INTRODUCTION: ASHOK LAYLAND

HISTORY OF THE INDUSTRY

Ashok Leyland is a commercial vehicle manufacturing

company based in Chennai, India. The company was established in 1948 as
Ashok motors, with an aim to assmble Austin cars. Manufacturing of
commercial vehicles was started in 1955 with equity contribution from
Leyland Motors. Today the company is the flagship of the Hinduja Group
and England based Indian Group. They have a market share of around 30%.

In 1948, Ashok Motors was set up in what was then

Madras (now Chennai), for the assembly of Austin cars. The
company’s destiny and name changed soon with equity participation
by British Leyland and Ashok Leyland commenced manufacture of
commercial vehicles in 1955. Early products included the Leyland
comet bus chasis, which sold in large numbers to many operations,
including Hyderabad Road Transport, Ahmedabad Municipality
Travancore State Transport, Bombay State Transport and Delhi Road
Transport Authority. By 1963 the comet was operated by every state
transport undertaking in India. Over 8,000 were in service. The comet
was soon joined in production by a version of the Leyland Tiger.

In 1968 production of the Leyland Titan ceased in Britain,

but was restarted by Ashok Leyland in India. The Titan PD 3 chasis
was modified, as a fire speed heavy duty constant Mesh gearbox
utilized together with the Ashok Leyland version of the 0.680 engine.
The Ashok Leyland Titan was very successful and continued in
production for many years.

Ashok Leyland vehicles have built a reputation for

reliability and ruggedness. The 375,000 vehicles being put on the
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roads have considerably ceased the additional pressure placed on
road transportation in independent India.
Company Facts :-

 Eight out of ten metro state transport buses in India are from
Ashok Leyland. At 70 million passengers a day. Ashok Leyland
buses carry more people than the entire Indian rail network.

 Ashok Leyland has a near 98.5% market share in the Marine

Diesel Engines market in India.

 In 2002, all the vehicle manufacturing units of Ashok Leyland

were ISO 14001 certified with Environmental Management
System.

 The company has six manufacturing locations in India.

ENNORE, CHENNAI
The parent plant, situated at Ennore near Chennal, was
set up in 1948. The Ennore plant manufactures medium duty
commercial vehicles and AL 400 series engines. It has a highly
integrated manufacturing facility and accounts for a major share of
the Company’s production.

HOSUR (III UNIT)

Set up in 1994, this plant manufactures the Cargo range
of trucks An ultra modern paint shop and attached lab facilities, a
state-of-the-art assembly line, a large press shop, a high degree of
computerization and extensive automatic and semi-automatic
material handling systems are some of the special features of this
modern plant.

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BHANDARA
The Bhandara plant, located 80 kms off Nagpur,
Maharashtra, established in 1982, produces transmission equipment
such as Z.F.gear box, the IVECO 2838 gear box and Crown Wheel
Pinions, in addition to assembling vehicles.

ALWAR (RAJSTHAN)

The plant at Alwar, Rajslhan, was set up In 1982, as an

assembly base for medium duty commercial vehicles to cater to the
Northern Region. Additionally, Alwar also undertakes bus body
building activities.

Current Direction :

The company has increased its rated capacity from

50,000 vehicles capacity per annum to nearly 77,000 vehicles per
annum. Also further investment plans including putting up two new
plants; one in North India and one is Middle East Asia are fast a foot.
After expansion, the company shall attempt to a dominate the
medium and heavy duty commercial vehicle market in India. In fact
the company achieved an all time production of 65,000 vehicles in the
financial year 2005-2006. The company is actively considering and
has made great plans to enter the second hemisphere market like
Africa and middle east. It has already a sizable presence in African
countries like Nigeria, Ghana, Egypt and South Africa.

Additionally, Ashok Leyland is looking to expand its

production operations overseas to make it a more global company.
To assist in this goal, the company is looking to aquire smalMo-
medium size commercial vehicles manufacturers in China and other
developing countries which have an established product line. It has
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recently announced the acquisition of the Truck Business Unit of
Czech based AVIA.

The company has recently started to build its own

corporate office in the suburbs of Chennai at a cost of Rs. 50 crore.

The company has embarked upon an ambitious

modernization plan for manufacturing engines, gearboxes and axles,
at its Chennai plant. The new engine manufacturing facility is
exposed to go on stream by April 2018. Once it goes on stream the
new engine facility will be one of the most modern facilities in Asia.
The axles facility is expected to go on stream by January 2018.

The gearbox facility, which is a capacity addition

programme utilizing technology from ZF-Germany will follow latter.

Ashok Leyland Gadegaon, Bhandara :

One of the industries of Ashok Leyland is also situated at

Gadegaon Bhandara. In Bhandara, activity of assembling commercial
vehicles have started in 1981. The main products made in this
industry are -

 Chasis (Buses and Trucks)

 Gear boxes

 Gear boxes components like gear, shaft, casings

 Crown wheels

For making the products the industry needs water and the
requirement is 300-400 m3day. They use the water source from MIDC
through Wainganga river water and also 2/3 parts of water from Bore
well within their premises.
Products manufactured at Bhandara

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 Passenger segment

 Viking BS-I

 Viking BS-II

 Cheetah BS-I

 Cheetah BS-II

 Panther

 Stag mini

 StagCNG

 222 CNG

 Lynx

 Double Decker

 Vestibule
 Airport Tormac coach

INTRODUCTION TO TOPIC

Financial analysis is the process of identifying the

financial strengths and weaknesses of the firm by properly

establishing relationships between the items of the balance sheet and

the profit and loss account. Financial analysis can be undertaken by

management of the firm, or by parties outside the firm , viz owners,

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creditors investors and others . The nature ot analysis will differ

depending on the purpose of the analyst.

The basis for financial planning, analysis and decision-

making is the financial information. Financial information is needed to

predict, compare and evaluate the firm's earning ability. It is also

required to aid in economic decision-making -investment and

financing decision-making. The financial information of an enterprise

is contained in the financial statement or accounting reports. Three

basic financial statements are of great significance to owners,

management and investors are balance sheet, profit and loss account

and cash flow statement.

OBJECTIVES OF STUDY

The soundness and intrinsic worth of a company is knwon by

financial analysis. The financial and operational efficiency and profitability

also known by financial analysis. An investor as well as share holder need to

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know the performance of the company. This is short importance of financial

analysis.

OBJECTIVES :

i) To study the earning capacity of 'Ashok Leyland Ltd., Bhandara'.

ii) To study the financial position and financial performance of 'Ashok

Leyland Ltd., Bhandara'.

iii) To study the long term solvency as well as short-term liquidity.

iv) To study the debt capacity of the 'Ashok Leyland Ltd., Bhandara'.

v) To study the operating performance of 'Ashok Leyland Ltd.,

Bhandara'.

vi) To study future prospects of the firm.

CHAPTER - III
RESEARCH METHODOLOGY

Research is a process of systematic and in-depth study of research

of any topic, subject backed by the collection, presentation and interpretation of

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relevant data. Methodology is important tool in any research work. It acts as a

guideline and leads to completion of research project. It consists of various steps

that are generally adapted by researcher in study in problem along with logic

behind them. On the basis of general guideline, a model of the following steps is

prepared and presented in the dissertation work.

A) Selection Of Subject :

Selection of subject or topic for dissertation work is a very important

job for researcher. The dificult task is the information which is required for the

purpose of research. It should be easily available.

Research has chosen this after discussion with guide and other

persons of "Ashok Leyland Ltd., Bhandara."

B) Title Of Dissertation :

In view of the object behind the selection of subject researcher has

chosen the topic entitled "Financial Analysis at 'Ashok Leyland Ltd., Bhandara"

C) Period Of Study :

The study has been done on financial data of three years

D) Collection Of Data :

1) Primary data : From Ashok Leyland Ltd. Bhandara.

Annual report of last three years.

2) Secondary data : Books, Internet, Business Magzines.

The research methodology would like to gather information for

carrying out analysis by using the following method during research study.
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Primary Data —

Def:-

 Observation and personal interview with senior managers.

 To fine-tune experience gained by the researcher, would like to take the

expertise opinion to shape the project report.

Secondary Data —

Def:-

 Financial research is the systematic design, collection and analysis of data

and finding relevant to specific financial aspects of the company.

 The data was collected through financial statements like

1) Annual reports

2) Balance sheet

3) Profit and loss account

4) Internet & Other articles

HYPOTHESIS

A hypothesis is tentative generalization, the validity of whch has got

to be tested. Hypothesis at its intital stage may be an imagined idea or more

given.

A hypothesis is made in order to find out correct explanation of the phenomenon

through investigation. On the basis of the hypothesis facts are observed and

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collected when by verification. The hypothesis is found to be tire, a theory is

obtained.

 That, the 'Ashok Leyland Company' in second larget commercial vahicles

manufacturing company here it is assumed that W. C. management at

Ashok Leyland adequate.

 That, the company has growth aspects.

 That, the companies financial position in market is good and company

retaning this position.

 That, the company having goal to become No. 1 in Commercial vehicles

manufacturing company by the year 2018.

CHAPTER - V
FINANCIAL ANALYSIS

INTRODUCTION :

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 Financial analysis is the process of determining the significant
operating and financial characteristics of a firm from accounting data. this
accounting data is presented in the form of Financial Statements. Balance
Sheet and Profit & Loss Account are the two principal financial statement
Besides. Surplus Statement is also prepared by the business concerns. These
statements are outcome of preparing financial accounts. They reveal
financial position and profitability of the concern and utilisation of retained
earnings. However, these financial statements are not an end in themselves,
they are only vehicles of communication. The financial analysis is
concerned with the analysis and interpretation of these various financial
statements. As such, the technique of financial analysis is typically devoted
to evaluate the past, present and future performance of a business firm. In
general business usage, financial analysis is concerned with the analysis of
financial statements such as balance sheet, profit and loss account etc.
Broadly, the term financial analysis is applied to almost any kind of detailed
inquiry into financial data. A financial executive has to evaluate the past
performance, present financial position, liquidity situation, enquire into
profitability of the firm and to plan for future operations, For all of this, they
have to study the relationship among various financial variables in a business
as disclosed in various Fiancial statements. “The analysis of financial
statements is an attempt to determine the significance and meaning of the
financial statements data so that the forecast may be made of the future
prospects for earnings, ability to pay interest and debt maturities (both
current and long-term) and profitability. Financial analysis is commonly
called the analysis and interpretation of financial statements. Here are some
important definitions of this concept

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Definitions :

According to John N. Myer “Financial Statement analysis is

largely a study of relationships among tbe various financial factors in a
business, as disclosed by a single set of statements and study of these factors
as shown in a series of statements”.

According to R. D. Kenedy & S. Y. McMuller “The analysis

and interpretation of financial statements are an attempt to determine the
significance and meaning of the financial statement data so that tbe forecast
may be made of tbe prospects for future earnings, ability to pay interest and
debt maturities (both current and long-term) and profitability of a sound
dividend policy”.

According to Meigs, W. B. and others, “Financial analysis is the

process of selection, relation and evaluation”.

Thus, the focus of financial analysis is on key figures contained

in financial statements and the significant relationship that exists between
them.

“Analysing financial statement” to quote Metcalf and Titard, “is

a process of evaluating relationship between component parts of financial
statements to obtain a better understanding of a firm’s position and
performance”

Types of Financial Analysis :

Distinction between different types of financial analysis can be

made either on ihe basis of material used for the analysis or according to
modus operandi of the analysis or object of the analysis. It is important to
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distinguish between different types of analysis because the techniques of
analysis and interpretation differ according to the type of analysis. The
following chart gives a snapshot view of financial analysis :

1. External Analysis -

External analysis of financial statements is made by those who

do not have access to the detailed accounting record of the company, i.e.

banks, creditors and general public. These people depend almost entirely on

published financial statement. The main objective of such analysis varies

from party to party.

2. Internal Analysis -

Such analysis is made by the finance and accounting department

to help the top management These people have direct approach to the

relevant financial records so they can Peep behind the two basic financial

statements (B.S. & Income statement) and narrate the inside story. Such
analysis emphasizes on the performance and assessing the profitability of

different activities.

3. Short term Analysis -

The shor-term analysis of financial statement is mainly

concerned with the working capital malysis, activity tnalysis. return on

investment analysis etc. In the short-run a company must have ample funds

readily available to meet its current needs and sufficient borrowing capacity

to meet the contingencies. Hence, in short-term analysis the current assets

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and current liabilities are analysed and cash position (liquidity) of the

concern is determined. For short-term analysis the ratio analysis is very

useful.

4. Long-term Analysis -

In the long-run the company must earn a minimum amount

sufficient to maintain a suitable rate of return on the investment, to provide

(or the necessary growth and development of the company and to meet the

cost of capital. Financial planning is also necessary for the continued success

of a company. Thus, in the long-run analysis the stress is on be stability and

earning potentiality of the concern. In long-term analysis the fixed assets

structure, leverage analysis, ownership pattern of securities etc. are analysed.

The short-term and long-term, both types of analysis are

important, Proper planning for the future requires fairly sufficient knowledge

of the company’s current position which may be determined from short-tern

financial analysis only. The need of short-term analysis for long term

planning is useful in the same way as a driver consulting a road map for the

best route to bis destination must know his present location too exactly.

5. Horizontal Analysis -

When financial statements for a number of years are reviewed

and analyzed, the analysis is called ‘horizontal analysis’. The preparation

of Comparative Financial Statements is an example of horizontal analysis.

As it is based on data from year to year, rather than on one date or period of

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time as whole, this is also known as ‘dynamic Analysis’. It is very useful for

long-term planning as it involves the trend study of financial data.

6. Vertical Analysis -

It is also known as static analysis. When ratios are calculated

from the balance sheet of one year (or profit and loss account of one year), it

consists of vertical analysis. It has got limited utility as it is concerned with

short-term analysis only.

Procedure of Analysis -

A common procedure of analysis of financial statements, to be

done by any interested party, will be as follows -
1. Deciding upon the extent of analysis- First of all the depth, object and
extent of analysis will be determined by the analysis. The
determination of these basic facts determines the scope of analysis,
toll of analysis and the amount and quality of financial data to be
required. For example, to measure die financial position of the firm,
the balance sheet of the firm will be analysed.
2. Going through the financial statements - Before analysing and
preparing any statement or composing financial ratios, it is necessary
for the analyst to go through the various financial stuemene of the firm
carefully.
3. Collection of necessary information - The analyst should collect other
useful information from the management useful for analysis and
interpretation but not being revealed from the published financial
statements.

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4. Rearrangement of financial data - Before making actual analysis and
interpretation the analyst must rearrange the data provided by these
statements in useful manner. The approximation of figures, re-
classification or consolidation of items etc. is done in this step.
5. Analysis - Now the actual analysis is made. For analysis any ot the
technique of financial analysis can be used. Ratio analysis is very
important tool in this respect.
6. Interpretation and Presentation- After analysing the interpretation is
made and the inferences drawn from this analysis are presented in the
shape of reports to the management etc.

Parties interested in Financial Analysis :

Financial analysis is an important and very useful activity The

end-users of financial statements of any business are interested in these
statements primarily is an aid to determine the financial position and the
results of the operations. There are different parties interested in the financial
analysis of these statements and their aims and objectives of analysis also
differ significantly. The following are the uses of financial statement
analysis to different parties :

1. To the Financial Executives -

The first party interested in the financial statement analysis is
the finance department of the business concern itself. To the financial
planner such analysis provides a deep insight into the financial conditions of

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the enterprise and a view of the past performance which helps in future
decision - making. The financial statements give vital information
concerning the financial position of the enterprise as well as result of the
business operations.

2. To the Top Management -

  The top management of the concern is also interested in the
analysis of these statements because it helps them in reaching conclusions
regarding the over-all operations of business. The management is interested
in very aspect of the financial analysis. It is their over-all responsibility to
see that the resources of the firm are used most effectively and that the firms
financial position is sound. As such, return on Investment (ROI) analysis is
very important for them.

3. To the Creditors -
The analysis of these statements is very useful to the creditors
also. Some of the aspects of an enterprise's operations which are of interest
to the creditors are liquidity of funds, soundness of the financial structure,
profitability of the operations, effectiveness of working capital management
etc. The bankers and trade creditors of a business enterprise are interested in
its cash generation and credit worthyness. They want to assess whether the
enterprise will be able to meet commitments belong to repayments of
principal amount advanced as well as interest payments due to as per agreed
schedules. They get all this information from the analysis of balance sheet
and income statement of the company.

4. To the Investors and Others -

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 Investors, present as well as prospective, are also interested in
the measurement of earning capacity of the securityes. Investors have been
increasingly concerned with the cash generation capability of an enterprise
primarily in term of the flexibility available to such enterprises to acquire
other business and new assets on an advantageous basis. For this purpose,
cash-flow analysis and funds flow analysis have proved to be very useful.

Tool of Financial Analysis —

Following are the important tools of financial analysis:
1. Comparative Financial and Operating Statements.
2. Common - size statement.
3. Trend Ratios or Trend Analysis.
4. Average Analysis.
5. Statement of Changes in Working Capital..
6. Funds-flow and Cash-flow Analysis.
7. Ratio Analysis. There brief description is as follows;
Balance Sheet As on
April 1ST 2018 - 31th March 2019
YEAR ASSET YEAR

LIBILITIES 2018 2019 2018 2019

In Crore In Crore In Crore

Shareholders fund : Fixed Asset :

Capital 118.93 122.15 Gros block 2002.24

Reserve & Surplus 1048.93 1290.29 Less Depriciation 1,108.40

loan Funds:- Net block 893.84 943.27

Secured Loan 263.49 184.69 Capital W-I-P 85.14 141.41

Unsecured Loan 616.91 507.23 Investment 229.19 368.17

Deferred tax 170.84 179.68 Current Assets

Liability-net Loan & Advances

Current Liability :-

Liabilities & provisions 1,165.66 1,408.52 Inventories 568.09 902.57

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 Sundry debtors 458.76 424.33

Cash and bank 796.68 602.87

balance

Loan & advances 333.73 302.64

Misc. Expenditure 19.33 7.30

Total 3,384.76 3,692.56 Total 3,384.76 3,692.56

P & L A/C
For the Year Ended 31st March 2018 - 2019
YEAR
PARTICULARS 2018 2019
In Crore In Crore
Income:-
Sales 4811.28 6053.10
Less Excise duty 628.90 805.45
Net Sales 4182.38 5247.65
Other Income 53.75 32.97
Total Income 4236.13 5280.62
Less Expenditure:-
Manufacturing & other Expenses 3759.52 4707.58
Depreciation 109.21 126.00
Financial Expense 2.79 16.45
Profit before extraordinary
Expenditure: 364.61 430.59
Extraordinary Expenditure:-
Compensation amortized 9.58 8.45
Profit on sale undertaking - 30.16
Profit before tax 355.03 452.30
Provision for taxation:-
Current 89.50 113.05
Deferred 5.90 7.23
Fringe  Benefit Tax - 4.70
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Profit after tax 259.63 327.32
Balance profit from
last year 133.92 178.41
Transfer from :-
Debenture Redemption 8.91 6.83
Less:-Reserve
General Reserve 100.00 100.00
Total 302.46 412.56
Dividend :-
Interim Dividend
Tax on Dividend 16.90 22.41
Proposed fund 118.90 159.78
Balance Profit Carried
to Balance Sheet 166.64 230.37

Balance Sheet As on
April 1ST 2017 - 31th March 2018

YEAR ASSET YEAR

LIBILITIES 2017 2018 2017 2018

Shareholders fund : Fixed Asset :

Capital 122.15 132.38 Gros block 2138.50 2620.19

Reserve & Surplus 1290.29 1762.20 Less Depriciation 1195.23 1313.16

Loan Funds:- Net block 943.27 1307.03

Secured Loan 184.69 360.21 Capital W-I-P 141.41 237.49

Unsecured Loan 507.23 280.18 Investment 368.17 221.09.

Deferred tax Liability-net 179.68 196.97 Current Assets

Loan &

Current Liability :- Advances :-

Liabilities & provisions 1408.52 1755.89 Inventories 902.57 1070.32

Sundry debtors 424.33 522.87

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 Cash and bank 602.87 434.94

balance

Loan & advances 302.64 669.68

Misc. Expenditure 7.30 24.41

Total 3,692.56 4,487.83 Total 3,692.564,487.83

P & L A/C For the Year Ended

March 31st 2017 - 2018

YEAR
PARTICULARS 2019 2018
In Crore In Crore

Income:-
Sales 6053.10 8304.71
Less Excise duty 805.45 1136.54
Net Sales 5247.65 7168.17
Other Income 32.97 70.80
Total Income 5280.62 7238.97
Less Expenditure:-
Manufacturing & other Expenses 4707.58 6465.49
Depriciation 126.00 150.57
Finiancial Expense 16.45 5.33
Profit before extraordinay
Expenditure: 430.59 617.58
Extraordinary Expenditure:-

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Compensation amortised 8.45 13.07
Profit on Sale of Under taking 30.16 -
Profit before tax 452.30 604.51
Provision for taxetion:-
Current 113.05 135.05
Deferred 7.23 23.02
Fringe Benefit tax 4.70 5.15
Profit after tax 327.32 441.29
Excess provision written back:-
Dividend - 2.59
Dividend Tax - 0.36

(1) (2) (3)

Balance profit from
last year 178.41 230.33
Transfer from :-
Debenture Redemption 6.83 13.50
General Reserve 100.00 100.00
Total 412.56 588.07
Dividend:-
Interim Dividend - 198.58
Tax on Dividend 22.41 27.85
Proposed fund 159.78 -
Balance Profit Carried
to Balance Sheet 230.37 361.64

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 Balance Sheet As on April 1ST 2013 - 31th March 2017

YEAR ASSET YEAR

LIBILITIES 2013 2017 2013 2017

Shareholders fund : Fixed Asset :

Capital 122.15 132.38 Gros block 2138.50 2620.19

Reserve & Surplus 1290.29 1762.20 Less Depriciation 1195.23 1313.16

Loan Funds:- Net block 943.27 1307.03

Secured Loan 184.69 360.21 Capital W-I-P 141.41 237.49

Unsecured Loan 507.23 280.18 Investment 368.17 221.09.

Deferred tax Liability-net 179.68 196.97 Current Assets

Loan &

Current Liability :- Advances :-

Liabilities & provisions 1408.52 1755.89 .Inventories 902.57 1070.32

Sundry debtors 424.33 522.87

Cash and bank 602.87 434.94

balance

Loan & advances 302.64 669.68

Misc. Expenditure 7.30 24.41

Total 3,692.56 4,487.83 Total 3,692.56 4,487.83

P & L A/C For the Year Ended

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 March 31st 2013 - 2017

YEAR
PARTICULARS 2013 2017
In Crore In Crore

Income:-
Sales 6053.10 8304.71
Less Excise duty 805.45 1136.54
Net Sales 5247.65 7168.17
Other Income 32.97 70.80
Total Income 5280.62 7238.97
Less Expenditure:-
Manufacturing & other Expenses 4707.58 6465.49
Depriciation 126.00 150.57
Finiancial Expense 16.45 5.33
Profit before extraordinay
Expenditure: 430.59 617.58
Extraordinary Expenditure:-
Compensation amortised 8.45 13.07
Profit on Sale of Under taking 30.16 -
Profit before tax 452.30 604.51
Provision for taxetion:-
Current 113.05 135.05
Deferred 7.23 23.02
Fringe Benefit tax 4.70 5.15
Profit after tax 327.32 441.29
Excess provision written back:-
Dividend - 2.59
Dividend Tax - 0.36

(1) (2) (3)

Balance profit from

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last year 178.41 230.33
Transfer from :-
Debenture Redemption 6.83 13.50
General Reserve 100.00 100.00
Total 412.56 588.07
Dividend:-
Interim Dividend - 198.58
Tax on Dividend 22.41 27.85
Proposed fund 159.78 -
Balance Profit Carried
to Balance Sheet 230.37 361.64

Comparative B/S
for the year 2018 & 2019

YEAR

PARTICULARS 2018 2019 Change Percentage

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 Change
Liabilities & Capital :
Current Liabilities 1,165.66 1,408.52 242.86 20.83%
& Provi
Deferrent fax Liabilities 170.84 179.68 8.84 5.17%
long ferm Liabilities- 880.40 691.92 -188.48 -21.40%
Capital 118.93 122.15 3.22 2.70%
Reserve & Surplus 1,048.93 1,290.29 241.36 23.00

Total Liabilities 3,384.76 3,692.56 307.80 9.09%

Assets:-
Current Assets 2,157.26 2,232.41 75.15 3.48%
Net block 893.84 943.27 49.43 5.53%
Investment 229.19 368.17 138.98 60.63%
Capital W-I-P 85.14 141.41 56.27 66.09%
MIsc Expenditure 19.33 7.30 -12.30 62.23%

Total Assets 3,384.76 3,692.56 307.80 9.09%

Interpretation :-
The above statement Showing decreased in long term Liabilities &
Reserve & Surplus are increased by 23 %. Investment & Misc Expenditure
are increased by 60.63% & 62.23 %.

Comparative P & L A/C

For the Year 2018 & 2019

YEAR

PARTICULARS 2018 2019 Change Percentage

Change

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Income :-

Sales 4811.28 6053.10 1241.82 25.81%

Less Excise duty 628.90 805.45 176.55 28.07%

Net Sales 4182.38 5247.65 1065.27 25.47%

Other Income 53.75 32.97 -20.78 -38.66%

Total Income 4236.13 5280.62 1044.49 24.65%

Less Expenditure:-

Manufacturing & other Expenses 3759.52 4707.58 948.06 25.21%

Depriciation 109.21 126.00 16.79 15.37%

Finiancial Expense 2.79 16.45 13.66 489.60%

Profit before extraordinay

Expenditure: 364.61 430.59 65.98 18.09%

Extraordinary Expenditure:-

Compensation amortised 9.58 8.45 -1.13 -11.79%

Profit on Sale of Under taking - 30.16 30.16 100.00%

Profit before tax 355.03 452.30 97.27 27.39%

Provision for taxetion:-

Current 89.50 113.05 23.55 26.31%

Deferred 5.90 7.23 1.33 22.54%

Fringe Benefit tax - 4.70 4.70 100.00%

Profit after tax 259.63 327.32 67.69 26.07%

(1) (2) (3) (4) (5)

Excess provision written back :-

Dividend - - - -

Dividend Tax - - - -

Balance profit from

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last year 133.92 178.41 44.49 33.22%

Transfer from :-

Debenture Redemption 8.91 6.83 -2.08 -23.34%

General Reserve 100.00 100.00 - -

Total 302.46 412.56 110.10 36.40%

Dividend :-

Interim Dividend - - - -

Tax on Dividend 16.90 22.41 5.51 32.60%

Proposed fund 118.90 159.78 40.86 34.35%

Balance Profit Carried

to Balance Sheet 166.64 230.37 63.73 38.24%

Interpretation :-
From the above statement financial expenses are increased by
489.60% compensation amortised are decreased by 11.79% and Profit on sale
of undertaking add for the year 2018 due to which PAT are increase.

Comparative Balance Sheet for the Year 2017 & 2018

YEAR

PARTICULARS 2017 2018Change

Percentage
Change

Liabilities & Capital :

Current Liabilities 1,408.52 1,755.89 347.37 24.66 %
& Provi
Deferrent fax Liabilities 179.68 196.97 17.29 9.62 %
long ferm Liabilities- 691.92 640.39 -51.53 -7.44 %
Page | 28
Capital 122.15 132.38 10.23 8.37 %
Reserve & Surplus 1,290.29 1,762.20 471.91 36.57 %

Total Liabilities 3,692.56 4,487.83 795.27 21.53%

Assets:-
Current Assets 2,232.41 2,697.81 465.40 20.84%
Net block 943.27 1,307.03 363.76 38.56%
Investment 368.17 221.09 -147.08 39.94%
Capital W-I-P 141.41 237.49 96.08 67.94%
MIsc Expenditure 7.30 24.41 17.11 234.38%

Total Assets 3,692.56 4,487.83 795.27 21.53%

Interpretation :-
Capital & Reserve & Surplus are increased by 8.37 % & 36.57%
but long term Liabilities are decreased by 7.44 % Net Block & MIsc Expenditure
are increased by 38.56% and 234.38%.

Comparative P & L A/C For the Year 2017 & 2018

YEAR
PARTICULARS 2017 2018 Change Percentage
Change
Income :-
Sales 6053.10 8304.71 2251.61 37.19%
Less Excise duty 805.45 1136.54 331.09 41.10%
Net Sales 5247.65 7168.17 1920.52 36.59%
Other Income 32.97 70.80 37.83 114.74%
Total Income 5280.62 7238.97 1958.35 37.08%
Less Expenditure:-
Manufacturing & other Expenses 4707.58 6465.49 1757.91 37.34%
Depriciation 126.00 150.57 24.57 19.50%
Page | 29
Finiancial Expense 16.45 5.33 -11.12 -67.59%
Profit before extraordinay
Expenditure: 430.59 617.58 186.99 43.42%
Extraordinary Expenditure:-
Compensation amortised 8.45 13.07 4.62 54.67%
Profit on Sale of Under taking 30.16 - - 30.16 -100.00%
Profit before tax 452.30 604.51 152.21 33.65%
Provision for taxetion:-
Current 113.05 135.05 22.00 19.46%
Deferred 7.23 23.02 15.79 218.39%
Fringe Benefit tax 4.70 5.15 0.45
9.57%
Profit after tax 327.32 441.29 113.97 34.81%
Excess provision written back :-
Dividend - 2.59 2.59 100.00%
Dividend Tax - 0.36 0.36 100.00%
Balance profit from
last year 178.41 230.33 51.92 29.10%

Transfer from :-
Debenture Redemption 6.83 13.50 6.67 97.65%
General Reserve 100.00 100.00 - -

Total 412.56 588.07 175.51 42.54%

Dividend:-
Interim Dividend - 198.58 198.58 100.00%
Tax on Dividend 22.41 27.85 5.44 24.27%
Proposed fund 159.78 - - 159.78 -100.00%

Balance Profit Carried

to Balance Sheet 230.37 361.64 131.27 56.98%

Interpretation :-
Page | 30
 From the above statement Sales are increased by 37.19% as
compared to the year 2018 and other income also increased.

Financial expenses are highly decreased for the year 2019 by

67.59% due to which Profit before tax increased.

Statement Showing Changes in Working Capital

For the year 2018 & 2019

YEAR Change in W.C

PARTICULARS 2018 2019 Increase Decrease
Current Asset:-
Inventories 568.09 902.57 334.48 -
Sundry Debtors 458.76 424.33 - 34.43
Cash & Bank balance 796.68 602.87 - 193.81
Loan & Advance 333.73 302.64 - 31.09

Total Current Asset 2,157.26 2,232.41

Current Liability:-
Liabilities 961.18 1,146.89 - 187.71
Provisions 204.47 261.63 - 56.16

B) Total Current Liability 1165.66 1408.52

C) Working Capital 991.60 823.89

(A-B)

Page | 31
Decrease in W.C. - 167.71 167.71

Total 991.60 991.60 502.19 502.19

Interpretation :-

Statement of working Capital showing decrease in working Capital

for the financial year 2018-by 167.71 Crores.

Statement Showing Changes in Working Capital

For the year 2017 & 2018
YEAR Change in W.C

PARTICULARS 2019 2012 Increase Decrease

Current Asset:-
Inventories 902.57 1,070.32 167.75 -
Sundry Debtors 424.33 522.87 98.54 -
Cash & Bank balance 602.87 434.94 - 167.93
Loan & Advance 302.64 669.68 367.04 -

Total Current Asset 2,232.41 2,697.81

Current Liability:-
Liabilities 1,146.89 1,651.65 - 504.76
Provisions 261.63 104.24 157.39 -

B) Total Current 1,408.52 1,755.89

Liability
C) Working Capital 823.89 941.92

Page | 32
(A-B)
Increase in W.C. 118.03 - - 118.03

Total 941.92 941.92 790.72 790.72

Interpretation :-

Statement of working Capital showing Increase in working Capital

for the financial year 2019 by 118.03 Crores.

Common Size Balance Sheet

YEAR
PARTICULARS 2017 2018 2019
Current Liability :
Liabilities 28.40 31.06 36.82
Provisions 06.04 07.08 02.32
Total Current Liability 34.44 38.14 39.14

Long - term Liability :-

Secured Loan 7.79 5.02 8.03
Unsecured Loan 18.23 13.73 6.24
Total Long - term Liability 26.02 18.75 14.27

Total Liabilities 60.46 56.89 53.41

Net worth:-
Capital 3.52 3.31 2.95
Reserve & Surplus 30.98 34.94 39.26

Total Net worth 34.50 38.25 42.21

Deferred tax Liability 5.04 4.86 4.38

TOTAL FUNDS 100.00 100.00 100.00

Page | 33
Current Asset:-
Inventories 16.78 24.46 23.84
Sunday Debtors 13.55 11.49 11.66
Cash & Bank Balance 23.53 16.34 09.69
Loan & Advance 09.85 08.13 14.92

Total 63.71 60.42 60.11

Fixed Assets:-
Gross block 59.15 57.93 58.38
Less Depreciation 32.74 32.36 29.26
Net block 26.41 25.57 29.12
Capital W-I-P 02.52 03.84 05.29
Investment 06.78 09.98 04.93
Misc Expenditure 00.58 00.19 00.55

Total 36.29 39.58 39.89

Total Assets 100.00 100.00 100.00

Interpretation :-

Above statement shows increase in Current Liabilities from the

year 2017 to 2019. Gross Block decreased & Investment is increasing
from 2018 to 2019 but it is decreased in year 2019.

Page | 34
 Common Size P& L A/C
YEAR
2017 2018 2019
Net Sales 100 100 100
Expenditure 92.56 92.42 92.37
Profit before extraordinary Exp. 7.44 7.58 7.63
Compensation amortized 0.22 0.16 0.18
Profit on sale of undertaking - 0.57 -
Other income 1.28 0.62 0.98
Profit before tax 8.50 8.61 8.43
Provision for taxetion 2.28 2.38 2.27
PAT 6.22 6.23 6.16
Dividend - - 0.036
Dividend tax - - 0.005
Balance profit from last year 3.20 3.39 3.21
Transfer from:-
Debenture Redemption 0.21 0.13 0.19
General Reserve 2.39 1.90 1.39
Dividend :-
Interim Dividend - - 2.78
Proposed fund 2.84 3.04 -
Tax on dividend 0.40 0.42 0.38
Balance Profit Carried to B/S 4.00 4.39 5.04

Page | 35
Interpretation:- Comparative Statment gives only vertical percentage or
ratio for financial data without giving Rupee values are known as comman size
statment these are also Known as 100 % statements.

RATIO ANALYSIS

1) Current Ratio :-

C.R.= Current Asset

Current Liability

For the Year 2018,

C.R. = 1463.66

832.70

C.R. = 1.75:1

For the Year 2019,

C.R. = 2157.26

1165.66

C.R. = 1.85 :1

For The year 2012,

C.R. = 2232.41

1408.52

C.R. = 1.58 :1

Page | 36
 Year 2017 2018 2019
Current Assets 1463.66 2157.26 222.

Current Liabilities 832.70 1165.66 1408.52

Current Ratio 1.75:1 1.58 :1

1.85 :1

1.9

1.85

1.8

1.75

1.7

1.65

1.6

1.55

1.5

1.45

1.4
Current Ratio

Interpretation :-

The Standard for this ratio is 2:1. But in above calculation the
values are less than that. But this ratio is test of quantity, not quality Therefore it
does not mean that companies short term paying capacity is not satisfactory for
Page | 37
the financial years. But, as per the Tandon Committees recomendation 1.33:1
Ratio is satisfactory for the Companies Short terms paying capacity.

2) Net Asset turnover Ratio :-

N.A.T.R = Sales
Net Assets
For the year 2017,
N.A.T.R = 3,392.01
1,505.78
N.A.T.R. = 2.25:1

For The year 2018,

N.A.T.R = 4182.37
1885.54
N.A.T.R. = 2.20:1

For The year 2019,

N.A.T.R = 5247.65
1767.16
N.A.T.R. = 2.90 :1

2.5

1.5

0.5

0
Net Asset Turnover Ratio

Interpretation :-

The Net Assets turnover ratio of 2.20, 2.90 and 3.10 times implies
that Ashok Leyland Limited is producing 2.20, 2.90 and 3.10 of sales for one

Page | 38
Rupee of Capital employed for the financial year 2017-15 ,2018-16,2018-
2019and Respectively.

3) Net Profit Ratio :-

N.P.R = Net Profit x 100
Sales
For the year 2017,

N.P.R = 193.58 x 100

3392.01

N.P.R = 5.70 %

For The year 2018,

N.P.R = 271.41 x 100
4182.37
N.P.R = 6.48 %

For The year 2019,

N.P.R = 327.31 x 100
5247.65
N.P.R = 6.23 %
6.60%

6.40%

6.20%

6.00%

5.80%

5.60%

5.40%

5.20%
Net Profit Ratio

Interpretation :

Page | 39
 Net Profit Ratio gives the net Profit to sales of the business. The net
profit Ratio for Ashok Leyland Limited is increased as Compared to 2017 but in
2019 it is decreased slightly.

4) Return on Total Resources :-

R.O.T.R. = Return (Net Profit) x 100
Total Resources (Total Assets)
For the year 2017,
R.O.T.R. = 193.58 x 100
2370.08
R.O.T.R. = 8.16 %

For The year 2018,

R.O.T.R. = 271.41 x 100
3070.43
R.O.T.R. = 8.83 %

For The year 2019,

R.O.T.R. = 327.31 x 100
3182.98
R.O.T.R. = 10.28 %

12.00%
10.00%
8.00%
6.00%
4.00%
2.00%
0.00%
Return on total Resources

Interpretation :-

Page | 40
 The Return on Total Resources gives net profit on Total Resources
used. The Return is increasing in every year on Total Resources. Return on Total
Resourees is 8.83 %, 10.28 % and 10.95 % for the financial years 2017-15 ,
2018-16, Respectively Hence greater the Ratio better it is.

5) Working Capital Turnover Ratio :-

W.C.T.R. = Sales
Net Current Assets

For the year 2017,

W.C.T.R. = 3392.01
630.96
W.C.T.R. = 5.30
Reciprocal of W.C.T.R. = 0.18

For The year 2018,

W.C.T.R. = 4182.37
991.70
W.C.T.R. = 4.20
Reciprocal of W.C.T.R.l = 0.23

For The year 2019,

W.C.T.R. = 5247.65
823.89
W.C.T.R. = 6.36
Reciprocal of W.C.T.R. = 0.15

6000

5000

4000

3000

2000

1000

0
Sales Net Current Assets

Page | 41
Interpretation :-

The reciprocal of W.C.T.R. of financial years { are 0.23, 0.15 and

0.13 Respectively Thus it indicates that for one Rupee of sales the Company
Ashok Leyland needs 0.23, 0.15 and 0.13 Rs. of Net Current Assest.

6) Capital employed to Net worth Ratio :-

C.E.N.W.R. = Net Assets

Net Worth

For the year 2017,

C.E.N.W.R. = 1505.78
1051.79

C.E.N.W.R. = 1.43

For The year 2018,

Net Assets = 1885.54
Net Worth = 1167.86
C.E.N.W.R. = 1885.54
1167.86
C.E.N.W.R. = 1.61

For The year 2019,

C.E.N.W.R. = 1767.16
1412.44

C.E.N.W.R. = 1.25

Interpretation :-

The Capital employed to Net worth Ratio is showing that 1.61, 1.25
and 1.18 Rupee have been contributed together by lenders and owners for
financial year 2017-15 ,2018-16, Respectively.

Page | 42
7) Average collection Period :-
A.C.P. = Debtors x 365 days
Sales

For the year 2017,

A.C.P.. = 405.61 x 365 days
3392.05

A.C.P. = 12 days

For The year 2018,

A.C.P.. = 458.76 x 365 days

4182.38

A.C.P. = 11 days

For The year 2019,

A.C.P.. = 424.33 x 365 days
5247.65

A.C.P. = 8 days

12
10
8
6
4
2
0
Average Collection Period

Page | 43
Interpretation :-Average Collection Period shows with what speed inventory
is converted into cash. This ratio is, in-fact interrelated with and dependent
upon the receivable turnover ratio It is indicative of Credit management.
Average Collection Period for Ashok Leyland Limited is Very good.

CONCLUSION
 Company having goal to become No. 1 Commercial vehicle

manufacturing company which is appearing by the companies

performance and five company has a desire to achieve that goal.

 Company is determinant to give satisfaction to users and commercial

vehicle customers to have good value of their money.

 Company having profit in every year which shows that, companies

goals are clear and it wants to increase net profit margin.

 Company is doing research and development program to fight with

foreign players.

 Ashok Leyland company is having good financial position and it is

showing in companies financial statements.

 Company is minimizing expenses to have more net profit and it is

utilizing all the available resources.

Page | 44
 Average collection period for debtors is good.

 Net sales are increasing as well as profit margin on it, is also

increasing.

 From the financial analysis some conclusions are found.

SUGGESTIONS

 Company should do Research and Development programme to have

growth in future and to overcome the Indian & Foreign Players.

 Company should maintain the current assets at appropriate level to

meet its current liabilities.

 Ashok Leyland Company should minimize excess of inventory

and should maintain proper balance in inventory.

Page | 45
 LIMITATION

 Time was less to perform the project properly.

 Being just a student it may be possible, there could be variation of

analysis in Financial Analysis.

 All tools are not utilize for financial analysis.

Page | 46
 REFERENCES

 Financial Management - B. L. Mathur

 Financial organisation & - Gresten Berge C. W.

Management of Business

 Corporation finance - S.C. Kuchhal

24th edition. Chaitanya Publication House.

 Financial Management - I. M. Pandey

9th edition. Vikas Publusing House.

 Working Capital - Institute for Financial Management

and Management Research (Chennai)

 Techniques of financial - Rechard D. Irwin, Home wood.

Page | 47
 analysis

 Financial Management - M. Y. Khan, P. K. Jain

4th edition. TATA Mcgraw hill Publication.

Page | 48