Estimation of Financial Strength of

Escorts.
Presented to:

Mr. Sunil Buddhiraja,
Presentation Incharge

Presented by:

Narender Dagar,
Reg. No. 10904044
RS1903A23
Objective Of The Study
To assess the long-term and short-
term financial soundness of the
company.
To make a comparison of Escorts
performance with its competitors.
To evaluate current performance of the company and
comparing it with its past performances
To find out various reasons which are
responsible for the differences in the
performance of Escorts and its
competitors.


Introduction to the Project
Title- Estimation of Financial Strength of Escorts.
The main purpose of the study is to know the
financial health of the company and to make a
comparison with competitors.
Study of Financial Strength of the company is
totally based on Ratio Analysis
financial position of
the company on the
basis of ratio analysis.
the financial position
of the company is
measured by making
comparison with its
competitors
Two methods are adopted to
estimated the strength of
escorts
Cont.
Introduction to Escorts

In 1960, Escorts set up the
strategic Agri Machinery
Group (AMG) to venture
into tractors.
In 1965, the company rolled
out its first batch of tractors
under the brand name of
Escort.
In 1969, a separate
company Escorts Tractors
Ltd. was established
1996, Escorts Tractors Ltd.
formally merged with the
parent company Escorts
Ltd.

Escorts AMG has three
recognized and well accepted
tractor brands
Scope of the study
The ability of
the firm to meet
current
obligation
The extent to which
firm has used its
long term solvency
by borrowing funds.
The efficiency to
which firm is utilizing
its assets in
generating sales
revenue.


Firm utilizing the
overall operating
efficiency and
performance of the
firm.


Research Methodology
Research
Design
Exploratory
+
Descriptive
Methods of
Data collection
Primary Data
Secondary Data

observations
newspaper
Journals
websites
Research Methodology cont.
Sample
Size
4 Companies
Presentation
Bar- diagram
Pie charts
Graphs
Review Of Existing Literature

SOURCE 1
http:// www.escorts.com




Balance
Sheet of
different
years

Internal data
of the
company
Annul
Reports of
the escorts
Ratio Analysis
A ratio is defined as the indicated quotient of two
mathematical expressions and as the relationship
between two or more things
Ratio analysis involves comparison for a useful
interpretation of the financial statements

Types of Ratio:-
RATIO ANALYSIS OF ESCORTS
0
0.2
0.4
0.6
0.8
1
1.2
1.4
Curent ratio 1.04 1.03 1.15 1.27 0.97 1.12 1.13
Quick ratio 0.75 0.83 0.89 0.97 0.7 0.84 0.85
sep'05 sep'06 sep'07 sep'08 sep'09 sep'10 sep'11
CURRENT AND QUICK RATIO:-
Projected ratios for year 2010 and 2011 by using
method of Least Square.

Equations for regression line or trend line using time
series:
Current ratio : Y = 1.09 + 0.011 X (where X=3, 4 for
2010 & 2011 respectively in all cases)
Quick ratio : Y = 0.83 + 0.004 X
0
2
4
6
8
10
12
14
creditors turnover
ratio
4.32 4.16 3.85 3.99 3.62 3.54 3.39
debtors turnover
ratio
5.89 7.46 6.18 4.07 5.09 4.24 3.74
sep'05 sep'06 sep'07 sep'08 sep'09 sep'10 sep'11
Debtor turnover ratio : Y = 5.74 0.5 X
Creditors turnover ratio : Y = 3.99 0.15 X
CURRENT RATIO:-
0
1
2
3
4
5
6
escorts ltd. 1.04 1.03 1.15 1.27 0.97
mahindrra & mahindra 1.51 1.48 1.48 1.23 1.02
HMT 5.29 4.77 5.1 3.59 3.65
VST Tillers 1.83 1.5 1.54 1.56 1.71
sep'05 sept'06 sept'07 sept'08 sept'09
COMPARATIVE ANALYSIS OF ESCORTS WITH
ITS COMPETITORS
COMPARISON OF GROSS PROFIT RATIOS OF
DIFFERENT COMPANIES WITH ESCORTS
-50%
0%
50%
100%
VST Tillers 10.21 11.17 13.74 11.54 15.34
HMT -4.73 0.56 -2.32 -29.21 -38.3
mahindrra &
mahindra
12.8 12.48 14.73 8.12 6.1
escorts ltd. -18.96 1.32 3.3 3.17 7.42
sep'05 sept'06 sept'07 sept'08 sept'09
COMPARISON OF NET PROFIT RATIOS OF DIFFERENT
COMPANIES WITH ESCORTS
-60
-40
-20
0
20
escorts ltd. 3.08 1.08 -0.31 0.59 4.16
mahindrra &
mahindra
7.85 10.73 11.12 10.21 6.62
HMT 1.88 3.67 16.09 -18.41 -40.84
VST Tillers 4.42 5.72 7.65 7.55 10.41
sep'05 sept'06 sept'07 sept'08 sept'09
Limitation of the study
Excessive carriage of
inventory over the
normal levels
Working capital
problems will arise
when there is a slow
down in collection of
debtors.
Sometimes capital
goods will be
purchased from the
funds available for
working capital
Unplanned production
schedules will cause
excessive stocks
Dependence in short
term sources of
finance
Recommendations

Investments: The
Company has invested
in various fields which is
good as it has diversed
its risk.




Market share: The
Companys main
motive should be to
increase their market
share.



Collection
period: Escorts
should have to
reduce its credit
period


Proper training: The
personnel must be given
training for proper use of
equipments and materials
so as to avoid damages


Payment policies:
Payment policies
followed by Escorts
should be reviewed
time to time.

CONCLUSION

The company has improved its
performance very well as compared
to its previous years ratios.



Escorts is still in backward position if compared it
with Mahindra & Mahindra and VST Tillers.


continuous improvement of Escorts is also giving them a
tougher competition and will definitely acquire a better position
in the future.

Time To Ask
Questions.!!!