A MINOR PROJECT REPORT

ON
“FINANCIAL RATIO ANALYSIS OF HAVELLS”

Submitted in the fulfilment of the requirement of Bachelor of Commerce

course of Guru Gobind Singh Indraprastha University

By
SNIGDHA DHUPAL
ENROLLMENT No.: 03514788818
Session: 2018-2021

Under the guidance of

Mr. Nakul Anand

Guru Gobind Singh Indraprastha University

New Delhi – 110017
 DECLARATION

I, SNIGDHA DHUPAL hereby declare that the project work entitled “Financial
Ratio Analysis of HAVELLS”, submitted to Guru Gobind Singh Indraprastha
University, New Delhi, is a record of an original work done by me under the
guidance of Mr. Nakul Anand, Faculty, Guru Gobind Singh Indraprastha
University, New Delhi, and this project work has not performed on the basis for
the award of any degree or diploma and similar project or any.

NAME: SNIGDHA DHUPAL

ENROLLMENT No.: 03514788818
 ACKNOWLEDGEMENT
“Perseverance inspiration and motivation and motivation have always played a
key role in success of any venture”.

This project would have remained incomplete without mentioning some of the
names as a token of sincere to those who had contributed a lot towards completion
of the project.
At the very outset I would like to thank all the faculty of Maharaja Agrasen
Institute of Management Studies.
I express my sincere thanks to Mr. Nakul Anand for allowing to accomplish my
project. Without his guidance and field help, this project would have been
difficult to achieve.

Snigdha Dhupal
 CERTIFICATE

This is to certify that SNIGDHA DHUPAL student of B.Com(H) second semester

of Maharaja Agrasen Institute of Management Studies hence completed her
project on the topic of financial ratio analysis of Havells under my supervision.
She has taken care and shown utmost sincerity in completion of this project.

She has worked under my guidance and direction.

Mr. Nakul Anand

(Faculty – MAIMS)
 CONTENTS

Chapter 1: Introduction of the Study

1.1: Introduction
1.2: Objectives of the Study
1.3: Scope and Significance of the Study
1.4: Review of Literature
1.5: Research Methodology
1.5: Limitations of the Study

Chapter 2: Profile of the Organisation

2.1: History
2.2: Vision, mission and Objectives of the Company
2.3: Organisational Structure
2.4: Products and Services Offered
2.5: Marketing Strategies for Customer Satisfaction
2.6: Future Plans

Chapter 3: Analysis and Interpretation of Data

3.1: Analysis of Data
3.2: Summary of Findings

Chapter 4: Conclusions and Recommendations

4.1: Conclusion
4.2: Recommendations

Appendices
1. Annexure like copy of Balance Sheet, Profit and Loss Account, Income
Statement, Brochures, Photographs to be enclosed.
2. Bibliography
 CHAPTER 1:
INTRODUCTION
OF THE STUDY
1.1 Introduction

ABOUT RATIO ANAYSIS

The ratio analysis is the most powerful tool of financial analysis. Several ratios
calculated from the accounting data can be grouped into various classes according
to financial activity or function to be evaluated.

DEFINITION
“It is a form of Financial Statement Analysis that is used to obtain a quick
indication of a firm’s financial performance in several key areas.
Diverse groups of people are interested in analysing financial information to
indicate the operating and financial efficiency and growth of firm. These people
use ratios to determine those financial characteristics of the firm in which they
interested with the help of ratios one can determine. The ability of the firm to
meet its current obligations:
 The extent to which the firm has used its long-term solvency by borrowing
funds.
 The efficiency with which the firm is utilising its assets in generating the
sales revenue.
 The overall operating efficiency and performance of firm.
The information contained in these statements is used by management, creditors,
investors and others to form judgment about the operating performance and
financial position of firm. Uses of financial statements can get further insight
about financial strength and weakness of the firm to make their if they properly
analyse information reported in these statements. Management should be
particularly interested in knowing financial strength of the firm to make their best
use and to be able to spot out financial weakness of the firm to take suitable
corrective actions. The further plans firm should be laid down in new of the firm’s
financial strength and weakness. Thus, financial analysis is the starting point for
making plans before using any sophisticated forecasting and planning procedures.
Understanding the past is a prerequisite for anticipating the future.

1.2 OBJECTIVE OF THE STUDY

1. To study and analyse the financial position of the company through ratio
analysis.
2. To suggest measures for improving the financial performance of organisation.
3. to analyse the profitability position of the company.
4. To access the return on invest.
5. To analyse the asset turnover ratio.
6. To determine the solvency position of company.
7. To suggest measures for effective and efficient usage of investment.

1.3 SCOPE OF THE STUDY

The scope of the study is limited to collecting financial data published in the
annual reports of the company every year. The analysis is done to suggest the
possible solutions. The study is carried out for 4 years (2014 – 2018)
Using the ratio analysis, firms past, present and future performance can be
analysed and this study has been divided as short-term analysis and long-term
analysis. The firm should generate enough profits not only to meet the
expectations of owner, but also to expansion.
The prevalent educational system providing the placement training at an industry
being a part of the curriculum has helped in comparison of theoretical knowledge
with practical system. It has led to the convergences and divergence theory and
practice.
1.4 REVIEW OF LITERATURE

1.5 RESEARCH METHODOLOGY

1.5.1 STATEMENT OF RESEARCH DESIGN

In view of the objects of the study listed above an explanatory research design
has been adopted. Explanatory 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.

1.5.2 SOURCES OF THE DATA

Data Collection Methods
Primary Data
Information collected from internal guide and finance manager. Primary data is
first hand information.
Secondary Data
Secondary data is second hand information and is collected from the secondary
sources such as annual reports, magazines, company’s website, etc.

1.5.3 RESEARCH DESIGN AND METHODOLOGY

The data relating to the performance of Havells drawn from the different sources
have been analysed by using well known ratios and comparing the operational
cycle.
Assessment of the firm’s past, present and future financial conditions s done to
find firm’s financial strength and weakness.
Primary Tools:
 Financial Statements
 Comparison of financial ratios with past years

1.5.4 PRESENTTION TOOLS USED

 Bar Diagrams
 Tables

1.6 LIMITATION OF THE STUDY

 The study is limited to our year financial data.
 The study is purely based on secondary data which were taken primarily
from published 1annual reports of HAVELLS.
 There is not 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 analyse the performance.
 The short span of the time provided also one of the limitations .
 CHAPTER 2:
PROFILE OF THE
COMPANY
Havells India Limited is a Fast-Moving Electrical Goods (FMEG) Company with
an extremely strong global presence and extensive distribution network and world
class quality.
2.1 History
In 1958, Qismat Rai Gupta, founder of the company; founded an electric trading
operation in the electric trading operation in the electric wholesale market of Old
Delhi. He started Havells Industries with an investment of ₹10,000. He bought
HAVELLS brand from Haveli Ram Gandhi. In next 5 years, he started the first
manufacturing plant at Tilak Nagar, New Delhi.
He initially started manufacturing of rewireable switches and changeover
switches. In next few years, Havells built the first manufacturing plant. Later, it
acquired Towers and Transformers Ltd. and turned it out into a manufacturing
energy meters company. After that the company entered in the field of MCBs
manufacturing in joint venture with Geyer, Germany. In 1980, they started
manufacturing Control Gear Products. In late 1980s, they acquired a
manufacturing plant for Cables & Wires. In the same year, the company started
manufacturing power cables and wires and entered into a joint venture with
Electrium, UK for manufacturing Dorman Smith MCCB and Crabtree modular
plate switches. Later on, introduced high-end Ferrari’s Meters in joint venture
with DZG, Germany. Then, acquired controlling stake of Duke Arnics
Electronics Private Limited.
In late 1990s, Standard Electrical Company became a 100% subsidiary of the
company. In 1999, Havells launched their very first international sales office in
London.
 CHAPTER 2:
ANALYSIS AND
INTERPRETATION
OF DATA
Financial ratio analysis calculation and comparison of ratios which are derived
from the information in a company’s financial statements. The level and
historical trends of these ratios can be used to make inferences about a
company’s financial condition its operations and attractiveness as an
investment.
This is this is the measure of inter relationship between different sections of the
financial statements which then is compared with the budgeted or forecasted
results, prior reserves are the industrial results. To be most important ratios must
include a study of underlying data. Ratios should be taken as guides that are
useful in evaluating a company’s financial position and operations and making
comparison with results in previous years or with other companies. The primary
purpose of ratios used to point out areas needing further investigations. Ratios
will not carry meaningful business reasoning if there is no supporting
quantitative and financial information.
When it comes to investing analysing financial statement information (also
known as quantitative analysis), is one of, if not the most important element in
the fundamental analysis process.
Ratios our relationship expressed in mathematical terms between two individual
groups of figures connected with each other different ratios are calculated to
analyse and study different aspects of a firm ratios have been classified into the
following groups:
 Liquidity ratios
 Activity ratios
 Leverage ratios
 Profitability ratios
Uses of Financial Ratios
1. Financial ratios are used as a relative measure that facilitates a evaluation
of efficiency or condition of a particular aspect of a firm’s operations and
status.
2. Ratio analysis involves methods of calculating and interpreting financial
ratios in order to SS firm’s performance and status.
3. Assessment of the firm's past, present & future.
4. Den to find firm’s financial strengths and weaknesses.
5. Primary tools.
6. Financial statements
7. Comparison of financial ratios to past, industry sector and all firms.
Users of Ratio Analysis
 Trade creditors are interested in forms ability to meet their claims over a
very short period of time they analysis will they for confined to the
evaluation of the firm’s liquidity position.
 Suppliers of long term debt on the other hand are concerned with the
forms long term solvency and survival the analyse the forms profitability
over time its ability to generate cash to be able to pay interest and repay
principal at the relationship between various sources of funds capital
structure relationships long term creditors to analyse the historical
financial statements birthday place more emphasis on the forms projected
on pro forma financial statements to make analysis about his future
solvency and profitability.
 Investors, who have invested their money in the firm’s shares, are most
concerned about the firm’s earnings. As such,