Professional Documents
Culture Documents
ON
CONDUCTED AT
OSRAM INDIA PVT. LTD.
SONEPAT
DECLARATION
Entitled “ A Study on RatioAnalysis ” is an original work and the same has not been
submitted to any other institute for the award of any other degree.
incorporated.
Presentation Incharge SANJEEV
MISS SHIWANI ARORA
(Faculty) MBA – 2nd Year
HIM,
Sonepat.
Countersigned
Director of HIM
ACKNOWLEDGEMENTS
The successful completion of the project would have been far from
for them.
great pleasure for me to place on record my gratitude for their competent and perfect
guidance, valuable opinion and healthy criticism, which have gone a long way in
the guide of this project, Mr. ANANT SHARMA, is very inadequate to match
TABLE OF CONTENTS
Preface
Objective of Study
Scope of Study
Introduction
a) Osram Worldwide
b) Quality Policy
c) Certification
d) Quality Objectives
f) Our Vision
g) Our Mission
h) Our Values
Company Profile
a) History
b) New Markets
c) Innovations
d) Employees
g) Description of Products
SWOT Analysis
Research Methodology
a) Research Objective
b) Research Design
Project Profile
I. Project : An overview
a) Necessity of Project
b) Advantages of Project
c) Meaning of Project
d) Inference
Financial Analysis
Suggestions
Limitations
Conclusion
Bibliography
PREFACE
GITA,III,8
In the two year full time MBA course, there is provision for summer training of eight
weeks. The essential purpose for this training is to give an exposure to student of day-to-
and deciding best course of action when some difficulty is encountered. I have done my
The project entitled Ratio Analysis, which was undertaken at Osram India Pvt. Ltd.,
Sonepat , is related to study each and every type of ratio of the company. The main
To will reveal the trend of costs, sales, profits and other important
facts.
enterprise.
To get a view about the business happiness, the past data of some year relating
to the problem are studied and trend is determined. The present study covers a period of
years from 2004 – 2007. A large period may prove inconvenient while a short period
would not give desired results. A period of four to six years is to be considered to be the
optimum one.
The present study has been undertaken to analyze the Ratio analysis is being
managed in the company and how far it contributes to the overall objective of
Any type of research study suffers from certain limitation relating to either the
research itself or to the topic thought. The degree and nature of the limitation varies with
the topic.
The present study has been undertaken to analyze the Ratio analysis is being
managed in the company and how far it contributes to the overall objective of
business.
Current year's ratios are compared with those of previous years and if
some weak spots are thus located remedial measures are taken to
correct them.
to the company.
It gives information to the taxation authorities.
that company.
INTRODUCTION
INTRODUCTION
The plant of OSRAM India Pvt. Ltd. Sonepat was established by Birla Group of
company as ECE Industries Sonepat in the year 1973 in collaboration with M/s
In Oct. 1998, ECE Industries Ltd. Sonepat was taken over by OSRAM India
Pvt. Limited a wholly owned subsidiary of OSRAM GmbH. OSRAM India Pvt. Ltd.
having its registered at New Delhi, was Primarily formed for sales and marketing
operations in India. The company has got three regional offices at Bombay, Calcutta
OSRAM India pvt. Ltd. were worth Rs.42 crore in acquisition, innovation and
expansion
has been regular feature of this plant. Currently a high speed CFL manufacturer
line and slim tube manufacture line have been brought from
(Germany). With this new induction, total investment at this to approximately Rs.100
crore.
OSRAM India Pvt. Ltd. has Government's approval for manufacturing and
UV lamps.
• Incandescent Lamps.
OSRAM WORDWIDE
• 58
for 91 Countries.
• 54 Production Plants in
18 Countries.
QUALITY POLICY
Management is committed to :-
• Customer Orientation :-
• PROCESS ORIENTATION :-
• PREVENTIVE BEHAVIOUR :-
CERTIFICATION
OSRAM has been certified for Quality Management system by :-
• Iqnet
(Www.iqnet-cetification.com)
• Rina
(Www.Rina.org)
• CISQ
(Www.cisq.com)
QUALITY OBJECTIVE
and efficiency.
• To ensure health & safety of its employees, prevent pollution and protect the
• Prevent behavior which is integral to the quality policy shall be the guiding
principle for implementation.
• This policy shall be deployed at all level of the orgn. and interested
• The management shall review EHS performance at regular interval for continual
improvement.
Our Vision :
its future
country.
India.
Our Mission :
Better Technology
Better Quality
Better Tomorrow
Our Values :
Customer Satisfaction.
COMPANY PROFILE
COMPANY PROFILE
OSRAM GmbH is one of the three leading lamp manufacturers in the word with its
The world wide sales for the year 1998-99 amounts to approximately 16,000 crore
of Rupees. Of this huge amount, 88% was earned outside Germany, which
Today OSRAM is 81 years young the history of this world present giant can be
traced back to year 1919 , when three companies - AEG, Siemens & Halske AG, and
lamps.
internationally recognized trade names. The name 'OSRAM' had been derived from
"OSMIUM" and "WOLFRAM" the two German words for metals required for
halogen lamps, compact fluorescent lamps, and metal halide lamps continue to show
in 18 countries, catering the needs of customers in 146 countries. The company was
awarded the technical Oscar in march 1988 by the academy of motion picture arts and
science for the invention and continuous improvement in HMI lamps for the
professional motion pictures. Currently, company is spending 4%of its turnover R&D
activities. It is at top in Europe and second largest lamp producer in North America (as
Europe and North America, Asia is one of the most important growth
become a potential market for energy efficient lighting products. So, due to strong
urge to explore the market here, OSRAM GmbH set up OSRAM India Pvt. Ltd. in 1994
for sales & marketing operations. The company has 100% foreign equity.
HISTORY
lighting engineering. It was this company that in 1919 under one roof the
& Halske.
the Imperial Patent Office as the official trademark forits incandescent and arc lamps.
1906 was thus the birth date of a trade name that was destined to win world renown :
OSRAM. The origin of the OSRAM name came about thus : OS - (OS)MIUM which
The history of electric light and the history of OSRAM are inextricably
intertwined. Again and again , new developments from OSRAM have
As early as 1925, for example, OSRAM made night time driving much
safer with the development of the first twin filament headlight lamp worth
high and low beams. These BILUX lamps became famous throughout the
able; for example to reduce the tube diameter of fluorescent lamps from
particularly strong , Asia is one of the most important growth markets for
OSRAM India Pvt. Ltd. became quite strong & with the acquisition of E.C.E.
Lamps , division the projected sale was projected to be in excess of Rs.100 crore. In
1997 and achieved the same the far east joint ventures were established in Taiwan &
Indonesia & a new factory was started in Foshan ( China ). OSRAM continually
lamp sale achieved with products, which are less than 5 years old.
EMPLOYEES
As of Sept. 30, 1997, the OSRAM company world wide employed about
The company's strong international focus is reflected by the fact that 88%
leader.
Emphasis is also being placed on Latin America as well as on East & South East Asia.
OSRAM has 51 manufacturing units in 18 countries with most of the production is being
realized in the North America & Germany. Similar good growth in the sales has been
marked by the OSRAM INDIA Pvt. Ltd. The graph depicting the growth of the
DESCRIPTION OF PRODUCT
Product offerings from OSRAM India
The range of products which osram has to offer can be broadly classified
in to four groups:-
GROUPS DESCRIPTION
AM Automotive lamps
3.) Osram India Pvt. Ltd. has taken over lamp division of ECE industries limited satiated
at Sonepat ( Haryana ) on Oct 1998. Osram India Pvt. Limited is now owner of the
factory. Here different luminary products are manufactured in the following plants :-
1. GLASS PLANT.
2. LAMP PLANT.
3. COIL PLANT.
4. GLS PLANT.
45 mm round 75 mm elliptical
80 mm round 90 mm mushroom
110 mm round
04 feet
tubes per month and different kinds of GLS production is about 3100000
RESEARCH METHODOLOGY
problem. In it, step-by-step methods are followed to solve a particular problem. It refers
to a search for knowledge. It can also be defined as a scientific and systematic search for
investigation.
Redman & Mory defines research as “systematized effort to gain new knowledge.”
RESEACH DESIGNS:
Research Design is the way in which the research is carried out. It works as a
blue print. Research Design is the arrangement of conditions for the collection and
analysis of data in a manner that aims to combine relevance to the research purpose with
economy in procedure.
TYPES OF RESEARCH DESIGN:
or a group.
present. The main characteristic of this method is that the researcher has no control
over the variables; he can only report what has happened or what is happening.
DATA COLLECTION:
Primary Data
Secondary Data
collected afresh.
In this project, Questionnaire Method has been used for gathering required
Secondary Data: Secondary Data are those data which are already
collected and stored and which has been passed through statistical research.
sources :-
Annual Report
Books
PROJECT PROFILE
PROJECT : AN OVERVIEW
Managerial persons have vital role in this new management era. Industry's
project gives the pre idea about planning of the industries and deals with
various field of industry. By this project persons get the opportunity to face
the problems that will come ahead in his path. Before making the project
futer process of the project. In general words " Project is scheme of work
of book without practical knowledge they are like as a room without light.
project.
the skill of personal, increasing the aptitude and abilities to perform specific
3. If the project for a job designed then no wastage of money and material
takes place.
6. If we have the project of any proposed job then there is great easiness
in the installation.
work to be carried out is taken into consideration estimate with full details
from which the way problem will be solved and the matter will be select.
J : Joint efforts :- The work which has been planned, is done by the
schedule.
to find out the better result. Hence the project is an engineering junction.
completed. When all the activity are completed , the project as whole is
considered to be completed.
OR
As the mater of fact project is the work which used for construction
consideration subject.
project with the help of this coach guide. Oral examination is given to test
meaningless. these figure often do not convey much meaning unless expressed in relation
to other figures.
A Ratio is simply one number expressed in term of another. It is found by dividing one
financial statement.
Ratio Analysis simplifies and summarizes a long array of accounting data and
Current year's ratios are compared with those of previous years and if
some weak spots are thus located remedial measures are taken to
correct them.
If Ratio analysis is prepared for a number of years, they will reveal the trend of
the business.
Ratio analysis discloses the liquidity , solvency and profitability of the business
in hundredth.
LIMITATION OF RATIO ANALYSIS
Window dressing i.e., showing a better position than the one which
really exists.
Circumstances differ from firm to firm hence no single ratio can be
fixed for all firms against which the actual ratio may compared.
Ratio derived from analysis of statement alone are not sure indicator
Profitability
Liquidity
Solvency
Operating Efficiency
PROFITABILITY
must for the survival and growth of every business enterprise. profit serves
technical risks.
or obligations arising over a short period of time of say, one year. Liquidity
is reflected by current assets and current liabilities and liquidity ratio are
assets and current liabilities and indicate an enterprise ability to meet the current
to pay current liabilities as and when they mature. This ratio is calculated
as follows :-
The current ratio of 2 : 1 is the standard ratio. It means the current assets
are twice as comparison to the current liabilities and they are sufficient to
Quick current assets are those current assets which are convertible into cash rather
early. As inventory is not likely to be realized early, the some is not treated as quick
assets.
balance etc. and the current liability includes creditors, bills payable,
SOLVENCY
The solvency ratio reveal that ability of the firm to meet its long run obligation. Solvency
ratio indicate long term liquidity. Lenders like Bank , Financial institution, debenture
holders who gives long term loans to the enterprise. are interested in ascertaining the
with the profits available for the period and indicates the number of times the interest
PBIT means profit before interest and taxes. This ratio must be greater than 1 , otherwise
the profit available being less than the interest payable , the enterprise would not be able
2. LEVERAGE RATIO :- This ratio relates debt to equity or owners fund. Equity
here is used in broader sense as net worth (i.e. capital plus retained earnings ) ,while debt
normally used as a long term interest bear in loans. This ratio is calculated as under :-
The debt equity ratio thus , the ratio of total outside liabilities
GROSSPROFIT RATIO
5000
4500
4000 Gross Profit
3500
3000
NET SALES
2500
2000
1500 GROSS PROFIT
1000 RATIO
500
0
2003- 2004- 2005- 2006-
2004 2005 2006 2007
Profit is the difference between revenues and expenses over a period of time.
Profit is the ultimate output of a company and it will have no future if it fails to make
sufficient profit.
Gross profit is the difference between sales and the manufacturing cost of sold
goods. A number of companies in India define gross profit differently. They define it as
earnings before depreciation interest and taxes etc.On the above table ratio is 31.83% in
financial year it means company paid the direct expenses easily? This ratio is varying its
5000
4000 NPAT
3000
NET SALES
2000
NET PROFIT
1000 RATIO
0
2003- 2004- 2005- 2006-
2004 2005 2006 2007
YEAR
company can not survive. So profit play the very important role to survive the every
company like Osram India Pvt. Ltd. Gain the profit 10.22% in 2003-2004 Financial
year. It is good net profit ratio of company and ext year 2006-2007 gain the more
4500
4000
3500 PAT
3000
2500
2000
TOTAL ASSETS
1500
1000
500
0 RETURN
ONTOTAL
2003- 2004- 2005- 2006-
ASSETS
2004 2005 2006 2007
YEAR
The profitability ratio is measured in term of relationship between net profit and assets
employed to earn that profit. This ratio measures the profitability of the firm in term of
On the above table in financial year 2005-2006 this ratio was 10.26 %. If this ratio is
RETURN ON EQUITY
1800
1600
1400
1200 PAT & D
1000
EQUITY FUND
800
600 ROI
400
200
0
2003- 2004- 2005- 2006-
2004 2005 2006 2007
YEAR
Return on equity measure he profitability of equity funds invests in the firm. This ratio
reveals how the firm has utilized profitability of the owner funds. On the above basis of
table in financial year 2005-2006 his ratio is 26.53% it means shareholders funds is
proper utilized.And after that in next financial year in 2006-2007 this ratio is 27.52%. It
is good ratio.
500
400
300 NPAT
NO. OF SHARES
200
EPS
100
0
2003- 2004- 2005- 2006-
2004 2005 2006 2006
YEAR
The profit of a firm from the point of view of ordinary shareholders can be measured in
(Earning Per Share) ratio.On the basis of above table it is very much clear that the
company earning was Rs. 10.74 per share in 2003-2004 financial year. Which is less
than the face value of the share and next financial year 2006-2007. Increase the share
value 10.34 per share. Through this ratio company decide the market value of the share.
LIQUIDITY RATIOS
CURRENT RATIO
7000
6000
5000
CURRENT
4000
CURRENT
3000
RATIO
2000
1000
0
2003- 2004- 2005- 2006-
2004 2005 2006 2007
YEAR
This is the most important ratio for the every company’s point of view. Because every
body who have any relation with company are interested in company’s current ratio. It
is a part of liquidity ratio. It includes cash and those assets, which can be converted into
cash with in one year such as marketable securities, debtors and investment. Prepaid
The current ratio is a measure of the firm’s short-term solvency. It indicate the
availability of current liabilities. A ratio of greater than one means the firm has more
current assets than claims against them. Standards ratio of current ratio is 2:1. On the
basis of above figures it is clear that in the financial year of 2006-2007 the current ratio
of Osram India Pvt. Ltd. was 2.25 : 1 . It is more than the standards ratios this
3000
2500
2000 LIQUID ASSETS
1500 CURRENT
1000 LIQUIDITY RATIO
500
0
2003- 2004- 2005- 2006-
2004 2005 2006 2007
YEAR
It is extremely essential for firm to be able to meet its current obligations. In fact,
analysis of cash budgets and cash and fund flow statements; but liquidity ratio, by
establishing a relationship between cash and other current assets to current obligations ,
A firm should ensure that it does not suffer from lack of liquidity, and that it does not
have excess liquidity. Its standard ratio is 1 : 1. On the basis of above figures it is clear
that in the financials year of 2003-2004 the quick ratio was 0.93 : 1 and 2006 - 2007
ratio of Osram India Pvt. Ltd. was 1.25 : 1. It is good for the company that the
quick ratio of the company Increase from 0.93 to 1. According to the above information
1800
1600
1400 DEBT
1200
1000 EQUITY
800
600 DEBT EQUITY
400 RATIO
200
0
2003- 2004- 2005- 2006-
2004 2005 2006 2007
YEAR
Several debt ratios may be used to analyze the long-term solvency of the firm.
The firm may be interested in knowing the proportion of the interested bearing debt in the
capital structure. It may, therefore compute debt ratio by dividing debt funds by equity
short and long term borrowing from financial intuitions, debenture, bonds, defers
payments, arrangements from buying capital equipment and bank borrowing, public
Debt-equity ratio can be calculated by many different ways but the above
method is the most appropriate than the other method. Whatever way the debt ratio is
calculated, it shows the extent to which debt financing has been used in the business.
High ratio shows that claim of creditors are greater than those of owners are.
II. INTEREST COVERAGE RATIO = PROFIT BEFORE TEX
NET INTEREST
1200
1000 PBIT
800
INTEREST
600
400 INTEREST
COVERAGE
200 RATIO
0
2003- 2004- 2005- 2006-
2004 2005 2006 2007
YEAR
This ratio also known as time interest earned ratio. It indicates the firms ability to meet
interest obligation, Earning before tax an interest are used in the numerator of this ratio
because the ability to pay interest is not affected by tax burden as interest on debt funds is
deductible expenses. A high coverage ratio means that enterprises can easily meets its
interest obligation. This ratio is five or seven time high of interest then the firm growing
good position. On the basis of above table in 2003-2004 ratio is 4.5 time good position.
Last year 2006-2007 ratio is 7 times. Its mean company pay the interest easily to the
investors.
ANALYSIS
&
INTERPRETATION
Steady increase in current ratio and acid test ratio indicates that the company is
able to meet its short term financial obligation out of its current assets. Company
is having 2.25:1 and 1.55:1 value of current ratio and acid test ratio respectively
for the year 2006-2007. However in the earlier years, the ratio less than one
indicates that current liabilities of the company was very high on account of
The current ratio of the company is less than standard current ratio 2:1. So that
the company will be able to pay its current liabilities more easily. A much higher
ratio may be considered to be adverse from the view point of management but it is
The quick ratio of the company is 1.25:1. Which is more than the standard ratio
1:1. So the company does not face any difficulty to fulfill its short term
obligation.
The trend of decreasing interest coverage ratio is mainly due to heavy investment
and take loans. The interest obligation of the company is increased and the
Average holding period of the inventory has come down from 39 to 15.5 days
vendor to close vicinity of Osram India Pvt. limited and hence implementing the
new system for raw material and component supplies which leads to considerable
The localization of sources are also contributed to lesser inventory. Also the cost
inventory cost.
Delivery instruction systems: A system by which the firm production plan is sent
to all the vendor end 15 days well in advance itself for their production schedule.
This makes sure that there is a large-scale reduction in Inventory not only in
the pallet. The idea of these Kanban/Nagare cards is to give an indication that
whether these components have been used on the line or not. Upon receipt back of
these cards, vendor will start make these components and to send it back to Osram
Now, E-Kanban reduces this effort. Through Intranet services the message would be
flashed at the vendor ends that at the end of the day about the production status/
sales.
Cash and cash equivalent is available in the company are sufficient for daily
Debt equity ratio is 0.21. It is not good because it is less than standard debt equity
Debtor turn over ratio is high debtor turn over ratio is seems to be good for any
concerns.
SWOT ANALYSIS
STRENGTHS :
1. Osram India Pvt. Ltd. is Strong Brand Equity in the market of the products.
3. Its products are ISO marked which means that the products are standardized
products.
4. The company provides after sale services to its customers, which make them, satisfy
in all respects.
5. The company uses better and advance technology for manufacturing goods.
6. The company makes available better quality products, which has increased its
7. Osram India Pvt. Ltd. is having very strong Distribution Network, which make
WEAKNESS :
OPPORTUNITIES :
utilization.
investments.
SUGGESTIONS
SUGGESTIONS
The current ratio of the company is less than standards, which is 2.25:1 and standard
current ratio is 2:1. A much higher ratio may be considered to be adverse from the
1.25:1 and the standard quick ratio is 1:1. So the company should decrease its liquid
assets.
There is excess of working capital in the company which effects the profitability of
the firms. The company should keep up working capital up to sufficient level.
There is decreasing trend in interest coverage ratio, which is due to heavy investment
and the heavy investment effect the return o investment ratio. So the company should
Debt equity ratio is not good because it is less than standard ratio
0.21 : 1 1:1
Time : The time of around two months was too short to study as wide subject like
Financial Analysis.
having very busy schedule because of which they were reluctant to give
appointment.
CONCLUSION
It can be concluded that the financial health of Osram India Pvt. Ltd. has been very
good and this is classical example of how a company can take over from the level of
monopoly to competitive environment and how best can be coped up with. Through the
losses were there in the year 2003-2004, they were able to come out of it successfully and
Also, it can be seen that by not seeing a superficial picture of a company (seeming
to be bad), if analyses are done in respective of financial ratios, the strong fundamentals
can be seen.
Though the returns on investments are less compared with pre liberalization era, at
Since the company has gone public only this year (2006-2007), the crucial
dividend policy and all related ratios can be studied after the release of the annual report
of 2007-08 only.
BIBLIOGRAPHY
BIBLIOGRAPHY
9 www.osramindia.com