A FINANCIAL REPORT

ON

MAHARASHTRA

SCOOTERS

LIMITED

SUBMITTED TO: GLS Institute of Business Administration

SUBMITTED BY: Rishabh M chopra

SY BBA ROLL NO:28

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PREFACE

Financial management is the combination of three financial areas ,investment in long term and current assets, financing and dividend policy of a company .

So it is a great experience for me that I have got opportunity to learn all the areas and functions of finance by analyzing and interpreting the financial statement of a particular company .

So to get practical knowledge, I have analyzed the financial statement of “MAHARASHTRA SCOOTER LIMITED” of last three annual years and through my level best. I have covered whole report and all relevant information.

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ACKNOWLEDGEMENT

In our course, as a part of our syllabus, we have to prepare a financial report on a company; I have prepared the project on ratio analysis and financial statement of “MAHARASHTRA SCOOTER LIMITED”.

First and foremost I am very proud to be a student of GLSIBA, ahmedabad and am most grateful for having been given the chance to workwith a reputed company like Maharashtra scooters ltd at the beginning of my career.

Maharashtra scooters ltd is a leading automobile company of india which deals in making gear segments of two wheelers.

I would like to thank our Prof. Mrs. Shreeda Shah who gave us guidance & enough information to finish our project easily. I would also like to thank our director V. B. Patel for giving us the opportunity to show our talent in the financial field.

Rishabh m chopra Roll no 28

Sy-bba

INDEX

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Sr. No.

Particular Page No.

1. Preface2. Acknowledgement

3. Index4. Introduction5. The automobile industry6. Introduction 7. History8. Management9. Company background10. About Maharashtra Scooter Ltd

11. Directors’ report12. Auditors’ report

13. Ratio analysis

14. Balance sheet15. Profit and loss account16. Cash flow statement

17. Conclusion 18. Bibliography

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PART- A:

INTRODUCTION

THE AUTOMOBILE INDUSTRY

Indian automobile industry has grown leaps and bounds since 1898, a time when a car had touched the Indian streets for the first time. At present it

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holds a promising tenth position in the entire world. The monthly sales of passenger cars in India exceed 100,000 units. A surge in economic growth rate and purchasing power led to growth in the Indian automobile industry, which grew at a rate of 17% on an average.

The industry provided employment to a total of 13.1 million people as of 2006-07, which includes direct and indirect employment. The export sector grew at a rate of 30% per year during early 21st century.

India was one of the largest manufacturers of tractors in the world in 2005-06, when it produced 2, 93,000 units.

India is:

1. The second largest Two Wheeler manufacturer.

2. The Largest Tractor Manufacturer.

3. 4th largest Passenger Vehicle market in Asia.

4. 5th largest Commercial Vehicle manufacturer in the world.

5. The largest three wheeler market.

6. India has the fourth largest car market in the world.

Major Manufacturers Of Automobiles in India:-

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 Tata Motors

 Maruti Udyog Ltd.

 Honda motors

 Suzuki

 Maharashtra scooters ltd

 Daewoo Motors India

 Hero Motors

 Hindustan Motors

 Hyundai Motor India Ltd.

 Royal Enfield Motors

 TVS Motors

 kinetic engineering ltd

 Swaraj Mazda Ltd

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PART B: COMPANY PROFILE

INTRODUCTION

8

Maharashtra scooters ltd is a company whose 27% shares are under stake of western Maharashtra development corporation ltd. and 24% of shares are under the stake of bajaj auto, ltd. remaining 49% are with the public.

It is indulge in manufacturing of gearing sector for two wheelers, it is engaged in manufacture of pressure die casting dies, jigs and fixtures primarily for two and three-wheeler industry. It is also engaged in the manufacturing of scooters.

Shares stake:

HISTORY

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Year Events 1975:

The company was incorporated on 11th June, at Pune. The company was promoted by Western Maharashtra Development Corporation Ltd. Of Maharashtra and Bajaj Auto Limited. The main objective of company is to manufacture of scooter under the trade name ‘PRIYA’

The company entered into a two agreement with Bajaj Auto Ltd one for preparation of project report and another for technical know-how and assistance.

The technical know-how agreement was to be in force for a period of 10 years from the date of commencement of operations or till the company achieved a production of 3,00,000 scooters whichever is later. Under the agreement Bajaj Auto Ltd, agreed to supply the company components at reasonable prices which was understood to be lower than in the replacement market.

Year 1977:

70 shares subscribed for by signatories to the memorandum of association; 2,69,960 shares allotted to WMDC and 2,39,970 shares allotted to Bajaj Auto, Ltd.4,90,000 shares offered at par to the public.

Year 1982:

4,28,571 bonus shares issued in prop. 3:7

Year 1985;

The installed capacity was increased from 73,000 to 87,000 motorized two-wheelers up to 350cc engine capacity.

Year 1986:

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1,428,571 bonus shares issued in prop. 1:1.

Year 1990:

During the year, the company commercial manufacture of Bajaj Super Scooters for which a technical know-how agreement was entered into with Bajaj Auto, ltd. on terms and conditions similar to the agreement for manufacture of Priya Scooters.

2,857,142 bonus shares issued in prop.1:1.

Year 1996:

During the company has renewed its technical know-how agreement with Bajaj Auto Ltd fur a further period of 10 years as similar terms. Company has also entered into agreement with both the promoters of company (ie, Bajaj Auto Ltd and Western Maharashtra Development Corp. Ltd)

Year 1997:

57, 14,284 bonus shares issued in the prop. 1:1.

Year 2000:

Bajaj Auto Limited has offered to buy out the Maharashtra government's entire 27 per cent holding in this scooter manufacturing joint venture Maharashtra Scooters Limited (MSL)

Rashtriya Chemicals and Fertilizers Limited, Mumbai and Maharashtra Scooters ltd. Satara were presented the Dr. R J Rathi Award for environment Pollution Control.

Year 2001 :

Bajaj Auto Ltd has evinced interest to purchase the 27 per centequity stake in Maharashtra Scooters Ltd

Year 2003:

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Shri B V Patil, Director of the Company has resigned as Director with effect from January 07, 2003 and in his place Shri V H Deshmukh has been appointed as a Director at the meeting of the Board of Directors held on January 14, 2003.

Delisting from Pune Stock Exchange.

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Company Background: Industry Name Auto - 2 & 3 Wheelers

House Name Bajaj Group

Collaborative Country Name N.A.

Joint Sector Name N.A.

Year Of Incorporation 1975

Year Of Commercial Production N.A. Regd. Office:

Address C/o Bajaj Auto Ltd,, Mumbai-Pune Road,

DistrictPune

StateMaharashtra

Pin Code 411035

Registrars:

Name  Maharashtra Scooters Ltd.

Address  C/o Bajaj Auto Ltd, Mumbai- Pune Road,akurdi, Maharashtra.

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MANAGEMENT

Name DesignationMadhur Bajaj ChairmanD.S.Metha DirectorJayant H.Shah DirectorSanjiv Bajaj DirectorShirish N.Karle DirectorR.K.Nikharge DirectorA.T.Shaikh DirectorA.Mahatekar DirectorM.V.Bhagat Director

Audit Committee:

Jayant H.Shah ChairmanD.S.Metha DirectorR.K.Nikharge Director

Shareholders’/Investors’Grievance Committee:

JayantH.Shah ChairmanD.S.Metha DirectorSanjv Bajaj Director

N.S.kulkarni Company secretary

Board of Directors

Company secrectary

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R.d.haware Senior manager(satare)

R.B.laddha Senior manager(finance)

Maharashtra scooters limited key data:

Chief executive

Ranjit gupta Chief executive

Senior manager

Auditors

P.C Parmar &co. Auditors

Cost Auditor

A.P.Rahman Cost auditor

BANKERS

Bankers Central bank of india

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Ticker:

Country:

Exchanges:

Major Industry:

Sub Industry:

2010 sales:

Employees:

Market Cap:

Currency:

Shares Outstanding:

Share Type:

Fiscal Yr Ends:

500266

INDIA

BOM

Automative

Diversified Automative

41,487,505

608

4,742,855,720

Indian Rupees

11,428,568

Ordinary

March

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DIRECTORS’ REPORT

Introduction:

The directors present their Thirty Fifth Annual Report and Audited statement of accounts for the year ended 31st March 2010.

Financial Result :

Particular

Year ended

2009-10(Rs. In lakh)

Year ended

2008-09(Rs. In lakh)

Net sales and other income 2,433.54 2,698.16Gross profit before int. and depreciation 744.22 1,192.66Interest 0.04 0.01

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Depreciation 104.11 104.63Profit before tax 640.07 1,088.02Provision for taxation including fringe benefit tax - 1.30Net profit 640.07 1,086.72Debit/(credit) relating to earlier years taxation (201.07) (3.83)Disposable surplus after adjustments for earlier years

841.14 1,090.55

Provision for proposed dividend (inclusive of dividend distribution tax)

732.97 735.40

Balance carried to general reserve 108.18 355.15

Dividend :

The directors recommend for consideration of the shareholders at the ensuing annual general meeting, payment of dividend of rupees 5.50 per equity share (55%) on 1, 14, 28, 568 equity share of rupees 10 each for the year ended 31st march 2010.The amount of dividend and the tax thereon aggregate to rupees 732.97 Lacks.

Research, Development and technology absorption :

During the year under review, no expenditure has been incurred by the company attributable to research and development activities

Conservation of energy :

During the year under, review the company continued to initiate requisite steps with a view to effect savings in the consumption of power, fuel, oil, water including maintaining power factor to unity, use of biogas, solar heaters, recycling of treated effluent.

Safety, Health and environment :

The company has taken adequate measures to reduce noise pollution inside the factory, by use of screw compressor, reduction in the volume/timing of siren etc….

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Environment Audit was carried out as stipulated the company has formulated AIDS policy and has displayed the same at prominent locations at the factory premises.

Foreign exchange earnings and outgo:

During the year under review, while the foreign exchange earnings were nil, the outgo of that A/c was Rs 3.26 lacks.

Cash flow statement:

A cash flow statement for the year 2009-2010 is included in the annexed statement of accounts.

Depository:

Shares of the company can be held and traded in electronic from both through National Securities Depositing Ltd (NSDL) and central depository services ltd (CDSL).The company’s shares are tradable compulsory in dematerialized form only.

Industrial relations:

Industrial Relations continued to be cordial during the year under review.

Directors:

a) During the year under review Western Maharashtra developmentCorporation ltd (WMDC).

1. Recalled the nomination of Shri Avinash Mahatekar, who was retiring director and Shri A.T.Shaikh, their nominee director on the board was made a non-retiring director.

2. Nominated Shri P.B.Satam as adirector, retiring by rotation.

b) Shri R.K.Nikharge holds office until the ensuing Annual General Meeting and is eligible for re appointment. c) Shari Jayant.H.Shah and Shri Sanjiv Bajaj. Retire by rotation and

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being eligible, offers themselves for re-appointment.

Directors Responsibility Statement:

The directors confirm:

a) That in the preparation of the annual accounts, the applicable accounting standards have been followed;

b) That the directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year ended and the profit of the company for that period.

c) That the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities.

d) That the directors have prepared the annual accounts on a going concern basis.

Re appointment of “ manager “ under the companies act 1956

The board of directors, subject to the approval of shareholders have reappointed Shree Ranjit Gupta ,chief executive of the company, as ‘Manager’ under the companies act 1956,for a further period of 3 Years effective from 1st April 2010 ,on the terms and conditions as set out in the resolution contained in the notice convening the ensuing Annual General Meeting. . The directors commend the said resolution for the approval of shareholders.

Particulars of employees

Information as per sub section (2A) of Section 217 on the companies act,1956 read with the companies rule,1975 and forming part of the

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directors’ report for the year ended 31st March ,2010 in annexed year has annexure .

Corporate Governance

Pursuant to clause 49 of the listing agreement with stock exchanges, a separate section title ‘Corporate Governance’ has been included in this annual report along with the section on management discussion and analysis.A certificate from the auditors of the company regarding the company’s compliance of corporate governance annexed to this report as annexure -2

Auditors report

The observation maid in the auditors report ,read with the relevant notes thereon are self explanatory and hence do not called for any further comments under section 217 of the companies act ,1956

Auditors

The auditors, M/s P. C. Parmer and company Chartered accountants, Pune, who retire at the conclusion of the ensuing Annual General Meeting, are eligible for reappointment. Since Western Maharashtra Development Corporation Ltd ,a govt company ,holds more than 25% of the subscribed capital of the country , the appointment of auditors and the payment of remuneration to them is required to be made by special resolution ,pursuant to Section 224-A of the Companies act ,1956. The shareholders are requested to appoint the auditors and fixed their remuneration.Shree A.P.Raman, cost accountant Pune has been appointed as cost auditors to conduct the audit of cost accounts maintained by the company for the year ending 31st march 2011 govt approval for the appointment is awaited.

On behalf of the Board of Directors

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Madhur Bajaj Chairman

Pune, 10th May 2010

AUDITORS’ REPORT

To the members of Maharashtra Scooters Limited.

We have audited the attached balance sheet of Maharashtra Scooters Limited as act 31st March 2010, and the related profit and loss account for the year ended on that date annexed thereto and the cash flow statement for the year ended on that date, which we have signed under reference to this report. These financial statements are the responsibility of the company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with the auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts

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and disclosure in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

As required to our comments by the companies order, 2003 issued by the Central Government of India in terms of sub-section 227 (4A) of “The Companies Act, 1956”, we give in the Annexure as statement on the matters specified in paragraphs 4 and 5 of the order to the extend applicable to the company.

Further the comments in the Annexure referred to in paragraph 3 above, we report that:

a) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purpose of audit;

b) In our opinion, proper books of account as required by law have been kept by the company so far as to appear from our examination of those books;

c) The balance sheet, profit and loss account and cash flow statement dealt with this report are in agreement with the books of accounts;

d) In our opinion, the balance sheet, profit and loss account and cash flow statement dealt with this report comply with the accounting standards referred to in Section (3C) of section 211 of the Act;

e) On the basis of written representatives received from the directors of the company, as on 31st December, 2008, and taken on record by the board of directors of the company, none of the directors is disqualified as on 31st December, 2008 from being appointed as director in terms of clause (g) of sub-section (1) of section 274 of the Act;

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P. C. Parmar and Co.Chartered Accountants

J.P.ParmarProprietors

Memberships No: 46293Firm Reg No. : 10760400

Pune 10th May, 2010

RATIO

“One of the most importance methods of analysis of financial statement is Ratio Analysis”. Ratio Analysis is a in numerical figure which is used to find out relationship between different statements. Single statement carries no meaning. if relationship between various related items in these financial statements are established they can provide useful clue to gauge accurately the financial health and ability of business to make profit. this relation between the two related items of financial statements is known as ratios.

For example, if there are two companies A and B.current assets and current liabilities of company A are 200000 and 100000 respectively and of company B are 300000 and 100000 respectively. The current ratio will be;

CURRENT ASSETSCURRENT RATIO = CURRENT LIABILITIES

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For company A current ratio will be 2:1 and for company B current ratio will be 3:1.so we can find out company B is doing well in comparison to company A. so the financial position of company B is stronger.

RATIO ANALYSIS

Ratio analysis is a widely used tool of financial analysis. The relation between two accounting figures, expressed mathematically, is known as Financial Ratio. In financial analysis, a ratio is used as a benchmark for evaluating the financial position and performance of a firm. From the ratio analysis one can get further insight about financial strength and weaknesses of the firm. Management, creditors, investors and others calculate the ratio to form judgment about the operating performance and financial position of the firm.

The absolute accounting figures reported in the financial statement do not provide a meaningful understanding of the performance and financial position of a firm. An accounting figure conveys the meaning when it is related to some other relevant information.

Thus, the financial analysis is the starting point for making plans, before using any sophisticated forecasting and planning procedure.

Here in this project report following ratios is calculated to judge

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the financial position of the company.

CLASSIFICATION OF RATIOS

1. Liquidity Ratio.2. Profitability Ratio.3. Leverage Ratio. 4. Activity or Efficiency Ratio.5. Coverage Ratio.

Liquidity ratio:

a) Current Ratio b) Liquid Ratio

Profitability ratio:

a) Gross Profit Ratio b) Net Profit Ratio

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c) Operating Ratiod) Expenses Ratioe) Return on Capital Employedf) Return on Share holders Fundg) Earning/Shareh) Dividend/Sharei) Price Earningsj) Return on Equity Share holders Fund

Leverage ratio:

a) Debt Equity Ratiob) Proprietary Ratioc) Gearing Ratiod) Long Term Fund To Fixed Assets Ratio

Activity ratio:

a) Stock turnover Ratiob) Working Capital Turnoverc) Debtors Ratiod) Creditors Ratioe) Total Assets Turnover Ratiof) Book Value /Share

Coverage ratio:

a) Debt Services Coverage Ratiob) Interest Coverage

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ADVANTAGES OF RATIO ANALYSIS

The use of the ratios was started by banks for ascertaining the liquidity and profitability of companies’ business for the purpose of advancing loans to them. It gradually became popular and other creditors began to use them profitably. Now even the investors calculate ratios from the published accounts of the company in order to have an idea about the solvency and profitability of the company before investing their savings. The ratio analysis provides useful data to the management, which would help them in taking important policy decisions. Diverse groups of people make use of ratios, to determine a particular aspect of the financial position of the company, in which they are interested.

Profitability:

Useful information about the trend of profitability is available from profitability ratios. The gross profit ratio, net profit ratio and ratio of return on investment give a good idea of the profitability of business. On the basis of these ratios, investor get an idea about the overall efficiency of business, the management gets an idea about the

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efficiency of managers and banks as well as other creditors draw useful conclusions about repaying capacity of the borrowers.

Liquidity:

In fact, the use of ratios was made initially to ascertain the liquidity of business. The current ratio, liquid ratio, and acid-test ratio will tell whether the business will be able to meet its current liabilities as and when they mature. Banks and other lenders will be able to conclude from these ratios whether the firm will be able to pay regularly the interest and loan installments.

Efficiency:

The turnover ratios are excellent guides to measure the efficiency of managers. E. g. the stock turnover will indicate how efficiently the sale is being made, the debtor turnover will indicate the efficiency of collection department and assets turnover shows the efficiency with which the assets are used in business. All such ratios related to sales present a good picture of the success or otherwise of the business.

Inter-firm Comparison:

The absolute ratios of a firm are not of much use, unless they are compared with similar ratios of other firms belonging to the same industry. This is inter-firm comparison, which shows the strength and weakness of the firms as compared to other firms and will indicate corrective measures.

Indicate trend:

The ratios of the last three to five years will indicate the trend in the respective fields. For examples, the current ratio of a firm is lower

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than the industry average, but if the ratios of last five years show an improving trend, it is an encouraging trend. Reverse may also be true. A particular ratio of a company for one year may compare favorably with industry average but, if its trend shows a deteriorating position, it is not desirable. Only ratio analysis will provide this information.

Useful for budgetary Control:

Regular budgetary reports are prepared in a business where the system of budgetary control is in use. If various ratios are presented in these reports, it will give a fairly good idea about various aspects of financial position.

Useful for decision-making:

Ratios guide the management in making some of the important decisions. Suppose the liquidity ratios show an unsatisfactory position, the management may decide to get additional liquid funds. Even for capital expenditure decisions, the ratio of return on investment will guide the management. The efficiency of various departments can be judged on the basis of their profitability ratios and efficiency of each department can thus be determined.

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LIMITATIONS OF THE RATIOANALYSIS

Anyone who draws any conclusion on the basis of accounting ratios about the financial conditions and earning capacity of the business must take account of the following limitations of ratios:

Single Year’s Ratios Have Limited Utility:

The utility of ratios computed from the financial statements of one year only is obviously limited. They must be compared with the past results of the company as also with the results of other business firms in the same industry.

Other Factors Must Be Considered:

While comparing ratios of different firms, it must be remembered that different firms follow different accountancy plans and polices. For example, some way use a straight line method of depreciation, while other may make use of diminishing balance method. Hence, great care

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has to be exercised before only conclusions are drawn from such comparison.

Limited Utility of Historical Ratio:

While comparing ratios of past several years, it should be remembered that changes in price level may render such comparison useless. An asset purchased some 10 years before may be shown its historical value and comparison of these assets with sales may be of no value as sales are expressed in current market value.

Use of One Ratio Misleading:

One ratio used without reference to other ratios may be misleading. If some conclusions are to be drawn, then the combined effect of a few related ratios must be considered.

Lack of Standard Ratios

There is practically no standard ratio against which the actual performance can be compared. The satisfactory level of various ratios may differ from one industry to another only because circumstances differ from industry to industry and even from firm to firm.

Other Factors Important:

Financial results of the business depend upon a number of factors such as general economic conditions and competition, local factors and the policy adopted by the management. Hence before giving any

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opinion on the basis of accounting ratios all such factors must be kept in mind.

Inaccurate Base:

The accounting ratios can never be more correct than the information from which they are computed. If the accounting data is not accurate, the accounting ratios based on these figures would give misleading results.

Investigation Necessary :

It must be remembered that accounting ratios are only a preliminary step in investigation. They suggest areas were investigation or inquiry is necessary. Hence before taking any action on the basis of accounting ratios, a rigorous investigation must be made.

INTERPRETATION OF RATIOS

The interpretation of ratios is an important factor. Through calculation is also important but it is only a clerical task whereas interpretation needs skills, intelligence and foresightedness. The interpretation of the ratios can be done in the following ways.

Single Absolute Ratio: Generally speaking one cannot draw meaningful conclusions when a single ratio is considered in isolation. But single ratios may be studied in relation to certain rules of thumb which are based upon well proven contentions.

Groups of Ratio: Ratios may be interpreted by calculating a group of related ratios. A single ratio supported by related additional ratios becomes more understandable and meaningful.

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Historical Comparisons: One of the easiest and most popular ways of Evaluating the performance of the firm is to compare its present ratios with the past ratios called comparison over time.

Projected Ratios: Ratios can also be calculated for future standard based upon the projected financial statements. Ratio calculation on actual financial statements can be used for comparison with the standard ratios to find out variance, if any. Such variance helps in interpreting and taking corrective action for improvement in future.

Inter firm Comparison: Ratios of one firm can also be compared with the ratios of some other selected firms in the same industry at the same industry at the same point of time

RATI OS

1) CURRENT RATIO:

a. Meaning: - This ratio establishes relationship between current assets and current liabilities. It indicates working capital of the firm.

b. Objective: - The objective of computing this ratio is to measure the ability of the firm to meet its short term obligation and to reflect the short term financial strength or solvency of a firm. The other words the objective is to measure the safety margin available for short term creditors.

c. Components :- There are two components of this ratio which are as under:

Current Assets :-Current Assets mean the assets which can be converted into case within a shorter period of time. They are as under:

Cash balance Marketable securities

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Bills receivables Prepaid expenses Income accrued but not due (outstanding) Advance payment of tax Bank balance Debtors (less provision) All the type of stock (raw material, work in progress, finished goods) Income due but not received

Current Liabilities :-Current Liabilities mean the liabilities which are expected to be mature within a year or short period of time and included the following:

Creditors Bills payable Short term loan and advances Provision for taxation Bank overdraft Income received in advance

d. Calculation : - This ratio is calculated by divided the current assets by the current liabilities. This ratio is usually express as a pure ratio. E.g. 2:1 is known as pure ratio. In the form of the formula this ratio may be express as under.

Current assets Current ratio = Current liabilities

Particulars 2007-08 2008-09 2009-10Current Assets 9,26,19,952 11,15,94,634 163,344,423Current Liabilities

23,76,76,004 23,07,08,519 230,140,344

Ratio 0.39:1 0.48:1 0.71:1

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e. Interpretation:-

Here we can see that in the year 2007-08 the current ratio was 0.39 and then it increased to 0.48 in the year 2008-09 and to 0.71 in the year 2009-10. So the working capital of the company is better and sound.

2) LIQUID RATIO :

a. Meaning: - This ratio establishes in relationship between quick assets and current liabilities.

b. Objective: - The objective of computing this ratio is to measure the ability of the firm to meet its short term obligation.

c. Calculation: - This ratio is calculated by dividing quick assets by liquid liabilities. This ratio is usually express as a pure ratio. E.g. 1:1 is known as pure ratio. In the form of the formula this ratio may be express as under:

current assets-stock Liquid ratio = Current liabilities-bank overdraft

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Particulars 2007-08 2008-09 2009-10Current assets-Stock 8,81,46,366 10,40,28,827 15,73,13,751Current liability-Bank overdraft

23,76,76,004 23,07,08,519 23,01,40,344

Ratio 0.37:1 0.45:1 0.68:1

d. Interpretation:-

Here we can see that in the year 2007-08 the liquid ratio was 0.37 which increased to 0.45 in 2008-09 and increased to 0.68 in 2009-10 which shows that the company liquidity position is very sound company is having good liquidity.

3) GROSS PROFIT RATIO: a. Meaning :- This ratio measures the relationship between gross profit

and net sales.

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b. Objective:- The main objective of computing this ratio is to determine the efficiency.

c. Components :- There are two components of this ratio which are as under:

Gross profit which is the excess of net sales (sales – sales return) and cost of good sold (opening stock + purchase + purchase expenses – closing stock)

Net sales means sales- sales return

d. Calculation:- This ratio is computed by divided the gross profit by the net sales. It is express as %. In the form of the formula this ratio may be express as under:

Gross profit Gross profit ratio = *100

Sales

Particulars 2007-08 2008-09 2009-10Gross Profit 1,53,48,801 21,132,346 2,41,81,460Net Sales 2,70,63,433 2,49,92,992 4,14,87,505Ratio 56.71% 84.55% 58%

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e. Interpretation:-

Here we can see that in 2007-08 the gross profit ratio of the company was 56.71 % which increased to 84.55 % in 2008-09 and it than decrease to 58 % in 2009-10. This shows that the company position is fluctuating. However, company is doing well in comparison to 2008 but in compare to 2009 it is doing badly.

4) NET PROFIT RATIO:

a. Meaning:- This ratio measures the relationship between Net profit and Net sales.

b. Objective:- The main objective of computing this ratio is to determined the over all profitability due to various factors such as operational efficiency, trading on equity etc.

c. Components :- There are two components of this ratio which are as under:

Net Profit Net sales

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d. Calculation:- This ratio is computed by dividing the net profit by the net sales. It is express as a %. In the form of the formula this ratio can be express as under:

Net profit Net profit ratio = * 100

Sales

Particulars 2007-008 2008-09 2009-10Net Profit 11,75,69,899 10,90,55,048 84,11,44,879Net Sales 2,70,63,433 2,49,92,992 4,14,87,505Ratio 434.42% 436.33% 202.74%

e. Interpretation:-In 2007-08 the net profit ratio was 434.42% which increased to 436.33 % in 2008-09.But in 2009-10 it decrease to 202.74 %.This shows that net profit is decreasing.

5) OPERATING RATIO:

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a. Meaning:- This ratio means the relationship between operating cost and net sales.

b. Objective:- The main objective of computing this ratio is to determine the operational efficiency from which production or purchasing and selling operations are carried.

c. Components :- There are two components of this ratio which are as under:

Cost of good sold + Other operating expenses (administrative expenses, selling &

distribution expenses, interest ) Net sales which mean: sales – sales return.

d. Calculation:-This ratio is computed by regarding the operating cost by net sales. This is express as %. In the form of the formula this ratio is as under: Operating cost

Operating ratio = * 100 Net sales

Particulars 2007-08 2008-09 2009-10Operating Cost 2,04,28,908 1,34,86,144 2,82,86,628Net Sales 2,70,63,433 2,49,92,992 4,14,87,505Ratio 75.48% 54% 68.18%

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e. Interpretation:- Here we can see that in 2008 operating ratio of the company was 75.48% which decreased to 54% in year 2009 and to 68.18% in the year 2010.in compare to 2009 operating ratio is increasing in 2010 but in compare to 2008 it is decreasing which is not good for the company.

6) EXPENSES RATIO:

a. Meaning:- This ratio measures the relationship between operating expenses and net sales.

b. Objective: The main objective of computing different types of expenses ratio is to find out the efficiency or otherwise the incurrence of different types of expenses.

c. Components: There are two components of this ratio which are as under: Different types of expenses Net sales

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d. Calculation : This ratio is calculated by dividing different type of expenses by the net sales. This ratio is represented by %. In the form of a formula this may be expressed as under:

Operating exp. Expenses ratio = * 100

Net sales

6.1) WELFARE EXPENSES RATIO :

Welfare exp. Welfare Expenses ratio = * 100

Net sales

Particulars 2007-08 2008-09 2009-10Welfare expenses 63,04,523 67,85,473 7,107,122Net Sales 2,70,63,433 2,49,92,992 41,487,505Ratio 23.3% 27.14% 17.14%

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Interpretation:-

The welfare expense ratio was 23.3% in 2007-08. In 2008-09 it increase to 27.14% then it declined to 17.14% in 2009-10.so expenses are declining which is good for the company.

6.2) TRAVELLING EXPENSES RATIO :

Travelling exp. Travelling Expenses ratio = * 100

Net sales

Particulars 2007-08 2008-09 2009-10Travelling expenses 64,006 93,100 89,100Net sales 2,70,63,433 2,49,92,992 41,486,505Ratio 0.24% 0.37% 0.21%

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Interpretation: The ratio in 2007-08 was 0.24 % and in the year of 2008-09 the ratio increase to 0.37 % but in the year 2009-10 the ratio decreased to 0.21 % which is profitable for the company.

6.3) MISCELLANEOUS EXPENSES RATIO:

Miscellaneous exp. Miscellaneous Expenses ratio = * 100

Net sales

Particulars 2007-08 2008-09 2009-10Misc.expenses 23,45,747 27,46,925 37,85,261Net sales 2,70,63,433 2,49,92,992 41,486,505Ratio 8.67% 11% 9.12%

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Interpretation: The miscellaneous expenses ratio of the company in 2007-08 was 8.67 %. In 2008-09 it increased to 11 %, but in 2009-10 it decreased to 9.12 %.

7) RETURN ON CAPITAL EMPLOYED:

a. Meaning:- This ratio measures the relationship between Net profit before interest and tax and Capital employed.

b. Objective:- The objective of computing this ratio is to find out how efficiently the long term fund supplied by the creditors and share holders has been used.

c. Components :- There are two components of this ratio which are as under: Net Profit before interest and tax Capital employed

(equity share capital + preference share capital + reserve and surplus +profit and loss account credit balance + long term debts – fictitious assets)

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d. Calculation:- This ratio is computed by dividing the Net profit before interest and tax by capital employed. It is express as %. In the form of a formula this ratio can be express as under:

Net profit before interest &tax Return on capital employed = * 100

Capital employed

Particulars 2007-08 2008-09 2009-10NPBI & T 11,98,00,000 1,088,00,000 6,40,00,000Capital Employed 19,591,00,000 19,946,0,000 20,055,00,000Ratio 6.11% 5.45% 3.19%

e. Interpretation:-

In 2007-08 the return on capital employed was 6.11 % which decreased to 5.45 % and it further decreased to 3.19 %. This is not good for the company.

8) RETURN ON SHAREHOLDERS FUND:

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a. Meaning:- This ratio measures a relationship between Net profit

after interest and tax and share holders fund.

b. Objective:- The objective of computing this ratio is to find out how efficiency the funds supplied by equity share holders have been used.

c. Components :- There are two components of this ratio as under:

Net Profit After Interest and Tax Share holders fund

(Equity share capital + preference share capital + reserve and surplus – fictitious assets)

d. Calculation:- This ratio is calculated by dividing the Net profit after interest and tax by share holder’s fund. It is express as %. In the form of a formula this ratio can be express as under:

Net profit after interest &tax Return on shareholder funds = * 100

Shareholders fund

Particulars 2007-08 2008-09 2009-10NPAI & T 11,75,69,899 109,055,048 84,114,489Shareholders fund 19,591,00,000 19,946,00,000 2,005,500,000Ratio 6% 5.46% 4.19%

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e. Interpretation:-

In 20007-08 the return on shareholders fund was 6% which reduced to 5.45% in 2008-09 and in 2009-10 it further decreased to 4.19%. So management and utilization of shareholders fund is becoming more efficient.

9) EARNING/SHARE:

a. Meaning:- This ratio measures the earnings availability to an equity share holders on per share basis.

b. Objective :- The objective of computing this ratio is to measure the profitability of the firm on per equity share bases.

c. Components :- There are two components of this ratio which are as under: Net Profit After Interest and Tax and preference dividend Number of equity shares

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d. Calculation:- This ratio is computed by dividing the Net profit after interest and tax and preference dividend by the number of shares. It is express as an absolute or pure ratio. In the form of a formula this ratio can be expressed as under:

Net profit after interest &tax and preference dividend Earning per share=

Number of equity shares

Particular 2007-08 2008-09 2009-10NPAT-dividend

117569899 109055048 841144890

no.of eq.shares 114285680 114385680 114385680Earning/share 10.29Rs 9.54Rs. 7.36Rs.

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e. Interpretation:-

The earnings per share in 2007-08 was 10.29 rupees which reduced to 9.54 rupees in 2008-09, and in 2009-10 it also reduces to 7.36 rupees which shows that the company’s earnings are decreasing. This is a negative sign for the company.

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10) DIVIDEND/SHARE:

a. Meaning: - This ratio measures relationship between Dividend

per share and number of equity shares.

b. Objective: - The objective of computing this ratio is to find out the net distributed profit after interest and preference share dividend belongs to equity shareholders.

c. Components: - There are two components of this ratio. Dividend paid to equity share holders Number of equity shares

d. Calculation: - This ratio computed by dividing dividend paid to equity share holders by number of equity shares. It is an absolute figure. In the form of a formula this ratio can be express as under:

Dividend paid to equity shareholders Dividend per Share =

Number of equity shares

Particulars 2006 2007 2008Dividend paid to equity share holders

6,85,71,408 6,28,57,124 6,28,57,125

Number of shares 11,428,568 11,428,568 11,428,568Ratio 6Rs. 5.5Rs. 5.5Rs.

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e. Interpretation:-

In the year 2007-08 the dividend paid to equity share holders was 6Rs. which decrease to 5.5Rs in 2008-09 and it further decrease to 5.5Rs. in 2009-10.This shows that the company is making loss. This is a negative sign for the company.

11) RETURN ON EQUITY SHAREHOLDERS FUNDS:

a. Meaning:- This ratio measures a relationship between Net profit after interest and tax and preference dividend and equity share holders fund.

b. Objective :- The objective of computing this ratio is to find out how efficiency the funds supplied by equity share holders have been used.

c. Components :- There are two components of this ratio as under:

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Net Profit After Interest and Tax Equity share holders fund

(Equity share capital + reserve and surplus + profit and loss account credit balance – fictitious assets)

d. Calculation:- This ratio is calculated by dividing the Net profit after interest and tax by equity share holder’s fund. It is express as %. In the form of a formula this ratio can be express as under:

Net profit after interest &tax Return on equity share fund = * 100

Eq. Shareholders fund

Particulars 2007-08 2008-09 2009-10NPAI & T & PF 11,75,69,899 109,055,048 84,114,489Equity share holders fund 1,959,100,000 19,946,00,000 2,005,500,000Ratio 6% 5.46% 4.19%

e. Interpretation:-

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In 2007-08 the return on equity shareholders funds was 6% which reduced to 5.5% in 2008-09 and in 2009-10 it further declined to 5.5%. This shows that the equity share capital is not properly used. This is not good for the company.

12) PRICE EARNING RATIO

(A)meaning:-meaning:- This ratio measures a relationship between market value of equity shares and earnings per share.

(B)objectivesobjectives :- The objective of calculating this ratio is to measure the expected return on investment on equity share.

(C)(C) components :-:- There are two components of this ratio:-1) Market price per equity share2) Earnings per share.

(D) calculation:- This ratio is calculated by dividing Market price per equity share by earning per share.

Market price perEquity Share

Price earnings ratio = -----------------------------------------Earnings per share

Particulars 2007-08 2008-09 2009-10

Market price per equity share

117569899 109055048 84114489

Earnings per share 102900000 95400000 73600000Price earnings ratio 1.143Rs 1.143Rs 1.143Rs

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(E) interpretationinterpretation :-:- The price earnings ratio has been showing a constant trendThe price earnings ratio has been showing a constant trend from the year 2007 to the year 2010. It shows that the marketfrom the year 2007 to the year 2010. It shows that the market value of its equity shares has increased by Rs.1.143.value of its equity shares has increased by Rs.1.143.

12) PROPRIETORY RATIO:

a. Meaning:- This ratio measures in relationship between Total assets and Proprietary funds or Share holder’s fund.

b. Objective:- The objective of this ratio is to find out how the proprietors have utilized the funds for purchasing the assets.

c. Components :- There are two components of this ratio as under: Total assets or total liabilities Share holders fund or proprietor’s fund

(Equity share capital, preference share capital, reserve and surplus, credit balance of profit and loss account –fictitious assets)

d. Calculation :- This ratio is express in %. In the form of the formula this ratio as under:

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Total assets Proprietary ratio = * 100

Eq. Shareholders fund

Particulars 2007-08 2008-09 2009-10 Share holders fund

1,959,100,000 1,994,600,000 2,005,500,000

Total assets 1,959,122,236 1,994,637,592 2,005,455,174Ratio 99.99% 99.99% 100%

e. Interpretation:- Proprietary ratio is increasing from year to year. It was 99.99% in 2007-08 which remains same 99.99% in 2008-09 but in 2009-10 it increase to 100%.This shows that the funds are properly used for the purchase of assets.

13) LONG TERM FUNDS TO FIXED ASSETS RATIO

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a. Meaning:- This ratio establishes in relationship between long term funds to fixed assets.

b. Objective:- The objective of computing this ratio is to find out relation between long term funds and fixed assets and how efficiency the capital is utilized for the firm.

c. Components: - There are two components in this ratio. Share holders fund + long term funds Fixed assets

d. Calculation :- In the form of a formula can be express as under.

Shareholders fund +Long term debt

Long Term Funds to Fixed Assets = Fixed assets

Particulars 2007-08 2008-09 2009-10Share holder funds +Long term debts

19,59,122,236 99,46,37,592 2,005,455,174

Fixed assets 10,96,14,863 10,05,43,550 9,07,93,907Ratio 17.87:1 19.83:1 22.08:1

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e. Interpretation:- The long term fund to fixed assets ratio is increasing from year to year. It was 17.87:1 in 2007-08 which rose to 19.83:1 and 22.08:1 in 2008-09 and 2009-10 respectively. This shows that the capital is properly used. This is good for the company.

14) STOCK TURNOVER RATIO: a. Meaning :- This ratio establishes a relationship between cost of good

sold and average inventory or stock.

b. Objective :- The objective of this ratio is to determine the efficiency with which the inventory is utilized.

c. Components :- There are two components: Cost of good sold

(opening stock + purchase + purchase expenses – Closing stock) Or(Net sales – gross profit)

Average inventory (Opening stock + closing stock / 2)

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d. Calculation :- This ratio is computed by dividing the cost of good sold by average inventory. This ratio is usually expressed as x number of times. In the form of a formula it is as under

Cost of goods sold Stock turnover ratio =

Average cost

e. In

interpretation:

Particulars 2007-08 2008-09 2009-10Cost of good sold

1,17,14,632 38,60,646 1,73,05,145

Average stock 50,76,132 49,36,458 55,04,276Ratio 2.3 times 0.78 times 3.14 Times

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The stock turnover ratio in 2007-08 was 2.3 times. But in 2008-09 it decrease to 0.78 times. In 2009-10 it again increase to 3.14 times.

17) WORKING CAPITAL TURNOVER RATIO :

a. Meaning :- This ratio establishes a relationship between Net sales and Working capital.

b. Objective :- The objective of computing this ratio is to determine the efficiency with which working capital is utilized.

c. Components :- There are two components: Net sales

(Sales – Sales return) Working capital

(Current assets – Current liabilities)

d. Calculation :- This ratio is computed by dividing the net sales by working capital. This ratio is usually expressed as x number of times. In the form of a formula it is as under.

Net sales Working capital turnover ratio =

Working capital

Particulars 2007-08 2008-09 2009-10Net sales 2,70,63,433 2,49,92,992 41,487,505Working capital

14,51,00,000 11,91,00,000 6,68,00,000

Ratio 0.18 times 0.20 times 0.62 times

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e. Interpretation: The working capital turnover ratio for 2007-08 was 0.18 which increase to 0.20 in 2008-09. But in 2009-10 it is more increase to 0.62. This shows that the company is using the working capital properly.

18) DEBTORS RATIO:

a. Meaning :- This ratio shows average collection period for credit sales. In the other words, it can be said that the period of time given to debtors to pay their payments can be know from this ratio.

b. Objective :- The objective of computing this ratio is to determine the efficiency with which the trade debtor is utilized.

c. Components:- There are two components of this ratio. They are debtors + bills receivables and credit sales.

d. Calculation:- This ratio is computed by dividing the amount of debtor and bills receivable by the average daily sales. The average daily sale is obtained by dividing the total annual sales by 365 days.

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Debtors+ B/R Debtors ratio = *365

Credit sale

Particulars 2007-08 2008-09 2009-10Debtors + bills receivable 16,83,259 48,99,577 89,83,962Credit sales 2,70,63,433 2,49,92,992 41,487,505Ratio 23 days 72 days 79 days

e. Interpretation:- Debtors’ ratio is satisfactory for all the three years. Lower Debtors’ ratio indicates good credit & collection policy. Debtor’s ratio also indicates good liquidity & working positions. Debtors have increased, so the current assets of company have increased

19) CREDITORS RATIO:

a) Meaning:- This ratio establishes a relation between creditors & bills payable average credit purchase.

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b) Objective :- The objective of computing this ratio is to determine the efficiency with which creditors are managed.

c) Components:-There are two components of this ratio. Creditors & bills payable Net credit purchase

c) Calculation:- This ratio is calculated by dividing the creditors and bills payable by net credit purchase. This ratio is expressed as no. of days.

Debtors + B/P Creditors ratio = * 365

Credit purchaseParticulars 2007-08 2008-09 2009-10Creditors + bills payable

31,765,206 30,190,265 32,264,148

Total assets 84,99,581 6,796,349 15,505,978Ratio 1364 days 1621 days 760 days

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f. Interpretation:- The creditors ratio in 2007-08 was 1364 days it increase to 1621 days in 2008-09. But in 2009-10 it decrease to 760 days which is not good for the company

20) TOTAL ASSETS TURNOVER RATIO:

a. Meaning :- This ratio measures the overall performance or activity of the business enterprise.

b. Objective :- The objective of calculating this ratio is to point out efficiency or inefficiency in the use of total assets.

c. Components :- There are two components Net sales Total assets

d. Calculation :- This ratio is calculated by dividing net sales by total assets. In the form of a formula this ratio can be expressed as under:

Net sales Total assets turnover ratio =

Total assets

Particulars 2007-08 2008-09 2009-10Net sales 2,70,63,433 2,49,92,992 41,487,505Total assets 1,959,122,236 1,994,637,592 2,005,455,174Ratio 0.013:1 0.012:1 0.020:1

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e. Interpretation:- Total assets turnover ratio was 0.013:1 in 2007-08, which decrease to 0.012:1 in 2008-09.But in 2009-10 it is to 0.020:1. This shows that there is efficiency in th use of total assets. This is good for the company

21) BOOK VALUE/SHARE:

a. Meaning :- This ratio establishes the relationship between share capital and reserves & surplus with number of shares.

b. Objective :- The objective of calculating this ratio is to measures to proportion of share capital and reserve and surplus with number of shares.

c. Components :- There are two components of this ratio which are as under. Share capital and reserve &surplus Number of equity shares

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d. Calculation :- This ratio is always express in absolute figure. In the form of a formula this ratio may be expressed as under:

Equity share capital + reserve & surplus Book Value/Share =

Number of Equity shares

Particulars 2007-08 2008-09 2009-10Equity share capital + Reserve & surplus

1,959,122,236 1,994,637,592 2,005,455,174

Number of equity shares

11,428,568 11,428,568 11,428,568

Ratio 171.42 174.53 175.47

d) Interpretation:- The book value/share is increasing from year to year. It was 171.42 in 2007-08 which rose to 174.53 in 2008-09 and in 2009-10 it again increase to 175.47. This shows that the profitability of the firm is high which means company’s reserves & surplus is increasing.

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22) INTEREST COVERAGE RATIO:

a) Meaning: This ratio is useful to know if the firm as sufficient profit to pay its liability of interest.

b) Objective: This ratio shows that how many times the interest payable is covered by the amount of profit as a result, it will be easy for a firm to decide whether or not more capital should be borrowed to get the benefit of use of equity shares.

c) Components:There are two components of this ratio: Earning before interest and tax Interest

c) Calculation: This ratio is calculated by dividing earnings before interest and tax by interest.

Earnings before int.& tax Interest coverage ratio = Interest

Particulars 2007-08 2008-09 2009-10Earnings before interest & tax

11,98,00,000 10,88,00,000 6,40,00,000

Interest 12,103 908 4,696Ratio 9898 Times 119824 Times 13629 Times

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e) Interpretation : In 2007-08 the interest coverage ratio was 9898 times, in 2008-09 it has increased to 119824 times which is good for the company. But in the year 2009-10 it decreased to 13629 times which is not good for the company.

NOTE: Price-Earning Ratio, Debt-Service Coverage Ratio, The following two ratios were not calculated because the relevant information for calculating them was not available in the annual reports of the company.

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COMMON SIZE STATEMENT

They are those statements in which items reported in the financial statements are converted into percentage by taking some common base. In common size income statement, the net sales are assumed to be 100% and other items are expressed as a percentage of sales. Similarly in common size balance sheet the total assets or total liabilities are assumed to be 100% and other items of assets and liabilities are expressed as a percentage of this total .i.e., 100% common size statements because each statement is reduced to the total of 100 and each individual item is expressed as a percentage of this total.

IMPORTANCE OF COMMON SIZE STATEMENT

The use of common size statement can make comparisons of business firms of different sizes much more meaningful since the numbers are brought to the common base. i.e., percentage.

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Such statement allows an analyst to compare the operating and financing features of two companies in the same industry.

Common size statement from profit and loss account

Particular 2007-08 % 2008-09 % 2009-10 %

Income

Gross sales 31294755 10.72 27720245 10.27 44837307 18.42

- Excise duty 4231322 1.45 2727253 1.01 3349802 1.38

Net sales 27063433 9.27 24992992 9.26 41487505 17.05

+ Other income

264862569 90.73 244823148 90.74 201866748 82.95

Total (A) 291926002 100 269816140 100 243354253 100

Expenditure

Materials 8499581 2.91 6796349 2.52 15505978 6.37

+ Other expenses

152998295 52.41 143754057 53.28 153426180 63.05

+ Employee expenses

12103 .004 908 .0003 4696 .002

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+ Depreciation

10602529 3.63 10462765 3.88 10410639 4.28

Total (B) 172112508 58.96 161014079 59.68 179347493 73.7

Profit before provision for taxation C = (A – B)

119813494 41.04 108802061 40.32 64006760 26.3

Provision for taxation

- - -

Current year - - -

Differed tax liability

- - -

Fringe benefit tax

120000 .04 130000 .05 - -

Total (D)

Profit for the yearE = (C - D)

119693494 41 108672061 40.28 64006760 26.3

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PROFIT AND LOSS ACCOUNT

Particulars 2007-08 2008-09 2009-10

Income:Sales (gross) 3,12,94,755 2,77,20,245 44,837,307Less: excise duty on sales

42,31,322 27,27,253 3,349,802

Net sales 2,70,63,433 2,49,92,992 41,487,505Other income 26,48,62,569 24,48,23,148 20,18,66,748Total income 29,19,26,002 26,98,16,140 24,33,54,253

Expenditure:Materials 84,99,581 67,96,349 15,505,978Other expenses 15,29,98,295 14,37,54,057 15,34,26,180Interest 12,103 908 4,696Depreciation 1,06,02,529 1,04,62,765 1,04,10,639 Total expenditure

17,21,12,508 16,10,14,079 17,93,47,493

Profit before 11,98,13,494 10,88,02,061 6,40,06,760

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taxation and exceptional items

Provision for tax Current tax - - - Deferred tax - - - Fringe benefits tax

1,20,000 1,30,000 -

Contd….

Profit for the year

11,96,93,494 10,86,72,061 6,40,06,760

Debit/(Credits) relating to earlier years taxation

21,23,595 (3,82,987) (2,01,07,729)

Net profit 11,75,69,899 10,90,55,048 8,41,14,489

Transfer to general reserveDividend & dividend distribution tax thereon:

3,73,44,780 3,55,15,356 1,08,17,582

ProposedDividend

6,85,71.408 6,28,57,124 6,28,57,124

Proposed for dividend distribution tax

1,16,53,711 1,06,82,568 1,04,39,783

8,02,25,119 7,35,39,692 7,32,96,907Balance carried to balance sheet

- - -

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Profit for the year 11,75,69,899 10,90,55,048 8,41,14,489No of equity shares

1,14,28,568 1,14,28,568 1,14,28,568

Basic and diluted earnings per share of Rs. 10 each

10.29 9.54 7.36

INTERPRETATION :

Income :

Income of the company was 2919 lacs in 2007-08 which increased to 2698 in lacs in 2008-09. It increased to 2433 lacs in 2009-10, which is a good sign for the company.

Expenditure :

Expenditure of the company was 1721 lacs in 2007-08 which decreased to 1610 lacs in 2008-09 which is a good sign for the company. It increased to 1793 lacs in 2009-10, which is not a good sign for the company.

Profit before tax :

Profit before tax of the company was 1198 lacs in 2007-08 which decreased to 1088 lacs in 2008-09 which is not a good sign for the

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company. It decreased to 640 lacs in 2009-10, which is not a good sign for the company.

Common size statement from balance sheet

Particulars 2007-08 % 2008-09 % 2009-10 %

Source of fundsShare holder’s fund

1959122236 100 1994637592 100 2005455174 100

(a) capital 114285680 5.83 114285680 5.73 114285680 5.7(b) Reserve & surplus

1844836556 94.17 1880351912 94.27 1891169494 94.3

Loan Funds - - -(a)Unsecured loans

- - -

Total 1959122236 100 1994637592 100 2005455174 100Application of funds(i) fixed assets(a) Gross block

272918914 13.93 272898606 13.68 272464750 13.59

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(b) less: Depreciation

163304051 8.34 172355956 8.64 181670843 .91

( c) Net block

109614863 5.6 100543550 5.04 90793907 4.53

(ii) Investments

1994563425 101.81

2013207927 100.93 1981457188 98.8

Total I & II (A)

2104178288 107.40

2113751477 105.97 2072251095 103.33

(iv) Current assets, loans & advances

92619952 4.73 111594634 5.59 163344423 8.15

(v) Less: current liability

237676004 12.13 230708519 11.57 230140344 11.48

Total (iv – v) (B)

145056052 7.40 119113885 5.97 66795921 3.33

Grand Total (A+B)

1959122236 100 1994637592 100 2005455174 100

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BALANCE SHEET

Particulars 2007-08 2008-09 2009-10

Sources of funds:

A) Shareholders’ funds:Capital 11,42,85,680 11,42,85,680 11,42,85,680Reserve & Surplus

1,84,48,36,556 1,88,03,51,912 1,891,169,494

1,95,91,22,236 1,99,46,37,592 2,005,455,174Loan funds:Secured loans - - -TOTAL 1,95,91,22,236 1,99,46,37,592 2,005,455,174

B) Application of funds:

Fixed assets:Gross block 27,29,18,914 27,28,98,606 272,464,750

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Less: depreciation 16,33,04,051 17,23,55,056 181,670,843Net block 10,96,14,863 10,05,43,550 90,793,907

Investments: 1,99,45,63,425 2,01,32,07,927 1,981,457,188

Current assets, loans and advances:Inventories 44,73,596 75,65,807 6,030,672Sundry debtors 16,83,259 48,99,577 8,983,962Cash & bank balance

81,27,450 66,38,567 47,469,659

Loans and advances

7,83,35,657 9,24,90,683 100,860,130

9,26,19,952 11,15,94,634 163,344,423 Contd…

Less: current liabilities and provision:Liabilities 15,27,09,413 15,22,97,355 152,521,965Provisions 8,49,66,5591 7,84,11,164 77,618,379 23,76,76,004 23,07,08,519 230,140,344Net current assets

(14,50,56,052) (11,91,13,885) (66,795,921)

TOTAL 1,95,91,22,236 1,99,46,37,592 2,005,455,174

INTERPRETATION :

1. Sources of funds :

Share holders funds was 19591 lacs in 2007-08 which increased to 19946 in lacs in 2008-09. It increased to 20055 in 2009-10, which is a good sign for the company.

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There are no borrowed funds which is a very good sign for the company.

2.Applications of funds :

Net fixed assets was 1096 lacs in 2007-08 which increased to 1005 lacs in 2008-09 which is a good sign for the company but it fell down to 908 lacs in 2009-10 which is not good and it shows the the funds are not applied properly.

Investment was 19946 lacs in 2007-08 which increased to 20132 lacs in 2008-09 which is a good sign for the company but it fell down to 19815 lacs in 2009-10 which is not good and it shows the the funds are not applied properly.

CASH FLOW STATEMENT

Particulars 2007-08 2008-09 2009-10

A)Cash flow from operating activities:Profit before tax 11,98,13,494 10,88,02,061 64,006,760Add: Adjustment for: Depreciation 1,06,02,529 1,04,62,765 10,410,639 Loss on Assets sold, demolished or discard

2,25,361 2,65,119 3,34,190

Interest paid 12,103 908 4,696Lead-hold write-off 6,315 6,135 6,315 13,06,59,802 11,95,37,168 1,07,55,840 Less: Income from investing activities included in above:Dividend/income from investment

14,11,50,600 14,12,60,196 11,59,28,128

Interest income from 6,85,95,404 7,81,37,093 7,96,29,049

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investmentAdd: Amortization of premium paid/discount Received on acquisition(net)

11,0,952 (2,02,866) 11,10,272

Profit on sale of investment

2,52,35,037 2,35,99,993 25,24,237

23,60,81,993 24,27,94,416 19,91,91,686Surplus on sale of assets

27,09,465 7,01,504 1,41,678

Cash from operations (10,81,31,656) (12,39,58,752) (12,45,70,764)Less: Adjustment for working capital changes

Inventories (41,88,663) 30,92,221 (15,35,135)

Sundry debtors 6,69,315 32,16,320 40,84,385 Other current assets, loans and advances

(15,34,790) (11,16,882) (1,42,55,871)

(50,54,138) 51,91,659 (1,17,06,621)Less: Trade payables (1,88,59,443) (17,01,441) (10,51,205)Less: Provision for gratuity

- - -

2,21,90,305 68,93,100 (1,06,55,416)Net cash generated from operations after working capital changes

(13,03,21,961) (13,08,51,852) (11,39,15,348)

Less: income tax paid/refunds(net)

(2,95,22,817) (17,84,736) 77,031

Net cash sales from operating activities

(10,07,99,144) (12,90,67,116) (11,39,92,379)

B)Cash flow from investing activities: Sale of fixed assets 40,91,642 9,08,448 5,59,351 Sale of investments 75,62,18,535 1,02,15,68,726 1,74,89,30,792Income from

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investing activities: Dividends/income from investments

14,11,50,600 14,12,60,196 11,59,28,128

Interest 5,43,03,496 6,14,63,437 7,66,38,491

Sub-total 19,54,54,096 20,27,23,633 19,25,66,619 Sub total 95,57,64,273 1,22,52,00,808 1,94,20,56,762

Less: Purchase of fixed assets Purchase of investment:

35,48,926

80,83,46,226

18,69,831

1,01,68,16,100

14,19,174

1,81,35,45,544

NET CASH FROM INVESTING ACTIVITIES(B)

14,38,69,121 20,65,14,877 12,70,92,044

C)Cash flow from financing activities: Increase/(decrease) in bank cash credit balances

- - -

Interest paid (12,103) (908) (4,696) Dividend paid (3,41,82,218) (6,72,82,025) (6,15,81,309) Dividend distribution tax paid

(58,26,855) (1,16,53,711) (1,06,82,568)

NET CASH FROM FINANCING ACTIVITIES(C):

(4,00,21,176) (7,89,36,644) (7,22,68,573)

NET INCREASE IN CASH EQUIVALENT ( A+B+C)

30,48,801 (14,88,883) (5,91,68,908)

Cash & cash equivalent as at 1st April(opening balance)

50,78,649 81,27,450 10,66,38,567

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Cash & cash equivalent as at 31st March(closing balance)

81,27,450 66,38,567 4,74,69,659

Interpretation of cash flow statement:

a) The net cash flow from operating activities in 2007-08 was 10,07,99,144 which increased to 12,90,67,116 in 2008-09 and it decrease to 113,992,379 in 2009-10. The operating profit before working capital changes is also increasing between the year 2007-08 to 2008-09.But in 2009-10 it decrease.

b) The net cash flow from investing activities in 2007-08 was 14,38,69,121 which increased to 20,65,14,877 in 2008-09. But in 2009-10 it decrease to 127,092,044. It shows that the company is investing more and more in 2007-08 to 2008-09. But in the year 2009-10 the company reduce its investment.

c) The net cash flow from financing activities in 2007-08 was 4,00,21,176, which increase to 7,89,36,644 in 2008-09. But in 2009-10 it reduces to 72,268,573.

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CONCLUSION

The analysis of annual report of the last three years of the company reveals that the company is improving working efficiency taking step of increasing its turnover. The analysis reveals that the total income of the company is increasing and its expenses are decreasing. Hence it can be concluded that the company is performing very efficiently, it has highly qualified managerial personnel. The analysis also reveals that the company utilizes its raised sources very efficiently to earn profit and achieve its objectives. Company repays there loan regularly which is good sign for the future. Ratios show satisfactory situation so it indicate the company’s ability to increase its profit, performance and financial position is very sound. Overall it can be concluded that company is performing very efficiently and therefore it has future prospects in India and international market.

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BIBLIOGRAPHY

Annual reports of MAHARASHTRA SCOOTER LIMITED (2009). Annual reports of MAHARASHTRA SCOOTER LIMITED (2010). Official website of MAHARASHTRA SCOOTER LIMITED. www.Moneycontrol.com

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