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Summer Training Report

on

Cash Flow Statement

ESCOTS Ltd.

Submitted in partial fulfillment of the requirement of degree in

Master of Business Administration

Of

MAHARSHI DAYANAND UNIVERSITY, ROHTAK

Session 2012-14

SUBMITTED TO: SUBMITTED BY

CONTROLLER OF EXAMINATION DHIRAJ KUMAR

MDU ROHTAK 12/MBA 12

MBA 3RD SEM.

B.S.ANANGPURIA INSTITUTE OF TECHNOLOGY

AND MANAGEMENT, FARIDABAD


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INDEX

SNO. PARTICULARS PAGE NO.

1. Company Profile 116

2. Intro of topic 1742

3. Research Methodology 43

45

4. Analysis & interpretation 4684

5. Findings of study 8586

6. Conclusion & recommendation 8788

7. Annexure & Questionnaires

Bibliography

Webliography

8992


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A C K N O W L E D G E M E N T

This project report by me is a result of the joint effort of several helping hands of the

Personnel Department of Escorts Ltd., Farmtrac Division, Faridabad. The knowledge of

our theoretical studies is absolutely incomplete without its proper implementation and

application in the diversified corporate world of today. I have been really opportunistic to

be a part of the Escort Group during my summer training, which is one of the leading

business in todays scenario.

An undertaking of study like this is never an outcome of efforts put in by a single person;

rather it bears imprint of number of persons who directly or indirectly helped me in

completing the study.

At the outset I would like to extend my sincere gratitude to Mr. KS Yadav, Head of

Personnel Department, Farmtrac Division, for providing the opportunity to carry out the

research and for providing guidance during the preparation of the report whenever needed.

I would like to thank Mr. Vishal Singh, Chief ManagerPersonnel & IR, for providing

the basic knowledge on personnel management, project topic & the methodology to be

used for preparing the report. I am also thankful to Mr. Rajesh Goel, Chief Manager

Personnel & IR, for sharing his knowledge.

Last but not the least I would also like to thankful to Miss. Swati Vatslecturer who has

provided me the necessary guidance and shared her experience without which it was not

possible for me to complete this project.

DHIRAJ KUMAR

(MBA)


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Preface

Summer training is an essential part of any professional study. It introduces the student to

the real world in which he is going to step in after his professional studies. Summer

training introduces the student to the industry and tells him/ her about the job aspects in

the near future when he is about to leave the college for a job.

In the field of management apart from the theoretical knowledge practical knowledge is

also an essential part, because it helps the student to gain knowledge of the ongoing

changes required in the industry.

Therefore industrial training should be imposed after the forth semester of M.B.A degree

to the shaping the student and accustom him/her to the industry.

I got an opportunity to work with Escorts Ltd.Under the guidance of their most superior

staffs.


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CCCOOOMMMPPPAAANNNYYY PPPRRROOOFFFIIILLLEEE

ABOUT COMPANY

The Escorts Group, is among India's leading engineering conglomerates operating in

the high growth sectors of agri-machinery, construction & material handling

equipment, railway equipment and auto components.

Having pioneered farm mechanization in the country, Escorts has played a pivotal role in

the agricultural growth of India for over five decades. One of the leading tractor

manufacturers of the country, Escorts offers a comprehensive range of tractors, more than

45 variants starting from 25 to 80 HP. Escort, Farmtrac and Powertrac are the widely

accepted and preferred brands of tractors from the house of Escorts.

A leading material handling and construction equipment manufacturer, we manufacture

and market a diverse range of equipment like cranes, loaders, vibratory rollers and

forklifts. Escorts today is the world's largest Pick 'n' Carry Hydraulic Mobile Crane

manufacturer.

Escorts has been a major player in the railway equipment business in India for nearly five

decades. Our product offering includes brakes, couplers, shock absorbers, rail fastening

systems, composite brake blocks and vulcanized rubber parts.

In the auto components segment, Escorts is a leading manufacturer of auto suspension

products including shock absorbers and telescopic front forks. Over the years, with

continuous development and improvement in manufacturing technology and design, new

reliable products have been introduced.

The Escort Group has also been operating in the ITES and financial services sectors.


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Throughout the evolution of Escorts, technology has always been its greatest ally for

growth. In the over six decades of our inception, Escorts has been much more than just

being one of India's largest engineering companies. It has been a harbinger of new

technology, a prime mover on the industrial front, at every stage introducing products and

technologies that helped take the country forward in key growth areas. Over a

million tractors and over 16,000 construction and material handling equipment that have

rolled out from the facilities of Escorts, complemented by a highly satisfied customer

base, are testimony to the manufacturing excellence of Escorts. Following the globally

accepted best manufacturing practices with relentless focus on research and development,

Escorts is today in the league of premier corporate entities in India.

Technological and business collaboration with world leaders over the years, Globally

competitive indigenous engineering capabilities, over 1600 sales and service outlets and

footprints in over 40 countries have been instrumental in making Escorts the Indian

multinational. At a time when the world is looking at India as an outsourcing destination,

Escorts is rightly placed to be the dependable outsourcing partner of world's leading

engineering corporations looking at outsourcing manufacture of engines, transmissions,

gears, hydraulics, implements and attachments to tractors, and shock absorbers for heavy

trailers and armored tanks.

In today's Global Market Place, Escorts is fast on the path of an internal transformation,

which will help it to be a key driver of manufacturing excellence in the global arena. For

this we are going beyond just adhering to prevailing norms, we are setting our own

standards and relentlessly pursuing them to achieve our desired benchmarks of excellence.


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INDIAN TRACTOR INDUSTRY

INTRODUCTION

India is predominantly an agricultural country.70% of the population lives in villages and

villagers depends upon agriculture for their bread and butter. Since Indian valley

civilization, agriculture is the main source of income but at that time the agriculture was

manual work. Before independence Indian agriculture was in very bad situation. But since

1947, when India became independent, the farmers also became independent. They had

seen many ups and downs in their income. After independence in five-year plans, first

priority was assigned to agriculture government tried best to improve the industry but a

systematic planned approach for development started in 1950, since than irrigation was

recognized as key factor for agriculture. Education and research were also taken as a major

initiative.

In over six decades of the inception, Escorts has been much more than just being

one of India's largest engineering companies. It has been a prime mover on the industrial

front introducing products and technologies and taking the country forward in key areas.

All these developments made mechanization mandatory for agriculture and

imports of tractors began. Acceptance of mechanization was slow, in fiftys the use of

tractor was very low. Green Revolution was the result of tractor was barely 10000 in 1970.

The industry was producing around 25000 to 30000 tractors. Today, India is the largest

tractor market estimating 2185000 tractors per annum with the annual growth of 12.3.

Today the tractor industry is of about 5000 crores.

With the 12% of arable land, today India has 4.7% of the worlds tractor. India splits

tractors largely into four categories i.e. 20-30hp, 31-40hp, 41-50hp, 51& above. 21-30hp

and 31-40hp ranges into together are nearly 76%.

SEGMENT OF TRACTORS ACCORDING TO HP WISETractor Range 1965-97 1997-98 1998-99 1999-2000

20-30 HP 24% 22% 17% 10%

31-40 HP 51% 50% 54% 55%

41-50 HP 19% 20% 22% 25%

50&above 6% 8% 7% 10%


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Demand for big hp segment is increasing as per the table shown. In the budget of 1995-96,

the central government has given subsidy of Rs. 30000 per tractor. The subsidy was for the

user of low up segment tractors (for small farmers). The government wants to increase the

usage of tractor for higher agriculture production. In the budget of yearorm the slow down

of economy and the East Asian Crises. According to economic survey of 1997-98 the

production of agriculture has dropped by 205%. Until 1993-94 small tractor (below 25hp)

were exempted fro the excise in bid to encourage small farmers. Because in India, almost

65% of farmers has less than 4 acres of arable land.

According to business India, due to the Mahindra & Mahindra and Swaraj tractors would

be benefited about Rs. 10000 to Rs.12000 per tractor as compared to others, which imports

parts from abroad. The compound average growth rate during last six years has been

around 15%. The level of tractorization is high in Punjab & Haryana at around 95&74

tractors per thousand hectares respectively. The tractor demand is driven by agriculture

Products, Interest Rates, Total

Agricultural Credit, Total Irrigation Facilities and Crop Pattern. Among them, credit is

strongly correlated with the tractor sale. Nearly 80% of the tractors sale is through credit.

Financial Pattern:

As stated above that 80% of the tractor is financed through credit rates essentially through

commercial banks, regional banks, rural banks and state level land development banks.

The credit worthiness of the farmer is ascertained to have minimum holding of 6 areas of

cultivated land to be eligible for loan. However bank can provide a loan on smaller

landholding subject to farmer establishing his credit worthiness. The credit inflow since

financial year 1996 is increasing support from NSBARD. This has already allocated 2000

crores from current year.

HISTORICAL BACKGROUND:Indian agricultural in the fifties followed age bound tradition and was considered

backward. The country did not produce enough food grain to feed its 36 crores population

and famines were recurrent features. Import of food grains became necessary to meet the

short fall in domestic production, there by causing a drain on scare foreign exchange

resources. It therefore became imperative to high priority to the development of

agriculture.


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F ir st phase of development(1960-1967):

Farm mechanism made a small beginning in the first five year PLAN. Tractors were

imported for introduction is isolated pockets. However acceptance of mechanization was a

slow process due to lack of awareness about its economic usefulness and versatility.

The decade 1960 saw green revolution both increase in production and productivity with

the parallel emphasis on industry. The birth of Indian tractor industry took place in 1959-

60 when

import was restricted & five manufacturing units were set up in private sector all with

collaboration. It was in this background that production of tractors in the country in 1960.

NAME COLLABORATION YEAR OF

COMMENCEMENT

M/S EICHER TRACTORS

LTD.

WEST GERMANY 1959

M/S HINDUSTAN

TRACTORS LTD.

CZECHOSLOVAKIA 1963

M/S TRACTORS &

FARM, EQUIPMENT

LTD.(TAFE)

U.K. 1963

M/S ESCORTS LTD. POLAND 1964

M/S INTERNATIONAL

TTACTORS CO. OF

INDIA LTS LATER

RENAMED AS

MAHINDRA &

MAHINDRA

U.K. 1965


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The total indigenous production of tractors by 1965 was just 6000. The real spurt in

mechanization of agriculture came in the introduction of high yielding variety (HYV) of

seeds in 1966-67 and their enthusiastic adoption by farmers, particularly in the wheat

growing northern region. With the successful introduction and acceptance these high

quality seeds there was a upspring in the demand of tractors in 1967 and demand started

multiplying at an annual rate of almost 50% (1967:1800-1970:33000).A natural

consequent of sharp upsurge and consequent shortage was heavy price premium on

tractors : Recognizing the situation , imports of tractors were liberalized and over and

above the domestic production of 20000 in 1970 3000 tractors were imported.

Second phase of development(1968-1980):

Since the pace of indigenous five tractors manufacturing units already set up far below

expectation, the Government decided to provide diligence to the tractor industry in 1968

and invites new entrepreneurs. Benefiting from this forward-loo

king policy six more units came in during 1971-1974. These were:

NAME COLLABORTION YEAR OF

COMMENCEMENT

M/S ESCORTS

TRACTORS LTD.

U.K. 1971

M/S HMT LTD. CZECHOSLIVAKIA 1971

M/S KIRLOSKAR

TRACTORS LTD.

WEST GERMANY 1974

M/S PUNJAB TRACTORS

LTD.

INDIGENOUS 1974

M/S HARSHA

TARCTORS LTD.

USSR 1975


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Not withstanding the above progress on the setting up to new units. Tractor industry ran

into difficulties from 1969 onwards and by 1972 domestic tractor production stagnated at a

level of 20000units primarily due to continuing of imports of tractors. Problem was further

compounded by the oil crisis in 1973-74 and the resultant economic crisis and inflationary

pressures, which persisted till middle of 1975.

The tractor market started slowly pocking up from 1975 (31000tractors) because of

relative price stability , govt. directives of the commercial banks increase rural lending

expansion of rural branches of commercial banks good monsoons which resulted in

bumper harvests and accelerated pace of extension of irrigation facilities . This trend

continued throughout the late seventies and by 1979-80 yearly market off take had risen to

a level of 62000tractors.

Thi rd phase of development(1980-86):

The buoyancy in the tractor market experienced in the late seventies continued tell 1981-

82 when 78000 tractors were sold. The encouraging trend led to the setting up of more for

the manufacture of tractors during 1981-86. These units were:


COMMENCEMENT

M/S AUTO TRACTORS

LTD.

U.K. 1981

M/S PRATAP STEEL

ROLLING MILL LTD.

INDIGENOUS 1983

M/S VST TRACTORS

LTD.

JAPAN 1986

However, the sale of tractors plummeted to a low level of 66000 tractors in the year 1982-

83 in the wake of severe credit squeeze imposed by reserve bank of India.


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The demand for tractors again picked up when the credit squeeze was eased and a sale of

80000units was recorded in the year 1984-85 for next year. Tractor industry stagnated

causing closure of five manufacturing units as detailed below

NAME YEAR OF CLOSURE

PINE TRACTORS LTD. 1983

HARSHA TRACTORS LTD. 1987

AUTO TRACTORS LTD. 1987

KISLOSKAR TRACTOR LTD. 1991

PRALAP STEEL ROLLING MILLS

(HARYANA TRACTORS LTD.)

1996

Four th phase of development(1987 onwards):

In the year 1987-88 the country saw a severe drought situation. This was a difficult period

and it widely anticipated that crop yield would be severely affected. Under such a situation

it was necessary to have provisions for supply of power, to perform farm operation, at

proper time in order to fully exploit the limited moisture content left in soil. The versatility

in the tractor became evident as this vehicle was used for pumping out underground water

in this background tractor industry showed a remarkable growth during this period and all

time high sale of 90000 tractors was recorded in the drought year (1987-88).Fourth phase

of development

The growth trend appears to be continuing with relaxation of tractor financing norms,

except for a 2 year slack period due to general economic slowdown and political turmoil.

In fiscal 1997-98 tractors sales refaced an all time high record of 250000.This impressive

growth has influenced 3 more players, as listed below, to enter the market


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COMMENCEMENT

INTERNATIONAL

TRACTORS LTD.

INDIGENOUS 1997

BAJAJ TEMPO LTD. INDIGENOUS 1997

NEW HALLAND

TRACTORS (INDIA) PVT.

LTD.

ITALY 1998

JOHN DHEER

TRACTORLTD.

POLAND 2000

HISTORICAL BACKGROUND OF ESCORTS GROUP

Escorts came into being a vision that led two brothers Yudi Nanda and Hari Nanda to

branch out their familys prospering transport s business and institute ventures that were to

become the foundations of escorts Ltd. Escorts Agents Limited was born at Lahore on 17th

October 1944 with Yudi Nanda as Managing Director and Hari Nanda as Chairman. After

the owing to opportunity lying in the Indian village, Escorts (Agricultural Machinery) Ltd.

was launched in 1948 with Yudi Nanda as Director. Tragically Yudi Nanda died in an

accident in 1952. Then Escorts agent Ltd. And Escorts (Agricultural Machine) Ltd. Was

merged in 1953 to create single Escorts agents Pvt Ltd


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SOME MILESTONES

1948 Pioneered farm mechanization in the country by launching Escorts Agricultural Machines Ltd.

With a franchise from a U.S. based MINNEAPOLIS MOLINE, WISCONCIN, for marketing

tractors, implements, engines and other equipments.

1958 Started importing MF tractor from Yugoslavia for marketing the same in India.

1960 A manufacturing plant was set up at Faridabad

1965 Got industrial license to manufacture URSUS/ ESCORT tractors.

169

1969 Escorts signed a contract with FORD MOTOR COMPANY to manufacture Ford 3000

model tractors. Escorts Institute of Farm Mechanization (EIFM) was established at

Bangalore. This training Institute is one of its kind.


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1971 1st

February, the first tractor FORD 3000 rolled out of the factory. The same year the

turnover touched the Rs.53 million mark.

1973 Escorts Tractors Limited (ETL) declared a healthy Profit Before Tax of Rs.4.725 million.

1974 Export of 400 tractors to Afghanistan - perhaps the worlds largest ever airlift of such

equipment.

1975 Turnover crossed the Rs. 200 million mark for ETL. Profit After Tax Rs. 8.7 million.

Maiden dividend of 10% declared.

1976

1976 FORD 3600, advancement in Farm Mechanization, was launched with fanfare to a

tremendous reception. Trial production of in-plant manufacturing of engine parts (Block &

Head).

1977

1977 Escorts Scientific Research Centre marked its beginning at Faridabad by developing its ownEngines for E-27 and E-37. Due to constant technology absorption, indigenization level

touched 72% for FORD tractors, which was a result of relentless effort in that direction.

1979 Turnover crossed the Rs. 50 crores mark. In plant facility for machining centre housing and

case transmission, on built-in line concept, installed


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1983 Escorts Tractors Limited (ETL) established a state-of-the-art research and development

centre to spearhead newer breakthroughs in Farm Mechanization and to maintain industry

leadership. Line concept introduced for engine block machining.

1984 75000t

tractor rolled out. A great occasion for the large family that worked for ETL. Newer

challenges and frontiers were set.

1985 In keeping with the stupendous financial success, Escorts Tractors Limited (ETL) offered its

first Bonus Issue (1:1).

1987 50hp FORD 3610 was launched, another leap for the Indian Farm Mechanization Industry, the

farmers and the people of the land.

1988

1988 ETLs annualized turnover crossed Rs. 100 crores. Dividend: 45% for 15 months.

1989 A MOU with CLAAS was signed for manufacturing &

1990

-91First Public Issue (February91) over-subscribed four times. Shares listed on Delhi andBombay Stock Exchanges.

1991

-92

The Crop Tiger range of Combine Harvesters was launched by Escorts Claas Ltd.


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1993 FORD 3620 tractor launched

1996 Disengagement of joint venture collaboration with New Holland and launch of FARMTRAC

Tractor.

1997 A Joint Venture with Italian company CARRARO was finalized to establish a company in

India for manufacturing and marketing of transmission and axles.

COLLABORATIONS

Collaboration with international Organization of technological excellence , constant

research to adopt the emerging technology to specify requirement of the market and belief

in the philosophy industrial interdependence have made Escorts today one of the leading

trend steers in Indias New Industrial Culture. Escorts have merged as fraternity of above

50,000 shareholders, 22,000 employees 4,000 ancillary suppliers and 1, 6000 dealers and

stockiest all engaged in a large scale investment and sustained efforts to meet the ever

widening market horizons of technological competence appropriate to Indias unique

changing needs.

Escorts believe in incorporating the finest existing technology to meet Indian consumers

demands by collaborating with the internationally renowned companies prominent among

these are:

IN GERMANY

GOETZE AG Piston rings and cylinder liners.

MAHLE GmbH Piston

CLASS OHG Harvesters Combines

KNORR BREMSE AG Railway Brake System

AUGUST BILSTEIN GmbH Absorbers, Hydraulic products,

Pressure and temperature switches.


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IN JAPAN

KAYABA INDUSTRY CO. LTD. Telescopic Front Forks Car

MIKUNI SHOKO CO. Carburetors for BI-Wheelers

IN U.K.

J.C.BAMFORD EXCAVATORS JCB Excavators loaders Front end Loaders,

Telescopic handlers

IN U.S.A

HUGHESNETWORKS SYSTEMS AB Road Construction Machinery

Vibratory Road Rollers

OFFICIAL ADDRESS OF ESCORTS

Registered Office Corporate

Secretariat & Law

Escorts Ltd.

11, Scindia House,

Connaught Circus,

New Delhi-110 001.

Tel. No. 011-23310145

Fax No. 011-23311715

Escorts Ltd.

15/5, Mathura Road,

Faridabad - 121 003

Tel. No. ( 0129 ) 2250222

Fax: ( 0129 ) 2250060

Email Address: [email protected]

Web Site : www.escortsgroup.com
mailto:[email protected]://www.escortsgroup.com/http://www.escortsgroup.com/mailto:[email protected]


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LEADERSHIP TEAM

Mr. Rajan Nanda

Chairman

Mr. Nikhil Nanda

Joint Managing Director

Mr. Rohtash Mal

Executive Director and Chief Executive Officer - Agri Machinery Group

Mr. Manoj Jha

Executive Vice President of Engineering Division

Mr. Kamal Bali

CEOEscorts Construction Equipment Limited (ECEL)

Mr. G.B. Mathur

Vice President - Law & Company Secretary

Mr. Rakesh Kumar Budhiraja

Group Chief Financial Officer

Mr. Partha Dasgupta

Group Vice President Human Resources and Employee Relations
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LEVELS OF MANAGEMENT

MANAGEMENT

TOP

MANAGEMENT

SENIOR

MANAGEMENT

MIDDLE

MANAGEMENT

JUNIOR

MANAGEMENT

MANAGING

DIRECTOR &

CEO(G-11)

CHIEF GENERAL

MANGER(G-8)

CHIEF

MANAGER

(G-5)

ASSISTANT

MANAGER(G-2)

VICE PRESIDENT

(G-10)

GENERAL

MANAGER(G-7)

SENIOR

MANAGER(G-4)

EXECUTIVE(G-

1)

ASSOCIATE

VICE PRESIDENT

(G-9)

DEPUTY

GENERAL

MANAGER(G-6)

MANAGER(G-3)


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MISSION

WE WILL ACHI EVE LEADERSHI P IN MARKET SHARE & PROFI TABILI TY IN

THE DOMESTIC TRACTOR MARKET BY THE YEAR 2004-2006 AND SHALL BE

THE WORLSS LARGEST SUPPLIER OF SUB 100 HP TRACTORS. WE SHALL

PROACTIVELY CONTRIBUTE TO THE PROSPERITY OF THE RURAL

ECONOMY BY DEF INING A LARGER ROLE FOR OURSELVES IN THE FOOD

AND AGRICULTURE SECTOR.

THE VISION

WE SHAL L STRIVE TO BE THE NUMERO UNO IN THE I NDIAN TRACTOR

INDUSTRY AND TOP FI VE TRACTOR MANUFACTURERS IN THE WORLD.

WE SHALL CONTINUOUSLY STRIVE TO MEET THE EVER RISING

EXPECTATIONS OF OUR VALUED CUSTOMERS AT THE LOWEST INTERNAL

COST.

WE SHALL AIM TO OFFER THE FARM ING COMMUNITY A RANGE OF

INNOVATIVE PRODUCTS AND SERVICES, WHI CH SHALL ENABLE THEM TO

IMPROVE THEI R PRODUCTIVITY AND COMPETITI VNESS.

WE SHALL ACHIEVE A TURNOVER OF RS. 2 BIL LI ON BY THE YEAR

2006.TRANSCENDING NATI ONAL BOUNDARIES, WE SHALL STRIVE TO

ATTAIN EXPORTS OF ONE TENTH OF OUR TOTAL TRACTOR PRODUCTION

BY THE YEAR 2


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REVIEW OF LITERATURE

INTRODUCTION

MEANING OF FINANCIAL STATEMENTS

The financial statements are nothing but the financial information presented in concise and

capsule form, and are the financial information is the information relating to the financial

position of any firm. The firm prepares the financial statements.

To communicate with different parties about the financial position of the firm

(Shareholders, creditors, banks, financial institution, financial analysts, investors

etc. And

To analyze the operations and performance of the firm for the further planning.

The basic source, which provides the financial information, is the Annual report of the

company, which is presented by the company to its shareholders at the Annual General

Meeting.

Though the presentation of annual report is a statutory requirement under the

Companies Act 1956, however it is also a medium of communication with the present as well

as prospective investors and creditors of the company.

Clause 43 A of the Listing Agreement (with the stock exchange) requires every

listed company to publish unaudited quarterly results. But it does not mean the non-corporate

firms do not prepare the financial statements. Every firm big or small, prepare the following

financial statements:


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The Balance Sheet (BS).

1. The Income Statement (IS).

Two other key financial statements, which are usually prepared by corporate firms, are:

1. Statement of appropriation of profit, and

2. Statement of Change in financial position.

ANALYSIS OF FINANCIAL STATEMENTS (AFS)

Analysis of financial statements refers to the process of the critical examination of the

financial information contained in the financial statements in order to understand and

make decisions regarding the operations of the firm. The AFS is basically a study of the

relationship among various financial fact and figures as given in a set of financial

statements. AFS is the process of establishment and identifying the financial weakness

and strength of the firm. It is indicative of two aspects of a firm i.e. the profitability

and the financial position.

OBJECTIVES OF AFS

The objectives of the AFS is to understand the information contained in financial

statements with a view to know the weakness and strength of the firm and to make a

forecast about the future prospects of the firm and thereby enabling the financial

analyst to take different decisions regarding the operation of the firm. The objectives

are as follows:

To assess the present profitability and operating efficiency of the fir


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COMMON-SIZE STATEMENTS (CSS)

The CSS represents the relationship of different items of financial statements with some

Common items by expressing each item as a percentage of the common item. In common size

Balance Sheet, each item of the balance sheet is stated as a percentage of the total balance

sheet. The percentages for different items are computed by dividing the absolute amount of

that item by the Common Base and then multiply by 100. The percentage so calculated can

be easily compared with the corresponding percentage in some other period. Thus, the CSS is

useful not only in intra-firm comparison for the same year or free several years

TREND PERCENTAGE ANALYSYS(TPA)

The TPA is a technique of studying several financial statements over a series of years. In

TPA, the trend percentages are calculated for each item by taking the figure of that item for

some base year as 100. So, the trend percentage is the percentage relationship, which

Each item of different years bears to the same item in the base year. Any year may be Taken

as the base year, but generally the starting / initial year is taken as the base year. So, each

item for base year is taken as 100 and then the same item for other years is Expressed as a

percentage of the base year.


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RATIO ANALYSIS (RA)

The RA has emerged as the principle technique of the AFS. A ratio is a relationship

Expressed in mathematical terms between two individual or groups of figures connected with

other in some logical manner. The RA is based in the premise that a single accounting figure

by itself may not communicate any meaningful information but when expressed as a relative

to some other figure, it may definitely give some significant information. The relationship

between two or more accounting figures/groups is called a Financial Ratio

A financial ratio helps to summarize a large mass of financial data into a concise form

and to make meaningful interpretations and conclusions about the performance of a firm.

For example, a firm has net sales Rs. 5, 00,000

Gross Profit Rs. 1,00,000

Ratio of Gross Profit to net sales is 20%

i.e., (Rs.l, 00,000 /Rs.5, 00,000)

Forms of Ratios

Since a ratio is a mathematical relationship between two or more variables / accounting

figures, such relationship can be expressed in different ways as follows:

Asa Pure Ratio.

As a Rate of Times.

As a Percentage.

Ratio canbe classified into:

The Liquidity Ratio

The Activity Ratio

The Leverage Ratio

The Profitability Ratio


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STATEMENT OF CHANGES IN FINANCIAL POSITION

(SCFP)

Since the BS & IS of a firm are two basic depicting the financial position of a firm at the end

of the year. These two financial statements are called the traditional statements. Both these

statements fail to throw light on changes in assets, liabilities and shareholders wealth during

this year.

BS deals with the financial position gives only the static view of the year- end financial

position and fails to indicate the movement and causes in assets and liabilities during the

year. Similarly, IS show the profit or loss resulting out of the operations of the firm during

the year? This profit or loss in fact to ascertain the sufficiency of resources to declare the

dividend etc. thus, there is a need to prepare another statement (together with the BS & IS)

which may identify the changes in assets, liabilities and the shareholders funds over a given

period.

The SCFP is essentially an explanation of the changes in financial position of a Firm

occasioned by the firm in between two successive BS's. The SCFP draws basic Information

from the BS and IS helps in understanding the change in assets, liabilities and shareholders

worth. The SCFP deals with the flow of funds during the year i.e. the funds coming in and

going out of the firm. It summarizes the sources from where the funds might have been

arranged / procured by the firm and the uses for which the funs might have been used by

the firm during the year.

The SCFP can be prepared as follows

SCFP (Cash Basis) also known as a Cash Flow Statement

SCFP (Net Working Capital Basis) Fund Flow Statement


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SCFP (WORKING CAPITAL BASIS)

FUND FLOW STATEMENT

The FFS reports the flows of funds through the firm during the year i.e., it shows the

Sources and uses of working capital between two balance sheet dates. The FFS

attempts to explain the changes in financial position from one BS to the subsequent BS

in terms of the change in the funds or the working capital position of the firm.

The term Working capital (WC) is generally defined as the excess of total

current assets over the total current liabilities. The current Assets (CA) of a firm may

include cash in hand and at bank, stock, debtors, bills, advances etc. and the Current

Liabilities (CL) includes creditors, bills payable, outstanding expenses, provision for

tax, short term liabilities etc. the term WC is a single figure representing the net effect

of a transaction is to increase or decrease the Working Capital by affecting any of the

elements of Current Assets or Current Liabilities.

Therefore, the FFS in its standard form incorporates only those transactions,

which affect the Working Capital i. e. those transactions where in only one of the

affected accounted is a current account.

Now a flow of working capital arises when one of the affected accounts is a current

account. From the point of view of current account, the effected on working capitalcan examined in the light of the definitions of the term working capital i.e., the excess

of current assets over current liabilities i.e.,


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Impliedly change in any of the CA or CL will affect the WC. Simple observation

equation tells that:

Increase in any of the CA or decrease in any of the CLs will result in increase

in the WC.

Decrease in any of the CA or increase in any of the CLs will result in decrease

in the WC.

To find out the relative importance of different components of the financial position

of the firm.

To identify the reasons for change in the profitability / financial position of the

firm, and

To assess the short term as well as the long term liquidity position of the firm.

TECHNIQUES /TOOLS OF THE AFS

AFS can be undertaken by different persons and for different purposes, therefore the

methodology adopted for the AFS may be carrying from one situation to another. However,

the following are some of the common techniques of the AFS:

Comparative financial statements.

Common-size financial statements.

Trend percentage analysis , and

Ratio Analysis.


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COMPARATIVE FINANCIAL STATEMENTS

In CFS , two or more BS and/or the IS of a firm are presented

simultaneously in columnar form. The Financial data for two or more tears are placed and

presented in adjacent columns and thereby the financial data is provided at times

perspective in order to facilitate periodic comparison. In CFS , the BS and the IS for number

of years are presented in condensed form for year to year comparison and to exhibit the

magnitude and direction of changes.

The CFS helps a financial analyst of the firm and in establishing operating and

positional trend of the firm. The CFS may be prepared to show

1. The absolute amount of different items in monetary terms,

2. The amount of periodic changes in monetary terms,

3. The percentages of periodic changes to reveal the proportionate changes.

The CFS can be prepared for both the BS and the IS.


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CORE COMPETENCE OF ESCORTS

Customer # 1

We put customers first in everything we do. We take decisions keeping the customer in

mind.

Challenging Spirit

We strive for excellence in everything we do and in the quality of goods & services we

provide. We work hard to achieve what we commit & achieve results faster than our

competitors and we never give up.

Team-work

We work cohesively with our colleagues as a multi-cultural team built on trust, respect,

understanding & mutual co-operation. Everyone's contribution is equally important for

our success.

Frank & Fair Organization

We are honest, sincere, open minded, fair & transparent in our dealings. We actively

listen to others and participate in healthy & frank discussions to achieve the

organization's

A firm undertakes numerous during a year and" most of these transactions during a year and

most of these transactions may affect one or the other current account i.e. most of thesetransactions May results in the flow of the WC. Neither is it necessary nor practical to

identify the effect of each and every transaction on the WC. These transactions, instead, are

considered and analyzed in a collective form and then their effect on the WC is identified.


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SCFP (CASH BASIS) OR

THE CASH FLOW STATEMENT

The CFS attempts to analyze the transactions of the firm in terms of cash i.e., the transactions

generating cash and using cash. The focus in the CFS is on cash rather than on WC. The

sources of cash may be the cash profits earned by the firm, issue of capital for cash, issue of

other securities for cash, borrowings, sale of assets, investment, redemption of debenture or

preference share, repayment of loan, payment of tax, dividend distribution etc. Thus, the

CFS summarizes the cash inflows and outflows.

An analysis of cash flows is useful for short-run planning. A firm needs sufficient cash to

debts maturing in the near future, to pay interest and other expenses and to pay dividends to

shareholders. The firm can make projections of cash flows and outflows for the near future to

determine the availability of cash. This cash balance can be matched with the firm's need for

cash during the period, and accordingly, arrangements can be made the deficit or invest the

surplus cash temporarily. A historical analysis of cash flows provides insight to prepare

reliable cash flow projections for the immediate future.

A statement of changes in financial position on cash basis, commonly known as cash flow

statement, summarizes the causes of changes in cash position between dates of two balance

sheets. It indicates the sources & uses of cash. The cash flow statement is similar to the fund

flow statement except that it focuses attentions on cash instead of working capital (funds).

Thus, this statement analyses change in non-current accounts as well as current accounts

(other than cash) to determine the flow of cash.

The CFS is based on the concept on the WC Where as the CFS is based in cash which is only

the element of WC. Thus , the CFS provides details of cash movements whereas the FFS

provides the details of funds movements.

The CFS considers only the actual movement of cash whereas the FFS considers the

movements of the funds as defined in terms of net working capital.


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CASH-FLOW STATEMENT

A cash-flow statement is a statement showing inflows (receipts) and outflows (payments) of

cash during a particular period. In other words, it is a summary of sources and applications of

Cash during a particular span of time. It analyses the reason for changes in balance of cash

between the two balance sheet dates. The term "Cash" here stands for cash and cash

equivalents.

A cash-flow statement includes only those items, which affect cash. As such the cash-flow

statement is called a "statement of changes in financial position - cash basis."A cash - flow

statement can be for the past or can be projected for a future period.

OBJECTS OR USES OF CASH-FLOW STATEMENT

The main objectives behind preparing a cash-flow statement can be laid down as under:-

USEFUL FOR SHORT-TERM FINANCIAL PLANNING:-

A cash-flow statement provides information for planning the short-term financial needs of the

firm. Since it provides information regarding the sources and utilization of cash during a period,

it become easier for the management to assess whether it will have. Adequate cash to meet day-

to-day expenses and pay the long - term loans and interest .Thereon and whether it has enough

cash to pay for the purchase of fixed assets or not.

USEFUL FOR PREARING THE CASH BUDGET:-

A cash-flow statement prepared for the future period is helpful in preparing a cash budget. It

informs the management about the future period is helpful in preparing a cash budget. It informs

the management about the surplus or deficit periods of cash, i.e., in which months the payments

will be in excess of receipts. It helps in planning the investment of surplus cash in short-term

investment and to plan short-term credit in advance of deficit periods.


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COMPARISON WITH CASH BUDGET:-

A cash budget is prepared at the commencement of the year, whereas a cash flow Statement is

prepared at the end of the year. A comparison between the two helps in ascertaining the extent

to which the financial resources of the firm have been generated and used according to the plan.

Causes of variances between the figures of two statements can be analyzed and proper

corrective measures may be takes.

STUDY OF THE TREND OF CASH RECEIPTS AND PAYMENTS:-

A cash-flow statement reveals the speed at which the cash is being generated from debtors, stock

and other current assets the speed at which the current liabilities are being paid. It enables the

management to assess the true position of the cash in future.

IT EXPLAINS THE DEVIATIONS OF CASH FROM EARNINGS:-

A firm may earn huge profits yet it may have paucity of cash or when it suffered a loss it may

still have plenty of cash . A cash flow statement explains the reasons for it.

HELPFUL IN ASCERTAINING CASH-FLOW FROM VARIOUS

ACTIBITIES SEPARATELY:-

A cash-flow statement aims at highlighting the cash flow from operating, investing and

financing activities separately. It includes how much cash has been generated or used in these

activities.


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HELPFUL IN MAKING .DIVIDEND DECISIONS:-

Dividend must be paid within 42 days of its declaration. Hence the management takes the help of

cash-flow statement to ascertain the position of cash generated from operating activities, which

can be used for payment of dividend.

IMPORTANCE AND RELEVANCE OF CFS

The CFS has gained importance in view of the fact that there are many managerial Decisions,

which are taken in the light of the cash availability or cash position of the firm.

For example, declaration of dividend by the company requires cash disbursement and Therefore,

the Board of Directors must consider the cash position before proposing a dividend. The CFS

also provides information for the short term financial planning and in particular the short term

cash needs of the firm.

In view of increasing importance and relevance of the CFS, the clause 32 of the Listing

agreement (between a Company and the Stock Exchange where the shares proposed to be listed)

has been amended by the SEBI. As a result, the listed companies in India are now required to

supply a copy of the CFS to each shareholder as a part of Annual Report. As a result, the listed

companies have started a practice of sending a CFS for which the BS has been prepared as

apart of the Annual Report of the company.

DIFFRENCE BETWEEN CASH - FLOW STATEMENT AND

CASH BUDGET

There is not much difference between cash flow statement and a cash budget. The

only difference is that a cash flow statement is prepared for a past period where as cash

budget is prepared for a future period. Hence, it is of limited use as far as the future

periods are concerned. A cash budget is therefore prepared showing how much cash is

likely to be received and what will be the disbursements during a future period of time.

Thus, a cash budget indicates in which months there will be surplus cash and in which


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moths there will be deficiency of cash resources. The management can then take suitable

decision to invest the surplus cash or make arrangement for the deficiency of cash at the

required time.

LIQUIDITY

It does not present true picture of the liquidity of the firm the liquidity does

not depend upon cash alone. Liquidity also depends upon those assets,

which can be converted into cash easily.

Exclusion of these assets obstructs the true reporting of the ability of the firm to

meet its liabilities when they become due for payment.

The possibilities of window - dressing is higher in case of cash position in

comparison to the working capital position of the firm.

The cash balance can be easily maneuvered by postponing purchases and other

payments and by rapidly collecting cash from debtors before the balance sheet date.

Hence, a fund - flow statement presents a more realistic picture than a cash flow

statement.

Cash flow statement ignores non- cash charges. Hence the true position of the

enterprise cannot be judged by cash flow statement.

It is prepared on cash basis and hence ignores one of the basic concept of accounting,

namely accrual concept.

PROCEDURE OF PREPARING CASH FLOW STATEMENT:-

The institute of charted accountants of India has issued accounting standards (as)-3 revised, for

preparing a cash flow statement. This accounting standard has been made mandatory in respect

of accounting periods commencing on or after 1st

April 2001, for certain enterprises. These

enterprises are:-


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Enterprises whose equity or debt securities are listed on a recognized stock exchange in

India. And enterprise that are in the process of issuing equity or debt securities that will

be listed on a recognized stock exchange in India.

All other commercial, industrial and business enterprises, whose turnover for accounting

period Rs 50 crores.

As such, the cash flow statement has been prepared according to as -3 revised in this project.

According to as-3 revised, the cash flow statement summarizes the cash inflows and cash

outflows and the net changes (increase or decrease) in cash and cash equipment resulting from

operating, investing and financing activities of a firm during a period. The following terms are

used for preparing a cash flow statement:

CASH:-

It compares cash in hand and demands with banks.

CASH EQUIVALENTS:-

There are short - term, highly liquid investments that are readily into known amounts of cash

and which present insignificant risk of changes in their values. Normally, an investment will be

termed as cash equivalent only if it has a short maturity period, say three months or less, from the

date of its acquisition. Examples of cash equivalent are treasury bills, commercial papers etc.

Which are purchased with cash that is in excess of immediate needs investment in shares are

excluded from cash equivalents unless they are cash equivalent in reality. For example, the

preference shares of the company, which are purchased shortly before their redemption date will

be included in cash equivalents, provided there is only an insignificant risk of failure of the

company in repaying the amount at the date of the maturity.


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CLASSIFICATION OF CASH FLOW:-

According to as -3 (revised), cash flow statement should be presented in a manner that it reports

inflows of cash by classifying them into three categories, namely: operating, investing andfinancing activities. Classification of all activities into these activities on the cash and cash

equivalents of the enterprise such information will be helpful in evaluating the relationships

among these three activities are explained as below:

CASH FLOW FROM OPERATING ACTIVITIES:-

Operating activities are the main revenue generating activities of an enterprise. As such they

include cash flows from those transactions and events, which enter into the ascertainment of

net profit or loss of the enterprise. Examples of cash flows arising operating activities are:

Cash receipts from the sale of goods and rendering of services;

Cash receipts from royalties, fees, commissions and other revenue; Cash payments to suppliers for goods and services;

Cash payments to and on behalf of employees;

Cash receipts and cash payments of an insurance enterprise for premiums and claims,

annuities and other policy benefits;

Cash receipts and payments relating to future contracts, forward contracts, option

contracts and swap contracts when the contracts are held for dealing or trade purpose and

Cash payments of refunds of income taxes unless they can be specifically identified with

. financing and investing activities


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CASH FLOW FROM INVESTING ACTIVITIES:-

Investing activities include the purchase and sale of long term assets such as land, building, plant

and machinery etc not held for resale. These activities also include the purchase and sale of such

investment, which are, not including in cash equipments. Cash flow from investing activities

discloses the expenditures incurred for resources intended to generate future income and cash

flows.

Examples cash flow arising from investing activities are;

Cash payments to acquire fixed assets (including intangible);

Cash receipts from sale of fixed assets (including intangibles);

Cash payments to acquire shares ,warrants or debt instruments of other enterprises

(other than receipts for those instruments considered to be cash equivalents);

Cash receipts from sale of shares, warrants or debt instruments of other enterprises (other

than receipts for those instruments considered to be cash equivalents).

Cash advances and loans made to third parties. In case of financial enterprises these will

be treated as cash flow from operating activities;

Cash receipts from the repayment of advances and loans made to third parties. In case of

financial enterprises these will be treated as cash flow from operating activities;

Cash receipts of insurance claim for property involved in accident; and

Cash receipts of interest and dividend. In case of financial enterprise these will be treated

cash flow from operating activities;


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CASH FLOW FROM FIANCING ACTIVITIES:-

Financing activities are the activities that result in change in capital and borrowing of the

enterprise.

Examples of cash flows arising from financing activities are:

Cash receipts from issuing shares or other similar instruments;

Cash receipts from issuing debentures, loans, bonds and other short term or long term

borrowing;

Cash repayment of amounts borrowed, buy back of equity shares, redemption of

preference shares, debentures, loans, bonds etc;

Cash payment of interest and dividend;

IMPORTANT NOTE

In case of financial enterprise such as bank or mutual fund company cash Outflow

and cash inflow arising from the purchase and sale of securities will Be treated as

flows from operating activities. This is, because, purchase and sale of securities is a

part of operating activity in case of financial enterprise. In addition, interest paid

and interest received as well as dividends received will also be treated as cash flowfrom operating activities in case of financial Enterprises.


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CASH FLOW STATEMENT

(DIRECT METHOD)

CASH FLOW FROM OPERATING ACTIVITIES

Cash receipts from costumers ****

Cash paid to suppliers and employers (****)

Cash generated from operations ****

Income tax paid (****)

Cash flows from extraordinary item ****

Extra ordinary items ****

Net cash from operating activities ****

CASH FLOW FROM INVESTING ACTIVITIES:-

Purchase of fixed assets ****

Proceed from sale equipment (****)

Interest received ****

Dividend received (****)

Net cash from investing activities ****

CASH FLOW FROM. FINANCING ACTIVITIES;

Proceeds from insurance of share capital ****

Proceeds from long- term borrowings (****)

Repayment of from long-term borrowings ****

Interest paid ****

Dividend paid (****)

Net cash from financing activities ****

Net increase in cash and cash equivalent ****

Cash and cash equivalents at beginning of period ****


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SOME SPECIAL TERMS:-

i) INTERSET AND DIVIDEND:-

Cash inflow from interest and dividends and cash outflow on account of interest and

dividends should be disclosed separately. Cash inflow arising from interest and dividends

received should be shown as cash flow from investing activities where as cash outflow

disclosed outflow on account of interest and dividend paid should be shown as cash flow

from financing activity.

ii) TAXES ON INCOME:-

Tax paid on income is a part of cash flow from operating activity. Hence, taxes paid are

shown as a deduction under 'cash flow from operating activity'

iii) EXTRAORDINARY ITEMS;-

Cash flow relating to extra ordinary items such as bad debts recovered. Claims received from

insurance companies, winning of a lottery or a law etc. Should be disclosed separately as

arising from operating, investing or financing activities. For example, the amount received

for insurance company on account of loss of stock by fire. Earthquake and floods etc. Should

be reported as cash flow from operating activities.

iv) SIGNIFICANT NON - CASH TRANSACTION:-

There are some investing and financing activities, which do not require the use of cash or

cash equivalents. Such non cash activities should be excluded from the cash flow statement.

Examples are; the acquisition of assets by issue of debentures or shares, conversion of

shares into debentures etc. Such significant on non cash transaction should be disclosed

outside the cash flow statement.


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CASH FLOW STATEMENT

(INDIRECT METHOD)

CASH FLOW FROM' OPERARATTNG ACTIVITIES:

Net profit before taxation, and extraordinary item ****

Adjustment for:

Depreciation ****

Foreign exchange loss ****

Interest income ****

Dividend income ****

Interest expense ****

Operating profit before working capital changes ****

Increase in sundry debtors ****

Decrease in inventories ****

Decrease in sundry creditors ****

Cash generated from operations ****

Income tax paid (****)

Cash flow before extraordinary item ****

Extra - ordinary items ****

Net cash from operating activities

****

CASH FLOW FROM INVESTING ACTIVITIES:

Purchase of fixed assets (****)

Proceeds from sale of equipment ****

Interest received *****

Dividend received (****)

Net cash from investing activities ****


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CASH FLOW FROM FINANCING ACTIVITIES:-.

Proceeds from insurance of share capital ****

Proceeds from long - term borrowings ****Repayments of from long - term borrowings (****)

Interest paid (****)

Dividend paid (****)

Net cash from financing activities ****

Net increase in cash and cash equivalent ****

Cash and cash equivalents at beginning of period ****

CHANGES IN CASH FLOWS

Changes in cash flows can be treated to the following;

1. Net profit will increase the cash flows; these cash flows will be

increased further if there are any non-cash changes (such as depreciation

and amortization)

2. Any payment of dividends will decrease the cash flows; as will the

repayment of debt; an issue of share or debt will also increase the

cash flows.

3. An increase in non-cash assets will decrease cash flows; increase in

current assets and fixed assets will result in drain on cash flows.

Thus, a statement of changes in cash flows i.e. the cash flow statementclassifies all Changes into one of three categories - operating, investing, or

financing activities, Therefore, the preparation of a statement of changes in cash

flows requires classification of changes in liabilities, shareholders equity, and

non-cash assets into one of these categories, although some items will not fit

easily onto one other.

h equivalent at end of period


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STEP- BY-STEP PROCEDURE TO PREPARE CFS

1. Calculate the net increase or decrease in cash and cash equivalents :-

For this purpose the opening balance of total cash and cash equivalents is compared with the

closing balance of cash and equivalents.

Increase/decrease in cash and equivalents

Opening balance Closing Balance

Cash in hand **** ****

Cash in bank **** ****

Short-term Investment **** ****

Total **** ****

The difference between the total of opening and closing balance will be increased or

Decreased in cash equivalents during the period. It may be noted that if there are only one or

two of items of cash etc.

2. Net Cash flaw from operating activities:-

The term operating refers to the normal purchase of goods and services. On the basis of the

information contained in the comparative BS s and the IS and the additional Information, the

net cash flow generated or use by the operating activities may be ascertained. The IS prepared

by the firm gives the net profit figure earned by the firm,. On actual basis i.e., all items in the

IS are incorporated on the basis of earned/accrued even.

3. If not resulting in cash movements;-

So the profit or loss as by the IS may not result in increase or decrease in cash balance by the


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SYNOPSIS

INTRODUCTION

ESCORTS PVT. LTD. is a private limited company not listed in a stock exchange

of India and employees 900 highly trained personnel. Its manufacturing plants are

strategically located in close proximity to its customers at Faridabad (Haryana),

Noida (U.P.)

OBJECTIVES OF THE STUDY

To find the movement of cash inflow and cash outflow.

To make the comparison between cash inflow and

Cash outflow.

To prepare the Cash Flow Statement.

To analyze the Balance Sheet of the company in terms of Cash Flow

Statement.

To focus on various activities of the organization in terms of

Operating, Financing, Investment.


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SCOPE OF THE STUDY

Financial resources are the assets for the company and their productivity is key

factor for profitability. It is necessary to know their problems, their knowledge,

skills, abilities & the measures that can be taken to reduce them. By analyzing this

top management can build good relations with the employees.

The whole study is to determine the competencies of different employees who are

working in ESCORTS PVT. LTD. By analyzing it, the top management can

introduce the concept of competency mapping in the organization. Through this

management can attempt to use more suitable strategies towards the human

resource development.

The research is confined to elicit the existing gap between the standard skill

required to perform the job and the skill processed by the employees at ESCORTS

PVT. LTD. And to provide them suitable training program to over come those gaps,

for the better utilization of human resources.

RELEVANCE

The scope of the study was confined to the outside parties like creditors,

shareholders, government, etc. Who want to invest their money in the

company?

The benefit of the report for the company is that through this report, they can come

to know about the cash flow statements of the company.

This study also unable the company that their cash is not utilizing in unnecessary

things.The benefit of the report for the researcher is that it has helped to get

knowledge about the cash inflow and cash.


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RESERRCH METHODOLOGY:-

RESEARCH DESIGN:

The study was conducted under well- structured approach.

The project lasted for 4 weeks and the year 2009 i.e. from 08 July to 12

Aug.2009.

The questionnaire method & personal interview method was used to collect

the primary data for the study.

The secondary data is collected from Internet & company training material and

many other company materials

SAMPLE DESIGN:

The process of extracting a sample from a population is called sampling

procedure. The selection of sampling procedure to conduct the research

depends upon the nature of the study and the objective to be accomplished.

Judgment sampling technique is adopted to select the respondents in this

study. The sample design included the various departments in the YAMAHA

MOTORS PVT. LTD.


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Methodology of date collection

Conducting personal interview.

Data collection from primary and secondary sources.

Designing questionnaire.

Selecting sample size from the sample frame for the survey.

Questionnaire distribution.

Analysis of collected data with the help of statistical tools.

Interpretation of collected data .

Stating the conclusion based on the entire study.

Sampling Technique

The sampling technique used for this research is of non-probability and convenience

sampling.

Sample Unit

Employees of the company

Sample Size

For this research study the sample size is 25 respondents.


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Sources of data

Primary data:

Primary data is the data which is collected by the researcher for the first time

and which was not there. The tools used to collect the data are:-

1) Questionnaire method from the employers in different departments.

2) Face to Face personal interactions.

Secondary Data

The data already collected is called as secondary data. The relevant information

for this study has been collected from secondary source such as

Books

Journal

Reports

Publication by the organizational circulation

Company records

Business bulletins

Internet

Secondary data is also collected from various of the internet and intranet. Some

of the website trough which information was gathered was through


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HYPOTHESIS

The report is analyzed under the presumption that cash flow position of

ESCORTS.LTD. It can be improved and made effective in terms of cash flows.

In testing the above hypothesis the following aspects will be considered

1. Balance sheet comparisons

2. Presentation of cash flow statement in terms of revised AS-3

LIMITATIONS

The study though conducted to the best of the ability suffers from somecertain limitations. There are:

The data is secondary one and as such its reliability may be

questioned upon.

The time availability for the study is less, and as such it hinders thee

progress of the study.

Senior officials were rarely approachable.

Websites were not giving comprehensive data.

Not having face-to-face interaction to get more relevant

information.

Analysis and interpretation of data was done on the assumption that

the respondents information was online

Information collected was totally subjectiv


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DATA ANALYSIS

ESCORTS PVT. LTD

CASH FLOW STRATEMENT

Year Ended Year Ended

30.09.2009 30.09.2008

Rs. Crores Rs.

Crores

A,Cash Flow from Operating Activities

Net profit before tax (17.33) 34.44

Adjustment for:

Loss on sale/ Provision for diminution in value of Long Term

Investments & loans to Group Companies 1.89 40.18

Gain on sale of Long Term Investments (1.22) (94.92)

Gain on sale of Asset (0.13) -

Depreciation 44.97 39.55

Misc. Exp./ Assets Write off/ Provisions 8.08 7.50

Interest Expense 72.22 79.99

Dividend Income (0.02) (0.01)

Interest Income (20.82) -

Operating Profit before working capital changes 87.64 106.73

Adjustments for:

Trade and other Receivables (88.17) (120.35)

Inventories 13.79 (46.92)

Trade Payables 67.05 190.46

Miscellaneous Expenditure (7.50) (5.11)


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(14.83) 18.08

Cash Generated from Operations 72.81 124.81

Direct Taxes (Paid)/Refunds (17.85) 31.66

Net Cash F low from operating activities 54.96 156.47

B,Cash Flow from Investing Activities

Purchase of Fixed Assets (30.95) (27.94)

Proceeds from sale of Fixed Assets 0.86 1.77

Movement in Loans and Advances (16.27) (16.44)

Sale of Investments 32.33 114.52

Short Term Deposits with schedule Banks (2.31) (10.48)

Interest Received 20.70 -

Dividend Received 0.02 0.01

Net Cash F low from I nvesting activi ties 4.38 61.44

Proceeds from Share Capital & Securities Premium 114.44 -

Proceeds from Long Term Borrowings 86.60 -

Less : Repayment of Long Term Borrowings (0.54) (78.96)

Proceeds/ (Repayment) from short term borrowings (net) (227.26) -

Interest Paid (77.40) (82.23)

Net Cash used in financing activities (104.16) (161.19)

Net Increase/(Decrease) in Cash and Cash equivalents (44.82) 56.72

Cash and Cash equivalents as at 01.10.2008 105.65 48.93

Cash and Cash equivalents as at 30.09.2009 . 60.83 105.6


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ANALYSIS OF CASH FLOW

From the cash flow statements of the ESCORT PVT.LTD.It can be analyzed

from the two years that the net cash balance of the company has increased

manifold in 30-09-2008 than the year 30-09-2009.

The net profit in 30-09-2008 is higher than the 30-09-2009, but due to certain

changes there has been increase in the cash balance.

The interest paid this year is ore of the last year, which implies that thee

company has not repaid his borrowed capital, due to which the interest has got

down.

The depreciation has increased but it does not affect cash to an extent, as it is a

non-cash item. In the head of working capital there is drastic change in the cash

balance in the form of Trade and other Receivables; which has affected the cash

balance.

There is outflow of cash for receivables rather than the inflow in the last year.

So, the net effect is that the cash from operating activities has been decreased

two times from the last year.

The company has no accumulated losses as at the end of the financial year i.e.

September 31, 2008.

Provision for taxation has been made in accordance with the requirement of AS-

22 issued by Institute of Charted Accountants of India.

Pursuant to that, current year deferred tax liability have been charged to profit &

loss account

In opinion of the board of directors of thee company, the current assets, loans

and advances have a value on realization in the ordinary course of the business at

least equal to the amount stated in the balance sheet and provision for all

liabilities have been made.

Balance of sundry debtors, creditors, loans and advances are subject to confirmation by

the concerned parties.


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METHOD OF ANALYSIS

1. Data analysis is done using the following statistical tools wherever required, in

order to extract meaningful information from the collected data.

o Simple percentage and averages

o Bar diagram

o Cone diagram

o Pie diagram

2. The collected data from the questionnaire has been put together in the form of

tables.

3. Percentage has been calculated wherever necessary for generalization of the

data.

4. Data analysis and interpretation has been done on the basis of primary and

secondary data.

5. The findings researches have been recorded based on the analysis.

6. The study conducted pertains only to YAMAHA MOTORS INDIA PVT.LTD.

All bank balances (debit/credit) have been confirmed by the concerned bank.


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Identified from the available information which has been relied upon by the auditors.

The names of small-scale industrial units to whom outstanding for more than

thirty days within agreed terms.

The company has 99.96% of shareholders in its subsidiary company named as

ESCORTS PVT. LTD. As at 31-03-2008.

So the net effect is that the net cash from investing activities has many more

times than the last year, which is negative. Now the company has repaid its long

term borrowing more than the last year, which has decreased the cash balance by

the little amount.

Balance with the schedule banks under the head current & collection account

amounting to represent funds in transit lying with schedule banks pending

transfer against loan liabilities under the head cash credit & bill discounting.


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LIQUIDITY RATIO

1. CURRENT RATIO

(Amount in Rs.)

Current Ratio

Year Cur rent Assets Cur rent L iabil iti es Ratio

2003 58,574,151 7,903,952 7.41

2004 69,765,346 31,884,616 2.19

2005 72,021,081 16,065,621 4.48

2006 91,328,208 47,117,199 1.94

2007 115,642,068 30,266,661 3.82

Interpretation

As a rule, the current ratio with 2:1 (or) more is considered as satisfactory

position of the firm.

When compared with 2006, there is an increase in the provision for tax, because

the debtors are raised and for that the provision is created. The current liabilities

majorly included Lanco Group of company for consultancy additional services.

The sundry debtors have increased due to the increase to corporate taxes.

In the year 2006, the cash and bank balance is reduced because that is used for

payment of dividends. In the year 2007, the loans and advances include majorly

the advances to employees and deposits to government. The loans and advances

reduced because the employees set off their claims. The other current assets

include the interest attained from the deposits. The deposits reduced due to the

declaration of dividends. So the other current assets decreased.

The huge increase in sundry debtors resulted an increase in the ratio, which is

above the benchmark level of 2:1 which shows the comfortable position of the

firm.


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GRAPHICAL REPRESENTATION

7.41

2.19

4.48

1.94

3.82

0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

8.00

Ratio

2003 2004 2005 2006 2007

Years

CURRENT RATIO

Ratio


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2. QUICK RATIO

(Amount

in Rs.)

Quick Ratio

Year Quick Assets Cur rent L iabil iti es Ratio

2003 58,574,151 7,903,952 7.41

2004 52,470,336 31,884,616 1.65

2005 69,883,268 16,065,620 4.35

2006 89,433,596 47,117,199 1.92007 115,431,868 30,266,661 3.81

Interpretation

Quick assets are those assets which can be converted into cash with in a short

period of time, say to six months. So, here the sundry debtors which are with the

long period does not include in the quick assets.

Compare with 2006, the Quick ratio is increased because the sundry debtors are

increased due to the increase in the corporate tax and for that the provision

created is also increased. So, the ratio is also increased with the 2006.


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7.41

1.65

4.35

1.90

3.81

0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

8.00

Ratio

2003 2004 2005 2006 2007

Years

QUICK RATIO

Ratios


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3. ABOSULTE LIQUIDITY RATIO

(Amount

in Rs.)

Absolute Cash Ratio

Year Absolu te L iquid Assets Cur rent L iabil it ies Ratio

2003 31,004,027 7,903,952 3.92

2004 10,859,778 31,884,616 0.34

2005 39,466,542 16,065,620 2.46

2006 53,850,852 47,117,199 1.14

2007 35,649,070 30,266,661 1.18

Interpretation

The current assets which are ready in the form of cash are considered as absolute

liquid assets. Here, the cash and bank balance and the interest on fixed assts are

absolute liquid assets.

In the year 2006, the cash and bank balance is decreased due to decrease in the

deposits and the current liabilities are also reduced because of the payment of

dividend. That causes a slight increase in the current years ratio.

\


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3.92

0.34

2.46

1.14 1.18

0

0.5

1

1.5

2

2.5

3

3.5

4

Ratios

2003 2004 2005 2006 2007

Years

ABSOLUTE CASH RATIO

Ratios


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LEVERAGE RATIOS

4. PROPRIETORY RATIO

(Amount

in Rs.)

Proprietory Ratio

Year Share Holders Funds Total Assets Ratio

2003 67,679,219 78,572,171 0.86

2004 53,301,834 88,438,107 0.6

2005 70,231,061 89,158,391 0.79

2006 56,473,652 106,385,201 0.53

2007 97,060,013 129,805,102 0.75

Interpretation

The proprietary ratio establishes the relationship between shareholders funds tototal assets. It determines the long-term solvency of the firm. This ratio indicates

the extent to which the assets of the company can be lost without affecting the

interest of the company.

There is no increase in the capital from the year2004. The share holders funds

include capital and reserves and surplus. The reserves and surplus is increased

due to the increase in balance in profit and loss account, which is caused by the

increase of income from services.

Total assets, includes fixed and current assets. The fixed assets are reduced

because of the depreciation and there are no major increments in the fixed assets.

The current assets are increased compared with the year 2006. Total assets are

also increased than precious year, which resulted an increase in the ratio than old


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0.86

0.60

0.79

0.53

0.75

0.00

0.10

0.20

0.30

0.400.50

0.60

0.70

0.80

0.90

Ratios

2003 2004 2005 2006 2007

Years

PROPRIETORY RATIO

Ratios


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ACTIVITY RATIOS

5. WORKING CAPITAL TURNOVER RATIO

(Amount

in Rs.)

Working Capital Turnover Ratio

Year I ncome From Services Work ing Capital Ratio

2003 36,309,834 50,670,199 0.72

2004 53,899,084 37,880,730 1.42

2005 72,728,759 55,355,460 1.312006 55,550,649 44,211,009 1.26

2007 96,654,902 85,375,407 1.13

Interpretation

Income from services is greatly increased due to the extra invoice for Operations

& Maintenance fee and the working capital is also increased greater due to theincrease in from services because the huge increase in current assets.

The income from services is raised and the current assets are also raised together

resulted in the decrease of the ratio of 2007 compared with 2006.


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0.72

1.421.31

1.261.13

0.00

0.20

0.40

0.60

0.80

1.00

1.20

1.40

1.60

Ratio

2003 2004 2005 2006 2007

Years

WORKING CAPITAL TURNOVER RATIO

Ratio


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6. FIXED ASSETS TURNOVER RATIO

(Amount in Rs.)

Fixed Assets Turnover Ratio

Year I ncome From Services Net F ixed Assets Ratio

2003 36,309,834 28,834,317 1.26

2004 53,899,084 29,568,279 1.82

2005 72,728,759 17,137,310 4.24

2006 55,550,649 15,056,993 3.69

2007 96,654,902 14,163,034 6.82

Interpretation

Fixed assets are used in the business for producing the goods to be sold. This

ratio shows the firms ability in generating sales from all financial resources

committed to total assets. The ratio indicates the account of one rupee

investment in fixed assets.

The income from services is greaterly increased in the current year due to the

increase in the Operations & Maintenance fee due to the increase in extra invoice

and the net fixed assets are reduced because of the increased charge of

depreciation. Finally, that effected a huge increase in the ratio compared with the

previous years ratio.


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GRAPHICAL REPRSENTATION

1.261.82

4.24 3.69

6.82

0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

Ratios

2003 2004 2005 2006 2007

Years

FIXED ASSETS TURNOVER RATIO

Ratios


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