Sunny Chauhan

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TABLE OF CONTENTS

CHAPTER CONTENTS PAGE NO.

1 INTRODUCTION

ABOUT FINANCIAL

STATEMENT2 OBJECTIVE OF THE

FINANCIAL

STATEMENT

3 INDUSTRIAL

PROFILE

4

COMPANY PROFILE

5 ABOUT THE

FINANCIAL

STATEMENT

6 RESEARCH

METHODOLOGY.

7

DATA ANALYSIS

AND

INTERPRETATION

8 FINDING

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9 CONCLUSION

10 LIMITATION

11 SUGGESTION

BIBLIOGRAPHY

ANNEXURE

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FINANCIAL STATEMENTS

Financial statements mean a statement or document which explains necessary financial

information about an organization/ company. the financial statements ae prepared on the basis of

facts recorded in books. These recorded facts are expressed in the monetary terms.

In the United States, a company that offers its common stock to the public typically needs to file

periodic financial reports with the Securities and Exchange Commission (SEC).

The SEC governs the content of these filings and monitors the accounting profession. In turn, the

SEC empowers the Financial Accounting Standards Board (FASB) - an independent,

nongovernmental organization - with the authority to update U.S. accounting rules. When

considering important rule changes, FASB is impressively careful to solicit input from a wide

range of constituents and accounting professionals. But once FASB issues a final standard, this

standard becomes a mandatory part of the total set of accounting standards known as Generally

Accepted Accounting Principles (GAAP).

Statements are including in the list of financial statements :-

1. Profit and loss account.

2. Balance sheet.

3. P & L appropriation account.

4. Cash flow statement.

5. Various schedules.

6. Explanatory notes given at the end of financial statement.

FINANCE

It is true that money (Finance) plays a very important role in the sphere of business to grow andbring the company position at the top . if the financial position of the company is good, there is no

doubt that company or industry will grow faster in the existing.

FINANCIAL ANALYSIS

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

Financial analysis is the process of identifying the financial strength and weakness of tiles Finn by

property establishing relationship between the item of balance sheet & profit & loss

account.Financial analysis can be undertaken by the firm or by outside parties, firms owner,

creditors, investors and other. Actually the nature of analysis depends upon the parties.

Feature of Financial Analysis :-

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

understandable form.

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

groups.

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

TYPES OF FINANCIAL ANALYSIS

1. Classification on the basis of material used.

1.External analysis :- Outsiders, who dont have access to the detailed internal accounting record

of business firm, do this analysis. These outside parties potential investors, creditors, government

agencies & general public.

2. Internal analysis :-

The analysis conducted by person who has access to the internal accounting records of a business

firm is known as internal analysis.

2. Classification on the basis of modus operandi.

Horizontal analysis:-

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Horizontal analysis refers to the comparison, of financial data of a company for several

years. The figures of this types of analysisare presented horizontally over a number of

columns. This types of analysis is also called dynamic analysis.

Vertical analysis:-

This analysis refers to the study of relationship of the various items in the financial

statements of one accounting period. It is also known as Static analysis

Significance or importance of Financial Analysis :-

1. Significance for Managers ;-Planning and Control are the two most important ingredients to a

Successful Business. A Business Plan takes most of the guess work out of Business Strategy

and Control through solid Financial analysis. Financial Data provides a way to gauge where

you are in your Strategic Plan, telling you where changes in your Plan are necessary. Because

of this, Financial Data Analysis and Management are vitally important to running a successful

business.

2. Significance for Investors:- Investors are generally considered one of the primary users of

financial statements. They use the financial statements to determine the current profitability of

the firm and attempt to predict its future profitability. Their

interest is in the future growth of a company's stock price and/or the likelihood of the

company paying dividends to the owner.

3. Significance for Creditors:- In the ongoing relationship between suppliers and a firm

financaial statement can play several roles consider the relationship between a firm and the

suppliers to its loan capital.e.g a bank in the initial loan granting stageof the

relationship,financial statement typically are an important items.

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4. Significance for regulatory agency:- The demand by these bodies can arise in diverse set of

areas such as revenue raising e.g for income tax,sales tax ,value added tax collection. Govt.

intervention e.g determine wheather to provide a govt.backed loan agreement to a finically

distressed firm.

5. Significance for Employess:- They are the part of the orgnisation and feel that their effort

contributed to the firm profitthey would therefor prefers togive bonusesnas salary

inceresesthis also increase expensies of the firm.

6. Significance for others parties:- The set of party that demand for financial analysis

information of corporation is open ended . diverse party such as academic ,environmental

protection organization, and other special interest lobbing groups approach corpartionfor

detail relating to their financial and other affairs.

7. Significance for Government :- Various ministries and department have interest in the firms

payments of taxes. Also seet the enchment of lawfor the industry and the provision of

socialservice to the public. The govet may also want to ensure that the firm complies with the

law on for example wages payments and employees benefit.

LIMITATION OF FINANCIAL ANALYSIS :-

although analysis of financial statement is essential to obtain relevant information for making

several decisions and formulating corporate plans and policies, it should be carefully performed as

it suffers from a number of the following limitations.

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d the users:-The accuracy of financial information largely depends on how accurately

financial statements are prepared. If their preparation is wrong, the information obtained

from their analysis will also be wrong which may mislead the user in making decisions.

1. Not useful for planning:-Since financial statements are prepared by using historical financial

data, therefore, the information derived from such statements may not be effective in

corporate planning, if the previous situation does not prevail.

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

about the company's financial affairs. However, it fails to provide qualitative information such

as management labour relation, customer's satisfaction, management's skills and so on which

are also equally important for decision making.

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

Therefore comparativeanalysis of financial statements of different years can not be done as

inflation distorts the view presented by the statements of different years.

5. Wrong judgement:-The skills used in the analysis without adequate knowledge of the subject

matter may lead to negative direction . Similarly, biased attitude of the analyst may also lead to

wrong judgement and conclusion.

6.Not helpful in price fixation:-In financial accounting the cost is not available as an aid in

determining prices of the product services production order and product line.

7. Not control on cost:-It does not provide for a proper control of materials and

suppliers,wages.labours and overheads.

8. No analysis of losses:- It does not provided the complete analysis of lossesdue to defective

material ,idle time,idle palnt and equipment. In other words no distinction is made between

avoidable and unavoidable wastage.

TECHNIQUES OR METHODS OF FINANCIAL ANALYSIS :-

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1. Comparative Statements.

2. Trend analysis

3. Common size Statements.

4. Fund flow statements.

5. Cash flow statements.

6. Ratio Analysis.

7. Break even point Analysis

.

OBJECTIVE OF THE STUDY : -

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

2. To measures the solvency of the company.

3. To measures the financial strength of the company.

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

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

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

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INDIAN FOOTWEAR INDUSTRY:-

Indian leather industry is the core strength of the Indian footwear industry. It is the engine of

growth for the entire Indian leather industry and India is the second largest global producer of

footwear after China.Reputed global brands like Florsheim, Nunn Bush, Stacy Adams, Gabor,

Clarks, Nike, Reebok, Ecco, Deichmann, Elefanten, St Michaels, Hasley, Salamander and

Colehaan are manufactured under license in India. Besides, many global retail chains seeking

quality products at competitive prices are actively sourcing footwear from India.While leather

shoes and uppers are produced in medium to large-scale units, the sandals and chappals are

produced in the household and cottage sector. The industry is poised for adopting the modern and

state-of-the-art technology to suit the exacting international requirements and standards. India

produces more of gents footwear while the worlds major production is in ladies footwear. In the

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case of chapels and sandals, use of non-leather material is prevalent in the domestic

market.Leather footwear exported from India are dress shoes, casuals, moccasins, sport shoes,

horrachies, sandals, ballerinas, boots. Non-leather footwear exported from India are Shoes,

Sandals and Chappals made of rubber, plastic, P.V.C. and other materials.With changing

lifestyles and increasing affluence, domestic demand for footwear is projected to grow at a faster

rate than has been seen. There are already many new domestic brands of footwear and many

foreign brands such as Nike, Adidas, Puma, Reebok, Florsheim, Rockport, etc. have also been

able to enter the market.The footwear sector has matured from the level of manual footwear

manufacturing methods to automated footwear manufacturing systems. Many units are equipped

with In-house Design Studios incorporating state-of-the-art CAD systems having 3D Shoe Design

packages that are intuitive and easy to use. Many Indian footwear factories have also acquired the

ISO 9000, ISO 14000 as well as the SA 8000 certifications. Excellent facilities for Physical and

Chemical testing exist with the laboratories having tie-ups with leading international agencies like

SATRA, UK and PFI, Germany.

One of the major factors for success in niche international fashion markets is the ability to cater

them with the latest designs, and in accordance with the latest trends. India, has gained

international prominence in the area of Colours & Leather Texture forecasting through its

outstanding success in MODEUROP. Design and Retail information is regularly made available

to footwear manufacturers to help them suitably address the season's requirement.The Indian

Footwear Industry is gearing up to leverage its strengths towards maximizing benefits.Strength of

India in the footwear sector originates from its command on reliable supply of resources in the

form of raw hides and skins, quality finished leather, large installed capacities for production of

finished leather & footwear, large human capital with expertise and technology base, skilled

manpower and relatively low cost labor, proven strength to produce footwear for global brand

leaders and acquired technology competence, particularly for mid and high priced footwear

segments. Resource strength of India in the form of materials and skilled manpower is a

comparative advantage for the country.

INDIAN SCENARIO:

The Footwear Industry is a significant chunk of the Leather industry in India. India ranks second

among the footwear producing countries next to China. The industry is labor intensive and is

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concentrated in the small and cottage industry sectors. While leather shoes and uppers are

concentrated in large-scale units, the sandals and chappals are produced in the household and

cottage sector. India produces more of gents footwear while the worlds major production is

inladies footwear. In the case of chappals and sandals, use of non-leather material is used

tomanufacture these in the domestic market.Reputed global brands like Florsheim, Nunn Bush,

Stacy Adams, Gabor, Clarks, Nike, Reebok, Ecco, Deichmann, Elefanten, St Michaels, Hasley,

Salamander and Colehaan are manufactured under license in India. Besides, many global retail

chains seeking quality products at competitive prices are actively sourcing footwear from India.

The industry is on the edge of adopting the modern and state-of-the-art technology to suit the

exacting international requirements and standards. The Indian Footwear Industry is all set for

leveraging its strengths towards maximizing benefits. Strength of India in the footwear sector

originates from its command on reliable supply of resources in the form of raw hides and skins,

quality finished leather, large installed capacities for production of finished leather & footwear,

large human capital with expertise and technology base, skilled manpower and relatively low-cost

labor, proven strength to produce footwear for global brand leaders and acquired technology

competence, particularly for mid and high priced footwear segments. India has the competitive

advantage over other countries in the form of materials and skilled manpower The Indian

footwear retail market is expected to grow at a CAGR of over 20% for the period spanning from

2008 to2011. Footwear is expected to comprise about 60% of the total leather exports by 2011

from over 38% in 2006-07. Presently, the Indian footwear market is dominated by Men's footwear

market that accounts for nearly 58% of the total Indian footwear retail market.By products, the

Indian footwear market is dominated by casual footwear market. As footwear retailing in

India remains focused on men's shoes, there exists a plethora of opportunities in the

exclusive ladies' and kids' footwear segment. The Indian footwear market scores over other

footwear markets as it gives benefits like low cost of production, abundant raw material, and has

huge consumption market.

India is now a major supplier of leather footwear to world markets and has the potential to rival

China in the future (60% of Chinese exports are synthetic shoes).

India is often referred to as the sleeping giant in footwear terms. It has an installed capacity of

1,800 million pairs, second only to China. The bulk of production is in mens leather shoes and

leather uppers for both men and ladies. It has over 100 fully mechanized, modern shoe making

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plants, as good as anywhere in the world (including Europe). It makes for some up market brands

including Florsheim (US), Lloyd (Germany), Clarks (UK), Marks and Spencer (UK).

SWOT ANALYSIS OF INDIAN FOOTWEAR INDUSTRY:-

STRENGTHS: -

Existence of more than sufficient productive capacity in tanning.

Easy availability of low cost of labour.

Exposure to export markets.

Managements with business background become quality and environment conscious.

Presence of qualified leather technologists in the field.

Comfortable availability of raw materials and other inputs.

Massive institutional support for technical services, designing, manpower development

and marketing.

Exporter-friendly government policies.

Tax incentives on machinery by Government.

Well-established linkages with buyers in EU and USA.

WEAKNESSES: -

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

developed technology is very slow.

Low level of labour productivity due to inadequate formal training / unskilled labour.

Horizontal growth of tanneries.

Less number of organised product manufacturers.

Lack of modern finishing facilities for leather. Highly unhygienic environment.

Unawareness of international standards by many players as maximum number of leather

industries are SMEs.

Difficulties in accessing to testing, designing and technical services.

Environmental problems.

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Non availability of quality footwear components

Lack of fresh investment in the sector.

Uneconomical size of manufacturing units.

Competition among units vying for export orders leading to undercutting.

Little brand image.

Poor labour productivity. Lack of awareness about consistent in

plant training and retraining- Inconsistent quality high rejection rate

Low machine and material productivity.

Lack of quality job work units

Delayed deliveries

Weak support infrastructure for exports

OPPORTUNITIES: -

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

Growing fashion consciousness globally.

Use of information technology and decision support software to help eliminate the length

of the production cycle for different products

Product diversification - There is lot of scope for diversification into other products,

namely, leather garments, goods etc.

Growing international and domestic markets.

Exposure to newer markets through Fairs/ BSMs

Retain customers through quality supplies and timely deliveries

Aim to present the customer with new designs, infrastructure, country & company

profiles.

Use of modern technology

Exhibit strengths in manufacturing, for example, strengths in classic shoe manufacturing,

hand crafting etc.

De-reservation of the footwear sector.

THREATS: -

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Entry of multinationals in domestic market.

Stiff competition from other countries.(The performance of global competitors in leather

and leather products indicates that there are at least 5 countries viz, China, Indonesia,

Thailand, Vietnam and Brazil, which are more competitive than India.)

Non- tariff barriers - Developing countries are resorting to more and more non tariff

barriers indirectly.

Improving quality to adapt the stricter international standards.

Fast changing fashion trends are difficult to adapt for the Indian leather industries.

Limited scope for mobilising funds through private placements and public issues, as many

businesses are family-owned.

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SHARE IN GDP OF FOOTWEAR INDUSTRY:-

India's GDP recently crossed the trillion-dollar mark for the first time and with this India

has joined the elite club of 12 countries with a trillion dollar economy. Countries that have

breached trillion-dollar GDP level in the past are he US, Japan, Germany, China, UK,

France, Italy, Spain, Canada, Brazil and Russia.

The GDP or Gross Domestic Product is the primary indicator used to gauge the health of a

country's economy. The GDP of a country is defined as the market value of all final goods

and services produced within a country in a given period of time. It is also considered the

sum of value added at every stage of production of all final goods and services produced

within a country in a given period of time. GDP is a number that expresses the worth of the

output of a country in local currency. GDP tries to capture all final goods and services that

are produced within the political and geographical frontiers of the country, thereby assuring

that the final monetary value of everything that is created in a country is represented in the

GDP. GDP is calculated for a specific period of time, usually a year or a quarter of a year.

According to the data released for the year 2006-2007, India's GDP grew at an impressive 9.2

per cent. The share of different sectors of the economy in India's GDP is as follows:

Agriculture - 18.5 per cent, Industry - 26.4 per cent, and Services - 55.1 per cent. The fact

that the service sector now accounts for more than half the GDP is a milestone in India'seconomic history and takes it closer to the fundamentals of a developed economy. At the time

of independence agriculture occupied the major share of GDP while the contribution of

services was relatively very less.

The government has set a target of an average annual GDP growth of 9 per cent for the

Eleventh Five Year Plan. The target looks achievable as all the macroeconomic fundamentals

are strong and the impressive growth rate of Indian GDP looks all set to continue. Footwear

Market in India 2010 ... India has around 3% share in the global trade of leather in

comparison to Chinas 20%. In order to . ... From 10% of the Indian GDP in2007, it became

12% of GDP in 2009.

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INTRODUCTION

Liberty is leading footwear industry covering brands under its own name. Liberty shoes are

known for its quality in India and abroad. The footwear liberty emerged in 1954 in the field of

manufacturing and exporting of footwear. This company is manufacturing leather shoes , sports

shoes, non leather shoes , leather shoes upper and Hawaii chappals for gents, ladies and

children. The Liberty has its corporate office , centre house and human Tech. centre , liberty

park in karnal city Registered office & human tech. centre , Liberty puram in kutial (karnal) and

human Tech. centre ,liberty complex in Ghuraunda (karnal) .The marketing office is located at

Punjab Begh New Delhi. The liberty has its domestic branch office at Agra , Banglore, Chennai,

Delhi, Jaipur , Jammu, Rajpura and Sharanpur. It has its banker state Bank of india specializedcommercial branch karnal for enhancement of working capital limits. By invention of ACS (air

circulation system) technology , a sole , that prevents feet from sweating in hot and humid

conditions are more revolutionary step by liberty in footwear market. It talk the extra mile to

ensure customers satisfaction wprld wide. The major strength of liberty footwear is its strong

distribution channel and itas technological advancement. Liberty is devoted to the customer of

the world and they strive hand to keep ture to there motto

,SAPNE AB HUAE APNE.

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HISTORY OF LIBERTY SHOES LIMITED

Like all the enterprises this company too is steeped in history . It was on 25 th December 1954

when India was nurturing its growth as a free country those three dreamers in a small town in

erstwhile Punjab throughtout of producing an Indian brand of footwear to make a basic necessity

available to their countrymen . Late Sh. D.P.Gupta. Late Sh.P.D. Gupta & Late Sh. R.K. Bansal

Ji allowed their vision to cross every barrier and brought in technology to ensure that the feed to

the market was of world class. Soon the product and the name become generic to quality

footwear in the domestic market and this allowed the company to invest further for enhancing

production capacity and cater to international market too.With 50 years of excellence behind it

liberty today is amongst the five largest footwear manufacturers of the world. It produce footwear

for the entire family and is a trusted name in many households across India and the world. In the

domestic market we are one of the most admired footwear brands and hold the largest market

share for leather footwear. Liberty 50 years of excellence behind it Liberty today is amongst the

five largest footwear manufacturers of leather footwear of the world with a turnover in excess of

U.S $100 Million .Producing more than 90000 pair of footwear a day .A range that is among the

largest in the industry , covering virtually every age group and income category. Marketed across

the globe through 150 distributors ,350excutive showrooms andover 6000 multi- brand outlets

and sold in thousands every day in more than 25 countries including fashion driven, qualityobsessed nations like France , Italy. Company was incorporated on 3 rd sept.1986 as a public

company and obtained the company wof business on 11th March 1988. Firm register office of the

companies situated at Delhi , Haryana and New Delhi. The company shifted its register office

from Union Territory of Delhi to Karnal.

The company has been set to manufacturer and to sell leather and non- leather shoes upper and

leather garments. Presently company is engage manufacturing leather and non- leather shoes.

Company has also set up a joint venture in Russia to manufacture shoes in 1991 under the name

ofM/S Liberty & Co. with M/S Groky Product & shoes unit Groky City but subsequently

the name of venture was changed as Liberty & Nino

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SOCIAL RESPONSIBILITYOF COMPANY

Liberty conducts its business with honestly, intergrity and respect for all those who come in

contact with it in course of business. Fully apprective of the fact that its reputation stems from not

just quality products and technological innovations but also from the manner of its dealing with

customers, suppliers, government official and all those who are outside the Liberty Group.

Utmpst importance is also given to ensuring a safe, healthy and non discriminatory work

environment for all Liberty employees where they are free from harassment of any from

supervisor , senior, co- workers, customer and suppliers. Ethical standards and practices are

rigorously brands like Wal-Mart, Reebok, Nike etc. who recognize it as an equal opportunity

employers.

THE PRESENT SCENARIO

The company markets its product nationally and internationally under the brand Liberty Co. Is

well established in national and global marker. The company has appointed dealer and distributor

for marketing its product besides selling through the existing Dealer Company provide 20% to

30% discount rate on the print rate. The company has enter into an agreement with one of the

group firm M/S Liberty Enterprise for using the established brand name Liberty. As per the

term of agreement company can use this term of agreement co. and use the trademark initially

for a period of 5 years and has to royalty of Rs 20 Lac. The Company has commencedcommercial production for non- leather shoes on 25 th December 1993. Initially direct injection-

soing machine was installed with the capacity of 24000 pairs premium on single shift basis. The

second direct injection mechinebe installed in march 1994. From the commencement of

commercial period till 31th march 1994 the co. has been separated on full capacity. As the

promoters are in this line for the last five decades the company has recently launched new

product of Hawaii chapels.

The present over supply in the domestic market is improved due to this inceasing growth rate of

demand over the base several years.

FUTURE PLAN

Group has set up this company to expand its exciting capacity by more thantwo times to increase

in the market share in national and international market and to meet out the

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growing demand of its product. The group has ambition plan for the future to globalize its brands

Liberty and with and in new it has created a distribution network not only in India but also in

Europe and in Middle East , which is dedicated to market the group branded products. The group

plans to restructure its separation into integrated shoes manufacturing and market organization.

DECISION MAKING

All the decision , which is of the strategic nature, is to be taken at highest level . various

committees for the formulation of policies for the different functional area have been

constituted. Before taking any financial decision proper consultation with concerned executive

is done. The heads of the department have sufficient opportunities for participating in decision

making .their views recommendations and suggestion are given due consideration. However the

final authorities lies with top executive.

GROUP OF COMPANY

Liberty automotive is a joint venture company promoted by azin khodro group of Iran and

project at bawal industrial growth centre on Delhi Jaipur national highway for manufacturing

automotive trim parts. Drawing upon the consideration manufacturing experience of Azin Khodro

Group and the business of Liberty group, it is all set to deliver high quality finished products.

Armed with a unique R & D source Liberty automotive is able to offer ideas to create solution

and resources, to meet the challenge of performance optimization of a car.LIBERTY ORGANOSYS

Liberty group for manufacturing acedic acid in India promotes Liberty organosys limited. Liberty

proposesto use methanol carbonization route for manufacturing this organic chemical 60% of the

world production is based on technology. Liberty plans to build this in a large scale. Meeting the

entire demand of the nation. The technical details of the project will bwe announced soon.

LIBERTY REVOLUTION

In the elite shopping avenues of fashion capital Revolution has begun its walk. The fashion

accessory and footwear stores have begun operation in Chennai, Bangalore, Mumbai, Kolkata ,

Hyderabad and Pune. These are company managed and owned outlets where the emphasis is to

deliver high fashion to the customer backed by quality service making it a delightful shopping

experience. Liberty showrooms enter the international market as company has plans of opening

18 more revolution showrooms nationally & internationally.

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LIBERTY WHITEWARE LTD.

Just 90 minutes away from New Delhi on the national highway 8 that joins the countrys political

capital with its business capital frenetic activity is on. It is where Liberty whiteware factory is fast

taking shape. Liberty whiteware is all set to introduce to domestic market some very up market

sanitary ware that will be manufactured here. It will come with some obvious adventages. Like

international products at domestic process for one and the opportunity for discerning customer to

choose at leisure what would be seen first time in India. A part of Liberty s diversification the

investments in the project are to the tune of 10 million Euro and with production plans running

ahead of schedule the cash register should soon start ringing well before time at Liberty

whiteware Ltd.

PROMOTERS OF COMPANY

The company comes under the public limited companies groups and belongs to Liberty

Group. The company has been promoted by three business persons name as

Late Sh. D.P. Gupta

He has been associated with shoes industry for the last 80 years. He initiated the shoe business

under the trading cycle Pal Boot House. In 1994 he had been involved with Liberty group

since than. He was also activating in social.Late Sh. P.d. Gupta

He was 75 years old, chairman and the managing director of the company. He had been associated

with the shoe industry since the age of 16 years. He was also chairman of joint venture set up in

Russia by the company. He had been the president of all India chambers of footwear exports for

last 20 years.

Late Sh. R. K. Bansal

He was 67 years old and the promoters director of the company. He had been associated with

shoe industry and with the trade for last 45 years. He had the knowledge of international markets

with his ability in the marketing company is capable of introducing Liberty products in most

advanced countries such as Italy and America. He was also partner in many associated firms.

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BOARD OF DIRECTORS

Mr. Adesh Gupta (CEO,Executive Director)

Mr. Adarsh Gupta (Executive Director )

Mr. Shammi Bansal (Executive Director)

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

Mr. Sunil Bansal (Non Executive Director)

Mr. Amitabh Taneja (Independent Director)

Mr. Prem Chand Grag (Non Executive Independent Director)

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

Mr. Sidharth Sanghi (Non Executive Independent Director )

Mr. Raghu Dayal ( Non Executive Independent Director)

Mr. Vivek Bansal (Non Executive Independent Director)

Mr. Munish Kakra (Vice President & Company Secretary)

LIBRTY BRAND

Libety has developed a spectrum of 10 exclusive brands, each of which have been given tha t

extra edge to enter to a specific target group. Today the new range from liberty is all about style ,

design and comfort. The range imbibes the spirit of fun and is trendy to the core.

Liberty has something for every income bracket & every age group. It pampers its customers tokeep pace with global footwear fashion trend & by walking that extra mile which is why, special

care has been taken to make sure that the outlets design meets the specific needs taste of the

target groups.A part from the existing brands, liberty is busy fashioning the look of the future

footwear . introducing new decisions that redefines styles and comfort.

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This family brand is style personified with something for every need. Be it formal or casual, at

office or at the beach, a conference or a soiree Liberty fits in effortlessly.

COOLERS

Theyre cool and theyre hot. Theyre hap and theyre

happening. Perfect for the hot summer days. When the

sun blisters and the heat strokes, they keep the feet cool

and comfortable. But why limit the pleasure to summers?

Heres one brand of sandals that stays cozy and comfy all year round.

FOOTFUN

Something for those little feet as they learn to walk. Airy,

light and comfortable with lycra uppers and no laces.

In fairy-tale colors and designs.

FORCE-10

The flair, the style and ease that forces the world to take

notice. A happening range of sports shoes in far out colors

that provides the perfect footnote to a head-turning presence.

FORTUNE

Genuine leather uppers and extra light poly soles help

complete the power dressing in men with lan and panache.

GLIDERS

Cool and comfortable, trendy and with it. A range of

stunning brogues and smart lace ups that will be noticed and

talked about every step of the way. Unmistakably a part ofGeneration You.

SENORITA

Walk tall, walk light and walk with amazing style.

Rediscover the little girl that lurks not far behind in every

woman, laughing and loving every moment of life.

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TIPTOPP

Strappy, styles and comfortable heels. And colors that

become the envy of all and sundry. Perfect for conquering

the neighborhoods in designs that are the latest rage the

world over.

WARRIOR

Smart, stylish professional gear crafted from leather uppers

and direct injection P.U. soles with steel toe caps and

offering the widest range of styles in safety shoes. To master

the art of being confident and sure-footed on slippery

grounds and danger ones.

retardant and shock free product in economic range. Safety

footwear for industrial use.

DETAILED DESCRIPTION OF POPULAR BRANDS

NAME OF

BRAND

DETAILS TYPES MADE OF FOR THEM

Force -10 Family force Sports &

Leather

Canvas Gents

Windsor Liberty castte Leather shoe Leather Gents

Fortune Good luck Leather shoe Leather Gents

Ricardo Recoras Leather shoe Leather Gents

Gliders Fly in air Canvas shoe Canvas Children &

gents

Tip Top Fun for

children

Canvas &

leather

Canvas &

leather

Children

Senorita Seniority Bellerion

sandal

Leather Ladies

Coolers Feel coolness Slippers sandals Leather Gents

Geo Sports Build

sportsmanship

Sports shoe Leather Gents & ladies

Foot fun - Sports shoe Canvas Children

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OBJECTIVE OF THE COMPANY

The main objective to be pursued by the company on its incorporation as set on memorandum of

association as under:-

To work as buying selling agent with or without trademark for finished product.

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

To deal in raw hinds and skins.

To carry on business of manufacturing and and repairing and wholesale dealers in all types of

footwear and accessories of footwear(such as heels, soles , puckers and hand grouse and other

product of leather), PCC, leather manufactures and dealers in all kinds of water proof articles

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

and sell market install summary and carry on business as manufacture dealer in all kinds of

footwear, component and accessories.

NATIONAL AND INTERNATIONAL AWARDS

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

under :

Arch of Europe intertnational gold star, 1994.

International award for ggd quality,Brussels, Belgium 1988.

Europe award for pair in 1987.

International asian award ,Jakarta in 1982

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National award from government in 1981 1982. Udyog rattan by government of

India.

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

Leather export promotion council merit award for outstanding performance for 1976

to 1982.

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

Haryana government export award in 1978-1979.

UNITS OF LIBERTY SHOES LIMITED

REDGISTERED OFFICE & HUMAN TECH CENTRE -1

LIBERTYPURAM,

13TH MILE STONE,

G.T. KARNAL ROAD KUTAIL,

P.O.BASTARA.

DIST. KARNAL -132114 (HARYANA)

CORPORATE OFFICE & HUMAN TECH CENTRE -11

LIBERTY COMPLEX, 17TH MILE STONE,

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G.T. KARNAL ROAD, GHARAUNDA,

DISTT. KARNAL

HUMAN TECH. CENTRE -111

LIBERTY PARK , LIBERTY ROAD,

DISTT. KARNAL -132001 (HARYANA)

HUMAN TECH. CENTRE -1V

LANGA ROAD , V1LL. CHARBA,

P.O. SAHASPUR, VIKAS NAGAR,

DEHRAHUN (UTTRANCHAL)

BRANCHES

DELHI, JAMMU , JAIPUR,

CHENNAI, RAJPURA, BANGLORE,

AGRA, SAHARANPUR, MUMBAI,

CALCUTTA, HYDRABAD.

FINANCIAL ANALYSIS

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

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Financial analysis is the process of identifying the financial strength and weakness of tiles Finn by

property establishing relationship between the item of balance sheet & profit & loss account.

Financial analysis can be undertaken by the firm or by outside parties, firms owner, creditors,

investors and other. Actually the nature of analysis depends upon the parties.

Financial analysis consists in separating facts according to some definite plan, arranging them in

groups according to certain circumstances, and then presenting them in a convenient and easily

read and understandable form.

According to Finney and Miller

Financial statement analysis is largely a study of relationship among the various financial factors

in a business, as disclosed by a single set of statements and a study of the trends of these factors,

as shown in a series of statements.

According to John N. Myres

FEATURE OF FINANCIAL ANALYSIS :-

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

understandable form.

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

groups.

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

TYPES OF FINANCIAL ANALYSIS

1. Classification on the basis of material used.

2. Classification on the basis of modus operandi.

On the basis of material used :-

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External analysis :-

Outsiders, who dont have access to the detailed internal accounting record of business firm, do

this analysis. These outside parties potential investors, creditors, government agencies & general

public.

Internal analysis :-

The analysis conducted by person who has access to the internal accounting records of a business

firm is known as internal analysis.

On the basis of modus operand :-

Horizontal analysis:-

Horizontal analysis refers to the comparison, of financial data of a company for several years.

The figures of this types of analysisare presented horizontally over a number of columns. This

types of analysis is also called dynamic analysis.

Vertical analysis:-

This analysis refers to the study of relationship of the various items in the financial statements of

one accounting period. It is also known as Static analysis

6.4 SIGNIFICANCE OR IMPORTANCE OF FINANCIAL ANALYSIS

1.Significance for Managers;- Planning and Control are the two most important ingredients to

a Successful Business. A Business Plan takes most of the guess work out of Business Strategy

and Control through solid Financial analysis. Financial Data provides a way to gauge where you

are in your Strategic Plan, telling you where changes in your Plan are necessary. Because of this,

Financial Data Analysis and Management are vitally important to running a successful business.

2.Significance for Investors:- Investors are generally considered one of the primary users of

financial statements. They use the financial statements to determine the current profitability of the

firm and attempt to predict its future profitability. Their interest is in the future growth of a

company's stock price and/or the likelihood of the company paying dividends to the owner.

3. Significance for Creditors:-In the ongoing relationship between suppliers and a firm

financaial statement can play several roles consider the relationship between a firm and the

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suppliers to its loan capital.e.g a bank in the initial loan granting stageof the

relationship,financial statement typically are an important items.

4.Significance for regulatory agency:-The demand by these bodies can arise in diverse set of

areas such as revenue raising e.g for income tax,sales tax ,value added tax collection. Govt.

intervention e.g determine wheather to provide a govt.backed loan agreement to a finically

distressed firm.

5.Significance for Employess:-They are the part of the orgnisation and feel that their effort

contributed to the firm profitthey would therefor prefers togive bonusesnas salary inceresesthis

also increase expensies of the firm.

6.Significance for others parties:- The set of party that demand for financial analysis

information of corporation is open ended . diverse party such as academic ,environmental

protection organization, and other special interest lobbing groups approach corpartionfor detail

relating to their financial and other affairs.

7.Significance for Government :-Various ministries and department have interest in the firms

payments of taxes. Also seet the enchment of lawfor the industry and the provision of

socialservice to the public. The govet may also want to ensure that the firm complies with the law

on for example wages payments and employees benefit.

6.5 LIMITATION OF FINANCIAL ANALYSIS :-

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

following limitations.

1. Mis lead the users:- The accuracy of financial information largely depends on how accurately

financial statements are prepared. If their preparation is wrong, the information obtained from

their analysis will also be wrong which may mislead the user in making decisions.

2.Not useful for planning:-Since financial statements are prepared by using historical financial

data, therefore, the information derived from such statements may not be effective in corporate

planning, if the previous situation does not prevail.

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

about the company's financial affairs. However, it fails to provide qualitative information such as

management labour relation, customer's satisfaction, management's skills and so on which are

also equally important for decision making.

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

Therefore comparative analysis of financial statements of different years can not be done as

inflation distorts the view presented by the statements of different years.

5. Wrong judgement:-The skills used in the analysis without adequate knowledge of the subject

matter may lead to negative direction . Similarly, biased attitude of the analyst may also lead to

wrong judgement and conclusion.

6.Not helpful in price fixation:-In financial accounting the cost is not available as an aid in

determining prices of the product services production order and product line.

7.Not control on cost:-It does not provide for a proper control of materials and

suppliers,wages.labours and overheads.

8.No analysis of losses:- It does not provided the complete analysis of lossesdue to defective

material ,idle time,idle palnt and equipment. In other words no distinction is made between

avoidable and unavoidable wastage.

PURPOSE OF FINANCIAL ANALYSIS

The purpose os analysis of financial statements depends upon the need of a person who analysis

these statements. These needs may be :-

1. To know the earning capacity or profitability.

2. To know the solvency.

3. To know the financial strength

4. To make comparative study with other firms.

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

6. To know the trend of business

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PROCEDURES OF FINANCIAL STATEMENT ANALYSIS

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

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

He should know the plans and policies of the managements so that he may be able to find out

whether these plans are properly executed or not.

The exent of analysis should be determined so that the sphere of work may be decides. If the

aim is to find out the earning capacity of the enterprises then analysis of the income statement

will be undertaken. On the other hand, if financial position is to be studied then balance sheet

analysis will be necessary.

The financial data be given in the statement should be recognized and rearranged. It will

inolve the grouping of similar data same heads. Breaking down of individual components of

statements according to nature. The data is educed to standard form.

A relation is established among financial statements with help of tool & techniques of analysis

such as ratio, trends ,common size, fund flow etc.

The information is interpreted ina simple and understandable way. The significance and utility

of financial data is explained for help in decision making.

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

reports

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

1. Profit and loss account.

2. Balance sheet.

3. P & L appropriation account.

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4. Cash flow statement.

INCOME STATEMENT OR PROFIT &LOSS ACCOUNT

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

incurred.

NEED OF INCOME STATEMENT

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

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

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

and net profit with sales.

POSITION STATEMENT OR BALANCE SHEET

Balance sheet is a statement which presents the financial position of a business on a particular

date. It is prepared at the end of accounting period.

CHARACTERISTIC OF BALANCE SHEET:-

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

business on that very particular date.

2. Balance sheet has two columns. It tells the relationship between Assets and Liabilities and

the total of both the sides are equal.

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

PROFIT AND LOSS APPROPRIATION ACCOUNT

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Profit and Loss Appropriation account is the part of financial statements of company. It is

different from profit and loss appropriation account of partnership firm . When a company makes

his profit and loss account, its net profit is transferred to the credit side of profit and loss

appropriation account. Profit and loss account shows only the net profit or net loss from operation

of business but profit and loss appropriation accounts shows all non- operational adjustment

which is needed for proper distribution of net profit between shareholders and company for future

growth.

CASH FLOW STATEMENT

A cash flow statement is a statement which summarizes the sources of cash inflows and uses of

cash outflows of a business enterprise during a particular period of time, say a month or year.

When cash flow statement us prepared, sources and uses of cash only are taken in to account and

even liquid assets like debtors and bill receivable are excluded . since the idea of preparing this

staementis to sumarise the impact of various transaction on the cash position of the firm those

transctions which result in increase of cash position are termed as cash inflows and those which

result in decrease of cash position are the sources of cash outflows.inshort , it may be said that a

cash flow statement shows the sources of cash receipts and the purpose of which payments are

made .

6.8 TECHNIQUES OR METHODS OF FINANCIAL ANALYSIS

1. Comparative Statements.

2. Trend analysis

3. Common size Statements.

4. Fund flow statements.

5. Cash flow statements

6. Ratio Analysis.

7. Break even point Analysis.

COMPARATIVE STATEMENT

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This is a simple method for tracing changes in the financial performance of a company.

Comparative financial statements will contain items for atleast two periods. Changes increases

and decreases in income statement and balance sheet over period can be shown in two ways:

(1) Aggregate changes

(2) Proportional changes

Drawing special columns for aggregate amount or percentage, or both, of increase and decrease,

can indicate aggregate changes. Recording percentage calculated in relation to a common base in

special columns, on the other hand,shows relative, or proportional changes. An investigation of

the comparative financial statements help to highlight the significant facts and points out the

items which need further analysis.

TREND ANALYSIS

In financial analysis the direction of changes over a period of years isof crucial importance. Time

series or trend analysis of ratios indicate the direction of change. This kind of analysis is

particularly applicable

to the items of profit and loss account. For the trend analysis, the useof index numbers is

generally advocated. The procedure followed is toassign the number 100 to the items of the base

year and to calculate percentage changes in each item of other years in relation to the baseyear.

This procedures may be called as Trend Percentage Method.

COMMON SIZE STATEMENT

The values on the common size statement are expressed as percentages of a statement component

such as revenue. While most firms don't report their statements in common size, it is beneficial to

compute if you want to analyze two or more companies of differing size against each

other. Formatting financial statements in this way reduces the bias that can occur when

analyzing companies of differing sizes. It also allows for the analysis of a company over various

time periods, revealing, for example, what percentage of sales is cost of goods sold and how that

value has changed over time.

FUND FLOW STATEMENT

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Fund Flow Statements summarize a firms inflow and outflow of funds. Simply put, it tells

investors where funds have come from and where funds have gone. The statements are often used

to determine whether companies efficiently source and utilize funds available to them.

CASH FLOW STATEMENT

An accounting statement called the "statement of cash flows", which shows the amount of cash

generated and used by a company in a given period. It is calculated by adding noncash charges

(such as depreciation) to net income after taxes. Cash flow can be attributed to a specific project,

or to a business as a whole. Cash flow can be used as an indication of a company's financial

strength.

RATIO ANALYSIS

A tool used by individuals to conduct a quantitative analysis of information in a company's

financial statements. Ratios are calculated from current year numbers and are then compared to

previous years, other companies, the industry, or even the economy to judge the performance of

the company. Ratio analysis is predominately used by proponents of fundamental analysis.

BREAK EVEN POINT ANALYSIS

The break-even point for a product is the point where total revenue received equals the total costs

associated with the sale of the product (TR = TC). A break-even point is typically calculated in

order for businesses to determine if it would be profitable to sell a proposed product, as opposed

to attempting to modify an existing product instead so it can be made lucrative. Break even

analysis can also be used to analyze the potential profitability of an expenditure in a sales-based

business.

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

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RESEARCH METHODOLOGY

Research is common refer to a search for knowledge. Once can also define research as a scientific

and systematic search for pertinent information on a specific topic. Infact, research is an art of

scientific investigation. Research is an academic activity and as such the term should be used in

atechnical sense.

According to Clifford Woody, research comprises defining and redefining problems, formulating

hypothesis or suggested solution,collecting, orgnising and evaluating data, making deductions andreaching conclusions and at last carefully testing the conclusions to determine whether they fit the

formulating hypothesis.

RESEARCH DESIGN

Research design is a framework or the blue print for conducting the research project. Research

design is the arrangement of conditions for collection and analysis of data in a manner that aims

to combine relevance to the research purpose with economy in procedure. It includes an outlineof what the researcher will do from writing the hypothesis and its operational implications to the

final analysis of data.

TYPES OF RESEARCH DESIGN

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Exploratory research design

Descriptive research design

Experimental research design

EXPLORATORY RESEARCH DESIGN

It is also termed as formulative research design. The main purpose of the study is to formulate a

problem for more precise investigation.

DESCRIPTIVE RESEARCH DESIGN In descriptive research design, those studies are taken

which are concerned with describing the characteristics of a particular individual or a group.

EXPERIMENTAL RESEARCH DESIGN

In this casual relationships between the variables are tested. It is also known as hypothesis testing

research design.The present project is analytical in nature. The main objective of the analytical

research design is to define the problem into researchable one and analyse the data according to

the purpose.

SOURCES OF DATA

Primary Data:- The primary data are those which are collected afresh and for the first time and thus

happen to be original in character.

Secondary Data :-The secondary data are those data which have already been collected by someone

else and which have already been passed through the statistical process. The researcher would have to

decide which sort of data he would be using for his study and accordingly he will have to select one or

the other method of data collection.

In this project,I have used Secondary data of companies annual reports , questioning, ledger and

past records. Company has provided me annual reports from 2000-2001 to 2009 to 2010 by the help

of which prepared my report.

In this project,I have used secondary data which has been collected from following sources:-

Annual Reports

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Books

Internet

Other material and report published by company

PROFIT AND LOSS ACCOUNT OF LIBERTY SHOE LTD

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

Income

Operating income 260.47 241.69 248.79 222.43 205.14

Expenses

Material consumed 145.47 135.80 133.19 109.63 97.63

Manufacturing expenses 20.54 25.92 27.00 28.39 27.62

Personnel expenses 27.03 20.92 22.61 21.23 19.92

Selling expenses - 16.79 18.25 17.44 16.08

Adminstrative expenses 43.06 16.29 16.21 12.98 11.86

Expenses capitalised - - - - -

Cost of sales 236.10 215.72 217.26 189.68 173.10

Operating profit 24.37 25.97 31.54 32.75 32.04

Other recurring income 0.73 1.04 0.59 1.02 0.21

Adjusted PBDIT 25.11 27.01 32.13 33.77 32.25

Financial expenses 8.99 12.59 13.41 8.88 4.83

Depreciation 6.79 6.59 6.38 4.63 4.00

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Other write offs - - - - -

Adjusted PBT 9.32 7.83 12.34 20.26 23.42

Tax charges -0.35 -0.26 0.12 2.49 5.36

Adjusted PAT 9.67 8.09 12.23 17.77 18.06

Non recurring items - -0.54 3.82 -0.75 0.43

Other non cash adjustments -0.47 -0.02 -0.09 0.16 0.43

Reported net profit 9.20 7.52 15.96 17.18 18.92

Earnigs before appropriation 43.59 40.39 38.87 28.90 20.61

Equity dividend - - - - 2.54

Preference dividend - - - - -

Dividend tax - - - - 0.36

Retained earnings 43.59 40.39 38.87 28.90 17.72

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TABLE OF OPERATING INCOME


Income


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0

50

100

150

200

250

300

Operating income

INTERPRETATION

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

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

TABLE OF OPERATING PROFIT

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

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0

5

10

15

20

25

30

35

Operating profit

INTERPRETATION

According to profit and loss account of liberty shoe ltd the operating profit is increasein2006 and 2007 but decreased continuously in 2008,2009 and 2010.

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

TABLE OF PROFIT AFTER TAX


PAT 9.67 8.09 12.23 17.77 18.06

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0

2

4

6

8

10

12

14

16

18

20

PAT

INTERPRETATION

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

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

TABLE OF NET PROFIT


Net profit 9.20 7.52 15.96 17.18 18.92

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0

5

10

15

20

Net profit

INTERPRETATION

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

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

CASH FLOW STATEMENT FOR LAST FIVE YEARSCASH FLOW STATEMENT FOR LAST FIVE YEARS

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PARTICULARS Mar10 Mar09 Mar08 Mar07 Mar06

Profit Before Tax 17.85 19.50 29.05 27.82 28.27

Net CashFlow-

Operating Activity

15.41 27.13 22.81 46.31 30.29

Net Cash Used InInvesting Activity

-2.62 -4.01 -9.17 -50.19 -16.43

NetCash Used inFin. Activity

-13.54 -21.76 -13.30 6.15 -13.43

Net Inc/Dec In CashAnd Equivlnt

-1.01 1.36 0.34 1.68 0.49

Cash And EquivalntBegin of Year

5.15 3.79 4.15 2.94 2.45

Cash And Equivalnt

End Of Year

4.13 5.15 4.49 4.62 2.94

CASH FLOW FROM OPERATING ACTIVITY

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Net Cash Flow-Operating Activity

15.41 27.13 22.81 46.31 30.29

0

10

20

30

40

50

Net Cash Flow-Operating Activity

INTERPRETATION

According to the cash flow statement of liberty shoe ltd the net cash flow from operationAccording to the cash flow statement of liberty shoe ltd the net cash flow from operation

activity in 2006,2007and 2008 increased and then decreased in 2009, 2010.activity in 2006,2007and 2008 increased and then decreased in 2009, 2010.

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

CASH FLOW FROM INVESTING ACTIVITYCASH FLOW FROM INVESTING ACTIVITY

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Net Cash UsedIn InvestingActivity

-2.62 -4.01 -9.17 -50.19 -16.43

-60

-50

-40

-30

-20

-10

0

Net Cash Used InInvesting Activity

INTERPRETATION

According to cash flow statement of liberty shoe ltd theNet cash used in investing activity

is increased in 2006,2007AND 2009 and now also decreased in 2008 AND 2010.increased in 2006,2007AND 2009 and now also decreased in 2008 AND 2010. Net cash

used in financing activity is decreased continuously.decreased continuously.

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

CASH FLOW FROM FINANCING ACTIVITYCASH FLOW FROM FINANCING ACTIVITY

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NetCash Used inFin. Activity

-13.54 -21.76 -13.30 6.15 -13.43

-25

-20

-15

-10

-5

0

5

10

NetCash Used in Fin.Activity

INTERPRETATION

According to the cash flow statement of liberty shoe ltd the net csh used in financing activityAccording to the cash flow statement of liberty shoe ltd the net csh used in financing activity

is regularly in the last five yearsand it is higherin the year of 2009.is regularly in the last five yearsand it is higherin the year of 2009.

It shows that company has not sound position this year because of decrease in operatingIt shows that company has not sound position this year because of decrease in operating

profit.profit.

LIQUIDITY RATIOSLIQUIDITY RATIOS

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1)1)CURRENT RATIOCURRENT RATIO

CURRENT RATIO = CURRENT ASSETS/CURRENT LIABILTIES

Year 2006-07 2007-08 2008-09Current Assets 1,81,20,38,152 1,80,59,34,193 1,71,01,81,068

CurrentLiabilities 1,37,98,19,154 1,32,91,32,688 1,20,98,20,277

CURRENT RATIO 1.31 1.36 1.41

INTERPRETATION IDEAL CURRENT RATIO IS 2:1.

The current ratio has decreased from 1.78 to 1.31 between the year 2005-2006 and

2006-2007. Then it is increasing continuously.

This shows that the short term liquidity of the company is not satisfactorily but

better compared to previous year.

2) QUICK RATIO

QUICK RATIO = QUICK ASSESTS / CURRENT LIABILITIES

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YEAR 2006-07 2007-08 2008-09Quick Assets 1050299387 1,04,40,61,085 1,03,74,55,656

Current liabilities 1,37,98,19,154 1329132688 1,20,98,20,277

Quick Ratio 0.76 0.79 0.86

INTERPRETATION

THE IDEAL QUICK RATIO IS 1:1

The quick ratio of the company has decreased from 1.07 to0.76 between the year 2005-

2006 and 2006-2007. Then increased to 0.79 to0.86 in the year 2007-2008 and 2008-

2009.This means that the company cannot meet its short term obligations.

3) CASH RATIO

CASH RATIO = CASH AND BANK / CURRENT LIABILITIES

YEAR 2006-07 2007-08 2008-09

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Cash and Bankbalance

4,62,40,483 4,49,26,777 5,14,67,849

Currentliabilities

1,37,98,19,154 1,32,91,32,688 1,20,98,20,277

Cash Ratio 0.0335 0.0338 0.0425

INTERPRETATION

The cash ratio has first decreased from 0.039 to 0.039 between the year 2005-2006 and

2006-2007 and then increased in the next 2 years but not sufficient increase.

This reveals that the cash position of the company is not

ACTIVITY RATIOS

1) STOCK TURNOVER RATIO

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INVENTORY TURNOVER RATIO = NET SALES / INVENTORY

YEAR 2006-07 2007-08 2008-09Net Sales 2,37,54,48,269 2,57,89,34,907 2,47,52,66,480

Inventory 76,17,38,315 76,18,73,108 67,27,25,412

InventoryTurnover Ratio

3.12 3.38 3.68

INTERPRETATION

The inventory turnover ratio has decreased from 4.12 to 3.12 between the years

2005-2006 and 2006-2007 and2006-2007 and 2007-08 it increases by 0.26 points

and in 2008-2009 by 0.30 points.

This shows that the company is better in generating the inventory into sales

compared to previous years but this is not very good situation.

2) DEBTORS TURNOVER RATIO

DEBTORS TURNOVER RATIO = SALES/DEBTORS

YEAR 2006-07 2007-08 2008-09

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Sales 2,37,54,48,269 2,57,89,34,907 2,47,52,66,480

Debtors 72,08,94,474 72,41,47,983 70,43,22,494

DebtorsTurnover Ratio

3.29 3.56 3.514

INTERPRETATION

The debtor turnover ratio has first decreased from 4.57 to 3.29 between the year 2005-

2006 and 2006-2007 and then increased from 3.29 to3.56 between the year 2006-007

and 2007-08 and then decreased from 3.56 to 3.51 between the year 2007-08 and

2008-09.

This shows that the debtor management system is not effic

Average Collection PeriodAVERAGE COLLECTION PERIOD = NUMBER OF WORKING DAYS /

DEBTORS TURNOVER RATIO

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YEAR 2006-07 2007-08 2008-09No. of working days 365 366 365

Debtors TurnoverRatio

3.29 3.56 3.514

Average 111 103 104

INTERPRETATION

The average collection period has decreased from 80days to 110 days between the year

2005-2006 and 2006-2007 and then decreased in the year 2007-2008 and there is no major

decrease.

More the average collection period less efficient is the debtor management system.

3) WORKING CAPITAL TURNOVER RATIO

WORKING CAPITAL TURNOVER RATIO = SALES/ NET WORKING CAPITAL

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YEAR 2006-07 2007-08 2008-09

Sales 2,37,54,48,269 2,57,89,34,907 2,47,52,66,480

Net WorkingCapital

43,22,18,998 47,68,01,505 50,03,60,791

WorkingCapitalTurnoverRatio

5.50 5.41 4.94

INTERPRETATION

The working capital turnover ratio has first increased from 3.73 to 5.5 between the year

2005-2006 and 2006-2007 and then decreased to 5.41 in the year 2007-2008 and again

reduced to 4.94.

PROFITABILITY RATIOS

1) OPERATING PROFIT RATIO

OPERATING PROFIT RATIO = OPERATING profit/Sales *100

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YEAR 2006-07 2007-08 2008-09

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

Sales 2,37,54,48,269 2,57,89,34,907 2,47,52,66,480

Operating Profit

Ratio

11.85 12.80 12.12

INTERPRETATION

The operating profit first increases to 12.84 between the year 2006-2007 and2007-2008

and then again decreases to 12.12% in the year 2008-2009.

This shows that the operating cost of the company has increased from 2007-2008 to

2008-2009.

2) NET PROFIT RATIO

NET PROFIT RATIO = NET PROFIT AFTER TAX X 100

NET SALES

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YEAR 2006-07 2007-08 2008-09Net Profit 17,01,94,554 16,05,13,611 7,54,52,361

Sales 2,37,54,48,269 2,57,89,34,907 2,47,52,66,480

Net Profit Ratio 7.164 6.22 3.048

INTERPRETATION

The net profit ratio first decreases from 8.36 to 7.164 in the year 2005-2006 and 2006-

2007 and then decreases to 3.048 in the year 2008-2009.

This fall is a tremendous fall compared to previous year situation of the company.

This reveals that the efficiency in manufacturing, administering and selling the products

is decreasing.

LONG TERM SOLVENCY RATIOS

1) DEBT-EQUITY RATIO

DEBT-EQUITY RATIO= LOANS /SHAREHOLDERS FUND

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YEAR 2006-07 2007-08 2008-09Loans 38,41,16,827 33,12,01,007 26,28,12,108

Shareholdersfund

98,85,72,605 1,14,81,89,285 1,22,33,98,993

Debt Equity

Ratio

0.3885 0.29 0.21

INTERPRETATION

The debt equity ratio is increasing first in the year 2006-07 to the2005-06 and now

decreases to 0.29 in the2007-08 and to 0.21 in the year 2008-09 which means that thecompanys dependence on the external debt is increasing but improving compared to

previous year.

This shows greater inflexibility in the companys operation.

This is only improved by retaining all the profit not distributing the dividend

This is not a good signal about the company position.

2) INTEREST COVERAGE RATIO

INTEREST = NET PROFIT BEFORE INTEREST AND TAXES

COVERAGE FIXED INTEREST CHARGES

RATIO

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YEAR 2006-07 2007-08 2008-09Net Profit beforeinterest and taxes

26,65,57,054 24,44,21,752 212588931

Fixed InterestCharges

8,18,68,867 13,34,56,945 12,56,40,916

Interest CoverageRatio

3.02 1.83 1.69

INTERPRETATION

The interest coverage ratio is decreases consecutively in the three years and now it

decreases too much.

A low ratio indicates excessive use of debt.

FINDINGS OF THE STUDY

1) Company is using WCDL (Working Capital draw down limit) for meeting short termrequirement of cash.

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2) The liquidity position of the company is better compared to previous year.

3) Companys inventories position is better compared to previous year.

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

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

CONCLUSION

There is always a conclusion at end of any activity or training programmed. After consultation,

reviewing the training period following are some conclusion regarding the Liberty Footwear:-

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Windsor in males and Senorita in female are the most popular brands.Liberty has gained more

popularity comparatively in competition with other shoe companies.Demand of Force-10 is very low

among men footwear.Demand of Gliders is very low among ladies footwear.

Maximum customers influences have preferred to watch Liberty advertisement betweenprogrammes.Liberty has got the largest range and variety of shoes.

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

local companies.

LIMITATIONS

Although every effort has been made to collect the relevant information through the sources

available, still some relevant information could not be gathered.

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Time duration:- The time duration could not provide ample opportunity to study every

detail of management in the company.

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

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

Confidential report :-As some figures have not been disclosed by the company on

account of confidential report.

Based upon predictions:- Estimates are based upon predictions.

SUGGESTIONS

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

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1. Company should produce more light weight chappals and sandals and should advertised it

separately so as to attract the children.

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

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

effective.

4. Company should give emphasis on persons attitude and perception while designing and

advertisement because personal likings is more influencing factor among people.

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

6. Company should give more emphasis on their sloganSAPNEY AB HUE APNE to make

more effective.

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BIBLIOGRAPHY

BOOKS

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

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

Khan ,M .Y., Financial ManagementEd. 2000,McGraw Hill, New Delhi Bhalla ,V.k , Working Capital, Ed.2001 , Anmol , New Delhi

Manual

Annual reports

Websites

www.libertyshoes.com

www.libertyfreedom.com

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PROFIT AND LOSS ACCOUNT OF LIBERTY SHOE LTD

(RS CRORE)


Income


Expenses

Material consumed 145.47 135.80 133.19 109.63 97.63

Manufacturing expenses 20.54 25.92 27.00 28.39 27.62

Personnel expenses 27.03 20.92 22.61 21.23 19.92

Selling expenses - 16.79 18.25 17.44 16.08

Adminstrative expenses 43.06 16.29 16.21 12.98 11.86

Expenses capitalised - - - - -

Cost of sales 236.10 215.72 217.26 189.68 173.10

Operating profit 24.37 25.97 31.54 32.75 32.04

Other recurring income 0.73 1.04 0.59 1.02 0.21

Adjusted PBDIT 25.11 27.01 32.13 33.77 32.25

Financial expenses 8.99 12.59 13.41 8.88 4.83

Depreciation 6.79 6.59 6.38 4.63 4.00

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Other write offs - - - - -

Adjusted PBT 9.32 7.83 12.34 20.26 23.42

Tax charges -0.35 -0.26 0.12 2.49 5.36

Adjusted PAT 9.67 8.09 12.23 17.77 18.06

Non recurring items - -0.54 3.82 -0.75 0.43

Other non cash adjustments -0.47 -0.02 -0.09 0.16 0.43

Reported net profit 9.20 7.52 15.96 17.18 18.92

Earnigs before appropriation 43.59 40.39 38.87 28.90 20.61

Equity dividend - - - - 2.54

Preference dividend - - - - -

Dividend tax - - - - 0.36

Retained earnings 43.59 40.39 38.87 28.90 17.72

BALANCE SHEETOF LIBERTY SHOE LTD.

(RS CRORE)


Sources of funds

Owner's fund

Equity share capital 17.04 17.04 17.04 17.04 17.04

Share application money - - - - -

Preference share capital - - - - -

Reserves & surplus 114.50 105.30 97.78 81.82 64.63

Loan funds

Secured loans 75.04 82.65 103.32 104.03 48.81

Unsecured loans 12.79 16.44 15.06 22.02 21.45

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Total 219.38 221.44 233.19 224.91 151.94

Uses of funds

Fixed assets

Gross block 136.53 131.73 126.06 110.55 79.70

Less : revaluation reserve - - - - -

Less : accumulated depreciation 53.25 47.08 40.61 35.55 31.22

Net block 83.28 84.64 85.46 75.01 48.49

Capital work-in-progress - 0.13 1.55 8.14 0.92

Investments 17.50 20.34 20.34 17.10 6.43

Net current assets

Current assets, loans & advances 171.99 171.02 180.59 182.61 134.95

Less : current liabilities & provisions 53.40 54.70 54.75 57.94 38.84

Total net current assets 118.59 116.32 125.84 124.67 96.10

Miscellaneous expenses not written - - - - -

Total 219.38 221.44 233.19 224.91 151.94

Notes:

Book value of unquoted investments 17.50 20.34 20.34 18.49 6.42

Market value of quoted investments - - - 0.01 0.01

Contingent liabilities 18.70 9.58 9.71 10.55 60.14

Number of equity shares outstanding (Lacs) 170.40 170.40 170.40 170.40 170.40

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Sunny Chauhan

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