A Study on FINANCIAL ANALYSIS With reference to HBL POWER SYSTEMS LTD., VIZIANAGARAM.

A project report submitted to JNTU University, Kakinada, In partial fulfillment for the award of the degree of, MASTER OF BUSINESS ADMINISTRATION Submitted by V .NAGENDRA BABU (Regd.No:116C1E0023) Under the guidance of Dr.P.S.Ravindra Associate Professor Miracle Educational Society Group of Institutions

MIRACLE SCHOOL OF MANAGEMENT

Miracle Educational Society Group of Institutions
(Approved by AICTE &Affiliated to JNTU, Kakinada) BHOGAPURAM, VIZIANAGARAM. 2011-2013

DECLARATION
I hereby declare that the project work entitled Study on FINANCIAL ANALYSIS with special reference to HBL POWER SYSTEMS LTD., VIZIANAGARAM Ltd., Submitted by me to the J.N.T.U.University, Kakinada in partial fulfillment for the award of degree of Master of Business Administration is entirely based on my own study and findings and is being submitted for the first time. It has not been submitted or published earlier for the award of any degree or Diploma of this university or any other university.

Date: Place: Bhogapuram

(V .NAGENDRA BABU)

ACKNOWLEDGEMENT
In the presentation of this report, I recall with a sincere gratitude to each of those who have been a source of immense help and inspiration during the process of my project work. I take this opportunity to express my deep sense of gratitude and indebtedness to Faculty cum Project Guide Dr. P s Ravindra Sir for his cooperation extended to me for the Preparation of this project work. I also express my sincere thanks to Mr. P.RAMBABU Sir, senior F&a Manager of HBL power systems ltd. my internal guide of the Project. With His Esteemed Guidance, support by providing Project Data and valuable time for completion of the Project.

I am profoundly thankful to Head of the Department, Professor Dr.P.S.Ravindra; of MRCL.College, P.G. Courses for their helpful comments and information regarding the logic and documentation of the project.

For the successful completion of my project I would like to thank Mr. Kamaya Sir, Financial manager; of M/S BLACK GOLD PROFILES (P) Ltd., without his guidance the completion of the project work would not have been possible. Lastly, I am thankful to my parents, friends and all those people who contributed their part in the preparation of this project.

(V .NAGENDRA BABU)

CONTENTS
CHAPTER 1 Introduction
Introduction Need for study Objectives Scope Methodology Limitations CHAPTER 2: It deals with steel rolling industries in India and Organizational profile of

Company Profile
CHAPTER 3 Theoretical frame work of FINANCIAL ANALYSIS

Meaning & Nature & scope of FINANCIAL ANALYSIS

Objectives Of FINANCIAL ANALYSIS Limitations of FINANCIAL ANALYSIS

Techniques of FINANCIAL ANALYSIS

CHAPTER 4 Analyses interpretation of FINANCIAL ANALYSIS CHAPTER 5 Summary & Suggestions

INTRODUCTION Financial analysis is the process of identifying the finance strengths and weakness of the firm by properly establishing relationship between the items of the balance sheet and the profit and loss account. The study on financial analysis help in assessing corporate excellence judging credit worthiness and it also helps in determining the financial performance of the company of this purpose date are collected for the period of 5 years. Various ratios are used in the study to find out the liquidity position of the company. The organization has to submit its true picture of financial position to the potential lender of money and to the up coming partners for that it wanted to have the first utilize of the analysis to rectify the problem if any. The process of identifying the finance strengths and weakness of the firm by properly establishing relationship between the items of the balance sheet and the profit and loss account. Financial analysis can be undertaken by management of the firm or by parties out side of the firm viz. owners, creditors investors and others to form judgment about the operating performance and financial position of the firm. Users of the financial statements can get insight about the financial strength and weakness of the firm if they properly analyze the information reported in the statements. Management should be interested in knowing the financial strengths of the firm to make their best use and able to spot the financial weakness of firm to take suitable corrective action.

Introduction to Ratio Analysis: Financial statements are prepared primarily for decision making. They play a dominant role in setting the frame work of managerial decision making. But the information provided in as no meaningful conclusions can be drawn from these statements alone. However, the information provided in these financial statements is of immense use in making decisions through analysis and interpretation of financial analysis is the process of identifying the financial strength and weakness of the firm by properly establishing relation between the items of the balance sheet and profit and loss account. There are various methods or techniques used analyzing financial statements such as comparative statements schedules of changes in working capital funds analysis etc. The ration analysis is the most powerful to do financial analysis. Meaning of Ratio Analysis: According to accounts hand book by Wixom, kill and Bedford a ratio is an expression of the quantitative relationship of one number to the other. Thus in simple language ratio is one number expressed in terms of another and can be worked by dividing one number to other. Ratio analysis defined as the systematic use of ratio to interpret the functional statements so that strengths and weakness of a firm as well as its historical performance and current financial conditions can be determined. This relationship can be expressed as Percentage Fraction Proportion of numbers Importance of Ratio Analysis: Ratio analysis is relevant is assessing the performance of a company in respect of the following aspect:Liquidity Position: Companies liquidity position can be determined with the help of ratio analysis. It the company is able to meet its current obligations, its liquidity position is said to be satisfactory. The greater the ratio, greater the companies

.liquidity and vice versa. Ratios of liquidity are particularly useful in credit analysis by banks and other suppliers of short term loans. Long-Term Solvency: Supplies of long term debt are concerned with the companys long-term solvency and survival. They analyze the companys profitability over time through ratio analysis. Operating Efficiency: From the management point of view, ratio analysis is useful in measuring the degree of efficiency in the management and utilization of its assets. Profitability: Through the profitability ratios one can measure the companys profitability. A. Managerial Uses Of Ratio Analysis: a) Helps in Decision Making: Financial statements are prepared primarily for decision-making. But the information provided in financial statements is not an end in itself and no meaningful conclusions can be drawn from these statements alone. Ratio analysis helps in making decisions from the information provided in these financial statements. b) Helps In Financial Forecasting And Planning: Ratio analysis is of much help in financial forecasting and planning. Planning is looking a head and ratios calculated for a number of years work as a guide for the future. Meaningful conclusions can be drawn for future from these ratios. This ratio analysis helps in forecasting and planning. c) Helps In Communicating: The financial strength and weakness of a firm are communicated in easy and understandable manner by the use of ratios. The information contained in the financial statements is conveyed in a meaningful manner to the one for whom it is meant. d) Helps In Control:

Ratio analysis even helps in making effective control of the business. Standard ratios can be based upon perform financial statements and variances or deviations, ill any, can be found by complaining the actual with the standards so as to take corrective action at the right time. e) Other Uses: There are so many uses of the ratio analysis. It is a useful part of the budget control and standard costing. B. Utility To Share Holders: An investor in the company will like to know the financial position of the concern where is going to invest. Ratio analysis will be useful to investors in making up his mind whether present financial position of the concern warrants further investments or not. C. Utility To Creditors: The creditors or supplies extend short-term credit to the concern. They are interested to know whether financial position of the concern warrants their payments at a specified time or not. D. Utility To Employees: The employees are also interested in the financial position of the concern especially profitability. Their wages increased and amount of fringe benefits are related to the volume of profits earned be the concern. The employees make use of information available in financial statements. E. Utility To Government: Government is interested to know the overall strengths of the industry. Government may base its future policies on the basis of industrial information available from various units. The ratios may be used as indicators of overall financial strengths of public as well as private sector.

Need For the Study

The Industrial sector and the financial system are undergoing metamorphic changes following the process of liberalization and reforms. The underlying principle behind every reform measure re-orientation of monetary policy techniques, introduction of new money market instruments and institutions, adoption of stricter prudential norms, inducing structural changes in 8

the financial system and strengthening regulatory arrangements has been to make the system more competitive, efficient and profitable. Every performance indicator seems to reflect the impact of thee reform measures. Profitability of the industry has witnessed a steady improvement mainly as a result of these measures, but also due to mobilization of equity and Tier-II capital by a few industries, Capital adequacy rations have crossed the norms prescribed for almost all industries. The industries have begun to focus on minimizing their asset liability mismatches and on risk management. At this backdrop, it is felt essential to study the financial performance of the Lead Acid Division, HBL Power Systems Ltd, which is one of the representatives of the system. Which is experiencing the recent reforms? Objectives of the Study Keeping in view of the above stated facts the study is planned with the following objectives. To study the overview of the Lead Acid Division, HBL Power

Systems Ltd., and highlights of its performance. To study the financial management practices adopted by the Lead

Acid Division, HBL Power Systems Ltd. To study the financial performance of the Lead Acid Division,

HBL Power Systems Ltd., with the help of Ratio Analysis, Comparative Statements, Common size Statements. To suggest measures required for long- term sustainability and

prosperity of the industry

Methodology

Knowing the fact that for any economic investigation research, methodology plays the most important role, the following methodology has adapted to study present period. The present study is aimed at critically examining the financial performance of the Lead Acid Division, HBL Power Systems Ltd. In order to carryout the study. The data collected from both primary and secondary sources. Primary data consists of information from the discussions with the heads of the departments, officials and staff of finance department. But majority of the information for the study is collected from the annual reports and published reports of the industry were used. The basic understanding of the subject is referred from different publication from professional institutions like ICAI, ICWAI, ICSI and the valuable guidelines from different books. The financial data for a period of five years i.e. from 2004-05 to 200708 is collected from the published annual report s of the industry, the collected data is then analyses with the help of Ratio Analysis, one of the effective tool for measuring performance of the organization.

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Limitations of the Study Ltd. Some of the confidential information was not revealed by the department, hence the qualitative aspects based on the data given by company. The scope is limited to the HBL POWER SYSTEMS Ltd, but not equally applicable to other company. The Head and the departments information may be biased. Due to the time constraints it is difficult to study in depth the

performance of a big organization of the size Lead Acid Division, HBL Power Systems

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CHAPTER -II
ORGANIZATION PROFILE Lead Acid Battery Industry- Profile an Overview The Widest range of specialized DC Power Systems HBL IS THE LARGEST MANUFACTURER OF SPECIALIZED

BATTERIES IN India, for Industrial, Telecom, Railways and Defense applications. HBL offers its customers the most appropriate technology based on the requirement, from the wide range of batteries-Nickel-cadmium, Silver Zinc, Lead-acid and Lithium batteries. Chargers for rechargeable batteries are also manufactured in both TR and SMR versions from 24V to 220V. The company has sales of about US$50 million and very substantial design and development capabilities, in-house. Over 25 years of experience in the domestic market and over 10 years in exporting too many countries including USA, South Korea, West Asia and South East Asia, has given HBL an understanding of the Customers special varied requirements, several major customers have found the companys products to be reliable over the years and have placed repeat orders. The company has adequate marketing and service personnel who can support the customers at short notice. The Triumph-HP series is a premium design valve regulated lead acid battery based n features offered by world class companies. The battery works on the gas recombination principle and has been designed to meet the requirements of a wide range of applications. This product has been manufactured under the controls. 12

Established by a for quality/environmental management system that meets the requirements of ISO 9001-2000: ISO 14001:1996, which has been independently certified by BVQI.

Products: Nickel Cadmium Pocket Plate Batteries: HBL offers a very wide range of Nickel Cadmium Pocket Plate Batteries that match diverse applications and operating conditions. These are available in tough polypropylene containers of single cell types and block battery types. Cells of Stainless Steel containers or structural foam molded containers are also offered as options. Incorporating variations in electrode design to meet different discharge requirements, HBL batteries are classified into three types L, M & H. These batteries conform to IEC 60623 and are certified by Intertek ETL SEMKO. They also conform to BS6260, DIN 40771 and other International Standards. Benefits : Exceptionally long & reliable service life Adaptability to a wide temperature range No emission of corrosive gases, Safe from flame & explosion Minimal maintenance, Low life time cost, quick recharging Range and Applications:

Cell Type L-Low Rate KPL (Single) KBL (Block)

Capacity Range 11 to 480 8 to 1540

Typical Back- up Above 3 Hours

Typical Application Fire Alarm Panels Emergency Lighting Telecommunication Switchgear

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Protection

M-Medium Rate KPM (Single) KBM (Block) 10 to 395 12 to 1460 60 Minutes to 3 Hours

Switchgear Protection Instrumentation And Process Control U.P.S Motive Power Emergency Lighting

H-High Rate Starting KPM (Single) KBM (Block)

10 to 265 Below 60 minutes 9 to 930

Generator U.P.S Diesel locomotive cracking

NICKET CADMIUM FIBRE PLATE BATTERIES:

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These batteries use Fiber Plate electrodes. The three Dimensional Fiber Structure in the plate provides a very high conducting density. The Advantages of this technology is its low internal resistance, high rates of discharge, improved recharge capability and lower weight with a high cycle life. The Ni-Cad Fiber Plate batteries are designed as L, M, and H and X types to suit customers requirements. These batteries conform to IEC 60623 and are certified by Intertek ETL SEMKO. They also conform to BS6260, DIN 40771 and other International Standards. Features: Consistent Voltage Output and stable Capacity over lifetime Long Service life and reliable Operation Can be used in extreme temperature zones, Ease of recharging the battery Ease of handling due to lightweight, Low maintenance and low water consumption Excellent for cyclic applications

Range and Applications: Cell Series L-Low Rate KFL Range (Single Block) Capacity Range Ah 20 to 1500 Typical Backup Typical Applications Fire alarms, Emergency Lighting, Telecom, Railway Signaling, Switchgear protection, Photovoltaic, Catholic Protection.

Above 3 hours

M-Medium Rate KFM Range (Single & Block)

11 to 1391

60 minutes to 3 hours

Switchgear protection, Emergency lighting, Motive Power, Train lighting, Instrumentation and process Control, UPS, Electric vehicles Generator Starting, UPS, Diesel locomotive cranking, Aircraft/ Helicopter ground starting, Electro magnets. Diesel locomotive cranking, Genset starting AGVs

H-High Rate KFH Range (Single & Block)

11 to 1026

Below 60 minutes

X Ultra High Rage

11 to 120

Below 10 minutes

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KFX Range (Single & Block) Sealed Cylindrical Ni-Cd Battery Packs for Defense Communications: HBLs Sealed Cylindrical NICAD Batteries are designed incorporating the latest technology ensuring high standards. They are available in packs using a wide range of cells from 110mAH to 8000m Ah for various applications. Applications: Memory back-up for interface Digital Equipment RS.VPS-Mark-I LHP-219 Radio communications, Star-V, RS.VPS Mark II, Kiran Mark I/IA Range and Applications Compact High Reliability User friendly Easy re-chargeability Maintenance free Optimal Cell life Consistent Voltage Long Shelf life Enhanced Performance. PURE LEAD-TIN VRLA MONOBLOCKS: The Pure Lead-Tin range offers the customer the highest energy density of any lead acid battery anywhere. The battery is constructed around a complex thin plate, pure lead-tin grid which packages more power in a smaller space. The plates being made of high purity lead last longer, offering excellent life. The proven benefits of this superior technology are high performance, quick recharge capability, high energy density and a long service life. The 6V & 12V monoblocks are available in capacities ranging from 12Ah to 150Ah.

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Benefits: Maintenance-free and spill-proof. This enables flexible mounting Wide operating temperature range (-40o C to + 50oC) High energy density (gravimetric and volumetric) Good charge retention leading to long storage life Low internal resistance ensures quick recharge Excellent high rate capability permits use of smaller capacity batteries Superior raw materials for good performance and life Excellent deep discharge recovery characteristics UL recognized plastic components These batteries conforms to IEC 60896 and are certified by Intertek ETL SEMKO Tubular GEL VRLA Batteries: The solar powered shelters carry batteries that expose them to higher temperatures. Net result is the need for a heavy duty, robust, deep cycling battery that is also less sensitive to high temperature. To meet such rigors of temperatures and varying pattern of usage, HBL introduces Tubular Gel VRLA Battery with unbeatable combination of Tubular plate and gelled electrolyte. Applications: Wireless: Base Transceiver, station (BTS), Base Switches (MSO), CDMA/3G base stations, main switches. Transmission: Fiber optic system, Digital Microwave radi, Satellite earth stations Switching: Local access switches, primary exchanges, Central Office/Secondary exchange, Point of inter connect switches, Internet & Gateway switches, Telecom collocation.

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Features & Benefits: Pressure die-cast spine grids-Longer float life, Very good cycling capability required for Indian conditions, Gelled Electrolyte Very good heat dissipation, suitable for out door installation, Antimony-free alloy long shelf life, Valve regulated No water additions during service life, 100% capacity on first discharge. Ready to install, Safe and economical transportation. No free acid, can be mounted both in horizontal and vertical orientation, ideal for Solar Powered telecom installations.

TUBULAR ULTRA LOW MAINTENANCE LEADS ACID BATTERY: Tubular LMLA battery is the combination of traditional advantage of tubular plate with ultra-low-maintenance feature. Tubular LMLA battery is a preferred choice for the applications with float, semi cyclic and cyclic operations along with long service life, high cycle life, Partial state of Charge (PSOC) & deep cycling requirements. Taurus: The Taurus Tubular plate low maintenance lead acid battery is the results of the strong R&D Expertise gained by HBL over a decade of supplying millions of lead acid batteries to various applications. Taurus batteries offer outstanding reliability over an expected service life of around 15 years in float applications. This battery offers very low maintenance, extended topping up frequency due to low antimony alloy & high acid reservoir. Silver Start- Pure Lead Tin VRLA Monoblocks Batteries for Civil Aviation: The Silver Sort range of On-board Aircraft starting batteries from HBL are designed using the Thin-plate Pure Lead tin Technology Features that make these batteries the right choice for Aircraft starting Applications: Sealed, maintenance-free: no filling of acid or water Excellent starting capability: very high peak power

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 Fast-charge capability: 100% recharge in 2 hours More flying hours: long life Operation in very low temperature:-40o C to + 50o C Safety inside the aircraft: non-spllable absorbed electrolyte design Delivered fully charged, ready to use: no commissioning at site Shock and vibration resistant: ideal for aerobatic use Silver Start batteries conform to International Aviation Standards like: IEC 60952-I MIL 8565J. Range of silver start 24V Aircraft Batteries (see Brochure for selection of battery for Aircrafts) 10Ah @ 1 hr 18Ah @ 1 hr 25Ah @ 1 hr 42Ah @ 1 h Nickel Cadmium Pocket Plate Batteries for Aircraft Ground Start: HBL offers vented type NICAD Pocket Plate High Rate Batteries for ground starting of MIG Aircrafts. The Batteries are mounted on an electrically driven trolley unit. It consists of two banks of KPH 140P, each bank consisting of 24 cells. These Batteries are primarily used for meeting the ground starting and servicing electric power requirements for MIG Series of aircrafts. Additionally it supplies critical power to the DC motor as the prime mover of the electrically driven trolley. Benefits: Excellent resistance to shock, vibrations, temperature and corrosion. Exceptionally long and reliable service life Low maintenance and low life time cost Flame and explosion proof vent No sudden death and negligible annual ageing Quick Recharging and no memory effect Nickel Cadmium Fiber Plate Batteries for Aircraft Ground Start :

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 HBL offers vented type NICAD Fiber Plate Batteries for ground starting of MIG Aircrafts These Batteries are primarily used for meeting the starting and servicing electric power requirements for MIG Series of aircrafts. The Batteries are mounted on an electric driven trolley unit. It consists of two banks of KFH 160P each bank consisting of 24 cells. Additionally it supplies critical power to the DC motor as the prime mover of the electrically driven trolley. The Batteries use High Rate Fiber Nickel Electrodes thereby giving an excellent Electrical performance. The benefits of these batteries are low internal resistance, High rates of discharge and improved recharge capability coupled with long cycle life. Benefits: Consistent Voltage Output and stable capacity over life time Long Service Life Ease of handling due to light weight Fast recharge Long topping of interval due to low water consumption Can be used in extreme temperature zones Can withstand mechanical stress Most reliable Sintered Plastic Bonded Batteries: HBLs Sintered Plastic Bonded Batteries are best suited for applications requiring high reliability coupled with low maintenance and high performance. The sintered Plastic Bonded batteries are manufactured using sintered positive plates and Plastic Bonded negative plates. These are specially designed for High Power Density and Reduced Water Consumption. These batteries use polypropylene cell containers with thermally welded lids for high impact resistance. Flame Retardant containers and lids are optional. All-steel terminal and fasteners give these batteries the ruggedness required to meet the demanding application needs. The cells are also provided with reliable flame-arresting vents and are assembled in stainless steel crates (as an option) for easy handling.

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Benefits: Optimized performance to suit application requirements. Fits in a very small space. Performs even at extremely low temperatures. No topping with water required for long periods and Long Life. INDUSTRY PROFILE VALVE REGULATED POCKET PLATE BATTERIES: Ultra Low maintenance Nickel Cadmium Valve Regulated Pocket Plate Battery engineered by HBL redefines convenience. The VRPP has a pocket Plate construction to guarantee the same reliability and performance as can be expected from a conventional Nickel Cadmium Pocket Plate battery. The design ensures no water top-up requirement during its lifetime under normal operating conditions. Benefits: Accepts low float voltages, No water top-up during lifetime, Capable of giving high performance, Exceptionally long and reliable service life, Unsurpassed resistance to Electrical and Mechanical abuse, Safe from Flame and Explosion These batteries conform to IEC 60623 and are certified by Intertek ETL SEMKO. They also conform to BS6260, DIN 40771 and other International Standards. Range: VRPP Batteries are available from 8 AH to 728 AH Applications: UPS Railway Signaling Telecommunications Switchgear Process Control Emergency Lighting Fire Alarm System

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Telecommunication: Valve Regulated Lead Acid Batteries 2V Cells Triumph HP is a premium design Valve Regulated Lead Acid Battery. The Battery works on Gas Recombination Principle with AGM technology and heavy duty Lead Calcium Grids. Available in a wide range: 80 Ah to 5800 Ah. Benefits: Does not require water top-up throughout its life No corrosive fumes and hence no special battery rooms are required Stackable design minimizes space requirements Designed for high integrity & long life Application specific designs Customized layouts for optimum space utilization Safe-Explosion-proof, lead-proof & flame-retardant material Consistent performance over life time Improved aesthetics Easy installation REQUIREMENTS ARE OF UTMOST IMPORTANCE: Telecommunications Switch Gear Process Control Systems Railway Signaling & Communication Renewable Energy The Companys operations are divided into 3 Segments: Batteries Electronics Others

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Further, the company is divided into various divisions depending upon the nature of the product; each division is treated as a separate company, each having its own funds allocation and manpower in various departments. The company manufactures various types of batteries viz., VRLA, Tubular, Monoblocks, Nickel-Cadmium, Lithium, Silver-Zinc, and Thermal etc. The electronics segment comprises of various divisions manufacturing electronic equipment like rectifiers, IPS, chargers, embedded systems, data loggers etc. Apart from batteries and electronics, the company also manufactures bulletproof jackets, windmills etc. The company has recently taken up railway signaling works contracts. The company has 3 divisions catering to the ancillary needs of the company, material components divisions at Shamirpet, Nandigaon, Bhoothpure, Kandivalasa and VSEZ (Duvvada) units indulge in various ancillary activities like sheet metal fabrication making of racks, cutting, bending, plating etc. Plastic moldings division at Nandigaon manufactures various types of boxes, and cell & battery containers. Annual turnover of the company is around 800 cores. HBL Company is the result of a merger in 1999 of Hyderabad Batteries Ltd., (HBL) in corporate in 1977, and SAB NIFE power systems Ltd., incorporated in 1986. The two companies which were under the same management were merged when foreign percentage of equity investment in SAB NIFE becomes too small to justify separate legal entities. The 28 years from 1977 to 2005 can be broken up into two phases of 14 years each. 1977-91 was a small scale industry phase. 1991-2005 was the stage of consolidation. HBL company is no on a strong foundation. Whether in finance, technology, market position, infrastructure, ability to attract talent, exports, diversified product Mix. Future Plans: Thinking bigger. Equity focused plans to Reduce Debt even further. Set up new overseas factories to serve export market (EU) UAE, Malaysia (USA) (Currently in UK & Malaysia) Export of high value engineering services using network in Europe (UK, Germany, France, and Italy).

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 Use existing size and market access to source design and sub-assemblies from small high tech companies, both in India and Europe, to do systems integration. Increase sales/Investment ratio. Value addition role in production of high-tech products, specially defense, engineering services exports. We expect sustained growth with high Incremental Capital Output Ratios because: New business chosen need less capital (compared to manufacturing). Economies of scale (In existing business) Systems Integration opportunities need less capital Financial Performance Particulars Net sales Operating profit before interest, depreciation & ordinary items Other income Finance cost Depreciation Provision for tax & tax adjustment Deferred tax liability Net profit Transfer to general reserve Earning per share Dividend provided Performance Review: Overall sales of the company for the year 2008-09 has recorded Rs. 124390 Lakes compared to previous year of Rs. 97276. The represent an increase 50% over the last year. The year 2009-10 has recorded 1109.51 cores compared to prevision year of Rs. 1243.90 cores. 20485 509 3883 2784 4370 216 9096 8000 3.75 30% 21037 654 3831 2807 4117 240 10042 8000 4.06 30% 8485 2297 4934 3030 145 989 1645 .650 10% 2008-09 124390 2009-10 110951 2010-11 99494

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This represent an increase of 30% for the year 2010-11 has recorded Rs. 99494 lakes compared to previous year of Rs. 1,10,951 lakes. Profit after tax was Rs.1645 lakes for the year 2010-11 as compared The demand for HBL company product is continuing. Over all performance of the HBL company is expected to grow. This will be the case both in VRLA batteries for domestic market and NCPP batteries in export market. The demand has necessitated an increase of additional capacities for manufacturing of VRLA and NCPP batteries. This deem and for additional capacities has initiated capital expansion in its existing and as well as setting up of new units at Vizianagaram. Subsidiary Companies: HBL (UK) Limited a 100% subsidiary is UK has had a trademark violation case initiated against it as a first defendant and the parent company as a second defendant. The legal claims have created a situation wherein the accounts could not be finalized and audited. In absence of any authentic information because of the operational difficulties the company is unable to consolidate the accounts of the subsidiary with the parent company for the current fiscal year. In the opinion of the management. HBL Power systems (M) SDN BHD a subsidiary company in Malaysia has reported a profit of Rs. 11.05 lakes for the year and accumulated loss Rs. 13.22. Lakes up to 31.03.08. This loss is considered temporary and hence no provision is made in the accounts for the fall in value of investment. BHAGIRATH ENERGY SYSTEMS PVT LIMITED a wholly owned subsidiary in Nepal is in process of winding up. Provision for diminution is the value of investment has been made based on official liquidators certificate of a available cash. Location of Plants: Shameerpet, Ranga Reddy District, Andhra Pradesh. Nandigam, Mahabubnagar District, Andhra Pradesh. Bhoothpur, Mahabubnagar District, Andhra Pradesh Kandhivalasa (Pusapatirega) Vizianagaram District, Andhra Pradesh. VSEN, Visakhapatnam, Andhra Pradesh. Haridwar, Uttarakhand 25

 IMT, Maneswar, Haryana. Bankers in HBL battery Ltd: State Bank of India. State Bank of Hyderabad. IDBI Bank Ltd., State Bank of Indore.

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PRODUCT PROFILE: Batteries: Nickel Cadmium Sintered Plated batteries Nickel Cadmium Pocket Plated batteries Nickel Cadmium Fiber Plated batteries Silver-zinc aircraft batteries Silver-zinc torpedo batteries Sealed Cylindrical Nicked Cadmium batteries Lithium batteries Valve Regulated Lead Acid batteries Sealed Lead Acid batteries Tubular Vent batteries Thermal batteries Monoblocks batteries Electronics: Switch Mode Rectifiers Integrated Power Supplies Universal Battery Chargers Rectifiers Data Loggers Thyristor based charged HFTCs SSIs Fazes Moving Target detectors RF Power Amplifiers BIT Units

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Others: Bulletproof jackets Windmills Cell Containers Battery Containers Steel & Wooden racks Packing boxes etc. for in-house use

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THEORITICAL FRAMEWORK FINANCIAL ANALYSIS A financial statement is an organized collection of data according to logical and consistent procedures. Its purpose is to convey an understanding of some financial aspects of a business firm. It may show a position of a moment is time as in the case of a balance sheet, or many reveal a series of activities of over a given period of time, as in the case of an income statement. Thus the term financial statement generally refers to two basic statements: (I) the income statement (II) the balance sheet of course, a business may also prepare (III) a statement of retained earnings and (IV) a statement of changes in financial position in addition to the above statement. Income Statement: The income statement (also termed as profit and loss account) is generally considered to be a most useful of all financial statement. It explains what has happened to a business as a result of operations between two balance sheets data. For this purpose it matches the revenues and costs incurred in the process of earnings revenues and shows the net profit earned or loss suffered during a particular period. Balance Sheet: It is a statement financial position of a business at a specified name of time and the claims (or equities) of the owners and outsiders against those assets at that line. It is in a way snap shot of the financial condition of the business at that time. Statement of Retained Earnings:

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The term-retained earnings mean the accumulated excess of earnings over loss and dividends. The balance shown by then income statement is transferred to the balance sheet through this statement, after making necessary appropriation. It is thus, a connecting link between the balances sheet and income statement. It is fundamentally a display of things that have caused the beginning of the period-retained earnings balance to be changed in the balance sheet. The statement is also termed as profit and loss appropriation accounts in case of companies. Statement of Changes in Financial Position: In balance sheet shows the financial condition of the business at a particular moment of time while the income statement discloses the results of operation of business over of time. The statement may emphasize any of the following relating to change in financial position of the business. Change in the firms working capital. Change in the firms cash position Change in the firms total financial position. The terms funds flow statement and cash flow statement are properly used for the first and second type of statements while the term statement of changes in financial position is used for the third type of statement. Nature of Financial Statement: Financial statement also called, as financial reports are plain statements of informed opinion uncompromising in their truthfulness with in the limits of accepted accounting principles. The balance sheet or statement of financial position reflects the assets, liabilities and capital as on a particular date. The profit and loss statement shows the results achieved earnings includes such schedules as those relating to land, buildings, equipment investors, long-term investment accrued liabilities, long-term debts, cost of goods manufactured selling expenses, administrative and general expenses etc. on the basis of information in those 30

reports the management is able to review the companies progress to date and make decisions upon the courses of action to be taken in future. The balance sheet or the position statement is the principle guide to the main question where business stands on a particular date. It gives management a snap shot view of financial position of measures the past performance. It gives the details of the sales revenue and expense. The difference between the total revenues and total expenditures constitutes the profit of the firm. The changes in the values of assets, liabilities and other accounts are reflected by the source and application of funds statements. The cash flow budget is used to project cash needs, to identify cash surplus and to highlight possible critical point on the income and out go cash. The perform statement of future incomes, expenses assets and liabilities of the business. The financial statements provide a measure of performance and are, therefore used as media to facilitate assessment by top management as to the degree of attainment of planned profit and financial growth. In case of joint stock companies governed by the company Act, it is a legal requirement that the profit & loss account should be so drawn up as to give a true and fair picture of the profit earned or loss suffered during the year and the balance sheet gives us on its date a true and fair picture of the financial position of the company. Types of Financial Analysis: Financial analysis can be classified in to different categories depending upon: On the basis of material used. On the basis of modus operand Types of financial analysis

On the basis of material eeeeqeqused

External analysis

On the basis of modules operandi

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Horizontal analysis Vertical analysis

Internal analysis

analysis

On The Basis Of Material Used: According to the basis, financial analysis can be of two types: External Analysis: Those who are outsiders for the business do this analysis. These persons mainly depend upon the published financial statement. Their analysis serves only a limited purpose. Internal Analysis: Persons who have access to the books do this analysis of account and at other information related to the business. Such an analysis can be done by executives and employees of the organization. The analysis is done depending upon the objective to be achieved through this analysis. On The Basis Of Modus Operandi: According to this financial analysis can also be of two types: Horizontal Analysis: In case of this type of analysis, financial statements for a number of years are reviewed and analyzed the current year figures are compared with the standard or base year. The analysis statement usually contains figures for two or more years and the change are shown regarding each item from the base year usually in the form of percentage. Since this type of analysis is based on the data from year rather than on one date, it is also termed as Dynamics Analysis. Vertical Analysis: In case of this type of analysis a study is made of the quantitative relationship of various items in the financial statements on a particular date. Since this analysis depends on the data for one period, this is not only very conductive to a proper analysis of the companys financial position. It is also called static analyses as it is frequently used for referring to ratios developed on one date or for one accounting period. 32

Techniques of Financial Analysis: A financial analysis can adopt one or more of the following techniques tolls of financial analysis. Financial Analysis Techniques

Comparative Common size Statement statement

Ratio Analysis

Funds Flow

Trend Analysis

Comparative Finance Statement: The statements, which have been designed in a way so as to provide time perspective to the consideration of various elements of financial position embodied in such statements. In these statements figures for two or more periods are placed side by side to facilitate comparison. Both the income statements and balance sheet can be prepared in the form of comparative financial statement. The comparative financial statement contains the following items: value. Increases or decrease in terms of percentages. Comparison expressed in ratios. Percentage of totals. Comparative Income Statement: The income statement (profit & loss A/c) gives the results of the operations during a definite period. It reveals the profit earned or loss Absolute figure (amount in Rs. As given in the final accounts) Absolute figures expressed in terms of percentages. Increase or decrease in absolute figures in terms of money

33

incurred by the concern. The comparative study of income statement for more than one year may enable us to know the progress of the concern. First two columns give figures of various items for two years. The third and fourth column used to show increase or decrease in figures in absolute amounts and percentages respectively. The following steps are adopted in preparing comparative balance sheet. In first step, find out the changes in absolute figures i.e., increase or should be calculated. of In second step, percentage of change should be calculated with the help decrease

the following formula. Change in amount Percentage of Change = -------------------------- X 100 Base year amount Guidelines for interpretation: The increase or decrease in sales should be compared with Increase or decrease in cost of goods sold. If increase in sales is more than the cost of goods sold. It means that the profitability of the concern is increase. The amount of gross profit should be studies. Operating profits should be studied. The expenses should be deducted The next step is some of the non-operating expenses are to be deducted

from gross profit to find out operating and then operating incomes should be added. profits. The opinion should be formed the profitability of the business concern and it should be given at the end. from the operating profits and non-operating incomes should be added to get net

34

Comparative Balance sheet: The balance sheet prepared on a particular date reveals the financial position of the concern on the date to study the trends of business over a period of time comparative balance sheet is prepared. The comparative study of balance sheet reveals the cause for changes in the financial position on amount of various transactions. The comparative study light on financial policies adopted by management. The comparative balance sheet consists of two columns for the original data. A third column used to show increase or decrease in various items. A fourth column containing the percentage of increase of decrease may be added. Guidelines for interpretation of Balance sheet: The short-term financial position can be studied by comparing the working capital of both the years. To study the liquidity position changes in liquid assets must be ascertain if there is any increase in liquid assets. We must understand that there is an improvement in the liquidity position of the concern and vice versa. A high increase in sundry debtors and bills receivables mean an increase in risk in collecting the amount of dues. A high increase in closing stock may mean that decrease in the Long-term financial position of the business concern can be analyzed by studying the changes in fixed assets, long-term liabilities and capital. Fixed assets must be compared with long-term loans and capital. If the increase in fixed assets is more than the increase in long-term financers than a part of fixed assets has been financed from the working capital, which is not good. demand.

35

If the increase in long term financial is more than the increase in fixed assets. It means that apart of long-term finance is made available for the working capital. If there is an increase in profit &loss Account or reserve balance it means that there is an increase in profitability of the concern. The decrease in profits & loss Account reserves means payment of dividends, capitalization of profit by issue of bonus share may be assumed.

Common Size Statement: The common size statement, balance sheet and income statement are shown in analytical percentage. The figures are shown as percentage of total assets, total liabilities and sales. The total assets are taken as 100 and different assets are expressed as percentage of the total. Similarly, various liabilities are taken as a part of total liabilities. These statements are also known as component percentage 100% statements because every individual item is stated as percentage of the total 100. The shortcomings in comparative statements and trend percentages where changes in items could not be compared with the totals have been covered up. The common size statements may be prepared in the following way: 1. 2. The totals of assets or liabilities are taken as 100. The individuals assets are expressed as a percentage of total assets i.e. 100 and different liabilities are calculated in relation to total liabilities. Common Size Income Statement: The items in income statements can be shown as percentages of sales to show the relation of each item to sales. A significant relationship can be established between items of income statement and volume of sales. The increase in sales will certainly increase selling expenses and not administrative or finance expenses. In case the volume of sales increases to a considerable extent, administrative and financial expenses may go up. In case the sales are declining, the selling expenses should be reduced at once. 36

So, a relationship is helpful in evaluating operational activities of the enterprise. Common Size Balance Sheet: A statement in which balance sheet items are expressed as the ratio of each liability is expressed as a ratio of total liability is called common size balance sheet. The common size balance sheet is a horizontal analysis. The comparison of figures in different periods is not useful because total figures may be affected by a number of factors. It is not possible to establish standard norms for various assets. The trends of year to year not be studied and even they may not given proper results. Trend analysis: Trend analysis is an important and useful technique of financial analysis. It involves computation of index numbers of the moments of the various financial items in the financial statements for a number of periods. It enables to know the changes in the financial position and the operational efficiency between the period chosen. Through trend analysis the analyst can give his opinion as to whether favorable or unfavorable tendencies are reflected by the accounting data. The comparative and common size balance sheets suffer from a major limitation i.e. absence of basic standard to indicate whether the proportion of an item is normal or abnormal but trend analysis overcomes this limitations. Trend analysis values are calculated for each item in isolation but conclusions are to be drawn by studying the related items also.

37

Utility and Significance of Financial Statements: The users of financial statements fall into various categories: 1. The directors of the company use them to create a favorable of the enterprise so as to attract favorable comments from the shareholders and the prospective investors. 2. The financial statements are used as media of information regarding the states of productivity, profitability and financial health of the enterprises. 3. They are equally useful to the economists, economic theorists, stock exchanges, investment analysts, exchange and security commissions and various government departments engaged in economic intelligence. 4. 5. 6. Internal revenue authorities use them for assessment realizable direct The top management uses them for planning and making vital The bankers make use of these statements to have sufficient and indirect taxes. decisions. information to justify the making of loans. The credit managers extend credit on the basis of the information gathered by these financial statements. 7. 8. Investors who demand a sufficient record financial success also Future oriented managers and accountants utilize profit planning and make use of them. budgeting as tools of forward accounting. The financial statements provide a measure of performance and are, therefore used as a media to facilitate assessment by top management as to the degree of attainment to planned profit and financial growth.

38

Limitations of Financial Statements: 1. Financial statements are essential interim reports, and therefore, can not be final. The actual gain or loss of a business can be determined only after it has put down its shelters. Income and cost transactions flow continuously through out the life of the business enterprise. The existence of contingent assets and liabilities differed maintenance etc., make the statement of assets and liabilities imprecise. 2. Financial statements tend to give an appearance of finality and accuracy because they are expressed in exact money amounts any value may be ascribed to the amounts presented in the statements depending upon in value standards of the person dealing with them. Rarely does the value put on an asset represent the amount of cash, which would be realized on liquidation. The amount of the assets shown do not as a rule represent either the amount for which fixed assets could be sold or the amount that would have to be spent to replace them. 3. Financial statements are complied on the basis of historical costs; there may be market decline in the value of monetary unit and resultant rise in prices. 4. In such a case the balance sheet loses its functions as index current economic realities. Similarly an increase in volume may represent increase in selling prices. 5. Financial statements do not give to many factors, which have a bearing financial conditions and operating results because they cannot be stated in terms of money and are qualitative in nature. 6. 7. Precision of the financial statement information is impossible because the statements deal with matters that cannot be measured precisely. These statements fail to give the full story.

39

CHAPTER- IV

40

PROFITABILITY: Profit margin indicates how efficient the companys management is in operating the company and in controlling costs. Profit margin as measured by net income as a percentage of sales. PROFITABILITY = EBIT/ SALES

PROFITABILITY FOR THE YEAR 2003-04 and 2004-05: YEAR Net sales Other income Less: expenditure EBIT sales 2837981749 PROFITABILITY 2837981749 1690200674 7.436 1690200674 2004 -05 2837981749 21884409 2587337067 272529091 2003 -04 1690200674 20933728 1585452395 125682007

9.602

41

ACTIVITY FOR THE YEAR 2003-04 AND2004-05: YEAR Sales: Total net assets: Fixed assets Net Current assets ACTIVITY 1.255 DUPONT Analysis of ROCE 2003-04 & 2004-05 1.043 955464846 1305654901 2261119747 840479305 780097569 1620576874 2004 -05 2837981749 2837981749 2003 -04 1690200674 1690200674

42

YEAR Net sales Other income Less: expenditure EBIT Fixed assets Net Current assets Total net assets: ROCE

2004 -05 2837981749 21884409 2587337067 272529091 955464846 1305654901 2261119747 12.051

2003 -04 1690200674 20933728 1585452395 125682007 840479305 780097569 620576874 7.756

DUPONT 2003-04 2004-05

PROFITABILITY 7.436 9.602

ACTIVITY 1.043 1.255

ROCE 7.756

12.051

43

14 12 10 8 6 4 2 0 2003-04 2004-05 PROFITABILITY ACTIVITY ROCE

DUPONT Analysis The profitability of the firm as shown by the first component has increased from 7.436 to 9.602 for the year 2003-04 to 2004-05.which is good for the company. Due to the sales rapidly increase at the same time slight increase in expenses. It caused to increase in EBIT(earnings before interest and tax) The second component is indicative of the balance sheet i.e. activity of the firm. The total assets have increased from 1.043 to 1.255 for the year 2003-04 to 2004-

44

05. This shows a usage of the assets efficiently. Therefore the major causes for increase of activity is increase of net current assets When the ROCE increases from 7.756 to 12.051 we can find that total net assets and sales have increased for the year 2003-04 to 2004-05. The financial position of the company is found to be satisfied

PROFITABILITY FOR THE YEAR 2004-05 and 2005-06:

YEAR Net sales Other income Less: expenditure EBIT

2005 -06 3679835532 29375510 3323790836 385420206

2004 -05 2837981749 21884409 2587337067 272529091

sales PROFITABILITY

3679835532

3679835532

2837981749

2837981749

10.474

9.602

ACTIVITY FOR THE YEAR2004-05 AND2005-06:

45

YEAR Sales: Total net assets: Fixed assets Net Current assets

2005 -06 3679835532 3679835532

2004 -05 2837981749 2837981749

1235387804 1775285665 3010673469

955464846 1305654901 261119747

ACTIVITY

1.222

1.255

DUPONT Analysis of ROCE 2004-05 & 2005-06:

YEAR Net sales Other income Less: expenditure EBIT Fixed assets Net Current assets Total net assets: ROCE

2005-06 3679835532 29375510 3323790836 385420206 1235387804 1775285665 3010673469 12.799

2004-05 2837981749 21884409 2587337067 272529091 955464846 1305654901 2261119747 12.051

DUPONT

PROFITABILITY

ACTIVITY

ROCE

46

2004-05

9.602

1.255

12.051

2005-06

10.474

1.222

12.799

14 12 10 8 6 4 2 0 2004-05 2005-06 PROFITABILITY ACTIVITY ROCE

DUPONT Analysis The profitability of the firm as shown by the first component has increased from 9.602 to 10.474 for the year 2004-05 to 2005-06.which is good for the company. Due to the sales rapidly increase at the same time slight increase in expenses. It caused to increase in EBIT(earnings before interest and tax) The second component is indicative of the balance sheet i.e. activity of the firm. The total assets have increased from 1.255 to 1.222 for the year 2004-05 to 200506. This shows a usage of the assets efficiently. Therefore the major causes for increase of activity is increase of net current assets

47

 When the ROCE increases from 12.051 to 12.799 we can find that total net assets and sales have increased for the year 2004-05 to 2005-06. The financial position of the company is found to be satisfied . PROFITABILITY FOR THE YEAR 2005-06 and 2006-07: YEAR Net sales Other income Less: expenditure EBIT sales 5118490030 PROFITABILITY 10.066 10.474 5118490030 3679835532 3679835532 2006-07 5118490030 39518017 4642758143 515249904 2005 -06 3679835532 29375510 3323790836 385420206

ACTIVITY FOR THE YEAR2005-06AND2006-07:

48

YEAR Sales: Fixed assets Net Current assets Total net assets:

2006 -07 511849003 0 176348366 6 375036597 0 1.353 551384963 6 511849003 0

2005 -06 3679835532 3679835532

1235387804 1775285665 3010673469 1.222

ACTIVITY

DUPONT Analysis of ROCE 2005-06 & 2006-07:

YEAR Net sales Other income Less: expenditure EBIT Fixed assets Net Current assets Total net assets: ROCE

2006-07 5118490030 39518017 4642758143 515249904 1763483666 3750365970 5513849636 13.619

2005 -06 3679835532 29375510 3323790836 385420206 1235387804 1775285665 3010673469 12.799

49

DUPONT 2005-06

PROFITABILITY 10.474

ACTIVITY .222

ROCE 12.799

2006-07

10.066

1.353

13.619

16 14 12 10 8 6 4 2 0 2005-06 2006-07 PROFITABILITY ACTIVITY ROCE

DUPONT Analysis The profitability of the firm as shown by the first component has increased from 10.474 to 10.066 for the year 2005-06 to 2006-07.which is good for the company. Due to the sales rapidly increase at the same time slight increase in expenses. It caused to increase in EBIT(earnings before interest and tax) The second component is indicative of the balance sheet i.e. activity of the firm. The total assets have increased from 1.222 to 1.353 for the year 2005-06 to 200607. This shows a usage of the assets efficiently. Therefore the major causes for increase of activity is increase of net current assets 50

 When the ROCE increases from 12.799 to 13.619 we can find that total net assets and sales have increased for the year 2005-06 to 2006-07. The financial position of the company is found to be satisfied

PROFITABILITY FOR THE YEAR 2006-07 and 2007-08:

YEAR Net sales Other income Less: expenditure EBIT 9727564484 37048061 8651681402

2007 -08 5118490030 39518017 4642758143 1112931143

2006-07

515249904

sales
PROFITABILITY

9727564484

9727564484

5118490030 10.066

5118490030

11.441

ACTIVITY FOR THE YEAR2006-07AND2007-08:

51

YEAR Sales: Fixed assets Net Current assets Total net assets:

2007 -08 9727564484 2538943725 3750365970 6289309695 9727564484

2006 -07 5118490030 1763483666 3750365970 5513849636 5118490030

ACTIVITY

1.569

1.353

DUPONT Analysis of ROCE 2006-07& 2007-08:

YEAR Net sales Other income Less: expenditure EBIT

2007 -08 972756448 4 37048061 865168140 2 1112931143

2006 -07 5118490030 39518017 4642758143 515249904

Fixed asets Net Crurent assents Total net assets: ROCE

253894372 5 375036597 0 6289309695

763483666 3750365970 5513849636 13.619

17.696

52

DUPONT

PROFITABILITY

ACTIVITY

ROCE

2006-07

10.066

1.353

13.619

2007-08

11.441

1.569

17.951

20 18 16 14 12 10 8 6 4 2 0 2006-07 2007-08 PROFITABILITY ACTIVITY ROCE

DUPONT Analysis The profitability of the firm as shown by the first component has increased from 10.066 to 11.441 for the year 2006-07 to 2007-08.which is good for the company. Due to the sales rapidly increase at the same time slight increase in expenses. It caused to increase in EBIT(earnings before interest and tax) The second component is indicative of the balance sheet i.e. activity of the firm. The total assets have increased from 1.353 to 1.569 for the year 2006-07 to 200708. This shows a usage of the assets efficiently. Therefore the major causes for increase of activity is increase of net current assets

53

 When the ROCE increases from 13.619 to 17.951 we can find that total net assets and sales have increased for the year 2006-07 to 2007-08. The financial position of the company is found to be satisfied

PROFITABILITY FOR THE YEAR 2007-08 and 2008 -09: YEAR Net sales Other income Less: expenditure EBIT sales PROFITABILITY 11.109 11.441 12438957853 2008 -09 12438957853 50885209 11107978389 1381864673 12438957853 9727564484 2007 -08 9727564484 37048061 8651681402 1112931143 9727564484

ACTIVITY FOR THE YEAR2007-08AND2008-09: YEAR 2008 -09 1243895785 3 1243895785 3 2007 -08 9727564484 9727564484

Sales: Fixed assets Net Current assets Total net assets: ACTIVITY

2801164515 2538943725 5091557929 3750365970 6892722444 1.804 1.569 6198698521

54

DUPONT Analysis of ROCE 2007-08 & 2008-09: YEAR Net sales Other income Less: expenditure EBIT Fixed asets Net Crurent assents Total net assets: ROCE 2008 -09 1243895785 3 50885209 1110797838 9 2801164515 5091557929 6892722444 6289309695 20.048 17.696 1381864673 1112931143 2538943725 3750365970 2007 -08 9727564484 37048061 8651681402

DUPONT 2007-08

PROFITABILITY 11.441

ACTIVITY 1.569

ROCE 17.951

2008-09

11.109

1.933

21.474

55

25 20 15 10 5 0 2007-08 2008-09 PROFITABILITY ACTIVITY ROCE

DUPONT Analysis The profitability of the firm as shown by the first component has increased from 11.441 to 11.109 for the year 2007-08 to 2008-09.which is good for the company. Due to the sales rapidly increase at the same time slight increase in expenses. It caused to increase in EBIT(earnings before interest and tax) The second component is indicative of the balance sheet i.e. activity of the firm. The total assets have increased from 1.569 to 1.923 for the year 2007-08 to 200809. This shows a usage of the assets efficiently. Therefore the major causes for increase of activity is increase of net current assets When the ROCE increases from 17.951 to 21.474 we can find that total net assets and sales have increased for the year 2007-08 to 2008-09. The financial position of the company is found to be satisfied

56

PROFITABILITY FOR THE YEAR 2008-09 and 2009 -10: YEAR Net sales Other income Less: expenditure EBIT sales PROFITABILITY ACTIVITY FOR THE YEAR2008-09AND2009-10: YEAR 2009-10 1109514862 4 3359690439 5132065238 8491755677 6892722444 1.804 1109514862 4 2008 -09 12438957853 12438957853 2009-10 11095148624 65401405 9720715562 1439834467 2008 -09 12438957853 50885209 11107978389 1381864673

Sales: Fixed assets Net Current assets Total net assets:

2801164515 4091557929

ACTIVITY 1.306 DUPONT Analysis of ROCE 2008-09& 2009-10:

57

YEAR Net sales Other income Less: expenditure EBIT Fixed asets Net Crurent assents Total net assets: ROCE

2009-10 1109514862 4 65401405 9720715562 1439834467 3359690439 5132065238 8491755677 16.955

2008 -09 12438957853 50885209 11107978389 1381864673 2801164515 5091557929 6892722444 20.048

DUPONT 2008-09

PROFITABILITY 11.441

ACTIVITY 1.804

ROCE 20.048

2009-10

12.97

1.306

16.955

DUPONT Analysis The profitability of the firm as shown by the first component has increased from 11.441 to 12.97for the year 2008-09to 2009-10.which is good for the company. Due to the sales rapidly increase at the same time slight increase in expenses. It caused to increase in EBIT(earnings before interest and tax) The second component is indicative of the balance sheet i.e. activity of the firm. The total assets have increased from 1.1.804 to 1.306 for the year 2008-09to 2009

58

 This shows a usage of the assets efficiently. Therefore the major causes for increase of activity is increase of net current assets When the ROCE increases from 20.048 to 16.955 we can find that total net assets and sales have increased for the year 2008-09to 2009-10. The financial position of the company is found to be satisfied

59

PROFITABILITY FOR THE YEAR 2009-10and 2010-11: YEAR Net sales Other income Less: expenditure EBIT sales PROFITABILITY 0.99 12.97 2010-11 9949455502 79035717 10127088113 -98596894 9949455502 2009-10 11095148624 65401405 9720715562 1439834467 11095148624

ACTIVITY FOR THE YEAR2009-10and2010-11: YEAR 2010-11 9949455502 Sales: Fixed assets Net Current assets Total net assets: ACTIVITY 9949455502 2009-10 11095148624 11095148624

4127094521 5800879549 9927974070 1.002

3359690439 5132065238 8491755677 1.306

60

DUPONT Analysis of ROCE 2010-11&2009-10: YEAR Net sales Other income Less: expenditure EBIT Fixed asets Net Crurent assents Total net assets: ROCE 0.993 16.955 4127094521 5800879549 9927974070 2010-11 9949455592 79035717 1012708811 3 -98596894 3359690439 5132065238 8491755677 2009-10 11095248624 65401405 9720715562 1439834467

DUPONT 2009-10

PROFITABILITY 12.97

ACTIVITY 1.306

ROCE 16.955

2010-11

0.99

1.022

-0.993

61

DUPONT Analysis The profitability of the firm as shown by the first component has increased from 12.97 to 0.99 for the year 2009-10 to 2010-11.which is good for the company. Due to the sales rapidly decrease at the same time slight increase in expenses. It caused to increase in EBIT(earnings before interest and tax) The second component is indicative of the balance sheet i.e. activity of the firm. The total assets have increased from 1. 1.306 to 1.022for the year 2009-10 to 201011. This shows a usage of the assets efficiently. Therefore the major causes for increase of activity is decrease of net current assets When the ROCE increases from 16.955 to 0.993 we can find that total net assets and sales have increased for the year 2009-10 to 2010-11. The financial position of the company is found to be not satisfied

62

63

Return on Investment: Particulars

INCOME STATEMENT Profit Before Interest Tax Less: extra ordinary items Profit Before Tax Less: Income Tax Provision Deferred tax Income & wealth tax Profit after tax:BALANCE SHEET Fixed assets Net current assets investments Capital in progress Miscellaneous expenses Total assets ROI 955464846 1305654901 14435636 76353775 55851777 2357494335 7.825 5.019 840479305 780097569 13595200 50247208 10791465 1695210747 52500000 1926300 0 2656547 184480400 17500000 164450 00 4128641 86608366 272529091 13629144 258899947 125682007 1000000 124682007 2004 -05 2003-04

64

DUPONT Analysis of Return on Investment for the year 2003-04 to 2004-05: The Income Statement of the firm as shown by the first component of profit after tax has increased 86608366 from 184480400 for the year 2003-04 to 2004-05 .which is good for the company. Due to the more increase in profit after tax at the same time slight increase in total assets. The second component is indicative of the balance sheet of the firm. The total assets have increased from 1695210747 to2357494335 for the year 2003-04 to 2004-05. This shows a usage of the assets efficiently. Therefore the major causes for increase of total assets in balance sheet. When the ROI increases from 5.019 to 7.825 we can find that total assets and profit after tax have increased for the year 2003-04 to 2004-05. The Return on Investment of the company is found to be satisfied. particulars 2005 -06 2004 -05

Profit Before Interest Tax Less: extra ordinary items Profit Before Tax Less: Income Tax Provision Deferred tax Income & wealth tax Profit after tax:-

385420206 -

272529091 13629144

385420206 97500000 7732216 8185324 262488666

258899947 52500000 19263000 2656547 184480400

65

1235387804 Fixed assets 1775285665 Net current assets 184252474 investments 181294231 Capital in progress 4338211 Miscellaneous expenses 3380558385 Total assets 7.765 ROI

955464846 1305654901 14435636 76353775 55851777 2357494335 7.825

DUPONT Analysis of Return on Investment for the year 2004-05 to 2005-06: The Income Statement of the firm as shown by the first component of profit after tax has increased 184480400 from 262488666 for the year 2004-05 to 2005-06 .which is good for the company. Due to the more increase in profit after tax at the same time slight increase in total assets. The second component is indicative of the balance sheet of the firm. The total assets have increased from 2357494335 to 3380558385 for the year 2004-05 to 2005-06. This shows a usage of the assets efficiently. Therefore the major causes for increase of total assets in balance sheet. When the ROI decreases from 7.825 to 7.765 we can find that total assets and profit after tax have increased for the year 2004-05 to 2005-06. The Return on Investment of the company is found to be satisfied. particulars 2006 -07 2005 -06

66

Profit Before Interest Tax Less: extra ordinary items Profit Before Tax Less: Income Tax Provision Deferred tax Income & wealth tax Profit after tax:Fixed assets Net current assets investments Capital in progress Miscellaneous expenses Total assets ROI

515249904 -

385420206 -

515249904 152500000 26764000 15217491 320768413

385420206 97500000 7732216 8185324 262488666

1763483666 2019525202 25679644 444287216 11295750 4264271478 7.522

1235387804 1775285665 184252474 181294231 4338211 3380558385 7.765

DUPONT Analysis of Return on Investment for the year 2005-06 to 2006-07: The Income Statement of the firm as shown by the first component of profit after tax has increased from 262488666 to 320768413 for the year 2005-06 to 200607which is good for the company. Due to the more increase in profit after tax at the same time slight increase in total assets. The second component is indicative of the balance sheet of the firm. The total assets have increased from 3380558385 to 4264271478 for the year 2005-06 to

67

2006-07. This shows a usage of the assets efficiently. Therefore the major causes for increase of total assets in balance sheet. When the ROI decreases from7.765 to 7.522 we can find that total assets and profit after tax have increased for the year 2004-05 to 2005-06. The Return on Investment of the company is found to be satisfied. particulars 2007 -08 2006 -07

Profit Before Interest Tax Less: extra ordinary items Profit Before Tax Less: Income Tax Provision Deferred tax Income & wealth tax Profit after tax:Fixed assets Net current assets investments Capital in progress Miscellaneous expenses Total assets ROI

1112931143 10323850

515249904 -

1102607293 370000000 24200000 37103851 670878442

515249904 152500000 26764000 15217491 320768413

2538943725 3750365970 36135700 344821831 8200674 6678467900 10.045

1763483666 2019525202 25679644 444287216 11295750 4264271478 7.522

68

DUPONT Analysis of Return on Investment for the year 2006-07 to 2007-08: The Income Statement of the firm as shown by the first component of profit after tax has increased from 320768413 to 670878442 for the year 2006-07 to 2007-08 which is good for the company. Due to the more increase in profit after tax at the same time slight increase in total assets. The second component is indicative of the balance sheet of the firm. The total assets have increased from 4264271478 to 6678467900 for the year 2006-07 to 2006708. This shows a usage of the assets efficiently. Therefore the major causes for increase of total assets in balance sheet. When the ROI increases from7.522 to10.045 we can find that total assets and profit after tax have increased for the year 2006-07 to 2007-08. The Return on Investment of the company is found to be satisfied. particulars 2008 -09 2007 -08

Profit Before Interest Tax Less: extra ordinary items Profit Before Tax Less: Income Tax Provision Deferred tax Income & wealth tax

381864673 13581692

1112931143 10323850

1368282981 420000000 23076488 15650000 909556493

1102607293 370000000 24200000 37103851 670878442

69

Profit after tax:2881519479 Fixed assets 4091557929 Net current assets 33635700 investments 663740459 Capital in progress 5105599 Miscellaneous expenses 7675559166 Total assets 11.85 ROI DUPONT Analysis of Return on Investment for the year 2007-08 to 2008-09: The Income Statement of the firm as shown by the first component of profit after tax has increased from 320768413 to 670878442 for the year 2007-08to 2008-09 which is good for the company. Due to the more increase in profit after tax at the same time slight increase in total assets. The second component is indicative of the balance sheet of the firm. The total assets have increased from 6678467900 to 7675559166 assets in balance sheet. When the ROI increases from 10.045 to 11.85we can find that total assets and profit after tax have increased for the year 2007-08 to 2008-09. The Return on Investment of the company is found to be satisfied. Particulars 2009-10 2008-09 for the year 2007-08 to 2008-09. This shows a usage of the assets efficiently. Therefore the major causes for increase of total 10.045 6678467900 8200674 344821831 36135700 3750365970 2538943725

70

Profit Before Interest Tax Less: extra ordinary items Profit Before Tax Less: Income Tax Provision Deferred tax Income & wealth tax Profit after tax:Fixed assets Net current assets investments Capital in progress Miscellaneous expenses Total assets ROI

1439834467 381864673 ______ 13581692

1439834467 415000000 24000000

1368282981 420000000 23076488 15650000

1004179022

909556493

3429789193 5132065238 206121160 78820619 _______ 8846796210

2881519479 4091557929 33635700 663740459 5105599 7675559166

11.35

11.85

DUPONT Analysis of Return on Investment for the year 2008-09 to 2009-10: The Income Statement of the firm as shown by the first component of profit after tax has increased from 909556493 to 1004179022for the year 2008-09 to 2009-10 which is good for the company. Due to the more increase in profit after tax at the same time slight increase in total assets.

71

The second component is indicative of the balance sheet of the firm. The total assets have increased from 7675559166 to 9556181782 for the year 2008-09 to2009-10. This shows a usage of the assets efficiently. Therefore the major causes for increase of total assets in balance sheet. When the ROI increases from 11.85 to 11.35we can find that total assets and profit after tax have decreased for the year 2008-09 to 2009-10. The Return on Investment of the company is found to be satisfied. particulars 2010-11 2009-10

Profit Before Interest Tax Less: extra ordinary items Profit Before Tax Less: Income Tax Provision Deferred tax Income & wealth tax Profit after tax:-

52103188 ______

1439834467 ______

52103188

1439834467 415000000

98900000 24000000

164494886

1004179022

72

Fixed assets Net current assets investments Capital in progress Miscellaneous expenses Total assets ROI

4186937065 5800879549 1412184078 937355144 ______ 12337355836

3429789193 5132065238 206121160 78820619 _______ 8846796210

1.333

11.35

DUPONT Analysis of Return on Investment for the year 2009-10 to 2010-11: The Income Statement of the firm as shown by the first component of profit after tax has increased from 1004179022 to 164494886 for the year 2009-10 to2010-11 which is good for the company. Due to the more decrease in profit after tax at the same time slight increase in total assets. The second component is indicative of the balance sheet of the firm. The total assets have increased from 9556181782 to12337355836 for the year 2009-10 to 2010-11. This shows a usage of the assets efficiently. Therefore the major causes for increase of total assets in balance sheet. When the ROI increases from 11.35 11.333we can find that total assets and profit after tax have decreased for the year 2009-10 to 2010-11. The Return on Investment of the company is found to be satisfied.

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Return on equity:

particulars

2004 -05

2003 -04 125682007

Profit Before Interest Tax Less: extra ordinary items Profit Before Tax Less: Income Tax Provision Deferred tax Income & wealth tax Profit after tax:share capital Reserves & surplus Owners equity

272529091 1000000 13629144

258899947 52500000

12468200 7 17500000

19263000 2656547 184480400 1644500 0 412864 1 200723230 817375705 1168248135 1018098935 8.507 86608366

200723230 967524905

ROE

15.791

DUPONT Analysis of Return on Equity for the year 2003-04 to 2004-05 The Income Statement of the firm as shown by the first component of profit after tax has increased 86608366 from 184480400 for the year 2003-04 to 2004-05 .which is good for the company. Due to the more increase in profit after tax at the same time slight increase in owners equity

74

The second component is indicative of the balance sheet of the firm. The total owners equity increased from1018098935 to 1168248135 for the year 2003-04 to 2004-05. This shows the value of the form increases. Therefore the major causes for increase of total assets in balance sheet. When the ROE increases from 8.507 to 15.791 we can find that profit after tax and owners equity had increased for the year 2003-04 to 2004-05. The Return on Equity of the company is found to be satisfied.

Return on equity of 2004-05 and 2005-06:

particulars 2005 -06 2004 -05

Profit Before Interest Tax Less: extra ordinary items Profit Before Tax Less: Income Tax Provision Deferred tax Income & wealth tax Profit after tax:share capital Reserves & surplus Owners equity ROE

385420206 -

272529091 13629144

385420206 97500000 7732216 8185324 262488666

258899947 52500000 19263000 2656547 184480400

200723230 220723230 967524905 1682261623 1902984853 13.793 1168248135 15.791

75

DUPONT Analysis of Return on Equity for the year 2004-05 to 2005-06:

The Income Statement of the firm as shown by the first component of profit after tax has increased 184480400 from 262488666 for the year 2004-05 to 2005-06 .which is good for the company. Due to the more increase in profit after tax at the same time slight increase. The second component is indicative of the balance sheet of the firm. The owners equity increased had increased from 1168248135 to 1902984853 for the year 2004-05 to 200-09. This shows a usage of the assets efficiently. Therefore the major causes for increase of total assets in balance sheet. When the ROI increases from 10.045 to 11.85we can find that total assets and profit after tax have increased for the year 2007-08 to 2008-09. The Return on Investment of the company is found to be satisfied.

76

Return on equity of 2005-06 and 2006-07:

particulars 2006 -07 2005 -06

Profit Before Interest Tax Less: extra ordinary items Profit Before Tax Less: Income Tax Provision Deferred tax Income & wealth tax Profit after tax:share capital Reserves & surplus Owners equity

515249904 -

385420206 -

515249904 152500000 26764000 15217491 320768413

385420206 97500000 7732216 8185324 262488666

242795550 220723230 2155296593 1682261623 2398092143 1902984853

ROE

13.376

13.793

77

DUPONT Analysis of Return on Equity for the year 2005-06 to 2006-07:

The Income Statement of the firm as shown by the first component of profit after tax has increased from 262488666 to 320768413 for the year 2005-06 to 200607which is good for the company. Due to the more increase in profit after tax at the same time slight increase in owners equity. The second component is indicative of the balance sheet of the firm. The total assets have increased from 6678467900 to 7675559166 for the year 2007-08 to 2008-09. This shows a usage of the assets efficiently. Therefore the major causes for increase of total assets in balance sheet. When the ROI increases from 10.045 to 11.85we can find that total assets and profit after tax have increased for the year 2007-08 to 2008-09. The Return on Investment of the company is found to be satisfied.

78

Return on equity of 2006-07 and 2007-08:

particulars 2007 -08 2006 -07

Profit Before Interest Tax Less: extra ordinary items Profit Before Tax Less: Income Tax Provision Deferred tax Income & wealth tax Profit after tax:share capital Reserves & surplus Owners equity ROE

1112931143 10323850

515249904 -

1102607293 370000000 24200000 37103851 670878442

515249904 152500000 26764000 15217491 320768413

242795550 2783566236 3026361786 22.168

242795550 2155296593 2398092143 13.376

79

DUPONT Analysis of Return on Equity for the year 2006-07 to 2007-08: The Income Statement of the firm as shown by the first component of profit after tax has increased from 320768413 to 670878442 for the year 2006-07to 2007-08 which is good for the company. Due to the more increase in profit after tax at the same time slight increase in total assets. The second component is indicative of the balance sheet of the firm. The total assets have increased from 6678467900 to 7675559166 assets in balance sheet. When the ROI increases from 10.045 to 11.85we can find that total assets and profit after tax have increased for the year 2006-07 to 2007-08. The Return on Investment of the company is found to be satisfied. for the year 2006-07 to 2007-08. This shows a usage of the assets efficiently. Therefore the major causes for increase of total

80

Return on equity of 2007-08 and 2008-09:

particulars 2008 -09 2007 -08

Profit Before Interest Tax Less: extra ordinary items Profit Before Tax Less: Income Tax Provision Deferred tax Income & wealth tax Profit after tax:share capital Reserves & surplus Owners equity ROE

381864673 13581692

1112931143 10323850

1368282981 420000000 23076488 15650000 909556493

1102607293 370000000 24200000 37103851 670878442

242795550 242795550 3607905133 2783566236 3850700683 3026361786 23.62 22.168

81

DUPONT Analysis of Return on Equity for the year 2007-08 to 2008-09:

The Income Statement of the firm as shown by the first component of profit after tax has increased from 320768413 to 670878442 for the year 2007-08to 2008-09 which is good for the company. Due to the more increase in profit after tax at the same time slight increase in owners equity. The second component is indicative of the balance sheet of the firm. The total assets have increased from 6678467900 to 7675559166 for the year 2007-08 to 2008-09. This shows a usage of the assets efficiently. Therefore the major causes for increase of total assets in balance sheet. When the ROI increases from 10.045 to 11.85we can find that total assets and profit after tax have increased for the year 2007-08 to 2008-09. The Return on Investment of the company is found to be satisfied.

82

Return on equity of 2008-09 and 2009-10:

particulars 2009-10 2008-09

Profit Before Interest Tax Less: extra ordinary items Profit Before Tax Less: Income Tax Provision Deferred tax Income & wealth tax Profit after tax:share capital Reserves & surplus Owners equity ROE

1439834467

381864673 13581692

1439834467 415000000 24000000

1368282981 420000000 23076488 15650000

1004179022

909556493

253000000 4860324964 5113324964

242795550 3607905133 3850700683

19.63

23.62

83

84

DUPONT Analysis of Return on Equity for the year 2008-09 to2009-10:

The Income Statement of the firm as shown by the first component of profit after tax has increased from 909556493 to 1004179022for the year 2008-09 to 200910which is good for the company. Due to the more increase in profit after tax at the same time slight increase in owners equity. The second component is indicative of the balance sheet of the firm. The total assets have increased from 7675559166 to 9556181782for the year2008-09 to 2009-10. This shows a usage of the assets efficiently. Therefore the major causes for increase of total assets in balance sheet. When the ROI increases from 23.62 to 19.63we can find that total assets and profit after tax have increased for the year2008-09 to2009-10. The Return on Investment of the company is found to be satisfied.

85

Return on equity of 2009-10and 2010-11:

particulars 2010-11 2009-10

Profit Before Interest Tax Less: extra ordinary items Profit Before Tax Less: Income Tax Provision Deferred tax Income & wealth tax Profit after tax:share capital Reserves & surplus Owners equity ROE

52103188

1439834467

52103188

1439834467 415000000

98900000

24000000

164494886

1004179022

253000000 4995415557 5248415557

253000000 4860324964 5113324964

03.13

19.63

86

DUPONT Analysis of Return on equity for the year 2009-10 to 2010-11:

The Income Statement of the firm as shown by the first component of profit after tax has increased from 1004179022 to 164494886 for the year 2009-10 to2010-11 which is good for the company. Due to the more decrease in profit after tax at the same time slight increase in total assets. The second component is indicative of the balance sheet of the firm. The total assets have increased from 9556181782 to12337355836 for the year 2009-10 to 2010-11. This shows a usage of the assets efficiently. Therefore the major causes for increase of total assets in balance sheet. When the ROI increases from 19.63 to 03.13we can find that total assets and profit after tax have decreased for the year 2009-10 to 2010-11. The Return on Investment of the company is found to be satisfied

87

88

SUMMARY The project titled Financial Analysis in HBL Power systems Limited is divided into 5 chapters. Whenever need is felt suggestions have been offered. Chapter wise summary as follows: The First Chapter: It deals with the introduction, need for the study, objectives, methodology and limitations of the study. The financial management is a financial aspect which deals with all the financial transactions done in an organization. Every organization irrespective of its size and machine may be viewed as a financial entity. The scope of the finance functions was treated by the traditional approach in the narrow sense of procurement of funds by corporate enterprise to meet their financial needs. It has now been discarded as it suffers from serious limitations. The modern approach views the term financial management in a broad sense are provides a conceptual and analytical frame work for financial decision making. According to it, the finance function covers both acquisitions of funds as well as their allocations. The new approach is on analytical way of viewing the financial problems of a firm. Thus, financial management in the modern sense of the firm can be listed as financial analysis, planning and control investing financing. It also involves some of important routine finance functions like supervision of cash receipts and payments and safeguarding of cash balances. Custody and safeguarding of securities, insurance policies and other valuable papers. Apart from thus, objectives of financial management such as profit maximization, wealth maximization are also clearly illustrated. The methodology involves primary data and secondary data. The required data has been collected from the income and expenditure and balance sheets from the years 2003 to 2008 of the board. The information collection from the annual reports of the Board is more accurate.

89

The Second Chapter:It deals with over view of the HBL Power Systems Ltd., and Organization structure. HBL power systems in corporate in 1977. It has located in Kandivalasa. Its chairman in Dr.A.J.Prasad. The quality assurance System consists of a stringent quality control for both raw materials and products are being maintained as per the standards and being supported by a full fledged inspection and quality control department. It has got ISO certification in the year 1994 efforts have been paid to accredit with ISO-9001 implementation 1977. The certificate was issued at ISO-9001, 14001 versions. HBL power systems consideration over all performance of the organization may impact customer loyalty repeat business and referral, operational result s such as revenue and market share, flexible and fast responses to market opportunities. The company provides amenities for employees like welfare, health and family planning, canteen, educational facilities, Rural Development, Social Activities , place of worship etc., The Third Chapter:It deals with theoretical background on Financial Analysis in HBL power systems Ltd which includes the financial statements of the company like Income statement Balance sheet Return on capital employed. Return on assets. Return on equity. For the purpose of knowing the companys financial position to compare with the last year. I t included data analysis and interpretation according to the financial statement of the company.

90

The fourth Chapter:Analysis an interpretation of Return on capital employed. Return on assets. Return on equity The fifth Chapter:It deals with summary, findings that which include suggestions to company. FINDINGS Current Ratio is decreased from 3.58 to 2.98 during April 2003 to March 2008 because of increase in Current Liabilities and decrease in Current Assets. Quick Ratio is decreased from 2.50 to 2.24 during April 2003 to March 2008 because if decrease in quick assets and decrease in current liabilities. Net working capital Ratio is increased from 0.53 to 0.53 during April 2003 to March 2008 because of No Change in working capital and increase in net assets. Debt-equity Ratio is decreased from 1.38 to 0.74 during April 2003 to March 2008 because of decrease in total debt and increased in net worth. Proprietary Ratio is increased form 0.33 to 0.46 during April 2003 to March 2008 because of increase in net worth and decrease in total assets. Fixed Asset to Proprietary Ratio is decreased from 1.38 to 0.93 during April 2003 to March 2008 because of increase in fixed assets and increase in net worth. Net Working capital turnover Ratio is increased from 2.13 to 2.53 during April 2003 to March 2008 because of increase in sales and decrease in working capital. Net Profit Ratio is decreased from 0.08 to 0.06 during April 2003 to March 2008 because of decrease in profit after tax.

91

SUGGESTIONS The Liquidity Position of HBL Power Systems has the necessity to improve the position, it is better to maintain the traditional convention standards that means Current Ratio is 2:1. Liquidity Ratio is 1:1 and the Working Capital should be increased. In the case of Debt-Equity Ratio during the period from 2003-04 to 2007-08 has decreased that means the utilization of outsiders funds has reduced by the firm it is better to improve the outsiders funds why because the increasing of outsiders funds leads to decrease the cost of capital. In the case of Total Assets Turnover ration coming under Activity Ratios, the volume of sales has been not improving with the respect to the total assets so it is suggested to HBL to improve the sales position with respects to total assets by the optimum utilization of total assets. In the case of Profitability Ratios the firm must to reduce the operating cost and the same time it should increase the sales volume for better results.

92

CONCLUSION After the Detailed Study of the Financial Analysis of HBL Power Systems Ltd, I conclude that: The liquidity position of the company is not following

traditional conventional standards. The position of Debt-Equity of the firm satisfactory. The firm maintaining better inventory control measures. The Firm tremendously increased sales region this results the

sales has increased by 28.11% when compare to last financial year and its generates the firm into profits zone.

93

BIBLIOGRAPHY:Text Books Referred: Financial Management by I.M Pandey Financial Management by Khan and Jain. Financial Decision Policy by R.M Srivastav Financial Management by Prasanna Chandra Investment Decision Making By John J.Hampton. Management by Heinz weirich and Horold Knoontz. Financial Management and Policy by James C Van Horne.

Reports and Journals Referred: Journals of ICWAI Journals of ICAI Journals of ICFAI Annual Reports of HBL Power Systems Ltd from April 2003 to March 2011.

94

39