A Project Report On

Ratio Analysis of Nesco Ltd.

Master of Business Administration (Finance) Submitted in partial fulfilment of the requirements for award of Master of Business Administration of Tilak Maharashtra University, Pune. Submitted by Saiyad Arifali Mahammadali PRN: 07208013441 Of

PAI International Centre for Management Excellence, Pune

Guided by Prof. Zafir Asad Tilak Maharashtra University Gultekdi, Pune 411 037

ACKNOWLEDGEMENT
The satisfaction euphoria that accompanies the successful completion of any work would be incomplete unless we mention the name of the persons, who made it possible, whose constant guidance and encouragement served as a beacon of light and crowned our efforts with success. I consider it a privilege to express through the pages of this report, a few words of gratitude and respect to those who guided and inspired in the completion of this project. I am deeply indebted to Prof. R.Ganesan for giving me the opportunity to do this interesting project and the timely suggestions & valuable guidance.

My sincere thanks to Prof. Zafir Asad Sir who has guided me and provided valuable insight during the project. He constantly encouraged me and showed the right path from day one up until the completion of my project.

I express my deep sense of gratitude to finance manager R.G. Upadhay and External guide (HR executive) Mr. Mansur Thakor for providing necessary information and kind cooperation.

Saiyad Arifali M

Tilak Maharashtra University, Pune

(Deemed Under Section 3 of UGC Act 1956 Vide Notification No. F.9-19/85 U3 dated 24th April 1987 By the Government of India.)

Vidyapeeth Bhavan, Gultekdi, Pune 411 037.

CERTIFICATE

This is to Certify that the project tiled Ratio Analysis of Nesco Ltd. is a bonafide work carried out by Mr. Saiyad Arifali Mahammadali a student of Master of Business Administration Semester3rd,Specialization Finance PRN. 07208013441 Tilak Maharashtra University, in the year 2009.
under Head of the Department Examiner Internal Date : Examiner External

Place

: University Seal

Certificate of Internal Guide

This is to certify that the project titled Ratio Analysis of Nesco Ltd. is a bonafide work carried out by Saiyad Arifali Mahammadali a candidate for the award of Master of Business Administration of Tilak Maharashtra University, Pune under my guidance and direction.

Signature of guide

Name: Prof. Zafir Asad Date: Place: Pune Dsignations: Lecturer Institute: PICME

Contents Sr. No. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Topic Rationale of the study Objectives of the Study Profile of the company Review of Literature Research Methodology Data analysis and interpretations Findings Limitations of the study Appendix Bibliography Page No. 1 2 3 - 19 20 - 38 39 40 - 62 63 64 65 - 68 69

Chapter 1

Rationale of the Study

RATIONALE OF THE STUDY

Ratio analysis is a widely-used tool of financial analysis. It can be used to compare the risk and return relationships of firms of different sizes. It compares historical performance and current financial condition of the company. The term ratio refers to the numerical or quantitative relationship between two items or variables. This relationship can be expressed as (i). Percentages, (ii). Fraction, (iii). Proportion of numbers. These alternative methods of expressing items which are related to each other are for purposes of financial analysis, referred to as ratio analysis. It should be noted that computing the ratios does not add any information not already inherent in the above figures of profits and sales. What the ratios do is that they reveal the relationship in a more meaningful way so as to enable equity investors; management and lenders make better investment and credit decisions. The rationale of ratio analysis lies in the fact that it makes related information comparable. A single figure by itself has no meaning but when expressed in terms of a related figure, it yields significant inferences. For instance, the fact that the net profits of a firm amount to, say, Rs 10 lakhs throws no light on its adequacy or otherwise. The figure of net profit has to be considered in relation to other variables. How does it stand in relation to sales? What does it represent by way of return on total assets used or total capital employed? If therefore net profits are shown in terms of their relationship with items such as sales, assets, capital employed, equity capital and so on, meaningful conclusions can be drawn regarding their adequacy. To carry the above example further, assuming the capital employed to be Rs 50 lakhs and Rs 100 lakhs, the net profit are 20 per cent and 10 per cent respectively. Ratio analysis thus as a quantitative tool, enable analysis to draw quantitative answers to questions such as: Are the net profits adequate? Are the assets being used efficiently? Is the firm solvent? Can the firm meet its current obligations and so on? So, ratio analysis is one of the techniques of financial analysis where ratios are used as a yardstick for evaluating the financial condition and performance of a firm. Analysis and interpretation of various accounting ratio gives a skilled and experienced analyst, a better understanding of the financial condition and performance of the firm than what he could have obtained only through a perusal of financial statements.

Chapter 2

Objectives of the Study

OBJECTIVES OF THE STUDY

To understand the importance and use of different types of ratios in business.

To assess the liquidity of the company.

To evaluate the financial condition and profitability of the company.

To know the working capital requirement of the company.

To compare the past performance of the company systematically. To identify the financial strengths and weakness of the company.

To find out the utility of financial ratios in credit analysis and determining the financial capability of the firm.

Chapter 3

Profile of the Company

PROFILE OF THE COMPANY

New Standard Engineering Company Ltd. (NSE) is a multi product, multi division enterprise established in 1939. It was promoted in 1939 by Mr. J. V. Patel. The company was amalgamated with Burjorji Pestonji & Sons Pvt. Ltd., a company incorporated on April 15, 1946. Its name was subsequently changed to new Standard Engineering Company Ltd. on May 20, 1959. New Standard Engineering is a well diversified company manufacturing textile spinning machinery, forging equipment, abrasives & onshore oil recovery equipment with technology from world's leading corporations viz. Wheelabrator Corporation Inc., U.S.A.; Davy McKee (Sheffield) Ltd., U.K.; Salzgitter Machinenbau GmbH, Germany; &Schubert & Salzer, Ingolstadt, Germany.

Due to prolonged depression in its hitherto main product line-textile machinery & the gestation period for its new products, the company made losses from 1984 till 1990. As a result, the company approached the BIFR to restructure its past dues.

The BIFR package has restructured & rescheduled the past dues & also provided need based working capital requirements of the company that would be met by banks at an interest rate of 15% p.a. The company has received an award for its outstanding performance in exports of textile preparatory & spinning machinery for 1991-92.

The company has also reached an agreement with Wheelabrator Allevard, France, to set up a joint venture for the manufacture of abrasives in India.

Location Details NESCO Location Type Secretarial Office Address Nesco Limited Western Express Highway Goregaon East Mumbai - 400063 Maharashtra - India Phone : 66450123 Branch Office Ahmedabad Office B, Jadhav Chamber 3rd floor Ahmedabad - 380006 Gujarat - India Phone : 6580924,6580927,6587822 Sales & Marketing Office Benoy Bhavan 27-B, 5th floor Camac Street Kolkata - 700016 West Bengal - India Phone : 22809703 Branch Office Coimbatore office 1176,1st floor Old sangam,Trichy road Coimbatore - 641045 Tamil Nadu - India Phone : 315088 Registered Office & Factory Nesco Complex Western Express Highway Goregaon Mumbai - 400063 Maharashtra - India Phone : 66450123 Fax : 66450101 Email : bharati.khandelwal@nesco.in Sales & Marketing Office B-1-102, 10th floor Himalaya House New Delhi - 110001 Delhi - India Phone : 30422644 Fax : 30424679 Sales & Marketing Office Fagun Mansion Chennai (Madras) - 600105 Tamil Nadu - India Phone : 28271108, 28721821

Branch Office

Bangalore office 15, Wood Street 2nd floor Bangalore - 560025 Karnataka - India Phone : 5300344

Sales & Marketing Office

Anand Sojitra Road Karamsad Gujarat - India Phone : 237992, 233458 Fax : 237991

Sales & Marketing Office

Nadiad Khambat Road P.O Vishnoli Anand Gujarat - India Phone : 235347

Factory/plant

Nadiad Khambat Road P.O Vishnoli Tal. Pethlad Anand - Gujarat - India Phone : 235347

History of the Company:Established in 1939 as the New Standard Engineering Co. Ltd. (NSE), the company is known as a pioneer in the tool manufacturing segment, as it brought into the country, world class processes and designs for the manufacture of a number of engineering products. Equipment such as forging hammers and presses, blow room lines and high production cards for the textile industry; and sucker rod pumps for on-shore oil recovery were some of the main product lines that emerged as market leaders. As the products manufactured were high in quality, the company soon saw an incremental rise in its exports, and not only are it products market leaders in India, but also have found a niche overseas. Today, the Engineering Group of Nesco continues to be a leading provider of this equipment to the Indian Railways, numerous Ordnance Factories, and Forging Plants. In order to reflect on the various new avenues that the company was entering into, the promoters of the New Standard Engineering Company, decided to change the name to Nesco Limited. This reflected in the Company's transformation from a pure play Engineering Company to that of a diversified one, whose diversification entailed it to be a player in the services segment. While the company originally operated from Byculla, and set up two more plants at Parel and Santacruz. In 1959 it consolidated all these three operations and moved to a 70 acre estate on the Western Express Highway at Goregaon in Mumbai. In 1986, the company diversified into the realty business by developing and providing customized built-up space for multinational companies and leading corporates at Goregaon. In 1992, the company setup an exhibition centre - known as the Bombay Exhibition Centre at its complex on the Western Express Highway at Goregaon, Mumbai. Starting with a hall area of 2, 00,000 sq. ft., this has now been expanded to over 5, 00,000 sq. ft. This venue holds the distinction of being the largest exhibition centre promoted by the private sector in India and has hosted over 500 national and international exhibitions, trade fairs, and events since inception. What sets this Venue apart from the rest is the presence of various permanently air conditioned hall's ranging from an area of 2,000 Sq. Mts to 20,000 Sq. Mts.

ORGANIZATION STRUCTURE:-

S J PATEL CMD

RG UPADHAYAY Finance

M P PARIKH CEO

SK MACWAN HR AR KANSARA P&A

N R PATEL QC

A R SHAH ED

MA VASAVDA PRESIDNET

N R SHAH DGM

R H BHATT MARKETING

T K KACHHIA VP

JR SUKHADIA WORKS(K)

B K PATEL FOUNDRY

P K PARMAR DESIGN

S R SHAH PURCHASE

B A PATEL WORKS (V)

Milestones Achieved:-

First to bring into India, world class manufacturing process and product designs for Forging tools and pumps for on-shore oil recovery.

First Private Exhibition Centre located in the heart of Mumbai, just adjacent to the Western Express Highway, which serves as an important arterial road transporting goods to and from the City.

Founder and Chairman:-

Shri Jethabhai Vaghjibhai Patel Founder Nesco Group 12 July 1904 24 January 1996 From a humble beginning, the respected founder Shri Jethabhai Patel created a diversified business group. He was a true entrepreneur, a person ahead of his times who had courage, conviction and confidence to achieve the most difficult. Starting the New Standard Eng. Co. (now known as Nesco Ltd) in 1939 as a small job workshop, Jethabhai never looked back. He continued to expand by setting up one new unit after another. He also acquired and turned around 10 companies, as a result he was often referred as Doctor of Sick Units. Jethabhai was a pioneer, manufacturing for the first time in India several new products. He established relations with world leading companies so as to bring to India the latest technology products. The Bhagavad Gita states "Your right is with the action only, never to the fruits." This was closest to Jethabhai's heart. Jethabhai gave utmost importance to the youth of rural areas and strived to give them the right direction. He firmly considered that excellent outcome can be attained only by effective management. Jethabhai's main motto was "There is no substitute for hard work".

Jethabhai believed in giving back to the society and helped set up schools, hospitals, and contributed to several other social causes. Jethabhai's values, vision, leadership qualities, humility will guide and inspire us and future generations at Nesco. Though Jethabhai is no more, his legacy will live forever.

Companys Mission:"Setting the stage for exhibiting progress" The Bombay Exhibition Centre is driven to emerge as a purpose-built Convention and Exhibition Centre which offers organizers, participants and visitors, a touch of Indian hospitality backed up by robust infrastructure for the successful culmination of any event. Leave Blank The Realty Group imbibes best practices for facilities development and management, which delivers a secure and pleasant working environment for its client and their employees. "The pioneers in meshing global designs with local manufacturing talent" The Engineering Group delivers stable and functional tools which delivers customer satisfaction and trust, backed up by a constant improvement in design, cost efficiency, delivery and after sales service.

Companys Vision:The company is committed to customer satisfaction by providing excellent / world class facilities and services for their exhibitions & events and become top exhibition centre in India.

Companys Value: Nesco Group will act with absolute honesty & integrity in dealing with its Customers, Employees, Stakeholders and Society at large. Nesco will always care for its customers by delivering value to them & delight them through quality products & services. Nesco will encourage creativity & innovation across the organization and offer equal opportunity for growth to all employees through a culture of meritocracy, teamwork, commitment & discipline. Nesco will always adopt fair practices and will aim to become a symbol of Trust & Reliability for all stakeholders. It will strive to maximize value for shareholders as well as all stakeholders in a balanced manner.

Companys Policy:Indabrator firmly believe that quality cannot happen. It has to be built into the product. It is committed to provide products and services of a quality that meet the needs and expectations of customers at a competitive price and Achieve product quality excellence by continual improvement through strictly adhering to quality management system as per ISO 9001 2000 requirements.

It is committed to continually improve environmental conditions by utilising environment friendly technique to control potential hazards, reduce risk factors and improve environmental conditions through strictly adhering to environment management system as per ISO 14000: 2004 requirements. It is committed to provide training & tools for safe operation systems to continually improve occupational health & safety of interested parties as per OSHA 180001: 1999 guidelines. It is committed to comply with current applicable statutory & regulatory requirements for production, environment management, occupational health & safety management.

Board of Directors:-

Chairman & Managing Director

Shri. Sumant J. Patel

Director

Mr. Ram Tarneja

Director

Mr. Bharat Patel

Director

Mr. Srinivasa Moorthy

Director

Mr. Mahendra. K.Chauhan

Jt. Managing Director

Mrs. Sudha Patel

Director

Mr. Mohan. P. Parikh

Executive Director

Mr. Krishna Patel

GROUP COMPANIES:-

INDABRATOR

BOMBAY EXHIBITION CENTRE

NESCO REALTY

INDABRATOR DIVISION:Indabrator is leading manufacturer, supplier and exporter of surface preparation equipments, providing services to various Indian industries; mainly Foundries, Forging plants, Automotive industries, Indian railways, Defence organizations, Heavy engineering industries, Ship building industries, Chemical and petrochemical industries etc. It believes in establishing long term business relationships with its clients by providing them with nothing short of the best. Its aim is to provide excellence in its entire range of products; it has successfully supplied more than 10,000 + machines to a cross section of industries in the domestic as well as the international market. Presently, its export about 20% of its products to the Middle East, Bangladesh, Indonesia, Sri Lanka, UK, USA, African Countries and many other places across the globe. It has its own captive Alloy Iron Foundry employing shell moulding process for manufacture of wear resistant components for shot blasting machines. This enables its customers to get all spares of shot blasting machine off the shelf, so that they do not have to maintain undue inventory. It supplies quality steel shots & grits to the specifications of IS: 4606/SAE J827. This enables its clients to get quality abrasives i.e. steel shots & grits at reasonable prices and in shorter delivery period. Its sales and service branches are located at Mumbai, Delhi, Kolkata, Chennai, Karamsad (near Anand, Gujarat) and at Dubai (U.A.E.). These branches provide, after sales service through service engineers stationed at these branches and supply fast wearing spare parts.

Mission and Values:Its Mission is to become the largest Surface Preparation System provider in Asia, known for its quality, technology, fully integrated range, innovation, dynamism, ethical behaviour and business results; and build long lasting customer relationships that will make it their preferred supplier. Honesty and Integrity: Nesco group will act with absolute honesty and integrity in dealing with its customers, employees, stakeholders and society at large Care and Concern: Nesco group will always care for its customers by delivering value to them and delight them through quality products and services Teamwork: Nesco will encourage creativity and innovation across the organization and offer equal opportunity for growth to all employees through a culture of meritocracy, team work, commitment and discipline Trust and Reliability: Nesco will always adopt fair practices and thereby, will aim to become a symbol of trust and reliability for all stakeholders. It will strive to maximize value for its stakeholders in a balanced manner. Quality Certifications Customer satisfaction is the hallmark that has earned it several accolades and honours. This has given it a competitive edge over other players functioning in the same industry. Following are some of the citations bestowed on Nesco Limited.

ISO 9001 : 2000 ISO 14001:2004 ISO 18001:1999.

Product and Application:Applications Industry Vertical Equipment

Debarring Deflashing Descaling Painting Peening Coating removal Etching Profiling Rust removal Sand removal

Automotive Foundry / Forge Steel Railways Shipyards Manufacturing

Blasting equipments Peening equipments Spare Erection and commissioning

Companys Client:Indabrator has supplied 10000+ equipments in last 43 years of its existence in India and abroad. Its clients range from public sectors enterprises such as BHEL, BEML, NALCO, Cochin Shipyards, Indian Railways, HAL to private sector corporate like TATA group, Jindal, L & T, Bajaj and many more. As per the requirement of its esteemed client we manufacture standard or customized models of shot blasting / Peening equipments and add value to their primary products.

BOMBAY EXHIBITION CENTRE:Bombay Exhibition Centre (BEC) is the largest and permanent exhibition centre, in the private sector, in India and was set up in 1991. BEC has hosted several prestigious International trade fairs/exhibitions ever since. The centre is ideally situated along the Western Express Highway in Goregaon, within 10 minutes from airports, walking distance to train stations and a 20 minute drive from the heart of the city. There are numerous hotels, entertainment activities, retail shopping & sightseeing spots in close proximity. BEC consists of four halls occupying over 45,000 sq.mtrs of centrally air-conditioned space for conducting exhibitions. The halls are Wi-Fi enabled, have ample height, good lighting, well-designed ventilation and strong flooring to withstand even the heaviest machinery. Major highlights of the available facilities for organizing large or medium scale events in the commercial and business capital of our country Mumbai, include air-conditioned Seminar/ Convention halls, International lounges, operational air-conditioned restaurants, open air cafeterias, business communication centres, site offices, service centres and sufficient parking space within the complex having serene and lush-green surroundings. Utilities and infrastructure to meet demands of power, water supply and compressed air supply, telephone lines are available within the exhibition halls to facilitate organization of major industrial trade fairs/exhibitions.

Amenities & Facilities:The centre is the largest in the private sector in India and plays a pivotal role in further enhancing the reputation of Mumbai as an international convention city. BEC consists of 4 halls, occupying an area of over 4, 00,000 sq. ft. Plans for expansion are under way. Each hall is Wi-Fi enabled, has ample height, well air-conditioned with tough flooring that can withstand even the heaviest machinery Large parking lots inside BEC accommodate over 2000 vehicles at any given time and loading / offloading can be done from special bays in the halls. Due to ample power infrastructure, every single machine in the exhibit area can be powered and made operational to display its features. Organisers can avail of the following facilities in and around the premises of BEC: A convention centre Conference and seminar halls An international lounge An open air area for inaugural / valedictory functions Restaurants

It is the BECs endeavour to provide better infrastructure facilities and services for ensuring the success of the exhibition & event.

NESCO REALTY:Capitalizing on an area of over 70 acres, in 1986, the Company decided to diversify into facilities development and management business. Strategically located at Goregaon in Mumbai, adjacent to the Western Express Highway, it was setup with a simple mission to become "the preferred location" for corporate by constructing good quality premises, backed up by consistent and reliable amenities such as uninterrupted power and water, to deliver a safe and enhanced work atmosphere to our clients. It handle complete property transactions (right from sourcing of clients to concluding the deal) related to leasing of space for various real estates use viz., InfoTech, commercial office, industrial, retail and logistics / warehousing. As part of its ongoing effort to enhance our deliverables in this segment, it has successfully received permission to develop an IT Park. This effort will cover a half-million Square Feet and will be recognized by the STPI as an Export Processing Zone. With this, it plans on attracting most blue chips IT companies Its reputed licensee's includes: Schlumberger Asia Services Limited Sodexo India Citi Group Services Ltd. (a Citibank subsidiary) Intelenet Global Services Pvt. Ltd.)

Sparsh (an Intelenet subsidiary)

Chapter 4

Review of Literature

REVIEW OF LITERATURE Meaning of Ratio:Ratios are relationships expressed in mathematical terms between figures which are connected with each other in some manner. Obviously, no purpose will be served by comparing two sets of figures which are not at all connected with each other. Moreover, absolute figures are also unfit for comparison. Ratio can be expressed in two ways: (1). Times: - When one value is divided by another, the unit used to express the quotient is termed as Times. For example, if out of 100 students in a class, 80 are present, the attendance ratio can be expressed as follows: = 80 / 100 = .8 Times (2). Percentage: - If the quotient obtained is multiplied by 100, the unit of expression is termed as Percentage. For instance, in the above example, the attendance ratio as a percentage of the total number of students is as follows: = .8 X 100 = 80% Accounting ratio are, therefore mathematical relationships expressed between inter-connected accounting figures.

Following are the objectives of ratio analysis technique:

A financial ratio is a relationship between two financial variables. It helps to ascertain the financial condition of a firm.

In ratio analysis, the liquidity ratio measures the firms ability to meet current obligations and is calculated by establishing relationships between current assets and current liabilities.

The profitability ratio measure the overall performance of the firm by determining the effectiveness of the firm in generating profit and are calculated by establishing relationship between profit figures on the one hand and sales and assets on the other.

The main objective of using this technique to judge the performance of the business. Ratio throws light on the profitability of the business, solvency position of the business, liquidity of the business etc.

Comparisons of ratios of a business enterprise either with ratios of the same concern for past periods or with ratio of the concern for same period or both, reveals the weakness of the business and the point of its strengths. Points of weakness are further investigated and corrective action is taken.

Thus, ratios are useful and perhaps the indispensable part of financial analysis. They provide the analyst of underlying conditions.

Ratio analysis is relevant in assessing the performance of a firm in respect of the following aspects:

Liquidity position

Long term solvency

Operating efficiency

Overall profitability

Inter firm comparison

Trend analysis

We can use ratio analysis to try to tell us whether the business

is profitable

has enough money to pay its bills

could be paying its employees higher wages

is paying its share of tax

is using its assets efficiently

has a gearing problem

is a candidate for being bought by another company or investor

Importance of Ratio Analysis:As a tool of financial management, ratios are of crucial significance. The importance of ratio analysis lies in the fact that it presents facts on a comparative basis and enables the drawing of inferences regarding the performance of a firm. Ratio analysis is relevant in assessing the performance of a firm in respect of the following aspects: Liquidity Position:With the help of ratio analysis conclusions can be drawn regarding the liquidity position of a firm. The liquidity position of a firm would be satisfactory if it is able to meet its current obligations when they become due. A firm can be said to have the ability to meet its short-term liabilities if it has sufficient liquid funds to pay the interest on its short-maturing debt usually within a year as well as to repay the principal. This ability is reflected in the liquidity ratios of a firm. The liquidity ratios are particularly useful in credit analysis by banks and other suppliers of short-term loans. Long-term Solvency:Ratio analysis is equally useful for assessing the long-term financial viability of a firm. This aspect of the financial position of a borrower is of concern to the long-term creditors, security analyst and the present and potential owners of a business. The long-term solvency is measured by the leverage or capital structure and profitability ratios which focus on earning power and operating efficiency. Ratio analysis reveals the strengths and weaknesses of a firm in this respect. The leverage ratios for instance will indicate whether a firm has a reasonable proportion of various sources of finance or if it is heavily loaded with debt in which case its solvency is exposed to serious strain. Similarly, the various profitability ratios would reveal whether or not the firm is able to offer adequate return to its owners consistent with the risk involved. Operating Efficiency:Yet another dimension of the usefulness of the ratio analysis, relevant from the viewpoint of management, is that it throws light on the degree of efficiency in the management and utilization of its assets. The various activity ratios measure this kind of operational efficiency. In fact, the solvency of a firm is, in the ultimate analysis,

dependent upon the sales revenues generated by the use of its assets-total as well as its components. Overall Profitability:Unlike the outside parties which are interested in one aspect of the financial position of a firm, the management is constantly concerned about the overall profitability of the enterprise. That is, they are concerned about the ability of the firm to meet its short-term as well as long-term obligations to its creditors, to ensure a reasonable return to its owners and secure optimum utilization of the assets of the firm. This is possible if an integrated view is taken and all the ratios are considered together. Inter-firm Comparison:Ratio analysis not only throws light on the financial position of a firm but also serves as a stepping stone to remedial measures. This is made possible due to inter-firm comparison and comparison with industry averages. A single figure of a particular ratio is meaningless unless it is related to some standard or norm. One of the popular techniques is to compare the ratios of a firm with the industry average. It should be reasonably expected that the performance of a firm should be in broad conformity with that of the industry to which it belongs. An inter-firm comparison would demonstrate the firms position vis-a-vis its competitors. If the results are at variance either with the industry average or with those of the competitors, the firm can seek to identify the probable reasons and in that light, take remedial measures. Ratio analysis provides data for inter-firm comparison. Ratios highlight the factors associated with successful and unsuccessful firms. They also reveal strong firms and weak firms, over-valued and under-valued firms. Make Intra-firm Comparison Possible:Ratio analysis also makes possible comparison of the performance of the different division of the firm. The ratios are helpful in deciding about their efficiency or otherwise in the past and likely performance in the future. Trend Analysis:Finally, ratio analysis enables a firm to take the time dimension into account. In other words, whether the financial position of affirm is improving or deteriorating over the

years. This is made possible by the use of trend analysis. The significance of trend analysis of ratio lies in the fact that the analysts can know the direction of movement, that is, whether the movement is favourable or unfavourable. For example, the ratio may be low as compared to the norm but the trend may be upward. On the other hand, though the present level may be satisfactory but the trend may be a declining one. Simplifies Financial Statements:Ratio analysis simplifies the comprehension of financial statements. Ratios tell the whole story of change in the financial condition of the business. Help in Planning:Ratio analysis helps in planning and forecasting. Over a period of time a firm or industry develops certain norms that may indicate future success or failure. If relationship changes in firms data over different time periods, the ratios may provide clues on trends and future problems. Thus, ratios can assist management it its basic function of forecasting, planning, coordination, control and communication.

Limitation of the Ratio Analysis:Ratio analysis is a widely used tool of financial analysis. Yet, it suffers from various limitations. The operational implication of this is that while using ratios, the conclusions should not be taken on their face value. Some of the limitations which characterise ratio analysis are as follows: Difficulty in Comparison:One serious limitation of ratio analysis arises out of the difficulty associated with their comparability. One technique that is employed is inter-firm comparison. But such comparisons are vitiated by different procedures adopted by various firms. The differences may relate to: Differences in the basis of inventory valuation

Different depreciation methods

Estimated working life of assets, particularly of plant and equipments

Amortization of intangible assets like goodwill, patents and so on

Amortization of deferred revenue expenditure such as preliminary expenditure and discount on issue of shares

Capitalization of lease

Treatment of extraordinary items of income and expenditure and so on.

Secondly, apart from different accounting procedures, companies may have different accounting periods, implying differences in the composition of the assets particularly current assets. For these reasons, the ratios of two firms may not be strictly comparable. Another basis of comparison is the industry average. This presupposes the availability, on a comprehensive scale, of various ratios for each industry group over a

period of time. If, however, as is likely, such information is not compiled and available, the utility of ratio analysis would be limited. Impact of Inflation:The second major limitation of the ratio analysis as a tool of financial analysis is associated with price level changes. This, in fact, is a weakness of the traditional financial statements which are based on historical costs. And implication of the is feature of the financial statements as regards ratio analysis is that assets acquired at different periods are, in effect, shown at different prices in the balance sheet, as they are not adjusted for changes in the price level. As a result, ratio analysis will not yield strictly comparable and therefore dependable results. To illustrate, there are two firms which have identical rates of returns on investments, say 15 per cent. But one of these had acquired its fixed assets when prices were relatively low, while the other one had purchased them when prices were high. As a result the book value of the fixed assets of the former type of firm would be lower, while that of the latter higher. From the point of view of profitability, the return on the investment of the firm with a lower book value would be over-stated. Obviously, identical rates of returns on investment are not indicative of equal profitability of the two firms. This is a limitation of ratios. Conceptual Diversity:Yet another factor which influences the usefulness of ratios is that there is difference of opinion regarding the various concepts used to compute the ratios. There is always room for diversity of opinion as to what constitutes shareholders equity, debt, assets, and profit and so on. Different firms may use these terms in different senses or the same firm may use them to mean different things at different times. Reliance on a single ratio for a particular purpose may not be a conclusive indicator. For instance, the current ratio alone is not an adequate measure of short-term financial strength; it should be supplemented by the acid-test ratio, debtor turnover ratio and inventory turnover ratio to have a real insight into the liquidity aspect. Limitation of Financial Statements:Ratios are based only on the information which has been recorded in the financial statements. Financial statements suffer from a number of limitations, the ratios

derived there from, therefore, are also subject to those limitations. For example, nonfinancial changes through important for the business are not revealed by the financial statements. If the management of the company changes, it may have ultimately adverse effects on the future profitability of the company but this cannot be judged by having a glance at the financial statements of the company. Similarly, the management has a choice about the accounting policies. Different accounting policies may be adopted by management of different companies regarding valuation of inventories, depreciation, research and development expenditure and treatment of deferred revenue expenditure, etc. The comparison of one firm with another on the basis of ratio analysis without taking into account the fact of companies having different accounting policies, will be misleading and meaningless. Moreover, the management of the firm itself may change its accounting policies form one period to another. It is, therefore, absolutely necessary that financial statements are they subjected to close scrutiny before an analysis attempted on the basis of accounting ratio. The financial analyst must carefully examine the financial statements and make necessary adjustments in the financial statements on the basis of disclosure made regarding the accounting policies before undertaking financial analysis. The growing realization among accountants all over the world, that the accounting policies should be standardized, has resulted in the establishment of International Accounting Standards Committee which has issued a number of International Accounting Standards. In our country, the Institute of Chartered Accountants of India has established Accounting Standards Board for formulation of requisite accounting standards. The accounting Standards Board had already issued nineteen standards including AS-1: Disclosure of accounting Policies. The standard AS-1 has been made mandatory in respect of accounting periods beginning on or after 1.4.1991. It is hoped that in the years to come, with the progressive standardization of accounting policies, this problem will be solved to a great extent. Ratio alone are not adequate:Ratios are only indicators; they cannot be taken as final regarding good or bad financial position of the business. Other things have also to be seen. For example, a high current ratio does not necessarily mean that the concern has a good liquid

position in case current assets mostly comprise outdated stocks. It has been correctly observed, Ratio must be used for what they are financial fools. Too often they are looked upon as ends in themselves rather than as a means to an end. The value of a ratio should not be regarded as good or bad inter se. It may be an indication that a firm is weak or strong in a particular area, but it must never be taken as proof. Ratios may be linked to railroads. They tell the analyst, Stop, look, and listen. Window Dressing:The term window dressing means manipulation of accounts in a way so as to conceal vital facts and present the financial statement in a way to show a better position that what is actually is. On account of such a situation, presence of a particular ratio may not be a definite indicator of good or bad management. For example, a high stock turnover ratio is generally considered to be an indication of operational efficiency of the business. But this might have been achieved by unwarranted price reductions or failure to maintain proper stock of goods. Similarly, the current ratio may be improved just before the Balance Sheet date by postponing replenishment of inventory. For example, if a company has got current assets of Rs. 4000 and current liabilities of Rs. 2000, the current ratio is 2, which is quite satisfactory. In case the company purchases goods of Rs. 2000 on credit, the current assets would go up to Rs. 6000 and current liabilities to Rs. 4000. Thus, reducing the current ratio to 1.5. The company may, therefore, postpone the purchases for the early next year so that its current ratio continues to remain at 2 on the Balance Sheet date. Similarly, in order to improve the current ratio, the company may pay off certain pressing current liabilities before the Balance Sheet date. For example, if in the above case the company pays current liabilities of Rs. 1000, the current liabilities would stand reduced to Rs. 1000, current assets would stand reduced to Rs. 3000 but the current ratio would go up to 3. No Fixed Standards:No fixed standards can be laid down for ideal ratios. For example, current ratio is generally considered to be ideal if current assets are twice the current liabilities. However, in case of those concerns which have adequate arrangements with their

bankers for providing funds when they require, it may be perfectly ideal if current assets are equal to slightly more than current liabilities. It is, therefore, necessary to avoid many rules of thumb. Financial analysis is an individual matter and value for a ratio which is perfectly acceptable for one company or one industry may not be at all acceptable in case of another. Ratios are a Composite of Many Figures:Ratios are a composite of many different figures. Some cover a time period, others are at an instant of time while still others are only averages. It has been said that, a man who has his head in the oven and his feet in the ice-box is on the average, comfortable! Many of the figures used in the ratio analysis are no more meaningful than the average temperature of the room in which this man sits. A balance sheet figure shows the balance of the account at one moment of one day. It certainly may not be representative of typical balance during the year. It may, therefore, be concluded that ratio analysis, if done mechanically, is not only misleading but also dangerous. It is indeed a double edged sword which requires a great deal of understanding and sensitivity of the management process rather than mechanical financial skill. It has rightly been observed: The ratio analysis is an aid to management in taking correct decisions, but as a mechanical substitute for thinking and judgment, it is worse than useless. The ratio if discriminately calculated and wisely interpreted can be a useful tool of financial analysis. Finally, ratios are only a post-mortem analysis of what has happened between two balance sheet dates. For one thing, the position in the interim period is not revealed by ratio analysis. Moreover, they give no clue about the future. In brief, ratio analysis suffers from some serious limitations. The analyst should not be carried away by its oversimplified nature, easy computation with a high degree of precision. The reliability and significance attached to ratios will largely depend upon the quality of data on which they are based. They are as good as the data itself. Nevertheless, they are an important tool of financial analysis.

Financial Ratio Analysis Financial ratio analysis is the calculation and comparison of ratios which are derived from the information in a company's financial statements. The level and historical trends of these ratios can be used to make inferences about a company's financial condition, its operations and attractiveness as an investment. Financial ratios are calculated from one or more pieces of information from a company's financial statements. For example, the "gross margin" is the gross profit from operations divided by the total sales or revenues of a company, expressed in percentage terms. In isolation, a financial ratio is a useless piece of information. In context, however, a financial ratio can give a financial analyst an excellent picture of a company's situation and the trends that are developing. A ratio gains utility by comparison to other data and standards. Taking our example, a gross profit margin for a company of 25% is meaningless by itself. If we know that this company's competitors have profit margins of 10%, we know that it is more profitable than its industry peers which are quite favourable. If we also know that the historical trend is upwards, for example has been increasing steadily for the last few years, this would also be a favourable sign that management is implementing effective business policies and strategies. Financial ratio analysis groups the ratios into categories which tell us about different facets of a company's finances and operations. An overview of some of the categories of ratios is given below.

Leverage Ratios which show the extent that debt is used in a company's capital structure.

Liquidity Ratios which give a picture of a company's short term financial situation or solvency.

Operational Ratios which use turnover measures to show how efficient a company is in its operations and use of assets.

Profitability Ratios which use margin analysis and show the return on sales and capital employed.

Solvency Ratios which give a picture of a company's ability to generate cash flow and pay it financial obligations.

Types of Ratios:Liquidity Ratios

Liquidity refers to the ability of a firm to meet its short-term financial obligations when and as they fall due.

The main concern of liquidity ratio is to measure the ability of the firms to meet their short-term maturing obligations. Failure to do this will result in the total failure of the business, as it would be forced into liquidation.

Current Ratio The Current Ratio expresses the relationship between the firms current assets and its current liabilities. Current assets normally include cash, marketable securities, accounts receivable and inventories. Current liabilities consist of accounts payable, short term notes payable, short-term loans, current maturities of long term debt, accrued income taxes and other accrued expenses (wages). Current Ratio = Current Assets / Current Liabilities The rule of thumb says that the current ratio should be at least 2 that are the current assets should meet current liabilities at least twice. Quick Ratio Measures assets that are quickly converted into cash and they are compared with current liabilities. This ratio realizes that some of current assets are not easily convertible to cash e.g. inventories. The quick ratio, also referred to as acid test ratio, examines the ability of the business to cover its short-term obligations from its quick assets only (i.e. it ignores stock). The quick ratio is calculated as follows Quick Ratio / Acid-test Ratio = Quick Assets / Current Liabilities Clearly this ratio will be lower than the current ratio, but the difference between the two (the gap) will indicate the extent to which current assets consist of stock.

Turnover Ratio The liquidity ratios discussed so far relate to the liquidity of a firm as a whole. Another way of examining the liquidity is to determine how quickly certain current assets are converted into cash. The ratios to measure these are referred to as turnover ratios. In fact, liquidity ratios are not independent of activity ratios. Poor debtor or inventory turnover ratios limit the usefulness of the current and acid-test ratios. Both obsolete / unsalable inventory and uncollectible debtors are unlikely to be sources of cash. Therefore, the liquidity ratios should be examined in conjunction with relevant turnover ratios affecting liquidity. Inventory Turnover Ratio It is computed by dividing the cost of goods sold by the average inventory. Thus, Inventory Turnover Ratio = Cost of Goods sold / Average Inventory This ratio measures the stock in relation to turnover in order to determine how often the stock turns over in the business. It indicates the efficiency of the firm in selling its product. It is calculated by dividing the cost of goods sold by the average inventory. The ratio shows a relatively high stock turnover which would seem to suggest that the business deals in fast moving consumer goods.

The trend shows a marginal increase in days which indicates a slowdown of stock turnover.

The high stock turnover ratio would also tend to indicate that there was little chance of the firm holding damaged or obsolete stock.

Debtors Turnover Ratio It is determined by dividing the net credit sales by average debtors outstanding during the year. Thus, Debtors turnover ratio = Net credit sales / Average debtors

Net credit sales consist of gross credit sales minus returns, if any, from customers. Average debtors are the simple average of debtors including bills receivable at the beginning and at the end of the year. The analysis of the debtors turnover ratio supplements the information regarding the liquidity of one item of current assets of the firm. The ratio measures how rapidly receivables are collected. A high ratio is indicative of shorter time-lag between credit sales and cash collection. Creditors Turnover Ratio It is a ratio between net credit purchases and the average amount of creditors outstanding during the year. It is calculated as follows: Creditors Turnover Ratio = Net credit purchases / Average Creditors A low turnover ratio reflects liberal credit terms granted by suppliers, while a high ratio shows that accounts are to be settled rapidly. The creditors turnover ratio is an important tool of analysis as a firm can reduce its requirement of current assets by relying on suppliers credit. The extent to which trade creditors are willing to wait for payment can be approximated by the creditors turnover ratio. Financial Leverage Ratios

The ratios indicate the degree to which the activities of a firm are supported by creditors funds as opposed to owners.

The relationship of owners equity to borrowed funds is an important indicator of financial strength.

The debt requires fixed interest payments and repayment of the loan and legal action can be taken if any amounts due are not paid at the appointed time. A relatively high proportion of funds contributed by the owners indicate a cushion (surplus) which shields creditors against possible losses from default in payment.

The greater the proportion of equity funds, the greater the degree of financial strength. Financial leverage will be to the advantage of the ordinary shareholders as long as the rate of earnings on capital employed is greater than the rate payable on borrowed funds.

Debt to Equity ratio This ratio indicates the extent to which debt is covered by shareholders funds. It reflects the relative position of the equity holders and the lenders and indicates the companys policy on the mix of capital funds. The debt to equity ratio is calculated as follows: DebtEquity Ratio = Long-term Debt / Shareholders Equity Debt to Total Capital Ratio The relationship between creditors funds and owners capital can also be expressed in terms of another leverage ratio. This is the debt to total capital ratio. Here, the outside liabilities are related to the total capitalization of the firm and not merely to the shareholders equity. Essentially, this type of capital structure ratio is a variant of the D/E, ratio described above. In can be calculated as follows: Debt to Total Capital Ratio = Total Debt / Total Assets Profitability Ratios Profitability is the ability of a business to earn profit over a period of time. Although the profit figure is the starting point for any calculation of cash flow, as already pointed out, profitable companies can still fail for a lack of cash.

A company should earn profits to survive and grow over a long period of time.

Profits are essential, but it would be wrong to assume that every action initiated by management of a company should be aimed at maximising profits, irrespective of social consequences.

The ratios examined previously have tendered to measure management efficiency and risk. Profitability is a result of a larger number of policies and decisions. The profitability ratios show the combined effects of liquidity, asset management (activity) and debt management (gearing) on operating results. The overall measure of success of a business is the profitability which results from the effective use of its resources.

Gross Profit Margin

Normally the gross profit has to rise proportionately with sales. It can also be useful to compare the gross profit margin across similar businesses although there will often be good reasons for any disparity.

This indicates that the rate in increase in cost of goods sold are less than rate of increase in sales, hence the increased efficiency. Gross Profit Margin = Gross Profit / Sales X 100

Net Profit Margin This is a widely used measure of performance and is comparable across companies in similar industries. The fact that a business works on a very low margin need not cause alarm because there are some sectors in the industry that work on a basis of high turnover and low margins, for examples supermarkets and motorcar dealers. What is more important in any trend is the margin and whether it compares well with similar businesses. However, to know how well the firm is performing one has to compare this ratio with the industry average or a firm dealing in a similar business. Net Profit Margin = Net Profit / Sales X 100 Earnings per Share (EPS) Whatever income remains in the business after all prior claims, other than owners claims (i.e. ordinary dividends) have been paid, will belong to the ordinary shareholders who can then make a decision as to how much of this income they wish to remove from the business in the form of a dividend, and how much they wish to retain in the business. The shareholders are particularly interested in knowing how much has been earned during the financial year on each of the shares held by them. For this reason, earnings per share figure must be calculated. Clearly then, the earning per share calculation will be: EPS = Net Profit available to Equity holders / Number of ordinary shares outstanding

Dividend Pay-out Ratio D/P ratio is also known as pay-out ratio. It measures the relationship between the earnings belonging to the ordinary shareholders and the dividend paid to them. In other words, the D/P ratio shows what percentage share of the net profits after taxes and preference dividend is paid out as dividend to the equity-holders. It can be calculated by dividing the total dividend paid to the owners by the total profits / earnings available to them. Alternatively, it can be found out by dividing the DPS by the EPS. Thus, D/P Ratio = Dividend per ordinary Share (DPS) / Earnings per share (EPS) X 100 Activity Ratios If a business does not use its assets effectively, investors in the business would rather take their money and place it somewhere else. In order for the assets to be used effectively, the business needs a high turnover. Unless the business continues to generate high turnover, assets will be idle as it is impossible to buy and sell fixed assets continuously as turnover changes. Activity ratios are therefore used to assess how active various assets are in the business. Total Assets Turnover Asset turnover is the relationship between sales and assets The firm should manage its assets efficiently to maximise sales.

The total asset turnover indicates the efficiency with which the firm uses all its assets to generate sales.

It is calculated by dividing the firms sales by its total assets.

Generally, the higher the firms total asset turnover, the more efficiently its assets have been utilized. Total Assets Turnover Ratio = Cost of Goods Sold / Average Total Assets

Fixed Asset Turnover The fixed assets turnover ratio measures the efficiency with which the firm has been using its fixed assets to generate sales. Generally, high fixed assets turnovers are preferred since they indicate a better efficiency in fixed assets utilization.

It appears that the activity of the business is relatively constant, with a slight upward trend.

The ratio also confirms that the business places a much greater reliance on working capital than it does on the fixed assets as the fixed assets (2001 and 2002) turned over more quickly than stock turnover.

Fixed Assets Turnover = Cost of Goods Sold / Average Fixed Assets

Chapter 5

Research Methodology

RESEARHC METHODOLOGY
The focus of this chapter is on the methodology used for the collection of data for research. Data constitutes the subject matter of the analyst. The primary sources of the collection of sources of the collection of data are observations, Interviews and the questionnaire technique. The secondary sources are collections of data are from the printed and annually published materials. A questionnaire form is prepared to secure responses to certain questions. It is device for securing answers to questions by using a form. The questionnaire technique is economical and time saving and is an important tool of collecting information. Research Design: A research design is the detailed blue print used to guide a research study towards its objective. It helps to collect, measure and analysis of data. The study undertaken is of Descriptive Historical Research Method. Descriptive research is those which are connected with describing the characteristics of the particular topic. Secondary data: Secondary data highlights the contextual familiarities for primary data collection. It provides rich insights into the research process. Secondary data is collected through magazine, reference books, journal, articles, websites etc. Secondary data like balance sheet and profit and loss account and cash flow statement collected through company and company websites and part of theory from reference books. Tools and Techniques In this industry project work the ratio analysis technique has been used. In this project ratio analysis technique is used for interpretation and evaluation of financial statements.

Chapter 6

Data Collection and Analysis

DATA ANALYSIS AND INTERPRETATION

1. LIQUIDITY RATIOS A. Current Ratio:The current ratio of a firm measures its short-term solvency, that is, its ability to meet shortterm obligations as a measure of short-term/current financial liquidity; it indicates the rupees of current assets (cash balance and its potential source of cash) available for each rupee of current liability/obligation payable. The higher the current ratio, the larger is the amount of rupees available per rupee of current liability, the more is the firms ability to meet current obligations and the greater is the safety of funds of short-term creditors. Thus, current ratio, in a way, is a measure of margin of safety to the creditors. It is calculated as follows: Current Ratio = Current Assets / Current Liabilities Calculation of Current Ratio with Diagram: Particulars Current Assets Current Liabilities Current Ratio Mar '04 9.70 17.11 0.56 Mar '05 18.41 26.20 0.70 Mar '06 18.47 34.03 0.54 Mar '07 28.39 37.38 0.75 (Rs. In Crores) Mar '08 49.55 59.33 0.83 Mar '09 68.32 65.79 1.04

Diagram of Current Ratio:-

Current Ratio
1.2 1 0.8
Times

0.6 1.04 0.4 0.2 0 Mar '04 Mar '05 Mar '06 Year Mar '07 Mar '08 Mar '09 0.56 0.70 0.54 0.75 0.83

Interpretation:

Current ratio 2:1 shows excellent liquidity position of the firm. Current ratio between 1:1 to 2:1 shows satisfactory position of the company. Ratio less than 1:1 shows no liquidity at all.

Generally current ratio should 2:1 but as per our calculation in Mar'04 it was 0.56, it means company has 0.56 rupees current assets against current liability on rupees 1. Company has less current assets than current claims against them. In Mar'09 Companys current ratio is 1.04 which is not satisfactory.

B. Acid-Test / Quick Ratio:The term quick assets refers to current assets which can be converted into cash immediately or at a short notice without diminution of value. Included in this category of current assets are (1) cash and bank balance; (2) short-term marketable securities and (3) debtors/receivables. Thus, the current assets which are excluded are: prepaid expenses and inventory. It is calculated as follows: Quick Ratio = Liquid Assets / Liquid Liabilities Calculation of Quick Ratio with Diagram: Particulars Liquid Assets Liquid Liabilities Mar '04 6.57 17.11 Mar '05 13.91 26.20 0.53 Mar '06 14.11 34.03 0.41 Mar '07 24.73 37.38 0.66 (Rs. In Crores) Mar '08 44.46 59.33 0.75 Mar '09 64.12 65.79 0.97

Quick Ratio (In 0.38 Times)

Diagram of Quick Ratio:-

Quick Ratio
1.2 1 0.8
Times

0.6 0.97 0.4 0.2 0 Mar'04 Mar'05 Mar'06 Year Mar'07 Mar'08 Mar'09 0.38 0.53 0.41 0.66 0.75

Interpretation:Generally quick ratio of 1:1 represents a satisfactory current financial condition. But we have seen in table that not evens a single year it has achieved. In all five years liquid ratios are less than 1.It indicates that firm has found difficult to meet its obligations because its quick assets are lesser than current liabilities. Similarly both year Mar'06 and Mar'07 the company suffers from the same position. It has increased to 0.97 in Mar'09.

2. TURN OVER RATIOS A. Inventory Turnover: This ratio measures the stock in relation to turnover in order to determine how often the stock turns over in the business. It is calculated as follows: Inventory Turnover Ratio = Cost of Goods Sold / Average Inventory Calculation of Inventory Turnover Ratio with Diagram: Particulars Cost Of Goods Sold Average Inventory
Inventory Turnover Ratio (In Times)

(Rs. In Crores) Mar '08 50.62 4.37 11.58 Mar '09 46.44 5.14 9.03

Mar '05 19.21 3.81 5.04

Mar '06 33.08 4.43 7.46

Mar '07 37.24 4.01 9.29

Diagram of Inventory Turnover Ratio:-

Inventory Turnover Ratio

14 12 10
Times

8 6 4 2 0 Mar '05 Mar '06 Mar '07 Year Mar '08 Mar '09 5.04 9.29 7.46 11.58 9.03

Interpretation:It indicates the efficiency of the firm in selling its product. In Mar'05 inventory turnover is 5 times and in Mar'09 it is 9 times in a year. High inventory turnover ratio is good from view point of liquidity. We can say company sells its product fast.

B. Debtors Turnover Ratio:-

It is determined by dividing the net credit sales by average debtors outstanding during the year. The analysis of the debtors turnover ratio supplements the information regarding the liquidity of one item of current assets of the firm. The ratio measures how rapidly receivables are collected. It is calculated as follows:Debtors Turnover Ratio = Net credit sales / Average Debtors Calculation of Debtors Turnover Ratio with Diagram: Particulars Net Credit Sales Average Debtors
Debtors Turnover Ratio (Times)

(Rs. In Crores) Mar '07 39.90 5.47 7.29 Mar '08 63.22 7.97 7.93 Mar '09 56.81 8.50 6.68

Mar '05 16.68 5.06 3.30

Mar '06 27.24 4.37 6.23

Diagram of Debtors Turnover Ratio:-

Debtors Turnover Ratio (Times)

9 8 7 6
Times

5 4 3 2 1 0 Mar'05 Mar'06 Mar'07 Year Mar'08 Mar'09 3.30 6.23 7.29 7.93 6.68

Note: - It is assumed that 60% sale is on credit and 40% on cash. Interpretation:The companys debtors turnover ratio of Mar'05 3.30 times, in Mar'08 7.93 times in a year which indicates company collects its receivable rapidly. We can say year to year the shorter time lag between credit sales and collection.

C. Debtors Collection Period:-

The ratio indicates the extent to which the debts have been collected in time. It gives the average debt collection period. Debtors Collection Period is calculated from following formula: Debtors Collection Period = 360 / Debtors Turnover Ratio Calculation of Debtors Collection Period Ratio with Diagram: (Rs. In Crores)

Particulars Days in Years Debtors Turnover

Debtors Collection Period (in Days)

Mar '05 360 3.30 109

Mar '06 360 6.23 58

Mar '07 360 7.29 49

Mar '08 360 7.93 45

Mar '09 360 6.68 54

Diagram of Debtors Collection Period:-

Debtors Collection Period (in Days)

120 100 80
Days

60 40

109 58

20 0 Mar '05 Mar '06

49

45

54

Mar '07 Year

Mar '08

Mar '09

Interpretation: -

According to debtor collection period from above table, Company was following liberal credit policy as its collection period of Mar'05 was 109 days. Thus, to decrease the debt collection period the company has to adopt certain policy s to attract the customers to pay debts. Policies like trade credit, cash credit. We can see that company has reduced its debtors collection period during these years it means now a days it follows strict credit policy.

D. Creditors Turnover ratio:

It is calculated as follows:Creditors Turnover Ratio = Net Credit Purchases / Average Creditors Calculation of Creditors Turnover Ratio with Diagram: Particulars Net Credit Purchase Average Creditors Mar '05 20.58 7.86 Mar '06
32.94

(Rs. In Crores) Mar '08

52.05

Mar '07
33.54

Mar '09
46.55

10.20 3.22

11.21 2.99

17.18 2.92

19.73 2.35

Creditors Turnover Ratio 2.61 (times per year)

Diagram of Creditors Turnover Ratio:-

Creditors Turnover Ratio

3.5 3 2.5
Times

2 1.5 1 0.5 0 Mar'05 Mar'06 Mar'07 Year Mar'08 Mar'09 3.22 2.61 2.99 2.92 2.35

Interpretation:Above stated graph indicates that in Mar'05 Company has settled its creditors accounts 2.61 times in a year. In Mar'06 it had increased by 3.22 which show that company had settled its account rapidly. From Mar'07 to Mar'09 it has paid its creditors account average of 3 times. If creditors turnover ratio is high companys requirements of working capital will increase and vice-a-versa.

E. Creditors Payment Period:It is calculated as follows:Creditors Payment Period = 360 / Creditors Turnover Ratio Calculation of Creditors Payment Period with Diagram: Particulars Days in Years Creditors Turnover Ratio Mar '05 360 2.61 Mar '06 360 3.22 111 Mar '07 360 2.99 120 (Rs. In Crores) Mar '08 360 2.92 123 Mar '09 360 2.35 153

Creditors Payment Period 137 (in Days) Diagram of Creditors Payment Period:-

Creditor's Paymeny Period

180 160 140 120
Days

100 80 60 40 20 0 Mar'05 Mar'06 Mar'07 Year Mar'08 Mar'09 137 111 153 120 123

Interpretation:We can analyse that in Mar'05 Company has paid its creditor after 137 days. After that this period is decreasing which shows strict collection policy followed by suppliers. Company has to settle its payments within short span to time. 1n Mar'09 company makes payment after 153 days which is comparatively higher than previous years, it means for this year suppliers has given more credit period to the company. Longer payment period shows the liberal credit terms granted by suppliers. It will reduce requirement of current assets by relying on suppliers credit.

F. Fixed Asset Turnover: The fixed assets turnover ratio measures the efficiency with which the firm has been using its fixed assets to generate sales. It is calculated by dividing the firms sales by its net fixed assets as follows: Fixed Asset Turnover Ratio = COGS / Average Fixed Asset Calculation of Fixed Asset Turnover Ratio with Diagram: Particulars Cost of Goods Sold Average Fixed Asset
Fixed Asset Turnover Ratio (In Times)

(Rs. In Crores) Mar '08 50.62 93.50 0.54 Mar '09 46.44 132.28 0.35

Mar '05 19.21 17.37 1.10

Mar '06 33.08 30.55 1.08

Mar '07 37.24 52.79 0.71

Diagram of Fixed Asset Turnover Ratio:-

Fixed Asset Turnover Ratio

1.2 1 0.8
Times

0.6 0.4 0.2 0

1.10

1.08 0.71 0.54 0.35

Mar '05

Mar '06

Mar '07 Year

Mar '08

Mar '09

Interpretation:Generally, high fixed assets turnovers are preferred since they indicate a better efficiency in fixed assets utilization. From the above calculations companys fixed assets turnover ratio is continuously decreasing. In year Mar05 it is 1.1 and in Mar09 it is 0.35. It means companys efficiency of managing and utilizing its assets goes down. Company is not utilizing its fixed assets at fullest capacity.

G. Total Assets Turnover Ratio: Total Assets turnover ratio indicates the efficiency with which firm uses all its assets to generate sales. It is calculated as follows:
Total Assets Turnover Ratio = Sale / Average Total Assets

Calculation of Total Asset Turnover Ratio with Diagram: Particulars Sale Average Total Assets
Assets Turnover Ratio (In Times)

(Rs. In Crores) Mar '08 105.38 171.67 0.61 Mar '09 94.69 211.77 0.45

Mar '05 27.80 38.82 0.72

Mar '06 45.41 59.16 0.77

Mar '07 66.51 93.28 0.71

Diagram of Asset Turnover Ratio:-

Assets Turnover Ratio

0.9 0.8 0.7 0.6
Times

0.5 0.4 0.3 0.2 0.1 0 Mar '05 Mar '06 Mar '07 Year Mar '08 Mar '09 0.72 0.77 0.71 0.61 0.45

Interpretation:-

Here, we can interpret that companys asset turnover ratio in Mar05 is 0.72 which is not ideal and in Mar06 there is negligible improvement is seen that the ratio is 0.77. In Mar07 it has decreased and in Mar09 it is 0.45 which indicates under utilization of available resources and presence of idle capacity. In operational term, it implies that the firm can expand its activity level (in terms of production and sales) without requiring additional capital investment.

3. LEVERAGE or CAPITAL STRUCTURE RATIO A. Debt to Equity ratio: This ratio indicates the extent to which debt is covered by shareholders funds. It reflects the relative position of the equity holders and the lenders and indicates the companys policy on the mix of capital funds. The debt to equity ratio is calculated as follows: Debt to Equity Ratio = Long Term Debt / Shareholders Fund Calculation of Debt to Equity Ratio with Diagram: Mar '04 Particulars 4.94 Long Term Debt 10.94 Shareholder Fund Debt to Equity Ratio 0.45 (In Times) Diagram of Debt to Equity Ratio:Mar '05 2.65 16.33 0.16 Mar '06 2.25 26.64 0.08 Mar '07 0.00 43.79 0.00 (Rs. In Crores) Mar '08 0.00 79.00 0.00 Mar '09 16.82 110.85 0.15

Debt to Equity Ratio

0.5 0.45 0.4 0.35
Times

0.3 0.25 0.2 0.15 0.1 0.05 0 Mar '04 Mar '05 Mar '06 Year 0.16 0.08 0 Mar '07 0 Mar '08 Mar '09 0.15 0.45

Interpretation:Company debt-equity ratio in Mar'04 is 0.45 and after that in each year it is decreasing. In Mar'07 and Mar'08 Company is operating its business only on equity. In Mar'09 it has raised capital from long term debt. This proportion of debt-equity in Mar'09 does not indicate good financial position.

B. Debt Assets Ratio: Debt-asset ratio measures the share of the total assets financed by outside funds. It is calculated as follows: Debt Assets Ratio = Total Debt / Total Assets Calculation of Debt Assets Equity Ratio with Diagram: Particulars Total Debt Total Assets Debt Assets Ratio Mar '04 4.94 24.62 0.20 Mar '05 2.65 38.82 0.068 Mar '06 2.25 59.16 0.038 Mar '07 000 93.28 000 (Rs. In Crores) Mar '08 000 171.67 000 Mar '09 16.82 211.77 0.079

Diagram of Debt - assets Ratio:-

Debt Assets Ratio

0.25 0.2
Percentage

0.15 0.1 0.05 0.068 0 Mar '04 Mar '05 Mar '06 Year 0.038 0 Mar '07 0 Mar '08 Mar '09 0.20

0.079

Interpretation:Above calculation intimates the debt asset ratio in Mar04 is 0.20 which has decreased in Mar05 in 0.068. In Mar07 Company was not having even single rupees debt, which indicates its financial strength. For Mar09 Companys debt has increased but comparatively its assets have also increased. So we can say that there is a margin of safety available to company as well as lender.

C. Interest Coverage Ratio Interest coverage ratio measures the debt servicing capacity of a firm insofar as fixed interest on long-term loan is concerned. It is determined by dividing the operating profits or earnings before interest and taxes (EBIT) by the fixed interest charges on loans. It is calculated as follows: Interest Coverage Ratio = EBIT / Interest Calculation of Interest Coverage Ratio with Diagram: Particulars EBIT Interest Interest Coverage Ratio Mar '05 11.36 0.84 13.52 Mar '06 15.61 0.41 38.07 Mar '07 27.49 0.12 229.08 (Rs. In Crores) Mar '08 56.39 0.62 87.72 Mar '09 50.50 1.62 31.17

Diagram of Interest Coverage Ratio:-

Interest Coverage Ratio

250 200 150 100 50 0 13.52 Mar'05 38.07 Mar'06 Mar'07 Year Mar'08 229.08

Times

87.72 31.17 Mar'09

Interpretation:Companys interest coverage ratio in Mar05 is 13.52. It has increased in each year after Mar05. In Mar07 it was 229.08 (highest during these 5 years). In Mar09 interest coverage ratio was comparatively reduced to 31.17. From all above, we can interpret that company is having unused debt capacity.

D. Proprietary Ratio Proprietary ratio indicates the extent to which assets are financed by owners funds. It is calculated as follows: Proprietary Ratio = Proprietors Funds / Total Assets * 100 Calculation of Proprietary Ratio with Diagram: Particulars Total Assts Proprietors Funds Proprietary Ratio Mar '04 24.62 10.94 2.25 Mar '05 38.82 16.33 2.37 Mar '06 59.16 26.64 2.22 Mar '07 93.28 43.79 2.13 (Rs. In Crores) Mar '08 171.67 79.00 2.17 Mar '09 211.77 110.85 1.91

Diagram of Proprietary Ratio:-

Proprietary Ratio
2.5 2
Percentage

1.5 1 0.5 0 Mar'04 Mar'05 Mar'06 Year Mar'07 Mar'08 Mar'09 2.25 2.37 2.22 2.13 2.17 1.91

Interpretation:A high ratio will indicate high financial strength. High proprietor ratio is desirable for lenders / creditors. Company is having proprietor ratio 2.25 in Mar04. We can see that later it is increasing slowly and steadily. In Mar09 Companys proprietor ratio is 1.91.

4. PROFITABILITY RATIOS A. Gross Profit Ratio: A lower gross profit ratio, generally indicates high cost of goods sold due to the unfavorable purchasing polices, lesser sales, lower selling prices, excessive competition, over investment in plant and machinery. Gross profit ratio is decreasing, which means the profitability of the company is decreasing.

Normally the gross profit has to rise proportionately with sales. It can also be useful to compare the gross profit margin across similar businesses although there will often be good reasons for any disparity.

It is calculated as follows: Gross Profit Ratio = Gross Profit / Sales * 100 Calculation of Gross Profit Ratio with Diagram: Particulars Gross Profit Sales Gross Profit Ratio Mar '05 8.59 27.80 30.89 Mar '06 12.38 45.41 27.26 Mar '07 29.27 66.51 44.00 Mar '08 54.76 105.78 52.00 (Rs. In Crores) Mar '09 48.20 94.69 50.00

Diagram of Gross Profit Ratio:-

Gross Profit Ratio

60.00% 50.00%
Percentage

40.00% 30.00% 52.00 20.00% 30.89 10.00% 0.00% Mar '05 Mar '06 Mar '07 Year Mar '08 Mar '09 27.26 44.00 50.00

Interpretation:The gross profit margin reflects the efficiency with which management produces each unit of the product. This ratio indicates the average spread between the cost of goods sold and the sales revenue. In the financial year Mar'05 the gross profit was 30.89% and in financial year Mar'09 it is 50.00%. It indicates higher sales price without a corresponding increasing in the cost of goods sold or decreasing in cost of sales.

B. Net Profit Ratio: This is a widely used measure of performance and is comparable across companies in similar industries. The fact that a business works on a very low margin need not cause alarm because there are some sectors in the industry that work on a basis of high turnover and low margins, for examples supermarkets and motorcar dealers. It is calculated as follows:Net Profit Ratio = Profit after Tax / Net Sales * 100 Calculation of Net Profit Ratio with Diagram: Particulars Net Profit Sales Net Profit Ratio Mar '05 6.30 27.80 22.66 Mar '06 9.91 45.41 22.00 Mar '07 16.12 66.51 24.00 Mar '08 35.64 105.18 34.00 (Rs. In Crores) Mar '09 31.64 94.69 33.00

Diagram of Net Profit Ratio:-

Net Profit Ratio

40.00% 35.00% 30.00%
Percentage

25.00% 20.00% 15.00% 10.00% 5.00% 0.00% Mar '05 Mar '06 Mar '07 Year Mar '08 Mar '09 22.66 22.00 24.00 34.00 33.00

Interpretation: This ratio indicates the firm s capacity to face adverse economic conditions such as price competition, low demand etc. obviously, higher the ratio, the better is the profitability. In the financial year Mar'05 the net profit was 22.66% and in Mar'08 it was increasing by 34.00% which ensure adequate return to the owner as well as enable a firm to cope with the adverse economy conditions when selling price is declining or demand of product is falling.

C. Operating Profit Ratio:

Operating Profit means profit before interest and tax. The term interest means interest on long term borrowings, interest on short term borrowing will be deducted for computing operating profit. A high operating margin indicates the healthy operating efficiency and pricing strategy of a company and vice-versa. The term net profit here means, net income after interest and tax it is different from the net operating profit which is used for computing the return on total capital employed in the business. This is because the shareholders are interested in total income after tax including net non operating income. It is calculated as follows:Operating Profit Ratio = Earnings before interest and taxes (EBIT) / Net Sales * 100 Calculation of Operating Profit Ratio with Diagram: Particulars EBIT Net Sales Operating Profit Ratio Mar '05 9.42 27.80 34.00 Mar '06 12.79 45.41 28.00 Mar '07 24.28 66.51 36.50 (Rs. In Crores) Mar '08 55.38 105.38 52.00 Mar '09 49.82 94.69 52.61

Diagram of Operating Profit Ratio:-

Operating Profit Ratio

60.00% 50.00%
Percentage

40.00% 30.00% 52.00 20.00% 10.00% 0.00% Mar '05 Mar '06 Mar '07 Year Mar '08 Mar '09 34.00 36.50 28.00 52.61

Interpretation: The operating ratio measures the relationship between operating profits and sales. This ratio adjusts the managerial efficiency in earnings profits which may not be reflected in net profit to sales ratio if net profit includes a higher non operating expenses or income. In the financial year Mar'05 ratio was 34.00% in Mar'06 the companys sales was higher but earning was lower therefore its operating profit ratio was decreasing by 28.00%. In Mar'09 operating profit is 52.61% which indicates company higher managerial efficiency.

D. Earnings per Share:One of the way of measuring profitability of shareholders investment to calculate earnings per share. EPS shows the profitability of the firm on a per share basis, it doesnt reflect how much is paid as dividend and how much retained in the business. It is calculated as follows:EPS = Profit after tax Preference share dividend / No. Of equity shares outstanding Calculation of Earnings per Share with Diagram: Particulars PAT
NO. of Equity Shares outstanding

(Rs. In Crores) Mar '07 18.21 70.46 26.00 Mar '08 36.74 70.48 52.00 Mar '09 32.90 70.46 47.00

EPS

Mar '05 6.23 25.43 24.92

Mar '06 9.90 35.23 28.29

Diagram of Earnings per Share:-

Earnings per Share

60 50
Percentage

40 30 52.00 20 10 0 Mar '05 Mar '06 Mar '07 Year Mar '08 Mar '09 24.92 28.29 26.00 47.00

Interpretation:The earnings per share are a good measure of the profitability and when compared with E.P.S of previous 5 years, it gives a view of the comparative earnings power of a firm. Calculated for 5 years indicates the earning power of the company is increasing. The earnings per share of the company for five years for Mar05 are 24.92% which increased up to 52.00% in the year Mar08. Earnings per share are increasing for the year Mar05 to Mar09. EPS is increasing as profit available for appropriation is increasing and Number of equity shares is constant for the four years.

E. Return on Assets: This ratio is computed to know the productivity of the total assets. It is calculated as follows:Return on Assets = PAT / Average Total Assets * 100 Calculation of Return on Assets Ratio with Diagram: Particulars PAT Average Total Assets Return on Assets Mar '05 6.23 38.82 16.04 Mar '06 9.90 59.16 16.73 Mar '07 18.21 93.28 19.52 Mar '08 36.74 131.67 27.90 (Rs. In Crores) Mar '09 32.90 210.77 15.61

Diagram of Return on Assets Ratio:-

Return on Assets
30 25
Percentage

20 15 10 16.04 5 0 Mar '05 Mar '06 Mar '07 Year Mar '08 Mar '09 20.20 19.52 15.61 27.9

Interpretation:The ROA measures the profitability of the total funds/investments of a firm. In Mar05 Return on asset ratio of the company is 16.04. In Mar07 it has increased 19.52 and 27.90 respectively. This indicates assets are effectively utilizing in the company. In Mar09 return on assets is decreasing which means companys assets are enable to generate sufficient revenue against their cost.

F. Return on Equity: Return on equity measures the return on the owners investment in the firm. It is used to see the profitability of owners investment. It is calculated as follows:Return on Equity = PAT / Shareholders Fund * 100 Calculation of Return on Equity Ratio with Diagram: Particulars PAT Shareholder Fund Return on Equity Mar '05 6.30 16.33 38.57 Mar '06 9.91 26.64 37.20 Mar '07 16.12 43.79 36.81 Mar '08 35.64 79.00 45.11 (Rs. In Crores) Mar '09 31.64 110.85 28.54

Diagram of Return on Equity Ratio:-

Return on Equity
50 45 40 35
Percentage

30 25 20 15 10 5 0 Mar '05 Mar '06 Mar '07 Year Mar '08 Mar '09 38.57 37.20 36.81 28.54 45.11

Interpretation:ROE indicates how well the firm has used the resources of owners. In fact, this ratio is one of the most important relationships in financial analysis. The earnings of a satisfactory return are the most desirable objective of business. This ratio is, thus, of great interest to the present as well as the prospective shareholders and also of great concern to management, this has the responsibility of maximizing the owners welfare.

Chapter 7

Findings

FINDINGS

As Companys current ratio is not satisfactory so it should increase current assets in comparision to current liabilities.

As companys fixed assets turnover ratio is continuously decreasing it means it has under utilization of available resources. So it can expand its activity level without any additional capital investment.

Liquid ratio is decreasing it may result in difficulties of meeting current obligation.

Company utilized its resources efficiently having high inventory turnover ratio and operating with reduced cost.

It can reduce the need of working capital by availing credit period from suppliers.

Company is not making optimum utilization of fixed assets as its fixed assets turnover ratio is continuously decreasing.

Recently proportion of debt in comparision to equity capital is higher in Mar09 which results in cash outflow in the form of interest.

Chapter 8

Limitations

LIMITATIONS OF THE STUDY

Ratio analysis of particular company is limited to that company. There are lot of variation in inventory valuation and deprecation methods, estimated working life of assets etc. are varying as per different companies.

Ratio analysis is affected by inflation.

It may lack complete and accurate financial information due to some confidential matters of the company.

Time given by the company to carry out research was limited.

The data provided by the company was not sufficient and accurate.

Data was kept confidential, so I have to depend on the companys balance sheet and profit and loss account.

Chapter 9

Appendix

APPENDIX

Balance sheet of Financial Five Years 2004-05 to 2009-10

Profit and Loss Account of Financial Five Years 2004-05 to 2009-10

Annual Brief Result

Balance Sheet of NESCO

Source of Funds Total Share Capital Equity Share Capital Share Application Money Preference Share Capital Reserves Revaluation Reserves Net worth Secured Loans Unsecured Loans Total Debt Total Liabilities Application Of Funds Gross Block Less: Accum. Depreciation Net Block Capital Work in Progress Investments Inventories Sundry Debtors Cash and Bank Balance Total Current Assets Loans and Advances Fixed Deposits Total CA, Loans & Advances Differed Credit Current Liabilities Provisions Total CL & Provisions Net Current Assets Miscellaneous Expenses Total Assets Contingent Liabilities Book Value (Rs) 30.41 15.55 14.86 0.00 0.06 3.13 3.84 0.03 7.00 2.61 0.09 9.70 0.00 17.11 0.15 17.26 -7.56 8.52 15.88 1.92 43.03 Mar '04 2.54 2.54 0.00 0.00 8.40 0.00 10.94 1.15 3.79 4.94 15.88

------------------- in Rs. Cr. ------------------Mar '05 2.54 2.54 0.98 0.00 13.79 0.00 17.31 0.41 2.24 2.65 19.96 Mar '06 3.52 3.52 0.00 0.00 23.12 0.00 26.64 0.04 2.21 2.25 28.89 Mar '07 7.05 7.05 0.00 0.00 36.74 0.00 43.79 0.00 0.00 0.00 43.79 Mar '08 7.05 7.05 0.00 0.00 71.95 0.00 79.00 0.00 0.00 0.00 79.00 Mar '09 7.05 7.05 0.00 0.00 103.80 0.00 110.85 16.82 0.00 16.82 127.67

40.53 23.63 16.90 0.00 3.51 4.50 6.28 0.85 11.63 5.48 1.30 18.41 0.00 26.20 0.82 27.02 -8.61 8.15 19.95 1.81 64.22

52.50 25.09 27.41 0.00 13.28 4.36 2.47 4.12 10.95 5.61 1.91 18.47 0.00 34.03 1.81 35.84 -17.37 5.56 28.88 16.67 75.63

55.95 26.71 29.24 0.32 35.65 3.66 8.47 2.46 14.59 10.11 3.69 28.39 0.00 37.38 15.92 53.30 -24.91 3.49 43.79 10.27 62.15

56.60 28.35 28.25 3.64 93.87 5.09 7.48 1.88 14.45 26.69 8.41 49.55 0.00 59.33 38.93 98.26 -48.71 1.97 79.02 19.30 112.12

62.36 30.47 31.89 20.37 110.56 5.20 9.53 0.86 15.59 41.95 11.78 69.32 0.00 65.79 39.66 105.45 -36.13 0.98 127.67 86.00 157.32

Profit loss account

Income Operating income Expenses Material consumed Manufacturing expenses Personnel expenses Selling expenses Administrative expenses Expenses capitalized Cost of sales Operating profit Other recurring income Adjusted PBDIT Financial expenses Depreciation Other write offs Adjusted PBT Tax charges Adjusted PAT Nonrecurring items Other non cash adjustments Reported net profit Earnings before appropriation Equity dividend Preference dividend Dividend tax Retained earnings 1.12 -0.40 1.12 0.40 0.71 1.60 0.04 2.05 4.80 1.55 2.68 4.23 0.82 0.80 2.02 0.59 0.28 0.30 -0.65 -0.06

------------------- in Rs. Cr. ------------------Mar '04 Mar '05 Mar '06 Mar '07 Mar '08 Mar '09 6.35 21.57 37.33 62.88 88.50 85.48

5.49 1.72 2.61 0.22 6.59 16.64 4.93 6.43 11.36 0.80 0.95 2.77 6.83 0.54 6.30 -0.05 -0.02

10.30 3.70 3.36 0.67 11.54 29.56 7.77 7.84 15.61 0.66 1.37 2.59 10.99 1.08 9.91 0.01 -0.03

12.92 1.92 4.10 0.64 21.88 41.47 21.41 6.09 27.49 0.34 1.60 2.07 23.48 7.36 16.12 2.11 -0.02

15.62 2.64 6.76 0.74 22.48 48.24 40.26 14.13 54.39 0.80 1.69 51.90 16.26 35.64 2.69 -1.59

16.85 2.88 6.19 1.12 15.54 42.57 42.91 7.60 50.50 1.99 2.12 0.98 45.42 13.78 31.64 -0.32 1.58

6.23 6.52

9.90 10.40

18.21 18.71

36.74 37.24

32.90 33.40

0.39 0.05 6.08

0.42 0.06 9.92

0.85 0.14 17.72

0.85 0.14 36.25

0.85 0.14 32.41

Annual results in brief

------------------- in Rs. Cr. -------------------

Particular Sales Operating profit Interest Gross profit EPS (Rs)

Mar ' 05 27.80 9.42 0.84 8.59 21.29

Mar ' 06 45.41 12.79 0.41 12.38 28.18

Mar ' 07 66.51 24.28 0.12 29.27 25.85

Mar ' 08 105.38 55.38 0.62 54.76 52.24

Mar ' 09 94.69 49.82 1.62 48.20 46.57

Chapter 10

Bibliography

BIBLIOGRAPHY

NAME OF THE BOOK Financial Management

AUTHOR

EDITION

PAGE NO.

M Y KHAN & P K JAIN

Sixth reprint 2008 Fifth Edition Ninth Edition

6.1 6.41

Financial Management

I M PANDEY

517 541

Management Accounting and Financial Control

DR. S N MAHESHWARI

Thirteenth Edition 2002

B.23 B.76

Web sites:

www.nesco.co.in www.moneycontrol.com

Dated 08/09/2009 Dated 09/09/2009