FM Project

FINANCIAL STATEMENT ANALYSIS OF
AMARARAJA GROUP OF COMPANIES

PROJECT REPORT
Submitted for the course: FINANCIAL MANAGMENT (CCA1028)
BY
(NAME OF THE STUDENTS WITH REG.NO)
P.G.SURESH
K.C.ARUN KUMAR
S.HARISH VENKATRAM
SAMARTH SINGH
KARTHICK
SURESH.J
SLOT: C1+TC1
15BCC0041
15BCC0097
15BCC0119
15BCC0071
15BCC0072
15BCC0004
NAME OF THE FACULTY: AJAY KUMAR SHARMA

(SCHOOL OF SCOIAL SCIENCE)
May, 2016
TABLE OF CONTENTS
CHAPTER
1.
TITLE AND TOPICS

INTRODUCTION
PAGE NO.
5-8
Introduction
Company Profile
2.
OBJECTIVES AND METHODOLOGY
9-12
Need of Study
Scope of study
Review of Literature
Objectives of the study
Research Methodology
Limitations of study
3.
DATA ANALYSIS AND
13-32
INTERPRETATION
4.
FINDINGS AND SUGGESTIONS
33-34
Findings
Suggestions
Conclusions
5.
ANNEXURE
35-47
LIST OF TABLES
SL.NO
PARTICULARS
PAGE NO.
1.
CURRENT RATIO
13
2.
QUICK RATIO
14
3.
CASH RATIO
16
4.
NET WORKING CAPITAL RATIO
17a
5.
DEBT RATIO
18
6.
DEBT EQUITY RATIO
19
7.
TOTAL LIABILITIES RATIO
21
8.
INVENTORY TURNOVER RATIO
22
9.
DEBTORS TURNOVER RATIO
23
10.
FIXED ASSETS TURNOVER RATIO
25
11.
WORKING CAPITAL TURNOVER
26
RATIO
12.
GROSS PROFIT MARGIN
27
13.
NET PROFIT MARGIN
28
14.
OPERATING EXPENSES RATIO
30
15.
RETURN ON EQUITY RATIO
31
LIST OF CHARTS
SL.NO
PARTICULARS
PAGE NO.
1.
CURRENT RATIO
14
2.
QUICK RATIO
15
3.
CASH RATIO
16
4.
17
5.
DEBT RATIO
19
6.
DEBT EQUITY RATIO
20
7.
TOTAL LIABILITIES RATIO
21
8.
INVENTORY TURNOVER RATIO
22
9.
DEBTORS TURNOVER RATIO
24
10.
FIXED ASSETS TURNOVER RATIO
25
11.
WORKING CAPITAL TURNOVER
26
RATIO
12.
GROSS PROFIT MARGIN
28
13.
NET PROFIT MARGIN
29
14.
OPERATING EXPENSES RATIO
30
15.
RETURN ON EQUITY RATIO
31
CHAPTER-I
1.1 INTRODUCTION
Every report has its own theme. The essence of this report is to know the financial condition
of AMARARAJA. This report helps to know about what AMARARAJA is all about and how
the company is performing in financial terms. To measure the financial performance of the
company, ratio analysis is conducted. For this analysis to be conducted, data is needed.
Balance sheet and profit and loss account of the company are used which is purely a
secondary data (given in appendixes) to make such analysis. The time period taken for
conducting this analysis is from 2004 to 2009 i.e. five years. The conclusion made from this
analysis is that AMARARAJA has been growing strongly and is performing well in every
financial aspect.
1.2 COMPANY PROFILE

BRIEF ABOUT THE PROMOTER OF AMARA RAJA GROUP OF COMPANIES:
Dr. Ramachandra N. Galla, a non-resident Indian now settled in India is the main
promoter. Dr. Ramachandra N Galla is an Electrical Engineer from Sri Venkateswara
University, Tirupati and has to his credit, Masters degrees in Applied Electronics, Roorkee,
India and Systems Sciences, Michigan State University, USA.
Dr. Ramachandra N Galla started his career as an Electrical Engineer in US Steel
Corporation, USA and moved on to Sargent & Lundy, USA as a consulting engineer for the
designing of Nuclear and Coal Fired Power Plant. He initiated various projects during his
tenure and mastered the ropes of this competitive business in a very short time. However, Dr.
Ramachandra N Galla was passionate to set up a battery manufacturing plant in India. With a
zeal and highly focused approach, he established, Amara Raja Batteries Limited, which
has grown to the top league of battery companies in India.
Dr. Ramachandra N Galla with his vast knowledge on the battery industry is a source
of inspiration for the employees of ARBL. Dr. Ramachandra N Galla has always been a pillar
of strength and his inputs/advise have been invaluable for the growth of the Company. The
Company also seeks his expertise on various technical issues for which he provides
immediate suggestions and actively involves himself in the affairs of the Company on a
regular basis.
5
AMARA RAJA GROUP OF COMPANIES

Amara Raja Batteries Limited was established in 13th , February 1985 and the converted into
public limited company in the year 1990. Amara Raja has a strategic tie-up with Johnson
Controls Inc. of the U.S.A.
Amara Raja has demonstrated its commitment to offer optimum system solution of
the highest quality and has become the largest supplier of Indian utilities such as the Indian
Railways, Department of Telecommunications, Electricity Board and major power generation
companies.
ARBL comprises of two major division viz., Industrial Battery Division and
Automotive Battery division. The total strength of ARBL is around 1350.
ARBL
Industrial Battery Division
Auto Battery Division
Railway Coaches
Telecom
UPS
INDUSTRIAL BATTERY DIVISION (IBD):

Amara Raja has become the benchmark in the manufacturer of Industrial batteries.
India is one of the largest and fastest growth markets for industrial batteries in the world.
Amara Raja is leading in the front, with an 80% market share is stand by VRLA batteries
point of view. It is also having the facility for production plastic components.
CAPACITY:
The capacity per the year 2005 2006 of IBD is 3,70,000 cells per anum.
PRODUCTS:
6
Amara Raja being the first entrant in this industry and has the privilege of pioneering
VRLA technology in India. Amara Raja has established itself as a reliable supplier of high
quality products to major segments like Telecom, Railways and Power.
COMPETITORS:
The major competitors for Amara Raja Batteries are Exide Industries Ltd.,
and GNB.
AUTOMOTIVE BATTERY DIVISION (ABD):

ARBL has inaugurated its new automotive plant at Karakambadi in Tirupati on
September 24th, 2001. This plan is a part of the most completely integrated battery
manufacturing facility in India with all critical components, including plastics sourced inhouse from existing facilities on site. In this project, Amara Rajas strategic alliance partners
Johnson Controls Inc., of USA have closely worked with their Indian counterparts to put
together the latest advances in manufacturing technology and plant engineering
CAPACITY:
With an existing production capacity of 5 Lakh units of automotive batteries, the new
Greenfield plant will now be able to produce 1 million batteries per annum. This is the first
phase in the enhancement of Amara Rajas production capacity, for this the company has
invested Rs.45 crores and the next phase, at an additional cost of Rs.25 crores, for this the
production capacity will be increase to 2 million units.
PRODUCTS:
The products of ABD are:
Amaron Hi-way
Amaron Harvest
Amaron Shield
Amaron Highlife
The plastic products of ABD are Jars and Jar Covers.
CUSTOMERS:
7
ARBL has prestigious OEM (Original Equipment Manufacture) clients like FORD,
GENERAL
MOTORS,
DAEWOO
MOTORS,
MERCEDES
BENZ,
DAIMLER
CHRYSLER, MARUTI UDYOG Ltd., Premier Auto Ltd., and recent acquired a preference
supplier
alliance
with
ASHOK
LEYLAND,
HINDUSTAN
MOTORS,
TELCO,
MAHINDRA & MAHINDRA and SWARAJ MAZDA.
COMPETITORS:
EXIDE, PRESTOLITE, and AMCO.
CRITICAL ASSESMENT AND EVALUATION OF THE ORGANIZATION

(SWOT ANALYSIS)
Internal Environment Strengths
1) The Amara Raja way
2) Experience in execution of green field projects
3) Strong group company image
4) Availability of Pan India office network
5) Exposure to Quality Management System (QMS)/ Safety Health Environment
(SHE)/Best business practices
Weakness
1) New entrant into business
2) Not
having
full-fledged
function
(Employee,
marketing,
tendering,
project
managementetc.)
Inadequate infrastructure
External Environment Opportunities
1) High potential growth rate in construction industry.
2) Small players benefit from low entry barriers and superior cost structure because of
lower overheads.
3) Untapped potential market in Mechanical Electrical Planning (MEP) services in tier
IIand tier III cities.
Threats
1) Shortage of skilled manpower.
2) High volatile raw material costs
CHAPTER-II
2.1 NEED FOR THE STUDY
The study enables us to have access to various facts of the Amara raja Group of Companies.
It helps in understanding the needs for the importance and advantage of materials in the
organization, the study also helps to exposure our minds to the integrated Financial
management the various procedures, methods and technique adopted by the organization. The
study provides knowledge about how the theoretical aspects are put in the organization in
terms of described below. With the help of ratios we summarize large quantities of financial
data of Amara raja Group of Companies and to make qualitative judgment about the firms
financial performance. With the help of ratios, one can determine.
The extent to which the firms has used its long term solvency by borrowing funds.
The efficiency with which the firm is utilizing its assets in generating sales revenue.
The overall operating efficiency and performance of the firm.
Thus ratio analysis can assist management in its basic function of forecasting,
planning, coordination, control and communication
2.2 REVIEW OF LITERATURE

Cooper (2000) conducted a study on Financial Intermediation on which he observed that the
quantitative behavior of business-cycle models in which the intermediation process acts
either as a source of fluctuations or as a propagator of real shocks. In neither case do we find
convincing evidence that the intermediation process is an important element of aggregate
fluctuations. For an economy driven by intermediation shocks, consumption is not smoother
than output, investment is negatively correlated with output, variations in the capital stock are
quite large, and interest rates are procyclical. The model economy thus fails to match
unconditional moments for the U.S. economy. We also structurally estimate parameters of a
model economy in which intermediation and productivity shocks are present, allowing for the
intermediation process to propagate the real shock. The unconditional correlations are closer
to those observed only when the intermediation shock is relatively unimportant.
Gerrard (2001) conducted a study on The Financial Performance on which he found that
Using ratio analysis the financial performance of a sample of independent single-plant
engineering firms in Leeds is examined with regard to structural and locational differences in
establishments. A number of determinants of performance are derived and tested against the
9
constructed data base. Inner-city engineering firms perform relatively less well on all
indicators of performance compared with outer-city firms. The study illustrates the
importance of using different measures of performance since this affects the magnitude and
significance of the results. Financial support is necessary to sustain engineering in the inner
city in the long run.
Schmidgall (2003) conducted a study on Financial Analysis Using the Statement of Cash
Flows on which he observed that Managers use many financial ratios to judge the health of
their businesses. With the recent requirement of a statement of cash flow (SCF) by the
Financial Accounting Standards Board, managers now have a new set of ratios that will give
a realistic picture of the business. The ratios include cash flow-interest coverage, cash flowdividend coverage, and cash flow from operations to cash flow in investments. These ratios
are particularly useful because they show changes in a hotel or restaurant's cash position over
time, rather than at a given moment, as is the case with many other ratios.
Murinde (2003) conducted study on Corporate Financial Structures on which he observed
that the financial structure of a sample of Indian non-financial companies using a new and
unique dataset consisting of a panel containing the published accounts of almost 900
companies that published a full set of accounts every year during 1989-99. In a new departure
in the literature, the dataset includes quoted and unquoted companies. We compare the
sources-uses approach to analyzing company financial structures with the asset-liability
approach. We use both approaches to characterize and to compare the financial structures of
Indian companies over time; between quoted and unquoted companies; and between
companies which belong to a business group and those that do not. Finally, we compare our
results to those obtained previously for India and for the industrial countries.
2.3 OBJECTIVES OF THE STUDY

To study and analyze the financial position of the Amara raja Group of Companies.
To suggest measures for improving the financial performance of organization.
2.4 RESEARCH METHODOLOGY

Research Design
10
In view of the objects of the study listed above an exploratory research design has
been adopted. Exploratory research is one which is largely interprets and already available
information and it lays particular emphasis on analysis and interpretation of the existing and
available information.
To know the financial status of the company.
To know the credit worthiness of the company.
To offer suggestions based on research finding.
Data Collection Methods

Secondary data collection method is adopted. Organizations financial statements was
used as reference and as a main source of data for the study.
Data Collection Tools
To analyze the data acquire from the secondary sources Ratio AnalysisThe scope of
the study is defined below in terms of concepts adopted and period under focus.
First the study of Ratio Analysis is confined only to the Amarraja Batteries Limited.
Secondly the study is based on the annual reports of the company for a period of 4 years from
2004-05 to 2008-09 the reason for restricting the study to this period is due time constraint.
2.5 LIMITATIONS
The study was limited to only five years Financial Data.

The study is purely based on secondary data which were taken primarily from
Published annual reports of Amararaja batteries Ltd.,
There is no set industry standard for comparison and hence the inference is made on
general standards.
The ratio is calculated from past financial statements and these are not indicators of
future.
The study is based on only on the past records.

Non availability of required data to analysis the performance.
The short span of the time provided also one of limitations.
11
CHAPTER-III
DATA ANALYSIS AND INTERPRETATION
FINANCIAL ANALYSIS:
Financial analysis is the process of identifying the financial strengths and weaknesses of the
firm by properly establishing relationship between the items of the balance sheet and profit &
loss account. Management should be particularly interested in knowing financial strengths
and weaknesses of the firm to make their best use and to be able to spot out financial
weaknesses of the firm to take their suitable corrective actions.
Financial analysis is the starting point for making plans, before using any
sophisticated forecasting and planning procedures.
LIQUIDITY RATIOS
1. CURRENT RATIO: The ratio between all current assets and all current liabilities; another way of
expressing liquidity. It is a measure of the firms short-term solvency. It indicates the
availability of current assets in rupees for every one rupee of current liability. A ratio of
greater than one means that the firm has more current assets than current claims against them.
Formula:
Current Assets
Current Liabilities
Table no: 1 current ratio

Standard ratio is 2:1
CURRENT ASSETS RS.
CURRENT LIABILITIES
RS.
CURRENT RATIO
2004-05
33,894, 349
27,138,593
1.24:1
2005-06
49, 397,942
24,404,997
2.02:1
2006-07
125,658,719
69,630,463
1.80:1
YEAR
12
2007-08
304,999,890
177861294
1.71:1
2008-09
455,742,126
260,088,191
1.75:1
CHART 1
CURRENT RATIO
2.5
2
1.5
CURRENT RATIO
1
0.5
0
2004-05
2005-06
2006-07
2007-08
2008-09
INTERPRETATION:
The standard norm for current ratio is 2:1. During the year 2005 the ratio is 1.24 and it
has increased to 2.02 during the year 2006 and decreased to 1.80 in 2007 and it is decreased
to 1.71 in the year 2008 and it has decreased to 1.75 in the year 2009. So the ratio was not
satisfactory.
2. QUICK RATIO: The ratio between all assets quickly convertible into cash and all current
liabilities. Specifically excludes inventory.
Formula:
Current Assets Inventories

Current Liabilities
13
Table no: 2 quick ratios

Standard ratio is 1: 1
YEAR
QUICK ASSETS RS.
CURRENT LIABILITIES RS.
QUICK RATIO
2004-05
27,913,828
27,138,593
1.02:1
2005-06
40,869,967
24,404,997
1.67:1
2006-07
83,916,683
69,630,463
1.20:1
2007-08
208,208,252
177,861,294
1.17:1
2008-09
330,199,379
260,088,191
1.27:1
CHART - 2
QUICK RATIO
1.8
1.6
1.4
1.2
1
QUICK RATIO
0.8
0.6
0.4
0.2
0
2004-05
2005-06
2006-07
2007-08
2008-09
INTERPRETATION:
The standard norm for the quick ratio is 1:1. Quick ratio is 1.02 in the year 2005. And it is
increased to 1.67and1.20 in the year 2006 and 2007.And it is decreased to 1.17 in the year
2008and increased to1.27 in the year 2009. However the ratio was above the standard norm
so the ratio was satisfactory.
3. CASH RATIO: The ratio between cash plus marketable securities and current liabilities.
14
Formula: Cash & Bank balances

Current liabilities
Table no:3 cash ratio

standard ratio is 0.5:1
CASH&BANK
CURRENT
YEAR
BALANCES RS.
LIABILITIES RS.
2004-05
18,003,083
27,138,593
0.66:1
2005-06
15,664,761
24,404,997
0.64:1
2006-07
19,989,626
69,630,463
0.28:1
2007-08
24,175,629
177,861,294
0.13:1
2008-09
61,157,640
260,088,191
0.23:1
CASH RATIO
CHART - 3
CASH RATIO
0.7
0.6
0.5
0.4
CASH RATIO
0.3
0.2
0.1
0
2004-05
2005-06
2006-07
2007-08
2008-09
INTERPRETATION:
In all the above years the absolute quick ratio is very low. The standard norm for
absolute quick ratio is 0.5:1 the company is failed in keeping sufficient Cash & Bank
Balances and Marketable Securities.
15
4. NET WORKING CAPITAL RATIO: The difference between current assets and current liabilities excluding short-term bank
borrowing is called net working capital or net current assets.
Formula: Net Working Capital

Net Assets
Table no: 4 net working capital ratio

NET WORKING
YEAR
NET WORKING
CAPITAL RS.
NET ASSETS RS.
CAPITAL RATIO
2004-05
6,869,969
221.355.246
0.03:1
2005-06
11,367,220
264,504,761
0.04:1
2006-07
42,402,531
337,735,853
0.12:1
2007-08
113,512,871
492,258,996
2.30:1
2008-09
192,653,935
733,924,377
0.26:1
CHART - 4

2.5
2
1.5
NET WORKING CAPITAL
RATIO
1
0.5
0
2004-05 2005-06 2006-07 2007-08 2008-09
16
INTERPRETATION:
Net Working Capital ratio is 0.03 in 2005and it is increased to 0.04 in the next year
i.e., 2006. From that year the ratio increased to 0.04 in 2006 and followed in 2007 also
increased 0.12 and also 2.30 in 2008 but condition of business working capital is shortage
and again it decrease to 0.26 in 2009.
LEVERAGE RATIOS
5. DEBT RATIO: If the firm may be Interested in knowing the proportion of the interest bearing debt in
the capital structure.
Formula:
Total debt
Total debt + Net worth
Total debt = Secured & UN Secured loans

Net Worth= Share holders funds misc expenses
Table no: 5 debt ratio

YEAR
TOTAL DEBT RS.
TOTAL DEBT + NET WORTH RS.
DEBT RATIO
2004-05
114,925,660
203,592,315
0.56:1
2005-06
111,545,855
242,170,949
0.46:1
2006-07
130,554,086
309,647,248
0.42:1
2007-08
202,412,086
455,186,403
0.44:1
2008-09
310,713,028
682,490,489
0.45:1
17
CHART - 5
DEBT RATIO
0.6
0.5
0.4
0.3
DEBT RATIO
0.2
0.1
0
2004-05
2005-06
2006-07
2007-08
2008-09
INTERPRETATION:
This ratio gives results relating to the capital structure of a firm. From the above in
fluctuating trend we can conclude that the companys dependence on debt is increasing. It is
not better position in collection of debt.
6. DEBT EQUITY RATIO: Shows the ratio between capital invested by the owners and the funds provided by the
lenders.
Formula:
Total Debt
Net Worth
Table no:6 debt equity ratio

YEAR
TOTAL DEBT RS.
NET WORTH RS.
D.E.RATIO
2004-05
114,925,660
88,666,655
1.29:1
2005-06
111,545,855
130,625,094
0.85:1
2006-07
130,554,086
179,093,162
0.72:1
2007-08
202,412,086
252,774,317
0.80:1
18
2008-09
310,713,028
371,777,461
0.83:1
CHART - 6
D.E.RATIO
1.4
1.2
1
0.8
D.E.RATIO
0.6
0.4
0.2
0
2004-05
2005-06
2006-07
2007-08
2008-09
INTERPRETATION:
The ratio gives results relating to the capital structure of a firm. Debt equity ratio is 1.29
in the year 2005 and decreased to 0.85 in the year 2006. In the year 2007 the ratio has
decreased to 0.72 and it increased to 0.80&0.83in the gradual years. We can conclude that the
company depends on the debt fund is increasing.
7. TOTAL LIABILITIES RATIO: -
Formula: Total Liabilities

Total Assets
Total liabilities: Current liabilities + Secured & Unsecured Loans.

Total Assets
: Fixed assets + Investments + Current assets
19
Table no: 7 total liabilities ratio

YEAR
TOTAL LIABILITIES RS.
TOTAL ASSETS RS.
T.L. RATIO
2004-05
142,064,253
216,489,607
0.6
2005-06
135,950,852
286,523,151
0.4
2006-07
200,184,549
403,717,278
0.4
2007-08
380,273,380
670,120,290
0.5
2008-09
570,801,218
724,830,857
0.7
CHART - 7
T.L. RATIO
0.8
0.7
0.6
0.5
0.4
T.L. RATIO
0.3
0.2
0.1
0
2004-05
2005-06
2006-07
2007-08
2008-09
INTERPRETATION:
In the years, 2005 & 2006 the total liabilities is 0.6&0.4 but in the year 2007 the total
liabilities decreased to 0.4 and the ratio increased to 0.5 & 0.7 in the corresponding years of
2008 &2009.
20
ACTIVITY RATIOS
8. INVENTORY TURNOVER RATIO: It indicates the firm efficiency of the firm in producing and selling its product. It is
calculated by dividing the cost of goods sold by the average inventory.
Formula:
sales
Average inventory
Table no: 8 inventory turnover ratio

YEAR
Sales RS.
AVG INVENTORY RS.
I.T.RATIO
2004-05
9,438,244
6,070,863
1.5
2005-06
18,160,031
7,254,248
2.5
2006-07
58,389,926
25,135,004
2.3
2007-08
736,541,123
69,266,837
10.6
2008-09
1,276,752,957
124,642,747
10.24
CHART 8
I.T.RATIO
12
10
8
6
I.T.RATIO
4
2
0
2004-05
2005-06
2006-07
2007-08
2008-09
21
INTERPRETATION:
Inventory turnover ratio is 1.5 times in the year 2005. But, it is increased to 2.5 in
the year 2006. Then, it is decreased to 2.3 in the year 2007 and increased to 10.6 in the year
2008. But, it is decreased to 10.24 in the year 2009. Inventory turn over ratio increased for
year by year that is company production is also increased. Subsequently sales are also
increased.
9. DEBTORS TURNOVER RATIO: It is found out by dividing the credit sales by average debtors. Debtors turnover
indicates the number of times debtors turnover each year.
Formula:
Sales
Average debtors
Sales = Gross Sales
Table no: 9 debtors turnover ratio

AVERAGE DEBTORS
D.T.RATIO
YEAR
SALES RS.
RS.
2004-05
9,438,244
2,207,265
4.2
2005-06
18,160,031
8,056,599
2.2
2006-07
58,389,926
17,996,034
3.2
2007-08
736,541,123
60,833,804
12.1
2008-09
1,276,752,957
181,063,357
7.05
22
CHART - 9
D.T.RATIO
14
12
10
8
D.T.RATIO
6
4
2
0
2004-05
2005-06
2006-07
2007-08
2008-09
INTERPRETATION:
Debtors turnover ratio is 4.2 times in the year 2005 and it is decreased to 2.2 times in
the year 2006 and increased to 3.2 times in the year 2007 and it increased to 12.1 times in the
year 2008 and decreased to7.05 times in 2009.
10. FIXED ASSETS TURNOVER RATIO: The firm may wish to know its efficiency of utilizing fixed assets and current
assets separately. The use of depreciated value of fixed assets in computing the fixed assets
turnover may render comparison of firms performance over period or with other firms.
Formula:
Sales
Net fixed assets
Sales = Gross Sales

Net fixed assets: Net block
23
Table no: 10 fixed assets turnover ratio

YEAR
SALES RS.
NET FIXED ASSETS RS.
F.A.T.RATIO
2004-05
9,438,244
182,595,258
0.05
2005-06
18,160,031
237,125,209
0.07
2006-07
58,389,926
278,058,559
0.20
2007-08
736,541,123
365,120,400
2.01
2008-09
1,276,752,597
515,551,197
2.47
CHART - 10
F.A.T.RATIO
3
2.5
2
1.5
F.A.T.RATIO
1
0.5
0
2004-05
2005-06
2006-07
2007-08
2008-09
INTERPRETATION:
Fixed assets turnover ratio is 0.05 in the year 2005 and it is increased to 0.07 in the
year 2006. In the year 2007 the ratio is 0.20 and it continued up to 2.01 and to 2.47 in the
years 2008&2009.
24
11. WORKING CAPITAL TURNOVER RATIO: A firm may also like to relate net current assets or net working capital to sales.
Working capital turnover indicates for one rupee of sales the company needs how many net
current assets. This ratio indicates whether or not working capital has been effectively
utilized market sales.
Formula:
Sales
Net Current Assets
Table no: 11 working capital turnover ratio

YEAR
SALES RS.
NET CURRENT ASSETS RS.
W.C.T. RATIO
2004-05
9,438,244
6,869,969
1.37
2005-06
18,160,031
11,367,220
1.59
2006-07
58,389,926
42,402,531
1.37
2007-08
736,541,123
113,512,871
6.48
2008-09
1,276,752,597
195,653,935
6.52
CHART - 11
W.C.T. RATIO
7
6
5
4
W.C.T. RATIO
3
2
1
0
2004-05
2005-06
2006-07
2007-08
2008-09
25
INTERPRETATION:
Working capital turnover ratio is 1.37 in the year 2005 and it is increased to 1.59 in
the year 2006. In the year 2006 decreased to 1.37 and it increased to 6.48 &6.52 in the next
two years 2008&2009. The higher the working capital turnover the more favorable for the
company.
PROFITABILITY RATIOS
12. GROSS PROFIT MARGIN: Indicator of how much profit is earned on your products without consideration of
selling and administration costs.
Formula: Gross profit X 100
Sales
Gross Profit: Sales Cost of goods sold
Table no: 12 gross profit margin
YEAR
GROSS PROFIT RS.
SALES RS.
G.P. RATIO (%)
2004-05
7,464,375
70,021,938
10.6
2005-06
54,577,760
129,761,262
42.06
2006-07
85,572,165
217,610,149
39.32
2007-08
123,829,045
736,541,123
16.81
2008-09
197,533,409
1,276,752,957
15.47
26
CHART - 12
G.P. RATIO (%)

45
40
35
30
25
20
15
10
5
0
G.P. RATIO (%)
2004-05
2005-06
2006-07
2007-08
2008-09
INTERPRETATION:
From the above we can say that gross profit ratio is 10.6% in the year 2005 but it
increased to 42.06 %&39.32% in 2006& 2007 and it decreased to 16.81 % in the year 2008
and it is decreased to 15.47 % in the year 2009. The company is maintaining proper control
on trade activities.
13. NET PROFIT MARGIN: Shows how much profit comes from every sales.
Formula:
Profit after tax X 100

Sales
Table no: 13 net profit margin

NET PROFIT MARGIN
YEAR
PROFIT AFTER TAX RS.
SALES RS.
(%)
2004-05
988,237
70,021,938
1.41
2005-06
38,958,439
129,761,262
30.02
2006-07
48,471,758
217,610,149
22.27
2007-08
74,513,415
736,541,123
10.11
27
2008-09
119,003,145
1,276,752,957
9.32
CHART 13
NET PROFIT MARGIN (%)

35
30
25
20
NET PROFIT MARGIN (%)
15
10
5
0
2004-05 2005-06 2006-07 2007-08 2008-09
INTERPRETATION:
During the year 2005 the net profit margin 1.41% and increased to 30.02in the year
2006. In the next year, it gradually decreased to 22.27 in the year 2007and to 10.11 in 2008
and to 9.32 in the year 2009.
14. OPERATING EXPENSES RATIO: The operating expenses ratio explains the changes in the profit margin ratio. A
higher operating expenses ratio is unfavorable since it will leave a small amount of operating
income to meet interest, dividends.
Formula:
Operating expenses X 100

Sales
Operating expenses =Admin expenses+ Selling expenses
28
Table no: 14 operating expenses ratio

YEAR
OPERATING EXPENSES RS.
SALES RS.
O.E. RATIO
2004-05
4,434,725
70,021,938
6.3
2005-06
5,322,708
129,761,262
4.1
2006-07
12,851,161
217,610,149
5.9
2007-08
22,785,265
736,541,123
3.0
2008-09
38,725,408
1,276,752,957
3.0
CHART 14
O.E. RATIO
7
6
5
4
O.E. RATIO
3
2
1
0
2004-05
2005-06
2006-07
2007-08
2008-09
INTERPRETATION:
Operating expenses ratio is 6.3%of sales in the year 2005 it decreased to 4.1% in the
year 2006 and increased in 2007 to 5.9% and it decreased in the next two years 2008&2009
to 3.0% subsequently.
29
15. RETURN ON EQUITY RATIO: Determines the rate of return on your investment in the business. As an owner or shareholder
this is one of the most important ratios as it shows the hard fact about the businessare you
making enough of a profit to compensate you for the risk of being in business.
Formula:
Profit after tax X 100

Net worth
Table no: 15 return on equity ratio

YEAR
PROFIT AFTER TAX RS.
NET WORTH RS.
R.O.E.RATIO (%)
2004-05
988,237
88,666,655
1.11
2005-06
38,958,439
130,625,094
29.82
2006-07
48,471,758
179,093,162
27.06
2007-08
74,513,415
252,774,317
29.47
2008-09
119,003,145
371,777,461
32.00
CHART - 15
R.O.E.RATIO (%)
35
30
25
20
R.O.E.RATIO (%)
15
10
5
0
2004-05
2005-06
2006-07
2007-08
2008-09
30
INTERPRETATION:
Return on equity is 1.11 in the year 2005 and again it increased to 29.82 in the year
2006. Return on Equity of the company is at satisfactory level and then it decreased to 27.06
in 2007 and again increased to 27.47 in 2008.And increased to 32.00% in the year 2009.
31
CHAPTER-IV
4.1 FINDINGS
Except in the year 2005-06, the company is not maintaining current ratio as more than
2 i.e., in the remaining years the company not reached the standard ratio. It shows that
the company is not strong in short term liabilities repayment.
The company is maintaining quick assets over the quick ratio. As the company having
quick assets above the quick ratio, so quick assets would meet quick liabilities.
The company is failed in keeping sufficient cash & bank balances and marketable
securities.
By observing current assets ratio are better in the year 2005-06 only. In the
same way by observing the absolute and super quick ratio the company cash
performance is in down position.
The debt ratios are not much increase or decrease.

Net working capital ratio is 0.12 in the year 2007 and 2.30 in the year 2008. It is
increasing trend so the business working capital ratio is good position. .
Debt Equity ratio is increasing and decreasing by year by year .so the company not
depends on the debt funds fully.
Total liabilities ratio is increasing from 2004-05 to 2007-08
Inventory turnover ratio increased by year to year that is company production sales
are also increased.
The net profit ratio of the company increasing over the study period. Hence the
organization having the good control over the operating expenses.
4.2 SUGGESTIONS
The company g .p. ratio was decrease from 39.32 % to 16.81 % in the year 2006-07 to
2007-08.respectively so it has to improve profit the g .p .ratio.
32
By considering the profit maximization in the company the earning per share,
investment and working capital also increases. Hence, the outsiders are interested to
invest there amount in the company
The company should maintain sufficient cash and bank balances; they should invest
the idle cash in marketable securities or short term investments in shares, debentures,
bonds and other securities.
The net profit of the company is in fluctuating in all the years. Hence the organization
should excuse its control on its expenses. Then only it can improve its net profit.
4.3 CONCLUSIONS
Liquidity ratios, both current ratio and quick ratio are showing effectiveness in
liquidity as in all the years current ratio is not greater than the standard 2:1 and quick ratio is
also not greater than the standard 1:1 ratio. The firm is maintaining a low cash balance and
marketable securities which means they done cash payments. Debt equity ratios are showing
an average increase in the long term solvency of the firm. Fixed assets turnover ratio is
showing that the firm needs lesser investment in fixed assets to generate sales.
The increasing trend of current assets turnover ratio indicates that the firm needs more
investment in current assets for generating sales. The gross profit ratio, net profit ratio is
showing the increasing trends. The profitability of the firm the increasing Operating ratio of
the company has observed decreasing trend, hence it may be good control over the operating
expenses. The company financial performance is very good and also they will increase their
business year by year by expanding their branches.
CHAPTER-V
ANNEXURE
33
BALANCE SHEET AS AT 31 MARCH 2005

Particulars
As at 31.03.2005
Rupees
As at 31.03.2004
Rupees
Rupees
Rupees
SOURCES OF FUNDS
Shareholders Funds
Share Capital
3,803,500
3,803,500
84,863,155
85,851,394
100,267,121
62,911,726
Unsecured Loans
14,658,539
14,541,702
Deferred Tax liability
17,762,931
17,762,931
Reserves & Surplus
Loan Funds
Secured Loans
Total
221,355,246
184,871,253
APPLICATION OF FUNDS
Fixed Assets
Gross Block
Less: Depreciation
215,888,399
183,076,692
33,293,141
23,135,030
Net Block
Capital Work-in-Progress
182,595,258
32,004,232
Investments
159,941,662
21,879,262
13,625,725
13,625,725
Current Assets, Loans & Advances

Inventories
5,980,521
6,161,205
Sundry Debtors
3,631,690
782,840
Cash & Bank Balances
4,377,358
3,879,120
Loans, Advances & Deposits
6,279,054
7,342,992
Other Current Assets
Less: Current Liabilities & Provisions
20,268,624
18,166,157
27,138,593
34
Liabilities
28,741,553
Provisions
Net Current Assets
6,869,969
10,575,396
Misc. Expenditure
--
--
221,355,246
184,871,253
Total
PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 MARCH 2005
Particulars
Year Ended on 31.03.05 Rupees
9,438,244
7,379,216
60,583,694
43,606,633
Other Income
959,836
858,426
Increase / (Decrease) in stocks
712,471
787,738
71,694,245
52,629,013
Raw Material Consumed
17,053,807
15,475,342
Payments & Benefits to Employees
19,424,712
17,690,847
Mfg., Selling Admn., &
11,199,326
INCOME
Sales
Job work charges
Total
Expenditure
7,981,696
Other Expenses
4,434,725
4,202,237
Taxes & Licenses
223,631
284,972
Financial charges
10,221,362
3,689,583
Depreciation
10,158,111
6,638,011
Total
72,715,674
55,962,688
Profit Before Taxation
(1,021,429)
(3,333,675)
35
Add: Excess provision in earlier years
33,192
1,431
Less: provision for taxation
--
--
Differed tax liability
--
5,084,625
1,481,252
--
(988,237)
( 9,898,121)
36,578,034
46,476,155
Short provision in earlier

Profit After Taxation
Profit / (loss) b/f from previous years
36,578,034
Profit available for appropriation

35,589,797
Less: Transfer to General Reserve
Net profit carried to balance sheet
35,589,797
36,578,034
Particulars
As at 31.03.2006
Rupees
As at 31.03.2005
Rupees
Rupees
Rupees
SOURCES OF FUNDS

Shareholders Funds
36
Share Capital
6,803,500
3,803,500
123,821,594
84,863,155
Secured Loans
96,195,022
100,267,121
Unsecured Loans
15,350,834
14,658,539
22,333,813
17,762,931
Reserves & Surplus
Loan Funds
Total
264,504,763
221,355,246
Fixed Assets
Gross Block
Less: Depreciation
Net Block
282,585,075
215,888,399
45,459,866
33,293,141
237,125,209
182,595,258
2,386,610
Investments
32,004,232
13,625,725
13,625,725

Inventories
Sundry Debtors
8,527,973
5,980,521
12,481,508
3,631,690
2,039,036
4,377,358
12,723,698
6,279,054
35,772,215
Net Current Assets
24,404,996
20,268,624
27,138,593
11,367,219
6,869,969
37
-Total
264,504,763
221,355,246
Particulars
INCOME
9,438,244
Sales
18,160,031
60,583,694
Job work charges
111,601,231
959,836
712,471
Total
129,761,262
71,694,245
12,180,558
17,053,807
23,188,980
19,424,712
Mfg.,& Selling Admn., &
16,907,278
11,199,326
Other Expenses
5,322,708
4,434,725
Taxes & Licenses
4,051,678
223,631
Financial charges
12,118,083
10,221,362
Depreciation
12,166,722
10,158,111
Expenditure
Total
85,936,007
43,825,255
Profit from operations
72,715,674
1,029,696
Add: prior period income

1,433,219
Other income
46,288,170
(1,021,429)
1,402,470
33,192
Less : provision for taxation
3,895,149
--
4,570,882
--
Deferred tax liability
38
Provision for fringe benefit tax

Short provision of income tax of
earlier years
257,095
1,481,252
9,074
38,958,439
(988,237)
35,589,797
36,578,034
Profit brought forward

Year from Previous
74,548,236
35,589,797

-Balance carried to Balance Sheet
74,548,236
35,589,797
39
Particulars
As at 31.03.2007
Rupees
As at 31.03.2006
Rupees
Rupees
Rupees
SOURCES OF FUNDS
Shareholders Funds
Share Capital
6,803,500
6,803,500
172,289,662
123,821,594
113,934,439
96,195,022
Unsecured Loans
16,619,647
15,350,834
28,088,605
22,333,813
Reserves & Surplus
Loan Funds
Secured Loans
Total
337,735,853
264,504,763
Fixed Assets
Gross Block
Less: Depreciation
Net Block
338,682,137
282,585,075
60,623,578
45,459,866
278,058,559
237,125,209
3,649,038
2,386,610
Investments
13,625,725
13,625,725

Inventories
41,742,036
8,527,973
Sundry Debtors
23,510,561
12,481,508
6,363,901
2,039,036
40,416,496
12,723,698

40
112,032,994
Net Current Assets
Total
69,630,463
35,772,215
24,404,996
42,402,531
11,367,219
337,735,853
264,504,763
Particulars
58,389,926
18,160,031
Job work charges
159,220,223
111,601,231
Total
217,610,149
129,761,262
42,114,496
12,180,558
31,496,788
23,188,980
Mfg.,& Selling Admn., & Other

Expenses
25,127,131
16,907,278
13,254,632
5,322,708
Taxes & Licenses
10,774,420
4,051,678
Financial charges
9,270,517
12,118,083
15,451,421
12,166,722
147,489,405
85,936,007
70,120,744
43,825,255
--
1,029,696
1,724,074
1,433,219
INCOME
Sales
Expenditure
Depreciation
Total

Add: prior period income
Other income
41
71,844,818
46,288,170
--
1,402,470
17,468,268
3,895,149
5,754,792
4,570,882

Less : provision for taxation
Deferred tax liability
Provision for fringe benefit tax
150,000
257,095
Short provision of income tax of

earlier years
9,074
--
48,471,758
38,958,439
74,548,236
35,589,797
123,019,994
74,548,236
--
--
123,019,994
74,548,236
Profit brought forward

Year from Previous
Balance carried to Balance Sheet

Particulars
As at 31.03.2008
Rupees
As at 31.03.2007
Rupees
Rupees
Rupees
SOURCES OF FUNDS
Shareholders Funds
Share Capital
17,008,750
6,803,500
235,765,567
172,289,662
178,164,815
113,934,439
Unsecured Loans
24,247,271
16,619,647
37,072,593
28,088,605
Reserves & Surplus

Loan Funds
Secured Loans
42
Total
492,258,996
337,735,853
Fixed Assets
Gross Block
444,006,523
Less: Depreciation
338,682,137
79,231,536
60,623,578
364,774,987
Add : capital work in progress

Net block
278,058,559
345,413
3,649,038
365,120,400
281,707,597
Investments
13,625,725
13,625,725

Inventories
96,791,638
41,742,036
Sundry Debtors
98,157,048
23,510,561
10,549,904
6,363,901
85,875,576
40,416,496
291,374,165
177,861,294
112,032,994
69,630,463
Net Current Assets
113,512,871
42,402,531
Total
492,258,996
337,735,853
43
Particulars
As at 31.03.2009
Rupees
As at 31.03.2008
Rupees
Rupees
Rupees
SOURCES OF FUNDS
Shareholders Funds
Share Capital
34,017,500
17,008,750
337,759,961
235,765,567
286,465,756
178,164,815
Unsecured Loans
24,247,271
24,247,271
51,433,888
37,072,593
Reserves & Surplus
Loan Funds
Secured Loans
Total
733,924,377
492,258,996
Fixed Assets
Gross Block
620,014,868
Less: Depreciation
104,463,670
Net Block
Investments
444,006,523
79,231,536
515551197
364,774,987
9,093,519
345,413
13,625,725
13,625,725

Inventories
124,642,747
96,791,638
Sundry Debtors
181,063,357
98,157,048
6,115,764
10,549,904
143,920,257
85,875,576

Total of Current Assets
455,742,126
287,612,725
44

Liabilities
155,436,682
116,889,033
Provisions
104,651,509
57,210,756
Net Current Assets
Misc. Expenditure
Total
260,088,191
174,099,789
195,653,935
113,512,871
-733,924,377
492,258,996
Particulars
1,543,800,353
924,910,348
--
--
267,047,396
188,369,225
1,276,752,957
736,541,123
6,718,488
27,935,159
846,203,098
466,897,823
86,800,828
56,891,277
128,206,095
73,637,871
Taxes & Licenses
380494
931,601
Financial charges
28,677,162
15,285,108
Depreciation
25,356,282
18,607,961
INCOME
Sales
Job work charges
Less : duties and taxes
Total net sales
Expenditure
Increase /decrease I stocks

Mfg., Selling Admn., &
Other Expenses
45
Total
1,115,623,959
631,320,039
161,128,998
105,221,084
20,771,436
10,476,318
181,900,434
115,697,403
Less : provision for tax
47,900,000
31,800,000
14,361,295
8,983,988
470,000
400,000
165,994
-------------
119,003,145
74,513,415
197533409
123,019,994
316,536,554
197,533,409
--
--
--
--
316,536,554
197,533,409

Other income
Deferred tax
Provision for fringe benefits
Earlier years Tax provision

Profit b/f from previous year
Less : proposed dividend, Transfer to

General Reserve and
Dividend tax
Net profit carried to Balance Sheet
46

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FINANCIAL STATEMENT ANALYSIS OF

AMARARAJA GROUP OF COMPANIES

NAME OF THE FACULTY: AJAY KUMAR SHARMA

TITLE AND TOPICS

OBJECTIVES AND METHODOLOGY

DATA ANALYSIS AND

FINDINGS AND SUGGESTIONS

NET WORKING CAPITAL RATIO

DEBT EQUITY RATIO

TOTAL LIABILITIES RATIO

INVENTORY TURNOVER RATIO

DEBTORS TURNOVER RATIO

FIXED ASSETS TURNOVER RATIO

WORKING CAPITAL TURNOVER

GROSS PROFIT MARGIN

NET PROFIT MARGIN

OPERATING EXPENSES RATIO

RETURN ON EQUITY RATIO

NET WORKING CAPITAL RATIO

DEBT EQUITY RATIO

TOTAL LIABILITIES RATIO

INVENTORY TURNOVER RATIO

DEBTORS TURNOVER RATIO

FIXED ASSETS TURNOVER RATIO

WORKING CAPITAL TURNOVER

GROSS PROFIT MARGIN

NET PROFIT MARGIN

OPERATING EXPENSES RATIO

RETURN ON EQUITY RATIO

1.2 COMPANY PROFILE

AMARA RAJA GROUP OF COMPANIES

Industrial Battery Division

Auto Battery Division

INDUSTRIAL BATTERY DIVISION (IBD):

AUTOMOTIVE BATTERY DIVISION (ABD):

MAHINDRA & MAHINDRA and SWARAJ MAZDA.

CRITICAL ASSESMENT AND EVALUATION OF THE ORGANIZATION

2.2 REVIEW OF LITERATURE

2.3 OBJECTIVES OF THE STUDY

2.4 RESEARCH METHODOLOGY

To know the financial status of the company.

To know the credit worthiness of the company.

To offer suggestions based on research finding.

Data Collection Methods

The study was limited to only five years Financial Data.

The study is based on only on the past records.

Table no: 1 current ratio

Current Assets Inventories

Table no: 2 quick ratios

QUICK ASSETS RS.

CURRENT LIABILITIES RS.

Formula: Cash & Bank balances

Table no:3 cash ratio

Formula: Net Working Capital

Table no: 4 net working capital ratio

NET ASSETS RS.

NET WORKING CAPITAL RATIO

Total debt = Secured & UN Secured loans

Table no: 5 debt ratio

TOTAL DEBT RS.

TOTAL DEBT + NET WORTH RS.

Table no:6 debt equity ratio

TOTAL DEBT RS.