A PROJECT REPORT ON

“ANALYSIS AND INTERPRETATION OF RATIOS” OF

AMBER ENTERPRISES INDIA LIMITED

SUBMITTED BY:
APPORVA PATIDAR

UNDER THE GUIDANCE OF

PROF. CHARU SHARMA

SUBMITTED TO:
SAVITRIBAI PHULE PUNE UNIVERSITY

SUBMITTED IN PARTIAL FULFILLMENT OF

BACHELOR OF BUSINNESS ADMINISTRATION

INDIRA COLLEGEOF COMMERCE AND SCIENCE

(2017-2020)
I
 DECLARATION

I, Apporva Patidar hereby declare that the project report titled “Analysis and Interpretation of
Ratios” of the company “ Amber Enterprises India Limited” is the record of authentic work
carried out by me during the academic year 2017-2020 has not been submitted to any other
university or institute toward the award of any degree.

Apporva Patidar

TYBBA( Finance)

Indira College of Commerce and Science

II
 ACKNOWLEDGEMENT

It gives me great honor while expressing my sense of gratitude towards all those who helped me
and guided me during this project.

I would like to express my sincere and profound sense of gratitude to the CEO & Chairman of
AMBER ENTERPRISES INDIA LTD., Mr. JASBIR SINGH for their inspiring guidance,
kindness, constant encouragement during the preparation of this project.

I would also like to thank my faculty guide Prof. Charu Sharma of Indira College of Commerce
and Science, Pune for her complete guidance and encouragement in the completion of this project.

I would also take the opportunity to thank Dr. Janardan Pawar (Principal Incharge) and Dr.
Thomson Varghese (HOD BBA & BBA-IB) of Indira College of Commerce and Science, Pune
for giving me an opportunity to be a part of this institution and encouraging me to complete this
project.

I would also like to thank all those who directly or indirectly helped me to complete this project.

Apporva Patidar

BBA

ICCS, PUNE

III
 EXECUTIVE SUMMARY

This project is carried out in Amber Enterprises India Limited. Amber Enterprises India is a one
stop shop for air conditioners and its components for consumers. Amber Enterprises India, a
contract manufacturer of room air conditioners has issued its IPO for up to Rs.600 crores. With
expertise in components like heat exchangers, sheet metal components, injection molding
components, and system tubing and motors, Amber is strongly positioned with its backward
integration to derive the core deliverable’s in terms of quality, cost and delivery.

The firm was incorporated as Amber Enterprises India private limited, as a private limited
company under the Companies Act, 1956 by Mr. Kartar Singh. The company was converted to a
public limited company on September 22, 2017. The manufacturing facilities have a high degree
of backward integration and are strategically located in proximity to the customers’ requirements.

This project is based on the RATIO ANALYSIS of the organization. The project report also
describes various methods used to find the ANALYSIS & INTERPRETATION OF RATIOS.

IV
 INDEX

S.NO. CONTENTS PAGE NO.

1 INTRODUCTION 1

2 INDUSTRY PROFILE 13

3 COMPANY PROFILE 17

4 OBJECTIVES OF THE PROJECT 28

5 RESEARCH METHODOLOGY 30

6 DATA ANALYSIS AND INTERPRETATION 32

7 RECOMMENDATION/ SUGESSION 48

8 CONCLUSION 50

9 BIBLOGRAPGHY 52

10 ANNEXURE 54

V
 LIST OF TABLES

S.NO. TABLE DETAILS PAGE

NO. NO.

1 3.1.1. INTRODUCTION TO THE UNIT 18

2 5.1.1. CURRENT RATIO 33

3 5.2.1. QUICK RATIO 34

4 5.3.1. DEBT EQUITY RATIO 35

5 5.4.1. PROPRIETARY RATIO 36

6 5.5.1. FIXED ASSET RATIO 37

7 5.6.1. INTEREST COVERAGE RATIO 38

8 5.7.1. NET PROFIT RATIO 39

9 5.8.1. OPERATING PROFIT RATIO 40

10 5.9.1. RETURN ON CAPITAL EMPLOYED 41

RATIO
11 5.10.1. RETURN ON EQUITY RATIO 42
12 5.11.1 WORKING CAPITAL TURNOVER RATIO 43
13 5.12.1 INVENTORY TURNOVER RATIO 44
14 5.13.1 GROSS PROFIT RATIO 45
15 5.14.1 EARNING PER SHARE RATIO 46
16 5.15.1 DEBTORS TURNOVER RATIO 47
17 9.1 BALANCE SHEET (2015- 2019) 55
18 9.2 PROFIT AND LOSS ACCOUNT (2015-2019) 58

VI
 LIST OF GRAPHS

S.NO. GRAPH DETAILS PAGE

NO. NO.
1 5.1.2. CURRENT RATIO 33

2 5.2.2. QUICK RATIO 34

3 5.3.2. DEBT EQUITY RATIO 35

4 5.4.2. PROPRIETARY RATIO 36

5 5.5.2. FIXED ASSET RATIO 37

6 5.6.2. INTEREST COVERAGE RATIO 38

7 5.7.2. NET PROFIT RATIO 39

8 5.8.2. OPERATING PROFIT RATIO 40

9 5.9.2. RETURN ON CAPITAL EMPLOYED RATIO 41

10 5.10.2. RETURN ON EQUITY RATIO 42

11 5.11.2 WORKING CAPITAL TURNOVER RATIO 43

12 5.12.2 INVENTORY TURNOVER RATIO 44

13 5.13.2 GROSS PROFIT RATIO 45

14 5.14.2 EARNING PER SHARE RATIO 46

15 5.15.2 DEBTORS TURNOVER RATIO 47

VII
 CHAPTER 1
INTRODUCTION

1
1.1. RATIO ANALYSIS
Ratio analysis is a technique of analysis and interpretation of financial statements. It is a process
of establishing and interpreting various ratios for helping in making certain decisions. It is only a
means of better understanding of financial strengths and weaknesses of a firm. There are number
of ratios which can be calculated from the information given in the financial statements, but the
analyst has to select the appropriate data and calculate only few appropriate ratios from the same
keeping in mind the objective of analysis.

Ratio analysis is used to evaluate various aspects of a company’s operating and financial
performance such as its efficiency, liquidity, profitability and solvency.

Ratios are usually only comparable across companies in the same sector, since an acceptable
ratio in one industry may be regarded as too high in another. The ratio analysis is one of the most
important tools of financial analysis. It is used as a device
to analyze and interpret the financial health of the enterprise.

1. Helps in decision making

2. Helps in financial forecasting and planning
3. Helps in control
4. Utility to shareholders/investors
5. Utility to creditors
6. Helpful in determining liquidity position
7. Helpful in determining long term solvency

2
1.1. REASONS OF DETERMINING RATIO ANALYSIS
From the above, it is very clear that financial decisions are very important in any form and will
leave the company towards either profit or loss. Let us use the benefits in some more detail:

1.Help Provide Stability:

When things are financially unstable, good accounting records can provide answers as to what
changes to make or what to do away with in order to keep business growing and prospering.

2. Accurate Records Serves as a Mirror:

Keeping records regularly up-to-date is much easier than trying to remember weeks or months
later the details of transactions.

3. Helps Keep Objectives Clear:

Everyday accounting and financial information will need to be processed and reviewed in order
to achieve goals and to be able to predict future finances.

4. Value Maximization:
Capital structure maximizes the market value of a firm.

5. Cost Minimization:
Capital structure minimizes the firm's cost of capital or cost of financing by determining a proper
mix of funds sources, a firm can keep the overall cost of capital to the lowest.

3
1.3. CLASSIFICATION OF RATIOS

1.3.1. LIQUIDITY RATIO

Liquidity ratio measures a company's ability to pay debt obligations and its margin of safety
through the calculation of metrics including the current ratio, quick ratio and operating cash flow
ratio.

Current liabilities are analyzed in relation to liquid assets to evaluate the coverage of short-term
debts in an emergency. bankruptcy analysts and mortgage originators use liquidity ratios to
evaluate going concern issues, as liquidity measurement ratios indicate cash flow positioning.

Liquidity ratios are most useful when they are used in comparative form. This analysis may be
performed internally or externally. For example, internal analysis regarding liquidity ratios
involves utilizing multiple accounting periods that reported using the same accounting
methods. Comparing previous time periods to current operations allows analysts to track changes
in the business. In general, a higher liquidity ratio indicates that a company is more liquid and has
better coverage of outstanding debts.

Alternatively, external analysis involves comparing the liquidity ratios of one company to another
company or entire industry. This information is useful to compare the company's strategic
positioning in relation to its competitors when establishing benchmark goals.

Some of the examples of Liquidity Ratios are as follows:

i)Current Ratio

ii)Quick Ratio

4
i) Current Ratio
A current ratio is popular financial ratio used to test a company's liquidity (also referred to as its
current or working capital position) by deriving the proportion of current assets available to cover
current liabilities. The ideal current ratio is 2:1.

Current Ratio = Current Assets

Current Liabilities

Current assets include cash receivables, cash and bank, accruals, loans and advances, bills
receivable, disposal investment, inventories and marketable securities (short-term), WIP and
prepaid expenses.

Current liabilities include payables, short term loans, bank overdraft, outstanding expenses,

provision for taxation and proposed dividend.

ii) Quick Ratio

Quick ratio is, also known as acid test ratio, is a type of liquidity ratio which measures the ability
of a business to pay its short-term liabilities with the help of assets which can be quickly converted
into cash without any significant decrease in their value.

Quick Ratio = Quick Assets

Current Liabilities

The ideal quick ratio is 1:1.

5
1.3.2. TURNOVER RATIO
In accounting, turnover ratios are the financial ratios in which an annual income statement amount
is divided by the average balance of an asset (or group of assets) throughout the year.

Turnover ratios include:

i) Accounts receivable turnover ratio
ii) Inventory turnover ratio
iii) Total assets turnover ratio
iv) Fixed assets turnover ratio
v) Working capital turnover ratio

Some of the turnover ratios are also categorized as liquidity ratios, operating ratios, activity ratios,
efficiency ratios, and asset utilization ratios. The larger the turnover ratio, the better. For instance,
a large amount of credit sales in relationship to a small amount of accounts receivable indicates
that the company is efficient and effective in collecting its accounts receivable.

Turnover ratios are more accurate when they use the assets average balances for the year (as
opposed to one balance at the final instant of the accounting year). The reason is that an income

statement amount reflects the total activity during the entire year.

i)Inventory Turnover Ratio

Inventory turnover is a ratio showing how many times a company's inventory is sold and replaced
over a period of time. The days in the period can then be divided by the inventory turnover formula
to calculate the days it takes to sell the inventory on hand. It is calculated as sales divided by

average inventory.

The higher the inventory turnover ratio, the better, provided you are able to fill customers’ orders
on time. I would be foolish to lose customers’ because you didn't carry inventory quantities.

Inventory Turnover Ratio = Cost of Goods Sold

Average Inventory
A higher inventory turnover ratio is ideal for the company.

6
ii) Fixed Asset Turnover Ratio
Fixed asset turnover is the ratio of sales (on the profit and loss account) to the value of fixed assets
(on the balance sheet). It indicates how well the business is using its fixed assets to generate sales.
The management of the company is said to be good if the ratio is high.

Fixed Asset Turnover Ratio = Net sales

Net fixed assets

Generally speaking, the higher the ratio, the better, because a high ratio indicates the business has
less money tied up in fixed assets for each unit of currency of sales revenue. A declining ratio may
indicate that the business is over invested in plant, or other fixed assets.

iii) Debtors Turnover Ratio

The receivables turnover ratio is an accounting measure used to quantify a firm's effectiveness in
extending credit and in collecting debts on that credit. The receivables turnover ratio is an activity

ratio measuring how effectively a firm uses its assets.

Receivables turnover ratio can be calculated by dividing the net value of credit sales during a given
period by the average accounts receivable during the same period. Average accounts receivable
can be calculated by adding the value of accounts receivable at the beginning of the
desired period to their value at the end of the period and dividing the sum by two. A higher ratio
shows that the company is efficient enough to convert credit sales to cash.

Debtors Turnover Ratio = Net Credit Sales

Average Accounts Receivable

The receivables turnover ratio is most often calculated on an annual basis, though it can also be
calculated on a quarterly or monthly basis.

7
iv) Creditors Turnover Ratio

The accounts payable turnover ratio is a short-term liquidity measure used to quantify the rate at
which a company pays off its suppliers. Accounts payable turnover ratio is calculated by taking
the total purchases made from suppliers, or cost of sales and dividing it by the average accounts
payable amount during the same period. Lower the ratio, the better is the liquidity of the firm.

Creditors Turnover Ratio = Total Credit Purchases

Average Accounts Payable

1.3.3. LEVERAGE/SOLVENCY RATIO

A leverage ratio is any one of the several financial measurements that look at how much capital
comes in the form of debt (loans), or assesses the ability of a company to meet its financial
obligations. The leverage ratio is important, given that companies rely on a mixture of equity and
debt to finance their operations, and knowing whether it can pay its debts off as they come due.

Too much debt can be dangerous for a company and its investors. However, if a company's
operations can generate a higher rate of return than the interest rate on its loans, then the debt is
helping to fuel growth in profits. Nonetheless, uncontrolled debt levels can lead to credit
downgrades or worse. On the other hand, too few debts can also the questions. A reluctance or
inability to borrow may be a sign that operating margins are simply too tight.

Leverage ratio may also be used to care a company's mix of operating expenses to get an idea of
how changes in output will affect operating income. Fixed and variable costs are the two types of
operating costs depending on the company and the industry, the mix will differ.

Finally, the consumer leverage ratio refers to the level of consumer debt as compared to disposable
income and is used in economic analysis and by policymakers.

8
Some types of the solvency ratios are as follows:
i) Debt Equity Ratio
ii) Proprietary Ratio
iii) Interest Coverage Ratio

i)Debt-Equity Ratio
Debt/Equity (D/E) Ratio, calculated by dividing a company's total liabilities by its stockholders’
equity, is a debt ratio used to measure a company's financial leverage. The D/E ratio indicates how
much debt a company is using to finance its assets relative to the value of shareholders’ equity.

Debt/Equity Ratio= Total Liabilities

Shareholders Equity

The result can be expressed either as a number or as a percentage. The debt/equity ratio is also
referred to as a risk or gearing ratio. The ideal Debt equity ratio is 2:1.

ii) Proprietary Ratio

The proprietary to also known as the equity ratio) is the proportion of shareholders’ equity to total
assets, and as such provides a rough estimate of the amount of capitalization currently used to
support a business. If the ratio is high this indicates that a company has a sufficient amount of
equity to support the functions of the business, and probably has room in its financial structure to
take on additional debt, if necessary. Conversely, a low ratio indicates that a business may be
making use of so much debt or trade payables, rather than equity, to support operations.

Thus, the equity ratio is a general indicator of financial stability. It should be used in conjunction
with the net profit ratio and an examination of the statement of cash flows to gain a better overview
or the financial circumstances of a business. These additional tests measure the ability of a business

to earn profit and generate cash flows, respectively.

Proprietary Ratio = Shareholder’s equity

Total assets

The ideal Proprietary ratio is 0.75:1.

9
1.3.4. PROFITABILITY RATIOS

Profitability ratios are a class of financial metrics that are used to assess a business ability to
generate earnings compared to its expenses and other relevant costs incurred during a specific
period of time. For most of these ratios, having a higher value relative to a competitor’s ratio or
relative to the same ratio from a previous period indicates that the company is doing well.

The different profitability ratios are as follows:

i) Gross profit ratio
ii) Net profit ratio
iii) Operating ratio
iv) Return on Equity
v) Return on Capital Employed
vi) Earnings per share

i)Gross Profit Ratio

Gross profit margin is a financial metric used to assess a company's financial health and business
model by revealing the proportion of money left over from revenues after accounting for the cost
of goods sold (COGS). Gross profit margin, also known as gross margin, is
calculated by dividing gross profit by revenues. Also known as "gross margin.”

Gross Profit Ratio = Net Sales - COGS × 100

Net Sales

There are several layers of profitability that analysts monitor to assess the performance of a
company, including gross profit, operating profit and net income. Each level provides information
about a company's profitability. Gross profit, the first level of profitability, tells analysts how good
a company is at creating a product or providing a service compared to its competitors. Gross profit
margin, calculated as gross profit divided by revenues, allows analysts to compare business models
with quantifiable metric. A Higher ratio implies better profitability of the products sold.

10
ii) Net Profit Ratio
Net profit ratio (NP ratio) is a popular profitability ratio that shows relationship between net profit
after tax and net sales. It is computed by dividing the net profit (after tax) by net sales.

Net profit ratio= Net Profit After Tax × 100

Net sales

For the purpose of this ratio, net profit is equal to gross profit minus operating expenses and income
tax. All non-operating revenues and expenses are not taken into account because the purpose of
this ratio is to evaluate the profitability of the business from its primary operations. Examples of
non-operating revenues include interest on investment and income from sale of fixed assets.
Examples of non-operating expenses include interest on loan and loss on sale of fixed assets.

A Higher ratio indicates efficient management of business.

iii) Operating Ratio

The operating ratio shows the efficiency of a company's management by comparing operating
expense to net sales. The smaller the ratio, greater is the organization's ability to generate profit if
revenues decrease. When using this ratio, however, investors should be aware that it doesn’t take

debt repayment or expansion into account.

Operating Ratio= COGS + Operating Expense × 100

Net Sales

Analysts have many ways of analyzing performance trends. One of the most popular, because it
concentrates on core business activities, is the operating ratio. The operating ratio is viewed as a
measure of operational efficiency. An operating ratio that is going up is indicative of an inefficient
operating environment that might need to implement cost controls for margin improvement. An
operating ratio that is decreasingly indicative of an efficient operating environment in which

operating expenses are a smaller percentage of sales.

11
iv) Return On Equity
Return on equity (ROE) is the amount of net income returned as a percentage of shareholders’
equity. Return on equity measures a corporation's profitability by revealing how much profit a
company generates with the money shareholders have invested. It is expressed as a percentage.

Return on Equity = Net Profit After Interest & Tax × 100

Shareholders’ Funds

The ROE useful for comparing the profitability of a company to that of other in the same industry.
It illustrates how effective the company is at turning the cash put into business into greater gains
and growth for the company and investors. The higher the return on equity, the more efficient the
company's operations are making use of those funds.

v) Return On Capital Employed

Return on capital employed is a financial ratio that measures a company’s profitability and the
efficiency with which its capital is employed. Many investors take the help of this ratio to take
decisions. Capital employed is the difference between current liabilities and (fixed+ current)
assets.

Return on capital Employed = Net Profit Before Interest & Tax × 100

Capital Employed

vi) Earnings Per Share

Earnings per share (EPS) is the portion of a company's profit allocated to each outstanding share
of common stock. Earning per share serves as an indicator of company’s profitability.
Earning Per Share = Earning Per Share × 100

Market Price Per Share

To calculate the EPS of a company, the balance sheet and income statement should be used to
find the total number of shares outstanding, dividends on preferred stock (if any) and the net
income or profit value.

12
 CHAPTER 2
INDUSTRY PROFILE

13
2.1. ORIGINAL DESIGN MANUFATURING (ODM) AND

ORIGINAL EQUIPMENT MANUFACTURING (OEM)

ODM and OEM are related to manufacturing industry.

An original design manufacturer (ODM) is a company that designs and manufactures a product,
as specified, that is eventually rebranded for sale. Such companies allow the firm that owns or
licenses the brand to produce products without having to engage in the organization or running of
a factory.

An original equipment manufacturer(OEM) is a company that produces parts and equipment that
may be marketed by another manufacturer. When referring to parts, OEM refers to the
manufacturer of the original equipment, that is, the parts are assembled and installed during the
making of a new product. These companies manufacture product based on the product design and
specifications provided by their client.

A company which comes under the category of ODM as well as OEM industry does the research
as well as the manufacturing part. At first all the market research, research and development is
done and then the design for the product is developed. After the designing it is time to manufacture
the product, which is done according to the specifications of the design decided upon. Both the
manufacturing of design and equipment is done on the basis of requirements of the customer.
When the company is done with the manufacturing it hands over its product to its clients, which
include companies which have a brand name and they sell the product on their name on it.

Benefits of ODM and OEM:

 Customization of the product is the key benefit.
 The products offered are Niche, i.e.: exclusive.
 The Product development costs are quite low or negligible.
 The MOQ (Minimum order quantity) requirement is low which increases the number of
customers.

14
2.2 OEM / ODM PROCESS

ODM

Customer’s Inquiry

Make samples and

modify formula OEM

Quotation Customer’s Formula

Order Confirmation

Quality Assurance Production Raw Material

Inspection Quality Assurance

Delivery

After-sales Service

15
2.3. ABOUT AMBER ENTERPRISES INDIA LIMITED

The firm was incorporated as Amber Enterprises India private limited, as a private limited
company under the Companies Act, 1956 by Mr. Kartar Singh. The company was converted to a
public limited company on September 22, 2017. From a single factory in Rajpura, Punjab, that
commenced operations in 1994, it today has grown to 10 manufacturing facilities across seven
different locations in India. The manufacturing facilities have a high degree of backward
integration and are strategically located in proximity to the customers’ requirements.

With expertise in components like heat exchangers, sheet metal components, injection molding
components, and system tubing and motors, Amber is strongly positioned with its backward
integration to derive the core deliverable’s in terms of quality, cost and delivery.

It offers higher energy efficiency and expertise in indoor, outdoor, split and window AC units. It
deals in AC components as well as non- AC components. The company has a diversified product
portfolio:

RACs:
It designs and manufactures complete RACS including Window Air Conditioners (WACS) and
Indoor Units (IDUS) of Split Air Conditioners (SACS) with specifications ranging from 0.75 TON
to 2 TONS, across energy ratings and types of refrigerant. It also designs and manufactures inverter
RACS too.

RAC Components:
It manufactures reliable components of RACS that include heat exchangers, motors and multi flow
condensers with other components such as sheet metal components, copper tubing and including
plastic excursion, vacuum forming and injection molding processes too.

Non AC Components:
It manufactures components other durables and automobiles such as case liners for refrigerator,
plastic excursion sheets, sheet metal components for microwave, washing machine tub assemblies
with other sheet metal and plastic injection molding and extrusion components for automobiles
and metal ceiling industries.

Its customers include Daikin, Godrej, Blue Star, Hitachi, Mahindra, John Deere, LG.

16
 CHAPTER 3

COMPANY PROFILE

17
3.1. INTRODUCTION TO THE UNIT

3.1.1.

S. NO. PARTICULARS DETAILS

1 NAME OF COMPANY AMBER ENTERPRISES INDIA
LIMITED
2 NAME OF THE OWNER Mr. Jasbir Singh and Mr. Daljit Singh

3 ADDRESS OF THE COMPANY Universal Trade Tower, 1st Floor,

Sector-49, Sohna Road,
Gurugram- 122018
4 PHONE NUMBER 9997092560, 9878840009

5 COMPANY STARTED April 2, 1990

6 BUSINESS STRUCTURE PUBLIC LTD. COMPANY

7 AREA OF BUSINESS Air conditioners and parts

8 OWNER’S CAPITAL 310,000,000

9 PRODUCTION BEGAN 1994

18
3.2. MISSION
 To be the number one OEM and parts manufacturing company in its sector.
 Provide excellent services to customers.
 Create growth for all associated with the organization.
 To maximize profits with minimum expense.
 Utilize the available resources to its fullest.

3.3. VISION
 To be the first choice of customers.
 Add value to the business.
 Discipline and strong management principles.
 To grow rapidly and acquire highest market share in the market.

19
3.4. ORGANIZATIONAL VALUES

All our people in the organization are committed to the following organizational values:

 HONESTY & INTEGRITY:

Always dealing with our customers, suppliers, employees and other stakeholders with trust,
transparency and with full honesty.

 MUTUAL RESPECT:
Dealing with every individual within the organization and outside stakeholders as a human
being irrespective of caste, creed, grade or status.

 TEAM WORK:
Matrix working with functional cooperation and mutual support for the organizational
goals.

 PUNCTUALITY:
Punctuality in every act and delivery of every task.

 QUALITY AND SAFETY MINDSET:

Quality and safety in everything we do.

 SOCIAL ACCOUNTABILITY:
Save and improve environment with sanitation development and promoting health care.

 SMART WORKING:
Save time and energy by dealing with projects smartly.

 INNOVATION:
Innovating new and more efficient products for better customer satisfaction is our main
motive.

20
3.5. OBJECTIVES OF THE COMPANY

 CUSTOMER FOCUSED:
 High level consistent quality, what customer expects.
 Reduced rejection and network.
 Delivery quality and safety.
 Customer satisfaction.

 EMPLOYEE FOCUSED:
 Employee Development
 Health and Safety

 BUSINESS AND FINANCIAL:

 Available update of equipment and rationalized utilizations
 Cost Reduction
 Logistics
 Imports and material Consumption
 Business Growth
 Growth in market share

 SOCIAL AND ENVIRONMENTAL:

 Compliance to the statutory regulatory requirements
 Prevention of pollution
 Conversation of energy and natural resources

21
3.6. PRODUCT PROFILE

3.6.1. ROOM AIR CONDITIONERS:

 Window room air conditioners
 Split air conditioners
 Inverter split air conditioner

3.6.2. AIR CONDITIONER COMPONENTS:

 Heat exchanger
 Sheet metal component
 Electric motor
 Copper tubing

3.6.3.NON AIR CONDITIONER COMPONENTS:

 Plastic extrusion
 Vacuum forming

22
3.6.1. ROOM AIR CONDITIONER

i)Window Room Air Conditioners

These are not only an affordable cooling option, but they are also extremely efficient in the amount
of energy they use. These units fit directly inside your window.

FEATURES

 High efficiency window AC in both rotary and reciprocating.

 Options available in wireless with remote and manual controller.
 Easy to install and economical.

ii)Split Air Conditioner

A Split Air Conditioner is a sleek looking indoor unit containing a cooling coil, a long blower and
an air filter. A split air conditioner consists of an indoor unit and outdoor unit.

FEATURES

 Highly efficient in fixed speed series.

 High performance fans and heat exchangers.
23
iii)Inverter Split Air Conditioners
Inverter Split Air conditioners are indoor unit which run with the help of inverter. The inverter is
used to control the speed of the compressor motor and regulate the temperature.

FEATURES

 The censor in the invertor adjusts the power according to the room temperature
 Low electricity consumption
 Saves energy

24
3.6.2. AC COMPONENTS

i) Heat Exchanger
It is used to transfer heat from refrigerant to ambient thus providing the cooling needed.
Heat exchangers are essential elements in the air conditioning system, they consist of two tubes
namely evaporator and condenser.

ii) Sheet Metal Components

Usually made out of carbon steel, galvanized or pre coated steel and aluminum of all alloys. They
are produced with strict quality processes and monitored regularly.

25
iii) Electric Motor
Electrical motors are used in residential and commercial air conditioners, Washing machines,
coolers. They make wide range of electrical motors which include Dia 95, Dia 110, Frame 42,
Frame 46, Frame 56.

iv) Copper Tubing

Copper tubing is most often used for the supply of hot and cold water in coolers.

26
3.6.3.NON-AC COMPONENTS

i) Plastic Extrusion
It is a high volume manufacturing process in which raw plastic is melted and formed into items
such as window frames, sheeting, fencing etc.

ii) Vacuum Forming

It is a much more economic process than other forming processes and offers several advantages.
It is used to make a number of components used in refrigerators, automobiles and consumer
durable items.

27
 CHAPTER 4

OBJECTIVE OF THE PROJECT

28
The major objectives of the study are to know about the financial position of AMBER
ENTERPRISES through ANALYSIS OF RATIOS.

The main objectives of the study are reiterated into following:

 To evaluate the performance of the company by using ratios as a yardstick to measure the
efficiency of the company.

 To understand the liquidity, profitability and efficiency positions of the company during
the study period.

 To evaluate and analyze various facts of the financial performance of the company.

 To make comparisons between ratios during different periods.

 To understand the requirement of financial statements in a business.

 To understand the different aspects of the financial statements and how ratios help in
analyzing them.

 To identify the different important parts in the financial statements that is usually required
to make financial decisions.

 To understand the concept and applicability of sources of finance.

29
 CHAPTER 5

RESEARCH METHODOLOGY

30
 RESEARCH METHODOLOGY

The main aim of the study of the study is to know the financial performance of Amber
Enterprises Pvt Ltd.

Research:

Any efforts which are directed to study of strategy needed to identify the problems and selection
of the best solutions for better results are known as Research.

Research Design:

In view of the objective of the study listed above the exploratory research design has been adopted.
Exploratory 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.

It helps: -

 To know the financial status of the company.

 To know the credit worthiness of the company.
 To offer suggestions based on research finding.

Data collection method

Type of data:

Secondary Data-

Secondary data is the existing or previous data of the company which include-

 Company’s balance sheet and Profit and loss account

 Company’s annual reports
 Company websites

Techniques and Tools used are: -

 Time Series analysis

 Cross Sectional analysis

31
 CHAPTER 6

DATA ANALYSIS AND INTERPRETATION

32
5.1. CURRENT RATIO
5.1.1.

YEAR CURRENT CURRENT RATIO

ASSETS LIABILITIES
(in crores) (in crores)
2015 446.81 506.42 0.99
2016 485.94 554.21 0.87
2017 601.68 591.69 1.02
2018 824.64 577.26 1.42
2019 1339.26 967.12 1.38

5.1.2 CURRENT RATIO

1.6
1.42
1.38
1.4

1.2
0.99 1.02
1
0.87
0.8

0.6

0.4

0.2

0
2015 2016 2017 2018 2019

INTERPRETATION:

The current ratio of the company has gradually increased over the years. As the ideal ratio is 2:1,
it can be said that the company has the required amount of assets in possession. The increase in
the ratio from the year 2015 to 2019 proves that the company is capable enough to meet the
liabilities of the business as and when they fall due.

33
5.2. QUICK RATIO
5.2.1.

YEAR QUICK ASSETS CURRENT RATIO

(in crores) LIABILITIES
(in crores)
2015 271.5 506.42 0.53
2016 277.5 554.21 0.5
2017 355.1 591.69 0.6
2018 496.74 577.26 0.86
2019 855.57 967.12 0.88

5.2.2 QUICK RATIO

1
0.86 0.88
0.9

0.8

0.7
0.6
0.6 0.53
0.5
0.5

0.4

0.3

0.2

0.1

0
2015 2016 2017 2018 2019

INTERPRETAION:

The quick ratio of the firm is high and is almost equal to the ideal ratio which is 1:1. The increase
in the ratio from 2015 to 2019 states that the assets in the enterprise are utilized in a more
productive and profitable manner. This increase also states that the company is in a good state of
conversion into liquidity.

34
5.3. DEBT-EQUITY RATIO
5.3.1.

YEAR DEBT EQUITY RATIO

2015 145.01 231.89 0.62
2016 161.42 252.31 0.63
2017 219.54 319.31 0.68
2018 9.70 882.97 0.01
2019 102.27 975.24 0.10

5.3.2 DEBT-EQUITY RATIO

0.8

0.68
0.7
0.62 0.63
0.6

0.5

0.4

0.3

0.2
0.1
0.1
0.01
0
2015 2016 2017 2018 2019

INTERPRETATION:

The ideal debt equity ratio is 2:1, the ratio of the firm is comparatively low which indicates that
the company is dependent mainly on internal sources and owner’s funds.

35
5.4 PROPRIETARY RATIO
5.4.1.

YEAR EQUITY TOTAL ASSETS RATIO

2015 231.89 936.81 0.24
2016 252.31 1,045.63 0.24
2017 319.31 1,174.83 0.27
2018 882.97 1,496.30 0.59
2019 975.24 2083.81 0.47

5.4.2 PROPRIETARY RATIO

0.7

0.59
0.6

0.5 0.47

0.4

0.3 0.27
0.24 0.24

0.2

0.1

0
2015 2016 2017 2018 2019

INTERPRETATION:

The proprietary ratio indicates the strength of funding of the company. The ratio of the years 2015
to 2017 shows the investment in fixed asset is ideal. But the ratio of 2018 is comparatively higher
to the previous years because the firm invested Rs. 600 crores to incorporate the company as a
Public Ltd. By issuing shares under the Companies Act 1956.

36
5.5. FIXED ASSTES TURNOVER RATIO
5.5.1.

YEAR NET SALES NET FIXED RATIO

ASSTES
2015 1081.23 83.11 13
2016 978.07 93.44 10.46
2017 1561.94 69.63 16.16
2018 1923.07 126.48 15.26
2019 2188.40 145.20 15.07

5.5.2 FIXED ASSET TURNOVER RATIO

18
16.16
16 15.26 15.07

14 13

12
10.46
10

0
2015 2016 2017 2018 2019

INTERPRETATION:

The fixed asset ratio of the firm is high which indicates that the fixed assets are fully utilized. The
efficiency and profit earning capacity of the business is also satisfactory.

37
5.6. INTEREST COVERAGE RATIO
5.6.1.

YEAR NET PROFIT INTEREST ON RATIO

BEFORE LONG TERM
INTEREST AND DEBT
TAX
2015 96.20 37.83 2.54
2016 102.59 48.16 2.13
2017 133.75 59.15 2.26
2018 179.14 46.57 3.84
2019 197.30 14.78 13.34

5.6.2 INTEREST COVERAGE RATIO

16

14 13.34

12

10

6
3.84
4
2.54 2.26
2.13
2

0
2015 2016 2017 2018 2019

INTERPRETATION:

The interest coverage ratio of the company has increased over the years with slight decrease in the
year 2016 and 2017. The current increase in the ratio states that the debt burden of the company is
less or negligible which is a plus point for the firm.

38
5.7. NET PROFIT RATIO
5.7.1.

YEAR NET PROFIT NET SALES RATIO

2015 25.28 1081.23 2.33
2016 20.42 978.07 2.08
2017 24.17 1561.94 1.54
2018 61.99 1923.07 3.22
2019 92.52 2188.40 4.22

5.7.2 NET PROFIT RATIO

4.5 4.22

3.5 3.22

2.5 2.33
2.08
2
1.54
1.5

0.5

0
2015 2016 2017 2018 2019

INTERPRETATION:

The net profit ratio is variable, it is high in 2015, 2018, 2019 and is low in 2016, 2017. A high ratio
is advantageous for the firm and it will survive in the phase of falling prices, rising cost of
production or declining demand for the product.

39
5.8. OPERATING PROFIT RATIO
5.8.1.

YEAR OPERATING NET SALES RATIO

PROFIT
2015 89.97 1081.23 8.32
2016 100.23 978.07 10.24
2017 125.63 1561.94 8.04
2018 171.21 1923.07 8.9
2019 188.34 2188.40 8.6

5.8.2 OPERATING PROFIT RATIO

12

10.24
10
8.9
8.32 8.6
8.04
8

0
2015 2016 2017 2018 2019

INTERPRETATION:

Lower ratio is favorable which implies that the efficiency of the business is more and it is low
enough to provide fair returns to shareholders and investors. As the ratio is low the firm will be
able to meet non-operating expenses and payment of interests and dividends.

40
5.9. RETURN ON CAPITAL EMPLOYED
5.9.1.

YEAR PROFIT BEFORE CAPITAL RATIO

INTEREST AND EMPLOYED
TAX
2015 72.98 430.39 16.96
2016 74.97 491.42 15.25
2017 97.66 583.14 16.74
2018 135.74 919.04 14.76
2019 147.70 1116.69 13.22

RATIO
18 16.96 16.74
16 15.25
14.76
14 13.22

12

10

0
2015 2016 2017 2018 2019

RATIO

INTERPRETATION:

The increase in the ratio has been very rapid which is advantageous for the company. The managers
take decisions with the help of this ratio. The increasing ratio states the overall profitability of the
firm; so higher ratio is therefore beneficial.

41
5.10. RETURN ON EQUITY
5.10.1.

YEAR NET PROFIT SHAREHOLDER’S RATIO

AFTER INTEREST FUNDS
AND TAX
2015 25.28 231.89 10.9
2016 20.42 252.31 8.09
2017 24.17 319.31 7.56
2018 61.99 882.97 7.02
2019 92.52 975.24 9.48

5.10.2 RETURN ON EQUITY RATIO

12
10.9

10 9.48

8.09
8 7.56
7.02

0
2015 2016 2017 2018 2019

INTERPRETATION:

The ratio indicates the relative performance and strength of the company in attracting the
prospective investors. It helps the investors to take decisions. According to the ratio it clearly states
that the company has to work hard to gain investors.

42
5.11. WORKING CAPITAL TURNOVER RATIO
5.11.1.

YEAR NET SALES WORKING RATIO

CAPITAL
2015 1801.22 52.91 34.04
2016 978.07 25.25 38.73
2017 1561.94 151.44 10.31
2018 1923.07 266.20 7.22
2019 2188.40 421.03 5.19

5.11.2 WORKING CAPITAL TURNOVER RATIO

45

40 38.73

34.04
35

30

25

20

15
10.31
10 7.22
5.19
5

0
2015 2016 2017 2018 2019

INTERPRETATION:

The working capital turnover ratio measures how well a company is utilizing its working capital
to support a given level of sales. In 2015 and 2016 ratio is satisfactory which indicates that
management is efficient in using a firm’s short-term asset and liability to support sales. Contrary
in 2017, 2018, 2019 the ratio low which indicates firm’s short-term asset and liability not
supporting sales efficiently.

43
5.12. INVENTORY TURNOVER RATIO
5.12.1.

YEAR COST OF GOODS INVENTORY RATIO

SOLD
2015 1081.22 175.31 6.16
2016 978.07 208.44 4.69
2017 1561.94 246.58 6.33
2018 1923.07 327.90 5.86
2019 2188.40 483.69 4.52

5.12.2 INVENTORY TURNOVER RATIO

7
6.33
6.16
5.86
6

5 4.69
4.52

0
2015 2016 2017 2018 2019

INTERPRETATION:

This ratio is employed to measure how quickly stock is converted into sales. As company has
maintained the ideal inventory turnover ratio it indicates that more sales are being made by a
rupee of investment in stock.

44
5.13. GROSS PROFIT RATIO
5.13.1.

YEAR GROSS PROFIT NET SALES RATIO

2015 178.90 1081.23 16.54
2016 190.46 978.07 19.47
2017 223.85 1561.94 14.33
2018 332.17 1923.07 17.27
2019 335.42 2188.40 15.32

5.13.2 GROSS PROFIT RATIO

25

19.47
20
17.27
16.54
15.32
15 14.33

10

0
2015 2016 2017 2018 2019

INTERPRETATION:

Gross profit ratio indicates the average mark-up or margin on product sold. It serves as an
indicator of general profitability of the business concern. As company has maintained good gross
profit ratio it implies better profitability of the product sold by business concern.

45
5.14. EARNING PER SHARE RATIO
5.14.1.

YEAR PROFIT FOR THE NO. OF EQUITY RATIO

YEAR SHARE (IN LAKH)
2015 25.28 217.03 11.65
2016 20.42 217.03 9.41
2017 24.17 238.10 10.15
2018 61.99 314.47 19.71
2019 92.52 314.47 29.42

5.14.2 EARNING PER SHARE RATIO

35

29.42
30

25

19.71
20

15
11.65
9.41 10.15
10

0
2015 2016 2017 2018 2019

INTERPRETATION:

Earning per share throws light on the overall profitability and helps in determining the market
price of equity share. The company has good EPS ratio which reflects the capacity of business to
pay dividend to equity shareholder.

46
5.15. DEBTORS TURNOVER RATIO
5.15.1.

YEAR NET CREDIT AVERAGE TRADE RATIO

SALES RECEIVABLES
2015 1081.22 174.79 6.18
2016 978.07 220.82 4.42
2017 1561.94 263.07 5.93
2018 1923.07 314.35 6.11
2019 2188.40 533.88 4.09

5.15.2 DEBTORS TURNOVER RATIO

7
6.18 6.11
5.93
6

5
4.42
4.09
4

0
2015 2016 2017 2018 2019

INTERPRETATION:

The firm here has high debtor’s turnover ratio which means that firm is collecting their
receivable more frequently throughout the year. Higher efficiency is favorable from cash flow
standpoint as well. If a company can collect cash from customer sooner, it will be able to use that
cash to pay bills and other obligation sooner.

47
 CHAPTER 7

RECOMMENDATION/SUGGESTION

48
Some recommendations or suggestions for the company are:

 Looking at the financial statements of the company, we see that the company has
increased sales and profit.

 The company should be careful with the IPO as investment and issue of share
involves a lot of risk.

 The company should properly specify its number of investors and board of
directors as it will create a goodwill for the company.

 The company should not only focus on its key products but should also look after
the designing and manufacturing of various other parts.

 Expansion to other parts of the country will help the company achieve its mission
of becoming the number one suppliers.

49
CHAPTER 8

CONCLUSION

50
From the above given Project Report, we can conclude the following aspects:

 The company’s profits have increased because of the initial public offer.

 The company runs on a large scale as the amounts are in crores.

 Current ratio is approximately equal to the ideal ratio which implies that there is no
excessive cash it only has the amount which is required which is a positive aspect for the
firm.

 It can be concluded from quick ratio that the company is in a good liquidity position.

 The company is not dependent on any external funds; it only relies on owner’s (internal)
funds.

 The equity shareholders have been contributing and increasing amount of their equity
towards the assets, specially in 2018 because of the IPO.

 The firm is using its fixed assets in an effective and efficient manner.

 The company has achieved sufficient profit in the past 5 years and even has excess profit
lest for further investment.

 The company’s overall financial position is directed towards earning huge sums of profits
which is benefiting all the members of the organization.

 The firm does not have any debts stated under its name.

 The operating profit ratio signifies sufficient returns to the investors and the stakeholders.

 Managers are able to take decisions for further improvement as well as to earn more profits
for the company.

51
 CHAPTER 9

BIBLOGRAPHY

52
 All the information provided and portrayed above has been taken from the company-
AMBER ENTERPRISES INDIA LIMITED

Websites:
 http//www.ambergroupindia.com/products/
 http://m.moneycontrol.com/balance_sheet/
 http://www.investopedia.com/return-on-investment/

Reference books:
 Nirali Publications- Analysis of Financial Statements
 C M Pandey Publications- Long Term Finance

53
CHAPTER 10

ANNEXURE

54
 9.1 BALANCE SHEET OF AMBER ENTERPRISES

( Rs. in Crore)

2019 2018 2017 2016 2015

EQUITIES AND LIABILITIES

SHAREHOLDER'S FUNDS
Equity Share Capital 31.45 31.45 23.81 21.7 21.7
Total Share Capital 31.45 31.45 23.81 21.7 21.7
Reserves and Surplus 943.79 851.53 295.5 230.61 210.18
Total Reserves and Surplus 943.79 851.53 295.5 230.61 210.18
Total Shareholders Funds 975.24 882.97 319.31 252.31 231.89
Hybrid/Debt/Other Securities 0 0 33.98 0 0
NON-CURRENT LIABILITIES
Long Term Borrowings 102.27 9.7 219.54 161.42 145.01
Deferred Tax Liabilities [Net] 32.49 21.08 4.99 30.85 24.87
Other Long Term Liabilities 2.72 2.61 2.88 44.72 27.1
Long Term Provisions 3.97 2.68 2.43 2.12 1.53
Total Non-Current Liabilities 141.45 36.07 229.85 239.12 198.5
CURRENT LIABILITIES
Short Term Borrowings 54.03 30.66 132.43 128.07 133.21
Trade Payables 820.99 478.47 410.95 273.06 215.48
Other Current Liabilities 91.72 67.27 47.78 152 153.63
Short Term Provisions 0.38 0.86 0.53 1.08 4.11
Total Current Liabilities 967.12 577.26 591.69 554.21 506.42
Total Capital And Liabilities 2,083.81 1,496.30 1,174.83 1,045.63 936.81
ASSETS
NON-CURRENT ASSETS
Tangible Assets 502.84 460.37 427.66 397.65 325.8
Intangible Assets 67.07 60.89 54.64 40.9 31.85
Capital Work-In-Progress 7.52 4.4 4.9 7.87 40.03

55
Intangible Assets Under
17.58 15.21 11.99 19.83 9.21
Development
Other Assets 4.32 4.32 4.32 0 0
Fixed Assets 599.34 545.19 503.52 466.25 406.89
Non-Current Investments 111.16 111.94 50.3 50.3 50.3
Long Term Loans And Advances 10.13 5.47 4.87 41.2 30.21
Other Non-Current Assets 23.91 9.07 14.46 1.94 2.6
Total Non-Current Assets 744.54 671.66 573.15 559.7 490
CURRENT ASSETS
Inventories 483.69 327.9 246.58 208.44 175.31
Trade Receivables 731.93 335.83 292.87 233.23 208.42
Cash And Cash Equivalents 42.12 120.5 33.44 16.26 28.54
Short Term Loans And Advances 12.76 12.77 9.32 27.6 32.77
Other Current Assets 68.76 27.63 19.48 0.41 1.77
Total Current Assets 1,339.26 824.64 601.68 485.94 446.81
Total Assets 2,083.81 1,496.30 1,174.83 1,045.63 936.81
OTHER ADDITIONAL INFORMATION

CONTINGENT LIABILITIES, COMMITMENTS

Contingent Liabilities 99.01 79.22 57.66 117.86 103.12

CIF VALUE OF IMPORTS
Raw Materials 0 0 0 139.94 100.47
Capital Goods 0 0 0 14.05 17.54
EXPENDITURE IN FOREIGN EXCHANGE

Expenditure In Foreign Currency 524.04 448.91 0 0.46 1.83

REMITTANCES IN FOREIGN CURRENCIES

FOR DIVIDENDS

Dividend Remittance In Foreign

- - - - -
Currency
EARNINGS IN FOREIGN EXCHANGE
FOB Value Of Goods - - - 4.77 4.65
Other Earnings 6 4.64 - - -
BONUS DETAILS
Bonus Equity Share Capital 12.53 12.53 12.53 12.53 12.53

56
NON-CURRENT INVESTMENTS
Non-Current Investments Quoted
- - - - -
Market Value
Non-Current Investments
111.16 111.94 50.3 50.3 50.3
Unquoted Book Value
CURRENT INVESTMENTS
Current Investments Quoted
- - - - -
Market Value
Current Investments Unquoted
- - - - -
Book Value

57
9.2 PROFIT AND LOSS ACCOUNT OF AMBER ENTERPRISES

(Rs. in Crore)

Mar 19 Mar-18 Mar-17 Mar-16 Mar-15

INCOME
Revenue From
2,133.84 1,921.65 1,620.08 1,007.38 1,102.58
Operations [Gross]
Less: Excise/Sevice
0 26.9 70.43 39.73 32.12
Tax/Other Levies
Revenue From
2,133.84 1,894.75 1,549.65 967.66 1,070.46
Operations [Net]
Other Operating
54.55 28.32 12.29 10.42 10.77
Revenues
Total Operating
2,188.40 1,923.07 1,561.94 978.07 1,081.22
Revenues
Other Income 8.96 7.69 8.16 2.36 6.23
Total Revenue 2,197.35 1,930.76 1,570.10 980.44 1,087.45
EXPENSES
Cost Of Materials
1,852.97 1,590.90 1,338.09 787.61 902.32
Consumed
Changes In Inventories Of
FG,WIP And Stock-In -20.99 19.33 -29.07 -3.65 -5.94
Trade
Employee Benefit
40.43 41.83 38 31.42 29.17
Expenses
Finance Costs 14.78 46.57 59.15 48.16 37.83
Depreciation And
49.6 43.16 36.13 28.03 23.22
Amortisation Expenses
Other Expenses 127.64 99.8 89.28 62.46 65.71
Total Expenses 2,064.42 1,841.59 1,531.59 954.03 1,052.30
Profit/Loss Before
Exceptional,
132.93 89.17 38.51 26.41 35.15
ExtraOrdinary Items And
Tax
Profit/Loss Before Tax 132.93 89.17 38.51 26.41 35.15

58
Tax Expenses-Continued Operations
Current Tax 28.88 19.26 8.94 5.52 7.07
Less: MAT Credit
0 0 0 5.52 4.54
Entitlement
Deferred Tax 11.53 7.92 5.41 5.99 7.35
Total Tax Expenses 40.41 27.19 14.34 5.99 9.88
Profit/Loss After Tax
And Before 92.52 61.99 24.17 20.42 25.28
ExtraOrdinary Items
Profit/Loss From
92.52 61.99 24.17 20.42 25.28
Continuing Operations
Profit/Loss For The
92.52 61.99 24.17 20.42 25.28
Period
OTHER ADDITIONAL INFORMATION
EARNINGS PER SHARE
Basic EPS (Rs.) 29.42 23.04 10.69 9.41 11.65

Diluted EPS (Rs.) 29.42 23.04 10.69 9.41 11.65

VALUE OF IMPORTED AND
INDIGENIOUS RAW MATERIALS
Imported Raw Materials 0 0 0 123.83 132

Indigenous Raw Materials 0 0 0 663.78 770.32

STORES, SPARES AND LOOSE

TOOLS
DIVIDEND AND DIVIDEND
PERCENTAGE
Equity Share Dividend 0 0 5.01 0 0

Tax On Dividend 0 0 1.02 0 0

Equity Dividend Rate (%) 0 0 21 0 0

59