ABOUT COMPANY

HPTDC is a pioneer in the development of tourism infrastructure in Himachal Pradesh. Formed in 1972, it provides a complete package tourism services, including accommodation, catering, transport & sport activities. HPTDC is a public sector organization that offers services in travel/tourism with annual turnover of 0-10 crs. and with employee strength of 1001-2500. Himachal Pradesh Tourism Development Corporation or HPTDC has four prime touristy destinations through which it efficiently functions. Tribal circuit, Dhauldhar circuit, Beas circuit and Sutlej circuit are the zones in which the HPTDC offers travel opportunities to both local and foreign tourists. HPTDC also organizes Adventure Sports packages like Ski packages for learners at Narkanda and Manali, every year between Decembers to March. These packages include accommodation, breakfast, lunch and dinner (for first day), Skiing equipments. The Department of tourism is the nodal and executing agency of the Government of Himachal Pradesh for tourism development. It is the regulating and
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registering authority for the hospitality and travel industry in the state. It plays a proactive role in the promotion of tourism and publishes\distributed a wide range of literature and publicity material. The Department organizes and participates in various national and international events, seminars and meets. It invites and facilitates investments in the tourism sector in the state. The Himachal Pradesh Tourism Development Corporation (HPTDC) is a wholly State-owned public sector undertaking with 57 hotels and 62 cafes and restaurants throughout the state. It also operates a transport fleet. Different types of tourism: TRADITIONAL TOURISM PILGRIM TOURISM ADVENTURE TOURISM WILDLIFE TOURISM CULTURAL TOURISM RURAL TOURISM ECO TOURISM & HEALTH TOURISM

HISTORY RELATED TOURISM

Historically Himachal is even richer. Shimla, the summer capital of India during the British period, is an internationally known destination. It evokes memories of history linked to the Raj the freedom movement and more recent times such as the Shimla Agreement. A monumental testimony to the times of the Raj is the Vice-Regal Lodge, re-christened the Indian Institute of Advanced studies. Himachal has fort whose recorded history is more than 2000 years old. Many of the temples and monasteries are authentically more than 1000 years old. Several events are being structured around history. The Kalka- shimla Railway completed hundred years in November, 2003 and celebrated its birthday with official ceremonies, a theatre festival at the historic Gaiety Theatre band displays at the Ridge and a Vintage Car Rally .The Naldehra Golf course, so discerningly identified by lord Curzon, completes its centenary in 2005.As a precursor to the event, the Lahore- Shimla teams teed off from the course in a unique celebration of brotherhood in july, 2004. The crisp crunchy Himachal apple also completes a century in 2005.

DIRECTORS REPORT
Particulars 2010 Income Expenditure Gross Profit/ Loss Depreciation Net Profit/Loss 6969.68 6548.45 421.23 262.78 158.45 Rupee in laces 2011 6261.55 5692.61 568.94 260.45 308.49

REVIEW OF PERFORMANCE
1. During the year under review company achieved a turnover of Rs 6969.68 lacs which is higher by 11.31% from the previous year turnover of Rs 6261.55 lacs. The expenditure has increased by 15.03 % due to the following reason: As per the decision of the state govt. for payment of Lease Rent on the government properties amounting to Rs. 61, 49,300 /- per annual w.e.f. 01.04.2009. Therefore, a lease Rent of Rs.1, 22, 98,600 /- for two year has been provided in the books of accounts. A provision of Rs.29.83 lacs on account of arrear of gratuity payable to the retirees w.e.f. 01.01.2006 to 31.07.2010 due to the revision of pay scales has been made. A provision of Rs.31.90 lac on account of Leave Encashment of the employees posted at H.P.Sectt. Canteen has been made first time in the current year as the Govt. has decided not to pay the retrial benefits to the employees.

The net profit of the corporation for current financial year has reduced by Rs.184.72 laces. Had the effect of the above provisions not been taken, the net profit of the corporation would have been Rs.343.17 lacs.

Leave Encashment Expenses amounting to Rs. 271.38 lacs have been provided in these accounts on accrual basis as per the requirement of Accouting Standard-15 (Revised). The actual leave encashment paid during the year 2010-11 is Rs. 101.25 lacs

COMPANYS VISION, MISSION & OBJECTIVES

VISION: We aim to become one of the finest and leading service providers in the Hospitality Sector.

MISSION: M Expansion of quality tourism infrastructure in the State and outside, in order to provide world class facilities to the tourists, where guests can enjoy, relaxes and spends memorable time. Objective OBJECTIVES 1. 2. 3. 4. 5. 6. 7. 8. To improve and upgrade existing facilities in HPTDC units. To achieve maximum growth and profit to make HPTDC self sustainable. To adopt modern HRD techniques to meet the growing demands of Quality human resources. To create new and modern facilities in our exiting units to meet the demands of tourists. To provide best quality food and services including Himachali Cuisines. Adopt use of latest IT techniques. To develop modern tourism transport systems. To develop theme based diction.

FUNCTIONS OF HPTDC
1. 2. Improvement and up-gradation of existing HPTDC units. Development of tourism infrastructure in the State.

3.

Human resource development.

4.

To efficiently and effectively market and showcase HPTDC properties in India and aboard

5.

To provide quality food and services to the tourists.

6.

Attract high end tourists and corporate by developing modern infrastructure in selected HPTDC units.

7.

To develop effective feedback mechanism from the tourists to monitor, evaluate and take action on the feedback.

8.

Co-operation and tie up with other Tourism Development Corporations in the country.

9.

To develop modern tourism transport systems within and outside the State.

GOVERNMENT PROJECTs

PROJECT Golf Course and Resort at Baragaon ,Kullu Passenger Ropeway at Bijli Mahadev, Kullu Tourism Development Plan of Fossil Park,Sirmour Eco Tourism Units at Craignaino,Shimla Water- based activities at chamera Lake,Chamba Excursion and Waterbased tourism near Gobind Sagar Lake,Bilaspur Health Resort at Shojha ,KULLU Resort at Jhatingri, Mandi

Estimated Project Cost Rs. 20-25 Crores Rs.715 lacs Rs. 5-7 Crores

STATE/ COUNTRY Estimated Time Himachal Pradesh. Himachal Pradesh Himachal Pradesh Of Completion 24-36 months 36 months 24-36 months

Rs. 5 Crores Rs. 559 lacs Rs.382.10 lacs

Himachal Pradesh Himachal Pradesh. Himachal Pradesh.

24-36 months 36 months 36-48 months

Rs. 3 Crores Rs.6-7 Crores

Himachal Pradesh Himachal Pradesh

24 months 36 months

Departments
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HUMAN RESOURCE DEPARTMENT

FINANCE DEPARTMENT

MARKETING & PUBLICITY DEPARTMENT

TRANSPORT WING

PERSONNEL

During the year 110 employees have been promoted in various cadres. 242 students of the various Hotel Management Institutes have been provided On job training in the Hotels\ Marketing offices of HPTDC. Employees of the corporation have easy accessibility to the Management to raise and get redressed of their grievances. Special attention was paid to the redressal of employees grievances and their appeals\ representations were attended to and decided prompt

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Human resource department

Policy Department

Establishment Deptt

P&A P&A
Requirement Department DEPTT. DEPTT.

Industrial Relation welfare Department

Corporate Communication Department

Law Department

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FINANCE DEPARTMENT Bills Section:As I had chosen finance as a field of my specialization so I was being assigned to work in the finance section under the guidance of head of the department. So following is the list of the functions and issues being handled by the above said departments. The training official avail me opportunity to get the glimpse of the various functions handled by all the departments. Bills-I Section:This department deals with the following subjects:--- AMC (Annual Maintenance contract) Telephone bills Vehicle repair & maintenance bills Hospitality/Entertainment bills including Credit card of Directors. Training or Seminars Professional subscription / membership fees Medical bills Medical TA bills Hospital bills LTC /TA bills Briefcase /Newspaper bills All work related to Provident fund
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All work related to Pension

Bills-II Section:This department deals with the following subjects:- Closing of Accounts and Schedules Legal Insurance Consultancy provided by the corporation Contractors/ Suppliers bills New projects Bank Guarantees Monthly Cash Expenditure Weekly Cash Expenditure Report Quarterly performance report Rent (offices/GH) Reimbursement of Vehicle Expenses Advance to Govt. Departments Departmental Advances Consultants Bills Employees Reimbursement Bills Other Partys Bills Electricity/Water Bills

Compilation Section: 13

It deals with the following subjects:------- CERC (Central Electricity Regulatory Commission) Assets Register Fund Management Income Tax/Wealth Tax Interest Calculation Bank Reconciliation Physical Verification Sales Accounting Compilation of Accounts IUT Reconciliation Maintenance of Bank Books Preparation of Monthly Trial balance Dealing with various banks Preparation of cheques of all banks

Salary- Section All works relating to HPTDC Executives. All works relating to HPTDC supervisors and workmen.

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MARKETING &PUBLICITY DEPARTMENT

MARKETING:-

1. Corporation has obtained the ISO9001-2008 Certification through M/S Corporate certificate and services initially for its 2 units that is The Holiday Home and the Goofa Ashiana. The corporation will go in for ISO certification of the other units and phased manner to improve the standard, if it proves beneficial. 2. Corporation has started the process to obtain the Heritage Grand and Naggar as per the guidelines and requirements of Ministry of Tourism, Govt. of India 3. In addition to above the following activities were carried out during the year :The corporation organized Road show, Cultural Programmed and Food Festival at Bangalore during TTF jointly with Deptt. of Tourism, Govt. of H.P. amongst the Travel Agents/Travel Writer/ Media Persons with a view to attract maximum tourist to visit H.P. so as to increase the occupancy and business of the Corporation. The earning in respect of accommodation and catering during the year has increased by Rs. 506.43 lacs which is 10.88% higher than the previous year. The breakup of sale is given below:15

Particulars Room Sales Food Sales Total

Rs. In laces 2010-11 2946.84 2213.60 5160.44 2009-10 2640.90 2013.11 4654.01 %increase 11.58 9.96 10.88

PUBLICITY With a view to attract more tourist to Himachal and to advertise HPTDC facilities, a comprehensive advertising campaign was undertaken by the Corporation wherein well crafted advertisements in shape of radio jingles were broadcasted for 28 days through Big 92.7 FM Radio at Bangalore, Amritsar, Chandigarh, Chennai, New Delhi, Hissar, Hyderabad, Jalandhar, Patiyala and Shimla stations. Special emphasize was given to publicize HPTDC Website, various packages and discounts being offered to the tourist in its Hotels in Himachal Pradesh. Numbers of Press Notes were issued during the periods which were not only published in the leading English and Hindi news papers but also by popular internet magazines. These include celebration of X-mas and New Year Eve, Beti Hai Anmol, Karva Chauth, Senior Citizen and Special Package for Disabled person on the World Disability Day. The HPTDC designed and printed a comprehensive Tourist Map for the information of the tourist. In this map, all roads, distance to each destination including Circuit Map, photographs of Hotels and other available facilities have been given.

TRANSPORT WING
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The financial results of the Transport Wing with its fleet position are as under:-

S.No. 1. 2. 3.

Particulars Income Expenditure Operational Profit

Figures in lacs 786.19 733.16 53.03

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INTRODUCTION TO THE PROJECT REPORT The project is done on the Ratio Analysis of HPTCD Limited. Ratio analysis isnt just comparing different numbers from the balance sheet, income statement and cash flow statement. Its comparing the number against previous year, other companies, the industry or even the economy in general. Ratio looks at the relationship between individual values and relates then to how a company has performed in the past and might performed in the future.

Meaning of Ratio A ratio is one figure expressed in term of another figure. It is a mathematical yardstick that measures the relationship between two figures, which are related to each other and mutually interdependent. Ratio is expressed by dividing one figure by the other related figure. Thus a ratio is an expression relating one number to another. It is simply the quotient of two numbers. It can be expressed as a fraction or as a decimal or as a pure ratio in an absolute figure as so many times. As accounting ratio is an expression relating two figures or account or two sets of Account Heads or group contain in financial statement. Meaning of Ratio Analysis Ratio analysis is the method or process by which the relationship of one item or group of item in the financial statement are computed, determined and presented.

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Ratio analysis is an attempt to derive quantitative measure or guides concern the financial health and profitability of business enterprise. Ratio analysis can be used both in trend and static analysis. There are several ratio at the disposal of an analysis but their group of ratio he would prefer depend upon the purpose and objective of analysis. While a detailed explanation of ratio analysis is beyond the scope of this section, we will focus on techniques which are easy to use. It can provide you with a valuable investment analysis tools. This technique is called as cross sectional analysis. Cross sectional analysis compare financial ratio of several companies From the same industry. Ratio analysis can provide valuable information about a companys financial health. A financial ratio measure a companys performance in specific areas. For example you could use a ratio of company debts to its equity to measure company leverage. By comparing the leverage ratio of two companies, you can determine which company usage greater debt in the conduct of its business. A company whose leverage is higher than a competitor has more debt than equity. You can use this information to make a judgment as to which company is a better investment risk.

However you must be careful not to place too much importance on one ratio. You obtain a better indication of the direction in which a company is moving when several ratios are taken in a group.

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Steps in ratio Analysis The first task of financial analysis is to select the information relevant to the decision under consideration from the statement and appropriate ratios. calculate

To compare the calculate ratios with the ratios of same firm or with the industry ratios. It facilitate in assessing success or failure of the firm.

Third step is to intermission, drawing of inferences and repot writing conclusion are drawn after comparison in the shape of report or recommended course of actions.

Advantages of Ratio Analysis Financial Ratio are essential concerned with the identification of significant accounting data relationship, which gives the decision maker insight into the financial performance of a company. The advantages of ratio analysis are as under:

Ratio facilitates conducting trend analysis, which is important for decision making and forecasting.

Ratio analysis helps in the assessment of the liquidity, operating efficiency, profitability and solvency of the firm.
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Ratio analysis provides a basis for both intra- firm as well as inter- firm comparison.

The comparison of actual ratios with base year ratios or standard ratios helps the management analysis the financial problem of the firm.

Objectives of Ratio analysis 1. 2. 3. 4. 5. 6. 7. Solvency Long term Short term Immediate Stability Profitability Operational efficiency Credit standing Structural analysis Effective utilization of resources

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Limitation of Ratio Analysis Ratio analysis has its limitation. These limitations describe below:1. Information problems Ratios require quantitative information for analysis but it is not decisive about analytical output. The figures in a set of account are likely to be at least several months out of dates, and so might not give proper indication of the companys current financial position. Where historical cost convention is used, assets valuation is the balance sheet could be misleading. Ratio based on this information will not be very useful to the decision making.

2.

Comparison of performance over time When comprising performance over time, there is need to consider to change in price. The movement in performance should be in line with the change in price. When comprising performance over time, there is need to consider to change in technology. The movement in performance should be in line with the change in technology. Change in accounting policy may effect the comparison of result between different accounting years.

3.

Inter firm comparison Companies may have different capital structure and to make comparison of performance when one is all equity financed and other is geared company it may not be a good analysis.
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 Selective application of the government incentives to various companies may also distort intercompany comparison. Inter firm comparison may be useful unless the firm compared are of the same size and age and employ similar production method and accounting practices. Even within a company, comparison can be distorted by changes in price level

23

Classification of Ratio Ratio has been divided into four categories:1. 2. 3. 4. Liquidity Ratio Solvency Ratio Activity Ratio Profitability Ratio

1.

Liquidity Ratios

Liquidity means ability of the firm to pay its short term debts in time. Liquidity ratio are calculated to measure the short-term financial position or short term solvency of the firm. Commercial banks and short term creditors are interested in such type analysis. Management can also make use of these ratios to find out how efficiently the working capital is being used. To understand the liquidity position of the business, following ratios can be used: Current Ratio Liquidity / Quick/ Acid test Ratio Absolute Liquidity Ratio

Current Ratio Current Ratio may be defined as a relationship between current assets and

current liability. This ratio is also known as working capital ratio is a measure of
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general liquidity and is most widely use to make the analysis of short term financial position or liquidity of the firm.

Current assets Current Ratio = ______________ Current Liabilities

Liquidity/ Quick/ Acid test Ratio With the help of this ratio, the capacity of the firm to pay its current

liabilities immediately is measured. This ratio is calculated by dividing liquid assets by current liabilities. Liquid assets are those assets which can be immediately or in a short period be converted into cash without much loss. Liquid assets do not include stock and prepaid exp. Because stock is less liquid and its price fluctuates. Prepaid exp cant be realized. The ideal ratio is that 1:1.

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Liquid assets Liquidity Ratio = ________________ Current liabilities

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Absolute Liquidity Ratio

This ratio is also called supper acid test or supper quick ratio. This ratio is calculated by dividing absolute liquid assets by current liabilities. Supper liquid assets mean cash and marketable securities. Debtors are not included in them. The ratio of 0.5:1 is considered the standard ratio.

Cash + Bank + Marketable securities Absolute Liquidity Ratio = _________________________________ Current liabilities

2.

Solvency and Leverage Ratio Solvency of business is related to its debt paying capacity. With the help of

this ratio, short term solvency of the firm can be analysis. Normally the shareholders, financial institutions and other long term creditors are interested in these ratios. Long term solvency of business means its ability to pay the long term debts and interest regularly.
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 3.

Debt Equity Ratio Debt to total capital Ratio Proprietary/ Equity Ratio Interest coverage Ratio Capital Gearing Activity Ratio Funds are invested in various assets in business to make sale and earn profits.

The efficiency with which assets are managed directly effect on the volume on sale. Activity ratios measure the efficiency with which a firm manages its resources or assets. Inventory turnover Ratio Debtors turnover Ratio Creditors turnover Ratio Working Capital turnover Ratio Capital employed turnover Ratio

Inventory Turnover Ratio This is the ratio of cost of goods sold to average inventory. Cost of goods

sold is ascertained by deducting gross profit from sales. Average inventory is calculated by dividing the total of opening and closing inventory by two.

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Cost of goods sold Inventory Turnover Ratio = ______________________________ Average inventory

Debtors Turnover Ratio

This ratio is calculating by dividing the amount of net credit sales with average

debtors. Net credit sales are calculated by dividing the amount of sales return from the gross credit sales. Average debtors are found by averaging opening and closing debtors.

Net Credit Sales Debtors Turnover Ratio = ____________________________ Average Debtors

Creditors Turnover Ratio

This ratio establishes a relationship between net credit purchase and average creditors.

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Creditors Turnover Ratio =

Net Credit Purchase _______________________ Average Creditors

Working Capital Turnover Ratio

This ratio indicates whether the working capital has been efficiently used to increase sales.

Working Capital = Current Assets- current liabilities

Net Sales Working capital turnover Ratio =___________________________ Net working capital

4.

Profitability Ratio

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Profitability is a measure of efficiency and control. Earning of more and more profits with the optimum use of available resources of business is called profitability. Profitability expresses the efficiency and effectiveness of business with which the business has been operated. All parties are interested in profitability of business.

Gross Profit Ratio Net Profit Ratio Operating Ratio Expense Ratio Operating Profit Ratio Gross Profit Ratio This ratio establishes a relationship between gross profit and sales.

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Gross Profit Gross Profit Ratio =___________________* 100 Net Sales Net sales = Gross Sales Sales Return Gross profit= Net Sales Cost of goods sold

Net Profit Ratio

This ratio is known as net profit margin. This is the ratio of net profit sales. The greater the ratio, the more profitable the business will be. It is necessary to differentiate between net profit and net operating profit.
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Net Profit Net Profit Ratio = _____________ * 100 Net sales

Operating Ratio

This ratio establishes a relationship between all the operating expenses and sales.

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Operating Exp= COGF + selling & distribution exp+ office & admi Operating costs Operating Ratio = ________________* 100 Net sales

Balance Sheet as on 31st March, 2011 S.No. 1 (1) A B (ii) (iii) 2 (i) (ii) (a) (b) (d) (e) Particulars source of fund Shareholder fund share capital reserves & surplus Total loan funds secured loans Long term liabilities Total application of funds fixed assets capital work in progress current assets, loan & adv. stock and store sundry debtors cash , bank and other bal. other current assets loan and advances Total
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Current Year (In Rs) 122986000 1502810 124488810 18732202 8764139 151985151 195347714

Previous year (In Rs) 122986000 1502810 124488810 13035604 8764139 146288553 195000970 2326547 10455536 7935326 176514837 52355561 27280270 274541530

8523687 10271355 210023541 66321048 49731900 344871531

(iii) (iv) (v)

less current liabilities 558804256 511980379 net current assets -213932725 -237438849 miscellaneous expenditure 545234 1090467 profit &loss accounts 169464507 185309418 Total 151985151 146288553 st Profit & Loss Account for the Year Ended 31 March, 2011 Current Year 2011 (In Rs) Previous Year 2010 (In Rs) 228271471 349454993 48429160 626155624 112925937 34994749 330040594 2934233 10338939 1086972 2489802 2135069 2260765 1585138 7041 1004079 3890782 11455785 45708 193037 623317 41974195

Particulars INCOME Sales Income from services rendered Other income Total EXPENDITURE Cost of raw materials Power and Fuel Employees remuneration Rent Rates & Taxes Insurance Charges Telephone, postage and telegram Printing & Stationery Travelling and conveyance Running and Maint. Of staff vehicles Corporation Guests Advt. publicity & Promotional Exp Interest & Financial Charges Repairs and Maintenance Charges Directors remuneration Auditors Remuneration Legal & Professional Charges Commission and Discount

251147664 389471610 56348319 696967593 121385669 39772597 377017503 15242875 12988345 1245569 2293257 2377213 2594351 1737255 21070 2075949 2263942 13718300 611703 196881 825018 51254785
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Other Exp Provision for Doubtful Assets Depreciation for current year Total Profit (loss) for the year before prior period adjustments Prior Period Adjustment (Net) Net Profit/(loss) after Prior period adjustments Balance Carried Over to Balance Sheet

8752241 24172 26278346 682677041 14290552 1554359 15844911 (169464507)

7224746 558671 26045422 593814981 32340643 (1491147) 30849496 (185309418)

Objectives of Study 1. 2. To see the Solvency of company in long term and Shot term. To check the Stability of company and investigate the how much Debt can be supported. 3. 4. To measures the Profitability of business. To see the Operational efficiency, and how much effective the business.
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5. 6. 7.

To find the company Credit standing policy To see the Structure of company Effective utilization of resources

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RESEARCH METHODOLOGY RESEARCH DESIGN Research design is the arrangement of condition for collection and analysis of data in a manner that aims to combine relevance to the research purpose with the economy in procedure. It is the blueprints for collection, measurement and analysis of data.

Type of Research: Under the analytical research, the researcher has to use facts or information already available and analyze the facts and information to make a critical evaluation of the material. The research is designed to study the performance of insurance companies in the post-liberalization era. The methodology followed for research is as following: 1. Survey of concerned literature 2. Collecting data:

Quantitative Qualitative

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3. After the collection of data the raw data is processed through editing, loading, classification and tabulation to make analysis of the data of information After the analysis the finding are drawn and recommendations/conclusion are made. The research design which help to answer the following questions:

Why the study is being made? From where the data needed can be collected?

DATA COLLECTION 1. PRIMARY DATA These include the survey or questionnaire method, telephonic interview as well as the personal interview methods of data collection. But in this project report primary data has not collected. 2. SECONDARY DATA In the secondary sources of data is used. (Internet, magazine, books, journals and official documents ) TOOLS OF ANALYSIS In the project work quantitative technique & percentage method are has been used.

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INTERPRETATION OF DATA ANALYSIS OF SHORT- TERM FINANCIAL POSITION OF HPTDC Ltd. Two types of ratio can be calculated for measuring short- term financial position or short term solvency of a firm. 1. 2. LIQUIDITY RATIO CURRENT ASSETS MOVEMENT OR EFICIENCY RATIO

LIQUIDITY RATIO:Liquidity Ratio refers to ability of a concern to meet its current obligations as and when these become due. Liquidity ratios measure the ability of the firm to meet its current obligation. If current assets can pay of current liabilities, then liquidity position will be satisfactory. On the other hand, if current liabilities may not be easily meeting out of current assets them liquidity position will be bad. The most common ratios which indicate the extent of liquidity are:I. II. III.

Current Ratio Quick Ratio Absolute Ratio

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CURRENT ASSTES MOVEMENT OR EFICIENCY / ACTIVITY RATIO:Activity ratios are employed to evaluate the efficiency with which the firm manage and utilizes its assets. Activity ratio, thus, involves a relationship between sales and assets. A proper balance between sales and assets generally reflects can be calculated to judge the effectively of assets utilization. 1. Inventory turnover ratios 2. Debtors turnover ratios 3. Working capital turnover ratios

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LIQUIDITY RATIOS
I.

CURRENT RATIO:Current Ratio = current Assets ______________ Current Liabilities

Particulars Stock & Stores Sundry Debtors Cash & Bank Other Current Assets Loans & Advances Total Current Assets Current Ratio Years 2011 2012 Current assets 344871531 274541530

Current Year 2011(In Rs) 8523687 10271355 210023541 66321048 49731900 344871531

Previous Year 2010(In Rs) 10455536 7935326 176514837 52355561 27280270 274541530

Current liabilities 58804256 511980379

% Ratio 0.62 0.54

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As a conventional rule, a current ratio 2:1 or more considered satisfactory. But a current ratio up to 1:1 is considered acceptable. Thus the current ratio of HPTDC Ltd. is not acceptable.
II.

QUICK / ACID TEST RATIO Quick Ratio = Quick Assets _______________ Current Liabilities

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Quick Assets

= Current assets inventory prepaid expenses = 344871531 8523687 = 336347844

Current Liabilities = 558804256

Years

Quick Assets 2010 264085944 2011 336347844

Current Liabilities 511980379 558804256

% Ratio 0.52 0.60

Quick Assets

Current assets stock prepaid exp.

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2010 Current Liabilities Quick Ratio

= = =

274541530 10455536 =264085994 511980379 264085994 ___________ 511980379 = 0.52

Quick Ratio 1:1 is considered to represent a satisfactory current financial condition. The HPTDC Ltd. has quick ratio 0.52 in 2010 which is not satisfactory and it has improved in 2011 has become 0.60 which is also not satisfactory.

III.

ABSOLUTE LIQUID RATIO:-

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Absolute Liquid Ratio

Cash & Bank Balances ___________________ Current Liabilities

Particulars Cash & Bank Current Liabilities

31-03-2011 (In Rs) 210023541 558804256

31-03-2010 (In Rs) 176514837 511980379

ABSOLUTE LIQUID RATIO Years 2010 2011 Cash & Bank 176514837 210023541 Current Liabilities % Ratio 511980379 0.34 558804256 0.38

The absolute liquid ratio for the 2010 & 2011 is 0.34 & 0.38 respectively. The norm for this ratio is 50 % 0r 0.5. Thus we see that absolute liquid ratio of HPTDC is not acceptable

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EFFICIENCY RATIO / ACTIVITY RATIO I. Working Capital Turnover Ratio:-

Working Capital Turnover ratio indicates the velocity of the utilization of net working capital. This indicates the number of times the working capital is turned over in the course of a year. This ratio measure the efficiency with which the working capital being used by a firm.

Working capital Turnover Ratio

Sales ____ ___________ Working Capital

Working Capital

= Current Assets Current Liabilities.

Particulars Sales Current Assets

31-03-2011 (In Rs) 251147664 344871531

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31-03-2010 (In Rs) 228271471 274541530

Current Liabilities Working Capital

213932725 130938806

237438849 37102681

Working Capital Turnover Ratio:Year 2010 2011 Sales 228271471 251147664 Working Capital 37102681 130938806 % Ratio 6.15 1.92

The working capital turnover ratio for the year ended 2010 is better than the for the year 2011.Because the turnover is greater than the current year. It is clear from the above analysis that in 2010 when we employed 37102681 working capital our sales were 228271471 and for the present year 2011 when we employed 130938806 the sales generated are 251147664 so clearly the previous year position is better.

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49

ANALYSIS OF PROFITABILITY RATIOS

Profit is the difference between revenues and expenses over a period of time (usually one year). The profitability ratios are calculated to measure the operating efficiency of the company. It measures the overall efficiency of the business in relation to sales or investment.

The main types of ratios used for profitability analysis are:-

1. 2. 3.

Gross Profit Ratio Expenses Ratio Net profit Ratio

Gross profit Ratio:This ratio expresses the relationship between gross profit and sales. It indicates the average spread between the cost of goods sold and the sales revenues. Higher ratio is always considered good and serves as an index of higher profitability.
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Gross Profit Gross Profit Ratio = _______________ *100 Sales Gross Profit = Sales- generation, Administration & other exp.

Net Profit Ratio:-

Net profit is obtained when operating expenses, interest and taxes are subtracted from the gross profit. The net profit ratio is measured by dividing Net Profit after tax by Sales.

Net Profit after tax Net Profit Ratio = ___________________* 100 Sales

Particulars 31-03-2011 (In Rs) Net Profit after tax 15844911

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31-03-2010 (In Rs) 30849496

Sales

251147664

228271471

Net Profit Ratio:Years 2010 2011 Net profit after tax 308494496 15844911 Sales 228271471 251147664 % Ratio 13.51 6.31

In the year 2011 net profit has been decreased (i.e. 6.31 %). In the year 2010 it was increased 13.51 %. This shows that the profitability of the concern has been decreased.
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RETURN ON INVESTMENT:The term of investment may refer to total assets or net assets. The fund employed in net assets is known as capital employed.

Net assets = net fixed assets + current assets current liabilities.

Alternatively, capital employed is equal to net worth plus total debt.

Net profit after tax interest Return on investment = _______________________ Shareholder Funds

Particulars Net profit after int. & tax Shareholder Funds

31-03-2011 (In Rs) 15844911 124488810

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31-03-2010 (In Rs) 30849496 124488810

RETURN ON INVESTMENT:Years 2010 2011 Net Profit after int. & Tax 30849496 15844911 Shareholder Funds 1224488810 124488810 % Ratio 24.78 12.73

The return on investment for the year 2011 is 12.73 % which is less than the year 2010 i.e. 24.78 % this state that the company does not effectively utilized it capital employed. ANALYSIS OF LONG TERM FINANCIAL POSITION OR TEST OF SOLVENCY OF HPTDC LTD. The term solvency refers to the ability of HPTDC Ltd. to meet its long term obligations. The long term solvency ratio indicate a firms ability to meet the
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fixed interest and cost and repayment schedules associated with its long term borrowings.

Different types of ratios used for analysis of test of solvency are as follows:1) 2) 3) 4) Debt Equity ratio Proprietary ratio Solvency ratio Fixed assets to Net Worth ratio

DEBT EQUITY RATIO:Debt equity ratio is also known as external interval equity ratio. It is calculated to measure the relative claims of outsides and the relationship between the owners (i.e. shareholders) against the firms assets. This ratio indicates the relationship between external equities and the internal equities. A higher ratio indicates a risky financial position while a lower ratio indicates safer financial position.

External long term debt Debt to Equity Ratio = _______________________ Net Worth

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DEBT EQUITY RATIO:-

Years 2010 2011

External long term Debt 13035604 18732202

Net Worth 124488810 124488810

% Ratio 0.10 0.15

The debt equity ratio in 2010 was 0.10 & in 2011 it is increased 0.15. A higher ratio indicates a risky financial position while a lower ratio indicates safer financial position. In India this ratio may be taken as acceptable if it is 2:1 although, now a days, lending institution prefers it to be 1:1. So we see that the debt equity ratio of HPTDC Ltd. is acceptable.
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PROPRIETORY RATIO OR EQUITY RATIO:This ratio establishes the relationship between shareholders fund to total assets of the firm. The ratio of proprietors fund is an important ratio of determining longterm solvency of the firm.

Shareholders Fund Equity/ Proprietary Ratio = ___________________ Total assets Total Assets = Fixed Assets + Current Assets

Particulars Shareholders Fund Fixed Assets Current Assets Total Assets

31-03-2011 (In Rs) 124488810 195347714 344871531 540219245

31-01-2010 (In Rs) 124488810 195000970 274541530 469542500

Equity Ratio:57

Years 2010 2011

Shareholder fund 12448810 124488810

Total Assets 469542500 540219245

% Ratio 0.27 0.23

The equity ratio of HPTDC Ltd. is fluctuating every year i.e. 23 % & 27 % in the year 2011 & 2010. The long- term solvency position of the HPTDC Ltd. is not satisfactory. SOLVENCY RATIO:This ratio indicates the relationship between total liabilities to outsiders total assets of a firm and can be calculated as:

Total Liabilities to outsiders Solvency Ratio = __________________________ Total Assets

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Total Liabilities to outsiders

secured Loans + unsecured Loans + Current Liabilities

Particulars Secured Loan Long term Liabilities Current Liabilities Total Liabilities to outsiders Total Assets SOLVENCY RATIO:Years 2010 2011

31-03-2011 (In Rs) 18732202 8764139 558804256 586300597 540219245

31-03-2010 (In Rs) 13035604 8764139 511980379 533780122 469542500

Total Liabilities to Outsiders 533780122 586300597

Total Assets 469542500 549219245

%Ratio 1.14 1.09

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The solvency ratio of the company depicts that there is greater margin of safety to the outsiders. For both the year 2011 & 2010 respectively.

FIXED ASSETS TO NET WORTH RATIO:This ratio establishes the relationship between fixed assets and shareholders fund and indicates the extent to which shareholders funds are sunk into the fixed assets.

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Fixed Assets (after Depreciation) Fixed assets to Net worth ratio = ______________________________ Shareholders Fund

Particulars Shareholders Fund Fixed assets

31-03-2011 (In Rs) 124488810 195347714

31-03-2010 (In Rs) 124488810 195000970

Fixed Assets to Net worth ratio

Years 2010 2011

Shareholder Fund 124488810 124488810

Fixed Assets 195000970 19537714

% Ratio 1.566 1.569

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There is no thumb rule for this ratio. Fixed assets to net worth ratio have been increased year by year because of increased profitability.

FINDINGS

1.

As a conventional rule, a current ratio 2:1 or more considered satisfactory. But a current ratio up to 1:1 is considered acceptable. Thus the current ratio of HPTDC Ltd. is not acceptable.

2.

Quick Ratio 1:1 is considered to represent a satisfactory current financial condition. The HPTDC Ltd. has quick ratio 0.52 in 2010 which is not
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Satisfactory and it has improved in 2011 has become 0.60 which is also not satisfactory

3.

The absolute liquid ratio for the 2010 & 2011 is 0.34 & 0.38 respectively. The norm for this ratio is 50 % 0r 0.5. Thus we see that absolute Liquid ratio of HPTDC is not acceptable.

4.

The working capital turnover ratio for the year ended 2010 is better than the for the year 2011.Because the turnover is greater than the current year. It is clear from the above analysis that in 2010 when we employed 37102681 working capital our sales were 228271471 and for the present year 2011 when we employed 130938806 the sales generated are 251147664 so clearly the previous year position is better.

5.

In the year 2011 net profit has been decreased (i.e. 6.31 %). In the year 2010 it was increased 13.51 %. This shows that the profitability of the concern has been decreased.

6.

The return on investment for the year 2011 is 12.73 % which is less than the year 2010 i.e. 24.78 % this state that the company does not effectively utilized it capital employed.

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7.

The debt equity ratio in 2010 was 0.10 & in 2011 it is increased 0.15. A higher ratio indicates a risky financial position while a lower Ratio indicates safer financial position. In India this ratio may be taken as acceptable if it is 2:1 although, now a days, lending institution prefers it to be 1:1.

8.

The equity ratio of HPTDC Ltd. is fluctuating every year i.e. 23 % & 27 % in the year 2011 & 2010. The long- term solvency position of the HPTDC Ltd. is not satisfactory.

9.

The solvency ratio of the company depicts that there is greater margin of safety to the outsiders. For both the year 2011 & 2010 respectively.

10.

There is no thumb rule for this ratio. Fixed assets to net worth ratio have been increased year by year because of increased profitability.

Summary & Recommendation

Financial statement analysis is largely a study of the relationship among the various financial factors in a business as disclosed by a single set of statements and
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a study of the trend of these factors as shown in a series of statement. Financial analysis is a powerful mechanism which helps in ascertaining the strengths and weakness in the operation and financial position of HPTDC Ltd. by comparing the financial statement of 2010 & 2011 of HPTDC LTD. through the tools of financial analysis. It can be evident that HPTDC Ltd. has not a good liquidity position and long term financial position of the company not also satisfactory. According to profit and loss account and balance sheet we can see that company is in a position of earning profits and by comparing it with previous 2 years company is growing annually and successful in earning profits as compared to previous years report.The solvency ratio of the company depicts that there is greater margin of safety to the outsiders. Fixed assets to net worth ratio have been increased year by year because of increased profitability. The current Ratio of HPTDC is not satisfactory and not acceptable because it current assets equal the liabilities. The working Capital ratio of HPTDC is better than the previous year because he has improved their capital structure. The HPTDC ltd. increased their Debt equity Ratio then previous year. A higher ratio indicates a risky financial position while a lower ratio indicates safer financial position. If company has smoothly business then they has to require reduced their debt equity ratio. REFERENCE

JOURNAL Corporate booklet of HPTDC

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Annual Report of HPTDC

BOOKS Financial Management by IM Pandey Management Accounting And Financial Management by Shashi K.Gupta

SITES http://www.hptdc.nic.in http://www.hptdc.gov.in

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