KES SHROFF COLLEGE OF ARTS AND COMMERCE

PROJECT REPORT ON
LARSEN & TOUBRO LIMITED SUBMITTED BY NIRALI G. PATEL

M.Com.-1 ADVANCED FINANCIAL ACCOUNTING (SEMESTER I)

SUBMITTED TO UNIVERSITY OF MUMBAI

PROJECT GUIDE MRS.JIGNA VYAS ACADEMIC YEAR 2012 2013

KANDIVLI EDUCATION SOCIETYS B.K.ShroffCollege of Arts & M.H.ShroffCollege of Commerce

1

Bhulabhai Desai Road, Kandivli (West), Mumbai 400067

PROJECT REPORT

LARSEN & TOUBRO LIMITED SUBMITTED BY NIRALI G. PATEL

SUBMITTED TO UNIVERSITY OF MUMBAI

PROJECT GUIDE NAME OF THE GUIDE MRS. JIGNA VYAS

ACADEMIC YEAR 2012 2013

KANDIVLI EDUCATION SOCIETYS B.K.ShroffCollege of Arts & M.H.ShroffCollege of Commerce Bhulabhai Desai Road, Kandivli (West), Mumbai 400067 CERTIFICATE This is to certify that NIRALI G. PATEL of M.Com.-1 has successfully completed a project on LARSEN& TOUBRO LIMITED for the Semester I under the guidance of MRS. JIGNA VYAS during the academic year 2012-13.

Co-ordinator

Project Guide

Principal

Internal Examiner

External Examiner

College Seal

DECLARATION

I NIRALI G. PATEL of K.E.S. SHROFF COLLEGE OF ARTS & COMMERCE M.Com.-1(SEMESTER 1) hereby declare that I have completed my project title LARSEN & TOUBRO LIMITED I also declare that this project which has been the partial fulfillment of the requirement of the degree of M.COM-1(SEM1) of the Mumbai University has been the result of my efforts.

Signature of Student _________________

ACKNOWLEDGEMENT

I have sincerely done my project alloted to me. I would like to thank MRS. JIGNA VYAS, the guide for giving her valuable suggestion and guidance.

I would also like to thank our PrincipalDr. LILY BHUSHAN and our vice Principal Mr.V.S.Kannan.

It gives me immense pleasure to present this project in the course of M.COM-1, and I also would like to share the credit with Mrs. ALKA WADHWANA for her valuable, helps in this project. I would like to thank all those people who gave me their opinion without their help this project would not be possible to submit in time.

INDEX
SR. NO 1. 2. 3. TOPIC Introduction to Larsen & Toubro History of Larsen & Toubro Analysis of balance sheet
Trend analysis Comparative analysis Common size analysis Ratio analysis

PAGE NO 7& 8 9 to 12 13 to 27

4.
5.

Accounting Policies of Larsen & Toubro

k

28 to 32 33 & 34 35

Suggestion &Conclusion.

6.

Bibliography. L L
L

l
L

l l l l l

INTRODUCTION
Today, L&T is one of India's biggest and best known industrial organizations with a reputation for technological excellence, high quality of products and services, and strong customer orientation. It is also taking steps to grow its international presence. Larsen & Toubro Limited (L&T) is a technology, engineering, construction and manufacturing company. It is one of the largest and most respected companies in India's private sector. More than seven decades of a strong, customer-focused approach and the continuous quest for world-class quality have enabled it to attain and sustain leadership in all its major lines of business. L&T has an international presence, with a global spread of offices. A thrust on international business has seen overseas earnings grow significantly. It continues to grow its global footprint, with offices and manufacturing facilities in multiple countries. The company's businesses are supported by a wide marketing and distribution network, and have established a reputation for strong customer support. L&T believes that progress must be achieved in harmony with the environment. A commitment to community welfare and environmental protection are an integral part of the corporate vision. In response to changing market dynamics, L&T has gone through a phased process of redefining its organisation model that facilitates growth through greater levels of empowerment. The new structure is built around multiple businesses designated Independent Companies or ICs. A strong, customer-focussed approach and the constant quest for top-class quality have enabled the company to attain and sustain leadership in its major lines of business. It has established an international presence, with a global spread of offices. A thrust on international business across the last few years has seen overseas earnings growing to 18 per cent of total revenue. With factories and offices located around the country,further supplemented by a comprehensive marketing and distribution network, L&T enjoys an image and equity in virtually every district of India.The companys business can be primarily divided into the following segments: Engineering & Construction Projects, Heavy
7

Engineering, Shipbuilding, Construction, Electrical & Electronics, Information Technology, Machinery & Industrial Products. The L&T vision reflects the collective goal of the company. It was drafted through a large scale interactive process which engaged employees at every level, worldwide. Larsen & Toubro Limited operates as a technology, engineering, construction, and manufacturing company. The company engages in the design, engineering, and construction of hydrocarbon upstream, mid and downstream, and construction and pipelines projects; coal and gas based power plants; and refinery, petrochemical, fertilizers, modular process plant, and gas processing projects. It is also involved in the construction of infrastructure, buildings and factories, power transmission and distribution, metallurgical and material handling, and realty projects; manufacture and supply of equipment and systems for refinery, oil and gas, fertilizer, coal gasification, aerospace, thermal power plant, nuclear power plant, and defense industries; and provision of solutions for power projects, such as thermal, hydropower, nuclear, plant automation, power transmission and distribution, and power development. In addition, the company manufactures and sells switchgear products, energy management and home automation solutions, metering solutions, electrical systems, control and automation solutions, medical equipment and systems, and tooling solutions; and provides integrated engineering and information technology services, as well as construction and mining equipment, material handling products, crushing systems and equipment, hydraulic equipment, valves, rubber processing machinery, plastics processing machinery, paper machinery, welding products, and castings. Further, it provides various financial services, including portfolio management, equipment and infrastructure finance, general insurance, and mutual funds; undertakes railway projects; and engages in the shipbuilding activities.

SALIENT FEATURES OF L&T :A public limited company. Over eight lakh shareholders. More than 25,800 employees. A professionally managed company. Largest Engineering & Construction Company. Quality systems at most of L & Ts factories are ISO 9000 certified

HISTORY

The company was founded in Mumbai in 1938 by two Danish engineers, Henning HolckLarsen and SrenKristian Toubro. The company began as a representative of Danish manufacturers of dairy equipment. However, with the start of the Second World War in 1939 and the resulting restriction on imports, the partners started a small workshop to undertake jobs and provide service facilities. Germany's invasion of Denmark in 1940 stopped supplies of Danish products. The war-time need to repair and refit ships offered L&T an opportunity, and led to the formation of a new company, Hilda Ltd., to handle these operations. L&T also started two repair and fabrication shops signalling the expansion of the company. The sudden internment of German engineers in India (due to suspicions caused by the War), who were to put up a soda ash plant for the Tatas, gave L&T a chance to enter the field of installation. In 1944, ECC was incorporated by the partners; the company at this time was focused on construction projects (Presently, ECC is the construction division of L&T). L&T decided to build a portfolio of foreign collaborations. By 1945, the company represented British manufacturers of equipment used to manufacture products such as hydrogenated oils, biscuits, soaps and glass. In 1945, the company signed an agreement with Caterpillar Tractor Company, USA, for marketing earth moving equipment. At the end of the war, large numbers of war-surplus Caterpillar equipment were available at attractive prices, but the finances required were beyond the capacity of the partners. This prompted them to raise additional equity capital, and on 7 February 1946, Larsen & Toubro Private Limited was born.

POST-INDEPENDENCE Independence and the subsequent demand for technology and expertise offered L&T the opportunity to consolidate and expand. Offices were set up in Kolkata (Calcutta), Chennai (Madras) and New Delhi. In 1948, fifty-five acres of undeveloped marsh and jungle was acquired in Powai, Mumbai. That uninhabitable swamp is presently its main manufacturing hub. In December 1950, L&T became a public company with a paid-up capital of 20 lakhs. The sales turnover in that year was 1.09 crore. Notable orders executed by the Company during this period included the Amul Dairy at Anand and Blast Furnaces at Rourkela Steel Plant.

With the successful completion of these jobs, L&T emerged as the largest erection contractor in the country. In 1956, a major part of the company's Mumbai office moved to ICI House in Ballard Estate, Mumbai; which would later be purchased by the company and renamed as L&T House, its present Corporate Office. The sixties were also a decade of rapid growth for the company, and witnessed the formation of many new ventures: UTMAL (set up in 1960), Audco India Limited (1961), Eutectic Welding Alloys (1962) and TENGL (1963). In 1976, Holck-Larsen was awarded the Magsaysay Award for International Understanding in recognition of his contribution to India's industrial development. He retired as Chairman in 1978.

10

NATIONWIDE NETWORK
Larsen & Toubro Limited (L&T) is a technology, engineering, construction and manufacturing company. It is one of the largest and most respected companies in India's private sector. More than seven decades of a strong, customer-focused approach and the continuous quest for world-class quality have enabled it to attain and sustain leadership in all its major lines of business. L&T has an international presence, with a global spread of offices. A thrust on international business has seen overseas earnings grow significantly. It continues to grow its global footprint, with offices and manufacturing facilities in multiple countries. The company's businesses are supported by a wide marketing and distribution network, and have established a reputation for strong customer support. L&T believes that progress must be achieved in harmony with the environment. A commitment to community welfare and environmental protection are an integral part of the corporate vision. In response to changing market dynamics, L&T has gone through a phased process of redefining its organisation model that facilitates growth through greater levels of empowerment. The new structure is built around multiple businesses designated Independent Companies or ICs

The various business groups of L&T are:

Engineering & Construction - Projects: L&T has an enviable track record of successful implementation of turnkey projects in major core and infrastructure sectors. L&T's core competencies in engineering include highly qualified and experienced personnel from various disciplines, state-of-the-art 2-D and 3-D CAD facilities with sophisticated plant design systems and basic engineering capabilities. L&T is the only Indian EPC company prequalified for executing large, process-intensive projects for oil & gas, refinery, petrochemical and fertiliser sectors.

Heavy Engineering: L&T has been among Indian corporate sector in introducing new processes, products and materials in manufacturing. It is acknowledged as one of the top five
11

fabrication companies in the world and has globally-benchmarked workshops are located in Mumbai, Hazira, Baroda and Kansbahal.

Construction: ECC, the Engineering Construction & Contracts Division of L&T, is India's largest construction organization. It is credited with building some of India's famous landmarks such as exquisite buildings, tallest structures, largest industrial projects, longest flyovers, highest viaducts, longest pipelines etc.

Electrical & Electronics: L&T is a major international manufacturer of a wide range of electrical and electronic products and systems. In the electrical segment, L&T is India's largest manufacturer of low tension switchgear. In the electronic segment, L&T offers a wide range of meters and provides complete control and automation systems for diverse industries.

Information Technology: L&T Infotech Limited, a 100 per cent subsidiary of L&T, caters to leading international companies across the globe and offers comprehensive, end to end software solutions and services with a focus on Manufacturing, BFSI and Communications & Embedded Systems.

Machinery & Industrial Products: L&T manufactures, markets and provides service support for critical construction and mining machinery such as surface miners, hydraulic excavators, aggregate crushers, loader backhoes and vibratory compactors.

ACHIEVEMENTS OF L&T

Built India's first indigenous hydrocracker reactor. Built the world's largest continuous catalyst regeneration reactor. Built the world's biggest fluid catalytic cracking regenerator. Built the world's longest product splitter. Built Asia's highest

12

13

viaduct - Panvalnadi for the Konkan Railway. Built the world's longest LPG pipeline.

PROFIT & LOSS ACCOUNT

Mar '10 Mar '11 Mar '12

Income Sales Turnover Excise Duty Net Sales Other Income Stock Adjustments Total Income Expenditure Raw Materials Power & Fuel Cost Employee Cost Other Manufacturing Expenses Selling and Admin Expenses Miscellaneous Expenses Preoperative Exp Capitalised Total Expenses Operating Profit PBDIT Interest PBDT Depreciation Other Written Off Profit Before Tax Extra-ordinary items PBT (Post Extra-ord Items) Tax Reported Net Profit Total Value Addition Preference Dividend Equity Dividend Corporate Dividend Tax Per share data (annualised) Shares in issue (lakhs)

37,187.50 317.31 36,870.19 2,321.67 -422.99 38,768.87 9,593.53 334.08 2,379.14 16,913.31 1,854.23 325.58 -36.25 31,363.62 5,083.58 7,405.25 995.37 6,409.88 383.65 30.95 5,995.28 -45.13 5,950.15 1,577.02 4,375.52 21,770.09 0 752.75 110.25 6,021.95

44,055.55 398.84 43,656.71 1,781.28 559.49 45,997.48 12,372.32 355.45 2,884.53 19,886.12 2,103.38 773.7 -37.87 38,337.63 5,878.57 7,659.85 1,199.23 6,460.62 575.81 23.41 5,861.40 -49.05 5,812.35 1,858.47 3,957.89 25,965.31 0 882.84 112.82 6,088.52

53,849.48 583.53 53,265.95 885.32 539.77 54,691.04 14,456.43 638.79 3,506.72 24,286.29 2,439.36 689.1 -18.75 45,997.94 7,807.78 8,693.10 1,683.31 7,009.79 699.46 0 6,310.33 -3.89 6,306.44 1,853.83 4,456.50 31,541.51 0 1,010.46 101.44 6,123.99 14

Earning Per Share (Rs) Equity Dividend (%) Book Value (Rs)

72.66 625 303.28

65.01 725 352.4

72.77 825 411.53

BALANCE SHEET OF LARSEN AND TOUBRO

------------------- in Rs. Cr. -------------------

Mar '10 Rs.

Mar '11 Rs.

Mar '12 Rs.

SOURCES OF FUND
SHAREHOLDER'S FUND Equity Share Capital Share Application Money Preference Share Capital Reserves Revaluation Reserves NETWORTH Secured Loans Unsecured Loans TOTAL DEBT TOTAL SOURCES OF FUND 120.44 25.09 0 18,142.82 23.29 18,311.64 955.73 5,845.10 6,800.83 25,112.47 121.77 368.31 0 21,334.05 22.13 21,846.26 1,063.04 6,098.07 7,161.11 29,007.37 122.48 0 0 25,079.40 21.14 25,223.02 1,453.34 8,442.43 9,895.77 35,118.79

APPLICATION OF FUND
FIXED ASSET Gross Block Less: Accum. Depreciation Net Block Capital Work in Progress Investments CURRENT ASSET Inventories Sundry Debtors Cash and Bank Balance Total Current Assets Loans and Advances Fixed Deposits Total CA, Loans & Advances LESS : CURRENT LIABILITIES Liabilities Provisions Total CL & Provisions Net Current Assets 7,235.78 1,727.68 5,508.10 857.66 13,705.35 1,415.37 11,163.70 1,104.89 13,683.96 12,662.55 326.98 26,673.49 19,443.77 2,188.36 21,632.13 5,041.36 8,897.02 2,220.82 6,676.20 785 14,684.82 1,577.15 12,427.61 1,518.98 15,523.74 19,499.23 211.37 35,234.34 26,139.56 2,233.43 28,372.99 6,861.35 10,618.74 2,952.61 7,666.13 807.94 15,871.90 1,776.62 18,729.84 1,020.09 21,526.55 21,445.72 885.17 43,857.44 30,697.53 2,387.09 33,084.62 10,772.82 15

Miscellaneous Expenses TOTAL APPLICATION OF FUND

0 25,112.47

0 29,007.37

0 35,118.79

TREND BALANCE SHEET

Mar '10 Mar '11 Mar '12 TREND % BASE YEAR : 2010 Mar Mar Mar '11 '10 '12

Rs.

Rs.

Rs.

SOURCES OF FUND
SHAREHOLDER'S FUND Equity Share Capital Share Application Money Preference Share Capital Reserves Revaluation Reserves NETWORTH Secured Loans Unsecured Loans TOTAL DEBT TOTAL SOURCES OF FUND 120.44 121.77 122.48 25.09 368.31 0 0 0 0 18,142.82 21,334.05 25,079.40 23.29 22.13 21.14 18,311.64 21,846.26 25,223.02 955.73 1,063.04 1,453.34 5,845.10 6,098.07 8,442.43 6,800.83 7,161.11 9,895.77 25,112.47 29,007.37 35,118.79 100 101.10 101.69 100 1467.96 0.00 100 0.00 0.00 100 117.59 138.23 100 95.02 90.77 100 119.30 137.74 100 111.23 152.07 100 104.33 144.44 100 105.30 145.51 100 115.51 139.85

APPLICATION OF FUND
FIXED ASSET Gross Block Less: Accum. Depreciation Net Block Capital Work in Progress Investments CURRENT ASSET Inventories Sundry Debtors Cash and Bank Balance Total Current Assets Loans and Advances Fixed Deposits Total CA, Loans & Advances LESS : CURRENT LIABILITIES Liabilities Provisions Total CL & Provisions Net Current Assets 7,235.78 8,897.02 10,618.74 1,727.68 2,220.82 2,952.61 5,508.10 6,676.20 7,666.13 857.66 785 807.94 13,705.35 14,684.82 15,871.90 1,415.37 11,163.70 1,104.89 13,683.96 12,662.55 326.98 26,673.49 1,577.15 12,427.61 1,518.98 15,523.74 19,499.23 211.37 35,234.34 1,776.62 18,729.84 1,020.09 21,526.55 21,445.72 885.17 43,857.44 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 122.96 128.54 121.21 91.53 107.15 111.43 111.32 137.48 113.44 153.99 64.64 132.09 134.44 102.06 131.16 136.10 146.75 170.90 139.18 94.20 115.81 125.52 167.77 92.33 157.31 169.36 270.71 164.42 157.88 109.08 152.94 213.69 16

19,443.77 26,139.56 30,697.53 2,188.36 2,233.43 2,387.09 21,632.13 28,372.99 33,084.62 5,041.36 6,861.35 10,772.82

Miscellaneous Expenses TOTAL APPLICATION OF FUND

0 0 0 25,112.47 29,007.37 35,118.79

100 100

0.00 0.00 115.51 139.85

17

Meaning & Importance of Trend Analysis

Trend Analysis compares account balances over accounting periods of months, quarters and years as the date ranges and cutoff dates for account activity. It can be helpful in determining unusual changes in balances from period to period. Unusual changes in account balances can pinpoint errors, under/over payments and fraud. Trend analysis is useful because: Trend shows the direction of the changes . Trends are easy to calculate and interpret. It is quick method of analysis. It is accurate because it is based on percentage.

The base year trend percentage is always 100.0%. A trend percentage of less than 100.0% means the balance has decreased below the base year level in that particular year. A trend percentage greater than 100.0% means the balance in that year has increased over the base year. A negative trend percentage represents a negative number.

COMMENT ON TREND BALANCESHEET

Capital ofL&T has increased from base of 100% in march 2010 to 101.10% in 2011 and 101.69% in 2012. Increase in share capital indicate issue of shares. Reserve of the company increased from 100% in 2010 to 117.59% in 2011 and further higher to 138.23% in 2012. Net worth increased from 100% in 2010 to 119.30% in 2011 and further increased to 137.74% in 2012. There is increase in total loan taken by firm in 2011. It has gone up from 100% in 2010 to 105.30% in 2011 and 145.51% in 2012. The additional borrowing indicate increased the interest burden of the company.

The fixed asset after charging depreciation have gone up to 121.21% in 2011 and 139.18% in 2012. This seems to have been financed by capital contribution by the company and increased loan fund.
18

The investment of company increased from 100% in 2010 to 107.15% in 2011 and 115.81% in 2012. It shows company had purchase investment. The total current asset and loans & advances have increased from 100% in 2010 to 132.09% in 2011 and 164.42% in 2012. This increased due to increase in debtor, inventories, loans and advances. Increase in total current asset and loans & advances shows that company has smooth cash flow.

There is position of total liabilities has change drastically. The total liabilities have gone up from 100% in 2010 to 131.16% in 2011 and 152.94% in 2012. This is due to may be increase in creditors.

There is increased net current asset from 100% in 2010 to 136.10% in 2011 and 213.69% in 2012. It shows high level of operations. From the above trend analysis it can be said that company have upward

trend. This is because company make growth every year.

19

COMMON SIZE BALANCE SHEET

Mar '10 Rs. % SOURCES OF FUND
SHAREHOLDER'S FUND Equity Share Capital Share Application Money Preference Share Capital Reserves Revaluation Reserves NETWORTH Secured Loans Unsecured Loans TOTAL DEBT TOTAL SOURCES OF FUND 120.44 0.48 121.77 0.42 122.48 0.35 25.09 0.10 368.31 1.27 0 0.00 0 0.00 0 0.00 0 0.00 18,142.82 72.25 21,334.05 73.55 25,079.40 71.41 23.29 0.09 22.13 0.08 21.14 0.06 18,311.64 72.92 21,846.26 75.31 25,223.02 71.82 955.73 3.81 1,063.04 3.66 1,453.34 4.14 5,845.10 23.28 6,098.07 21.02 8,442.43 24.04 6,800.83 27.08 7,161.11 24.69 9,895.77 28.18 25,112.47 100.00 29,007.37 100.00 35,118.79 100.00

Mar '11 Rs. %

Mar '12 Rs. %

APPLICATION OF FUND
FIXED ASSET Gross Block Less: Accum. Depreciation Net Block Capital Work in Progress Investments CURRENT ASSET Inventories Sundry Debtors Cash and Bank Balance Total Current Assets Loans and Advances Fixed Deposits Total CA, Loans & Advances LESS : CURRENT LIABILITIES Liabilities Provisions Total CL & Provisions Net Current Assets Miscellaneous Expenses TOTAL APPLICATION OF FUND 7,235.78 1,727.68 5,508.10 857.66 13,705.35 28.81 8,897.02 6.88 2,220.82 21.93 6,676.20 3.42 785 54.58 14,684.82 30.67 10,618.74 7.66 2,952.61 23.02 7,666.13 2.71 807.94 50.62 15,871.90 30.24 8.41 21.83 2.30 45.19

1,415.37 5.64 11,163.70 44.45 1,104.89 4.40 13,683.96 54.49 12,662.55 50.42 326.98 1.30 26,673.49 106.22

1,577.15 5.44 12,427.61 42.84 1,518.98 5.24 15,523.74 53.52 19,499.23 67.22 211.37 0.73 35,234.34 121.47

1,776.62 5.06 18,729.84 53.33 1,020.09 2.90 21,526.55 61.30 21,445.72 61.07 885.17 2.52 43,857.44 124.88 30,697.53 87.41 2,387.09 6.80 33,084.62 94.21 10,772.82 30.68 0 0.00 35,118.79 100.00

19,443.77 77.43 26,139.56 90.11 2,188.36 8.71 2,233.43 7.70 21,632.13 86.14 28,372.99 97.81 5,041.36 20.08 6,861.35 23.65 0 0.00 0 0.00 25,112.47 100.00 29,007.37 100.00

20

Meaning & importance of common size balance sheet

A commonsize balance sheet presents not only the standard information contained in a balance sheet, but also a column that notes the same information as a percentage of the total assets (for asset line items) or as a percentage of total liabilities and shareholders' equity (for liability or shareholders' equity line items). Common size balance sheet is a statement in which total of assets or liabilities is assumed to 100 and all the figure are expressed as % of total. In other words each asset is expressed as % of total asset & each liabilities expressed as % to total liabilities. That is why it is also known as percentage balance sheet. A comparison of common size balance sheet for different periods helps to highlight the trends in different items.

COMMENT ON COMMON SIZE BALANCE SHEET Share of companies reduces. In 2010 It was 0.48%, in 2011 it was 0.42% and in 2011
it is 0.35%. The fund raise from this may be utilized for the purpose of purchase of fixes asset.

From the above balance sheet it can be observe that reserve constitutes a major
portion of the total liabilities. The second thing is that there is reduction in percentage of reserve from 73.55% in 2011 to 71.41% in 2012, almost 2% reduction. There is reduction in total borrowed fund is 24.69% in 2011 as compared to earlier year but there is increase in borrowed fund in the 2012 as it is 28.18%. Increase in borrowed fund because company may be took loan for purchase of real estate to expand their operations. The fixed asset of company is increases in 2011 as it is 30.67% it shows that company had purchase the fixed asset but in the year 2012 there is decrease in fixed asset after charging depreciation compared to 2011 this is due to sale of fixed asset . There current asset in the year2010 is 106.22% and it is increases in 2011 and 2012 as it is 121.47% and 124.88%.This is because there is increase or decrease in item current asset. in total current asset sundry debtor and loans & advances constitute
21

major part it is shoes that company will received money from the debtor because company sale goods on credit and in loans & advances company will get money in future with interest because the company give loan to other company. Total current liabilities of company increases in 2011 and it was 97.81% compared 2010 but there is decrease in liabilities in the year 2012 is 94.21%. The working capital of company is increases. In 2010 it is 20.08%. In 2011 & 2012 it is increases by 23.65% and 30.68%. It is indicate that the company have more current asset as compared to c urrent liabilities. Increase in working capital shows that more fund kept for day to day business.

22

COMPARATIVE BALANCE SHEET

Mar '10 Mar '11 Absolute increase or decrease Percentage increase or decrease

Rs.

Rs.

SOURCES OF FUND
SHAREHOLDER'S FUND Equity Share Capital Share Application Money Preference Share Capital Reserves Revaluation Reserves NETWORTH Secured Loans Unsecured Loans TOTAL DEBT TOTAL SOURCES OF FUND 120.44 25.09 0 18,142.82 23.29 18,311.64 955.73 5,845.10 6,800.83 25,112.47 121.77 368.31 0 21,334.05 22.13 21,846.26 1,063.04 6,098.07 7,161.11 29,007.37 1.33 343.22 0 3191.23 -1.16 3534.62 107.31 252.97 360.28 3894.9 1.10 1367.96 0.00 17.59 -4.98 19.30 11.23 4.33 5.30 15.51

APPLICATION OF FUND
FIXED ASSET Gross Block Less: Accum. Depreciation Net Block Capital Work in Progress Investments CURRENT ASSET Inventories Sundry Debtors Cash and Bank Balance Total Current Assets Loans and Advances Fixed Deposits Total CA, Loans & Advances LESS : CURRENT LIABILITIES Liabilities Provisions Total CL & Provisions Net Current Assets Miscellaneous Expenses TOTAL APPLICATION OF FUND 7,235.78 1,727.68 5,508.10 857.66 13,705.35 1,415.37 11,163.70 1,104.89 13,683.96 12,662.55 326.98 26,673.49 19,443.77 2,188.36 21,632.13 5,041.36 0 25,112.47 8,897.02 2,220.82 6,676.20 785 14,684.82 1,577.15 12,427.61 1,518.98 15,523.74 19,499.23 211.37 35,234.34 26,139.56 2,233.43 28,372.99 6,861.35 0 29,007.37 1661.24 493.14 1168.1 -72.66 979.47 161.78 1263.91 414.09 1839.78 6836.68 -115.61 8560.85 6695.79 45.07 6740.86 1819.99 0 3894.9 22.96 28.54 21.21 -8.47 7.15 11.43 11.32 37.48 13.44 53.99 -35.36 32.09 34.44 2.06 31.16 36.10 0.00 15.51

23

Meaning & Importance of Comparative Statement

A comparative balance sheet will include several different types of accounting data.A list of assets and liabilities is also included. All of these factors are necessary to see what the total worth of the company is through the balance sheet. The comparative balance sheet allows the company or business to see at a glance how its profits differ from one year to another. These comparative balance sheets are aligned so that business people can see at a glance the financial differences from year to year. Without a comparative balance sheet, businesses would not know how to change their strategy from year to year. All they would have to go on would their current balance statements. This would be detrimental to most businesses. It is very important to be able to look at past profit information to judge how to act for the future.

Procedure of Comparative Balance Sheet: The Comparative balance sheet has two columns for the data of original balance sheet. Third column is used to show increases in figures. The forth column is use to give percentages of increase or decrease.

COMMENT ON COMPARATIVE BALANCESHEET Capital of the company increased by Rs. 1.33 as compared to earlier year. There is increase in reserve of Rs. 3191.23 which shows 17.59% as compared to earlier
year which is sign of financial soundness. The company followed good financial policy.

Total loan fund have increased by Rs.360.28 or 5.30% over the year. The firm has taken
the additional loan from the bank.

As a result net worth and total loan, long term sources of fund increased by Rs.3894.9 or
by 15.51%.

The company had purchase additional fixed asset out of a new loan of Rs. 1661.24 as
compared to earlier year.

The company had purchase new investment of Rs. 979.47or increased by 7.15%.

24

 The total current asset, loans & advances of company increased by Rs.8560.85 which
shows 32.09% as compared to earlier year. It shows that company block majority fund for temporary purpose.

There is increase in total current liabilities and provisions of Rs.6740.86 or increased by

31.16% as compared to last year. The increased in current liabilities shows that the company had to pay more liabilities during the year.

There is increased in working capital of Rs.1819.99 which shows 36.10% as compared to

earlier year. Despite of increase in current liabilities the companys working capital is increases which shows that firm is able to continue its operation & that it has sufficient fund to satisfy both short term debt and upcoming expenses. from the above analysis it is said that company earn more profit in 2011 compared previous year.the comp

25

RATIO ANALYSIS
MEANING AND IMPORTANCE OF RATIO ANALYSIS
Ratio analysis is a widely used tool of financial analysis. It is defined as the systematic use of ratio to interpret the financial statements so that the strength and weaknesses of a firm as well as its historical performance and current financial condition can be determined. The term ratio refers to the numerical or quantitative relationship between two variables. IMPORTANCE OF RATIO ANALYSIS : It helps in evaluating the firms performance It helps in inter-firm comparison. The short term creditors like bankers and suppliers of materials can determine the firms ability to meet its current obligation with the help of liquidity ratio and quick ratio. The long term creditors like debenture holders and financial institutions can determine the firms long term financial strength and survival with the help of leverage or capital structure ratio as debt equity ratio.

Balance Sheet Ratios

1. CURRENT RATIO = CURRENT ASSET / CURRENT LIABILITIES

2010 26673.49 / 21632.13 =1.23 : 1 2012 43857.44 / 33084.62 =1.33 : 1

2011 35234.34 / 28372.99 =1.24 : 1

26

Current ratio is average in all year. In 2012 there is no significant change in this ratio. This ratio indicate that for every one rupee of current liabilities, the company has increase its current asset every year. In other words it means that after paying current liabilities of rupee one out of current asset of Rs. 1.23 in 2010, Rs.1.24 in 2011 and Rs.1.33 in 2012, the company will have working capital of Rs.0.23, Rs. 0.24 and Rs.0.33.

2. QUICK RATIO = QUICK ASSET / QUICK LIABILITIES

2010 24931.14 / 21632.13 = 1.15:1

2011 33445.82 / 28372.9 =1.18:1

2012 41195.65 / 33084.62 =1.25:1

Here quick assets are more in than quick liabilities in every year. The companies quick ratio is increases. The inventorys contribution is less than other asset so there is quick ratio is increases in every year. In 2010 the quick ratio is 1.15 it is increases in 2011 and 2012 i.e.1.18, 1.25. The quick ratio of 1.15:1, 1.18:1, & 1.25:1 means that for every one rupee of a quick liabilities, the companies has got Rs1.15, Rs1.18, Rs1.25 in the form of quick assets. This indicates that company can pay its all immediate liabilities out of its liquid assets.

27

3. PROPRIETORY RATIO = PROPRIETORS FUND / TOTAL ASSETS * 100

2010 18311.64 / 45886.94 * 100 = 39.91%

2011 21846.26 / 56595.36 * 100 = 38.60%

2012 25223.02 / 67395.47 * 100 = 37.43%

From the above ratio it is clear thatproprietary ratio for 2010 is 39.91%. In 2011 it is 38.60% and in 2012 it is 37.43% which is quite lower than earlier year.As compared to standard ratio of 70% the above ratio is lower. The above lower ratio indicates that company is more dependent on external fund that create problem during period of weakness in business operation.

4. DEBT - EQUITY RATIO = DEBT / EQUITY

2010 6800.83 / 18311.64 = 0.37 : 1 2012

2011 7161.11 / 21846.26 = 0.33 : 1

9895.7 / 25223.02 = 0.39 : 1

From the above ratio it is clear that debt equity ratio in 2010 is 0.37 times . it was 0.33 times in 2011 and 0.39 times in 2012.The ideal Debt-Equity Ratio is 2:1, in 2010, 2011, 2012 the ratio is less than two because lower amount of long term debt.but in
28

2012 the debt ratio is high compared to earlier year then also above ratio is lower than two so it indicate that long term debt are less. It good sign for the company 5. STOCK - WORKING CAPITAL RATIO = CLOSING STOCK / WORKING CAPITAL * 100

2010 1415.37 / 5041.36*100 = 28.08% 2012

2011 1577.15 / 6861.35*100 = 22.99%

1776.62 / 10772.82*100 = 16.49%

This ratio shows that extent of fund blocked in stock. The stock working capital ratio is declining .in 2010 the ratio is 28.08% , in 2011 ratio is 22.99% and in 2012 it is 16.49% which is lower than earlier year. In the year 2011, 2010 sale is increased which affects decrease in stock that effected in increase in working capital in 2011 & 2012.

From the above ratio analysis it is observed that not only working capital is increasing but also company sale is increasing.This shows that the company is on the verge of profit.

29

SIGNIFICANT ACCOUNTING POLICIES

1. Employee benefits
a) Short term employee benefits:All employee benefits falling due wholly within twelve months of rendering the service are classified as short term employeebenefits. The benefits like salaries, wages, short term compensated absences etc. and the expected cost of bonus, ex-gratia. arerecognised in the period in which the employee renders the related service. b) Post-employment benefits: i. Defined contribution plans: The Companys superannuation scheme, state governed provident fund scheme, employee stateinsurance scheme and employee pension scheme are defined contribution plans. The contribution paid/payable under theschemes is recognised during the period in which the employee renders the related service. ii. Defined benefit plans: The employees gratuity fund schemes, post-retirement medical care scheme, pension scheme andprovident fund scheme managed by trust are the Companys defined benefit plans. The present value of the obligationunder such defined benefit plans is determined based on actuarial valuation using the Projected Unit Credit Method. The obligation is measured at the present value of the estimated future cash flows. The discount rate used for determining the present value of the obligation under defined benefit plans, is based on the market yield on government securities of a maturity period equivalent to the weighted average maturity profile of the related obligations at the Balance Sheet date. Actuarial gains and losses are recognised immediately in the Statement of Profit and Loss. The interest element in the actuarial valuation of defined benefit plans, which comprises the implicit interest cost and the impact of changes in discount rate, is classified under finance costs. The balance charge is recognisedas employee benefit expenses in the Statement of Profit and Loss. In case of funded plans, the fair value of the plan assets is reduced from the gross obligation under the defined benefit plans to recognise the obligation on a net basis.

30

Gains or losses on the curtailment or settlement of any defined benefit plan are recognised when the curtailment or settlement occurs. Past service cost is recognised as expense on a straight-line basis over the average period until the benefits become vested. c) Long term employee benefits:The obligation for long term employee benefits such as long term compensated absences, long service award etc. is recognized in the similar manner as in the case of defined benefit plans as mentioned in (b)(ii) above. d) Termination benefits:Termination benefits such as compensation under Voluntary Retirement cum Pension Scheme are recognised as expense in the period in which they are incurred.

2. Investments Trade investments comprise investments in subsidiary companies, joint ventures, associate companies and in the entities in which the Company has strategic business interest. Investments, which are readily realizable and are intended to be held for not more than one year from the date of acquisition, are classified as current investments. All other investments are classified as long term investments. Long term investments including trade investments are carried at cost, after providing for any diminution in value, if such diminution is other than temporary in nature. Investments in integrated joint ventures are carried at cost net of adjustments for Companys share in profits or losses as recognised. Current investments are carried at lower of cost and fair value. The determination of carrying amount of such investments is done on the basis of weighted average cost of each individual investment.

31

3. Extraordinary and exceptional items Income or expenses that arise from events or transactions that are clearly distinct from the ordinary activities of the Company are classified as extraordinary items. Specific disclosure of such events/transactions is made in the financial statements. Similarly, any external event beyond the control of the Company, significantly impacting income or expense, is also treated as extraordinary item and disclosed as such. On certain occasions, the size, type or incidence of an item of income or expense, pertaining to the ordinary activities of the Company, is such that its disclosure improves an understanding of the performance of the Company. Such income or expense is classified as an exceptional item and accordingly disclosed in the notes to accounts. 4. Foreign currency transactions, foreign operations, forward contracts and derivatives a) The reporting currency of the Company is Indian rupee. b) Foreign currency transactions are recorded on initial recognition in the reporting currency, using the exchange rate at the date of the transaction. At each balance sheet date, foreign currency monetary items are reported using the closing rate. Non-monetary items, carried at historical cost denominated in a foreign currency, are reported using the exchange rate at the date of the transaction. Exchange differences that arise on settlement of monetary items or on reporting of monetary items at each balance sheet date at the closing rate are: i) adjusted in the cost of fixed assets specifically financed by the borrowings contracted up to March 31, 2004 to which the exchange differences relate ii) adjusted in the cost of fixed assets specifically financed by borrowings contracted between the period April 1, 2004 to March 31, 2007 and to which the exchange differences relate, provided the assets are acquired from outside India iii) recognized as income or expense in the period in which they arise, in cases other than (i) and (ii) above. c) Financial statements of foreign operations comprising jobs contracted prior to April 1, 2004, are translated as follows:
32

i) Closing inventories at rates prevailing at the end of the year ii) Fixed assets as at April 1, 1991 at rates prevailing at the end of the year in which the additions were made. Subsequent additions are at rates prevailing on the dates of the additions. Depreciation is accounted at the same rate at which the assets are translated. iii) Other assets and liabilities at rates prevailing at the end of the year iv) Net revenues at the average rate for the year. d) Financial statements of foreign operations comprising jobs contracted on or after April 1, 2004, are treated as integral operations and translated as in the same manner as foreign currency transactions, as described above. Exchange differences arising on such translation are recognized as income or expense of the period in which they arise. e) Forward contracts, other than those entered into to hedge foreign currency risk on unexecuted firm commitments or highly probable forecast transactions, are treated as foreign currency transactions and accounted accordingly as per Accounting Standard (AS) 11 The Effects of Changes in Foreign Exchange Rates. Exchange differences arising on such contracts are recognised in the period in which they ariseGains and losses arising on account of roll over/cancellation of forward contracts are recognised as income /expense of the period in which such roll over / cancellation takes place. f) All the other derivative contracts, including forward contracts entered into to hedge foreign currency risks on unexecuted firm commitments and highly probable forecast transactions, are recognised in the financial statements at fair value as on the Balance Sheet date, in pursuance of the announcement of the Institute of Chartered Accountants of India (ICAI) dated March 29, 2008 on accounting of derivatives. The Company has adopted Accounting Standard (AS) 30 Financial Instruments: Recognition and Measurement for accounting of such derivative contracts, not covered under Accounting Standard (AS) 11 The Effects of Changes in Foreign Exchange Rates, as mandated by the ICAI in the aforesaid announcement. Accordingly, the resultant gains or losses on fair valuation/settlement of the derivative contracts covered under Accounting Standard (AS) 30 Financial Instruments: Recognition and Measurement are recognised in the Statement of Profit and Loss or Balance Sheet as the case may be after applying the test of hedge effectiveness. Where the hedge in respect of off33

balance sheet items is effective, the gains or losses are recognised in the hedging reserve which forms part of reserves and surplus in the Balance Sheet. The amount recognised in the hedging reserve is transferred to the Statement of Profit and Loss in the period in which the underlying hedged item affects the Statement of Profit and Loss. Gains or losses in respect of ineffective hedges are recognised in the Statement of Profit and Loss in the period in which such gains or losses are incurred. g) The premium paid/received on a foreign currency forward contract is accounted as expense/income over the life of the contract. 5. Presentation of financial statements The Balance Sheet and the Statement of Profit and Loss are prepared and presented in the format prescribed in the Schedule VI to the Companies Act, 1956 (the Act). The Cash Flow Statement has been prepared and presented as per the requirements of Accounting Standard (AS) 3 Cash Flow Statements. The disclosure requirements with respect to items in the Balance Sheet and Statement ofProfit and Loss, as prescribed in the Schedule VI to the Act, are presented by way of notes forming part of accounts along with the other notes required to be disclosed under the notified Accounting Standards and the Listing Agreement. Amounts in the financial statements are presented in Indian Rupees in crore [1 crore = 10 million] rounded off to two decimal places in line with the requirements of Schedule VI. Per share data are presented in Indian Rupees to two decimals places.

34

SUGGESTION

After analysis it is came to know about some factors, whichthe company should take in to consideration. This is because ithave been analysis the balance sheet and able to give some suggestion recommendation to the company as follows. The very first thing is that the company having large amount of Reserves and Surplus which should be taken for the use of expansion or the same kind of other activities. The company should to reduce the investment in capital work in progress because the large amount has been blocked in it.

35

CONCLUSION As the annual report of company is made very well and as per the law, it was very interesting to analyze the financial statement of company. From the above analysis it can be conclude that the company has good financial position due to good management in company. Financial position is so much good because company making expansion every year and it can be seen from its healthy balance sheet.

36

BIBILIOGRAPHY
http://www.larsentoubro.com/lntcorporate/Uploads/AnnualReport2011-12-23.pdf Management accounting Ainapure www.bized.ac.uk/compfact/ratio.

37

38

39

40

41

42

43

44

45