Finance Colgate

7/29/2019 Finance Colgate

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AN

ANALYTICAL

STUDY OF

THREE YEARS

PUBLISHED

DATA OF

COLGATE-

PALMOLIVE

(INDIA)

LIMITED

Prepared by:-

CHARVI.A.TRIVEDI

SYBBA CROLL NO.-211

Submitted to:-

Prof. Swenee Shah


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Acknowledgement

I am highly thankful to the management and staff

ofColgate-Palmolive (India) Limited. I am

especially thankful to Prof. Swenee Shah for

helping me in my Practical Studies. In addition to

allowing me to visit the company and study the

organization, they provided me with many details

which were very useful in preparing this report.

I take this opportunity to thank our Director,

Prof. Vadibhai Patel, Professor in-charge Prof Swenee

Shah for their encouragement and the office staff for

providing us all the facilities for making the visit more

learning oriented.

Charvi A Trivedi

Date: 20/12 /2011


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PREFACE

BBA is a professional course where equal

importance is given to practical and theoretical

knowledge .This feature makes it different from

B.COM wherein importance is given only to the

theoretical knowledge to gain this practical

knowledge, visit to various companies are

organized. The sole objective of this project is to

add practical knowledge to the theoretical one.

With this objective we made this project on

Colgate-Palmolive (India) Limited. To study about

such a company was a great pleasure.


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INDEX

SR. NO. TOPIC PAGE NO.

1 Company profile

1.1 Name of organization

1.2 Registration Address of the company

1.3 Brief introduction of the activities

1.4 Status of the company in market

1.5 Special Achievements

1.6 Financial Highlights

1.7 Meaning and analysis and objective

2 Results of Operation

2.1 Profit of 3 years

2.2 Meaning and importance of Cash Flow

2.3 Cash Flow Statement of the company

2.4 Conclusion

3 Ratio Analysis

3.1 Meaning, Importance, Limitation,

and Classification of Ratio Analysis.

3.2 Profitability ratio


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3.2.1 Gross Profit ratio

3.2.2 Net Profit Ratio

3.2.3 Operating ratio

3.2.4 Return on Capital Employed

3.2.5 Return on Share holders fund

3.2.6 Return on Eq. Share Capital

3.2.7 Return on Eq. shareholders Fund

3.2.8 Earnings per share

3.2.9 Dividend per share

3.2.10 Price earning ratio

3.2.11 Dividend Payout ratio

3.3 Activity/Turnover Ratio

3.3.1 Fixed Asset turnover Ratio

3.3.2 Debtors Ratio

3.3.3 Creditors Ratio

3.3.4 Stock turnover Ratio

3.3.5 Working Capital turnover

3.3.6 Book value per share

3.4. Liquidity Ratio

3.4.1 Current Ratio


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3.4.2 Liquid Ratio

3.5. Leverage Ratio

3.5.1 Proprietary Ratio

3.5.2 Debt Equity ratio

3.5.3 Capital gearing Ratio

3.5.4 Long term fund to F.A

3.6 Coverage Ratio

3.6.1 Interest Coverage Ratio

3.6.2 Debt Service Coverage Ratio

4 Accounting Policies and Notes

5 Directors Report

6 Auditors Report

7 Common Size Statement

8 Conclusion & Findings


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1. COMPANY PROFILE

1.1 Name of the company

Colgate-Palmolive (India) Limited

1.2 Registered Address of the Company

Colgate Research Centre,

Main Street,

Hiranandani Gardens,

Powai, Mumbai 400076.


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1.3 Brief introduction of the activities of

the business:-

Oral care-Under this segment the company

offers product like toothpastes, toothbrush,

tooth powder & tooth whitening products.

Personal care -In this segment it offer products

skin care, hair care ,body wash ,& shavingcreams

Household care-Under this segment it has

launched brand AXIOM-a dish washing paste.

From the Dentist - New products line introduced

by the company under which it provides

products like Gingivitis Treatment, ColgateSensitive treatment, Tooth Whitening, Fluoride

Therapy, Mouth Ulcer Treatment, Specialty

Cleaning.

It has also introduced new products namely

colgate dental floss, ORAGARD-B a mouth ulcer

cream etc.

In 2011 Colgate-Palmolive (India), the marketleader in oral care, has introduced Colgate 360

Surround - a ground-breaking and innovative

toothbrush with a unique head.


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1.4 Status in the market

Colgate-Palmolive is Rs1,300 crore companystarted in year 1937.In Rs2,400 crore domestic

market it enjoys 50% of market share. It spread

across 4.5 million retails outlets out of which

1.5 million are direct outlets.

The Company is having four wholly owned

subsidiaries namely Colgate-Palmolive (Nepal),

Multimint Leasing & Finance and Jigs

Investments and Passion Trading & Investment

Company.

In November 2007, it acquired a 75% equity

interest in Advanced Oral Care Products,

Professional Oral Care Products and SS Oral

Hygiene Products, the company is the fastest

growing and one of the oldest companies

catering to the personal care products. Thecompany is regularly coming up with new

products and has been a consistent financial

performer.


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In July 2009, the Bombay High Court sanctioned

the amalgamation of both subsidiaries of the

companyAdvanced Oral Care Products, Goa and

Professional Oral Care Products, Goa.

In March 2010, Colgate Palmolive (India) has

acquired the remaining 25% of stake in CC

Health Care Products from the local

shareholders at an aggregate price of Rs 69.07lakh. Colgate already has 75% stake in CC

Health, which is engaged in the manufacture of

toothpowder at Hyderabad.


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1.5 Special Achievements

In 2003 Colgate was ranked as Indias Most

Trusted Brand across all categories by Brand

Equitys Most Trusted Brand Survey for four

consecutive years from 2003 to 2007.

Colgate was also rated as the number

one brand by the A&M MODE Annual

Survey for Indias Top Brands for eight out of

nine years during the period 1992 to 2001.

In 2011 Colgate-Palmolive (India), the market

leader in oral care, in association with the

Indian Dental Association (IDA) achieved the

Guinness World Records for maximum

number of dental check-ups in a single day

(multiple venues).


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1.6Financial Highlights

PROFIT OF THREE YEARS(In Lacs)

PARTICULAR 2009 2010 2011

NET PROFIT

(%)

17.12 18.13 21.57

SALES OF THREE YEARS

(In Lacs)

PARTICULAR 2009 2010 2011

SALES 1,758,16 2,024,65 2,317,40

EPS OF THREE YEARS

EPS = PROFIT AFTER TAX - PERFERENCE DIV.NO. OF EQUITY SHARES

CALCULATION (In Lacs)


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1.7 Meaning of analysis and objective of

study

PARTICULAR

S

2008-09 2009-10 2010-11

NETPROFIT

AFTER TAX

29021.94 42325.82 40258.33

NO. OF

EQUITY

SHARES

13599281

7

13599281

7

13599281

7

RATIO 21.34 31.12 29.60


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The analysis of the company has helped me a lot

in understanding the working of companies. The

analysis of the company gives practical knowledgeand where we have to use theories into practise.

Objectives of the study:-

1) It provides an attempt to learn practical

rather than bookish knowledge.

2)The main objective of the study is to developanalytical skills.

3)Various finance concepts are used in practical

world.

4)The main purpose of the study is analysis of

ratios, cash flow statement, and common-size

statement of particular company.

Chpt:- 2 RESULTS OF OPERATIONS


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2.1 PROFIT OF 3 YEARS

GROSS PROFIT:-

(In Lacs)

PARTICULARS 2008-09 2009-10 2010-11

GROSS PROFIT 95350.59 118561.63 134859.19

NET PROFIT:-

(In Lacs)

PARTICULARS 2008-09 2009-10 2010-11

NET

PROFIT

29021.94 42325.82 40258.33

EBIT:- EARNING BEFORE INTEREST AND TAX

(In Lacs)

PARTICULARS 2008-09 2009-10 2010-11

EBIT 34530.65 48479.85 51994.85

EBT:- EARNING BEFORE TAX (In Lacs)

PARTICULARS 2008-09 2009-10 2010-11


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EBT 34530.65 48479.85 51994.85

EAT:- EARNING AFTER TAX (In Lacs)

PARTICULARS 2008-09 2009-10 2010-11

EAT 29021.94 42325.82 40258.33

2.2 MEANING AND IMPORTANCE OF

CASH FLOW STATEMENT:-


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Cash is the most important liquid asset of the

business. All business transactions ultimately

results into cash inflow or outflow. Hence astatement that shows cash flow is considered to be

an important one.

Meaning of Cash Flow :-

A statement showing Inflow of Cash and Outflow of

Cash during the last year and as a result the

balance of cash at the end of the year is known as

CASH FLOW STATEMENT.

IMPORTANCE OF CASH FLOW

STATEMENT:-

1. Effective cash management can be done by

finance manager through an idea in cash receipts

and cash payments, cash resources can beeffectively managed.

2. If the cash payments are planned at a time when

enough cash inflows is likely, it is possible to

manage business with minimum working capital.


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3. The management can plan out payment of

dividend, repayment of long term loans, purchase

of machinery or equipments etc.

4. Cash flow statement gives clear information

about cash receipts and cash payments which is

very useful to the management in meeting any

future contingencies and also in seizing any

profitability opportunity.

5. The historical cash flow statement prepared for

last year is important for comparing the figures of

cash budgets and points of differences may be

located.

6. By cash flow statement it becomes easy inobtaining funds from financial institutes.

CASH FLOW STATEMENT

Particulars 2008-09 2009-10 2010-11


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1. Cash Flows from operating

Adjustment far unrealized

forgone exchange

(loss/chain) (net)Depreciation Amortization.

34530.65 48479.85 51994.85

2

3

4

56

7

8

9

Cash flow from operating act

net profit before tax

Generalized foreign

exchange loss (net)

Depreciation/Amortization

Interest expenseloss/(profit) on sale as

fixed assets (net)

Interest income

Dividend form subsidiary

Loss on maturity of L.T inv.

34530.65

(875.44)

2294.89

110.01

(980.54)

3136.57

(397.56)

39.13

48479.85

(135.39)

3756.79

150.43

(293.3)

2270.07

(240)

31.51

51994.85

51.06

3424.95

328.57

6.44

(3014.26)

-----------

----------

12

13

14

15

Operating profit before w.c

changes adjustment

far(Inc)/dec.inwc

Inventories

Sundry debtors

loans and advance

current liabilities andprovisions

33257.19

420.74

194.90

933.82

3186.50

49479.82

(2008.35)

136.57

(1868.84)

1648.90

52179.97

(4222.15)

(3322.12)

(702.40)

5030.45

16 Cash generated from

operations direct taxes

paid(net)

36761.87

(4823.45)

47388.10

(7652.75)

48963.75

(10420.74)

(A) Net cash from/ (used in)

operating. Act(A)

31938.42 39735.35 38543.07

B. Cash flow from Investing


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Activity:

1

2

3

4

5

6

7

8

Purchase of fixed Assets

Sale of fixed Assets

sale of Investment

sale of other investment

Inter corporate deposits

Loans to subsidiaries

Interest received

Dividend received

243.50

1107.27

165.28

3071.48

290.00

3335.00

2682.08

775.61

(3551.28)

449.56

1500.00

2750.00

2372.86

240.00

(4110.53)

21.19

1916.73

1734.00

2821.91

-

Net cash from/used

Inv.Act(B)

4182.66 3451.89 (1450.16)

1

2

3

4

Cash flow from financing

Act.

Long term loans/(paid)(/net)

Interest paid

Dividend paid

Dividend tax paid

110.01

21746.08

3657.04

(10.00)

(150.43)

(28714.08)

(4871.24)

(453.75)

(161.13)

(27161.28)

(4523.20)

Net cash from /(used

in)financing Act.(C)

25513.13 (33745.75) (32299.36)

Net increase in cash and

cash.

Equivalent (A+B+C)

Cash and cash Equivalent

take over

10607.95 9441.49 4793.49

Cash and cash equivalent at

the beginning of the year-

opening balance 14426.28 25114.33 34758.44

Cash and Cash Equivalent

taken over as per the scheme

of amalgamation

80.10 202.62 8.93

Cash and cash Equivalent of


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at the end of the year

closing balance

25114.33 34758.44 39560.86

2.4 CONCLUSION

1. NET PROFIT BEFORE TAX shows an increasing

trend from 2008-09 to 2010-2011

2. Depreciation is also increased shows constant

increase which decrease net profit.

3.Net interest paid has also increased from 150.43

to 328.57 which decreases Net rofit.

4. Sundry debtor is high in 2008-09 but it

decreased in 2009-2010 and it again increased in

2010-2011 which decreased the profit.

5. Profit on fix assets is decreasing year by year.

6. Interest income received in 2010-2011 is more

than that of 2009-2010 but theres not much

increase seen in it.

7. Inventories are more in 2010-2011 as compared

to both the years.


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8. Current liabilities are 5030.45 in 2010-2011

which is very high as compared to last two years.

Chpt:-3 RATIO ANALYSIS


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MEANING OF RATIO ANALYSIS:-

Ratio analysis is a very important tool of financial

analysis. It is the process of establishing a

significant relationship between the items of

financial statement (profit and loss a/c and balance

sheet) to provide a meaningful understanding of

the performance and financial position of the firm.

ADVANTAGES OF RATIO ANLYSIS

There are various groups of people who are

interested in analysis of financial position of the

company. They use the ratio analysis to work out

particular financial circumstances of the company

in which they are interested. Ratio analysis helps

the various groups in the following manner:-

To know about the profitability:-

Accounting ratio helps to measure the

profitability it helps the management to know

about the capacity of the firm. In this way

profitability ratio shows the actual performance of

the business.

To know about solvency:-


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With the help of solvency ratio, solvency of the

company can be measure. This ratio shows the

relationship between the assets and liabilities. Incase external liabilities are more than the assets; It

shows the unsound position of the business. In this

the firm has to make it possible to repay its loan.

Helpful in analysis:-

Ratio analysis helps the outsiders just likecreditors, shareholders, debenture holders,

bankers to know about the profitability and ability

of the firm to pay their interest, dividend etc.

Helpful in comparative analysis of performance:-

With the help of ratio analysis, a company may

have comparative study of its performance to the

previous year. In this way co. come to know about

its weak point and able to improve them.

To know about the efficiency:-

Ratio analysis helps to know the operating

efficiency of the co. with the help of various

turnover ratios. All turnover ratios are calculated to

evaluate the performance of the business in

utilizing the resources.


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To know about liquidity position:-

Ratio analysis helps to know the short term

financial position (liquidity position) of thecompany with the help of liquidity ratios. In case of

short term financial position is not good efforts are

made to improve it.

Helpful for forecasting purpose:-

Accounting ratios indicate the trend of thebusiness. The trend is useful for estimating future.

With the help of previous years Ratio, estimates for

future can be made in this way. Ratio provides the

basis for preparing budget and helps for future

course of action.

LIMITATION OF RATIO ANALYSIS

In spite of many advantages there are some

limitations and they should be kept in mind while

using them in interpreting financial statement. Thefollowing are the main limitation of ratio.

Limited comparatively:-

Different firms apply different accounting policies.

There the ratio of one firm cannot always be

compared with the ratio of other firm. Some firm


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may value the closing stock on last in first out

(LIFO) based. While some other firms may value

first in first out (FIFO) based. Similarly there maybe different in providing depreciation of fixed

assets or certain provisions etc.

False result:-

Accounting ratios are based on data taken from

accounting records, incase their data is correctthen only the ratio will be correct. e.g.:- valuation

of stock is based on very high price the profits of

the firm with inflected and it will indicate a wrong

financial position. The data therefore must be

absolutely correct.

Effect of price level changes:-

Price level change often made the comparison of

different amounts difficult over a period of

production, sales and also the value of assets.

Therefore it is necessary to made proper

adjustment for price changes before any

comparison.

Qualitative factors are ignored:-

Ratio analysis is a technique of qualitative analysis

and this ignores qualitative factors which may be


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important in decision making .e.g.:- average

collection period may be equal to standard credit

period put for some debtors may be in the list ofdoubtful list which is not disclose by ratio analysis.

Effect of window dressing:-

In order to cover up their head financial position,

some companies use window dressing. They may

record the accounting data according to financialposition of a company in a better way.

Costly technique:-

Ratio analysis is a technique and can be use by big

business houses. Small business units are not able

to afford it.

Miss leading results:-

In absence of absolute data, the result may be

misleading. E.g.:-the gross profit of two firms is

25% where as the profit earned by one company is

just 5000RS and sales are 20,000 RS and profit

earned by the other one is 10,000RS and sales are

40,00,000RS even he profitability of the 2 firms is

same but the magnitude of their business is quite

different. 22


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Absence of standard universally expected

technology:-

There are no standard ratios which are

universally accepted for comparison purpose. As

such the significant of ratio analysis technique is

reduced.

CLASSIFICATION OF RATIO:-

As per the requirement of various users

(for e.g.:-short term creditors, long term creditors,

management, investors) we can classify ratio into

following group.

Traditional Classification:-

1. Revenue Statement Ratios

2. Balance Sheet Ratios

3. Composite Ratios

Functional Classification:-

1. Liquidity Ratios

2. Profitability Ratios

3. Leverage Ratios or Structural Ratios

4. Activity Ratios or Efficiency Ratios

23


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3.2 Profitability Ratios:-

N RELA TION TO SALES

1. G.P Ratio 1. Return on Capital

Employed

2. N.P Ratio 2. Return on

Shareholders Fund

3. Expenses Ratio 3. Return on Eq.

shareholders fund

4. Operating Ratio 4. Return on Eq. share

capital

5. Earnings per share

6. Dividend per share

7. Price earning ratio

PROFITABILITY

RATIO

IN RELATION TO SALES IN RELATION TO INVESTMENTS


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8. Dividend payout ratio

3.2.1 GROSS PROFIT

MEANING:-

It is the basic measure of profitability of business. It

expresses relationship between gross profit earned

to net sales.

FORMULA:

This ratio is calculated by dividing the gross profit

by the net sales. It is expressed in percentage (%).It

form of formula this ratio may be expressed as

under

GROSS PROFIT = GROSS PROFIT * 100

SALES

CALCULATION: (In Lacs)

PARTICULARS 2008-09 2009-10 2010-11

GROSS

PROFIT

95350.59 118561.63 134859.19


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SALES 169481.35 196245.92 222055.77

RATIO (%) 56.26 60.73 60.41

INTERPRETATION:-

This ratio indicate an average gross margin earn on

a sale of 100 rupees. The limit beyond which fall in

sales prices will definitely result in losses.

In 2008-2009 the profit 56.26%, in 2009-2010 it is

60.73% and in n2010-2011 its 60.41% . So we can

54.00%

55.00%

56.00%

57.00%

58.00%

59.00%

60.00%

61.00%

2008-09 2009-10 2010-11

Gross Profit Ratio

Ratio


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say that as compared to 2008-2009, 2009-2010 has

more profit but it slowly decreases in 2010-2011

3.2.2NET PROFIT RATIO:-

MEANING:-

This ratio measures the relationship between net

profit and net sales.

FORMULA:-

This ratio is calculated by dividing the net profit by

net sales. It is expressed as (%). In the form of a

formula this ratio may be expressed as under

NET PROFIT RATIO: - NET PROFIT

* 100

SALES


PARTICULARS 2008-2009 2009-2010 2010-2011

NET PROFIT 29021.94 42325.82 40258.33


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SALES 169481.35 196245.92 222055.77

RATIO (%) 17.12 21.57 18.13

INTERPRETATION:-

This ratio indicates an average net margin earned

on a sale of 100 rupees.

In the above table we can see that in the year

2008-2009 the Net profit is 17.12%, in 2009-2010 is

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

2008-09 2009-10 2010-11

Net Profit Ratio

Ratio


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21.57%, and in 2010-2011 it is 18.13%. So we can

say that as compared to 2008-2009, in 2009-2010 it

has more net profit which shows good economiccondition of the company but it declines in 2010-

2011.

3.2.3OPERATING RATIO:-

MEANING:-

This ratio measures a relation between operating

cost and net sales.

FORMULA:-

This ratio is calculated by dividing the operating

cost by net sales. This ratio is expressed as % .In the

form of a formula this ratio may be expressed as

under.

OPERATING RATIO= COST OF GOODS SOLD + OPERATING EXP*

100

NET SALES



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PARTICULARS 2008-2009 2009-2010 2010-2011

OPERATING

EXP+COGS

137261.25 146427.04 167444.02

SALES 169481.35 196245.92 222055.77

RATIO (%) 81 74.61 75.41

INTERPRETATION:-

This ratio indicates an average operating cost

incurred sales on goods worth rupees 100.Lower

the ratio greater is the operating profit to cover the

operating expense to pay dividend and to create

reserve and vice-versa.

70

72

74

76

78

80

82

2008-09 2009-10 2010-11

Operating Ratio

Operating Rstio


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In the above table we can see that the operating

exp. In the year 2008, 2009 and 2010 are

respectively 81%, 74.61%, 75.41%.From the aboveanalysis we can say that the year 2008-2009 has

the highest op. Exp. and 2009-2010 has the lowest

OPERATING EXP but it increases by 1.20% in year

2010-2011.

3.2.5 RETURN ON INVESTMENT / CAPITAL

EMPLOYED:-

MEANING:-

This ratio measures a relationship between

net profit before interest and tax and capital

employed.

FORMULA:-

This ratio is calculated by dividing net profit

before interest and tax by capital employed. It is

expressed as % in the form of a formula this ratio

may be expressed as under.

RETURN ON CAPITAL EMPLOYED=NET PROFIT

*100

Capital employed


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PARTICULARS 2008-

2009

2009-

2010

2010-

2011

NETPROFIT(BEFOR

E INT. & TAX)

34530.6

5

48479.8

5

51994.8

5

CAPITALEMPYOYED

21629.57

32611.16

38405.33

RATIO (%) 159.65 148.66 135.38

Capital employed= Share capital + Reserves and

surplus

INTERPRETATION:-

This ratio indicates the ability of the firm higher the

ratio the more efficient the mgt and utilization ofcapital employed.

In the above table we can see that the

return on capital employed in 2008-2009, 2009-

2010, and 2010-2011 is respectively 159.65%,

148.66%, 135.38%. As compared to 2009-2010 and


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2010-2011 the return on Capital employed is less

which shows that the returns and profit have

decreased.

3.2.6 RETURN ON SHARE HOLDERS FUND:-

MEANING:-

This ratio measures a relationship between net

profit after tax, interest, and equity share holders

fund.

FORMULA:-

This ratio is computed by dividing the net profit

after interest and tax by equity share holders fund.

It is expressed as a %. In the form of formula this

ratio may be expressed as under:-

RETURN ON EQUITY SHARE HOLDERS FUND =

NET PROFIT AFTER INTEREST, TAX AND PREFERENCE

DIVIDEND*100

SHARE HOLDERS FUND


PARTICULARS 2008-2009 2009-2010 2010-2011


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NET PROFIT

(AFTER

INTEREST &TAX AND

PREFERENCE

DIVIDEND)

29021.94 42325.82 40258.33

SHARE

HOLDERSFUND

21629.57 32611.16 38405.33

RATIO (%) 134.18 129.79 104.82

Preference dividend is zero (not given)

Share holders fund=share capital + Reserves and

surplus


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INTERPRETATION:-

This ratio indicates the firms ability of generating

profit per rupee of equity share holders fund.Higher the ratio the more efficient the

management and utilization of equity share

holders fund. In the above graph we can see that

the equity share holders fund in 2008-2009, 2009-

2010and 2010-2011 is 134.18%, 129.79%, and

104.82%.This shows that the company have notworked as efficiently as in 2008-2009.

3.2.7 RETURN ON Eq. SHARE CAPITAL:

MEANING:-

0

20

40

60

80

100

120

140

160

2008-09 2009-10 2010-11

Return on Share Holders Fund

Return on Share Holders

Fund


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The ratio indicates profitability of a firm from the

view point of real owners who are ordinary

shareholder, who bear all the risks of business.

FORMULA:-

This ratio is calculated by dividing Profit after tax

and Pref. Dividend by Eq. share capital.

RETURN ON Eq. SHARE CAPITAL= PAT PREFDIVIDEND *100

EQUITY SHARE CAPITAL


PARTICULARS 2007-08 2008-09 2009-10

NETPROFIT(AFTER

TAX)

29021.94 42325.82 40258.33

Eq. share Capital 1359.93 1359.93 1359.93

Pref. Dividend 0 0 0

RATIO (%) 2134.08 3112.35 2960.32

INTERPRETATION:-


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This ratio indicates the firms ability of generating

profit per rupee of equity share capital fund.

Higher the ratio the more efficient themanagement and utilization of equity share capital

fund.

In the above table we can see that the equity share

holders fund in 2008-2009, 2009-2010and 2010-

2011 is 2134.08%, 3112.35% and 42960.32%. The

ratio increases in 2009-2010 but then again shows

a fall in 2010-2011.

3.2.8 RETURN ON Eq. SHARE HOLDER FUND:-

MEANING:-

This ratio measures a relationship between net

profit after tax, interest, and equity share holders

fund.

FORMULA:

This ratio is computed by dividing the net profit

after interest and tax by equity share holders fund.

It is expressed as a %. In the form of formula this

ratio may be expressed as under:-

RETURN ON EQUITY SHARE HOLDERS FUND =


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NET PROFIT AFTER INTEREST, TAX - PREFERENCE DIVIDEND*100

SHARE HOLDERS FUND


PARTICULARS 2008-

2009

2009-

2010

2010-

2011

NET

PROFIT(AFTER

INTEREST&

TAX )

29021.94 42325.82 40258.33

SHARE

HOLDREFUND

21629.57 32611.16 38405.33

PREF

DIVIDEND

0 0 0

RATIO (%) 134.18 129.79 104.82


44/104

INTERPRETATION:-

This ratio indicates the firms ability of

generating profit per rupee of equity share holdersfund. Higher the ratio the more efficient the

management and utilization of equity share

holders fund.

In the above table we can see that the equity

share holders fund in 2008-2009, 2009-2010 and

2010-2011 is 134.18%, 129.79%, 104.82%.As we see

that as compared to 2009-2010 and 2010-2011, 2008-

2009 has made more returns on Eq share holder

Fund. Therefore companys profit has decreased as

compared to 2008-2009.

0

20

40

60

80

100

120

140

160

2008-09 2009-10 2010-11

Return on Eq. Share Holders Fund

Return on Share Holders

Fund


45/104

3.2.9 EXPENSES RATIO:

MEANING:

This ratio measures a relationship between

different types of ratio related with expenses and

net sales

FORMULA

This ratio is calculated by dividing different types of

expenses by net sales. This ratio is expressed as a

percentage.

Expense Ratio = No.s Expenses X 100

Net sale

A. Administration Exp = Adm. Exp. X 100

Net sale


PARTICULA

R

2008-09 2009-10 2010-11

Adm. Exp. 25062.57 25591.95 13234.19

Net sales 169481.3

5

196845.9

2

222055.7

7


46/104

Ratio 14.79% 13.04% 5.96%

INTERPRETATION:

This ratio shows that in year 2008-09 expense is

more to compare the other two year.

B. Selling Expenses Ratio = Selling Exp. * 100

Net sale


0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

14.00%

16.00%

2008-09 2009-10 2010-11

Adminitrative Exapenses


47/104

PARTICULA

R

2008-09 2009-10 2010-11

Selling Exp. 37674.47 43714.8 53546.71

Net sale 169481.3

5

196845.9

2

222055.7

7

Ratio 22.33% 22.28% 24.11%

21.00%

21.50%

22.00%

22.50%

23.00%

23.50%

24.00%

24.50%

2008-09 2009-10 2010-11

Selling Expense Ratio

Ra


48/104

INTERPRETATION:

In the year 2010-11 the selling and distribution

expenses are more to compare the other two

financial ratios.

3.2.10 EARNINGS PER SHARE:-

MEANING:-

This ratio measures the profit earnings

available to equity share holder on per share basis.

FORMULA:-

This ratio is calculated by dividing the net profitafter interest, tax and preference dividend by the

no. of equity share .It is expressed as an absolute

figure. In the form of a formula this ratio may be

expressed as under.

EARNING PER SHARE = NET PROFIT AFTER TAX -

PERFERENCE DIV.

NO. OF EQUITY

SHARES



49/104

PARTICULARS 2008-

2009

2009-

2010

2010-

2011

NETPROFIT(AFT

ER TAX)

29021.94 42325.82 40258.33

NO. OF EQUITY

SHARES 13599281

7

13599281

7

13599281

7

PREF DIVIDEND 0 0 0

RATIO(Rs) 21.34 31.12 29.60

INTERPRETATION:-

0

5

10

15

20

25

30

35

2008-09 2009-10 2010-11

Earning Per Share Ratio

Earning Per Share Ratio


50/104

In general higher the ratio better it is the

company and vice versa.

In the above table we can see that E.P.S in the

yr 2008-2009,2009-2010 and 2010-2011 is 21.34,

31.12, 29.60. So we can say that as compared to

2008-2009 and 2009-2010 EARNING PER SHARE of

2010-2011 is higher which shows that the earning

available to equity share holder are sufficient.

3.2.11 DIVIDED PER SHARE:-

MEANING:-

This ratio measures a relationshipbetween dividend and no. of equity share.

FORMULA:-

This ratio is calculated by dividing dividend paid to

equity shareholder by no. of equity shares .It is

expressed as absolute figure. In the form of aformula this ratio can be expressed as under

DIVIDEND PERSH. = DIVIDEND PAID TO EQ. SHARE HOLDER

NO OF EQUITY SHARE


51/104

CALCULATION:

PARTICULA

RS

2008-2009 2009-2010 2010-2011

DIV PAID TO

EQUITY S.H

203989200

0

271985700

0 299184200

0

NO. OF

EQUITY

SHARE

135992817

135992817 135992817

RATIO(Rs) 15 20 22

Dividend=First interim + second interim + third

interim


52/104

INTERPRETATION :-

The actual payment of the dividend to the share

holders is rs15 in the year 2008-09 and in the year

2010-11 it increases to rs22.

3.2.12 PRICE EARNING RATIO:-

MEANING:-

It shows the relationship between the market price

of the share and the earnings per share.

FORMULA:-

0

5

10

15

20

25

2008-09 2009-10 2010-11

Dividend per share

Ratio


53/104

PRICE EARNING RATIO= MARKET VALUE PER SHARE

EARNINGS PER SHARE


PARTICULARS 2008-2009 2009-2010 2010-

2011

MARKET

VALUE PERSHARE

450.95 702.53 852.2

EARNING PER

SHARE

21.34 31.12 29.60

RATIO(RS) 21.13 22.57 28.79

Market value of share (NSE) = (High price + Low

price)/2


54/104

INTERPRETATION:-

As per NSE, the current market price of the share in

the market in the year 2008-09 it was rs21.12 andit increased to rs28.79 in the year 2010-11.

3.2.13 DIVIDEND PAYOUT RATIO:-

MEANING:-

It is the proportion of actual dividend received to

the earnings per share or the amount which

belongs to the equity shareholders.

FORMULA:-

0

5

10

15

20

25

30

35

2008-09 2009-10 2010-11

Price Earning Ratio

Price Earning Ratio


55/104

This ratio is calculated by dividing earnings per

share by dividend per share . It is expressed as a

ratio or in percentage form. In the form of aformula this ratio can be expressed as under.

DIVIDEND PER SHARE = DIVIDEND PER SHARE (DPS)

EARNINGS PER SHARE (EPS)

32

CALCULATION:-

PARTICULARS 2008-

2009

2009-

2010

2010-

2011

DPS 15 20 22

EPS 21.34 31.12 29.60

RATIO 0.70 0.64 0.74


56/104

INTERPRETATION:-

Dividend payout ratio shows that 70% dividend is

distributed among the share holders and 30%profit is retained in the year 2009-10 whereas, 74%

is distributed in the year 2010-11 and 26% profit is

retained.

3.3 ACTIVITY / TURNOVER RATIO

3.3.1 FIXED ASSET TURNOVER:-

MEANING:-

0.58

0.6

0.62

0.64

0.66

0.68

0.7

0.72

0.74

0.76

2008-09 2009-10 2010-11

Dividend Payout Ratio

Dividend Payout Ratio


57/104

To ascertain the efficiency and profitability of the

business, the total fixed assets are computed to

sales.

FORMULA:-

FIXED ASSET TURNOVER = SALES

FIXED ASSETS

34.


PARTICULARS 2006-07 2007-08 2008-09

SALES 169481.35 196245.92 222055.77

FIXED ASSETS 17859.64 25313.66 26730.93

RATIO(IN

TIMES)

9.49 7.75 8.31


58/104

INTERPRETATION:-

As shown in the above table the FIXED ASSETS

TURNOVER for the years 2008-2009, 2009-2010and 2010-2011 are 9.49, 7.75, 8.31. From the data

we can clearly clarify that as compared to two year

2009-2010 has higher turnover.

3.3.2 DEBTORS RATIO:-

MEANING:-

This ratio establishes a relationship

between debtors and bills receivable with average

daily sales.

0

1

2

3

4

5

6

7

8

9

10

2008-09 2009-10 2010-11

Fixed Assets Turnover Ratio

Fixed Assets Turnover Ratio


59/104

FORMULA:-

This ratio is calculated by dividing debtors and bills

receivable by net credit sales. This ratio is usually

expressed as x no. of days. As a form of a formula it

can be expressed as under.

DEBTORS RATIO = DEBTORS+BILLS RECEIVABLE * 365

NET CREDIT SALE


PARTICULARS 2008-

2009

2009-

2010

2010-

2011

DEBTORS+BILL

S REC.

1113.45 976.88 4296.46

NET CERDIT

SALES

169481.3

5

196245.9

2

222055.7

7

RATIO(IN

DAYS)

2 2 7

Bills receivables not given.

Credit sale not given. So, net sales assumed to be

cr. Sales.


60/104

INTERPRETATION:-

This ratio shows average collection period for

credit sales.In the above table the time period

allowed to the debtors is respectively 2 days, 2

days, 7 days.

3.3.3 CREDITORS RATIO:-

MEANING:-

This ratio establishes a relationship between

creditors and bills payable and average daily credit

purchase.

0

1

2

3

4

5

6

7

2008-09 2009-10 2010-11

Debtors Ratio (IN DAYS)

RATIO(IN DAYS)


61/104

FORMULA:-

This ratio is calculated by dividing the creditors and

bills payable by net credit purchase. This ratio is

usually expressed in x no of days.

CREDITORS RATIO = CREDITORS+BILLS PAYABLE*365

NET CREDIT PURCHASE


PARTICULARS 2008-

2009

2009-201 2010-

2011

CREDITORS+BILLS

PAYABLE

34172.77 37080.06 42128.76

NET CREDIT

PURCHASE

74809.24 80497.32 91511.14

RATIO(DAYS) 167 168 168

Bills Payable not given.

Purchases= Cost of goods sold - Opening stock +

Closing stock;

Stock= Inventory


62/104

INTERPRETATION:-

This ratio shows an average time period for which

the credit purchase remain outstanding. Creditors

ratio for the year 2008-2009,2009-2010 and 2010-

2011 is 167 days,168 days,168 days.

3.3.4 STOCK TURNOVER RATIO:-

MEANING:-

This ratio establishes a relationship between costs

of goods sold and average inventory.

FORMULAS:

166.4

166.6

166.8

167

167.2

167.4

167.6

167.8

2008-09 2009-10 2010-11

Creditors Ratio (DAYS)

Creditors Ratio (DAYS)


63/104

This ratio is calculated by dividing the cost of goods

sold by average stock .This ratio is usually

expressed as no. of times. In the form of a formulathis ratio may be expressed as under:

STOCK TURN OVER RATIO = COST OF GOODS SOLD

AVERAGE STOCK

CALCULATIONS:

(In Lacs)

PARTICULARS 2007 2008 2009

CO.O.G.S 398.53 486.37 413.82

AVERAGE

STOCK

15.82 15.52 11.05

RATIO(IN

TIMES)

25.19 31.34 37.45

.

Average stock= opening stock + closing stock

2


64/104

INTERPRETATION:-

It indicates the speed with which inventory is

converted into sales. A high ratio indicates efficientperformance of the company.

In the above graph we can see that the stock turn

over in the yr 2008, 2009 and 2010 is respectively

25.19, 31.34 and 37.45.

So we can say that in the yr 2010 the stock

turnover is effective which indicates the inefficient

performance of the company.

3.3.5 WORKING CAPITAL TURNOVER:-

0

5

10

15

20

25

30

35

40

2008-09 2009-10 2010-11

Stock Turnover Ratio

Stock Turnover Ratio


65/104

MEANING:-


the sales and working capital.

FORMULA:-

This ratio is calculated by dividing the net sales

by the working capital. This ratio usually expressed

as NO of times. In the form of formula, this ratiomay be expressed as under

WORKING CAPITAL TURN OVER RATIO = NET SALES

WORKING CAPITAL

CALCULATIONS: (In Lacs)

PARTICULARS 2008-

2009

2009-2010 2010-2011

NET SALES 169481.35 196245.92 222055.77

WORKING

CAPITAL

1363.03 3866.15 6121.16

RATIO(IN 124.34 50.76 36.28


66/104

TIMES)

INTERPRETATION:-

This ratio indicates the firms ability to generate

sales per rupee of working capital. In general

higher the ratio, the more efficient the

management and utilization of working capital and

vice-versa.

In the above graph W.C. turnover ratio in yr 2008-

2009, 2009-2010 and 2010-2011 is 124.34, 50.76

0

20

40

60

80

100

120

140

2008-09 2009-10 2010-11

Working Capital Turnover Ratio

Ratio


67/104

and 36.28 respectively which shows the inefficient

management of the company.

3.3.6 BOOK VALUE PER SHARE:-

MEANING:-

This ratio establishes a relationship between share

capital, reserve and surplus with no. of equity

shares.

FORMULA:-

This ratio is calculated by dividing equity share

capital reserve and surplus by no. of equity shares.

It is expressed as an absolute figure. In the form of

a formula this ratio is expressed as under.

BOOK VALUE PER SAHRE = EQUITY SHARE CAPITAL+R & S

NO. OF EQUITY SHARES

CALCULATION:

PARTICULAR

S

2008-2009 2009-2010 2010-2011

EQUITY 21629570 32611160 38405330


68/104

S.CAPITAL+R

&S

00 00 00

NO. OF

EQUITY

EQUITYSHAR

ES

13599281

7

13599281

7

13599281

7

RATIO(Rs) 15.90 23.98 28.24

INTERPRETATION:-

In general higher the ratio the better it is. From the

above table we can see that book value per share is

increasing from 15.90 to 23.98 to 28.24 which

0

5

10

15

20

25

30

2008-09 2009-10 2010-11

Book value per share

Ratio


69/104

show the higher amount of profitability of the

company.

3.4 LIQUIDITY RATIOS

3.4.1 CURRENT RATIO:-

MEANING:-


current assets and current liabilities.

CURRENT ASSETS:-

The assets which can be converted into cash

within a period of a year are known as currentassets. E.g. cash balance, marketing security, bills

receivable, prepaid expense, advance payment of

cash ,bank balance, debtors, all type of stock i.e.

raw material , work in progress , finished goods,

income due but not received.

CURRENT LIABLITIES:

This means liabilities which are accepted to be

mature within a year and included following: -

creditors, bills payable, short term loans, advances,


70/104

provision for tax, bank over draft, income received

in advance, unclaimed dividend.

FORMULA:-

This ratio is calculated by dividing current assets by

current liabilities. This ratio is usually expressed as

a pure ratio. In the form of the formula this ratio

may be expressed as under:

CURRENT RATIO = CURRENT ASSETS

CURRENT LIABLITIES

CALCULATIONS: (In lacs)

PARTICULARS 2008-2009 2009-2010 2010-2011

CURRENT

ASSETS

54210.29 59013.45 70444.31

CURRENT

LIABLITIES

55573.32 55147.30 64323.15

RATIO(IN

PROPOTION)

0.98:1 1.07:1 1.1:1


71/104

INTERPRETATION:-

This ratio indicates availability of current assets to

pay current liabilities. Traditionally a current ratio

of 2:1 is considered to be a satisfactory ratio.

In the above graph we can see that current ratio in

2008-2009,2009-2010 and 2010-2011 is

respectively 0.98,1.07 and 1.1 which shows that

the liquidity position of the company is satisfactory

at present.

3.4.2 LIQUID RATIO:-

MEANING:-

This ratio establishes relationship between Liquid

assets and liquid liabilities.

0.9

0.95

1

1.05

1.1

2008-09 2009-10 2010-11

Current Ratio

Ratio


72/104

FORMULA:-

This ratio is calculation by dividing liquid assets by

liquid liabilities. This ratio is usually expressed as a

pure ratio.

LIQUID RATIO= CURRENT ASSETS - STOCK

CURRENT LIABLITIES-B.O.D

CALCULATION: (In lacs)

PARTICULARS 2008-2009 2009-2010 2010-2011

LIQUID

ASSETS

STOCK

45967.96 47958.09 55074.39

LIQUID

LIABLITIES-

BOD

55573.32 55147.30 64323.15

RATIO(INPROPOTION)

0.83:1 0.87:1 0.86:1

Bills Overdraft (BOD) not given.


73/104

INTERPRETATION:-

This ratio indicates rupees of liquid assets available

for each rupee of liquid liabilities. Ideal liquid ratiois 1:1.

In the above graph we can see that the liquid ratio

in 2008-2009, 2009-2010 and 2010-2011 is

respectively 0.83,0.87,0.86 so, we can say that the

liquid ratio has been increased in the yr 2009-2010

which is efficient condition for the company.

3.5 LEVERAGE RATIO:-

3.5.1 PROPRIETORY RATIO:-

0.81

0.82

0.83

0.84

0.85

0.86

0.87

0.88

2008-09 2009-10 2010-11

Liquid Ratio

Liquid Ratio


74/104

MEANING:-

This ratio measures the relationship between share

holders fund and total assets ofthe company.

FORMULA:-

This ratio is computed by dividing share holders

funds by total assets it is expressed as %.

PROPRIETORY RATIO= PROPRITERS FUND*100

NET ASSETS

CALCULATIONS: (In Lacs)

PARTICULARS 2008-2009 2009-2010 2010-2011

SHARE

HOLDERS

FUND

21629.57 32611.16 38405.33

NET ASSETS 22098.32 33069.91 38410.33

RATIO (%) 97.88 98.61 99.98

Proprietors fund= Shareholders fund.


75/104

INTERPRETATION:-

This ratio indicates the assets of the firm purchase

out of owners funds.

From the above table we can see that the

proprietary ratio was very high in the yr 2010-

2011as compared to in 2008-2009 & 2009-2010,

which shows that the owners fund is enough at present.

3.5.2 DEBT EQUITY RATIO

MEANING:-

This ratio establishes a relationship between long

term debts and share holders funds.

96.50%

97.00%

97.50%

98.00%

98.50%

99.00%

99.50%

100.00%

2008-09 2009-10 2010-11

Proprietory Ratio

Ratio


76/104

FORMULA:-

This ratio is calculated by dividing the long term

debt of the firm by the share holders fund. This

ratio is usually expressed as the pure ratio e.g.:-

2:1.

DEBT EQUITY RATIO= LONG TERM DEBTS*100

SHARE HOLDERS FUND

(No long term debt is given. So, this ratio cannot be

calculated.)

3.5.3 CAPITAL GEARING RATIO:-

MEANING:-

This ratio expresses the proportion of preference

capital + debentures and ordinary capital.

FORMULA:

CAPITAL GEARING RATIO = FIXED INTEREST

BEARING CAPITAL*100

ORDINARY

CAPITAL


77/104

(Fixed interest bearing capital is not given. So, this

ratio cannot be calculated.)

3.5.4 LONG TERM FUND TO FIXED ASSETS

MEANING:-

This ratio measures a relationship between long

term funds to fixed assets.

FORMULA:-

This ratio is computed by dividing share holders

fund & long term debts by fixed assets. This ratio is

expressed as pure ratio. Ideal is 1:1.The formula is

as under.

LONG TERM FUNDS TO F/ A = LONG TERM FUND*100

FIXED ASSETS


PARTICULARS 2008-2009

2009-2010

2010-2011

LONG TERM

FUND

21629.57 32611.16 38405.33

FIXED ASSETS 17859.54 25313.66 26730.93


78/104

RATIO(Proportion) 1.21:1 1.29:1 1.44:1

Long term funds= Share capital + Reserves &

surplus

INTERPRETATION:-

Fixed assets should be purchased from long

term capital. In the above table we can see that the

fixed assets as compare to long term fund is more

than 2008-2009 and 2009-2010, in the yr 2010-

2011 which shows that the long term funds have

been properly utilized.

1.051.1

1.15

1.2

1.25

1.3

1.35

1.4

1.45

2008-09 2009-10 2010-11

LONG TERM FUND TO FIXED ASSETS

RATIO

Ratio


79/104

3.6 COVERAGE RATIO

3.6.1 INTEREST COVERAGE RATIO:

MEANING:-

This ratio is useful to know if the firm has sufficient

profit its liability or interest.

FORMULA:-

This ratio is calculated by dividing earnings before

interest and tax by interest. It can be shown in the

form of a formula as under.

INTEREST COVERAGE RATIO = EBIT

INTEREST


PARTICULARS 2008-2009 2009-2010 2010-2011

EARNINGBEFORE

(INT.&TAX)

34530.65 48479.85 51994.85

INTEREST 110.01 150.43 161.13

RATIO(TIMES) 313.87 322.28 322.69


80/104

INTERPRETATION:-

The calculation shows that profit available before

int. and tax is 313.87 times more than the int.payable in the year 2008-09 and it increases to

322.69 in the year 2010-11. It means that the

financial position of the company is sound.

3.6.2 DEBT SERVICE COVERAGE RATIO:

MEANING:-

This ratio measures the ability of the firm to

measure the amount of capital.

FORMULA:-

308

310

312

314

316

318

320

322

324

2008-09 2009-10 2010-11

Interest Coverage Ratio

Ratio


81/104

DEBT SERVICE COVERAGE RATIO= PROFIT AFTER TAX+NON

CASH EXP.

INTEREST + PRINCIPALAMT. OF C.YR


Non cash exp. = Depreciation

Principle amount of current year is not given.

PARTICULARS 2008-

2009

2009-

2010

2010-

2011

PROFIT AFTER

TAX+NON

CASH EXP

31316.83 43688.28 46082.61

PRINCIPEL+INT 110.01 150.43 161.13

RATIO 284.67 290.42 286


82/104

INTERPRETATION:-

Higher the ratio, better it is for the money lenders.

Highest ratio is in the yr 2009-10 and in the year2010-11 it is 286.

281

282

283

284

285

286

287

288

289

290

291

2008-09 2009-10 2010-11

Debt Service Coverage Ratio

Debt Service Coverage Ratio


83/104

CHPT-4 ACCOUNTING POLICIES

SIGNIFICANT ACCOUNTING POLICIES:

Basis of accounting

The financial statements are prepared to comply

in all material aspects with all the applicable

accounting principles in India, the accounting

standards notified under Section 211(3C) of the

Companies Act, 1956 of India (the Act) and the

relevant provisions of the Act

Fixed Assets

Fixed assets are stated at cost less accumulated

depreciation. The Company capitalises all direct

costs relating to the acquisition and installation of

fixed assets. Interest on borrowed funds, if any,

used to finance the acquisition of fixed assets, is

capitalised up to the date the assets are ready for


84/104

commercial use. Under utilised/Idle assets are

recorded at estimated realisable value.

Intangible Assets

Goodwill and other Intangible Assets are amortised

over the useful life of the assets, not exceeding 10

years.

Tangible Assets

Lease-hold land is being amortised over the period

of lease

Investments

Long-term investments are valued at cost. Current

investments are valued at lower of cost and fair

value as on the date of the Balance Sheet

Inventories

Inventories of raw and packing materials, work-in

process and finished goods are valued at lower

of cost and net realisable value.

Revenue Recognition


85/104

Sales are recognised upon delivery of goods and

are recorded net of trade discounts, rebates, sales

tax/value added tax and inclusive of excise duty

on own manufactured and outsourced products.

Service Income

Service Income is recognised on cost plus basis

for services rendered

Provisions and Contingent Liabilities

The Company recognises a provision when there

is a present obligation as result of a past event

that probably requires an outflow of resources and

a reliable estimate can be made of the amount of

the obligation

Expenditure

Advertising expenses are consistently accrued

and recognised in the year in which the related

activities are carried out. The Company has Defined

Contribution Plan comprising of Provident Fund

and Superannuation Fund and Benefit Plan


86/104

comprising of Gratuity Fund and Pension Scheme

for employees which are recognised by the Income

Tax Authorities and administered through itstrustees/appropriate authorities.

Actuarial Gains and Losses comprise experience

adjustments and the effect of changes in the

actuarial assumptions and are recognised

immediately in the Profit and Loss Account as

income or expense.

Expenditure on Voluntary Retirement Scheme is

charged to the Profit and Loss Account in the year

in which it is incurred.

Foreign Currency Transactions

Transactions in foreign currencies are recognised

at the prevailing exchange rates on the transaction

dates

Taxation

Current tax is determined as the amount of tax

payable in respect of taxable income for the

year.Deferred tax for timing differences between

the income as per financial statement and income


87/104

as per the Income-tax Act, 1961 is accounted for

using the tax rates and laws that have been

enacted or substantially enacted as of the BalanceSheet date


88/104

Chpt:-5 Directors report

The year 2010-11 was another challenging

year for the global markets. The continued

high level of food inflation along with the

firming up of

Commodity costs have led to an inflationary

business environment.

Uncontrolled high inflation could dampen the

growth trend in Indian market. In this

challenging environment, their Company

achieved a healthy double-digit sales growth

during the year 2010-11.

Sales for the year increased by 13 per cent at

` 2,221 crore as against ` 1,962 crore during

the previous year. The toothpaste business

registered an impressive volume growth of 13

per cent during the year.

The profit before tax for the financial year

2010-11 was` 520 crore as against ` 485 crore

during the previous year. During the year,

their Company significantly increased its

investment in the brand and equity building

activities by 16.7 per cent i.e. ` 50 crore.


89/104

Despite this additional investment coupled

with the lower deduction under the Income-

tax regulations on the profits of the Baddimanufacturing facility resulting in higher year

on year tax payments of ` 56 crore, the profit

after tax for the financial year 2010-11 was `

403 crore as against` 423 crore during the

previous year.

Their Company continued to achieveexcellent business results year after year

despite the fierce competitive market

environment.

Their Company has developed strong

relationships with dental professionals. Thisstrategy has contributed greatly to increasing

professional recommendations for their

Companys brands. In India, 81 per cent of

professionals are now recommending Colgate

ahead of any other brand.

During 2010-11, innovative products like

Colgate Plax Mouthwash and Colgate

Sensitive Toothpaste grew strongly to deliver

new and improved benefits to consumers.

Their Companys strong cash generation and

positive growth momentum led your Board to


90/104

declare three interim dividends of ` 10, ` 5

and ` 7 per share aggregating` 22 per share

for the financial year 2010-11 as against ` 20per share in the previous year. These

dividends were paid on August 30 and

December 24, 2010 and April 19, 2011.

Since 2002, their Company partnered with

Pratham, a non-profit organisation, to

promote academic education of the lessprivileged children.

Their Company achieved a hat-trick of

Guinness World Records TM in the oral care

category that started off in 2007 with the

Colgate Brush-up Challenge where 1,77,003students from 380 locations in 22 cities across

the country, in one day and at one time,

brushed their teeth for one minute.


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Chpt 6 Auditors reports

They had audited the attached Balance Sheetof Colgate-Palmolive (India) Limited (the

Company)as at March 31, 2011, and the

related Profit and Loss Account and Cash Flow

Statement for the year ended on that date

annexed thereto, which we have signed

under reference to this report. These financial

statements are the responsibility of the

Companys Management. Their responsibility

was to express an opinion on these financial

statements based on their audit.

They conducted their audit in accordance

with the auditing standards generallyaccepted in India. Those Standards require

that they plan and perform the audit to

obtain reasonable assurance about whether

the financial statements are free of material

misstatement.

As required by the Companies (Auditors

Report) Order, 2003, as amended by the

Companies(Auditors Report) (Amendment)

Order, 2004(together the Order), issued by

the Central Government of India in terms of

sub-section (4A)of Section 227 of The

Companies Act, 1956 of India (the Act) and


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on the basis of such checks of the books and

records of the Company as they considered

appropriate and according to the informationand explanations given to them, they gave in

the Annexure a statement on the matters

specified in paragraphs 4 and 5 of the Order.

Further to our comments in the Annexure

referred to in paragraph 3 above, they

reported that :

(a) They obtained all the information and

explanations which, to the best of their

knowledge and belief, were necessary for the

purposes of their audit;

(b) In their opinion, proper books of account

as required by law have been kept by Auditors

Report To the Members of Colgate-Palmolive

(India) Limited the Company so far as appears

from their examination of those books;

(c) The Balance Sheet, Profit and Loss Account

and Cash Flow Statement dealt with by this

report were in agreement with the books of

account;


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(d) In our opinion, the Balance Sheet, Profit

and Loss Account and Cash Flow Statement dealt

with by this report comply with the accountingstandards referred to in sub-section (3C) of

Section 211 of the Act;

(e) In their opinion and to the best of their

information and according to the explanations

given to them, the said financial statements

together with the notes thereon and attachedthereto give, in the prescribed manner, the

information required by the Act, and give a true

and fair view in conformity with the accounting

principles generally accepted in India:

(i) In the case of the Balance Sheet, of the

state of affairs of the Company as atMarch 31, 2011;

(ii) In the case of the Profit and Loss

Account, of the profit for the year ended

on that date; and

(iii)

In the case of the Cash Flow Statement,of the cash flows for the year ended on

that date.


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COMMON SIZE STATEMENT

OFPROFIT & LOSS

BALANCE SHEET

Meaning of common-size statement:-

The method discussed so far do not provide any

common base with which all items in each

statement can be compared. For this purpose

common size statement are prepared in which all

items are compared with one common item.

For example in income statement of

profit and loss account sales may be taken as 100

and all other item in the statement are computed

as presentence of sales. Similarly in case of balance

sheet the relation of each item to total assets is

computed. When financial statements arepresented in this way, they are called common-

sized statement or 100% statement.


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COMMONSIZE STATEMENT OF PROFIT

AND LOSS:-

MEANING:-

In the common size income statement, the sales as

100 and all individual items of expenses and

incomes are shown as % of sales.

The common size statement gives useful

proportions of each component to the total. But

they alone are not of much use, as they do not give

information about the trends of individual items

from year to year.


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Common Sized Statement of Profit &

Loss A/c:

(In

Value in Rs. % of value

Particulars 2008-09 2009-10 2010-11 2008-09 2009-10 2010-11

NCOME

Sales 175815.90 202464.5 231739.89 103.74 103.17 104.36

-)Excise Duty 6334.55 6218.73 9684.12 3.74 3.17 4.36

Net sales 169481.35 196245.9

2

222055.77 100.00 100.00 100.00

Other income 10775.72 9845.72 10680.10 6.36 5.02 4.81

EXPENDITURE

Cost of good sold 74130.76 77684.29 87196.58 43.74 39.59 39.27

Employees

emuneration and

benefits

14340.65 15907.35 19322.33 8.46 8.11 8.70

Other expanses 54960.12 60263.36 70797.16 32.43 30.71 31.88

Depreciation 2294.89 3756.79 3424.95 1.35 1.91 1.54

145726.42 157611.7

9

180741.02 85.98 80.31 81.39

Profit before tax 34530.65 48479.85 51994.85 20.37 24.70 23.41

-)Current tax 4107.50 6430.80 11659.42 2.42 3.28 5.25

-)differed tax 1031.21 276.77 77.10 0.61 -0.14 0.034

-)fringe benefitax

370.00 - - 0.22 - -

Profit after tax 29021.94 42325.82 40258.33 17.12 21.57 18.13

+)balance

brought forward

from last year

577.17 2883.98 9194.98 0.34 1.47 4.14

profit available

for

appropriation

29599.11 45209.80 49712.69 17.46 23.03 22.39


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Interpretation:

The sales of the company has increased but

with that the expense has also increased so

the profit decreases.

Expenditure is the highest in the year 2010-

2011 in absolute terms but low in terms of%.

Profit after tax is low in absolute as well as %

terms.


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COMMON-SIZE STATEMENT OF BALANCE

SHEET:

MEANING:-

In the balance sheet is taken as 100 and all

items are presented as % of total assets as

shown below.

The balance sheet shows the % of each assetto the total assets as well as the % of each

liability to the total liabilities.

COMMON SIZE STATEMENT OF

BALANCE SHEET

Particulars 2008-09 2009-10 2010-11 % % %

Sources

of funds

Shareholders fund

Share

capital

1009.54 1009.55 975.68 3.38 3.12 2.70

Reserves

and surplus

21891.96 28088.43 32204.68 73.26 86.87 89.21


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22901.50 29097.98 33180.36 76.64 89.99 91.91

Loan funds

Secured

loans

5264.27 1135.64 1005.94 17.62 3.51 2.79

Differed tax

liabilities

1714.76 2099.83 1913.97 5.74 6.49 5.30

29880.53 32333.83 36100.27 100 100 100

Applicati

on of

fund

Fixed assets

Gross block 23838.00 24006.91 25525.28 79.78 74.25 70.71

Less:

depreciatio

n

8620.88 8358.61 8257.76 28.85 25.85 22.87

Less:

impairment

469.73 469.73 - 1.57 1.45

Net block 14747.39 15178.57 17267.52 49.35 46.94 47.83

Capital

work- in

progress

2648.42 26614.88 3480.37 8.86 8.09 9.64

17395.81 17793.45 20747.89 58.22 55.03 57.47

Investment

s

1624.58 84.56 4776.06 5.44 0.26 13.23

Currentas

sets


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,loans

and

advances

Inventories 6087.72 4717.81 5510.20 20.38 14.59 15.26

Sundry

debtors

6076.46 3896.25 5686.12 20.33 12.05 15.75

Cash and

bank

balance

1480.98 8046.57 1790.88 4.96 24.87 4.96

Loans and

advances

10256.47 11392.60 12762.49 34.32 35.23 35.35

23901.63 28053.23 25749.69 79.99 86.76 71.33

Less:

current

liabilities

andprovisions

Current

liabilities

12163.81 12419.06 13286.50 40.71 38.41 36.80

Provisions 877.68 1178.73 1886.87 2.94 3.65 5.23

13041.49 13597.79 15173.37 43.65 42.05 42.03

Net current

assets

10860.14 14455.44 10576.32 36.35 44.71 29.30

Total29880.53 32333.45 36100.27 100% 100% 100%


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INTERPRETATION:

The above balance sheet shows the

percentage of each asset to the total assets as well

as the percentage of each liability to total liability

and capital. The current assets and the current

liabilities of the company has increased in the year

2009, compare to year 2008. But it has decline in

the year 2010.

Fixed assets were increased from 30.90% in the

year 2008 to 42.09 % in the year 2009 but it was

declined to 40.14% in the year 2010.

The share capital of the company has remained

same in the year 2008, 2009 &2010.

Reserve and surplus has declined in the year 2009

but it has increased in the year 2010, compare to

2009.


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CHPT:- 8 CONCLUSION & FINDINGS

FINDINGS:

From the study of the company Colgate-Palmolive

(India) Limiteds three years ratio, I have come toknow that the financial position of the company is

really good. By studying and comparing all the

financial position of balance sheet and profit and

loss I found that the company is in profit.

G.P is high as compared to the three years and so

as N.P. PBT is also in increasing so this shows that

the company is in profit. Sales is in the increasing

stage. The expenditure of the company goes down

continuously. The return on capital employed is

very high; which indicates the profitability is also

very high. The companys solvency is satisfactory.

So, it is good for the point of view of investors to

invest in this company for the long term.


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Conclusion:

Analysis the three financial results of Colgate-Palmolive (India) Limited Company gave me a great

exposure to the financial and general management

function of the organization. I am sure my

analytical; comprehension and writing presenting

skill have improved. I will use the skills all across

my management carrier and projects. I also found

that ratios are very important point to analyze the

company performance.


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References

Annual Report of Colgate Palmolive (India)

Limited.

Finance Colgate

Documents

Transcript of Finance Colgate