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INDEX

S.No:
1

CHAPTER

PAGE NO.

CHAPTER-1

01-8

INTRODUCTION
Scope of the Study
Objectives of the Study
Methodology of the Study
Limitations of the Study
2

9-28

CHAPTER-1I
INDUSTRY PROFILE &
COMPANY PROFILE

29-55

CHAPTER-1II
REVIEW OF LITERATURE

56-76

CHAPTER-1V
DATA ANALYSIS AND
INTERPRETATION

77-81

CHAPTER-V

FINDINGS

SUGGESTIONS
CONCLUSION

BIBLIOGRAPHY

ABSTRACT

A financial performance (or financial report) is a formal record of the


financial activities of a business, person, or other entity.
For a business enterprise, all the relevant financial information, presented in a
structured manner and in a form easy to understand, are called the financial
performance.
For large corporations, these performance are often complex and may include an
extensive set of notes to the financial performance and performance discussion and
analysis. The notes typically describe each item on the balance sheet, income
statement and cash flow statement in further detail. Notes to financial performance
are considered an integral part of the financial performance.
Purpose of financial performance by business entities

"The objective of financial performance is to provide information about the


financial position, performance and changes in financial position of an enterprise
that is useful to a wide range of users in making economic decisions." Financial
performance should be understandable, relevant, reliable and comparable. Reported
income and expenses are directly related to an organization's financial performance.
Financial performance are intended to be understandable by readers who have "a
reasonable knowledge of business and economic activities and accounting and who
are willing to study the information diligently.

CHAPTER-I
INTRODUCTION

INTRODUCTION

In our present day economy, FINANCE is defined as the provision of money at


the time when it is required. Every enterprise, whether big, medium of small, needs
finance to carry on its operations and to achieve its targets.
Finance is so indispensable today that it is the lifeblood of an enterprise. Without
adequate finance, no enterprise can possibly accomplish its objectives.
Finance is the life blood and nerve system of any business organization. Just as
circulation of blood, is necessary in the human body to maintain life. Finance is necessary
in the business org. for smooth running of the business.
Financial management involves managerial activities concerned with the
procurement and utilization of funds for business purpose the finance function does with
procurement of money taking in to consideration of todays as well as future need and its
effective utilization. Since finance is required to purchase of machinery and raw
materials, to pay salaries and wages also for day-to-day expenses.
Financial management entails planning for the future of a person or a business
enterprise to ensure a positive cash flow. It includes the administration and maintenance
of financial assets. Besides, financial management covers the process of identifying and
managing risks.
The primary concern of financial management is the assessment rather than the
techniques of financial quantification. A financial manager looks at the available data to

judge the performance of enterprises. Managerial finance is an interdisciplinary approach


that borrows from both managerial accounting and corporate finance.
Some experts refer to financial management as the science of money management. The
primary usage of this term is in the world of financing business activities. However,
financial management is important at all levels of human existence because every entity
needs to look after its finances.
Financial Management: Levels
Broadly speaking, the process of financial management takes place at two levels. At the
individual level, financial management involves tailoring expenses according to the
financial resources of an individual. Individuals with surplus cash or access to funding
invest their money to make up for the impact of taxation and inflation. Else, they spend it
on discretionary items. They need to be able to take the financial decisions that are
intended to benefit them in the long run and help them achieve their financial goals.
From an organizational point of view, the process of financial management is associated
with financial planning and financial control. Financial planning seeks to quantify various
financial resources available and plan the size and timing of expenditures. Financial
control refers to monitoring cash flow. Inflow is the amount of money coming into a
particular company, while outflow is a record of the expenditure being made by the
company. Managing this movement of funds in relation to the budget is essential for a
business.
At the corporate level, the main aim of the process of managing finances
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Is to achieve the various goals a company sets at a given point of time. Businesses also
seek to generate substantial amounts of profits, following a particular set of financial
processes.
Financial managers aim to boost the levels of resources at their disposal. Besides,
they control the functioning on money put in by external investors. Providing investors
with sufficient amount of returns on their investments is one of the goals that every
company tries to achieve. Efficient financial management ensures that this becomes
possible.

SCOPE OF THE STUDY


The scope of the study is to find out financial performance of Madhucon Ltd. For
the past four years. A sincere attempt has been made to include all the aspect relating to
the study. For this purpose analysis of financial performance of the company has done
from the last four years published financial statement and all aspects the researcher
should be included in the report.

NEED FOR STUDY

Need of financial management study to diagnose the information contain in


financial statement. So as to judge the profitability and financial position of the
firm.

Financial analyst analyses the financial statements with various tools of analysis
before commanding upon the financial health of the firm.
Essential to bring out the history.
Significance and meaning of the financial statements.

OBJECTIVES OF FINANCIAL STATEMENT ANALYSIS


1. To estimate the earnings capacity of the firm.
2. To gauge the financial position and financial performance of the firm.
3. To determine the long-term liability of the funds as well as solvency.
4. To decide about the future capacity of the firm.
5. To decide about the future prospects of the firm.

RESEARCH METHODOLOGY

RESEARCH DESIGN

This is a systematic way to solve the research problem and it is important


component for the study without which researches may not be able to obtain the format.
A research design is the arrangement of conditions for collection and analysis of data in a

manager that aims to combine for collection and analysis of data relevance to the research
purpose with economy in procedure.

MEANING OF RESEARCH DESIGN


The formidable problem that follows the task of defining the research problem is
the preparation of design of the research project, popularly known as the research design,
decision regarding what, where, when, how much, by what means concerning an inquiry
of a research study constitute a research design. A research design is the arrangement of
conditions for collection and analysis of data in a manager that aims to combine for
collection and analysis of data relevance to the research purpose with economy in
procedure.

SOURCES OF DATA
Data we collected based on two sources.
Primary data.
Secondary data.

Primary data
The Primary data are those informations, which are collected afresh and for the
first time, and thus happen to be original in character.

Secondary Data:
The Secondary data are those which have already been collected by some other
agency and which have already been processed. The sources of Secondary data are
Annual Reports, browsing Internet, through magazines.

1. It includes data gathered from the annual reports of Madhucon Projects Limited.
2. Articles are collected from official website of Madhucon Projects Limited.

METHODOLOGY USED:
1.TYPES OF FINANCIAL STATEMENTS ADOPTED:
Following two types of financial statements are adopted in analyzing the firm
financial position
a. BALANCE SHEET.
b. Profit and Loss statements.

2.TOOLS OF FINANCIAL STATEMENT ANALYSIS USED


The following financial analysis tools are used in order to interpret the financial
position of the firm.

LIMITATIONS OF FINANCIAL STATEMENT:


1. ONLY INTERIM REPORTS:
Only interim statements dont give a final picture of the concern. The data given
in these statements is only approximate. The actual position can only be determined when
the business is sold or liquidated.

2. DONT GIVE EXTRA POSITION:


The financial statements are expressed in monetary values, so they appear to give
final and accurate position. The values of fixed assets in the balance sheet neither

represent the value for which fixed assets can be sold nor the amount which will be
required to replace these assets.

3. HISTORICAL COSTS:
The financial statements are prepared on the basis of historical costs or original
costs. The value of assets decreases with the passage of time current price changes are not
taken into account. The statements are not prepared keeping in view the present economic
conditions. The balance sheet loses the significance of being an index of current
economic realities.

4. ACT OF NON MONITORY FACTORS IGNORED:


There are certain factors which have a bearing on the financial position and
operating results of the business but they dont become a part of these statements because
they cant be measured in monetary terms. Such factors may include in the reputation of
the management.

NO PRECISION:
The precision of financial statement data is not possible because the statements
deal with matters which cant be precisely stated. The data are recorded by conventional
procedures followed over the years. Various conventions, postulates, personal judgments
etc.

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CHAPTER-III
LITERATURE REVIEW

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FINANCIAL PERFORMANCE ANALYSIS


Financial performance analysis is the process of identifying the financial strengths and
weaknesses of the firm by properly establishing the relationship between the items of
balance sheet and profit and loss account. It also helps in short-term and long term
forecasting and growth can be identified with the help of financial performance analysis.
The dictionary meaning of analysis is to resolve or separate a thing in to its element or
components parts for tracing their relation to the things as whole and to each other. The
analysis of financial statement is a process of evaluating the relationship between the
component parts of financial statement to obtain a better understanding of the firms
position and performance. This analysis can be undertaken by management of the firm or
by parties outside the namely, owners,creditors,investors.

The analysis of financial statement represents three major steps:

The first step involves the re-organization of the entire financial data contained
the financial statements. Therefore the financial statements are broke down into
individual components and re-grouped into few principle elements according to
their resemblances and affinities. Thus the balance sheet and profit and loss
accounts are completely re-casted and presented in the condensed form entirely
different from their original shape.

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The second step is the establishment of significant relationships between the


individual components of balance sheet and profit and loss account. This is done
through the application tools of financial analysis like Ratio analysis, Trend
analysis, Common size balance sheet and comparative Balance sheet.

Finally, the result obtained by means of application of financial tools is evaluated.

In brief financial analysis is the process of selection, relation and evaluation of


financial statements. The tools of analysis are used for determining the investment
value of the business, credit rating and for testing efficiency of operation.

Thus financial analysis helps to highlight the facts and relationships concerning
managerial performance, corporate efficiency, financial strength and weakness and credit
worthiness of the company.

Financial statement analysis (or financial analysis) the process of


understanding the risk and profitability of a firm (business, sub-business or project)
through analysis of reported financial information, particularly annual and quarterly
reports.
Financial statement analysis consists of 1) reformulating reported financial statements, 2)
analysis and adjustments of measurement errors, and 3) financial ratio analysis on the
basis of reformulated and adjusted financial statements. The two first steps are often
dropped in practice, meaning that financial ratios are just calculated on the basis of the
reported numbers, perhaps with some adjustments. Financial statement analysis is the

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foundation for evaluating and pricing credit risk and for doing fundamental company
valuation.
1) Financial statement analysis typically starts with reformulating the reported financial
information. In relation to the income statement, one common reformulation is to divide
reported items into recurring or normal items and non-recurring or special items. In this
way, earnings could be separated in to normal or core earnings and transitory earnings.
The idea is that normal earnings are more permanent and hence more relevant for
prediction and valuation. Normal earnings are also separated into net operational profit
after taxes (NOPAT) and net financial costs. The balance sheet is grouped, for example,
in net operating assets (NOA), net financial debt and equity.
2) Analysis and adjustment of measurement errors question the quality of the reported
accounting numbers. The reported numbers can for example be a bad or noisy
representation of invested capital, for example in terms of NOA, which means that the
return on net operating assets (RNOA) will be a noisy measure of the underlying
profitability (the internal rate of return, IRR). Expensing of R&D is an example when
such investment expenditures are expected to yield future economic benefits, suggesting
that R&D creates assets which should have been capitalized in the balance sheet. An
example of an adjustment for measurement errors is when the analyst removes the R&D
expenses from the income statement and put them in the balance sheet. The R&D
expenditures are then replaced by amortization of the R&D capital in the balance sheet.
Another example is to adjust the reported numbers when the analyst suspects earnings
management.

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3) Financial ratio analysis should be based on regrouped and adjusted financial


statements. Two types of ratio analysis are performed: 3.1) Analysis of risk and 3.2)
analysis of profitability:
3.1) Analysis of risk typically aims at detecting the underlying credit risk of the firm.
Risk analysis consists of liquidity and solvency analysis. Liquidity analysis aims at
analyzing whether the firm has enough liquidity to meet its obligations when they should
be paid. A usual technique to analyze illiquidity risk is to focus on ratios such as the
current ratio and interest coverage. Cash flow analysis is also useful. Solvency analysis
aims at analyzing whether the firm is financed so that it is able to recover from a loss or a
period of losses. A usual technique to analyze insolvency risk is to focus on ratios such as
the equity in percentage of total capital and other ratios of capital structure. Based on the
risk analysis the analyzed firm could be rated, i.e. given a grade on the riskiness, a
process called synthetic rating.
Ratios of risk such as the current ratio, the interest coverage and the equity percentage
have no theoretical benchmarks. It is therefore common to compare them with the
industry average over time. If a firm has a higher equity ratio than the industry, this is
considered less risky than if it is above the average. Similarly, if the equity ratio increases
over time, it is a good sign in relation to insolvency risk.
3.2) Analysis of profitability refers to the analysis of return on capital, for example return
on equity, ROE, defined as earnings divided by average equity. Return on equity, ROE,
could be decomposed: ROE = RNOA + (RNOA - NFIR) * NFD/E, where RNOA is

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return on net operating assets, NFIR is the net financial interest rate, NFD is net financial
debt and E is equity. In this way, the sources of ROE could be clarified.
Unlike other ratios, return on capital has a theoretical benchmark, the cost of capital also called the required return on capital. For example, the return on equity, ROE, could
be compared with the required return on equity, kE, as estimated, for example, by the
capital asset pricing model. If ROE < kE (or RNOA > WACC, where WACC is the
weighted average cost of capital), then the firm is economically profitable at any given
time over the period of ratio analysis. The firm creates values for its owners.
Insights from financial statement analysis could be used to make forecasts and to evaluate
credit risk and value the firm's equity. For example, if financial statement analysis detects
increasing superior performance ROE - kE > 0 over the period of financial statement
analysis, then this trend could be extrapolated into the future. But as economic theory
suggests, sooner or later the competitive forces will work - and ROE will be driven
toward kE.
A financial statement (or financial report) is a formal record of the financial
activities of a business, person, or other entity. In British Englishincluding United
Kingdom company lawa financial statement is often referred to as an account,
although the term financial statement is also used, particularly by accountants.
For a business enterprise, all the relevant financial information, presented in a structured
manner and in a form easy to understand, are called the financial statements. They

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typically include four basic financial statements, accompanied by a management


discussion and analysis:
1. Statement of Financial Position: also referred to as a balance sheet, reports
on a company's assets, liabilities, and ownership equity at a given point in time.
2. Statement of Comprehensive Income: also referred to as Profit and Loss
statement (or a "P&L"), reports on a company's income, expenses, and profits
over a period of time. A Profit & Loss statement provides information on the
operation of the enterprise. These include sale and the various expenses incurred
during the processing state.
3. Statement of Changes in Equity: explains the changes of the company's
equity throughout the reporting period
4. Statement of cash flows: reports on a company's cash flow activities,
particularly its operating, investing and financing activities.
For large corporations, these statements are often complex and may include an extensive
set of notes to the financial statements and explanation of financial policies and
management discussion and analysis. The notes typically describe each item on the
balance sheet, income statement and cash flow statement in further detail. Notes to
financial statements are considered an integral part of the financial statements.

Purpose of financial statements by business entities

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"The objective of financial statements is to provide information about the financial


position, performance and changes in financial position of an enterprise that is useful to a
wide range of users in making economic decisions." Financial statements should be
understandable, relevant, reliable and comparable. Reported assets, liabilities, equity,
income and expenses are directly related to an organization's financial position.
Financial statements are intended to be understandable by readers who have "a
reasonable knowledge of business and economic activities and accounting and who are
willing to study the information diligently." Financial statements may be used by users
for different purposes:

Owners and managers require financial statements to make important business


decisions that affect its continued operations. Financial analysis is then performed
on these statements to provide management with a more detailed understanding of
the figures. These statements are also used as part of management's annual report
to the stockholders.

Employees also need these reports in making collective bargaining agreements


(CBA) with the management, in the case of labor unions or for individuals in
discussing their compensation, promotion and rankings.

Prospective investors make use of financial statements to assess the viability of


investing in a business. Financial analyses are often used by investors and are
prepared by professionals (financial analysts), thus providing them with the basis
for making investment decisions.

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Financial institutions (banks and other lending companies) use them to decide
whether to grant a company with fresh working capital or extend debt securities
(such as a long-term bank loan or debentures) to finance expansion and other
significant expenditures.

Government entities (tax authorities) need financial statements to ascertain the


propriety and accuracy of taxes and other duties declared and paid by a company.

Vendors who extend credit to a business require financial statements to assess the
creditworthiness of the business.

Media and the general public are also interested in financial statements for a
variety of reasons.

Government financial statements


The rules for the recording, measurement and presentation of government financial
statements may be different from those required for business and even for non-profit
organizations. They may use either of two accounting methods: accrual accounting, or
cash accounting, or a combination of the two (OCBOA). A complete set of chart of
accounts is also used that is substantially different from the chart of a profit-oriented
business

Financial statements of not-for-profit organizations


The financial statements that not-for-profit organizations such as charitable organizations
and large voluntary associations publish, tend to be simpler than those of for-profit
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corporations. Often they consist of just a balance sheet and a "statement of activities"
(listing income and expenses) similar to the "Profit and Loss statement" of a for-profit.
Charitable organizations in the United States are required to show their income and net
assets (equity) in three categories: Unrestricted (available for general use), Temporarily
Restricted (to be released after the donor's time or purpose restrictions have been met),
and Permanently Restricted (to be held perpetually, e.g., in an Endowment).

Personal financial statements


Personal financial statements may be required from persons applying for a personal loan
or financial aid. Typically, a personal financial statement consists of a single form for
reporting personally held assets and liabilities (debts), or personal sources of income and
expenses, or both. The form to be filled out is determined by the organization supplying
the loan or aid.

Audit and legal implications


Although laws differ from country to country, an audit of the financial statements of a
public company is usually required for investment, financing, and tax purposes. These are
usually performed by independent accountants or auditing firms. Results of the audit are
summarized in an audit report that either provide an unqualified opinion on the financial
statements or qualifications as to its fairness and accuracy. The audit opinion on the
financial statements is usually included in the annual report.
There has been much legal debate over who an auditor is liable to. Since audit reports
tend to be addressed to the current shareholders, it is commonly thought that they owe a
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legal duty of care to them. But this may not be the case as determined by common law
precedent. In Canada, auditors are liable only to investors using a prospectus to buy
shares in the primary market. In the United Kingdom, they have been held liable to
potential investors when the auditor was aware of the potential investor and how they
would use the information in the financial statements. Nowadays auditors tend to include
in their report liability restricting language, discouraging anyone other than the
addressees of their report from relying on it. Liability is an important issue: in the UK, for
example, auditors have unlimited liability.
In the United States, especially in the post-Enron era there has been substantial concern
about the accuracy of financial statements. Corporate officers (the chief executive officer
(CEO) and chief financial officer (CFO)) are personally liable for attesting that financial
statements "do not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of the circumstances under
which such statements were made, not misleading with respect to the period covered by
th[e] report." Making or certifying misleading financial statements exposes the people
involved to substantial civil and criminal liability. For example Bernie Ebbers (former
CEO of WorldCom) was sentenced to 25 years in federal prison for allowing WorldCom's
revenues to be overstated by billion over five years.

Standards and regulations


Different countries have developed their own accounting principles over time, making
international comparisons of companies difficult. To ensure uniformity and comparability
between financial statements prepared by different companies, a set of guidelines and
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rules are used. Commonly referred to as Generally Accepted Accounting Principles


(GAAP), these set of guidelines provide the basis in the preparation of financial
statements, although many companies voluntarily disclose information beyond the scope
of such requirements.
Recently there has been a push towards standardizing accounting rules made by the
International Accounting Standards Board ("IASB"). IASB develops International
Financial Reporting Standards that have been adopted by Australia, Canada and the
European Union (for publicly quoted companies only), are under consideration in South
Africa and other countries. The United States Financial Accounting Standards Board has
made a commitment to converge the U.S. GAAP and IFRS over time.

Inclusion in annual reports


To entice new investors, most public companies assemble their financial statements on
fine paper with pleasing graphics and photos in an annual report to shareholders,
attempting to capture the excitement and culture of the organization in a "marketing
brochure" of sorts. Usually the company's chief executive will write a letter to
shareholders, describing management's performance and the company's financial
highlights.
In the United States, prior to the advent of the internet, the annual report was considered
the most effective way for corporations to communicate with individual shareholders.
Blue chip companies went to great expense to produce and mail out attractive annual

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reports to every shareholder. The annual report was often prepared in the style of a coffee
table book.

Moving to electronic financial statements


Financial statements have been created on paper for hundreds of years. The growth of the
Web has seen more and more financial statements created in an electronic form which is
exchangeable over the Web. Common forms of electronic financial statements are PDF
and HTML. These types of electronic financial statements have their drawbacks in that it
still takes a human to read the information in order to reuse the information contained in a
financial statement.
More recently a market driven global standard, XBRL (Extensible Business Reporting
Language), which can be used for creating financial statements in a structured and
computer readable format, has become more popular as a format for creating financial
statements. Many regulators around the world such as the U.S. Securities and Exchange
Commission have mandated XBRL for the submission of financial information.
The UN/CEFACT created, with respect to Generally Accepted Accounting Principles,
(GAAP), internal or external financial reporting XML messages to be used between
enterprises and their partners, such as private interested parties (e.g. bank) and public
collecting bodies (e.g. taxation authorities). Many regulators use such messages to collect
financial and economic information.

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In financial accounting, a balance sheet or statement of financial position is a summary


of the financial balances of a sole proprietorship, a business partnership, a corporation or
other business organization, such as an LLC or an LLP. Assets, liabilities and ownership
equity are listed as of a specific date, such as the end of its financial year. A balance sheet
is often described as a "snapshot of a company's financial condition". Of the four basic
financial statements, the balance sheet is the only statement which applies to a single
point in time of a business' calendar year.
A standard company balance sheet has three parts: assets, liabilities and ownership equity.
The main categories of assets are usually listed first, and typically in order of liquidity.
Assets are followed by the liabilities. The difference between the assets and the liabilities
is known as equity or the net assets or the net worth or capital of the company and
according to the accounting equation, net worth must equal assets minus liabilities.
Another way to look at the same equation is that assets equals liabilities plus owner's
equity. Looking at the equation in this way shows how assets were financed: either by
borrowing money (liability) or by using the owner's money (owner's equity). Balance
sheets are usually presented with assets in one section and liabilities and net worth in the
other section with the two sections "balancing."
A business operating entirely in cash can measure its profits by withdrawing the entire
bank balance at the end of the period, plus any cash in hand. However, many businesses
are not paid immediately; they build up inventories of goods and they acquire buildings
and equipment. In other words: businesses have assets and so they cannot, even if they
want to, immediately turn these into cash at the end of each period. Often, these
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businesses owe money to suppliers and to tax authorities, and the proprietors do not
withdraw all their original capital and profits at the end of each period. In other words
businesses also have liabilities.

Types
A balance sheet summarizes an organization or individual's assets, equity and liabilities at
a specific point in time. We have two forms of balance sheet. They are the report form
and the account form. Individuals and small businesses tend to have simple balance
sheets. Larger businesses tend to have more complex balance sheets, and these are
presented in the organization's annual report. Large businesses also may prepare balance
sheets for segments of their businesses. A balance sheet is often presented alongside one
for a different point in time (typically the previous year) for comparison.

Personal balance sheet


A personal balance sheet lists current assets such as cash in checking accounts and
savings accounts, long-term assets such as common stock and real estate, current
liabilities such as loan debt and mortgage debt due, or overdue, long-term liabilities such
as mortgage and other loan debt. Securities and real estate values are listed at market
value rather than at historical cost or cost basis. Personal net worth is the difference
between an individual's total assets and total liabilities.
A small business bump that balance sheet lists current assets such as cash, accounts
receivable, and inventory, fixed assets such as land, buildings, and equipment, intangible
assets such as patents, and liabilities such as accounts payable, accrued expenses, and
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long-term debt. Contingent liabilities such as warranties are noted in the footnotes to the
balance sheet. The small business's equity is the difference between total assets and total
liabilities.

Public Business Entities balance sheet structure


Guidelines for balance sheets of public business entities are given by the International
Accounting Standards Board and numerous country-specific organizations/companys.
Balance sheet account names and usage depend on the organization's country and the
type of organization. Government organizations do not generally follow standards
established for individuals or businesses.
If applicable to the business, summary values for the following items should be included
in the balance sheet: Assets are all the things the business owns, this will include
property, tools, cars, etc.

Assets
Current assets
1. Cash and cash equivalents
2. Accounts receivable
3. Inventories
4. Prepaid expenses for future services that will be used within a year
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Non-current assets (Fixed assets)


1. Property, plant and equipment
2. Investment property, such as real estate held for investment purposes
3. Intangible assets
4. Financial assets (excluding investments accounted for using the equity method,
accounts receivables, and cash and cash equivalents)
5. Investments accounted for using the equity method
6. Biological assets, which are living plants or animals. Bearer biological assets are
plants or animals which bear agricultural produce for harvest, such as apple trees
grown to produce apples and sheep raised to produce wool.

Liabilities
See Liability (accounting)
1. Accounts payable
2. Provisions for warranties or court decisions
3. Financial liabilities (excluding provisions and accounts payable), such as
promissory notes and corporate bonds
4. Liabilities and assets for current tax
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5. Deferred tax liabilities and deferred tax assets


6. Unearned revenue for services paid for by customers but not yet provided

Equity
The net assets shown by the balance sheet equals the third part of the balance sheet,
which is known as the shareholders' equity. It comprises:
1. Issued capital and reserves attributable to equity holders of the parent company
(controlling interest)
2. Non-controlling interest in equity
Formally, shareholders' equity is part of the company's liabilities: they are funds "owing"
to shareholders (after payment of all other liabilities); usually, however, "liabilities" is
used in the more restrictive sense of liabilities excluding shareholders' equity. The
balance of assets and liabilities (including shareholders' equity) is not a coincidence.
Records of the values of each account in the balance sheet are maintained using a system
of accounting known as double-entry bookkeeping. In this sense, shareholders' equity by
construction must equal assets minus liabilities, and are a residual.
Regarding the items in equity section, the following disclosures are required:
1. Numbers of shares authorized, issued and fully paid, and issued but not fully paid
2. Par value of shares

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3. Reconciliation of shares outstanding at the beginning and the end of the period
4. Description of rights, preferences, and restrictions of shares
5. Treasury shares, including shares held by subsidiaries and associates
6. Shares reserved for issuance under options and contracts
7. A description of the nature and purpose of each reserve within owners' equity

Income statement (also referred to as profit and loss statement (P&L), revenue
statement, statement of financial performance, earnings statement, operating
statement or statement of operations) is a company's financial statement that indicates
how the revenue (money received from the sale of products and services before expenses
are taken out, also known as the "top line") is transformed into the net income (the result
after all revenues and expenses have been accounted for, also known as Net Profit or the
"bottom line"). It displays the revenues recognized for a specific period, and the cost and
expenses charged against these revenues, including write-offs (e.g., depreciation and
amortization of various assets) and taxes. The purpose of the income statement is to show
managers and investors whether the company made or lost money during the period
being reported.
The important thing to remember about an income statement is that it represents a period
of time. This contrasts with the balance sheet, which represents a single moment in time.
Charitable organizations that are required to publish financial statements do not produce
an income statement. Instead, they produce a similar statement that reflects funding
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sources compared against program expenses, administrative costs, and other operating
commitments. This statement is commonly referred to as the statement of activities.
Revenues and expenses are further categorized in the statement of activities by the donor
restrictions on the funds received and expended.
The income statement can be prepared in one of two methods. The Single Step income
statement takes a simpler approach, totaling revenues and subtracting expenses to find the
bottom line. The more complex Multi-Step income statement (as the name implies) takes
several steps to find the bottom line, starting with the gross profit. It then calculates
operating expenses and, when deducted from the gross profit, yields income from
operations. Adding to income from operations is the difference of other revenues and
other expenses. When combined with income from operations, this yields income before
taxes. The final step is to deduct taxes, which finally produces the net income for the
period measured.

Usefulness and limitations of income statement


Income statements should help investors and creditors determine the past financial
performance of the enterprise, predict future performance, and assess the capability of
generating future cash flows through report of the income and expenses.
However, information of an income statement has several limitations:

Items that might be relevant but cannot be reliably measured are not reported (e.g.
brand recognition and loyalty).

30

Some numbers depend on accounting methods used (e.g. using FIFO or LIFO
accounting to measure inventory level).

Some numbers depend on judgments and estimates (e.g. depreciation expense


depends on estimated useful life and salvage value).

Guidelines for statements of comprehensive income and income statements of business


entities are formulated by the International Accounting Standards Board and numerous
country-specific organizations, for example the FASB in the U.S..
Names and usage of different accounts in the income statement depend on the type of
organization, industry practices and the requirements of different jurisdictions.
If applicable to the business, summary values for the following items should be included
in the income statement:

Operating section

Revenue - Cash inflows or other enhancements of assets of an entity during a


period from delivering or producing goods, rendering services, or other activities
that constitute the entity's ongoing major operations. It is usually presented as
sales minus sales discounts, returns, and allowances. Every time a business sells a
product or performs a service, it obtains revenue. This often is referred to as gross
revenue or sales revenue.

31

Expenses - Cash outflows or other using-up of assets or incurrence of liabilities


during a period from delivering or producing goods, rendering services, or
carrying out other activities that constitute the entity's ongoing major operations.

Cost of Goods Sold (COGS) / Cost of Sales - represents the


direct costs attributable to goods produced and sold by a business
(manufacturing or merchandizing). It includes material costs, direct
labour, and overhead costs (as in absorption costing), and excludes
operating costs (period costs) such as selling, administrative, advertising
or R&D, etc.

Selling, General and Administrative expenses (SG&A or


SGA) - consist of the combined payroll costs. SGA is usually understood
as a major portion of non-production related costs, in contrast to
production costs such as direct labour.

Selling expenses - represent expenses needed to sell products


(e.g. salaries of sales people, commissions and travel expenses,
advertising, freight, shipping, depreciation of sales store buildings
and equipment, etc.).

General and Administrative (G&A) expenses - represent


expenses to manage the business (salaries of officers / executives,
legal and professional fees, utilities, insurance, depreciation of
office building and equipment, office rents, office supplies, etc.).
32

Depreciation / Amortization - the charge with respect to fixed assets


/ intangible assets that have been capitalised on the balance sheet for a
specific (accounting) period. It is a systematic and rational allocation of
cost rather than the recognition of market value decrement.

Research & Development (R&D) expenses - represent expenses


included in research and development.

Expenses recognised in the income statement should be analysed either by nature (raw
materials, transport costs, staffing costs, depreciation, employee benefit etc.) or by
function (cost of sales, selling, administrative, etc.). (IAS 1.99) If an entity categorises
by function, then additional information on the nature of expenses, at least,
depreciation, amortisation and employee benefits expense must be disclosed. (IAS
1.104) The major exclusive of costs of goods sold, are classified as operating expenses.
These represent the resources expended, except for inventory purchases, in generating the
revenue for the period. Expenses often are divided into two broad sub classicifications
selling expenses and administrative expenses.

Non-operating section

Other revenues or gains - revenues and gains from other than primary
business activities (e.g. rent, income from patents). It also includes unusual gains
that are either unusual or infrequent, but not both (e.g. gain from sale of securities
or gain from disposal of fixed assets)

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Other expenses or losses - expenses or losses not related to primary business


operations, (e.g. foreign exchange loss).

Finance costs - costs of borrowing from various creditors (e.g. interest


expenses, bank charges).

Income tax expense - sum of the amount of tax payable to tax authorities in
the current reporting period (current tax liabilities/ tax payable) and the amount of
deferred tax liabilities (or assets).

Irregular items
They are reported separately because this way users can better predict future cash flows irregular items most likely will not recur. These are reported net of taxes.

Discontinued operations is the most common type of irregular items.


Shifting business location(s), stopping production temporarily, or changes due to
technological improvement do not qualify as discontinued operations.
Discontinued operations must be shown separately.

Cumulative effect of changes in accounting policies (principles) is the difference


between the book value of the affected assets (or liabilities) under the old policy
(principle) and what the book value would have been if the new principle had been
applied in the prior periods. For example, valuation of inventories using LIFO instead of
weighted average method. The changes should be applied retrospectively and shown as

34

adjustments to the beginning balance of affected components in Equity. All comparative


financial statements should be restated. (IAS 8)
However, changes in estimates (e.g. estimated useful life of a fixed asset) only requires
prospective changes.
No items may be presented in the income statement as extraordinary items under IFRS
regulations, but are permissible under US GAAP. Extraordinary items are both unusual
(abnormal) and infrequent, for example, unexpected natural disaster, expropriation,
prohibitions under new regulations. [Note: natural disaster might not qualify depending
on location (e.g. frost damage would not qualify in Canada but would in the tropics).]
Additional items may be needed to fairly present the entity's results of operations.

Disclosures
Certain items must be disclosed separately in the notes (or the statement of
comprehensive income), if material, including:

Write-downs of inventories to net realisable value or of property, plant and


equipment to recoverable amount, as well as reversals of such write-downs

Restructurings of the activities of an entity and reversals of any provisions for the
costs of restructuring

Disposals of items of property, plant and equipment

Disposals of investments
35

Discontinued operations

Litigation settlements

Other reversals of provisions

Earnings per share


Because of its importance, earnings per share (EPS) are required to be disclosed on the
face of the income statement. A company which reports any of the irregular items must
also report EPS for these items either in the statement or in the notes.

There are two forms of EPS reported:

Basic: in this case "weighted average of shares outstanding" includes only actual
stocks outstanding.

Diluted: in this case "weighted average of shares outstanding" is calculated as if


all stock options, warrants, convertible bonds, and other securities that could be
transformed into shares are transformed. This increases the number of shares and
so EPS decreases. Diluted EPS is considered to be a more reliable way to
measure EPS.

Sample income statement


36

The following income statement is a very brief example prepared in accordance with
IFRS. It does not show all possible kinds of items appeared a firm, but it shows the most
usual ones. Please note the difference between IFRS and US GAAP when interpreting the
following sample income statements.

Bottom line
"Bottom line" is the net income that is calculated after subtracting the expenses from
revenue. Since this forms the last line of the income statement, it is informally called
"bottom line." It is important to investors as it represents the profit for the year
attributable to the shareholders.
After revision to IAS 1 in 2003, the Standard is now using profit or loss for the year
rather than net profit or loss or net income as the descriptive term for the bottom line of
the income statement.

Requirements of IFRS
, the International Accounting Standards Board issued a revised IAS 1: Presentation of
Financial Statements, which is effective for annual periods beginning.
A business entity adopting IFRS must include:

a Statement of Comprehensive Income or

two separate statements comprising:


1. an Income Statement displaying components of profit or loss and
37

2. A Statement of Comprehensive Income that begins with profit or loss


(bottom line of the income statement) and displays the items of other
comprehensive income for the reporting period.
All non-owner changes in equity (i.e. comprehensive income ) shall be presented in either
in the statement of comprehensive income (or in a separate income statement and a
statement of comprehensive income). Components of comprehensive income may not be
presented in the statement of changes in equity.
Comprehensive income for a period includes profit or loss (net income) for that period
and other comprehensive income recognized in that period.
All items of income and expense recognized in a period must be included in profit or loss
unless a Standard or an Interpretation requires otherwise. Some IFRSs require or permit
that some components to be excluded from profit or loss and instead to be included in
other comprehensive income.

Items and disclosures


The statement of comprehensive income should include:
1. Revenue
2. Finance costs (including interest expenses)
3. Share of the profit or loss of associates and joint ventures accounted for using the
equity method
38

4. Tax expense
5. A single amount comprising the total of (1) the post-tax profit or loss of
discontinued operations and (2) the post-tax gain or loss recognized on the
disposal of the assets or disposal group(s) constituting the discontinued operation
6. Profit or loss
7. Each component of other comprehensive income classified by nature
8. Share of the other comprehensive income of associates and joint ventures
accounted for using the equity method
9. Total comprehensive income
The following items must also be disclosed in the statement of comprehensive income as
allocations for the period:

Profit or loss for the period attributable to non-controlling interests and owners of
the parent

Total comprehensive income attributable to non-controlling interests and owners


of the parent

No items may be presented in the statement of comprehensive income (or in the income
statement, if separately presented) or in the notes as extraordinary items.

39

Financial statement analysis is, of course, the underlying purpose of preparing financial
statements. Everyone who looks at your financial statements will be automatically
performing some form of analysis. Your banker will quickly analyze them to determine
your capability of paying back a loan.
Your investor(s) will always perform a financial statement analysis to determine if you
have been performing according to plan, and/or whether your business is a good
investment.
Your suppliers will analyze your financial statements to determine your credit worthiness
and so on.
The important thing to remember is: everyone who looks at your financial statements will
conduct a financial statement analysis, in one form or another. That is why your
statements need to be as accurate and truthful as possible.
You, as well as your business, will be judged according to your financial statements.

But the most important aspect of financial statement analysis is the analysis you perform
yourself.
There are three major analyses you need to make. There are many others as well, but
well stick to the three major ones here, as follows:
1. Actual

vs. Planned Performance

40

You did considerable business planning before you started your business (and you likely
updated it for the banks, investors, or suppliers), complete with pro forma financial
statements (no matter how crude).
So, after your business is operating, you will need to compare your actual performance
(from your financial statements) against your planned performance (from your pro forma
financial statements).
This financial statement analysis should be performed line item by line item. If you had
fewer sales than planned you should know or find out why. If any costs were greater
than planned again, you should know or find out why.
Ever dollar received, and every dollar spent shows up on your financial statements, and
every dollar that is different than you planned should be analyzed. This could be a good
thing as you may need to change your planning.
This is where it becomes important to have an advisory group where you can bounce
information, and ideas, around.

2. Trend Analysis

By comparing current financial statements to previous financial statements you can see
which areas of your business have changed, and by how much.
Then you need to determine why the change occurred, whether positive or negative:

Are sales trending up?


41

Are costs trending down (which ones arent)?

Are profits trending up?

Is your cash flow improving?


These are the types of things you will want to look at in your financial statement
analysis.

Like the performance analysis, you need to analyze your financial statements line item by
line item to determine trends and don't be afraid to change your planning if you see a
new trend emerging.

3. Industry Comparisons
This analysis is not only a comparison or your businesss performance to others in your
industry, but also to standards set by your banker, your investor(s), your advisory group,
or even yourself.
These comparisons are usually made in the form of financial ratios.
Here are a few of the more common financial ratio analyses:

Balance Sheet Ratios.


Balance Sheet ratios typically measure the strength of your business, using the
following formulas:

Current Ratio This is one of the most widely used tests of financial
strength, and is calculated by dividing Current Assets by Current
42

Liabilities. This ratio is used to determine if your business is likely to be


able to pay its bills.
Obviously, a minimum acceptable ratio would be 1:1; otherwise your company would not
be expected to pay its bills on time. A ratio of 2:1 is much more acceptable, and the
higher, the better.

Quick Ratio This is sometimes called the acid test ratio because it
concentrates on only the more liquid assets of your business. It is
calculated by dividing the sum of Cash and Receivables by Current
Liabilities.

It excludes inventories or any other current asset that might have questionable liquidity.
Depending on your history for collecting receivables, a satisfactory ratio is 1:1.

Working Capital Bankers especially, watch this calculation very


closely as it deals more with cash flow than just a simple ratio. Working
Capital equals Current Assets minus Current Liabilities.

Quite often your banker will tie your loan approval amount to a minimum Working
Capital requirement.

Inventory Turnover Ratio Not every business has an inventory


that needs to be of concern, and if that is your situation you can ignore this
ratio.

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This ratio tells you if your inventory is turning over fast enough, and is calculated by
dividing Net Sales by your average Inventory (at cost).
If you are concerned about your inventory, then you definitely should watch this ratio
carefully when comparing it to industry guidelines.

Leverage Ratio This is another of the analyses used by bankers to


determine if your business is credit worthy. It basically shows the extent
your business relies on debt to keep operating. This ratio is calculated by
dividing Total Liabilities by Net Worth (total assets minus total liabilities).

Obviously, the higher the ratio is, the more risky it becomes to extend credit to your
business.
This is often the calculation a supplier to your business will make before extending credit
to you.

P&L Ratios
Profit and Loss (P&L) financial statements also have some important ratio
calculations for your financial statement analysis:

Gross Profit Ratio This is the most common calculation on your


P&Lit is simply your Gross Profit divided by Net Sales. Often, different
industries will have standard guidelines that you can compare your
businesss numbers to.

44

It is also desirable to watch your trends and not let this number move too far from your
target.

Net Profit Ratio This calculation is simply Net Pre-tax Profit


divided by Net Sales. Other than wanting this number to be as large as
possible, I usually dont pay too much attention to it because it includes
too many non-operating costs (depreciation, amortization, etc.) to be of
any real analysis value. (Your banker may be interested however.)

Management

Ratios.

There are a couple of other ratios that interested outside parties will want to
analyze:

Return on Assets This is calculated by dividing Net Pre-tax Profit


by Total Assets. The ratio is supposed to indicate how efficiently you are
utilizing your assets.

To me, this is a useless analysis for helping you run your business. However, bankers and
investors will always calculate this ratio if you dont.

Return on Investment (ROI) To a bank or investor this is the


most important ratio of all. It is supposed to tell youthe business owner
if you are investing your time, and money, properly, or should you just
liquidate your business and put the money into a savings account.

45

This, of course, is pure bull concocted by non-entrepreneurs and academics who have
no idea what it means to be an entrepreneur.
Having said that, I do realize it can be of some value to a banker or investorthey likely
want to know if they could make a better return on their money by investing or loaning it
to someone other than you. So, for that purpose, it can be valuable to them.
To calculate your Return on Investment, divide your Net Pre-tax Profit by your Net
Worth (total assets minus total liabilities).

46

CHAPTER-II
INDUSTRY PROFILE
&
COMPANY PROFILE

47

Manufacturing is the use of machines, tools and labor to produce goods for use or sale.
The term may refer to a range of human activity, from handicraft to high tech, but is most
commonly applied to industrial production, in which raw materials are transformed into
finished goods on a large scale. Such finished goods may be used for manufacturing
other, more complex products, such as aircraft, household appliances or automobiles, or
sold to wholesalers, who in turn sell them to retailers, who then sell them to end users
the "consumers".
Manufacturing takes turns under all types of economic systems. In a free market
economy, manufacturing is usually directed toward the mass production of products for
sale to consumers at a profit. In a collectivist economy, manufacturing is more frequently
directed by the state to supply a centrally planned economy. In free market economies,
manufacturing occurs under some degree of government regulation.
Modern manufacturing includes all intermediate processes required for the production
and integration of a product's components. Some industries, such as semiconductor and
steel manufacturers use the term fabrication instead.
The manufacturing sector is closely connected with engineering and industrial design.
Examples of major manufacturers in North America include General Motors Corporation,
General Electric, and Pfizer. Examples in Europe include Volkswagen Group, Siemens,
and Michelin. Examples in Asia include Toyota, Samsung, and Bridgestone.

48

History and development

In its earliest form, manufacturing was usually carried out by a single skilled
artisan with assistants. Training was by apprenticeship. In much of the preindustrial world the guild system protected the privileges and trade secrets of
urban artisans.

Before the Industrial Revolution, most manufacturing occurred in rural areas,

where

household-based manufacturing served as a supplemental subsistence strategy to

49

agriculture (and continues to do so in places). Entrepreneurs organized a number of


manufacturing households into a single enterprise through the putting-out system.

Toll manufacturing is an arrangement whereby a first firm with specialized


equipment processes raw materials or semi-finished goods for a second firm.

Manufacturing systems: changes in methods of manufacturing

Craft or Guild system

Tropicana system

English system of manufacturing

American system of manufacturing

Soviet collectivism in manufacturing

Mass production

Just In Time manufacturing

Lean manufacturing

Flexible manufacturing

Mass customization

Agile manufacturing

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Rapid manufacturing

Prefabrication

Packaging and labeling

Ownership

Fabrication

Publication

Economics of manufacturing
According to some economists, manufacturing is a wealth-producing sector of an
economy, whereas a service sector tends to be wealth-consuming.[1][2] Emerging
technologies have provided some new growth in advanced manufacturing employment
opportunities in the Manufacturing Belt in the United States. Manufacturing provides
important material support for national infrastructure and for national defense.
On the other hand, most manufacturing may involve significant social and environmental
costs. The clean-up costs of hazardous waste, for example, may outweigh the benefits of
a product that creates it. Hazardous materials may expose workers to health risks.
Developed countries regulate manufacturing activity with labor laws and environmental
laws. Across the globe, manufacturers can be subject to regulations and pollution taxes to
offset the environmental costs of manufacturing activities. Labor Unions and craft guilds
have played a historic role in the negotiation of worker rights and wages. Environment
51

laws and labor protections that are available in developed nations may not be available in
the third world. Tort law and product liability impose additional costs on manufacturing.
Manufacturing may require huge amounts of fossil fuels. Automobile construction
requires, on average, 20 barrels of oil.

Manufacturing and investment


Surveys and analyses of trends and issues in manufacturing and investment around the
world focus on such things as:

the nature and sources of the considerable variations that occur cross-nationally in
levels of manufacturing and wider industrial-economic growth;

competitiveness; and

attractiveness to foreign direct investors.

In addition to general overviews, researchers have examined the features and factors
affecting particular key aspects of manufacturing development. They have compared
production and investment in a range of Western and non-Western countries and
presented case studies of growth and performance in important individual industries and
market-economic sectors.[4][5]
On June 26, 2009, Jeff Immelt, the CEO of General Electric, called for the United States
to increase its manufacturing base employment to 20% of the workforce, commenting
that the U.S. has outsourced too much in some areas and can no longer rely on the
52

financial sector and consumer spending to drive demand. A total of 3.2 million one in
six U.S. manufacturing jobs have disappeared between 2000 and 2007. In the UK, EEF
the manufacturers organisation has led calls for the UK economy to be rebalanced to rely
less on financial services and has actively promoted the manufacturing agenda.
Evolution of the manufacturing industry:

Manufacturing industries came into being with the occurrence of technological and socioeconomic transformations in the Western countries in the 18th-19th century. This was
widely known as industrial revolution. It began in Britain and replaced the labor intensive
textile production with mechanization and use of fuels.
Working of manufacturing industry:

Manufacturing industries are the chief wealth producing sectors of an economy. These
industries use various technologies and methods widely known as manufacturing process
management. Manufacturing industries are broadly categorized into engineering
industries, construction industries, electronics industries, chemical industries, energy
industries, textile industries, food and beverage industries, metalworking industries,
plastic industries, transport and telecommunication industries.
Manufacturing industries are important for an economy as they employ a huge share of
the labor force and produce materials required by sectors of strategic importance such as
national infrastructure and defense. However, not all manufacturing industries are
beneficial to the nation as some of them generate negative externalities with huge social

53

costs. The cost of letting such industries flourish may even exceed the benefits generated
by them.

World Manufacturing Industry


Owing to the emerging technologies world wide, the world manufacturing industry
has geared up and has incorporated several new technologies within it's purview.
Economists consider the World manufacturing industry as a sector which generates a
lot of wealth. Generating employment, introducing latest techniques, real earnings from
shipments etc., have put the world manufacturing industry in a favorable position.
With the implementation of the concept of eco friendly environment, world
manufacturing industry has taken several measures to ensure that the manufacturing
industries worldwide abide by the eco friendly norms. World manufacturing industry also
plays an important role in the defense of a country. By manufacturing aircrafts which
play a vital role in the country's defense, the aerospace manufacturing industry acts as a
shield. Other industries in the manufacturing sector manufacture products which are
indispensable in our daily lives. With regard to the GDP or gross domestic product, world
manufacturing industry contributes to the global economy as well as the global GDP.

World manufacturing industry and type of economy:


Capitalist economy:

Manufacturing industries in a capitalist economy indulges in mass production and make


them available to the customers by earning profits.
54

Collectivist economy:

Manufacturing industry in a collectivist economy is guided by a state run agency for


making available the manufactured goods depending on the requirement.
Modern economy:

Manufacturing industry in a modern economy operates under regulations framed by the


Government.

Paints
The paint industry volume in India has been growing at 15% per annum for quite
some years now. As far as the future growth prospects are concerned, the industry is
expected to grow at 14-16% annually over the next five years. FY13 was a challenging
year for the industry as a whole due to subdued demand across key sectors and rising
inflation.
The unorganised sector controls around 35% of the paint market, with the
organised sector accounting for the balance. In the unorganised segment, there are about
2,000 units having small and medium sized paints manufacturing plants. Top organised
players include Asian Paints, Kansai Nerolac, Berger Paints and ICI.

Demand for paints comes from two broad categories:


Decoratives: Major segments in decoratives include exterior wall paints, interior wall
paints, wood finishes and enamel and ancillary products such as primers, putties etc.
Decorative paints account for over 72% of the overall paint market in India. Asian Paints
55

is the market leader in this segment. Demand for decorative paints arises from household
painting, architectural and other display purposes. Demand in the festive season
(September-December) is significant, as compared to other periods. This segment is price
sensitive and is a higher margin business as compared to industrial segment.
Industrial: Three main segments of the industrial sector include automotive coatings,
powder coatings and protective coatings. Kansai Nerolac is the market leader in this
segment. User industries for industrial paints include automobiles engineering and
consumer durables. The industrial paints segment is far more technology intensive than
the decorative segment.
The paints sector is raw material intensive, with over 300 raw materials (30%
petro-based derivatives) involved in the manufacturing process. Since most of the raw
materials are petroleum based, the industry benefits from softening crude prices.

Key Points
Supply
Supply exceeds demand in both the decorative as well as the industrial paints segments.
Industry is fragmented.

Demand
Demand for decorative paints depends on the housing sector and good monsoons.
Industrial paint demand is linked to user industries like auto, engineering and consumer
durables.

56

Barriers to entry
Brand, distribution network, working capital efficiency and technology play a crucial
role.

Bargaining power of suppliers


Price increase constrained with the presence of the unorganised sector for the decorative
segment. Sophisticated buyers of industrial paints also limit the bargaining power of
suppliers. It is therefore that margins are better in the decorative segment.

Bargaining power of customers


High due to availability of wide choice.

Bargaining power of suppliers


Bargaining power of customers

Competition
In both categories, companies in the organised sector focus on brand building. Higher
pricing through product differentiation is also followed as a competitive strategy.

Financial Year '13

57

FY13 was a mixed bag for the paint companies. While all the 3 players viz. Asian
Paints, Kansai Nerolac and Berger Paints reported strong growth in sales, operating
margins came under severe pressure due to raw material price inflation. Top-line growth
was boosted by strong demand from the decorative paints segment. Nonetheless, the
demand environment in the industrial segment continues to remain challenging due to
rising interest rates.

Performance on the margins front was a big disappointment. Rising prices of


crude oil and titanium dioxide increased the overall expenditure thereby impacting
profitability growth. However, companies are undertaking a gradual and calibrated price
increase to shield margins. Nonetheless, as a complete pass on of raw material price
increase is not possible in the industrial segment, the blended margins continue to suffer.
All the key players are in an expansion phase. Asian Paints' plant in Khandala,
Maharashtra is under construction and is expected to be commissioned by 4QFY13.
Kansai Nerolac's capacity expansion plans at Jainpur and Hosur culminated during the
year. Berger Paints has also undertaken capacity expansion for its plants located in
Andhra Pradesh and Goa. Further, it is also contemplating to set up a manufacturing
facility in Pune, Maharashtra.

Prospects
The market for paints in India is expected to grow at 1.5 times to 2 times GDP in
the next five years. With GDP growth expected to be over 7% levels, the top three players

58

are likely to clock above industry growth rates, especially given the fact that protection
that was available to unorganised players has come down significantly.
Decorative paints segment is expected to witness higher growth going forward.
The fiscal incentives given by the government to the housing sector have benefited the
housing sector immensely. This will benefit key players in the long term.
Although the demand for industrial paints is lukewarm it is expected to increase
going forward. This is on account of increasing investments in infrastructure. Domestic
and global auto majors have long term plans for the Indian market, which augur well for
automotive paint manufacturers like Kansai Nerolac and Asian-PPG. Increased industrial
paint demand, especially powder coatings and high performance coatings will also propel
topline growth of paint majors in the medium term.

COMPANY PROFILE
59

Madhucon group has interests in Construction, Granites Coal and Power Sugars. The
Group is based in Hyderabad, India. Promoter-Chairman Sri N Nageswara Rao, a name
to reckon with in the field of Civil Engineering Construction, with clear foresight far
beyond his years has steered the Company to great heights. His passion for Quality,
uncompromising adherence to principles, his interest in cutting-edge engineering
technologies and his care for the employees and society earned several awards and
recognitions for the Group.

Madhucon Projects Limited


Madhucon Projects Limited (MPL) is a profit making listed Public Limited Company
engaged in execution of Infrastructure Projects, such as construction of National
Highways, Fly-Overs, Dams, Tunnels, Aquaducts, Bridges, Coal Handling Plants,
Workshops Property Development Projects including High Rise structures, Hospitality
60

and retail industry structures etc. & enjoying substantial non-fund based limits in the
form of Bank Guarantees with Banks under Multiple Banking arrangements.

Madhucon Granites Limited


Madhucon Granites Ltd(MGL) has an experience of over 16 years in the business of
quarrying dimensional granite blocks and production of polished slabs catering to the
needs of international markets, the world over. It has earned a name for quality,
dependability and competitiveness in the international market for its products with a wide
variety of colours and shades. MGL established its first 100% EOU in 1988, in the
granite rich region of Khammam District in Andhra Pradesh.
The factory at Khammam processes a wide variety of intricately patterned monuments in
various shades of Black, Black Galaxy, Vizag Blue, Paradise,etc. crafted by skilled
artisans.
MGL has a reputation for excellence in terms of quality of products and timely delivery
of shipments, catering to the varied needs of the customers, the world over.
MGL has a very sophisticated Processing Plant spread over 12.5 acres near Hosur on
Bangalore - Chennai Highway. The-state-of-the-art facility is an epitome of excellence in
design and work flow methods - equipped with Avant-Garde processing know-how from
Germany and France.This Plant envisages an annual production of 7,00,000 sq. meters
finished slabs of 2-4 Cms thickness and in sizes ranging from 2.60 x 1.20 to 3.40 x 2.10
meters.

61

Madhucon Granites owns quarries spanning over 2250 acres of land having abundant
Granite deposits in the States of Andhra Pradesh, Tamil Nadu, Karnataka, Orissa and
Madhya Pradesh in India. The jewel of the crown is the world famous Black Galaxy
quarries in Chimakurthy area of Prakasam District of Andhra Pradesh, which alone
produces about 1000 CBM of rough blocks every month.
MGL has to its credit an exquisite variety of fine Granite-earthy stones to soft corals and
greens. The range displays rare varieties of textural beauty and shades such as - Steel
Grey, Absolute Black, Vizag Blue, Ilkal Rose, White Galaxy, Himalayan Blue, Kashmir
White, Paradise, Red Multi, Imperial Green, Seaweed Green, Tan Brown, Salem Blue,
Madhura Gold, Kashmir Gold, Columbo Jupurana and Lady Dream.
MGL has its presence felt in USA, UK, Japan, Germany, France, Italy, Belgium, Holland,
Middle East and Australia. MGL is developing its own distribution network in USA,
Middle East, Australia and other countries. MGL has warehouses in Dubai, Australia,
Indonesia & USA.

Madhucon Sugars Limited


Madhcon acquired a loss-making and sick sugar factory in the co-operative sector at
Khammam and turned it to a profit making company. Madhucon Sugars Limited's (MSL)
present crushing capacity is 1500 TPD, which is being augmented to 5000 TPD in stages.
The sugar factory is adding an Ethanol Distillery also, apart from setting up a 22MW
Cogen Plant for producing power, using bagasse as the main fuel.

Simhapuri Energy Limited


62

Simhapuri Energy Pvt. Ltd. (SEPL), incorporated on December 2, 2005 Madhucon is


setting up a coal based thermal power project of ultimate capacity of 1920 MW in phase
I, II and III at Tamminapatnam and Mommidi Villages, Chillakur Mandal, SPSR Nellore
District of Andhra Pradesh. Power purchases Agreement (PPA) and coal linkage have
been tied up with power Trading Corporation of India. The fuel coal for our power plant
is met from our own mines in Indonesia.

PT Madhucon Indonesia
Madhucon has started open cast coal mining in Indonesia on a 100 acres site initially. We
expect to mine about 3 lakh tonnes production by December 2007. The coal has higher
calorific value and less ash content compared to domestic coal.

About Us
Established in 1983
Engaged in Execution of Expressways and National Highways , Irrigation &
Water Supply, Dams, Tunnels, Spillways, Canal systems, Sewage Treatment, Engineering
and Property Development Projects.

The Company
As one of India's leading Engineering, Procurement and Construction (EPC) and
Build, Operate and Transfer (BOT) Contractors, we have executed wide ranging
projects in the areas of State & National Highways, Bridges, Flyovers, Irrigation Projects

63

(Dams, Canals, Tunnels) Industrial Projects, Townships, Railway Projects etc. Madhucon
has a rich and varied track record as a premier Construction Company.
We mobilize state-of-the-art equipment along with a team of technicians, qualified &
experienced engineers to complete our projects, with uncompromising focus on speed,
quality and safety. We set benchmarks for ourselves and achieved a long list of firsts.
(Look at our Achievements & Awards section for more information).
Madhucon

has a wide

ranging

experience in design & execution of huge Civil

Engineering projects, both on item rate as well as EPC/BOT basis. Madhucon has an in
house Design engineering cell manned by qualified, experienced Design engineers
equipped with state of art software.
Madhucon is a leader in construction of Highways and Expressways. Madhucon has built
nearly 500 KM of Highways in the Golden Quadrilateral Road Network in India
connecting Mumbai, Delhi, Calcutta and Chennai. Which works out to be 70% of the
length of the golden quadrilateral. MPL won recognition from National Highway
Authority of India for its Quality and Speed in execution.
Our large fleet of state-of-the-art machinery and equipment, a majority of which are
procured from overseas are worth over INR 4 billions.

Divisions
To facilitate concentrated working and fast expansion, Madhucon has set up 7 Operating
Divisions.

BOT Projects
64

Highways & Airports


Irrigation
Hydel Power
Property Development
Water Resources
Overseas Projects
Recognitions
Fastest Growing Construction Company Award for the year 2004 from National
Institute of Construction Management And Research(NICMAR)
Innovation in Road Construction from Construction World Ingersoll Rand in 2005.
Joint Venture & Consortiums Partners
Sinohydro Corporation, Beijing, China (a US$2 Billion company) specializing in Water
Resources Projects
(Madhucon-Sinohydro JV)
Binapuri Sdn Bhd, Malaysia, experts in Highways and Property Development
(Madhucon-Binapuri JV)
Kanchanjunga Constructions, Nepal, a leading Construction Company
(Madhucon-Kanchanjunga JV)
65

Glomac Berhard, Malaysia, a leading company in Property Development


(Glomac-Madhucon JV)
WCT Land Berhard, Malaysia, a leading Property Development Company of Malaysia
(WCT Land-Madhucon JV)
SKEC, Seoul, Korea, a leading Infrastructure company of South Korea.
(Madhucon-SKEC JV)

Special Strengths
We are well equipped for infrastructure construction, particularly in the areas of
Expressways and Toll Roads; we have built hundreds of kilometres of Roads, including
National and State Highways and Expressways. Equally noteworthy are our projects in
the irrigation, property development and railway sectors.

Future Outlook
Madhucon Projects Limited is one of the top players in India in the construction
engineering sector. Madhucon desires to participate in a big way in the Property
Development sector as well.
With the increasing impetus being given by the Government of India in its yearly budget
for infrastructure development, Madhucon aspires to bag several prestigious projects.

66

Madhucon is also studying the overseas markets and keenly watching the developments
with a view to make an entry into the world markets at an appropriate time.

Management Team
Sri N Nageswara Rao, the Founder of MADHUCON group, is an entrepreneur with a
clear vision who established the name of MADHUCON in the Indian and global markets.
A man known for his unrelenting passion for quality, has taken the group to new heights
as evidenced by the fact that a Rs 2/- share of Madhucon Projects Limited, the flagship
company of the group, has gone up more than 100 times and is quoted at Rs 282/- on the
premier Bombay Stock Exchange.

Founder
He has an uncompromising spirit on principles, an eye for detail--both major and minor.
Putting work before self and using his cutting edge Human Resources, placed the group
in a commanding position. His leadership qualities endear him to the Madhucon family,
demonstrated by the loyalty of the personnel and their work ethos. He can discriminate
between the good and the bad easily and is a quick decision maker.
The qualities of compassion, foresight, wisdom, punctuality, single minded concentration
on the objectives, instant decision making and evaluation of Strengths, Weaknesses,
Opportunities and Threats (SWOT) embedded in him, have taken the group to new
heights with a phenomenal growth in the recent years. Mr.Nageswara Rao's untiring
efforts in constantly nurturing the organization from scratch made it possible for the
company to achieve the recognition of being the fastest growing construction company of

67

the year in 2004. His able guidance, visionary leadership and ambitious plans, we are
sure, would take the group to dizzy heights in the near future.

Managing Director
Sri N Seethaiah, the Managing Director is a technocrat in-charge of the execution of the
massive projects Madhucon undertakes in various States. He is always mobile and is
quick in decision making. He can assess what is required for the project to race ahead and
takes timely decisions to see that the project is not starved of good management. He is
well versed in cost estimation and is an effective Public Relations Manager. These
qualities in him coupled with the positive attitude of making others learn on the job,
enable MPL to successfully complete the projects, some of them even before scheduled
time, earning reputation and awards for the company.
Sri N Krishnaiah, Managing Director, ably handles the operations in the Granite field.
His passion for Granite Mining is well proven. His 16 years experience in the fields of
survey, mining and marketing has led Madhucon Group to own and operate Granite
quarries of many hues and colours.His Commitment, Dedicated Work and Ambitious
Plans are a boon to Madhucon Granites, which is set to soar high with the existing
opportunities and ebullient markets encompassing the Granite Industry.

ACHIEVEMENTS
Created a record by laying 1470 Running Meters of 2-Lane Rigid Pavement of National
Highway-76 Chittorgarh- Mangalwar Road in a single day.

68

Completed National Highway-76 from Chittorgarh- Mangalwar of 48kms Length, 4/6


divided Carriageway, one year ahead of schedule.
Executed 360 km of 4/6 Laning on National Highways in the last 5 Years and 100 km
Rigid (Concrete) Pavement within the last 3 years.
Executed 1 lakh Cum of Earthwork in a single day in SRSP Flood Flow Canal,
Karimnagar, AP
Executed 170 mts. of tunnel length in one month in one face of BG Single Line Tunnel,
Ratnagiri (South), Konkan Railway Corporation.
Community
Madhucon is committed to fulfilling its Corporate Social Responsibility by supporting
communities in areas where we do business and has a long-standing record of this
support. Our objective is to improve the economic status and expand opportunities for the
local needy.
Our activities range from providing employment to the local youth to carrying out
welfare activities like supplying/ providing drinking water, medical facilities etc.
Sri Nama Nageswara Rao, Chairman, Madhucon group, founded the Nama Muthiah
Memorial Trust (in memory of his father) to undertake various social service activities for
the benefit of the Society in general and development of the local backward areas around
the various projects undertaken by Madhucon.
His main aim is to bring a marked change in the lives of people and the communities
among which our Company undertakes projects.
69

Nama Muthiah Memorial Trust has undertaken the following activities


Supply of drinking water through tankers in Khammam Urban localities and nearby
rural villages and Girijan Thandas.
Supplying Drinking water in packets during Jatharas and village festivals.
Undertaking repairs of dried village tanks and digging borewells by using the
machinery of Madhucon Granites.
Digging Borewells for providing water to the agricultural farmers.
Financial assistance to freedom fighters.
Providing employment to local youth in the groups Sugar, Granite and Infrastructure
Companies.
Acquired sick Palair Sugar Factory with a view to reviving and providing employment
to the local youth and lending a helping hand to sugar cane growers/farmers.
Helping poor patients.
Financial assistance to Tsunami affected people.
Rewards to the meritorious students and financial assistance to the poor Adivasis and
Girijan Thandas for their education.

70

CHAPTER-IV
DATA ANALYSES AND
INTERPRETATION
71

Table 1: Comparative Balance Sheet as on 31st March 2015 -2016


PARTICULARS

Mar'14

Mar '13

ABSOLUTE

CHANGE
0

Total Share Capital

7.40

7.40

Equity Share Capital

7.40

7.40

Reserves

698.89

668.03

30.86

4.61955

Networth

706.29

675.43

30.86

4.56894

Secured Loans

512.71

478.48

34.23

7.1539

Total Debt

512.71

478.48

34.23

7.1539

1,219.00

1,153.91

65.09

5.64082

Gross Block

537.74

536.88

0.86

0.16018

Less: Accum. Depreciation

409.53

363.66

45.87

12.6134

Net Block

128.21

173.22

-45.01

-25.984

1,377.21

1,357.49

19.72

1.45268

51.58

57.33

-5.75

-10.03

116.46

381.96

-265.5

-69.51

19.57

22.92

-3.35

-14.616

Total Liabilities

Investments
Inventories
Sundry Debtors
Cash and Bank Balance

72

CHANGE

IN %

Total Current Assets

187.61

462.21

-274.6

-59.41

Loans and Advances


Total CA, Loans &

1,477.46

1,089.79

387.67

35.5729

1,665.07

1,552.00

113.07

7.28544

Current
Liabilities
Advances

1,874.43

1,808.50

65.93

3.64556

77.05

120.31

-43.26

-35.957

1,951.48

1,928.81

22.67

1.17534

-286.41

-376.81

90.4

-23.991

Total Assets

1,219.01

1,153.90

65.11

5.6426

Contingent Liabilities

1,133.15

1,972.14

-838.99

-42.542

95.71

91.53

4.18

4.56681

Provisions
Total CL & Provisions
Net Current Assets

Book Value (Rs)

INTERPRETATION:
The current assets are in negative sign, inventories are increased and current
assets are 90.40 cr increased and sundry debtors are decreased i.e. -265 and cash and
bank balances are decreased is3.35 and loans and advances are increased in 387.65

73

Cr.The net current Aspects i.e. current assets over current liabilities are decreased the
value is -2.10.
The current liabilities are in this year decreased and provisions are increased in
the working capital net increased for the company.

Table 1: Comparative Balance Sheet as on 31st March 2014 -2015


particulars

Mar'15

ABSOLUTE CHANGE

Mar '14

Total Share Capital

7.40

7.40

00

Equity Share Capital

7.40

7.40

00

Reserves

668.03

635.12

32.910

Networth

675.43

642.52

Secured Loans

478.48

561.86

32.910.
-83.38-.

Total Debt

478.48

561.86

1,153.91

1,204.38

Gross Block
Less: Accum.

536.88

512.23

363.66

311.45

Net
Block
Depreciation

173.22

200.78

1,357.49

1,144.25

57.33

41.94

381.96

644.65

Total Liabilities

Investments
Inventories
Sundry Debtors

-83.38-0
-50.47-0
24.6500
52.210.
-27.56-.
213.2400
15.390.
-262.69-.
0

74

22.92

34.82

-11.9-

Total Current Assets

462.21

721.41

Loans and Advances


Total CA, Loans &

1,089.79

1,106.24

-259.2-0
-16.45-0

1,552.00

1,827.65

Current
Liabilities
Advances

1,808.50

1,839.67

120.31

128.63

1,928.81

1,968.30

-376.81

-140.65

Total Assets

1,153.90

1,204.38

Contingent Liabilities

1,972.14

1,351.83

91.53

87.07

Cash and Bank Balance

Provisions
Total CL & Provisions
Net Current Assets

Book Value (Rs)

-275.65-0
-31.17-0
-8.32-0
-39.49-0
-236.1610
-50.48-.
620.3100
4.460.
.

INTERPRETATION:

75

The current assets are in negative sign, inventories are increased and current
assets are 462.21 cr decreased and sundry debtors are increased i.e 381.96 and cash and
bank balances are decreased is22.92 and loans and advances are increased in 1089.79.The
net current Aspects i.e. current assets over current liabilities are decreased the value is
-1.67.
The current liabilities are in this year decreased and provisions are increased in
the working capital net increased for the company.

Table 1: Comparative Balance Sheet as on 31st March 2013 -2014

PARTICULARS

Mar14

Mar 13

ABSOLUTE

CHANGE
0

Total Share Capital

7.40

7.40

Equity Share Capital

7.40

7.40

Reserves

635.12

601.21

33.91

5.64029

Networth

642.52

608.61

33.91

5.57171

Secured Loans

561.86

579.51

-17.65

-3.0457

0.00

171.12

-171.12

-100

561.86

750.63

-188.77

-25.148

1,204.38

1,359.24

-154.86

-11.393

Gross Block

512.23

505.22

7.01

1.38751

Less: Accum. Depreciation

311.45

264.24

47.21

17.8663

Net Block

200.78

240.98

-40.2

-16.682

1,144.25

756.14

388.11

51.3278

Unsecured Loans
Total Debt
Total Liabilities

Investments

76

CHANGE

IN %

41.94

178.40

-136.46

-76.491

644.65

378.53

266.12

70.3035

34.82

60.32

-25.5

-42.275

Total Current Assets

721.41

617.25

104.16

16.8748

Loans and Advances

1,106.24

764.66

341.58

44.6708

Inventories
Sundry Debtors
Cash and Bank Balance

Fixed Deposits
Total CA, Loans &

0.00

3.75

-3.75

-100

1,827.65

1,385.66

441.99

31.8974

Current
Liabilities
Advances

1,839.67

991.13

848.54

85.6134

128.63

32.40

96.23

297.006

1,968.30

1,023.53

944.77

92.3051

-140.65

362.13

-502.78

-138.84

Total Assets

1,204.38

1,359.25

-154.87

-11.394

Contingent Liabilities

1,351.83

1,160.12

191.71

16.525

87.07

82.47

4.6

5.57779

Provisions
Total CL & Provisions
Net Current Assets

Book Value (Rs)

INTERPRETATION:

77

The current assets are in negative sign, inventories are increased and current
assets are 140.65 cr decreased and sundry debtors are increased i.e 644.65 and cash and
bank balances are decreased is34.82 and loans and advances are increased in 1106.24.The
net current Aspects i.e. current assets over current liabilities are decreased the value is
-13.84.
The current liabilities are in this year decreased and provisions are increased in
the working capital net increased for the company.

Table 1: Comparative Balance Sheet as on 31st March 2012 -2013

PARTICULARS

Mar '12 ABSOLUT CHANGE

Mar '13

Total Share Capital

7.40

7.40

Equity Share Capital

7.40

7.40

Reserves

601.21

570.96

30.25

5.29809

Networth

608.61

578.36

30.25

5.23031

Secured Loans

579.51

512.58

66.93

13.0575

Unsecured Loans

171.12

0.00

171.12

Total Debt

750.63

512.58

238.05

46.4415

1,359.24

1,090.94

268.3

24.5935

Gross Block

505.22

491.02

14.2

2.89194

Less: Accum. Depreciation

264.24

217.61

46.63

21.4282

Total Liabilities

78

IN %

Net Block

240.98

273.41

-32.43

-11.861

Investments

756.14

638.65

117.49

18.3966

Inventories

178.40

75.11

103.29

137.518

Sundry Debtors

378.53

123.69

254.84

206.031

60.32

48.52

11.8

24.3199

Total Current Assets

617.25

247.32

369.93

149.575

Loans and Advances

764.66

498.41

266.25

53.4199

3.75

6.95

-3.2

-46.043

1,385.66

752.68

632.98

84.0968

991.13

544.71

446.42

81.9555

32.40

29.10

3.3

11.3402

1,023.53

573.81

449.72

78.3744

362.13

178.87

183.26

102.454

Total Assets

1,359.25

1,090.93

268.32

24.5955

Contingent Liabilities

1,160.12

460.58

699.54

151.882

82.47

78.37

4.1

5.23159

Cash and Bank Balance

Fixed Deposits
Total CA, Loans & Advances
Current Liabilities
Provisions
Total CL & Provisions
Net Current Assets

Book Value (Rs)

79

INTERPRETATION:
The current assets are in positive trend ,it shows inventories are increased and
current assets are 362.13 increased and sundry debtors are increased i.e 378.53 and cash
and bank balances are increased is 60.32 and loans and advances are increased in
764.66.The net current Aspects i.e. current assets over current liabilities are increased the
value is 10.24.
The current liabilities are in this year increased and provisions are increased in the
working capital net increased for the company.

Table 1: Comparative Balance Sheet as on 31st March 2011 -2012

PARTICULARS

Mar '11 ABSOLUT CHANGE IN

Mar '12

Total Share Capital

7.40

7.40E

Equity Share Capital

7.40

7.40

Reserves

570.96

528.62

42.34

8.00953

Networth

578.36

536.02

42.34

7.89896

Secured Loans

512.58

319.87

192.71

60.2464

Total Debt

512.58

319.87

192.71

60.2464

1,090.94

855.89

235.05

27.4626

Gross Block

491.02

448.97

42.05

9.36588

Less: Accum. Depreciation

217.61

173.12

44.49

25.6989

Net Block

273.41

275.85

-2.44

-0.8845

Total Liabilities

80

Investments

638.65

372.76

265.89

71.3301

Inventories

75.11

51.70

23.41

45.2805

123.69

87.47

36.22

41.4085

48.52

59.24

-10.72

-18.096

Total Current Assets

247.32

198.41

48.91

24.651

Loans and Advances

498.41

491.04

7.37

1.5009

6.95

25.54

-18.59

-72.788

Total CA, Loans & Advances

752.68

714.99

37.69

5.2714

Current Liabilities

544.71

490.79

53.92

10.9864

29.10

29.47

-0.37

-1.2555

Total CL & Provisions

573.81

520.26

53.55

10.2929

Net Current Assets

178.87

194.73

-15.86

-8.1446

1,090.93

855.90

235.03

27.46

460.58

217.28

243.3

111.975

78.37

145.27

-66.9

-46.052

Sundry Debtors
Cash and Bank Balance

Fixed Deposits

Provisions

Total Assets
Contingent Liabilities
Book Value (Rs)

81

INTERPRETATION:
The current assets are in positive trend this shows inventories are increased and
current assets are 178.87 increased and sundry debtors are increased i.e 123.69 and cash
and bank balances are decreased is 48.52 and loans and advances are increased in
498.41.The net current Aspects i.e. current assets over current liabilities are increased the
value is 8.14.
The current liabilities are in this year increased and provisions are increased in the
working capital net increased for the company.

Table 1: Analysis of Common Size Balance Sheets as on 31 st March 2015


-2016

PARTICULARS

Sources Of Funds
Total Share Capital
Equity Share Capital
Reserves
Networth
Secured Loans
Total Debt
Total Liabilities
Application Of Funds
Gross Block
Less: Accum. Depreciation

% of total

Mar '16

Mar '15

% of total

7.4
7.4
698.89
706.29
512.71
512.71
1,219.00

0.60705496
0.60705496
57.3330599
57.9401148
42.0598852
42.0598852
100

7.40
7.40
668.03
675.43
478.48
478.48
1,153.91

0.641298
0.641298
57.89273
58.53403
41.46597
41.46597
100

537.74
409.53

44.1132075
33.5955701

536.88
363.66

46.52703
31.51546

82

Net Block
Investments
Inventories
Sundry Debtors
Cash and Bank Balance
Total Current Assets
Loans and Advances
Total CA, Loans & Advances
Current Liabilities
Provisions
Total CL & Provisions
Net Current Assets
Total Assets
Contingent Liabilities
Book Value (Rs)

128.21
1,377.21
51.58
116.46
19.57
187.61
1,477.46
1,665.07
1,874.43
77.05
1,951.48
-286.41
1,219.01
1,133.15
95.71

Interpretation:
83

10.5176374
112.978671
4.23133716
9.55373257
1.60541427
15.390484
121.202625
136.593109
153.767842
6.32075472
160.088597
-23.49548
100
92.9573421
7.85151764

173.22
1,357.49
57.33
381.96
22.92
462.21
1,089.79
1,552.00
1,808.50
120.31
1,928.81
-376.81
1,153.90
1,972.14
91.53

15.01157
117.6426
4.968325
33.10137
1.98629
40.05598
94.44324
134.4992
156.728
10.42629
167.1543
-32.6551
100
170.9093
7.932161

By Analyzing the Trends of the company from 2015-2016 is in the flaxuative Position
and The result of which both the assets and liabilities is given i.e. In the assets the current
assets was Gradually Decreased in 2 %and in the year 2016 is was increased to more than
12% and in same case of liabilities also in the year2015 it has a change of more than 12
%in the long term liabilities

Hence the company is planning for the short term funding and long term liabilities for
the

Stability of the industry year by year

Table 1: Analysis of Common Size Balance Sheets as on 31 st March 2014


-2015
PARTICULARS

Sources Of Funds
Total Share Capital
Equity Share Capital
Reserves
Networth
Secured Loans
Unsecured Loans
Total Debt
Total Liabilities
Application Of Funds
Gross Block
Less: Accum. Depreciation
Net Block
Investments

Mar '15 % of total

Mar '14 % of total

7.40
7.40
668.03
675.43
478.48
0.00
478.48
1,153.91

0.641298
0.641298
57.89273
58.53403
41.46597

7.40
7.40
635.12
642.52
561.86
0.00
41.46597 561.86
100 1,204.38

0.61442402
0.61442402
52.7341869
53.3486109
46.6513891
0
46.6513891
100

536.88
363.66
173.22
1,357.49

46.52703 512.23
31.51546 311.45
15.01157 200.78
117.6426 1,144.25

42.5305967
25.8597785
16.6708182
95.0073897

84

Inventories
Sundry Debtors
Cash and Bank Balance
Total Current Assets
Loans and Advances
Fixed Deposits
Total CA, Loans & Advances
Current Liabilities
Provisions
Total CL & Provisions
Net Current Assets
Total Assets
Contingent Liabilities
Book Value (Rs)

57.33
381.96
22.92
462.21
1,089.79

4.968325 41.94
33.10137 644.65
1.98629 34.82
40.05598 721.41
94.44324 1,106.24

3.48228964
53.5254654
2.8911141
59.8988691
91.851409

1,552.00
1,808.50
120.31
1,928.81
-376.81
1,153.90
1,972.14
91.53

134.4992
156.728
10.42629
167.1543
-32.6551
100
170.9093
7.932161

1,827.65
1,839.67
128.63
1,968.30
-140.65
1,204.38
1,351.83
87.07

151.750278
152.748302
10.680184
163.428486
-11.6782079
100
112.242814
7.22944586

Interpretation:

85

By Analyzing the Trends of the company from 2014-2015 is in the flaxuative Position
and The result of which both the assets and liabilities is given i.e. In the assets the current
assets was Gradually Decreased in 2 %and in the year 2015 is was increased to more than
11% and in same case of liabilities also in the year2015 it has a change of more than -11
%in the long term liabilities

Hence the company is planning for the short term funding and long term liabilities for
the Stability of the industry year by year

Table 1: Analysis of Common Size Balance Sheets as on 31 st March 2013


-2014
PARTICULARS

Sources Of Funds
Total Share Capital
Equity Share Capital
Reserves
Networth
Secured Loans
Unsecured Loans
Total Debt
Total Liabilities
Application Of Funds
Gross Block
Less: Accum. Depreciation
Net Block
Investments

Mar '14 % of total


7.40
7.40
635.12
642.52
561.86
0.00
561.86
1,204.38
512.23
311.45
200.78
1,144.25
86

0.61442402
0.61442402
52.7341869
53.3486109
46.6513891
0
46.6513891
100
0
42.5305967
25.8597785
16.6708182
95.0073897

Mar '13 % of total


7.40
7.40
601.21
608.61
579.51
171.12
750.63
1,359.24
505.22
264.24
240.98
756.14

0.54442188
0.54442188
44.2313352
44.775757
42.6348548
12.5893882
55.224243
100
0
37.1693005
19.4402754
17.729025
55.6296166

Inventories
Sundry Debtors
Cash and Bank Balance
Total Current Assets
Loans and Advances
Fixed Deposits
Total CA, Loans & Advances
Current Liabilities
Provisions
Total CL & Provisions
Net Current Assets
Total Assets
Contingent Liabilities
Book Value (Rs)

41.94
644.65
34.82
721.41
1,106.24
0.00
1,827.65
1,839.67
128.63
1,968.30
-140.65
1,204.38
1,351.83
87.07

3.48228964
53.5254654
2.8911141
59.8988691
91.851409
0
151.750278
152.748302
10.680184
163.428486
-11.6782079
100
112.242814
7.22944586

178.40
378.53
60.32
617.25
764.66
3.75
1,385.66
991.13
32.40
1,023.53
362.13
1,359.25
1,160.12
82.47

13.1249816
27.8486507
4.43777405
45.4114064
56.2564374
0.27588947
101.943733
72.9179542
2.383685
75.3016392
26.6420941
100
85.3506371
6.06736117

Interpretation:

By Analyzing the Trends of the company from 2013-2014 is in the flaxuative Position
and The result of which both the assets and liabilities is given i.e. In the assets the current
87

assets was Gradually Decreased in 1%and in the year 2014 is was increased to more than
11% and in same case of liabilities also in the year2014 it has a change of more than -7
%in the long term liabilities

Hence the company is planning for the short term funding and long term liabilities for
the

Stability of the industry year by year

Table 1: Analysis of Common Size Balance Sheets as on 31 st March 2012


-2013
PARTICULARS

Total Share Capital


Equity Share Capital
Reserves
Networth
Secured Loans
Unsecured Loans
Total Debt
Total Liabilities
Gross Block
Less: Accum. Depreciation
Net Block
Investments
Inventories
Sundry Debtors
Cash and Bank Balance

Mar '13 % of total Mar '12 % of total


7.40
7.40
601.21
608.61
579.51
171.12
750.63
1,359.24
505.22
264.24
240.98
756.14
178.40
378.53
60.32
88

0.54442188
0.54442188
44.2313352
44.775757
42.6348548
12.5893882
55.224243
100
37.1693005
19.4402754
17.729025
55.6296166
13.1249816
27.8486507
4.43777405

7.40
7.40
570.96
578.36
512.58
0.00
512.58
1,090.94
491.02
217.61
273.41
638.65
75.11
123.69
48.52

0.67831411
0.67831411
52.3365171
53.0148312
46.9851688
0
46.9851688
100
45.0088914
19.9470182
25.0618732
58.541258
6.88488826
11.3379288
4.44754065

Total Current Assets


Loans and Advances
Fixed Deposits
Total CA, Loans & Advances
Current Liabilities
Provisions
Total CL & Provisions
Net Current Assets
Total Assets
Contingent Liabilities
Book Value (Rs)

617.25
764.66
3.75
1,385.66
991.13
32.40
1,023.53
362.13
1,359.25
1,160.12
82.47

45.4114064
56.2564374
0.27588947
101.943733
72.9179542
2.383685
75.3016392
26.6420941
100.000736
85.3506371
6.06736117

247.32
498.41
6.95
752.68
544.71
29.10
573.81
178.87
1,090.93
460.58
78.37

22.6703577
45.6862889
0.63706528
68.9937118
49.9303353
2.66742442
52.5977597
16.3959521
99.9990834
42.2186371
7.18371313

Interpretation:

By Analyzing the Trends of the company from 2012-2013 is in the increasing Position
and The result of which both the assets and liabilities is given i.e. In the assets the current
assets was Gradually increased in 3%and in the year 2013 is was increased to more than

89

7% and in same case of liabilities also in the year2013 it has a change of more than 10
%in the long term liabilities

Hence the company is planning for the short term funding and long term liabilities for
the Stability of the industry year by year.

Table 1: Analysis of Common Size Balance Sheets as on 31 st March 2011


-2012
PARTICULARS

Sources Of Funds
Total Share Capital
Equity Share Capital
Reserves
Networth
Secured Loans
Unsecured Loans
Total Debt
Total Liabilities
Gross Block
Less: Accum. Depreciation
Net Block
Investments
Inventories
Sundry Debtors
Cash and Bank Balance
Total Current Assets

Mar '12 % of total Mar '11 % of total


7.40 0.67831411
7.40 0.67831411
570.96 52.3365171
578.36 53.0148312
512.58 46.9851688
0
0.00
512.58 46.9851688
100
1,090.94
491.02 45.0088914
217.61 19.9470182
273.41 25.0618732
638.65 58.541258
75.11 6.88488826
123.69 11.3379288
48.52 4.44754065
247.32 22.6703577
90

7.40 0.86459709
7.40 0.86459709
528.62 61.7626097
536.02 62.6272068
319.87 37.3727932
0
0.00
319.87 37.3727932
100
855.89
448.97 52.4565073
173.12 20.2268983
275.85 32.2296089
372.76 43.5523256
51.70 6.04049586
87.47 10.2197712
59.24 6.92145019
198.41 23.1817173

Loans and Advances


Fixed Deposits
Total CA, Loans & Advances
Current Liabilities
Provisions
Total CL & Provisions
Net Current Assets
Total Assets
Contingent Liabilities
Book Value (Rs)

498.41 45.6862889
6.95 0.63706528
752.68 68.9937118
544.71 49.9303353
29.10 2.66742442
573.81 52.5977597
178.87 16.3959521
100
1,090.93
460.58 42.2186371
78.37 7.18371313

491.04 57.3718585
25.54 2.98402832
714.99 83.5376041
490.79 57.3426492
29.47 3.44319948
520.26 60.7858486
194.73 22.7517555
100
855.90
217.28 25.3864398
145.27 16.9729755

Interpretation:

By Analyzing the Trends of the company from 2011-2012 is in the increasing Position
and The result of which both the assets and liabilities is given i.e. In the assets the current
91

assets was Gradually increased in 2%and in the year 2012 is was increased to more than
6% and in same case of liabilities also in the year2012 it has a change of more than 11
%in the long term liabilities.

Hence the company is planning for the short term funding and long term liabilities for
the Stability of the industry year by year

CHAPTER-V
FINDINGS
SUGGESSIONS
CONCLUSIONS
BIBLIOGRAPHY

92

FINDNGS
1. I found that every year the sales are increases in increased manner. It shows good sign for
the organization. It fluctuates only one year due to competition and heavy expenditure in
fixed assets.
2. The Net profit was increased every year. This was happened due to increasing of cost of
goods sold every year
3. In the year 2016, they spend more money towards packing material sealing and
distribution transportation and administration expenses. The shows results in reduction of
operating profit in 2015.
4. On overall ever year cash & bank balance were increased fixed deposits receipts are
decreased inventories on average are in good position.
5. In the year 2015 they minimized the exp .of stores maintenance. But other expensed like
packing materials and transportation charges increased rapidly

93

CONCLUSION

The financial position of Madhucon Projects Limited is quite comfortable with a


judicious mix of debt and equity. The overall assessment of financial statement signifies
efficient utilization of the investments, loans and advances. The profitability of the
company appears to be impressive, as judged by increase in reserves and surplus.

The management discussions and analysis by Directors report and opinions expressed by
Auditors report through financial statements is true and fair view in accordance with the
provisions of the companies Acts, and Accounting standards.
The overall financial position of the company appears to be more than satisfactory.

94

SUGGESTIONS

The company should provide notes to explain items not tallying with the profit
and loss and balance sheet in the Annual report.

Instead of disclosing the combined flows of debtors and loans advances as


decrease/(increase) in trade and other receivables, their separate disclosure will be
more meaningful.

Globalization of economies and the requirement of shares from investors in


capital market, diverse and demanding audience to the company, need a clear and
in-depth in information about the companys financial position in Annual report.

95

Comparison of basic and diluted EPS to be included in Annual report to predict


the EPS sustainable in future.

BIBLIOGRAPHY

SL.

BOOKS:

AUTHOUR NAME

No.
1.
Financial Management
2.
Financial Management
3.
Management Accounting

Kahan & JAIN


I.M.Pandey
R.P.Trivedi

NEWS-PAPERS & JOURNALS:


1. BUSINESS TODAY
2. THE ECONOMIC TIMES

WEBSITES & SEARCH ENGINES


1. www.madhucon.com

96

2. www.moneycontrol.com
3. www.googlefinance.com
Annual reports of Madhucon Projects Limited 2012-2016.

97

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