A Project Report

FINANCE
1.1 INTRODUCTION:
The word FINANCE is derived from Latin word finis. Finance may be defined as the provision of money at the time it is wanted. Finance is the backbone of all economic activity. The dimensions of business finance have undergone phenomenal transformation during the last few decades. Until the recent past finance was considered with procurement of funds for economic purpose and application of that funds for various requirements. The term FINANCE is the application of skills (or) care to the manipulation, the use and control of money.
Different scholars have interpreted the term finance in real world differently.
According to them finance have been categorized into three following major groups:
a) The first category incorporates the views of all those who opine that finance concerns with acquiring funds on reasonable terms and condition to pay bills promptly.
b) The second approach holds that finance is concerned with cash. Since all business transaction are expressed ultimately in terms of cash: every activity with in the firm is the concern of a finance of a finance manager.
The Oxford College of Business Management
c) The third approach to finance looks on finance being concerned with procurement of funds and their wise application. Protagonists of this approach holds that the responsibility of a finance manager is not only limited to acquisition of adequate cash to meet business requirement but extends beyond it to optimal utilization of funds.
1.2 IMPORTANCE OF FINANCE IN MODERN WORLD

Finance is omnipresent and it is associated with plans and a result of every functional department because every proposal and every decision entails financial problems (or) has an influence on financial results. Finance is lifeblood for every organization and it is an important function of every organization.
The important of finance is coated in several points. They are as follows:
1. To setup an organization (or) enterprise finance is very necessary. 2. To maintain an industry finance is required. 3. To purchase raw materials, spare parts, finance is very necessary. 4. For starting production finance is very essential. 5. Finance plays significant role in achieving in organizational goal. For example: profit maximization, consumer satisfaction, Etc. 6. For the convenience of business transportation finance is necessary. 7. The finance is very much important to give salary and wages for employees.
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8. Knowledge of finance and its tools and techniques provide strong and sound basis for making decisions in all business matters. 9. For the achievement of wealth maximization goal finance is very important. 10. To gain market leadership finance is necessary. 11. For providing dividends to share holders finance is required. 12. The payment of interest also depends on finance. 13. Finance helps business entrepreneurs and management in getting over their business problems. 14. Finance is important for increasing market value of shares. 15. To provide training facilities for selected new bloods finance is required. In todays world for each kind of transaction in any business finance is the base point and all other things are next to the finance.
1.3 FINANCIAL GOALS (OR) OBJECTIVES OF FINANCIAL MANAGEMENT

Financial management is an area of business management devoted to a judicious Use of capital and a careful selection of sources of capital in order to enable a business firm to move in the direction of reaching its goals by J.F. Bradlery.
The goals of the financial management is basically two categories i.e.,
GOALS OF FINANCIAL MANAGERMENT
GENERAL OBJECTIVES
SPECIFIC OBJECTIVES
1. BALANCED ASSETS STRUCTURE 2. LIQUIDITY 3. EFFICIENCY 4. CAREFULL PLANNIGN OF FUNDS 5. FINANCIAL DISCIPLINE
1. PROFIT MAXIMIZATION 2. WEALTH MAXIMIZATION
GENERAL OBJECTIVES (OR) OTHER OBJECTIVES
1. BALANCED ASSET STRUCTURE:-
The subject of financial management must have a goal of maintaining balanced asset structure in the company, i.e., the size of fixed asset and current assets should be determined scientifically and balanced should be maintain between them.
2. LIQUIDITY:-
If a firm is in liquidity it is an indication of positive growth. the companies capacity to meet short term as well as long-term obligations is called liquidity.
3. EFFICIENCY:-
A company should always innovative and only then it can run successfully by meeting stiff competition from other businessmen. Hence, Creativity places a very important role in an organization.
4. CAREFULL PLANNING OF FUNDS:-
Every company should do the operations in such a manner so that the overall cost will decrease and the funds can be put to maximum usage.
5. FINANCIAL DISCIPLINE:-
Financial discipline means not doing scandals and usage of funds Etc., and maintain financial discipline properly.
SPECIFIC OBJECTIVES
1. PROFIT MAXIMIZATION:-
Earning profits by a corporate or a company is a social obligation. Profit is the only means through which an efficiency of organization can be measured. They need profits to recover the cost of the funds and to have expansion and growth. Profit maximization achieved by an organization is the primary measure of its success.
2. WEALTH MAXIMIZATION:The concept of Wealth Maximization refers to the gradual growth of the value of assets of the firm in terms of benefits it can produce. Therefore wealth maximization is also stated as net present worth. Net present worth is the difference between gross present worth and the amount of capital investment required for achieving the benefits. a) Positive NPV [Creating wealth for the organization]. b) Negative NPV [Reducing the existing wealth of the organization].
FINANCIAL ANALYSIS
1.4 MEANING OF FINANCIAL ANALYSIS
Financial Analysis consists in separating facts according to some definite plan arranging them in groups according to certain circumstances and then in a convenient and easily read and understandable form. Financial analysis is largely a study of relationship among the various financial factors in a business as closed by a single set of statements, and a study of the trend of those factors as shown in series of statements.
STEPS INVOLVED IN THE ANALYSIS OF FINANCIAL STATEMENTS
1. Analysis. 2. Comparison. 3. Interpretation.

1.5 OBJECTIVES OF FIANCIAL STATEMENT
Financial statements are generally analysis with the following objectives: 1. To determine the profitability (or) earning capacity of the concern. 2. To know the progress of the concern. 3. To judge the financial position of the concern. 4. To know the trends of the business i.e., purchase, sales, profits, liquidity, solvency, etc. 5. To measure the financial performance of the concern. 6. To assess the debt-capacity of the concern. 7. To measure the efficiency of operations. 8. To estimate the future prospects of the concern. 9. To facilitate decision-making and policy formulation. 10. To judge managerial performance and efficiency.
SIGNIFICANCE (OR) IMPORTANCE OF FINANCIAL ANALYSIS AND FINANCIAL STATEMENTS
The importance of financial analysis to different users of financial statements is as follows:
1. To share holders 2. To prospective investors 3. To management 4. To debenture holders 5. To banks and other financial institutions
TOOLS (OR) TECHNIQUES OF FINANCIAL ANALYSIS
Following are the methods used for financial analysis: 1. COMPARATIVE STATEMENTS 2. TREND ANALYSIS 3. COMMON SIZE STATEMENTS 4. CASH FLOW ANALYSIS 5. FUND FLOW ANALYSIS 6. C.V.P ANALYSIS 7. RATIO ANALYSIS
1. COMPARATIVE STATEMENTS:Comparative statements methods are a sample method of tracing financial periodic changes in the financial performance of a company. Generally two financial statement i.e.,
Balance sheet and Income statement
These are prepared in Comparative form for financial analysis purpose.
The comparative statement may shown: A) Absolute figure (Amount in Rs.) B) Change in absolute figures i.e., increase (or) decrease in absolute figures. C) Absolute data in terms of percentage. D) Increase (or) decrease in terms of percentage.
Comparative statement helps to highlights the significant facts and point out this items, which need further analysis.
The financial data will be comparative only when same accounting principles are used in preparing these statements. In case of any discretion in the use of accounting principles, this fact must be mentioned at the foot of finance statements and analysts should be careful in using these statements.
2. TREND ANALYSIS:The financial statements may be analyzed by computing trend of series of information. This method determines the direction, upward (or) downwards and involves the computation of the percentage relationship that each statement bears to the same item in same year. The information (or) the number of years is taken up and the first year is taken as a base year. The figures of the base year are taken as 100 and trend ratios for other years are calculated on the basis of above year. The analyst is able to set the trend of figures whether upward (or) downward.
3. COMMON SIZE STATEMENTS:This is one of the methods (or) techniques of financial analysis. Common size statement expresses absolute rupee amounts into percentage. In this method the income the income statements are expressed as percentage of total sales by taking total sales as 100%. The items in the balance sheet are stated as a percentage of total asset and total liabilities.
4. CASH FLOW ANALYSIS:This is one of the methods (or) techniques of financial analysis. Cash flow analysis (or) cash flow statement means the actual flow (or) movement of cash balance (or) bank balance of the concern. On the other hand, if business transaction does not result in any changes in the cash (or) bank balance of the concern, there is no cash flow (or) flow of cash.
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5. FUND FLOW ANALYSIS:Fund flow analysis is a modern technique of financial analysis. The technique of analyzing movement of funds in and out of an undertaking is analyzed through a statement knows as fund flow statement.
Fund flow analysis (or) statement is a supplement to the principal financial statement, viz., income statement and position statement. It supplements particularly the position statement.
While supplementing the position statement, it shows the changes in the assets and liabilities of a concern between two balance sheet dates and indicates the sources from which additional funds are obtained and the uses to which the funds are applied. It is a tool widely used by financial managers for analyzing the financial performance of a concern.
6. C.V.P. ANALYSIS:C.V.P analysis is an analytical technique for studying the relationship between cost, volume, and price of profits. It is a advice used and to determine the influence of the profit planning process of the firm. The profit planning and control involves the use of budgets and forecast. C.V.P analysis provides and overview of the profit planning process and helps to evaluate the purpose of reasonableness of such budgets and forecasts. It helps the management to seek most profitable combination of cost and volume.
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7. Ratio Analysis
A ratio is simply one number expressed in term of another number. In other words, a ratio expresses mathematical relationship between one number and another.
An accounting ratio shows the mathematical relationship between two figures which have meaningful relation with each other e.g. gross profit and sales, net profit and sales, currents assets and current liabilities etc. no useful purpose is served if ratios are calculated between two figures which are not related at all to each other.
TYPES OF RATIOS:
Several ratios, calculated from the accounting data can be grouped into various classes according financial activity or functions should be evaluated. The sort term creditors main interest in the liquidity position or the short term solvency of the firm. Long term creditors on the other hand are more interested in the long term solvency and profitability of the firm. Similarly owners concentrate on the firms profitability and financial condition. Management interested in evaluating every aspects of the firms performance. They have to protect the interest of all parties see that the firm grows profitably. In view of the requirement of the various users of ratios, ratios classified them into following four important categories. Liquidity ratio Leverage ratio
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Activity ratio Profitability ratio
LIQUIDITY RATIO:
Liquidity ratio measures the ability of a firm to meet its current liabilities. It is extremely essential for a firm to be able to meet its obligations as they become due. Analysis of liquidity leads preparation of cash budgets and cash and fund flow statements. But liquidity ratio, by establishing a relationship between cash and other current assets to current obligation, providing quick measure of liquidity. A firm should ensure that it does not suffer from lack of liquidity and also it does not have excess liquidity. The failure of company to meet its
obligation due to lack of sufficient liquidity, will resuld in a poor credit worthiness, loss of creditor confident. A very high degree of liquity is also bad.
The most common ratio which indicate the extent of liquidity or lack of it are1. current ratio 2. quick ratio 3. other ratio includes cash ratio, interval measure and networking capital ratio
CURRENT RATIO:
The current ratio is calculated by dividing current assets by current liability. The current assets include cash and those assets which can be converted into cash with in a year, such as marketable securities, debtors and inventories. The current
ratio is a measure of a firm short term solvency. It indicates the availability of current assets in rupees for every Re.1 of current liability. A ratio of greater than one means that the firm as more current assets than current claims against them. The most current liability includes creditors, bills payable, accrued expenses, short term bank loan, income tax liability and long term debt maturing in the current year.
QUICK RATIO:
Quick ratio establishes a relationship between quick or liquid, assets and current liabilities. An asset is liquid if it can be converted into cash immediately or reasonably soon without a loss of value. Cash is the most liquid assets. Others assets which are consider to be relatively liquid and included in quick assets or debtors in bills receivable and marketable securities.
CASH RATIO:
Since cash is most liquid assets a financial analyst may examine cash ratio and its equal ant to current liabilities. Trade investments and marketable securities are equal ant of cash. Therefore they included in the computation of cash ratio.
INTERVAL MEASURE RATIO:
Yet another ratio which assesses firms ability to meet its regular cash expenses is interval measure. Interval measures relate liquid assets to average daily operating cash flows. The daily operating expenses will be equal to COGS plus selling, administrative and general expense less depreciation.
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NETWORKING CAPITAL RATION:
The difference between current assets and current liabilities excluding short term borrowings are called net working capital. Net working capital ratio can be computed from net working capital by dividing net sales.
LEVERAGE RATIOS:
Leverage ratio may be calculated from the balance sheet items to determine the proportion of debt in total financing. Leverage ratio are also computed from profit and loss items by determining the extends to which operating profits are sufficient to cover the fixed charges.
DEBT RATIO:
Several debt ratios may be used to analyze the long term solvency of a firm. The firm may be interested in knowing the proportion of the interest bearing debt in the capital structure. The compute debt ratio by dividing total debt by capital employed. Total debt will include short term and long term borrowing from the financial institutions, debentures, bank borrowings, public deposits or any other interest bearing loan. Capital employed will include total debt and net worth.
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DEBT EQUITY RATIO:
This relationship describes the lenders contribution for each rupee of the owners contribution is called debt equity ratio. It can be directly computed by dividing total debt by net worth.
CAPITAL EMPLOYED TO NET WORTH RATIO:
It is another alternative way of expressing the basic relationship between debt and equity.
COVERAGE RATIO:
Debt ratios described above are static in nature, and fail to indicates firms ability to meet interest obligation. The interest coverage ratio used to test the firms debt servicing capacity. The interest coverage ratio is computed by dividing EBIT by interest charges.
ACTIVITY RATIOS:
The activity ratios are employed to evaluate the effeciancy with which the firm manages and utilizes its assets. These ratios also called turnover ratios, because they indicated the speed with which assets are being converted or turned over into sales. Activity ratios thus involves a relationship between sales and assets.
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INVENTORY TURNOVER RATIO:
It indicates the efficiency of the firms in producing and selling its product. It is calculated by dividing the cost of goods sold by the average inventories.
DEBTORS TURNOVER RATIO:
A firm sells goods for cash and credit. Credit is used as a marketing tool by a number of companies. When the firm is extends credits to its customers debtors are created in the firms account. The liquidity position of the firm depends on the quality of the debtors to a great extent. Debtors turnover indicates the number of times debtors turnover each year. Generally the higher the value of debtors
turnover the more efficient in the management of credit. ASSET TURNOVER RATIO: Assets are used to generate sales. Therefore a firm should manage its assets efficiently to maximize sales. The relationship between sales and assets is called assets turnover. Several assets to be calculated Net assets turnover, which can be computed simply by dividing sales by net assets.
PROFITABILITY RATIOS:
The profitability ratios are calculated to measure the operating efficiency of the company. Besides management of the company, creditors and owners are also interested in the profitability of the firm.
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Generally two major types of profitability ratios are calculated Profitability relations to sales.
Profitability ration to investment
GROSS PROFIT MARGIN:
The gross profit margin reflects the efficiency with which management produced each unit of products. This ratio indicates the average spread between COGS and sales revenue. A high gross profit margin ratio is a sign of goods management. The gross profit margin increases due to higher sales prices, lower COGS, combinations of variation in sales prices and cost
NET PROFIT MARGIN RATIO:
It establishes the relationship between net profit and sales and indicates management efficiency in manufacturing, administering and selling the products. The ratio is the overall measure of the firms ability to turn each rupee sales into net profit. This ratio also indicates firms capacity to withstand adverse economy conditions.
OPERATING EXPENSE RATIO:
The operating ration explains the changes in the profit margin that is EBIT to sales ratio. This ratio is computed by dividing operating expenses by sales.
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RETURN ON EQUITY:
It indicates how well the firm has used the resources of owners in fact this ratio is one of the most important relationships in the financial analysis the earning of the satisfactory return is most desirable of the business. This ratio is thus of great interest to present as well as the prospective share holders and also of great concern to management which has the responsibility of maximize the owners welfare. It can be calculated by PAT divided by shareholders equity.
UTILITY OF RATIO ANALYSIS:
The ratio analysis is the most powerful tool of the financial analysis. With the help of ratios one can determine The ability of the firm to meet its current obligation The extent to which the firm has used its long term solvency by borrowing funds. The efficiency with which the firm is utilizing its assets in generating the sales revenues and The overall operating efficiency and performance of the firm. The ratios are also used in performance analysis, credit analysis, security analysis, competitive analysis, trend analysis.
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PROCEDURE FOR RATIO ANALYSIS (OR) STEPS INVOLVED IN RATION ANALYSIS

1. Restructuring, classification, grouping (or) re-arrangement of the data found in the financial statements in a form suitable for analysis. 2. Calculation of the required ratios from the restructuring (or) classifies data. 3. Comparison of the computed ratios with the standards established. 4. Interpretation of the comparison.
STANDARD OF COMPARISON
1. Ratios calculated from the past financial statements of the same firm. 2. Ratios developed using the projected financial statement of the same firm. 3. Ratios of some selected firms. Especially the most progressive and successful, at the same point of time. 4. Ratios of the industry to which the firm belongs.
IMPORTANCE AND ADVANTAGE OF RATIOS
As stated earlier, ratio analysis is one of the most important tools of financial analysis. This tool can diagnose financial health of a business. Such an analysis offers the following advantages:
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1. USEFUL IN ANALYSIS OF FINANCIAL STATEMENTS:-
Ratio analysis is the most important tool available for analyzing the financial statements i.e., profit and loss account and balance sheet. Such analysis is made not only by the management but also by outside parties like bankers, creditors, investors, etc.
2. USEFUL IN IMPROVING FUTURE PERFORMANCE:-
Ratio analysis indicates the weak spots of the business. This helps management in overcoming in such weaknesses and improving the overall performance of the business in future.
3. USEFUL IN INTER-FIRM COMPARISON:-
Comparison of the performance of one firm with another can be made only when absolute data is converted into comparison ratios. If A firm is earning a net profit of RS.50,000 while another firm B is better off unless this profit figure is converted into a ratio and then compared.
4. USEFUL IN JUDGING THE EFFICIENCY OF A BUSINESS:-
As stated earlier, accounting ratios helps in judging the efficiency of a business. Liquidity, solvency, profitability etc. of a firm can be easily evaluated with the help of various accounting ratios like current ratios, liquid ratios, debt equity ratio, net profit ratio, etc. such an evaluation enables the management to judge the operating efficiency of the various aspects of the business. 5. USEFUL IN JUDGING ACCOUNTING FIGURES:The Oxford College of Business Management 21
Complex accounting data presented in profit and loss account and balance sheet is simplified, summarized and systematized with the help of ratio analysis so as to make it easily understandable. For Example: Gross Profit Ratio, Net Profit Ratio, Operating Ratio, etc.
LIMITATIONS OF RATIOS
1. There is no consistency in the meaning of the certain accounting ratios. As such, the items used in the calculation of ratios differ from one analyst to another. That means ratios become non-comparable. 2. Financial analysis based on accounting ratios will give misleading results, if the effects of changes in price level are not taken into account in the computation of accounting ratios. 3. A ratio is a hyper sensitive. A new entry of transaction can change its magnitude drastically. 4. A single ratio itself is not important, (or) has limited value a change in particular ratio is meaningful only when it is studied with reference to other ratios.
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5. Today, there are a large number of ratios used for analysis. If too many ratios are computed and used for analysis, then, they are likely to cause confusion instead of facilitating meaningful conclusions. 6. if the data base is very small, then the ratios may depict a misleading picture. In such a case, there arises the need for taking into account even absolute figures in arriving the conclusions. 7. The quality of the assets must be considered in interpreting the ratios. 8. The type of business under consideration affects the ratios and conclusions drawn from them.
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RESEARCH DESIGN (OR) DESIGN OF THE STUDY
INTRODUCTION
A research design is a logical and systematic plan prepared for directing a search study. It specifies the objectives of the study. The methodology and techniques to be adopted for achieving the objectives. It is the plan, strategy of investigation conceived so as to obtain answer to search question. Generally the reliability of the data collected and analyzed is considered to be good.
2.1 DEFINATION OF PROBLEM

When a company is earning average profit and is a head of its competitors in terms of market share then the company is considered to be performing well. The aspect of the contributing to the good performance of a company may be its superior technology, superior quality product, better marketing proper utilization of its funds, assets, etc. thus it can be broadly said that financial analysis indicate the success of an organization.
2.2 PURPOSE OF THE STUDY

The purpose of doing this project is mainly to make a through study of the working of the RINAC INDIA LIMITED from its inspection till date with reference to financial management.
To access the industry trends for the last 5 years with regard to operation performance. The purpose also include assessing the RINAC INDIA LIMITED.
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2.3 OBJECTIVES OF THE STUDY

This study is mainly aimed at examining the profitability, the financial strength and the future prospects of RINAC POWR EQUIPMENT COMPANY. Apart from main objectives, other is as follows:
1. To examine the growth of RINAC POWER EQUIPMETN COMPANY over a period of 3 years from 2003-04 to 2007-08. 2. To ascertain the liquidity position of the company. 3. To judge the operational efficiency and financial position of the corporation. 4. To analyze the rate of return on investment. 5. To suggest some work instruction regarding the default in working found if any. 6. To check the inventory control management, debt collection and creditors turnover. 7. To provide information to the management to take effective decision.
2.4 SCOPE OF THE STUDY
This data has been collected and analyzed for a 3 years from 2004-05 to 2006-07. The study would have been more authentic and reliable. The study covers all the aspect affecting finance of whole company. Important area covered in this study is FINANCIAL ANALYSIS AND RATIO ANALYSIS.
The information regarding capital assets and liability, profit earned by the company in different years are collected and interpreted.
2.5 METHODOLOGY
Methodology refers to the special form of scientific procedure to acquire a predetermined objective. The study is purely an analytical method where in the data have been analyzed on the basis of the information supplied by the management.
To make the project more interesting to the readers I have added some graphs and charts that are drawn from the RINAC INDIA LIMITED annual reports.
2.6 SOURCES OF DATA
1. PRIMARY DATA:Primary data is designed in order to provide in its most efficient and accurate manner. For this survey, the following methods were utilized to gather required data: (A) Personal interview was conducted with the finance manager and other staff member to get information while compiling this report. (B) Telephone enquiries with the company staff and finance division were made to get information while compiling this report.
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2. SECONDARY DATA:-
The annual reports are some of the secondary data for this research study it has been collected for the past 5 years from 2001-02 to 2003-04.
ARRIVING OF THE GATHERING DATA TO ARRIVE AT A FINAL CONCLUSION
After gathering all necessary data, it has been arranged in proper manner to make the analysis.
Ratio analysis has been utilized ratio, fund cash flow analysis has been utilized to scrutinize the gathering data and come to a final conclusion.
TIME FRAME
The study is primarily based on the 5 years data of financial statements with the help of the accounting ratios derived from the financial statement. The period taken in consideration for the study is from 2003-04 to 2007-08.
2.7 LIMITATIONS OF THE STUDY
There are certain limitation that are identified in this research study even though every possible setup has been take to minimize the effect of these and to maintain accuracy of analytical data derived.
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Such limitations include: 1. A limited span, which lead to the limitations of not gathering data for the study. 2. Due to business secrecy maintained by the company, the financial data furnished by the company was restricted only to the annual figures of the company, which it was willing to disclose for this research study. 3. Because of valuation of stocks and depreciation on fixed assets, the figures that are furnished may not depict the actual situations. 4. time factor is also another limitation for this study.
2.10 OVERVIEW OF THE REPORT The study has been divided into five chapters. Chapter one: It contains the introduction to the study and the background of the study is described in detail. Chapter two: It contains the statement of problem, scope of the study, need of the study, objectives of the study, review of literature, the definition of the operational terms, tools for data collection, limitations of the study and the overview of the report. Chapter three: It gives an overall profile and developments and the profile of the organization.
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Chapter four: This chapter deals with the analysis and interpretation of financial statements of Rinac India Limited, with the help of ratio analysis.. Chapter five: It includes summary of conclusions and contains the suggestions and recommendations of the researcher.
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COMPANY PROFILE
M/S RINAC INDIA (P) LTD. BANGALORE, was set up with a very modest paid up Shares Capital of Rs.19000 initially in the year 1995, which was enhanced in phases to Rs.115.15 lakhs in the years 2002. The company formed by professional engineers, who are first generation entrepreneurs and having hands on expertise in the fields of refrigeration, insulation and air conditioning engineering. The company was formed by merging erstwhile proprietary firms of individual promoters in 1994.
RINAC INDIAL LIMITED, offers every product and service in Refrigeration, insulation and Air-conditioning from a single source. Rinacs objective is to offer focused technology to a wide cross section of industries. The company has been associated with many pioneering developments in Aquaculture, Agriculture, Horticulture and Sericulture. Rinacs Design Team develops perfect, tailor-made solution for the most complex, needs of the industry. From the flagship product, insulated panels and Blast Freezers, the products have been well received in every market.
Rinac is considered the number one manufacturer of high-tech insulated doors in the country having associated with reputed international manufacturers in Chill and Freezer room doors. The modern production facility for panels and doors can meet the growing development of different models of lifting and power doors to serve certain unique needs are also underway. The introduction of mobile telephones in India paved way for network infrastructure development indigenously. RINAC used this opportunity to catapult
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themselves to the leading mobile network operators as one of the prime suppliers of TELESHELTERS using their sandwich panels since 2000. Rinacs team of over 200 focuses on customer support in all its endeavors. Constant research and training keeps the Engineers and Technicians up-to-date with international trends.
With Rinac, the customer is assured of a quality product equivalent to any international standards. Rinac is completely self-supporting and independent with all the technical disciplines in-house. Thus, we have an edge over our competitors where customer is satisfied of getting all the products and services from a single source and the responsibility lies with Rinac.
EXPANSION PLANS
The present capacity of manufacturing facility are 100000 sqmtres of PUF and 150000 sqmtres of EPS needs to the augmented to reach a target beyond Rs.100 crores in a year.
Rinac has achieved a turnover of Rs.4678 lakhs and targeting to reach a turnover of Rs.65 Crores in 2005-06 an has plans in place for expansion of capacity and marketing spread to reach Rs.500 Crores by the year 2010.
Rinac is targeting at Rs.50 Crores of turnover from the northern India during 2006-07 and is expecting to reach Rs.300 Crores by 2010. To achieve this Rinac proposes to put up a plant in north India and are looking for a suitable location which will be logistically and economically viable.
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With Growing retail segment in India and the investment in retail segment is estimated to be around Rs.700 crores. Rinacs COOL BARN range of rech-in and other refrigerating equipment and cold rooms needs a larger manufacturing facility and hence it is decided to go in for a manufacturing set up at a new location which can be financially and logistically advantageous.
The choices were to locate new plant at a. Himachal Pradesh, b. Uthranchal or c. at Jammu & Kashmir. Considering the factors of logistics and proximity to market, it was decided to locate the plant at PANT NAGAR, DISTRICT AT UTTARANCHAL
RINAC foresees a big boom in the prefabricated insulated buildings which can reduce the construction time, aesthetic, hygienic and conserves energy. As these items are required in bulk, RINAC as planned for a continuous line of production and has also identified a running machine at Belgium which the company proposes to purchase.
As the RPUF building panels are used in constructions of a warehouse, industrial buildings, cold stores and freezers, office buildings and shopping malls. The prefabricated panels of RPUF foam have wide export market and hence the company proposes to locate the plant near a port. Considering the potential of Indian Market also RINAC had decided to locate the plant near MUMBAI.
Some of the present and prospective customers are: MCCAINS, ITC, FRITO LAY, METRO, RELIANC HYPER MALLS, HIGHWAY PETROL BUNK, SHELL ETC.,
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The proposed has a capacity to produce 3360 square meter of panels per 8 hours shift in a day. The machine is capable of running 3 shifts/ 24 hours a day. Also in Europe 50 such plants are available and
they are still enhancing capacities. In INDIA, RINAC will be the first company to put up such a plant. The plant not only increases the capacity of production but also ensures the quality and reduces the wastages. Thus putting this plant will increase the volume, reduce cost and increase our profit margins. The payback period of the plant is less than three years.
PRODUCTS AND SERVICES

RINAC OFFERS PREFABRICATED COLD ROOMS Of various sizes For various temperatures For various refrigerants Using Air cooled and Water cooled models of condensing units
CLEAN ROOMS AND AIR MANAGEMENT RINAC Clean Rooms Panels are recommended for classified clean areas in production process of electronic, Pharma and other process industries. Clean air management from concept to commissioning for classified process envelopes using state of the art packages
PREFABRICATED SANDWICH INSULATED PANELS With RPUF or EPS insulation With various thickness ranging from 60mm to 200mm With various finishes PCGI on both sides SS on both sides Aluminum on both sides TF on both sides Combinations For application Free Standing Modular Construction Process areas in food, Pharma and Beverages Clean Rooms
INSULATED DOORS OF ANY THICKNESS AND SIZE Single Swing Sliding Manual Sliding Motorized Lift and Slide
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ENGINEERED SOLUTIONS FOR Various refrigeration and Air conditioning application Pre-coolers Stability chambers
CONTRACTS
Turnkey Projects Design, supply and installation of central airconditioning and refrigeration system on turnkey basis for industrial applications including Horticulture, Tissue culture, Aqua culture, Floriculture, Food processing, Dairy, Pharmaceuticals, Hospitals, Hotels etc.,
Projects will be handled from concept to commissioning by experienced professionals who will ensure quality and high levels of workmanship.
Facilities for in-situ spraying/pouring of RPUF on roof-tops, containers etc., as well as for plants and equipments. Site preparation Service-Erection of Walk on ceiling, partitions for food processing, marine processors, floriculture, etc. Design, manufacturing and supply Teleshelters for tailor made applications for the GSM and WILL mobile operators.
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Customized Clean Room envelops worthy of approval from agencies like WHO and USFDA that are at par with the best available in the world with integrated clean air management system.
Operation, Maintenance and Service Contracts for central airconditioning and refrigeration system- Our dedicated team called RINAC TEAM led by qualified, experienced service personnel is RINACs distinctive strength. Equipped with advanced service facilities, they will ensure quick, comprehensive response to every customer requirement. The service personnel are provided with regular in-house training to keep them tuned into the rapidly changing industry trends. Several prominent companies from diverse industries vouch for RINACs quality standard and service excellence.
Our vision: The RINAC vision is focused on excellence, the highest quality in products and in being the leader in the subcontinent, as provider of cold chain and clean room infrastructure, ever meeting the aspirations of investors and employees for a better tomorrow.
Mission: 1. Rinac define the quality day after day continuously assimilating new skills. 2. To provide world class products and services 3. To set higher and higher standards
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4. Performance of the company keeps the customer oriented towards Rinac 5. The team Rinac with an exuberant morale
Goal: To set higher and standards and maintain higher quality in products.
Objectives: To provide world class products and services.
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Rinac has offices in following locations in India:
Corporate office:
M/s Rinac India limited, No:5, Saraswathi Nivas, Main Channel Rd, Saraswathi Puram, Ulsoor, Bangalore-08. Phone No: 25542929/25542988/51132998/29 Fax: 080-25511750 Email No: rinac@vsnl.com Website: www.rinac.com:
RINAC FACTORIES
UNIT-I :
Survey No: 2, Tavarekere hobli, Marenahalli Village, Magadi Road, Bangalore South-562120 Ph: 28434507/28434508 Fax: 28430490 Email: rinac unit@vsnl.net
UNIT II:
Survey No: 128/1 Herohally Village, Vishwaneedam post Magadi Road, Byadrahally Bangalore 562120 Ph: 30622061 Telefax: 23588222 Email: rinacu2@vsnl.net
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BRANCH OFFICES
Bangalore:
No: 25, 1st floor, karnaa sree point, Anand Nagar, Maratha halli ring road, Bangalore 560037 Ph: 080-25238012/25238116 (Telefax) Email: rinacblr@vsnl.net No: 25, 1st floor, karnaa sree point, Anand Nagar, Maratha halli ring road, Marathalli Post Bangalore 560037 Ph: 25238116 (Telefax) Email: rinacsrgn@vsnl.net S.C.O 83-84, Cabin No: 3, 3rd floor, sector 34 A, city centre, Chandigarh 160022 Ph: 0172-5073580 Email: rinacchd@eth.net
Southern regional office:
Chandigarh:
Chennai:
No: 4, Barnaby Avenue, Barnaby Road, Kilpauk, Chennai 600010 Telefax: (044) 25325304/26616427 Email: rinacchn@vsnl.net 101-c, Kundan House (1st floor),
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Delhi:
Hari Nagar, Ashram, New Delhi 110014 Ph: 011-26346590/91/92 Email: rinacdelhi@vsnl.net
Goa:
Mr. Ajesh Kumar.V.K. III floor, Hire Niketan Co-operative Housing Society ltd, Near Saraswathi Bank, Comba, Margao, Goa-403601 Ph: 2770206/9890211856
Hyderabad:
Plot no. 38, First Floor, Anand Nagar, Malani Co-operative Housing Society, Chinna Thokatta, Bowenpally, Secunderabad-500011 Telefax: (040) 27951563/27753043 E-mail: hyd2_rinachyd@sancharnet. In
Kochi:
37/862, Fathima Church Road, Elamkulam, Cochin-682020. Ph: 0484 2206165/66 E-mail: rinackhi@md5.vsnl.net. In
Mumbai:
106, 1st Floor, Bhagtani Enclave,
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(Behind Asian Paints) Off. L.B.S Marg, Bhandup (W) Mumbai-400078 Ph: (022) 25900719/20/21 Telefax: 022 25900722 E-mail: rinacind@vsnl.com
Pune:
D/4, Amar Deep, 257/16B, sholapu Road, Hadapsar, Pune-411013. Telefax; 020-26811073 E-mail: rinpune@vsnl.net
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MARKETING:
In competitive economy, it is the consumers who decided the success or failure of the business either accepting the product or reject it. Today it has become a necessity to study substantially the different aspects relating to market process with regard to fulfilling the expectation and needs of the consumers by the right thing at the right and at the right place.
In modern era of business marketing is more important than production and so understanding the market needs, is important than anything else. That is the needs, desires and demands of consumer and then goods and services are produced according to those needs the core factor of concept of marketing is shown below core concept of marketing.
Needs ------- products ------- value satisfaction wants ------- desires ------ feedback ------- market and mark efforts ------- exchange and transaction
OBJECTIVES 1. 2. 3. 4. 5. Consumer satisfaction Increase in company sales To distribute the quality products in the market Explore new market for the company products To attain the company objectives
PRODUCT MIX AND USER SEGMENTS

Rinac Company primarily engages itself in to the following products: Product Cold rooms Application Fresh fruits and vegetables storage, cooked food, meat, fish & poultry, milk & milk products, volatile chemicals long and short storage User segments Hospitality, (hotels, restaurants, caterers) food, pharma, agro based industries, bio tech, research labs, Medical hospitals etc., Air catering processed food airport cargo electronic assembly shops, industry houses, industry, handling, hardware any large
Insta-build construction services Quick and light weight construction of premises using prefabricated sandwich Panels & doors for clean Zones
Manufacturing area in food process factories, telecom shelters for housing relay equipments, warehouse partitions, walk on false ceilings in industrial applications, automobile paint booth
Clean rooms & Clean Quick to install, Clean, Energy Air Management saving construction using Prefabricated insulated panels, special doors and other clean air circulation fan and filtration system.
Manufacturing area in pharmaceutical, bio tech, nano technology, air craft, space craft hardware assembly areas, automobile precession components assembly zones Industrial refrigeration Custom design projects for Food processing, diary, Products cooling, freezing. Beverage, meat and poultry industry.
Cool barn Reach in Short storage at low Hospitality, food and Commercial temperature, dispensing at dispensing, pharmaretail or distribution point product distribution, pathological labs, hospitals and supermarkets
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Rinac Company has a team of core competent Marketing and selling personnel with requisite support from the Service Experts. The network developed by the Company with branches at Mumbai, Delhi, Chandigarh, Chennai, Kochi, Hyderabad, Kolkata, Pune, Bangalore, act and communicate effectively to the customers on the solution providing aspects.
MANUFACTURING PROCESS This production process is based mainly on insulation and refrigeration.
Sheet preparation:
At first the sheet which will be in the coil form should be first received from the stores and marking dimension will be made on the sheet. Once after marking the size required to make the panel will be cut accordingly and taken to the serration Machine. At the serration machine the sheet which has been cut will be serrated as per the required design and check for any Buckling or dent formed on the sheets. After process next comes the production process.
PRODUCTION PROCESS:
After the sheet is prepared for production it will be brought to the production area. This prepared sheet will be kept on the working table for sticking pve tape pn the periphery of the sheet. This is done avoid leakage of p.u. chemical between the lamination sheet and the powder coated sheets.
Soon after this process the sheet will be ready production and then it will be placed on the jid different thickness profiles are available at the jig area and suitable thickness profile as the design will be placed on either side of the serrated
sheet. Between these two profile cross pieces will be kept at the top and bottom of the sheet to these profiles adhere is a catch mart slot for fixing CAM LOCK PC. On one side male pc of the CAM lock will be fixed after fixing of these CAM lock on the profile a layer of polish will be applied on the inner side of the profile faces. Once after this application of polish is complete spacers are kept on top of Bottom Sheet. Spacers are nothing but the same infill material which is formed during chemical ejection process. These spacers are cut to the size as of kept on top of another sheet with the same above process will be kept on the top of the spacers now you can see an Bottom sheet and Top sheet with spacers as an separate between these two sheets can be seen. After this the top lid of the jig will be closed and clamped tightly. Now the jig is ready for pouring chemical with the Ratios (1:1) and time set according one after the other machine is ready the gun of the machine will be placed in the provision made on the fare and ejection starts. During these process the chemical named A. (mdz) of the chemical named B. (polyol) will ejected by the It will ejected by the gun at the gun. These two chemicals meet and poured into the jig inside the jig these two chemicals tend to form a fanned material and hence fills the empty space between the two sheets and hence solidifies after curing. After curing the foamed material and hence fills the empty space between the two sheets and hence solidifies after curing. After curing the foamed material will become a hard insulated material. After this the top jig will be opened and the panel is taken out for cleaning.
Cleaning Process:
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One after the panel is made from production process the panel is taken to cleaning area where the excess flow of chemicals will be cleaned and all the unwanted materials are cleaned and taken down for making hole for CAM lock and the Burs are cleaned. After this process is offered to inspection.
Inspection Process
In this stage the panels are checked are checked with the DWG for correct sizes and visual and actual inspections are carried out are Dents scratches, chemical leakage, excess formation, Building etc., Measurement of length, width, thickness, located C.M etc., and checked any defects found will be rejected or sent back for rectification.
Those panels which are within our inspection standards will be cleared for packing. One after packing the panel with corrugated sheet and plastic sheet will be numbered and offered for dispatch and dispatch will be made to corresponding sites.
PRODUCTS : The company is manufacturing various types of panels for the cold rooms they are RPUF -----rigid polyurethane GI\SS ----- Stainless steel sheets EPS ----- Expanded Polystrene PRE-FAB ROOM ----- Prefabricated Cold Rooms REF-SYSTEM ------ Refrigerating system 1. Pre-coolers-Mobile & Stationary
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2. Walk-in Coolers & Freezers 3. Floor-Mounted Unit 4. Wall-Mounted Unit 5. Ceiling-Mounted Unit 6. Water-Cooled Unit 7. Combinest -Cooler cum Freezer 8. Refrigerated Containers for Trucks 9. Pre-Fab Insulated Building Panels
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HUMAN RESOURCES
Human resource management is concerned with the human resource, the most valuable among the resource available in an enterprises. Personnel policies are developed by the top management to assist business executives at various levels to deal with the people at work. The personnel policies can be interpreted as the recognized intention top management with respect to man power.
Personnel policies must be established in relation to various function of the personnel department.
HUMAN RESOURCE POLICIES OF RINAC INDIA LIMITED 1. Policies for hiring people 2. Policies with regard to medical assistance-sickness benefits and company benefits 3. Policies regarding training and development need recognition, collective bargaining, grievance procedure, 4. Policies regarding compensation The success of any organization depends upon the quality of its work force and hence selecting the right person to the right place at the right time (man power planning is very important. Man power planning helps to generate a group of motivated man power who will work sincerely for achieving the goal of the organization. Rinac India Limited, is having well governed personal department. This department comes under the general manager.
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QUICK SWOT ANALYSIS Strengths: Technical competence, committed service, solution provider, Professional management Weaknesses: size, Brand Opportunities: Market expansion in Food processing, pharma, Bio technology, telecom; Technological tie ups; export to African and SAARC countries Threats: competition
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1. SHORT TERM SOLVENCY OR LIQUIDITY RATIO:

A) Current Assets Ratio: Current Assets Current Ratio = Current Liabilities
Current Assets
Inventories Sundry Debtors Cash & Bank Loans and Advances Total
2004-05
70290101 121503911 8468170 19747245 220009427
2005-06
76629510 119574764 6727635 24878952 227810861
2006-07
102694883 186780299 66217976 57070559 412763717
Current Liabilities
Current liabilities Provisions Total
2004-05
159906571 3860423 163766994
2005-06
162130691 5465145 167595836
2006-07
249100559 12258525 261359084
Table 1: showing the current ratio for 3 years:
Year
2004-05 2005-06 2006-07
Current Liabilities
163766994 167595836 261359084
Current assets
220009427 227810861 412763717
Current Ratio
1.34 1.36 1.58
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1.6 1.55 1.5 1.45 1.4 1.35 1.3 1.25 1.2 Current Ratio
2005 2006 2007
Interpretation of Current Ratio: A relatively high current ratio is an indication that, the firm is liquid and has the ability to pay its current obligations in time, as and when they become due. On the other hand, a relatively lower current ratio represents that the liquidity of the firm is not good and, the firm shall not be able to pay its current liabilities in time, without facing difficulties. The current ratio is 1.34 in the year 2005 and high in the year 2006 i.e., 1.36 and also in the year 2007 i.e., 1.58. This is because there is increase in current assets and in current liabilities. The current ratio of the company is increased from year to year. It may be observed that the concern has a current ratio less than the standard ratio of 2:1. Companys liquidity position is better than the industry average.
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B) Quick Assets Ratio:
Quick Assets Quick Ratio = Quick Liabilities
Quick Assets
Sundry Debtors Cash & Bank Loans and Advances Total
2004-05
121503911 8468170 19747245 149719326
2005-06
119574764 6727635 24878952 151181351
2006-07
186780299 66217976 57070559 310068834
Current Liabilities
2004-05
159906571 3860423 163766994
2005-06
162130691 5465145 167595836
2006-07
249100559 12258525 261359084
Table 2: Showing the quick ratio for 3 years:
Year
2004-05 2005-06 2006-07
Quick Assets
149719326 151181351 310068834
Quick Liabilities
163766994 167595836 261359084
Current Ratio
0.91 0.90 1.19
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1.2 1 0.8
2005
0.6 0.4 0.2 0 Quick Ratio
2006 2007
Interpretation of Quick Ratio: If the actual quick ratio is equal to or more than the standard quick ratio of 1:1, the conclusion can be that the concern is liquid and, so it can pay off its shortterm liabilities out of its quickly realizable assets without any difficulty. On the other hand, if the quick ratio is less than the standard, the conclusion can be that, the concern is not liquid. However, while the interpreting the quick ratio, due consideration should also be given to the amount locked up in debtors. The above calculation indicated that the quick ratio is more than one that indicates effective management and good financial position of the company. From the analysis, the companys quick ratio was decreased 0.91 to 0.90 in 2005 to 2006 and is less than the standard ratio
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C) ABSOLUTE LIQUID RATIOS:
It is easily convertible to cash. Absolute liquid ratio = Absolute liquid asset Quick liabilities
Absolute liquid Ratio

Cash & bank balance Total
2004-05
8468170 8468170
2005-06
6727635 6727635
2006-07
66217976 66217976
Quick liabilities
2004-05
159906571 3860423 163766994
2005-06
162130691 5465145 167595836
2006-07
249100559 12258525 261359084
Table 3: Showing the Absolute liquid ratio for the 3 years.
Year
2004-05 2005-06 2006-07
Absolute liquid Assets

8468170 6727635 66217976
Quick Liabilities
163766994 167595836 261359084
Ratio
0.05 0.04 0.25
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0.25 0.2 0.15 0.1 0.05 0 Absolute liquid ratio

2005 2006 2007
Interpretation of Absolute Quick Ratio:
The acceptance norm for this ratio is 5% or 1:2 in the above table the ratio are 0.05, 0.04 and 0.25 in the year 2004-05, 2005-06 and 2006-07 respectively. All the above ratio are less than 50%. It indicates that the firm does not have enough cash in hand to meet all current liabilities and pay its short term debts.
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D) Inventory to working capital ratio:
The inventory to Working capital ratio measures how well the company is able to generate cash using working capital at its current inventory level. Inventory to working capital ratio = Inventory Working capital x100
Inventories
Closing stock Total
2004-05
70290101 70290101
2005-06
76629510 76629510
2006-07
102694883 102694883
Working capital
Total (A B)
2004-05
56242433
2005-06
60215025
2006-07
151404633
Table 4: Showing the absolute inventory to working capital ratio for the 3 years.
Year
2004-05 2005-06 2006-07
Inventory x100/working capital

70290101 x100/56242433 76629510 x 100/60215025 102694883 x 100/151404633
Ratio
12.50% 12.73% 67.83%
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140.00% 120.00% 100.00% 80.00% 60.00% 40.00% 20.00% 0.00% Inventory to working capital rato
2005 2006 2007
Interpretation of Inventory to Working Capital Ratio:
The ideal to measure inventory to working capital is less than or equal to 75%. In the above table the ratios are 12.50%, 12.73% and 67.83% in the year 2004-05, 2005-06 and 2006-07 respectively. Which shows in 2006-07 there is under stocking and there is liquidity in the company. The company has to maintain the liquidity levels so that they may not run out of stock. A low inventory to working capital ratio indicates under stocking and high liquid position.
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2. LEVERAGE RATIO OR LONG TERM SOLVENCY RATIO

A) PROPRIETARY RATIO The Proprietary ratio represents the proportion of Proprietors Equity to Total Assets. Proprietors fund / Net worth Total Assets
Proprietary Ratio =
Net worth
Share capital Reserves & Surplus Total
20004-05
11514800 53434677 64949477
2005-06
57574000 31413858 88987858
2006-07
59762150 75464477 135226627
Total Assets
Fixed Assets Inventories Sundry Debtors Cash & Bank balance Loans & advances Total
2004-05
48963501 70290101 121503911 8468170 19747245 268972928
2005-06
74316168 76629510 119574764 6727635 24878952 302127029
2006-07
137700330 102694883 186780299 66217976 57070559 550464047
Table 5: Showing the Proprietary ratio for the 3 years.
Year
2004-05 2005-06 2006-07
Net worth
64949477 88987858 135226627
Total Assets
268972928 302127029 550464047
Ratio
0.24 0.29 0.24
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0.3 0.25 0.2

2005
0.15 0.1 0.05 0 Proprietary Ratio
2006 2007
Interpretation of Proprietary Ratio:
It can be seen from the diagram that the proprietary ratio increases from 0.24 in 2004-05 to 0.29 in 2005-06 and then poses a constant figure of 0.24 in 2006-07. This is due to increase in the capital in the past two financial years. The actual proprietary ratio of 0.24, 0.29 and 0.24 in 2004-05, 2005-06 and 2006-07 respectively, which has increased considerably in the last two years and is higher than the standard ratio of 0.5:1. This indicates that the concerns financial position is strong. On verification of the balance sheet, it is seen that the concern does not rely on outside capital or loans.
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B) SOLVENCY RATIO:
Any several formulas used to gauge a company ability to meet its long-term obligations. It is calculated as total net worth divided by the total assets. Solvency Ratio = Total liabilities Total Assets
Total Liabilities
Secured loans Current Liabilities Provisions Total
2004-05
40756457 159906571 3860423 204523451
2005-06
46107085 162130691 5465145 213702921
2006-07
154329337 249100559 12258525 415688421
Total Assets
Fixed Assets Inventories Sundry Debtors Cash & Bank balance Loans & advances Total
2004-05
48963501 70290101 121503911 8468170 19747245 268972928
2005-06
74316168 76629510 119574764 6727635 24878952 302127029
2006-07
137700330 102694883 186780299 66217976 57070559 550464047
Table 6: Showing the Solvency Ratio for the 3 years.

Year
2004-05 2005-06 2006-07
Total Liabilities
204523451 213702921 415688421
Total Assets
268972928 302127029 550464047
Ratio
0.76 0.71 0.76
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0.76 0.75 0.74 0.73 0.72 0.71 0.7 0.69 0.68 Solvency Ratio
2005 2006 2007
Interpretation of Solvency Ratio:
The chart shows that the solvency ratio was 0.76 in 2004-05, 0.71 in 200506 and 0.76 in 2006-07. The diagram indicates that the solvency ratio has decreased and this is due to an increase in the total assets in the year 2004-05 and 2005-06. The solvency ratios of 0.71 in 2005-06 and 0.76 in 2006-07 are indicating that the concern doing well and it has the ability to meet its liabilities out of its total assets. The concern is in a comfortable position. The proportion of the total assets to the total liability in every year is in a better position where the long-term solvency and the short-term solvency ratios are ideal are ideal and from both the angels it seems to be satisfactory. The solvency ratios are in a very good position from the viewpoint of liquidity and solvency.
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C) FIXED ASSETS TO NET WORTH RATIO:
Fixed assets to net worth ratio = Net Fixed Assets Net Worth
x100
Net Fixed Assets

Net fixed assets
2004-06
48963501
2005-06
74316168
2006-07
101934041
Net worth
2004-05
11514800 53434677 64949477
2005-06
57574000 31413858 88987858
2006-07
59762150 75464477 135226627
Table 7: Showing the Fixed assets to net worth ratio for the 3 years.
Year
2004-05 2005-06 2006-07
Net fixed assets x100/net worth

48963501x100/64949477 74316168x100/88987858 101934041x100/135226627
Ratio
75.39% 83.51% 75.38%
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84.00% 82.00% 80.00% 78.00% 76.00% 74.00% 72.00% 70.00% Fixed Assets to Net Worth Ratio
2005 2006 2007
Interpretation of Fixed Assets to Net Worth Ratio:
It is the ratio of the fixed assets to the net worth. It indicates the extent to which the shareholders funds are sunk into the fixed assets. In this table the ratios are 75.39% in the year 2004-05; 83.51 in the year 2005-06; 75.38% in the year 2006-07. The above ratio shows that the owners funds are far less than fixed assets. It implies that the firm depends upon outsiders to finance the fixed assets.
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D) CURRENT ASSETS TO NET WORTH RATIO:
Current Assets to Net worth Ratio =
Current Assets Net Worth
x100
Current Assets
2004-05
70290101 121503911 8468170 19747245 220009427
2005-06
76629510 119574764 6727635 24878952 227810861
2006-07
102694883 186780299 66217976 57070559 412763717
Net worth
2004-05
11514800 53434677 64949477
2005-06
57574000 31413858 88987858
2006-07
59762150 75464477 135226627
Table 8: Showing the Current Assets to Net worth for the 3 years.
Year
2004-05 2005-06 2006-07
Current assets x100/net worth

220009427x100/64949477 227810861x100/88987858 412763717x100/135226627
Ratio
33.87% 25.60% 30.52%
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350.00% 300.00% 250.00% 200.00% 150.00% 100.00% 50.00% 0.00% Current Assets to Net worth
2005 2006 2007
Interpretation of Current Assets to Net Worth Ratio:
This ratio indicates the extent to which the proprietors funds are invested in current assets. In the above table the ratio are 33.87%, 25.60% and 30.52% in the year 2004-05, 2005-06 and 2006-07 respectively. Here the proprietors funds are more than current assets that indicates the financial strength of the company is good and there are sufficient funds available for the current assets.
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E) CURRENT LIABILITIES TO NET WORTH RATIO:
Current liabilities to net worth ratio = Current Liabilities Net Worth
x100
Current Liabilities
2004-05
159906571 3860423 163766994
2005-06
162130691 5465145 167595836
2006-07
249100559 12258525 261359084
Net worth
2004-05
11514800 53434677 64949477
2005-06
57574000 31413858 88987858
2006-07
59762150 75464477 135226627
Table 9: Showing the Current Liabilities to Net worth Ratio for the 3 years.
Year
2004-05 2005-06 2006-07
Current Liabilities x100/net worth

163766994x100/64949477 167595836x100/88987858 261359084x100/135226627
Ratio
25.22% 18.83% 19.33%
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300.00%
250.00% 200.00% 150.00% 100.00% 50.00% 0.00% Current Liabilities to Net Worth
2005 2006 2007
Interpretation of Current Liabilities to Net Worth Ratio:
This ratio indicates the extent to which the proprietors funds are invested in current assets. In the above table the ratios are 25.22%, 18.83% and 19.33% 2004-05, 2005-06 and 2006-07 respectively. Here the proprietors funds are more than current assets that indicates the financial strength of the company is good and there are sufficient funds available for the current.
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F) FIXED ASSETS RATIO:
Fixed Assets Ratio = Net Fixed Assets Capital Employed
Capital Employed
Share Capital Reserves & Surplus Secured loans Total
2004-05
11514800 53434677 40756457 105705934
2005-06
57574000 31413858 46107085 135094943
2006-07
59762150 75464477 154329337 289555964
Net Fixed Assets

Net fixed assets
2004-05
48963501
2005-06
74316168
2006-07
101934041
Table 10: Showing the Fixed Assets Ratio for the 3 years.
Year
2004-05 2005-06 2006-07
Net Fixed Assets / Capital Employed

48963501 / 105705934 74316168 / 135094943 101934041 / 289555964
Ratio
0.46 0.55 0.35
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0.6 0.5 0.4

2005
0.3 0.2 0.1 0 Fixed Assets Ratio
2006 2007
Interpretation of Fixed Assets Ratio:
The diagram indicating the amount of fixed assets financed by long-term funds has increased from 0.46 and 0.55 in the year 2004-05 and 2005-06 respectively. And, the ratio has decreased to 0.35 in the year 2006-07. This is because of the fact that the lesser amount of capital employed is being allocated to finance the fixed assets during the last two years. In the last two years, major chunks of funds are being utilized to finance working capital to improve the companys liquidity position.
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G) DEBT EQUITY RATIO:
Debt Equity Ratio =
Long Term Funds Shareholders Funds
Long Term Funds

Secured loans Total
2004-05
40756457 40756457
2005-06
46107085 46107085
2006-07
154329337 154329337
Net worth
2004-05
11514800 53434677 64949477
2005-06
57574000 31413858 88987858
2006-07
59762150 75464477 135226627
Table 11: Showing the Long Term Debt for the 3 years.
Year
2004-05 2005-06 2006-07
Long Term Debt / Shareholders fund

40756457 / 64949477 46107085 / 88987858 154329337 / 135226627
Ratio
0.63 0.52 1.14
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1.2 1 0.8
2005
0.6 0.4 0.2 0 Long Term Debt
2006 2007
Interpretation of Debt Equity Ratio:
If the debt equity ratio is high, the owners are putting up relatively less money of their own. It is a danger signal for the creditors. If the project should fail financially, the creditors would lose heavily. The greater the ratio, the greater is the risk to the creditors. The company is having very good debt equity ratio for the past two years. In the above table the ratios are 0.63, 0.52 and 1.14 2004-05, 200506 and 2006-07 respectively. An acceptable norm for this ratio is considered to be 2:1. in the above table the ratio is less than 2, which implies a greater claim of owners. But from the point of view of the creditors, it represents a satisfactory capital structure of business since the high proportion of equity provides a larger margin of safety for them.
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3) ACTIVITY RATIO & TURN OVER RATIO:
A) Inventory Turn-Over Ratio = Cost of goods sold Average stock
Cost of Goods sold

Cost of Goods sold
2004-05
24186863
2005-06
42190244
2006-07
57124524
Average Stock
Average Stock Total
2004-05
70290101 70290101
2005-06
76629510 76629510
2006-07
102694883 102694883
Table 12: Showing the Inventory Turnover Ratio for the 3 years:
Year
2004-05 2005-06 2006-07
COGS / AVERAGE STOCK

24186863/70290101 42190244/76629510 57124524/102694883
Ratio
0.34 0.56 0.56
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0.6 0.5 0.4

2005
0.3 0.2 0.1 0 Inventory Turnover Ratio
2006 2007
Interpretation of inventory turnover ratio:
A high ratio of 8 times or more indicates that there is more turnover ratio of sales i.e., the business is expanding and as such, there is effective inventory management low ratio would signify that the inventory that the inventory does not sell fast and stays on the shelf or in the warehouse for a long time. From the analysis, the inventory turnover ratio has increased from 0.34 to 0.56 and 0.56 in 2004-05, 2005-06 and 2006-07 respectively.
73
B) CASH TURN OVER RATIO:
Cash turn over ratio = Net Annual Sales Cash

Sales
Sales
2004-05
468783067
2005-06
553203383
2006-07
720865522
Cash
Cash
2004-05
8468170
2005-06
6727635
2006-07
66217976
Table 13: Showing the Cash Turnover Ratio for the 3 years:
Year
2004-05 2005-06 2006-07
Net Sales / Cash

468783067 / 8468170 553203383 / 6727635 720865522 / 66217976
Ratio
55.36 82.23 10.89
74
90 80 70 60 50 40 30 20 10 0 Cash Turnover Ratio

2005 2006 2007
Interpretation of cash turnover ratio:
A cash turnover ratio of 10:1 or more indicates the effective utilization of the cash resources of the enterprise. On the other hand, a cash turnover ratio of less than 10:1 suggests that the cash resources of the enterprise are not effectively utilized. From the above analysis, the cash turn over ratio has increased from 55.36 and 82.23 in the year 2004-05 and 2005-06 respectively and then further decreased to 10.89 in the year 2006-07 , this due to increase in the sales. Higher the sales, higher will be the ratio. Since, the ratio is above the standards indicates the effective utilization of the cash of the company.
75
C) WORKING CAPITAL TURNOVER RATIO:
Working capital Turnover Ratio =
Net Sales Working capital
Sales
Sales
2004-05
468783067
2005-06
553203383
2006-07
720865522
Working capital
Total (A B)
2004-05
56242433
2005-06
60215025
2006-07
151404633
Table 14: Showing the Working capital turnover Ratio for the 3 years:
Year
2004-05 2005-06 2006-07
Net Sales / Working Capital

468783067 / 56242433 553203383 / 60215025 720865522 / 151404633
Ratio
8.34 9.19 4.76
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10 8 6 4 2 0 Working Capital Turnover Ratio

2005 2006 2007
Interpretation of Working Capital turnover ratio: A higher working capital turnover ratio indicates the efficiency and a lower ratio indicates the inefficiency of the management in the utilization of working capital. A company, which achieves higher volume of sales with relatively small amount of working capital, is an indication of the operating efficiency of the company. The higher the ratio, higher will be the utilization of the net working capital. However, it should be noted that a very high working capital turnover ratio means over trading and a very low ratio means under trading, none of which is good for a concern. So, the ratio should neither be very high nor very low.
In Rinac India limited, working capital turn over ratio has been 8.34 and 9.19 in the year 2004-05 and 2005-06 respectively, which was good utilization of working capital but, it has subsequently fallen in the year 2006-07.
77
D) FIXED ASSETS TURN OVER RATIO:
Fixed assets turn over ratio =
Net sales Net Fixed assets
Sales
Sales
2004-05
468783067
2005-06
553203383
2006-07
720865522
Net Fixed Assets

Net fixed assets
2004-05
48963501
2005-06
74316168
2006-07
101934041
Table 15: Showing the Fixed assets turnover Ratio for the 3 years:
Year
2004-05 2005-06 2006-07
Net Sales / Net Fixed Assets

468783067 / 48963501 553203383 / 74316168 720865522 / 101934041
Ratio
9.57 7.44 7.07
10 8 6
2005 2006 2007
4
2 0 Fixed assets Turn over Ratio
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Interpretation of fixed assets turnover ratio:
A fixed assets turnover ratio of 5 times or more indicates better utilization of fixed assets. On the other hand, a ratio of less than 5 times is an indication of under utilization of fixed assets. It may be noted that a very high fixed assets turnover ratio means under trading, which is not good for the business. The ratio requires proper interpretation taking cognizance, of the nature of production process and the type of machinery used. The ratio may vary from one organization to another due to the capitalized value of fixed assets and its total active production life.
The fixed assets turnover ratio shows a gradual decreased 9.57, 7.44 and 7.07 in the year 2004-05, 2005-06 and 2006-07 respectively, which means that the use of fixed assets has been to the maximum in 2004-05 then they have
comparatively been under utilized in 2006-07. The company has to hike its sales to get a more profitable return on its investment in fixed assets. One more reason for the lesser ratio in the last year could be that new assets are being purchased but are not utilized yet.
79
D) CURRENT ASSETS TURNOVER RATIO:
Current assets turn over ratio =
Net Sales Current Assets
Sales
Sales
2004-05
468783067
2005-06
553203383
2006-07
720865522
Current Assets
2004-05
70290101 121503911 8468170 19747245 220009427
2005-06
76629510 119574764 6727635 24878952 227810861
2006-07
102694883 186780299 66217976 57070559 412763717
Table 16: Showing the Current Assets Turnover Ratio for the 3 years:
Year
2004-05 2005-06 2006-07
Net Sales / Current Assets

468783067 / 220009427 553203383 / 227810861 720865522 / 412763717
Ratio
2.13 2.43 1.75
80
2.5 2 1.5 1 0.5

2005 2006 2007
0
Current Assets Turnover Ratio
Interpretation of current assets turnover ratio:
A high current assets turnover ratio is an indication of a better utilization of current assets. On the other hand, a low ratio suggests that the current assets have not been utilized effectively. In Rinac India ltd,. The current assets turnover ratio has increased from 2.13 to 2.43 in the year 2004-05 and 2005-06 respectively. There has been at decrease at 1.75 in 2006-07. This ratio thereby reveals that the current assets utilization has been efficient during 2005-06 but, not utilized to its optimum level in 200-05 and 2006-07. This can be inferred from the fact that the employment of more current asset has not helped in generating the proportionate net sales. i.e., with the increase in current assets there has been a disproportionate increase in sales. Thus it can be concluded that the current assets utilization is not adequately done.
4.
PROFITABILITY RATIO: A) Gross Profit Ratio: Gross Profit Ratio = Gross Profit Net Sales x 100
Gross Profit Gross Profit
2004-05
444596204
2005-06
511013139
2006-07
663740998
Sales
Sales
2004-05
468783067
2005-06
553203383
2006-07
720865522
Table 17: Showing profitability ratio for the 3 years:
Year
2004-05 2005-06 2006-07
Gross Profit x 100 / Net Sales

444596204x100/468783067 511013139x100/553203383 663740998x100/720865522
Ratio
9.48% 9.24% 9.21%
82
95 94.5
94
93.5 93 92.5 92 91.5 91 90.5 Gross Profit Ratio
2005 2006 2007
Interpretation of gross profit ratio:
The above graph shows that there is a very slight decrease in the gross profit ratio. The gross profit ratio of the company has decreasing over the year, the ratio was 9.48%, 9.24% and 9.21% in the year 2004-05, 2005-06 and 2006-07 respectively. This shows that there is a kind of stability in the gross profit. The sales have increased and so, the gross profit, because the percentage of gross profit to sales is more or less the same.
83
C) Net Profit Ratio: Profit Ratio = Net Profit Sales x 100
Net Profit Net Profit
2004-05
15958108
2005-06
28203136
2006-07
39441496
Sales
Sales
2004-05
468783067
2005-06
553203383
2006-07
720865522
Table 18: Showing profitability ratio for the 3 years:
Year
2004-05 2005-06 2006-07
Net Profit x 100 / Net Sales

15958108x100/468783067 28203136x100/553203383 39441496x100/720865522
Ratio
3.40 5.10 5.47
84
6 5 4
2005
3 2 1 0 Net Profit Ratio
2006 2007
Interpretation of net profit ratio:
A high net profit ratio indicates that the profitability of the concern is good. On other hand, a low net profit ratio indicates that the profitability of the enterprise is poor. But, while interpreting the ratio, it should be kept in mind that the performance of profits must also be seen in relation to investment or capital of the firm and not only in relation to sales.
Thus, in case of Rinac India ltd., the net profit margin ratio is good in 200405 i.e., 3.40% was increased to 5.10 in 2005-06 and further increased to 5.47 in the last year. This because of the fact that there has been a constant increase in the sales year after year.
85
D) Return on Owners Fund:
Return on Owners Fund =
Net PAT x 100 Net worth
Net PAT Net PAT
2004-05
49312132
2005-06
26383320
2006-07
59899466
Net worth
2004-05
11514800 53434677 64949477
2005-06
57574000 31413858 88987858
2006-07
59762150 75464477 135226627
Table 19: Showing Return on Owners Fund for the 3 years
Year
2004-05 2005-06 2006-07
Net PAT x 100 / Net worth

49312132x100/64949477 26383320x100/88987858 59899466x100/135226627
Ratio
75.92 29.65 44.30
86
80 70 60 50 40 30 20 10 0 Return On Owners Fund

2005 2006 2007
Interpretation of Return on Owners fund:
The return on owners fund ratio is good in 2004-05 i.e., 75.92% was decreased to 29.65% in 2005-06 and further increased to 44.30% in the last year.
87
FINDINGS
INTRODUCTION:
Financial statements are prepared primarily for decision-making. Ratio analysis is the process of establishing and interpreting various ratios. In this study the process of establishing and interpreting various ratios. In this study the financial statement of RINAC INDIAL LIMITED has been analyzed and an attempt is made to know the performance of the company by properly analyzing and interpreting the financial statement with the help of the various ratios. The major findings from the ratios can be studied under four heads i.e., Liquidity position; Long term solvency position, Activity turnover position and profitability positions.
LIQUIDITY RATIO:
Current Ratio: The companys current ratio has increased over a period of time with 1.34:1, 1.36:1 and 1.58 in the year 2004-05, 2005-06, 2006-07 respectively. Quick Assets Ratio: The ratios are 0.91:1, 0.90:1 and 1.19:1 in the year 2004-05, 2005-06, 2006-07 respectively. Before, the companys quick ratio was very low which indicates that the companys liquid position was not good.
88
Absolute liquid ratio: The ratios are 0.05:1, 0.04:1 and 0.25:1 in the year 2004-05, 2005-06, 2006-07 respectively. All the above ratios less than 50% It indicates that the firm does not have enough cash in hand to meet all current liabilities and pay its short-term debts. Inventory to working capital ratio: The ratios are 12.50%, 12.73% and 67.83% in the year 2004-05, 2005-06, 2006-07 respectively.
Leverage Ratio:
Proprietary Ratio: The ratios are 24%, 29% and 24% in the year 2004-05, 2005-06, 2006-07 respectively. Initially the proprietary ratio was below 50%, which indicates greater risk to creditors. But in the year 2005-06 the ratio come up to 29% and slope down to 24% in 2006-07 which indicates unsecured position of the creditors. Solvency Ratio: The ratios are 0.76, 0.71 and 0.76 in the year 2004-05, 2005-06, and 2006-07 respectively. Fixed assets to net worth ratio: The ratios are 75.39%, 83.51% and 75.38% in the year 2004-05, 2005-06, and 2006-07 respectively. The above ratio shows that the owners funds are far less than fixed assets. It implies that the firm depends upon outsiders to finance the fixed assets. Current Assets to Net worth Ratio: The ratios are 33.88%, 25.60% and 30.52% in the year 2004-05, 2005-06, and 2006-07 respectively.
89
Current liabilities to net worth ratio: The ratios are 25.22%, 18.83% and 19.33% in the year 2004-05, 2005-06 and 2006-07 respectively. Fixed Assets Ratio: The ratios are 0.46, 0.55 and 0.35 in the year 2004-05, 2005-06 and 2006-07 respectively. All the above ratios shows that the long term funds are more than the total fixed assets, it means that a part of the working capital requirements is met out of the long term funds of the firm. Debt Equity Ratio: The ratios are 0.63 in the year 2004-05; 0.52 in the year 2005-06 and 1.14 in the year 2006-07.
ACTIVITY RATIO & TURN OVER RATIO:

Inventory Turn-Over Ratio: The ratios are 0.34, 0.56 and 0.56 in the year 2004-05, 2005-06 and 2006-07 respectively. Cash turn over ratio: The ratios are 55.36, 82.23 and 10.89 in the year 2004-05, 2005-06 and 2006-07 respectively. This indicates that the company is not keeping any idle cash balance. Working capital Turnover Ratio: The ratios are 8.34 in the year 2004-05; 9.19 in the year 2005-06 and 4.76 in the year 2006-07. Fixed assets turn over ratio: The ratios are 9.57, 7.44 and 7.07 in the year 2004-05, 2005-06 and 2006-07 respectively.
90
PROFITABILITY RATIO
Gross Profit Ratio: The ratios are 9.48, 9.24 and 9.21 in the year 2004-05, 2005-06 and 2006-07 respectively. The gross profit in 2004-05 was relatively better than in 2005-06 and 2006-07. It implies that the cost of production of the firm is relatively higher than in 2004-05. It also indicates that the firm is not able to maintain its inventory. Net Profit Ratio: the net profit margin ratio is good in 2004-05 i.e., 3.40% was increased to 5.10% in 2005-06 and further increased to 5.47% in the last year. This because of the fact that there has been a constant increase in the sales year after year. Return on Owners Fund: The ideal ratio is 135. Higher the ratio; better is the results.
91
CONCLUSION:
In the case of Rinac India limited the liquidity position or the short term solvency position of the company is good. This comes true when we analyzed the various liquidity ratios like current ratios, quick ratios, absolute ratios, inventory to working capital ratios.
The only point of concern is that in case of absolute liquidity ratios, the cash and the bank balance position of the company is not up to the mark. The company may face problems when it comes to meeting its immediate or short-term obligation.
It is found from the study that the long-term solvency position of the company is also good. The company is solvent enough to meet its long-term obligations of the outsiders debt whenever there is a demand from them.
The activity or the turnover position of the company indicates good inventory management and efficient business activities in managing debts, inventories and its policy towards utilization of its resources. It is found that the company has properly allocated its resources into its fixed assets and current assets. This observed from fixed and current assets ratios. The companys inventory management is also good.
The overall profitability position of the company is not satisfactory when it is compared to its efficiency in managing its resources.
Gross profit; net profit & profit available to shareholders is not satisfactory. This may be a point of concern to the investors.
92
SUGGESTION:
There are various recommendation, which I have suggested to Rinac India ltd. These are as follows:-
1. The company should maintain higher cash in hand or at bank in order to meet the short-term requirements of the company.
2. The company should maintain low inventory because high inventory reveals the accumulation of absolute stock for the carrying of too much stock..
3. The company should pay its creditors quickly, because quick payments of debts may result for the company to enjoy various credit facilities given by the creditors such as discount and lower price.
4. The company should take necessary steps to increase its sales and keep it in an increasing trend in years so that there is greater profit.
Its is important that the company keeps up its margin of gross profit; otherwise the company may not cover its operating expenses and shall not provide an adequate return to proprietors.
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FINANCE

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1.2 IMPORTANCE OF FINANCE IN MODERN WORLD

The important of finance is coated in several points. They are as follows:

1.3 FINANCIAL GOALS (OR) OBJECTIVES OF FINANCIAL MANAGEMENT

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The goals of the financial management is basically two categories i.e.,

GOALS OF FINANCIAL MANAGERMENT

1. PROFIT MAXIMIZATION 2. WEALTH MAXIMIZATION

GENERAL OBJECTIVES (OR) OTHER OBJECTIVES

1. BALANCED ASSET STRUCTURE:-

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4. CAREFULL PLANNING OF FUNDS:-

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1.4 MEANING OF FINANCIAL ANALYSIS

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STEPS INVOLVED IN THE ANALYSIS OF FINANCIAL STATEMENTS

1. Analysis. 2. Comparison. 3. Interpretation.

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SIGNIFICANCE (OR) IMPORTANCE OF FINANCIAL ANALYSIS AND FINANCIAL STATEMENTS

The importance of financial analysis to different users of financial statements is as follows:

TOOLS (OR) TECHNIQUES OF FINANCIAL ANALYSIS

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Balance sheet and Income statement

These are prepared in Comparative form for financial analysis purpose.

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Activity ratio Profitability ratio

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NETWORKING CAPITAL RATION:

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DEBT EQUITY RATIO:

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INVENTORY TURNOVER RATIO:

DEBTORS TURNOVER RATIO:

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Profitability ration to investment

GROSS PROFIT MARGIN:

NET PROFIT MARGIN RATIO:

OPERATING EXPENSE RATIO:

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UTILITY OF RATIO ANALYSIS:

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PROCEDURE FOR RATIO ANALYSIS (OR) STEPS INVOLVED IN RATION ANALYSIS

IMPORTANCE AND ADVANTAGE OF RATIOS

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1. USEFUL IN ANALYSIS OF FINANCIAL STATEMENTS:-

2. USEFUL IN IMPROVING FUTURE PERFORMANCE:-

3. USEFUL IN INTER-FIRM COMPARISON:-

4. USEFUL IN JUDGING THE EFFICIENCY OF A BUSINESS:-

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RESEARCH DESIGN (OR) DESIGN OF THE STUDY

2.1 DEFINATION OF PROBLEM

2.2 PURPOSE OF THE STUDY

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2.3 OBJECTIVES OF THE STUDY

2.4 SCOPE OF THE STUDY

2.6 SOURCES OF DATA

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ARRIVING OF THE GATHERING DATA TO ARRIVE AT A FINAL CONCLUSION