1

1.1. ABOUT THE STUDY

Accounting is the process of identifying, measuring and communicating economic
information to permit informed judgements and decisions by users of the information. It
involves recording, classifying and summarising various business transactions. The end
products of business transactions are the financial statements comprising primarily the position
statement or the balance sheet and the income statement or the profit and loss account.
MEANING OF FINANCIAL STATEMENTS
A financial statement is a collection of data organised according to logical and
consistent accounting procedures. Its purpose is to convey an understanding of some financial
aspects of a business firm. It may show a position at a moment in time, as in the case of a
balance sheet, or may reveal a series of activities over a given period of time, as in the case of
an income statement.
FINANCIAL STATEMENTS:
The term financial statement or published accounts refer to the:
1) Balance Sheet.
2) Profit & Loss Account.
3) Directors Report.
4) Auditors Report

NATURE OF FINANCIAL STATEMENT

According to john N. Myer, The financial statements are composed of data which are
the result of a combination of (1) recorded facts concerning the business transactions, (2)
conventions adopted to facilitate the accounting technique, (3) postulates, or assumptions made
to and (4) personal judgements used in the application of the conventions and postulates.
The nature and accuracy of the data shown in the financial statement are affected by the
following facts:
BASED ON RECORDED FACTS
The transactions affecting the business are recorded in the books and shown in the
financial statements at the same values. For eg: fixed assets are recorded in the books at cost
price and shown in the business at cost price less depreciation. The financial statements do not
disclose facts which cannot be recorded in books. However, recently such facts are mentioned
as foot notes to make the financial statement more meaningful and useful.
ACCOUNTING CONVENTIONS
The financial statements are prepared by following certain accounting conventions and
principles. Accounting itself is a dynamic science of accountants has developed, from time to
time, a member of conventions on the basis of experience.

When accounts are finalized, some conventions are followed: for eg. A part of particular
expenses is charged to profit & loss account (revenue) and the rest may be capitalized. A
number of conventions have been developed for valuation of stock, debtors, etc. Therefore data
shown in the financial statements are subject to the validity of conventions used in their
preparation.
POSTULATES
Accountants always take some facts as accepted or Postulates. In other words,
business transactions are recorded on certain assumptions such as going concern, stable value
of rupee, profit accrual, etc. These postulates or assumptions are reflected in the financial
statements.
PERSONAL JUDGMENTS
Even though a number of conventions and assumption have been propounded in
accountancy, their use is affected by the personal judgment of accountants. That is why
financial statements prepared by two different persons of the same concerns give dissimilar
results and this is due to different personal judgments in using or applying particular
conventions. Personal judgments of accountants affects the amount kept as reserve for
doubtful debts, amount of depreciation on fixed assets, valuation of stock etc. The financial
statements are affected by the personal judgments of accountants and as such they are
subjective documents.
OBJECTIVES OF FINANCIAL STATEMENTS
Financial statements are the sources of information on the basis of which conclusions are
drawn about the profitability and financial position of a concern. the accounting principles
board of America (APB) states the following objectives of financial statement:
1. To provide reliable financial information about economic resources and obligations of a

business firm.
2. To provide other needed information about changes in such economic resources and

obligations.
3. To provide reliable information about changes in net resources arising out of business

activities.

4. To provide financial information that assists in estimating the earning potentials of

business
5. To disclose, to the extent possible, other information related to the financial statements

that is relevant to the needs of the users of these statements.

INTERPRETATION OF FINANCIAL STATEMENTS:
Financial statement is to determine the solvency of the business form its balance sheet,
to measure the efficiency of operation or the profitability from its income statement and to
appraise financial statement as compared with similarly situated concerns.
NATURE OF THE RATIO ANALYSIS
Ratio analysis is a technique of analysis and interpretation of financial statements. It is
the process of establishing and interpreting various ratios for helping in making certain
decisions. However, ratio analysis is not an end in itself. It is only a means of better
understanding of financial strengths and weakness of the firm. Calculation of mere ratios does
not serve any purpose, unless several appropriate ratios are analyze and interpreted. There are a
number of ratios, which can be calculated from the information given in the financial
statement, but the analyst has to select the appropriate data and calculate only a few
appropriate ratios from the same keeping in mind the objective of analysis. The ratios may be
used as a symptom like blood pressure, the pulse rate or the body temperature and their
interpretation depends upon the calibre and competence of the analyst. The following are the
four steps involved in the ratio analysis:
o Selection of relevant data from the financial statements depending upon the objective
of the analysis.
o Calculation of appropriate ratios from the above data.

o Comparison of the calculated ratios of the same firm in the past, or the ratios
developed from projected financial statements or the ratios of some other firms or the
comparison with the industry to which the firm belongs.
o Interpretation of the ratios.

INTERPRETATION OF RATIOS
SINGLE ABSOLUTE RATIO
Generally speaking one cannot draw any meaningful conclusion when a single ratio is
considered in isolation. But single ratio may be studied in relation to certain rules of thumb
which are based upon well proven conventions as for example 2:1 is considered to be a good
ratio for current assets to current liabilities.
GROUP OF RATIOS
Ratios may be interpreted by calculating a group of related ratios. A single ratio
supported by other related additional ratios becomes more understandable and meaningful. For
example, the ratio of current assets to current liabilities may be supported by the ratio liquid
assets to liquid liabilities to draw more dependable conclusions.
HISTORICAL COMPARISON
One of the easiest and most popular ways of evaluating the performance of the firm is
to compare its present ratios with the past ratios called comparison overtime. When financial
ratios are compared over a period of time, it gives an indication of the direction of change and
reflects whether the firms performance and financial position has improved, deteriorated or
remained constant over a period of time. But while interpreting ratios from comparison over
time, one has to be careful about the changes, if any, in the firms policies and accounting
procedures.
PROJECTED RATIOS
Ratios can also be calculated for future standards based upon the projected or
Performa financial statements. These future ratios may be taken as standard for comparison and
the ratios calculated on actual financial statements can be compared with the standard ratios to

find out variance, If any. Such variances help in interpreting and taking corrective action for
improvement in future.
INTER-FIRM COMPARISON
Ratios of one firm can also be compared with the ratios of some other selected firms
in the same industry at the same period of time. This kind of comparison helps in evaluating
relative financial position and performance of the firm. But while making use of such
comparison one has to be very careful regarding the different accounting methods, policies and
procedures adopted by different firms.
A. MANAGERIAL USES OF RATIO ANALYSIS

Helps in Financial Forecasting and Planning

Helps in communicating

Helps in Co-ordination

Helps in control

1.2. ABOUT THE INDUSTRY

We started in the year 1984.Pledged to add any one new technology per year to
survive competition; we advanced from oxy acetylene gas stelliting to plasma spraying and
from manual lathe to CNC lathe. We have now specialized Work- centers for MIG using
Kempy MIG welding Power source. Although started with benign governmental orders, we
find ourselves mostly busy now with Valve Internals for the globlally renowned valve
manufacturing MNCs. It was discovered that this was due to synthesizing our technological
sense, with familial / social opportunities, intertwined by ethics. We became, quality minded,
customer- friendly and environment friendly- everything, simultaneously. Today, we have
expanded to Machinery building for Dam shutters and Hoists like Gear boxes , Rope drums ,
Walk way bridges and Piping. We also do High Pressure Parts in CS , LAS, SS and other CRAs
to Customer Specification.

GR is one of the most sought after valve internal suborder people in south India and we
decided to give our best to meet that challenge in coming years. Our Partners are thinking and
working closer than ever for this, seeing success!
Our Mission
To be available as a hospitable and credible welding and machining super specialty
shop, serving the original equipment manufacturers with reliable and certified components
using metallurgically the correct materials, making 100% effort to that effect to procure
inspected and certified materials and process these with absolute traceability.
GR Responsibility
GR as a well-communicated and integrated family group is dedicated to
Employees quality of life, Customer Satisfaction, Environmental Sustainability and Social
Consciousness. We factually assess our gaps in monthly and yearly basis and implement
corrective actions leading to continued improvisations. We have appointed a very senior
employee as Quality Supervisor with full powers to even correct the decision makers in
technical and administrative pursuits. GR has written procedures for its exact functions in
vogue.
GR Differentiated By
1.A team of professionals having adequate knowledge in state- of- art Welding Technology and
High Precision Machining and State of Art Equipment and Quality Assurance systems.
2. Strict, personalized control of the metallurgical conformance of raw materials.
3. A team of high caliber, qualified, self actualized welders and machinists to execute precision
weld overlay of high performance alloys for the Valve Industry.

4. All Welding Procedures are qualified by Third Party agencies like Bureau Veritas, Lloyds
Register etc
5. Inspection by ASNT Level-II technicians for Non Destructive Testing like MPI, LPI, UT,
and RT.
6. Highly innovative and proactive Executive and Project Management. Ever modified capacity
additions based on order positions Sustainable pricing policies with fast track Delivery Timings
and Quality Assurances based on latest QMS techniques, such as Computerized Action
Tracking.

GR ORGANISATION & FACILITIES / SYSTEMS - Organization Chart

GRIEP Products & Services

Products
1. Valve internals: Dresser, Severn Glucon, Instrumentation, KOSO, Schuf & MIL
like Stellited Seats, Stems, Plugs, Guide Bushes, Wedges, Bodies.

2. Valve Body Welding: 100% RT Welding of Ram Valves(Schuf), Jacketed Valves

(KOSO), Body pups (Dresser Valve India), Butterfly Valve- Stem Guide Sleeves
(Valveitalia),
3. Root Valves, Instrumentation Ltd Palakkad.

Non-Slam Check Valve, piston rim (Mokweld)

Clad Roller bearing, Shaft Collar and Circlips-BHEL

Conveyor Belts ELTEX.( 0.5mm SS Sheet, 2m welds)

Precision Structural for concrete trucks, Revathi Equipments

Dam Sluice Shutters.

Miniature Welded Pressure Vessels C.S /LAS/SS

Services
Welding:
Sl No

Material

Grade

Thickness

Welding Process

Stainless Steel

SS316 P8 to P8

All

GTAW / MIG/SMAW

Stellite on Stainless

316 # Fe Ni Cr Mo 3

2 to 5 mm OFW/TAP/GTAW

SS on Carbon Steel

A8 /A9 on P1

3 to 5mm

GTAW/ SMAW

SS to SS Sheet

316#316

0.5mm

GTAW

CS to CS

P1 to P1

All

SMAW/GTAW/GMAW

SS -17-4-PH

CA 6NM

Upto 25mmGTAW

P10 Steel Castings

A 487

Hastealloy 6

GTAW
GTAW

10

Titanium- Pure & Alloy

GTAW
Upto 25

10

Aluminum

AA1000/2000/4000/6000

GTAW/MIG
mm

11

Stellite casting

Stellite -6

Build up

GTAW

Any

Upto 80mmGTAW/SMAW/GMAW

All Carbon & Low Alloy

12
Steel parts upto 3 tons

Machining:
Sl.No

Material
1

SS Castings

SS Forgings

Stellited Surfaces

Shape
Rod

Tolerance

Size

0.01

500mm Dia

0.01

500mm Dia

Wedge, Seat

10mm To
0.02

Ring,Plug,Body

500mm
25mm to

Screw Rods

Round Bars

0.10
200mm

GRIEP Quality Management System

GR INDUSTRY AND GR ENGINEERING BOTH ARE ISO 9001-2008 COMPANIES
CERTIFIED BY TUV NORD. THE SAME CERTIFICATION WILL BE EXTENDED
TO GRIEP DURING APRIL 2012.
GR has written System and Work Procedures, compliance with which is
constantly monitored through scheduled audits directly by partners. Vendors are well
assessed for their technical integrity and delivery capability. The contractual metallurgy is

11

established on raw materials as required. Quality of the incoming goods and subcontractor
supplied components are constantly checked by Internal Inspectors. Final finished surfaces /
goods are subjected to 100% visual and Dimensional and Surface NDT checks by the Quality
Supervisors. All inspections are recorded and signed off by the Internal Inspectors concerned
for the sake of accountability. Monthly Executive Management Meeting keeps an action
track of crucial decisions. Machining Accuracies of 0.02 is average practice. Fine Machining
is not subcontracted. Quality Documentation Dossiers with material, welding and welder
certifications are readily provided in compliance to contractual specifications. Welding
Procedures and welders are third-party certified. Expediting and status reporting with photos
are done for critical subcontracted components like casting. Heat Treatment with printed
chart available.

GR Quality Objectives
1. To apply the state of art manufacturing technologies and engineering
information for developing reliable components for the energy and other
sectors.
2. Constant endeavor to comprehend the requirements of the Customer,
respecting their experiences.
3. To quote the rates with substantial margin for implementation of Quality.

12

4. To adhere to laid down System Procedures and Work Instructions in

order to minimize wastage; to learn from lessons.
5. To continually monitor quality and assess the gaps for perennial
competence.
6. To enhance work culture and business approach based on above facts
Our Managing partner, Karunakaran Pullat arranged thus one day to write
boldly on our wall, these words which came deep from his realizations:
"Goodwill and Quality are the only assets that Competition cannot under sell
or destroy"
Business Process

Technology and Information Up gradation

Drawing Review and Estimation

Planning and Preparation of Delivery Schedules

Procurement and Incoming Goods inspection

Subcontract Assignments and Order monitoring

Non Destructive Testing

Finish Machining and packing

Dispatch and Billing

System / Work Procedures System Procedures

Contract Review

Procurement

Subcontracting

13

In-house Inspection

NCR/CAR Procedures

Documentation Control and Records of Quality

Internal Auditing

Work Procedures

WPS / Welder Qualification

Welding Consumables Weld Quality Control

Material storage and preservation

Machinery Maintenance

Calibration of Inspection & Testing Equipment

NDT Procedures

Heat Treatment

Hot pressing

Hydro Test

Traceability

Safety

Scrap disposal

Document Control
GR Documentation includes:

EN 20104- 3.1 Certification based on Third Party Lab Test Reports

14

Visual and Dimensional Inspection Reports

NDT and Other Test Report.

Records of Welding Procedure Specifications and PQRs. Witnessed by Third

Party. Certificate of Conformity.

Quality Assurance and Control

GR has as minimum, its own recorded System and Work procedures, compliance
to which is constantly monitored through unscheduled audits directly by partners.

Quality of incoming Goods and Subcontractor- machined components are

constantly checked by Internal Inspectors.

Final finished surfaces / goods are subjected to 100% visual and Dimensional and
Surface NDT checks by the Quality Supervisors.

All inspections are recorded and signed off by the Internal Inspectors concerned,
for the sake of accountability.

Clients & Recognition

M/s GE-Dresser Valve India Pvt Ltd Coimbatore.

M/s Bharat Heavy Electricals Ltd,Tiruchirapalli,Ranipet,Varanasi

M/S Kerala State PWD

M/S Sanathan Infrastructure Kerala

M/S Valvitalia, Coimbatore.

M/s Instrumentation Ltd,Palakkad.

15

M/s Koso Fluid Controls Pvt. Ltd, Palakad

M/s MIL Controls Ltd, Aluva.

M/s. Severn Glocon India Pvt. Ltd, Chennai

M/s Revathi Equipments.

M/s Schuf Specialty Valves Coimbatore.

M/s Texmo Precision Castings, Pollachi.

AMPO / POYAM Valves, Coimbatore.

Recognitions

M/s Dresser India - Grade -A Supplier

M/s Revathi Equipments Coimbatore -Grade A supplier

M/s BHEL Tiruchirapalli, Varanasi, Ranipet etc Single Tender many times for Retainer
Ring, Clad Rollers & Shaft Collars

Kerala State PWD - Group A Contractor

16

2.1. OBJECTIVES OF THE STUDY

1. To study the financial performance of the company.
2. To ascertain the profitability position of the company.
3. To access the solvency position of the company.
4. To suggest ways and means to improve the present performance of the company.

17

18

2.2. SCOPE OF THE STUDY

The study mainly focused

on

the

Financial

performance

of

the

GR

Industries,Coimbatore. The Study could be used to review the Financial Performance of the
company. The study gives a clear-cut picture regarding the Financial Evaluation of the
company. It helps the company to plan for the expansion of the company.
This study helps to measure the degree of wealth and health position of the enterprise.
This Study could help the management to use the Sources in such a way, So as to maintain
profitability of minimum risk. This Study will help to take Suitable Measure to over come the
problems.

LIMITATIONS OF THE STUDY

19

Finance data required for the Study has been obtained from the Secondary data.
This study focuses only GR Industries Ltd, for the period of 5 years 2008 -2009 to 20102011
The study is limited with GR Industries Ltd and other concerns are not considered.
The study does not take into account the other areas of financial management such as
capital budgeting, dividend policy and others.
The figures taken from the financial statement analysis were historical in nature; time value
of money is not being used.

20

2.3. RESEARCH METHODOLOGY

Research in common parlance refers to a search for knowledge. Once can also define
research as a scientific and systematic search for pertinent information on a specific topic.
Research is an art of scientific investigation.
1. RESEARCH DESIGN
To research design used on the study is analytical research. The research has to analyze
the balance sheet, which is a historical data and derive conclusions from it.
2. NATURE OF DATA
The nature of data used for the study is secondary data. Because the data is collected
from the balance sheet for the analysis part.
3. DATA COLLECTION
The data needed for the study is being collected from the annual reports of the company
and which is a secondary data.
4. PERIOD OF THE STUDY
The period taken into consideration for the study is from 2004-2005 to 2008-2009.
5. TOOLS USED FOR ANALYSIS
The tools used for the study by researcher are follows.
a. RATIO ANALYSIS
b. COMPARATIVE BALANCE SHEET
c. COMMON SIZE BALANCE SHEET

21

RATIO ANALYSIS
CURRENT RATIO
Current ratio may be defined as the relationship between current assets and current
liabilities. This ratio also known as Working Capital Ratio is a measure of General liquidity
and is mostly used to make the analysis of short-term financial position of liquidity of a firm.
The rule of thumb is 2:1 the current ratio is.
CURRENT RATIO = CURRENT ASSETS / CURRENT LIABILITIES
LIQUID RATIO
Liquid ratio may be defined as the relationship between quick or liquid assets or current
assets of liquid liabilities. The rule of thumb of quick ratio is 1:1 the ratio can be calculated by
dividing the total of the quick asset by total liabilities.
LIQUID RATIO = LIQUID ASSETS / CURRENT LIABILITIES
LIQUID ASSETS = CURRENT ASSETS INVENTORIES
DEBT EQUITY RATIO
Debt equity ratio is also known as external- internal equity ratio is calculate do measure
the relative claims of outsiders and the owners against the firms assets. These ratios indicate
the relationship between external equities or the outsiders funds and the internal equities.
DEBT EQUITY RATIO = DEBT / EQUITY
EQUITY = SHARE CAPITAL+ RESERVE & SURPLUS

PROPRIETARY RATIO
Proprietary ratio is also known as equity ratio or share holders total equities ratio of net
worth total asset ratio. This ratio establishes the relationship between share holders funds total

22

assets of the firm. This ratio can be calculated as under.

PROPRIETARY RATIO = SHAREHOLDER FUND / TOTAL ASSETS
TOTAL ASSETS = FIXED ASSETS + CURRENT ASSETS

INVENTORY TURNOVER RATIO

Inventory turnover ratio is normally calculated as sales/average inventory turnover
ratio. This ratio is calculated as under.
INVENTORY TURNOVER RATIO = NET SALES / INVENTORY
WORKING CAPITAL TURNOVER RATIO
Working capital turnover ratio indicates the velocity of utilization of net working
capital. These ratios indicate the number of times the working capital is turned over in the
course of year. This ratio can be calculated as
WORKING CAPITAL
TURNOVER RATIO = NET SALES / NET WORKING CAPITAL
NET WORKING CAPITAL = CURRENT ASSETS-CURRENT LIABILITY

23

DEBTORS TURNOVER RATIO

Debtors turnover indicates the velocity of debt collection of the firm. It indicates the
numbers of average debtors are turned over during a year.
DEBTORS TURNOVER RATIO = NET CREDIT ANNUAL SALES / AVERAGE TOTAL
DEBTORS
AVERAGE COLLECTION PERIOD
The average collection period ratio represents the average number of days for which a
firm has to wait before its receivables are converted into cash. The ratio can be calculated as
AVERAGE COLLECTION PERIOD = NUMBER OF DAYS / AVERAGE
COLLECTION PERIOD
CREDITORS TURNOVER RATIO
It indicates the average number of days taken by firm to pay its creditors accounts
payable includes creditors and bills payable.
CREDITORS TURNOVER RATIO = NET CREDIT ANNUAL PURCHASE AVERAGE
TOTAL CREDITORS
AVERAGE PAYMENT PERIOD
The average payment period ratio represents the average number of days taken by the
firm to pay its creditors. This ratio indicates the velocity with which the creditors are turnover
in relation to purchases.
AVERAGE COLLECTION PERIOD = NUMBER OF DAYS / CREDITORS TURNOVER
RATIO

24

GROSS PROFIT RATIO

Gross profit ratio measures the relationship of gross profit to net sales and is usually
represented as percentage. This ratio is calculated as
GROSS PROFIT RATIO = (GROSS PROFIT / NET SALES) * 100

NET PROFIT RATIO

Net profit ratio measures the relationship of net profit to net sales (after tax) and sales
and indicate the efficiency of the management in manufacturing, selling, administrative and
other activities of the firm. This ratio is the overall measures of the first profitability and is
calculated as
NET PROFIT RATIO =

(NET PROFIT / NET SALES) * 100

B.COMPARATIVE BALANCE SHEET

Comparative balance sheet analysis is the study of the trend of the same item, group of
items and computed items in two or more balance sheet of the same business enterprise on
different dates. The comparative balance sheet has two columns is used to show increase in
figure, the fourth column may be added for giving percentage of increase or decrease.

25

2.4. REVIEW OF LITERATURE

A personal of research studies in projects reveals that the topic of financial performance
and analysis of major interest to finance students over the last decade the topic has been
researched by a good number of management students. In this chapter the researcher briefly
brings to light some of the selected studies on the topic.
A study on the financial performance of a sick unit Dharmapuri District
CO-Operative Spinning Mills Limited., (Prabu 1999) objectives of the study were; to
analyze the cost structure of the company in terms of various components of cost; to analyses
in details the financial position of the company; to examine the trend in sales ant to find out
the empirical relationship between the key elements of costs and rates; to identify the extent of
the sickness with the help of key financial ratios and to suggest suitable revival measured for
the company. The primary data was collected through interview and personal observation. The
secondary data was obtained from the annual reports of the company. The study revealed that
both materials and operational costs were very high, the accumulated losses were also very
high.
A study on financial planning and financial performance analysis, 10 years back and its
current trends in Madras refineries limited (Saba tilak). The objective of the study were to
examine the financial performance of the company. To analyze the operational efficiency of the
enterprises to make analysis on the possible changes that could be made to improve the
existing system. The study revealed that the financial position as well s financial performance
of the company was good but could be improved and strengthened further by consciously
identifying and cultivating new innovative techniques and methods of financial management
for better management of time an funds.
Sakthivel.V has done the project in the topic of performance of Bharat Heavy
Electrical Ltd in India from the year of 1993 to 2002. The main objectives are to study the
operational performance of BHEL thorough the value added analysis, the study the financial
performance of BHEL and evaluate the same, to study the profit and loss account of the unity
to know the economic condition of the BHEL units in India. The conclusions are there is a

26

general fall in cost of production, decrease in the placement of order is due to continued show
down in the capital goods sectors and lack of investment, turnover of the new products
continued 24 percent at the turnover and spares turn over was Rs.5724 million. While turn over
increased by 10 percent other expenses were strictly controlled.
Paramasivam. D. a research student has done the project topic for financial
performance analysis of TNPL in Karur during the period of 2002. The main objectives of to
measure the liquidity position, leverage effect, profitability and activity of the company. The
findings are the company is heavily good liquidity position and we can say with out any default
the company can pay its liability as on the due dates, the gross profit ration is concerned the
TNPL has a good gross profit margin, the net profit ratio of TNPL is a satisfaction before the
expansion programmed, as for as the financial leverage ration is concerned TNPL us at far. But
in the year 2001, the company has lost its magnitude of the financial leverage.

27

ANALYSIS & INTERPRETATION

TABLE -3.1
CURRENT RATIO
CURRENT ASSET

CURRENT LIABILITIES

( LAKHS )

( LAKHS )

06 07

16435

7928

2.07

07 08

17986

10768

1.67

08 09

21789

17296

1.26

09 10

40469

35837

1.13

10 11

62614

38959

1.60

YEAR

RATIO

INTERPRETATION
The above table indicates the current ratio of the year 2005 is 2.07.who is shows the
decrease as 1.67 in 2006, 1.26 in 2007, 1.13 in 2008 and finally it reached 1.60 in 2009. The
table indicates current ratio is not satisfactory.

28

CHART 3.1
CURRENT RATIO

2.5
2.07
2

Percentage

1.67
1.5

1.6
1.26

1.13

0.5

0
06 07

07 08

08 09
year

09 10

10 11

29

TABLE 3.2
LIQUID RATIO

YEAR

LIQUID ASSETS
( LAKHS)

CURRENT
LIABILITIES

RATIO

( LAKHS )
06 07

6538

7928

0.82

07 08

7969

10768

0.74

08 09

13962

17296

0.81

09 10

23852

35837

0.66

10 11

41153

38959

1.05

INTERPRETATION
The above table indicates liquidity ratio have got achieved year by year as 0.82 in 2007,
0.74 in 2008, 0.81 in 2009 and finally it reaches to 1.05 in 2011.It shows that liquid ratio of the
company is satisfactory.

30

CHART -3.2
LIQUID RATIO

1.2
1.05
1
0.82

Percentage

0.8

0.81
0.74
0.66

0.6

Series1

0.4

0.2
0
06 07

07 08

08 09

year

09 10

10 11

31

TABLE 3.3
DEBT EQUITY RATIO

YEAR

DEBT

EQUITY

( LAKHS )

(LAKHS )

06 07

32668

14746

2.21

07 08

30491

17442

1.75

23136

26324

0.88

09 10

43619

39649

1.10

10 11

99703

35515

2.80

08 09

RATIO

INTERPRETATION
The above table indicates the debt equity ratio that increased from 2.21 in 2007 to 1.75
in 2008. Suddenly got decrease in 2009 as 0.88 & 1.10 in 2010 & finally reaches to 2.80 in
2011. The debt equity ratio of the company is satisfactory.

32

CHART 3.3
DEBT EQUITY RATIO

2.5

percentage

RATIO

1.5

0.5

0
06 07

07 08

08 09

Year

09 10

10 11

33

TABLE-3.4.
PROPRIETARY RATIO
YEAR

SHAREHOLDER
FUND
( LAKHS )

TOTAL ASSETS

06 07

14746

60946

0.24

07 08

17442

66575

0.26

08 09

26324

74191

0.35

09 10

39649

125135

0.24

10 11

35515

174929

0.20

( LAKHS )

RATIO

INTERPRETATION
The above table indicates the proprietary ratio. in the year 2009 the ratio level is highest
0.35. It suddenly decreased to 0.24 in 2010 and suddenly decreased for coming years and
finally reaches to 0.20 in 2011, It shows that the proprietary ratio is not satisfactory.

34

CHART 3.4
PROPRIETARY RATIO
0.4
0.35

Percentage

0.3
0.25
0.2

RATIO

0.15
0.1
0.05
0
06 07

07 08

08 09
Year

09 10

10 11

35

TABLE -3.5
INVENTORY TURNOVER RATIO

YEAR

NET SALES

INVENTORY

RATIO

( LAKHS)

( LAKHS )

06 07

38686

9897

3.90

07 08

48504

10017

4.84

08 09

72663

7827

9.28

09 10

93193

16617

5.61

10 11

113745

21461

5.30

INTERPRETATION

The above table indicates the inventory turnover ratio of the year 2007 in 3.90, it is
suddenly increases to 4.84 in 2008&2009 and suddenly it is decreased for coming years 2008
to 2009.The Company maintain its inventory level in bad position. It shows not satisfactory in
inventory management.

36

CHART 3.5
INVENTORY TURNOVER RATIO
10
9
8

Percentage

7
6
5

RATIO

4
3
2
1
0
06 07

07 08

08 09
Year

09 10

10 11

37

TABLE-3.6
WORKING CAPITAL TURNOVER RATIO

YEAR

NET SALES
( LAKHS )

NET WORKING
CAPITAL

RATIO

( LAKHS )
06 07

38686

8507

4.55

07 08

48504

7218

6.72

08 09

72663

4493

16.17

09 10

93193

4632

20.10

10 11

113745

23655

4.81

INTERPRETATION
The above table indicates the working capital turnover ratios of the year 2006 in 4.55
and suddenly increased in the yea 2007 as 6.72 and it increased in 2008 as 16.17 & 20.10 in
2009 and finally reached 4.81 in 2011. It denotes inefficient utilisation of working capital. .

38

CHART 3.6
WORKING CAPITAL TURNOVER RATIO

25

Percentage

20

15
RATIO
10

0
06 07

07 08

08 09
Year

09 10

10 11

39

TABLE 3.7
DEBTORS TURNOVER RATIO

YEAR

NET CREDIT
ANNUAL SALES

AVERAGE TOTAL
DEBTORS

RATIO

( LAKHS )

( LAKHS )

06 07

38686

1706

22.68

07 08

48504

1825.5

26.57

08 09

72663

1721.5

42.20

09 09

93193

1593

58.50

10 11

113745

2678.5

42.46

INTERPRETATIO7
The above table indicates the debtors turnover ratios for year 2007 is 22.68 it slightly
increased in 2008 as 26.57 and in for coming years 58.50 is 2009. It is decreased and finally it
reaches to 42.46 is2010. it shows the insufficient bank balance & cash in hand. It is not
favourable for the company.

40

CHART 3.7
DEBTORS TURNOVER RATIO

70
60

Percentage

50
40

RATIO
30
20
10
0
06 07

07 08

08 09

Year

09 10

10 11

41

TABLE-3.8
AVERAGE COLLECTION PERIOD

YEAR

NO.OF. DAYS

DEBTORS
TURNOVER RATIO

AVERAGE
COLLECTION
PERIOD

06 07

365

22.68

16.09

07 08

365

26.57

13.74

08 09

365

42.20

8.65

09 10

365

58.50

6.24

10 11

365

42.46

8.60

INTERPRETATION
The above table indicates the Average Collection Period year 2007 is decreased and in
for coming year it is increased year by year. Which indicates that the company reaches its
collection period which is for the process. The average collection period is satisfactory.

42

CHART 3.8
AVERAGE COLLECTION PERIOD

18
16
14

Percentage

12
10

AVERAGE
COLLECTION PERIOD

8
6
4
2
0
06 07 07 08 08 09 09 10 10 11

year

TABLE 3.9

43

CREDITORS TURNOVER RATIO

YEAR

NET CREDIT
AVERAGE TOTAL
ANNUAL PURCHASE
CREDITORS

RATIO

( LAKHS)

( LAKHS)

06 07

2838

3656

0.78

07 08

3838

4023

0.95

08 09

5902

4402.5

1.34

09 10

8806

7739.5

1.14

10 11

10956

10702.5

1.24

INTERPRETATION
The above table Indicates the Creditors Turnover Ratios for the year 2007 is 0.95 and it
is increased in for coming years and reaches to 1.24 in the year 2011. The ratio indicates
unfavourable condition for the company.

44

CHART 3.9
CREDITORS TURNOVER RATIO
1.6
1.4
1.2

Percentage

1
0.8

RATIO

0.6
0.4
0.2
0
06 07

07 08

08 09

Year

09 10

10 11

45

TABLE 3.10
AVERAGE PAYMENT PERIOD

YEAR

NO.OF. DAYS

CREDITORS
TURNOVER RATIO

AVERAGE
PAYMENT
PERIOD

06 07

365

0.78

467.95

07 08

365

0.95

384.21

08 09

365

1.34

272.39

09 10

365

1.14

320.17

10 11

365

1.24

294.35

INTERPRETATION
The above table indicates the Average Payment Period to creditors in the year 2007 is
2008 is 384.21, but in the year the ratio level is low that 467.95 in 2006, 272.39 in 2009,320.17
in 2008 & finally 294.35 in 2011. The Low ratio indicates that the average payment period to
creditors is good for the company.

46

CHART 3.10
AVERAGE PAYMENT PERIOD

47

TABLE 3.11
GROSS PROFIT RATIO

YEAR

GROSS PROFIT

NET SALES

GROSS PROFIT

( LAKHS )

( LAKHS )

RATIO

06 07

32689

38686

84.49

07 08

41677

48504

85.92

08 09

61595

72663

84.77

09 10

79501

93193

85.3

10 11

100978

113745

89.0

INTERPRETATION
The above table clearly depicts the gross profit ratios from 2006 2007 indicates a ratio
of 84.49 and against it has increased to 85.92 in the year 2007 2008 and it is decreased to
84.77 in the year 2008 2009 and again it is increased to 85.3 in the year 2009 2010 and
2010 - 2011 indicates a ratio of 89.0. It shows that they had increased the profit in sales.

48

CHART 3.11
GROSS PROFIT RATIO

100
90

84.49

85.92

84.77

85.3

89

80

Percentage

70
60
GROSS PROFIT

50
40
30
20
10
0

0
YEAR

06
07

07
08

08
09

Year

09
10

10
11

49

TABLE - 3.12
NET PROFIT RATIO

YEAR

NET PROFIT

NET SALES

NET PROFIT

( LAKHS)

( LAKHS )

RATIO

06 07

7487

38686

19.35

07 08

9729

48504

20.05

08 09

18868

72663

25.97

09 10

31256

93193

33.54

10 11

25022

113745

31.99

INTERPRETATION
The above table indicates that the year 2006 2007 net profit ratios is 19.35 and in the
year 2010 2011 net profit ratio is 31.99. It shows that net profit is increased.

50

CHART 3.12
NET PROFIT RATIO

40
35
30

Percentage

25
20

NET PROFIT

15
10
5
0
YEAR 06 07 07 08 08 09 09 10 10 11

Year

TABLE 3.13

51

COMPARATIVE BALANCE SHEET OF GR INDUSTRIES LIMITED

PARTICULARS

2009-2010 2010-2011 INCREASE/ PERCENTAGE

DECREASE CHANGE (%)
( RS.In
( RS.In
lakhs)
lakhs )

Assets
Inventories

6004

9897

3893

64.84

Sundry Debtors

1505

1907

402

26.71

Cash&Bankbalance

1395

1709

314

22.50

Loans& Advances

2462

2904

442

17.95

30

18

-12

-40

11396

16435

5039

44.21

Fixed Assets

41328

43569

2241

5.42

Investments

NIL

NIL

NIL

NIL

Working-in-progress

880

942

62

7.04

53604

60946

7342

13.69

Less: provision

6934

7928

-994

-14.33

Total Assets

46670

53018

6348

13.60

Share Capital

2950

2950

---

---

Reserves& Surplus

10345

11796

-8549

-82.63

13295

14746

1451

10.91

others

Current Liability
Shareholder funds

52

Loans Funds
Secured Loans

12428

5906

-6522

-52.47

Unsecured Loans

16477

26762

10285

62.42

DeferredTaxLiability 4470

5604

1134

25.36

Total Liabilities

53018

6348

13.60

46670

INTERPRETATION
(i)The comparative balance sheet shows that during the year 2009-2010, Their has been
increased in fixed assets, worth Rs. 2241 i.e., 5.24%. The company is it purchased fixed asset.
(ii) The current asset has increased Rs.44.21 and current liability has increased by Rs.212
respectively. This further conforms that the company has raise the long term finance increasing
the current asset or for paying current liabilities.
(iii) Overall performance is satisfactory.

53

TABLE-3.14
COMPARATIVE BALANCE SHEET OF CHETTINAD CEMENT CORPORATION
LIMITED
PARTICULARS

2009-2010

2010-11 INCREASE/

( RS.In lakhs ( RS.In

)

DECREASE

PERCENTAGE
CHANGE (%)

lakhs)

Current Assets
Inventories

9897

10017

120

1.21

Sundry Debtors

1907

1744

-163

-8.54

Cash& Bank balance

1709

2149

440

25.74

Loans & Advances

2904

4072

1168

40.22

Others

18

-14

-77.77

16435

17986

1551

9.43

43569

47948

4379

10.05

NIL

361

361

100

942

280

-662

-70.27

60946

66575

5629

9.23

7928

10768

2840

35.82

53018

55807

2789

5.26

Fixed Assets
Investments
Working-in-progress

Less: provision
Total Assets

54

Current Liability
Shareholder Funds
Share Capital

2950

2950

---

---

Reserves& Surplus

11796

14492

2696

22.85

14746

17442

2696

18.28

5906

2404

-3502

-59.29

26762

28087

1325

4.95

5604

7874

2270

40.50

53018

55807

2789

5.26

Loans Funds
Secured Loans
Unsecured Loans
DeferredTax Liability
Total Liabilities

INTERPRETATION
(i)Comparative balance sheet reveals that during the year 2005 2006 there has been
an increased fixed asset of Rs.4379 i.e. 10.5%, while that the company have purchase fixed
assets in the year 2005-2006.
(ii)Current assets and current liability has increased by Rs. 151 i.e. 9.43% and Rs.2840
i.e. 35.82% respectively. While reserve and surplus has the slightly increase from Rs.182.63 in
2005 to Rs.22.85 in 2006.which shows that company has utilized reserves and surplus for the
payment.
(iii)Overall financial performance is satisfactory.

TABLE-3.15

55

COMPARATIVE BALANCE SHEET OF GR INDUSTRIES LIMITED

PARTICULARS

2009-2010
( RS.In

2010-

INCREASE/

PERCENTAGE

2011( RS.In DECREASE

CHANGE (%)

lakhs)

lakhs )

Current Assets
Inventories

10017

7827

-2190

-21.86

Sundry Debtors

1744

1699

-45

-2.58

Cash&Bank balance

2149

2825

676

31.45

Loans & Advances

4078

9434

5356

131.33

Others

---

---

17986

21789

3803

21.14

47948

48497

549

1.14

361

58

-303

-83.93

280

3847

3567

1273.92

66575

74191

7616

11.43

10768

17296

6528

60.62

55807

56895

1088

1.94

2950

2950

---

---

23374

8882

61.28

Fixed Assets
Investments
Working-in-progress

Less: provision
Total Assets
Current Liability
Shareholder Funds
Share Capital

Reserves& Surplus 14492

56

17442

26324

8882

50.92

2404

903

-1501

-62.43

28087

22233

-5854

-20.84

7874

7435

-439

-5.57

55807

56895

1088

1.94

Loans Funds
Secured Loans
Unsecured Loans
DeferredTaxLiability
Total Liabilities

INTERPRETATION
(i)The comparative balance sheet of the company in the year 2009 and 2010 indicates
that the fixed asset have been increased for Rs. 549 @1.14% respectively.
(ii)Where current asset and current liabilities of the company also shows increases in
values bys21.14 % and 60.62%, debtors and loans and other items increased respectively.
(iii)Overall financial performance is satisfactory.

57

TABLE-3.16
COMPARATIVE BALANCE SHEET OF CHETTINAD CEMENT CORPORATION
LIMITED
PARTICULARS

2009-2010

2010-2011

INCREASE/

PERCENTAGE

( RS.In

( RS.In

DECREASE

CHANGE (%)

lakhs )

lakhs)

Current Assets
Inventories

7827

16617

8790

112.30

Sundry Debtors

169

1487

-212

-12.47

Cash&Bankbalance 2825

2585

-240

-8.49

Loans &Advances 9434

19780

10346

109.66

Others

---

-4

-100

21789

40469

18680

85.73

48497

49243

746

1.53

58

58

---

819.28

3847

35365

31518

---

74191

125135

50944

68.66

17296

35837

18568

107.35

56895

89298

32403

56.95

Fixed Assets
Investments
Working-inprogress

Less: provision
Total Assets

58

Current Liability
Shareholder Funds
Share Capital

2950

2950

---

---

Reserves& Surplus 23374

36299

12925

55.29

26324

39249

12925

49.09

903

3761

2858

316.50

22233

39858

17625

79.27

7435

6430

-1005

-13.51

56895

89298

32403

56.95

Loans Funds
Secured Loans
UnsecuredLoans
DeferredTaxLiability
Total Liabilities

INTERPRETATION
(i)The Comparative balance Sheet reveals that during the year 2009 2010 there has
been increased in fixed assets Rs. 746 i.e.1.53%. This shown that the company purchase fixed
assets for this year.
(ii)Current assets and Current liability has increased by Rs. 18680 i.e.85.73% and
Rs.12925 i.e.55.29% respectively.
(iii)Overall financial performance is satisfactory.

59

TABLE-3.17
COMPARATIVE BALANCE SHEET OF CHETTINAD CEMENT CORPORATION
LIMITED
PARTICULARS

2009-2010 2010-2011
( RS.In

( RS.In

lakhs)

lakhs)

INCREASE/ PERCENTAGE
DECREASE

CHANGE (%)

Current Assets
Inventories

16617

21461

4844

29.15

Sundry Debtors

1487

3870

2383

160.25

2585

4299

1714

66.30

19780

32983

13203

66.74

---

100

40469

62614

22145

54.72

49243

80941

31698

64.37

58

58

---

---

35365

31316

-4049

-11.44

125135

174929

49749

39.79

35837

38959

3122

8.71

89298

135970

46672

52.26

Cash&Bankbalance
Loans&Advances
Others

Fixed Assets
Investments
Working-in-progress

Less: provision
Total Assets

60

Current Liability
Shareholder Funds
Share Capital

2950

2950

---

---

Reserves& Surplus

36299

32565

-3734

-10.28

39249

35515

-3734

-9.51

3761

28200

24439

649.80

39858

71503

31645

79.39

6430

752

-5678

-88.30

89298

135970

46672

52.26

Loans Funds
Secured Loans
UnsecuredLoans
DeferredTaxLiability
Total Liabilities

INTERPRETATION
(i)The Comparative balance Sheet reveals that during the year 2009 2010 there has been
increased in fixed assets Rs. 64.37 i.e.7.5%. Will the company purchase fixed assets for this
year.
(ii)Current assets & current liability has increased by Rs. 54.72 i.e., -10.28 % and Rs.312.
&39.79 is respectively.
(iii)Overall financial performance is satisfactory.

61

4.1. FINDINGS
Current ratio in the year 2007 is 2.07 & next three years it is decreased to 1.67, 1.26,
and 1.13 respectively and during 08-09 it is increased to 1.60.
Liquid ratio in the year 2007 is 0.82 & next years it is decreased to 0.74 and suddenly
increased 2008 are 0.81, and 2009 is 0.66 respectively and during 09-10 it is increased
to 1.05.
Debt equity ratio in the year 2008 is 2.21 & next three years it is decreased to 1.75,
0.88, and 1.10 respectively and during 10-11 it is increased to 2.80.
Proprietary ratio was constant in the year 2007 is 0.26 and increased 2008 is 0.35.
Inventory turnover ratio for the year 2008 is 9.28.
Working capital turnover ratio for the year 2009 is 20.1 is shown inefficient utilization
of working capital.
In the year 2009 the debtor turnover ratio is 58.50.
In the year 2006 the average collection period is reduced to 16.09.
Creditor turnover ratio is high in the year 2008 and it decreases in for the coming years.
Average payment period 2006 is reduced to 467.95.
In the year 2010 the gross profit ratio is 89.
Net profit ratio decreases in trend due to move expenses.
Comparative balance sheet of the company was satisfactory for all the years from 2006
to 2009.

62

4.2. SUGGESTION
Company should concentrate to reduce the current liability. The dues should meet of
time & company should maintain adequate current asset & reserves to meet the current
obligation of the company.
The company has to maintain adequate working capital to operate the day to day
operations of business smoothly.
The step has to be taken to keep adequate cash in hand & cash at bank and should
maintain lowest wastage in manufacturing side.

63

4.3CONCLUSION
The study is based on analyzing the financial position of a company using various tools
and techniques GR INDUSTRIES LTD, COIMBATORE is taken as a sample case and its
operations are analyzed with aid of financial techniques.
The study is primarily based on the annual reports of the company for the period of five
years. Regarding this study it is identified that the industry is comparing the overall efficiency
by calculating the ratios and average of five years but this study is calculated by the difference
of each year with the previous year. Hence it can be concluded that the GR Industries, overall
financial position is satisfactory. The company has to still analysis various aspects to improve
the company position on Coimbatore.

APPENDIXE
BALANCE SHEET

Schedule

As at 31.03.2005

As at 31.03.2006

As at 31.03.2007

As at 31.03.2008

As at 31.03.2009

Sources of Funds
(a) Capital

2950

(b) Reserves and Surplus

11796

Loan Funds (a) Secured Loans

5906

26762

(b) Unsecured Loans

2950
14746

14492

2950
17442

2404
32668

28087

23374

2950
26324

903
30491

22233

36299

2950
39249

3761
23136

39858

32565

35515

28200
43619

71503

99703

Deferred Tax
Deferred tax liability
Less : Deferred tax asset

Total

8014
2410

8173
5604
53018

299

7575
7874
55807

140

6503
7435
56895

73

836
6430
89298

84

752
135970

Application of Funds
Fixed Assets
(a) Gross Block

68642

76558

82424

91320

166039

(b) Less : Depreciation

25073

28610

33927

42077

85098

(c) Net Block

43569

47948

48497

49243

80941

(d) Capital work in progress

Investment

942

44511

280

48228

3847

361

52344

35365

58

84608

31316

58

58

Current Assets, Loans & Advances

(a) Inventories

9897

10017

7827

16617

21461

(b) Sundry Debtors

1907

1744

1699

1487

3870

(c) Cash and Bank balance

1709

2149

2825

2585

4299

18

2904

4072

9434

19780

32983

16435

17986

21789

40469

62614

6056

7759

7457

15640

14620

(d) Other Current Assets

(e) Loan & Advance

Less: Current Liabilities &

Provisions
(a) Liabilities

112257

(b) Provisions

Net Current Assets

Total

1872

3009

9839

20197

24339

7928

10768

17296

35837

38959

8507

7218

4493

4632

53018

55807

56895

89298

23655
135970

BIBLIOGRAPHY
BOOKS
1. I.M. Pandey Financial Management, New Delhi, Vikash Publishing
House Pvt., Ltd.,
2. Prasanna Chandra - Financial Management Theory and Practice, Tata
Mcgraw Hill.
3. Dr.S.N.Maheswari- Elements of Financial Management, Sultan Chand
& Sons, Educational Publishers, New Delhi.
4. Y.K.Busan Fundamental of Business organization and Management.
Y
5. Kuchai.S.C - Financial Management
6. Varma Agarwal Financial Management
REPORTSS
Company Annual Records & Reportss

WEBLIOGRAPHY
1. www. chettinadcement.com
2. www.google.com