A

Project

ON

A Study Of

MANAGEMENT OF WORKING CAPITAL

AT

GBTL LTD.
(A SUBSIDARY OF DONEAR INDUSTRIES LTD)

Submitted in partial fulfillment of the requirement of

MASTER OF BUSINESS ADMINISTRATION

CH. BANSI LAL UNIVERSITY CAMPUS

Research Supervisor: Submitted by:

Suresh Saraf PANKAJ
Dy.General Manager Roll no:-180000502015
GBTL Ltd Specialization:Finance
Specialization: Accounts &Finance

Session: 2018-19

CH. BANSI LAL UNIVERSITY BHIWANI

 ACKNOWLEDGEMENT

The satisfaction and euphoria that accompany the successful

completion of any task would be, but incomplete without mentioning the
people who made it possible, whose constant guidance encouraging
crowned my effort with success.

I would like to begin with a special note of gratitude and

heartfelt thanks to Mr. Suresh Saraf (Dy.General Manager), who gave
me the opportunity to complete my project at GBTL Ltd., Bhiwani
(Haryana), a subsidiary of DONEAR INDUSTRY.

I am extremely grateful to the MR. Suresh Saraf for his

constant encouragement and valuable suggestions throughout my summer
training and project for his cooperation extended to me.
I am extremely indebted to him for sharing his valuable time,
comments and encouraging suggestions that guided and inspired me
throughout the preparation of the project.
I express my special thanks to Miss. Monika Tayal Ma’am
(Finance Officer) for giving me their valuable opinions time to time.
At last but not the least, I am very thankful to all the staff
members of Finance department also.
 DECLARATION

I Pankaj, the student of M.B.A. III Semester of “CH. BANSI

LAL UNIVERSITY BHIWANI’’ here by declare that the Project Report on
“RATIO ANALYSIS” of GBTL Ltd. – a subsidiary of Donear Industry Is
my original work and has not been submitted by any other person.

I also declare that I have done my work sincerely and

accurately even then if any mistake or error had kept in it, I request the
readers to point out these errors and guide me to remove these errors in
future.

Presentation In charge Signature of the Candidate

 PREFACE

Practical work experience is the integral part of individual learning. An

individual who is learning managerial concepts has to undergo this practical
experience for being a future executive.

Master of Business Administration is a two-year programme

that inserts management knowledge in an individual to make that individual
completely professional for which practical experience is must.

GBTL LTD. is the market leader in Textile industry. GBTL

offered me a project on Working Capital Management to understand the
current position through dates provided by them.
 TABLE OF CONTENTS

 Introduction to Topic
 Use and significance of ratio analysis

 Objective of Study

 Research Methodology

 Donear Industry Ltd.

 An Overview of Donear Industry

 Characteristics of Donear Industry
 Mission
 Main Products of Donear Industry

 GBTL Ltd.

 About the Mill

 Strategy & Philosophy of Company
 Objective
 SWOT Analysis of GBTL
 Organization structure of finance
 What can we do
  What you can expect

 RATIO ANALYSIS

 FINDINGS AND CONCLUSIONS

 LIMITATIONS
 BIBLIOGRAPHY
 INTRODUCTION TO THE TOPIC

Ratio analysis is a powerful tool of financial analysis. A ratio is defined as

“the indicated quotient of two mathematical expressions” and “the
relationship between two or more things”. In financial analysis, a ratio is
used as a benchmark for evaluation the financial position and performance
of a firm. The absolute accounting figures reported in the financial
statements do not provide a meaningful understanding of the performance
and financial position of a firm. An accounting figure conveys meaning
when it is related to some other relevant information. For example, an Rs.5
core net profit may look impressive, but the firm’s performance can be said
to be good or bad only when the net profit figure is related to the firm’s
Investment.
The relationship between two accounting figures expressed
mathematically, is known as a financial ratio (or simply as a ratio). Ratios
help to summarize large quantities of financial data and to make qualitative
judgment about the firm’s financial performance. For example, consider
current ratio. It is calculated by dividing current assets by current liabilities;
the ratio indicates a relationship- a quantified relationship between current
assets and current liabilities. This relationship is an index or yardstick,
which permits a quantitative judgment to be formed about the firm’s
liquidity and vice versa. The point to note is that a ratio reflecting a
quantitative relationship helps to form a qualitative judgment. Such is the
nature of all financial ratios.
Standards of comparison:

The ration analysis involves comparison for a useful interpretation of the

financial statements. A single ratio in itself does not indicate favorable or
unfavorable condition. It should be compared with some standard.
Standards of comparison may consist of:
 Past ratios, i.e. ratios calculated form the past financial statements
of the same firm;
 Competitors’ ratios, i.e., of some selected firms, especially the
most progressive and successful competitor, at the same pint in time;
 Industry ratios, i.e. ratios of the industry to which the firm belongs;
and
 Protected ratios, i.e., developed using the protected or proforma,
financial statements of the same firm.

In this project calculating the past financial statements of the same firm
does ratio analysis.
Use and significance of ratio analysis:-
The ratio is one of the most powerful tools of financial analysis.
It is used as a device to analyze and interpret the financial health of
enterprise. Ratio analysis stands for the process of determining and
presenting the relationship of items and groups of items in the financial
statements. It is an important technique of the financial analysis. It is the
way by which financial stability and health of the concern can be judged.
Thus ratios have wide applications and are of immense use today. The
following are the main points of importance of ratio analysis:

A)Managerial uses of ratio analysis:-

1. Helps in decision making:-

Financial statements are prepared primarily for decision-making. Ratio
analysis helps in making decision from the information provided in these
financial Statements.

2. Helps in financial forecasting and planning:-

Ratio analysis is of much help in financial forecasting and planning.
Planning is looking ahead and the ratios calculated for a number of years a
work as a guide for the future. Thus, ratio analysis helps in forecasting and
planning.

3. Helps in communicating:-
The financial strength and weakness of a firm are communicated in a more
easy and understandable manner by the use of ratios. Thus, ratios help in
communication and enhance the value of the financial statements.

4. Helps in co-ordination:-
Ratios even help in co-ordination, which is of at most importance in
effective business management. Better communication of efficiency and
weakness of an enterprise result in better co-ordination in the enterprise.

5. Helps in control:-
Ratio analysis even helps in making effective control of business.The
weaknesses are otherwise, if any, come to the knowledge of the managerial,
which helps, in effective control of the business.
 B) Utility to shareholders/investors:-

An investor in the company will like to assess the financial position of the
concern where he is going to invest. His first interest will be the security of
his investment and then a return in form of dividend or interest. Ratio
analysis will be useful to the investor in making up his mind whether
present financial position of the concern warrants further investment or not.

C) Utility to creditors: -

The creditors or suppliers extent short-term credit to the concern. They are
invested to know whether financial position of the concern warrants their
payments at a specified time or not.

D) Utility to employees:-

The employees are also interested in the financial position of the concern
especially profitability. Their wage increases and amount of fringe benefits
are related to the volume of profits earned by the concern.

E) Utility to government:-

Government is interested to know overall strength of the industry. Various

financial statement published by industrial units are used to calculate ratios
for determining short term, long-term and overall financial position of the
concerns.

F) Tax audit requirements:-

Sec44AB was inserted in the income tax act by financial act; 1984.Caluse
32 of the income tax act requires that the following accounting ratios
should be given:
1. Gross profit/turnover.
2. Net profit/turnover.
3. Stock in trade/turnover.
4. Material consumed/finished goods produced.
Further, it is advisable to compare the accounting ratios for the year under
consideration with the accounting ratios for earlier two years so that the
auditor can make necessary enquiries, if there is any major variation in the
accounting ratios.
 RESEARCH METHODOLOGY

NEED FOR THE STUDY:-

The purpose and importance of ratio analysis are to evaluate or analyze the
financial performance of the firm in terms of Risk, Profitability, Solvency,
and Efficiency.

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.

OBJECTIVE OF STUDY:-

 To manage the firm’s current assets and liabilities

 To examine the financial performance of the GBTL Ltd.
 To analyses interpret and to suggest the operational efficiency of the
GBTL Ltd. by comparing the balance sheet& profit & loss A\c.

Data sources:-

The study is based on secondary data. However the primary data is also
collected to fill the gap in the information..
 Primary data will be through regular interaction with the officials of
GBTL Ltd..
 Secondary data collected from annual reports and also existing
manuals and like company records balance sheet and necessary
records.
About:-
Donear Industries Ltd is a reputed and fastest
growing fashion fabric brand creating a wide variety of
exotic; Suitings, Trouser & Shirting Fabrics. The company
is engaged in the manufacturing and marketing of fabrics.
They manufacture suitings, trouser, and shirting fabrics in
India and internationally. They offer polyester viscose
blended fabrics, polyester cotton blended fabrics, polyester
fabrics, cotton high value plain and yarn dyed shirting
fabrics, and cotton plain and yarn dyed bottomwear
fabrics, as well as polyster wool, wool rich, and all wool
fabrics used in the manufacture of suits, trousers, shirts,
jacketing, skirts, workwear, corporate wear, uniforms, and
ladies tops.
The company's brands include Donear Suitings &
Shirtings, Donear Royal Classico, Donear QSF, Donear
Gifts 4U, Donear Soft & Smooth, Donear International,
Linen Fiesta, and Donear International with Fit. The
fabrics like suiting, trouser and shirtings created by the
company come in a range meant for menswear and
women's wear.
The company is having their manufacturing facilities
located at Silvassa and Surat. They are their presence
across India with a network of 44 agents, 290 wholesalers
and 12,000 retailers. The company is also into export of
fabrics.
Donear Industries Ltd was incorporated in the year 1987.
The company set up a manufacturing unit at Silvassa and
commenced commercial production on August 27, 1994.
During the year 1996-97, the company increased the
number of Looms by 16 Nos. During the year 1999-2000,
they further increased the number of Looms from 56 Nos
to 132 Nos at an expense of Rs 76 crore.

In November 1999, the company commenced commercial

production at their new project in Silvassa. During the year
2002-03, the company increased the number of Looms
from 132 Nos to 164 Nos. During the year 2003-04, they
further increased the number of Looms by 3 Nos.
During the year 2004-05, the company launched
aggressive marketing schemes and introduced variety of
fabrics to cater the demand of masses at affordable price.
They launched a new range of Fabric under the brand
name 'FERRINO MIZZON' to cater to the demand of the
premium segment. Also, the company increased the
number of Looms by 44 Nos.
In December 2007, the company started their Phase I Yarn
Dyeing, Weaving and Processing plant at Surat. Thus, they
installed Yarn Dyeing with the capacity of 2,000,000 Kgs
and Fabric processing with the capacity of 9,000,000 Mtrs.
During the year 2007-08, the company increased the
number of Looms from 208 Nos to 246 Nos. During the
year 2008-09, the company increased the production
capacity of Fabric Processing from 9,000,000 Mtrs to
24,000,000 Mtrs. The company commenced their Surat
operations taking up the installed capacity to 17 million
metres of fabrics annually.

At present, the company is a composite textile unit

with yarn dyeing, weaving and processing capacities. The
Surat facility is one of the best world-class facilities in the
textile industries.
 BOARD OF DIRECTORS

1. Anupkumar D Singh Director

2. Poonam Barsaiyan Company Secretary

3. R.V.Agarwal Managing Director

4. Ajay V. Agarwal Whole Time Director

5. Santkumar Agarwal Independent Director

6. Medha Pattanayak Independent Director

THE BRAND AMBESSDOR
 GBTL LTD
The erstwhile Punjab cotton Mills at Bhiwani in Haryana was taken over by
Grasim Industries 1964.Subsiquently, its product mix was changed from
cotton to polyester/ viscose suiting.

Today with a capacity of over 40,000 spindles and over 160 looms, GBTL
LTD . caters to a large market in India. Its brand- Graviera Suiting- is well
received in Middle East, South East Asia, Cyprus, Latin America and
Mauritius as well. The first to introduce Synthetic Denims and Polyester
Jute Suiting, the Subsidiary intends to diversify into fancy yarn spinning
and blended design suiting using fibers like silk, cotton, flax and jute. A
leader in Yarn and fabric - right from its inception- GBTL's brands include,
Adonis, and Sumo.

GBTL is equipped with

 World Class spindles.
 Dornier Looms (Germany) and Sluzer Looms (Switzerland).
 Computerized matching systems and sophisticated jet- dyeing
machines in its Processing Subsidiary.
 Computer Aided Design packages in its Fabric Development Section.
GBTL also promotes the mega fashion event “GRASIM MR. INDIA”-
the winner of this event participates in the publicized event, it has provided
a boost to the image of the company’s products.
THE BRAND AMBESSDOR
 STRATEGIES OF GBTL

Strategies are key to achieve objective. Every company must have set
strategies through which it achieves its objective. B. T.M. has also its
well-defined strategies, which is Implemented, in all the three levels.
The strategies are: -

 World Class Manufacturing

 Birla Management Centre
 Quality Circles
 5-S (a house keeping practice)
 Total Quality Management (TQM)
 Participative Management

1. WORLD CLASS MANUFACTURING (WCM)

In order to delight customers, employees, and stakeholders and to

become a Successful competitor in global market, Aditya Birla Group has
evolved and promoted this top rank methodology of W.C.M. to sustain
excellence in Company wise performance. This is multidimensional viz.
waste elimination, 5-S, JIT, TPM System & Cash Flows.
2. BMC (Birla Management Centre)

Philosophy behind its logo: The philosophy of BMC is beautifully

captured in its symbol. The logo has been designee to reflect concept of
group dynamics and group Synergy, six symbolic person, one is dark
blue and five is light blue denote one group, all fusing their energies and
knowledge to form a strong nucleus.

3.Quality Circles

Quality is match word of the subsidiary. Checks and counters do

not impose its checks. It is a part of total manufacturing system. Quality
is first parameter. Again in order to maintain a superior quality of the
product various Management practices and being carries out by top
management. The top management with a view to has formed
QualityCircles meetings Increase the involvement and responsibility in
their individual work areas. After completion of the Project, award by
way of recognition are given to all The quality circles team members.

4. 5-S (a house-keeping management)

Good quality management producers can prosper only in clean and
serene Atmosphere an so the top management at GBTL have
implemented the 5-S Technique (related to the wok environment):

 Seiri Sorting out unnecessary items.

 Seiton Systematizing necessary items.
 Seison Sweeping of work place and machines.
 Seiketsu Sanitizing.
  Shitsuke Self disciplining.

5.TQM (TOTAL QUALITY MANAGEMENT)

Today’s executive views the task of improving product and service

quality as their top priority. Most customers, whether they are internal
or external will no longer accept average quality performance. If
company wants to stay in. They have no choice but to adopt TQM.

Because of this strong quality consciousness of GBTL, in 1994

Graviera was awarded the prestigious ISO 9002 so certification. Each
process from buying the Fibre to the finished fabric monitored by the
computerized machines, highly observant workers and technicians.
 OBJECTIVES OF THE COMPANY
Objectives establish the goals and the aims of the business and determine
the shape of future events. Objectives are the way of achieving motives for
profit of social service.

Main objectives of GBTL Ltd. as in its Memorandum of Association are:

 Increasing productivity of work force
 To introduce new products and create new markets
 Customers service and customer satisfaction
 Improving work culture among the employees
 Capitalizing on company strength and use of corporate assets
 Continuous innovation
 To provide a growth rate of about 10% p.a.
 Improve the advertising effectiveness
 To ensure that a large proportion of its sales is directed towards the
sectors and urban sectors
 SWOT ANALYSIS OF GBTL

Strengths of GBTL

 GBTL is a composite firm in Haryana.

 GBTL is a financially sound firm.

 Working environment is peacefully (Union is strength principle

is followed)

 Facilities given to employees & employers on time and upto date.

 Product quality is given equally to all (Wholesaler, Retailers)

Weaknesses of GBTL

 Basic salary structure is not up to date some manipulations are

need.

 Not sufficient facilities are given employers & employees

 .
Opportunities for GBTL

 Given chance to Grasim to make & sale its product providing them
manpower, machine, money, market, material

 In near future they will start readymade garments

Threats to GBTL

 GBTL face threats from its competitors like Vimal, ocm, Siyaram,
Raymond
 GBTL face in overseas market like Philippines, Malaysia, Canada,
Mexico, America
 WHAT CAN WE DO

a) Sampling
b) Seeding
c) Perfecting a new product
d) Trade and / or Consumer Research
e) Launch of new products
f) Co-Branding
g) Joint Promotion
h) Sharing Distribution
 WHAT CAN YOU EXPACT

Under this our partners can expect / avail of the following support
services from Birla Viscose.

 Yarn Logistic support: A good quality viscose or viscose blended

yarn can be made available from a good spinning mill with in time.

 Technical support: Viscose based processing support through

manuals is available on a case-to-case basis. Physical demonstration
at select process houses is also carried out for the benefit of the
knitters and processors.

 Design and Development support: We have an application

development center at TIT & S; Bhiwani, where we keep on
developing new product and concepts.

 Marketing Support: To tie up spinners/ knitters/showcase.

RATIO ANALYSIS:-

Ratio analysis is the process of the determining and presenting the

relationship of the items and group of items in the statements .According to
Batty j. management accounting “Ratio can assists management in its
basics functions of forecasting ,planning,coordination,control and
communication”.

Benefits of ratio analysis to GBTL:-

1. Helpful in analysis of financial statements.
2. Helpful in comparitive study.
3. Helpful in locating the weak spots of the GBTL.
4. Helpful in forecasting.
5. Estimate about the trend of the business.
6. Fixation of ideal standards.
7. Effective control.
8. Study of financial soundness.
Types of ratio:-

Liquidity ratio: They indicates the firms ability to meet its current
obligation out of current resources.

 Current ratio:- Current Assets / Current Liabilities

 Quick ratio:- Liquid Assets / Current Liabilities
Liquid assets =Current Assets – Stock -Prepaid Expenses

Leverage or Capital structure ratio: This ratio discloses the firms

ability to meet the interest costs regularly and long term solvency of the
firm.

 Debt Equity ratio:- Long Term Loans / Shareholders Funds or Net

Worth

 Debt to total fund ratio:- Long Terms Loans/ Share Holder Funds
+Long Term Loan
 Proprietary ratio:- Shareholders Fund/ Shareholders Fund+Long
 Term Loan
 Total Assets to debt ratio:- Total Assets/Debt
 Interest Coverage Ratio:- PBIT/ Interest Charges

Activity ratio or Turnover ratio:- They indicate the rapidity with

which the resources available to the concern are being used to produce
sales.
 Stock turnover ratio:- Cost of good sold/Average Stock
( Cost of good old= Net Sales/ Gross Profit,
Average stock=Opening Stock+Closing Stock/2)

 Debtors turnover ratio:- Net Credit Sales/ Average Debtors

+Average B/R

 Average collection period:- Debtors+B/R /Credit sales perday

( Credit sales per day=Net Credit sales of the year/365)

 Creditors Turnover Ratio:- Net Credit Purchases/ Average

Creditors + Average B/P

 Average Payment Period :- Creditors + B/P/ Credit Purchase

Per day

 Fixed Assets Turnover ratio:- Cost of goods sold/Net Fixed

Assets

( Net Fixed Assets = Fixed Assets – depreciation)

 Working Capital Turnover Ratio:- Cost of goods sold/Working
Capital
(working capital= current assets – current liability)

Profitability Ratios or Income ratios:- The main objective of every

business concern is to earn profits. A business must be able to earn
adequate profit in relation to the risk and capital invested in it.

 Gross profit ratio:- Gross profit / Net Sales * 100

(Net sales= Sales – Sales return)

 Net profit Ratio:- Net profit / Net sales * 100

(Operating Net Profit= operating net profit/ Net Sales *100 or
operating Net profit= gross profit – operating expenses)

 Operating Ratio: - Cost of goods sold + Operating expenses/

Net Sales * 100
Cost of goods sold = Net Sales – Gross profit

Operating expenses = office & administration expenses + Selling

& distribution expenses + discount + bad debts + interest on short
term loans)

 Earning per share(E.P.S.) :- Net Profit – dividend on

preference share / No. of equity shares

 Dividend per share(D.P.S.) :- Dividend paid to equity share

Holders / No. of equity shares *100.
 Dividend Payout ratio(D.P.) :- D.P.S. / E.P.S. *100
 KEY WORKING CAPITAL RATIOS
The following, easily calculated, ratios are important measures of
working capital utilization.
Ratio Formulae Result Interpretation

On average, you turn over the value

of your entire stock every x days.
You may need to break this down
Average Stock into product groups for effective
Stock
* 365/ = x stock management.
Turnover
Cost of Goods days Obsolete stock, slow moving lines
(in days)
Sold will extend overall stock turnover
days. Faster production, fewer
product lines, just in time ordering
will reduce average days.

It take you on average x days to

collect monies due to you. If your
official credit terms are 45 day and
Receivables
Debtors * 365/ = x it takes you 65 days... why ?
Ratio
Sales days One or more large or slow debts can
(in days)
drag out the average days.
Effective debtor management will
minimize the days.

On average, you pay your suppliers

every x days. If you negotiate
better credit terms this will
increase. If you pay earlier, say, to
Creditors * get a discount this will decline. If
Payables
365/ =x
Ratio
Cost of Sales days
you simply defer paying your
(in days) suppliers (without agreement) this
(or Purchases)
will also increase - but your
reputation, the quality of service
and any flexibility provided by your
suppliers may suffer.
 Current Assets are assets that you can
readily turn in to cash or will do so
within 12 months in the course of
business. Current Liabilities are amount
you are due to pay within the coming
Total Current 12 months. For example, 1.5 times
Current Assets/ =x
Ratio Total Current times
means that you should be able to lay
Liabilities your hands on $1.50 for every $1.00
you owe. Less than 1 times e.g. 0.75
means that you could have liquidity
problems and be under pressure to
generate sufficient cash to meet
oncoming demands.

(Total Current
Assets - Similar to the Current Ratio but takes account
Quick =x
Inventory)/ of the fact that it may take time to convert
Ratio times
Total Current inventory into cash.
Liabilities
(Inventory +
Working
Receivables - As % A high percentage means that working capital
Capital
Payables)/ Sales needs are high relative to your sales.
Ratio
Sales
 RATIO ANALYSIS FOR GBTL

 CURRENT RATIO:-
In Year 2018
C.R.= current assets/ current liabilities
=20715.40/17266.60
= 1.19

In Year 2019
C.R. = 23055.13/18619.48
= 1.23

 QUICK RATIO:-
In Year 2006
Q.R. = 1037/946
= 1.09
In Year 2007
Q.R. = 1175.34/1108
= 1.06
 DEBT EQUITY RATIO:-
In Year 2006
D.E.R = 2065.23/3610.83
= 0.57
In Year 2007
D.E.R = 2008.34/4328.35
= 0.46

 INTEREST COVERAGE RATIO:-

In Year 2006
I.C.R = 1213/154
= 7.88 times
In Year 2007
I.C.R = 1334/139
= 9.61 times
 DEBT TO TOTAL FUND RATIO:-
In Year 2006
D.T.F.R. = 2065.23/6309
= 0.327 or 32.7%
In Year 2007
D.T.F.R.= 2008.34/6936
= .289 or 28.9%

 PROPRIETARY RATIO:-
In Year 2006
P.R.= 3610.83/6309
= 0.572 or 57.2%
In Year 2007
P.R.= 4328.35/6936
= 0.624 or 62.4%
 CAPITAL TURNOVER RATIO:-
In Year 2006
C.T.R.= 3863/3768
= 1.03 times

In Year 2007
C.T.R.= 4583.36/3954
= 1.16 times

 FIXED ASSETS TURNOVER RATIO:-

In Year 2006
F.A.T.R.= 3863/3218
= 1.20 times
In Year 2007
F.A.T.R.=4583.36/3208
 = 1.43 times

 WORKING CAPITAL TURNOVER RATIO:-

In Year 2006
W.C.T.R.=3863/550
=7.03 times
In Year 2007
W.C.T.R.=4583.36/746
=6.15 times

 STOCK TURNOVER RATIO:-

In Year 2006
S.T.R.= 3863/500
= 7.73 times

In Year 2007
 S.T.R.= 4583.36/569
= 8.05 times

 GROSS PROFIT RATIO:-

In Year 2006
G.P.R.= 1350.30/5213*100
= 25.9%

In Year 2007
G.P.R.=1645.90/6229*100
= 26.42%

 NET PROFIT RATIO:-

In Year 2006
N.P.R.=1077.26/5213*100
= 20.66%

In Year 2007
 N.P.R.=1361.36/6229*100
= 21.85%

 OPERATING NET PROFIT RATIO:-

In Year 2006
O.N.P.R.= 524.84/5213*100
= 10.06%

In Year 2007
O.N.P.R.=707.44/6229*100
= 11.36%

 EARNING PER SHARE:-

In Year 2006
E.P.S.= 7790000000/91671233
= RS. 85

In Year 2007
 E.P.S.= 9450000000/91672097
= RS.103.08

 DIVIDEND PER SHARE:-

In Year 2006
D.P.S.=1280000000/91671233
= RS.14

In Year 2007
D.P.S.=1470000000/91672097
=RS.16

 DIVIDEND PAYOUT RATIO:-

In Year 2006
D.P.R.=144.8/779*100
= 18.6%
 In Year 2007
D.P.R.=167.6/944.7*100
=15.52%

COMPARATIVE P&L ACCOUNT

(Rs.In Crores)

FY06 FY07 %chang FY04 FY05 %chang

e e
Gross turnover 11714.8 10476. 9 7607. 7201. 6
4 2 1
Net turnover 10191. 9291.7 10 6620. 6229. 6
9 5 3
Other income 252.4 245.2 3 204.2 187.2 9
Total expenditure 8113.8 7264.5 12 5233. 4631. 13
8 8
Operating 2330.5 2272.4 3 1590. 1784. (11)
profit(PBIDT) 9 7
Interest 212.2 284.6 (25) 97.4 138.8 (30)
Gross 2118.3 1987.8 7 1493. 1645. (9)
profit(PBDT) 5 9
Depreciation 563.1 556.2 1 291.6 284.6 2
Surplus on 4.1 34.4 - 4.1 34.4 -
prepayment of
sales tax loan
Provision for - (162.5) - - (92.0) -
diminution in
value of
investments and
loans
Profit before tax 1559.3 1303.5 20 1206. 1303. (7)
0 7
Total tax expenses 402.7 442.1 (9) 342.8 418.0 (18)
Net profit after 1156.6 861.4 34 863.2 885.7 (3)
total tax
Minority share 116.0 19.0 - - - -
Net Profit 1040.6 880.4 18 863.2 885.7 (3)

CASH FLOW STATEMENT

(for year 2007-08)
(Rs.In Crores)
CASH FLOW FROM OPERATING 2006 2007
ACTIVITY
Net Profit Before Tax 1361.36 1077.26
Depreciation 284.57 273.06
Interest Expenses 138.76 153.88
Interest Income (75.38) (55.28)
Dividend Income (39.37) (86.32)
Assets for disposable 7 -
Sale of fixed assets (2.25) .9
Sale of long term Investment (24.9) (31.65)
Sale of current Investment (3.37) (1.79)
Operating profit before working 1646.42 1330.06
capital changes
Trade receipts (708.33) (64.28)
 Stock (219.13) 80.49
Assets for disposable 1.84 2.49
Trade payables 190.96 30.75
Cash from Operations 1441.76 1379.51
Direct tax paid 391.3 (210.28)
CASH FLOW FROM
Total 1050.46 1169.23
INVESTING ACTIVITY
CASHofFLOW
Purchase FROM
fixed assets (301.75) (231.24)
FINANCING
Sale of fixed assets ACTIVITY 19.71 5.65
Proceeds
Purchase from borrowings
of investments 326.4
(75.41) 410.5
(792.83)
Repay
Sale of borrowings
of investments (354.13)
666.13 (388.73)
53.64
Interest paid
Subsidiaries (150.11)
(1294.15) (173.66)
24.74
Dividends paid (128.19) (91.57)
Sale of currentdividends
Corporate investment
tax 3.37(16.77) 1.79(11.75)
Interest received 74.29 55.28
Total received
Dividend (322.8)
39.37 (255.21)
86.32
Total (868.44) (796.65)
INCREASE/DECREASE IN (140.78) 117.37
CASH & CASH EQUIVALENT
At Beginning of year 227.48 110.11
At end of year 86.7 227.48
 Profit & Loss A/c
(2007-08)
(Rs.In Crores)
Particulars 2007 2006 2005
INCOME
Gross sales 7201.06 6129.95 5412.28
Less: Excise duty -971.80 -916.74 -803.13

Net sales 6229.26 5213.21 4609.15

Interest & dividend 114.75 141.60 74.54
Income
Other income 72.44 87.69 58.44
Increase/Decrease in 100.67 (24.31) (16.70)
stock
Total 6517.12 5418.19 4725.43
EXPENDITURE
Raw material 1873.05 1372.49 1175.91
consumed
Manufacturing 1498.77 1306.67 1244.81
expenses
Purchases of 49.02 50.47 17.62
finished &other
products
Payments 373.13 358.90 326.32
&provisions for
employees
Selling, distribution, 938.46 825.46 819.10
administration
&other expenses
Interest 138.76 153.88 168.41
Depreciation 284.57 273.06 254.44
Total 5155.76 4340.93 4006.31
Profit before tax and 1361.36 1077.26 719.12
exceptional items
Surplus on pre-payment 34.35 - -
of sales tax loan
Provision for diminution (92.00) - -
in the value of investment
and loans
Loss on sale of shares - - (208.62)
Employee separation - - -
compensation
Profit before tax 1303.71 1077.26 504.58
Provision for current tax (451.00) (291.00) (192.00)
Deferred tax 33.00 (7.00) 15.00
Tax provision of earlier - - 40.00
years written back
Profit after tax 885.71 779.26 367.58

Debenture redemption 6.86 42.04 212.04

reserve no longer required
0.16 8.27 -
Investment allowance
reserve no longer required
Balance brought forward
from previous year 790.20 955.41 929.24

Profit available for 1682.93 1784.98 1508.83

Appropriation
Appropriations
Proposed dividend 146.68 128.34 91.67
Corporate dividend tax 20.90 16.44 11.75
General reserve 700.00 850.00 450.00
Balance carried to 815.35 790.20 955.41
balance sheet
Total 1682.93 1784.98 1508.83
 BALANCE SHEET

FY 07 FY 06
(Rs crore) FY 05 FY 04 FY 03

SOURCES OF FUNDS

Shareholders’ Funds

91.67 91.67
Share Capital 91.67 91.67 91.67

0.02 0.02
Share Capital 0.02 0.02 0.02
Suspense

4,236.66 3,519.14
Reserves and 2,885.62 2,622.51 3,001.66
Surplus

4,328.35 3,610.83
2,977.31 2,714.20 3,093.35

599.5 632.50 -
Deferred Tax 625.50 640.50
Balance

Loan Funds

1,439.02 1,327.80
Secured Loans 1,500.86 1,484.50 1,411.68
 535.79 709.09
Unsecured Loans 539.26 475.09 366.39

- - - -
Deferred Payment 0.08
Credits

33.53 28.34
Documentary Bills 35.95 105.15 122.29
Discounted with
Banks

2,008.34 2,065.23
2,076.07 2,064.74 1,900.44

6,936.19 6,308.56
TOTAL 5,678.88 5,419.44 4,993.79
 APPLICATION OF FUNDS

Fixed Assets

5,897.04 5,705.53
Gross Block 5,486.12 5,249.21 5,246.24

2,848.17 2,588.92
Less: Depreciation 2,330.11 2,108.06 2,008.82

3,048.87 3,116.61
Net Block 3,156.01 3,141.15 3,237.42

145.94 79.09
Capital Work-in- 89.02 102.90 83.06
Progress

5,897.04 3,195.70
3,245.03 3,244.05 3,320.48

2,848.17 22.57 -
Fixed Assets held 25.06 26.48
for disposal

3,048.87 2,540.65
Investments 1,796.05 1,416.04 682.48

Current Assets, Loans and Advances

1.09 - -
Interest accrued on 0.01 0.17
Investments

678.59 459.46
Inventories 539.95 548.89 725.91

522.01 484.63
Sundry Debtors 429.65 497.85 616.46

86.7 227.48
Cash and Bank 110.11 148.32 158.35
Balances

565.54 324.44
 CONCLUSIONS

 The % of Fixed Assets has come down in 2008 from 2007.

 As per current ratio firm is able to pay its current liability.

 Quick ratio presents a better test of short-term financial

position, which shows better working capital position of firm.

 Debt equity ratio and debt to total fund ratio presents

protection to long-term lenders and shows sufficient working
capital in the firm.

 G.P. and N.P. have increased from previous year.

 LIMITATIONS

 Based on financial statements these statements

suffer from certain limitations.
 Affected by window dressing.
 Company provides only secondary data, so certain
type of bias is in study.
 Unsuitable for forecasting.
 REFERENCES

The main references that are going to be used as a part of Study

are as follows:

 Annual Reports of GBTL Ltd.

 2006-07
 2007-08

 www.birlagroup.com

 www.birlaviscose.com

 www.adityabirla.com/our_sectors/index.htm

 www.fiber2fashion.com/grasim/contact.asp

 Financial Management Sashi K Gupta

 Financial Management M.Y.Khan & P.K.Jain

 Financial Management D. K. Goyal