Anda di halaman 1dari 57

FINANCIAL ANALYSIS

INTRODUCTION

Finance is one of the foundations of all kinds of economic activities. It is the master
key, which provides access to all the sources for being employed in manufacturing and
merchandising,. Hence it is rightly said that finance is the lifeblood of any enterprise, besides
being the scarcest elements, it is also the most indispensable requirement. Without finance
neither any business can be started nor successfully run. Provision of a sufficient fund at the
required time is the key to success of concern. As matter of fact finance may be said to be the
circulatory system of economic body, making possible the needed co-operation among units
of the activity.

FINANCIAL MANAGEMENT:
Financial Management emerged as a distinct field of study at the turn of this century.
Many eminent persons defined it in the following ways.

DEFINITION:
According to GUT HMANN AND DOUGHAL:” Business finance can broadly be
defined as the activity concerned with planning, rising, controlling and administering of used
in the business”.

According to BONNEVILE AND DEWEY: “Financing consists is the rising,


providing and managing of all the money, capital or funds of any kind to be used in
connection with business.”

According to Prof. EZAR SOLOMAN: “Financial Management is concerned with the


efficient use of any important economic resource, namely capital funds”.

FINANCIAL FUNCTION:
The finance functions of rising funds, investing them in assets and distributing returns
earned from assets to shareholders are respectively known as financing, investment and
dividend decision. While performing these functions, a firm attempts to balance cash inflows
and outflows.

V.C.R INSTITUTE OF COMPUTER SCIENCES 1


FINANCIAL ANALYSIS

The finance function can be divided into three broad categories.


1. Investment or long-term asset mix decision
2. Financing or capital mix decision
3. Dividend or profit allocation decision-
4. Liquidity or short-term asset mix decision

Investment Decision:
Investment or capital budgeting involves the decision of allocation of cash or
commitment of funds to long-term assets, which would yield benefits in future. It involves
measurement of future profitability, which involves risk, because of uncertain future-
Investment proposal should therefore be evaluated in terms of both expected return and risk.
Other major aspect of investment decision is the measurement of standard of hurdle rate
against which the expected return of new investment can be compared.

Financing Decisions:
Financing decision is the important function to be performed by the fir. Broadly, he
must decide when, where, and how to acquire funds to meet the firm investment needs. He
has to determine the proportion of debt and equity. This mix of debt and equity is known as
the firm ‘capital structure.’ The financial manager must strive to obtain the lest financing mix
or the ‘optimum capital structure’ where the market value of share is maximized.

Dividend Decision:
It is the third major financial decision. The financial manager decides whether the firm
should distribute all profits, or return them or distribute a portion and return the balance. The
optimum dividend policy should be determined where is maximize the market value of the
share.

Liquidity Decision:
Current assets management, which affects firm’s liquidity, is yet another finance
function in addition to the management of long-term assets. Current assets should be
managed effectively safeguarding the firm against the dangers of liquidity and insolvency.
Investment in current assets affects the profitability, liquidity, and risk. A conflict exists

V.C.R INSTITUTE OF COMPUTER SCIENCES 2


FINANCIAL ANALYSIS

between profitability and liquidity while managing current assets. If the firm doesn’t vest
sufficient funds in current assets it may. Become illiquid. But it could loose profitability, as
idle CA would not earn anything. Thus a proper takeoff must be achieved between
profitability and liquidity, In order to ensure that neither insufficient nor unnecessary funds
are invested in current assets.

GOALS OF FINANCIAL MANAGEMENT:

Maximize the value of the firm to its equity shareholders. This means that the goal of
the firm should be to maximize the market value of its equity shares
(Which represent the value of the firm to its equity shareholders)
 Maximization of profit.
 Maximization of earning per share.
 Maximization of return on equity (defined as equity earning/net worth).
 Maintenance of liquid assets in the firm.
 Ensuring maximum operation efficiency through planning, directing and
controlling of the utilization of the funds i.e., through the effective employment of
funds.
 Enforcing financial discipline in the use financial resources through the
coordination of the operation of the various divisions in the organization.
 Building up of adequate reserves for financing growth and expansion.
 Ensuring a fair to the shareholders on the investment.
The key challenges for the finance manager in India appear to be in the following
areas:
Investment planning
 Financial structure
 Treasure operations
 Foreign Exchange
 Investor Communication
 Management control

V.C.R INSTITUTE OF COMPUTER SCIENCES 3


FINANCIAL ANALYSIS

INDUSTRIAL PROFILE

BACKGROUND OF MANGO INDUSTRY

The lack of mango market development globally opens a large untapped


opportunity for India to make an organized entry in the fresh mango and mango pulp
market. India is well positioned to capitalize on this opportunity with a very large national
production of mangos, including leading varieties like Alphonso. India has the potential to
create a long–term global market position and to capitalize on the fast growth of mango as
a preferred ingredient for the natural package food industry.

Additionally, mango is a preferred fresh fruit within the Indian domestic market, as
well as globally. Mango is in strong demand within the worldwide retail sector. The total
market value of Indian mango and mango pulp represents 25% of the value of agricultural
and processed food products exported by India. Moreover, the consumption growth for
mangos in the United States and Europe has average 10–15% per year during the last 5
years. Collectively, these factors indicate a strong opportunity to position Indian mango
and mango products to meet a growing international demand. India is the world’s largest
supplier of mangos, having an annual production of 10.5 million metric tons in 2003.

This accounts for 41% of the estimated worldwide mango production of 25.56
million metric tons in 2003. Despite this large mango production, India is a minor exporter
of mango and mango products at this time. During the five–year period from 1998–2002,
exports of fresh mangos from India averaged approximately 42.4 thousand metric tons, or
only about 0.4% of mango production during this time frame. Data on exports of Indian
mango pulp and juice products are more limited. Data from 1995 indicated that India
exported 37.7 thousand metric tons of mango pulp.

Data from 2001 indicated that India exported 3.2 thousand metric tons of mango
juice, but also imported 2.2 thousand metric tons of mango juice. Collectively, these
observations indicate that, despite being by far the world’s largest mango producer, India
exports less than 1% of its mango crop as fresh mangos or processed mango products.
These observations with mango are consistent with aggregate data available on Indian fruit
and vegetable exports.

V.C.R INSTITUTE OF COMPUTER SCIENCES 4


FINANCIAL ANALYSIS

One barrier to efficient development of the Indian mango industry is an


exceedingly complex supply chain. Within the value chain, a number of buyers and other
aggregators operate at local Minds and APMC to assemble larger lots from the many small
producers in any given region. Associated with this inefficient aggregation process is the
application of numerous commissions as fresh agricultural products trade hands.
Numerous stakeholders in India have expressed concern that this overly complex value
chain is a hindrance to effective marketing of Indian mangos and mango products.

A recent report from the Indian Ministry of Food Processing Industries further
details the overly complex supply chain and its contribution to costs and post–harvest
losses. This report concludes that it is imperative to streamline the mango supply chain in
order to reduce wastage and raw material costs. (Sources: India Ministry of Food
Processing Industries and Rambo bank Report).

INDIA MANGO & MANGO PULP INDUSTRY DEVELOPMENT

Through partnerships with mango growers, processors, export organizations, and


Indian government organizations, among others, PFID—F&V is working to strengthen the
small and medium mango grower base by providing capacity building at all levels.

Education and training in Good Agricultural Practices and other sanitary standards,
as well as employment of certification systems, will lead to better yields, pesticide use in
accordance with regulations, and a more efficient supply chain. PFID—F&V partnerships
will also help identify and facilitate resources necessary for enhancing the mango supply
chain such as cold storage facilities, improved packing and grading facilities, testing
facilities, and logistics management. Furthermore,

A further approach will target reduction of waste in the fresh mango chain by
developing high–value mango products and enhancing processing capacity for the
domestic market. Ultimately, these steps will help stabilize prices, increase farmer
incomes, and development the farmer base at commercial and social levels.

V.C.R INSTITUTE OF COMPUTER SCIENCES 5


FINANCIAL ANALYSIS

MANGO PULP INDUSTRY HOPES

 Mango pulp production to reach 75,000 tones by 2010


 Mango is raised in 36,000 hectares in Krishna Giri district

 Mango pulp processed annually is 50,000 tones

 Farmers have to go to Bangalore, as there is no testing facility in Krishnagiri

 Farmers are not getting fair price, even if there is a rise in prices in global market

MANGO MARKET DEVELOPMENT

PFID-F&V India has continued to forge and strengthen public and private
partnerships to the point that, now, just over one year from project start-up, notable results
are beginning to show in the form on increasing contributions from partnership members.

Dr. Thiagarajan, MSU/PFID-F&V, together with our two India-based coordinators,


recently met with the Agricultural Product Export Development Authority (APEDA) as
well as the Federation of Indian Chambers of Commerce (FICCI) and the National
Institute of Marketing Boards (NIAM) to follow up on each of their commitments to
promote the Indian Mango Industry.

During this visit, both the Maharashtra State Horticulture Mission and the National
Horticulture Missions’ approvals were secured to begin the critical selection of 100 GAP
demonstration farms, identification of trainers to participate in train-the-trainer courses
and program implementation, as well as the initial survey and audits of the nucleus
demonstration farms in Maharashtra.

A PROPOSAL IS BEING PREPARED & SUBMITTED TO APEDA


 Support employment of agric-officers to supervise, inspect and monitor the 100
demonstration farms

V.C.R INSTITUTE OF COMPUTER SCIENCES 6


FINANCIAL ANALYSIS

 To support controlled atmosphere trials of mango for both domestic and export
market purposes

 To support training of extension agents from four key mango growing states in
India to replicate mango demonstration model farms in these states

 To support GAP certification costs for a sub-set of mango producers

 To support the interface of project marketing activities with companies such as


ITC, Reliance, ShopRite, and Metro to provide market access for these
demonstration farms.

The India team is also engaged in discussion with ITC to cosponsor a packaging
conference on innovations for both fresh and processed mango industries. The goals of
this packaging conference are to expose domestic producers, processors and retailers to
modern food packaging solutions, and to strength market linkages among mango
producers and processors with India-based supermarkets as well as key players in the
export market.

Other opportunities to explore with groups like ITC, ShopRite and similar partners
are establishment of a direct contract program which would include promotion, direct
shipment from packing houses to stores, proper packaging, and early contracting.

GOALS OF INDIA MANGO MARKET DEVELOPMENT

Currently, only 1% of the total mango production in India is exported. One reason
contributing to this poor export performance is that overseas buyers have stricter standards
than are currently accepted within the Indian domestic market. PFID—F&V will facilitate
the development and implementation of quality and safety standards which will meet the
demands of the export market.

 PFID—F&V will partner with relevant Indian organizations in establishing a


global image for the Indian mango starting with the establishment of quality
standards and Good Agricultural Practices (GAPs) standards for India.

V.C.R INSTITUTE OF COMPUTER SCIENCES 7


FINANCIAL ANALYSIS

 PFID partnerships in India can facilitate the development of a distribution


network in European and other countries where the value realizations for mango
and mango pulp are the highest.
 PFID partnerships can assist mango growers and processors in developing an
"India" brand image for fresh mango and processed mango products that meet
consumer preferences. The predominant mango varieties grown in India make
this product unique in country and abroad.
 After demonstrated success in developing a strengthening the market
development of mangoes, PFID India liaisons can easily adapt this approach to
the further development of other fruit and vegetable products in India.

FOOD PROCESSING

Food processing involves any type of value addition to agricultural or horticultural


produce and also includes processes such as grading, sorting, and packaging which
enhance shelf life of food products. The food processing industry provides vital linkages
and synergies between industry and agriculture. The Food Processing Industry sector in
India is one of the largest in terms of production, consumption, export and growth
prospects. The government has accorded it a high priority, with a number of fiscal relief’s
and incentives, to encourage commercialization and value addition to agricultural produce,
for minimizing pre/post harvest wastage, generating employment and export growth.
India's food processing sector covers a wide range of products fruit and vegetables; meat
and poultry; milk and milk products, alcoholic beverages, fisheries, plantation, grain
processing and other consumer product groups like confectionery, chocolates and cocoa
products, Soya-based products, mineral water, high protein foods etc.

The following policy initiatives are taken to boost the


Food industry:
 Government declared the new policy on August 20, 1998 with regards to licenses for new
factories, which shows that there will be no food factory in a radius of 15 km.

 Setting up of Indian Institute of food Technology at Kanpur is meant for

 improving efficiency in the industry.

V.C.R INSTITUTE OF COMPUTER SCIENCES 8


FINANCIAL ANALYSIS

 In the year 1982, the food development fund was set up with a view to avail loans for
modernization of the industry.

Food Production in States


The following table shows level of food production (In Lakh Tonnes) in Indian States:
State 2006-07 2007-08 2008-09
Uttar Pradesh 56.74 40.08 60.32
Maharashtra 60.64 31.99 42.29
Karnataka 13.68 10.57 15
Tamil Nadu 19.04 11.9 9.84
Andhra Pradesh 11.88 8.81 9.75
Gujarat 10.28 10.77 8.32
Haryana 5.99 5.86 4.03
Uttaranchal 4.59 3.93 3.82
Punjab 5.11 3.88 3.37
Bihar 4.21 2.77 2.77
Madhya Pradesh 0.85 0.94 1.85
Other 0.91 1.09 6.58

The food production in the states largely depends upon monsoon. From 1998-03 good
monsoon resulted a larger production of food in the country.

Problems
Food is the second largest agro-based industry in India. The industry provides
employment to about two million skilled and semi-skilled workers besides those who are
employed in ancillary activities, mostly from rural areas. Though the industry contributes a
lot to the socioeconomic development of the nation, it is plagued with a number of problems
such as cyclical fluctuations, high support prices payable to farmers, lack of adequate
working capital, partial decontrol and the uncertain export outlook. Despite the problems, the
industry has good growth potential due to steady increase in food consumption, retail boom
and diversification into areas such as power generation and production of ethanol. In addition

V.C.R INSTITUTE OF COMPUTER SCIENCES 9


FINANCIAL ANALYSIS

twthis, strong possibilities exist for counter trade, if the Government designs and develops
food industry-oriented policies.

Steps Need to be Taken


India is one of the largest producer of food in the world and so also the consumer. It
can manage its inventory to its advantage by rotating the same through imports and exports.
The following steps should be taken for the the improvement in food industry and are:

Importance of Indian food Industry


Food Industry occupies an important place among organised industries in India. Its
main raw-material is food. The special thing for all kinds of the raw material is that it should
contain the highest percentage of the content for which it is used as raw 16 materials. But the
quality of food of our country is not so good and researchers are trying to update it but due to
lack of interest and proper attention from the government side, they are not succeeded yet
today. Per hectare production of the food is also not improving which is a matter of great
concern. It is probably due to lack of land fertility and lack of irrigation facilities. Other
countries of the world such as Cuba, Fizzy & Caribbean's, which are very small in
comparison to India, are producing much more food per hectare than India.
The share of India in the total production of food in the world is 37%. But the
production of food is only 15 tones per acre whereas in Java it is 56 tones and in Hawaii it is
52 tones i.e. almost four times than India. The production cost of food is also high due to
inferior quality of Indian food. Since food mills are running to loss so they are unable to pay
the cane grower growers timely. So the quality improvement in cane grower is the need of the
time
The food policy of the Government has been seriously lacking a long-term
perspective. Controls, decontrols, partial controls, etc. have been used in past in an ahoy
manner. It is necessary to assure supply of food to poorer sections at reasonable rate. But
government policy on cane prices,control of price of food, dual pricing etc. Have been
designed and implemented for the benefit of food mill owners and distributors and rarely for
benefits of cane growers or for benefit of consumers of food. Much of the illness and problems
of food industry are the result of the government's policy. In the food industry.

V.C.R INSTITUTE OF COMPUTER SCIENCES 10


FINANCIAL ANALYSIS

Growth in food Industry Report

Executive Summary In an era where there is a need for inclusive growth, the
food industry is amongst the few industries that have successfully contributed to the rural
economy. It has done so by commercially utilizing the rural resources to meet the large
domestic demand for food and by generating surplus energy to meet the increasing energy
needs of India. In addition to this, the industry has become the mainstay of the alcohol
industry. The sector supports over 50 million farmers and their families, and delivers value
addition at the farm side1 . In general, food price accounts for approximately 70 percent of
the ex-mill food price2. The sector also has a significant standing in the global food space.
The Indian domestic food market is one of the largest markets in the world, in volume terms.
India is also the second largest food producing geography.

India remains a key growth driver for world food, growing above the Asian
and world consumption growth average. Globally, in most of the key geographies like Brazil
and Thailand, regulations have a significant influence on the food sector. Perishable nature of
cane, small farm landholdings and the need to influence domestic prices; all have been the
drivers for regulations. In India, too, food is highly regulated. Since 1993, the regulatory
environment has considerably eased, but food still continues to be an essential commodity
under the Essential Commodity Act.
There are regulations across the entire value chain land demarcation, food
price, food procurement, food production and sale of food by mills in domestic and
international markets. However, fundamental changes in the consumer profile and the
demonstrated ability of the sector to continuously ensure availability of food for domestic
consumption has diluted the need for food to be considered as an essential commodity.
According to a recently conducted nation wide survey, nearly 75 percent of the total non-levy
food is...

V.C.R INSTITUTE OF COMPUTER SCIENCES 11


FINANCIAL ANALYSIS

Food
Food has long been an essential crop of the Caribbean countries and the news
of reform has left the islands scrambling to maintain a viable economy. In order to understand
how the islands economies became so dependent on food, it must be made clear how food
became so important, the extent of the Caribbean's dependency on preferential pricing and
how the preferences have been reformed. The food industry has been a part of the Caribbean
since shortly after being discovered and colonized by people of the western world. Its
importance can be seen through significant historical changes such as slavery, indentured
servitude and finally through independence. The food industry creates a significant amount of
jobs for the uneducated residents of the Caribbean. According to McDonald (2003) it was
estimated in two thousand and three that the industry employed approximately one hundred
and twenty-five thousand workers in both direct and indirect employment that otherwise may
be unemployed.
Most importantly, food exported to the member countries of the European Union
generated significant revenues. The European Union (EU) food program as it was original
implemented in nineteen sixty-eight, served to facilitate competitiveness by compensating
intuitional price cuts for food with direct income payments. The program consisted of a
mixture of price arrangements along with production quotas made possible by the
implementation of the following management tools, fixed pricing, tariffs and quotas. The
Caribbean Community's (CARICOM's) dependency on the preferential pricing of food stems
from the declining price of food on the world market. Since the enactment of the food
Protocol in nineteen seventy-five, the world price of food has fallen steadily, causing an
increasing dependency on the preferences.

V.C.R INSTITUTE OF COMPUTER SCIENCES 12


FINANCIAL ANALYSIS

COMPANY PROFILE

HISTORY OF FOOD AND INNS Ltd.

The division combines people with vast experience in agric-trading with the
FOODS AND INNS Ltd Group’s credibility to justify its premier standing in the trading
arena. The division was set up in 1967 and since then has handled a wide range of
products - such as Sesame Seeds, Processed Fruits, Food grains, Aqua etc.

FOODS AND INNS Ltd began its fruit processing operations in early 70s.However
fruit processing operations have been given a special thrust since the last season with an
emphasis on developing strategic partnerships across the value chain especially fruit
procurement and processing. FOODS AND INNS (P) Ltd has established it's presence as
a reliable and competitive exporter to Coca Cola, USA, Western Europe, Far East, Middle
East etc.

BACKGROUND OF FOOD AND INNS (P) Ltd

Situated at Chittoor in Andhra Pradesh, the mango belt in India, FOOD AND
INNS Ltd (FIL) is a 100% Export Oriented Unit (EOU) processing Tropical Fruit Purees,
Concentrates and Fresh Fruits FOOD AND INNS Ltd was started keeping in mind the
local farming community wealth. The farming community is an integral part and forms the
backbone of the organization. In its effort to be a forerunner in the chosen areas of
business in terms of best practices in quality and technology, FIL plans to benefit armors,
the industry and the nation in a phased manner.

FOODS AND INNS Ltd believes in empowering farmers by providing technical


assistance from research institutes in the food industry to support the farmers in achieving
better quality and higher yields by developing the gardening and harvesting techniques.
Further to educating farmers with latest horticultural techniques, FOODS AND INNS
LTD is encouraging farmers to mobilize the fruits directly to the factory, thereby
minimizing the fruit handling damages and high value realizations. The first phase has
been completed, by setting up of state-of-the-art fruit processing plant to produce natural
tropical fruit puree and concentrates.

V.C.R INSTITUTE OF COMPUTER SCIENCES 13


FINANCIAL ANALYSIS

BORD OF DIRECTORS

S.No Name of the Director

1 Mr.Utsav Dhupelia Director

2 Mr. D.B. Engineer Solicitor

3 Mr.Raymond Simkins Foreign Director

4 Mr.C.M.Maniar Solicitor

5 Mr. D.D. Trivedi Ex. IIM Professor

6 Mr. M. B. Dalal Director

Mr. Utsav Dhupelia , a Chartered Accountant from U.K., looking after the routine
affairs of the company, is the brain and brawl for taking the company’s turnover from Rs.5
crores (USD1.1 MIO) to Rs.70 Crores (USD 16 MIO) giving the status of government
recognized EXPORT HOUSE.

With the back up of technical and managerial support staff, the state of art
technology implementation, innovative R & D and Lab facilities, the doyen guidance of
Mr.Utsav coupled with the contribution of other directors, the company is poised for a
steady and continuous growth graph moving upwards in all Para meters.

V.C.R INSTITUTE OF COMPUTER SCIENCES 14


FINANCIAL ANALYSIS

PRODUCTS

1) PRODUCTS OF FRUITS

ALPHONSO TOTAPURI GUAVA PAPAYA

2) PRODUCTS OF VEGETABLES

FRUIT SEASONS

Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec

Mango

Papaya

Guava

Market Presence
V.C.R INSTITUTE OF COMPUTER SCIENCES 15
FINANCIAL ANALYSIS

 European Union
 United States of America
 Canada
 Australia
 Middle East including Iran & North Africa
 Japan & South Korea

SAHER OF COUNTRIES MARKET

FACILITY

V.C.R INSTITUTE OF COMPUTER SCIENCES 16


FINANCIAL ANALYSIS

FOODS AND INNS Ltd processing facility is located in Chittoor, spread over an
area of 15 acres. This place has been earmarked to host Integrated Food Complex of
International standards. The facility currently has a tropical fruit Puree / Concentrate
processing plant and the pack house for preparing the Fresh Fruits & Vegetables.

CUTTING EDGE TECHNOLOGY

FOODS AND INNS (P) Ltd plant is equipped with state-of-the-art fruit puree
processing aseptic filling line of SIG- Mizzen, Italy to produce natural fruit pulps &
concentrates. The plant has one of the India's single largest fruit processing lines -10 TPH
ripen fruit processing with Aseptic Packaging.

INITIATIVES SPAN THE FOLLOWING DISCIPLINES

 PLC operated equipments for better control over monitoring and operations with
supervisory units.
 Two stage washing of fruits to ensure HACCP quality requirement.
 Two-stage sterilization to retain the natural flavor and aroma.
 High speed advanced Mono block aseptic filling machine supplied by SIG
Mizzen. Integrated Enterprise Resources Planning system is in place to automate
business processes and provide data for analysis and reporting, allowing a closer
control on quality and operations.

V.C.R INSTITUTE OF COMPUTER SCIENCES 17


FINANCIAL ANALYSIS

EFFICIENT PLANT LAYOUT

 Minimal drop in power and steam transfer.


 Straight-line process flow design to maintain the hygiene• and control in
respective areas.
 Special food grade self-leveling epoxy flooring to maintain optimum hygienic
conditions.
 Curved corners and food grade epoxy painted walls to avoid dust accumulation
and to facilitate easy washing.
 Advanced high raise insulated roofing with double layer GI Sheeting with air
extractors to maintain temperature inside the plant.
 Utility lines are routed outside the plant to keep the interiors free from dust
accumulation.

VALUABLE INDUSTRIAL EXPERTISE

V.C.R INSTITUTE OF COMPUTER SCIENCES 18


FINANCIAL ANALYSIS

FOOD AND INNS (P) Ltd is backed with strong support and service from its
team of highly qualified technical personnel and domain experts with perceptive
knowledge and skill. Powered by priceless hands-on experience these professionals are
upgrading themselves continuously to identify and introduce improved and innovative
product offerings that would delight customers worldwide and comply with the leading
global quality standards.

PUREE & CONCENTRATE FACILITY

The fruit processing aseptic line is from SIG-Mazzini of Italy. The line has a
capacity to process 10 metric tones per hour ripened fruits. The processing line is fully
integrated and controlled by PLC.

PACK HOUSE

FOODS AND INNS (P) Ltd has a set up a Fresh fruit and Vegetable processing
facility from Grief, Spain. Fresh fruits including mangoes, bananas are processed along
with tropical vegetables like Okra, Egg plant, Lemon, Bitter gourd etc. The facility also
holds ripening chambers, pre cooling chambers and cold storage to handle fresh fruits and
vegetables.

VAPOUR HEAT TREATMENT

To enable Fresh Mango exports to countries like Japan and Korea, FOOD AND
INNS (P) Ltd has commissioned the VHT facility. This ensures irradiation of the fruit
flies in the fresh fruit. FOOD AND INNS (P) Ltd is the first private organization to set up
this facility in the country.

WATER MANAGEMENT

V.C.R INSTITUTE OF COMPUTER SCIENCES 19


FINANCIAL ANALYSIS

Water is an essential & precious natural resource. It is a nature’s gift. Without water
there is no life on the earth. It is as important to the fruit processing industry as to the living
being. But, water is becoming scarce year by year due to increase n its consumption in
industries & agriculture sectors & indiscriminate use /wastage by human beings, therefore, it
needs a integrated& scientific approach for its management to use it so that undesirable
wastage is avoided which helps us to save water for right utilization .

STAGE OF USE OF WATER TO THE BEST EFFECT IN OUR FACTORY

Our main source of water is bore wells. The water is potable. Water from all bore
wells is collected in a sump. From there it is pumped to over head tank to supply to various
locations of use. To manage appropriately & conserve the water, we are taking following
steps at various locations of its use:

 FRUIT WASHING

The water is re-circulated after filtration up to it becomes dirty. This water is


chl0rinated to control the contamination by continuous dosing of chlorine in the
washing tub.

 STEAM GENERATION

Water for boiler feeding is treated in water softener to reduce the hardness. The
steam condensate of evaporator is recycled to boiler to save water & energy as
condensate will have high temperature.

THE BEST EFFECT IN OUR FACTORY

 Steam condensate from other heating equipments & Vapour condensate from pulp
concentration is collected in a tank to use in crate & floor cleaning.
 Floor & equipments are cleaned by compressed water jet to conserve the water.
 Treated effluent is used for civil construction & gardening.
 Flow meters are installed at location of major use to have control over water
utilization.

V.C.R INSTITUTE OF COMPUTER SCIENCES 20


FINANCIAL ANALYSIS

 UV sterilizer is installed on main line of water, which feed to processing to sanitize


the water.
 The water to be used for blending in product is treated in r o plant.
 Drinking water is passed through zero-b filter.

WASTE MANAGEMENT

Our factory is equipped with aerobic effluent treatment plant of 250 kl capacity.
Effluent from all locations of water use is collected through inter connected drains in ET
plant. It is aerated here & transferred to settlement tank for sedimentation of solid particles.
The treated effluent is sent to oxidation pond. From pond, water is used for gardening & civil
construction. The sludge is transferred to drying bed. The dried sludge is used as manure in
our garden. The main feature of our company is that no effluent treated or untreated is
released in public drains & therefore, does not pose any danger to surrounding environment
& public.

SOLID WASTE MANAGEMENT

 Seeds of fruits
 Stem ends & skin/peel of fruits & vegetables
 Pumice-consists of fibbers & embedded pulp.
 Spoiled fruits & vegetables

The seeds & peels of good fruits are passed second time through a pulped to remove
the remaining pulpy portion. The pulp extracted so & pumice are mixed & given an
enzymatic treatment & centrifuge to remove the extraneous materials so that pulp can be used
for making concentrate. This helps in improving the recovery out of fruits.

OBJECTS OF THE COMPANY:

V.C.R INSTITUTE OF COMPUTER SCIENCES 21


FINANCIAL ANALYSIS

 To carry in the business as manufacturers, produces, processors, sellers, distributors,


stock lists and traders of food and its derivatives, Molasses biases and all materials
and substances arising as By products and waste products out of and in the course of
manufacture of food.
 To carry in the business as manufacturers, producers, brewers, Blenders, dealers
distillers, stock lists and traders of rectified spirit, ethyl. Alcohol, gasohol, acetic acid,
acetone anhydride, vinyl acetate, polymers, polyvinyl chloride, liquors and all
products made there from.
 To carry on the business as manufacturers, producers, packers, dealers, stock lists and
traders of furfural, bulk drugs, pharmaceutical and medical preparations, made out of
by-products of food or their derivatives.
 To carry in the business as manufacturers, dealers, distributors, stock lists and traders
of biogases pulp, paper pulp and pulp made out agricultural Residues or other fibrous
material, paper, newsprint, paper boards, mill boards, cites paper of all kinds, paper
bags, febrile boxes, cartons, corrugate containers, wrapping and packing materials.
 To carry on the business as planters, growers, cultivators, farmers and producers of
sugarcane, food beet.
 To generate electrical power by conventional, non-conventional methods, including
coal, gas Lignite, Naphtha oil, bio-mass, biogases, waste thermal solar, hide, geo-
hydel, minor tidal waves any to promote, own acquire erect, construct, establish,
maintain, improve.
Manage, operate, and alter carry on, control. Take in hire/lease, power plants,
cogeneration plants, energy conversion projects power houses, transmissions and
distribution system for generation, transmission and supply of electrical energy to the
state electricity board, state government, appropriate authorities, agricultural, household,
industrial, commercial, and any other consumer for industrial purpose in Indian and
elsewhere specified by the state/central government, local authority in state electricity
board and any other competent authorities by entering into necessary agreements.

Introduction to Financial Management

V.C.R INSTITUTE OF COMPUTER SCIENCES 22


FINANCIAL ANALYSIS

Financial management is that managerial activity which is concerned with the planning
and controlling of the firms financial resources. The three most important activities of any
business firm are production, marketing and finance.
A firm secures what ever capital it needs and employees it finance activity in activities
which generates returns on invested capital production and marketing activities.
The vital importance of the financial decision to a firm makes it imperative to set up a
sound and efficient organization fro the finance functions for this purpose the financial
statements are analyzed.
A firm communicates financial information to the users through financial statements and
reports financial statements contain summarized information of the firms financial affairs,
organized systematically.
Two basic financial statements prepared for the purpose of external reporting to owners,
investors and creditors are
Balance sheet (or) Statement of financial position
Profit and Loss account (or) Income statement.

FINANCIAL STATEMENT ANALYSIS

V.C.R INSTITUTE OF COMPUTER SCIENCES 23


FINANCIAL ANALYSIS

Financial statements comprising the balance sheet and the profit and loss account is
that they do not give all the information related to the financial operations of a firm.
Nevertheless, they provide some extremely useful information to the extent that the balance
sheet mirrors the financial position on a particular date in terms of the structure of assets,
liabilities and owners’ equity, and so on and the profit and loss account shows the results of
operations during a certain period of time in terms of the revenues obtained and the cost
incurred during the year.

Thus, the financial statements provide summarized view of the financial position and
operations of a firm. Therefore, much can be learnt about a firm from a careful examination
of its financial statements as invaluable documents/performance reports. The analysis of
financial statements is, thus, an important aid to financial analysis.

The focus of financial analysis is on key figures in the financial statements and the
significant relationship that exists between them. The analysis of financial statements is a
process of evaluating the relationship between component parts of financial statements to
obtain a better understanding of the firm’s position and operations of a firm.

The first task of the financial analyst is to select the information relevant to the
decision under consideration from the total information contained in the financial statements.
The second step is interpretation and drawing of inferences and conclusions. In brief,
financial analysis is the process of selection, relation and evaluation.

OBJECTIVES OF THE STUDY

V.C.R INSTITUTE OF COMPUTER SCIENCES 24


FINANCIAL ANALYSIS

To make inter and intra firm comparison of the firm and to highlight the trends in
performance efficiency of firm for a period of six years from 1-4-2006 to
31-3-2010.
To measure the profitability, turnover and solvency position of firm (or) debt
equity position of a firm.
To forecast factors like sales, net profit, earnings per share, current assets, current
liabilities, fixed assets and net worth.
To make decisions and to suggest improvements in the existing systems to
improve the overall efficiency of the company.

NEED FOR THE STUDY

V.C.R INSTITUTE OF COMPUTER SCIENCES 25


FINANCIAL ANALYSIS

 In India of plenty human and nature resources are available but the capital
resources are highly restricted. A understanding of financial management
practices. Is necessary to utilize limited capital resources efficiently and
effectively in order to norms, for sound financial management in various
organization it is necessary to study the financial management practices in auto
parts industry particular reference to FOODS AND INNS Ltd. CHITTOOR.
 It is useful for the owners who are interested in the Return on investment earnings
per share by comparing the details for different periods to assess the period of the
firm.
 It is useful for the employees and consumers in their own field of interest.
 It is useful for the students like me, to make an analysis for enhancing our
knowledge and skills in the filed of financial management.

SCOPE OF THE STUDY

V.C.R INSTITUTE OF COMPUTER SCIENCES 26


FINANCIAL ANALYSIS

This study is carried in the months of may-June. The data for the study are
collected from the balance sheet, profit and loss account and various schedules relating to it
for six years from
This study covers analysis like ratio analysis; funds flow statement, comparative financial
statements, common size financial statements and Trend analysis and also include SWOT
analysis.
It covers the various activities in the organization and measures the profitability, solvency
and efficiency for six successive years of he firm. Based on the analysis a trend is to be drawn
for a further period of three years.

LIMITATIONS OF THE STUDY

V.C.R INSTITUTE OF COMPUTER SCIENCES 27


FINANCIAL ANALYSIS

It is based on past data, which may not be appropriate due to the continuous
changes undergone in the business environment.
Financial statement analysis cannot be substitute for judgment or conclusion.

TECHNIQUES/ TOOLS OF FINANCIAL STATEMENT ANALYSIS

Ratio analysis
Common size income statement
Common size balance sheet
Comparative income statement
Comparative balance sheet
Funds flow statement
Regression analysis

V.C.R INSTITUTE OF COMPUTER SCIENCES 28


FINANCIAL ANALYSIS

REVIEW OF LITERATURE

Financial Statements of Analysis


Financial statement provides the rich information about the operational results
of the business unit and much can be learnt from a careful examination of these statements. A
forecast of future earnings of a business can also be prepared on the basis of analysis and
interpretation of financial statements.

Definition:-
“Financial statement is largely a study of relationship among the various financial
factors in a business as disclosed by a single set of statements.”
-Myers
Preparation of the financial statements is the responsibility of management. As
investors and financial analysts examine the firms performance in order to make investment
decisions use these statements, they should be prepared very carefully and contain as much
information as possible.
Two basic financial statements prepared for the purpose of external reporting
to owners, investors and creditors are

 Balance sheet

 Profit and loss account

Nature of financial statements:-


According to A/C PA, financial statements reflect “a combination of recorded
facts. Accounting Conventions, Postulates, Personal Judgments and Conventions applied
affect them materially.

V.C.R INSTITUTE OF COMPUTER SCIENCES 29


FINANCIAL ANALYSIS

a) Recorded facts
The term recorded facts means facts which have been recorded in the
accounting books. Facts which have not been recorded in the financial books are not depicted
in the financial statements, however, material they might be.
Example: Fixed assets are shown at cost irrespective of their market or replacement price.
Since, such price is not recorded in the books.
b) Accounting Conventions:-

Accounting Conventions imply certain fundamental accounting principles, which have been
satisfied by long usage.
Example: An Account of the Convention of conservatism provision is made for expected
losses but expected profit is ignored.
This means that the real financial position of the business may be much better than
what has been shown by the financial statements.
c) Postulates:-

Business transactions are recorded as certain assumptions such as” Going concern”, “Profit
Accrual”, etc, these Postulates or assumptions are related in the financial statements.
d) Personal Judgments:-

Personal Judgments have also an important bearing on the financial statements.


Example: The choice of selecting methods of depreciation lies on the accountant. Similarly,
the made amortization of fictitious assets also depends on the personal judgments of the
accountant.

Importance of Financial Statements:


The information given in the financial statements is very useful to a number of parties
as given below.

V.C.R INSTITUTE OF COMPUTER SCIENCES 30


FINANCIAL ANALYSIS

(1) Owners:-

The Owners provide funds for the operations of business and they want to know
whether the funds are being properly utilized or not. The financial statements prepared
from time to time satisfy the curiosity.

(2) Creditors:

Creditors want to know the financial position of concern before giving loans or
granting credit. The financial statements help them in judging such position.

(3) Investors:-

Prospective investors, who want to invest money in a firm, would like to make an
analysis of the financial statements of that firm to know safe proposed investment will
be.

(4) Employees:-

Employees are interested in the financial position of a concern they serve, particularly
an payment of bonus depends upon the size of the profits earned. They correct so,
they become invested in the preparation of correct profit and loss accounts.

(5) Government:-

Central and State Governments are invested in the financial statements because they
reflect the earning for a particular periods for purpose of taxation. Moreover, these
financial statements are used for compiling statistics concerning business which
intern, helping compiling national accounts.

(6) Consumers:-

Consumers are interested in the establishment of goods accounting controls. So, that
cost of production may be reduced with the resultant reduction of the prices of goods
they buy.

V.C.R INSTITUTE OF COMPUTER SCIENCES 31


FINANCIAL ANALYSIS

(7) Managers:-

Management is the art of getting things done through others. This requires that the
subordinates are doing work properly. Financial statements are aid in this respect
because they serve the manager is apprising the performance of the subordinate.

Limitations of the Financial Statements:

 The information shown in financial statements is not accurate.

 The data and information does not disclose current values.

 Many items shown in profit and loss account are not real but estimated

figures.

Example: Reserve for bad debts, depreciation etc.

 Financial statements dumb, which require further, detailed analysis in the

interpretations.

 Financial statements of one period may not be comparable as such with

statements of other periods due to difference in conditions and changes in


economic situation.

 Financial statements are influenced by the personal opinions, judgments,


subjective views and whims of accountants of each concern.

 Statement of one concern cannot be compared with those of other concerns as


the accounting practices differ.

Meaning of Financial Statement Analysis and Interpretation:-


Kennedy and Muller said, “Analysis and interpretation of financial statements are an attempt
to determine the significance and meaning of the Financial Statement data. So, that forecast
may be made of the prospects for the future earnings, ability to pay interest and debt
maturities (both current and long term) and probability of a sound dividend policy”.

V.C.R INSTITUTE OF COMPUTER SCIENCES 32


FINANCIAL ANALYSIS

The balance sheet and profit and loss accounts are to be interpreted to convey
meaningful message to the layman who is still the typical shareholder in the company.
Interpretation is considered to be the most important functions of the management accountant
because it needs the relevant data and information to conduct its functions efficiently.
Objectives:-
 To interpret the profitability of various business activities with the help of
profit and loss account.

 To measure the managerial efficiency of the firms.

 To measure short term and long term solvency of the business.

 To ascertain the earning capacity of the firm in future period.

 To determine the future potential and concerns of the firm.

 To measure the utilization of various assets during the period.

 To compare the operational efficiency of the similar concerns engaged in the


same industry.

Procedure for Financial Analysis and Interpretation:


(1) The Techniques of the Analysis are to be selected on the basis of objectives.

(2) The assumptions, principles, practices etc followed in the preparation of


financial statements are to be ascertained.

(3) Additional data and information required has to be collected.

(4) The data collected has to be present is a logical sequence.

(5) The data is to be analyzed for making comparative statements for computation
of ratios and for ascertaining averages and for estimating trends.

(6) Facts gathered from analysis are to be interpreted by considering the general
state of the market and economy as well.

(7) The interpreted data and information has to be presented in suitable form.

V.C.R INSTITUTE OF COMPUTER SCIENCES 33


FINANCIAL ANALYSIS

Tools of financial statement analysis:-


A Financial analyst can adopt the following tools for analysis of the financial
Statements. These are also termed as “methods of financial analysis”.
I. Comparative financial statement analysis

a. Comparative Balance sheet

b. Comparative income statement

II. Common size financial statement analysis

a. Common size Balance sheet

b. Common size income statement

III Ratio analysis

This project is related to first three methods


Comparative Statements: The comparative financial statements are statements of the
financial position at different periods of time. The elements of financial at two or more
periods. Any statements prepared in a comparative form will be covered in comparative
statements.
The comparative statements may show:
 Absolute figures

 Changes in absolute figures i.e., increase or decrease in absolute figures.

 Absolute data in terms of percentages

 Increase or decrease in terms of percentages.

The financial data will be comparative only when same accounting principles are used
I preparing these statements. The tow comparative statements are

V.C.R INSTITUTE OF COMPUTER SCIENCES 34


FINANCIAL ANALYSIS

 Balance sheet

 Income statement

Comparative Balance sheet:


The comparative balance sheet analysis is the study of the trend of the same items,
groups of items and computed items in two or more balance sheet of the same business
enterprise of different dates. The changes in periodic balance sheet items reflect the conduct
of business.

Guidelines for interpretation of Comparative Balance Sheet:


While interpreting comparative balance sheet the interpreter is expected to study the
following aspects
1. Current financial position and liquidity position

2. Long term financial position

3. Profitability of the concern

Comparative income statement:


The income statement gives the results of the operations of a business. The
comparative income statement gives an idea of the progress of a business over a period of
time. The changes in absolute data in money values and percentages can be determined to
analyze the profitability of the business. Like comparative balance sheet, income statements
also have four columns. First two columns give figures of various items or two years. Third
and fourth columns are used to show increases or decreases in figures in absolute amounts
and percentages respectively.

V.C.R INSTITUTE OF COMPUTER SCIENCES 35


FINANCIAL ANALYSIS

Guide lines for interpretation of income statements:


The analysis and interpretation of income statement will involve the following
steps:
a) The increase or decrease in sales should be compared with the increase or decrease in
cost of goods sold. An increase in sales will not always sales is more than the increase
in cost of goods sold. The amount of gross profit should be studied in the first step.

b) The operating expenses such as office administrative expenses, selling and


distribution expenses should be deducted from gross profit to find our operating
profits. An increase in operating profit will result from the increase in sales position
and control of operating expenses. A decrease in operating profit may be due to an
increase in operating expenses or decrease in sales. The change in individual expenses
due to the expansion of business activities while others may go up due to managerial
inefficiency.

c) The increase or decrease in let profit will give an idea about the overall profitability of
the concern. Non operating expenses such as interest paid, loss for, sales of assets,
writing of deferred expenses, payment of tax, etc., decrease the figure of operating
profit. When all non operating expenses are deducted from the operational profit, we
get a figure of net profit. Some non operating incomes may also be there which
increase in net profit will give us an idea about the progress of concern.

d) An opinion should be formed about profitability of the concerned it should be given at


the end. It should be mentioned whether the overall profitability or good or not.

COMMON-SIZE STATEMENT:
The common-size statements, balance sheet and income statements are shown
in analytical percentages. The figures are shown as percentages of total assets, total liabilities
and total sales. The total assets are taken as 100 and different assets are expressed as
percentages of the total.
COMMON- SIZE INCOME STATEMENT:
The items in income statement can be shown as percentages of sales to how the
relation of each item of income statement and volume of sales. The increase in sake will
certainly increase selling expenses and not administrative or financial expenses.

V.C.R INSTITUTE OF COMPUTER SCIENCES 36


FINANCIAL ANALYSIS

RESEARCH METHODOLOGY

According to D.Slessinger and M.Stephenson in the Encyclopedia of social sciences


define research as “the manipulation of things, concepts or symbols for the purpose of
generalizing to extend, correct or verify knowledge, whether that knowledge aids in
construction of theory or in the practice of an art”.
RESEARCH DESIGN
 First the problem has to be defined and determined. Knowledge the need of the study
can do this.
 The information that is required for solving the problem has to be specifically
identification.
 In this sage the sources from which the information can be obtained is identified.
 The next step is to obtain information through data collection techniques.
 The obtained information is processed to get the required output
 The findings obtained from the processed information are then interpreted.
 Lastly the findings are presented.

SOURCES OF DATA
PRIMARY SOURCE
 Informal interview of the employees of the company.
SECONDARY SOURCE
 Annual report of FOODS AND INNS LTD
 Company website
 journals

V.C.R INSTITUTE OF COMPUTER SCIENCES 37


FINANCIAL ANALYSIS

DATA ANALYSIS AND INTERPRETATION

COMPARATIVE INCOME STATEMENT OF FOODS AND INNS

INCOME (OR)
INCOME Year 2006 Year 2007 %
RECOVERY

Sales 226233287 321056780 94823493 141.91

Stock 93221687 107701016 14480329 115.53

Total = 319454974 428757796 109303822 134.21

INCOME (OR)
EXPENDITURE Year 2006 Year 2007 %
RECOVERY

Consumption of raw materials 254504145 303164832 48660687 119.11

Manufacturing expenses 19303448 40364585 21061137 109.105

Salaries 22324127 23375833 1051706 104.71

Admin expenses 8218789 9936508 1717719 120.89

Operations 23697999 23805268 107269 100.45

Other expenses 5268418 48770743 43502325 825.71

Total = 333316926 449417769 116100843 134.83

Loss for the year 13861758 20659974 6798016 49.04

V.C.R INSTITUTE OF COMPUTER SCIENCES 38


FINANCIAL ANALYSIS

COMPARATIVE BALANCE SHEET OF FOODS AND INNS

Increase/
LIABILITIES Year 2006 Year 2007 %
Decrease

Share capital 274407700 274407700 - -


Reserves & Surplus 262823490 - -262823490 -
Secured lonas 177589768 253408846 75819078 42.69
-
Un Secured loans 134789487 105914487 -28875000 21.42
Current liabilities 146684904 362236043 215551139 146.1
Differed tax liability 85017925 - -85017925 -
Total = 1081313274 995967076 -85346198 92.10

Increase/
ASSETS Year 2006 Year 2007 %
Decrease

Fixed assets

Gross stock 554213081 562808479 8595398 101.5


Less: Depreciation 254978931 278784199 23805268 109.3
299234150 284024280 -15209870 94.91
Capital workings 9096115 12520913 3424798 37.65
Current Assets, Land &
Advances
Inventories 175447569 303238111 127790542 172.8
Debtors 8068939 8256619 187680 102.3
Cash & bank 2214356 2907579 693223 131.3
Loan & advances 74538394 89584621 15046227 120.1
3. Differed tax liability - -
4. Miscellaneous 489704 367278 -122426 25
5. Profit & Loss a/c 217800007 20659974 -197140033 90.5
6. Suspend a/c 294424040 274407700 -20016340 6.79
Total = 1081313274 995967076 -85346198 92.10

V.C.R INSTITUTE OF COMPUTER SCIENCES 39


FINANCIAL ANALYSIS

COMPARATIVE INCOME STATEMENT OF FOODS AND INNS

INCOME (OR)
INCOME Year 2007 Year 2008 %
RECOVERY

Sales 321056780 446392044 125335264 39.03

Income (or) because of stock 107701016 74444167 -33256849 -30.87

Other income

Total = 428757796 520836211 92078415 8.16

INCOME (OR)
EXPENDITURE Year 2007 Year 2008 %
RECOVERY

Consumption of raw materials 303164832 391436510 88271678 29.11

Manufacturing expenses 40364585 57824840 17460255 43.25

Salaries 23375833 31625273 8249440 35.29

Admin expenses 9936508 8759405 -1177103 -11.84

Operations 23805268 24457497 652229 2.73

Other expenses 48770743 85374337 36603594 75.05

Total = 449417769 599477862 150060093 33.38

Loss for the year 20659974 78641650 57981676 280.64

COMPARATIVE BALANCE SHEET OF FOODS AND INNS

V.C.R INSTITUTE OF COMPUTER SCIENCES 40


FINANCIAL ANALYSIS

Increase/
Liabilities Year 2007 Year 2008 %
Decrease
Share capital 274407700 274407700 0 0
Reserve & surplus - - - -
Secured loan 253408846 365142945 111734099 44.09
Un secured loans 105914487 68289487 -37625000 35.52
Current liabilities 362236043 467143647 104907604 28.96
Differed tax liability - -
Total = 995967076 1174983779 179016703 117.97

Increase/
Assets Year 2007 Year 2008 %
Decrease

Fixed Assets
Gross block 562808479 580496620 17688141 10.32
Less: Dpreciation 27878419 303241696 275363277 10.82
534930060 277254924 -257675136 51.83
284024280 277254924 -6769356 2.38
Capital work in progress 12520913 4309183 -8211730 65.58
Assets, Loans & Advances
Inventories 30238111 375676892 72438781 23.58
Bills 8256619 8416762 160143 1.93
Cash & Bank 2907579 5067311 2159732 74.77
Loan & advances 89584621 150964503 61379882 68.51
Tax assets - - - -
Miscellanious expenditure 367278 244852 122426 33.33
Profit & Loss A/c 20659974 78641650 57981676 280.64
Suspend A/c 274407700 274407700 - 0
Total = 995967076 1174983779 179016703 117.97

COMPARATIVE INCOME STATEMENT OF FOODS AND INNS

V.C.R INSTITUTE OF COMPUTER SCIENCES 41


FINANCIAL ANALYSIS

INCOME (OR)
INCOME Year 2008 Year 2009 %
RECOVERY

Sales 446392044 380820947 -65571097 -14.68


Income (or) because of stock 74444167 -217914213 143470046 192.72
Other income - 26118647 26118647 -
Total = 520836211 189025381 104017596 -63.707

INCOME (OR)
EXPENDITURE Year 2008 Year 2009 %
RECOVERY

Consumption of raw materials 391436510 103459245 -287977265 -73.56


Manufacturing expenses 57824840 36451713 -21373127 -36.96

Salaries 31625273 30698199 -927074 -2.93


Admin expenses 8759405 8882627 123222 1.40
Operations 24457497 25683267 1225770 5.01
Other expenses 85374337 34970673 -50403664 -59.03
Total = 599477862 240145724 -359332138 -59.94
Loss for the year 78641650 51120343 -27521307 -34.99

Inventories 375676892 156306246 -219370646 58.37


Debtors 8416762 7348982 -1067780 12.68
Cash & Bank balances 5067311 8755706 3688395 73.79
Loan & advances 150964503 145766518 -5197985 3.44
3. Differred tax liability - -
4. Miscelanious expenditure 244852 122426 -122426 50
5. Profit & Loss A/c 78641650 51120343 -27521307 34.99
6. Suspend A/c 274407700 274407700 - 0
Total = 1174983779 935461712 -239522067 79.61

V.C.R INSTITUTE OF COMPUTER SCIENCES 42


FINANCIAL ANALYSIS

COMPARATIVE BALANCE SHEET OF FOODS AND INNS

INCOME (OR)
Liabilities Year 2008 Year 2009 %
RECOVERY
Share capital 274407700 274407700 0 0
Reserve & surplus - - - -
Secured loan 365142945 292838366 72304579 19.8
Un secured loans 68289487 110248323 41958836 61.44

V.C.R INSTITUTE OF COMPUTER SCIENCES 43


FINANCIAL ANALYSIS

C
u
r
r
e
n
t

l
i
a
b
i
l
i
t
i
e
s 42-
D
i
f
f
e
r
e
d
COMPARATIVE BALANCE SHEET OF FOODS AND INNS t
a
Increase/
x
Liabilities Year 2009 Year 2010 %
Decrease
l
Share capital 274407700 274407700 0 0 i
Reserve & surplus - - - - a
b
Secured loan 292838366 299428725 6590359 02.25 i
Un secured loans 110248323 111248323 1000000 00.90 l
Current liabilities 257973323 202512606 -55460717 7.85 i
t
Differed tax liability - - y --
935467712 887597354 -47870358 94.88 T
Total =
o
t
a
INCOME (OR) l
Assets Year 2009 Year 2010 %
RECOVERY = 19-
1. Fixed Assets
A
Gross block 615531243 616421505 s
s
Less:
V.C.R Dpreciation
INSTITUTE 328924963
OF COMPUTER SCIENCES 353969816 44
944456206 262451689 -682004517 2.77
Capital work in progress 5027508 22103565 177076057 43.9
Inventories 156306246 136429420 -19876826 8.7
Debtors 7348982 8062874 713892 10.9
Cash & Bank balances 8755706 3903005 -48852701 4.45
FINANCIAL ANALYSIS 145766518 145443323
Loan & advances -323195 9.97
3. Differred tax liability - -
4. Miscelanious expenditure 122426 0 -122426 0
5. Profit & Loss A/c 51120343 34795778 -16324565 6.80
6. Suspend A/c 274407700 274407700 - 0
Total = 935461712 887597354 -47864358 94.88

INCOME Year 2006 % Year 2007 % Year 2008 %

Sales 226233287 100 321056780 100 446392044 100

Increase in stock 93221687 41.205 107701016 33.54 74444167 16.67

Total = 319454974 141.205 428757796 133.54 371947877 116.67

EXPENDITURE Year 2006


% Year 2007 % Year 2008 %

Consumption of raw
materials 254504145 112.49 3031641832 94.42 391436510 87.68
Manufacturing
expenses 19303448 8.53 40364585 12.57 57824840 12.95

Salaries 22324127 9.86 23375833 7.28 3165273 7.08

Admin expenses 8218789 3.63 9936508 3.09 8759405 1.96

V.C.R INSTITUTE OF COMPUTER SCIENCES 45


FINANCIAL ANALYSIS

Operations 23697999 10.47 23805268 7.41 24457497 5.47

Other expenses 5268418 2.32 48770743 15.19 85374337 19.125

Total = 333316926 147.33 3177894769 139.98 571017862 134.265

Loss for the year 13861958 6.12 20659974 6.43 78641650 17.61

COMMONSIZE INCOME STATEMENT OF FOODS AND INNS

INCOME Year 2009 % Year 2010 %

Sales 380820947 100 304828634 100

Increase in stock -217914213 -57 -19451112 -6.38

Other income 26118647 6.85 12118647 3.97

2974361
Total = 189025381 49.63 69 97.59

EXPENDITURE Year 2009 % Year 2010 %

Consumption of raw materials 103459245 27.16 210010065 68.89

Manufacturing expenses 36451713 9.57 21751958 7.13


V.C.R INSTITUTE OF COMPUTER SCIENCES 46
Salaries 30698199 8.06 31254899 10.25

Admin expenses 8882627 2.33 9286666 3.04


FINANCIAL ANALYSIS

COMMMANSIZE BALANCE SHEET OF FOODS AND INNS


LIABILITIES Year 2008 % Year 2009 %
Year 2010 %

1. Share capital 274407700 23.35 274407700 29.33 274407700 30.91


-
2. Reserve & Surplus - - - - -

3. Secured loans 365142945 31.07 292838366 31.30 299428725 33.73


4. Un secured loans
68289487 5.81 110248323 11.78 111248323 12.53
5. Current liabilities
467143647 39.75 257973326 27.57 202512606 22.81
6. Differed taxable - -
- - - -

Total = 1174983779 100 935467719 100 887597354 100

ASSETS Year 2008 % Year 2009 %


Year 2010 %
Fixed assets
Gross block
580496620 49.40 615531243 65.79 616421505 69.44
Less: Depreciation
303241696 25.80 328924963 35.16 353969816 39.87

277254924 23.59 286606280 30.63 262451689 29.56


Capital workings
4309183 0.36 5027508 0.53 22103565 2.49
Current Assets
Loan & advances

Inventories 375676892 31.97 156306246 16.70 136429420 15.37

Debtors 8416762 0.71 7348982 0.78 8062874 0.90

Cash & bank 5067311 0.43 8755706 0.93 3903005 0.43

Loan & advances 150964503 12.84 145766518 15.58 145443323 16.38


3. Differed tax liability - - - - -
-
4. Miscellaneous 244852 0.02 122426 0.01

5. Profit & Loss a/c 78641652 6.69 51120343 5.46 34795778 3.92

V.C.R INSTITUTE OF COMPUTER SCIENCES 47


FINANCIAL ANALYSIS

30.9
6. Suspend a/c 274407700 23.35 274407700 29.33 274407700 1

Total = 1174983779 100 935461719 100 887597354 100

RATIO ANALYSIS AND INTERPRETATION

CURRENT RATIO

It measures the short term solvency of firm that is its ability to meet short term

obligations.

CURRENT ASSETS

CR = _______________________________

CURRENT LIABILITIES

Year Current assets Current liabilities Ratio


2005-2006 260269258 113584355 2.29

2006-2007 403986930 362236043 1.11

2007-2008 540125469 467143647 1.15

2008-2009 318177455 257973323 1.23

2009-2010 293838622 202512606 1.45

V.C.R INSTITUTE OF COMPUTER SCIENCES 48


FINANCIAL ANALYSIS

GRAPH:

Year

INFERENCE

The ratio is an index of financial stability. Here the ideal ratio is 2, but a ratio of 1 is

just enough to pay the creditors without leaving any balance or surplus. Here in this company

the ratio is on a decreasing which is a draw back during the short term. It is because the

increases in assets are not proportionate to the increase in liabilities.

V.C.R INSTITUTE OF COMPUTER SCIENCES 49


FINANCIAL ANALYSIS

LIQUIDITY RATIO

It is to measure the of liquidity designed to overcome this defect of the current

liabilities.

LIQUID ASSETS

LR = ________________________________

CURRENT LIABILITIES

Year Liquid assets Current liability Ratio


2005-2006 84821689 113584355 0.74
2006-2007 100748819 362236043 0.27
2007-2008 164448576 467143647 0.35
2008-2009 161871209 257973323 0.62
2009-2010 157409202 202512606 0.77

V.C.R INSTITUTE OF COMPUTER SCIENCES 50


FINANCIAL ANALYSIS

GRAPH:

Year

INFERENCE

The liquidity ratio shows the solvency of the company in a more rigorous manner than

the current ratio. The liquidity ratio is on decreasing terms that shows a low liquidity position

in the short run. In comparing with the current ratio it shows that there are lots of stocks held

up with the company without being used or sold. The decreasing ratio is mainly due to the

decrease in cash and bank balances of the company. This affects liquidity in the short run.

V.C.R INSTITUTE OF COMPUTER SCIENCES 51


FINANCIAL ANALYSIS

ABSOLUTE LIQUID RATIO

The ABSOLUTE LIQUID RATIO is calculated by taking Liquid assets by Current

liabilities.

ABSOLTE LIQUID ASSETS

ALR = ________________________________________________

CURRENT LIABILITES

Year Absolute liquid Current liability Ratio


Assets
2005-2006 2214356 113584355 0.01
2006-2007 2907579 362236043 0.02
2007-2008 5067311 467143647 0.01
2008-2009 8755709 257973323 0.03
2009-2010 3903005 202512606 0.01

GRAPH:

V.C.R INSTITUTE OF COMPUTER SCIENCES 52


FINANCIAL ANALYSIS

Year

INFERENCE
.This is a more rigorous measure of the firm’s liquidity. The ratio has been drastically

decreasing. There are very low in proportion to the current liabilities. The liquid ratio

balance as it is decreasing makes an unsafe space to stay in. In case of emergency the

company will be under pressure

FIXED ASSETS TURN OVER RATIO

V.C.R INSTITUTE OF COMPUTER SCIENCES 53


FINANCIAL ANALYSIS

This ratio explains adequacy of the long term funds with respect of fixed assets of the

firm. Ideal ratio is 0.73; if is necessary this ratio must be grater than one.

NET SALES

FAR = ____________________________

FIXED ASSETS

Year Net Sales Fixed Assets Ratio


2005-2006 225910943 308330265 0.73

2006-2007 320594420 296545193 1.08

2007-2008 446392044 281564107 1.58

2008-2009 407989582 291633788 1.39

2009-2010 318263738 284555254 1.11

GRAPH :

V.C.R INSTITUTE OF COMPUTER SCIENCES 54


FINANCIAL ANALYSIS

Year

INFERENCE

It is calculated to ascertain the proportion of long term funds invested in fixed assets.

Here the ratio has been decreasing because of the continuous expansion process undertaken

by the company. However the ratio has not only been used to purchase fixed assets, but also

for financing a part of working capital.

CURRENT ASSETS TURN OVER RATIO

V.C.R INSTITUTE OF COMPUTER SCIENCES 55


FINANCIAL ANALYSIS

The proportion of Net Sales and its relationship with equity funds in long term source

of funds is explained by this ratio.

NET SALES

CATR = _______________________________

CURRENT ASSETS

Year NET SALES CURRENT ASSETS Ratio


2005-2006 225910943 260269258 0.86

2006-2007 320594420 403986930 0.79

2007-2008 446392044 540125469 0.82

2008-2009 407989582 318177455 1.28

2009-2010 318263738 293838622 1.08

GRAPH :
V.C.R INSTITUTE OF COMPUTER SCIENCES 56
FINANCIAL ANALYSIS

Year

INFERENCE

It is calculated to ascertain the proportion of long term funds invested in current

assets. Here the ratio has been decreasing because of the continuous expansion process

undertaken by the company. However the ratio has not only been used to net sales, but also

for financing a part of working capital.

V.C.R INSTITUTE OF COMPUTER SCIENCES 57

Anda mungkin juga menyukai