2022-23

Project Report on
“A COMPARATIVE FINANCIAL PERFORMANCE ANALYSIS
OF ESCORTS POWERTRAC AND POWER BY MEANS OF
RATIOS”

SUBMITTED BY:
NAME : NEHA PRAJAPATI
ROLL NO: 2314110010062
COURSE : BBA 3rd Year
(Finance)

1
 CERTIFICATE

This is to certify that project report entitled " A COMPARATIVE

FINANCIAL PERFORMANCE ANALYSIS OF ESCORTS POWERTRAC, NARAIN
TRACTORS " has been written by Neha Prajapati student of BBA,
6th Semester Deen Dayal Upadhyaya Gorakhpur University,
Gorakhpur affiliated under my guidance and supervision. This is
his own work and the project is fit for submission in partial
fulfillment of degree of BBA. (Academic year-2022-2023)

(Project Guide) (Internal Examiner) (External Examiner)

2
 DECLARATION

I hereby declare that the Project Report entitled “A COMPARATIVE

FINANCIAL PERFORMANCE ANALYSIS OF ESCORTS POWERTRAC,
NARAIN TRACTORS” submitted by me for the partial fulfillment of the
degree of BBA under the Deen Dayal Upadhyaya Gorakhpur
University,Gorakhpur, is my original work and has not been submitted
earlier to any other university for the fulfillment of the requirement for
any course of study.
I also declare that no chapter of this manuscript in whole or in part has
been incorporated in this report from any earlier work done by others
or by me. However, extracts of any literature which has been used for
this report has been duly acknowledged providing details of such
literature in this references.

NAME – NEHA PRAJAPATI

ROLL NO.-

3
 ACKNOWLEDGEMENT

“Acknowledging the debt is not easy for us we are indebted to so

many people”.
I take this opportunity in expressing the fact that this project report is
the result of incredible amount of encouragement, co-operation and
moral support that I have received from others.
Words alone cannot express my deep sense of gratitude to “MR.
SACHCHIDANAND PANDEY”, who provided me an opportunity to do a
project on “A COMPARATIVE FINANCIAL PERFORMANCE ANALYSIS OF
ESCORTS POWERTRAC, NARAIN TRACTORS”. His valuable guidance &
support made this project work an enlightening educational
experience. His consistent support and co-operation showed the way
towards the successful completion of project.
I would like to express my deep sense of gratitude to all the member,
who directly or indirectly helped me during my project work.

4
 PREFACE

In any organization, the two important financial statements are the Balance
Sheet and Profit &Loss Account of the business. Balance Sheet is a statement of
financial position of an enterprise at a particular point of time. Profit & Loss
account shows the net profit or net loss of a company for a specified period of
time. When these statements of the last few year of any organization are
studied and analysed, significant conclusions may be arrived regarding the
changes in the financial position, the important policies followed and trends in
profit and loss etc. Analysis and interpretation of financial statement has now
become an important technique of credit appraisal. The investors, financial
experts, management executives and the bankers all analyse these statements.
Though the basic technique of appraisal remains the same in all the cases but
the approach and the emphasis in the analysis vary. A banker interprets the
financial statement so as to evaluate the financial soundness and stability, the
liquidity position and the profitability or the earning capacity of borrowing
concern. Analysis of financial statements is necessary because it helps in
depicting the financial position on the basis of past and current records. Analysis
of financial statements helps in making the future decisions and strategies.
Therefore it is very necessary for every organization whether it is a financial or
manufacturing, to make financial statement and to analyse it.

5
 INDEX

Chapter No. PARTICULAR PAGE NO.

Certificate 2

Declaration 3

Acknowledgement 4

Preface 5

1 Introduction of Escorts Industry in India 7-22

• Objective
• Company Profile
• Escort Powertrac
4 Theoretical Framework 23-32

5 Data Analysis 33-36

6 Group Finance 37-41

7 Recent Key Inititative 42

8 Conclusion 43

9 Suggestion 44

10 Limitation 45

11 Bibliography 46

6
 INTRODUCTION OF ESCORTS INDUSTRY IN INDIA

INTRODUCTION

Escorts Limited, commonly known as Escorts, is a renowned engineering

conglomerate based in India. The company was established in 1944 by
two brothers, Har Prasad Nanda and Yudi Nanda, with a primary focus on
manufacturing agricultural machinery. Over the years, Escorts has grown
into a diversified business group, operating in multiple sectors and
serving customers across the globe.
Escorts has become a prominent player in the fields of agri-machinery,
construction equipment, material handling, and railway equipment. The
company has a strong presence in the Indian market and has also
expanded its operations internationally, exporting its products to various
countries.

MARKET SIZE

Escorts is India’s fourth largest tractor maker (11.3% FY21 market share)
and also serves the domestic construction equipment, railways space.
• FY21 sales mix – tractors 82%, construction equipment 11%,
railways 7%
• Past five year CAGR: 44.9%, 59.8% in EBITDA, PAT; cash positive b/s
• The company posted a stable Q3FY22 performance.
Total operating income at ₹ 1,957.5 crores down 3% YoY
EBITDA margins for the quarter came in at 13.5%, up 88 bps QoQ
PAT declined 32.2% YoY to ₹ 194.9 crore (includes loss from
associates)

7
INVESTMENTS

In September 2021, Escorts Limited, an Indian engineering conglomerate,

was involved in various investment activities.

• Escorts Agri Machinery Investment: Escorts Limited has made

significant investments in its agri-machinery division, which
manufactures tractors, farm equipment, and related products. They
have focused on expanding their product portfolio, enhancing
manufacturing capabilities, and strengthening their distribution
network.
• Joint Ventures and Partnerships: Escorts Limited has formed joint
ventures and strategic partnerships with international companies to
enhance their technological capabilities and expand their global reach.
For example, they have collaborated with companies like Kubota
Corporation (Japan) and Tadano Limited (Japan) to develop and
manufacture construction and material handling equipment.
• Railway Equipment: Escorts Limited has invested in the development
and production of railway equipment such as brakes, couplers, and
bogies. They have focused on catering to the evolving needs of the
railway industry in India and exploring export opportunities.

GOVERNMENT INITIATIVES

• Subsidies and Financial Assistance: Governments often provide

subsidies or financial assistance programs to promote the tractor
industry.
• Research and Development (R&D) Support: This support aims to
encourage innovation, improve tractor technology, and enhance
productivity and efficiency in the agricultural sector.
• Tax Incentives: Governments may offer tax incentives to both tractor
manufacturers and buyers. Infrastructure Development: This includes
improving rural roads, constructing or upgrading farm-to-market
transportation networks, and creating storage and distribution

8
 facilities to enhance the movement of tractors and agricultural
equipment.
• Skill Development and Training Programs: Governments may initiate
skill development and training programs to enhance the capabilities of
farmers and tractor operators.
• Regulatory Reforms: This can include simplifying licensing procedures,
easing import/export restrictions, and implementing industry-specific
regulations.
• Promotion of Mechanized Farming: This involves awareness
campaigns, educational programs, and demonstrations highlighting
the benefits of tractors in improving agricultural productivity and
reducing manual labor.

ROAD AHEAD

Escorts has been a leading player in the Indian agricultural machinery

industry. Escorts' brand Farmtrac has gained recognition for its tractors and
agricultural equipment. The company has received awards and accolades
for its innovative products and technology, such as the Farmtrac 60
Powermaxx tractor winning the "Best Tractor in India" award.

Escorts has collaborated with international partners to bring advanced

technology and products to the Indian market. For instance, Escorts
partnered with Japan's Kubota Corporation to manufacture tractors in India,
leveraging Kubota's expertise and technology.

Escorts manufactures a range of construction equipment, including cranes,

loaders, and compactors. The company's products have been used in
various infrastructure projects across India, contributing to the
development of the nation's infrastructure. Escorts has developed a diverse
customer base in the construction and infrastructure sector, including
government organizations, private contractors, and industrial enterprises.

9
 OBJECTIVES OF STUDY

The present study “A COMPARATIVE FINANCIAL PERFORMANCE ANALYSIS

OF ESCORTS POWERTRAC, NARAIN TRACTORS.”

Has been designed to achieve the following objectives:-

1. To study the financial position of Escorts Products.

2. in respect of above objective we are trying to judge the financial

performance of Escorts Powertrac , Narain Tractors.

SCOPE OF THE STUDY

The present study is confined to the Escorts Group, Escorts Agri Business,
Escorts Construction Equipment, Railway Equipment Division, Group
Financials

This Study is enough to cover both the short and medium terms fluctuations
and to set reliability.

10
COMPANY PROFILE

11
 INTRODUCTION

Escorts Limited, commonly known as Escorts, is an Indian engineering

company that operates in various sectors, including agri-machinery,
construction equipment, and railway equipment. The company was
established in 1944 by Mr. Yudi Nanda and Mr. H.P. Nanda in Faridabad,
Haryana, India.

Escorts started its journey as a manufacturer of agricultural machinery

and equipment, specializing in tractors and related products. Over the
years, the company expanded its product portfolio and diversified into
multiple sectors. Today, Escorts is recognized as a leading player in the
Indian engineering industry.

In the agricultural sector, Escorts manufactures a wide range of tractors,

harvesters, and implements that cater to the diverse needs of farmers.
The company has earned a strong reputation for its innovative
technologies, high-quality products, and customer-centric approach.
Escorts' tractors are known for their reliability, durability, and
performance, and they have a significant market presence in India.

In the construction equipment segment, Escorts offers a comprehensive

range of products such as cranes, compactors, loaders, and backhoe
loaders. These machines are designed to meet the demands of the
construction industry and are known for their robustness, efficiency, and
productivity.

Escorts also has a presence in the railway equipment industry, where it

manufactures brake systems, coupling devices, and other safety-related
components for trains and locomotives. The company's railway division
supplies its products to both Indian Railways and international markets.

Apart from manufacturing, Escorts has a strong distribution network and

provides after-sales support services to its customers. The company has a
12
wide network of dealerships, service centers, and spare parts outlets
across India, ensuring prompt assistance and maintenance for its
products.

Escorts has consistently focused on research and development to

introduce new technologies and improve its product offerings. The
company emphasizes sustainability and environmental consciousness in
its operations, aiming to develop energy-efficient and eco-friendly
solutions.

With a rich history, diverse product portfolio, and commitment to

customer satisfaction, Escorts has established itself as a trusted brand in
the engineering industry in India and beyond.

In the construction equipment segment, Escorts offers a comprehensive

portfolio of machines for the construction industry. Their range includes
cranes, such as mobile cranes, tower cranes, and pick-n-carry cranes,
which are widely used for lifting and material handling tasks on
construction sites

Additionally, Escorts' railway equipment division plays a vital role in the

transportation sector. The company manufactures a range of safety-
related components for trains and locomotives, including braking
systems, draft gears, and couplers.

Overall, Escorts has established a strong presence in the agricultural

machinery, construction equipment, and railway equipment sectors
through its commitment to innovation, quality, and customer satisfaction.
The company continues to develop advanced solutions and expand its
product offerings to meet the evolving needs of its customers in India and
across the globe.

13
 HERITAGE

Har Prasad Nanda (1917-1999)

Escorts started as a modest trading company in Lahore, which is now part

of present-day Pakistan. However, with the partition of India in 1947, the
company had to relocate and rebuild itself in Faridabad, Haryana.
Under the leadership of Mr. H.P. Nanda, Escorts transitioned from a
trading firm to a manufacturing company. The company initially focused
on the manufacturing of electric motors and fans. However, in the early
1960s, Escorts identified the potential in the agricultural machinery
sector and ventured into the manufacturing of tractors.

Rajan Nanda (1942-2018)

Rajan Nanda, who belonged to Fazilka town of Punjab, joined Escorts in

1965 at the age of 23, and took over as the Chairman of Escorts Group in
the year 1994.
A Visionary leader, who has played a pivotal role in promoting the cause
of Indian Agriculture
Active member of several apex trade and industry bodies and member of
CII National Council

14
Nikhil Nanda (1974)

Nikhil Nanda is an Indian businessman and the managing director of

Escorts Limited, a leading engineering company in India. Nkhil Nanda
joined Escorts Limited, an Indian engineering company, in 1995. Since
then, he has made several notable achievements during his tenure as the
managing director of the company. Some of his accomplishments include:
• Business Expansion
• Market Presence
• Technological Advancements
• Financial Growth
• Corporate Social Responsibility
These achievements demonstrate Nikhil Nanda's contributions to the
growth and success of Escorts Limited.

Mission Statement :
Escorts’ vision is to be among the top engineering companies in India.
We shall achieve this goal by being the preferred solution provider to
the needs of our customers; by practicing respectful and ethical
business practices; by being the employer of choice within the
engineering industry, and by providing superior returns to our
investors.

15
Management Teams

16
Management

17
Board of Directors

18
 Products and Brands

Escorts Limited is an Indian engineering company that operates in the sectors of

agri-machinery, construction equipment, and railway equipment. They are known
for manufacturing and marketing a wide range of products under various brands.
Here are some notable products and brands associated with Escorts Limited:
1. Agriculture Machinery:
• Powertrac: Escorts' Powertrac brand offers a range of tractors designed for
small and medium-sized farms, featuring compact size and versatility.
• Digitrac: Escorts introduced Digitrac, a range of smart tractors equipped
with advanced technology features such as GPS navigation, remote
diagnostics, and precision farming capabilities.
2. Construction Machinery:
• Hydra Series: Escorts manufactures Hydra cranes that are widely used in
construction and infrastructure projects for lifting and material handling
purposes.
• Compactor Series: Escorts produces compactors used for soil compaction
and road construction.
3. Earthmoving Equipment:
• Escorts Digmax: The Digmax series includes hydraulic excavators designed
for digging, trenching, and earthmoving applications.
• Escorts JCB: Escorts has partnered with JCB, a renowned construction
equipment manufacturer, to distribute and support JCB machines in
specific regions.
4. Railway Rolling Stock:
• Diesel-electric locomotives: Escorts manufactures diesel-electric
locomotives used for hauling freight and passenger trains.
• Railbus: Escorts produces railbuses, which are self-propelled vehicles used
for passenger transport on railways.
5. Engines:
• Escorts Gensets: Escorts manufactures power generation sets, commonly
known as gensets, which are used as backup power sources in various
applications.

19
BUSINESSES

20
Manufacturing Facilities

21
JOURNEY SO FAR…

22
 THEORITICAL FRAMEWORK

INTRODUCTION

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.

Definition:

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”

23
RATIO

A ratio is a number expressed in terms of another. It is a fraction

whose numerator is the antecedent and denominator is the
consequent. A ratio indicates the quantitative relationship between
two figures. It may be expressed in different forms like –

1. Pure Ratio
2. Rates
3. Percentage
FINANCIAL RATIO

It is a ratio between two accounting figures or data expressing the

relationship between the two. It is an expression of the relation
between different relevant accounting variables.

The Financial statements of a business comprise of (1) the Revenue

Statement or the Profit & Loss Account and (2) The Balance Sheet.
These include a mass of figures which make it difficult to deduce any
inference or decision. An accounting ratio is used to gauge the
financial solvency and profitability of the business. It is computed from
the basic financial statements periodically published by the business
and it highlights in arithmetical terms, the relationships that exist
between various items from the financial statements.

FINANCIAL RATIO ANALYSIS

It is an analytical tool used for financial analysis. It is a process of

determination and interpretation of the numerical relationships
between the financial data published by business in periodical
statement. It aims at facilitating comparisons with the positions of
other business firms as well as of the same business firm over a
number of financial periods. It is done mainly for the following groups:

24
1. The Management – which, for internal use, wants to ascertain the
profitability and solvency of the business. The extended areas over
which the Management becomes interested are over or under-
trading, over or under-investments, over or under-capitalisation and
useful credit policy.

2. The outsiders who are interested in the solvency, liquidity and

profitability of a business. Outsiders include creditors, debenture
holders, employees, Government and useful credit policy.

3. Others like Distress Analysts, Credit Rating Agencies and Auditors

also used as financial ratios.

IMPORTANCE OF FINANCIAL RATIO ANALYSIS

1. It helps the management to gauge the efficiency of performance

and assess the financial health of the business.
2. It is an essential tool for checking the efficiency with which the
working capital is being used and managed.
3. Comparative ratio analysis injects trend analysis. The improvement
or deterioration of a business is clearly disclosed by ratio analysis.
4. It helps to make financial forecasts.
5. It is an integral part of introduction of standard costing and
budgetary control.
6. Its inherent feature ‘easiness’ is its greatest advantage. Ratio
analysis can be easily made and easily understood.
7. It helps to make inter-firm comparisons, that is, to know the relative
position of a firm vis-à-vis its competitors.
8. The ability of a firm to pay its short debts denotes its liquidity
positions.

25
LIMITATIONS OF RATIO/RATIO ANALYSIS
1. The result expressed by the application of a ratio may be
misleading. Accounting data may remain over or understated in
financial statements.
2. The ratio becomes misleading where inconsistent methods are
applied for valuations of stock, etc.
3. It is difficult to set up any standard or Ideal Ratio as the basis of
comparison.
4. The same ratio may bear different interpretations for two separate
business or even, for the same business, in separate years.
5. Ratio analysis is mainly based on past performances. So, its
application for the future may lead to erroneous decisions.

CLASSIFICATION OF ACCOUNTING RATIOS

Accounting Ratios may be classified or grouped in different ways
depending on the results or information expected. But the widely used
classifications are made as –

1. Classification on the basis of source; and

2. Classification on the basis of purposes or economic aspects or

operations of the firm.

Source wise classification refers to the sources from which the

accounting figures used in the ratio have been derived. Such
classification may be made as –

A. Balance Sheet Ratios [between accounting figures taken from the

Balance sheet]

B. Revenue Statement (Profit & Loss Account) Ratios [between

accounting figures taken from the Profit & Loss Account]

26
C. Mixed Ratios [between accounting figures taken both Profit & Loss
Account and Balance Sheet]

Purpose or aspect wise classification refers to the purpose of

computing a ratio. It generally involves information about particular
economic aspects of the operations of a firm. Such classification may
be made to know –

1. Short-term solvency.
2. Long-run solvency.
3. Efficiency / turnovers.
4. Profitability.
This classification may also be called as – ‘on the basis of uses.’

27
BALANCE SHEET RATIOS

𝑪𝒖𝒓𝒓𝒆𝒏𝒕 𝑨𝒔𝒔𝒆𝒕
1. Current ratio =
𝑪𝒖𝒓𝒓𝒆𝒏𝒕 𝑳𝒊𝒂𝒃𝒊𝒍𝒊𝒕𝒊𝒆𝒔

To be noted that:
(a) This ratio measures the ability of an enterprise to meet its short-
term liabilities.
(b) The Standard Ratio is considered as 2:1. It means perfect ability of
the business is existing after keeping funds to meet day to day
expenses.

2. Quick ratio or Liquid Ratio or Acid Ratio

𝑸𝒖𝒊𝒄𝒌 𝒐𝒓 𝑳𝒊𝒒𝒖𝒊𝒅 𝑨𝒔𝒔𝒆𝒕𝒔

Quick Ratio =
𝑸𝒖𝒊𝒄𝒌 𝑳𝒊𝒂𝒃𝒊𝒍𝒊𝒕𝒊𝒆𝒔

𝑪𝒖𝒓𝒓𝒆𝒏𝒕 𝑨𝒔𝒔𝒆𝒕𝒔−𝑰𝒏𝒗𝒆𝒏𝒕𝒐𝒓𝒚−𝑷𝒓𝒆𝒑𝒂𝒊𝒅 𝑬𝒙𝒑𝒆𝒏𝒔𝒆𝒔

or
𝑪𝒖𝒓𝒓𝒆𝒏𝒕 𝑳𝒊𝒂𝒃𝒊𝒍𝒊𝒕𝒊𝒆𝒔−𝑩𝒂𝒏𝒌 𝑶𝒗𝒆𝒓𝒅𝒓𝒂𝒇𝒕

To be noted that:
(a) Quick Ratio is used to ascertain the immediate solving of a firm.
(b) The minimum desired ratio is 1:1. A firm must have at least one
rupee to pay one rupee of its quick liabilities.

𝑪𝒂𝒔𝒉+𝑩𝒂𝒏𝒌+𝑴𝒂𝒓𝒌𝒆𝒕𝒂𝒃𝒍𝒆 𝑺𝒆𝒄𝒖𝒓𝒊𝒕𝒊𝒆𝒔
3. Super Quick Ratio =
𝑪𝒖𝒓𝒓𝒆𝒏𝒕 𝑳𝒊𝒂𝒃𝒊𝒍𝒊𝒕𝒊𝒆𝒔−𝑩𝒂𝒏𝒌 𝑶𝒗𝒆𝒓𝒅𝒓𝒂𝒇𝒕

To be noted that:
(a) It measures the very immediate ability of a firm to meet its quick
liabilities.
(b) It comes to use in banks and other financial institutions.

28
 𝑳𝒐𝒏𝒈 𝒕𝒆𝒓𝒎 𝑫𝒆𝒃𝒕 [𝑬𝒙𝒕𝒆𝒓𝒏𝒂𝒍 𝑬𝒒𝒖𝒊𝒕𝒊𝒆𝒔]
4. Debt Equity Ratio =
𝑺𝒉𝒂𝒓𝒆𝒉𝒐𝒍𝒅𝒆𝒓′ 𝒔 𝑭𝒖𝒏𝒅𝒔 [𝑬𝒒𝒖𝒊𝒕𝒚]

To be noted that:
(a) This ratio is used to ascertain the respective claims of the outsiders
and the owners like Equity Shareholders within the assets of a firm.
(b) If this ratio is high that may indicate – (i) Too much dependence on
outside funds; (ii) Greater financial risks in payment of interests and
repayment of the loans taken in due time; (iii) Reduced margin of safety
of creditors.

5. Fixed Asset-proprietorship Ratio

𝑭𝒊𝒙𝒆𝒅 𝑨𝒔𝒔𝒆𝒕𝒔
Or =
𝑷𝒓𝒐𝒑𝒓𝒊𝒆𝒕𝒐𝒓′ 𝒔 𝑭𝒖𝒏𝒅𝒔
Net Block to Proprietorship Ratio

To be noted that:
(a) This ratio indicates how much of the proprietor’s funds has been
blocked by fixed assets.
(b) The result should be less than 1.

𝑪𝒖𝒓𝒓𝒆𝒏𝒕𝑨𝒔𝒔𝒆𝒕𝒔
6. Current Assets Proprietorship Ratio =
𝑷𝒓𝒐𝒑𝒓𝒊𝒕𝒐𝒓′ 𝒔 𝑭𝒖𝒏𝒅𝒔

To be noted that:
(a) This ratio indicates how much of the proprietor’s funds have been
used for current-trading of the concern.

𝑺𝒆𝒄𝒖𝒓𝒊𝒕𝒊𝒆𝒔 𝑩𝒆𝒂𝒓𝒊𝒏𝒈 𝑭𝒊𝒙𝒆𝒅 𝑪𝒉𝒂𝒓𝒈𝒆𝒔

7. Capital Gearing Ratio =
𝑬𝒒𝒖𝒊𝒕𝒚 𝑺𝒉𝒂𝒓𝒆𝒉𝒍𝒅𝒆𝒓 𝑭𝒖𝒏𝒅𝒔

29
To be noted that:
(a) Securities bearing fixed charges = Preference Share Capital +
Debenture + Long-term Debts; AND
(b) Equity Shareholder’s Funds = Equity Share Capital + Reserves &
Surplus – Fictitious assets.

𝑻𝒐𝒕𝒂𝒍 𝑨𝒔𝒔𝒆𝒕𝒔
8. Total Assets to Debt Ratio =
𝑳𝒐𝒏𝒈−𝑻𝒆𝒓𝒎 𝑫𝒆𝒃𝒕𝒔

To be noted that:
(a) Total Assets means Non-Current Assets + Current Assets. But fictitious
assets and Deferred Tax Assets (Advance Payment of Tax) should not be
included within total Assets.
(b) Long-term Debts should be including – (i) Long-term borrowings (like
Debenture and Bank Loan); (ii) Other Non-Current Liabilities; and (iii)
Long-term Provisions.

𝑪𝒂𝒔𝒉+𝑪𝒂𝒔𝒉 𝑬𝒒𝒖𝒊𝒗𝒂𝒍𝒆𝒏𝒕
9. Cash Position Ratio =
𝑻𝒐𝒕𝒂𝒍 𝑨𝒔𝒔𝒆𝒕𝒔

Where cash equivalent = Bank Balance + Marketable Securities readily

convertible into known amount of cash.

To be noted that:
(a) It indicates how much (portion) of the total assets is represented by
cash and cash equivalent.
(b) If the ratio is high, that indicates availability of sufficient cash to meet
the dues in time.

30
10. Cash to Current Liabilities Ratio
𝑪𝒂𝒔𝒉+𝑪𝒂𝒔𝒉 𝑬𝒒𝒖𝒊𝒗𝒂𝒍𝒆𝒏𝒕
Or =
𝑪𝒖𝒓𝒓𝒆𝒏𝒕 𝑳𝒊𝒂𝒃𝒊𝒍𝒊𝒕𝒊𝒆𝒔
Absolute Cash Ratio

To be noted that:
(a) This ratio shows how much liquid funds are available for paying each
rupee of current liabilities. So, it is a measure of available cash to
discharge current liabilities.

𝑸𝒖𝒊𝒄𝒌 𝑨𝒔𝒔𝒆𝒕𝒔
11. Cash Interval /Cash Defensive Interval=
𝑨𝒗𝒆𝒓𝒂𝒈𝒆 𝑷𝒓𝒐𝒋𝒆𝒄𝒕𝒆𝒅 𝑫𝒂𝒊𝒍𝒚 𝒄𝒂𝒔𝒉 𝑬𝒙𝒑𝒆𝒏𝒔𝒆𝒔

Where

(a) Quick Assets = Cash + Bank + Marketable Securities + Receivables; AND

𝑨𝒏𝒏𝒖𝒂𝒍 𝑪𝒂𝒔𝒉 𝑶𝒑𝒆𝒓𝒂𝒕𝒊𝒏𝒈 𝒆𝒙𝒑𝒆𝒏𝒔𝒆𝒔
(b) Projected Daily Cash Expense =
𝟑𝟔𝟓

To be noted:
(a) Here ‘Interval’ denotes the time gap during which further cash may
not be generated.
(b) The ratio shows how long the normal activities of a concern can be
carried on with the available quick assets, even if cash is not generated.

𝑷𝒓𝒐𝒋𝒆𝒄𝒕𝒆𝒅 𝑪𝒂𝒑𝒊𝒕𝒂𝒍 𝑬𝒙𝒑𝒆𝒏𝒅𝒊𝒕𝒖𝒓𝒆 𝑭𝒐𝒓 𝒔𝒕𝒂𝒓𝒕𝒖𝒑

12. Cash Burn Ratio = 365 𝑑𝑎𝑦𝑠 𝑥
𝑪𝒂𝒔𝒉 𝑹𝒂𝒊𝒔𝒆𝒅 𝒇𝒓𝒐𝒎 𝑰𝒏𝒊𝒕𝒊𝒂𝒍 𝑰𝒏𝒗𝒆𝒔𝒕𝒐𝒓
Or
𝑪𝒂𝒔𝒉 𝑹𝒂𝒊𝒔𝒆𝒅 𝒇𝒓𝒐𝒎 𝑰𝒏𝒊𝒕𝒊𝒂𝒍 𝑰𝒏𝒗𝒆𝒔𝒕𝒐𝒓
365 𝑑𝑎𝑦𝑠 𝑥
𝑷𝒓𝒐𝒋𝒆𝒄𝒕𝒆𝒅 𝑺𝒕𝒂𝒓𝒕𝒖𝒑 𝑪𝒂𝒑𝒊𝒕𝒂𝒍 𝑬𝒙𝒑𝒆𝒏𝒅𝒊𝒕𝒖𝒓𝒆

31
To be noted that:
(a) At the initial or formative stage of a company, its management should
know how long the business can run with the limited amount of money it
has been able to raise from the initial public offer. In other words, they
must know the length of the period till which the company resumes
normal earning. This ratio confirms such period of waiting.
(b) Its correct calculation can help to avoid disturbances in normal
function or shutdown of the business due to dearth of funds.

13. Other Ratios

𝑻𝒐𝒕𝒂𝒍 𝑫𝒆𝒃𝒕𝒔
(a) Debts to Capital Employed =
𝑻𝒐𝒕𝒂𝒍 𝑪𝒂𝒑𝒊𝒕𝒂𝒍 𝑬𝒎𝒑𝒍𝒐𝒚𝒆𝒅

➢ Owners prefer high debts ratio, but creditors like low debt ratio.

𝑪𝒖𝒓𝒓𝒆𝒏𝒕 𝑨𝒔𝒔𝒆𝒕𝒔
(b) Current Assets to Fixed Assets =
𝑭𝒊𝒙𝒆𝒅 𝑨𝒔𝒔𝒆𝒕𝒔
➢ Helps to locate position of storage of stock, trend of collection from
debtors, etc.

𝑰𝒏𝒗𝒆𝒏𝒕𝒐𝒓𝒚
(c) Inventory to Working Capital =
𝑾𝒐𝒓𝒌𝒊𝒏𝒈 𝑪𝒂𝒑𝒊𝒕𝒂𝒍

➢ It shows the portion of working blocked within working capital and

the nature of movement of stock.

32
 DATA ANALYSIS

KEY FINANCIAL MAR MAR MAR MAR MAR

RATIOS OF ESCORTS 23 22 21 20 19
(in Rs. Cr.)
PER SHARE RATIOS

Basis EPS (Rs.) 46.74 58.91 68.14 40.63 40.48

Diluted EPS (Rs.) 46.68 58.71 68.14 40.63 40.48
Cash EPS (Rs.) 57.25 67.86 73.41 48.14 46.52
Book Value 639.29 597.10 399.88 283.90 246.60
[ExclRevalReserve]/Share
(Rs.)
Book Value 639.29 597.10 399.88 283.90 246.60
[InclRevalReserve]/Share
(Rs.)
Dividend / Share(Rs.) 7.00 7.00 7.50 2.50 2.50
Revenue from 632.48 542.12 513.93 469.97 505.50
Operation/Share Rs.)
PBDIT/Share (Rs.) 80.41 88.25 95.22 62.66 66.42
PBIT/Share (Rs.) 69.16 78.41 86.63 54.13 59.45
PBT/Share (Rs.) 61.02 77.45 85.82 52.12 58.84

Net Profit/Share (Rs.) 46.00 58.03 64.83 39.56 39.56

33
PROFITABILITY MAR MAR MAR MAR MAR
RATIOS 23 22 21 20 19

PBDIT 12.71 16.27 18.52 13.33 13.13

Margin (%)
PBIT Margin (%) 10.93 14.46 16.85 11.51 11.76
PBT Margin (%) 9.64 14.28 16.69 11.08 11.63
Net Profit Margin 7.27 10.70 12.61 8.42 7.82
(%)
Return on 7.19 9.71 16.21 13.95 16.04
Networth/Equity
Return on Capital 10.58 12.87 21.05 18.46 23.29
Employed (%)
Return on Asset 5.88 8.16 12.13 9.14 9.70
(%)

Total Debt/Equity 0.00 0.00 0.00 0.00 0.09

(X)
Asset Turnover 0.85 0.86 1.11 108.44 124.00
Ratio (%)

34
LIQUIDITY MAR MAR MAR MAR MAR
RATIO 23 22 21 20 19

Current 2.89 5.08 2.77 1.66 1.45

Ratio(X)
Quick 2.20 4.48 2.37 1.18 1.01
Ratio(X)
Inventory 5.83 6.08 5.38 7.01 7.54
Turnover
Ratio(X)
Dividend 0.00 9.63 2.80 4.41 4.92
Payout
Ratio(NP)(%)
Dividend 0.00 8.23 2.47 3.63 4.19
Payout
Ratio(CP)(%)
Earning 0.00 90.37 97.20 95.59 95.08
Retention
Ratio(%)
Cash 0.00 91.77 97.53 96.37 95.81
Earning
Retention
Ratio (%)

35
VALUATION MAR MAR MAR MAR MAR
RATIO 23 22 21 20 19

Enterprise Value 24,493 22,057 16,061 7,814 9,807

(Cr.) .27 .87 .04 .56 .10
EV/Net Operating 2.94 3.08 1.36 1.36 1.58
Revenue(X)
EV/EBITDA(X) 23.09 18.94 12.51 10.17 12.05

MarketCap/NetOp 2.99 3.12 2.51 1.41 1.58

erating
Revenue(X)
Retention 0.00 90.36 97.19 95.58 95.07
Ratios(%)
Price/BC(X) 2.96 2.86 3.22 2.34 3.23

Price/Net 2.99 3.12 2.51 1.41 1.58

Operating
Revenue
Earning Yield 0.02 0.03 0.05 0.06 0.05

36
Group Financials

37
Revenue and Profit Growth

38
Financial Metrices

39
Shareholding Structure

40
Corporate Governance

41
 Recent Key Initiatives

1. EY appointed as Internal Auditors.

2. Backward Integration of EAM & ECE Operations and R&D
function to leverage synergies.
3.International Business: With our ‘Global Transformation Vision
2020’ we launching 12 new tractors in 12 HP to 110 HP range
under flagship brands.
4. Divested Auto part business As a part of strategic orientation
divested OEM & Export business of Auto Product division to
Badve Engineering Ltd.
5. Corporate Governance: New directors introduced in order to
create a more vibrant board.
6. New Partnerships: enhancing partnership with DLL for tractor
financing.
7. Culture Change: Young leaders leading new projects, with
support of senior leaders.
8. Strategic outsourcing: Non core activities are outsourced to
strategic partners.
9. New Products: Extended Powertrac Euro series to 41-50 HP,
new backhoe loader 4X4 with brute power.
10. Manpower Cost rationalization: White collar by role clubbing
and blue collar VRS.

42
 CONCLUSION

The overall disbursement registered a growth of 35.3 per

cent at Rs.19,504.3 Crores as compared to Rs. 14,419.9
Crores in the previous year. Your Company during the year
under review, continued to provide a wide range of
financial products and services to its customers through
diversification of its product portfolio within its vehicle
financing business as well as through the introduction and
growth of other financial products and maintained its
market leadership position in rural and semi-urban
markets. Your Company has increased its presence in
financing of commercial vehicle, railway equipment, as
well as, pre-owned vehicle while maintaining aggressive
growth in tractor financing, retaining its leadership
position in financing Escorts range of vehicles and tractors
in addition to extending its lending to vehicles of other
Original Equipment Manufacturers (OEMs).

43
 SUGGESTION

1. Should give their product at affordable interest rates.

2. More and more promotion techniques should be there
to promote it
3. Make more offices in every place.
4. Should be available in every place. In small town there is
a problem of office or franchise.
5. Generally people are not aware, make them aware

44
 LIMITATIONS

• Non Cooperation’s of Respondents :-

The respondent was not cooperative at the time of
survey.
They were hesitating to talk with the strangers.
• Language Problem:-
The problem of English was occurring.
Shortage of time
The time period was not fulfilled.
The requirement of more time was there.

45
 BIBLIOGRAPHY

Following books are referred for carrying out the project:-

1. Amitabha Basu, Financial Accounts, Volume – 3, Edition -

August- 2017, accounting ratios for financial statement
analysis, page – 829 – 835.

2. Annual reports of Escorts Agri Machinery, Escorts

Construction Equipment, Railway Equipment Division

Following website are referred:-

• www.facebook.com/ESCORTSGROUP
• www.linkedin.com/company/escorts-limited
• www.twitter.com/escortsgroup
• www.youtube.com/escortslimited
• www.escortsgroup.com

46