MBA PROGRAMMEMADDI LKSHMAIAH & CO. LTD INTRODUCTION Every organization irrespective of nature and mission may be viewed as financial entity. Management of the organization is confronted with issue and decisions about sources of finance, its capital structure and credit policy. In order to take strategic decisions the management needs to assess the progress and the performance of the organization. Financial statements provides summery of the accounts of a business enterprises. But the accounts stated in the balance sheet and income statements are not self-explanatory, those statements required treatment in order as certain the financial health of the organization. There are many tools used to know about financial position and result operation. The main tools analysis of common size statements and ratio analysis. All the tools help to know the operations of the organizational particular position and also over period of time. The focus of financial analysis is on key figures in the financial statements and the significant relationship that exists between them. The analysis of financial statements is a process of evaluating the relationship between the component parts of financial statements to obtain a better understanding of the firm’s position and performance. Financial analysis is the process of selection relation and evaluation. A financial statement is a compilation of data which is logically and consistently organized according to the accounting principles. An understanding of some financial aspects of a business firm. It may show a position at a moment in 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. Financial statements are the major financial situations to stock holders, credited and the general public. The majority of firms include extensive financial statements in their annual reports of them. Financial statements are prepared primarily for decision making. They play a dominant role in setting the frame weak of managerial decision. But the information provided in the financial statements is not an end in itself as no meaningful conclusions can be drawn from these statements alone. However, the information provided in the financial statements is of use in making decisions through analysis and interpretation of financial statements. S.C.R ENGINEERING COLLEGE 1 MBA PROGRAMME MADDI LKSHMAIAH & CO. LTD Financial analysis is the process of identifying the financial strengths and weakness of the firm by properly establishing relationship between the items of the balance sheet and the profit and loss amount. There are various methods or techniques used in analyzing financial statements such as comparative statements, schedule of changes in working capital; funds flow and analysis ration analysis. Management creditors, investors and others to from judgment and about the operating performance and financial position of the users of financial statements can get further insight about financial strengths and weaknesses of the firm. Management should be particularly interested in financial statements of the firm to make their best use and to be able to spot out financial weaknesses of the firm to take suitable corrective actions. The future plans of the firm should be laid down in view of the financial strengths and weaknesses of the firm by properly establishing relationship between the items of the balance sheet and the profit and loss account. Financial analysis can be undertaken by management of the firm, by parties outside the firm owners, creditor’s investors and others. Meaning of Financial Statements: A financial statement is a collection of data organized according logical and consistent accounting procedures. Its purposes are to convey an understanding of some financial aspects of a business firm. It may shows a position at a moment intimae as in the case of an Income statement thus the term financial statements generally refers to the statements. The position statement or the balance sheet and the Income statement or the profit and loss account. These statements are used to convey to management and other interested out standers the profit ability and financial position to a firm. Financial statements are the outcome of summarizing process of accounting. In the words of John N. Her, the financial statements provide a summary of the accounts of business enterprise, the balance sheet reflecting the asset, liabilities and capital as on a certain date and the income statement showing the results of operations during a certain periods. Financial statements are prepared as an end result of financial accounting and are the major sources of financial information of an enterprise smith and Asborne define financial statements as the product of financial accounting in asset of financial statements prepared by the accountant of a business enterprise that purpose to reveal the financial position of the enterprise. The results of list recent activities and an analysis of what has been done with earning. S.C.R ENGINEERING COLLEGE 2 MBA PROGRAMME MADDI LKSHMAIAH & CO. LTD Financial statements are also called financial reports. In the words of Anthony, financial statements essentially are interring reports. Presented annually and reflect a division of the life of an enterprise on to more or less arbitrary accounting period more frequently a year. FINANCIAL STATEMENT ANALYSIS: A financial statement is an organized collection of data according to logical and consistent procedures. Its purpose is to convey an understanding of some financial aspects of a business firm. It may, show a position of a moment is time as in the case of a balance sheet, or many reveal a series of activities of over a given period of time, as in the case of an income statement. Types of Financial Statements: Financial statements primarily comprise two basic statements. 1) The position statement or the balance sheet and 2) The income statement or the profit and loss account. However, specified that a complete set of financial statements must include. 1) A balance sheet 2) An income statement 3) A statement of changes in financial position Techniques of Financial Analysis: The analysis and interpretation of financial statement is used to determine the financial position and result of operations as well. A number of methods or devices are used to study the relationship between different statements. An effort is made to use those devices, which clearly analyze the position of the enterprise. The following methods of analysis are generally used. 1. 2. 3. 2. 3. 4. Comparative statement Common size statement Trend analysis Funds flow statement Cash flow statement Ratio analysis 1. Comparative Statement: Comparative statements are those statements which are designed to provide time perspective to the consideration of various elements of financial position S.C.R ENGINEERING COLLEGE 3 Common size statement can be used both for vertical and horizontal analysis. The fourth column may be added for giving percentages of increases or decreases. Since the two or more period can quickly ascertain whether sales have increased or decreased whether cost of sales has increased or decreased etc. A comparative income statement will show the absolute figures for two or more periods. Comparative Income Statements: The income statement describes net profit or net loss account of operations. This statement component percentage or100 percent statement. 1. Comparison of S. The changes can be observed by comparison of the balance sheet at the beginning and at the end of a period and these changes can help in forming an opinion about the progress of an enterprise.C. The common size balance sheet percentage shows the relation of each asset item to total assets and of each liability and owners equity item to total liabilities and owner’s equity.R ENGINEERING COLLEGE 4 . In common size statement. each item is stated as a percentage of the total of which that item is a part each percentage exhibits the relation of the individual item to its respective tool. The common size percentage method represents a type of ratio analysis. Common Size Statement: Common size statements financial tool of studying key changes and trends in financial position of a company. Compute the ratio of each item to the total in the statement. 2. The changes in periodic balance sheet the conduct of a business. State the total of the statement as 100. Both the income statement and balance sheets be prepared in the form of comparative financial statements. 2. Comparative Balance Sheet: The comparative balance sheet analysis is the study of the extend of the same items groups of items and computed items in two or more balance sheet of the same business enterprise on different dates. LTD embodied in such statements. A third column is used to show in increasing figures.MBA PROGRAMME MADDI LKSHMAIAH & CO. Common Size Balance Sheet: Common size balance sheet is prepared by stating the total assets as 100 and reducing individual assets into percentages of the total. The absolute change from one period to another and if change in terms percentages. The comparative balance sheet has two columns for the data of original balance sheet. The sources and uses of working capital between dates of two balance sheets are known as the funds flow statement. Funds Flow Statement: The statement of changes in financial position a business enterprise. The information for a number of years is taken one year. This method determines the direction upwards or downward and involves. A statement of changes in financial position on cash basis. This statement analyses changes in non-current accounts as well as current accounts to determine the flow of cash. The major sources of working capital are the firm’s net profit from operations. 4. 3. Cash Flow Statement: The statement of cash flows is useful for short run planning.R ENGINEERING COLLEGE 5 . Trend Analysis: The financial statements may be analyzed by computing trends of series of information. A tool used by individuals to conduct a quantitative analysis of information in a company’s financial statement. The ultimate success of a company depends upon its ability to earn profit.MBA PROGRAMME MADDI LKSHMAIAH & CO. 6. The analyst is able to see the trend of figures whether upward or downward. LTD common size statement of a single enterprise over the years is valuable in that it reveals the changing proportions of components within groups of assets and liabilities. The expense items that do not involve working capital should be added to not profit.C. It indicates the sources and user of cash. S. commonly known as the cash flow statement. A firm needs sufficient cash to pay debts nature in the near future to pay interest and other expenses and to pay dividend to share holders. The flows of in order to plan the repayment schedules of its long-term debt. Summarizes the causes of changes in cash position between dates of the two balance sheets. The figures of the base year are taken as 100 and trend ratios for other years are calculated on the base of the year. Ratio Analysis: Financial ratios are useful measure to provide a snapshot of a company’s financial position. 5. The cash flow statement is similar to the funds flow statements expect that it focuses attention on cash instead of working capital or funds. The computation of the percentage relationships that each statement item bears to the same item in base year. A projected statement of changes in working capital is immensely useful in the firm’s long range planning. Financial ratios are exercised to examine the trend and for comparing the firm’s financial status with the other firms. S. Generally ratios are classified into four categories: Liquidity Ratios Leverage Ratios Activity Ratios Profitability Ratios A. We analyze the liquidity needs by the preparation of cash budgets. (i) Current Ratio: It may be defined as the relationship between current assets and current liabilities. it will not be difficult to come across the potential problems. cash and funds flow statements. by such means. the industry. other companies.MBA PROGRAMME MADDI LKSHMAIAH & CO. A firm should ensure that it does not suffer from the lack of liquidity and that it does not have excess liquidity. The following ratios are calculated the most common ratios which indicate the extent of liquidity or lack of it. by establishing a relationship between cash and other current assets to current obligations. Thus.R ENGINEERING COLLEGE 6 . LTD Ratios are calculated from current year numbers and are then compared to previous year. It is a measure of general liquidity and is most widely used to make the analysis of a short-term financial position or liquidity of a firm. or even the economy to judge the performance of the company. provide a quick measure of liquidity. It is calculated by dividing the total of current assets by total of the current liabilities. This ratio is known as working capital ratio. Thus. Ratio analysis is predominately used by proponents of fundamental analysis. but we can calculate liquidity ratios. Financial ratios give out a detail report about with reference to firm’s performance and financial situation. Liquidity Ratios: Liquidity Ratios measure the firm’s ability to meet its current obligations.C. CLASSIFICATIONS OF RATIO’S: Ratio’s are variously classified into different types based upon the endues as well as the nature of base adopted. There should be a proper balance between high liquidity and lack of liquidity to measure the liquidity of the firm. usually. If current ratio is less than 2. refers to long term debt.R ENGINEERING COLLEGE 7 . Equity includes equity and preference share capital and reserves. LTD Current Ratio = Current Assets / Current Liabilities A current ratio of 2:1 is considered as ideal. A very high quick ratio is also not advisable. are more concerned with the firms long.Equity Ratio = Share holders founds Shareholders Found = Equity+ General Reserve+ Dividend Reserve+ Net Profit A debt equity ratio of 2:1 is considered ideal. Quick or Acid Test Ratio = Quick Assets / Current Liabilities A quick ratio of 1 is considered as ideal. An asset is said to be liquid if it can be converted into cash within a short period without loss of value. Long term debt Debt. However. (i) Debt-Equity Ratio (ii) Interest coverage ratio (i) Debt-Equity Ratio: It reflects the relative claims of creditors and share holders against the assets of the business. it indicates that the business does not enjoy adequate liquidity.C. Debt. B. Leverage Ratio: The short term creditors like bankers and suppliers of raw material are more concerned with the firm’s current debt paying ability. S. (ii) Quick Ratio: It is also known as acid test or liquid ratio is more rigorous test of liquidity than the current ratio. A quick ratio of less than 1 is indicative of inadequate liquidity of the business. A firm with a high debt equity ratio exposes its creditors to greater risk. Quick ratio may be defined as the relationship between the quick/ liquid assets and current/ liquid liabilities.term financial strengths in fact a firm should have a strong short-term as well as long-term financial position of the firm like financial leverage or capital structure are also calculated their ratios indicated mix of fund provided by owners and lenders. Inventories cannot be termed to be liquid assets because they can not be converted into cash immediately.MBA PROGRAMME MADDI LKSHMAIAH & CO. a high current ratio of more than 3 indicates that the firm is having funds and has not invested them properly. financial institutions etc. On the other hand long-term creditors like debenture holders. A firm with a debt equity ratio of 2 or less eposes its creditors to relatively lesser risk. closing stock conversion period. The following are the various types of turnover ratios. S. It is calculated as number of effective days in a year divided by number of days. if average stock can’t be calculated. It used to test the firm’s debt servicing capacity. (i) Inventory Turnover Ratio: Stock turnover ratio indicates the number of times the stock has turned over into sales in a year. Similarly.MBA PROGRAMME MADDI LKSHMAIAH & CO. measure how efficiently the assets are employed by a firm. sales may be taken in the numeration. information regarding cost of goods sold is not known. These ratios are based on the relationship between the level of activity. Activity Ratios (or) Turnover Ratios: Turnover ratio is also referred to as activity ratios or asset management ratios. LTD (ii) Interest Coverage Ratio: It indicates the ability of a firm to meet its interest obligation. and levels of various assets.R ENGINEERING COLLEGE 8 . represented by sales or cost of goods sold. EBIT=Earnings before interest and taxes EBIT=net profit+ Interest+ taxes C.C. Inventory Turnover Ratio = Cost of Goods Sold / Average Stock Cost of Goods Sold = Sales-Gross Profit Or Cost of Goods Sold = Opening Stock + Purchases – Closing Stock Average Stock = Opening Stock + Closing Stock/2 In case. EBIT Interest Coverage Ratio = Interest Where. helps me towards a real life scenario of financial management so that can have a practical knowledge of ratio analysis.R ENGINEERING COLLEGE 9 .C. From the beginning of the study to till now. This study will help the organization in the future forecasting and also in implementing the strategies for the future action. This study will help the organization to see where they are lacking and how is the performance. This certainly does through light on financial performance and its evaluation of the company. The present study “financial statements analysis of Maddi Lakshmaiah & Co. So that I can come out with my application of theoretical knowledge and thereby have practical insight into the financial management and there by I come out with meaningful findings and suggestions OBJECTIVES OF THE STUDY The present study is intended to examine the overall financial performance of the Maddi Lakshmaiah & Co. who are the major players and what is the future focus of the steel industry. S. The following are the specific objectives of the study. This study will help the company to find out there position among the competitors. Ltd. This will help the organization to find out the competitors movement. comparative statements.MBA PROGRAMME MADDI LKSHMAIAH & CO. common size statements and trend analysis. Appropriate financial analysis is the key for the success of a business organization without which we can’t anticipate a proper direction for the business. LTD NEED FOR THE STUDY This study will help to find out the weak area of operation and also to find out the performance in a year. To present theoretical frame work relating to financial statements analysis. To study financial statement analysis is needed to know the financial status of the company. in terms of liquidity. solvency. LTD The study and analysis the financial performance of the Maddi Lakshmaiah & Co. To comparative study in regard to one firm with another firm or one department with another department of the financial analysis. Ltd.C.R ENGINEERING COLLEGE 10 . operating and profitability against the conventional financial norms and identity the short comings. To analyze the findings and suggestions of the firm. S.MBA PROGRAMME MADDI LKSHMAIAH & CO. R ENGINEERING COLLEGE 11 . the annual reports of Maddi Lakshmaiah & Co.MBA PROGRAMME MADDI LKSHMAIAH & CO. common size analysis.e. Performance Evaluation is confined only for the period 5 years i.e. from 2009 to 2013. Ltd. Ltd. The study has been focused on ratio analysis. comparative analysis and trend analysis in Maddi Lakshmaiah & Co. The Financial Performance Evaluation is carried out on the basis of secondary data i. Ltd.. S.. To find out the financial stability of the organization using the different ratios. LTD SCOPE OF THE STUDY The study of financial performance evaluation is confined to the financial position of Maddi Lakshmaiah & Co.C. Secondary data 1. Some of the information were verified and supplemented through personal observation. LTD RESEARCH METHODOLOGY Methodology is a systematic procedure of collecting information in order to analyze and verify phenomena.R ENGINEERING COLLEGE 12 . The annual report comprises the income statements. The data collection includes: 1) Annual reports. The Data Collection Includes: Interviewing of a few financial department heads officers and management bodies and staff members of the company from part of primary data. The study carried with the co-operation of the management who permitted to carry on the study and provided the requisite data. Either individually (or) collectively. Primary data 2. The data is collected from the following sources.C. The balance sheet and the statements of cash flows. published records and reference books.MBA PROGRAMME MADDI LKSHMAIAH & CO. There are three types of the data 1. S. The primary source is the data provided by the firm itself in its annual reports and required disclosures. In this study it is to gathered through interviews with concerned officers and staff. 2. Secondary Data: 1 The secondary data collected from already published sources such as pamphlets of annual reports. Sources of Data: The financial statements are so many sources. 3) Executives of other departments. Primary Data: It is the information collected directly without any references. returns and internal records. 2) Executive and staff of financial accounting department. LTD Techniques used to analyze the data: A number of methods or devices are used to study the relationship between different statements. which clearly analyze the position of the enterprise. Those device (or) techniques. 1) 2) 3) 4) 5) Common size balance sheet Comparative balance sheet Comparative income and expenditure A/C Ratio Analysis Trend analysis S.MBA PROGRAMME MADDI LKSHMAIAH & CO. An effort is made to use those devices.R ENGINEERING COLLEGE 13 .C. S. it does not give exact position. It does not consider changes in price level. Different people may interpret the same analysis in different ways. As the financial statements are prepared on the basis of a going concern.MBA PROGRAMME MADDI LKSHMAIAH & CO. The project period is limited to 45 day which not sufficient to have completed analysis of financial position. Analysis is only a means and not an end itself. Changes in accounting procedures by a firm may often make financial analysis misleading. LTD LIMITATIONS OF THE STUDY Some of the important limitations of financial analysis are however summed up as below: It is only a study of internal reports. The analyst has to make interpretation and drawn his conclusions. Financial analysis is based upon only monetary information and non-monetary factors are ignored.R ENGINEERING COLLEGE 14 .C. Thus accounting concept and conventions cause a serious limitation to financial analysis. As early as ‘1’ B. 12 years after the mayflower arrived on Plymouth Rock. P. This was also a time when some of the dangerous effects of smoking tobacco were being realized by some individuals. The seed of a tobacco plant is very small. Pierre Lorillard establishes a company in New York City to process tobacco.C.S. American Indians began using tobacco in many different ways. pepper and the poisonous nightshade. from bad breath to cancer. tobacco was so popular that it was frequently used as money! Tobacco was literally “as good as gold!”. In 1760. it was illegal to smoke publicly in Massachusetts! This had more to do with moral beliefs of the day. Today. during the American revolutionary war.Lorillard is the oldest tobacco company in the U. TOBACCO: A GROWTH INDUSTRY: In 1776. A ‘1’ ounce sample contains about 300. and was used to dress wounds. than health concerns about smoking tobacco. Europeans believed that tobacco could cure almost anything. he died of nose cancer (because it was popular then to breathe the smoke out through the nose). and the plant was being grown all over Europe. a Spanish doctor named Nicolas Monads’ wrote a book about the history of medicinal plants of the new world. such as in religious and medicinal practices.000 seeds! It is believed that tobacco began growing in the America about 6. In 1588. LTD INDUSTRY PROFILE In The Beginning: Tobacco is a plant that grows natively in north and South America. as well as a pain killer. sailors brought tobacco back to Europe. a Virginian named Thomas Harriet promoted smoking tobacco as a viable way to get one’s daily dose of tobacco. The major reason for tobacco’s growing popularity in Europe was its supposed healing properties. Soon after..000 B. In this he claimed that tobacco could cure 36 health problems. . Unfortunately.C. In 1610 sir Francis Bacon noted that trying to quit the bad habit was really hard! In 1632.C. a very dead plant. tobacco helped finance the revolution by serving as collateral for loans the Americans borrowed from France! S. In 1571. cigar. and snuff. It is in the same family as the potato.R ENGINEERING COLLEGE 15 .MBA PROGRAMME MADDI LKSHMAIAH & CO. During the 1600’s. Tobacco was believed to be a cure-all. Chewing tobacco was believed to relieve the pain of a toothache. were mainly made from scraps left over after the production of other tobacco products. especially chewing tobacco. The demand for cigarettes grew however.S. including a now famous Marlboro brand. Chewing tobacco became quite popular at this time with the “cowboys” of the American West. LTD Over the years.MBA PROGRAMME MADDI LKSHMAIAH & CO. In 1875. R. J. while 6 billion cigars were sold. the British Phillip Morris sets up a New York headquarters to market its cigarettes. Reynolds began to market a cigarette brand called Camel. In 1902. selling hand rolled Turkish cigarettes. Liggett and Brother are established in St. more and more scientists begin to understand the chemical in tobacco. scientists conclude that nicotine is dangerous poison. J. New Englander Samuel Green stated that tobacco is an insecticide. In 1826. Reynolds Tobacco Company (better known for its Reynolds wrap aluminum foil) was established to produce chewing tobacco. a poison. in 1901 3. the pure form of nicotine is finally discovered. In 1836. the famous Phillip Morris is established. Louis. (the company that has settled out of the big lawsuits recently). with some states proposing a total ban on tobacco. Soon after in 1849. Still. Cigarettes in the U. Along with the popularity of cigarettes however.R ENGINEERING COLLEGE 16 . Soon after.C. It wasn’t until the 1900’s that the cigarette became the major tobacco product made and sold. as well as the dangerous health effects smoking produces. was a small but growing antitobacco campaign. E. and can kill a man.J. Mo.5 billion cigarettes were sold. S. In 1847. and in 1913 R. Cigarettes became popular around this time when soldiers brought it back to England from the Russian and Turkish soldiers. Bravo. and becomes RJ Reynolds industries. a non-tobacco cigarette brand was marketed. cigarette rates are at an all time high. American Tobacco Company. begins to market its cigarette to women and gains 38% of the market. Phillip Morris begins to buy into the Miller Brewing company. HEALTH HAZARDS REVEALED: In 1964. Miller Late. To battle this. Winders find that putting cigarette tar on the backs of mice causes tumors! In 1954. television cigarette ads are taken off the air in Great Britain. Made primarily of Lettuce.C. Ernst L. which contained asbestos! This was fortuneless discontinued in 1956. market! In 1924. RJ Reynolds introduces the Salem brand.R ENGINEERING COLLEGE 17 . RJ Reynolds Tobacco Company drops the “Tobacco Company” in its name. This report assisted in allowing the government to regulate the advertisement and sales of cigarettes. those health warnings on cigarette packs begin propping up. the companies had a steady stream of loyal customers. which allows American to become the largest tobacco company in the U. In 1953. In 1965. The 1960’s in general was a time when much of health hazards of smoking were reported. S. the major tobacco companies begin to diversify their products. and Red Dog Beer. maker of the lucky strike brand. makers of Miller Beer. It also begins to buy into other products. Smoking rates among female teenagers soon triple during the years between 1925-1935. more and more evidence was surfacing that smoking was linked to lung cancer. the surgeon general’s report on “Smoking and Health” came out. In 1968.S. and when these soldiers came home. Phillip Morris begins to market Marlboro as a woman’s cigarette that is a “Mild as May”. LTD WAR & CIGARETTES: A DEADLY COMBO: The cigarette exploded during world war (1914-1918). In 1939. During World War II (1939-1945). Pall Mall. such as aluminum. In 1966. Dr. Cigarettes were included in a soldier’s C-Rations (like food). Camel controls 45% of the U. In 1952 P. it failed miserably.MBA PROGRAMME MADDI LKSHMAIAH & CO. which is the first filter-tipped menthol cigarette. American Tobacco Company introduces a new brand. Lorillard markets its Kent brand with the ’Micronized’ filter. During the 1950’s. By 1923. Because of the negative press about tobacco.S. Tobacco companies sent millions of cigarettes to the soldiers for free. where cigarettes were called the “soldier’s smoke”. S.The machines processing ism called THRESHING. the tobacco will be further processed for stabilization of moisture in it this process is called “REDRYING”. The packed tobacco is ready for exports. This is created at Ganapavaram tie plant is still running at high efficiency levels in the country with 98% average efficiency level for the last 3 years. There are 2 plants owned by ITC which can be compared with this plant in the country. LTD American Tobacco Company also drops “Tobacco” from its name. After stripping/threshing. becoming American Brands. cigarettes.C. In 1977.R ENGINEERING COLLEGE 18 . This process can also on machines . ITC uses their threshing plants for their own consumption. television ads for cigarettes are finally taken off the air in the U. Each grade will generally have unique quality parameters. S. the first national great American Smoke out takes place.MBA PROGRAMME MADDI LKSHMAIAH & CO.in tobacco is done mainly on the basis if color. the first threshing plant which is working uninterruptedly for the last 25/30 years an imported one by Maddi Lakshmaiah &co ltd. In India. this processing is called DEBUTTING and STRIPPING workers separate the butt of the tobacco leaf from the leaf. however. are still the most heavily advertised product second to automobiles. VFC Tobacco Traditional/NLS/Mysore 20 millions VAL Tobacco HDBRG 12 millions LSB Tobacco LSB 10 millions AL Tobacco - 25 millions The tobacco purchased from the tobacco board auction platforms will be graded further wherever required grading is a process of a manual separation of one variety of leaf from the other . After refrying process the tobacco will be packed in the required packing say bale packing /case packing etc. Average efficiency level for the last 3 years. there are 3 plants owned by ITC which can be compared with this plant in the country. ITC uses their threshing plants for their own consumption. The graded tobacco is further processed either manually or on machines. In 1971. Inc. In this process the tobacco first of all will be dried completely a then will be given steam at the required temperature. C. Occupation Cigarette manufacturing & un manufactured tobacco exports Cigarette manufacturing & un manufactured tobacco exports Cigarette manufacturing & un manufactured tobacco exports Cigarette manufacturing & un manufactured tobacco exports % of business in India 50% 12% 6% 8% S. It is encouraging the farmers by providing subsidized. The major players in tobacco industry in India are as under: Name of the company ITC ltd. Through the central govt. is announcing several restrictions on advertisement and consumption of cigarettes in the country. GTC industries ltd.R ENGINEERING COLLEGE 19 . it is providing employment to lakhs of people directly and millions of people indirectly and is also contributing RS 1000 cores of forex reserves to the country. fertilizers and by supporting through tobacco board. Godfrey Phillips India ltd. LTD Tobacco industry is fetching more Rs 9000 cores of revenue to the central govt. VST industries ltd.MBA PROGRAMME MADDI LKSHMAIAH & CO. S. mats of warehousing complexes in south India. The group owns around 1. SHARE HOLDING PATTERN& MANAGEMENT OF GROUP: The group has been successfully improving its business in all of its activities such as domestic sales. The group is founded by Sri Maddi lakshmaiah. a mechanical engineer after 15 years of versatile experience in tobacco industry in 1970 at Chilakaluripet . in terms of sec31(1)/44 of the companies act 1956 the name of the company changed to CEO of Maddi Lakshmaiah Maddi Lakshmaiah And Company Limited.C. 1) Maddi Lakshmaiah & Co Ltd (MLCO) 2) ML Agro Products (MLAP) 3) K.R ENGINEERING COLLEGE 20 . maddi lakshmaiah and company private limited having delay passed the necessary special resolution on the 23rd day of march 2002 .S Subbaiah Pillai & Co Ltd (KSSP) 4) ML Exports (MLE) 5) Coromandal Agro Products & Oils Ltd (CAPOL) Expecting capo which is engaged in edible oils all are engaged in tobacco industry.P . of India as export house. 00. LTD COMPANY PROFILE ML Company is a demand limited company (m/s Maddi Lakshmaiah and Company Limited). The group has 2 tobacco processing plants and one solvent extraction plant in south India.000 sq. Which was originally incorporated on 8th day of October 1970 under the name. MLCO & MLAP have concentrated on processing activities where as KSSP & MLE are leading exporters and are recognized by govt. Günter dist. export sales. A.MBA PROGRAMME MADDI LKSHMAIAH & CO. warehousing facilities etc.the group has 5 major concern namely. tobacco processing & other tobacco development activities. after completing of his engineering degree. middle east countries. ML group of companies (ML group) a pioneer in Indian unmanufactured tobacco industry has been exporting tobacco to all over the world for the past 3 decades it has solidified its relationship with overseas tobacco merchants& manufactures. The company foresees a very bright future for this company in tobacco in the coming years. CIS countries. African countries. U. The company processes tobacco and another agro based products that are used both in the country and exported to the most quality conscious of world markets. well before India. The group established its branches in Russia & European countries and has strong ties up with African and Latin American countries and especially with the neighbor giant china. multi products conglomerate known as ML group that is recognized world over for its excellence. ML group is the first tobacco company who exported tobacco to china and is the first company who imported tobacco also from china.A by manufacturing the cigarettes on job work basis.Maddi lakshmaiah in 1970.MBA PROGRAMME MADDI LKSHMAIAH & CO. Today it has evolved into a diversified. These are no imported of tobacco in Indian tobacco history before this and after till now. ML Company is now exporting cigarettes to Middle East and U. a village in Andhra Pradesh that products some of the best tobacco in the country. Latin American countries. Our company is not exporting much because of the poor economic conditions of the country. Maddi Lakshmaiah & co ltd.K. LTD HISTORY OF THE COMPANY: ML group of companies (ML group) was founded by Mr. The group is performing excellently well from the date of its incorporation and has been exporting large volume of tobacco to Russia. GROWTH OF THE COMPANY: Our ML company has developed strong relationship with overseas manufacturing in Europe.R ENGINEERING COLLEGE 21 . The joint family business started payback in 1943 dealing with tobacco exports. china.S.C. S. Bangladesh & Nepal etc. The group maintains good relationship with the Chinese tobacco monopoly. An emphasis on total quality and dedication to the interests of its client’s world wide is a hallmark of ML group. Europe. He joined in his family business in 1952. was set up at Chilakaluripet. Russia and Middle East through there is very good demand from Russia market. R ENGINEERING COLLEGE 22 .MBA PROGRAMME MADDI LKSHMAIAH & CO. Bangladesh & Nepal etc. The group is performing excellently well from the date of its incorporation and has been exporting large volume of tobacco to Russia.P . a mechanical engineer after 15 years of versatile experience in tobacco industry in 1970 at Chilakaluripet . The group established its branches in Russia & European countries and has strong tie up with African and Latin American countries and especially with the neighbor giant China. Maddi Lakshmaiah & Co Ltd was set up at Chilakaluripet. (CAPOL.e. The company enjoys a reputation for excellent delivery schedules and transparent business practice in global markets. The group is founded by Sri Maddi Lakshmaiah. achievements/ awards. Prakasam Dist ) got several achievement awards. African countries. LTD One of the trade delegates that accompanied our horrible prime minister to during his recent visit to china is from ML Company. multi products conglomerate known as ML Group that is recognized world over for its excellence. An emphasis on total quality and dedication to the interests of its client’s world wide is a hallmark of ML group. CIS countries.C.K. ML EXPORTS: (Exporting to the world): ML exports is a totally export oriented unit. a village in Andhra Pradesh that produces some of the best tobacco in the country.Chirala . Other than that are of the concern of lakshmaiah Group Maddi i. Middle East countries. S. The production capacity per each day is 1 lakh 20 tones The production current assets capacity per year is around 1. The company processes tobacco and another agro based products that are used both in the country and exported to the most quality conscious world markets. A. Guntur dist. Today it has evolved into a diversified.the group has 5 major concern namely.5 million tones. Achievements/Awards: Maddi Lakshmaiah Company has no particulars /peculiar/. Europe. with clients in a variety of markets around the world. NATURE OF ACTIVITY: This factory products good quality tobacco. Latin American countries. China. Maddi Lakshmaiah & Co Ltd (MLCO). U. There ambassadors of china have visited our company in the fast as our guests and expressed their satisfaction on our infrastructure facilities. VISION: Descriptions of some thing can organization corporate culture. The company is going for sheet tobacco plant in joint venture with on of the Indian best tobacco cigarette manufacturer. MISSION: A mission statement is an enduring statement of purpose that distinguishes one business from others similar firms. MLCO & MLAP have concentrated on processing activities where as KSSP & MLE are leading exporters and are recognized by government of India as export house. The ambassadors are coming to Maddi Lakshmaiah Company limited in August. The company is trying to develop world class information technology building in Bangalore.C. M. This statement identifies the scope of firms operations in product and market terms.MBA PROGRAMME MADDI LKSHMAIAH & CO.S Subbaiah Pillai & Co Ltd (KSSP).B. The ambassadors of South Africa are hold up and the company is having top joint venture with U. K.A in USA) Sri Maddi Ramesh Sri Mallavarapu Rama Mohana Rao Sri Meaden Sekhar S. ML Exports (MLE). Coramandal Agro Products & Oils Ltd (CAPOL) Expecting CAPOL which is engaged in edible oils all are engaged in tobacco industry. The company exports with second strongest country china. china and Hyderabad in the coming 5 years time.L & company limited mission is to produce good quality of tobacco and get number one position in India in producing and exporting tobacco.R ENGINEERING COLLEGE 23 .K. LTD ML Agro Products (MLAP). BOARD OF DIRECTORS: Managing Director Director Director Director Executive Director Executive Director : : : : : : Sri Maddi Lakshmaiah Sri Maddi Seetha Devi Sri Maddi Venkateswara Rao (M. Russia and Germany. business technology an activity in the future. The company is also contemplating for 100% tobacco joint venture association with one of the best cigarette manufacturer. Shekhar M. Babu Rao M. Rama Mohana Rao M. Rami Reddy Anji Babu P. Venkateswara Rao M. Lakshmaiah M.R ENGINEERING COLLEGE 24 . Subba Rao S.S. Rama Mohana Rao B. Shekhar K. LTD MANAGEMENT TEAM: Managing Director Director General Director Personnel Manager Leaf Manager Finance Manager Export Manager Production Manager Circle Manager Factory coordinator : : : : : : : : : : M.C.MBA PROGRAMME MADDI LKSHMAIAH & CO. . Employment policy is formulation and adoption. The personal department manager B. The company has well defined policies for exports the quality tobacco. leaf manager or department manager.R ENGINEERING COLLEGE 25 .e. The general manager of ML Company is M.Rami Reddy is headed by the G.Shakhar deals all the matters regarding the export departments and directly reports to managing director. Requirements of all customs and unsure fitness for use of all products there by ensuring total confidence to every customer. The production manager K.S. S. finance manager.M.MBA PROGRAMME MADDI LKSHMAIAH & CO.L Company managing director M. cleaning. OBJECTIEVES OF THE COMPANY: To serve the nations vital interest in the tobacco related sectors.C.M.L is tobacco& marketing network at optimum costs and provide up to date technical assistance to the consumer to conceive the valuable energy resources. To maintain vicinity of supplies through M. Ram Mohan Rao assisted by fine general manager i. personal manager. is assisted by a plant engineer and staff of the production department. This company shall maintain quality leadership by providing products and services that completely and consistently meet the agreed. exports manager and production manager. LTD POLICIES: Policies can be considered a guide to action it is desirable that persons responsible for implementation of policies use discretion and judgment in appraising and deciding among alternative courses of action. he looks after the areas of personnel & administration under there may be a personal offices welfare officer and a safely officer. Employment policy formulation and adoption. Responsibilities: The M. The finance manager M. Canteen. Babu Rao is headed by who reports directly to G.Shekhar is assisted by a team of experienced management and non management staff who tekes care of the finance is accounts activities of the organization. To earn a reasonable return on investment. The export manager M. To conduct its operation with honesty integrity and transparency.Venkateswara Rao is under the complete administrative control of the managing direction and he is reported by the director and he is reported by general manager. security maintenance of good industrial relation. To carry on all kinds of agency business. lease mortgage abandon or otherwise deal with all or any part of the property. The personnel department is headed by personnel manager who reports directly to G. Computer maintenance software development and software exports and to develop and design software in India.manage. LTD To work towards achievement of self reliance in the field of tobacco. threshing formulation& distribution system. prospects.R ENGINEERING COLLEGE 26 . work develop.MBA PROGRAMME MADDI LKSHMAIAH & CO. Abroad and to start software technology part in India or abroad and to offer relationship management solutions for individuals and organizations both individually and through strategic alliances with others companies. conduct seminary. Manager personnel. To create strong research& development in the field of tobacco and stimulate R&D of development of exports. Manager leaf department. The general manager (ML Company) is assisted by 5 general managers. workshop and educational courses on computers. Manger finance. Manager production. value character and circumstance of any business concern and under taking and generally of any assets property or right.C. ORGANISTION STRUCTURE: The company (ML Company) is under the complete administrative control of the managing director and he is reported by the director and he is reported by general manager.M. Manager exports. To carry on business as merchants in all kinds of goods. To employ experts to investigate and examine into the conditions. he looks after the areas of personnel& administration under may by a S. rights and concessions of the company. To improve . To maximize utilization of the existing facilities in order to improve efficient and increased productivity. To import training. No. Subbaiah Pillai & Co (India) Ltd: Tobacco export. Coromandal Agro Products &Oils Ltd. K. packers &exporters. No. The leaf manager is headed by G. factory co-ordinate and shift in charge. Maddi Lakshmaiah And Co Ltd: Tobacco threshers.M and assisted by circle manager. ML group was a multifaceted corporate leader of which the group consists of 5concern namely. ML. packers & exporters real estate &leasing. Agro Products: Tobacco threshers. buyers. ML Exports: Exports house.S. LTD personnel officer. a branch manager.MBA PROGRAMME MADDI LKSHMAIAH & CO.C.R ENGINEERING COLLEGE 27 .: Bulk producers of oils TURN OVER OF THE COMPANY: The turnover of ML company for the following years of 2007-2013 are as follows: Table No:1: S. of Years Amount In Rs In Lakhs 1 2007 2370 2 2008 1693 3 2009 2020 4 2010 2372 5 2011 3358 6 2012 3400 7 2013 3800 S. welfare officer and a safety officer. They usually do their business with the international reputed companies like.every year ML company was taking participation in 5-6 exhibitions.e. 4. At the time of requirement. Participating in exhibitions. The company has some direct contracts with other countries and they directly ask them at the time of requirement. LTD MARKETING POSITION OF THE COMPANY: In ML Company the methods of purchasing of tobacco is of various types i. 2. even from Europe. IN LAKHS 270 2 2008 203 3 2009 312 4 2010 262 5 2011 134 6 2012 103 7 2013 123 The above table represents the profit for the following years after paying all the taxes. Every year they were producing 1000 tones of various varieties /grades of tobacco.MBA PROGRAMME MADDI LKSHMAIAH & CO.R ENGINEERING COLLEGE 28 . Russia & china. Profit After Tax: Table No:2: SNO NO OF YEARS 1 2007 AMOUNT IN Rs. they send samples through carriers. The people who have connection in tobacco may visit tobacco stalls usually. 3. They have good contracts with various merchants (mediators between manufacture & exporters) in reputed companies Günter. 1. Which tenders rise in market document will be filled up by various companies or merchants can purchase them.C. Universal Demon Standard commercial. MARKETING CHANNELS: Normally they send samples/verities. S. the payment must be done with in 180 days from the date. of India. LTD People like manufactures. In India there is a rule that on credit basis. Regulation crop. The market range depends on supply &demand forces. ANOTHER MODE: The other mode of marketing (channel) is through business delegations tobacco board of central govt. MARKET RANGE: ML Company was marketing 7-10 million kilos of tobacco every year.P. 2. MAJOR COPETETORS: M. ministry of commerce govt.R ENGINEERING COLLEGE 29 . Document against payment Document against acceptance. The board explores marketing possibilities with the help of exporters. CREDIT: 1.C’S (letters of credit). Customers usually approach them because of the good will of the company. Shipment of tobacco is through Chennai port only. 1. Some time through advance payment ion terms of D. They register the foreigners. 2. But the market range is not fixed.C. MODE OF PAYMENT: Exporters normally receive payment from their buyers through L. dealers.. They fix the crop size. In the tobacco field. They get the business through reputation. The tobacco board usually. Guntur. Some parties asks/needs some time for payment with in certain period from the date of bill of payment (up to 180 days). When there is demand.L Group Mittapalli Group S. bankers. the company produces more. the marketing/market range may be flexible internationally supply demand.MBA PROGRAMME MADDI LKSHMAIAH & CO. merchants of tobacco may visit the tobacco exhibitions. After customers checkers in the madras port it may send to abroad.A & D. 2. 4. The company exports with the second strongest country china. NEGOTIATIONS: The company is trying to develop world class information technology building in Bangalore.MBA PROGRAMME MADDI LKSHMAIAH & CO. Cash bills and credit bills may get from trashing factory and engineering department. Credit bills payment will be given in the form of cheque’s or DD’s LAND MARKS: Maddi Lakshmaiah Company was the first India company entered with china to did business. They have worked for joint venture arrangements with Yugoslavian Govt. Maddi Lakshmaiah Company is also working on joint venture basis with UK based commodities Company for supply of agree products to South Asian countries. S. Concerned accounts may be generalized by the accountants and may be sent to concerned heads. 2. The company (Maddi lakshmaiah) for an ECB for 50 million dollars and development of regular trade and also infrastructure projects in India. 3. Ambassadors have already come here and 4th one is coming in this august. Cash payments will be checked by cashiers. The company already entered into joint venture with an US based company by name CARGIL for the south Indian need.C. china and Hyderabad in the coming 5 years time and 100% tobacco joint venture association with one of the best cigarette manufacture. 4.T. Russia and India.C and some other small companies FINANCIAL INFORMATION: 1.R ENGINEERING COLLEGE 30 . for their requirement for India. It was the first company to import tobacco and export tobacco. LTD Bommidala Group I. The finance manager is assisted by a team of experienced management and non management staff who takes care of the finance & accounts activities of the organization. 3. Future Plans: 1. The export manager (ML Company) deals all the matters regarding the exports department and directly reports to the managing director. 2. This for above 5 million dollars of investment in supply of 5000 tonnes every year. Application of a decision rule for making the choice. 3. ANALYSIS ON CAPITAL BUDGETING IN M.MBA PROGRAMME MADDI LKSHMAIAH & CO. ORGANIZATIONAL STRUCTURE S. Estimation of cash flows. LTD 5. They involve commitment of large amount of funds They are irreversible or reversible at substantial loss and most difficult decisions to make.L. INVESTMENT EVALUATION CRITERIA: Three steps are involved in the evaluation of investment: 1.C. They affect the risk of the firm. Estimation of the required rate of return (the opportunity cost of capital).R ENGINEERING COLLEGE 31 . & CO LIMETED: IMPORTANCE OF INVESTMENT DECISION: Investment decisions require special attention because of the following reasons: They influence the firm’s growth in the long term. or services Exchange rate fluctuations S.C.R ENGINEERING COLLEGE 32 .MBA PROGRAMME MADDI LKSHMAIAH & CO.) Online Product and services expansion Take over’s Threats: Competition Cheaper technology External changes(government . LTD SWOT ANALYSIS Strength: Effective communication Online growth Loyal customers Strong brand equity Strong management team Strong financial position Pricing Weakness: Diseconomies to scale Low R&D No online presence Not diversified Opportunity: Acquisition Financial markets (raise money through debt. etc. etc) Maturing categories. taxes. products.politics. 34 Secured loan 379475270 51.03 Capital work-in-progress 5165550 0.. AS ON 31-3-2008: As on 31-3-2008 Percentage in liabilities/assets Capital 13000000 1. AS ON 31-3-2009: S.68 TOTAL 742900638 100 COMMON SIZE BALANCE SEET OF M.70 Investments 2983165 0.L.08 Unsecured loan 193040880 25.MBA PROGRAMME MADDI LKSHMAIAH & CO.74 Reserves & surplus 151136957 20.L.40 Current assets..84 TOTAL 742900638 100 Particulars Sources of funds Shareholder’s funds Loan fund Application of funds: Fixed assets Gross block 726114635 Less-depreciation 151280668 Net block 574833967 78. COMPANY LTD.R ENGINEERING COLLEGE 33 . loans & advances: Inventories 239880075 Sundry debtors 35992686 Cash & bank balances 7150276 Other current assets 69640943 Loans & advances 12529745 Less-current liabilities & provisions Current liabilities 202449314 Provisions 9073986 Net current assets 153670425 20. LTD DATA ANALYSIS & INTERPRETATION COMMON SIZE BALANCE SEET OF M.98 Net deferred tax liability: 6247531 0.C. COMPANY LTD. 24 Investments 2983165 0. COMPANY LTD.C.39 TOTAL 773002348 100 COMMON SIZE BALANCE SEET OF M.L. loans & advances: Inventories 236975762 Sundry debtors 36258591 Cash & bank balances 13998934 Other current assets 93687132 Loans & advances 10864119 Less-current liabilities & provisions Current liabilities 158452146 Provisions 21580520 Net current assets 211751872 27.39 Current assets.37 Unsecured loan 81595729 10.R ENGINEERING COLLEGE 34 . AS ON 31-3-2010: S.77 Capital work-in-progress 1855829 0.30 Secured loan 478682475 62.. LTD As on 31-3-2009 Percentage in liabilities/assets Capital 13000000 1.69 Reserves & surplus 194200158 25.63 Net deferred tax liability: 5523986 0.MBA PROGRAMME MADDI LKSHMAIAH & CO.7 TOTAL 773002348 100 Particulars Sources of funds Shareholder’s funds Loan fund Application of funds: Fixed assets Gross block 738903208 Less-depreciation 188015262 Net block 550887496 71. 56 Net deferred tax liability: 42151888 4.18 Investments 2983165 0.74 Capital work-in-progress 1550361 0.61 TOTAL 913565294 100 Particulars Sources of funds Shareholder’s funds Loan fund Application of funds: Fixed assets Gross block 77255360 Less-depreciation 260653520 Net block 511900080 58.69 Secured loan 429126132 49. LTD As on 31-3-2010 Percentage in liabilities/assets Capital 13000000 1.C. loans & advances: Inventories 327412543 Sundry debtors 22361498 Cash & bank balances 73891461 Other current assets 151568707 Loans & advances 13966691 Less-current liabilities & provisions Current liabilities 143360960 Provisions 90860140 Net current assets 354979800 TOTAL 913565294 100 COMMON SIZE BALANCE SEET OF M.. COMPANY LTD.MBA PROGRAMME MADDI LKSHMAIAH & CO.L.49 Reserves & surplus 345901071 39. AS ON 31-3-2011: S.R ENGINEERING COLLEGE 35 .24 Unsecured loan 83386203 9.34 Current assets. .L. loans & advances: Inventories 341906868 Sundry debtors 83013158 Cash & bank balances 156007572 Other current assets 219855601 Loans & advances 16218624 Less-current liabilities & provisions Current liabilities 125982205 Provisions 127893051 Net current assets 563126567 49.26 Current assets. COMPANY LTD.55 Net deferred tax liability: 46984472 4.52 TOTAL 1137013461 100 COMMON SIZE BALANCE SEET OF M. AS ON 31-3-2012: S.98 Unsecured loan 51737891 4.19 Reserves & surplus 424599303 37.34 Secured loan 600691795 52.MBA PROGRAMME MADDI LKSHMAIAH & CO.C. LTD As on 31-3-2011 Percentage in liabilities/assets Capital 13000000 1.2 0.13 TOTAL 1137013461 100 Particulars Sources of funds Shareholder’s funds Loan fund Application of funds: Fixed assets Gross block 827717465 Less-depreciation 303798208 Net block 523919257 Capital work-in-progress - Investments 2983165 50.R ENGINEERING COLLEGE 36 . 48 TOTAL 1000831727 100 COMMON SIZE BALANCE SEET OF M. COMPANY LTD.MBA PROGRAMME MADDI LKSHMAIAH & CO.57 Provisions - Net current assets 455248338 45.19 Secured loan 398172603 39.90 TOTAL 1000831727 100 Particulars Sources of funds Shareholder’s funds Loan fund Application of funds: Fixed assets Gross block 831482484 Less-depreciation 292580912 Net block 538901572 53.C. loans & advances: Inventories 286746201 Sundry debtors 187578498 Cash & bank balances 27637213 Other current assets 8063870 Loans & advances 9096384 Less-current liabilities & provisions Current liabilities 135873828 13.84 Capital work-in-progress 3698112 0.36 Investments 2983165 0. LTD As on 31-3-2012 Percentage in liabilities/assets Capital 13000000 1.78 Unsecured loan 28192253 2.8 Net deferred tax liability: 49104631 4.29 Current assets..29 Reserves & surplus 512362240 51.L.R ENGINEERING COLLEGE 37 . AS ON 31-3-2013: S. 48 COMPARATIVE BALANCE SEET OF M. LTD As on 31-3-2013 Percentage in liabilities/assets Capital 13000000 1..L.MBA PROGRAMME MADDI LKSHMAIAH & CO.36 TOTAL 1138969025 100 Particulars Sources of funds Shareholder’s funds Loan fund Application of funds: Fixed assets Gross block 981830657 Less-depreciation 326591828 Net block 655238829 57. AS ON 2006-07 to 2007-08: S.R ENGINEERING COLLEGE 38 .52 Capital work-in-progress 3718810 0.47 Unsecured loan 35892612 3.32 Investments Current assets.75 TOTAL 1138969025 100 9.15 Net deferred tax liability: 61117474 5.86 Secured loan 438254754 38. COMPANY LTD.38 357607317 Sundry debtors 92904975 Cash & bank balances 54394425 Other current assets 70889326 Loans & advances Less-current liabilities & provisions Current liabilities 7838168 108045990 Provisions - Net current assets 475588221 41.14 Reserves & surplus 590704185 51. loans & advances: Inventories 4423165 0.C. 01 Application of funds: Fixed assets 4.9 Cash & bank balances 6059037 7150276 1091239 18.5 Net block Capital work-inprogress Investments Current assets.57 Gross block 711551528 726114635 14563107 2.L.04 Less-depreciation 105478021 145033137 39555116 37.9 Less-current liabilities & provisions COMPARATIVE BALANCE SEET OF M.78 199239493 193040880 (6198613) 3.C.MBA PROGRAMME MADDI LKSHMAIAH & CO. AS ON 2007-08 to 2008-09 S.12 - 5165550 5165550 2983165 2983165 - - 187934102 239880075 51946063 27..5 Net current assets 129613310 153670425 24057115 18.R ENGINEERING COLLEGE 39 .6 Sundry debtors 26860540 35992686 9132146 33.9 12018960 12018960 9073986 (2944974) 24.7 738669987 742900638 4230656 0. loans & advances: Inventories 606073507 581081498 (24992009) Unsecured loan Net deferred tax liability: Total % increase/ (decrease) 16.11 5796209 6247531 451322 7.0 Other current assets 48679846 69640943 20961097 Loans & advances 11723019 12519745 806726 Current liabilities 139624184 202449314 62825130 44. LTD Particulars 2006-07 2007-08 Absolute increase/ (decrease) Sources of funds Shareholder’s funds Capital Reserves & surplus Loan fund Secured loan 13000000 130270036 13000000 151136957 20866921 390364244 379475270 (10888974) 2.56 Total 73866982 742900638 206442802 27. COMPANY LTD. LTD Particulars Sources of funds Shareholder’s funds Capital Reserves & surplus Loan fund Secured loan Unsecured loan Net deferred tax liability: Total Application of funds: Fixed assets Gross block Less-depreciation Net block Capital work-inprogress Investments 2007-08 2008-09 Absolute increase/ (decrease) % increase/ (decrease) 13000000 151136957 13000000 194200158 43063201 28.MBA PROGRAMME MADDI LKSHMAIAH & CO.L.79 4.14 57.29 202449314 9073986 153670425 742900638 158452146 21580520 211751872 773002348 (43997168) 12506534 58081447 30101710 21.63 5. COMPANY LTD.53 12519745 10864119 (1665626) 13.73 6247531 5523986 (723545) 11. AS ON 2008-09 to 2009-10 S.05 Current assets..74 7150276 13998934 6848658 95.05 726114635 145033137 581081498 738903208 188015262 550887496 12788573 42982125 (30194002) 1.49 379475270 193040880 478682475 81595729 99207205 (111445151) 26.58 742900638 773002348 30101710 4.07 2983165 2983165 - 239880075 35992686 236975762 36258591 2904313 265905 1.21 0.73 137.83 37.76 29.C.R ENGINEERING COLLEGE 40 . loans & advances: Inventories Sundry debtors Cash & bank balances Other current assets Loans & advances Less-current liabilities & provisions Current liabilities Provisions Net current assets Total COMPARATIVE BALANCE SEET OF M.78 69640943 93687132 24046189 34.19 5165550 1855829 3309721 64. 92 Loan fund Application of funds: Fixed assets Less-current liabilities & provisions COMPARATIVE BALANCE SEET OF M.33 Cash & bank balances 13998934 73891461 59892527 472.35 Unsecured loan Net deferred tax liability: Total 81595729 83386203 1790474 2.84 Other current assets 93687132 151568707 57881575 61.07 773002348 913565294 107602946 13.16 Sundry debtors 36258591 22361498 (13897093) 38.46 2983165 2983165 - 2986165 236975762 327412543 90436781 38.MBA PROGRAMME MADDI LKSHMAIAH & CO.64 Total 773002348 913565294 107602946 13.03 Net current assets 211751872 354979800 143227928 67.92 Gross block 738903208 77255360 661647848 89. loans & advances: Inventories 550887496 511900080 (38987416) 7.08 1855829 1550361 (305468) 16.C.63 Net block Capital work-inprogress Investments Current assets.19 5523986 42151888 36627902 663.78 Loans & advances 10864119 13966691 3102572 28.56 Current liabilities 158452146 143360960 (15091186) 9.54 Less-depreciation 188015262 260653520 72638258 38. LTD Particulars 2008-09 2009-10 Absolute increase/ (decrease) % increase/ (decrease) Sources of funds Shareholder’s funds Capital Reserves & surplus 13000000 194200158 13000000 345901071 151700913 78.L COMPANY LTD. AS ON 2009-10 to 2010-11 S.12 Secured loan 478682475 429126132 (49556343) 10.53 Provisions 21580520 90860140 69279620 321.R ENGINEERING COLLEGE 41 . R ENGINEERING COLLEGE 42 .95 42151888 46984472 4932584 11. COMPANY LTD.98 Unsecured loan Net deferred tax liability: Total 83386203 51737891 (31648312) 37.C.64 Total 913565294 1137013461 223548167 24.23 Cash & bank balances 73891461 156007572 82116111 111.MBA PROGRAMME MADDI LKSHMAIAH & CO.45 Less-depreciation 260653520 303798208 38312104 17.75 429126132 600691795 171565663 39.12 Provisions 90860140 127893051 37032911 40.05 Loans & advances 13966691 16218624 2251933 16. loans & advances: Inventories 2983165 2983165 - - 327412543 341906868 14494325 4.43 Sundry debtors 22361498 83013158 60651660 271. LTD 2009-10 2010-11 Absolute increase/ (decrease) % increase/ (decrease) Capital 13000000 13000000 - - Reserves & surplus Loan fund Secured loan 345901071 424599303 78698232 22. AS ON 2010-11 to 2011-12 Particulars 2010-11 2011-12 Absolute increase/ (decrease) % increase/ (decrease) S.53 Net block 511900080 523919257 16851761 3.65 913565294 1137013461 223548167 24.12 Current liabilities 143360960 125982205 (17378755) 12.31 Other current assets 151568707 219855601 68286894 45.47 Particulars Sources of funds Shareholder’s funds Application of funds: Fixed assets Less-current liabilities & provisions COMPARATIVE BALANCE SEET OF M..47 Gross block 77255360 827717465 50163865 6.L.04 Capital work-in-progress 1550361 - - 1550361 Investments Current assets.76 Net current assets 354979800 563126567 208146767 58. MBA PROGRAMME MADDI LKSHMAIAH & CO.67 600691795 398172603 (202519192) 33.15 11.97 COMPARATIVE BALANCE SEET OF M.85 Provisions 127893051 - - 1278930 Net current assets 563126567 455248338 107878229 19..46 Less-depreciation 303798208 292580912 (35767176) 13.51 Loans & advances 16218624 9096384 (7122240) 43.93 Net block Capital work-inprogress Investments 523919257 538901572 32002157 5. loans & advances: Less-current liabilities & provisions Total 1137013461 1000831727 136181734 11.13 Sundry debtors 83013158 187578498 106565340 128.51 46984472 49104631 2120159 4.94 Current liabilities 125982205 135873828 9891623 7. COMPANY LTD.37 Cash & bank balances 156007572 27637213 (128370359) 82. LTD Sources of funds Shareholder’s funds Capital Reserves & surplus Loan fund Secured loan 13000000 424599303 13000000 512362240 87762937 20. AS ON 2011-12 to 2012-13 Particulars 2011-12 2012-13 Absolute increase/ (decrease) % increase/ (decrease) Sources of funds S.60 - 3698112 - 3698112 2983165 2983165 - - Inventories 341906868 286746201 (55160667) 16.51 Unsecured loan Net deferred tax liability: Total Application of funds: Fixed assets 1137013461 1000831727 (136181734) Gross block 827717465 831482484 3765019 0.71 51737891 28192253 (23545638) 45.C.977 Current assets.R ENGINEERING COLLEGE 43 .28 Other current assets 219855601 8063870 (56078269) 25.L. MBA PROGRAMME MADDI LKSHMAIAH & CO.80 Application of funds: Fixed assets Less-current liabilities & provisions TREND ANALYSIS OF M.47) Cash & bank balances 27637213 54394425 26757212 96.2 loan fund Secured loans S.31 49104631 61117474 12012843 24. LTD Shareholder’s funds Capital 13000000 13000000 - - Reserves & surplus Loan fund Secured loan 512362240 590704185 78341945 15.56 2983165 4423165 1440000 48.48 Provisions - - - - Net current assets 455248338 475588221 20339883 4.71 Sundry debtors 187578498 92904975 (94673523) (50.83 Current liabilities 135873828 108045990 (27827838) 20.81 Other current assets 8063870 70889326 62825456 25.66 Net block Capital work-inprogress Investments Current assets.51 Loans & advances 9096384 7838168 (1258216) 13.LTD.46 1000831727 1138969025 138137298 13.L.08 Less-depreciation 292580912 326591828 34010916 8. COMPANY.02 390364244 100 379475270 97.80 Gross block 831482484 981830657 150348173 18.29 398172603 438254754 40082151 10. loans & advances: Inventories 538901572 655238829 116337257 21.58 3698112 3718810 20698 0.46 Total 1000831727 1138969025 138137298 13.R ENGINEERING COLLEGE 44 . FROM 2006-07 TO 2007-08 Particulars Share capital Reserves& surplus 2006-2007 13000000 130270036 % 100 100 2007-08 13000000 151136957 % 100 116.27 286746201 357607317 70861116 24.06 Unsecured loan Net deferred tax liability: Total 28192253 35892612 7700359 27.C. 99 Provision 12018960 100 9073986 75.01 Other current assets 48679846 100 69640943 143.88 Current liabilities 139624184 100 202449314 144.64 Sundry debtors 26860540 100 35992686 1339. FROM 2006-07 TO 2008-09 Particulars 2006-07 % 2008-09 % Share capital 13000000 100 13000000 100 Reserves& surplus 130270036 100 194200158 149 390364244 100 478682475 122.05 Loans & advances 11723019 100 12529745 106. COMPANY.78 Total funds 890313126 100 954423938 107.LTD.87 Investments 2983165 100 2983165 Current liabilities & provisions Other liabilities Application of funds Capital work in progress Current assets & advances - 5165550 Inventory 187934012 100 239880075 127.R ENGINEERING COLLEGE 45 .49 Deffered tax 5796209 100 6247531 107.21 Net fixed assets 606073509 100 581081498 95.6 loan fund Secured loans S. LTD Unsecured loans 199239493 100 193040880 96.L.74 Cash & bank 6059037 100 7150276 118.88 Total 890313126 100 954423938 107.21 TREND ANALYSIS OF M.C.MBA PROGRAMME MADDI LKSHMAIAH & CO. 5 Deffered tax 5796209 100 5523986 95.LTD FROM 2006-07 TO 2009-10 Particulars 2006-07 % 2009-10 % Share capital 13000000 100 13000000 100 Reserves& surplus 130270036 100 345901071 265.8 Investments Capital work in progress Current assets & advances Inventory 2983165 100 2983165 100 187934012 100 236975762 126 Sundry debtors 26860540 100 36258591 134.6 Total 890313126 953035014 107 Current liabilities & provisions Other liabilities - 1855829 TREND ANALYSIS OF M.C.9 Cash & bank 6059037 100 13998934 231 Other current assets 48679846 100 93687132 192.8 Loan Fund S.3 Total funds Application of funds 890313126 953035014 107 Net fixed assets 606073509 100 556411482 91.4 Provision 12018960 100 21580520 179.9 Unsecured loans 199239493 100 83386203 27.MBA PROGRAMME MADDI LKSHMAIAH & CO.9 Current liabilities 139624184 100 158452146 113.4 Loans & advances 11723019 100 10864119 92.5 Secured loans 390364244 100 429126132 109. LTD Unsecured loans 199239493 100 81595729 40.R ENGINEERING COLLEGE 46 .L COMPANY. L COMPANY.9 Other liabilities Application of funds Net fixed assets 606073509 100 554051968 91.6 Provision 12018960 100 90860140 755.3 Cash & bank 6059037 100 73891461 1219.9 TREND ANALYSIS OF M.LTD FROM 2006-07 TO 2010-11 Particulars 2006-07 % 2010-11 % Share capital 13000000 100 13000000 100 Reserves& surplus 130270036 100 424599303 325.3 Loans & advances 11723019 100 13966691 119.C.4 Investments 2983165 100 2983165 100 Capital work in progress - 1550361 Current assets & advances Inventory 187934012 100 327412543 174.9 Secured loans 390364244 100 600691795 153.8 Unsecured loans Current liabilities & provisions 199239493 100 51737891 255. LTD Current liabilities & provisions Current liabilities 139624184 100 143360960 102.1 Total 890313126 1147786394 128.9 Deffered tax 5796209 100 42151888 727.MBA PROGRAMME MADDI LKSHMAIAH & CO.5 Other current assets 48679846 100 151568707 311.R ENGINEERING COLLEGE 47 .9 loan fund S.2 Sundry debtors 26860540 100 22361498 83.2 Total funds 890313126 1147786394 128. R ENGINEERING COLLEGE 48 .C.3 Secured loans 390364244 100 398172603 102 Unsecured loans 199239493 100 28192253 14.MBA PROGRAMME MADDI LKSHMAIAH & CO.2 TREND ANALYSIS OF M.3 Total 890313126 1390888717 156.2 Other liabilities Application of funds Net fixed assets 606073509 100 570903729 94.6 Loans & advances 11723019 100 16218624 138.6 Total funds 890313126 1390888717 156.LTD FROM 2006-07 TO 2011-2012 Particulars 2006-07 % 2011-12 % Share capital 13000000 100 13000000 100 Reserves& surplus 130270036 100 512362240 393. LTD Current liabilities 139624184 100 125982205 90.9 Sundry debtors 26860540 100 83013158 309 Cash & bank 6059037 100 156007572 2574.L COMPANY.2 Provision 12018960 100 127893051 1064.7 Other current assets 48679846 100 219855601 451.0 Deffered tax 5796209 100 46984472 810.4 loan fund Current liabilities & provisions S.1 Investments 2983165 100 2983165 100 Capital work in progress Current assets & advances - - Inventory 187934012 100 341906868 181. 3 Provision 12018960 100 - - Deffered tax 5796209 100 49104631 847.L COMPANY.C.1 Total funds 890313126 1136705555 127.R ENGINEERING COLLEGE 49 .3 Cash & bank 6059037 100 27637213 456.6 Loans & advances 11723019 100 8063870 68.9 Investments 2983165 100 29830165 100 Capital work in progress - - 3698652 Current assets & advances Inventory 187934012 100 286745201 152.6 Other liabilities Application of funds Net fixed assets 606073509 100 538901572 88.78 Total 890313126 1136705555 127.LTD FROM 2006-07 TO 2012-2013 Particulars 2006-07 % 2012-13 % Share capital 13000000 100 13000000 100 Reserves& surplus 130270036 100 590704185 453.MBA PROGRAMME MADDI LKSHMAIAH & CO.5 Sundry debtors 26860540 100 187578498 698.26 Unsecured loans 199239493 100 35892612 18.4 Secured loans 390364244 100 438254754 112.01 loan fund Current liabilities & provisions S.6 TREND ANALYSIS OF M. LTD Current liabilities 139624184 100 135873828 97.3 Other current assets 48679846 100 9096384 18. 86 Total 890313126 1247015015 140. Current ratio is calculated by dividing current assets by the current liabilities. Other ratio includes cash ratio.38 Provision 12018960 100 - - Deffered tax 5796209 100 61117474 1054. LTD Current liabilities 139624184 100 108045990 77.62 Loans & advances 11723019 100 7838168 66.C. interval measure and net working capital ratios. CURRENT RATIO: The current ratio is a measure of the firms short-term solvency.06 LIQUIDITY RATIOS: It is extremely essential for a firm to be able to meet its obligation as they become due. It indicates the availability of current assets in rupees for every one rupee of current liability. Liquidity ratios measure the ability of the firm to meet its current obligations (liabilities).74 Other current assets 48679846 100 70889326 145.11 Investments 2983165 100 4423165 148. In fact.R ENGINEERING COLLEGE 50 .MBA PROGRAMME MADDI LKSHMAIAH & CO.88 Cash & bank 6059037 100 54394425 897.27 Capital work in progress - 3718810 - Current assets & advances Inventory 187934012 100 357607317 190.43 Total funds 890313126 1247015015 140. are: (i) current ratio and (ii) quick ratio. Current Ratio = Current Assets/Current Liabilities S. The most common ratios which indicate the extend of liquidity or lack of it.28 Sundry debtors 26860540 100 92904975 345. analysis of the liquidity needs the preparation of cash budgets and cash and funds flow statements.06 Other liabilities Application of funds Net fixed assets 606073509 100 655238829 108. C. inventories and prepaid expenses are also included in current assets.40 Graphical Representation: INTERPRETATION: The above table and chart shows the current ratio. liability and long term debt maturing in the current year. accrued expenses. shortterm loans. YEARS Current assets (A) Current liabilities (B) Ratio C=A/B 2009 391784538 180032666 2. income tax .MBA PROGRAMME MADDI LKSHMAIAH & CO.82 2013 583634211 108045990 5. It is maximum (5.17 2010 589200900 234221100 2.51 2011 817001823 243875256 3. debtors.R ENGINEERING COLLEGE 51 .72) in the year 2009. such as marketable securities.21 2012 519122166 135873828 3. S. Current liabilities include creditors bills payable.40) in the year 2013 and minimum(1. LTD Current assets include cash and those assets that can be converted into cash with in one year. 2:1 during the period of study.R ENGINEERING COLLEGE 52 . LTD But the liquidity position of the company is satisfactory. It is more than standard ratio i.e. S.MBA PROGRAMME MADDI LKSHMAIAH & CO.C. 03 2011 304375965 243875256 1. Inventories cannot be termed to be liquid assets because they can not be converted into cash immediately. A very high quick ratio is also not advisable YEARS Quick assets (A) Current liabilities (B) Ratio A/B 2009 261788357 180032666 1. A quick ratio is less than 1 is indicative of inadequate liquidity of the business.R ENGINEERING COLLEGE 53 .11 2013 226026894 108045990 2.25 2012 286746201 135873828 2.MBA PROGRAMME MADDI LKSHMAIAH & CO. An asset is said to be liquid if it can be converted into cash within a short period without loss of value. LTD QUICK RATIO: It is also known as acid test or liquid ratio is more rigorous test of liquidity than the current ratio.C. Quick ratio may be defined as the relationship between the quick/ liquid assets and current/ liquid liabilities.45 2010 475094955 234221100 2. Quick or Acid Test Ratio = Quick Assets / Current Liabilities A quick ratio of 1 is considered as ideal.09 S. 25) in the year 2011.C. It is maximum (2.MBA PROGRAMME MADDI LKSHMAIAH & CO. The convention rule for quick ratio is 1:1. S. LTD Graphical Representation: INTERPRETATION: The above table shows the quick ratio of the company.11) in the year 2012 and minimum (1.R ENGINEERING COLLEGE 54 . term financial strengths in fact a firm should have a strong short-term as well as long-term financial position of the firm like financial leverage or capital structure are also calculated their ratios indicated mix of fund provided by owners and lenders. DEBT-EQUITY RATIO: YEARS Debt (A) Equity (B) Ratio (A/B) 2009 560278204 207200158 2.79 S. refers to long term debt.C. are more concerned with the firms long. Debt. LTD LEVERAGE RATIOS: The short term creditors like bankers and suppliers of raw material are more concerned with the firm’s current debt paying ability. (i) Debt-Equity Ratio (ii) Interest coverage ratio (i) Debt-Equity Ratio: It reflects the relative claims of creditors and share holders against the assets of the business. Equity includes equity and preference share capital and reserves.49 2012 426364256 525362240 0. A firm with a debt equity ratio of 2 or less eposes its creditors to relatively lesser risk. A firm with a high debt equity ratio exposes its creditors to greater risk. financial institutions etc.81 2013 474147366 603704185 0.43 2011 652429686 437500303 1. On the other hand long-term creditors like debenture holders.Equity Ratio= Long term debt Share holders founds Shareholders Found = Equity+ General Reserve+ Dividend Reserve+ Net Profit A debt equity ratio of 2:1 is considered ideal. Debt.70 2010 512512335 358901071 1.MBA PROGRAMME MADDI LKSHMAIAH & CO. usually.R ENGINEERING COLLEGE 55 . C. In the fallowing years the ratio is fluctuating. LTD Graphical Representation: INTERPRETATION: The above table shows the debt equity ratio.70)in the year 2009 and lowest (0. The overall debt equity ratio of the company is satisfactory. It is highest (2.R ENGINEERING COLLEGE 56 . S.79)in the year 2013.MBA PROGRAMME MADDI LKSHMAIAH & CO. LTD INTEREST COVERAGE RATIO: It indicates the ability of a firm to meet its interest obligation.R ENGINEERING COLLEGE 57 .62 2011 120583786 46543858 2.22 2010 25141569 40357291 0.29 S.C.59 2012 260447088 36690054 7.MBA PROGRAMME MADDI LKSHMAIAH & CO. It used to test the firm’s debt servicing capacity. EBIT Interest Coverage Ratio= Interest EBIT = Earnings before interest and taxes EBIT = Net Profit+ Interest+ Taxes YEARS EBIT (A) Interest (B) Ratio (A/B) 2009 60103469 49132743 1.09 2013 127756648 434244778 0. 29) in the year 2013.MBA PROGRAMME MADDI LKSHMAIAH & CO. LTD Graphical Representation: INTERPRETATION: The above table shows the interest coverage ratio of the company.C. It is maximum (7. S.R ENGINEERING COLLEGE 58 . The overall interest coverage ratio of the company is satisfactory. In the fallowing years the ratio is fluctuating.09) in the year 2012 and minimum (0. MBA PROGRAMME MADDI LKSHMAIAH & CO. (i) Inventory Turnover Ratio: Stock turnover ratio indicates the number of times the stock has turned over into sales in a year. These ratios are based on the relationship between the level of activity. measure how efficiently the assets are employed by a firm. and levels of various assets.48 2012 527362718 321269530 1.37 S. The following are the various types of turnover ratios. Inventory Turnover Ratio = Cost of Goods Sold / Average Stock Cost of Goods Sold = Sales-Gross Profit Or Cost of Goods Sold = Opening Stock + Purchases – Closing Stock Average Stock = Opening Stock + Closing Stock/2 YEARS Cost of goods sold (A) Average stock(B) Ratio A/B 2009 322992689 202872506 1. represented by sales or cost of goods sold.64 2013 712371342 299984106 2. LTD ACTIVITY RATIOS: Turnover ratio is also referred to as activity ratios or asset management ratios.42 2011 128972737 268562016 0.C.59 2010 318416449 224788820 1.R ENGINEERING COLLEGE 59 . It is calculated as: Credit sales Debtor’s Turnover Ratio = Average debtors S. 2013 the ratio is very high (2.MBA PROGRAMME MADDI LKSHMAIAH & CO.R ENGINEERING COLLEGE 60 . DEBTORS TURNOVER RATIO: Debtor’s turnover indicates the number of times debtors turnover ratio expresses the relationship between debtors and sales.C.37) when compare to previous years. LTD Graphical Representation: INTERPRETATION: The above table represents the inventory turnover ratio of the company In the present year i. The overall inventory turnover ratio of the company is satisfactory.e. MBA PROGRAMME MADDI LKSHMAIAH & CO.55 2012 588655944 83013158 7.11 2010 257993866 36258591 7.R ENGINEERING COLLEGE 61 .C. LTD Net credit sales imply credit sales after adjusting for sales returns. ‘sales’ can be taken in the numeration. YEARS Sales(A) Debtors(B) Ratio A/B 2009 255762587 35992686 7.12 2011 280678564 22361498 12.09 2013 678175554 189578498 3.58 S. In case information on credit sales is not available. MBA PROGRAMME MADDI LKSHMAIAH & CO.C.58 in 2013. LTD Graphical Representation: INTERPRETATION: The above table represents the debtors turnover ratio of the company The highest ratio is 12. The overall debtor’s turnover ratio of the company is Satisfactory. and the lowest ratio is 3.55 in the year 2011.R ENGINEERING COLLEGE 62 . S. C.26 S.51 2012 588655944 570903729 1. LTD FIXED ASSETS TURNOVER RATIO: By this ratio we can identified the efficiency of utilizing the fixed assets in the firm separately to generate the sales.R ENGINEERING COLLEGE 63 . The ratio is defined as: Fixed Assets Turnover Ratio = Net Sales / Net Fixed Assets YEARS Net sales (A) Net fixed assets (B) Ratio (A/B) 2009 255762587 581081498 0.03 2013 678175554 538901572 1.MBA PROGRAMME MADDI LKSHMAIAH & CO.44 2010 257993866 556411482 0.46 2011 280678564 554051968 0. C. and the lowest ratio is 0.MBA PROGRAMME MADDI LKSHMAIAH & CO. S.44 in 2009. The fixed assets turnover ratio of the company is not satisfactory.R ENGINEERING COLLEGE 64 .26 in the year 2013. LTD Graphical Representation: INTERPRETATION: The above table represents the fixed assets turnover ratio of the company. The highest ratio is 1. MBA PROGRAMME MADDI LKSHMAIAH & CO. LTD TOTAL ASSETS TURNOVER RATIO: (iv) Total Assets Turnover Ratio: This ratio shows the firm’s ability in generating sales from all financial resources committed to total assets. Total Assets Turnover Ratio = Net Sales / Total Assets Years Net Sales (A) Total Assets (B) Ratio (A/B) 2009 255762587 954423938 0.27 2010 257993866 953035014 0.27 2011 280678564 1147786394 0.24 2012 588655944 1390888717 0.42 2013 678175554 1136705555 0.60 S.C.R ENGINEERING COLLEGE 65 MBA PROGRAMME MADDI LKSHMAIAH & CO. LTD Graphical Representation: INTERPRETATION: The above table represents the Total Assets turnover ratio of the company. The highest ratio is 0.60 in the year 2013, and lowest ratio is 0.24 in the years 2011. In the present year i.e. 2011 the ratio is very high when compare to previous years. The overall Total assets turnover ratio of the company is satisfactory. S.C.R ENGINEERING COLLEGE 66 MBA PROGRAMME MADDI LKSHMAIAH & CO. LTD PROFITABILITY RATIOS: Profitability reflects the final result of business operations. There are two types of profitability ratios: profit margins ratios and rate of return ratios. Profit margins ratios show the relationship between profit and sales. The two popular profit margin ratios are: gross profit margin ratio and net profit margin ratio. Rate of return ratios select the relationship between profit and investment the important rate of return measures are: return on total assets, earning power, and return on equity. Generally, there are two types of profitability ratios. Profitability in relation to sales Profitability in relation to investment (i) Gross Profit Ratio: It is calculated by dividing the gross profit by sales. Gross Profit Gross Profit Ratio = x 100 Net Sales YEARS Gross Profit (A) Net Sales (B) Ratio (A/B) 2009 67230102 255762587 0.26 2010 6042253 257993866 0.02 2011 151705827 280678564 0.54 2012 61293226 588655944 0.10 2013 34195788 678175554 0.05 Graphical Representation: S.C.R ENGINEERING COLLEGE 67 02 in the year 2010 The overall gross profit ratio of the company is satisfactory. The lowest gross profit ratio is 0.C. The highest ratio is 0.MBA PROGRAMME MADDI LKSHMAIAH & CO. when compare to previous years. PROFIT RATIO: Net profit is obtained when operating expenses. This ratio indicates the management’s efficiency in manufacturing.54 in the year 2011. This ratio is the overall measure of the firm’s ability to turn each rupee into net profit. administering and selling the products. Net profit Net Profit Ratio = x 100 Sales YEARS Net Profit (A) Sales (B) Ratio (A/B) S. interest and taxes are subtracted from the gross profit.R ENGINEERING COLLEGE 68 . LTD INTERPRETATION: The above table represents the gross profit ratio of the company. LTD 2009 24342875 255762587 9.MBA PROGRAMME MADDI LKSHMAIAH & CO.R ENGINEERING COLLEGE 69 .52 2010 58618826 257993866 22.84 S.48 2013 127756648 678175554 18.79 2012 120583786 588655944 20.C.72 2011 260447088 280678564 92. R ENGINEERING COLLEGE 70 .79 in the year 201. The overall net profit ratio of the company is satisfactory.MBA PROGRAMME MADDI LKSHMAIAH & CO.52. The highest ratio is 92. The lowest net profit ratio in the year 2009 i.. 9. LTD Graphical Representation: INTERPRETATION: The above table represents the net profit ratio of the company. S.C.e. 98 2013 84123989 525362240 16.R ENGINEERING COLLEGE 71 .C. LTD Return On Net Worth: This ratio indicates how well the firm has used the resources of owners.MBA PROGRAMME MADDI LKSHMAIAH & CO.32 2011 151667926 358901071 42.26 2012 78698232 437599303 17.82 2010 42096494 207200158 20.01 S. Profit after tax ROE = x 100 Net worth YEARS PAT (A) Equity (B) Ratio (A/B) 2009 21044577 164136957 12.as well as useful for interfirm and inters industry comparisons. And also gives the shareholders and idea if the return of founds . The overall return on net worth of the company is satisfactory.C. The highest ratio is 42.26 in the year 2011. S.MBA PROGRAMME MADDI LKSHMAIAH & CO.e. LTD Graphical Representation: INTERPRETATION: The above table represents the return on net worth of the company. 12. The lowest return on net worth in the year 2009 i.R ENGINEERING COLLEGE 72 .82. LTD RETURN ON CAPITAL EMPLOYED: The ratio is calculated by dividing the net profit with total capital employed in the firm.87 2011 120583786 13000000 9.28 2012 260447088 13000000 20.51 2010 24342875 13000000 1.R ENGINEERING COLLEGE 73 .03 2013 127756648 13000000 9.83 S. Capital employed is founded by subtracting intangible assets from investment. Net profit means profit means profit after tax but with interest. Net profit + Interest Return on Capital Employed Ratio = x 100 Capital employed (or) Return on investment Years Net Profit (A) Capital Employed (B) Ratio (A/B) 2009 58618826 13000000 4.C.MBA PROGRAMME MADDI LKSHMAIAH & CO. e. S.R ENGINEERING COLLEGE 74 . LTD Graphical Representation: INTERPRETATION: The above table represents the return on capital employed of the company. The lowest return on capital employed in the year 2010 i.MBA PROGRAMME MADDI LKSHMAIAH & CO. 1.C.03 in the year 2012.87 The overall return on capital employed of the company is satisfactory. The highest ratio is 20. S. The overall earnings per share of the company is satisfactory.61 2011 11. 1.66 Graphical Representation: Interpretation: The above table represents the earning per share of the company.MBA PROGRAMME MADDI LKSHMAIAH & CO.67 2012 6.66 in the year 2013.e. The lowest earnings per share in the year 2010 i. LTD Earnings Per Share: Year Ratio 2009 3.23 2010 1.C.61. The highest ratio is 14.R ENGINEERING COLLEGE 75 .05 2013 14. In the previous year 2013 the ratio is very high when compared with the previous years. The fixed assets turnover ratio is very low in the year 2011 compared to the other succeeding years. The study reveals that the debt ratio of the company is high in the year 2010 through this we can say it is in a not satisfactory position. From the profit after taxation. It was found that the standard debt equity ratio of the company.C.MBA PROGRAMME MADDI LKSHMAIAH & CO. But the gross profit ratio of the company is very low in the year 2010 compared to the other succeeding years. The net profit ratio of the company is not satisfactory for the period of the study of the company. most of the amount transfers to the provision under different heads. In the year 2010. is fluctuating for the period of study the company. a high quick ratio is not advisable to the company. So that it is good indicates for future expansion. the quick ratio is very high. The reason for this low ratio is sales are not satisfactory in that year. S.R ENGINEERING COLLEGE 76 . The study reveals that the inventory turnover ratio of the company is very low in the year 2009. LTD FINDINGS Based on the analysis of various ratios applied in analyzing. The debtor turnover ratio of the company is not effective in the period of study the company. In financial data relating Maddi lakshmaiah & co ltd and conclusions arrived at the fallowing findings are as fallows: It was observed that the current ratio of Maddi lakshmaiah & co ltd. The gross profit ratio is good indicator of the company. Increase the more facilities for the Maddi lakshmaiah & co ltd Employees and optimize the uses of management expenditure and general expenditure. The Maddi lakshmaiah & co ltd.R ENGINEERING COLLEGE 77 . Common size balance sheets and comparative balance sheets were showing position good. The gross profit of the company is well. So. CONCLUSION To study all aspects of the company. The company should maintain the same interest coverage ratio in future also. Comparative income statements were good except one year (2010). I am suggested to company maintain the quick ratio is not below the one. LTD SUGGESTIONS Based on the analysis of various ratios applied in analyzing. The debtor’s turnover ratio of the company is not effective in the period of study. In financial data relating Maddi lakshmaiah & co ltd.MBA PROGRAMME MADDI LKSHMAIAH & CO. Net profit is increased except one year (2010). has maintained the same equity share capital from begin to till onwards. It is very good indicator to Maddi lakshmaiah & co ltd. I suggest that maintain the debtor’s turnover ratio is 10-12 debt collection period is 30-60 days. Company should reduce the taking of loans. The Maddi lakshmaiah & co ltd.C. has to go for search of new markets and to be innovative in their productive work. S. it is hard to pay interest. it stands good position and it should improve. The quick ratio 1:1 is considered as ideal. and conclusions arrived at the following suggestions are as fallows: The company has maintained a satisfactory current ratio due to increase in current assets more than current liabilities. MBA PROGRAMME MADDI LKSHMAIAH & CO.R ENGINEERING COLLEGE 78 .C. LTD S. org S.S.C.P.financialmarketresearch. Maheswari Sarma & Gupta Dr .M.K Jain G.Pandey My Khan.MBA PROGRAMME MADDI LKSHMAIAH & CO. LTD BIBLIOGRAPHY Reference Text Books: Financial Management Financial Management Financial Accounting And Analysis Financial Management Advanced Financial Accounting Financial Management Financial Management - I.Prasad Prasanna Chandra S.com www. P.en.R ENGINEERING COLLEGE 79 .wikipedia.com www.N. indiafinancialanalysis. Gupta Web Sites: www.