio = ----------------------------------------- x 100

Sales

40

2.2 OBJECTIVES OF THE STUDY

The basic objective of studying the ratios of the company is to know the financial position of the company. To know the borrowings of the company as well as the liquidity position of the company.
To study the current assets and current liabilities so

as to know the shareholders could invest in Samtel Color Ltd or not. To study the profits of the business and net sales of the business and to know the stock reserve for sales of the business. To know the solvency of the business and the capacity to give interest to the long term loan lenders (debenture holders) and dividend to the share holders. To study the balance of cash and credit in the organization.

41

2.3 RESEARCH METHODOLOGY:

2.3.1 Research design:
The descriptive form of research method is adopted for study. The major purpose of descriptive research is description of state of affairs of the institution as it exits at present. The nature and characteristics of the financial statements of Samtel Color Ltd have been described in this study.

2.3.2 Nature of data:

The data required for the study has been collected from secondary source .The relevant information were taken from annual reports, journals and internet.

2.3.3 Methods of data collection:

This study is based on the annual report of Samtel Color Ltd. Hence the information related to, profitability, short term and long term solvency and turnover were very much required for attaining the objectives of the present study.

2.3.4 Tools applied:

To have a meaningful analysis and interpretation of various data collected, the following tools were made for this study.

42

 Ratio analysis Common-size statement Comparative statement Trend analysis

CHAPTER- III DATA ANALYSIS AND INTERPRETATION

43

RATIO ANALYSIS:
Ratio analysis is a widely used tool of financial analysis. The term ratio in it refers to the relationship expressed in mathematical terms between two individual figures or group of figures connected with each other in some logical manner and are selected from financial statements of the concern. The ratio analysis is based on the fact that a single accounting figure by it self may not communicate definitely any meaningful some information but when the expressed as a relative to some other figure, it may provide significant information relationship between two or more accounting figure/groups is called a financial ratio helps to express the relationship between two accounting figures in such a way that users can draw conclusions about the performance, strengths and weakness of a firm. Classification of ratios:
A) Liquidity ratios B) Leverage ratios C) Activity ratios
44

D) Profitability ratios

A) Liquidity ratios:

These ratios portray the capacity of the business unit to meet its short term obligation from its short-term resources (e.g.) current ratio, quick ratio.
i)Current ratio:

Current ratio may be defined as the relation ship between current assets and current liabilities it is the most common ratio for measuring liquidity. It is calculated by dividing current assets and current liabilities. Current assets are those, the amount of which can be realized with in a period of one year. Current liabilities are those amounts which are payable with in a period of one year.
Current assets Current assets = ------------------------Current liabilities

TABLE -1 CURRENT RATIO:

45

Year 2005-2006 2006-2007 207-2008 2008-2009 2009-2010

Current asset 63,232,294 96,699,412 87,908,620 98,197,393 56,028,561

Current liabilities 27,943,268 28,547,982 23,128,596 64,509,752 19,276,000

Ratio 2.26 3.38 3.80 1.52 2.91

CHART-1 CURRENT RATIO

4 3.5 3 2.5 2 1.5 1 0.5 0 2005-06 2006-07 2007-08 2008-09 2009-10 Current ratio

Interpretation and Analysis: The above table and diagram shows that the current ratio in the year 2005-06 was 2.26 and then in increases to 3.38 in the year 2007-08, further move upwards to 3.80 and in the
46

year 2006-07 it slashed down to 1.52 and finally in the year 2008-09 it again moved up to 2.91. The normal current ratio is 2:1. The above table shows current ratio is more than 2% in all the first four years. But in 2008-2009 the current ratio is lower than the normal. This shows that the company is enjoying credit worthiness.

ii) LIQUIDITY RATIO:

The term liquidity refers to the ability of a firm to pay its short-term obligation as and when they become due. The term quick assets or liquid assets refers current assets which can be converted into cash immediately it comprises all current assets except stock and prepaid expenses it is determined by dividing quick assets by quick liabilities.
Liquid assets Liquidity ratio = ------------------------Liquid liabilities

TABLE-2 LIQUIDITY RATIO:

47

Year 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010

Liquidity assets 47,782,491.51 55,809,100.59 54,831,547.34 76,488,121.13 18,362,128.30

Liquidity liabilities 20,073,088.54 25,805,580.98 20,615,801.31 29,645,904.71 18,784,066.35

Ratio 2.38 2.16 2.65 2.58 0.97

CHART-2 LIQUIDITY RATIO:

3 2.5 2 1.5 1 0.5 0 200506 200607 200708 200809 200910 Liquidity Ratio

Interpretation and Analysis:

48

The above table and diagram shows the liquidity ratio during the study period except in the year 2009-2010 is more than the normal (i.e.) 1:1.It was 2.38 in the year 2005-06 and reached the highest in 2007-08 to 2.65 and then came down to .97 in the year 2009-10. Hence the firm is controlling its stock position because there linear relationship between current ratio and liquidity ratio.

ii) ABSOLUTE LIQUIDITY RATIO:

Absolute liquidity assets include cash, bank, and marketable securities. This ratio Obtained by dividing cash and bank and marketable securities by current liabilities.

Cash + bank +marketable securities Absolute liquidity ratio = ---------------------------------------------Current liabilities

49

TABLE-3 ABSOLUTE LIQUIDITY RATIO:

Year 20052006 20062007 20072008 20082009 20092010

Cash and securities 1,002,474 1,496,467 332,231 3,225,488 260,094

Current liabilities 27,943,268 28,547,982 23,128,596 64,509,752 19,276,000.47

Ratio 0.03 0.05 0.01 0.05 0.01

CHART-3 ABSOLUTE LIQUIDITY RATIO:

50

0.05 0.04 0.03 0.02 0.01 0 2005-06 2006-07 2007-08 2008-09 2009-10 Absolute Ratio

Interpretation and Analysis: The above table and diagram shows the absolute ratio for the study period 2005-06 to 2009-10. There is fluctuation in the absolute ratio. It was 0.03 in the year 2005-06. In 2006-07 and 2008-09 it was 0.05. It was 0.01 in 2007-08 and 2009-10.
B) LEVERAGE RATIOS:

Many financial analyses are interested in the relative use of debt and equity in the firm. The term solvency refers to the ability of a concern to meet its long-term obligation. Accordingly, long-term solvency ratios indicate a firms ability to meet the fixed interest and costs and repayment schedules associated with its long-term borrowings. (E.g.) debt equity ratio, proprietary ratio, etc.

i) DEBT EQUITY RATIO:

51

It expresses the relationship between the external equities and internal equities or the relationship between borrowed funds and owners capital. It is a popular measure of the long-term financial solvency of a firm. This relationship is shown by the debt equity ratio. This ratio indicates the relative proportion of dept and equity in financing the assets of a firm. This ratio is computed by dividing the total debt of the firm by its equity (i.e.) net worth.
Outsiders funds Debt equity ratio = -----------------------------Proprietors funds

TABLE-4 DEBT EQUITY RATIO: Year 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 Outsiders funds 21,220,083 55,125,897 40,741,814 32,238,020 25,255,603 Proprietors funds 53,331,692 63,576,119 65,810,599 66,462,086 66,405,370 Ratio 0.40 0.87 0.62 0.49 0.38

CHART-4
52

DEBT EQUITY RATIO:

0.9 0.8 0.7 0.6 0.5 0.4 0.3 0.2 0.1 0

Debt Equity Ratio

2005- 2006- 2007- 2008- 200906 07 08 09 10

Interpretation and Analysis: The above table and diagram shows the debt equity relationship of the company during the study period. It was 0.4 in the 2005-06 and then reached its highest in the next year and from there it began to slope downwards and ultimately came to 0.38 in the year 2009-10. In all the years the equity is more when compared with borrowings. Hence the company is maintaining its debt position

53

ii) PROPRIETARY RATIO:

Proprietary ratio relates to the proprietors funds to total assets. It reveals the owners contribution to the total value of assets. This ratio shows the long-time solvency of the business it is calculated by dividing proprietors funds by the total tangible assets.
Proprietors funds Proprietary ratio = --------------------------Total tangible assets

TABLE-5 PROPRIETARY RATIO:

Year 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010

Proprietors funds 53,331,692 63,576,119 65,810,599 66,462,086 66,405,370

Total assets 74,551,774 118,702,016 106,552,413 98,670,106 91,660,973

Ratio 0.72 0.54 0.62 0.67 0.72

54

CHART-5 PROPRIETARY RATIO:

0.8 0.7 0.6 0.5 0.4 0.3 0.2 0.1 0 2005- 2006- 2007- 2008- 200906 07 08 09 10 Proprietary Ratio

Interpretation and Analysis: The above table and diagram shows the proprietary ratio during the study period. In all the years the owner's contribution to the total assets was appropriate and they maintain their share in the company's assets. Except 2007-08 in all the years the proprietor's contribution in to the total assets is more than the 2/3. During 2006-07 it is more than 50%
C) ACTIVITY RATIOS:

These ratios evaluate the use of the total resources of the business concern along with the use of the components of total assets. They are intended to measure the effectiveness of the assets management the efficiency with
55

which the assts are used would be reflected in the speed and rapidity with which the assets are converted into sales. The greater the rate of turnover, the more efficient the management would be (E.g.) stock turnover ratio, fixed assets turnover ratios etc.
i) STOCK TURNOVER RATIO:

This ratio indicates whether investment is inventory is efficiently used or not it explains whether investment in inventories in with in proper limits or not. It also measures the effectiveness of the firms sales efforts the ratio is calculated as follows.
Cost of goods sold Stock turnover ratio = ----------------------------Average stock Opening Stock + Closing Stock Average ----------------------------------------2 stock =

TABLE-6 STOCK TURNOVER RATIO:

56

Year 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010

Cost of goods sold 147,163,123 141,793,483 154,284,918 195,951,080 105,517,193

Average stock 4,186,860 2,142,590 4,065,741 13,599,668 15,166,139

Ratio 35.14 66.17 39.08 14.40 6.95

CHART-6 STOCK TURNOVER RATIO:

70 60 50 40 30 20 10 0 2005- 2006- 2007- 2008- 200906 07 08 09 10 Stock Turnover Ratio

Interpretation and Analysis:

57

The above table and diagram shows the relation ship between costs of goods sold and average stock. During the year 2006-07 it is 66.17% which shows higher position of cost of goods sold. In the years of study it is shown above that the cost of goods sold are almost 35-65times of the average stock. But at the same time during 2009-10 it is only 6.95 which shows that more stock was remaining in the company.

ii) FIXED ASSETS TURNOVER RATIO:

The ratio indicates the extent to which the investments in fixed assets contribute towards sales. If compared with a pervious year. It indicates whether the investment infixed assets has been judies or not the ratio is calculated as follows.
Net sales Fixed assets turnover ratio = ------------------Fixed assets

TABLE-7
58

FIXED ASSET TURNOVER RATIO: Year 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 Net sales 169,056,118 173,896,782 179,231,321 225,250,870 113,095,288 Fixed assets 39,262,748 50,550,585 41,772,389 64,982,465 54,908,412 Ratio 4.30 3.41 4.29 3.47 2.06

CHART-7 FIXED ASSET TURNOVER RATIO:

4.5 4 3.5 3 2.5 2 1.5 1 0.5 0 200506 200607 200708 200809 200910

Fixed Assets Turnover Ratio

Interpretation and Analysis:

59

The above table and diagram shows the relation ship between the fixed assets and sales. The sale is 4 times more than the fixed assets 2005-06 and 2007-08. It is more than 3 times during 2006-07 and 2008-2009. It is more than 2 times during 2009-10. It can be observed that in the year 2008-09 the fixed assets value increased a lot and which shows that there is an additions made to the fixed assets, similarly the sales was also increased from 179,231,321(2007-08) to 225,250,870 (2008-09). However in the year 2009-10 it slashed to about 50% of the sales of 2008-09.

iii) WORKING CAPITAL TURNOVER RATIO:

Working capital turnover ratio indicates the velocity of the utilization of net working capital. This ratio indicates the number of times the working capital is turned over in the course of a year. It is a good measure over trading and under-trading.

Net sales Working capital turnover ratio = capital

60

---------------------------Net working

TABLE-8 WORKING CAPITAL TURNOVER RATIO: Year 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 Net sales 169,056,118 173,869,782 179,231,321 225,250,870 113,095,288 Net working capital 35,289,026 68,151,430 64,780,024 33,687,641 36,752,561 Ratio 4.79 2.55 2.77 6.69 3.08

CHART-8 WORKING CAPITAL TURNOVER RATIO:

7 6 5 4 3 2 1 0 2005-06 2006-07 2007-08 2008-09 2009-10 WC T/o Ratio

61

Interpretation and Analysis: The above table and diagram shows the relation ship between net working capital and net sales. During the years the sales is 2 to 7 times more than the working capital. It was 4.79 in the year 2005-06 and as there was more working capital the ratio sloped downwards and reached 2.77 in the year 2007-08. As the sales increased and working capital decreased the ration now moved up to 6.69 times and in the very next year as the sales slashed to 50% of the previous year the ration again decreased.

iv) TOTAL ASSETS TURNOVER RATIO:

This ratio is an indicator of how the resources of the organization utilized for increasing the turnover. It shows the ratio between the total assets and the net sales of the company. From this ratio one can understand how the assets are performing and being utilized in achieving the objectives of the company.

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Total assets Total assets turnover ratio = ------------------Net assets

TABLE-9 TOTAL ASSETS TURNOVER RATIO: Year 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 Total assets 74,551,774 118,702,016 106,552,413 98,670,106 91,660,973 Net sales 169,056,118 173,896,782 179,231,321 225,250,870 113,095,288 Ratio 0.44 0.68 0.59 0.44 0.81

CHART-9 TOTAL ASSETS TURNOVER RATIO:

63

0.9 0.8 0.7 0.6 0.5 0.4 0.3 0.2 0.1 0 2005-06 2006-07 2007-08 2008-09 2009-10 Total assets T/o Ratio

Interpretation and Analysis: The above table and diagram shows the relation ship between the total assets to net sales. During all the study period years the relationship between sales to total assets is high. The ratio increased from 0.44 (2005-06) to 0.68 (200607) and then it was decreasing and reached to again 0.44 in the year 2008-09 and raised to 0.81 in the year 2009-10 due to the heavy fall in the sales. Thus the company's sales were almost directly proportionately in the first three years of the study and then in the year 2008-09 it was adversely affected.

v) CAPITAL TURNOVER RATIO:

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This is a ratio which shows how much sales are entertained from the capital. It shows how the sales are attracted from the Proprietor's Fund.
Sales Capital turnover ratio = ----------------------Proprietors fund

TABLE-10 CAPITAL TURNOVER RATIO: Year 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 Sales 169,056,118 173,896,782 179,231,321 225,250,870 113,095,288 Proprietors funds 53,331,692 63,576,119 65,810,599 66,462,086 66,405,370 Ratio 3.17 2.74 2.72 3.39 1.70

CHART-10
65

CAPITAL TURNOVER RATIO:

3.5 3 2.5 2 1.5 1 0.5 0 2005-06 2006-07 2007-08 2008-09 2009-10 Capital T/o Ratio

Interpretation and Analysis: The above table and diagram shows the

relationship between the sales and proprietors funds. In the year 2005-06 the ratio 3.17 and then it was decreasing and reached 2.72 in the year 2007-08 and again raised to 3.39 in 2008-09 and in the final year i.e. 2009-10 it reached the lowest to 1.70. The sales are in between 1.5 and 3.5 times more than the proprietor's funds. It shows the firms is maintaining the better utilization of own funds

vi) RETURN ON TOTAL ASSETS:

66

Profitability can be measured in terms of relationship between net profit and total assets. It measures the profitability of investment. The overall profitability can be known by applying this ratio.

Net profit Return on total assets x100 Total assets = -----------------------------

TABLE-11 RETURN ON TOTAL ASSETS RATIO: Year 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 Net profit 10,699,894 9,472,578 231,044 621,486 (26716) Total assets 74,551,774 118,702,016 106,552,413 98,670,106 91,660,973 Ratio 0.144 0.080 0.002 0.006 -

CHART-11
67

RETURN ON TOTAL ASSETS RATIO

0.16 0.14 0.12 0.1 0.08 0.06 0.04 0.02 0

Return on TA Ratio

2005- 2006- 2007- 2008- 200906 07 08 09 10

Interpretation and Analysis: The relationship above between table net and profit diagram and total shows assets the in

percentage. As the total assets were increasing year by year the net profit percentage was decreasing. The Net profit from the year 2007-08 is very less and in the year 2009-10 the company made a loss.
D) PROFITABILITY RATIOS:

The profitability ratios of a business concern can be measured by the profitability ratios. These ratios highlight the end result of business activities by which alone the over all efficiency of a business unit can be judged, (E.g.) gross ratios, Net profit ratio.
68

i) GROSS PROFIT RATIO:

This ratio expresses the relationship between Gross profit and sales. It indicated the efficiency of production or trading operation. A high gross profit ratio is a good management as it implies that cost of production is relatively low.

Gross profit Gross profit ratio = ----------------------------------- x 100 Net sales

TABLE-12 GROSS PROFIT RATIO: Year 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 Gross profit 21,892,995 16,162,083 24,946,403 29,299,790 7,578,095 Net sales 169,056,118 173,896,783 179,231,321 225,250,870 113,095,288 Ratio 12.95 9.29 13.92 13.01 6.70

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CHART-12 GROSS PROFIT RATIO:

14 12 10 8 6 4 2 0 20 0506 20 0607 20 0708 20 0809 20 0910 Gross Profit Ratio

Interpretation and Analysis: The above table and diagram shows the relation ship between the gross profit and net sales in percentage. During 2005-06 the gross profit position was 12.95% and in the very next year it slashed down to 9.29% and again raised to 13.92% and since then it was decreasing and finally reached the lowest to 6.70% in the year 2009-10. However it can be noticed that the sales also reduced to about 50% in 2009-10 when compared to sales of 2008-09.

70

ii) NET PROFIT RATIO:

Net profit ratio establishes a relationship between net profit (after taxes) and sales. It is determined by dividing the net income after tax to the net sales for the period and measures the profit per rupee of sales.

Net profit Net profit sales = ----------------- x 100 Net sales

TABLE-13 NET PROFIT RATIO: Year 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 Net profit 10,699,894 9,472,578 231,044 621,486 (26,716) Net sales 169,056,118 173,896,782.3 179,231,321 225,250,870 113,095,288 Ratio 6.32 5.45 0.12 0.28 -

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CHART-13 NET PROFIT RATIO:

7 6 5 4 3 2 1 0 2005-06 2006-07 2007-08 2008-09 2009-10 Net Profit Ratio

Inference: The above table and diagram shows the relation ship between net profit and net sales during 2005-06 it was 6.32% on sales and in 2006-07 it was 5.45. But in all other 3 years it is less than 1% and even negative in the year 200910. This means that either there is any defect in pricing the product or excess non-value added expenditures which reduces the net profit of the company. The sales of the organization are also decreasing and hence management must take care of the quality and market situations into consideration to resolve the issue so that it may bring good profits to the organization.

72

iii) EXPENSES RATIO:

This ratio establishes the relationship between various indirect expenses to net sales.
b) ADMINISTRATIVE ve expenses Administrative expenses ratio = ------------------------------- x 100 Sales b) SELLING &DISTRIBUTION &distribution expenses Selling &distribution expenses ratio = ----------------------------------------- x 100
EXPENSES RATIO: EXPENSES RATIO:

Administrati

Selling

Sal es

TABLE-14 EXPENSES RATIO: Administration expenses + selling expenses Expenses ratio = _______________________________________ x 100
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Sales Year 20052006 20062007 20072008 20082009 20092010 Administration & Selling expenses 23,664,446 28,296,402 36,818,797 33,462,817 29,355,781 Sales 169,056,118 173,896,783 179,231,321 225,250,870 113,095,288 Ratio 13.99 16.27 20.54 14.85 25.95

CHART-14 EXPENSES RATIO:

30 25 20 15 10 5 0 20 0506 20 0607 20 0708 20 0809 20 0910 Expense Ratio

Interpretation and Analysis:

74

The above table and diagram shows the relation ship between the administration and selling expenses and sales. The administration and selling expenses during 2009-10 is very high when compared to previous year's %age as they were in between 13-20% of sales. This may also be one of the reasons to a net loss in that year.

TABLE-15

Common size income statement (2005-06 &2006-07)

Particulars Income: Sales Other income Closing stock Total income Expenditure: Opening stock Purchases Direct expenses Administration expenses Selling Expenses Depreciation Total expenses Net profit Total 7,340,630 90,966,622 49,888,961 15,776,297 7,888,149 6,079,468 177,940,127 10,699,894 75 188,640,894 3.90 48.22 26.44 8.36 4.18 3.22 94.32 5.68 100 1,033,090 110,670,457 47,140,653 18,864,268 9,432,134 650368 187,640,02 1 9,472,578 197,263,54 8 0.52 56.10 23.92 9.56 4.78 0.32 95.20 4.80 100 169,056,118 18,550,813 1,033,090 188,640,021 89.61 9.85 0.54 100 173,896,783 22,257,266 1,109,500 197,263,54 8 88.16 11.28 0.56 100 2005-2006 % 2006-2007 %

Inference: The common size income statement for the year 2006 to 2007 reveals the following. The sales figure increasing year after year. It increased about Rs.48,40,665. Administrative and other expenses were fluctuating. The other income of the company was increased year by year.

TABLE-16

Common size income statement (2006-07 & 2007-08)

Particulars Income: Sales Other income Closing stock Total income Expenditure: Opening stock Purchases Direct expenses Administration expenses Selling Expenses Depreciation Total expenses Net profit Total 2006-2007 173,896,783 22,257,266 1,109,500 197,263,548 1,033,090 110,670,457 47,140,653 18,864,268 9,432,134 650368 187,640,021 9,472,578 197,263,548
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% 88.16 11.28 0.56 100 0.52 56.10 23.92 9.56 4.78 0.32 95.20 4.80 100

2007-2008 179,231,321 19,961,865 7,021,983 206,215,169 1,109,500 81,132,703 79,064,698 24,545,865 12,272,932 7,858,427 205,984,125 231,044 206,215,169

% 86.92 9.68 3.40 100 0.53 39.34 38.34 11.90 5.95 3.82 99.88 0.12 100

Inference: The common size income statement for the year 2007to 2008 reveals the following. The sales figure increasing year after year. In the year 2007-08, cost of sales is 38.34% of the total income. Administrative and other expenses are fluctuating. Even though the sales increased but there is heavy decrease in the net profit of the organization. The net profit slashed from 4.80% to 0.12% only. The company must adopt correct pricing and control the unnecessary expenses to attain high profits TABLE-17

Common size income statement (2007-08 & 2008-09)

Particulars Income: Sales Other income Closing stock Total income Expenditure: Opening stock Purchases Direct expenses Administration expenses 1,109,500 81,132,703 79,064,698 24,545,865
77

2007-2008

20082009

179,231,321 19,961,865 7,021,983 206,215,16 9

86.92 9.68 3.40 100

225,250,87 0 9,908,254 20,177,353 255,336,4 77

88.22 3.88 7.90 100

0.53 39.34 38.34 11.90

7,021,983 105,677,58 3 103,428,86 7 22,308,545

2.75 41.38 40.50 8.76

Selling Expenses Depreciation Total expenses Net profit Total

12,272,932 7,858,427 205,984,12 5 231,044 206,215,16 9

5.95 3.82 99.88 0.12 100

11,154,272 5,123,740 254,714,9 90 621,487 255,336,4 77

4.36 2.00 99.75 0.25 100

Inference: The common size income statement for the year 2008 to 2009 reveals the following. The sales figure increased from Rs.179,231,321 to Rs.225,250,870. In the year 2008-09 cost of sales is 40.50%. There is heavy decrease in the other incomes. In the year 2008-09 income increased from Rs.231,044 to Rs.621,487. TABLE-18 Common size income statement (2008-09 & 2009-10)

78

Particulars Income: Sales Other income Closing stock Total income Expenditure: Opening stock Purchases Direct expenses Administration expenses Selling Expenses Depreciation Total expenses Net profit Total

20082009

20092010

225,250,87 88.22 0 9,908,254 3.88 20,177,353 7.90 255,336,4 77 7,021,983 100

113,095,28 75.74 8 26,032,716 17.46 10,154,926 6.80 149,309,6 46

100

2.75

20,177,353 13.52 39,032,353 26.14 56,462,413 37.82 19,570,521 13.10 9,785,260 4,308,462 149,336,3 62 (26716) 149,309,6 46

105,677,58 41.38 3 103,428,86 40.50 7 22,308,545 8.76 11,154,272 4.36 5,123,740 254,714,9 90 621,487 255,336,4 77 2.00 99.75 0.25 100

6.55 2.88 100.01 (0.01) 100

Inference:
The common size income statement for the year 2009 to 2010 reveals the following. The sales figure slashed down very. It decreased from Rs.225,250,870 to Rs.113,095,288 which is almost 50% of the previous year. In the year 2009-10 cost of sales is 37.82%. However in Administrative and other expenses there was a negligible change due to which organization attained a loss of Rs.26716.
79

TABLE-19

Common size balance sheet (2005-06 & 2006-07)

Particulars Sources of funds: Share capital Reserves & surplus Loan funds: Secured loan Unsecured loan Total Application of funds: Fixed assets 39,262,74 8 52.67 50,550,586 42.59 2005-2006 52,599,867 731,825 21,197,278 22,805 74,551,77 5 % 70.55 0.98 28.43 0.04 100 2006-2007 53,371,716 10,204,403 55,103,092 22,805 118,702,016 % 44.96 8.60 46.42 0.02 100

Current assets & Loan and advances Cash & bank 1,002,474 Sundry debtors 42,435,207 Advances and deposits 18,761,523 Investments Other assets Total current liabilities & provisions: Less: Current liabilities Expenses for provisions Net Current assets Total ---------1,033,090 63,232,294 19,725,023 8,218,245 35,289,02 6 74,551,77 5

1.34 56.92 25.17 ----1.39 84.82 26.46 11.02 47.33 100

1,490,466 63,785,212 30,308,234 6,000 1,109,500 96,699,412 25,486,282 3,061,700 68,151,430 118,702,016

1.26 53.74 25.53 0.01 0.93 81.46 21.47 2.58 57.41 100

Inference: The common size balance sheet for the year 2006-2007 is as follows: Share capital of the company is decreasing in %age of the net worth. In 2004-2005 in 70.55% to
80

44.96%.Secured loan for the company has decreasing trend. It increases 28.43 to 46.42% of the net worth of the company. Fixed asset of the company is decreasing in this year from 52.92% to 42.59%. Current liability and provisions is decreasing 37.48% to 24.05 %. TABLE-20

Common size balance sheet (2006-07 & 200708)

Particulars Sources of funds: Share capital Reserves & surplus Loan funds: Secured loan Unsecured loan Total Application of funds: Fixed assets 2006-2007 53,371,716 10,204,403 55,103,092 22,805 118,702,01 6 50,550,586 % 44.96 8.60 46.42 0.02 100 42.59 20072008 55,375,152 10,435,447 40,741,814 -----106,552,4 13 41,772,38 9 326,232 58,873,736 21,680,669 6,000 7,021,983 78,204,998 19,777,355 3,351,241 64,780,02 4 106,552,4 13 % 51.97 9.79 38.24 ----100 39.20

Current assets & Loan and advances Cash & bank 1,490,466 Sundry debtors 63,785,212 Advances and deposits 30,308,234 Investments 6,000 Other assets 1,109,500 Total 96,699,412 current liabilities & provisions: Less: Current liabilities 25,486,282 Expenses for provisions 3,061,700 Net Current assets 68,151,430 Total 118,702,01 6
81

1.26 53.74 25.53 0.01 0.93 81.46 21.47 2.58 57.41 100

0.31 55..25 20.35 0.01 6.59 82.50 18.56 3.15 60.80 100

Inference: The common size balance sheet for the year 2007 to 2008 is as follows: Share capital of the company has increased from 44.96% to 51.97. Secured loan for the company has decreasing trend. It increases 46.42% to 38.24%.Unsecured loan of the company has been paid off. Fixed asset of the company is decreasing in this year of 42.59% to 39.20%. Current liability and a provision is decreasing 24.05% to 21.71%. TABLE-21 Common size balance sheet (2007-08 & 2008-09)
Particulars Sources of funds: Share capital Reserves & surplus Loan funds: Secured loan Unsecured loan Total Application of funds: Fixed assets Current assets & Loan and advances Cash & bank Sundry debtors Advances and deposits Investments Other assets Total Current Assets current liabilities & provisions: Less: Current liabilities Expenses for provisions Net Current assets Total 2007-2008 55,375,152 10,435,447 40,741,814 -----106,552,413 41,772,389 % 51.97 9.79 38.24 ----100 39.20 2008-2009 55,375,152 11,056,934 32,212,520 25,500 98,670,10 6 64,982,46 5 1,573,364 67,142,698 9,297,978 6,000 20,177,353 98,197,393 % 56.12 11.21 32.65 0.02 100 65.86

326,232 58,873,736 21,680,669 6,000 7,021,983 78,204,998

0.31 55..25 20.35 0.01 6.59 82.50

1.59 68.05 9.42 0.01 20.45 99.52

19,777,355 3,351,241
82 64,780,024

18.56 3.15 60.80 100

54,707,520 9,802,232 33,687,64 1 98,670,10 6

55.44 9.93 34.14 100

106,552,413

Inference: The common size balance sheet for the year 2008 to 2009 is as follows: Share capital figure remained constant however their %age to net worth has increased from 51.97% to 56.12%. Some amount of the secured loans has been paid off. Fixed asset of the company has been increased and there share is 65.86% to the total assets in the year 200809. Current liability and a provision is increasing 21.71% to 65.37%. It can be noticed that the fixed assets are purchased on credit from the creditors and they both increased TABLE-22 Common size balance sheet (2008-09 & 2009-10)

83

Inference:
Particulars Sources of funds: Share capital Reserves & surplus Loan funds: Secured loan Unsecured loan Total Application of funds: Fixed assets Current assets & Loan and advances Cash & bank Sundry debtors Advances and deposits Investments Other assets Total current liabilities & provisions: Less: Current liabilities Expenses for provisions Net Current assets Total 54,707,520 9,802,232 33,687,641 98,670,106 55.44 9.93 34.14 100 15,919,41 0 3,356,590 36,752,5 61 91,660,9 73 17.37 3.66 40.10 100 2008-2009 55,375,152 11,056,934 % 56.12 11.21 20092010 55,375,15 2 11,030,21 8 25,236,10 3 19,500 91,660,9 73 54,908,4 12 260,095 41,001,21 0 4,612,330 -------10,154,92 6 56,028,56 1 % 60.41 12.03

32,212,520 25,500 98,670,106 64,982,465

32.65 0.02 100 65.86

27.53 0.03 100 59.90

1,573,364 67,142,698 9,297,978 6,000 20,177,353 98,197,393

1.59 68.05 9.42 0.01 20.45 99.52

0.28 44.73 5.03 ----11.08 61.13

The common size balance sheet for the year 2009 to 2010 is as follows:Share capital figure remained constant however their %age to net worth has increased from 56.12%
84

to 60.41%. Some amount of the secured loans has been paid off. Current liability and a provision is decreased from 65.37% to 21.03% this means that a heavy amount is paid to the creditors of the fixed assets. TABLE-23 Comparative income statement (2005-06 & 2006-07)
Particulars Income: Sales Other income Closing stock Total income Expenditure: Opening stock Purchases Direct expenses Administration expenses Selling Expenses Depreciation Total expenses Net profit /Loss Total 7,340,630 90,966,622 49,888,961 15,776,297 7,888,149 6,079,468 177,940,1 27 10,699,894 188,640,8 94 1,033,090 (6307540.00) 110,670,45 7 47,140,653 18,864,268 3087971.00 9,432,134 650368 (5429100.00) 187,640,0 21 9,472,578 197,263,5 48 9699894.00 (1227316.00) 8622654.00 1543985.00 19703835.00 (2748308.00) 169,056,11 8 18,550,813 1,033,090 188,640,0 21 173,896,78 3 22,257,266 1,109,500 197,263,5 48 4840665.00 3706453.00 76410.00 8623527.00 20052006 2006-2007 INC/DCE

2.86 19.98 7.40 4.57 (85.9 3) 21.66 (5.51) 19.57 19.57 (89.3 0) 5.45 (11.4 7) 4.57

Inference:
85

The

sales

level

has

increased

2006

to

2007

in

2.86%.Other income of the company has increased in 19.98%. The stock differential of the firm in the year of 2005 to 2006 is 7.40%.The operating expenses is increased by 19.57% in both administration and selling and the net profit of the year is decreased by 11.47%

86

TABLE-24

Comparative income statement (2006-07 & 2007-08)

Particulars Income: Sales Other income Closing stock Total income Expenditure: Opening stock Purchases Direct expenses Administration expenses Selling Expenses Depreciation Total expenses Net profit /Loss Total 1,033,090 110,670,45 7 47,140,653 18,864,268 9,432,134 650368 187,640,0 21 9,472,578 197,263,5 48 1,109,500 81,132,703 79,064,698 24,545,865 5681597.00 12,272,932 7,858,427 205,984,1 25 231,044 206,215,1 69 2840798.00 7208059.00 18344104.0 0 (9241534.00) 8951621.00 30.12 30.12 1108.30 9.78 (97.56) 4.54 76410.00 (29537754.0 0) 31924045.00 7.40 (26.69) 67.72 173,896,78 3 22,257,266 1,109,500 197,263,5 48 179,231,32 1 19,961,865 7,021,983 206,215,1 69 5334538.00 (2295401.00) 5912483.00 8951621.00 3.07 (10.31) 532.90 4.54 2006-2007 2007-2008 INC /DEC %

Inference: The sales level has increased 2007 to 2008 in 3.07% .Other income of the company has decreased in 10.31%. The stock differential of the firm in the year of 2007 to 2008 is increased which is almost 533% of the last year. The operating expenses were increased by 30.12% in both
87

administration and selling and the net profit of the year is decreased by 97.56% and it earned just 2.44% of the last year net profit.
Particulars Income: Sales Other income Closing stock Total income Expenditure: Opening stock Purchases Direct expenses Administration expenses Selling Expenses Depreciation Total expenses Net profit /Loss Total 1,109,500 7,021,983 5912483.00 24544880.0 0 24364169.0 0 179,231,32 225,250,87 46019549.0 1 0 0 19,961,865 9,908,254 (10053611.0 0) 7,021,983 20,177,353 13155370.0 0 206,215,1 255,336,4 49121308. 69 77 00 20072008 20082009 INC /DEC

25.68 (50.36) 187.35 23.82

532.90 30.25 30.82 (9.11) (9.11) (34.80) 23.66 168.99 23.82

81,132,703 105,677,58 3 79,064,698 103,428,86 7 24,545,865 22,308,545 (2237320.00 ) 12,272,932 11,154,272 (1118660.00 ) 7,858,427 5,123,740 (2734687.00 ) 205,984,1 254,714,9 48730865. 25 90 00 231,044 621,487 390443.00 206,215,1 255,336,4 49121308. 69 77 00

TABLE-25

Comparative income statement (2007-08 & 2008-09) Inference:

88

The sales level has increased 2008 to 2009 in 25.68% .Other income of the company has decreased by 50.36%. The stock differential of the firm in the year of 2008 to 2009 is increased. The operating expenses are decreased in 9.11% in both administration and selling and the net profit of the year is increased. TABLE-26 Comparative income statement (2008-09 & 2009-10)
Particulars Income: Sales Other income Closing stock Total income Expenditure: Opening stock Purchases 7,021,983 20,177,353 39,032,353 (66645230.00) 56,462,413 (46966454.00) 19,570,521 (2738024.00) 9,785,260 (1369012.00) 4,308,462 149,336,3 62 (26716) 149,309,6 46
89

20082009 225,250,87 0 9,908,254 20,177,353 255,336,4 77

20092010 113,095,28 8 26,032,716 10,154,926 149,309,6 46

INC / DEC

(112155582.0 0) 16124462.00 (10022427.00) (106026831. 00)

(49.79) 162.74 (49.67) (41.52)

13155370.00

187.35 (63.06) (45.41) (12.27) (12.27) (15.91) (41.37) (104.30) (41.52)

105,677,58 3 Direct expenses 103,428,86 7 Administration 22,308,545 expenses Selling 11,154,272 Expenses Depreciation 5,123,740 Total expenses Net profit /Loss Total 254,714,9 90 621,487 255,336,4 77

(815278.00) (105378628. 00) (648203.00) (106026831. 00)

Inference: The sales level has slashed down by 49.79% when compared to last year sales .Other income of the company has increased. The stock differential of the firm in the year of 2009 to 2010 also decreased. The operating expense is decreased in 12.27% in both administration and selling. The company incurred a net loss of Rs.26716. TABLE-27 Comparative balance sheet (2005-06 & 2006-07)
Particulars Sources of funds: Share capital Reserves & surplus Loan funds: Secured loan Unsecured loan Total Application of funds: Fixed assets 20052006 52,599,867 731,825 21,197,278 22,805 74,551,77 5 2006-2007 INC / DEC 53,371,716 10,204,403 55,103,092 22,805 118,702,01 6 50,550,586 771,849 9,472,578 33,905,814 44,150,24 1 11,287,83 8 487,992 21,350,005 11,546,711 6,000 76,410 33,467,118 5,761,259 -5,156,545 32,862,40 % 1.47 1294.38 159.95 59.22

39,262,74 8 Current assets & Loan and advances Cash & bank 1,002,474 Sundry debtors 42,435,207 Advances and deposits 18,761,523 Investments ---------Other assets 1,033,090 Total 63,232,294 current liabilities & provisions: Less: Current liabilities 19,725,023 Expenses for 8,218,245 provisions Net Current assets 35,289,02
90

28.75 48.68 50.31 61.54 100.00 7.40 52.93 29.21 -62.75 93.12

1,490,466 63,785,212 30,308,234 6,000 1,109,500 96,699,412 25,486,282 3,061,700 68,151,430

Total

6 74,551,77 5

118,702,01 6

4 44,150,24 1

59.22

Inference: The comparative balance sheet of the year 2006-2007 is as follows The share capital of the company has increasing in the year of 2006-07 by 1.47%. The profit of the company has increased the reserves and surplus by 1295% .The fixed assets of the company has increased in 28.75%. The cash position of the company has fluctuating increase or decreases. The current liability and provisions of the company is fluctuating year after year. TABLE-28

91

Comparative balance sheet (2006Particulars Sources of funds: Share capital Reserves & surplus Loan funds: Secured loan Unsecured loan Total Application of funds: Fixed assets Current assets & Loan and advances Cash & bank Sundry debtors Advances and deposits Investments Other assets Total current liabilities & provisions: Less: Current liabilities Expenses for provisions Net Current assets Total 50,550,58 6 1,490,466 63,785,212 30,308,234 6,000 1,109,500 96,699,412 25,486,282 3,061,700 68,151,43 0 118,702,0 16 41,772,38 9 326,232 58,873,736 21,680,669 6,000 7,021,983 78,204,998 19,777,355 3,351,241 64,780,02 4 106,552,4 13 -8,778,197 -1,164,234 -4,911,476 -8,627,565 0 5,912,483 -18,494,414 -17.37 -78.11 -7.70 -28.47 0.00 532.90 -19.13 2006-2007 53,371,716 10,204,403 55,103,092 22,805 118,702,0 16 20072008 55,375,152 10,435,447 40,741,814 -----106,552,4 13 INC / DEC 2,003,436 231,044 -14,361,278 -22,805 12,149,603 % 3.75 2.26 -26.06 -100.00 -10.24

-5,708,927 289,541 -3,371,406 12,149,603

-22.40 9.46 -4.95 -10.24

07 & 2007-08) Inference: The comparative balance sheet of the year 2007 to 2008 is as follows The share capital of the company has increasing in the year of 2007-08. The secured loan of the company has decreased in this year by 26.06% .The fixed assets of the company has
92

decreased. The cash position of the company has fluctuating increase or decreases. The current liability and provisions of the company is fluctuating year after year.

93

TABLE-29 Comparative balance sheet (2007-08 & 2008-09)

94

Particulars

20072008

20082009 55,375,15 2 11,056,93 4

INC / DEC 0 621,487

Sources of funds: Share capital 55,375,152 Reserves & surplus Loan funds: Secured loan Unsecured loan Total Application of funds: Fixed assets 10,435,447 40,741,814 -----106,552,4 13

0.00 5.96 -20.93 100.00 -7.40

32,212,52 0 8,529,294 25,500 25,500 98,670,10 6 7,882,30 7 64,982,46 5 1,573,364 67,142,69 8 9,297,978 6,000 20,177,35 3 98,197,39 3 54,707,52 0 9,802,232 23,210,0 76 1,247,132 8,268,962 12,382,69 1 0 13,155,37 0 19,992,39 5 34,930,16 5

41,772,38 9

55.56 382.28 14.05 -57.11 0.00 187.35 25.56

Current assets & Loan and advances Cash & bank 326,232 Sundry debtors 58,873,736 Advances and deposits Investments Other assets Total current liabilities & provisions: Less: Current liabilities Expenses for provisions Net Current assets Total 21,680,669 6,000 7,021,983 78,204,998

19,777,355 3,351,241 64,780,02 4 106,552,4 13

176.62 192.50 -48.00 -7.40

6,450,991 33,687,64 1 31,092,3 83 98,670,10 6 7,882,30 7

95

Inference: The comparative balance sheet of the year 2008-2009 is as follows The share capital of the company remains same. The secured loan of the company has decreased in this year by 20.93% .The fixed assets of the company has increased by purchasing the new assets on credit. The cash position of the company has fluctuating increase or decreases. The current liability and provisions of the company is also increasing as the fixed assets were purchased on credit and hence they both increases.

96

TABLE-30 Comparative balance sheet (2008-09 & 2009-10)

97

Inference:
Particulars Sources of funds: Share capital Reserves & surplus Loan funds: Secured loan Unsecured loan Total Application of funds: Fixed assets 2008-2009 20092010 55,375,15 2 11,030,21 8 INC / DEC %

55,375,152 11,056,934 32,212,520 25,500 98,670,106

0 -26,716

0.00 -0.24 -21.66 -23.53 -7.10

25,236,10 3 -6,976,417 19,500 -6,000 91,660,97 3 7,009,133 54,908,41 2 10,074,05 3

64,982,465

-15.50

Current assets & Loan and advances Cash & bank 1,573,364 Sundry debtors 67,142,698 Advances and deposits Investments Other assets Total current liabilities & provisions: Less: Current liabilities Expenses for provisions Net Current assets Total 9,297,978 6,000 20,177,353 98,197,393

260,095 41,001,21 0 4,612,330 -------10,154,92 6 56,028,56 1

-1,313,269 26,141,48 8 -4,685,648 -6,000 10,022,42 7 42,168,83 2

-83.47 -38.93 -50.39 -100.00 -49.67 -42.94

54,707,520 9,802,232 33,687,641 98,670,106

15,919,41 0 3,356,590
98 36,752,56

38,788,11 0 -6,445,642

-70.90 -65.76 9.10 -7.10

1 3,064,920 91,660,97 3 7,009,133

The comparative balance sheet of the year 2009 to 2010 is as follows: The share capital of the company remains same. The secured loan of the company has decreased in this year .The fixed assets of the company has decreased. The cash position of the company has fluctuating increase or decreases. Large amount to the creditors has been paid off during the year.

TABLE-31

Trend analysis
Trend Income Statement in the study period (2005-06 to 200910)
200506 Trend Sales Total income Total expenditure Net profit 100 100 100 100 2006-07 Trend 102.86 104.57 105.45 88.53 2007-08 Trend 106.02 109.32 115.76 2.16 2008-09 Trend 133.24 135.36 143.15 5.81 2009-10 Trend 66.90 79.15 83.92 (0.25)

Particulars

99

160 140 120 100 80 60 40 20 0 2005- 2006- 2007- 2008- 200906 07 08 09 10 Total income

100

120 100 80 60 40 20 0 -20 2005- 2006- 2007- 2008- 200906 07 08 09 10 Net profit

101

160 140 120 100 80 60 40 20 0 2005- 2006- 2007- 2008- 200906 07 08 09 10 Total expenditure

Inference: By taking 2005-06 as base year (100%) the sales, total income, total expenditure, and net profit during the study period were analysis by taking trend as a tool. The above table shows the movement of variables during the study period. The entire variable shows the lower trend during the 2009-10.

102

TABLE-32 TREND BALANCE SHEET IN THE STUDY PERIOD (2005-06 to 2009-10)

2005 Trend 2006 Trend 2007 Trend 2008 Trend 2009 Trend

Particulars

Share capital Reserves and surplus Secured loans Un secured loans Fixed assets Other assets Debtors Cash and bank balance Advances and deposits Current liability Provisions

100 100 100 100 100 100 100 100 100 100 100

101.467 105.276 4 105.2762 2 105.2762 1394.37 1510.87 7 1425.948 1 1507.221 259.953 151.965 6 192.203 4 119.0535 111.817 100 0 6 85.50756 128.749 165.506 5 106.3919 7 139.8486 107.396 1953.10 3 679.7068 7 982.9662 150.312 138.7379 158.224 96.62074 148.678 156.948 8 32.54269 1 25.94531 161.544 49.5587 6 115.5592 6 24.58398 129.207 277.350 9 100.2653 9 80.70667 37.2549 1 40.77806 119.274 40.84315

Inference: Trend Percentages of Balance Sheet is done by taking 100 as base for all financial years 2006 to 2010. Fixed assets have been decreased during the period 2009-10.current
103

assets, Current liabilities and provisions were fluctuating during the study period. Therefore the balance sheet total shows an increasing trend in the figures.

CHAPTER- IV FINDINGS AND SUGGESTIONS Contents: 4.1 Findings 4.2 Suggestions

104

4.1 FINDINGS

The current ratio is more than 2% in all the first four years. But in 2008-2009 the current ratio is slightly lower than the normal. This shows that the company is enjoying credit worthiness. The liquid ratio during the study period except in the year 2009-10 is more than the normal (i.e.) 1:1. Hence the firm is controlling its stock position because there is linear relationship between current ratio and liquid ratio.

There is fluctuation in the absolute ratio for all the years. In all the years the debt equity is more, when compared with borrowings. Hence the company is maintaining its debt position. The proprietary ratio during the study period to the total assets is more than the 2/3. During 2006-07 it is more than 50%
105

During the year 2006-07 it is 66.17% which shows higher position of cost of goods sold .But at the same time during 2009-10 it is only 6.95. The sale is 4 times more than the fixed assets 200506 and 2007-08. It is more than 3 times during 200607 and 2008-2009. It is more than 2 times during 2009-10.

During all the years of study period the sales is 2 to 7 times more than the working capital. During all the study period years the relationship between sales to total assets is high. The sales are in between 1.5 and 3.5 times more than the proprietor's funds. It shows the firms is maintaining the better utilization of own funds. The Net profit from the year 2007-08 is very less and in the year 2009-10 the company made a loss. During 2009-10 the gross profit position is 6.70%. But in 2005-06 it was 12.9 %.and it was fluctuating
106

more than the base year in all other years of the study period. During 2005-06 it was 6.32% on sales and in 2006-07 it was 5.45. But in all other 3 years it is less than 1% and even negative in the year 2009-10. This means that either there is any defect in pricing the product or excess non-value added expenditures which reduces the net profit of the company. The sales of the organization are also decreasing and hence management must take care of the quality and market situations into consideration to resolve the issue so that it may bring good profits to the organization.

The administration and selling expenses during 200910 is very high when compared to previous year's %age as they were in between 13-20% of sales. This may also be one of the reasons to a net loss in that year.

The sales figure increasing year after year. It increased about Rs.48,40,665. Administrative and other expenses were fluctuating. The other income of the company was increased year by year.
107

 Net profit has been reduced from 100% to (0.25) %. During the period of study the total income was less than the total expenditure which is not good for the company. Share capital has been increased in 2006-07 and after that it remained constant. Sundry debtors have been fluctuating over the years. It increased during the first four years of the study period from 100% to 158.22% i.e. from 2005-06 to 2008-09 and then from there it decreased to 96.62% in the year 2009-10

4.2 SUGGESTION

The company's profit over the years has been decreasing when compared to previous years and even it incurred loss in the last year. The company must increase the profit in future. The company must take steps to increase the profit level.

The Gross Profit ratio can be improved by increasing the gross profit and the factors decreasing the gross profit ratio should be thoroughly checked timely
108

whither they are operating factors or any misleading factors. A Non-operating expense of the company is high. So the management should take necessary steps to reduce the non-operating should take steps expenses. to reduce The the management

borrowed capital. Net fixed asset of the company has increased and even though they are not utilizing the enhanced technology to increase sales. So the management should take initiative steps for the proper utilization of the resources. The liquidity position of the company is quite satisfactory. And this must be improved further for the purpose of proper utilization of the liquid assets of the company. The cash ratio position of the company is not satisfactory for the last five years. It is fluctuating over the years and there is no standard ration maintained. So the management should take steps to improving the cash position of the company.

109

Debt equity ratio has not satisfactory for the past two years. So the company has enough scope for the more long-term borrowings from the outsiders as its current ratio is also good and has a sufficient amount of current assets. The sales of the organization can be further

increased by improving the quality through optimum utilization of company's resources (i.e. assets, raw materials, credit system, etc.) and that in turn will increase the overall profits of the organization. The Management must find out the reasons for the decrease measures. The Management must also study the market in sales and must take appropriate

position and it also find the demand prevailing in the market for the products and thus this will guide them to enhance their sales volume.

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CONCLUSION AND BIBLIOGRAPHY Contents: 5.1 Conclusion 5.2 Limitations of the Study 5.3 Bibliography

5.1 CONCLUSION:On studying the financial performance of Samtel Color Ltd. for a period of five years from 2005-06 to 2009-10, the study reveals that the financial performance is better. Samtel Color Ltd has been able to maintain optimal cost positioning. Despite price drops in various products, the company has been able to maintain and grow its market share to make strong margins in market, contributing to the strong financial position of the company. The company was
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able to meet its entire requirements for capital expenditures and higher level of working capital commitment with higher volume of operations and from its operating cash flows. The export sales of Samtel Color Ltd are only 30% of total sales during 2009-10. Present scenario of Picture tube industry indicates the need for more glass even with the cause of lower production facilities. The company should now give more importance to exports because it provides good net sales realization but also export benefits. The following table the contribution of export sales to sales and the justification for the above suggestions. Year Export sales Domest ic sales Total sales % Export sale to total sale 2005-06 15,215,05 1 153,841,0 67 169,056,1 18 2006-07 13,911,74 3 159,985,0 40 173,896,7 83 2007-08 21,507,75 9 157,723,5 62 179,231,3 21 2008-09 27,030,10 4 198,220,7 66 225,250,8 70 2009-10 9,047,623 104,047,6 65 113,095,2 88

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As it is noticed due to the market situation prevailing the total sales of the organization were affected. Considering the fact that the margins in the export sales are low, but have the potential to raise in the near future, the company can maintain a minimum level of presence in the global market

5.2 LIMITATION OF THE STUDY:

The analysis was made with the help of the secondary data collected from the company.
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 All the limitations of ratio analysis, common-size statement, comparative statements, and trend analysis and interpret are applicable to this study. The period of study is 5 years from 2005-06 to 2009-10. The analysis of financial performance is based on information available and any mistake inherent would be reflected in the study. The figures and facts claims in the annual report and other forms are assumed to be true.
It is based on the data supplied by the company

personnel. Since only five year data is used for analysis, the outcome may not be generalized.
Analysis made only on working capital aspect does not

suit into the long-term financing.

5.3 BIBLIOGRAPHY

Annual Reports of SAMTEL COLOR LTD

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General Articles and Magazines of SAMTEL COLOR LTD. Financial management, T.S Reddy and Y. Hariprasad Reddy, New Delhi: Tata Mc company Ltd., 1999, 3rd edition Graw hill Publishing

Management and Accounting 4th Edition, M.A Sahaf, Tata McGraw Hill Publishing Company Ltd, 5th Reprint - 2006 - New Delhi. Financial Management 8th Edition, IM. Pandey, Vikas Publishing house Pvt Ltd, 6th Reprint -2006- New Delhi. Working capital Management 8th Edition, IM .Pandey, Vikas Publishing house Pvt Ltd, 6th Reprint -2006- New Delhi Financial Management , Mr. Amitabh Ranjan Sinha www.samtelgroup.com for all information in Samtel color Ltd.

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ANNEXURE Contents: 6.1 Balance Sheet 6.2 Profit & Loss

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SCHEDULE SOURCES OF FUNDS Shareholders Funds Share Capital Advance Subscription Reserves and Surplus Loan Funds Secured Loans Unsecured Loans

31-03-2011 Rs. in lacs 11,628.84 3,000.00 7,010.98 --------------------- ---- -- -- -27,316.45 2,533.36 --------------------- -- -- -- -- -8,438.66 5,641.72 11,111.16 -------------------- -- -- -- ---- 36,094.60 2,575.50 -------------------- ---- -- -- -- -

As at 31-03-2010 Rs. in lacs

A AA B C D

21,639.82 29,849.81 -------------------- -- -- -- -- -- -

25,191.54 38,670.10 ---------------- - -- --

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