TABLE OF CONTENTS

CHAPTER CONTENTS PAGE NO.

1 INTRODUCTION
ABOUT FINANCIAL
STATEMENT
2 OBJECTIVE OF THE
FINANCIAL
STATEMENT

3 INDUSTRIAL
PROFILE

4
COMPANY PROFILE

5 ABOUT THE
FINANCIAL
STATEMENT

6 RESEARCH
METHODOLOGY.

7
DATA ANALYSIS
AND
INTERPRETATION

8 FINDING

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9 CONCLUSION

10 LIMITATION

11 SUGGESTION

BIBLIOGRAPHY

ANNEXURE

2
FINANCIAL STATEMENTS
Financial statements mean a statement or document which explains necessary financial
information about an organization/ company. the financial statements ae prepared on the basis of
facts recorded in books. These recorded facts are expressed in the monetary terms.
In the United States, a company that offers its common stock to the public typically needs to file
periodic financial reports with the Securities and Exchange Commission (SEC).

The SEC governs the content of these filings and monitors the accounting profession. In turn, the
SEC empowers the Financial Accounting Standards Board (FASB) - an independent,
nongovernmental organization - with the authority to update U.S. accounting rules. When
considering important rule changes, FASB is impressively careful to solicit input from a wide
range of constituents and accounting professionals. But once FASB issues a final standard, this
standard becomes a mandatory part of the total set of accounting standards known as Generally
Accepted Accounting Principles (GAAP).

Statements are including in the list of financial statements :-

1. Profit and loss account.

2. Balance sheet.
3. P & L appropriation account.
4. Cash flow statement.
5. Various schedules.
6. Explanatory notes given at the end of financial statement.

FINANCE
It is true that money (Finance) plays a very important role in the sphere of business to grow and
bring the company position at the top . if the financial position of the company is good, there is no
doubt that company or industry will grow faster in the existing.

FINANCIAL ANALYSIS

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The term analysis is methodical classification of data given in the financial statements.
Financial analysis is the process of identifying the financial strength and weakness of tiles Finn by
property establishing relationship between the item of balance sheet & profit & loss
account.Financial analysis can be undertaken by the firm or by outside parties, firm’s owner,
creditors, investors and other. Actually the nature of analysis depends upon the parties.
Feature of Financial Analysis :-

1. To presents a complex data contained in the financial statement in simple and

understandable form.

2. To classify the item contained in the financial statement in the convenient and rational
groups.

3. To make comparison between various groups to draw various conclusions.

TYPES OF FINANCIAL ANALYSIS

1. Classification on the basis of material used.

1.External analysis :- Outsiders, who don’t have access to the detailed internal accounting record
of business firm, do this analysis. These outside parties potential investors, creditors, government
agencies & general public.

2. Internal analysis :-
The analysis conducted by person who has access to the internal accounting records of a business
firm is known as internal analysis.
2. Classification on the basis of modus operandi.

Horizontal analysis:-

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 Horizontal analysis refers to the comparison, of financial data of a company for several
years. The figures of this types of analysisare presented horizontally over a number of
columns. This types of analysis is also called “ dynamic analysis”.

Vertical analysis:-

This analysis refers to the study of relationship of the various items in the financial
statements of one accounting period. It is also known as “ Static analysis “

Significance or importance of Financial Analysis :-

1. Significance for Managers;-Planning and Control are the two most important ingredients to a
Successful Business. A Business Plan takes most of the guess work out of Business Strategy
and Control through solid Financial analysis. Financial Data provides a way to gauge where
you are in your Strategic Plan, telling you where changes in your Plan are necessary. Because
of this, Financial Data Analysis and Management are vitally important to running a successful
business.

2. Significance for Investors:- Investors are generally considered one of the primary users of
financial statements. They use the financial statements to determine the current profitability of
the firm and attempt to predict its future profitability. Their

interest is in the future growth of a company's stock price and/or the likelihood of the
company paying dividends to the owner.

3. Significance for Creditors:-In the ongoing relationship between suppliers and a firm
financaial statement can play several roles consider the relationship between a firm and the
suppliers to its loan capital.e.g a bank in the initial loan granting stageof the
relationship,financial statement typically are an important items.

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4. Significance for regulatory agency:-The demand by these bodies can arise in diverse set of
areas such as revenue raising e.g for income tax,sales tax ,value added tax collection. Govt.
intervention e.g determine wheather to provide a govt.backed loan agreement to a finically
distressed firm.

5. Significance for Employess:-They are the part of the orgnisation and feel that their effort
contributed to the firm profitthey would therefor prefers togive bonusesnas salary
inceresesthis also increase expensies of the firm.

6. Significance for others parties:- The set of party that demand for financial analysis
information of corporation is open ended . diverse party such as academic ,environmental
protection organization, and other special interest lobbing groups approach corpartionfor
detail relating to their financial and other affairs.

7. Significance for Government :-Various ministries and department have interest in the firm’s
payments of taxes. Also seet the enchment of lawfor the industry and the provision of
socialservice to the public. The govet may also want to ensure that the firm complies with the
law on for example wages payments and employees benefit.

LIMITATION OF FINANCIAL ANALYSIS :-

although analysis of financial statement is essential to obtain relevant information for making
several decisions and formulating corporate plans and policies, it should be carefully performed as
it suffers from a number of the following limitations.

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lead the users:-The accuracy of financial information largely depends on how accurately
financial statements are prepared. If their preparation is wrong, the information obtained
from their analysis will also be wrong which may mislead the user in making decisions.

1. Not useful for planning:-Since financial statements are prepared by using historical financial
data, therefore, the information derived from such statements may not be effective in
corporate planning, if the previous situation does not prevail.

2. Qualitative aspects:-Then financial statement analysis provides only quantitative information

about the company's financial affairs. However, it fails to provide qualitative information such
as management labour relation, customer's satisfaction, management's skills and so on which
are also equally important for decision making.

3. Comparison not possible:-The financial statements are based on historical data.

Therefore comparativeanalysis of financial statements of different years can not be done as
inflation distorts the view presented by the statements of different years.

5. Wrong judgement:- The skills used in the analysis without adequate knowledge of the subject
matter may lead to negative direction . Similarly, biased attitude of the analyst may also lead to
wrong judgement and conclusion.

6.Not helpful in price fixation:-In financial accounting the cost is not available as an aid in
determining prices of the product services production order and product line.

7. Not control on cost:-It does not provide for a proper control of materials and
suppliers,wages.labours and overheads.
8. No analysis of losses:- It does not provided the complete analysis of lossesdue to defective
material ,idle time,idle palnt and equipment. In other words no distinction is made between
avoidable and unavoidable wastage.

TECHNIQUES OR METHODS OF FINANCIAL ANALYSIS :-

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 1. Comparative Statements.

2. Trend analysis

3. Common size Statements.

4. Fund flow statements.

5. Cash flow statements.

6. Ratio Analysis.

7. Break even point Analysis

OBJECTIVE OF THE STUDY : -

1. To measures the earning capacity or profitability of the company.

2. To measures the solvency of the company.

3. To measures the financial strength of the company.

4. To measures the capability of payment of interest and dividend of the company..

5. To judge the efficiency of management of the company.

6. To determine the change in financial condition of business.

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 INDIAN FOOTWEAR INDUSTRY:-
Indian leather industry is the core strength of the Indian footwear industry. It is the engine of
growth for the entire Indian leather industry and India is the second largest global producer of
footwear after China.Reputed global brands like Florsheim, Nunn Bush, Stacy Adams, Gabor,
Clarks, Nike, Reebok, Ecco, Deichmann, Elefanten, St Michaels, Hasley, Salamander and
Colehaan are manufactured under license in India. Besides, many global retail chains seeking
quality products at competitive prices are actively sourcing footwear from India.While leather
shoes and uppers are produced in medium to large-scale units, the sandals and chappals are
produced in the household and cottage sector. The industry is poised for adopting the modern and
state-of-the-art technology to suit the exacting international requirements and standards. India
produces more of gent’s footwear while the world’s major production is in ladies footwear. In the

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case of chapels and sandals, use of non-leather material is prevalent in the domestic
market.Leather footwear exported from India are dress shoes, casuals, moccasins, sport shoes,
horrachies, sandals, ballerinas, boots. Non-leather footwear exported from India are Shoes,
Sandals and Chappals made of rubber, plastic, P.V.C. and other materials.With changing
lifestyles and increasing affluence, domestic demand for footwear is projected to grow at a faster
rate than has been seen. There are already many new domestic brands of footwear and many
foreign brands such as Nike, Adidas, Puma, Reebok, Florsheim, Rockport, etc. have also been
able to enter the market.The footwear sector has matured from the level of manual footwear
manufacturing methods to automated footwear manufacturing systems. Many units are equipped
with In-house Design Studios incorporating state-of-the-art CAD systems having 3D Shoe Design
packages that are intuitive and easy to use. Many Indian footwear factories have also acquired the
ISO 9000, ISO 14000 as well as the SA 8000 certifications. Excellent facilities for Physical and
Chemical testing exist with the laboratories having tie-ups with leading international agencies like
SATRA, UK and PFI, Germany.

One of the major factors for success in niche international fashion markets is the ability to cater
them with the latest designs, and in accordance with the latest trends. India, has gained
international prominence in the area of Colours & Leather Texture forecasting through its
outstanding success in MODEUROP. Design and Retail information is regularly made available
to footwear manufacturers to help them suitably address the season's requirement.The Indian
Footwear Industry is gearing up to leverage its strengths towards maximizing benefits.Strength of
India in the footwear sector originates from its command on reliable supply of resources in the
form of raw hides and skins, quality finished leather, large installed capacities for production of
finished leather & footwear, large human capital with expertise and technology base, skilled
manpower and relatively low cost labor, proven strength to produce footwear for global brand
leaders and acquired technology competence, particularly for mid and high priced footwear
segments. Resource strength of India in the form of materials and skilled manpower is a
comparative advantage for the country.

INDIAN SCENARIO:
The Footwear Industry is a significant chunk of the Leather industry in India. India ranks second
among the footwear producing countries next to China. The industry is labor intensive and is

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concentrated in the small and cottage industry sectors. While leather shoes and uppers are
concentrated in large-scale units, the sandals and chappals are produced in the household and
cottage sector. India produces more of gents footwear while the world’s major production is
inladies footwear. In the case of chappals and sandals, use of non-leather material is used
tomanufacture these in the domestic market.Reputed global brands like Florsheim, Nunn Bush,
Stacy Adams, Gabor, Clarks, Nike, Reebok, Ecco, Deichmann, Elefanten, St Michaels, Hasley,
Salamander and Colehaan are manufactured under license in India. Besides, many global retail
chains seeking quality products at competitive prices are actively sourcing footwear from India.
The industry is on the edge of adopting the modern and state-of-the-art technology to suit the
exacting international requirements and standards. The Indian Footwear Industry is all set for
leveraging its strengths towards maximizing benefits. Strength of India in the footwear sector
originates from its command on reliable supply of resources in the form of raw hides and skins,
quality finished leather, large installed capacities for production of finished leather & footwear,
large human capital with expertise and technology base, skilled manpower and relatively low-cost
labor, proven strength to produce footwear for global brand leaders and acquired technology
competence, particularly for mid and high priced footwear segments. India has the competitive
advantage over other countries in the form of materials and skilled manpower The Indian
footwear retail market is expected to grow at a CAGR of over 20% for the period spanning from
2008 to2011. Footwear is expected to comprise about 60% of the total leather exports by 2011
from over 38% in 2006-07. Presently, the Indian footwear market is dominated by Men's footwear
market that accounts for nearly 58% of the total Indian footwear retail market.By products, the
Indian footwear market is dominated by casual footwear market. As footwear retailing in
India remains focused on men's shoes, there exists a plethora of opportunities in the
exclusive ladies' and kids' footwear segment. The Indian footwear market scores over other
footwear markets as it gives benefits like low cost of production, abundant raw material, and has
huge consumption market.
India is now a major supplier of leather footwear to world markets and has the potential to rival
China in the future (60% of Chinese exports are synthetic shoes).
India is often referred to as the sleeping giant in footwear terms. It has an installed capacity of
1,800 million pairs, second only to China. The bulk of production is in men’s leather shoes and
leather uppers for both men and ladies. It has over 100 fully mechanized, modern shoe making

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plants, as good as anywhere in the world (including Europe). It makes for some up market brands
including Florsheim (US), Lloyd (Germany), Clarks (UK), Marks and Spencer (UK).

SWOT ANALYSIS OF INDIAN FOOTWEAR INDUSTRY:-

STRENGTHS: -

• Existence of more than sufficient productive capacity in tanning.

• Easy availability of low cost of labour.
• Exposure to export markets.
• Managements with business background become quality and environment conscious.
• Presence of qualified leather technologists in the field.
• Comfortable availability of raw materials and other inputs.
• Massive institutional support for technical services, designing, manpower development
and marketing.
• Exporter-friendly government policies.
• Tax incentives on machinery by Government.
• Well-established linkages with buyers in EU and USA.

WEAKNESSES: -

• Low level of modernisation and upgradation of technology, and the integration of

developed technology is very slow.
• Low level of labour productivity due to inadequate formal training / unskilled labour.
• Horizontal growth of tanneries.
• Less number of organised product manufacturers.
• Lack of modern finishing facilities for leather.
• Highly unhygienic environment.
• Unawareness of international standards by many players as maximum number of leather
industries are SMEs.
• Difficulties in accessing to testing, designing and technical services.
• Environmental problems.

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 • Non availability of quality footwear components
• Lack of fresh investment in the sector.
• Uneconomical size of manufacturing units.
• Competition among units vying for export orders leading to undercutting.
• Little brand image.
• Poor labour productivity. Lack of awareness about consistent in
plant training and retraining- Inconsistent quality high rejection rate
• Low machine and material productivity.
Lack of quality job work units
• Delayed deliveries
• Weak support infra- structure for exports

OPPORTUNITIES: -

• Abundant scope to supply finished leather to multinationals setting up shop in India.

• Growing fashion consciousness globally.
• Use of information technology and decision support software to help eliminate the length
of the production cycle for different products
• Product diversification - There is lot of scope for diversification into other products,
namely, leather garments, goods etc.
• Growing international and domestic markets.
• Exposure to newer markets through Fairs/ BSMs
• Retain customers through quality supplies and timely deliveries
• Aim to present the customer with new designs, infrastructure, country & company
profiles.
• Use of modern technology
• Exhibit strengths in manufacturing, for example, strengths in classic shoe manufacturing,
hand crafting etc.
• De-reservation of the footwear sector.

THREATS: -

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• Entry of multinationals in domestic market.
• Stiff competition from other countries.(The performance of global competitors in leather
and leather products indicates that there are at least 5 countries viz, China, Indonesia,
Thailand, Vietnam and Brazil, which are more competitive than India.)
• Non- tariff barriers - Developing countries are resorting to more and more non – tariff
barriers indirectly.
• Improving quality to adapt the stricter international standards.
• Fast changing fashion trends are difficult to adapt for the Indian leather industries.
• Limited scope for mobilising funds through private placements and public issues, as many
businesses are family-owned.

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 SHARE IN GDP OF FOOTWEAR INDUSTRY:-

India's GDP recently crossed the trillion-dollar mark for the first time and with this India
has joined the elite club of 12 countries with a trillion dollar economy. Countries that have
breached trillion-dollar GDP level in the past are he US, Japan, Germany, China, UK,
France, Italy, Spain, Canada, Brazil and Russia.
The GDP or Gross Domestic Product is the primary indicator used to gauge the health of a
country's economy. The GDP of a country is defined as the market value of all final goods
and services produced within a country in a given period of time. It is also considered the
sum of value added at every stage of production of all final goods and services produced
within a country in a given period of time. GDP is a number that expresses the worth of the
output of a country in local currency. GDP tries to capture all final goods and services that
are produced within the political and geographical frontiers of the country, thereby assuring
that the final monetary value of everything that is created in a country is represented in the
GDP. GDP is calculated for a specific period of time, usually a year or a quarter of a year.
According to the data released for the year 2006-2007, India's GDP grew at an impressive 9.2
per cent. The share of different sectors of the economy in India's GDP is as follows:
Agriculture - 18.5 per cent, Industry - 26.4 per cent, and Services - 55.1 per cent. The fact
that the service sector now accounts for more than half the GDP is a milestone in India's
economic history and takes it closer to the fundamentals of a developed economy. At the time
of independence agriculture occupied the major share of GDP while the contribution of
services was relatively very less.
The government has set a target of an average annual GDP growth of 9 per cent for the
Eleventh Five Year Plan. The target looks achievable as all the macroeconomic fundamentals
are strong and the impressive growth rate of Indian GDP looks all set to continue. Footwear
Market in India 2010 ... India has around 3% share in the global trade of leather in
comparison to Chinas 20%. In order to . ... From 10% of the Indian GDP in2007, it became
12% of GDP in 2009.

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 INTRODUCTION
Liberty is leading footwear industry covering brands under its own name. Liberty shoes are
known for its quality in India and abroad. The footwear liberty emerged in 1954 in the field of
manufacturing and exporting of footwear. This company is manufacturing leather shoes , sports
shoes, non – leather shoes , leather shoes upper and Hawaii chappals for gents, ladies and
children. The Liberty has its corporate office , centre house and human Tech. centre ΙΙΙ , liberty
park in karnal city Registered office & human tech. centre Ι, Liberty puram in kutial (karnal) and
human Tech. centre ΙΙ ,liberty complex in Ghuraunda (karnal) .The marketing office is located at
Punjab Begh New Delhi. The liberty has its domestic branch office at Agra , Banglore, Chennai,
Delhi, Jaipur , Jammu, Rajpura and Sharanpur. It has its banker state Bank of india specialized
commercial branch karnal for enhancement of working capital limits. By invention of ACS (air
circulation system) technology , a sole , that prevents feet from sweating in hot and humid
conditions are more revolutionary step by liberty in footwear market. It talk the extra mile to
ensure customer’s satisfaction wprld wide. The major strength of liberty footwear is its strong
distribution channel and itas technological advancement. Liberty is devoted to the customer of
the world and they strive hand to keep ture to there motto
,”SAPNE AB HUAE APNE”.

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17
 HISTORY OF LIBERTY SHOES LIMITED

Like all the enterprises this company too is steeped in history . It was on 25 th December 1954
when India was nurturing its growth as a free country those three dreamers in a small town in
erstwhile Punjab throughtout of producing an Indian brand of footwear to make a basic necessity
available to their countrymen . Late Sh. D.P.Gupta. Late Sh.P.D. Gupta & Late Sh. R.K. Bansal
Ji allowed their vision to cross every barrier and brought in technology to ensure that the feed to
the market was of world class. Soon the product and the name become generic to quality
footwear in the domestic market and this allowed the company to invest further for enhancing
production capacity and cater to international market too.With 50 years of excellence behind it
liberty today is amongst the five largest footwear manufacturers of the world. It produce footwear
for the entire family and is a trusted name in many households across India and the world. In the
domestic market we are one of the most admired footwear brands and hold the largest market
share for leather footwear. Liberty 50 years of excellence behind it Liberty today is amongst the
five largest footwear manufacturers of leather footwear of the world with a turnover in excess of
U.S $100 Million .Producing more than 90000 pair of footwear a day .A range that is among the
largest in the industry , covering virtually every age group and income category. Marketed across
the globe through 150 distributors ,350excutive showrooms andover 6000 multi- brand outlets
and sold in thousands every day in more than 25 countries including fashion driven, quality
obsessed nations like France , Italy. Company was incorporated on 3rd sept.1986 as a public
company and obtained the company wof business on 11th March 1988. Firm register office of the
companies situated at Delhi , Haryana and New Delhi. The company shifted its register office
from Union Territory of Delhi to Karnal.
The company has been set to manufacturer and to sell leather and non- leather shoes upper and
leather garments. Presently company is engage manufacturing leather and non- leather shoes.
Company has also set up a joint venture in Russia to manufacture shoes in 1991 under the name
of M/S Liberty & Co. with M/S Groky Product & shoes unit Groky City but subsequently
the name of venture was changed as “ Liberty & Nino

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 SOCIAL RESPONSIBILITYOF COMPANY

Liberty conducts its business with honestly, intergrity and respect for all those who come in
contact with it in course of business. Fully apprective of the fact that its reputation stems from not
just quality products and technological innovations but also from the manner of its dealing with
customers, suppliers, government official and all those who are outside the Liberty Group.
Utmpst importance is also given to ensuring a safe, healthy and non discriminatory work
environment for all Liberty employees where they are free from harassment of any from
supervisor , senior, co- workers, customer and suppliers. Ethical standards and practices are
rigorously brands like Wal-Mart, Reebok, Nike etc. who recognize it as an equal opportunity
employers.
THE PRESENT SCENARIO
The company markets its product nationally and internationally under the brand “Liberty Co”. Is
well established in national and global marker. The company has appointed dealer and distributor
for marketing its product besides selling through the existing Dealer Company provide 20% to
30% discount rate on the print rate. The company has enter into an agreement with one of the
group firm M/S Liberty Enterprise for using the established brand name “ Liberty”. As per the
term of agreement company can use this term of agreement co. and use the trademark initially
for a period of 5 years and has to royalty of Rs 20 Lac. The Company has commenced
commercial production for non- leather shoes on 25th December 1993. Initially direct injection-
soing machine was installed with the capacity of 24000 pairs premium on single shift basis. The
second direct injection mechinebe installed in march 1994. From the commencement of
commercial period till 31th march 1994 the co. has been separated on full capacity. As the
promoters are in this line for the last five decades the company has recently launched new
product of Hawaii chapels.
The present over supply in the domestic market is improved due to this inceasing growth rate of
demand over the base several years.
FUTURE PLAN
Group has set up this company to expand its exciting capacity by more thantwo times to increase
in the market share in national and international market and to meet out the

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growing demand of its product. The group has ambition plan for the future to globalize its brands
“Liberty “ and with and in new it has created a distribution network not only in India but also in
Europe and in Middle East , which is dedicated to market the group branded products. The group
plans to restructure its separation into integrated shoes manufacturing and market organization.
DECISION MAKING
All the decision , which is of the strategic nature, is to be taken at highest level . various
committees for the formulation of policies for the different functional area have been
constituted. Before taking any financial decision proper consultation with concerned executive
is done. The heads of the department have sufficient opportunities for participating in decision
making .their views recommendations and suggestion are given due consideration. However the
final authorities lies with top executive.

GROUP OF COMPANY
Liberty automotive is a joint venture company promoted by azin khodro group of Iran and
project at bawal industrial growth centre on Delhi – Jaipur national highway for manufacturing
automotive trim parts. Drawing upon the consideration manufacturing experience of Azin Khodro
Group and the business of Liberty group, it is all set to deliver high quality finished products.
Armed with a unique R & D source Liberty automotive is able to offer ideas to create solution
and resources, to meet the challenge of performance optimization of a car.
LIBERTY ORGANOSYS
Liberty group for manufacturing acedic acid in India promotes Liberty organosys limited. Liberty
proposesto use methanol carbonization route for manufacturing this organic chemical 60% of the
world production is based on technology. Liberty plans to build this in a large scale. Meeting the
entire demand of the nation. The technical details of the project will bwe announced soon.
LIBERTY REVOLUTION
In the elite shopping avenues of fashion capital “Revolution” has begun its walk. The fashion
accessory and footwear stores have begun operation in Chennai, Bangalore, Mumbai, Kolkata ,
Hyderabad and Pune. These are company managed and owned outlets where the emphasis is to
deliver high fashion to the customer backed by quality service making it a delightful shopping
experience. Liberty showrooms enter the international market as company has plans of opening
18 more revolution showrooms nationally & internationally.

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LIBERTY WHITEWARE LTD.
Just 90 minutes away from New Delhi on the national highway 8 that joins the country’s political
capital with its business capital frenetic activity is on. It is where Liberty whiteware factory is fast
taking shape. Liberty whiteware is all set to introduce to domestic market some very up – market
sanitary ware that will be manufactured here. It will come with some obvious adventages. Like
international products at domestic process for one and the opportunity for discerning customer to
choose at leisure what would be seen first time in India. A part of Liberty ‘s diversification the
investments in the project are to the tune of 10 million Euro and with production plans running
ahead of schedule the cash register should soon start ringing well before time at Liberty
whiteware Ltd.

PROMOTERS OF COMPANY

The company comes under the public limited companies groups and belongs to “ Liberty
Group”. The company has been promoted by three business persons name as
Late Sh. D.P. Gupta
He has been associated with shoes industry for the last 80 years. He initiated the shoe business
under the trading cycle “Pal Boot House”. In 1994 he had been involved with Liberty group
since than. He was also activating in social.
Late Sh. P.d. Gupta
He was 75 years old, chairman and the managing director of the company. He had been associated
with the shoe industry since the age of 16 years. He was also chairman of joint venture set up in
Russia by the company. He had been the president of all India chambers of footwear exports for
last 20 years.
Late Sh. R. K. Bansal
He was 67 years old and the promoter’s director of the company. He had been associated with
shoe industry and with the trade for last 45 years. He had the knowledge of international markets
with his ability in the marketing company is capable of introducing “Liberty” products in most
advanced countries such as Italy and America. He was also partner in many associated firms.

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 BOARD OF DIRECTORS

 Mr. Adesh Gupta (CEO,Executive Director)

 Mr. Adarsh Gupta (Executive Director )

 Mr. Shammi Bansal (Executive Director)

 Mr. S.K. Goel (Independent Executive Director)

 Mr. Sunil Bansal (Non Executive Director)

 Mr. Amitabh Taneja (Independent Director)

 Mr. Prem Chand Grag (Non Executive Independent Director)

 Mr. S.K. Arya (Non Executive Independent Director)

 Mr. Sidharth Sanghi (Non Executive Independent Director )

 Mr. Raghu Dayal ( Non Executive Independent Director)

 Mr. Vivek Bansal (Non Executive Independent Director)

 Mr. Munish Kakra (Vice President & Company Secretary)

LIBRTY BRAND
Libety has developed a spectrum of 10 exclusive brands, each of which have been given tha t
extra edge to enter to a specific target group. Today the new range from liberty is all about style ,
design and comfort. The range imbibes the spirit of fun and is trendy to the core.
Liberty has something for every income bracket & every age group. It pampers its customers to
keep pace with global footwear fashion trend & by walking that extra mile which is why, special
care has been taken to make sure that the outlets design meets the specific needs taste of the
target groups.A part from the existing brands, liberty is busy fashioning the look of the future
footwear . introducing new decisions that redefines styles and comfort.

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This family brand is style personified with something for every need. Be it formal or casual, at
office or at the beach, a conference or a soiree Liberty fits in effortlessly.

 COOLERS
They’re cool and they’re hot. They’re hap and they’re
happening. Perfect for the hot summer days. When the
sun blisters and the heat strokes, they keep the feet cool
and comfortable. But why limit the pleasure to summers?
Here’s one brand of sandals that stays cozy and comfy all year round.
 FOOTFUN
Something for those little feet as they learn to walk. Airy,
light and comfortable with lycra uppers and no laces.
In fairy-tale colors and designs.
 FORCE-10
The flair, the style and ease that forces the world to take
notice. A happening range of sports shoes in far out colors
that provides the perfect footnote to a head-turning presence.

 FORTUNE
Genuine leather uppers and extra light poly soles help
complete the power dressing in men with élan and panache.
 GLIDERS
Cool and comfortable, trendy and with it. A range of
stunning brogues and smart lace ups that will be noticed and
talked about every step of the way. Unmistakably a part of
Generation You.
SENORITA
Walk tall, walk light and walk with amazing style.
Rediscover the little girl that lurks not far behind in every
woman, laughing and loving every moment of life.

23
 TIPTOPP
Strappy, styles and comfortable heels. And colors that
become the envy of all and sundry. Perfect for conquering
the neighborhoods in designs that are the latest rage the
world over.

 WARRIOR
Smart, stylish professional gear crafted from leather uppers
and direct injection P.U. soles with steel toe caps and
offering the widest range of styles in safety shoes. To master
the art of being confident and sure-footed on slippery
grounds and danger ones.
retardant and shock free product in economic range. Safety
footwear for industrial use.
DETAILED DESCRIPTION OF POPULAR BRANDS
NAME OF DETAILS TYPES MADE OF FOR THEM
BRAND
Force -10 Family force Sports & Canvas Gents
Leather
Windsor Liberty castte Leather shoe Leather Gents
Fortune Good luck Leather shoe Leather Gents
Ricardo Recoras Leather shoe Leather Gents
Gliders Fly in air Canvas shoe Canvas Children &
gents
Tip –Top Fun for Canvas & Canvas & Children
children leather leather
Senorita Seniority Bellerion Leather Ladies
sandal
Coolers Feel coolness Slippers sandals Leather Gents
Geo Sports Build Sports shoe Leather Gents & ladies
sportsmanship
Foot fun - Sports shoe Canvas Children

24
OBJECTIVE OF THE COMPANY

The main objective to be pursued by the company on its incorporation as set on memorandum of
association as under:-
 To work as buying selling agent with or without trademark for finished product.

 To import the technical knowhow of foot wear and PVC technology.

 To deal in raw hinds and skins.

 To carry on business of manufacturing and and repairing and wholesale dealers in all types of
footwear and accessories of footwear(such as heels, soles , puckers and hand grouse and other
product of leather), PCC, leather manufactures and dealers in all kinds of water proof articles

 To prepare , process, cost ,transport,refine,recover,retain utilize ,extract, finish import, buy

and sell market install summary and carry on business as manufacture dealer in all kinds of
footwear, component and accessories.

NATIONAL AND INTERNATIONAL AWARDS

The liberty group has won several prestigious national and international awards, which are as
under :

 Arch of Europe intertnational gold star, 1994.

 International award for ggd quality,Brussels, Belgium 1988.

 Europe award for pair in 1987.

 International asian award ,Jakarta in 1982

25
 National award from government in 1981 – 1982. Udyog rattan by government of
India.

 Certificate of merit as national export award from government of India in 198

 Leather export promotion council merit award for outstanding performance for 1976
to 1982.

 National award for best export performance in leather garmants in 1987 – 1988.

 Haryana government export award in 1978-1979.

UNITS OF LIBERTY SHOES LIMITED

REDGISTERED OFFICE & HUMAN TECH CENTRE -1

LIBERTYPURAM,

13TH MILE STONE,

G.T. KARNAL ROAD KUTAIL,

P.O.BASTARA.

DIST. KARNAL -132114 (HARYANA)

CORPORATE OFFICE & HUMAN TECH CENTRE -11

LIBERTY COMPLEX, 17TH MILE STONE,

26
 G.T. KARNAL ROAD, GHARAUNDA,

DISTT. KARNAL

HUMAN TECH. CENTRE -111

LIBERTY PARK , LIBERTY ROAD,

DISTT. KARNAL -132001 (HARYANA)

HUMAN TECH. CENTRE -1V

LANGA ROAD , V1LL. CHARBA,

P.O. SAHASPUR, VIKAS NAGAR,

DEHRAHUN (UTTRANCHAL)

BRANCHES

DELHI, JAMMU , JAIPUR,

CHENNAI, RAJPURA, BANGLORE,

AGRA, SAHARANPUR, MUMBAI,

CALCUTTA, HYDRABAD.

FINANCIAL ANALYSIS
The term analysis is methodical classification of data given in the financial statements.

27
Financial analysis is the process of identifying the financial strength and weakness of tiles Finn by
property establishing relationship between the item of balance sheet & profit & loss account.

Financial analysis can be undertaken by the firm or by outside parties, firm’s owner, creditors,
investors and other. Actually the nature of analysis depends upon the parties.

“ Financial analysis consists in separating facts according to some definite plan, arranging them in
groups according to certain circumstances, and then presenting them in a convenient and easily
read and understandable form.”
According to Finney and Miller

“Financial statement analysis is largely a study of relationship among the various financial factors
in a business, as disclosed by a single set of statements and a study of the trends of these factors,
as shown in a series of statements.”
According to John N. Myres

FEATURE OF FINANCIAL ANALYSIS :-

1. To presents a complex data contained in the financial statement in simple and

understandable form.

2. To classify the item contained in the financial statement in the convenient and rational
groups.

3. To make comparison between various groups to draw various conclusions.

TYPES OF FINANCIAL ANALYSIS

1. Classification on the basis of material used.

2. Classification on the basis of modus operandi.

On the basis of material used :-

28
External analysis :-
Outsiders, who don’t have access to the detailed internal accounting record of business firm, do
this analysis. These outside parties potential investors, creditors, government agencies & general
public.
Internal analysis :-
The analysis conducted by person who has access to the internal accounting records of a business
firm is known as internal analysis.
On the basis of modus operand :-

Horizontal analysis:-
Horizontal analysis refers to the comparison, of financial data of a company for several years.
The figures of this types of analysisare presented horizontally over a number of columns. This
types of analysis is also called “ dynamic analysis”.
Vertical analysis:-
This analysis refers to the study of relationship of the various items in the financial statements of
one accounting period. It is also known as “ Static analysis “

6.4 SIGNIFICANCE OR IMPORTANCE OF FINANCIAL ANALYSIS

1.Significance for Managers;- Planning and Control are the two most important ingredients to
a Successful Business. A Business Plan takes most of the guess work out of Business Strategy
and Control through solid Financial analysis. Financial Data provides a way to gauge where you
are in your Strategic Plan, telling you where changes in your Plan are necessary. Because of this,
Financial Data Analysis and Management are vitally important to running a successful business.
2.Significance for Investors:- Investors are generally considered one of the primary users of
financial statements. They use the financial statements to determine the current profitability of the
firm and attempt to predict its future profitability. Their interest is in the future growth of a
company's stock price and/or the likelihood of the company paying dividends to the owner.
3. Significance for Creditors:-In the ongoing relationship between suppliers and a firm
financaial statement can play several roles consider the relationship between a firm and the

29
suppliers to its loan capital.e.g a bank in the initial loan granting stageof the
relationship,financial statement typically are an important items.
4.Significance for regulatory agency:-The demand by these bodies can arise in diverse set of
areas such as revenue raising e.g for income tax,sales tax ,value added tax collection. Govt.
intervention e.g determine wheather to provide a govt.backed loan agreement to a finically
distressed firm.
5.Significance for Employess:-They are the part of the orgnisation and feel that their effort
contributed to the firm profitthey would therefor prefers togive bonusesnas salary inceresesthis
also increase expensies of the firm.
6.Significance for others parties:- The set of party that demand for financial analysis
information of corporation is open ended . diverse party such as academic ,environmental
protection organization, and other special interest lobbing groups approach corpartionfor detail
relating to their financial and other affairs.
7.Significance for Government :-Various ministries and department have interest in the firm’s
payments of taxes. Also seet the enchment of lawfor the industry and the provision of
socialservice to the public. The govet may also want to ensure that the firm complies with the law
on for example wages payments and employees benefit.
6.5 LIMITATION OF FINANCIAL ANALYSIS :-
lthough analysis of financial statement is essential to obtain relevant information for making several decisions
and formulating corporate plans and policies, it should be carefully performed as it suffers from a number of the
following limitations.
1.Mis lead the users:-The accuracy of financial information largely depends on how accurately
financial statements are prepared. If their preparation is wrong, the information obtained from
their analysis will also be wrong which may mislead the user in making decisions.
2.Not useful for planning:-Since financial statements are prepared by using historical financial
data, therefore, the information derived from such statements may not be effective in corporate
planning, if the previous situation does not prevail.
3.Qualitative aspects:-Then financial statement analysis provides only quantitative information
about the company's financial affairs. However, it fails to provide qualitative information such as
management labour relation, customer's satisfaction, management's skills and so on which are
also equally important for decision making.

30
4.Comparison not possible:-The financial statements are based on historical data.
Therefore comparative analysis of financial statements of different years can not be done as
inflation distorts the view presented by the statements of different years.

5. Wrong judgement:- The skills used in the analysis without adequate knowledge of the subject
matter may lead to negative direction . Similarly, biased attitude of the analyst may also lead to
wrong judgement and conclusion.

6.Not helpful in price fixation:-In financial accounting the cost is not available as an aid in
determining prices of the product services production order and product line.

7.Not control on cost:-It does not provide for a proper control of materials and
suppliers,wages.labours and overheads.

8.No analysis of losses:- It does not provided the complete analysis of lossesdue to defective
material ,idle time,idle palnt and equipment. In other words no distinction is made between
avoidable and unavoidable wastage.

PURPOSE OF FINANCIAL ANALYSIS

The purpose os analysis of financial statements depends upon the need of a person who analysis
these statements. These needs may be :-
1. To know the earning capacity or profitability.

2. To know the solvency.

3. To know the financial strength

4. To make comparative study with other firms.

5. To know the capability of payment of interest & dividend.

6. To know the trend of business

31
 PROCEDURES OF FINANCIAL STATEMENT ANALYSIS

The following procedure is adept for the analysis and interpretation of financial statements : -

 The anaylsis should acquaint himself with principals and postulates of accounting.

He should know the plans and policies of the managements so that he may be able to find out
whether these plans are properly executed or not.

 The exent of analysis should be determined so that the sphere of work may be decides. If the
aim is to find out the earning capacity of the enterprises then analysis of the income statement
will be undertaken. On the other hand, if financial position is to be studied then balance sheet
analysis will be necessary.

 The financial data be given in the statement should be recognized and rearranged. It will
inolve the grouping of similar data same heads. Breaking down of individual components of
statements according to nature. The data is educed to standard form.

 A relation is established among financial statements with help of tool & techniques of analysis
such as ratio, trends ,common size, fund flow etc.

 The information is interpreted ina simple and understandable way. The significance and utility
of financial data is explained for help in decision making.

 The conclusion drawn from interpretation is presented to the management in the forms of
reports

Following statements are including in the list of financial statements :-

1. Profit and loss account.

2. Balance sheet.
3. P & L appropriation account.

32
 4. Cash flow statement.

INCOME STATEMENT OR PROFIT &LOSS ACCOUNT

It ia an important financial statement. It is a statement of revenues earned and the expenses
incurred.

NEED OF INCOME STATEMENT

1. To ascertain the cost of production, gross profit, gross loss/ net profit and net loss.

2. To ascertain the cost of goods sold and establishing its relationship with sales.

3. To ascertain the profitability of the business by establishing relationship of gross profit

and net profit with sales.

POSITION STATEMENT OR BALANCE SHEET

Balance sheet is a statement which presents the financial position of a business on a particular
date. It is prepared at the end of accounting period.

CHARACTERISTIC OF BALANCE SHEET:-

1. Balance sheet is prepared on a particular date and it shows the financial position of
business on that very particular date.

2. Balance sheet has two columns. It tells the relationship between Assets and Liabilities and
the total of both the sides are equal.

3. Balance sheet shows the financial position of a business on going concern value.

PROFIT AND LOSS APPROPRIATION ACCOUNT

33
Profit and Loss Appropriation account is the part of financial statements of company. It is
different from profit and loss appropriation account of partnership firm . When a company makes
his profit and loss account, its net profit is transferred to the credit side of profit and loss
appropriation account. Profit and loss account shows only the net profit or net loss from operation
of business but profit and loss appropriation accounts shows all non- operational adjustment
which is needed for proper distribution of net profit between shareholders and company for future
growth.

CASH FLOW STATEMENT

A cash flow statement is a statement which summarizes the sources of cash inflows and uses of
cash outflows of a business enterprise during a particular period of time, say a month or year.
When cash flow statement us prepared, sources and uses of cash only are taken in to account and
even liquid assets like debtors and bill receivable are excluded . since the idea of preparing this
staementis to sumarise the impact of various transaction on the cash position of the firm those
transctions which result in increase of cash position are termed as cash inflows and those which
result in decrease of cash position are the sources of cash outflows.inshort , it may be said that a
cash flow statement shows the sources of cash receipts and the purpose of which payments are
made .

6.8 TECHNIQUES OR METHODS OF FINANCIAL ANALYSIS

1. Comparative Statements.

2. Trend analysis

3. Common size Statements.

4. Fund flow statements.

5. Cash flow statements

6. Ratio Analysis.

7. Break even point Analysis.

COMPARATIVE STATEMENT

34
This is a simple method for tracing changes in the financial performance of a company.
Comparative financial statements will contain items for atleast two periods. Changes – increases
and decreases – in income statement and balance sheet over period can be shown in two ways:
(1) Aggregate changes
(2) Proportional changes
Drawing special columns for aggregate amount or percentage, or both, of increase and decrease,
can indicate aggregate changes. Recording percentage calculated in relation to a common base in
special columns, on the other hand,shows relative, or proportional changes. An investigation of
the comparative financial statements help to highlight the significant facts and points out the
items which need further analysis.
TREND ANALYSIS
In financial analysis the direction of changes over a period of years isof crucial importance. Time
series or trend analysis of ratios indicate the direction of change. This kind of analysis is
particularly applicable
to the items of profit and loss account. For the trend analysis, the useof index numbers is
generally advocated. The procedure followed is toassign the number 100 to the items of the base
year and to calculate percentage changes in each item of other years in relation to the baseyear.
This procedures may be called as “Trend Percentage Method”.

COMMON SIZE STATEMENT

The values on the common size statement are expressed as percentages of a statement component
such as revenue. While most firms don't report their statements in common size, it is beneficial to
compute if you want to analyze two or more companies of differing size against each
other. Formatting financial statements in this way reduces the bias that can occur when
analyzing companies of differing sizes. It also allows for the analysis of a company over various
time periods, revealing, for example, what percentage of sales is cost of goods sold and how that
value has changed over time.

FUND FLOW STATEMENT

35
Fund Flow Statements summarize a firm’s inflow and outflow of funds. Simply put, it tells
investors where funds have come from and where funds have gone. The statements are often used
to determine whether companies efficiently source and utilize funds available to them.

CASH FLOW STATEMENT

An accounting statement called the "statement of cash flows", which shows the amount of cash
generated and used by a company in a given period. It is calculated by adding noncash charges
(such as depreciation) to net income after taxes. Cash flow can be attributed to a specific project,
or to a business as a whole. Cash flow can be used as an indication of a company's financial
strength.

RATIO ANALYSIS
A tool used by individuals to conduct a quantitative analysis of information in a company's
financial statements. Ratios are calculated from current year numbers and are then compared to
previous years, other companies, the industry, or even the economy to judge the performance of
the company. Ratio analysis is predominately used by proponents of fundamental analysis.

BREAK EVEN POINT ANALYSIS

The break-even point for a product is the point where total revenue received equals the total costs
associated with the sale of the product (TR = TC). A break-even point is typically calculated in
order for businesses to determine if it would be profitable to sell a proposed product, as opposed
to attempting to modify an existing product instead so it can be made lucrative. Break even
analysis can also be used to analyze the potential profitability of an expenditure in a sales-based
business.

break even point (for output) = fixed cost / contribution per unit

36
RESEARCH METHODOLOGY
Research is common refer to a search for knowledge. Once can also define research as a scientific
and systematic search for pertinent information on a specific topic. Infact, research is an art of
scientific investigation. Research is an academic activity and as such the term should be used in
atechnical sense.
According to Clifford Woody,” research comprises defining and redefining problems, formulating
hypothesis or suggested solution,collecting, orgnising and evaluating data, making deductions and
reaching conclusions and at last carefully testing the conclusions to determine whether they fit the
formulating hypothesis”.

RESEARCH DESIGN
Research design is a framework or the blue print for conducting the research project. Research
design is the arrangement of conditions for collection and analysis of data in a manner that aims
to combine relevance to the research purpose with economy in procedure. It includes an outline
of what the researcher will do from writing the hypothesis and its operational implications to the
final analysis of data.

TYPES OF RESEARCH DESIGN

37
 • Exploratory research design
• Descriptive research design
• Experimental research design

EXPLORATORY RESEARCH DESIGN

It is also termed as formulative research design. The main purpose of the study is to formulate a
problem for more precise investigation.

DESCRIPTIVE RESEARCH DESIGN In descriptive research design, those studies are taken
which are concerned with describing the characteristics of a particular individual or a group.

EXPERIMENTAL RESEARCH DESIGN

In this casual relationships between the variables are tested. It is also known as hypothesis testing
research design.The present project is analytical in nature. The main objective of the analytical
research design is to define the problem into researchable one and analyse the data according to
the purpose.

SOURCES OF DATA
Primary Data:- The primary data are those which are collected afresh and for the first time and thus
happen to be original in character.

Secondary Data :-The secondary data are those data which have already been collected by someone
else and which have already been passed through the statistical process. The researcher would have to
decide which sort of data he would be using for his study and accordingly he will have to select one or
the other method of data collection.

In this project,I have used Secondary data of companies annual reports , questioning, ledger and
past records. Company has provided me annual reports from 2000-2001 to 2009 to 2010 by the help
of which prepared my report.
In this project,I have used secondary data which has been collected from following sources:-
 Annual Reports

38
  Books
 Internet
 Other material and report published by company

PROFIT AND LOSS ACCOUNT OF LIBERTY SHOE LTD

Mar ' 10 Mar ' 09 Mar ' 08 Mar ' 07 Mar ' 06
Income
Operating income 260.47 241.69 248.79 222.43 205.14
Expenses
Material consumed 145.47 135.80 133.19 109.63 97.63
Manufacturing expenses 20.54 25.92 27.00 28.39 27.62
Personnel expenses 27.03 20.92 22.61 21.23 19.92
Selling expenses - 16.79 18.25 17.44 16.08
Adminstrative expenses 43.06 16.29 16.21 12.98 11.86
Expenses capitalised - - - - -
Cost of sales 236.10 215.72 217.26 189.68 173.10
Operating profit 24.37 25.97 31.54 32.75 32.04
Other recurring income 0.73 1.04 0.59 1.02 0.21
Adjusted PBDIT 25.11 27.01 32.13 33.77 32.25
Financial expenses 8.99 12.59 13.41 8.88 4.83
Depreciation 6.79 6.59 6.38 4.63 4.00

39
 Mar ' 10 Mar ' 09 Mar ' 08 Mar ' 07 Mar ' 06
Other write offs - - - - -
Adjusted PBT 9.32 7.83 12.34 20.26 23.42
Tax charges -0.35 -0.26 0.12 2.49 5.36
Adjusted PAT 9.67 8.09 12.23 17.77 18.06
Non recurring items - -0.54 3.82 -0.75 0.43
Other non cash adjustments -0.47 -0.02 -0.09 0.16 0.43
Reported net profit 9.20 7.52 15.96 17.18 18.92
Earnigs before appropriation 43.59 40.39 38.87 28.90 20.61
Equity dividend - - - - 2.54
Preference dividend - - - - -
Dividend tax - - - - 0.36
Retained earnings 43.59 40.39 38.87 28.90 17.72

40
 TABLE OF OPERATING INCOME

Mar ' 10 Mar ' 09 Mar ' 08 Mar ' 07 Mar ' 06
Income
Operating income 260.47 241.69 248.79 222.43 205.14

41
 300

250

200

150 Operatingincome

100

50

10 09 08 07 06

INTERPRETATION

• According to profit and loss account of liberty shoe ltd the operating income of company
increased continuously in the year 2006,2007,2008,and 2010 but decrease in 2009.

• Operating income of the liberty shoe ltd is higher in the year 2010and it is Rs.260.47 cr.

TABLE OF OPERATING PROFIT

Mar ' 10 Mar ' 09 Mar ' 08 Mar ' 07 Mar ' 06
Operating profit 24.37 25.97 31.54 32.75 32.04

42
 35

30

25

20
Operatingprofit
15

10

10 09 08 07

INTERPRETATION

• According to profit and loss account of liberty shoe ltd the operating profit is increase
in2006 and 2007 but decreased continuously in 2008,2009 and 2010.

• According to profit and loss account last time it is high in the year of 2007 and it is
Rs.32.75 cr.

TABLE OF PROFIT AFTER TAX

Mar ' 10 Mar ' 09 Mar ' 08 Mar ' 07 Mar ' 06
PAT 9.67 8.09 12.23 17.77 18.06

43
 20
18
16
14
12
10 PAT
8
6
4
2
0

10 09 08 07 06

INTERPRETATION

• According to profit and loss account of liberty shoe ltd the profit after tax is continually
decreased in 2006,2007,2008 and 2009 but it increase in 2010.

• Profit after tax is increased last time in the year 2006 and that is Rs. 18.06 cr.

TABLE OF NET PROFIT

Mar ' 10 Mar ' 09 Mar ' 08 Mar ' 07 Mar ' 06

Net profit 9.20 7.52 15.96 17.18 18.92

44
 20

15

10 Net profit

10 09 08 07 06

INTERPRETATION

• According to profit and loss account of liberty shoe ltd the net profit of the company is
regularly up and down in the last fives years.

• The net profit of the company is last time higher in the year 2006 and it is Rs. 18.92 cr.

CASH FLOW STATEMENT FOR LAST FIVE YEARS

45
PARTICULARS Mar’10 Mar’09 Mar’08 Mar’07 Mar’06

Profit Before Tax 17.85 19.50 29.05 27.82 28.27

Net CashFlow- 15.41 27.13 22.81 46.31 30.29

Operating Activity

Net Cash Used In -2.62 -4.01 -9.17 -50.19 -16.43

Investing Activity

NetCash Used in -13.54 -21.76 -13.30 6.15 -13.43

Fin. Activity

Net Inc/Dec In Cash -1.01 1.36 0.34 1.68 0.49

And Equivlnt

Cash And Equivalnt 5.15 3.79 4.15 2.94 2.45

Begin of Year

Cash And Equivalnt 4.13 5.15 4.49 4.62 2.94

End Of Year

CASH FLOW FROM OPERATING ACTIVITY

46
PARTICULARS Mar’10 Mar’09 Mar’08 Mar’07 Mar’06
Net Cash Flow- 15.41 27.13 22.81 46.31 30.29
Operating Activity

50

40

30
Net Cash Flow-
OperatingActivity
20

10

10 09 08 07 06

INTERPRETATION

 According to the cash flow statement of liberty shoe ltd the net cash flow from operation
activity in 2006,2007and 2008 increased and then decreased in 2009, 2010.

 The net cash flow from operating activity is higher in the year is2007 and that is Rs. 46.31 cr

CASH FLOW FROM INVESTING ACTIVITY

47
PARTICULARS Mar’10 Mar’09 Mar’08 Mar’07 Mar’06
Net Cash Used -2.62 -4.01 -9.17 -50.19 -16.43
In Investing
Activity

10 09 08 07 06
0

-10

-20

Net Cash Used In

-30
InvestingActivity

-40

-50

-60

INTERPRETATION
 According to cash flow statement of liberty shoe ltd theNet cash used in investing activity
is increased in 2006,2007AND 2009 and now also decreased in 2008 AND 2010. Net cash
used in financing activity is decreased continuously.

 The net cash used in investing activity is higher in the year 2007 and that is Rs.-50.19 cr.

CASH FLOW FROM FINANCING ACTIVITY

48
PARTICULARS Mar’10 Mar’09 Mar’08 Mar’07 Mar’06
NetCash Used in -13.54 -21.76 -13.30 6.15 -13.43
Fin. Activity

10
5
0 09 08 06
10

-5 07
NetCash Used in Fin.
-10 Activity

-15
-20

-25

INTERPRETATION
 According to the cash flow statement of liberty shoe ltd the net csh used in financing activity
is regularly in the last five yearsand it is higherin the year of 2009.

 It shows that company has not sound position this year because of decrease in operating
profit.

LIQUIDITY RATIOS

49
1) CURRENT RATIO
CURRENT RATIO = CURRENT ASSETS/CURRENT LIABILTIES

Year 2006-07 2007-08 2008-09

Current Assets 1,81,20,38,152 1,80,59,34,193 1,71,01,81,068
CurrentLiabilities 1,37,98,19,154 1,32,91,32,688 1,20,98,20,277
CURRENT RATIO 1.31 1.36 1.41

INTERPRETATION
 IDEAL CURRENT RATIO IS 2:1.
 The current ratio has decreased from 1.78 to 1.31 between the year 2005-2006 and
2006-2007. Then it is increasing continuously.
 This shows that the short term liquidity of the company is not satisfactorily but
better compared to previous year.

2) QUICK RATIO
QUICK RATIO = QUICK ASSESTS / CURRENT LIABILITIES

50
 YEAR 2006-07 2007-08 2008-09
Quick Assets 1050299387 1,04,40,61,085 1,03,74,55,656
Current liabilities 1,37,98,19,154 1329132688 1,20,98,20,277

Quick Ratio 0.76 0.79 0.86

INTERPRETATION
 THE IDEAL QUICK RATIO IS 1:1
 The quick ratio of the company has decreased from 1.07 to0.76 between the year 2005-
2006 and 2006-2007. Then increased to 0.79 to0.86 in the year 2007-2008 and 2008-
2009.This means that the company cannot meet its short term obligations.

 3) CASH RATIO
CASH RATIO = CASH AND BANK / CURRENT LIABILITIES
YEAR 2006-07 2007-08 2008-09

51
Cash and Bank 4,62,40,483 4,49,26,777 5,14,67,849
balance
Current 1,37,98,19,154 1,32,91,32,688 1,20,98,20,277
liabilities
Cash Ratio 0.0335 0.0338 0.0425

INTERPRETATION
 The cash ratio has first decreased from 0.039 to 0.039 between the year 2005-2006 and
2006-2007 and then increased in the next 2 years but not sufficient increase.
 This reveals that the cash position of the company is not

ACTIVITY RATIOS

1) STOCK TURNOVER RATIO

52
 INVENTORY TURNOVER RATIO = NET SALES / INVENTORY
YEAR 2006-07 2007-08 2008-09
Net Sales 2,37,54,48,269 2,57,89,34,907 2,47,52,66,480
Inventory 76,17,38,315 76,18,73,108 67,27,25,412
Inventory 3.12 3.38 3.68
Turnover Ratio

INTERPRETATION
 The inventory turnover ratio has decreased from 4.12 to 3.12 between the years
2005-2006 and 2006-2007 and2006-2007 and 2007-08 it increases by 0.26 points
and in 2008-2009 by 0.30 points.
 This shows that the company is better in generating the inventory into sales
compared to previous years but this is not very good situation.

2) DEBTORS TURNOVER RATIO

DEBTORS TURNOVER RATIO = SALES/DEBTORS

YEAR 2006-07 2007-08 2008-09

53
Sales 2,37,54,48,269 2,57,89,34,907 2,47,52,66,480
Debtors 72,08,94,474 72,41,47,983 70,43,22,494
Debtors 3.29 3.56 3.514
Turnover Ratio

INTERPRETATION
 The debtor turnover ratio has first decreased from 4.57 to 3.29 between the year 2005-
2006 and 2006-2007 and then increased from 3.29 to3.56 between the year 2006-007
and 2007-08 and then decreased from 3.56 to 3.51 between the year 2007-08 and
2008-09.
 This shows that the debtor management system is not effic

Average Collection Period

AVERAGE COLLECTION PERIOD = NUMBER OF WORKING DAYS /
DEBTORS TURNOVER RATIO

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 YEAR 2006-07 2007-08 2008-09
No. of working days 365 366 365
Debtors Turnover 3.29 3.56 3.514
Ratio
Average 111 103 104

INTERPRETATION
 The average collection period has decreased from 80days to 110 days between the year
2005-2006 and 2006-2007 and then decreased in the year 2007-2008 and there is no major
decrease.
 More the average collection period less efficient is the debtor management system.

3) WORKING CAPITAL TURNOVER RATIO

WORKING CAPITAL TURNOVER RATIO = SALES/ NET WORKING CAPITAL

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 YEAR 2006-07 2007-08 2008-09
Sales 2,37,54,48,269 2,57,89,34,907 2,47,52,66,480
Net Working 43,22,18,998 47,68,01,505 50,03,60,791
Capital

Working 5.50 5.41 4.94

Capital
Turnover
Ratio

INTERPRETATION
 The working capital turnover ratio has first increased from 3.73 to 5.5 between the year
2005-2006 and 2006-2007 and then decreased to 5.41 in the year 2007-2008 and again
reduced to 4.94.

PROFITABILITY RATIOS
1) OPERATING PROFIT RATIO

OPERATING PROFIT RATIO = OPERATING profit/Sales *100

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YEAR 2006-07 2007-08 2008-09

Operating profit 28,13,76,258 32,99,64,549 29,99,86,323

Sales 2,37,54,48,269 2,57,89,34,907 2,47,52,66,480
Operating Profit 11.85 12.80 12.12
Ratio

INTERPRETATION
 The operating profit first increases to 12.84 between the year 2006-2007 and2007-2008
and then again decreases to 12.12% in the year 2008-2009.
 This shows that the operating cost of the company has increased from 2007-2008 to
2008-2009.

2) NET PROFIT RATIO

NET PROFIT RATIO = NET PROFIT AFTER TAX X 100

NET SALES

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 YEAR 2006-07 2007-08 2008-09
Net Profit 17,01,94,554 16,05,13,611 7,54,52,361
Sales 2,37,54,48,269 2,57,89,34,907 2,47,52,66,480
Net Profit Ratio 7.164 6.22 3.048

INTERPRETATION
 The net profit ratio first decreases from 8.36 to 7.164 in the year 2005-2006 and 2006-
2007 and then decreases to 3.048 in the year 2008-2009.
 This fall is a tremendous fall compared to previous year situation of the company.
 This reveals that the efficiency in manufacturing, administering and selling the products
is decreasing.

LONG TERM SOLVENCY RATIOS

1) DEBT-EQUITY RATIO

DEBT-EQUITY RATIO= LOANS /SHAREHOLDERS’ FUND

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 YEAR 2006-07 2007-08 2008-09
Loans 38,41,16,827 33,12,01,007 26,28,12,108
Shareholders 98,85,72,605 1,14,81,89,285 1,22,33,98,993
fund
Debt Equity 0.3885 0.29 0.21
Ratio

INTERPRETATION
 The debt equity ratio is increasing first in the year 2006-07 to the2005-06 and now
decreases to 0.29 in the2007-08 and to 0.21 in the year 2008-09 which means that the
company’s dependence on the external debt is increasing but improving compared to
previous year.
 This shows greater inflexibility in the company’s operation.
 This is only improved by retaining all the profit not distributing the dividend
 This is not a good signal about the company position.

2) INTEREST COVERAGE RATIO

INTEREST = NET PROFIT BEFORE INTEREST AND TAXES
COVERAGE FIXED INTEREST CHARGES
RATIO

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YEAR 2006-07 2007-08 2008-09
Net Profit before 26,65,57,054 24,44,21,752 212588931
interest and taxes
Fixed Interest 8,18,68,867 13,34,56,945 12,56,40,916
Charges
Interest Coverage 3.02 1.83 1.69
Ratio

INTERPRETATION
 The interest coverage ratio is decreases consecutively in the three years and now it
decreases too much.
 A low ratio indicates excessive use of debt.

FINDINGS OF THE STUDY

1) Company is using WCDL (Working Capital draw down limit) for meeting short term
requirement of cash.
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 2) The liquidity position of the company is better compared to previous year.

3) Company’s inventories position is better compared to previous year.

4) Profit of the company decreased drastically this year compared to previous year. Company
is unable to reduce its fixed expenses.

5) The main focus is on the quality of the export goods. They give less attention to the needs of
Indian customer. That’s why company is not able to increase its market share.

CONCLUSION

There is always a conclusion at end of any activity or training programmed. After consultation,
reviewing the training period following are some conclusion regarding the Liberty Footwear:-

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Windsor in males and Senorita in female are the most popular brands.Liberty has gained more
popularity comparatively in competition with other shoe companies.Demand of Force-10 is very low
among men footwear.Demand of Gliders is very low among ladies footwear.

Maximum customers influences have preferred to watch Liberty advertisement between

programmes.Liberty has got the largest range and variety of shoes.

Main competitors of Liberty shoes are Action , Bata, Lakhani,Relaxo, Woodland, Phoneix and some
local companies.

LIMITATIONS

Although every effort has been made to collect the relevant information through the sources
available, still some relevant information could not be gathered.
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  Time duration:-The time duration could not provide ample opportunity to study every
detail of management in the company.

 Specific areas:-There are restrictions not to visit some specific areas.

 Busy schedule :-The concerned executives were having very busy schedule.

 Confidential report :-As some figures have not been disclosed by the company on
account of confidential report.

 Based upon predictions:- Estimates are based upon predictions.

SUGGESTIONS

Suggestion are also very important after two month experience in any company or organization.
Appended below are few suggestion.

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1. Company should produce more light weight chappals and sandals and should advertised it
separately so as to attract the children.

2. Company should makes their prices more competitive and should minimize the prices.

3. Company should increase the investments on advertisement as it has now become more
effective.

4. Company should give emphasis on persons attitude and perception while designing and
advertisement because personal likings is more influencing factor among people.

5. Company should change its time schedule on TV according to the respondents preferences.

6. Company should give more emphasis on their slogan“SAPNEY AB HUE APNE “to make
more effective.

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 BIBLIOGRAPHY

BOOKS

• Pandey, I.M., “Financial Management”, Ed. 2007, Vikas Publishing House Private Ltd.,
New Delhi.

• Gupta, Shashi K., “Management Accounting”, Ed. 2007, Kalyani Publishers, New Delhi.

• Khan ,M .Y., “Financial Management” Ed. 2000,McGraw Hill, New Delhi

• Bhalla ,V.k , “ Working Capital”, Ed.2001 , Anmol , New Delhi

Manual

• Annual reports

Websites

• www.libertyshoes.com

• www.libertyfreedom.com

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 PROFIT AND LOSS ACCOUNT OF LIBERTY SHOE LTD

(RS CRORE)
Mar ' 10 Mar ' 09 Mar ' 08 Mar ' 07 Mar ' 06
Income
Operating income 260.47 241.69 248.79 222.43 205.14
Expenses
Material consumed 145.47 135.80 133.19 109.63 97.63
Manufacturing expenses 20.54 25.92 27.00 28.39 27.62
Personnel expenses 27.03 20.92 22.61 21.23 19.92
Selling expenses - 16.79 18.25 17.44 16.08
Adminstrative expenses 43.06 16.29 16.21 12.98 11.86
Expenses capitalised - - - - -
Cost of sales 236.10 215.72 217.26 189.68 173.10
Operating profit 24.37 25.97 31.54 32.75 32.04
Other recurring income 0.73 1.04 0.59 1.02 0.21
Adjusted PBDIT 25.11 27.01 32.13 33.77 32.25
Financial expenses 8.99 12.59 13.41 8.88 4.83
Depreciation 6.79 6.59 6.38 4.63 4.00

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 Mar ' 10 Mar ' 09 Mar ' 08 Mar ' 07 Mar ' 06
Other write offs - - - - -
Adjusted PBT 9.32 7.83 12.34 20.26 23.42
Tax charges -0.35 -0.26 0.12 2.49 5.36
Adjusted PAT 9.67 8.09 12.23 17.77 18.06
Non recurring items - -0.54 3.82 -0.75 0.43
Other non cash adjustments -0.47 -0.02 -0.09 0.16 0.43
Reported net profit 9.20 7.52 15.96 17.18 18.92
Earnigs before appropriation 43.59 40.39 38.87 28.90 20.61
Equity dividend - - - - 2.54
Preference dividend - - - - -
Dividend tax - - - - 0.36
Retained earnings 43.59 40.39 38.87 28.90 17.72

BALANCE SHEETOF LIBERTY SHOE LTD.

(RS CRORE)
Mar ' 10 Mar ' 09 Mar ' 08 Mar ' 07 Mar ' 06
Sources of funds
Owner's fund
Equity share capital 17.04 17.04 17.04 17.04 17.04
Share application money - - - - -
Preference share capital - - - - -
Reserves & surplus 114.50 105.30 97.78 81.82 64.63
Loan funds
Secured loans 75.04 82.65 103.32 104.03 48.81
Unsecured loans 12.79 16.44 15.06 22.02 21.45

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 Mar ' 10 Mar ' 09 Mar ' 08 Mar ' 07 Mar ' 06
Total 219.38 221.44 233.19 224.91 151.94
Uses of funds
Fixed assets
Gross block 136.53 131.73 126.06 110.55 79.70
Less : revaluation reserve - - - - -
Less : accumulated depreciation 53.25 47.08 40.61 35.55 31.22
Net block 83.28 84.64 85.46 75.01 48.49
Capital work-in-progress - 0.13 1.55 8.14 0.92
Investments 17.50 20.34 20.34 17.10 6.43
Net current assets
Current assets, loans & advances 171.99 171.02 180.59 182.61 134.95
Less : current liabilities & provisions 53.40 54.70 54.75 57.94 38.84
Total net current assets 118.59 116.32 125.84 124.67 96.10
Miscellaneous expenses not written - - - - -
Total 219.38 221.44 233.19 224.91 151.94
Notes:
Book value of unquoted investments 17.50 20.34 20.34 18.49 6.42
Market value of quoted investments - - - 0.01 0.01
Contingent liabilities 18.70 9.58 9.71 10.55 60.14
Number of equity shares outstanding (Lacs) 170.40 170.40 170.40 170.40 170.40

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