Apollo Earth Movers Project

73
A PROJECT REPORT ON INDUSTRIAL TRAINING AT Apollo Earthmovers Limited 212-A, G.I.D.C. Estate, Mehsana-384 002, Gujarat, INDIA Phone No: +91 (02762) 252362 Fax: 251337 E-mail:[email protected] (ACADEMIC YEAR, 2010-11) Submitted To NGES Collage of Management Studies (BBA Programmed) (Affiliated to Hemchandracharya North Gujarat University), PATAN (N. G.) Submitted By:- Mitesh B. Prajapati

Transcript of Apollo Earth Movers Project

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APROJECT REPORT

ON

INDUSTRIAL TRAINING

AT

Apollo Earthmovers Limited 212-A, G.I.D.C. Estate,

Mehsana-384 002, Gujarat, INDIA Phone No: +91 (02762) 252362

Fax: 251337 E-mail:[email protected]

(ACADEMIC YEAR, 2010-11)

Submitted ToNGES Collage of Management Studies (BBA Programmed)(Affiliated to Hemchandracharya North Gujarat University),

PATAN (N. G.)

Submitted By:-Mitesh B. PrajapatiRoll no: - 32Programme: - TYBBA Subject:-Training

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PREFACE

As we are management students theoretical as well as practical study is very essential.

We should be aware of how business is done how different processes in business take

place. It is important to study practically because I may join any company in future so if

our base is strong I shall not face any problem in future. It is true that management

studies cannot be perfect without practical training and perfection is basic necessity of a

management student. Management student is a coin. It has got two sides one is

theoretical knowledge and other is practical knowledge.

So to make our base strong our college gives me a permission to get training at “APOLLO

EARTHMOVERS LIMITED”. In this training I gathered various information’s from various

sources. I saw how business is and how production and import export takes place.

This is an important study which makes me understand about trade. And here I have

presented the information which I got from different sources. In this report, I tried all my

efforts to present this report attractively with all sufficient information. If any error is

found than I am extremely sorry for it.

PREPARED BY

MITESH B PRAJAPATI

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ACKNOWLEDGEMENT

I sincerely acknowledge the support extended by “APOLLO EARTHMOVERS LIMITED AT

MEHSANA” as well as I am also thankful to my college NGES college of management

studies, paten for giving me permission to get practical knowledge through this training.

During this I was not knowing from where to start from where to study but the support

of my advisor MR VISHAL GAJJAR in the company made this possible as well as they also

gave me a new direction. I am hardly thankful to her and all those who helped me.

It was really a great experience for me which increased my burning desire to study

industry. Now finally I would say that I got an opportunity which I took positively and I

grabbed that opportunity. I am thanking all the people who supported me by giving their

guidance & direction.

PREPARED BY

MITESH B PRAJAPATI

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Executive Summery

In this competitive world it is important to have basic knowledge because today every

field is making rapid strides and development is very faster in each and every sector. In

order to survive in such competitive position we should definitely possess practical

knowledge. For the motive of developing my practical knowledge my institute

undertaken industrial training at “APOLLO EARTHMOVERS LIMITED”

The project report which I presented mainly consist department of finance, the

information which I got from various sources is included in this report. The report is

completely based on what I felt and learned during my training.

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INDEX

TABLE OF CONTENT

1. Preface.......................................................................................................022. Acknowledgement......................................................................................033. Executive Summery....................................................................................04

4. General Information4.1. Introduction................................................................................074.2. History and development of the unit...........................................084.3. Company At a Glance..................................................................094.4. Mission and vision……………………………………………….......................104.5. Development of the company………………………........................……114.6. Reason for select this G.I.D.C location..................……………………..124.7. Reason for select the name of the company…………….............……134.8. Commercial Items.........................................…………………………….144.9. Organization structure...................................……………………………15

5. Finance Department5.1. Finance Information.................................................………………….175.2. Organization Structure Of Finance Department.......................….185.3. Finance Planning.................................................................………195.4. Working Capital.......................................................................….205.5. Cash…………….....................................................................………..215.6. Account Receivable.....................................................................215.7. Inventories..................................................................................215.8. Capitalization..............................................................................225.9. Management of Fixed Assets…………………...........................…….…225.10. Management of Working Capital.................................................235.11. Management of Inventories........................................................245.12. Financial Leverage.......................................................................255.13. Ratio Analysis..............................................................................26

6. Financial Performance...............................................................................427. Cash flow Statement..................................................................................438. Conclusion.................................................................................................539. Bibliographies............................................................................................54

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4.

General

Information

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4.1 INTRODUCTION

The Apollo Group of Companies, of which Apollo Earthmovers Ltd. is the flagship, is No. 1 of India manufacturer of Road Construction & Maintenance equipment. From a modest beginning in the year 1972, the group today offers almost the entire range of equipment that lend themselves admirably to the bituminous road building industry. The Group has four modern manufacturing facilities.

The manufacturing and marketing activities of Apollo Earthmovers Ltd.(AEL) is headed by qualified professional with rich experience in the industry. Commitment to Quality and the urge to offer products at competitive prices has given AEL the status of pioneer in many product lines. The Drum mix asphalt plants with thermo drum technology of Barber Greene Co. Inc., USA as well as the Bituminous Pressure distributors the technology from Max Pietsch KG GmbH & Co. of Germany are the first indigenous products of its kind produced at this plant.

AEL is investment in R & D and quality manpower helps in continuous improvement in product quality that meets more than the exacting quality standards of ministry of Surface Transport (M.O.S.T)international consultants and customer. The manifestation of customer confidence on the quality of the products and services of Apollo lines in the customer base of over 400 an equipment population of over 800 and market share of 65%. The sales and service offices are available at all the important locations in the country. At these offices the spare parts and services regarding the equipment are also available on call.

AEL is oriented to grow throught total customer satisfaction by constant improvement of technology and market focus.

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4.2 HISTORY AND DEVELOPMENT OF THE UNIT

The company was establishing in 1974. At that time in the India, road construction and other related to

equipment work was going on. At that time the owner the “ANILBHAI PATEL” had thought that why they

can’t establish one branch in “Mehsana” in G.I.D.C related to produce this type of machinery or equipment

and his thought applied and established this company “APOLLO EARTHMOVERS LTD” in “Mehsana”.

The Group started business operation in 1965 by establishing Apollo Engineering Company for

water welt drilling constructs over a period of time, the company integrated backwards into production of

drilling rigs. It has also started manufacturing of trailers and agriculture equipments.

An Apollo Industrial Product Private Limited had set up for manufacture mechanical pavers finisher

and hot mox plants. The company’s business grew steadily and its product earned a good reputation in the

market

In 1986 the Apollo Earthmover Private Limited termed with Gujarat Industrial Investment

Corporation (GIIC) to set up Gujarat Apollo Equipments Limited (G.A.E.L.) .The Company started

manufacturing drum type asphalt plant and hydrostatic sensor paver finishers under a technical

collaboration arrangement with Barber Greene, USA. Apollo earthmovers Limited has been entered in

stock exchange just from 19th June 2001.Apollo Earthmover Limited Company is ISO 9001:2000 certified.

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4.3 COMPANY AT A GLANCE

Company Name : APOLLO EARTHMOVERS LTD

Organization Type : private Limited Company

Organization Scale : Medium Scale Organization (Small Scale Organization, Medium Scale Organization, Large Scale Organization, Very Large Scale Organization)

Promoters / Proprietors

Owner/Chairman/M.D : Mr. Ajitkumar .T. patel

Executive Director : Mr Anand. A Patel.

Director : Mr. Manibhai. H. patel

Director : Mr. rashminbhai. H. patel

Director : Mr. dharmeshbhai. m. Mashru

Director : Mr. tejas. M. patel

AUDITOR : Mr. S.K.MooNDRA & CO. Chartered Accountants Ahmedabad

Corporate Office :“Parishram”, 5/B, Rashmi Society, Mithakhali Circle, Navrangpura, Ahmedabad- 380009.

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4.4 MISSION AND VISION OF THE COMPANY

MISSION:

The company’s goal is to retain the leadership by designing & building the state of

the art equipment, through technology that is proven and is the best in the world, availed by

license and joint venture with pioneers and leaders in respective field. To make it possible to give

India and the developing world.

With the P’s process, product and people, well and truly in place, Apollo shall be the supplier by

choice of the road construction industry.

VISION: To increase the turnover of the product and to establish prestige of number one

at the world level.

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4.5 DEVELOPMENT OF THE COMPANY

The company today offers almost the entire range of equipment that lends them selves admirably

to the road building industry.

The company investment in R&D and quality manpower help in continuous improvement

in product quality that more than meets the existing quality standards of ministry of surface

transport. Indian roads congress irrigation projects. The Apollo group is a Gujarat industrial house

with a business track record of 35 yrs. Their main interests are in,

Road Construction Equipment

Road Construction

Filtration System

Ship Breaking.

For 35 year Apollo have retained leadership by offering state of the art construction equipment

developed through in house R &D and strategic technology tie-ups Apollo company today offers

the entire range of road construction equipment that helps in building roads, which are safe,

durable & economical. Apollo’s mission is to retain the leadership through continuous R &D and

world class technology availed through technology transfers.

They believe that customer satisfaction is achieved through quality of products & procedure.

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4.6 Reason for select this (G.I.D.C.) location for firm

In those days there was one rule that the company should be in premises. And

electricity was also less costly. The transportation actively very easy because it is

established in the G.I.D.C. The third reason for this location is the mainly this locations very

easy to get more labor for production of product.

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4.7 Reason for select the name of the company Apollo Earthmovers Ltd.

When the company was started at that time the satellite name was “Apollo” was

fallen down on the earth approximately in 1982, so the decider has thought that the name

should be kept the Apollo. And the company producing the road construction or related to

help in earth work so the company have decide the company’s name as “APOLLO

EARTHMOVER LTD”

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4.8 COMMERCIAL ITEMS

1) Duties Taxes: The price quoted is ex-works Mehsana. Taxes Octroi and other local levies as May applicable at the time of dispatch shall be charged extra. 2) Loading, Lashing & Forwarding: Loading, lashing and forwarding charges shall be extra. 3) Transport/ Transit Insurance: Transportations charges and transit insurance shall be to the customer's account. 4) Delivery: With 20/30 days from the date of receipt of your confirmed order 5) Payment: 30% advance an balance against delivery

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4.8 ORGANISATION STRUCTURE

DGM

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M.D AJIT.T.PATEL

DGMMITUL. A. PATEL

Production

Manager

Roller prod.

Mr.Prajapati

DM ProdJayesh Dave

Sales force & Time keeper

Marketing Executive

Marketing manager

Bpd Prod.Jignesh Modi

DesigningBabulal

/Tripathi

Asst.Devang/chirag

Mnts & Training

M.G.Darji

Gen. MntsVasuji

Electric MntsRaju & team

PLNG, S&S,K, R.SonI

Asst.Bela Raturi

Service team.

Marketing DeptMkt Manager

Sales Force

Mkt Executive

Finance DeptFin. Manager

AccountantB.P.Dave

TaxesV.L.Desai

Purchase manager

Anil M Patel

Purchase Assistant

R.K.Sharma

StoreK.K.Patel

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5.

Finance

Department

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5.1 FINANCIAL INFORMATION

When the company was started at that time the company was initial basis. The production

of goods was less and the sale of the company was also less at that time.

Finance play very important role in the every company. The process of estimation of fund

which is requirement for firm & main source of the fund is called financial planning.

The accountant of the company spares most of the time in making the financial planning.

In Apollo Earthmovers Ltd for requirement of fund the accountant has decided six monthly or

some time yearly forecast of fund.

The company has set targets for each job in terms of money period, time consumed, and

quality assured etc. Apollo Earthmovers Limited makes effective use of fund & collect wild source

of funds. In company financial planning has greater significance.

Particular Amount(2010)Paid up Capital 1,20,00,000

Reserve and surplus 8,55,76,186Turn over 24,01,82,316

Profit before tax 1,83,80,734

Profit after tax 1,19,05,041

Earnings Per share 9.92

The above diagrammed shows the information about finance of the company. The

paid up capital of the company is 1, 20, 00, 000. On other hand the turnover of the company is

more than 24 cr.That we can see. in the year 2006 the profit before tax of the company was

more than 1.82 cr. And after tax profit was 1.19 cr. Their earning per share is 9.92.

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Chairman

Managing director

Finance decision

Chief accountant

Account assistant

Clerks

APOLLO EARTHMOVERS LTD.

5.2 ORGANIZATION STRUCTURE OF FINANCE DEPARTMENT

Organization of finance department means the division & classification of various functions, which

are to be performed by the finance department.

The responsibility for financial management are spread throughout the organization in the sense

that financial mgmt, to on extent, an integral part of the job of finance manager involve in

planning, allocation of resources & control.

In this regard, the major decision to be taken by the finance department is as under;

Investment decision

Financing decision

Dividend decision

Liquidity decision

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5.3 FINANCIAL PLANNING

Planning is pre-requisite for managing any little things too. When we think about fund, financial

planning comes at first. Financial planning answers the following questions: -

What should be funds requirements?

How should procure funds?

From where to procure the funds?

How to utilize the fund at maximum level?

Head office deals with the arrangement of raising the funds and provides funds required by any of

four plants.

In AEML, they make weekly forecast of funds in which requirement of each department is

mentioned. After that the proposal is sent to head office and got sanction from there.

So, financial planning has a significant place for making decision of requirement and utilization of

funds.

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5.4 WORKING CAPITAL

Management of working capital usually involve management or administration of current assets namely cash and marketable securities, account receivable and inventories and also administration of current liabilities. The quantum of working capital in business is dependent on various factors. Such as type of business, turnover of inventories, term of purchase and sale, size of the business unit, process of manufacturing, seasonal variations etc. the present company is engaged in manufacturing of capital goods. Therefore naturally there is a high amount of working capital required.

Decisions related to working capital and short term financing are referred to as working capital management. These involve managing the relationship between a firm’s short-term assets and its short liabilities. The goal of working capital management is to ensure that the firm is able to continue its operations and that it has sufficient cash flow to satisfy both maturing short-term debts and upcoming operational expenses.

WORKING CAPITAL STATEMENTS

(Rs. In Cr.)

PARTICULAR 2009-2008 2009-2010Sales 678.44 963.04

Current Assets:Stock 57.25 217.44

Loans & Advance 139.3578 188.7285

Debtors 0.2427 0.0053

Cash & Bank Balance 47.6974 95.9287

TOTAL (A) 284.63 502.11

Current Liabilities:Current Liabilities 241.37 498.21

Provisions 61.35 82.32

TOTAL (B) 302.72 580.53

WORKING CAPITAL (A-B) -18.10 -78.43

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5.5 CASH

The cash is needed for various purposes in business. They may be speculative, transitive and

precautionary motives. The management of cash requires cash planning. It is a technique to plan

& control the use of the cash. Cash is the most liquid current asset. Finance manager has to do

cash planning. Manager the cash flows decide optimum balance of cash and invest the surplus

cash in marketable securities.

5.6 ACCOUNT RECEIVABLETrade credit is considered as an essential marketing tool, acting as a bridge for movement of

goods through production and distribution stage to customer stage to customers trade credit

creates receivables involves credit policy, monitoring accounting receivables. A firm may follow a

latent or a straight credit policy. Before following establishing any credit policy finance manager

has to evaluate the effect of policy in terms of cost and benefits.

5.7 INVENTORIESInventories constitute the most significant part of current assets of a large majority of companies.

The inventories are in form of raw material, work in process and finish goods. The management of

inventories is necessary to maintain a large size of inventory for efficient and smooth production

and sales operations and to maintain the minimum investment in inventories is not desirable. The

latest and modern techniques like economic order quantity are used in the company for

management of the inventories.

RPATICULARS RS.(LAKHS)Raw materials & stores 57.32

Raw material 57.20

Stores & spares 0.12

Finished & Semi finished goods 45.33

Finished goods 34.93

Sanitized goods 10.40

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5.8 CAPITALIZATION

Capitalization means total per value of all securities, debentures issued by the company, reserve &

surplus &value of all other long term obligation.

The term includes:

The value of all surplus- earned capital

The value of long term loan

The value of bound & securities still not redeemed

Capitalization is used in its quantitative aspects & refers to the amount, which a company’s

business can be valued.

5.9 MANAGEMENT OF FIXED ASSETS

CAPITAL BUDGETING

Capital budgeting may be defined as decision making process by which an organization evaluate

the major investments proposals keeping due consideration for the,

Amount needed for investment

Amount available for investment

Amount that can be acquired from different resources

The cost of raising funds

Funds cash flows

There are many techniques, which can be used to determine profit balance for the project.

There are various kinds of budgeting system such as,

Sales budget

Production budget

Purchasing budget

Cash budget

Capital expenditure budget

In short, spending money is the acquisition of such expenditure & facilities are called capital

expenditure & planning of such expenditure is called as budgeting.

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5.10 MANAGEMENT OF WORKING CAPITAL

Management of working capital means management of investment in current assets. Current

assets are the assets, which are converted into cash within an accounting year like bills receivable,

debtors, cash, stocks etc. so company has to maintain such level of working capital, which may

generate satisfactory earnings.

Working capital is descriptive of that capital which is not fixed.

They are to concept of working capital, they are as under;

1. Gross working capital 2. Net working capital

1) Gross working capital: Gross working capital is the total of all current assets like as under:

Raw- material & components

Work in process

Finished goods

Trade debtors

Loan & advances

Investments

Cash & bank balance

2) Net working capital: “Net working capital is the difference between current assets & current liabilities.” The working

capital indicates liquidity position of the firm & suggests the extent to which the working capital

needs in the business.

Working capital = Total current assets – Total current liabilities.

A positive net working capital will arise when current assets exceeds current liabilities. A negative

net working capital occurs when current liabilities are in excess of current assets. At AEML.

management of working capital is very effective &efficient. Net working capital of AEML is positive

because of higher level of current assets over current liabilities.

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5.11 MANAGEMENT OF INVENTORIES

Management of inventory to the effective & efficient operation & control over the stock of raw

material & finished goods.

The various forms of inventory are as under:

Raw Material

Work in process

Finished good

In AEML the valuation of inventory is made under the consideration of following points:

1) Raw material & stores are valued at cost

2) Semi finished goods are valued at estimated cost

3) Finished goods are valued at cost or net receivable value, which is lower

4) By product is valued at the realized value.

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5.12FINANCIAL LEVERAGE

Leverage means the effect of one finance variable on other related finance variable.

Financial leverage incurred by employments of dept in capital structure with leads to fix financial

burned in terms of interest.

The degree of financial leverage may be calculated at any level of operating profit, which is as

under.

Financial Leverage=EBIT/EBT

EBIT=Earnings before Interest & tax

EBT=Earnings before Tax

The ratio indicates how much of earning company is paying as interest. If company earns

handsome profit it can keep hang financial leverage to get the benefit of trading on equity.

Mar’10-09 Mar’09-08

EBT 244.84 156.57

EBIT 291.31 189.19

Financial

Leverage 1.189797 1.208341

2009-10 2008-091.18

1.185

1.19

1.195

1.2

1.205

1.21

financial leverage

financial leverage

Interpretation

We can interpret that the financial leverage declined during year by year and in Mar’ 2010-09

which good sign for finance risk of AEML (APOLLO EARTH MOVERS LTD) It is lowest which shows

that there lowest chance to get benefits of trading on equity.

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5.13 RATIO ANALYSIS

Ratio analysis is a widely – used tool of financial analysis it is defined as a systematic use

of ratio to interpret the financial statement so that the strength and the weakness of the

firm as well as its historical performance and its current financial condition can be

determined. The term ratio refers to the numerical or quantitative relationship between to

variables or items.

TYPES OF RATIO :

Ratios can be classified in to following groups:

1. Current Ratio2. Liquid Ratio3. Proprietary Ratio4. Cash position Ratio5. Reserves To Equity Share Capital Ratio6. Current Assets To Proprietor’s Fund Ratio7. Fixed Assets To Proprietors Ratio8. Gross Profit Ratio9. Net Profit Ratio10. Operating Ratio11. Stock Turnover Ratio12. Earnings Per Share Ratio13. Return On Capital Employed Ratio14. Debtor Turnover Ratio15. Total Assets Turnover Ratio

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1 CURRENT RATIO

The most widely used ratio shows the proportion of current assets to current liability. It is also known as “working capital ratio” as it is a measure of working capital available at a particular time. The ratio is obtained by dividing current assets by the current liability. It is a measure of short-term financial strength of the business and shows whether the business will be able to meet its current liabilities, as and when they mature. Similarly, current assets are in the form of cash or can be readily converted into cash within a short time.

Equation;-

Current Assets Current Ratio = Current liability2008-09 67,104,960

34,371,301

= 1.95:1 2009-10 94,536,740 = 40,242,347

= 2.35:1

2008-09 2009-100

0.5

1

1.5

2

2.5

CURRENT RATIO

RATIO

Interpretation

The company current ratio is in 2008-2009, 1.95:1.and 2009-2010.Is the 2.35:1. We

compare both the year in which 2005-2006 it is better for the company

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2 LIQUID RATIO

The liquid ratio is calculated by dividing the liquid assets by the liquid liability. The assets

are obtained by deducting the stock form the current assets, and the liquid liability is obtained

while deducting the bank over draft from the current liability of the firm. The liquid ratio is

designed to show the amount of cash available to meet immediate payments.

Equation:- Liquid Ratio = Liquid Assets Liquid liability2008-09 3, 08, 58,295 3, 43, 71,301

= 0.90:12009-10 4, 43, 10,739 4, 02, 42,347

= 1.10:1

2008-09 2009-100

0.2

0.4

0.6

0.8

1

1.2

RATIO

RATIO

Interpretation

The company’s Liquid ratio in 2008-2009 was 0.90.1 & in the year 2009-2010 is

1.10:1.As compare with previous year it is good for the company. We can see from the above

information that liquid assets are more than liquid liabilities. So, the condition of the company is

satisfactory.

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3 PROPRIETARY RATIO:-

The proprietary ratio is calculated by dividing the proprietor’s fund by the total assets of

the firm with multiplying by 100. Whereas the proprietors fund is the sum of share capital &

reserve and surplus and the total assets is the sum of net assets, investment & net current assets

of the firm.

The ratio shows the proportion of the proprietor’s fund s to the total assets employed in

the business. The higher the ratio the stronger the financial position of the enterprise.

Equation:-

Proprietary Ratio Proprietor’s funds = *100 Total Assets

2008-09 85,671,145 *100 13, 15, 84,155

= 65.10 % 2009-10 9, 75, 76,186 16, 44, 84,319 = 59.39 %

2008-09 2009-105657585960616263646566

PROPRIETARY RATIO

RATIO

Interpretation

From the above information, we can see that in the year 2008-2009 the ratio was 65.10%

& in the year 2009-2010 it is 59.39%.

The ratio is higher so companies have no outside liabilities.

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4 CASH PPOSITION RATIO

The cash position Ratio is calculated by dividing the cash plus marketable security with the

current liability of the firm. Where the marketable security is share capital. The higher the cash

position of the strong the position of the company in the market.

Equation:- Cash + Marketable securities

Cash Position Ratio = Current liability

2008-09 5,911,804 + 1, 20, 00,000

34,371,301 = 0.52:12009-10 93, 95,995 + 1, 20, 00,000

40,242,347 = 0.53:1

2008-09 2009-100.514

0.516

0.518

0.52

0.522

0.524

0.526

0.528

0.53

CASH PPOSITION RATIO

RATIO

Interpretation:-

From the above calculation, in the year 2008-2009 the ratio was 0.52:1 & in the year 2009-

2010 it is 0.53:1. It increases from previous year.

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5 FIXED ASSETS TO PROPRIETORS RATIO

The fixed assets to proprietor fund ratio are obtained by dividing the fixed assets with the

proprietor’s fund of the company. Where the fixed assets is calculated by deducting the

depreciation from the gross block.

Equation:-

Fixed assetsFixed assets to proprietors fund ratio = Proprietors Fund’s2008-09

1, 69, 64,695 85,671,145 = 0.20:12009-10 1, 74, 33,079

9, 75, 76,186 = 0.18:1

2008-09 2009-100.165

0.17

0.175

0.18

0.185

0.19

0.195

0.2

FIXED ASSETS TO PROPRIETORS RATIO

RATIO

Interpretation:-

From the above information, we can see that in the year 2008-2009 the ratio was 0.20:1 &

in the year 2009-2010 it is 0.18:1. It decreases from last year.

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6 RESERVES TO EQUITY SHARE CAPITAL RATIO

The ratio reserve to equity share capital is obtained by dividing the revenue reserve by equity

capital. The more the ratio indicates the good from the company’s point of view.

Equation:-

Revenue reserveReserve to equity share capital ratio = Equity Capital2008-09

7, 36, 71,145 1, 20, 00,000 7, 36, 71,145 1, 20, 00,000

= 6.14 times

2009-10 5, 55, 76,186 1, 20, 00,000

= 7.13 times

2008-09 2009-105.6

5.8

6

6.2

6.4

6.6

6.8

7

7.2

RESERVES TO EQUITY SHARE CAPITAL RATIO

RATIO

Interpretation:-

From the above information, we can see that in the year 2008-2009 the ratio was 6.14

times & in the year 2009-2010 it is 7.13 times.

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7 CURRENT ASSETS TO PROPRIETOR’S FUND RATIOThe current assets proprietor’s fund ratio is calculated by dividing current assets dividing

proprietor’s fund.

Equation:-

Current AssetsCurrent assets to proprietor’s fund ratio = Proprietor’s fund ratio2008-09 6, 71, 04,960 85,671,145

= 0.78:12009-10 9, 45, 36,740 9, 75, 76,186

= 0.97:1

2008-09 2009-100

0.10.20.30.40.50.60.70.80.9

1

CURRENT ASSETS TO PROPRIETOR’S FUND RATIO

RATIO

Interpretation

From the above calculation, in the year 2008-2009 the ratio was 0.78:1 & in the year 2009-

2010 it is 0.97:1. It increases from previous year. And it is the good for company

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8 GROSS PROFIT RATIO

It is a ratio expressing the relationship between gross profits earned to net sales. It is a

useful indication of the profitability of business. It is calculated by dividing the gross profit with

and sales of the firm & multiplying with hundred.

If the ratio is low, it indicates that the cost of sales is high or that the purchasing is

inefficient.

Equation:-

Gross profit

Gross Profit Ratio = * 100

Net sales

2008-09

4, 81, 51,410

= 16, 41, 77,020 *100

= 29.33%

2009-10

4, 44, 31,057

= 26, 57, 48,449 *100

= 16.72%

2008-09 2009-100

5

10

15

20

25

30

GROSS PROFIT RATIO

RATIO

Interpretation

From the above information, we can see that in the year 2008-2009 the ratio was 29.33%

& in the year 2009-2010 it is 16.72% .profit is decrease in current year the ratio is low compare to

previous year it indicate that the cost of good is high

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9 NET PROFIT RATIO

As the name suggest that net profit it is calculated by dividing the net profit with the

sales of the firm and multiplying with hundred.

A high net profit ratio obtain cost of production is rising and demand for the product is

falling. A firm wit5h a low profit margin can earn a high rate of return on investment.

Equation:

Net Profit Net Profit Ratio = * 100 Net sales 2008-09 1, 08, 42,532 16, 41, 77,020 *100 = 6.61%2009-10 1, 19, 05,041 = 26, 57, 48,449 *100 = 4.48%

2008-09 2009-100

1

2

3

4

5

6

7

NET PROFIT RATIO

RATIO

Interpretation

From the above information, we can see that in the year 2008-2009 the ratio was 6.61% &

in the year 2009-2010 it is 4.48%.the ratio is low it indicate that administrative expenses are

slowly rising

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10 OPERATING RATIO

The operating ratio showing relationship between costs of goods sold plus operating

expenses and net sales. It shows the efficiency of management.

The ratio is calculated with the sum of cost of goods sold plus operating expenses by

dividing with net sales & multiplying with hundred. Where cost of goods sold is obtained by

deducting the gross profit from the net sales where as operating expense is the total sum of

the setting, administrating expenses & interest.

Equation:-

Cost of goods sold + operating Expenses Operating Ratio = * 100 Net sales 2008-09 12, 54, 50,818 +70, 83,498 *100 16, 41, 77,020

= 80.73%

2009-10 20, 27, 37,970 + 77, 87,742 = 26, 57, 48,449 *100

= 79.22%

2008-09 2009-1078

78.5

79

79.5

80

80.5

81

OPERATING RATIO

RATIO

InterpretationFrom the above calculation, in the year 2008-2009 the ratio was 80.73%& in the year

2009-2010 it is 79.22%. It decreases from previous year. It is less compare to previous year than it

is profitable for the company

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11 STOCK TURNOVER RATIO

The number of the average stock is turned over during the year is known as stock

turnover. It is computing by dividing the cost of good sold by the average stock in the business.

Equation:- Cost of goods sold Stock turn over ratio = Average stock 2008-09 12, 54, 50,818 31, 94, 04,055 = 3.29 times 2009-10 = 20, 27, 37,970 3, 58, 49,605 = 5.65 times

2008-09 2009-100

1

2

3

4

5

6

STOCK TURNOVER RATIO

RATIO

Interpretation

From the above calculation, in the year 2008-2009 the ratio was 3,92 times & in the year

2009-2010 it is 5.65 times It increases from previous year. The higher the turnover ratio it is

smaller margin of gross profit

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12 EARNING PER SHARE RATIOThe ratio earning per share obtained by dividing the equity earning by the number per

share. Its measure the profit available to the equity shareholders on a per share basis that is the

amount that they can get every share held.

Equation:-

Equity Earning Earning Per Share =

No. of Share 2008-09

1, 20, 00,000 12, 00,000 = 10% 2009-10 1, 20, 00,000 12, 00,000 = 10%

2008-09 2009-100123456789

10

EARNING PER SHARE RATIO

RATIO

Interpretation

From the above information, we can see that in the year 2008-2009 the ratio was 10% &

in the year 2009-2010 it is 10%.it is same for both year

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13 RETURN ON CAPITAL EMPLOYED RATIOThe ratio return on capital employed is an index cost of profitability of the business and

obtained by comparing net profit with capital employed of the firm.

Equation:- Net profit

Return on capital employed = * 100 Capital employed2008-09 1, 08, 42,532 = * 100 1, 20, 00,000 = 90%2009-10 1, 19, 05,041

*100 1, 20, 00,000 = 99%

2008-09 2009-1084

86

88

90

92

94

96

98

100

RETURN ON CAPITAL EMPLOYED RATIO

RATIO

Interpretation

From the above information, we can see that in the year 2008-2009 the ratio was 90% & in

the year 2009-2010 it is 99%.it is increase for previous year it is best for the company

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14 DEBTOR TURNOVER RATIO

The ratio is determined by dividing the net credit sales by average debtor outstanding

during year the ratio measures how rapidly receivables are collected. The analysis of the debtor

ratio supplements the information regarding the liquidity of one item of the firm.

Equation:-

Net credit sales Debtor turn over rat = Average debtors 2008-09

1, 16, 70,861 58, 35,431 = 1.99days

2009-10 2, 02, 69,067 1, 01, 34,534 = 1.99days

2008-09 2009-100

0.20.40.60.8

11.21.41.61.8

2

DEBTOR TURNOVER RATIO

RATIO

Interpretation

From the above calculation, in the year 2008-2009 the ratio was 1.99 times & in the year

2009-2010 is 1.99time. Company maintain same position

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15 TOTAL ASSETS TURNOVER RATIO

This ratio can be calculated by dividing the sales by the total assets of the firm.

The higher the total assets turnover ratio the more efficient is the management and

utilization of assets, while low turnover ratio are indicative of under utilization of available

resource and presence of idle capacity.

Equation:- SalesTotal assets turnover ratio = Total assets2008-09 1, 16, 70,861 = 9, 72, 12,854 = 1.79time2009-10 2.02.69.067 12, 42, 41,972 = 2.89time

2008-09 2009-100

0.5

1

1.5

2

2.5

3

TOTAL ASSETS TURNOVER RATIO

RATIO

Interpretation

From the above information, we can see that in the year 2008-2009 the ratio was 1.79

times & in the year 2009-2010 it is 2.89 time. The ratio is increased from the last year. The ratio is

high, so it shows the efficiency of the company.

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6 FINANCIAL PERFORMANCE

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Source of Funds Current Year

(2009-10)

Current Year(2009-10)

Previous year(2008-09)

Previous year(2008-09)

a).Share Holder’s Funds

1.Share Capital 12,000,000 12,000,0002. Reserve & Surplus 85,576,186 73,671,145

97,576,186 85,671,145b). Loan Funds

1. Secured Loans 1,473,873 8,036,2052. Unsecured Loans 22,750,296 1,053,580

24,224,169 9,090,785c). Deferred Tax

Deferred Tax Liability 2,441,617 2,450,924

TOTAL 124,241,972 98,212,854

Application of Funds:

a). Fixed Assets: I. Gross Block 29,807,680 28,291,891

II Less: Depreciation 12,374,601 11,327,196III. Net Block 17,433,079 16,964,695

b). Investment 52,514,500 47,514,500

c). current Assets, loans, & advancesI. Inventories 50,226,001 36,246,665

II. Sundary Debtors 20,269,067 11,670,861III. Cash & Bank Balance 9,395,995 5,911,804

IV. Loans & Advances 14,645,677 13,275,630Total 94,536,740 67,104,960

Less: Current liability & ProvisionsI. Current Liability 39,990,116 34,087,954

252,231 283,34740,242,347 34,371,301

NET CURRENT ASSETS 54,294,393 32,733,659

124,241,972 97,212,854

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7 CASH FLOW STATEMENTS

PARTICULERS 2008-09 20009-10

(A) Cash flow from operating activities

Net profit before tax as per P & L A\c

3431.38 4271.20

AdjustmentImpairment of goodwill 76.00 -

Depreciation 606.16 611.41Other assets written off 0.79 -Prior period adjustment (10.29) 26.48

Profit on sale of investment (3.58) (3.90)Profit/loss on disposal of

subsidiaries- 6.85

Share of profit/loss of associates 9.31 4.02Profit/loss on disposal of assets (2.17) (14.67)

loss on disposal of associates company

- 70.71

Fair value adjustment - 2.75Interest income (17.54) (14.31)Dividend income (58.10) (115.28)

Interest paid 114.29 189.11

Operating Profit before working Capital changes: -

4146.25 5034.37

Adjustment1) Trade & other receivable (343.22) (1044.76)

2) Stock (636.71) (994.49)3) Trade payable 93.57 1286.58

Cash generated from operations 3259.89 4281.70Less: Income tax paid (1473.12) (1585.00)

Net cash provided by operating activities

1786.77 2696.70

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(B) Cash flow from investing activities

Fixed assets Purchase (867.18) (937.07)Fixed assets Sale 39.93 133.68

Purchase of investment (797.16) (395.58)Sale of investment 298.48 53.99Interest received 17.57 14.05Dividend income 58.10 115.28

Cash inflow/outflow on disposal of subsidiaries

- 5.51

Cash inflow/outflow on disposal of associate company

- 67.32

Cash outflow on acquisitions made by joint venture

- (269.38)

Net cash used for investing activities

(1250.26) (1212.20)

(C) Cash flow from financing activities

Repayment of long term loans (333.70) (280.53)Repayment of short term loans

Short term loans availed 56.73 736.84Long term loans availed 494.70 -

Interest paid (114.29) (189.11)Dividend paid (519.16) (1374.85)

Net cash used in financing activities

(415.72) (1107.65)

Adjustment on consolidationNet effect of exchange rate 5.10 (57.00)Net increase in cash & cash equipments (1) + (2) + (3)

125.89 319.85

Opening balance of cash & cash equipments

608.19 734.08

Closing balance of cash & cash equipments

734.08 1053.93

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OPERATING EXPENSES:

The analysis of the operating expenses would include the analysis of the following:

1) RAW MATERIAL CONSUMED:

YEAR VALUE CHANGE (%)2008-09 36,96,08,890 8.102009-10 39,96,82,885

Raw material consumed will include the expenses related to raw material used in production, work-in process goods, finished goods as well as the packing material goods. From the above table we can observe that the increase in this expense as compared to the previous financial year is moderately high. This shows that the company seems to plan its production well in accordance with the market demand and supply conditions.

2) MFG. EXPENSES:

YEAR VALUE CHANGE (%)2008-09 5,42,58,058 29.432009-10 7,02,30,525

Mfg. expenses would include excise duty, job charges, stores and spares expenses, electricity and fuel charges and transportation inwards. From the above table we can observe that there is an increase of about 29.43 percent in the manufacturing expenses as compared to the previous financial year.

3) EMPLOYEE EXPENSES:

YEAR VALUE CHANGE (%)2008-09 4,61,42,150 5.712009-10 4,87,80,069

There is about 5.71% increase in the employee expenses as compared to the previous financial year.

4) OTHER EXPENSES:

YEAR VALUE CHANGE (%)2008-09 10,13,51,740 4.282009-10 10,56,96,542

Other expenses would include the administrative expenses, marketing and promotional expenses, and laboratory expenses. There is about 4.28 percent rise in the other expenses as compared to the previous financial year.

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TOTAL OPERATING EXPENSES:

YEAR VALUE CHANGE (%)2008-09 57,13,66,818 9.282009-10 62,43,90,021 9

This is obtained by the sum total of all the expenses as mentioned above. From the table we observe that an increase of almost 9 percent is observed in the operating expenses as compared to the previous financial year.

2009-10 2008-098.85

8.9

8.95

9

9.05

9.1

9.15

9.2

9.25

9.3

9.35

TOTAL OPERATING EXPENSES

TOTAL OPERATING EXPENSES

From the above graph we can observe that the increase of about 9 percent in the operating expenses is brought about by the increase in all types of expenses. However the major contributors to the expenses still remain to be the manufacturing expenses. This appears to be a cause of concern for the company. Increase in the raw material expenses is related to the demand and supply conditions which are not under the control of the company. INTEREST EXPENSES:

YEAR VALUE CHANGE (%)2008-09 3,42,47,223 2.162009-10 3,49,88,744

From the above table we can observe that the increase in the interest expenses as compared to the previous year is 2.16 percent.

DEPRECIATION EXPENSES:

YEAR VALUE CHANGE (%)2008-09 51,15,933 2.232009-10 52,30,120

From the above table we can observe that the increase in the value of depreciation charges is about 2.23 percent as compared to the previous financial year. This will bring about reduction in the value of the fixed assets.

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EARNINGS BEFORE INTEREST DEPRECIATION AND TAXES:

YEAR VALUE CHANGE (%)2008-09 6,86,02,039 88.052009-10 12,90,09,321 85

These earnings are obtained by subtracting the operating expenses from the total income. Interest depreciation and taxation charges are not considered in this calculation. So is given the above mentioned title. From the table we observe that the increase in earnings obtained is about 88 percent.

2008-09 2009-1083

84

85

86

87

88

89

EARNINGS BEFORE INTEREST DEPRECIATION AND TAXES:

EARNINGS BEFORE INTEREST DEPRECIATION AND TAXES:

From the above graph we can observe that the increase in the income of the company is far greater than the operating expenses of the company. So the graph shows a positive graph for the company earnings. This is a good sign for the financial health of the company. This increase in the income is again dependent on the increase in the sales.

TOTAL EXPENDITURE:

YEAR VALUE CHANGE (%)2008-09 61,17,29,976 8.642009-10 66,46,08,888

From the above table we can observe that the increase in the total expenditure as compared to the previous financial year is around 8.64 percent.

PROFIT BEFORE TAXATION:

YEAR VALUE CHANGE (%)2008-09 2,82,38,882 2.142009-10 8,87,90,456

This calculation is carried out by subtracting the interest depreciation charges in addition to the operating expenses from the total income. So only taxation charges remain. From the above table we observe that the increase in the profit before taxation is significantly high as compared to the previous financial year.

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DIVIDEND PAID:

In comparison to the previous financial year, for this year the company paid out dividend of Rs. 26 lakh.

PROFIT AFTER TAXATION:

YEAR VALUE CHANGE (%)2008-09 2,49,91,410 1.312009-10 5,79,49,772

From the above table we can observe that the increase in the net profit is significantly higher as compared to previous financial year. This percentage has reduced as compared to profit before taxation because of the dividend paid and the taxation paid.

2008-09 2009-101.14

1.16

1.18

1.2

1.22

1.24

1.26

1.28

1.3

1.32

PROFIT AFTER TAXATION

PROFIT AFTER TAXATION

From the above graph we observe that the increase in the total income is almost twice as compared to the increase in the total expenditure which also includes the interest as well as depreciation charges. So we can observe an almost two times high growth in profit before taxation as compared to the previous financial year.

SOURCES OF FUNDS :

In this analysis the total sources of funds are assumed to be 100 percent and the percentage formation by the debt and equity funds is calculated.

TYPES OF FUNDS 2008-09 2009-10SHAREHOLDERS FUNDS 14.57% 13.51%RESERVES AND SURPLUS 13.31% 27.09%SECURED LOAN 54.03% 49.46%UNSECURED LOAN 18.27% 9.92%TOTAL 100 100 From the above table we can observe that in the year 2008-09 out of the total sources of funds the equity funds constituted about 27 percent while the debt funds constituted to about 73 percent. On the other hand in the present financial year the equity funds formed to about 40 percent while the debt funds constituted to about 60 percent. The same can be better understood with the help of this graph.

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SHAREHOLDERS FUNDS

RESERVES AND SURPLUS

SECURED LOAN UNSECURED LOAN

-15

-10

-5

0

5

10

SOURCES OF FUNDS :

SOURCES OF FUNDS :

The graph given above shows the changes occurring in the sources of funds being used by the company in the last two financial years. Analyzing point by point we can observe that there is an increase of about 1 per cent in the shareholders funds forming the total sources of funds. Also the total increase in the equity funds is about 14 percent as compared to the previous year of which the majority is constituted by the reserves and surplus.

Talking about the debt funds there is a total reduction of about 16 percent in the use of the debt funds by the company of which the reduction in the secured loan funds is about 7 percent and the total reduction in the unsecured loans is about 9 percent.

So to finalize the equity funds were raised from 27 percent to 40 percent while the debt funds were reduced from 72 percent to 56 percent.

CURRENT ASSETS:

In this analysis the current assets are assumed to be 100 percent and we calculate how much percentage does each of the component forms the same.

TYPES OF FUNDS 2008-09 2009-10INVENTORIES 50.56% 42.24%SUNDRY DEBTORS 44.84% 48.37%CASH AND BANK BALANCE 0.91% 0.86%OTHER CURRENT ASSETS 1.02% 3.20%LOANS AND ADVANCES 2.66% 5.25%TOTAL 100 100

From the above calculations we can observe that the major components of the formation of the current assets are inventories and the sundry debtors. The remaining components form a very small portion of the current assets. In the financial year 2008-09 the combination of the inventories and debtors formed about 94 percent of the total current assets while in the financial year 2009-10 this combination formed about 90 percent of the total current assets. The detailed analysis can be understood with the help of the following graph.

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INVENTORIES SUNDRY DEBTORS CASH AND BANK BALANCE

OTHER CURRENT ASSETS

-6

-4

-2

0

2

4

6

8

10

CURRENT ASSETS:

CURRENT ASSETS:

From the above graph we can observe that the major contributors to the total current assets of the company are the inventories and sundry debtors. We can observe that on a whole there is a reduction in the quantity in which in the inventories constitute the total current assets. This reduction is of about 8 percent which is quite significant one.

The other important point to observe is the increase in the quantity of the debtors that constitute the total current assets. There is an increase of about 4 percent in the debtors’ column which is a matter of concern for the company. The company needs to improve its collection policy.

Another important point to be noted is the increase in the loans and advances paid to the other companies and the increase in the other current assets of the company. However there impact is quite negligible as compared to the impact created by the inventories and debtors on the total current assets of the company.

APPLICATION OF FUNDS:

In this analysis the total application of funds are assumed as 100 and the percentage formation by each of the individual components is carried out by calculation.

TYPES OF FUNDS 2008-09 2009-10FIXED ASSETS 28.59% 26.34%INVESTMENT 0.42% 0.40%NET CURRENT ASSETS 70.20% 72.61%MISC.EXP.(W/O) 0.79% 0.63%TOTAL 100 100

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From the above table we can observe that the net current assets for any of the financial year form the major proportion of the application of funds. Net current assets are obtained as the difference between the current assets and the current liabilities of the company during any of the financial year.

We can further obtain in depth analysis of this with the help of the graph as shown below:

FIXED ASSETS INVESTMENT NET CURRENT ASSETS

MISC.EXP.(W/O)

-3

-2

-1

0

1

2

3

APPLICATION OF FUNDS:

APPLICATION OF FUNDS:

From the above graph we can observe that comparing the two financial years there is a reduction of almost 2 percent in the fixed assets constitution in the application of funds. There is an increase of 2 percent in the net current assets constitution of the application of funds. This shows that the company is expanding its operations on a whole.

Another important point to be noted is that the investments do not have any effect on the application of the funds. This shows that the company is using a very aggressive mode of financing in the recent two financial years.

To finalize we can say that the company constitutes a majority of its funds on the net current assets or the day to day operations financing. So the company needs to manage this working capital arrangement properly.

NET CURRENT ASSETS:

In this financial analysis we have selected the total net current assets of the company equal to 100 and have observed the formation of the net current assets by the various components.

TYPES OF FUNDS 2008-09 2009-10CURRENT ASSETS 115.46% 125.92%CURRENT LIABILITIES 15.46% 25.92%TOTAL 100 100

In the above financial analysis we have assumed the net current assets equal to 100. Since the net current assets are obtained after deducting the current liabilities from the current assets hence the resultant is 100. So the total current assets will always have the value greater than 100.

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CURRENT ASSETS CURRENT LIABILITIES

-15

-10

-5

0

5

10

15

NET CURRENT ASSETS:

NET CURRENT ASSETS:

From the above graph we can observe that there is a total increase of about 10 percent in the both current assets and the current liabilities of the company as compared to the previous year in the formation of the net current assets funds. This shows that the company has maintained a consistent rise in the application of the funds to the current assets as well as the current liabilities of the company.

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8 CONCLUSIONSIt was a nice experience to take an industrial training at Apollo Earthmovers Limited,

MEHSANA. I studied lot of new things regarding this case study of my project. I also acquired

useful insights regarding various departments of this organization and about their proceeding

viz. production, Marketing and Human Resources etc. I learnt new Real Life useful

information too which is about the theory part of business management. This kind of

corporate training definitely helps me to grasp as well as grab the meaningful information will

done in my real life. That means it provides a vital role in my valuable 28 days training

program. I am dame sure; it was a nice experience in my real life. This kind of making project

definitely helps me to digest the knowledge of Management skill. On seeing other point of

view, it is my AIM of life surely.

“I am never concluding my opinion towards you because this is indeed

a small mile stone of my real life and pioneer experience especially for

me. I believe the present situation because time has the power to

change an ordinary coal in to a diamond.”

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9 BIBLIOGRAPHIES

No Particular Reference Remark

1 Guidance Mr. Jignesh Thakar (lecturer, NGES, PATAN)

NGES College, PATAN

2 Guidance Mr VISHAL Gajjar( Office in-charge for project)

AEML- Mehsana

3 Website support www.the-apollo.com SGL-Ahmadabad

4 Book Financial Management Author : I. M. Panday

‘Have a nice journey!’

“No one can go back and change a bad beginning but anyone can start anything and create a successful ending”

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