Untitled

FINANCIAL PERFORMANCE OF TITAN INDUSTRIES LIMITED
LIST OF TABLES
TABLE NO TITLE PAGE NO

2.5.1 Gross Profit Ratio 35
2.5.2 Net Profit Ratio 37
2.5.3 Operating Ratio 39
2.5.4 Current Ratio 41
2.5.5 Quick Ratio 43
2.5.6 Investment To Total Assets Ratio 45
2.5.7 Working Capital Turnover Ratio 47
2.5.8 Debtors Turnover Ratio 49
2.5.9 Interest Coverage Ratio 51
2.5.10 Return On Shareholder Equity Ratio 53
2.5.11 Proprietary Ratio 55
2.5.12 Material Consumed Ratio 57
2.5.13 Investment To Working Capital Ratio 59
2.5.14 Fixed Assets Turnover Ratio 61
2.5.15 Conversion Cost Ratio 63
LIST OF DIAGRAMS
S. NO TITLE PAGE NO
2.5.1 Gross Profit Ratio 36
2.5.2 Net Profit Ratio 38
2.5.3 Operating Ratio 40
2.5.4 Current Ratio 42
2.5.5 Quick Ratio 44
2.5.6 Investment To Total Assets Ratio 46
2.5.7 Working Capital Turnover Ratio 48
2.5.8 Debtors Turnover Ratio 50
2.5.9 Interest Coverage Ratio 52
2.5.10 Return On Shareholder Equity Ratio 54
2.5.11 Proprietary Ratio 56
2.5.12 Material Consumed Ratio 58
2.5.13 Investment To Working Capital Ratio 60
2.5.14 Fixed Assets Turnover Ratio 62
2.5.15 Conversion Cost Ratio 64
TABLE OF CONTENTS
CHAPTER TITLE PAGE NO

1 1.1 Introduction 1
1.2 Need and Importance Of The Topic 4
1.3 Industrial Profile 8
1.4 Company Profile 10
1.5 Products Profile 12
1.6 Organizational Description 16
2 2.1 Scope Of The Study 30

2.2 Objective Of The Study 31
2.3 Research Methodology 32
2.4 Limitations Of The Study 33
2.5 Ratio Analysis and Interpretation 34
3 3.1 Findings 96
3.2 Suggestions 105
3.3 Conclusion 106
3.4 Bibliography 107
LIST OF BALANCE SHEET
S.NO TITLE PAGE NO

1 1.1 Comparative Balance Sheet 2003 - 2004 65
1.2 Comparative Balance Sheet 2004 - 2005 66
1.3 Comparative Balance Sheet 2005 – 2006 67
1.4 Comparative Balance Sheet 2006 -2007 68
1.5 Comparative Balance Sheet 2007 -2008 69
2 2.1 Common Size Balance Sheet 2003 -2004 82

2.2 Common Size Balance Sheet 2004 -2005 83
LIST OF INCOME STATEMENT

S.NO TITLE PAGE NO
1 1.1 Comparative Income Statement 2003 - 2004 72
1.2 Comparative Income Statement 2004 – 2005 74
2 2.1 Common Size Income Statement 2003 -2004 89

2.2 Common Size Income Statement 2004 -2005 90
1.1 INTRODUCTION
INTRODUCTION OF THE STUDY
Through the Indian economy is now fact changing and

adapting to ever changing international business practices. We need to do a lot
more survival of the fittest is now the global mantra in doing business and is
applicable to all involved in dynamic of business. We need to integrate our
country’s business community with the rest of the world.
As Alvin Toffler in “future shock” has wisely said “one

who adopts to change will survive and other will die” it is time to redefine the
age old business practices being followed generally by the Indian business
community in tune with the current international practices. If we are to reap the
huge economic advantages from the world we need to be proactive instead of
reactive. We have to redesign our own business process in order to be quick, cost
effective, error free innovative and creative. Business units have to address and
position themselves rightly in the current environment so that they fit in
naturally in the new alien environment thus in order to gear up with the challenge
thrown open to the Indian business units generally the management should be
particularly interest in knowing the financial strength of the firm to make their
best use and to be able to spot to spot out the financial weakness of the firm to
take suitable corrective action. The study intends to make an analysis of
financial statement of TITAN INDUSTRIES LIMITED Company in the manufacturing
sector to discuss the relative strength and weakness.
In any business the major objective is to make profit on

a regular basis. The objective can be achieved by making sufficient sales. This is
probable only when there is no interference in the supply of required goods. The
required goods may be supplied to the market. Only if there is no interference in
the production of these goods by the organization. There will be no interference
in the production of goods only if the firm has enough working capital.
Thus working capital form the basis to make an
organization successful by achieving its objective such an important factor
namely, financial performance.
Experiential observations show that the financial

manager has to spend much of their to the daily internal operations, relating to
current assets of the firm. As the largest portion of the financial manager’s
valuable time is devoted, it is necessary to manage financial performance in the
best possible way to get the maximum benefit. Thus, investment in current assets
represents a very significant portion of the total investment in assets. The
finance managers have to be very careful, while making any investment decision
especially short-term i.e. financial funds. Experiential results show that
ineffective management of funds is one of the important factors causing industrial
infection. There is a direct relationship between a firm’s growth and its
financial funds needs. As sales grow, the firm needs to invest more in inventories
and debtors.
The finance manager should determine levels and

composition of current assets, namely cash which will help to run the business
smoothly. In the changing scenario, it is essential that marketing tool, acting as
a bridge for the movement of goods through production and distribution stages to
customers. A firm grants trade credit to protect its sales from the competitors
and to attract the potential customers to but its products in favorable
conditions.
The receivables are a result of credit sales. In other

words, a firm sells its products or services on credit and does not receive cash
immediately. Hence it is defined “as debt owned to the firm by customer arising
from sales of goods and services and does not receive payment. The firm grants
trade credit and which could be collected in future”. Thus account receivable
represents an extension of credit to customers, allowing them a reasonable period
of time in which to pay for the goods received.
Debtors constitute a substantial portion of current assets

of several firms. In India, trade debtors, after inventories, are the major
components of the current assets. They form about one-third of current assets in
India. Though it blocks of the firms it helps to get funds from as substantial
amounts are locked up in banks or other sources. Thus trade debtors represent
investment. Receivables it needs careful analysis and proper management and hence
this study.
The present study of financial performance of TITAN

INDUSTRIES LIMITED is intended to examine the current practices of financial
performance in the regard under the present inflationary condition management of
financial performance is perhaps more important than even management of profit and
this requires greatest affection of the financial performance.
Two basic financial prepared for the purpose of external

reporting are 1.profit and loss account 2.Balance sheet these statement are
contained in a TITAN INDUSTRIES LIMITED annual report. It includes the auditors
report and accounting policy changes for internal management purpose.
1.2 NEED AND IMPORTANCE OF THE STUDY
As mentioned above, receivables are a direct result of

credit sales. The sales of goods on credit are an essential part of the modern
competitive economic system. The objective of credit sales is to promote sales and
thereby achieving more profits. At the same time, credit sales result in blockage
of funds in accounts receivable. Moreover increase in receivables will increase
the investment and also increase chances of bad debts. Hence if the receivable are
managed effectively, monitored efficiently, planned properly and reviewed
periodically at regular intervals to remove bottlenecks if any, the company cannot
earn maximum profit and increase its turnover. With this as the primary objectives
are framed for in depth analysis.
The theoretical background about any topic would not be

useful for anyone unless it is done practically.
So the importance of any project is to gain practical

exposure and proper insight on the topic under study. A study on financial
performance of TITAN INDUSTRIES LIMITED.
Analysis and interpretation through compilation of

the accounts department and revenue of income and expenditure, detailed of
budgets.
So as to afford full diagnosis of the profitability of

the financial soundness of the business.
1.3 REVIEW OF LITERATURE:
Financial statement analysis is largely a study of the

relationship among the various financial factors in a business. Analysis &
interpretation of financial statement refers to such a treatment of the
information contained in the income statement of balance sheet so as to find the
profitability and financial soundness of the business.
The term “analysis means classification of a data given

the financial statement “, financial analysis means interpretation of the
financial statement
Of the company” In other words “Financial analysis is an intelligent study of the
balance sheet and profit and loss account of a concern with a view of judging its
financial position”. According to the AICPS (American Institute of certified
public Accountant).
“Financial statements are prepared for the purpose of
presenting a periodical review on the progress by the management and deal with.
• The status of investment in the business.
• The result achieved the period under review.
The profit and loss account presents the summary of

revenues, expenses and Net income or Net loss of a specific of time.’ Net income’
is an indicator of the firm’s profitable operation where the income earned during
the period exceeds the expenses incurred during the period the surplus is the ‘Net
income or Profit’ on the other hand, if the total expenses of incomes and incurred
to earn that incomes made in the statement and the difference between the two is
known as Net profit or Net loss.
The balance sheet comprises a list of assets, liabilities

and capital fund at a given data. It set forth the financial condition of a
business concern as reversed by the accounting records. It reflects the assets
owned by the concern and the source of funds (from creditors and owners)used in
the acquisition of those assets it is prepared in such a way that true financial
position is revealed in a form easily readable and understandable than would be
possible from a study of the details contained in the record prepared during the
currency of the financial period thus,” balance sheet is only historic rather than
prophetic; ”book of accounts and financial statement are not prepared for the
purpose of prophecy the fact is: business is dynamic while balance sheet is static
“ it records only periodic changers rather than continuous ones.
1.4 FINANCIAL STATEMENT ANALYSIS
Financial statement analysis is largely a study of

relationship among the various financial factors in a business as disclosed be
7single set of statement and a study of the trend of these factors as shown in a
serious of statement.
Analysis financial statement is a process of
evaluating the relationship between component parts of a financial statement to
obtain a understanding of firm’s position and performance.
From a study of the meaning of analysis of financial
statement. It is clear that the work of analysis of financial statement involves
three steps there are.
1. Analysis
2. Comparison
3. Interpretation
1.5 ANALYSIS
ANALYSIS of financial statement is the process of re-

classifying of the figures found in the financial statement in to the desired
homogenous and comparable component part.
1.6 COMPARISON
COMPARISON is the process of ascertainment the relative
magnitude of the component part or the study of extent of relationship of the
component parts.
1.7 INTERPRETATION
INTERPRETION of result means the formation of rational

judgment and the drawing of proper conclusion about the progress. Financial
position and future prospects of the business through careful study of the
relationship of component part obtain through analysis and comparison in short;
interpretation is the drawing of conclusion about the progress financial position
and the business.
2.1 INDUSTRIAL PROFILE
Time and it’s in the history of thought and action:
The science or art of measuring time or making

timepieces is known as horology. Time appears to be more puzzling than spell
because it seems to follow or pass or people seem through it.
2.2 DEVELOPMENT OF WATCH:
The development for the watch was due to important

contribution made over four centuries by many individual craftsmen. Portable time
keeping instruments become possible with the invention of the main spring by peter
Heinlein of Nuremberg, Germany in 1500.
Christian Huygens of the Nether Land is general

credited with invention of hairspring in 1675.The invention reduced the size of
watch in 1765. Thoams mudge of England invented the escape mechanism.
In 1776 Jean moise,Geneva. Invented the watch with

independent seconds this was fitted with a mechanism by 1868. Patek phillipe was
making watch and one such can be seen in company’s private collection. About 1800,
Gir and perrageuse won an order for wristwatches from the German imperial navy.
Around 1914 the Geneva manufactures gay Preres and

Ponti gennali invested heavily in the design and production of the world’s first
metal watch bracelets.
The first self-winding watch was invented in about 1945

by John hardwood of England .in 1957 Hamilton watch company of the united states
introduced the first practical electric watch. The Bulova watch developed the
turning fork electrical watch in United States in 1960.
The first quart movement for wristwatches was

manufactured in 1967 in the phonological electronic center, Neufchatel. In the
1970’s timing system appeared and these enabled a completed service to be provided
to wrist that is timing and display. Today new levels of accuracy have been
achieved and the concept of the watch as designer fashion accessory has new
importance.
2.3 GROWTH OF WATCH INDUSTRY:
The present demand for wristwatch in India is estimated at between

12 million watches. The balance being met by watches brought into India from
abroad.
Growth projections for the industry as a whole are estimated to be 6%

per annum. This explains the positive reaction of the existing manufacturers in
the market to the new entrants.
3.1 COMPANY PROFILE
Titan Industries was established in 1984 as a joint

venture between the Tata Group and the Tamil Nadu Industrial Development
Corporation. The company brought about a paradigm shift in the Indian watch
market, offering quartz technology with international styling, manufactured in a
state-of-the-art factory at Hosur, Tamil Nadu. Leveraging its understanding of
different segments in the watch market, the company launched a second independent
watch brand-Sonata, as a value brand to those seeking to buy functionally styled
watches at affordable prices. In addition it focused on the youth with its third
brand – Fastrack. It has also premium fashion watches by acquiring a licence for
global brands such as Tommy Hilfiger and Hugo Boss, while. It has also in its
portfolio its first Swiss Made watch brand – Xylys.
In 1995, the company diversified into jewellery under
the brand – Tanishq to capitalize on a fragmented market operating with no brands
in urban cities. In 2005, the company launched its second Jewellery brand, Gold
Plus, for capitalizing on the opportunity in small towns and rural India.
The company has now diversified into fashion Eyewear by
launching Fastrack Eye-Gear sunglasses, as well as Prescription Eyewear. The
Company leveraged its manufacturing competencies and branched into Precision
Engineering Products and Machine Building from 2003.
Today Titan Industries is India's leading manufacturer
of watches and jewellery employing 3,800 people. Titan and Tanishq are among the
most admired brands in their categories.
3.2 IMPORTANT MILESTONE IN TITAN
Incorporation of titan watch limited –JULY 1984
Commencement of watch assembly –MARCH 1987
Commencement of Defraud watches assembly –MARCH 1990
Change of name as titan industry limited – SEPTEMBER 1993
Accreditation of ISO 9001 – DECEMBER 1994
Commencement of TANSI assembly unit, in OOTY – 1995
Accreditation of ISO 14001 –MARCH 2002
4.1 PRODUCTS PROFILE

The company manufactures over 8 million watches per
annum and has a customer base of over 80 million. It has manufacturing and
assembly operations at Hosur, Dehradun, Roorkee and Baddi in Himachal Pradesh and
an ECB plant in Goa. Its main products are:
Watches :
Currently manufactures four main watch brands viz. Titan
for the premium segment, Fastrack – focused on the youth and trendy fashion space,
Sonata for the mass market and Xylys for the premium market. The Titan brand
architecture comprises several sub-brands, each of which is a leader in its
segment. Notable among them are: Titan Edge – The world's slimmest watch which
stands for the philosophy of "less is more"; Titan Raga – the feminine and
sensuous accessory for today's woman, Nebula - crafted in solid gold and precious
stones and several other collections like Wall Street, Heritage, Regalia and the
Aviator series, all of which form a part of the Titan wardrobe. Sonata is today
India's largest watch selling brand and is priced between Rs 295/- and Rs 1200/-.
The company's first Swiss Made watch – Xylys is for the hi-end connoisseur and new
age achiever. It also markets Tommy Hilfiger watches under a licensing arrangement
and is introducing Hugo Boss. Today, the Titan portfolio has over 60% of the
domestic market share in the organized watch market.
The company has exclusive showrooms christened 'World of

Titan', making it amongst the largest chains in its category. Titan watches are
sold through over 12,000 outlets in over 2,500 cities and internationally in over
30 countries, primarily in the Middle-East and Asia Pacific. Its after-sales-
service is itself a benchmarked operation with a network of 750 service centers
and amongst the world's fastest turnaround times. The company has a world-class
design studio for watches and accessories.
4.2 TITAN MANUFACTURING:
Titan industries limited (TIL) have three major manufacturing plants

namely.
1) Watch plant
2) Jewelry plant
3) Alarm Time Piece Bracelet Plant
Watch plant has three major divisions:

• Movement component manufacturing
• watch case manufacturing
• watch assembly
Meaning for watch:
Watch is a portable time measuring instrument. This can function in any

direction and in any position.
Types of watch:
▪ Mechanical watch
▪ Electronic watch
Mechanical watch
▪ Hand wide
▪ Automatic
Electronic watch:
▪ Analog - Analog / Digital
▪ Digital - Digital /Analog
Watches
• Nebula
• Insignia
• Psi
• Silver raga
• Regalia
• Raga
• Royal
• Band ham
• Technology
• Steel
• Cacique
• Spectra
• Fastback
• Exacta
• Dash
4.3 VISION:
A significant and respected global watch, clock, and jewelry

brand. The market leader in India.
4.4 COMPANY OUTLETS:
The company’s products are distributed through a network spanning over

7400 retail outlet 1800 towns. The network includes 150 world of titan showroom
and 142 titans controlled multi brand outlets christened time zone.
The company also exports about 10% of it watches primarily to the Middle
East, Far East and Europe. In serve key countries of the Middle East market, titan
is ranked among top three brands.
Titan realized customer service was an element of the value chain meriting
the same attention as the selling of the product. Recognizing the leverage this
element could give to the brand. Titan established a service network now
consisting of about 342 authorized service centers, 4 authorized service workshop
and 222 service point. in addition, more then 4000 dealers are trained in minor
repairs and they purchase spares and accessories from titan.
5.1 ORGANIZATION DESCRIPTION:
TITAN INDUSTRIES LIMITED is a joint venture of the

TATA groups the Tamil Nadu Industrial Development Corporation (TIDCO). Its
business activity cover watches clocks and Jewelry. In a short span of time, the
company has built an enviable reputation for its corporate practices, products and
service.
The company’s products are distributed through a

network spanning over 7400retail outlets covering 1800 towns. The networks are
supported 33 clearing and forwarding agents, 121 redistribution stockiest (titan
62 and sonata) and manned by logistic professionals whose enviable task is
minimize stock outs across more then a 1000 variants.
Since its inception, titan realized that customer

service was an element of the value chain meriting the same attention as the
selling of the products. Recognizing the leverage this element could give to the
brand; titan estimate a service network now consisting of more then 327 authorized
service centers, 61 watch care centers, 4authorized service workshops and 193
service plans. Their service network covers 312 towns servicing 86% of the watch
population. In addition more than 4000 dealers are trained in minor repairs and
they purchase spares and accessories from titan.
5.2 TITAN’SCORE
TOTAL CONSUMER ORIENTATION:
• Anticipating and fulfilling needs

• Providing service
• Buildings long-term relationship, there by creating customer delight
5.3 RESPECTIVE AND VALUING EMPLOYEES:
• Fairness
• Improving quality of life
• Human approach
• Empowerment of people
• Partnering
• Encouraging people innovation
5.4 CREATING A POSITIVE WORK CULTURE:
• Non-hierarchical, non-bureaucratic transport style

• Consensus based decision-making process
• Performance and merit orientation
• Titan will use its manufacturing strengths to produce a variety of micro-
procession engineering and electronic unrelated to watches.
• Titan will use core competencies in the area of design .marketing retailing
sources and manufacturing as appropriate, to extend its business activities to
other prestigious personal use products and luxury goods.
• Positively engage the minds and hearts of people and all those who work for
its in the progress and prosperity of the company.
5.5 STRENGTHS OF TITAN
• Market share of over 65% in quartz watches

• Contemporary design and styling
• Commands good brand equity
• Sound distribution
• Quick response to market needs
• Price range from Rs.495 on wards
• Effective after sales and service network
5.6 AREA OF BUSINESS
Titan industries are India’s leasing manufacturer of

watches. Which it markets under the titan and sonata brand names, it enjoys 35%
share of total domestic markets-more then three times the size of its nearest
competitors and close to 50% share among nationality recognized brand.
Titan has very wide range of products in terms of look

function and price points. The company’s watches are presently sold in about 40
countries of the world through marketing subsidiary bases in London, Dubai and
Singapore. They enjoy reputation for being excellent value for money. Titan
industries also make watches for international labels.
Titan industries entered the precious jewelry segment in

1995 under the name Tanishq. It is India’s only fine jewelry brand with a national
presence and a business leader in the country’s US $ 10 billion market.
Tanishq jewelry is also exported to Europe, Middle East,

Australia and US. Titan industries also make and market a very attractive range of
decorated tablecloth incorporation both classical and contemporary designs include
some ethnic style.
The company employs around, 3700 personnel. The main manufacturing plants are
located at Hosur at the southern state of TamilNadu. In addition there is an
assembly unit at Dehradun in Utter Pradesh and unit that produces electronic
circuitry for quartz watches in Goa. Head quarter ’ s office in Bangalore.
5.7 EMPOLYEE
The company has highly skilled and dedicated workforces of

about 3062 are woman. Workforce consists of about 140 employees post graduates and
880 under graduates may of whom acquire additional qualifications after joining
the company. The company’s benefit is social responsibility is seen in that
opportunity it has created for employment of physically handicapped. About 200
such men and woman work in Hosur and Dehradun plants.
5.8 TECHNOLOGY:
Titan’s watches manufacturing facility was set up in 1987

with technical know how from Europe and Japan. Over the year company has estimated
highly integrated manufacturing facilities and grown to become the sixth largest
watch manufacturing brand in the world. The company manufacturers watch movement’s
watches in steel and bracelets in solid as well as sheet steel. The manufacturing
process includes micro-procession operation.
5.9 ENVIRONMENT:
Titan products and service have very little or marginal impact

on the environment. Titan adheres to all related legal statutory requirements. The
company is also extremely conscious o environmental issues and has been recognized
in this regard by hosur industries association. The foundation for integrated
approach to environmental issues has been well defined over the years. The
company’s environmental controls results in continuously checked with respect both
TNPCB (Tamil Nadu Pollution Controlled Board) and World Bank norms. The company
has been recently certified under ISO 14001 EMS (Environmental Management System)
standards.
5.10 ORGANISATIONAL CHALLENGES
COMPETITIVE ENVIRONMENT:
TITAN is entering an increasingly competitive world.

Titan’s major competitors includes brands that pay taxes like HMT, TIMEX, ROCHEES,
TIMEWELL and other foreign brands like CITIZEN, SEIKO, and the SWATCH group. The
real threat is from the brand that source cheaply from china often illegally.
TITAN brand has been consolidate around its premium highly

style image with a variety of sub-brands that provide a targeted offering for
different segments. A new brand SONATA was launched during the year 1996-1997 to
take advantage of the fast growing value segment of India watch market. The
company’s has to be clearly built up on its existing strengths and skills as on
new opportunities that emerge in a globalize India and the international market.
5.11 CURRENT CHALLENGES OF TITAN INDUSTRIES LIMITED
• Maintain current share of growing quartz watch market in India.

• Confront threats from foreign competition (Seiko, Citizen) that may set up
facilities in India.
• Prevent a further increase in market share of the IMPQ sector.
• Satisfy growing consumer expectation on quality, features and style.
• Prepare for fierce competition as import duties are reduced.
5.12 SUCCESS FACTORS
• The TITAN heritage.

• Brand awareness and image.
• Market share-leadership position.
• Knowledge of the Indian market and customer.
• Customer focus.
• Design skills – aesthetic engineering.
• Successful segmentation of market.
• Choice in terms of price looks and functions.
• Product quality and responsibility.
• Powerful distribution, quantitatively and quality.
• Company managed retail chains.
• After sales and service.
• Integrated manufacturing base.
• Solid vendor base.
• Excellent business relationship along the supply chain.
• Talented and engaged workforce.
• Positive work culture.
5.13 STRATEGIC CHALLENGES:
The key strategic challenge that company faces are:

• Increasing the profitability of the business such that it has high appeal
among investors and leader classes.
• Maintaining a leadership position in terms of share in virtually every
important segment of market in India.
• Strengths or developing core competencies the world protect or newly built
competitive advantages.
• Leveraging the human capital to titan company goals.
5.14 ADDING NEW REVENUE STREAMS BASED ON
• Brand extensions to other products such as eyewear, writing instruments

small leather and silk goods and perfumes.
• Deploying precession-engineering skills to make instrument, small deploying
precession-engineering skills to make watches for other brand owners as also to
make precision parts and components for automobile, telecommunications, aerospace
and defense industries.
• To preserve and promote the culture of the company.
• Containing employee costs while simultaneously keeping employee motivated.
• Efficiently deploy information technology through out the company for
efficient conduct of the business and for information and knowledge sharing.
DEPARTMENT AND THEIR FUNCTIONS
5.15 AUTO - TURNING
The manufacture of all cylindrical watch components.

5.16 GEARS AND SUB ASSEMBLY
The production of all gears required for watch manufacture.
5.17 PRESS SHOP
The production of steel metal components required for the manufacture

of a watch module.
5.18 EBAUCHE
The manufacture of the component it’s main plates and its

subassemblies.
5.19 TREATEMENT
Component surface and heat treatment processes in the manufacture of

watches.
5.20 CASE MACHINNE SHOP

Machining of watchcase and case parts.
5.21 CASE POLISHING

Buffing and polishing watchcases to improve surface finish.
5.22 CASE PLATING

Providing various surface coating to case, case and straps.
5.23 CASE ASSMBLY

Testing and assembly was case to improve surface finish.
5.24 ASSMBLY
Planning and supervising process of assembly watchcase parts.
5.25 DESIGNS
Design innovation and the preparation of standard technical designs
incorporating manufacturing details manufacturing of finished products.
5.26 INSPECTION AND QUALITY CONTROL

Complete quality control through all stages of manufacturing and assembly.
5.27 TRAINING
To ensure that new employee’s are provided with appropriate
training and information to enable them to perform their duties effectively. To
continue further training to update each one’s knowledge and skills from time to
time.
5.28 PERSONNEL
To recruit right people capable of performing the organizations
specify tasks, to utilize available human resources effectively and act as a
catalyst in the individual department of the people in the organization. Employees
their families and their well-being are there is the prime concern of the
personnel department.
5.29 MEDIACL CENTER

Health care of all employees and medical aid at the time of
emergencies.
5.30 ADMINISTRATION
Ensuring prompt service on security, transport, house keeping,
canteen, communication network etc.
5.31 PROJECT
Planning, scheduling, with external and internal sources for the
establishment and smooth functioning of the project.
5.32 PLANT SERVICES

Monitoring and maintaining the essential service like power supply
compressed air supply etc.
5.33 MACHINE MAINTENANCE

The regular maintaining of different machines available in the
manufacturing department.
5.34 INDUSTRIAL ENGINEERING

Studying the economics of production from work-studies to job
description. Ensuring high productive efficiency and promoting value engineering.
5.35 PURCHASE
The procurement of materials, tools, machinery and consumables
required for manufacturing and administration.
5.36 STORES
Storing and releasing material, tools and consumables to the
various departments to ensure and uninterrupted functioning of organization.
5.37 CUSTOMER ASSURANCE

The ensuring of quality as away of like based on feedback and
from customer’s point of view.
5.38 VENDER DEVELOPMENT

To identify and establish supplier that meet the company’s
quality standards and consumption requirements of materials for quality
production.
5.39 SALES
To develop new dealers and ensure the constant flow of products
to the market as per demands and consumer need.
5.40 MARKETING
To study and evaluate market condition and to promote corporate
image through value based decisions.
5.41 AFTER SALES AND SERVICE

To ensure prompt and quick service for all the watches sold.
These service centers are strategically located at important places all over
India.
5.42 PRODUCT ENGINEERING
The design and development of new product and innovation to

existing.
5.43 FORUMS AND COMMITTEES
SGAs
CFTs
EP (through various forums)
• Safety committee
• Quality committee
• Cultural committee
• CFD (community development forum)
• Canteen committee
• Sports committee
SGA (Small Group Activities)

Focus on mainly involving E-level employees. (Non-managerial)
CFT (Cross-Functional Teams)

Focus on mainly involving L-level employees. (Managerial)
5.44 ACCOUNTING POLICY
The accounts are prepared on an accrual basis under

the historical cost convention and materially comply with the applicable
accounting standards. The significant accounting policies followed by the company
are as stated below.
Revenue Recognition:
Revenue from sales of goods is recognized when the

goods are dispatched from the points to customers. Interest income is recognized
on a time proportion basis, taking into account the amount outstanding and the
rate applicable. Dividend income is recognized when the company’s right to receive
the payment is established.
5.45 FIXED ASSET:
Capitalized at acquisition cost including directly

attributable cost. In line with accounting standard 19 on “lease” fixed assets
acquired through “finance lease” transactions entered into on and after 1st April
2003, have been capitalized.
Depreciation:
Depreciation has been provided on the straight-line method

in accordance with the companies Act, 1956 except for computers which are
depreciated @ 25% instead of 16.21% and leased assets are depreciated over the
primary lease period.
5.46 FOREIGN CURRENCY TRANSACTIONS:
Foreign exchanges are recorded at the exchange rates

prevailing on the date of the transaction. Foreign currency liabilities incurred
for the acquisition of imported fixed assets are translated at exchange rates
prevailing on the last working day of the accounting year or forward cover rates,
as applicable. The net variation arising out of the said transaction is adjusted
to the cost of fixed assets. Other outstanding foreign currency monetary items
(including those relating to internal foreign operations) are restated at year end
rates or forward cover rates, as applicable. The net loss or gain arising on
restatement / settlement is adjusted to the profit and loss account.
In respect of forward exchange contracts, the premium or

discount arising at the inception of such a forward exchange contract is amortized
as expense or income over the life of the contract. Exchange differences on such
contracts are recognized in the statement of profit and loss of the reporting
period in which the exchange rates change except in case of liabilities incurred
for acquiring imported fixed assets.
Investment:
Long-term investments are valued at acquisition cost.

Necessary provision is made for permanent diminution in values if any.
Inventories:
Inventories are valued at lower of cost and net realizable

value. The cost of various categories of inventory is determined as follows.
Consumable stores, loose tools, raw materials and components are valued on a
moving weighted average rate. Work in process and manufactured goods are valued on
full absorption cost method based on the average cost of production. Traded goods
are valued at annual average cost purchases.
Retirement Benefits:
Contribution to the provident fund and pension fund is

made monthly at a predetermined rate to the provident fund. Trust and regional
provident fund commissioner respectively and debited to the profit and loss
account on an accrual basis.
Contribution on the superannuating fund is made annually
at a pre-determined rate to the superannuating trust and debited to the profit and
loss account on an accrual basis.
Contribution to the gratuity fund is made annually on
the basis of actuarial valuation done at the end of the years to the gratuity fund
trust and leave enhancement benefit is providing on an actuarial basis.
Deferred revenue expenditure:
Software and implementation costs including users

license fees of the enterprise recourse planning (ERP) system and other software
costs are amortized over the period of five years. Brand building costs are
amortized over the period two years.
Deferred taxation:
Deferred taxation is accounted for in respect of all

timing difference on a liability method. Deferred tax assets is recognized to the
extent where the management is reasonably certain that the realization more likely
than not.
Segment accounting policy:
Segments are identified based on the types of products

and the internal organization and management structure. The company has identified
business segment as its primary reporting segment with secondary information
reported geographically. The company’s primary segments consist of
watch jewelers and others where the’ others ’include eyewear, precision
engineering, machine building and clocks.
2.1 SCOPE OF THE STUDY:
Considering the availability of time information and source of

study was confined the performance of the TITAN INDUSTRIES LIMITED. This study
aims at analyzing three headings of the financial performance of the company that
are.
• Ratio analysis
• Comparative statement
• Common size statement
By using various financial tools:
The study is confined to the TITAN INDUSTRIES LIMITED it will be

useful for future research.
2.2 OBJECTIVES OF THE STUDY:
The present study is undertaken with the following objectives
1. To study the needs and importance of financial performance.
2. To access the financial position of TITAN INDUSTRIES LIMITED.
3. To evaluate the efficiency of financial operation.

4. To reveal the profitability of TITAN INDUSTRIES LIMITED.
5. To identify the factors influencing profitability and wealth maximization.
6. To analyze the financial performance of TITAN INDUSTRIES LIMITED.
7. To estimate the earning capacity of TITAN INDUSTRIES LIMITED.
8. To reveal the wealth maximization of TITAN INDUSTRIES LIMITED.
9. To give suggestion to improve the financial analysis of the TITAN

INDUSTRIES LIMITED.
2.3 RESEASRCH METHODOLOY
The study is concerned with. TITAN INDUSTRIES LIMITED This

Study is based on descriptive analytical of secondary data, which was obtained
from the published sources i.e. Annual report for the period of Five years (2003-
2004 to 2007-2008).The collected data has been analyzed with help of ratio
analysis, and through the application of statistical tools such as test,
correlation, mean, standard Deviation, simple percentage analysis.
Nature of data
Secondary data
Sources of Data
Company annual report for the period from 2003-2004, to2007-
2008.
Tools for presentation:
Bar charts where used for presentation.
Period of study:
The period covered by the past five years from 2003 to 2008
Tools used:
• Ratio analysis
• Comparative finance statement

Comparative income statement
Comparative balance sheet
● Common size financial statement

Common size income statement
Common size balance sheet
2.4 LIMITATION OF THE STUDY:
Comparison is done only for 5 years.

As the study is done only with the help of ratio analysis. it may no be the
extent of the research analysis.
Personal bias of researcher may have a role to play in the analysis and
interpretation of financial data.
No primary is used for the study.
Figures for the analysis are taken from the annual report .so all the
limitations of there statements will apply to the study.
Major part of the work is concerned with financial data; adequate data was
not able to pool because of the secrecy by the company.
2.5 RATIO ANALYSIS AND INTERPRETATION:
An analysis of financial statements based on ratios is

known as ratio analysis. Ratio analysis was pioneer by Alexander wall that
presented a system of ratio analysis in the year 1909.
A ratio is mathematical relationship between two or more

items taken from the financial statements. Ratio analysis is the process of
computing determining and presenting the relationship of item. It also includes
comparison and interpretation of ratios and using them as basis for the future
projection. Ratios analysis is helpful to management and outsider’s todiagnoss the
financial health of concern. It is help to measuring the profitability, solvency,
and activity of the firm. Ratio analysis is important way to state meaningful
relationship between components of financial statements. To be most useful a ratio
must also include a study of underlying data.
2.5.1 GROSS PROFIT RATIO
Gross profit ratio is also known as ‘Gross margin ratio’

or ‘trading margin ratio’ or ‘Per cent ratio’. This ratio relationship between
gross profit and net sales. Gross profit is highly significant. The earning
capacity of the business can be ascertained by taking the margin between cost of
goods sold and sales.
Gross profit
Sales – Cost of goods sold
GPR = ---------------------------------- × 100 (or) …………………………………x100
Net sales Net
sales
Table: 2.5.1
YEAR GROSS PROFIT NET SALES RATIO RATIO

2004 8771000 16018836 54.75
2005 7974000 15952964 49.98
2006 9812000 19397247 50.58
2007 11789000 23135608 50.97
2008 15638000 30451738 51.35

Chart: 2.5.1
INTERPRETATION :
Thé grosse protif ratio was high in the year 2002 which
is about 54.75%. then it was considerably less because of the increasing cost or
decreasein sales. In the year 2008 it again showed some growth gradually of 51.35%
then on theyear 2005 it was 50.97%. at the enxt year of 2006 which is 50.58% and
laste in the year of 2003 gross profit decrease 49.98%.
2.5.2 NET PROFIT RATIO
Net profit ratio it is called ‘Net profit to sales ratio’

(profit margin) this ratio expresses to the relationship between the net profit
and net sales. This ratio is used to measure the overall profitability and hence
it is very useful to proprietors.
Net profit
Net Profit Ratio =--------------------------------×100
Net sales
Table: 2.5.2
YEAR NET PROFIT NET SALES RATIO RATIO

2004 3702240 16018836 23.11
2005 2041928 15952964 12.80
2006 2530093 19397247 13.04
2007 2856591 23135608 12.35
2008 4287884 30451738 14.08
Chart: 2.5.2
INTERPRETATION :
The net profit for the year 2004 was 23.11% which shows
that there is better management efficiency. But in the next year it was down to
2008 14.08% shows there was a poor efficiency in the management but from that
point the organization followed a step increases in the net profit. The year of
2006 profit was 13.04%.and in the year of 2005and 2007same equal of profit 12.80%
and 12.35%.
2.5.3 OPERATING PROFIT RATIO
Operating profit ratios for relationship between the

operating profit and sales. Operating profit (Earning Befor Income and Tax). The
main using for this ratio operating profit by the company side.
EBIT (or) Operating profit

O P R =-----------------------------------------× 100
Sales
Table: 2.5.3
YEAR EBIT SALES RATIO

2004 42155550 7247836 58.16
2005 2474188 7978964 31.00
2006 2931456 9585247 30.38
2007 3215859 11346608 28.34
2008 4629491 14813738 31.25
Chart: 2.5.3
INTERPRETATION :
In the year of 2002 shows a high operating profit ratio

of 58.16% and this has been decreased by in the year of 2006 31.25%. on the next
year same amount earinig to the company operating profit of 31%. On the year of
2004 was 30.38% earing to the operating profit and followed year of decreasesing
28.34% of operating profit.
2.5.4 CURRENT RATIO
Current ratio expresses relationship between the total current assets

and total current liabilities. Current ratio is the most common ratio for
measuring liquidity. Being related to working capital analysis. It is also called
the working capital ratio.
Current assets
Current Ratio =-------------------------------------
Current liabilities
Table: 2.5.4
YEAR CURRENT ASSETS CURRENT LIABILITIES RATIO

2004 34990 11437 3.06
2005 35229 16139 2.18
2006 33913 15062 2.25
2007 39272 24567 1.60

2008 50280 33314 1.51
Chart: 2.5.4
INTERPRETATION :
The firm’s current ratio of in the year 3.06% better

when compared to other year. Next year of 2004 the ratio in 2.25%.it implies that
for every on rupee of current liabilities and current assets are available. The
followed year of 2003,2005 and 2006 ratio of 2.18%, 1.60% and 1.51%. The current
ratio of the remaining years is nearest to the idle ratio.
2.5.5 QUICK RATIO
Quick ratios are also called as ‘Liquid ratio’ or ‘Acid ratio’ or

‘Near money ratio’. It is the ratio between quick assets and quick liabilities. As
pointed out, the current ratio in the study of solvency may be sometime misleading
due to high ratio of stock to current assets.
Current assets – Stock

Quick Ratio =--------------------------------------
Current liabilities
Table: 2.5.5
YEAR C.ASSETS STOCK C.LIABILITIES RATIO
2004 34990 12482 11437 1.97
2005 35229 14192 16139 1.30
2006 33913 16412 15062 1.16
2007 39272 27162 24567 0.49
2008 50280 37439 33314 0.38
Chart: 2.5.5
INTERPRETATION :
As a quick ratio of better management for the company. In

the year of 2004 at 1.97% as a convention quick ratio considered satisfactory.
Then gradually decreased in the followed years 2006 it was decreased to 1.6% and
year of 2003 it was decreased 1.13% and in the year of 2007 and 2008 ratio
decreased in 0.49% and 0.38%.
2.5.6 INVESTMENT TO TOTAL ASSETS RATIO
The investment to total assets ratios for

relationship between the total investment and total assets. The company considers
outing side investment who amount earning to company assets with in period or
particular years.
Investment
I T A R =---------------------------------------×100
Total assets
Table: 2.5.6
YEAR INVESTMENT TOTAL ASSETS RATIO

2004 2462 77900 3.16
2005 3709 84439 4.39
2006 2758 77108 3.58
2007 2702 77119 3.50
2008 2702 88411 3.06
Chart: 2.5.6
INTERPRETATION :
The company has invested more in the year of 2005 4.39%.

Small decreased in investment in the year of 2006 at 3.58%. The next all the years
of 2007, 2004,and 2008 for ratios 3.5%, 3.16% and 3.06% the investment show that
it spent on the purchases of the assets in the company.
2.5.7 WORING CAPITAL TURNOVER RATIO
Working capital ratio expresses relationship

between the cost of sales and working capital. It help to determining liquidity of
a firm in as much a it gives the rate at which inventories are converted to sales
and then to cash.
Cost of sales
W C T R =------------------------------------
Net working capital
Net working capital =Current assets – Current liabilities
Table: 2.5.7
YEAR SALES W.CAPITAL RATIO

2004 7247836 23553 3.08
2005 7978964 19090 4.18
2006 9585247 18851 5.08
2007 11346608 14705 7.72
2008 14813738 16966 8.73
Chart: 2.5.7
INTERPRETATION :
This ratio measures the effective utilization of the working
capital. During the year of 2008 at 8.73%. 2007 the7.72% decreased in compare
with next year. The year of 2006 ratio 5.08% and followed year of 2005 and 2004
ratio of 4.18% and 3.08%.the higher ratio indicates that there is next followed
all the years.
2.5.8 DEBTORS TURNOVER RATIO
Debtor’s turnover ratio it is also called ‘Debtors

velocity ratio’ or ‘Receivable turnover ratio’. A firm sells goods on credit and
cash basis. When the firm extends credits to its customer. Book debts (Debtors or
Account receivable) are credited in the firm’s account. A debtor includes the
amount of bills receivables and book debts at the end of accounting period.
Credit sales
D T R =---------------------------
Average .debtors
Opening debtors + closing debtors

AVG.DEBTORS =------------------------------------------------
2
Table: 2.5.8
YEAR CREDIT SALES AVG.DEBTORS RATIO

2004 7247836 18340 3.95
2005 7978964 19707 4.05
2006 9585247 16727 5.73
2007 11346608 11263 10.07
2008 14813738 8361 17.72
Chart: 2.5.8
INTERPRETATION :
The ratio indicates measures the liquidity of the receivables.

During the17.72% of highest time. 2007 in the year of 10.07% times. And followed
year of 2006, 2005, and 2004 ratios for 5.73% times, 4.05% times, and 3.95% times.
The higher turnover ratio and shorter the average collection period. The better
liquidity of the debtors.
2.5.9 INTEREST COVERAGE RATIO
Interest coverage ratios it is called for ‘Debt service

ratio’ that is the relationship between Earning Before Interest and Tax (EBIT) and
fixed interest charges. This ratio measures the debt servicing capacity of a firm
in so for fixed interest on long term loan is concerned.
EBIT
I C R =------------------------------------------------
Fixed interest charges
Table: 2.5.9
YEAR EBIT INTEREST RATIO

2004 42155550 462664 9.11
2005 2474188 413467 5.98
2006 2931456 376218 7.99
2007 3215859 309174 10.40
2008 4629491 248357 18.64

Chart: 2.5.9
INTERPRETATION :
This ratio highlights the ability of the concern

to meet interest commitments and its capacity to additional to raise funds to the
concern. During the year 2008, 2007, 2006 the ratio was 18.64%, 10.4%, and 7.99%
respectively this shows the company has an average cover over the interest. The
year of 2004 at ratio of 9.11% and 2005 was decreased in interest. Which clearly
indicate that there is a greater coverage over the interest commitment.
2.5.10 RETURN ON SHAERHOLDERS EQUITY RATIO
Return on share holder equity ratio expresses of

relationship between the net profit and share holder funds. The tern net profit as
used here means net income after payment of interest and tax including net non-
operating income. (Non operating income – None operating expenses).
Net profit
R S H R=-------------------------------------×100
Shareholder funds
Table: 2.5.10
YEAR NET PROFIT S.H. FUND RATIO

2004 3742 20928 17.88
2005 2041 20406 10.00
2006 2530 20028 12.63

2007 2856 20657 13.83
2008 4257 25633 16.61
Chart: 2.5.10
INTERPRETATION :
Return on share holders equity ratios dividend paid

to the share holder in the company. The company dividend paid highest in the year
of 2008 at 8.93% and 2007 was paid a 6.87% and 2006, 2005, and 2004 for dividend
paid 5.53%, 4.38% and 3.67%.
2.5.11 PROPRIETARY RATIO
Proprietary ratios expresses to the relationship

between the share holder funds and total assets. This ratio shows the term or
future solvency of the business.
Shareholders fund
Proprietary Ratio =--------------------------------
Total assets
Table: 2.5.11
YEAR S.H. FUND TOTAL ASSETS RATIO

2004 20928 77900 0.27
2005 20406 84439 0.24
2006 20028 77108 0.26
2007 20657 77119 0.26
2008 25633 88411 0.29
Chart: 2.5.11
INTERPRETATION :
Proprietary ratio was considered to total shear

holders funds analysis. The shear holders fund better management for the year of
2008 and 2004 at ratio of 0.29% and 0.27%. The followed year of 2006 and 2007 same
ratio as a 0.26%. then next year of 2005 as a ratio of 0.24%.
2.5.12 MATERIAL CONSUMED RATIO
Material consumed ratios for relationship between the

material consumed and net sales. The company who mach amount of using total raw
material, working process and company total net sales measuring for material
consumed ratio.
Material consumed
M C R=-----------------------------×100
Net sales
Table: 2.5.12
YEAR MATERIAL.CONS NET SALES RATIO

2004 3792295 16018836 23.67
2005 4732311 15952964 29.60
2006 5934769 19397247 30.60
2007 7502973 23135608 32.43
2008 9816202 30451738 32.24
Chart: 2.5.12
INTERPRETATION :
Material consumed ratio was the company using total raw

materials. Has
Company properly material utilization of in the ear of 2008, 2007, and 2006 at the
ratio
Was called at 32.24%, 32.43%, and 30.6%. The next year followed the by company
using
the material using in the year of 2005 and 2004 at the ratio of 29.6% and 23.67%.
2.5.13 INVENTORY TO WORKING CAPITAL RATIO
Inventory to working capital ratios for relationship

between the total inventory and working capital. the working capital of current
assets less then current liabilities. company with in the period who mach stock
using this ratios.
Inventory
I W C R=---------------------------------
Working capital
Working capital =Current assets – Current liabilities
Table: 2.5.13
YEAR INVENTORY W.CAPITAL RATIO

2004 12482 23553 0.53
2005 14192 19090 0.74
2006 16412 18851 0.87
2007 27162 14705 1.85
2008 37439 16966 2.21
Chart: 2.5.13
INTERPRETATION :
This is calculating to ascertain the efficiency of the
capital management of the concern. The high inventory ratio indicates the
investment in inventory is optimum. Highest using for inventory in the year of
2008 at ratio of 2.21% and 2007 1.85%. the followed year of 2006, 2005, and 2004
ratios was 0.87%, 0.74% and 0.53%.which is indicates there is greater efficiency
of inventory management and efficiency of the business concern.
2.5.14 FIXED ASSETS TURNOVER RATIO
Fixed assets turnover ratio it is called as ‘sales to

fixed assets ratio’. This ratio measures the efficiency and profit earning
capacity of the firm. Higher the ratio greater is the utilization of fixed assets.
Cost of sales
F A T R=--------------------------
Net fixed assets
Net Fixed Assets =Value of assets – Depreciation
Table:
2.5.14
YEAR SALES N.F. ASSETS RATIO

2004 7247836 19764 3.67
2005 7978964 18210 4.38
2006 9585247 17330 5.53
2007 11346608 16513 6.87
2008 14813738 17646 8.39
Chart: 2.5.14
INTERPRETATION :
The fixed assets turnover ratio determines the

efficiency of utilization of fixed assets and the profitability of a business
concern. In the year of 2008 at ratio of 8.39% this year using assets. and next
followed year of 2007, 2006, 2005 and 2004 at ratio for followed 6.87%, 5.53%,
4.38%,and 3.67%.which clearly indicate that year by year the utilization of the
assets where indicated. So profitability of the business is also increased.
2.5.15 CONVERSION COST RATIO:
Conversation cost ratios for relationship between

the total manufacturing expenses and net sales. Conversation costs calculate by
manufacturing expenses less then total material cost. The consider to net sales.
Manufacturing expenses – Material cost

C C R =------------------------------------------------------×100
Net sales
Table: 2.5.15
YEAR MANU.EXPENSES MAT.COST NET SALES RATIO

2004 4555450 3792295 16018836 4.76
2005 5499812 4732311 15952964 4.81
2006 6880544 5934769 19397247 4.88
2007 8573141 7502973 23135608 4.63
2008 11008509 9816202 30451738 3.92

Chart: 2.5.15
INTERPRETATION :
Converation cost of maunfacturing total expenses

consider the company. The year of 2005 and 2006 company useing converation cost
for normaly at ratio of 4.81% and 4.88%. then next followed year of 2004 at ratio
of 4.76% and 2005 and 2008 for the ratio of 4.63% and 3.92%.
COMPARATIVE BALANCE SHEET OF 2003-2004
particular 31-03-2003
lacks 31-03-2004
lacks
Increase (+) or decrease (-) in 2004
Over 2003
Amount lacks Percentage (%)
Current assets
Inventories
Sundry debtors
Cash at bank
Total CA(A)
Fixed assets
Land & building
Plant & machinery
Furniture
Vehicles
Total FA(B)
Other assets
Other assets
Total OA(C)
Total assets(A+B+C)
Liabilities
Share holder fund
Share capital
Reserve & surplus
Deferred liabilities
Total SHF(A)
Loan fund
Secured loan
Unsecured loan
Current liabilities
Provisions
Total LF(B)
Total liability(A+B)
14623
15904
2752
33279
3214
16048
1363
130
20775
18057
18057
72091
8228
12509
-
20737
23551
18652
7579
1572
51354
72091
12482
20775
1733
34990
3794
14558
1238
174
19764
23146
23146
77900
8228
8242
4458
20928
21008
23321
11437
1206
56972
77900
-2141
+4871
-1019
+1711
+580
-1490
-125
+44
-991
+5089
+5089
+5809
-
-4267
-
-2543
+4669
+3858
-366
+5618
+5809
-14.64
+30.63
-37.03
+5.14
+18.04
-9.28
-9.17
+33.85
-4.77
+28.18
+28.18
+8.06
-34.11
+0.92
-10.79
+25.03
+50.90
+23.28
+10.93
+8.06
lacks 31-03-2005
lacks
Over 2004
Current assets
Inventories
Sundry debtors
Cash at bank
Total CA(A)
Fixed assets
Land & building
Plant & machinery
Furniture
Vehicles
Total FA(B)
Other assets
Other assets
Total OA(C)
Total assets(A+B+C)
Liabilities
Share holder fund
Share capital
Reserve & surplus
Total SHF(A)
Loan fund
Secured loan
Unsecured loan
Current liabilities
Provisions
Total LF(B)
12482
20775
1733
34990
3794
14558
1238
174
19764
23146
23146
77900
8228
8242
4458
20928
21008
23321
11437
1206
56972
77900
14192
18638
2399
35229
3657
13221
1222
110
18210
31000
31000
84439
8228
8091
4159
20406
12680
34026
16139
1188
64033
84439
+1710
-2137
+666
+239
-137
-1337
-16
-64
-1380
+7854
+7854
+6539
-
-223
-299
-522
-8328
+10705
+4702
-18
+7061
+6539
+13.70
-10.29
+38.43
+0.68
-3.61
-9.18
-1.04
-36.78
-7.04
+33.93
+33.93
+8.39
-
-2.71
-6.71
+2.49
-39.64
+45.90
+41.11
+1.49
+12.39
+8.39
lacks 31-03-2006
lacks
Over 2005
Current assets
Inventories
Sundry debtors
Cash at bank
Total CA(A)
Fixed assets
Land & building
Plant & machinery
Furniture
Vehicles
Total FA(B)
Other assets
Other assets
Total OA(C)
Total assets(A+B+C)
Liabilities
Share holder fund
Share capital
Reserve & surplus
Total SHF(A)
Loan fund
Secured loan
Unsecured loan
Current liabilities
Provisions
Total LF(B)
14192
18638
2399
35229
3657
13221
1222
110
18210
31000
31000
84439
8228
8091
4159
20406
12680
34026
16139
1188
64033
84439
16412
14816
2685
33913
4041
12044
1156
89
17330
25865
25865
77108
8228
8285
3515
20028
20361
20310
15062
1347
57080
77108
+2220
-3822
+286
-1316
+384
-1177
-66
-21
-880
-5135
-5135
-7331
-
+266
-646
-379
+7681
-13716
-1077
+159
-6953
-7331
+15.64
-20.51
+11.92
-3.74
+10.50
-8.90
-5.40
-19.09
-4.83
-16.56
-16.56
-8.68
-
+3.32
-15.15
-1.86
+60.56
-40.31
-6.67
+13.38
-10.86
-8.68
lacks 31-03-2007
lacks
Over 2006
Current assets
Inventories
Sundry debtors
Cash at bank
Total CA(A)
Fixed assets
Land & building
Plant & machinery
Furniture
Vehicles
Total FA(B)
Other assets
Other assets
Total OA(C)
Total assets(A+B+C)
Liabilities
Share holder fund
Share capital
Reserve & surplus
Total SHF(A)
Loan fund
Secured loan
Unsecured loan
Current liabilities
Provisions
Total LF(B)
16412
14816
2685
33913
4041
12044
1156
89
17330
25865
25865
77108
8228
8285
3515
20028
20361
20310
15062
1347
57080
77108
27162
7709
4401
39272
3958
11147
1149
259
16513
23334
23334
79119
8228
9497
2932
20657
19336
12467
24567
2092
58462
79119
+10750
-7107
+1716
+5359
-83
-897
-7
+170
-817
-2531
-2531
+2011
-
+1212
-583
+629
-1025
-7843
+9505
+745
+1383
+2011
+65.50
-47.91
+63.91
+15.80
-2.05
-7.45
-0.60
+191.01
-4.71
-9.79
-9.79
+2.61
-
+14.63
-16.58
+3.14
-5.03
-38.62
+63.11
+55.31
+2.42
+2.61
lacks 31-03-2008
lacks
Over 2007
Current assets
Inventories
Sundry debtors
Cash at bank
Total CA(A)
Fixed assets
Land & building
Plant & machinery
Furniture
Vehicles
Total FA(B)
Other assets
Other assets
Total OA(C)
Total assets(A+B+C)
Liabilities
Share holder fund
Share capital
Reserve & surplus
Total SHF(A)
Loan fund
Secured loan
Unsecured loan
Current liabilities
Provisions
Total LF(B)
27162
7709
4401
39272
3958
11147
1149
259
16513
23334
23334
79119
8228
9497
2932
20657
19336
12467
24567
2092
58462
79119
37439
9012
3829
50280
3642
12412
1270
322
17646
20485
20485
88411
8228
15030
2375
25633
14884
11909
33314
2671
62778
88411
+10277
+1303
-572
+11008
-316
+1265
+121
+63
+1133
-2849
-2849
+9292
-
+5533
-557
+4976
-4452
-558
+8747
+579
+4316
+9292
+37.84
+16.90
-13.00
+28.03
-7.98
+11.35
+10.53
+24.32
+6.86
-12.21
-12.21
+11.74
-
+58.26
-19.00
+24.09
-23.02
-4.48
+35.61
+27.68
+7.38
+11.74
INTERPRETATION
FIXED ASSETS
During the year 2003 to 2004 the Fixed Assets has been decreased to 4.77%
which indicated that the company has sold some of its Fixed Assets during the year
2004.
During the year 2004 to 2005 the Fixed Assets has been decrease to 6.98%.
It indicated that the company has sold further of its Fixed Assets during the year
2005.
During the year 2005 to 20046the Fixed Assets has been decreased to 4.83%.
It indicates that the company has sold further of its Fixed Assets during the year
2006
During the year 2006 to 2007 the Fixed Assets has been decreased to 4.71%.
It indicates that the company has sold further of its fixed assets during the year
2007.
During the year 2007 to 2008 the Fixed Assets has been increased to 6.86%.
It indicates that the company has purchased some Fixed Assets during the year
2008.
This shows that the long term financial position of the firm was not stable
or constant.
CURRENT LIABILITIES
In the year the 2003 to 2004 the current liabilities of the company has been
increased to 50.90% it indicates that the company has to repay its current
liabilities. It means the amount is still outstanding the company to pay its
liabilities. During the year 2004 to 2005 the current liabilities was in an
increasing trend of 41.11% which indicates that it is still outstanding to repay
its current liabilities.
In the year 2005 to 2006 the current liabilities of the company has been
decreased to 6.67% which indicates that the company has repaid its current
liabilities.
increase to 63.11% which indicates the company has not been repaid its current
liabilities.
increased to 35.61%, which indicates that the company has not repaid its current
liabilities.
RESERVES AND SURPLUS
During the year 2005 the general reserve was greater (12509 corers) when
compared to 2006(8242crores) the general reserve for the year 2005 was further
decreased to (8019crores). During the year 2006 the year 2007 and 2008 the
general reserves of the company was increased to 9497 and 15030 respectively. The
company maintained good reserves during 2007 and 2008.
CAPITAL
The share capital of the company has not been changed for a longer period of
Time. Generally there is an overall increase in the total assets and liabilities.
Comparative income statement for year ended 31-03-2003 to 31-03-2004

particular 2003 2004 Increase (+) or decrease (-) in 2004
Over 2003
Amount
percentage
Net sales
Lees: cost of goods sold
Gross profit(A)
Operating expenses
Material consumption
Labor consumption
Total operating expenses(B)
Operating profit(A-B) = C
Non operating expenses
Interest
Income tax
Total non operating exp (D)
Net profit(C-D)
15437026
6969026
8468000
3411930
740650
4152580
4315420
478402
20916
499318
3816102
16018836
7247836
8771000
3792295
763155
4555450
4215550
462664
50646
513310
3702240
+581810
+278810
+303000
+380365
+22505
+402870
-98870
-15738
+29730
+13992
-113862 +3.77
+4.00
+3.58
+11.15
+3.04
+9.70
-2.31
-3.29
+142.14
+2.80
-2.98
INTERPRETATION
The net sales have increased from the year 2003 to 2004 by 3.77% it may be
due to the demand of the production of goods had increased or when production is
being increased.
Cost of goods sold have increased from the year 2003 to 2004 by 4% this is
due to the increase in the cost of raw materials and much labor involved in the
production of goods.
The gross profit has been increased from the year 2003 to 2004 by 3.58%.
Operating expenses this includes the total operating expenses of the company
which have been increased by 9.70%.
To arrive at the operating profit we deduct the gross profit and operating
expenses so we get a decreases operating profit of 2.29% to the operating profit
of the company we add other incomes like interest and income tax. So that we
arrive at a decreased net profit of 2.98%.

Over 2004
Amount percentage
Net sales
Gross profit(A)
Operating expenses
Labor consumption
Interest
Income tax
Net profit(C-D)
16018836
7247836
8771000
3792295
763155
4555450
4215550
462664
50646
513310
3702240
15952964
7978964
7974000
4732311
767501
5499812
2474188
413467
18793
432260
2041928
-65872
+731128
-797000
+940016
+4346
+944362
-1741362
-49197
-31853
-81050
-1660312
-0.41
+10.09
-9.09
+24.79
+0.57
+20.73
-14.31
-10.63
-62.89
-15.79
-44.85
INTERPRETATION
The net sales have decreased from the year 2004 to 2005 by 0.41% it may be
due to the surplus of production of goods or when the production is being
decreased.
Cost of goods sold have increased from the year 2004 to 2005by 10.09% this
is due to the increase in the cost of raw material and much labor involved in the
The gross profit has been decreased from the year 2004 to 2005 by 9.09%.
This may be due to the increase in the cost of goods.
expenses so we get a decreased operating profit of 41.31% to the operating profit

Over 2005
Amount
percentage
Net sales
Gross profit(A)
Operating expenses
Labor consumption
Interest
Income tax
Net profit(C-D)
15952964
7978964
7974000
4732311
767501
5499812
2474188
413467
18793
432260
2041928
19397247
9585247
9812000
5934769
945775
6880544
2931456
376218
25145
401363
2530093
+3444283
+1606283
+1838000
+1202458
+178274
+1380732
+457268
-37249
+6352
-30897
+488165 +21.59
+20.13
+23.05
+25.41
+23.23
+25.11
+18.48
-9.01
+33.80
-7.15
+23.91
INTERPRETATION
The net sales have increased from the year 2005 to 2006 by 21.59% it may be
being increased.
Cost of goods sold have increased from the year 2005 to 2006 by 20.13% this
is due to the increase in the cost of raw materials and much labor involved in eh
expenses so we get a decreased operating profit of 18.48% to the operating profit

Over 2006
Amount
percentage
Net sales
Gross profit(A)
Operating expenses
Labor consumption
Interest
Income tax
Net profit(C-D)
19397247
9585247
9812000
5934769
945775
6880544
2931456
376218
25145
401363
2530093
23135608
11346608
11789000
7502973
1070168
8573141
3215859
309174
50094
359268
2856591 +3738361
+1761361
+1977000
+1568204
+124393
+1692597
+284403
-67044
+24949
-42095
+326498 +19.27
+18.38
+20.15
+26.42
+13.15
+24.60
+9.70
-17.82
+99.22
-10.49
+12.90
INTERPRETATION
The net sales have increased form the year 2006 to 2007 by 19.27%this is due
to the increase in the cost of raw materials and much labor involved in the
Cost of goods sold have increased from the year 2006 to 2007 by 18.38% this
is due to the increase in the cost of raw materials and much labor involved in the
expenses so we get and increased operating profit of 9.70% to the operating profit
arrive at a increase net profit of 12.90%.

Over 2007
Amount
percentage
Net sales
Gross profit(A)
Operating expenses
Labor consumption
Interest
Income tax
Net profit(C-D)
23135608
11346608
11789000
7502973
1070168
8573141
3215859
309174
50094
359268
285691
30451738
14813738
15638000
9816202
1192307
11008509
4629491
248357
93250
341670
4287884
+7316130
+3467130
+3849000
+3213229
+122139
+2435368
+1413632
-60817
+43156
-17661
+1431293 +31.62
+30.56
+32.65
+30.83
+11.41
+28.41
+43.96
-19.67
+86.15
-4.92
+50.10
INTERPRETATION
The net sales have increased from the year 2007 to 2008 by 31.62 % it may be
being increased.
Cost of goods sold have increased form the year 2007 to 2008 by 30.56% this
The gross profit has been increased form the year 2007 to 2008 by 32.65%.
expenses so we get an increased operating profit of 43.96% to the operating profit
arrive at a increased net profit of 50.10%
COMMON SIZE BALANCE SHEET OF 2003 -2004

lacks
percentage 31-03-2004
lacks
percentage
Current assets
Inventories
Sundry debtors
Cash at bank
Total CA(A)
Fixed assets
Gross block
(-) Depreciation
Total FA(B)
Other assets
Advance
Investment
Loans
Misc.expenses
Total OA(C)
Total assets(A+B+C)
Liabilities
Current liabilities
Current liabilities
Provision
Total CL(A)
Other liabilities
Capital
Reserve & surplus
Secured loans
Unsecured loans
Deferred tax
Total OL(B)
14623
15904
2752
33279
36623
15868
20755
361
2309
15067
320
18057
72091
7579
1572
9151
8228
12509
23551
18652
-
62940
72091
20.28
22.06
3.82
46.16
-
-
28.79
0.50
3.20
20.90
0.44
25.05
100
10.51
2.18
12.69
11.41
17.35
32.67
25.87
-
87.31
100
12482
20775
1733
34990
37814
18050
19764
326
2462
19740
618
23146
77900
11437
1206
12643
8228
8242
21008
23321
4458
65257
77900
16.02
26.67
2.22
44.92
-
-
25.37
0.42
3.16
25.34
0.79
29.71
100
14.68
1.55
16.23
10.56
10.58
26.97
29.94
5.72
83.77
100

lacks
lacks
percentage
Current assets
Inventories
Sundry debtors
Cash at bank
Total CA(A)
Fixed assets
Gross block
(-) Depreciation
Total FA(B)
Other assets
Advance
Investment
Loans
Misc.expenses
Total OA(C)
Total assets(A+B+C)
Liabilities
Current liabilities
Current liabilities
Provision
Total CL(A)
Other liabilities
Capital
Reserve & surplus
Secured loans
Unsecured loans
Deferred tax
Total OL(B)
12482
20775
1733
34990
37814
18050
19764
326
2462
19740
618
23146
77900
11437
1206
12643
8228
8242
21008
23321
4458
65257
77900
16.02
26.67
2.22
44.92
-
-
25.37
0.42
3.16
25.34
0.79
29.71
100
14.68
1.55
16.23
10.56
10.58
26.97
29.94
5.72
83.77
100
14192
18638
2399
35229
38174
19964
18210
966
3709
21708
4617
31000
84439
16139
1188
17327
8228
8019
12680
34026
4159
67111
84439
16.81
22.07
2.84
41.72
-
-
21.57
1.14
4.39
25.71
5.47
36.71
100
19.11
1.41
20.25
9.74
9.50
15.01
40.30
4.93
79.48
100
COMMON SIZE BALANCE SHEET OF 2005-2006

lacks
lacks
percentage
Current assets
Inventories
Sundry debtors
Cash at Bank Total CA(A)
Fixed assets
Gross block
(-) Depreciation
Total FA(B)
Other assets
Advance
Investment
Loans
Misc.expenses
Total OA(C)
Total assets(A+B+C)
Liabilities
Current liabilities
Current liabilities
Provision
Total CL(A)
Other liabilities
Capital
Reserve & surplus
Secured loans
Unsecured loans
Deferred tax
Total OL(B)
14192
18638
2399
35229
38174
19964
18210
966
3709
21708
4617
31000
84439
16139
1188
17327
8228
8019
12680
34026
4159
67111
84439
16.81
22.07
2.84
41.72
-
-
21.57
1.14
4.39
25.71
5.47
36.71
100
19.11
1.41
20.25
9.74
9.50
15.01
40.30
4.93
79.48
100
16412
14816
2685
33913
39342
22012
17330
407
2758
19369
3331
25865
77108
15062
1347
16409
8228
8285
20361
20310
3515
60699
77108
21.28
19.21
3.48
43.39
-
-
22.47
0.53
3.58
25.12
4.32
33.55
100
19.53
1.75
21.28
10.67
10.74
26.41
26.34
4.56
78.72
100
lacks
lacks
percentage
Current assets
Inventories
Sundry debtors
Cash at bank
Total CA(A)
Fixed assets
Gross block
(-) Depreciation
Total FA(B)
Other assets
Advance
Investment
Loans
Misc.expenses
Total OA(C)
Total assets(A+B+C)
Liabilities
Current liabilities
Current liabilities
Provision
Total CL(A)
Other liabilities
Capital
Reserve & surplus
Secured loans
Unsecured loans
Deferred tax
Total OL(B)
16412
14816
2685
33913
39342
22012
17330
407
2758
19369
3331
25865
77108
15062
1347
16409
8228
8285
20361
20310
3515
60699
77108
21.28
19.21
3.48
43.39
-
-
22.47
0.53
3.58
25.12
4.32
33.55
100
19.53
1.75
21.28
10.67
10.74
26.41
26.34
4.56
78.72
100
27162
7709
4401
39272
40008
23495
16513
978
2702
17214
2440
23334
79119
24567
2092
26659
8228
9497
19336
12467
2932
52460
79119
34.33
9.74
5.56
49.63
-
-
20.87
1.24
3.42
21.76
3.08
29.50
100
31.05
2.64
33.69
10.40
12.00
24.44
15.76
3.71
66.31
100
lacks
lacks
percentage
Current assets
Inventories
Sundry debtors
Cash at bank
Total CA(A)
Fixed assets
Gross block
(-) Depreciation
Total FA(B)
Other assets
Advance
Investment
Loans
Misc.expenses
Total OA(C)
Total assets(A+B+C)
Liabilities
Current liabilities
Current liabilities
Provision
Total CL(A)
Other liabilities
Capital
Reserve & surplus
Secured loans
Unsecured loans
Deferred tax
Total OL(B)
27162
7709
4401
39272
40008
23495
16513
978
2702
17214
2440
23334
79119
24567
2092
26659
8228
9497
19336
12467
2932
52460
79119
34.33
9.74
5.56
49.63
-
-
20.87
1.24
3.42
21.76
3.08
29.50
100
31.05
2.64
33.69
10.40
12.00
24.44
15.76
3.71
66.31
100
37439
9012
3829
50280
42042
24396
17646
1956
2702
14395
1430
20485
88411
33314
2672
35986
8228
15030
14884
11909
2375
52425
88411
42.35
10.19
4.33
56.87
-
-
19.96
2.22
3.06
16.28
1.62
23.17
100
37.68
3.02
40.70
9.31
17.00
16.83
13.47
2.69
59.30
100
INTERPRETATION
CURRENT ASSETS
During the year 2003 to 2004 the current assets of the company has decreased
from 46.92% to 44.92% which indicates that some amount of cash is gone out of the
company
from 44.91% to 41.72% which indicates that some amount has been spent for the
business or for purchase of any assets by the company
During the year 2005 to 2006 the current assets of the company has increased
from 41.72% to 43.98% it indicates that some amount has been came in to the
business by the way of sale of fixed assets or turnover by the company
from 43.98% to 49.63% which indicates that there is a sufficient cash and bank
balances in the company
from 49.63% to 56.87% which indicates that the company has good collection over
its debtors and also there is sufficient funds in the business.
FIXED ASSETS
The percentage of fixed assets of the company has decreased from 28.79% to
25.37% during the year 2003 to 2004 it indicates that the company has not
purchased any fixed assets during the year and hence there is no cash out flow.
21.57% during the year 2004 and 2005 it indicates that the company has not
The percentage of fixed assets of the company has increased from 21.57% to
22.47% during the year 2005 to 2006 it indicates that the company has purchased
some fixed assets during the year and hence there is an outflow of cash.
CURRENT LIABILITIES
The current liabilities of the firm have increased from 12.69% to 16.23%
which indicates that the company has not repaid its debts during the year 2004.
There is no outflow of cash during the year when compared to 2003.
The current liabilities for the year 2004 to 2005 have increased from 16.23%
to 20.52% which indicates that the company has not paid its debts or the amount
outstanding to them.
During the year 2005 to 2006 the current liabilities of the firm has
increased from 20.52% to 21.28% which indicates that the company has not paid its
debts.
increase from 21.36% to 33.69% which indicates that the company is still
outstanding to pay it debts.
This indicates the poor policy for repaying its debts.
Comparing the total current assets and current liabilities it shows that the
working capital position of the company is not satisfactory.
Therefore it can be concluded that the financial policy of the concern is highly
unsatisfactory.
Common size income statement for year ended 31-03-2003 to 31-03-2004
particular 2003 2004

Amount percentage Amount
percentage
Net sales
Gross profit(A)
Operating expenses
Labor consumption
Interest
Income tax
Net profit(C-D)
15437026
6969026
8468000
3411930
740650
4152580
4315420
478402
20916
499318
3816102
100
45
55
22.10
4.80
26.90
27.95
3.10
0.14
3.23
24.72
16018836
7247836
8771000
3792295
763155
4555450
4215550
462664
50646
513310
3702240
100
45
55
23.67
4.74
28.41
26.32
2.89
0.32
3.20
23.11

Amount percentage Amount percentage
Net sales
Gross profit(A)
Operating expenses
Labor consumption
Interest
Income tax
Net profit(C-D)
16018836
7247836
8771000
3792295
763155
4555450
4215550
462664
50646
513310
3702240
100
45
55
23.67
4.74
28.41
26.32
2.89
0.32
3.20
23.11
15952964
7978964
7974000
4732311
767501
5499812
2474188
413467
18793
432260
2041928
100
50.02
49.98
29.66
4.81
34.48
15.51
2.59
0.12
2.71
12.80

Net sales
Gross profit(A)
Operating expenses
Labor consumption
Interest
Income tax
Net profit(C-D)
15952964
7978964
7974000
4732311
767501
5499812
2474188
413467
18793
432260
2041928
100
50.02
49.98
29.66
4.81
34.48
15.51
2.59
0.12
2.71
12.80
19397247
9585247
9812000
5934769
945775
6880544
2931456
376218
25145
401363
2530093
100
49.42
50.58
30.60
4.88
35.47
15.11
1.94
0.13
2.07
13.04

Net sales
Gross profit(A)
Operating expenses
Labor consumption
Interest
Income tax
Net profit(C-D)
19397247
9585247
9812000
5934769
945775
6880544
2931456
376218
25145
401363
2530093
100
49.42
50.58
30.60
4.88
35.47
15.11
1.94
0.13
2.07
13.04
23135608
11346608
11789000
7502973
1070168
8573141
3215859
309174
50094
359268
285691
100
49.04
50.96
32.43
4.63
37.06
13.90
1.34
022
1.55
12.35

Net sales
Gross profit(A)
Operating expenses
Labor consumption
Interest
Income tax
Net profit(C-D)
23135608
11346608
11789000
7502973
1070168
8573141
3215859
309174
50094
359268
285691
100
49.04
50.96
32.43
4.63
37.06
13.90
1.34
022
1.55
12.35
30451738
14813738
15638000
9816202
1192307
11008509
4629491
248357
93250
341670
4287884
100
48.65
51.35
32.24
3.92
36.15
15.20
0.82
0.31
1.22
13.98
INTERPRETATION
The sales have increased in 2004 compared to 2003 and the percentage of
gross profit to sales has remained the same this is due to the increase in the
cost of sales. The percentage of the cost of sales has remained constant. Since
there is no difference in the cost of sales the gross profit also remains same.
During the year 2004 and 2005 the sales has decreased from the previous
year. The cost of sales increased during the year 2005 when compared to 2004 this
gradually decreases the gross profit of the company. The gross profit of the
company for the year 2004 was 55% but during the year 2005 it was decreased to
49.98% this is due to the increase in the cost of sales of the company.
The sales in the 2006 was increased this is due to the demand for the
product in the market. The cost of sales was also increased due to the purchase
of raw materials.
Though the cost of sales is high the sales during the year 2006 was also
high this paved the way for the increase in the gross profit of the company.
The sales and the cost of sales were increased in the year 2007 this
indicates the greater demand for the product in the market. This leads to an
increase in the gross profit of the company.
The sales and cost of sales during the year 2008 was again increased because
of the demand and production of the goods in large volume. This again resulted in
the increase in the gross profit of the organization.
Though there is an increase in the cost of sales. The profitability of the

organization has not affected this is due to the increase in the sales of the
goods.
OPERATING EXPENSES
The operating expenses during the year 2003 was at 26.90% but it was
increased during the year 2004 to 28.41% this is due to the increase in the cost
of sales and due to the increased sales for the goods.
This increase was common for the rest of the years i.e. from 2005-2008 the
percentage of the operating expenses was increased to 34.48%,35.47%,37.06% and
36.15% respectively this increase was due to the gradual increase in the cost of
sales and increasing cost.
NET PROFIT
The net profit for the year 2004 was comparatively low when compared to that
of the profit of 2003. The net profit of the year 2004 was 23.11% but during the
year 2003 it was at 24.72% this was due to the increase in the cost of sales of
producing that product.
The net profit during the year 2004 was at 23.11% but during the year 2005
the net profit is further reduced to 12.80% which clearly indicates there is a
greater increase in the cost of sales of the product.
During the year 2005 to 2006 the net profit of the company was slightly
increased from 12.80% to 13.04% this is slight variance due to not much difference
in the cost of sales of 2005 and 2006.
During the year 2006 and 2007 the net profit of the company was again
decreased from 13.04% to 12.35% this may be due to the increase in the cost of
sales of the organization.
During the year 2007 and 2008 the net profit of the company was increased
from 12.35% to 13.98% this is because there is and increase in the gross profit
for the year 2008.
It can be concluded that the overall profitability of the company have been
increased the main reason for such decrease of profit is due to increase in the
cost of sales so the company should take immediate steps to control the cost of
sales in order to increase the profitability of the company.
SUMMARY AND CONCLUSION
3.1 FINDINGS OF THE STUDY
• It was found that the gross profit ratio was high in the year 2004 which is
about (12.16%). Then it was considerably less because of the increasing cost or
decrease in sales. In the year 2006 it again showed some growth gradually of
(10.24%) then on the year 2006 it was (10.30%). At the end of 2008 March there is
a growth of (10.56%). This indicates there is an increase in sales or there is a
decrease in cost. To improve the gross profit the company should decrease its
cost and increase its sales.
• It was found that the net profit for the year 2004 was 1.81%, which shows
that there is better management efficiency. But in the next year it was down to
0.79% shows there was a poor efficiency in management but from that point the
organization followed a steep increase in the Net Profit. In the year 2004 It
raised to 1.17% and in 2007 it was at 2.2%. In the year 2008 the Net profit of
the company was the highest of 4.97%, which clearly indicates the operating
efficiency of the concern. The higher the Net profit the better is the operating
efficiency of the business concern.
• In 2004 the firm shows a high operating profit ratio of (8.89%) and this has
been decreased by the company because of low turn over of the company in the
remaining 2 years there is a slight increase in the operating profit in the year
2007 i.e.5.58% and in 2006 i.e.7.54% this shows that there is an increase in sales
which lead to a huge turnover.
• The firm’s current ratio of 3.06% in the year 2004 is better when compared
to other years. It implies that for every one rupee of current liability current
asset of 3.06% is available to meet them. The current ratio of the remaining
years is nearest to the idle ratio. Although there is a hard and fast rule
conventionally a current ratio of 2:1 considered to be satisfactory.
• As a rule of thumb or as a convention quick ratio of 1:1 is considered
satisfactory. Then the concern may able to meet its short-term obligations.
Here in the year the quick ratio was 1.90% then it gradually decreased. By the
year 2007 it was decr3eased to 0.49% and in 2008 was further reduced to 0.39% this
shows the company maintained an idle quick ratio of 1:1.
• The company has invested more in the year 2005 of rupees 6.38lakhs. The
investments show that it spent on the purchase of the assets for the company. In
the year 2004 it was at 4.38lakhs and in the year 2006, 2007 and 2008 it was at
5.07%, 4.54% and 3.72% respectively.
• The current asset ratio for the year 2004 was at 2.07% and for the year 2003
is was at 2.26% there is a slight increase in the current ratio every year in the
year 2006it was at 2.83% and in 2007 it further increased to 2.89%. The greater
the current asset turnover ratio is higher the profit of the company. So the
company experienced greater profitability in the year 2008 at 2.95%
• The fixed asset turn over ratio determines the efficiency of utilization of
Fixed Assets and the profitability of a business concern. In the year 2004 the
ratio is at 3.61% which indicates the assets were under utilized in the year 2005
it was at 4.16% which indicates there is a slight improvement in the utilization
of the assets. In the year 2006,2007 and 2008 it was gradually increased from
5.46%,6.40%and 7.56% which clearly indicates that year by year the utilization of
the assets where increased. So the profitability of the business concern is also
increased.
• During the year 2004 the total asset turnover ratio was at 1.26%. In the
year 2005 it was at 1.37% and in the year 2006 it increased to 1.76% this shows
the operational efficiency of the concern. The forthcoming years 2007 and 2008
the Total Asset Turnover Ratio was 1.91% and 2.04% respectively. This shows there
that the total assets of the company as contributed towards the total
profitability of the company.
• The working capital ratio measures the effective utilization of the working
capital. During the year 2004 the ratio was at 3.08% and in the next year it was
at 4.18. During the year 2006 and 2007 it increased to 5.08% and 7.72%. But in
the year 2008 the Working Capital Ratio was at it’s highest of 8.73, which
indicates the effective utilization of the working capital. The higher ratio
indicates that there is lower investment of working capital and more profits.
• This ratio indicates measures the liquidity of the receivables. During the
year 2004 the ratio was 7.78times in the year 2005 it increased to 9.26% from that
year the ratio decreased in the preceding year i.e., 9.04%, 6.78% and 5.98%
respectively. The higher the turnover ratio and shorter the average collection
period, better is the liquidity of the debtors.
• This ratio highlights the ability of the concern to meet interest

commitments and its capacity to raise additional funds to the concern. During the
year 2004, 2005 and 2006 the ratio was 1.39%, 1.24% and 1.37% respectively this
shows the company has an average cover over the interest. During the year 2007
and 2008 the ratio rose to 2.05% and 4.5%, which clearly indicate that there is a
greater coverage over the interest commitment.
FINDINGS OF COMPARATIVE BALANCE SHEET

FIXED ASSETS:
• During the year 2001 to 2002 the Fixed Assets has been decreased to 5.01%
which indicates that the company has sold some of its Fixed Assets during the year
2002.
• During the year 2002 to 2003 the Fixed Assets has been decreased to 7.04%.
2003.
2004.
2005.
• During the year 2005 to 2006 the Fixed Assets has been increased to 6.86%.
It indicates that the company has purchased some Fixed Assets during the year
2006.
• This shows that the long term financial position of the firm was not stable
to constant.
CURRENT LIABILITIES
• In the year 2003 to 2004 the current liabilities of the company has been
increased to 50.90% it indicates that the company has to repay its current
liabilities. It means the amount is still outstanding the company to pay its
liabilities. During the year 2004 to 2005 the current liabilities was in an
increasing trend of 41.11% which indicates that it is till outstanding to repay
its current liabilities.
• In the year 2005-2006 the current liabilities of the company has been
decreased to 6.67% which indicates that the company has repaid its current
liabilities.
increased to 63.11% which indicates the company has not been repaid its current
liabilities.
increased to 35.60% which indicates that the company has not repaid its current
liabilities.
RESERVES AND SURPLUS
During the year 2003 the general reserve was greater (12509crores) when
compared to 2004(8242crores) the general reserve for the year 2005 further
decreased to (8019crores). During the year 2006 the general reserve of the
company was increased to (8285crores) further during the year 2007 and 2008 teh
general reserves of the company was increased to 9497 and 15030 respectively. The
company maintained good reserves during 2007 and 2008.
CAPITAL
The share capital of the company has not changed for a longer period of
Time. Generally there is an overall increase in the total assets and liabilities.
COMPARATIVE INCOME STATEMENT
• The net sales have increased from the year 2003 to 2004 by 3.77% it may be
being increased.
• Cost of goods sold have increased form the year 2003 to 2004 by 4% this is
due to the increase in the cost of raw materials and much labor involved in the
• The gross profit has been increased form the year 2003 to 2004 by 3.58%.
• Operating expenses this includes the total operating expenses of the
company. Which have been increased by 9.70%.
• To arrive at the operating profit we deduct the gross profit and operating
expenses so we get a decrease operating profit of 2.29% to the operating profit of
the company we add other income like interest and income tax. So that we arrive at
a decrease net profit of2.98%.
• The net sales have decreased from the 2004to2005 by 0.66% it may be due to
the surplus of production of goods or when the production is being decreased.
• Cost of goods sold have increased from the year 2004 to2005 by 10.09% this
• The gross profit has been decreased from the year 2004 to2005 by 9.50% this
may be due to the increase in the cost of goods.
company, which have been increased by 20.73%.
expenses so we get a decrease operating profit of 41.86% to the operating profit
of the company we add other income like interest and income tax. So that we arrive
at a decrease net profit of 45.44%.
• The net sales have increased from the 2005 to 2006 by 21.59% it may be due
to the demand of the production of goods had increased or when the production is
being increased.
• The gross profit has been decreased from the year 2005 to2006 by 23.95%.
expenses so we get a decrease operating profit of 18.48% to the operating profit
at a decrease net profit of 23.91%.
being increased.
• The gross profit has been increased from the year 2006 to2007 by 20.15%.
expenses so we get a increase operating profit of 9.70% to the operating profit of
the company we add other income like interest and income tax. So that we arrive at
a increase net profit of 12.90%.
being increased.
• The gross profit has been increased from the year 2007 to2008 by 32.65%.
expenses so we get a increase operating profit of 43.96% to the operating profit
at a increase net profit of 49.05%.
COMMON SIZE BALANCE SHEET
CURRENT ASSETS
from 46.16% to 44.92% which indicates that some amount of cash is gone out of the
company.
from 44.92% to 41.72% which indicates that some amount has been spent for the
business or for purchase of any assets by the company.
from 41.72% to 43.98% it indicates that some amount has been came in to the
business by the way of sale of fixed assets or turnover by the company
from 43.98% to 49.63% which indicates that there is a sufficient cash and bank
balances in the company
• During the year 2007to 2008the current assets of the company has increased
from 49.63% to 56.87% which indicates that the company has good collection over
its debtors and also there is sufficient funds in the business
FIXED ASSETS
21.57% during the year 2004 and 2005 it indicates that the company has not
The percentage of fixed assets of the company has increased from 21.57% to
22.47% during the year 2005 to 2006 it indicates that the company has purchased
some fixed assets during the year and hence there is an outflow of cash.
CURRENT LIABILITIES
The current liabilities of the firm have increased from 12.69% to 16.23%
which indicates that the company has not repaid its debts during the year 2004.
There is no outflow of cash during the year when compared to 2003.
increased from 20.52% to 21.28% which indicates that the company has not paid its
debts.
increase from 21.36% to 33.69% which indicates that the company is still
outstanding to pay it debts.
This indicates the poor policy for repaying its debts.
Comparing the total current assets and current liabilities it shows that the
working capital position of the company is not satisfactory.
Therefore it can be concluded that the financial policy of the concern is highly
unsatisfactory.
3.2 SUGGESTION
1) The company should take suitable steps to improve financial performance.
2) The company should apply tools, techniques and new technologies to increase
its profitability.
3) Effective advertisements should be made in order to attract the customer.
4) The policy should be formulated for receiving outstanding balance from

debtors of the previous year. For this purpose periodic reminder should be sent.
5) It is suggested that fast collection of receivables will help the company in

clearing off liabilities.
6) The company should reduce its cost of sales for producing single unit. This
will increase the profitability of the product.
3.3 CONCLUSION
The financial analysis is a powerful mechanism of

determining financial strength and weakness of a firm. The analysis and
interpretation of financial statement is essential to bring out the mystery behind
the figures in the financial statement. Financial analysis is an attempt to
determine the significance and meaning of the financial statement data so that
forecast may be made of the future earnings ability to pay interest and debt
maturities and profitability of sound dividend policies.
The financial performance of the titan industry is

good. The sales increased year by but for every increase there is an increase in
the cost of sales.
3.4 BIBLIOGRAPHY
1) Financial management …….. Khan.M.Y and Jain.P.K
1996, 1st
Edition
.
2) Financial management ………I.M.Pandy
1992, 7th
Edition.
3) Financial management ……… Prsanchandra
1996,
4th Edition
4) Working capital management ………. R.A. Yadav
1986,
2nd Edition
5) Management Accounting ………. R.S.N.Pillai & Bagavathi
2003,
7th Edition
6) Financial Accounting ……… S. Chand
1997,
4th Edition

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FINANCIAL PERFORMANCE OF TITAN INDUSTRIES LIMITED

TABLE NO TITLE PAGE NO

CHAPTER TITLE PAGE NO

2 2.1 Scope Of The Study 30

LIST OF BALANCE SHEET

S.NO TITLE PAGE NO

2 2.1 Common Size Balance Sheet 2003 -2004 82

LIST OF INCOME STATEMENT

2 2.1 Common Size Income Statement 2003 -2004 89

INTRODUCTION OF THE STUDY

Through the Indian economy is now fact changing and

As Alvin Toffler in “future shock” has wisely said “one

In any business the major objective is to make profit on

Experiential observations show that the financial

The finance manager should determine levels and

The receivables are a result of credit sales. In other

Debtors constitute a substantial portion of current assets

The present study of financial performance of TITAN

Two basic financial prepared for the purpose of external

As mentioned above, receivables are a direct result of

The theoretical background about any topic would not be

So the importance of any project is to gain practical

Analysis and interpretation through compilation of

So as to afford full diagnosis of the profitability of

1.3 REVIEW OF LITERATURE:

Financial statement analysis is largely a study of the

The term “analysis means classification of a data given

The profit and loss account presents the summary of

The balance sheet comprises a list of assets, liabilities

1.4 FINANCIAL STATEMENT ANALYSIS

Financial statement analysis is largely a study of

ANALYSIS of financial statement is the process of re-

INTERPRETION of result means the formation of rational

2.1 INDUSTRIAL PROFILE

Time and it’s in the history of thought and action:

The science or art of measuring time or making

2.2 DEVELOPMENT OF WATCH:

The development for the watch was due to important

Christian Huygens of the Nether Land is general

In 1776 Jean moise,Geneva. Invented the watch with

Around 1914 the Geneva manufactures gay Preres and

The first self-winding watch was invented in about 1945

The first quart movement for wristwatches was

2.3 GROWTH OF WATCH INDUSTRY:

The present demand for wristwatch in India is estimated at between

Growth projections for the industry as a whole are estimated to be 6%

3.1 COMPANY PROFILE

Titan Industries was established in 1984 as a joint

4.1 PRODUCTS PROFILE

The company has exclusive showrooms christened 'World of

Titan industries limited (TIL) have three major manufacturing plants

Watch plant has three major divisions:

Meaning for watch:

Watch is a portable time measuring instrument. This can function in any

▪ Analog - Analog / Digital

▪ Digital - Digital /Analog

A significant and respected global watch, clock, and jewelry

The company’s products are distributed through a network spanning over

5.1 ORGANIZATION DESCRIPTION:

TITAN INDUSTRIES LIMITED is a joint venture of the

The company’s products are distributed through a

Since its inception, titan realized that customer

TOTAL CONSUMER ORIENTATION: