Project Report

Government of Karnataka
VIDYALAXMI GROUP OF INSTITUTIONS
BRAHMAVAR
(AFFILIATED TO MANGALORE UNIVERSITY, RECOGNIZED BY
GOVERNMENT OF KARNATAKA)
A study on financial statement analysis refer with Hegde Agrotech Pvt ltd
Honavar
Submitted by: -
VINAYAK NAGAPPA SHETTY
192512953
3rd B.COM
Under the guidance of: -
Ms. Deeksha
Assistant professor
DEPARTMENT OF COMMERECE AND MANAGEMENT

VIDYALAXMI GROUP OF INSTITUTION BRAHMAVAR
MAY 2022
i
DECLARATION
I am Vinayak Nagappa Shetty student of Vidyalaxmi Group of Institution Brahmavar,

studying in 3rd B.COM, hereby declare that I have completed my project on ‘financial
statement analysis refer with Hegde Agrotech Pvt Ltd Honavar during the academic year
2021-22, the information submitted true and original to their best of my knowledge.
I also declare that all information data and input which I have used and referred to in
this report are meant only for academic purpose and will not be parted with or use of any
commercial purpose.
Place: Brahmavar Signature of the student
Date:
ii
ACKNOWLEDGMENT
The successful competition of any task would be incomplete without maintaining the
people who gave helped me to completed it and proud of maintain those who motivated me
and making this project a success.
I would like to express my deep sense of gratitude to my project guide Ms. Deeksha
who took been interested on this project work and guided me along, till the completion of this
project work by providing necessary information.
I would like to express our sincere thanks and whole hearted granted gratitude Mrs.
Seema Bhat principal Vidyalaxmi Group of Institution Brahmavar for giving permission to
undertake this project.
I would like express my gratitude to Hegde Agrotech pvt ltd Honavar for their whole
hearted support and cooperation in providing me the necessary information to bring out this
project.
I would like to offer my whole hearted gratitude to my parents, and my friends for
being so encouraging supportive in completing my project work.
iii
Executive summary
The main focus of this report is on the Financial Statement Analysis and Performance
Evaluation of Hegde Agrotech Pvt Ltd. In order to focus on the financial performance and
evaluation of Hegde Agrotech Pvt Ltd, the study focuses on the financial statement and ratio
analysis, liquidity ratio, Efficiency ratio, Debt Management and Profitability and also analyse
the market ratio by comparing Hegde Agrotech Pvt Ltd Revenue, Net Income P&L a/c,
Balance sheet. The study has been conducted based on primary and secondary data.
Moreover, on the study describe the internship experience and objectives of the study. Some
information has also been collected from the discussion with the officers.
Hegde Agrotech Pvt Ltd was established on 15th July 2009. dealing with agricultural
equipment's, they have been in this service sector since last three decades with the sole motive
of promoting all necessary scientific and technical assistance to farmers of coastal and malnad
region.
For preparing the report we need to study the profile of the industry. Then we have to
study the organization profile. Organization profile includes the background of the company,
vision and mission statement, quality policy of the organization and product and services
profile of the organization. And this report includes the feature growth and prospects, SWOT
analysis.
The study concludes that Hegde Agrotech is well managed and it is carrying its
business very efficiently and effectively.
iv
TABLE OF CONTENTS
Declaration ………………………………………………………………………………... ii
Acknowledgement………………………………...……………………………………... iii
Executive summary ……………………………………...…….………………………… iv
1. INTRODUCTION …………………………………………………………………. 1
1.1 introduction to the topic……………….…………………………………………… 2
1.2 Research questions …………………………………………………………………2
1.3 Objective of the study ………………………………………………………………2
1.4 Scope of the study ………………………….……………………………………..…3
1.5 Limitation of the study……………………….…………………………………..…..3
1.6 Research methodology …………………...…….…………………………………....3
2. LITERATURE REVIEW…………………………………………………………….4
3. INDUSTRY AND COMPANY PROFILE………...………………………………..8
3.1. Historical background …………………………….…………………………………9
3.2.Company profile ……………………………………………...……………………..10
3.3.Organisational structure ………………………………………………...………..….11
3.4.Vision……………………………………......……………………………………….12
3.5.Mission …………………………………..……………...…………………………..12
3.6.Achievement …………………………….………………………………...………..12
3.7.Management function …………...………………………………………………….12
3.8.Products ………………………………….…...……………………………………..13
3. 9.SWOT analysis ……………………………………………………………………18
4. THEORITICAL BACKGROUND ……………………………………………….20
v
5. DATA ANALYSIS AND INTERPRETATION ………………………………….25
6. FINDINGS SUGGESTION AND CONCLUSION ….…………………………….39
6.1. Findings ……………………………………..…………………………………………
6.2.Suggestion ………………………………………………………………………………
6.3.Conclusion …………………………….………………………………………………..
BIBLIOGRAPHY ……………………………………………………………41
ANNEXURE………………………………….………………………………………….42
vi
CHAPTER-1
INTRODUCTION
1
1.1. INTRODUCTION TO THE TOPIC
Finance is defined as the provision of money when it is required. Every enterprise needs
finance to start and carry out its operation. Finance is the lifeblood of an organization. So,
finance should be managed effectively.
Financial statements are prepared primarily for decision making. Financial Statement
Analysis refers to the process of determining financial strength and weakness of the firm by
properly establishing strategic relationship between the items of the balance sheet and profit
and loss account. There are various methods and techniques used in analysing financial
statements, such as comparative statements, trend analysis, common size statements, schedule
of changes in working capital, funds flow and cash flow analysis, cost volume profit analysis
and ratio analysis and other operative data. The analysis of financial statement is used for
decision making by various parties.
• First task is to analyse and select the information which is requiring taking
decision.
• Second task is to arrange the information in a way to highlight significant
relationship.
• Final task is the interpretation and drawing of inferences and conclusions.
1.2 RESEARCH QUESTIONS
• To improve the skill

• To detailed review of working capital
• To analysis the financials statement of the company
• To Ratio analysis
• Cash flow lending
1.3 OBJECTIVE OF THE STUDY

A project report should have a proper objective. Without a meaning of an objective, it
cannot be implemented properly. The objective of the study is as follows.
2
• To study a financial aspects of a company
• To know the financial position of the company.
• To suggest the appropriate measure to improve the company.
1.4 SCOPE OF THE STUDY

• The data and information were gathered during internship.
• The scope is limited to the primary data and secondary data.
• The scope is delimited to the year 2016-17 to 2020-21.
1.5 LIMITATION OF THE STUDY

• Limitation of time
The limitation of time was another constraint in the study as the study had to be
conducted in few months therefore many aspects have been left unexplored.
1.6 RESEARCH METHODOLOGY

• Primary data: The data will be collected by various sources. Sources of primary
data are the sampling chosen.
1. Communication
2. Observation
3. Questioner
• Sample size:
• Interview method:
• Secondary data: The secondary data collected from internet or external record.
The secondary data gives detail information about the company. The secondary
data gives all information which unavailable in primary data.
 Company web
 Internet
3
Chapter 2
Review literature
4
A study focuses on the financial performance of agribusinesses and takes into account
the substantial finance literature on firm performance. An overview of existing literature
identifies indicators of firm performances, clarifying fundamental differences between types of
agribusinesses and other established firms. Agribusinesses operate with various business
models. The differing business objectives of these models necessitate defining the separation
between publicly-traded firms and other types of agribusinesses.
Researchers examine agribusiness management strategies with various methodologies.

Several studies focus on cooperative management strategies; they define a significant portion
of agribusinesses and present interesting business models to study. Katz (1997) focuses on the
managerial behaviour and strategy choices in agribusiness cooperatives while acknowledging
that limited empirical research exists in examining the differences in management behaviour
of cooperatives and investor-owned firms (IOF's). Katz's study utilizes some of the same
management strategies we examine throughout our research, including measures of leverage
and liquidity, Katz argues that publicly-traded firms are fundamentally different than
cooperatives; market-based measures serve as good indicators of firm performance in
publicly-traded firms while agribusiness cooperative may have a different focus. Our analysis
focuses on market-based measures of financial success compared to Katz's focus on
cooperative's member benefit.
Nilsson and Dijk (1997) work to bridge the gap between cooperatives and publicly
traded firms in their book on strategies and structures in the agro-food industries. They
examine the impacts of mergers and acquisitions in the performance of the U.S. food
industries and the strategic behaviour that leads to firm success.
Other authors have looked at the impact of agribusinesses on the global economy.
Cook and Chaddad (2000) provide a referential framework on the global economy; their work
focuses on providing an overview of the issues related to agro-industrialization and the role of
agribusiness management in bridging the gap between agribusiness and foreign development.
Cook and Chaddad (2000) also note a shift in the early 1970's from intra-firm to inter-firm
analysis in agribusiness management literature,
Wells (1979) supports the examination of U.S. based firms as an indicator of global
economic performance. Financial literature often examines the strength of these U.S. based
multinational firms, However, strategic examination of financial performance of
agribusinesses has rarely been studied.
5
Existing literature has found that investor and managerial perceptions of firm quality
are highly related to measures of financial success. In an analysis of a Fortune survey of firm
managers, McQuire et. al (1990) found that although firms with high return on assets and low
debt-to-asset ratios were considered successful, other measures of firm success (growth in
sales and operating income) were not significantly related to any of the reported qualitative
performance indexes of quality. Other studies, particularly those that focus specifically on
business growth through exporting, find that sales and sales growth are good indicators of firm
Liquidity as a measure of firm success has been studied in depth. Cleary (1999)
evaluates existing studies to state the investment decisions of financially-constrained firms are
more sensitive to firm liquidity than those of less constrained firms. Cleary's resulting
regression finds that investment outlays are less sensitive to liquidity at different levels of
financial constraint. In imperfect capital markets, a firm's ability to make investment decisions
impacts long-term corporate planning and success.
Return on assets and return on equity are popular measures of firm performance in
financial literature. Hansen and Wernerfelt (1989) utilize return on assets as an organization
determinant of firm performance. Johnson and Soenen (2003) provide an overview of litter
related to indicators of successful companies while testing out different measures of success
for a large sample of firms. The indicators cover several consistent measures of financial
performance, including cash relative to assets, return on equity, return on assets, a capital
structure ratio and sustainable growth measuring retained earnings relative to equity. Johnson
and Soenen (2003) also outline other potential indicators of successful companies; these
indicators include measures of advertising expenditures, research and development, cash
conversion cycle, and earnings volatility.
Overall, these performance indicators provide a basic foundational framework to

utilize in our study. As we move forward with additional research, we can examine how
combined measures of firm success relate to agribusiness firms. Indicators such as the
Economic Value Added (EVA), Sharpe's ratio, and Jensen's alpha could possibly provide an
introspective look into firm performance. The Sharpe Ratio (1966, 1994) would provide a look
at how agribusinesses perform within a portfolio. Jensen's alpha (1969) signals above market
performance and has some ability to indicate free cash flows. Economic value analysis is also
used as an additional measure of stock market performance.
Many analysts and investors tend to focus on return on equity as their main measure of
company financial performance. Several more sophisticated valuation techniques such as the
6
internal rate of return, cash flow return on investment, and discounted cash flow analysis have
been used more recently. However, the rate of return on equity has proven most enduring in
evaluating company's performance as it focuses on the simple concept of returns to the
shareholders of a company. In addition, return on assets has been widely accepted as a
performance measure, which unlike the return on equity avoids problems related to growing
debt leverage and stock buybacks to increase return on equity.
Very few studies apply the methodologies found in financial literature to the study of
agribusinesses. Schumacher and Boland (2003) compared the business performance
(accounting profitability) for publicly-traded and cooperatively-owned food agribusiness
firms. They used return on equity as their dependent variable to study industry and corporate
effects. Manfredo, Sanders, and Scott (2011) examined the forecast accuracy of earnings per
share (EPS) estimates for agribusiness firms. They found that forecast accuracy has decreased
over time and for many of the firms, the professional analysts provide EPS estimates that are
found to be biased and inefficient. Clark et al. (2012) developed a composite agribusiness
stock index and then compared the returns and volatility to other broad-based market indices.
They found that the index of agribusiness stocks has historically exhibited lower returns than
the market indices. Mishra et al. (2012) applied the DuPont expansion analysis to examine the
financial performance of farm businesses, which are typically not traded. Our analysis of firm
performance follows various aspects of the financial literature and applies them to
agribusiness firms.
7
CHAPTER- 3
COMPANY PROFILE
8
3.1 Historical Background:
Hegde Agrotech Pvt Ltd was established on 15th July 2009. dealing with agricultural
equipment's, they have been in this service sector since last three decades with the sole motive
of promoting all necessary scientific and technical assistance to farmers of coastal and malnad
region.
Who then were following the most unscientific and traditional methods heir farming
activities? This has given them the reputation of being the only organisation Which supplies
all kinds of agricultural equipment’s at the most competitive prices and also helping farmers to
get all the benefits of various schemes of government.
In order to keep our towns and village off from all kinds of diseases me viruses they
supply fogging machines. For the first time in Karnataka, an ich introducing agricultural
equipment’s has been set up with an international technology. As per the suggestions are of
experienced technologist they have set up and marketing their products by the name
‘Shambhavi'.
9
3.2 Company profile
Name of the company : Hegde Agrotech Pvt Ltd.
Nature of concern : Manufacture of agricultural machines,
Aluminium ladder, Wheel borrow etc.
Constitution : Private company
Registered office : Jalisatgi compound, Honavar (U.K.) 581334
Date of establishment : 15/07/2009
Company category : Company limited shares.
Authorised capital : ₹10000000
Paid up capital :₹10000000
Company CEO : Mr. Ganesh M Hegde
Directors : Ganesh Manjunath Hegde
Hareesh Manjunath Hegde
Managing Director : Manjunath G Hegde
Compotators information : Shri Chamunda mechanical works
Prakash mechanic works
Accounts maintained : computerised cash book, ledger, journal,
Purchase and sale register, etc
10
3.3 Organisational structure:
Directors (3)
Top level
Management
Managing Director (1)
Manager (1)
Middle level
management
Accountant (1)
Supervisor (1)
Lower-level
management
Labour (10)
11
3.4 Vision
Reliable and consistent service to our customer and maintain industrial relationship.
3.5 Mission
1. To promote manufacturing agriculture machines and delivering them in time
2. Honesty and hard work are the mission of the company.
3.6 Achievement:
Success cannot be compared with other it means the success has to be compared with
what we have done in the past.
Company is comparing their performance in each year and trying to achieve better
sales and services than the past.
3.7 Management functioning in Hegde Agrotech Pvt. Ltd:
Management consists of getting things done through the efforts of others. "In company
of any size it is humanly impossible for one individual to do justice of the complex demand of
both managing and operating business." Therefore, there arise a hierarchy of management
with authority and responsibility graded according to the functions of the management.
The following is the explanation of the level of management. The management can be
divided into three depending upon their functions that is:
1. Top management
2. Middle management
3. Lower management
Top Management:
Most of the business enterprises in these days are formed on the basis of Pvt Ltd
Company and one among them is the Hegde Agrotech Pvt. Ltd. In such a business enterprise
12
the top management consists of directors, managing directors of the company who are
expected to undertake administrative function
Middle Management:
In these organization middle level management consists of manager and
accountant who is the subordinate of manager. Manager puts the plans of the directors and
M.D. decisions and motivational factor into order to attend the organization goals. It is
divides into two parts that is upper middle management and lower middle management.
Lower Management:
The lower management consists of supervisors and the labour that come in direct with the
lower office staff and the workers. They are also known as working managers because they
deal with people, property of the management and internal working arrangement 3.8
Products manufactured in Hegde Agrotech Pvt Ltd
1. Aluminium tree climbers:
13
2. Wheeled brush cutters:
3. Lawn movers:
4. Pressure washer
14
5. Earth augers
6. Sprayers
7. Chain saw
15
8. Brush cutter
9. Transporter
10. Tiller trolley
11. Motorized wheel barrow
16
12. Wheel barrow
13. Tillers
14. Coconut tree climber
17
3.9 SWOT Analysis
SWOT Analysis is a structured planning method used to evaluate the strengths,

weakness, opportunities and threats involved in a project or in a business venture. A SWOT
analysis can be carried out for a product, place, industry or person. Every industry has some
strengths, weakness, opportunities and also threats to face, below are the various strengths,
weakness, opportunities and threats of Hegde Agrotech Pvt. Ltd.
Strengths:
 The products have good demand throughout the year.

 Better relation between employees and employers.
 Quick decision can be taken in this company as there is smaller number of members
control the business.
Weakness:
 Limited area of operation.

 Limited resources.
Opportunities:
 Expanding the company in other parts of the state increases demand for its products.
 Total quality-based marketing will increase its profit and image.
 It is nearest to the market place and can use road and railway transport facilities so
there is no problem of expanding the market.
Threats:
 There is chance of dispute because it is private limited company.

 There is no advertisement for products.
 It has to face threat of competition from other desiccated Agrotech industries.
18
CHAPTER -4
THEOROTICAL BACKGROUND
19
Finance is life blood of the business. The financial management is the study about the
process of procuring and judicious use of financial resources is a view to maximize the value
of the firm. There by the value of the owners i.e., the example of equity shareholders in a
company is maximized. The traditional view of financial management looks into the following
function that a finance manager of a business firm will perform.
1. Arrangement of short-term and long-term funds from the financial institutions.
2. Mobilization of funds through financial instruments like equity shares, bond Preference
shares, debentures etc.
3. Orientation of finance with the accounting function and compliance of legal provisions
relating to funds procurement, use and distribution. With increase in complexity of
modern business situation, the role of the financial manager is not just confirmed to
procurement of funds, but his area of functioning is extended to judicious and efficient
use of funds available to the firm, keeping in view the objectives of the firm and
expectations of providers of funds.
DIFINATION: -
Financial Management has been defined differently by different scholars.
1) Howard and Upton: - “Financial Management is the application of the planning and
control function to the finance functions”
2) Bringham: - “Financial Management is an area of financial decision-making

harmonizing, individual motives and enterprise goals”
MEANING OF RATIOS
Financial Statement contains a wealth of information which, if properly analysed and

interpreted, can provide valuable insights into a firm's performance and position. Analysis Soft
financial statements are of interest to (short terms well as long term) investors, security
analysts, managers, and others financial statement analysis may be done for a variety of
purpose, which may range from a simple analysis of the short-term liquidity position of the
firm to a comprehensive assessment of the strengths and weaknesses of the firm in various
areas.
20
The principal tool of financial statement analysis is financial ratio analysis. An absolute figure
does not convey much meaning, there for, become necessary to study a certain figure in
relation to some other relevant figure to arrive at certain conclusion e.g. If we give the figure
of only gross profit earned by certain firm, we cannot say whether the gross profit is heavy,
reasonable or sufficient for this purpose we must take into consideration the figure of sales.
Thus, the gross profit to is required to be studied in relation to the sales to decide the
percentage of gross profit to sale on the basis of percentage we can conclude whether the gross
profit earned is reasonable or otherwise.
OBJECTIVES OF RATIO ANALYSIS:
The study of financial statement of any corporate will help in knowing its present and future
earning capacity.
The study of financial resources can help in knowing whether a company can pay its long-term
or short-term liabilities.
It's very use full to know how much working capital is employed in business and same
effectively used.
It's use full to measure earning capacity and its comparison to other competitive units.
Help full to known marginal efficiency.
Use full to future planning.
INTERPRETATION OF RATIOS
The benefit of the ratio analysis depends to great extent upon their correct interpretation.
Interpretation requires considerable ability on the part of the analyst. He has to decide whether
the relationship disclosed by the ratio is satisfactory or not. He has to base his decision on
experience, or on comparison may be interpreted in any one of the following ways.
1. BASED ON SINGLE RATIO AND GROUP RATIOS:

2. COMPARISION OVERTIME
3. INTER-FIRM COMPARISION
TYPES OF RATIOS:
21
Classification of ratios is done in two ways.
A. According to nature of items.
B. Functional Classification.
A) According to nature of items:
1) Balance Sheet Ratios: - The ratios exhibiting the relationship between two item or
group of items in the balance sheet. Relation between current Assets and Current Liabilities.
2) Revenue Statement or Profit and loss account ratios: - The ratios disclosing the
relationship between two items or group of items in the profit and loss account it. Relationship
between Sales and Gross profit.
3) Inter Statement or Composite Ratio: The ratios indicating the relationship of certain
items in the balance sheet with some figures in the revenue statements i.e., Net Profit and
Capital or Sales and Fixed Assets.
B) Functional Classification:
1) Liquidity Ratios
2) Leverage Ratios.
3) Activity Ratios
4) Profitability Ratios
PROFITABILITY RATIO:
1) Gross Profit Ratio: - This ratio reflects the efficiency with which the management
produces each unit product.
2) Net Profit Ratio: Net Profit is that proportion of net sales which remains to the owners
or the shareholders after all costs. Charges and expenses including income-tax have
been deducted.
LIQUIDITY/SOLVENCY RATIO:
1. Current ratio
2. Quick ratio
22
ACTIVITY RATIO
1. Inventory turnover ratio

2. Operating ratio
3. Fixed asset turnover ratio
4. Total asset turnover ratio
LEAVARAGE RATIO
1. Debt equity ratio

2. Fixed asset to worth ratio
23
CHAPTER 5
DATA ANALYSIS AND INERPRETATION
24
Table 5.1 Showing comparative statement of balance sheet for 5 year of
Hegde Agrotech pvt ltd.
2016-17 2017-18 2018-19
I. Equity and liability
1) Shareholders’ funds
a) Share capital 10,000,000 10,000,000 10,000,000
b) Reserves & surplus 1,956,612 3,080,888 4,149,970
2) Non-current liabilities
a) Long term 3,727,178 19,152,800 19,252,602
borrowing 2,144,976 2,179,501 3,154,725
b) Other long-term
liability
3) Current liability 4,500,270 4,583,532 2,496,578

a) Trade payable 249,800 50,000 1,195,878
b) Other current
liability
Total 22579286 39,046,721 40,249,753
II. Assets
1) Non-current assets
a) Property, plant, 2,892,872 3,500,720 3,304,048
equipment
b) Loans and advance(long- 1,072,724 1,182,724 1,224,724
term)
2) Current assets
a) Inventories 11,430,771 19,012,012 22,129,480
b) Trade receivables 6,107,076 13,879,610 11,733,739
c) Cash and cash 9,6045 148,801 113,599
equivalents
d) Other current5 assets 979798 1,322,764 1,744,163
22,579,286 30,946,721 40,249,753
Total
25
2019-20 2020-21
1) Equity and liability

I. Shareholders’ funds
a) Share capital 10,000,000
10,000,000
b) Reserves & surplus 4,446,033
4,652,539
II. Non-current liabilities a)

Long term borrowing 18,792,417
48,988,942
b) Other long-term liability 3,761,034
3,650,928
III. Current liability

a) Trade payable 14,679,449
8,017,808
b) Other current liability 3,712,128
2,244,442
47,554,659 55,391,061
2) Assets
I. Non-current assets
a) Property, plant, equipment 2,552,232
2,064,535
b) Loans and advance(long- 2,374,724
1,951,724
term)
II. Current assets

a) Inventories 28,520,471
27,047,380
b) Trade receivables 12,617,219
21,253,850
c) Cash and cash equivalents 28,641
1,461,372 663,581
d) Other current5 assets 2,409,991
47,554,659 55,391,061
(Source: balance sheet of the Hegde Agrotech Pvt ltd Honavar)
Interpretation:
26
• In the above balance sheet clearly shows that the profit, share capital and reserve fund
and other reserves of the company are increasing in year by year.
• Interest payable is decreasing year by year it indicates that the company receiving more
interest than interest paying due to the amount of borrowing loans are increasing so it
clearly shows that company more concentrating on lending loans
• This shows that overall financial position of Hegde Agrotech Pvt Ltd Honavar
satisfactory.
Comparative income statement of Hegde Agrotech Kadle pvt ltd
27
Previous Current year Increase / % Of
Particular year 2017-2018 Decrease in Increase /
current year Decrease in
2016-2017 over current year
previous over
year previous
year
Net sales 96907858 128913482 32005624 33.02%

Less: Cost of goods sold 92813410 127110468 34297058 36.95%
Less: Direct expenses 250370 919352 668982 267.19%
Gross profit 3844078 883662 -2960416 -77.01%
Add: Other income 1681644 516489 -1165155 -69.28%

Less: Operating expenses 5525722 1400151 -4125571 -74.66%
Employee benefit expenses 1238608 1668245 429637 34.68%

Depreciation expenses 826567 1209502 382935 46.32%
Administration and other
expenses
Advertisement expenses 47626 63854 16228 34.07%
Business promotion 145085 264325 119240 82.18%
Services charges paid 71652 - - 71652 -100%
General insurance 47037 68185 21148 45%
Miscellaneous expenses 96346 155947 59601 61.86%
Lodging and boarding 42184 134253 92609 219.5%
expenses
Traveling allowances 236303 648960 412657 174.6%
Power charges 45874 85805 39931 87.04%
Hire charges 105810 81695 -24115 -22.79%
Office rent 338100 517500 179400 53.06%
Pooja expenses 55747 56476 729 1.31%
28
Communication charges 104532 15740 46208 44.20%
Printing and stationary 124651 289356 164705 132.13%
Registration expenses 113502 240041 126539 111.48%
Repair and maintenance 134945 248006 113061 83.78%
Statutory audit fees 15000 - -15000 -100%
Tax audit fees 10000 - -10000 -100%
Legal and professional 39600 60000 20400 51.51%
Fees
Premise maintenance 205680 202115 6435 3.13%
Late fees - 5350 5350 -
Total operation expenses 40448409 6160355 2115506 52.30%
Operating profit 1480873 2954429 1473556 99.50%
Less: Non-
operating expenses.
Finance charges 792757 1316090 523333 66.01%
Testing fees written off - 330690 330691
688116 1307648 619532 90.03%
Add: Non-operating income 16605 - -16605 -100%
Profit for the year 704721 1307648 602927 85.55%
Interpretation:
• 2016-2017 and 2017-2018
The net sales of the company were increased by 33.02%. Total operating
expenses were increased by 52.30% which is more than the proportionate increase in
sales. Non-operating expenses were also increased by 66.01%: Profits of the company
were increased by 85.55%. This shows that the overall profitability of the company is
good.
29
Particular 2018-19 (₹) 2019-20(₹) 2020-21(₹)
Revenue from 13,55,23,306 113,544,813 41573413
operations other
income 7,57,863 4 0
13,62,81,169 113,544,817 41573413

Expenses:
Cost of materials
12,65,62,555 110524315 33512840
consumed
Variation in Stocks
Direct Expenses -30,83,933 -6390992 1473091
Employee 10,56,826 1065119 1002434
benefits Expense 14,73,183 981667 840214
Finance costs
Depreciation Sales 25,90,314 1369700 329308
and distribution 8.89.813 833493 502571
expenses 7,83,307 916963 503869
Other expenses
Current Tax 39,79,262 36819354 3615592
11,53,039 10048 0
13,54,04,336 113042248 41779919
Net Profit for the 8,76,803 502569 -206506
period
(Source: profit and loss account of the Hegde Agrotech Pvt ltd Honavar)
profit or loss
1400000 1307648
1200000
1000000 8,76,803
800000 704721
600000 502569
400000
200000
0
2016-17 2017-18 2018-19 2019-20 2020-21
-200000
-206506
-400000
In the 2017 the profit will be ₹704721, 2018 the profit will be increase to the ₹1307648, in the
2019 the profit will be decrees to ₹8,76,803. Again the 2020 the profit will be decrease to the
502569. In the 2021 the company will be loss ₹206506, because of covid 19.
30
5.1Ratio Analysis
Financial ratios are useful indicators of a firm's performance and financial situation.
Financial ratios can be used to analyse trends and to compare the firm's financials to those of
other firms. Ratio analysis is the calculation and comparison of ratios which are derived from
the information in a company's financial statements. Financial ratios are usually expressed as a
percent or as times per period. Ratio analysis is a widely used tool of financial analysis. It is
defined as the systematic use of ratio to interpret the financial statements so that the strength
and weaknesses of a firm as well as its historical performance and current financial condition
can be determined. The term ratio refers to the numerical or quantitative relationship between
two variables. With the help of ratio analysis conclusion can be drawn regarding several
aspects such as financial health, profitability and operational efficiency of the undertaking.
Ratio points out the operating efficiency of the firm i.e., whether the management has utilized
the firm's assets correctly, to increase the investor's wealth. It ensures a fair return to its
owners and secures optimum. utilization of firm's assets. Ratio analysis helps in inter-firm
comparison by providing necessary data. An inter firm comparison indicates relative position.
It provides the relevant data for the comparison of the performance of different departments. If
comparison shows a variance, the possible reasons of variations may be identified and if
results are negative, the action may be initiated immediately to bring them in line. Yet another
dimension of usefulness or ratio analysis, relevant from the View point of management is that
it throws light on the degree efficiency in the various activity ratios measures this kind of
operational efficiency.
a) Liquidity Ratios
b) Profitability Ratios
c) Activity Ratios
d) Market Ratio
5.1.1 Liquidity Ratios.
Liquidity ratios measure a firm's ability to meet its current obligations. These include:
Current Ratio:
31
Current Ratio = Current Assets / Current Liabilities
This ratio indicates the extent to which current liabilities are covered by those assets expected
to be converted to cash in the near future. Current assets normally include cash, marketable
securities, accounts receivables, and inventories. Current liabilities consist of accounts
payable, short-term notes payable, current maturities of long-term debt, accrued taxes, and
other accrued expenses. Current assets are important to businesses because they are the assets
that are used to fund day-to-day operations and pay ongoing expenses.
Year 2016-17 2017-18 2018-19 2019-20 2020-21
Current asset 18553090 34363187 35720981 42627703 51374802
Current liability 4750070 4633532 3692456 10262250 18391577
Current ratio 3.91 7.42 9.67 4.15 2.79
current ratio
9.67
7.42
3.91 4.15
2.79
2016-17 2017-18 2018-19 2019-20 2020-21
The current ratio for the year 2016-17, 2017-18, 2018-19, 2019-20, 2020-21 is 3.19,
7.42, 9.67, 4.15, 2.79 respectively. The ratio is lower which shows low short term liquidity
efficiency at the same time holding less than sufficient current assets mean inefficient use of
resources.
Sales to Working Capital:
Sales to Working Capital = Sales / Working Capital
Sales to working capital give an indication of the turnover in working capital per year.
A low working capital indicates an unprofitable use of working capital
32
Year 2016-17 2017-18 2018-19 2019-20 2020-21
Sales 96907858 128913482 125311056 113544813 41573413
Working capitol 13803020 29729655 32028525 32365453 32983225
Sales to working 7.02 4.33 3.91 3.51 1.26
capital
SALE TO WORKING CAPITAL

8.00%
7.00%
6.00%
5.00%
4.00%
3.00%
2.00%
1.00%
0.00%
2016-17 2017-18 2018-19 2019-21 2020-21
The sales to working capital for the year 2016-17, 2017-18, 2018-19, 2019-20, 2020-
21 is 7.02, 4.33, 3.91, 3.51, 1.26. The ratio is lower which shows low short term liquidity
efficiency at the same time holding less than sufficient current assets mean inefficient use of
resources.
Working Capital:
Working Capital = Current Assets - Current Liabilities
A measure of both a company's efficiency and its short-term financial health. Positive
working capital means that the company is able to pay off its short-term liabilities. Negative
working capital means that a company currently is unable to meet its short-term liabilities with
33
its current assets (cash, accounts receivable and inventory). Also known as "net working
capital", or the "working capital ratio".
Year 2016-17 2017-18 2018-19 2019-20 2020-21

Current assets 18553090 34363187 35720981 42627703 51374802
Current liability 4750070 4633532 3692456 10262250 18391577
Working capital 13803020 29729655 32028525 32365453 32983225
35000000 32028525 32365453 32983225

29729655
30000000
25000000
20000000
13803020
15000000
10000000
5000000
0
working capital
2016-17 2017-18 2018-19 2019-20 2020-21
Interpretation: It is very clear from the above calculations that the working capital of the
company is gradually increasing over the years, which shows good short term liquidity
efficiency.
5.1.2 profitability ratio

Profitability is the net result of a number of policies and decisions. This section of the
discusses the different measures of corporate profitability and financial performance. These
ratios, much like the operational performance ratios, give users a good understanding of how
well the company utilized its resources in generating profit and. shareholder value. The long-
term profitability of a company is vital for both the survivability of the company as well as
the benefit received by shareholders. It is these ratios that can give insight into the all-
important "profit". Profitability ratios show the combined effects of liquidity, asset
management and debt on operating results. These ratios examine the profit made by the firm
and compare these figures with the size of the firm, the assets employed by the firm or its
level of sales. There are four important profitability ratios that I am going to analyse:
34
Net Profit Margin:
Net Profit margin = Net Profit/ Sales x 100
Net Profit Margin gives us the net profit that the business is earning per dollar of sales.
This margin indicates the profit after all the costs have been incurred it shows that what % of
turnover is represented by the net profit. An increase in the ratios indicates that a firm is
producing higher net profit of sales than before.
.
Year 2016-17 2017-18 2018-19 2019-20 2020-21
Net profit 704721 1307648 876803 502569 -206,506
Sales 96907858 128913482 125311056 113544813 41573413
Net profit margin 0.73% 1.01% 0.70% 0.44% -0.50%
net profit margin
1.01%
0.73% 0.70%
0.44%
2016-17 2017-18 2018-19 2019-20 2020-21
-0.50%
Interpretation: Therefore, the net profit margin was 7.3% in 2017, increase in to 1.01% in
2018, and it will be decrease to the 0.7% in 2019, again decrease 0.44% in 2020 and then
decrease -0.50% in 2021
35
Activity Ratios
Activity ratio are sometimes are called efficiency ratios. Activity ratios are concerned
with how efficiency the assets of the firm are managed. These ratios express relationship
between level of sales and the investment in various assets inventories, receivables, fixed
assets etc.
Total Asset Turnover:
Total Asset Turnover =Total Sales/Total Assets
The number of sales generated for every dollar's worth of assets. It is calculated by
dividing sales in dollars by assets in dollars. Asset turnover measures a firm's efficiency at
using its assets in generating sales or revenue the higher the number the better. It also indicates
pricing strategy: companies with low profit margins tend to have high asset turnover, while
those with high profit margins have low asset turnover.
Year 2016-17 2017-18 2018-19 2019-20 2020-21

Total sales 96907858 128913482 125311056 113544813 41573413
Total assets 22579286 38847775 40249753 47554659 55391061
Total sales 4.29 3.32 3.11 2.39 0.75
turnover
total sales turnover
4.29
3.32
3.11
2.39
0.75
2016-17 2017-18 2018-19 2019-20 2020-21
36
Interpretation: The total sales turnover will be decrease from 2017 to 2021. in 2017
total sales turnover is 4.29, 2018 3.32, 2019 3.11, 2020 2.39 and 2021 0.75.
Market Ratios
Market Value Ratios relate an observable market value, the stock price, to book values
obtained from the firm's financial statements.
Earning Per Share-EPS:
Earning Per Share = Profit after Taxation/Number of Shares
The portion of a company's profit allocated to each outstanding share of common

stock. Earnings per share serve as an indicator of a company's profitability. Earnings per share
are generally considered to be the single most important variable in determining a share's
price. It is also a major component used to calculate the price-to-earnings valuation ratio.
SUMMERY
Financial Statement Analysis is a method used by interested parties such as investors,

creditors, and management to evaluate the past, current, and projected conditions and
performance of the firm. This report mainly deals with the insight information of Sonali Bank
Limited. In the current picture where financial volatility is endemic and financial intuition is
becoming popular, when it comes to investing, the sound analysis of financial statements is
one of the most important elements in the fundamental analysis process. At the same time, the
massive number of numbers in a company's financial statements can be bewildering and
intimidating to many investors. However, through financial ratio analysis, I tried to work with
these numbers in an organized fashion and presented them in a summarizing form easily
understandable to both the management and interested investors. It is required by law that all
private and public limited companies must prepare the financial statements like, income
statement, balance sheet and cash flow statement of the particular accounting period. The
management and financial analyst of the company. analyse the financial statements for making
any further financial and administrative. decisions for the betterment of the company.
Therefore, I select this topic, so that I have done some financial analysis that will certainly
help the management of review their performance and also assist the interested people like
investors and creditors. That as a financial analyst how can I make any important financial
decision by analysing the financial statements of the company. Because, it is the primary
37
responsibility of the financial managers or financial analyst to manage the financial matters of
the company by evaluating the financial statements. I am also providing some important
suggestions and opinions: about the financial matters of the business.
38
CHAPTER-6
Findings, suggestions and conclusion
39
6.1 Findings
I analysis the financial statements of Hegde Agrotech Pvt ltd and found some findings;
• The profit will be decrease to year by year. And the 2021 there is a loss because of
covid 19 effects.
• Liquidity position of Hegde Agrotech pvt ltd is not up to standard. Working capital of
Hegde Agrotech pvt ltd is not good.
• Profitability ratios of Hegde Agrotech pvt ltd is not up to the mark.
• Activity ratio of Hegde Agrotech pvt ltd is not up to the mark.
6.2 Suggestions
• Hegde Agrotech has poor sales and lower ability to generate sales from its assets,
therefore, excess inventory. They need to increase their sales by better advertisement
process and discount.
• Hegde Agrotech improves their profitability ratio also.
• For recover the Hegde Agrotech need more common shareholders. They can increase
their Share holder by offering huge returns. Moreover, Hegde Agrotech also needs to
raise its Total Asset by increasing their investment and Account receivable because
both items are poor in amount.
6.3 Conclusion:
The present study relates to the financial statement analysis of Hegde Agrotech Pvt.
Ltd. It is one of the manufacturing industries. The company's overall position is at a very good
position. The company achieves sufficient profit in past four years. The long-term solvency
position of the company is very good. The company maintains low liquidity to achieve the
high profitability. The company distributes dividends every year to its shareholders. The profit
of the company decreased in the last year due to maintaining the comparatively high liquidity.
The net working capital of the company is maximum in the last year shows the maximum
liquidity.
40
Bibliography:
Website:
• http://hegdeagrotech.com
• Annual Reports
• Internet sources
• https://www.investopedia.com
• http://www.canadaone.com/tools/ratios/debt equity.html
• Financial Statement Analysis: A Practitioner's Guide, 3rd Edition.
• A Ross, S.A., R.W. Westerfield and B.D. Jordan. Essentials of Corporate Finance
(1999), 2nd Edition, Irwin/McGraw-Hill.
• Ross, S.A., R.W. Westerfield and J. Jaffe. Corporate Finance (1999), 5m Edition,
Irwin/McGraw-Hill.
• Scott, D.F., J.D. Martin, J.W. Petty and A. Keown. Basic Financial Management
(1999), 8 Edition, Prentice-Hall, Inc.
• https://www.google.com
• https://www.tradeindia.com
• https://m.indiamart.com
41
ANNEXURES
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Government of Karnataka

VIDYALAXMI GROUP OF INSTITUTIONS

VINAYAK NAGAPPA SHETTY

Under the guidance of: -

DEPARTMENT OF COMMERECE AND MANAGEMENT

I am Vinayak Nagappa Shetty student of Vidyalaxmi Group of Institution Brahmavar,

Place: Brahmavar Signature of the student

Executive summary ……………………………………...…….………………………… iv

1.1 introduction to the topic……………….…………………………………………… 2

1.2 Research questions …………………………………………………………………2

1.3 Objective of the study ………………………………………………………………2

1.4 Scope of the study ………………………….……………………………………..…3

1.5 Limitation of the study……………………….…………………………………..…..3

1.6 Research methodology …………………...…….…………………………………....3

3. INDUSTRY AND COMPANY PROFILE………...………………………………..8

3.1. Historical background …………………………….…………………………………9

3.2.Company profile ……………………………………………...……………………..10

3.3.Organisational structure ………………………………………………...………..….11

3.7.Management function …………...………………………………………………….12

3. 9.SWOT analysis ……………………………………………………………………18

4. THEORITICAL BACKGROUND ……………………………………………….20

6. FINDINGS SUGGESTION AND CONCLUSION ….…………………………….39

6.1. Findings ……………………………………..…………………………………………

1.2 RESEARCH QUESTIONS

• To improve the skill

1.3 OBJECTIVE OF THE STUDY

• To know the financial position of the company.

• To suggest the appropriate measure to improve the company.

1.4 SCOPE OF THE STUDY

1.5 LIMITATION OF THE STUDY

1.6 RESEARCH METHODOLOGY

Researchers examine agribusiness management strategies with various methodologies.

Overall, these performance indicators provide a basic foundational framework to

Name of the company : Hegde Agrotech Pvt Ltd.

Nature of concern : Manufacture of agricultural machines,

Aluminium ladder, Wheel borrow etc.

Constitution : Private company

Registered office : Jalisatgi compound, Honavar (U.K.) 581334

Date of establishment : 15/07/2009

Company category : Company limited shares.

Authorised capital : ₹10000000

Paid up capital :₹10000000

Company CEO : Mr. Ganesh M Hegde

Directors : Ganesh Manjunath Hegde

Hareesh Manjunath Hegde

Managing Director : Manjunath G Hegde

Compotators information : Shri Chamunda mechanical works

Prakash mechanic works

Accounts maintained : computerised cash book, ledger, journal,

Purchase and sale register, etc

1. To promote manufacturing agriculture machines and delivering them in time

2. Honesty and hard work are the mission of the company.

3.7 Management functioning in Hegde Agrotech Pvt. Ltd:

Products manufactured in Hegde Agrotech Pvt Ltd

1. Aluminium tree climbers:

10. Tiller trolley

11. Motorized wheel barrow

14. Coconut tree climber

SWOT Analysis is a structured planning method used to evaluate the strengths,

 The products have good demand throughout the year.

 Limited area of operation.

 There is chance of dispute because it is private limited company.