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Capstone Research Report Power Sector in India, Ratio analysis and EVA model

Submitted In partial fulfillment of requirement of PGDM program at St. Kabir Institute of professional studies (SKIPS)

Submitted By Neha Suraan Roll No. 37

Under Supervision of Prof. Rajlaxmi Sr.Professor St. Kabir Institute of Professional Studies, Ahmedabad October, 2012

Declaration

I hereby declare that this Project Report titled Power Sector in India, Ratio analysis and EVA model submitted by me to St. Kabir Institute of Professional Studies, Ahmedabad, is a bonafide work undertaken by me and it is not submitted to any other University or Institution for the award of any degree diploma / certificate or published any time before.

Date

Neha Surana

CERTIFICATE This is to certify that this project Power Sector in India, Ratio analysis and EVA model is submitted by the candidate, Neha Lalit Surana, in partial fulfillment of the requirements for the degree of Post Graduate Diploma in Management of St. Kabir Institute of Professional Studies, Ahmedabad. No part of this dissertation has been submitted for any other degree or diploma to any other university or institution. Date: Signature of the supervisor Prof. Rajlaxmi Sr. Professor St. Kabir Institute of Professional Studies, Ahmedabad

ACKNOWLEDGEMENTS At the outset, I wish to express my sincere thanks to almighty for showering his blessing on me to develop this project.

I would like to acknowledge my sincere thanks to _PROF.RAJLAXMI for her excellent guidance and supervision for the completion of this project successfully.

I am deeply indebted to the Principal MR. Shantanu Mehta for enabling me to do this project.

I express my sincere thanks to Power sector Companies for the permission to carry out this study in his esteemed organization.

Last but not the least I wish to thank my Parents who always believed me and have faith in me in whatever I wished to do.

CONTENTS
CHAPTER PARTICULARS INTRODUCTION AND DESIGN OF THE STUDY 1.1 Introduction of the Study CHAPTER I 1.2 Objective of the Study 1.3 Research Methodology 1.3.1 Research Design 1.3.2 Nature of Data 1.3.3 Methods Data Collection 1.3.4 Research Tools 1.4 Limitations of the Study PROFILE CHAPTER II 3.1 Industry Profile 3.2 Company Profile CHAPTER III DATA ANALYSIS AND INTERPRETATION FINDINGS AND SUGGESTIONS 5.1 Findings 5.2 Suggestions CONCLUSION AND BIBLIOGRAPHY 6.1 Conclusion 6.2 Bibliography

PAGE NO 1-11

16-35

36-85 86-91

CHAPTER IV

92-95

LIST OF TABLE SL.NO


1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Absolute liquidity ratio Debt equity ratio Proprietary ratio Stock turnover ratio Fixed assets turnover ratio Working capital turnover ratio Total assets turnover ratio Capital turnover ratio Return on total assets Gross profit ratio Net profit ratio Expenses ratio EVA model table Current ratio Liquid ratio 40 42 44 46 48 50 52 54 56 58 60 62 64

PARTICULRS

PAGE NO
38

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

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

This studying contain following analysis: 1) Ratio analysis 2) EVA analysis.

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

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

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

Current assets Current assets = ------------------------Current liabilities - (provisions )

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

Current assets - Inventory Quick ratio = ------------------------Current liabilities (Provision)

iii) Absolute liquidity ratio: Absolute liquid assets include cash, bank, and marketable securities. This ratio is obtained by dividing cash and bank and marketable securities by current liabilities.

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

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

i) Debt equity ratio: It expresses the relationship between the external equities and internal equities or the relationship between borrowed funds and owners capital. It is a popular measure of the long-

term financial solvency of a firm. This relationship is shown by the debt equity ratio. This ratio indicates the relative proportion of debt and equity in financing the assets of a firm. This ratio is computed by dividing the total debt of the firm by its equity (i.e.) net worth. Outsiders funds Debt equity ratio = -----------------------------Proprietors funds

ii) Debt-asset ratio: Debt-asset ratio relates to the proprietors funds to total assets. It reveals the owners contribution to the total value of assets. This ratio shows the long-time solvency of the business it is calculated by dividing proprietors funds by the total tangible assets.

Debt funds Proprietary ratio = --------------------------Total tangible assets C) TURNOVER RATIOS: These ratios evaluate the use of the total resources of the business concern along with the use of the components of total assets. They are intended to measure the effectiveness of the assets management the efficiency with which the assts are used would be reflected in the speed and rapidity with which the assets are converted into sales. The greater the rate of turnover, the more efficient the management would be (E.g.) stock turnover ratio, fixed assets turnover ratios etc.

i) Inventory turnover ratio: This ratio indicates whether investment is inventory is efficiently used or not it explains whether investment in inventories in with in proper limits or not. It also measures the effectiveness of the firms sales efforts the ratio is calculated as follows.

Cost of goods sold Inventory turnover ratio = ----------------------------Average stock Opening Stock + Closing Stock Average stock = ----------------------------------------2

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

Net sales Fixed assets turnover ratio = ------------------Average net fixed assets

iii) Average collection period: Average collection period ratio indicates the no of days worth of credit sales that is locked in sundry debtors. It can also be used to judge the efficiency of credit management.

Avg sundry debtors Average collection period= ---------------------------Avg daily credit sales

iv)Total assets turnover ratios:

Profitability can be measured in terms of relationship between net sales and total assets. It measures the profitability of investment. The overall profitability can be known by applying this ratio. Net sales Total assets turnover = ----------------------------- x100 Average Total assets

D) PROFITABILITY RATIOS:

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

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

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

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

Net profit

Net profit sales =

----------------- x 100 Net sales

iii) Return on asset ratio: This ratio establishes the relationship between profit and the assets.

Profit after tax Return on asset ratio = ------------------------------- x 100 Avg total assets

IV)RETURN ON CAPITAL EMPLOYED RATIO:

ROCE is the post tax version on earning power. It is internally consistent. It can be directly compared with post tax average cost of capital

profit before interest and tax ROCE ratio = ----------------------------------------- x 100 Avg total assets

v) Return on equity ratio: This ratio measures the great interest to equity shareholder. This ratio is also called the return on net worth

Equity earnings Return on equity ratio = ------------------------------- x 100

Avg equity

Eva model 1.2 OBJECTIVES OF THE STUDY The basic objective of studying the ratios of the companies is to know the financial position of the companies. To know the borrowings of the companies as well as the liquidity position of the companies.

To study the current assets and current liabilities so as to know whether the shareholders could invest in Power sector or not. To study the profits of the business and net sales of the business.

To know the solvency of the company and the capacity to give interest to the long term loan lenders (debenture holders) and dividend to the share holders. To study the balance of cash and credit in the organization.

1.3 RESEARCH METHODOLOGY:

1.3.1 Research design: The descriptive form of research method is adopted for study. The major purpose of descriptive research is description of state of affairs of the institution as it exists at present. The nature and characteristics of the financial statements of Power sector have been described in this study.

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

1.3.3 Methods of data collection:

This study is based on the annual report of Power sector. 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.

1.3.4 Tools applied: To have a meaningful analysis and interpretation of various data collected, the following tools were made for this study. Ratio analysis Comparative study EVA analysis 1.4 LIMITATION OF THE STUDY: The analysis was made with the help of the secondary data collected from the company. All the limitations of ratio analysis, comparative statements, and EVA analysis and interpret are applicable to this study.

The period of study is 5 years from 2007-08 to 2011-12.

Data analysis
Current ratio Current assets Current assets = ------------------------Current liabilities - (provisions)

ADANI POWER
year 2007 2008 2009 2010 2011 2012 current asset 5087.14 3668.59 9683.56 2634.64 3491.99 5287.97 Current liability 2308.67 4096.53 5453.2 1257.17 3402.31 1071.41 provisions 106.4 591 545.9 125.17 512.15 75.82 Current asset/current liability-provision 2.309953 1.046515 1.973297 2.32742 1.208234 5.311393

6.00 5.00 4.00 3.00 2.00 1.00 0.00 2008

current ratio
5.31

1.97 1.05

2.33 1.21 current ratio

2009

2010

2011

2012

Interpretation and Analysis: The above table and diagram shows that the current ratio in the year 2007-08 was 1.05 and then in increases to 1.97 in the year 2008-09, further move upwards to 2.33 and in the year 2010-11 it slashed down to 1.21 and finally in the year 2007-08 it again moved up to 5.31. The normal current ratio is 2:1. The above table shows current ratio is less than 2% in all the first two years. But in 20011-2012 the current ratio is higher than the normal. This shows that the company is not enjoying credit worthiness

CESC POWER
current asset Current liability provisions Current asset/current liabilityprovision 1.720123 1.794549 1.854286 1.803156 1.723491 1.797699

2007 2008 2009 2010 2011 2012

1542.4 1961.64 2926.75 2896.32 2892.88 3513.19

982.85 1213.68 1701.48 1728.92 1750.62 2042.65

86.17 120.57 123.11 122.67 72.12 88.38

current ratio cese


1.90 1.85 1.85 1.80 1.75 1.70 1.65 2008 2009 2010 2011 2012 1.79 1.80 1.80 current ratio cese 1.72

Interpretation and Analysis: The above table and diagram shows that the current ratio in the year 2008-09 was 1.85 and then in decreased to 1.72 in the year 2010-11, further move upwards to 1.80 and in the year 2007-08. The normal current ratio is 2:1. The above table shows current ratio is less than 2% in all the all years. But in 20010-2011 the current ratio is much lower than the normal. This shows that the company is not enjoying credit worthiness RELIANCE POWER year current asset Current liability Provisions Current asset/current liability-

2007 2008 2009 2010 2011 2012

45791.1 52500.92 74220.02 67546.21 88470.39 88970.12

35218.23 42386.4 43046.9 33600.1 16305.8 17569.9

34634.63 41746.3 41746.3 31520.1 16261.8 17513.9

provision 1.322119 1.262094 1.777883 2.142957 5.440381 5.079972

curren ratio reliance


6.00 5.00 4.00 3.00 2.00 1.00 0.00 2008 2009 2010 2011 2012 1.78 1.26 2.14 curren ratio reliance 5.44 5.08

Interpretation and Analysis: The above table and diagram shows that the current ratio in the year 2007-08 was 1.26 and then in increases to 1.78 in the year 2008-09, further move upwards to 2.14 and in the year 2010-11 it moved up by to 5.44 and finally in the year 20011-12 it again moved down to 5.08. The normal current ratio is 2:1. The above table shows current ratio is more than 2% in all the last three years. But in 2007-2008 the current ratio is lower than the normal. This shows that the company is enjoying credit worthiness TATA POWER year current asset Current liability provisions Current asset/current liabilityprovision 8.171606 5.797929 6.099762 7.801703

2007 4042.33 2008 3875.51 2009 4681.14 2010 5954.26

1126.26 1253.87 1419.33 1465.7

494.68 668.43 767.43 763.2

2011 2767.6 2012 5026.59

3105.33 3797.79

2752.43 3406.49

1.005511 1.475592

Chart Title
9 8 7 6 5 4 3 2 1 0 2008 2009 2010 2011 2012 2.40 3.34 tata 5.80 6.10 7.80

Interpretation and Analysis: The above table and diagram shows that the current ratio in the year 2007-08 was 5.80 and then in increases to 6.10 in the year 2008-09, further move upwards to 7.80 and in the year 2010-11 it slashed down to 2.40 and finally in the year 2011-12 it again moved up to 3.34. The normal current ratio is 2:1. The above table shows current ratio is more than 2% in all the first four years. But in 2006-2007 the current ratio is lower than the normal. This shows that the company is enjoying credit worthiness but now it is having lot of problems. TORRENT POWER year current asset Current liability provisions Current asset/current liabilityprovision 1.115721 1.476652 2.059824 2.963115 0.999065 1.11979

2007 2008 2009 2010 2011 2012

894.73 1232 1749.47 2598.8 2083.03 2254.45

1224.26 1439.22 1455.93 1819.75 2415.88 2253.08

801.93 834.32 849.33 2084.98 2084.98 2013.28

current ratio torrent


3.50 3.00 2.50 2.00 1.50 1.00 0.50 0.00 2008 2009 2010 2011 2012 1.48 1.00 1.12 current ratio torrent 2.06 2.96

Interpretation and Analysis: The above table and diagram shows that the current ratio in the year 2007-08 was 1.48 and then in increases to 2.06in the year 2008-09, further move upwards to 2.96 and in the year 2010-11 it slashed down to 1.00 and finally in the year 2007-08 it again moved up to 1.12. The normal current ratio is 2:1. The above table shows current ratio is more than2% in all the first three years. But in 2010-2011 and 2011-12 the current ratio is lower than the normal. This shows that the company is not enjoying credit worthiness QUICK RATIO Current assets - Inventory Quick ratio = ------------------------Current liabilities (Provision) ADANI POWER year 2007 2008 2009 2010 2011 2012 ca-inv 4947.96 3196.09 9533.16 2517.64 3215.66 4471.55 lia-prov 2202.27 3505.53 4907.3 1132 2890.16 995.59 ca/cl 1.411473 0.651293 8.421519 0.871107 3.229904 4.986785

quick ratio adani


9.00 8.00 7.00 6.00 5.00 4.00 3.00 2.00 1.00 0.00 2008 2009 2010 2011 2012 0.65 0.87 3.23 4.99 quick ratio adani 8.42

Interpretation and Analysis:

The above table and diagram shows the liquid ratio during the study period except in the year 2007-2008 is less than the normal (i.e.) 1:1.It was 0.65 in the year 2007-08 and reached the highest in 2008-09to 8.42 and then came down to 0.87 in the year 2007-08. Hence the firm is not controlling its stock position because there linear relationship between current ratio and liquid ratio. Cese year 2007 2008 2009 2010 2011 2012 ca-inv 1375.08 1785.43 2714.79 2658.04 2598.44 3218.49 lia-prov 896.68 1093.11 1578.37 1606.25 1678.5 1954.27 ca/cl 1.257952 1.131186 1.690142 1.583581 1.329622 0.092927

quick rario cese


1.80 1.60 1.40 1.20 1.00 0.80 0.60 0.40 0.20 0.00 2008 2009 2010 2011 2012 quick rario cese 1.13 1.69 1.58 1.34 1.66

Interpretation and Analysis:

The above table and diagram shows the liquid ratio during the study period except in the year 2007-2008 is more than the normal (i.e.) 1:1.It was 1.13 in the year 2007-08 and reached the highest in 2008-09 to 1.69 and then came down to 1.34 in the year 2010-11. Hence the firm is controlling its stock position because there linear relationship between current ratio and liquid ratio. Reliance year 2007 2008 2009 2010 2011 2012 ca-inv lia-prov 45791.1 34634.63 52500.92 41598.25 74220.02 41746.3 67546.21 31520.1 88470.39 16261.8 88970.12 17513.9 ca/cl 1.100794 1.257619 2.354689 4.153674 5.051439 5.079972

reliance quick ratio


6.00 5.05 5.00 4.15 4.00 3.00 2.00 1.00 0.00 2008 2009 2010 2011 2012 1.26 2.35 reliance quick ratio 5.08

Interpretation and Analysis:

The above table and diagram shows the liquid ratio during the study period in the year 2007-2008 is more than the normal (i.e.) 1:1.It was 5.08 in the year 2010-11reached the highest in 2011-12 to 5.08 Hence the firm is controlling its stock position because there linear relationship between current ratio and liquid ratio. Tata year 2007 2008 2009 2010 2011 2012 ca-inv lia-prov 3645.91 494.68 3401.9 668.43 4037 767.43 5364.9 763.2 2142.58 2752.43 4171.89 3406.49 ca/cl 5.454438 4.432847 5.28957 1.94915 0.62897 5.202312

tata quick ratio


6.00 5.00 4.00 3.00 2.00 1.00 0.00 2008 2009 2010 2011 2012 1.95 0.63 tata quick ratio 4.43 5.29 5.20

Interpretation and Analysis:

The above table and diagram shows the liquid ratio during the study period except in the year 2007-2008 is more than the normal (i.e.) 1:1.It was 4.43 in the year 2007-08 and reached the highest in 2008-09 to 5.29 and then came down to .63 in the year 2010-11. Hence the firm is controlling its stock position because there linear relationship between current ratio and liquid ratio. Torrent year 2007 2008 2009 2010 2011 2012 ca-inv lia-prov 741.93 801.93 1066.2 834.32 1581.51 849.33 2454.75 877.05 1819.59 2084.98 1954.9 2013.28 ca/cl 0.889263 1.255342 1.803215 1.177349 0.903794 0.971003

torrent quick ratio


2.00 1.80 1.60 1.40 1.20 1.00 0.80 0.60 0.40 0.20 0.00 1.80

1.26

1.18 0.90 0.97 torrent quick ratio

2008

2009

2010

2011

2012

Interpretation and Analysis:

The above table and diagram shows the liquid ratio during the study period except in the year 2007-2008 is more than the normal (i.e.) 1:1.It was 1.80 in the year 2009-10 and reached the highest in 2008-09 to 1.80 and then came down to .97 in the year 2011-12. Hence the firm is controlling its stock position because there linear relationship between current ratio and liquid ratio. Absolute liquidity ratio Cash + bank +marketable securities Absolute liquidity ratio = ---------------------------------------------Current liabilities (Provision)

Adani year 2007 2008 2009 2010 2011 2012 cash 1917.84 4970.46 4944.1 10266.6 626.26 3030.23 lia-prov 2202.27 3505.53 4907.3 1132 2890.16 995.59 cash/lia 0.870847 1.417891 1.007499 9.069435 0.216687 3.043653

absolute ratio adani


3.50 3.00 2.50 2.00 1.50 1.00 0.50 0.00 2008 2009 2010 2011 2012 1.42 1.01 0.91 0.22 absolute ratio adani 3.04

Interpretation and Analysis: The above table and diagram shows the absolute ratio for the study period 2007-08 to 2011-12. There is fluctuation in the absolute ratio. It was 0.22 in the year 2010-11. In 2011-12 it was 3.04. It was 0.91 in 2009-10. Cese year cash 2007 731.44 2008 986.44 2009 1274.73 2010 1119.79 2011 838.84 2012 859.84 lia-prov 896.68 1093.11 1578.37 1606.25 1678.5 1954.27 cash/lia 0.81572 0.902416 0.807624 0.697146 0.499756 0.43998

cese
1.00 0.90 0.80 0.70 0.60 0.50 0.40 0.30 0.20 0.10 0.00 0.90 0.81 0.70 0.50

0.44

cese

2008

2009

2010

2011

2012

Interpretation and Analysis: The above table and diagram shows the absolute ratio for the study period 2007-08 to 2011-12. There is fluctuation in the absolute ratio. There is a downward trend. It was 0.90 in the year 2007-08. In 2008-09 and 2010-11 it was 0.81 and 0.70 . It was 0.44 in 2011-12 Reliance year 2007 2008 2009 2010 2011 2012 cash lia-prov 7749.8 34634.63 36116.18 41598.25 14422.22 41746.3 98232.45 31520.1 98757 16261.8 20595 17513.9 cash/lia 0.223759 0.868214 0.345473 3.116502 6.072944 1.175923

reliance
7.00 6.00 5.00 4.00 3.00 2.00 1.00 0.00 2008 2009 2010 2011 2012 0.87 0.35 1.18 3.12 6.07

reliance

Interpretation and Analysis: The above table and diagram shows the absolute ratio for the study period 2007-08 to 2011-12. There is fluctuation in the absolute ratio. It was 0.87 in the year 2007-08. In 2008-09 and 2010-11 it was 0.35 and .07. It was 1.18 in 2011-12. Tata year 2007 2008 2009 2010 2011 2012 cash lia-prov 1367.72 494.68 2870 668.43 4550 767.43 1277.64 763.2 837.29 2752.43 1057.35 3406.49 cash/lia 2.764858 4.293643 5.92888 1.674057 0.3042 0.310393

tata
7.00 6.00 5.00 4.00 3.00 2.00 1.00 0.00 2008 2009 2010 2011 2012 1.67 0.30 0.31 tata 4.29 5.93

Interpretation and Analysis: The above table and diagram shows the absolute ratio for the study period 2007-08 to 2011-12. There is fluctuation in the absolute ratio. It was 4.29 in the year 2007-08. In 2008-09 and 2010-11 it was 5.93 to 0.30. It was 0.31 in 2011-12 Torrent year cash lia-prov 2007 41.29 801.93 2008 185.88 834.32 2009 640.49 849.33 2010 1171.43 877.05 2011 925.61 2084.98 2012 73.42 2013.28 cash/lia 0.051488 0.222792 0.754112 1.335648 0.443942 0.036468

torrent
1.60 1.40 1.20 1.00 0.80 0.60 0.40 0.20 0.00 2008 2009 2010 2011 2012 0.22 0.04 0.75 torrent 0.44 1.34

Interpretation and Analysis: The above table and diagram shows the absolute ratio for the study period 2007-08 to 2011-12. There is fluctuation in the absolute ratio. It was 0.22 in the year 2007-08. In 2008-09 and 2010-11 it was 0.75 and 0.44 It was 0.04 in 2011-12 i) Debt equity ratio: Outsiders funds Debt equity ratio = -----------------------------Proprietors funds

Adani Cese year 2008 2009 2010 2011 2012 outsider propietory 1629.78 3815.16 2398.11 5128.89 3016.58 5596.24 4673 6011.77 4412.21 5589.24 debt euityeuity 0.43 0.47 0.54 0.78 0.79

cese
0.90 0.80 0.70 0.60 0.50 0.40 0.30 0.20 0.10 0.00 2008 2009 2010 2011 2012 0.43 0.47 cese 0.54 0.78 0.79

Interpretation and Analysis: The above table and diagram shows the debt equity relationship of the company during the study period. It was 0.43 in the 2007-08 and then reached its highest in the next three year. In all the years the equity is more when compared with borrowings. Hence the company is maintaining its debt position Reliance year 2008 2009 2010 2011 2012 outsider 1274.89 1324.42 1340.58 1756.94 1630.85 debt propietory euityeuity 1354.26 0.94 1379.28 0.96 1406.6 0.95 1509.14 1.16 1529.14 1.07

reliance
1.40 1.20 1.00 0.80 0.60 0.40 0.20 0.00 2008 2009 2010 2011 2012 reliance 0.94 0.96 0.95 1.16 1.07

Interpretation and Analysis: The above table and diagram shows the debt equity relationship of the company during the study period. It was 0.94 in the 2007-08 and then reached its highest in the two year and from there it began to slope downwards and ultimately came to 1.07 in the year 2011-12. In all the years the equity is more when compared with borrowings. Hence the company is maintaining its debt position Tata year 2008 2009 2010 2011 2012 outsider 1115.12 1404.99 1703.55 2110.3 2517.71 debt propietory euityeuity 281.71 3.96 221.44 6.34 237.33 7.18 237.87 8.87 376.25 6.69

tata
10.00 9.00 8.00 7.00 6.00 5.00 4.00 3.00 2.00 1.00 0.00 8.87 7.18 6.34 6.69

3.96

tata

2008

2009

2010

2011

2012

Interpretation and Analysis: The above table and diagram shows the debt equity relationship of the company during the study period. It was 3.96 in the 2007-08 and then reached its highest in the two year and from there it began to slope downwards and ultimately came to 6.69 in the year 2007-08. In all the years the equity is more when compared with borrowings. Hence the company is maintaining its debt position Torrent year 2008 2009 2010 2011 2012 outsider 5854.42 6958.91 7834.43 10097.74 11828.71 propietory 2889.76 3233.4 3908.15 4787.13 5747.88 debt euityeuity 2.03 2.15 2.00 2.11 2.06

torrent
2.20 2.15 2.15 2.11 2.10 2.06 2.05 2.00 1.95 1.90 2008 2009 2010 2011 2012 2.03 2.00 torrent

Interpretation and Analysis: The above table and diagram shows the debt equity relationship of the company during the study period. It was 2.03 in the 2007-08 and then reached its highest in the next year and from there it began to slope downwards and ultimately came to 2.06 in the year 2011-12. In all the years the equity is more when compared with borrowings. Hence the company is maintaining its debt position

ii) Debt-asset ratio: Debt funds Proprietary ratio = --------------------------Total tangible assets Cese year 2008 2009 2010 2011 2012

equity assets equity asset 125.6 7155.39 0.017553201 125.6 8438.81 0.014883615 125.6 10035.54 0.01251552 125.6 12707.42 0.009883989 125.6 11732.07 0.010705698

0.02 0.018 0.016 0.014 0.012 0.01 0.008 0.006 0.004 0.002 0

cese
0.017 0.014 0.012 0.009 0.010 cese

2008

2009

2010

2011

2012

Interpretation and Analysis: The above table and diagram shows the proprietary ratio during the study period. In all the years the owner's contribution to the total assets was appropriate and they maintain their share in the company's assets. In all the years the proprietor's contribution in to the total assets is same. Reliance equity assets asset 1354.25 1379.89 1406.6 1756.94 1630.85

year 2008 2009 2010 2011 2012

equity 2259.95 2396 2396 2805.13 2805.13

1.67 1.74 1.70 1.60 1.72

reliance
1.75 1.70 1.65 1.60 1.55 1.50 2008 2009 2010 2011 2012 1.60 reliance 1.74 1.70 1.67 1.72

Interpretation and Analysis: The above table and diagram shows the proprietary ratio during the study period. In all the years the owner's contribution to the total assets was appropriate and they maintain their share in the company's assets. Except 2010-11in all the years the proprietor's contribution in to the total assets is more than the 2/3. Tata year 2008 2009 2010 2011 2012 equity 220.72 221.44 237.33 237.33 237.33 assets 11155.12 14004.99 16703.8 21205.3 25117.71 equity asset 0.02 0.02 0.01 0.01 0.01

tata
0.03 0.02 0.02 0.01 0.01 0.00 2008 2009 2010 2011 2012 0.02 0.02 0.01 0.01 0.01 tata

Interpretation and Analysis: The above table and diagram shows the proprietary ratio during the study period. In all the years the owner's contribution to the total assets was appropriate and they maintain their share in the company's assets. Torrent year 2008 2009 2010 2011 2012 equity assets equity asset 472.45 5854.4 0.08 472.45 6456.81 0.07 472.45 7834.43 0.06 472.45 10098.74 0.05 472.45 11828.71 0.04

torrent
0.09 0.08 0.07 0.06 0.05 0.04 0.03 0.02 0.01 0.00 2008 2009 2010 2011 2012 0.05 0.04 torrent 0.08 0.07 0.06

Interpretation and Analysis: The above table and diagram shows the proprietary ratio during the study period. In all the years the owner's contribution to the total assets was appropriate and they maintain their share in the company's assets. Inventory turnover ratio Cost of goods sold Inventory turnover ratio = ----------------------------Average stock adani Interpretation and Analysis: The above table and diagram shows the relationship between costs of goods sold and average stock. During the year 2008-09 it is 66.17% which shows higher position of cost of goods sold. In the years of study it is shown above that the cost of goods sold are almost 3565times of the average stock. But at the same time during 2007-08 it is only 6.95 which shows that more stock was remaining in the company. Cese inven avg.stock turn

year

cogs

op.stock cl.stock

2008 2009 2010 2011 2012

378.27 412.46 665.42 636.05 665.42

176.21 211.96 294.5 294.8 294.44

176.21 211.96 294.5 294.8 294.44

255.425 282.19 359.21 441.9 442.02

1.48 1.46 1.85 1.44 1.51

cese
2.00 1.80 1.60 1.40 1.20 1.00 0.80 0.60 0.40 0.20 0.00 1.85 1.48 1.46 1.44 1.51

cese

2008

2009

2010

2011

2012

Interpretation and Analysis: The above table and diagram shows the relationship between costs of goods sold and average stock. During the year 2008-09 it is 66.17% which shows higher position of cost of goods sold. In the years of study it is shown above that the cost of goods sold are almost 3565times of the average stock. But at the same time during 2007-08 it is only 6.95 which show that more stock was remaining in the company. Reliance inven avg.stock turn 284.34 1.11 419.065 0.50 324.665 1.20 376.33 1.15 217.09 3.17

year 2008 2009 2010 2011 2012

cogs 314.2 207.59 389.2 433 689.12

op.stock 336.34 165.45 318.43 115.8 202.58

cl.stock 336.34 165.45 318.43 115.8 202.58

reliance
3.50 3.00 2.50 2.00 1.50 1.00 0.50 0.00 2008 2009 2010 2011 2012 0.50 1.11 1.20 1.15 reliance 3.17

Interpretation and Analysis: The above table and diagram shows the relation ship between costs of goods sold and average stock. During the year 2008-09 it is 66.17% which shows higher position of cost of goods sold. In the years of study it is shown above that the cost of goods sold are almost 3565times of the average stock. But at the same time during 2007-08 it is only 6.95 which shows that more stock was remaining in the company. Tata inven avg.stock turn 934.19 0.59 782.27 0.63 669.21 0.53 743.4 1.06 1107.885 0.58

year 2008 2009 2010 2011 2012

cogs 553.5 493.4 351.56 789.43 647.53

op.stock 535.5 493.54 351.34 784.12 647.53

cl.stock 535.5 493.54 351.34 784.12 647.53

tata
1.20 1.00 0.80 0.60 0.40 0.20 0.00 2008 2009 2010 2011 2012 0.59 0.63 0.53 0.58 tata 1.06

Interpretation and Analysis: The above table and diagram shows the relation ship between costs of goods sold and average stock. During the year 2008-09 it is 66.17% which shows higher position of cost of goods sold. In the years of study it is shown above that the cost of goods sold are almost 3565times of the average stock. But at the same time during 2007-08 it is only 6.95 which shows that more stock was remaining in the company. Torrent inven cogs op.stock cl.stock avg.stock turn 1932.9 1932 1932 1684.43 1.15 2260.8 2260.44 2260.44 3062.22 0.74 1395 1395.54 1395.54 2958.21 0.47 1474.76 1474.23 1474.23 2132.655 0.69 2282.72 2282.72 2282.72 2615.59 0.87

year 2008 2009 2010 2011 2012

torrent
1.40 1.20 1.00 0.80 0.60 0.40 0.20 0.00 2008 2009 2010 2011 2012 0.74 0.47 0.69 torrent 1.15 0.87

Interpretation and Analysis: The above table and diagram shows the relation ship between costs of goods sold and average stock. During the year 2008-09 it is 66.17% which shows higher position of cost of goods sold. In the years of study it is shown above that the cost of goods sold are almost 3565times of the average stock. But at the same time during 2007-08 it is only 6.95 which shows that more stock was remaining in the company.

Fixed assets turnover ratio Net sales Fixed assets turnover ratio = ------------------Average net fixed assets Adani Interpretation and Analysis: The above table and diagram shows the relationship between the fixed assets and sales. The sale is 4 times more than the fixed assets 2007-08 and 2005-06. It is more than 3 times during 2008-09 and 2006-2007. It is more than 2 times during 2007-08. It can be observed that in the year 2010-11 the fixed assets value increased a lot and which shows that there is an additions made to the fixed assets, similarly the sales was also increased from 179,231,321(2005-06) to 225,250,870 (2010-11). However in the year 2007-08 it slashed to about 50% of the sales of 2010-11. Cese

year net sales 2774.97 3031.32 3939.85 4689.54 4172.54 avg fixedasset 5829.13 6882.17 7750.79 8091.23 7735.45 fixed aset turn 0.48 0.44 0.51 0.58 0.54

2008 2009 2010 2011 2012

cese
0.70 0.60 0.50 0.40 0.30 0.20 0.10 0.00 2008 2009 2010 2011 2012 reliance 0.48 0.44 0.58 0.51 0.54

Interpretation and Analysis: The above table and diagram shows the relationship between the fixed assets and sales. The sale is 0.48 times more than the fixed assets 2007-08 and 2008-09. It is more than 0.44 times during 2008-09. It is more than0.58 times during 2007-08. It can be observed that in the year 2010-11 the fixed assets value increased a lot and which shows that there is an additions made to the fixed assets. Reliance year net avg fixed aset sales fixedasset turn 2676.1 1324.43 2.02 2067.89 1340.89 1.54 3638 1449.09 2.51 6612 1513.12 4.37

2008 2009 2010 2011

2012

reliance
5.00 4.50 4.00 3.50 3.00 2.50 2.00 1.50 1.00 0.50 0.00 4.37

2.51 2.02 1.54 1.04 reliance

2008

2009

2010

2011

2012

Interpretation and Analysis: The above table and diagram shows the relation ship between the fixed assets and sales. The sale is 1 times more than the fixed assets 2007-08. It is more than 2 times during 2008-09. It is more than 2 times during 20010-11. It can be observed that in the year 2011-12 the fixed assets value increased a lot and which shows that there is an additions made to the fixed assets, similarly the sales was also increased . Tata year 2008 2009 2010 2011 2012 net sales 5915.9 7236.23 7089 6927.89 8512.33 avg fixedasset 3005.49 5951.34 6229.95 6812.98 7783.07 fixed aset turn 1.97 1.22 1.14 1.02 1.09

tata
2.50 2.00 1.50 1.00 0.50 0.00 2008 2009 2010 2011 2012 1.97

1.22

1.14

1.02

1.09

tata

Interpretation and Analysis: The above table and diagram shows the relationship between the fixed assets and sales. The sale is 2 times more than the fixed assets 2007-08.It is more than 1.5 times during 2008-09 and 2009-10. It is more than 1.5 times during 2010-11. It can be observed that in the year 201112 the fixed assets value decreased and which shows that there is an deductions made to the fixed assets, similarly the sales was also decreased However in the year 2011-12it slashed to about 50% of the sales of 2007-08. Torrent year net sales 3618.32 4315 5823.21 6828.2 7917.8 Avg fixed fixed asset asset turn 5999 0.60 6505.3 0.66 6702 0.87 6998.67 0.98 8433.35 0.94

2008 2009 2010 2011 2012

torrent
1.20 1.00 0.80 0.60 0.60 0.40 0.20 0.00 2008 2009 2010 2011 2012 0.66 torrent 0.98 0.87 0.94

Interpretation and Analysis: The above table and diagram shows the relation ship between the fixed assets and sales. The sale is .5 times more than the fixed assets 2007-08 It is same during 2008-09 It is more than 1 times during 2010-11. It can be observed that in the year 2010-11 the fixed assets value increased a lot and which shows that there is an additions made to the fixed assets.

Total assets turnover Net sales Total assets turnover = ----------------------------- x100 Average Total assets Adani Interpretation and Analysis: The above table and diagram shows the relation ship between the total assets to net sales. During all the study period years the relationship between sales to total assets is high. The ratio increased from 0.44 (2007-08) to 0.68 (2008-09) and then it was decreasing and reached to again 0.44 in the year 2010-11 and raised to 0.81 in the year 2007-08 due to the heavy fall in the sales. Thus the company's sales were almost directly proportionately in the first three years of the study and then in the year 2010-11 it was adversely affected. Cese

Year 2008 2009 2010 2011 2012 net sales 2774.97 3031.32 3939.85 4689.54 4172.54

avg total asset 7155.39 8438.81 10035.54 12707.42 11732.07

asset turnover 0.39 0.36 0.39 0.37 0.36

cese
0.40 0.39 0.38 0.37 0.36 0.35 0.34 0.33 2008 2009 2010 2011 2012 0.36 0.37 0.36 cese 0.39 0.39

Interpretation and Analysis: The above table and diagram shows the relationship between the total assets to net sales. During all the study period years the relationship between sales to total assets is high. The ratio decreased from 0.39 (2007-08) to 0.36 (2008-09) and then it was increasing and reached to again 0.39 in the year 2010-11 and fall to 0.37 in the year 2011-12 due to the heavy fall in the sales. Reliance Year 2008 2009 2010 2011 2012 net sales 1328.67 2676.1 2067.89 3638 6612 avg total asset 1354.25 1379.89 1406.6 1756.94 1630.85 asset turnover 0.98 1.94 1.47 2.07 4.05

reliance
4.50 4.00 3.50 3.00 2.50 2.00 1.50 1.00 0.50 0.00 2008 2009 2010 2011 2012 0.98 1.94 1.47 2.07 reliance 4.05

Interpretation and Analysis: The above table and diagram shows the relationship between the total assets to net sales. During all the study period years the relationship between sales to total assets is high. The ratio increased from 0.98 (2007-08) to 1.94 (2008-09) and then it was decreasing and reached to again 1.44 in the year 2010-11 and raised to 2.07 in the year 2010-11 due to the heavy fall in the sales. Thus the company's sales were almost directly proportionately in the first three years of the study and then in the year 2010-11 it was rising . Tata Year 2008 2009 2010 2011 2012 net sales 5915.9 7236.23 7089 6927.89 8512.33 avg total asset 11155.12 14004.99 16703.8 21205.3 25117.71 asset turnover 0.53 0.52 0.42 0.33 0.34

tata
0.60 0.50 0.40 0.30 0.20 0.10 0.00 2008 2009 2010 2011 2012 0.53 0.52 0.42 0.33 0.34 tata

Interpretation and Analysis: The above table and diagram shows the relationship between the total assets to net sales. During all the study period years the relationship between sales to total assets is high. The ratio increased from 0.53 (2007-08) to 0.52 (2008-09) and then it was decreasing and reached to again 0.42 in the year 2010-11 and fall to 0.33 Thus the company's sales were almost directly proportionately in the first three years of the study and then in the year 2010-11 it was adversely affected. Torrent Year 2008 2009 2010 2011 2012 net sales 3618.32 4315 5823.21 6828.2 7917.8 avg total asset 5854.4 6456.81 7834.43 10098.74 11828.71 asset turnover 0.62 0.67 0.74 0.68 0.67

torrent
0.80 0.70 0.60 0.50 0.40 0.30 0.20 0.10 0.00 2008 2009 2010 2011 2012 torrent 0.62 0.67 0.74 0.68 0.67

Interpretation and Analysis: The above table and diagram shows the relation ship between the total assets to net sales. During all the study period years the relationship between sales to total assets is high. The ratio increased from 0.62 (2007-08) to 0.67 (2008-09) and then it was increasing and reached to again 0.74 in the year 2010-11 and fall to 0.67 in the year 2011-12. Thus the company's sales were not directly proportionately in the first two years of the study. Gross profit Gross profit Gross profit ratio = Adani Cese gross profit 25270.34 27340.72 37460 47810.85 42460.65 net sales gross 2774.97 9.11 3031.32 9.02 3939.85 9.51 4689.54 10.20 4172.54 10.18 ----------------------------------- x 100 Net sales

year 2008 2009 2010 2011 2012

cese
10.40 10.20 10.00 9.80 9.60 9.40 9.20 9.00 8.80 8.60 8.40 10.20 10.18

9.51 9.11

9.02

2008

2009

2010

2011

2012

Interpretation and Analysis: The above table and diagram shows the relationship between the gross profit and net sales in percentage. During 2007-08 the gross profit position was 9.11% and in the very next year it slashed down to 9.02% and again raised to 9.51% and since then it was increasing and finally reached the highest to 10.20% in the year 2010-11. However it can be noticed that the sales also increased Reliance gross profit 31420.85 35640 28890.23 47100.54 53180 net sales gross 1328.67 23.65 2676.1 13.32 2067.89 13.97 3638 12.95 6612 8.04

year 2008 2009 2010 2011 2012

reliance
25.00 20.00 15.00 10.00 5.00 0.00 2008 2009 2010 2011 2012 13.32 13.97 12.95 8.04 reliance 23.65

Interpretation and Analysis: The above table and diagram shows the relationship between the gross profit and net sales in percentage. During 2007-08 the gross profit position was 23.65% and in the very next year it slashed down to 13.32% and again raised to 13.97% and since then it was decreasing and finally reached the lowest to 8.04% in the year 2011-2012. However it can be noticed that the sales also reduced to about 50% in 2011-12 when compared to sales of 2010-11. Tata gross profit 54110.63 67510.23 61200.59 63000.05 77890.43 net sales gross 5915.9 9.15 7236.23 9.33 7089 8.63 6927.89 9.09 8512.33 9.15

year 2008 2009 2010 2011 2012

tata
9.40 9.20 9.00 8.80 8.63 8.60 8.40 8.20 2008 2009 2010 2011 2012 tata 9.15 9.33 9.09 9.15

Interpretation and Analysis: The above table and diagram shows the relationship between the gross profit and net sales in percentage. During 2007-08 the gross profit position was 9.15% and in the very next year it was to 9.33% and again raised to 8.63% and since then it was increasing and finally reached the lowest to 9.09% in the year 2010-11. Torrent gross profit 37220 39800.98 47700.04 69300.48 80190.66 net sales gross 3618.32 10.29 4315 9.22 5823.21 8.19 6828.2 10.15 7917.8 10.13

year 2008 2009 2010 2011 2012

torrent
12.00 10.29 10.00 8.00 6.00 4.00 2.00 0.00 2008 2009 2010 2011 2012 torrent 9.22 8.19 10.15 10.13

Interpretation and Analysis: The above table and diagram shows the relationship between the gross profit and net sales in percentage. During 2007-08 the gross profit position was 10.29% and in the very next year it slashed down to 9.22% and again falled to 8.19%.

Net profit Net profit Net profit sales = ----------------- x 100 Net sales Adani Cese net profit net sales net 10350.14 2774.97 3.73 12500.9 3031.32 4.12 10090.4 3939.85 2.56 4880.4 4689.54 1.04 5540.8 4172.54 1.33

year 2008 2009 2010 2011 2012

cese
4.50 4.00 3.50 3.00 2.50 2.00 1.50 1.00 0.50 0.00 2008 2009 2010 2011 2012 1.04 1.33 2.56 3.73 4.12

Inference: The above table and diagram shows the relation ship between net profit and net sales during 2007-08 it was 3.73% on sales and in 2008-09 it was 4.12. But in all other 3 years it is less than 1% .This means that either there is any defect in pricing the product or excess nonvalue added expenditures which reduces the net profit of the company. Reliance net sales net 1328.67 1.05 2676.1 1.29 2067.89 2.98 3638 1.03 6612 0.62

year 2008 2009 2010 2011 2012

net profit 1388.67 3454.85 6168.21 3745.5 4108.6

reliance
3.50 3.00 2.50 2.00 1.50 1.00 0.50 0.00 2008 2009 2010 2011 2012 1.29 1.05 1.03 0.62 2.98

Inference: The above table and diagram shows the relation ship between net profit and net sales during 2007-08 it was 1.05% on sales and in 2008-09 it was 1.29. But in all other 2 years it is less than 1% The sales of the organization are also decreasing and hence management must take care of the quality and market situations into consideration to resolve the issue so that it may bring good profits to the organization. Tata net profit 14001.56 14700.68 16400.54 9410.7 11690.73 net sales net 5915.9 2.37 7236.23 2.03 7089 2.31 6927.89 1.36 8512.33 1.37

year 2008 2009 2010 2011 2012

tata
2.50 2.00 1.50 1.00 0.50 0.00 1 2 3 4 5 1.36 1.37 2.37 2.03 2.31

Inference: The above table and diagram shows the relationship between net profit and net sales during 2007-08 it was 2.37% on sales and in 2008-09 it was 2.03. But in all other 2 years it is 1%. This means that either there is any defect in pricing the product or excess non-value added expenditures which reduces the net profit of the company. The sales of the organization are also decreasing and hence management must take care of the quality and market situations into consideration to resolve the issue so that it may bring good profits to the organization. Torrent net profit net sales net 3390.11 3618.32 0.94 5390.67 4315 1.25 10640 5823.21 1.83 10650.72 6828.2 1.56 12370.46 7917.8 1.56

year 2008 2009 2010 2011 2012

torrent
2.00 1.80 1.60 1.40 1.20 1.00 0.80 0.60 0.40 0.20 0.00 1.83 1.56 1.25 0.94 1.56

2008

2009

2010

2011

2012

Inference: The above table and diagram shows the relationship between net profit and net sales during 2007-08 it was 0.94% on sales and in 2008-09 it was 1.25. This means that either there is good in pricing the product . The sales of the organization are also increasing iii) Return on asset ratio:

Profit after tax Return on asset ratio = ------------------------------- x 100 Avg total assets Adani Cese year 2008 2009 2010 2011 2012 pat 355.36 529 488.5 488.5 554.3 AV 177.7009 264.5487 244.2915 244.2983 277.2541 roa 0.03 0.04 0.05 0.07 0.04

cese
0.08 0.07 0.06 0.05 0.04 0.03 0.02 0.01 0.00 2008 2009 2010 2011 2012 0.03 0.05 0.04 0.04 cese 0.07

Inference: The above table and diagram shows the relationship between PAT and AVG total asset. during 2007-08 it was 0.05% on sales and in 2008-09 it was 0.07. This means that either no good returns and profit earned. Reliance year 2008 2009 2010 2011 2012 pat 946.85 2489 2732 2536.5 3108 AV 474.426 1245.545 1367.291 1271.233 1554.755 roa 0.46 1.19 1.20 0.99 0.48

reliance
1.40 1.20 1.00 0.80 0.60 0.40 0.20 0.00 2008 2009 2010 2011 2012 0.46 0.48 reliance 1.19 1.20 0.99

Inference: The above table and diagram shows the relationship between PAT and AVG total asset. during 2007-08 it was 0.46% on sales and in 2008-09 it was 1.19. This means that either good returns and profit earned.in first 3 years and than it getting low Tata year 2008 2009 2010 2011 2012 pat 869.9 926.77 938 270.33 513.15 AV 435.0131 463.4089 469.0204 135.1882 256.7109 roa 0.05 0.04 0.03 0.01 0.02

tata
0.06 0.05 0.04 0.03 0.02 0.01 0.00 2008 2009 2010 2011 2012 0.01 0.02 0.05 0.04 0.03 tata

Inference: The above table and diagram shows the relationship between PAT and AVG total asset. during 2007-08 it was 0.05% on sales and in 2008-09 it was 0.03. This means that either no good returns and profit earned. Torrent year 2008 2009 2010 2011 2012 pat 234.52 407.8 836.55 1065.12 1237.46 AV 117.3713 203.9937 418.4001 532.7427 618.8861 roa 0.03 0.04 0.06 0.07 0.08

torrent
0.09 0.08 0.07 0.06 0.05 0.04 0.03 0.02 0.01 0.00 2008 2009 2010 2011 2012 0.03 0.04 torrent 0.06 0.07 0.08

Inference:

The above table and diagram shows the relationship between PAT and AVG total asset. during 2007-08 it was 0.03% on sales and in 2010-11it was 0.07. This means that either good returns and profit earned.

Eva model

In economics, the value addition is calculated by the following formula: Value Added = Value of sales less the cost of bought -in goods and services. EVA focuses attention on how a firm uses its capital by asking, Is a firm generating earnings above and beyond that expected by the market (the providers of the capital)? The relevant formula is: EVA= (Return on Capital - Cost of Capital) x Total Capital EVA can be calculated product wise and it can be combined with ABC, which gives much better insight on true cost of a product.

Cese roc 13.47 16.56 12.71 10.12 10.94 wacc 4.04 4.07 4.75 4.93 5.07 total cap 5444.94 7527 8612.82 10684.77 10001.45 eva 51359.72 94013.32 68564.60 55444.60 58695.42

Inference: The good performance of the company can be seen from the fact that as against Dividend Expectation of 20%, the company is in a position to pay .This would make share of the company as attracative and the investors would be interested to keep the shares. If they buy the shares, the share value would further be more. The company would get equity investment if it desired to go for expansion. Reliance roc 9.52 3.90 0.14 0.49 0.20 Inference: The poor performance of the company can be seen from the fact that as against Dividend Expectation of 10%, the company is hardly in a position to pay. This would make share of the company as un-attractive and the investors would not be interested to keep the shares. If they sell the shares, the share value would further drop. The company would not get equity investment if it desired to go for expansion. Tata wacc 0.00 0.00 1.14 2.22 2.51 total eva cap 2629.15 25034.21 2703.7 10536.03 2747.18 -2755.85 3266.08 -5650.74 3159.99 -7301.68

roc

wacc 3.98 3.65 4.28 5.35 5.19

10.24 26.91 12.12 31.06 28.54 Inference:

total cap 1396.83 1626.43 1940.88 2348.17 2893.96

eva 8744.99 37825.17 15219.38 60384.45 67570.49

The poor performance of the company can be seen from the fact that as against Dividend Expectation of 20%, the company is in a position to pay . This would make share of the company as attractive and the investors would not be interested to keep the shares. If they buy the shares, the share value would further be more. The company would get equity investment if it desired to go for expansion. Torrent roc 4.46 6.96 13.93 15.39 13.69 wacc 2.11 3.95 4.90 4.88 4.34 total cap 8744.18 10192.31 11742.58 14884.87 17576.59 eva 20573.57 30690.43 106071.89 156456.55 164272.22

Inference: The poor performance of the company can be seen from the fact that as against Dividend Expectation of 20%, the company is hardly in a position to pay of it. This would make share of the company as attracative and the investors would not be interested to keep the shares. If they sell the shares, the share value would further be more. The company would get equity investment if it desired to go for expansion.

5.1 FINDINGS

The current ratio is more than 2% in all the first four years of Tata and Torrent ltd. But in 2010-11 the current ratio is slightly lower than the normal. This shows that the company is enjoying credit worthiness.

The liquid ratio during the study period is more than the normal (i.e.) 1:1. Hence the firm Reliance and Tata is controlling its stock position because there is linear relationship between current ratio and liquid ratio.

There is fluctuation in the absolute ratio for all the Firms.

In all the years the debt equity is more of Tata and Reliance, when compared with borrowings. Hence the company is maintaining its debt position.

The proprietary ratio during the study period to the total assets is more than the 2/3 of Tata and Reliance.

The sale is 4 times more than the fixed assets of Reliance. It is more than 3 times during 2008-.

During all the study period years the relationship between sales to total assets is high.

The sales are in between 1.5 and 3.5 times more than the proprietor's funds. It shows the firms is maintaining the better utilization of own funds.

The Net profit of Tata and Torrent is very high in all the firms The Gross profit position of Torrent and Reliance is very high. But the cese and adani is very low and it was fluctuating more than the base year in all other years of the study period.

The Return on Asset is more in Torrent and CESC than other firms The Return of Capital Employed is more in Torrent and EVA of Reliance is negative ,which is very bad sign for investors and the company EVA of Tata and torrent is best compared to any other company

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

The Gross Profit ratio can be improved by increasing the gross profit and the factors decreasing the gross profit ratio should be thoroughly checked timely whither they are operating factors or any misleading factors.. The liquidity position of the company like Tata and Torrent is quite satisfactory. And this must be improved further for the purpose of proper utilization of the liquid assets of the company.

The cash ratio position of the company like Tata and Torrent is satisfactory for the last five years. It is not fluctuating over the years and there is standard ration maintained.

Debt equity ratio has not satisfactory for the past two years of CESC and Reliance. So the companies has enough scope for the more long-term borrowings from the outsiders as its current ratio is also good and has a sufficient amount of current assets..

EVA analysis Reliance is negative for which the management has to take necessary steps.

But the EVA for Tata and Torrent is very high which is positive for investor to invest in o In power sector the companies which can attract the investors is Torrent and Tata. o The security returns on such firms is higher than any other in power industry. o Returns expected from Tata and Torrent is better than any other firms

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

6.2 BIBLIOGRAPHY

Annual Reports Of POWER INDUSTRY LTD General Articles and Magazines Of POWER INDUSTRY LTD. Tata Mc Graw hill Publishing company Ltd., 1999, 3rd edition M.A Sahaf Management and Accounting 4th Edition, Tata McGraw Hill Publishing Company Ltd, 5th Reprint - 2006 - New Delhi. IM .Pandey, Financial Management 8th Edition, IM .Pandey, Working capital Management 8th Edition, R.K. Sharma & S.K. Gupta, Financial Management

R.P. Rustagi, Financial Management