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INTRODUCTION 1.

1 GENERAL INFORMATION Financial analysis (also referred to as

analysis) refers to an assessment of the viability, stability and profitability of a business, sub-business or project. It is performed by professionals who prepare reports using ratios that make use of information taken from financial statements and other reports. These reports are usually presented to top management as one of their bases in making business decisions. Based on these reports, management may:

Continue or discontinue its main operation or part of its business; Make or purchase certain materials in the manufacture of its product; Acquire or rent/lease certain machineries and equipment in the production of its goods; Issue stocks or negotiate for a bank loan to increase its working capital; Make decisions regarding investing or lending capital; Other decisions that allow management to make an informed selection on various alternatives in the conduct of its business.

1.2 INDUSTRY PROFILE A Steel Fabrication Company mainly specializes in the building of machinery and equipments by cutting, shaping and assembling components made from raw materials. They purchase steel and fabricate products according to the specific structural design requirements of the projects. Thus an accurate picture of each steel element and connections between them with appropriate dimensions can be ascertained. Another important task they do is steel detailing. For this they usually employ the services of a steel structural detailer who creates the necessary drawings required to build and fabricate the structure. Sometimes this work is outsourced to engineering firms. Steel fabricators are usually proficient in the manufacturing of sturdy steel frames, cutwork grills and decorative motifs. They usually cater to commercial as well as industrial demands. The beams used for stairways, decks, platforms etc are usually fabricated products. Before you entrust work to a particular steel fabrication company, you need to make sure that they know the intricacies of the trade. Check out the quality of equipment used for the various processes involved in the fabrication. Most modern fabricators use laser cutting devices which give an accurate and smooth edge on steel. Steel fabrication companies will never experience a dearth of good projects since today's construction industry makes use of a lot of pre-fabricated steel in their designs due to their ease in assembling and the minimum construction waste involved. Many of the steel fabrication companies are based in China and India mainly due to the low cost labor available here. But this is not the only criterion; the staff is highly skilled and trained to provide the best in fabricated steel with high degree of precision exercised in every component delivered. The fabrication company has to employ a number of staff like welders, assemblers, fabricators and Production and Quality control staff for performing the various processes involved in fabrication. 2

1.3 COMPANY PROFILE Diamond Engineering Private Ltd was established in 1978, but was later acquired by P. Mohanraj in 1987, who dedicatedly shouldered the responsibility to turn it into what is today known as the Diamond Group- Worlds No.1 in fabrication. The organization possesses the expertise and production facilities to produce a wide range of products like Stacker, Reclaimer, Classifiers, Mill Stand, Pressure Vessels, Structurals, Bucket Elevators, Pan Conveyors, Cyclones, Separators, Airslides, Conveyor Galleries, Lime Mud Filters, Rotary Sluice, Ship Loaders, Industrial Fans, Impellers, Pollution control equipments like Bag Filters etc. What started out in a small way with only 10 employees is today coming to be reputed as the Worlds No.1 fabricator, due to the excellent and innovative leadership, careful planning and also the hard work and focused dedication of all the people associated with the Diamond Group. With a strength of 5000 employees, Diamond Group of Companies have contributed vastly from modernizing handling facilities and providing for advanced blasting processes to creating infrastructure to fabricate 10000 MT per month. Diamond Group of companies is situated on the IT highway, well connected by all means of transport and very close to Chennai Seaport and Airport. By constantly updating ourselves with market trends and latest developments, we are capable of foreseeing in the industrys future and evolve in the process. Our employees are also trained form time to time. According to the progressive changes in the organization so that they may keep ahead of the times with the knowledge gained. We acquire imported world-class machinery and equipments, so that we may continue to remain one of the best in the global industry providing quality services to our customers.

FOUNDER: Diamond group is headed by P. Mohanraj, a gold medalist in mechanical engineering from Anna university- Chennai, who has used his eight years of professional experience working with BHEL to embrak upon setting up Indias largest fabrication unit. Under his excellent ad innovative leadership along with his perseverance, Diamond group is now competing for the worlds no.1 position in the steel fabrication industry. Through out this amazing journey from a taking over a sick unit around 10 employees to building a steel fabrication empire of this magnitude in a short span of 23 years, he has always kept his employees welfare uppermost in mind second only to customer satisfaction. The fact that all the customers gained since 1987 are still with us stands as a testament to his business acumen and enterprising skills. MISSION STATEMENT: We continually improve our business process to maximize value for our customers and to enhance our company performance. We achieve this through timely supply of products and services of consistent quality meeting all contractual requirements.

VISION STATEMENT: We are committed to fabricate and supply high quality steel products to our customers. As a pioneering steel fabrication unit, the emphasis is always on the achievement of four indispensable goals: customer satisfaction high quality of products and services offer the most competitive price for our customers prompt delivery

towards this end, we would strive to achieve the best international standards of manufacturing process quality. The manufacturing activity will be given the best logistics support to deliver the products on time and in full condition to our customers. Our human resources will be constantly trained and fully equipped with the best material resources and technologically competent machinery to achieve the goals of quality, customer satisfaction and prompt delivery. QUALITY POLICY: We at diamond engineering are dedicated to manufacture and supply steel products conforming to customer specification as per agreed quality and effect timely delivery. Moreover, in order to be in pace with the changing era, we assured to improve upon our thoughts, activities and quality through continual improvement. Also, our diamond group will make all staff and employees as crorepathis before 15th November 2010, make them happy and carry itself to world no.1.

DEPARTMENT NAME Managing Director Executive Director President - Finance-Administration President - Operations President - Quality Control General Manager Projects General Manager - Purchase Group General Manager Diamond General Manager Works General Manager - Works Deputy General Manager Projects Deputy General Manager PPC Works Manager Manager - HR. Deputy General Manager Taxation Senior Manager - Sales. Deputy General Manager - QA & QC Sr. Executive - EXIM

NAME OF THE SUPERIORS Mr. P. Mohanraj BE gold medalist Mr. P. Danaraj, MA, M.com, MBA, AICWA, L.GabrielDePrasad P. Jeyaraj E. Rajagopal N. G. Thirunavukarasu K. R. Meenakshi S. Shanmugha Sundaram S. P. Mohanasundaram A. Kumaravel Jeeva Sabasteen J. Kamalraj M. Kiran Pradeep C. Hemalatha M. Geetha D. Jayashree P. Gunasekaran S. Sudha

UNITS:
DIAMOND TOPAZ EMERALD I EMERALD II RUBY
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Diamond Engineering (Chennai) Private Ltd, was established in 1978 and later transformed to Diamond group by P. Mohanraj who took the organization to give it the position of the position of the worlds no.1 fabricator. As the first company that was formed under the diamond group, diamond Engineering is the head office for all other units. The organization is equipped with the best of technology to support the production facilities and also has a well-qualified team of experts to run its operations.

Topaz Engineering was the first company that was added to the Diamond group in 1998. Located in Sholinganallur, Chennai, Topaz Engineering is only 500meters from Diamond Engineering and is exclusive for horizontal boring machine X - 7100 mm, Y-3000 mm, Z - 2000 mm, Spindle - 160mm make - Collet with Rotary table10 Tons Size1500mm x 1800mm, fully structured and equipped with 10tons EOT crane capacity. 3 acres of outdoor workspace is used only for fabricating and as storage area. Our engineers and skilled trades people work efficiently and to exact specifications and wellequipped facilities ensure that projects get completed on time and within the estimated budget.

Emerald Engineering Unit I is a part of the 200 crores Diamond group of Companies, located at Pudupakkam village which is 33 kilometers away from Chennai. We provide steel fabrication solutions to industrial leaders in the areas of cement plants, process plants and petrochemicals. We also provide erection and commissioning services 8

for various plants. The company was started in the year 2003 with a total area of 5 acres. With the latest and sophisticated machinery and material handling systems like 15 tons EOT cranes, 15 tons forklifts we can confidently claim that we deliver the best quality products to our customers.

Emerald Engineering Unit II is a part of the 200 crores Diamond group of Companies, located at Mambakkam village and is 40 kilometers away from Chennai. We cater to industrial leaders by providing steel fabrication solutions in the areas of cement plants, process plants and petrochemicals. Erection and commissioning services of various plants are also provided. The company was started in the year 2004 with a total area of 15 acres. We use complex and advanced machineries for sand blasting and material handling systems like 15 tons EOT cranes, 15 tons of mobile cranes and 15 tons forklifts to deliver best quality products to our customers.

Ruby Engineering is the biggest company under the Diamond Group of companies. The factory stretches to 60 acres and beyond and is designed to meet world standards. The company has the best of the latest machineries that are mainly used for sand blasting, painting, packing and storing.

FACILITIES TO THE EMPLOYEES

Education plays a vital role in the progress of a nation. That is why we at the Diamond group provide education, completely free of cost for the first two children of all the members of the Diamond family from their kindergarten to graduation. Diamond group provides shelter for the employees with a minimum of 5 years of service and their families by helping them with housing & land loans Safety of our employees are our prime concern. Having taken all precautionary measures, we provide complete first aid services and have ambulances at all our units Always aiming for improvement in quality and for meeting the delivery of products, Diamond group conducts many training & development programs to improve the skill sets and also to keep our employees updated on the current and evolving technologies. Diamond group ensures the security of our employees and their families by providing insurance facilities. Every employee of our company has medical as well as life insurance in case any mishaps occur. Diamond group ensures that our employees have their medical check-ups at least once every year at our campus. Diamond group provides free transportation for all its employees through a wide range of hi-tech buses and cabs owned and operated by the company itself. We believe in celebrating work and life in our Diamond family. That is why we celebrate the birthday of each and every employee and follow a policy to make sure that we participate in their marriage functions by wishing them with gifts and financial support. Diamond group believes in setting an example and motivating our employees by recognizing the extra efforts put in by each and every individual who has worked 10

hard and selflessly with dedication. We believe that no work should go unnoticed. That is why we provide motivational prizes for our employees in 10 categories every month. SERVICES OFFERED Packing

At Diamond Group of companies, we are constantly keeping in track of the latest technological advancements and other developments to continuously provide you with quality products. And to help our customers, we have exclusively developed Assembly Guides and Packing Guides for easy use. Packing Guide The packing guide has been designed by the Diamond Group exclusively for our clients by improvising and upgrading constantly. A Packing guide helps the client to ascertain the number of jobs contained in a single crate. Visual representations are given to make it easy for the clients to understand better about the jobs and their numbers. Assembly Guide Constantly keeping track of the latest technological advancements and other developments, we at Diamond Group have exclusively developed this user-friendly assembly guide for our clients, which gives simple directions to help them understand and assemble the machinery with ease on their own. This will help customers to save time and also get the process right.

Shipping

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At Diamond Group of companies, we are constantly keeping in track of the latest technological advancements and other developments to continuously provide you with quality products. And to help our customers, we have exclusively developed Assembly Guides and Packing Guides for easy use.

AWARDS 1. Regional award for export excellence 2004-2005 Silver shield for star performer as medium enterprise in the product of miscellaneous articles of iron\ steel. 2. Regional award for export excellence 2005-2006 Gold trophy for top exporter as medium enterprise. 3. All India Awards for export excellence - 2006-2007 Gold trophy for top exporter. 4. Institute of trade & industrial development Managing director Mr. P. Mohan raj received Udog patra for self made industrialists 5. BHEL Trichy Best sub contractor award for 2008-2009

1.4 PRODUCT PROFILE

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1. STRUCTURAL STEEL: a) Beams and columns b) structure c) conveyor structure d) rafter e) column assembly f) conveyor gallery 2. HEAVY FABRICATION: a) Travel carriage b) Rake car c) Cold stack d) Jib steel e) Main girder f) Mill housing g) Klin hood h) Riser duct

1.5 NEED OF THE STUDY

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Financial analysis is helpful to the management in knowing financial strength of the firms to make their best use and to be able to spot out financial weakness of the firm to take suitable corrective actions. To provide useful information this can gainfully be utilized to evaluate the earning capability. To suggest ways and means of improving the financial position in the company. The future plans of the firm should be laid down in view of the firms financial strength and weakness by properly establishing relationship between the items of the balance sheet and the profit & loss a\c

1.6 OBJECTIVES OF THE STUDY

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PRIMARY OBJECTIVES

To study the financial analysis of the DIAMOND ENGINEERING (CHENNAI) Private Ltd SECONDARY OBJECTIVES

1.

The main aim of this work is to study the financial performance of last 3 years of DIAMOND (ENGINEERING) CHENNAI Private Ltd.

2. 3.

To measure the profitability position of the firm for the last 3 years. To analyze the changes of previous years income & expenditure a\c and balance sheet to help the management in forecasting and planning.

4.

To review the business operations of the last year and its likely effect on the current years operations.

1.7 SCOPE OF THE STUDY

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The

study

aims

at

identifying

financial

performance

of

DIAMOND

(ENGINEERING) CHENNAI Private Ltd. This study includes providing information of last 3 years balance sheet of the company.

It analysis the financial position of the DIAMOND (ENGINEERING) CHENNAI Private Ltd. by using some financial techniques based on the financial results of the company in the previous and the current year.

The analysis was done using the tools like comparative statements, common size statements and trend analysis. These calculations cover the major area like income and expenditure, balance sheet.

1.8 LIMITATIONS OF THE STUDY

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The time period is limited and is not possible for analyzing the over all performance of DIAMOND (ENGINEERING) CHENNAI Private Ltd with maximum accuracy.

The project is fully based on the information from the company schedule.

As the balance sheet is prepared on a particular date it does not reflect the averages. The values are based in the book value. It does not consider the effect of inflation or deflation which may lead the value to increase or decrease.

LITERATURE SURVEY REVIEW OF LITERATURE

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Financial analysis (also referred to as financial statement analysis or accounting analysis) refers to an assessment of the viability, stability and profitability of a business, sub-business or project. It is performed by professionals who prepare reports using ratios that make use of information taken from financial statements and other reports. These reports are usually presented to top management as one of their bases in making business decisions. Based on these reports, management may:

Continue or discontinue its main operation or part of its business; Make or purchase certain materials in the manufacture of its product; Acquire or rent/lease certain machineries and equipment in the production of its goods; Issue stocks or negotiate for a bank loan to increase its working capital; Make decisions regarding investing or lending capital; Other decisions that allow management to make an informed selection on various alternatives in the conduct of its business. Financial statements are records that provide an indication of an individuals,

organizations, or business financial status. There are four basic types of financial statements: balance sheets, income statements, cash-flow statements, and statements of retained earnings. Typically, financial statements are used in relation to business endeavors. Balance sheet financial statements are used to provide insight into a companys assets and debts at a particular point in time. Information about the companys shareholder equity is included as well. Typically, a company lists its assets on the left side of the balance sheet and its debts and liabilities on the right. Sometimes, however, a balance sheet has assets listed at the top, debts in the middle, and shareholders equity at the bottom.

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Financial analysts often assess the firm's: 1. Profitability - its ability to earn income and sustain growth in both short-term and longterm. A company's degree of profitability is usually based on the income statement, which reports on the company's results of operations; 2. Solvency - its ability to pay its obligation to creditors and other third parties in the longterm; 3. Liquidity - its ability to maintain positive cash flow, while satisfying immediate obligations; Both 2 and 3 are based on the company's balance sheet, which indicates the financial condition of a business as of a given point in time. 4. Stability- the firm's ability to remain in business in the long run, without having to sustain significant losses in the conduct of its business. Assessing a company's stability requires the use of both the income statement and the balance sheet, as well as other financial and non-financial indicators.

Methods
Financial analysts often compare financial ratios (of solvency, profitability, growth, etc.):

Past Performance - Across historical time periods for the same firm (the last 5 years for example), Future Performance - Using historical figures and certain mathematical and statistical techniques, including present and future values, This extrapolation method is the main source of errors in financial analysis as past statistics can be poor predictors of future prospects.

Comparative Performance - Comparison between similar firms.

These ratios are calculated by dividing a (group of) account balance(s), taken from the balance sheet and / or the income statement, by another, for example: 19

n / equity = return on equity Net income / total assets = return on assets Stock price / earnings per share = P/E-ratio Comparing financial ratios is merely one way of conducting financial analysis. Financial ratios face several theoretical challenges:

They say little about the firm's prospects in an absolute sense. Their insights about relative performance require a reference point from other time periods or similar firms. One ratio holds little meaning. As indicators, ratios can be logically interpreted in at least two ways. One can partially overcome this problem by combining several related ratios to paint a more comprehensive picture of the firm's performance. Seasonal factors may prevent year-end values from being representative. A ratio's values may be distorted as account balances change from the beginning to the end of an accounting period. Use average values for such accounts whenever possible. Financial ratios are no more objective than the accounting methods employed. Changes in accounting policies or choices can yield drastically different ratio values. They fail to account for exogenous factors like investor behavior that are not based upon economic fundamentals of the firm or the general economy (fundamental analysis)

Financial analysts can also use percentage analysis which involves reducing a series of figures as a percentage of some base amount. For example, a group of items can be expressed as a percentage of net income. When proportionate changes in the same figure over a given time period expressed as a percentage is known as horizontal analysis. Vertical or common-size analysis, reduces all items on a statement to a common size as a percentage of some base value which assists in comparability with other companies of different sizes.

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Another method is comparative analysis. This provides a better way to determine trends. Comparative analysis presents the same information for two or more time periods and is presented side-by-side to allow for easy analysis.

TYPES OF FINANCIAL STATEMENT ANALYSIS: 1. EXTERNAL ANALYSIS: It is conducted by those persons who do not have access to the detailed record of the enterprise and therefore have to depend on published accounts and directors and auditors reports. Such type of analysis is made by investors, credit agencies, government agencies and research scholars. 2. INTERNAL ANALYSIS: It is conducted by the management for the reason that the management wishes to know the financial position and operational efficiency of the organization. The important feature of such analysis is that as the management has access to all information relating to the organization so the analysis is that as the management has access to all information relating to the organization so the analysis is more detailed, extensive and correct. 3. HORIZONTAL ANALYSIS: This analysis is made to review and analyze financial statements for a number of years and is, therefore, based on financial data taken for those years. It is a time series analysis. It shows comparison of financial data for several years against a chosen base year. It is useful for long-term trend analysis and planning. Comparative financial statement is an example of this type of analysis. 4. VERTICAL ANALYSIS: This analysis is made to review and analyze the financial statements of one year only. Such analysis is also called static analysis as it is frequently used for referring to ratios developed for one date or for one accounting 21

period. Such an analysis is useful in comparing the performance of several companies of the same type or divisions or departments in one enterprise.

PROCESS OF FINANCIAL STATEMENT ANALYSIS:


1. RE-ARRANGEMENT OF FINANCIAL STATEMENTS: For analysis, it is necessary to reclassify the data contained in the financial statements into purposive classes so that maximum information from every data for analysis can be obtained. Reclassification and rearrangement of different data depend upon the purpose of analysis. 2. COMPARISON: After the classification of data of financial statements into different categories, it is necessary to derive comparative data of the same enterprise of the past periods if it is a time series analysis. In case of cross-sectional analysis, it is necessary to derive comparative data of the same accounting period of the similar or comparable enterprises. For this, comparative study is necessary. 3. ANALYSIS: Comparative financial data are then analyzed with reference to financial characteristics like profitability, solvency and liquidity. 4. INTERPRETATION: The concluding part of financial statement analysis is interpretation of financial information generated in the process of financial statement analysis. The interpretation should be precise and pointed towards indicating the movement of various financial characteristics. RESEARCH METHODOLOGY 3.1 RESEARCH

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Research is an academic activity and as such the term should be used in technical sense. Research, is thus, an original contribution to the existing stock of knowledge making for its advancement. It is per suit of truth with the study, observation, comparison and experiment. In short, the search for knowledge through the objective and systematic method of finding solutions to a problem is research. The systematic approach concerning generalization and formulation of a theory is generalization and formulation of a theory is research. As such the term research refers to the systematic method consisting of enunciating the problem, collecting the facts or data, analyzing the facts and reaching certain conclusions either in the form of solutions towards the concerned problem or in certain generalizations for some theoretical formulation. 3.2 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 exists at present. The financial statement of DIAMOND (ENGINEERING) CHENNAI Private Ltd has been described in this study. 3.3 NATURE OF DATA The data required for the study has been collected from secondary source. The relevant information was taken from annual reports, journals and internet. METHODS OF DATA COLLECTION This study is based on the annual report of DIAMOND ENGINEERING (CHENNAI) Private 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.

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TOOLS APPLIED To have a meaningful analysis and interpretation of various data collected, the following tools were made for this study. Comparative statements Common size statements Expenses ratio

DATA ANALYSIS & INTERPRETATION

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COMPARATIVE INCOME STATEMENT: Comparative income statement shows the operating results for a number of accounting periods so that changes in data in terms of money and percentage from one period to another may be known. Percentage change = absolute change

------------------------------- * 100 Figures of previous year

COMPARATIVE BALANCE SHEET: Comparative balance sheet analysis is the study of the trend of the same items, group of items and computed items in two or more balance sheets of the same business enterprise on different dates. Percentage change = absolute change

------------------------------- * 100 Figures of previous year

TABLE 1 COMPARATIVE INCOME STATEMENT OF DIAMOND ENGINEERING (CHENNAI) PRIVATE LTD FOR 2006 - 2007 25

PARTICULARS INCOME SALES Domestic sales Export sales Less: net excise duty after CENVAT credit Net sales Other income Total I EXPENDITURE Salaries, bonus & OEB Materials consumed Manufacturing expenses Administrative expenses Bad debts written off Financial charges Marketing expenses Directors remuneration Total II Profit\loss before depreciation Less: depreciation Provision for ITAY 2006-07 Provision for IT Provision for FBT Provision for DTL Add: deferred tax liability no longer required Net profit\loss Net profit\loss carried to balance sheet INTERPRETATION:

2006

2007

INC\DEC

PERCE NTAGE (%) 84.26 (5.15) 13.43 (100) 14.68 (43.26) 13.32 93.87 6.94 27.91 71.49 (92.41) 37 10.82 396.67 16.56 (15.69) 113.41 (97.73) -----175.48 (100) (38.45) ---------(36.70) (36.70)

30,02,47,354 1,14,46,30,998 1,44,48,78,347 72,69,283 1,43,76,09,064 1,73,26,836 1,45,49,35,900 5,91,94,590 90,28,63,040 15,80,82,272 2,21,94,780 1,58,100 5,66,82,660 10,81,93,867 15,00,000 1,30,88,69,309 14,60,66,591 1,45,20,962 4,00,00,000 --------14,48,792 19,35,000 8,81,61,837 -----------8,81,61,837 8,81,61,837

55,32,35,683 10,85,65,66,302 1,63,88,91,985 98,31,787 1,64,87,23,772 98,31,787 1,64,87,23,772 11,47,62,662 96,55,21,962 20,22,09,359 3,80,61,495 12,000 7,76,56,824 11,99,00,255 74,50,000 1,52,55,74,557 12,31,49,215 3,09,88,976 9,07,389 33,00,00,000 39,91,200 -------------5,42,61,650 15,49,000 5,58,10,650 5,58,10,650

25,29,88,329 (5,89,74,691) 19,40,13,638 (72,69,283) 21,11,14,708 (74,95,047) 19,37,87,872 5,55,68,072 6,26,58,922 4,41,27,087 1,58,66,715 (1,46,100) 2,09,74,164 1,17,06,388 59,50,000 21,67,05,248 (2,29,17,376) 1,64,68,014 (3,90,92,611) 3,30,00,000 25,42,408 (19,35,000) (3,39,00,187) 15,49,000 (3,23,51,187) (32,51,187)

The table 1: In the year of 2006 & 2007 income statement is compared it is interpreted that 2007 profit level is higher than 2006. TABLE 2 COMPARATIVE INCOME STATEMENT OF DIAMOND ENGINEERING (CHENNAI) PRIVATE LTD FOR 2007 - 2008

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PARTICULARS INCOME SALES Domestic sales Export sales Net sales Other income Total I EXPENDITURE Salaries, bonus & OEB Materials consumed Manufacturing expenses Administrative expenses Bad debts written off Financial charges Marketing expenses Directors remuneration Total II Profit\loss before depreciation Less: depreciation Provision for IT AY 2006-07 Provision for IT AY 2007-08 Provision for IT AY 2008-09 Provision for FBT Provision for DTL Add: deferred tax liability no longer required Net profit\loss Add: transferred from PY balance sheet Less: transferred to general reserve Net profit\loss carried to balance sheet INTERPRETATION:

2007

2008

INC\DEC

PERCE NTAGE (%) 187.44 (299.67) 43.42 61.61 43.53 55.58 50.98 33.70 59.59 (100) 47.76 (56.22) 46.09 40.64 79.33 81.28 (100) (100) -----68.82 -----74.97 59.25 74.54 (46.26) 35.71 14.638

55,32,35,683 10,85,65,66,302 1,63,88,91,985 98,31,787 1,64,87,23,772 11,47,62,662 96,55,21,962 20,22,09,359 3,80,61,495 12,000 7,76,56,824 11,99,00,255 74,50,000 1,52,55,74,557 12,31,49,215 3,09,88,976 9,07,389 33,00,00,000 ------------39,91,200 -------------5,42,61,650 15,49,000 55,81,650 3,06,69,159 7,00,00,000 1,64,79,809

159,02,43,775 76,03,08,998 2,35,05,52,773 1,58,88,987 2,36,64,41,760 17,85,50,468 1,45,78,18,942 27,03,57,085 60,73,57,085 -----------11,47,42,818 5,24,96,547 1,08,84,018 2,14,55,93,288 22,08,48,472 5,61,77,879 ------------------------------64,00,00,000 57,25,000 --------------9,49,45,593 24,66,737 9,74,12,330 1,64,79,809 9,50,00,000 1,88,92,139

1,03,70,08,092 -32,53,47,304 71,16,60,788 60,57,200 71,77,17,988 6,37,87,806 49,22,96,980 6,81,47,726 2,26,81,915 (12,000) 3,70,85,994 (6,74,03,708) 34,34,018 62,00,18,731 9,76,99,257 2,51,88,903 (9,07,389) (3,30,00,000) 6,40,00,000 23,33,800 -----------4,06,83,943 9,17,737 4,16,01,680 (1,41,89,350) 2,50,00,000 24,12,330

The table 2: In the year of 2007 & 2008 income statement is compared it is interpreted that 2008 profit level is higher than 2007. TABLE 3 COMPARATIVE INCOME STATEMENT OF DIAMOND ENGINEERING (CHENNAI) PRIVATE LTD FOR 2008 - 2009 27

PARTICULARS INCOME SALES Domestic sales Export sales Net sales Other income Total I EXPENDITURE Salaries, bonus & OEB Materials consumed Manufacturing expenses Administrative expenses Bad debts written off Financial charges Marketing expenses Directors remuneration Total II Profit\loss before depreciation Less: depreciation Profit before IT Less: provision for tax Profit\loss after tax Net profit\loss Add: transferred from PY balance sheet Less: prior period IT Less: transferred to general reserve Net profit\loss carried to balance sheet INTERPRETATION:

2008

2009

INC\DEC

PERCEN TAGE (%) 30.63 (11.99) 16.85 16.55 16.84 23.67 14.33 26.17 27.85 ------77.180 (45.79) 114.02 19.38 (7.74) 47.54 (26.60) 26.99 (26.33) 14.63 --------47.37 101.95

1,59,02,43,775 76,03,08,998 2,35,05,52,773 1,58,88,987 2,36,64,41,760 17,85,50,468 1,45,78,18,942 27,03,57,085 60,73,57,085 -----------11,47,42,818 5,24,96,547 1,08,84,018 2,14,55,93,288 22,08,48,472 5,61,77,879 16,46,70,593 6,72,58,263 9,74,12,330 1,64,79,809 ----------9,50,00,000 1,88,92,139

2,07,74,13,300 66,91,37,135 2,47,65,50,435 1,85,19,210 2,76,50,69,645 22,08,22,144 1,66,66,58,228 34,11,23,298 7,76,62,723 5,289 20,33,01,821 2,84,57,328 2,32,94,162 2,56,13,24,993 20,37,44,652 8,28,83,412 12,08,61,240 4,91,00,330 7,17,60,910 1,88,92,139 25,00,000 5,00,00,000 3,81,53,049

48,71,69,525 (9,11,71,863) 39,59,97,662 26,30,223 39,86,27,885 4,22,71,676 20,88,39,286 7,07,66,213 1,69,19,313 5,289 8,85,59,003 (2,40,39,219) 1,24,10,144 41,57,31,705 (1,71,03,820) 2,67,05,533 (4,38,09,353) (1,81,57,933) (2,56,51,420) 24,12,330 25,00,000 (4,50,00,000) 1,92,60,910

The table 3: while comparing the income statement of 2008 & 2009 it is interpreted that 2009 profit level is higher than 2008.

TABLE 4

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COMPARATIVE BALANCE SHEET OF DIAMOND (ENGINEERING) CHENNAI PRIVATE LTD FOR 2006&2007 PARTICULARS SOURCES OF FUNDS Shareholders Funds Share capital Share application Reserves & Surplus Loan funds a. secured loan b. unsecured loan APPLICATION OF FUNDS FIXED ASSETS Gross block Less: depreciation Net block INVESTMENTS SBI blue chip fund SBI one India fund CURRENT ASSETS, LOANS AND ADVANCES a. Deposits & advances b. closing stock c. sundry debtors d. cash & bank balances less: current liabilities & provisions Net current assets 2006 2007 INC\DEC (in RS) 3,25,00,000 3,50,00,000 2,33,10,650 57,27,21,227 (43,91,361) 65,91,50,516 Percentage (%) 162.5 ------21.06 987.65 (100) 341.440

2,00,00,000 -----------11,06,69,159 5,79,89,450 43,91,361 19,30,49,970

5,25,00,000 3,50,00,000 13,39,79,809 63,07,20,677 ---------85,22,00,486

1,44,55,59,143 4,30,92,555 10,14,66,588 5,00,000 -----------

26,27,42,098 7,24,43,531 19,02,98,567 5,00,000 5,00,000

11,81,82,955 2,93,50,976 8,88,31,979 --------5,00,000

81.75 68.411 87.548 ---------

9,35,10,406 45,91,87,799 3,47,70,369 8,87,511 58,83,56,085 4,97,27,27,703 9,10,83,382 19,30,49,970

20,26,11,352 82,14,01,068 9,41,96,880 3,67,038 1,11,85,76,338 45,76,74,419 66,09,01,919 85,22,00,486

10,91,00,946 36,22,13,269 59,42,65,110 ( 5,20,473) 53,02,20,253 (4,51,50,53,284) 56,98,18,537 65,91,50,516

116.67 78.88 170.91 (58.64) 90.12 (90.79) 625.60 341.440

INTERPRETATION: The table 4 shows that we can interpret that there is considerable increase in the value of asset & liabilities in 2007 over 2006. TABLE 5 COMPARATIVE BALANCE SHEET OF DIAMOND (ENGINEERING) CHENNAI PRIVATE LTD FOR 2007&2008 29

PARTICULARS SOURCES OF FUNDS Shareholders Funds Share capital Share application Reserves & Surplus Loan funds a. secured loan b. unsecured loan APPLICATION OF FUNDS FIXED ASSETS Gross block Less: depreciation Net block INVESTMENTS SBI blue chip fund SBI one India fund CURRENT ASSETS, LOANS AND ADVANCES a. Deposits & advance b. Closing stock c. sundry debtors d. cash & bank balances e. Deferred assets less: current liabilities & provisions Net current assets

2007

2008

INC\DEC (in Rs) 14,75,00,000 (3,50,00,000) 10,54,94,330 36,90,22,789 17,61,75,630 64,26,10,749

Percentage (%) 280.95 (100) 78.738 --27.93 75.40

5,25,00,000 3,50,00,000 13,39,79,809 --------63,07,20,677 85,22,00,486

20,00,00,000 ------11,88,92,139 36,90,22,789 80,68,96,307 1,49,48,11,235

26,27,42,098 7,24,43,531 19,02,98,567 5,00,000 5,00,000

82,73,73,774 12,37,75,200 70,35,98,574 5,00,000 5,00,000

56,46,31,676 5,13,31,669 51,33,00,007 -----------------

214.90 70.86 269.73 -----------

20,26,11,352 82,14,01,068 9,41,96,880 3,67,038 -----------1,11,85,76,338 45,76,74,419 66,09,01,919 85,22,00,486

21,67,70,121 1,05,67,79,624 24,18,07,511 9,02,862 20,80,737 1,51,83,40,855 72,81,28,194 79,02,12,661 1,49,48,11,235

1,41,58,769 23,53,78,556 23,23,87,631 5,35,824 (20,80,737) 39,97,64,517 27,04,53,775 (58,18,80,258) 64,26,10,749

6.98 28.65 246.70 145.98 ---35.74 59.09 (73.64) 75.406

INTERPRETATION: The table 5: while comparing the value of assets and liabilities it shows that value increase in 2008 than 2007. TABLE 6 COMPARATIVE BALANCE SHEET OF DIAMOND (ENGINEERING) CHENNAI PRIVATE LTD FOR 2008&2009 30

PARTICULARS SOURCES OF FUNDS Shareholders Funds Share capital Reserves & Surplus Revaluation reserves for land Loan funds a. secured loan b. unsecured loan APPLICATION OF FUNDS FIXED ASSETS Gross block Less: depreciation Net block INVESTMENTS SBI blue chip fund SBI one India fund CURRENT ASSETS, LOANS AND ADVANCES a. Deposits& advances b. closing stock c. sundry debtors d. cash & bank balances e. Deferred assets less: current liabilities & provisions Net current assets

2008

2009

INC\DEC (in Rs) ----------6,92,60,910 ----------(15,36,46,684) 22,93,585 (8,20,92,189) 19,71,53,253 78,90,640 11,81,82,613 --------------------47,18,08,808 84,30,07,697 5,42,79,464 9,52,152

Percentage (%) --------58.25 -------(19.04) -----(5.492) 23.83 68.80 16.80 ------------217.65 79.77 22.45 105.46 223.24 90.54 216.30 (25.34) (5.49)

20,00,00,000 11,88,92,139 36,90,22,789 80,68,96,307 -------1,49,48,11,235 82,73,73,774 12,37,75,200 70,35,98,574 5,00,000 5,00,000 21,67,70,121 1,05,67,79,624 24,18,07,511 9,02,862 20,80,737 1,51,83,40,855 72,81,28,194 79,02,12,661 1,49,48,11,235

20,00,00,000 18,81,53,049 36,90,22,789 65,32,49,623 22,93,585 1,41,27,19,046 1,02,45,27,027 20,27,45,840 82,17,81,187 5,00,000 5,00,000 68,85,78,929 1,89,97,87,321 29,60,86,975 18,55,014

67,25,837 46,45,100 2,89,30,34,077 1,37,46,93,222 2,30,30,96,218 1,57,49,68,024 58,99,37,859 1,41,27,19,046 (20,02,74,802) (8,20,92,189)

INTERPRETATION: The table 6 shows that there is considerable increase in the value of asset & liabilities in 2008 than 2009.

COMMON SIZE INCOME STATEMENT:

31

It is that statement in which net sales figure is assumed to be equal to 100 and other figures of cost or expenses are expressed as percentage of sales. Common size statements for different periods help to reveal the efficiency or otherwise of increasing any cost or expenses. If it is being prepared for two firms it shows the relative efficiency of cost items of two firms. COMMON SIZE BALANCE SHEET: A common size balance sheet depicts the percentage relation of each asset \ liability to total assets\ total liabilities including capital. In common size balance sheet total assets or liabilities are taken as 100 and all the figures are expressed as percentage of the total. Comparative common size balance sheet for different periods helps to highlight the trends in different items. If it is prepared for different firms in an industry, if facilities to judge the relative soundness and helps in understanding their financial strategy.

TABLE 7 COMMON SIZE BALANCE SHEET OF DIAMOND (ENGINEERING) CHENNAI PRIVATE LTD FOR 2006&2007 PARTICULARS 2006 32 2006 (%) 2007 2007 (%)

SOURCES OF FUNDS Shareholders Funds Share capital Share application Reserves & Surplus Loan funds a. secured loan b. unsecured loan APPLICATION OF FUNDS FIXED ASSETS Gross block Less: depreciation Net block INVESTMENTS SBI blue chip fund SBI one India fund CURRENT ASSETS, LOANS AND ADVANCES a. Deposits& advances b. closing stock c. sundry debtors d. cash & bank balances less: current liabilities & provisions Net current assets

2,00,00,000 -----------11,06,69,159 5,79,89,450 43,91,361 19,30,49,970

10.37 ----57.32 30.04 2.27 100

5,25,00,000 3,50,00,000 13,39,79,809 63,07,20,677 -----------85,22,00,486

15.15 10.10 38.68 36.06 -----100

1,44,55,59,143 4,30,92,555 10,14,66,588 5,00,000 ----------9,35,10,406 45,91,87,799 3,47,70,369 8,87,511 58,83,56,085 4,97,27,27,703 9,10,83,382 19,30,49,970

74.88 22.32 52.56 2.59 ----48.44 237.86 18.01 0.46 304.77 257.58 47.18 100

26,27,42,098 7,24,43,531 19,02,98,567 5,00,000 5,00,000 20,26,11,352 82,14,01,068 9,41,96,880 3,67,038 1,11,85,76,338 45,76,74,419 66,09,01,919 85,22,00,486

30.83 8.50 22.33 0.06 0.06 23.77 96.38 11.05 0.04 131.25 53.70 77.55 100

INTERPRETATION: Table 7 shows that shareholders funds of the company has increased by 4.78% in 2007 and secured loan has also increased by 6.02% in 2007. TABLE 8 COMMON SIZE BALANCE SHEET OF DIAMOND (ENGINEERING) CHENNAI PRIVATE LTD FOR 2007&2008 PARTICULARS 2007 2007 (%) 33 2008 2008 (%)

SOURCES OF FUNDS Shareholders Funds Share capital Share application Reserves & Surplus Revaluation Reserves for land Loan funds a. secured loan b. unsecured loan APPLICATION OF FUNDS FIXED ASSETS Gross block Less: depreciation Net block INVESTMENTS SBI blue chip fund SBI one India fund CURRENT ASSETS, LOANS AND ADVANCES a. Deposits & advances b. closing stock c. sundry debtors d. cash & bank balances e. Deferred tax asset less: current liabilities & provisions Net current assets

5,25,00,000 3,50,00,000 13,39,79,809 --------63,07,20,677 -----------85,22,00,486 26,27,42,098 7,24,43,531 19,02,98,567 5,00,000 5,00,000 20,26,11,352 82,14,01,068 9,41,96,880 3,67,038 -----1,11,85,76,338 45,76,74,419 66,09,01,919 85,22,00,486

15.15 10.10 38.68 ------36.06 -----100 30.83 8.50 22.33 0.06 0.06 23.77 96.38 11.05 0.04 -------131.25 53.70 77.55 100

20,00,00,000 ------11,88,92,139 36,90,22,789 80,68,96,307 -------1,49,48,11,235 82,73,73,774 12,37,75,200 70,35,98,574 5,00,000 5,00,000 21,67,70,121 1,05,67,79,624 24,18,07,511 9,02,862 20,80,737 1,51,83,40,855 72,81,28,194 79,02,12,661 1,49,48,11,235

13.37 -----7.95 24.68 53.97 -----100 55.35 8.28 47.06 0.03 0.03 14.50 70.69 1.62 0.06 0.14 101.57 48.71 52.86 100

INTERPRETATION: The table 8 shows that revaluation of reserves for land and deferred tax liability was introduced in 2008. TABLE 9 COMMON SIZE BALANCE SHEET OF DIAMOND (ENGINEERING) CHENNAI PRIVATE LTD FOR 2008&2009 PARTICULARS 2008 (in rs) 34 2008 (%) 2009 (in rs) 2009 (%)

SOURCES OF FUNDS Shareholder funds Share capital Reserves & Surplus Revaluation Reserves for land Loan funds a. secured loan b. unsecured loan APPLICATION OF FUNDS FIXED ASSETS Gross block Less: depreciation Net block INVESTMENTS SBI blue chip fund SBI one India fund CURRENT ASSETS, LOANS AND ADVANCES a. Deposits& advances b. closing stock c. sundry debtors d. cash & bank balances e. Deferred tax asset Less: CURRENT LIABILITIES & PROVISIONS Net current assets

20,00,00,000 11,88,92,139 36,90,22,789 80,68,96,307 -------1,49,48,11,235

13.37 7.95 24.68 53.97 -----100

20,00,00,000 18,81,53,049 36,90,22,789 65,32,49,623 22,93,585 1,41,27,19,046

14.16 13.32 26.12 46.24 0.17 100

82,73,73,774 12,37,75,200 70,35,98,574 5,00,000 5,00,000 21,67,70,121 1,05,67,79,624 24,18,07,511 9,02,862 20,80,737 1,51,83,40,855 72,81,28,194 79,02,12,661 1,49,48,11,235

55.35 8.28 47.06 0.03 0.03 14.50 70.69 1.62 0.06 0.14 101.57 48.71 52.86 100

1,02,45,27,027 20,27,45,840 82,17,81,187 5,00,000 5,00,000 68,85,78,929 1,89,97,87,321 29,60,86,975 18,55,014 67,25,837 2,89,30,34,077 2,30,30,96,218 58,99,37,859 1,41,27,19,046

72.52 14.35 58.17 0.03 0.03 48.74 134.47 20.96 0.13 0.47 204.78 163.02 41.76 100

INTERPRETATION: Table 9 shows deferred tax asset has increased by 0.33% in 2009 and the reserves & surplus has also increased by 5.37% in 2009. TABLE 10 COMMON SIZE INCOME STATEMENT OF DIAMOND (ENGINEERING) CHENNAI PRIVATE LTD FOR 2006&2007 Particulars 2006 2006 (%) 35 2007 2007 (%)

INCOME SALES Domestic sales Export sales Less: net excise duty after CENVAT credit Net sales Other income Total I EXPENDITURE Salaries, bonus & OEB Materials consumed Manufacturing expenses Administrative expenses Bad debts written off Financial charges Marketing expenses Directors remuneration Total II Profit\loss before depreciation Less: depreciation Provision for IT AY 2006-07 Provision for IT Provision for FBT Provision for DTL Add: deferred tax liability no longer required Net profit\loss Net profit\loss carried to balance sheet INTERPRETATION:

30,02,47,354 1,14,46,30,998 1,44,48,78,347 72,69,283 1,43,76,09,064 1,73,26,836 1,45,49,35,900 5,91,94,590 90,28,63,040 15,80,82,272 2,21,94,780 1,58,100 5,66,82,660 10,81,93,867 15,00,000 1,30,88,69,309 14,60,66,591 1,45,20,962 4,00,00,000 --------14,48,792 19,35,000 8,81,61,837 ----------8,81,61,837 8,81,61,837

20.88 79.62 100.50 0.50 100 1.20 101.20 4.12 62.80 11 1.54 0.01 3.94 7.53 0.10 91.04 10.16 1.01 2.78 -----0.10 0.13 6.13 -------6.13 6.13

55,32,35,683 10,85,65,66,302 1,63,88,91,985 98,31,787 1,64,87,23,772 98,31,787 1,64,87,23,772 11,47,62,662 96,55,21,962 20,22,09,359 3,80,61,495 12,000 7,76,56,824 11,99,00,255 74,50,000 1,52,55,74,557 12,31,49,215 3,09,88,976 9,07,389 33,00,00,000 39,91,200 ------------5,42,61,650 15,49,000 5,58,10,650 5,58,10,650

33.76 66.24 100 0.599 100.59 0.599 100.59 7.00 58.91 12.34 2.32 0.07 4.74 7.32 0.45 93.08 7.51 1.89 0.05 2.01 0.24 ------3.40 0.09 3.40 3.40

Table 10 shows that domestic sales have increased by 12.92% in 2008 TABLE 11 COMMON SIZE INCOME STATEMENT OF DIAMOND (ENGINEERING) CHENNAI PRIVATE LTD FOR 2007&2008 Particulars 2007 2007 (%) 36 2008 2008 (%)

INCOME SALES Domestic sales Export sales Net sales Other income Total I EXPENDITURE Salaries, bonus & OEB Materials consumed Manufacturing expenses Administrative expenses Bad debts written off Financial charges Marketing expenses Directors remuneration Total II Profit\loss before depreciation Less: depreciation Provision for IT AY 2006-07 Provision for IT AY 2007-08 Provision for IT AY 2008-09 Provision for FBT Provision for DTL Add: deferred tax liability no longer required Net profit\loss Add: transferred from PY balance sheet Less: transferred to general reserve Net profit\loss carried to balance sheet INTERPRETATION:

55,32,35,683 10,85,65,66,302 1,63,88,91,985 98,31,787 1,64,87,23,772 11,47,62,662 96,55,21,962 20,22,09,359 3,80,61,495 12,000 7,76,56,824 11,99,00,255 74,50,000 1,52,55,74,557 12,31,49,215 3,09,88,976 9,07,389 33,00,00,000 ------------39,91,200 -------------5,42,61,650 15,49,000 55,81,650 3,06,69,159 7,00,00,000 1,64,79,809

33.76 66.24 100 0.599 100.59 7.00 58.91 12.34 2.32 0.07 4.74 7.32 0.45 93.08 7.51 1.89 0.05 -----2.01 0.24 ------3.31 0.09 0.34 1.87 4.27 1.00

1,59,02,43,775 76,03,08,998 2,35,05,52,773 1,58,88,987 2,36,64,41,760 17,85,50,468 1,45,78,18,942 27,03,57,085 60,73,57,085 -----------11,47,42,818 5,24,96,547 1,08,84,018 2,14,55,93,288 22,08,48,472 5,61,77,879 ------------------------------64,00,00,000 57,25,000 --------------9,49,45,593 24,66,737 9,74,12,330 1,64,79,809 9,50,00,000 1,88,92,139

67.65 32.35 100 0.67 100.67 7.59 62.02 11.50 2.58 ------4.88 2.23 0.46 91.28 9.40 2.39 --------------2.72 0.24 --------4.04 0.10 4.14 0.70 4.04 0.80

Table 11 shows that domestic sales have increased by 33.89% in 2008 and the profit has increased by 1.72% in 2008. TABLE 12 COMMON SIZE INCOME STATEMENT OF DIAMOND (ENGINEERING) CHENNAI PRIVATE LTD FOR 2008&2009 Particulars 2008 37 2008 2009 2009

(%) INCOME SALES Domestic sales Export sales Net sales Other income Total I EXPENDITURE Salaries, bonus & OEB Materials consumed Manufacturing expenses Administrative expenses Bad debts written off Financial charges Marketing expenses Directors remuneration Total II Profit\loss before depreciation Less: depreciation Provision before IT Less: provision for tax Profit\loss after tax Net profit\loss Add: transferred from PY balance sheet Less: prior period IT Less: transferred to general reserve Net profit\loss carried to balance sheet 1,59,02,43,775 76,03,08,998 2,35,05,52,773 1,58,88,987 2,36,64,41,760 17,85,50,468 1,45,78,18,942 27,03,57,085 60,73,57,085 -----------11,47,42,818 5,24,96,547 1,08,84,018 2,14,55,93,288 22,08,48,472 5,61,77,879 16,46,70,593 6,72,58,263 9,74,12,330 1,64,79,809 1,64,79,809 ----------9,50,00,000 1,88,92,139 67.65 32.35 100 0.67 100.67 7.59 62.02 11.50 2.58 ------4.88 2.23 0.46 91.28 9.40 2.39 7.00 2.86 4.04 0.70 0.70 ------4.04 0.80 2,07,74,13,300 66,91,37,135 2,47,65,50,435 1,85,19,210 2,76,50,69,645 22,08,22,144 1,66,66,58,228 34,11,23,298 7,76,62,723 5,289 20,33,01,821 2,84,57,328 2,32,94,162 2,56,13,24,993 20,37,44,652 8,28,83,412 12,08,61,240 4,91,00,330 7,17,60,910 1,88,92,139 1,88,92,139 25,00,000 5,00,00,000 3,81,53,049

(%) 83.88 27.01 100 0.75 111.65 8.92 67.30 13.77 3.14 0.02 8.21 1.15 0.94 103.42 8.23 3.35 0.76 4.88 1.98 2.90 0.76 0.10 2.02 1.54

INTERPRETATION: Table 12 shows that domestic sales have increased by 16.23% in 2009. On the whole the total income of the company has increased by 11%.

RATIO ANALYSIS EXPENSES RATIO These ratios are also known as supporting ratios to operating ratio. They indicate the efficiency with which the business as a whole functions. It is better for the concern to 38

know how it is able to save or waste over expenditure in respect of different items of expenses. Therefore each aspect of cost of sales and operating expenses are analyzed. A. MANUFACTURING EXPENSES RATIO: TABLE 13 TABLE SHOWING CHANGES IN MANUFACTURING EXPENSES RATIO (RUPEES IN CRORES)

S.no

Year

Manufacturing expenses 20.2 27.0

Net Sales

Ratio

2007

163.8 235.0

12.38

2008

11.5

2009

34.1

274.6

12.42

39

CHART 1

CHART SHOWING CHANGES IN MANUFACTURING EXPENSES RATIO

Manufacturing Expenses Ratio


350 300 250 200 150 100 50 0 2007 2008 2009 net sales manufact

INTERPRETATION: The table 13 shows that the manufacturing expenses ratio has decreased by 0.9% in 2008 and increased by 0.9% in 2009, which helps the company for its progress.

40

B.ADMINISTRATIVE EXPENSES RATIO: TABLE 14 TABLE SHOWING CHANGES IN ADMINISTRATIVE EXPENSES RATIO (RUPEES IN CRORES)

s.no

Year

Administrative Expenses

Net Sales

Ratio

2007

3.8

163.8

2.32

2008

6.1

235.0

2.58

2009

7.7

274.6

2.32

41

CHART 2 CHART SHOWING CHANGES IN ADMINISTRATIVE EXPENSES RATIO

Administrative Expenses Ratio

2009

2008

Series1 Series2

2007 0 100 200 300

42

INTERPRETATION: The table 14 shows that the administrative expenses ratio has increased by 0.6% in 2008 and decreased by 0.3% in 2009, which shows that the company has to take additional attention in administration.

C. MARKETING EXPENSES RATIO:

TABLE 15 TABLE SHOWING CHANGES IN MARKETING EXPENSES RATIO ( RUPEES IN CRORES)

43

s.no

Year

Marketing Expenses 11.9

Net Sales

Ratio

2007

163.8 235.0

7.32

2008

5.2

2.23

2009

2.8

274.6

1.04

CHART 3 CHART SHOWING CHANGES IN MARKETING EXPENSES RATIO 44

300 250 200 150 100 50 0 2007 2008 2009 market net sales

INTERPRETATION: The table 15 shows that the marketing expenses ratio has declined in both the years 2008 and 2009 by 5.1% and 1.19%, which shows that the company has reduced its marketing expenses in the past two years.

D.FINANCIAL EXPENSES RATIO:

45

TABLE 16 TABLE SHOWING CHANGES IN FINANCIAL EXPENSES RATIO ( RUPEES IN CRORES)

s.no 1 2 3

Year 2007 2008 2009

Financial Expenses 7.7 11.5 20.3

Net Sales 163.8 235.0 274.6

Ratio 4.7 4.9 7.4

46

CHART 4 CHART SHOWING CHANGES IN FINANCIAL EXPENSES RATIO

financial expenses
300 250 200 150 100 50 0 2007 2008 2009 Series1 Series2

INTERPRETATION: The table 16 shows that the financial expenses ratio has increased in both the years 2008 and 2009 by 0.2% and 2.5%. This shows that the company is utilizing the finance required for them effectively.

47

5.1 FINDINGS

The sales figures are increasing year by year. Administrative and other expenses were fluctuating. The other incomes of the company declined in the base year 2006 but gradually increased year by year.

When comparing income and expenditure statement, the total income exceeds the total expenditure.

Sundry debtors have been fluctuating over the years. It increased by RS. 5, 94, 26,511 in the year 2006-2007, in the year 2007-2008 by RS.23,87,631 and in the year 2008-2009 by RS. 5,42,79,464.

The cash and bank balance of the company has decreased in the year 2006-2007 but it is consistently increasing in the following 2 years. Liquidity position of the company is good.

48

5.2 SUGGESTIONS

The companys profit is increasing year by year when compared to previous years. The company must maintain same level it will increase the profit level in the future periods. The export sales of the company can be further increased by improving the quality through optimum utilization of companys resources and which will help the company to yield more return. The management must study the various expenses that are done by the company and utilize the fund properly. The management must also study the market position and it should also find the demand prevailing in the market for the products and thus this will guide them to enhance their sales volume.

49

5.3 CONCLUSION On studying the financial analysis of DIAMOND ENGINEERING (CHENNAI) PRIVATE LTD for a period of 3 years from 2006-2007 to 2008-2009, the study reveals that the financial performance is good. The export sales of the company have declined which is to be improved. The present scenario of steel industry indicates the need for more steel production. The company should now give more importance to exports. The management should take necessary measures considering the suggestions provided and improve its position.

50

APPENDIX BIBLOGRAPHY

M.Y. Khan & P.K. Jain, Management Accounting, Tata Mc Graw Hill, 2004

A shish K. Bhattacharya, Introduction to Financial Statement Analysis, Elsevier, 2007

Uma Sekaran, Research Methods for Business, Wiley India, New Delhi, 2006 www.google.com www.decpl.com www.scrbid.com

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