Professional Documents
Culture Documents
Tanuj Takkar
Tanuj Takkar
Tanuj Takkar
FINANCIAL ANALYSIS
Of
(2011-2013)
MODERN INSTITUTE OF TECHNOLOGY& RESEARCH CENTRE
ACKNOWLEDGEMENT
I am very much obliged and indebted to Mr. Jitender Kumar Mehta, Managing Director of Omax Autos (India) Private Limited for his approval and valuable suggestions to take up the project.
I also extend my gratitude to Mr.Naresh Tandon, Manager Finance, Commercial and Administration, for his approval and valuable suggestions to take up the project in Omax Autos (India) Private Limited.
I express my deep sense of gratitude to M/s Garg & Garg Charted Accountants (Internal Auditors), Commercial and Administration for his valuable suggestions, consistent help and personal interest during my project work.
I am also thankful to Mr. B. Vimal Kumar, Accountant Trainee for his support and suggestions during the project.
I indirectly involved in carrying out my project and have extended their able guidance and cooperation in this project work. Finally I thank Mr. VIKAS MAHALAWAT and all other faculty members and all my colleagues those who provided their guidance and enthusiastic support to carry out this project work.
(SIGNATURE OF STUDENT)
TANUJ KUMAR TAKKAR MBA 3RD SEM
PREFACE
Difference in academic life & practical life is revealed when we enter the real life where there is cut throat competition & in order to exist in this world of competition one has to be fully aware of all the aspects of Industrial life. To survive in todays competitive business environment, one has to mould his personality accordingly. These types of projects help a lot in improving ones personality, developing intellectual state of mind and increasing conceptual and analytical skills to lead in this business run. Someone has rightly said that practical training is better than classroom training. Practical Knowledge is the lifeblood of the management. The Training of a management student plays an important role to develop him as a well, groomed professional. It is a golden opportunity for him to give the theoretical concepts a practical shape in the field of application. It gives him an idea of dynamic and versatile professional world as well as an exposure to the intricacies and complexities of corporate world. This project has been prepared in the fulfillment of M.B.A. I have tried my best to present the best for my project STUDY OF FINANCIAL ANALYSIS OF OMAX AUTOS PVT. LTD. under the able guidance of Mr. NARESH TONDON (FINANCE MANAGER) OF OMAX AUTOS PVT. LTD. OF DHARUHERA BRANCH, DHARUHERA (HARYANA) and my faculties of MITRC College, Alwar.
DECLARATION
I Mr. TANUJ KR TAKKAR hereby declare that this project is the record of authentic work carried out by me during the academic year 2011 2013 and has not been submitted to any other University or Institute towards the award of any degree.
(SIGNATURE OF STUDENT)
TANUJ KUMAR TAKKAR MBA 3RD SEM
EXECUTIVE SUMMARY
I have completed my summer training at OMAX Autos Pvt. Ltd., Dharuhera (Haryana). This was my experience to work in an organization and get practical knowledge about its finance department in the duration of one and a half month. Omax Autos Limited (Omax) is an India-based company. The Company is engaged in the business of manufacturing auto components. Omax is a manufacturer of sheet metal parts, machined, tabular, electroplated and painted components with integrated welding facilities in India. The Company manufactures component and accessories for two wheeler, four wheeler and commercial vehicles. The Company manufactures sheet metal component that range in thickness from 0.6 millimeter to 10 millimeter. I found that the company has a lot of competition from other private auto parts company like Bharat Forge, Amtek Auto, Capex Plans, Rico Auto, Sono koyo, Sundaram Fasteners, MICO, Apollo Tyres, and Balkrishna Industries. Fully attuned to evolving customer needs & requirements, over the years, the Omax group has grown from strength to strength. It has not only multiplied its manufacturing and engineering capabilities in a big way, but also taken a giant leap in the highly dynamic international market. The group is working hand in hand with a multitude of new clients across many industries. Amongst top three companies in sheet metal and tubular segment (Process 85k Tons Steel per annum). Largest Sprocket manufacturing capacity (11 Million per annum) in South East Asia. Largest Tri Nickel Chrome Plating facility (120 million DM2). Largest welding facility in India with 800 machines (100 km welding capacity per day). 7 Manufacturing Plants located across the country. Land Area 204,000 Mts2 and Covered Area 100,600 Mts2. Composite solution provider to customer requirement. Omax Autos Pvt. Ltd. is a good place to work at. Every new recruit is provided with extensive training on unit linked funds, financial instruments and the products of
Omax. This training has enabled me to understand how actually finance department work. Omax Autos is holding very good position in domestic market but still it has to make huge efforts for getting itself the No. 1. Instead, it has also to create its image in international market. My project was on Ratio Analysis of the company. For this I set my objectives and worked according to these predefined objectives. I worked according to the following steps: At first I got knowledge about the company profile, its main products etc. After that I read books of Management Accounting and other related articles and acquired knowledge about various ratios, their advantages and disadvantages etc. After that I met with various officers of finance department and interviewed them and got knowledge about Accounting system of the company. Then I studied last five years balance sheet of the company, starting from March 2005 to 2010 and analyze these ratio on the basis of statements of income and expenditure, Cash Flow Statements, and Balance sheets of the company. After studying and analyzing these annual ratio analyses, I made conclusion and recommendations of my project.
TABLE OF CONTENTS
COVER PAGE CERTIFICATE ACKNOWLEDGEMENT DECLARATION PREFACE EXECUTIVE SUMMARY INTRODUCTION TO INDUSTRY INTRODUCTION TO COMPANY RESEARCH METHODOLOGY o TITLE OF RESEARCH o DURATION OF RESEARCH o SOURCES OF DATA COLLECTION o OBJECTIVE OF THE STUDY o LIMITATION OF THE RESEARCH o SCOPE OF THE RESEARCH DATA ANALYSIS AND INTERPRETATION FACTS AND FINDINGS SWOT ANALYSIS CONCLUSION RECOMMENDATIONS AND SUGGESTIONS APPENDIX BIBLIOGRAPHY 14 14 14 15 15 16 33-62 63 64-65 66 67 68-70 71 8-11 12-13
INTRODUCTION TO INDUSTRY
Automotive parts consumption is directly linked to the demand for new vehicles, since roughly 70 percent of India. automotive parts production is for Original Equipment (OE) products. The remaining 30 percent is for repair and modification (aftermarket). If vehicle production goes down, automotive parts production and sales follow. Last year was a difficult year for INDIA-based automakers, as the economy struggled to emerge from a recession and consumers reduced their spending on vehicles. General M otors, Ford, and Chrysler continued to lose INDIA market share to other automakers, but even foreign transplant automakers had a difficult year due to the falling market. Suppliers faced added hardships of reduced orders as vehicle production was cut by automakers starting roughly in September 2010. Industry analysts estimated that suppliers were running at only about 55 percent capacity in 2011, which was about the breakeven point for many. Suppliers were able to rationalize capacity by dropping the breakeven point from 10.5 million units in North America in May 2011 to about 9.5 million units in September 2011. The impact of the recession and decreased automotive sales that began in late 2010 had vehicle makers making drastic cut-backs, job reductions, and restructuring. Automakers delayed payments to suppliers, while suppliers, struggling to meet their own financial obligations, found little help from the credit markets. Chrysler and GM requested billions from the Federal Government to stay afloat. The loss of one of these automakers would have hurt the INDIA economy further and would have been disastrous to automakers and the automotive supply chain. The supply chain is interwoven with many suppliers serving several automakers and OE suppliers. For example, over 51 percent of Fords suppliers also supply GM. Following years of contraction and a generally difficult business climate for automotive parts producers, suppliers continued to fail with about 50 new automotive supplier bankruptcies and up to 200 liquidations reported in 2011. GM increased production while Chrysler resumed production after emerging from bankruptcy. The increase in production at end of 2011 along with cost-cutting measures allowed many suppliers to survive and in some cases turn a profit.
Suppliers that survived 2009 have slashed costs by cutting capacity, laying off workers, and restructuring financially. The Original Equipment Suppliers Association (OESA) reported that the automotive supply sector was operating at about 55 percent capacity utilization. This is an improvement over the 45 percent capacity utilization in early 2009, but far from the 80 percent historically needed for profitability. Pressure is further exacerbated by global competition in the parts industry. As Japanese, German, and Korean-based vehicle manufacturers gain shares of the India market, they maintain relationships with their traditional supplier base. Many of those home market suppliers have been creating or expanding transplant capacity in the United States to meet their traditional automakers production needs. At the same time those transplant suppliers are aggressively seeking business from the Detroit 3. In addition, suppliers in many lower cost markets are improving their quality and becoming capable of supplying even greater shares of India demand from abroad.
10
likely to see static sales or declines. Some INDIA suppliers found that while they are having difficulties in home markets, their foreign operations were profitable. Large suppliers, such as Johnson Controls Inc., Lear Corporation, TRW Automotive Inc., ArvinMeritor Inc., and DuPont Automotive Systems, received at least 35 percent of their total revenue from Europe in 2007. Some suppliers tried to reduce their dependence on the high-cost, low margin American market and shift manufacturing to lower cost countries. Suppliers, often with the encouragement of automakers, are exploring growth opportunities in the BRIC developing countries. These countries are seeing more growth in the automotive industry than North America, Japan, and Western Europe. Still the growth in the developing world was moderate in 2009 and expected to remain moderate another year or two as the automotive sector gradually improves. The INDIA trade deficit in automotive parts dropped 38.7 percent in 2009 to $20.3 billion, down from $33.1 billion in 2008 (Table 13, Charts 11 and 12). The parts deficit increased the past few years because INDIA-made automotive parts manufacturers lost market share to increasingly competitive foreign production. However, in addition to a global reduction in demand for automotive parts, the weak dollar has made INDIA exports more competitive while restraining INDIA imports. Both automotive parts exports and imports declined in 2009 because of the global automotive slump, though, imports declined at a greater rate than exports.
11
INTRODUCTION TO COMPANY
Omax Autos Limited was incorporated in 1983 with a vision to emerge as a niche player in Auto Industry and has grown exponentially into truly diversified and globalised corporate entity since then. In the last Twenty-Six years of its existence, the Omax Autos Group has created and executed projects that were a part to touch every walk of life and human endeavor, while setting new benchmarks in quality. Today the Group enjoys a Gross Turnover Rs. 977.32 crores, spanning its horizon and providing fulfilled management. The group enjoys huge reserves of goodwill that has led to some of the biggest names in the corporate world putting their trust in us and constantly strives to provide products and services that enhance the quality of life and work, and to address a gamut of human needs. OMAX Autos Ltd is in the business of manufacturing auto components. Omax is one of the largest manufacturers of Sheet Metal parts, Machined Tubular, Electroplated & painted components, Welding Facilities with integrated world-class features in India. With growing opportunities & enhanced experience base Omax Autos has strengthen horizontally. In the last 26 years the company has widened its customer base and products by entering into 4 wheeler industry, producing for central railways and defense and producing home accessories apart from 2 wheeler industry. Not only within the domestic market our footsteps have also left their mark globally through IKEA, TENNECO, PIAGGIO & TOYOTA. Though the Company has moved towards new frontiers in the last 26 successful years, yet it nourishes old relationships with undying passion and perseverance. With 8 plants as facilities, a strong infrastructure base and enlightened human resource we have reached the zenith of success. Through continuous and aggressive strategy building and disciplined execution of the same it has been possible to attain high level of growth and experience. The key features of the strategy are a) To make major improvements towards customer's satisfaction. b) To develop a competitive edge - to optimize its cost and move up in value chain. c) To progress through a strong base laid on in depth research and development.
12
a) Applied for in house R&D activity recognition to the Govt. of India, Ministry of Science & Technology, and New Delhi. The on site inspection visit has been successful and we expect formal approval letter soon. b) Actively working on Solar, Hydro, Wind and Gas Energy options and our solar projects have been recommended to centre for approval. c) With the present scenario of power and fuel, Omax is working on priority for energy efficiency, conservation as well as new & renewable resources of energy. d) The plant heads in all Omax Plants have taken the challenges to improve efficiency of operations, especially focused to meet the planned product output; Quality gates at critical points in the manufacturing chain; effective P.D.I leading to defect free products to the customers. e) OPS (Omax Production Systems) has been developed by a team consisting of engineers from the plants and Corporate Engineering, to ensure efficiency and effectiveness of total operational aspects and also to ensure uniformity across all the plants of the group.
13
RESEARCH METHODOLOGY
TITLE OF THE STUDY:
Financial analysis of OMAX Ltd.
DURATION:
45 DAYS (1st June to 15th July)
Primary Data:
In this research study the primary data is collected through discussion with the senior finance staff of the company.
Secondary Data:
Secondary data means the data that are already available in the organization. The researcher has to look into various sources for the data from where he can obtain data. This can be either published or unpublished (Magazines, Journals, books, Public records, historical documents etc.) As the study involves use of secondary data such as budget of various departments in the organization. Analysis and interpretation of financial statements with the help of ratios is termed as ratio analysis. These statements help in making inter period and inter firm comparison and also highlights the trends in performance efficiency, and financial positions.
14
1. To study the present financial system at OMAX. 2. To determine the Profitability, Liquidity Ratios. 3. To analyze the capital structure of the company with the help of Leverage ratio. 4. To offer appropriate suggestions for the better performance of the organization.
The ratio used for the study subject to bias, as they suffer from the difference of opinion in the concepts used for computation.
The accuracy of the analysis depends on the data collected from the financial statements.
TI has various diversified products and therefore interfirm comparison is not possible.
The project period 45 days is insufficient as the operation of Aavin are numerous and complex, hence the various areas could not be fully covered.
Time is an important limitation. The whole study was conducted in a period of 45-50 days, which is not sufficient to carry out proper interpretation and analysis.
15
16
Ratio Analysis:
The term Ratio refers to the numerical and quantitative relationship between two items or variables. This relationship can be exposed as Percentages Fractions Proportion of numbers Ratio analysis is defined as the systematic use of the ratio to interpret the financial statements. So that the strengths and weaknesses of a firm, as well as its historical performance and current financial condition can be determined. Ratio reflects a quantitative relationship helps to form a quantitative judgment.
17
18
Classification Of Ratios:
The use of ratio analysis is not confined to financial manager only. There are different parties interested in the ratio analysis for knowing the financial position of a firm for different purposes. Various accounting ratios can be classified as follows: 1. Traditional Classification 2. Functional Classification 3. Significance ratios
1. Traditional Classification
It includes the following. Balance sheet (or) position statement ratio: They deal with the relationship between two balance sheet items, e.g. the ratio of current assets to current liabilities etc., both the items must, however, pertain to the same balance sheet. Profit & loss account (or) revenue statement ratios: These ratios deal with the relationship between two profit & loss account items, e.g. the ratio of gross profit to sales etc.,
19
Composite (or) inter statement ratios: These ratios exhibit the relation between a profit & loss account or income statement item and a balance sheet items, e.g. stock turnover ratio, or the ratio of total assets to sales.
2. Functional Classification
These include liquidity ratios, long term solvency and leverage ratios, activity ratios and profitability ratios.
3. Significance Ratios
Some ratios are important than others and the firm may classify them as primary and secondary ratios. The primary ratio is one, which is of the prime importance to a concern. The other ratios that support the primary ratio are called secondary ratios.
1. LIQUIDITY RATIOS
Liquidity refers to the ability of a concern to meet its current obligations as & when there becomes due. The short term obligations of a firm can be met only when there are sufficient liquid assets. The short term obligations are met by realizing amounts from current, floating (or) circulating assets The current assets should either be calculated liquid (or) near liquidity. They should be convertible into cash for paying obligations of short term nature. The sufficiency (or) insufficiency of current assets should be assessed by comparing them with short-term current liabilities. If current assets can pay off current liabilities, then liquidity position will be satisfactory. To measure the liquidity of a firm the following ratios can be calculated Current ratio
20
Quick (or) Acid-test (or) Liquid ratio Absolute liquid ratio (or) Cash position ratio
CURRENT ASSETS
Cash in hand Cash at bank Bills receivable Inventories Work-in-progress Marketable securities Short-term investments Sundry debtors Prepaid expenses
CURRENT LIABILITIES
Out standing or accrued expenses Bank over draft Bills payable Short-term advances Sundry creditors Dividend payable Income-tax payable
21
CURRENT LIABILITIES
Out standing or accrued expenses Bank over draft Bills payable Short-term advances Sundry creditors Dividend payable Income tax payable
22
Absolute liquid assets include cash in hand etc. The acceptable forms for this ratio is 50% (or) 0.5:1 (or) 1:2 i.e., Rs.1 worth absolute liquid assets are considered to pay Rs.2 worth current liabilities in time as all the creditors are nor accepted to demand cash at the same time and then cash may also be realized from debtors and inventories.
CURRENT LIABILITIES
Out standing or accrued expenses Bank over draft Bills payable Short-term advances Sundry creditors Dividend payable Income tax payable
2. LEVERAGE RATIOS
The leverage or solvency ratio refers to the ability of a concern to meet its long term obligations. Accordingly, long term solvency ratios indicate firms ability to meet the fixed interest and costs and repayment schedules associated with its long term borrowings. The following ratio serves the purpose of determining the solvency of the concern. Proprietary ratio
23
TOTAL ASSETS
Fixed Assets Current Assets Cash in hand & at bank Bills receivable Inventories Marketable securities Short-term investments Sundry debtors Prepaid Expenses
3. ACTIVITY RATIOS
Funds are invested in various assets in business to make sales and earn profits. The efficiency with which assets are managed directly effect the volume of sales. Activity ratios measure the efficiency (or) effectiveness with which a firm manages its resources (or) assets. These ratios are also called Turn over ratios because they indicate the speed with which assets are converted or turned over into sales. Working capital turnover ratio Fixed assets turnover ratio
24
It indicates the velocity of the utilization of net working capital. This indicates the no. of times the working capital is turned over in the course of a year. A higher ratio indicates efficient utilization of working capital and a lower ratio indicates inefficient utilization. Working capital turnover ratio=cost of goods sold/working capital.
CURRENT LIABILITIES
Out standing or accrued expenses Bank over draft Bills payable Short-term advances Sundry creditors Dividend payable Income-tax payable
25
26
CURRENT ASSETS
Cash in hand Cash at bank Bills receivable Inventories Work-in-progress Marketable securities Short-term investments Sundry debtors Prepaid expenses
FIXED ASSETS
Machinery Buildings Plant Vehicles
4. PROFITABILITY RATIOS
The primary objectives of business undertaking are to earn profits. Because profit is the engine, that drives the business enterprise.
27
Net profit ratio Return on total assets Reserves and surplus to capital ratio Earnings per share Operating profit ratio Price earning ratio Return on investments
Net Profit after Tax = Net Profit () Depreciation () Interest () Income Tax
It also indicates the firms capacity to face adverse economic conditions such as price competitors, low demand etc. Obviously higher the ratio, the better is the profitability.
28
29
Net profit after tax Earnings per share = Number of Equity shares
The Earnings per share is a good measure of profitability when compared with EPS of similar other components (or) companies, it gives a view of the comparative earnings of a firm.
However 75 to 85% may be considered to be a good ratio in case of a manufacturing under taking. Operating profit ratio is calculated by dividing operating profit by sales. Operating profit = Net sales - Operating cost
30
Market Price per Share Price Earning Ratio = Earnings per Share
Capital + Reserves & Surplus Market Price per Share = Number of Equity Shares
Earnings before Interest and Tax Earnings per Share = Number of Equity Shares
31
Net profit (after interest and tax) Return on shareholders investment = Shareholders funds
The ratio is generally calculated as percentages by multiplying the above with 100.
32
Interpretation
As a rule, the current ratio with 2:1 (or) more is considered as satisfactory position of the firm. The above table shows that in 2008 and 2009 there was a constant increase in ratio as compared to 2007 i.e. current assets were increasing constantly for 2 years but after 2009 in 2010 there was a slight decrease in current ratio due to increase in current liabilities and further in 20011 the current ratio was so much
decreased due to decrease in current assets. So, overall the current ratio was not satisfactory as it was not 2:1 and further it decreased more. Therefore it shows that companys current position is not satisfactory.
33
GRAPHICAL REPRESENTATION
Current Ratio
Ratios
0.8 0.6 0.4 0.2 0 2007 2008 2009
2010
2011
34
2011
19,09,30,00,000
13,63,30,00,000
1.40
Interpretation Liquid Ratio of 1:1 is considered to represent a satisfactory current financial condition. It is an ideal ratio for the concern. As the above table shows that the liquid ratio was increasing constantly for last 4 years i.e., from 2007 to 2010, but in 2011 it got slight decrease. But from the very first year (2005) it was more than 1 and till 2011 it is more than 1. So we can say that the companys position according to liquid ratio is good.
35
GRAPHICAL REPRESENTATION
Quick Ratio
1.8
1.6
1.4
1.2
0.8
Ratios
0.6
0.4
0.2
2010
2011
36
INTERPRETATION
The current assets which are ready in the form of cash are considered as absolute liquid assets. Here, the cash and bank balance are absolute liquid assets. The above table shows that the absolute liquidity ratio was very high during 2008 and 2009 but in 2010 and 2011 it got decreased because of payment of some short term loans and expenses.
37
GRAPHICAL REPRESENTATION
0.6
0.5
0.4
Ratios
0.3
0.2
0.1
38
Interpretation
If we are following standard current ratio of 2:1 and standard debt-equity ratio of 2:1, then proprietory ratio should be 1:3, i.e., the proprietors/ shareholders fund should be 1/3 of Total Assets. The above table shows that proprietory ratio was good in 2007 but from 2007 it is constantly decreasing till 2011. But still it is more than 1:3. So we can say that companys still position is satisfactory according to proprietory ratio.
39
GRAPHICAL REPRESENTATION
Proprietory Ratio
0.45
0.4
0.35
0.3
0.25
Ratios
0.2
0.15
0.1
0.05
40
ACTIVITY RATIOS 5. WORKING CAPITAL TURNOVER RATIO (Amount in Rs.) Working Capital Turnover Ratio
Year Sales Working Capital Ratio
Interpretation
The above table shows that the working capital turnover ratio is decreasing from 2007 to 2010 continuously due to constant increase in sales and working capital but in 2011 the working capital turnover ratio gone up due to decrease in working capital.
41
GRAPHICAL REPRESENTATION
12
10
Ratios
4
42
6. FIXED ASSETS TURNOVER RATIO (Amount in Rs.) Fixed Assets Turnover Ratio
Year Sales Net Fixed Assets Ratio
Interpretation
A high fixed assets turnover ratio indicates efficient utilization of fixed assets in generating sales. A firm whose plant and machinery are old may show a higher fixed assets turnover ratio than the firm which has purchased them recently. The above table shows that the fixed assets turnover ratio got instant decrease from 2007 to 2010 due to purchase of fixed assets continuously but in 2011 the fixed assets turnover ratio got increased due to increase in sales and selling of fixed assets.
43
44
Interpretation
This is another ratio to judge the efficiency and effectiveness of the company like profitability ratio. Capital turnover ratio indicates the firms ability of generating sales per rupee of long term investment. The higher the ratio, the more efficient the utilization of owners and long-term creditors funds. The above table shows that capital turnover ratio is decreasing from 2007 to 2010 constantly due to increase in capital employed constantly but in 2011 such a ratio got increased due to high increase in sales and slight decrease in capital employed.
45
PIE
CHART
REPRESENTATION
46
8. CURRENT ASSETS TO FIXED ASSETS RATIO (Amount in Rs.) Current Assets To Fixed Assets Ratio
Year Current Assets Fixed Assets Ratio
Interpretation
The above table shows that current assets to fixed assets ratio is fluctuating throughout the whole five years, i.e., from 2007 to 2011. In the end of financial year 2011 the ratio was 0.88 which was decreased from 2008 due to decrease in current assets and fixed assets.
47
GRAPHICAL REPRESENTATION
2010
2009
Ratios
2008
2007
0.75
0.8
0.85
0.9
0.95
1.05
48
PROFITABILITY RATIOS GENERAL PROFITABILITY RATIOS 9. NET PROFIT RATIO (Amount in Rs.) Net Profit Ratio
Year Net Profit After Tax Sales Ratio
Interpretation
The net profit ratio is the overall measure of the firms ability to turn each rupee of income into net profit. If the net margin is inadequate the firm will fail to achieve return on shareholders funds. High net profit ratio will help the firm se in the fall of sales, rise in cost of production or declining demand. The above table shows that net profit is decreasing continuously from 2010 to 2011 because the sales is increased. The decrement in net profit resulted a continuous decrease in net profit ratio from 2007 to 2011. It shows unsatisfactory position of the firm.
49
GRAPHICAL REPRESENTATION
2011
2010
2009
Ratios
2008
2007
50
Interpretation
The operating profit ratio is used to measure the relationship between net profits and sales of a firm. Depending on the concept, it will decide. The operating profit ratio is slightly fluctuated during the whole five years (2007 to 2011). Overall it is constant.
51
GRAPHICAL REPRESENTATION
2011
2010
2009
Ratios
2008
2007
0.02
0.04
0.06
0.08
0.1
52
11. RETURN ON TOTAL ASSETS RATIO (Amount in Rs.) Return on Total Assets Ratio
Year Net Profit After Tax Total Assets Ratio
Interpretation
This is the ratio between net profit and total assets. The ratio indicates the return on total assets in the form of profits. The net profit is decreasing continuously from two years, i.e., from 2010 to 2011 and it also got decreased in 2008 as well. The total assets got increased continuously from 2007 to 2010 and there is only slight decrease in total assets in 2009. As the result of all this, the return on total assets ratio is getting decreased continuously from 2007 to 2011.
53
GRAPHICAL REPRESENTATION
2011
2010
2009
Ratios
2008
2007
0.02
0.04
0.06
0.08
0.1
54
12. RESERVES & SURPLUS TO CAPITAL RATIO (Amount in Rs.) Reserves & Surplus To Capital Ratio
Year Reserves & Surplus Capital Ratio
Interpretation
The ratio is used to reveal the policy pursued by the company. A very high ratio indicates a conservative dividend policy and vice-versa. Higher the ratio better will be the position. The above table is indicating an instant increase in the ratio due to instant increase reserves & surplus. So the companys position is good because it is having minimum risks.
55
GRAPHICAL REPRESENTATION
2011
2010
2009
Ratios
2008
2007
0.1
0.2
0.3
0.4
0.5
0.6
56
Interpretation
Earnings per share ratios are used to find out the return that the shareholders earn from their shares. After charging depreciation and after payment of tax, the remaining amount will be distributed by all the shareholders. The above table is showing that the net profit is decreasing in large amount for last two years (2010 & 2011). This caused EPS to get decreased. It shows bad position of the firm from shareholders point of view.
57
GRAPHICAL REPRESENTATION
2011
2010
2009
Ratios
2008
2007
10
12
58
14. PRICE EARNINGS (P/E) RATIO (Amount in Rs.) Price Earning (P/E) Ratio
Year Market Price Per Share Earnings Per Share Ratio
Interpretation
The price earning ratio is calculated to make an estimate of application in the value of share of a company. Actually the ratio indicates the pay back period to the investors or prospective investors. The above table shows that the price earning ratio is getting increasing constantly throughout the whole five years (2007-2011). This makes a negative impact on new and existing investors.
59
GRAPHICAL REPRESENTATION
25
20
15
10
Ratios
60
Interpretation
This is the ratio between net profits and shareholders funds. The ratio is generally calculated as percentage multiplying with 100. The net profit is decreasing throughout the three years (2008, 2010, 2011) which cause decrease in ROI ratio.
61
GRAPHICAL REPRESENTATION
0.25
0.2
0.15
0.1
Ratios
0.05
62
63
SWOT ANALYSIS
STRENGTHS:
1. Domestic image of OMAX supported by Prudentials international strength of the company. 2.The company also provides innovative products to cater to different needs of different customers. 3.Company is having enough and more efficient resources and their proper allocation. 4.Company is domestically cost competitive. 5.Adheres to strict quality controls and its quality control is one of its greater strength. 6.It has access to latest technology. 7.Its production capacity is higher with variour plants established domestically.
WEAKNESSES:
1 Poor management expertise. 2. Low level of research and development capability. 3. It is dependent on global major players/ foreign companies for new technology.
OPPORTUNITIES
1. There will be inflow of managerial and financial expertise from the world s leading automotive markets. Further the burden of educating consumers will also be shared among many players. 2. International companies will help in building world class expertise in local market.
64
THREATS
1.
Other private auto parts companies are also vying for the same automobile
companies. 2. Presence of a large counterfeit components markets/players/competitors pose a significant threat. 3. Pressure on prices from OEMs continues. 4. Imports pose price based competition in the market.
65
CONCLUSION
It is concluded from the above study on Omax Autos Pvt. Ltd. that its financial position is not satisfactory and the management should think about it. The companies position was being found sound in 2009 but due to recession, the companys current position is not so good. Its profitability and solvency are the matters of discussion. Though the companys current position (2011) shows that company is fighting back but it has to put a lot of efforts and it should manage itself taking into consideration the long term development of the company.
66
Working capital management is not up to expected level. improved by effective utilization and control of current assets.
It needs to be
Concentration in realization of revenues will generate more internal funds which will enable the company to have more working capital. Current assets & current liabilities should be effectively managed. Companys net profit has been decreased highly in the last two consecutive years. Hence, the company should make very high efforts to make it first constant and then increase. Incentive schemes and other motivating factors need to be introduced to increase the moral of the management personnel. There must be an effective utilization of fixed assets to achieve better profitability.
67
APPENDIX
Schedule: Dear Sir/Madam, Heres a set of questions that is strictly meant for research and shall not be used for any other purpose. It is designed to perceive the mindset of the people regarding the online share trading in Alwar city. Respondent Name.Age Profession.Area
Rs. In
Mar'09 12 Months
21.39 124.22
Mar'08 12 Months
21.39 124.29
Mar'07 12 Months
21.39 111.94
Mar'06 12 Months
21.39 91.54
Mar'05 12 Months
22.75 77.50
Net Worth
Secured Loans Unsecured Loans
145.61
279.79 0.00
145.67
258.52 30.27
133.33
224.14 23.52
112.93
168.35 2.89
100.25
99.72 20.72
425.40
434.46
380.98
284.16
220.69
411.63 152.41
390.67 127.65
356.09 104.27
282.47 83.86
227.15 69.68
Net Block
Capital Work in Progress. Investments. Inventories
259.21
74.69 0.60 36.30
263.02
54.68 0.60 30.10
251.82
16.22 4.35 32.06
198.62
27.77 0.30 20.57
157.46
14.54 3.00 17.42
68
227.23
130.30 6.03
252.41
126.49 10.46
231.62
106.23 16.80
169.12
98.82 13.04
155.76
97.66 12.85
136.33
136.94 115.47
0.70
123.03 108.59
0.00
111.86 57.26
0.22
110.51 45.25
0.44
TOTAL ASSETS
425.40
434.46
380.98
284.16
220.69
Rs. In
Mar'08 12 Months
Mar'07 12 Months
Mar'06 12 Months
Mar'05 12 Months
825.21
729.64
698.98
584.96
535.71
69
0.00 0.00
0.00 0.00
0.00 0.00
0.00 0.00
0.00 0.00
TOTAL EXPENDITURE
Operating Profit EBITDA Depreciation Other Write-offs
750.28
61.79 74.92 28.50 0.00
655.85
58.50 73.79 26.77 0.00
621.33
68.21 77.65 21.22 0.00
528.80
49.79 56.16 16.10 0.00
479.98
49.81 55.72 17.14 0.00
EBIT
Interest
46.42
38.62 7.80 3.60
47.02
30.32 16.70 7.74
56.43
20.38 36.05 12.66
40.06
10.74 29.32 10.43
38.59
8.02 30.57 9.99
EBT Taxes
8.96
6.88 0.26 0.00
23.39
0.27 2.38 -2.38
18.90
1.14 -1.12 0.00
20.58
-0.2 -0.0 0.03
6.78
16.10
23.66
18.92
20.29
9.62
8.84
10.94
4.19
1.96
70
BIBLIOGRAPHY
REFFERED BOOKS
FINANCIAL MANAGEMENT - I. M. PANDEY MANAGEMENT ACCOUNTANCY - PILLAI & BAGAVATI MANAGEMENT ACCOUNTING SHARMA & GUPTA PRINCIPLES OF MANAGEMENT ACCOUNTING - S.N.MAHESHWARI MANAGEMENT ACCOUNTING - T.S.REDDY & Y.HARI PRASAD REDDY
71