SUMMER TRAINING REPORT

ON

FINANCIAL ANALYSIS
At

HSIL LTD, (BAHADURGARH).

Formally known as

(HINDUSTAN SANITARYWARE INDUSTRIES LTD)

With a brand name of

Submitted in Partial Fulfillment for the award of Degree of

MASTER OF BUSINESS ADMINISTRATION

Session 2011-2013

SUBMITTED TO: - SUBMITTED BY: -

Dr. SHRUTI Deepika

MBA 3rd Sem

1
 DECLARATION

I Deepika Roll no. 701 Class MBA IIIrd semester of the P.D.M College of
Engineering (Dept. of Management Studies) hereby declare that the project
entitled FINANCIAL ANALYSIS AND INTERPRETATION is an original
work & the same has not been submitted to any other institute for the award
of any other degree. The interim report was presented to the supervisor on
25 Aug. and pre-submission presentation was made on 16 Aug. The feasible
suggestions have been duly incorporated in consultation with supervisor.

Countersigned

Signature of the Supervisor Signature of the candidate

Forwarded By: -

Director/ Principal of the Institute

2
 ACKNOWLEDGEMENT

I would like to pay my special thanks to the Chairman of Management Mr.

R.K Somany and general secretary Sonia Niranjan Das.

I would like to pay my gratitude to the persons without those support I

would not been able to conduct the project. I am highly grateful to Mr. R.B
Kabra (President) and Mr. V.K Ajmera (General Manager Finance) who have
suggested me the Topic for Training.

I would like to pay my thanks to Mr. A.K Mohanty (HRD Manager) who
always provided me the adequate information and has directed their
subordinates (Mr. A.K Mohta, MR. V.S Yadav & Mr. S.K Jajoo) to help in
the project.

Without the guidance of my teacher Dr. SHRUTI, it could have been very
difficult to known my defaults and they help me mending them.

Almost all the branch employees of HSIL have been cordial and helping
towards my problems. Such a working atmosphere has made the training a
memorable experience. I am highly grateful to all the personnel of HSIL
Company.

Lastly, I would again like to thank everybody for his or her support.

DEEPIKA

3
 TABLE OF CONTENTS

CHAPTERS TABLE CONTENTS PAGE

NO.

I INTRODUCTION

II COMPANY PROFILE

III MANAGERIAL USEFULNESS OF STUDY

IV OBJECTIVE OF STUDY

V RESEARCH METHODOLGY

VI DATA ANAYSIS AND INTERPRETATION

VII FINDINGS

VIII LIMITATIONS

IX RECOMMENDATIONS AND SUGGESTIONS

X CONCLUSIONS

4
 EXECUTIVE SUMMARY

Week No. Task

1. To gather all information about company profile and board of directors of the Company.
I searched the detail about financial position & status of the company.

2. Financial Analysis of HSIL from previous year balance sheet.:-ratio analysis of the
company like current ratio, Quick ratio, debtors ratio, turnover ratio etc.

3. How to analysis the excise duty:-I learned that how to calculate excise duty and how to
pay duty with license. I learned the insurance rate charge on export. The rate is
(0.280900%) charge.

4. Learn how to analysis TDS (Tax Deduct At Source).:-TDS charge by different rate on
different company and non companies.

5. I learned different section of TDS like 194c for contractors & rate of TDS(basic
2%,surcharge 10%, E.Case 2%,h.cess 1%),194h for commission/brokerage& rate of
TDS(basic 10%,surcharge 10%, E.Case 2%,h.cess 1%),194I for Rent company & rate
of TDS(Basic20%, surcharge 10%, E.Case 2%,h.cess 1%)

6. I Learn how to do entry of import clearing bill in the company accounting software.

7. I Learn how to Bank Reco. Statement of the company and I came to know what are the
reasons for difference between bank account and bank book of the company.

8. Learn how to analysis central sales act .I learned different rates of inter state sale and
intra state sale. I also learned about different sale form like form C, form F, form H and
form I.

5
CHAPTER – I

6
INTRODUCTION

The topic concentrates upon analyses the theory of Financial Analysis in

HSIL. Financial Analysis is concerned with the problem that arises in
attempting to manage the Total Assets, Total Liabilities & analysis them how
these are to be arranged. The term total assets refer to organize efficient
management of assets which is taken best used in company. Fixed Assets are
building, plant & machinery like as current Assets cash, marketable
securities, account receivables & inventory. Share capital and long term fund
are also being arranged for the analysis. Current Liabilities are those, which
are intended at the inception to be paid in ordinary course of business within
a year. The main current liabilities are accounts payable, bank overdraft,
outstanding expenses. HSIL manage the total assets and total liabilities in
such a way that satisfactory level of financial position and also be
maintained them.

In the company’s business, financial analysis is critical for number of

reasons:

 To determine the adequate or optimum quantum of investment in total

assets and liabilities.

 To determine the composition or structure of current assets.

 To maintain a proper balance between liquidity and profitability.

 To determine the policy or means of finance for long term loan.

 To maintain a large inventory of finished goods to cater diverse

requirement across geographies.

 To maintain a large stock of raw materials and large volumes of

packaging material due to seasonal availability.

CHAPTER – II

7
8
Company History - HSIL Ltd.

9
YEAR EVENTS 1960 - The company was incorporated in 8th February at
Calcutta. The name of the company was changed with effect from 3rd May
1969 from Hindustan Twyfords Ltd to Hindustan Sanitaryware & Ind Ltd.
The main object of the company is to manufacture Vitreous China
Sanitaryware, Glass products, refractories and Plaster of Paris.

- 10,000 No. of equity shares to promoters and 1,04,000 No. of equity shares
to foreign collaborators issued for cash. 1,00,000 No. of equity shares
allotted to directors etc. 20,000 pref. and 1,85,000 No. of equity shares
offered to the public.

1966 - 99,809 bonus equity shares issued in the proportion 1:4.

1969 - 2,39,542 bonus equity shares issued in the proportion 12:25.

1980 - 2,46,195 bonus shares issued in prop. 1:3.

1981 - Associated Glass Industries, Ltd. was merged with the company with
effect from 29th June, and their glass unit at Hyderabad was taken
possession of by the company from that date. Immediately thereafter, work
was taken up for extensive repairs to furnace, plant and machinery and gas
producers and updating of the I.S. Glass forming machines.

- With the co-operation of Glass Equipments (India), Ltd., it was possible to

start production in November on furnace HW-II and establish capacity to
draw 62 tonnes of glass per day as against the 42 tonnes specified by the
erstwhile foreign collaborators. HW-II furnace was put into service in July,
after minor modifications and extensive repairs for draw upto 69 tonnes per
day. As envisaged, operations proved to be profitable.

- Associated Glass Industries, Ltd. was merged with the company with effect
from 29th June.

1983 - Owing to labour unrest and violence, a lock-out had to be declared

10
from 18th May, to 11th November. Since then, one furnace was in operation
as HW-II sustained heavy damages at the time of sudden closure. It was
repaired, renovated and enlarged.

- Authorised capital reclassified. 15,000 pref. and 67,500 No. of equity

shares allotted without payment in cash to pref. and equity shareholders
respectively of Associated Glass Industries Ltd. on its merger with the
Company.

1984 - Capacity was increased by using electric booster of 90 TPD with the
booster installations, the furnace had been successfully operated on green
glass.

1986 - Production declined due to incessant power cut imposed by Andhra

Pradesh State Electricity Board, glass leakage in HW-II furnace twice and a
major break down in the new compressors. Despite these adverse factors, the
company acheived a production of 83% of the licensed capacity.

- The company installed and commissioned a CNC turning centre imported

from W. Germany

- The company undertook a modernisation programme in phase.

1987 - Production at 10,450 tonnes showed a marginal improvement despite

shut down of tunnel kiln for two and a half months for modernisation.

- Production declined to 26,961 tonnes due to reasons such as plant shut

down for 3 months for modernisation, power cut as high as 50% and
untimely break down in flint furnace.

- An application was made for an industrial licence to enhance the capacity

to 18,000 tpa.

- The company received Government permission for construction of another

11
highly energy efficient automated kiln.

- The amber glass furnace was commissioned at the Hyderabad Unit. Also, a
plant for substantial reduction of ash and tar from coal gas and thereby
prolong the life of the furnace, was introduced.

- During the year, a 2.9 MW Sulzer Autostar DG set and 2 centrifugal air
compressors were ordered.

- 5,26,141 bonus equity shares issued in prop. 1:2.

1988 - The company proposed to install a new Mirrlees Blackstone

generator of 3.3 MW in December and a sluzer set by the middle of the year.

- The company proposed to make an application for grant of LPG as the

supply of residential fuel oil was not satisfactory. It was also proposed to
replace 2 kilns by one high energy efficient kiln. Two new colours and a
range of silk matt glazes were introduced during the year.

- The Company launched "Solara" a new luxury bath room series.

- Production and sales showed improvements despite constraints due to

relocation of various equipments during the on going modernisation
programme. With amalgamation of Krishna Ceramics, Ltd., the company
acquired a sanitary ware manufacturing unit at Bibinagar in Nalgonda. This
was expected to meet the demand in the Southern Indian market.

- The flint glass furnace was commissioned after expansion and

modernisation of the unit. One of the two imported Centrifugal Air
Compressors was erected and was commissioned during 1989-90.

- With effect from 30th June, "Krishna Ceramics Ltd." (KCL) was
amalgamated with the company. As per the scheme of amalgamation, 8
equity shares of Rs. 10 each of KCL were to be exchanged for 1 equity
12
shares of the Company.

1989 - The performance of the Bhadurgarh and Bibinagar units would have
been better but for shortage of power at the Bhadurgarh unit and industrial
unrest for 23 days at Bibinagar unit.

- Also, a new casting shop with floor area of 97,000 sq. ft. incorporating
modern facilities was commissioned in early 1989.

- Apart from these, mechanisation and automation were also introduced in

various other departments.

- During the year, the Hyderabad Unit, was permitted an increase in its
licensed capacity by 40%. The Company proposed to rebuild the existing
furnaces and equip the present machines for higher speeds. Also necessary
infrastructures were proposed to be furnished for high speed operations and
increased production capacity of 48,000 tpa.

- 3,65,625 No. of equity shares issued without payment in cash to the

members of Krishna Ceramics Ltd. on its merger.

1990 - To counter the humid conditions during monsoon, an air heating

system in the casting shop was installed.

- A 300 KVA DG set was transferred to the 2nd unit of AP plants from the
glass division.

- However, Glass unit of 2.9 MW DG set was commissioned and with this
the production was streamlined in the second half.

- At the unit no. 1 in Bhadurgarh and one more shuttle kiln was installed.
With these, the company hoped to increase the installed capacity upto
18,000 TPA shortly.

13
1992 - New luxury bathroom suite was well received in the market.

- Production registered a marginal decline due to planned shut down of

white furnace for about one and a half months in the first half of the year.

- With the modification of Dig House Configuration of HW-II White

furnace, the quality of glass improved significantly in terms of seed count by
as much as 80%.

1993 - Environmental Control Equipment was installed at Unit No. 1 in

Bhadurgarh resulting in improved productivity.

- During October/November, public and right issue of 15,77,316-15%

secured redeemable partly convertible debentures of Rs. 130 each.

- Out of the total issue, 7,79,624 debentures were offered to the equity
shareholders of the company in the proportion of one debenture for every
two equity shares held (all were taken up) and 38,900 debentures were
offered to the employees of the company (only 5,400 debentures were taken
up).

- 57,692 debentures offered to the financial institutions. 75,800 debentures to

the Schablona India Ltd., 19,000 debentures to foreign institutional investors
(all were taken up). 75,800 debentures offered to the Mutual funds (only
65,400 debentures were taken up. Unsubscribed 10,400 debentures were
added back to the public issued of 5,30,500 debentures (all were taken up).

- Part A of Rs. 45 each debenture was to be converted into one equity share
of Rs. 10 at a premium of Rs. 35 on allotment.

- Part-B of Rs. 85 was to be redeemed in three annual instalments of Rs. 30,

Rs. 30 and Rs. 25 at the end of 7th, 8th and 9th year respectively from the
date of allotment.

14
- Soma Plumbing Fixtures, Ltd. and Ceramic Services, Ltd. are subsidiaries
of the Company Amal Ceramics, Ltd. is also a subsidiairy of the company.

- 15,43,816 No. of equity shares allotted in conversion of debentures.

1994 - The company procured a sophisticated multicolour printing machines

for increasing capacity of printed bottles for the soft drink/beverage industry.

- 15,25,198 No. of equity shares allotted at a prem. of Rs. 86.12 per share on
conversion of debentures.

1995 - The mould dryer was commissioned.

- During the year, the company proposed to add a new 250 tonnes per day
plant to its glass division.

1996 - New Colours and designs were introduced during the year.

- Production was constrained because of one of the glass furnaces was under
planned shutdown for ten weeks.

- A new Enterprise-wide Resource planning system was under installation of

Bhadurgarh of facilitate improved MIS and on-line availability of all
important information for decision markets. The company also proposed to
install a 4.2 MW DG set operating on Heavy Oil which was expected to be
operative in 1997-98.

2000 - The Company's container glass division has been renamed as "AGI
Glaspac." The modernisation and expansion programme of the division has
been completed. The new state-of-the-art furnace is energy efficient and
environment friendly.

- The Company has achieved the ISO 14001 certification for environment
friendliness. The Company's unit at Bahadurgarh is the first sanitaryware
15
plant in India to have achieved such recognition.

2001 - The Company, the largest sanitaryware producer in the country, has
put the proposal to spin off its glass division into a separate company on the
backburner.

2004

-Hindustan Sanitaryware & Industries Ltd (HSIL), makers of the

sanitaryware brand Hindware, launched a range of stainless steel kitchen
sinks in Chennai

2009

- Hindustan Sanitaryware and Industries Ltd (HSIL) has launched an eco-

friendly variety of water closet, Viva where the new range comes with a 3/6
litre water saving dual flush.

Goals

Financial analysts often assess the following elements of a firm:

1. Profitability - its ability to earn income and sustain growth in both the
short- and long-term. A company's degree of profitability is usually based on
the income statement, which reports on the company's results of operations;

2. Solvency - its ability to pay its obligation to creditors and other third
parties in the long-term;

16
3. Liquidity - its ability to maintain positive cash flow, while satisfying
immediate obligations;

Both 2 and 3 are based on the company's balance sheet, which indicates the
financial condition of a business as of a given point in time.

4. Stability - the firm's ability to remain in business in the long run, without
having to sustain significant losses in the conduct of its business. Assessing
a company's stability requires the use of both the income statement and the
balance sheet, as well as other financial and non-financial indicators. etc.

Overview and

Advantages of Financial Statement Analysis:

There are various advantages of financial statements analysis. The major

benefit is that the investors get enough idea to decide about the investments
of their funds in the specific company. Secondly, regulatory authorities like
International Accounting Standards Board can ensure whether the company
is following accounting standards or not. Thirdly, financial statements
17
analysis can help the government agencies to analyze the taxation due to the
company. Moreover, company can analyze its own performance over the
period of time through financial statements analysis.

TOOLS AND TECHNIQUES OF FINANCIAL STATEMENT

ANALYSIS:

Following are the most important tools and techniques of financial statement
analysis:

1. Horizontal and Vertical Analysis

2. Ratios Analysis

1. HORIZONTAL AND VERTICAL ANALYSIS:

18
Horizontal Analysis or Trend Analysis:

Comparison of two or more year's financial data is known as horizontal

analysis, or trend analysis. Horizontal analysis is facilitated by showing
changes between years in both dollar and percentage form. Click here to
read full article.

Trend Percentage:

Horizontal analysis of financial statements can also be carried out by

computing trend percentages. Trend percentage states several years'
financial data in terms of a base year. The base year equals 100%, with all
other years stated in some percentage of this base. Click here to read full
article.

Vertical Analysis:

Vertical analysis is the procedure of preparing and presenting common size

statements. Common size statement is one that shows the items appearing
on it in percentage form as well as in dollar form. Each item is stated as a
percentage of some total of which that item is a part. Key financial changes
and trends can be highlighted by the use of common size statements. Click
here to read full article.

2. RATIOS ANALYSIS:

Accounting Ratios Definition, Advantages, Classification and

Limitations:

The ratios analysis is the most powerful tool of financial statement analysis.
Ratios simply means one number expressed in terms of another. A ratio is a
statistical yardstick by means of which relationship between two or various
figures can be compared or measured. Ratios can be found out by dividing
one number by another number. Ratios show how one number is related to
another.

Profitability Ratios:

with which the resources of a firm have been employed. These ratios are
also called turnover ratios because they indicate the speed with which assets
19
are being turned over into sales. Following are the most important activity
ratios:

 Inventory / Stock turnover ratio

Debtors / Receivables turnover ratio Profitability ratios measure the results

of business operations or overall performance and effectiveness of the firm.
Some of the most popular profitability ratios are as under:

 Gross profit ratio

 Net profit ratio
 Operating ratio
 Expense ratio
 Return on shareholders investment or net worth
 Return on equity capital
 Return on capital employed (ROCE) Ratio
 Dividend yield ratio
 Dividend payout ratio
 Earnings Per Share (EPS) Ratio
 Price earning ratio

Liquidity Ratios:

Liquidity ratios measure the short term solvency of financial position of a

firm. These ratios are calculated to comment upon the short term paying
capacity of a concern or the firm's ability to meet its current obligations.
Following are the most important liquidity ratios.

 Current ratio
 Liquid / Acid test / Quick ratio

Activity Ratios:
 Activity ratios are calculated to measure the efficiency
 Average collection period

20
  Creditors / Payable turnover ratio
 Working capital turnover ratio
 Fixed assets turnover ratio
 Over and under trading

Long Term Solvency or Leverage Ratios:

Long term solvency or leverage ratios convey a firm's ability to meet the
interest costs and payment schedules of its long term obligations. Following
are some of the most important long term solvency or leverage ratios.

 Debt-to-equity ratio
 Proprietary or Equity ratio
 Ratio of fixed assets to shareholders funds
 Ratio of current assets to shareholders funds
 Interest coverage ratio
 Capital gearing ratio
 Over and under capitalization

Financial-Accounting- Ratios Formulas:

A collection of financial ratios formulas which can help you calculate

financial ratios in a given problem.

Limitations of Financial Statement Analysis:

Although financial statement analysis is highly useful tool, it has two

limitations. These two limitations involve the comparability of financial data
between companies and the need to look beyond ratios.

21
 CERAMIC DIVISION – 1

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E x e c u tiv e S e c r e ta r y JM D

P r e s id e n t

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G M P ro d .

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M G R -Q A M g r .S to re M g r .P u r c h a s e

D DG GM M P P. E. En ng gr .. D G M D e s ig n

M g r .S p l.P r o j. M g r .P r o d . D y .M g r .G la z i n
g & In s p .

A s s tt.M g r .W a
re H o u se

22
LOCATIONS IN INDIA

FACTORIES
23
The Company has two plants for manufacturing sanitary ware and one for glass
containers. One plant for sanitary ware is located at Bahadurgarh in Haryana in North
India and the other two are in South India Hyderabad (A.P.). The container glass unit is at

Hyderabad. The plant at Bahadurgarh is the first sanitary ware plant in India to obtain the
ISO: 9001:2000 series certification as well as the ISO 14001 certification. The other
plants have received ISO: 9002 certifications.

24
CHAPTER - III

25
FINANCIAL ANALYSIS

Introduction of Financial Analysis:-

The focus of financial analysis is on key figures in the financial statements

and the significant relationships that exist between them. The analysis of
financial statements is a process of evaluating relationships between
component parts of financial statements to obtain a better understanding of
the firm’s position and performance.

Financial Statement provides financial information in the term of money but

they did not give the information about liquidity and profitability of a
business. Financial analysis is classified the financial statement in that term
every person of related business understand the financial position of a
company.

Example:-Current assets items are taken in a separate columns and current

liabilities are taken separately.

“Actually financial statement could not say anything but the financial
analysis is the process that helps to deciding the financial position of a
company.”

Meaning of Financial Analysis:-

Financial Analysis consists in separating facts according to some define

plan, arranging them in groups according to certain circumstances and then
presenting them in a convenient and easily read and understandable form

Financial statement analysis is largely study of relationship among the

various financial factors in a business. As disclosed by a single set of
statement and a study of these factors as shows in a series of statement.

Financial Analysis:-

26
Financial analysis means study of the Trading, Profit & loss Account and
Balance Sheet. We make the Profit & Loss and Balance sheet by help of
Trial Balance. Make Trial Balance help journal entry, and base of the journal
entry voucher (bill).

VOUCHER JOURNAL TRIAL

BALANCE

ANALYSIS BALANCE SHEET TRADING &

P&L

Method of Financial Analysis:-

COMPARATIVE BALANCE SHEET

RATIO ANALYSIS

FUND FLOW STATEMENT

CASH FLOW STATEMENT

STANDARD COSTING

27
1. Comparative Balance Sheet:-

In comparative balance sheet we study two or more balance sheet. We

take our balance sheet OR other business balance sheet same nature
business in comparative balance sheet our profit increase or decrease
means trend of our profit. We also compare with other business. Fixed
assets and current liabilities increase or decrease, if fixed assets decrease
what are the reasons behind this.

2. Ratio Analysis:-

After this we make analysis of this financial statement, for example we

make ratio analysis for comparative study in ratio. Current ratio shows
the quick solvency of the firm. The idle ratio is 2:1 it means current asset
is twice then our current liabilities, if our current ratio is more then 2:1
we are able to easily pay our current liabilities. In debtor turnover ratio
we see the timing in which recover the money. Stock turnover ratio show
the timing in which our product sell in times. Capital structure means
debt equity ratio show we arrange the fund in which ratio and our cost of
capital. Cost of debt is less the equity but debt creates lot of risk,
generally use debt equity ratio is 40:60 .Interest coverage ratio shows the
we are in a situation to pay interest on debt or not. Profitability ratio tells
us what % profit we earn on sale.

3. Fund Flow Statement:-

This studies the sources of funds and the application of funds. Thus, we
can analyses the changes in working capital components by comparing
the current assets and current liabilities of two periods. These will
show/effect changes in each type of current assets as well as the sources
from which working capital has been obtained.

4. Cash Flow Statement:-

In fund flow statement, we study the working capital & non fund item
means that fund not generate in business activities. But in cash flow, we
study on cash only activity that effect cash. It means cash related entry
28
effects are show by the cash flow statement. We make cash flow on cash
basis for the example, we are purchase on credit, that means we are entry
in the fund flow statement but we make cash so this entry could not done
in cash flow statement. Because we are enter only cash purchase. In cash
flow statement, we includes cash from operating activity, cash from
financing activities and cash from investing activities.

5. Standard Costing:-

In standard costing, we are makes the estimation of standard price, time

and per unit cost of production. We compare them with actual and
standard cost. Then if any difference between finding by comparison, it
would be taken corrective decision. For example our per unit cost
increase what is the reason behind the increase the material rate, increase
in wages or increase of our labor or other cause of the change.

Process of Financial Analysis

29
 1. Determination of extent of analysis

2. Study of financial statement

3. Collection of other important information

4. Rearrangement of financial data

5. Approximation of Figures

6. Comparison

7. Study of Trend

8. Interpretation

Process of Financial Analysis:-

1. Determination of extent of analysis:-

30
In the study of every analysis, first of all important of analysis is depends on
the extent of their statement where it is defined as the important of objective
to be analysis. Financial analysis determined the extent of every analysis like
as if we analysis the liquidity of a company we needs to follow the current
assets or liquid assets and current liabilities.

2. Study of financial statement:-

For the study of financial statement, we need trading and profit & loss
statement and balance sheet. These statements are the factor that provides
the information for the profit and loss of a company and also gives
information about financial position.

3. Collection of other important information:-

Financial analysis is defined as the important information presents to given

by the company that provides the nature of creditors and other business
instrument. These all of information are collected by the financial analysis
and represented to the users who are concerned with these factors.

4. Rearrangement of financial data:-

Financial analysis rearranged the financial data in the form of classification

that every person can be analysis them and takes decision about the
company position. Financial analysis is that factor where every data is
defined in separate columns and shows the real position of the business.\

5. Approximation of figures:-

Financial analysis takes financial statement for the comparison and trend
analysis where the figures are showed in the large amount that increase
problem to determine the real picture so financial analysis shows them in
approximation figure to make easily analysis. Like as amount shows in lakhs
or crore.

6. Comparison:-

Financial statement are used in the form of comparative form where two or
more years statement show in the collection way and absolute increase or
31
decrease are setup in their percentage of change statements helpful in taking
decision about the changes which is required in future for a company.

7. Study of trend:-

A company financial position is analysis with the trend of financial

statement. Financial analysis shows the trend of the company growth or
decline with the more than two years financial statement. This trend
provides the long term stability position of company.

8. Interpretation:-

After the showing the financial comparative and trend statement it interprets
the strength and weakness of the company. Financial analysis assists to
maintain the strong position and represent the factors those helping the
company to grow up in the future period.

9. Reporting:-

Reporting is the way of representation of collected data where all affected

factors and defined in clear and understandable form. Financial analysis is
defined in the summary of financial position.

Type or Approaches of Financial Analysis:-

There are types of financial analysis which are defined as under.

1. On the basic of Material used

2. On the basic of process of analysis

On the basic of material used:-

1. External Analysis:-

32
External analysis is related with the outsider relative financial institution
which is interested with the company financial position .Example of
financial investors, banks, creditors, stock exchange, tax authorities and
researchers. This analysis is used to analysis the limited objective study.

External analysis is prepared on the basic of financial statement which is

represented in the publication. The main objective of the external analysis is
providing the base of financial instruction.

2. Internal Analysis:-

Internal analysis is maintained through out the company working person for
the extent of analysis. They are used by the company, employees, authorities
and company membership. Internal analysis is prepared with the internal
information which are provides through the company employees and
company authorities. They are used for taking important decision and
analysis the company stability.

On the basic of process of analysis:-

1. Horizontal Analysis:-

33
In this type of analysis, we take two or more year financial statement to
revaluation and analysis. We write these data tighter and compare them
with other. Horizontal analysis is maintained with the two or more
financial statement. This analysis defines the comparative and trend
statement of absolute increase and decrease of data for the purpose of
company position.

Horizontal analysis is also known as Dynamic Analysis.

2. Vertical Analysis:-

Vertical analysis is maintained on the basic of one year financial

statement where we analysis them with common type statement, ratio
analysis, cash flow statement, fund flow statement. Common size
statement shows the percentage of every item of profit and loss and
balance sheet on the basic of sales. This statement is used to analysis the
company current position in the presenting year.

This type of analysis is also known as Static Analysis.

34
 CHAPTER - IV

Objectives of the Study

35
1. To know the earning capacity or profitability:-
2. To know the solvency:-
3. To make comparative study with other firms:-
4. To know the financial strength:-
5. To know the efficiency of management:-
6. To know the trend of the business:-

CHAPTER - V
36
Research Methodology

37
DEFINITION

“Research Methodology is a way to systematically solve the research

problem”

“A careful investigation or inquiry especially through search for new

facts in any branch of knowledge”

Research is the search for knowledge through objective and

systematic method of finding solution to a problem. The purpose of research
is to discover answers to questions through the application of scientific
procedures.

MEANING OF RESEARCH

Research in common parlance refers to a search for knowledge. Once can

also define research as a scientific and systematic search for pertinent
information on a specific topic. In fact, research is an art of scientific
investigation.

TYPES OF RESEARCH

“Analytical Research”

Analytical research is a research that is done on the basis of already

existing information. This research is said to be analytical because the study

38
uses facts and information already available in the balance sheet of the
company in order to assess the working capital of the company.

Sources of Data
“Primary Data”

The data is said to be primary data when all data’s are collected for the first
time like data collected from quessionnaire,interviews directly .

“Secondary Data”

The sources of data is said to be secondary because the report is prepared on

the basis of balance sheet and annual report of the company. We are not
directly collect the data.

The basic types of research are as follows:

1. Descriptive vs. Analytical: includes surveys and fact-finding enquiries

of different kinds. The major purpose of descriptive research is
description of the state of affairs as it exists at present. The main
characteristic of this method is that the researcher has no control over
the variables; he can only report what has happened or what is
happening

2. Applied vs. Fundamental: Research can either be applied (or action)

Research or fundamental (to basic or pure) research. Applied research
aims at finding a solution for an immediate problem facing a society
or an industrial/business organization, whereas Fundamental research
is mainly concerned with generalizations and with the formulation of
a theory.

3. Quantitative vs. qualitative: Quantitative research is based on the

measurement of quantity. Qualitative research, on the other hand, is
concerned with qualitative phenomenon. (like: phenomena relating to
or involving quality or kind) Qualitative research is especially
important in the behavioral sciences where the aim is to discover the
underlying motives of human behavior.

39
 4. Conceptual vs. Empirical: Conceptual research is that related to some
abstract idea(s) or theory. It is generally used by philosophers and
thinkers to develop new concepts or to reinterpret existing ones On
the other hand, empirical research relies on experience or observation
alone, often without due regard for system and theory. It is data-based
research, coming up with conclusions which are capable of being
verified by observation or experiment. Empirical research is
appropriate when proof is sought that certain variables affect other
variables is some way.

5. Some other types of Research: All other types of research are

variations of one or more of the above stated approaches, based on
either the purpose of research, or the time required to accomplish
research, on the environment in which research is done, or on the
basis of some other similar factor.
Historical research is that which utilizes historical sources like
documents, remains, etc. to study events or ideas of the past, including
the philosophy of persons and decision-oriented.
Longitudinal research: Form the point of view of time; we can think
have research either as one-time research or longitudinal research.
Research can be field-setting research or laboratory research or
simulation research, depending upon the environment in which it is to
be carried out.

OBJECTIVES OF RESEARCH

The purpose of research is to discover answers to question through the

application of scientific procedures.

40
 1. To gain familiarity with a phenomenon or to achieve new insights into
it (studies with this object in view are termed a exploratory or
formulate research studies):

2. To portray accurately the characteristic of a particular individual,

situation or a group (studies with this object in view are known as
descriptive research studies):

3. To determine the frequency with which something occurs or with

which it is associated with something else (studies with this object in
view are known as diagnostic research studies):

4. To test a hypothesis of a causal relationship between variables (such

studies are known as hypothesis-testing research studies)

MOTIVATION IN RESEARCH

1. Desire to get a research degree along with its consequential benefits:

2. Desire to face the challenge in solving the unsolved problems, i.e.,
concern over practical problems initiates research:
3. Desire to get intellectual joy of ding some creative work:
4. Desire to be of service to society
5. Desire to get respectability.

SIGNIFICANCE OF RESEARCH

“The progress is born o inquiry. Doubt is often better than over confidence,
for it leads to inquiry, and inquiry leads to invention.” Research inculcates
scientific and inductive thinking and it promotes the development of logical
habits of thinking and organization.
41
 1. The role of research in several fields of applied economics, whether
related to business or to the economy as a whole, has greatly increased
in modern times.

2. Research provides the basis for nearly all government policies in our
economic system.

3. Research has its special significance in solving various operational

and planning problems of business and industry.
4. Research is equally important for social scientists in studying social
relationships and in seeking answers to a various social problems.

Tools and Techniques of Analysis

 Ratio Analysis

 Schedule of Change in Working Capital

 Balance Sheet of HSIL

 Profit & Loss A/c of HSIL

CHAPTER -VI
42
Method of Financial Analysis

43
 1. Comparative Financial Statement:-

When two of more year financial statement are taken with together to
present the comparative study purpose that is known as comparative
financial statement analysis.

Purpose of comparative Statement:-

1. To make the data simpler and more understandable

2. To indicate the trend

3. To indicate the strong points and weak point of the concern

4. To help in forecasting

There are many type of comparative financial analysis but some

important analyses are:

 Schedule of change in Working Capital

 Comparative Balance Sheet

 Common Balance Sheet

SCHEDULE OF CHANGE IN WORKING CAPITAL

44
 Amount as on
Particular Amount as on 31st 31st Working Capital
Mar-09 Mar-10 Increase Decrease

Current Asset
Inventories 1,509,397,161 1,625,779,868 116382707
Sundry debtors 1,027,730,365 1,419,199,170 391468805
Cash and bank balances 797,124,622 247,115,331 550009291
Other current assets 8,322,948 4,498,735 3824213
Loans and advances 421,225,758 673,633,327 252407569

Total current Asset (A) 3763800854 3,970,226,431

Current liabilities
Acceptances 288,523,589 47,806,441 240717148
Sundry creditor 1029245863 978019089 51226774
Advance against sales/orders 56,288,160 33,372,671 22915489
Unclaimed Dividend 3,621,826 4,437,065 815239
Unclaimed Share Fraction 2006 29,965 29,883 82
Unclaimed Bonus Fraction 2005 33,920 33,846 74

Other liabilities * 309,142,759 392,401,764 83259005

Total Current Liabilities(B) 1,686,886,082 1,456,100,759 1075118648 637907748

Working Capital A -B 2076914772 2514125672

Net Increase in Working Capital 437210900

HINDUSTAN SANITARYWARE & INDUSTRIES LIMITED

Comparative Balance Sheet as at 31 March 2010
45
 %increase or
Particular 2009 2010 increase or decrease in
decrease Over relation to
2009 2009
Rs. Rs. Rs. %
Total Fixed Assets (A) 5476272272 7759620959 2283348687 29.43

Total Investment (B) 107952098 117248520 9296422 8.61

Working Capital:-
Current Assets (1) 3763800854 3970226431 206425577 5.20
Current liabilities (2) 1827604919 1706743915 -120861004 -7.08
Working Capital (C) (1-2) 1936195935 2263482516 327286581 14.46

Capital Employed (A+B+C) 7520420305 10140351995 2619931690 25.84

Less: Loan and Liabilities 5130512074 5467466083 336954009 6.16
Shareholder's Fund 2389908231 4672885912 2282977681 48.86
Less: Preliminary Exp. 23677 17758 -5919 -33.33
Shareholder's Fund 2389931908 4672903670 2282971762 48.86
Represented By:-
Share Capital 110054841 110054841 0 0.00
Reserves 2279877067 4562848829 2282971762 50.03
Shareholder's Fund 2389931908 4672903670 2282971762 48.86

Common- size Balance Sheet

46
 as on 31 mar 2010
31st Mar 31st Mar
Particular 2009 2010
Amount % Amount %
Assets
Fixed Assets 5476272272 58.58 7759620959 65.50
Total Fixed Assets (A) 5476272272 58.58 7759620959 65.50
Current Assets
Inventories 1509397161 16.15 1625779868 13.72
Sundry debtors 1027730365 10.99 1419199170 11.98
Cash and bank bal. 797124622 8.53 247115331 2.09
O. current assets 8322948 0.09 4498735 0.04
Loans and adv. 421225758 4.51 673633327 5.69
Total Current Assets (B) 3763800854 40.26 3970226431 33.51
Investment 107952098 1.15 117248520 0.99
Preliminary Exp. 23677 0.00 17758 0.00
Other Assets (C) 107975775 1.16 117266278 0.99
Total Assets (A+B+C) 9348048901 100.00 11847113668 100.00
Liabilities and Capital
Owner's Equity
Share Capital 110054841 1.18 110054841 0.93
Reserves and surplus 2279877067 24.39 4562848829 38.51
Total Owner 's Equity (1) 2389931908 25.57 4672903670 39.44
Long Term Borrowing
Secured 4331935800 46.34 3137369919 26.48
Unsecured 375481776 4.02 1788911429 15.10
Total Long Term Loan (2) 4707417576 50.36 4926281348 41.58
Current Liabilities
Deferred tax liability 423094498 4.53 541184735 4.57
Liabilities 1673283452 17.90 1532290941 12.93
Provisions 154321467 1.65 174452974 1.47
Total Current Liab. (3) 2250699417 24.08 2247928650 18.97
Total Liab. and Capital
(1+2+3) 9348048901 100.00 11847113668 100.00

COMMENT

INTERPRETATION

47
 For interpretation of ratio analysis is the most important tool.
So the HSIL unit’s financial position analysis by means of following ratios: -

1. CURRENT ASSETS TO TOTAL ASSETS RATIO: -

Ratio = Current Assets x 100

Total Assets

This ratio explains the relationship between current assets and total
investment in assets. A business enterprise should use its current assets
economically and efficiently because it is the management of those assets
that are acquired by a business firm will end up in a loss if there is any
leniency managing the assets to the advantage of business firm. Investment
in fixed assets being inelastic in nature there is no space to make
amendments in this sphere and its impact on profitability remains minimal.

The Current Assets to total assets ratio as follows:

In year 2008-2009

= 3763800854 x 100 =40.26%

9348048901

In year 2009-2010

= 3970226431 x 100 =33.52%

11847113668

A low ratio of Current Assets to sales implies by and large a more efficient
use of fund Here the efficiency of utilization funds to generates sales was
more, compared too more finished goods buying at warehouse which
impairs firm’s profitability. In year 2009 the current asset to total asset ratio
is 40% that is decrease to 33.52% in year 2010 which shows that company
ratio is good but decrease in 2010 company increase their fixed assets,
48
because increase in fixed assets and our current assets are because decrease
use of fixed asset.

2. WORKING CAPITAL TO SALES RATIO: -

This ratio is computed by dividing working capital by sales.

= Working Capital x 100

Net Sales

In year 2008-09

= 1936195935 x 100 =29.05%

6665884442

In year 2009-10

= 2263482516 x 100 =26.59%

8512287049

In year 2009 the working capital to sales ratio is 29.05% that is

decreased to 26.59% in year 2010. Average ratio is good to sales ratio
because construction business need high working capital. Our ratio is
decreasing in 3% because our working capital is less then 2010 in
comparison of 2009.

3. CURRENT ASSETS TO SALES RATIO:-

The ratio of current asset to sale is being calculated as follows: -

= Current Assets x 100

Total Sales

In year 2008-09
49
= 3763800854 x 100 = 56.47%
6665884442

In year 2009-10

= 3970226431 x 100 = 46.65%

8512287049

This ratio helps to measure the efficiency of utilization of net

working capital. In year 2009 the ratio is 56.47% i.e. is decreased to
46.65%. It means we are efficiently use of current assets in comparison of
2009 because high ratio show the more current assets use in sales. That
shows company sound position. It signifies that for an amount of sales a
relative amount of working capital is needed. Thus this ratio helps the
management to maintain the adequate level of working capital.

4. FIXED ASSETS TO SALES RATIO:-

= Fixed Assets x 100

Net Sales

In year 2008-09

= 5476272272 x 100 = 82.15%

6665884442

In year 2009-10

= 7759620959 x 100 = 91.16%

8512287049

Manufacturing industries is very importance of this ratio. Because how

efficiently use of fixed assets. This ratio is so high so good. Fixed Assets to
sales ratio is increasing 2009, 82.15% to 91.16 in 2010. This ratio shows
50
how efficiently the fixed assets are being used. Fall in this ratio shows that
fixed assets have not been used efficiently.

5. DEBTORS TO SALES RATIO: -

= Debtors x 100
Total Sales

In year 2008-09

= 1027730365x 100 =15.42%

6665884442

In year 2009-10

= 1419199170 x 100 = 16.68%

8512287049

This ratio shows the extent of trade credit granted and the efficiency of
trade credit management. The lower the Debtors to Sales Ratio and shorter
the average collection period the better is the trade credit management. It
means the sales 15.42% in 2009 increase in 2010 to 16.68 we sales 15% or
16% on credit, in this type business that shows normal or average situation.
We are careful for not increase credit sales 15% or 16%. Limit of credit sales
20 to 25%.

7. CURRENT RATIO: -

= Current Assets
Current Liabilities

In year 2008-09

= 3763800854 = 1.94 times

51
 1936195935

In year 2009-10

= 3970226431 = 2.32 times

1706743915

Current Ratio is the most important ratio as far as the analysis of working
capital management is concerned. This ratio indicates the extent of
soundness of current financial position of an undertaking and degree of
safety provided to the creditors. The higher the current ratio and larger the
amount of money available per rupee of current liabilities, the more is the
firm’s ability to meet the current obligations and greater is the safety of
funds for short term creditors.

HSI industries current ratio in 2009 is 1.94 times that increase in 2010 are
2.32 times this shows we are very sound position. HSI pay their current
liabilities with in one year. Generally the current ratio of 2:1 is considered as
satisfactory and ideal for business concern. But this standard cannot be
discriminately because a satisfactory position depends upon many other
factors and also the nature of the industry.

8. QUICK RATIO: -

This ratio establishes a relationship between quick assets and current

liabilities. This ratio is being calculated as follows: -

= Current Assets – Inventories – Prepaid expenses

Current Liabilities

In year 2008-09

= 3763800854 – 1509397161 - 421225758 =0.95 times

1936195935
52
In year 2009-10

= 3970226431 – 1625779868 - 673633327 =0.98 times

1706743915

Quick ratio is mere the redefined tool. It is a better test for measuring the
financial strength then the current ratio because it excludes the very slow
moving inventories and item of current assets, which cannot be converted in
to cash. A quick ratio of 1:1 is considered to be satisfactory. HSI increase his
current assets, because we are low at ideal level. Yet we are in good position.

9. GROSS PROFIT RATIO:-

= Gross Profit x 100

Net Sales

In year 2008-09
= 1649722857 x 100 = 24.75%
6665884442

In year 2009-10

= 2286144651 x 100 = 26.86%

8512287049

The Gross Profit Ratio of the company is increasing continuously since

2009-10, which indicates that profitability position of the company is quite
good. It increases from 26.80% to 28.42%. That means our sales turnover is
increasing and profit is also increased. This ratio is sufficient that we pay
operating expenses, interest on loans and transfer to reserves.

10. DEBT—EQUITY RATIO

53
= Long term loans
Shareholders funds

In year 2008-09

= 4707417576 = 1.97 times

2389931908

In year 2009-10

= 4926281348 = 1.34 times

3683413704
Debt equity ratio signifies the proportion of debt & equity. There should be
proper balance between these two. Debt – equity ratio of company in 2009
1.97 : 1, which decreases to 1.34 : 1 in 2010. It means debt equity ratio of
the company has remained near to standards (2:1) which signifies that the
long - term position of the company is sound. In 2010 company use 1.34 of
debt, it means we pay 63% of liabilities with in one year that shows HSI are
in very sound position.

11. RETURN ON CAPITAL EMPLOYED

= Profit before interest, tax and dividends x 100

Capital Employed

In year 2008-09

=661503298 x 100 =10.73%

6160957803

In year 2009-10

=970962279 x 100
=9.77%
9942453812
54
 This ratio reflects the true earning capacity of the resources employed in the firm. It
measures how efficiently the capital employed in the business is being used. In HSIL
Return on capital employed ratio is decreases from10.73% to 9.77%.This is the only
minus point of HSI because return on capital employed decrease 1% in comparison of
2009.

12. INVENTORY TUNOVER RATIO

= Cost of goods sold
Average Stock

In year 2008-09

= 4508022244 =7.20 times

626409742

In year 2009-10

= 6226142398 =5.34 times

1166590206

This ratio indicates whether stock has been efficiently used or not. It shows the speed
with which the stock is rotated into sales during the year. The higher the ratio better it is,
since it indicates that stock is selling quickly. This ratio is decreased from 7.20 times to
5.34 times. It means sales are not made quickly.

55
CHART: Profit and Sale show the growth of HSIL what a monopoly.

Year Profit Sale

1 2007 443545432 5080000000 8.731209
2 2008 421674172 5208411735 8.096022
3 2009 493400212 6157745101 8.012677
4 2010 569013661 8042366990 7.075201

56
EARNING PER SHARE OF HSIL WHAT A RETURN.

Earning Per Share

Year 2007 2008 2009 2010

Earning Per Share 5.31 4.87 5.94 7.93

57
\\WORKING CAPITAL CHART SHOW INCRASE IN WORKING
CAPITL RAPIDLY.

WORKING
CAPITAL
years 2007 2008 2009 2010
Working capital 15.62 18.42 18.85 16.9

58
 CHAPT
ER-VII

59
 Findings

The requirement of net working capital for the co. in 2010-11 is

Rs.4420965032

Which is approx. 2 times than the previous year?

 The future requirement for Working Capital is increases at the rate of

10% in every two years. Working capital is increases because turnover of the
co. is increases and to maintain the proper stock of inventory. Also because
the product line and capacity is increasing that’s why in future need for
working capital are increases.

 HSIL enjoys 40% market Share of India’s organized sanitary ware

business. The market share is determined by survey of organized sector of
sanitary ware. To increase its market share from 36% to 40% the company
strengthen its distribution network through the following initiatives: --

i) Increase in authorized dealers by 91 in 2009 and 201 in 2010

ii) Increase its retailer outlets to 12000.

iii) Introduction of C&F agents into the distribution network at strategic

locations to shrink delivery time and holding time at the dealers end,
improving his profitability.

60
 The Financial strength of the company is:

a) Current ratio of the company is 2.32 times which is according to the

standards. It shows that the company is able to pay its current liabilities.

b) Gross Profit ratio of the company also increases from 26.80 to 28.42,
which indicates that profitability position of the company is quite good.

(c) Fixed Asset to Sale ratio manufacturing industries is very importance

of this ratio. Because how efficiently use of fixed assets. This ratio is so high
so good.

Fixed Assets to sales ratio is increasing 2009, 88.93% to 96.48 in 2010. This
ratio shows how efficiently the fixed assets are being used.

Debt equity ratio signifies the proportion of debt & equity. There should be
proper balance between these two. Debt – equity ratio of company in 2009
1.97 : 1, which decreases to 1.34 : 1 in 2010. It means debt equity ratio of
the company has remained near to standards (2:1) which signifies that the
long - term position of the company is sound. In 2010 company use 1.34 of
debt, it means we pay 63% of liabilities with in one year that shows HSI are
in very sound position.

Weaknesses of the company are:

Due to heavy capital-intensive unit the return on capital employed is low.

a) Average collection period of the company increased from 58 to 62 days.

b) This ratio reflects the true earning capacity of the resources employed in
the firm. It measures how efficiently the capital employed in the business is
being used. In HSIL Return on capital employed ratio is decreases
from10.73% to 9.77%.This is the only minus point of HSI because return on
capital employed decrease 1% in comparison of 2009.

c) Quick ratio is mere the redefined tool. It is a better test for measuring the
financial strength then the current ratio because it excludes the very slow
61
 moving inventories and item of current assets, which cannot be converted in
to cash. A quick ratio of 1:1 is considered to be satisfactory. HSI increase his
current assets, because we are low at ideal level. Yet we are in good position.

d) This ratio indicates whether stock has been efficiently used or not. It
shows the speed with which the stock is rotated into sales during the year.
The higher the ratio better it is, since it indicates that stock is selling quickly.
This ratio is decreased from 7.20 times to 5.34 times. It means sales are not
made quickly in comparison of 2009. we make extra effort to increase the
sale.

62
CHAPTER - VIII

LIMITATIONS
63
Although every effort has been into collect the relevant information
through the sources available still some relevant information could not
be gathered.

 The time duration could not provide ample opportunity to study

every detail of management of the company.

 As some figures have not been disclosed by the company on the

account of confidential report.

 There is restriction not to visit some specific areas of the company.

 Certain calculations regarding the projects were really

complicated.

64
CHAPTER - IX

65
 RECOMMENDATIONS

 The company should maintain the same standards in future so that it can
retain its potential customers & it should increase its turnover by dynamic
sales policy and aggressive attitude. Company increase marketing expanses
like advertisement.

 Working Capital is increases at 10 to 15 % every year because fixed

assets & sales are increasing over a period of time. This shows the
requirement of working capital will increase in future because product range
and capacity is increases. To maintain the proper level of inventories
working capital is required. So the firm should apply for cash credit limit
with bank.

 Company increases the market share for perfect monopoly. Because

many competitor come in the market especially Paryeware, M Sara, Roca
and liberty. Company make brand loyalty for providing more efficient
service like fitting facility, Guideline of use and free offer of powder for
washbasin and sentry ware product.

 Return on capital employed is decreasing from 10.73 to 9.77%. The

company has to take decisions regarding investment of funds. It has to
invest in new projects to increase the return on capital employed. And also
increase the product line.

 The study of Working capital of the company shows that it is going well
but still the company should made efforts to maintain & further improve its
present position.

 HSIL is a reputed company in today’s sanitary ware market. The product

of HSIL is of superior quality and is up to expectations of the customers.
Therefore HSIL should min in the market

66
 HSIL make wine and bear bottle in is glass factory and try to contract in
this type of company Kingfisher. And also make Tea Cup and plate because
its helpful to send to local customer.

CHAPTER - X

67
68
CONCLUSION REMARKS ABOUT THE ORGANISATION
AS WHOLE:

Private Indications: - (My Thinking)

1. There is a great coordination between various departments such as

materials, stores, accounts, finance and production. The information
system between these departments is efficient that any happening or
requirements of any of the departments are quickly reported to
another.

2. Financial position of the organization is quite good.

3. Workers and employees are very cooperative and extremely hard

working people, purely dedicated to their respective jobs.

4. Management has taken full attention towards adoption of modern

technology and also towards making employment of skilled workers
that is right man to the right job.

5. After doing a detailed study of financial analysis & whole study the
Co’s balance sheet and Profit & Loss, financial position of company
have long term planning and have a great future of growth.

69
 BIBLIOGRAPHY

 Khan & Jain ,”Financial management”, Third Edition

 Prasana Chandra ,” Management of Financial Services”,

Second Edition

 D.K. Goyal (2007). “Financial Management “ ,Fifth Edition

 Gorden & Natrajan ,”Financial Setrvices “, Forth Edition

70
Website address

chennai@hindware.co.in

Bangalore@hindware.co.in

Mumbai@hindware.co.in

hsikolsale@somanyent.com

marketing.hyd@hindware.co.in

APPENDIX

HINDUSTAN SANITARYWARE & INDUSTRIES LIMITED

Consolidated Profit and Loss for the year ended 31 March 2010

71
 (Amount in Rs.)
Schedule Year ended Year ended
31-Mar-2010 31-Mar-2009
INCOME
Income from operations 14 8,512,287,049 6,665,884,442
Less: Excise duty on sale of goods 469,920,059 508,139,341

8,042,366,990 6,157,745,101
1,189,287,672 721,506,286
(1,189,287,672) (721,506,286)
Other income 15 146,242,989 94,030,169
Increase/(Decrease) in stocks 16 207,585,458 49,065,754

8,396,195,437 6,300,841,024

EXPENDITURE
Goods purchased for resale 1,191,233,846 959,920,163
Personnel cost 17 879,937,259 671,214,885
Manufacturing, administrative
and other expenses 18 4,851,125,812 3,608,907,973

6,922,296,917 5,240,043,021

Profit before interest, depreciation,

amortization and tax 1,473,898,520 1,060,798,003
Interest 19 401,948,618 168,103,086
Depreciation & amortization 5 502,936,241 283,968,869

Profit before tax 569,013,661 608,726,048

Loss in respect of exceptional transaction 0 115,325,836

Profit before tax 569,013,661 493,400,212

Income tax expense

72
-Provision for Current tax 109,518,858 82,838,503
-Mat Credit (108,569,916) 0
-Income Tax for earlier years 13,491,595 (8,574,158)
-Provision for Fringe Benefit Tax 0 10,358,372
-Provision for Deferred Tax 118,090,237 82,119,339

Profit after tax 436,482,887 326,658,156

Deferred income tax for earlier years

- Current tax 0 (9,400,144)
Transferred from Debenture redemption reserve
on debentures redeemed 0 0

436,482,887 317,258,012
Balance transferred from last year 1,049,344,350 885,089,688

1,485,827,237 1,202,347,700

Appropriations: 0 0
Transferred to general reserve 60,000,000 50,000,000
Interim dividend Paid on equity shares 0 0
Tax Paid on interim dividend 0 0
Proposed dividend on equity shares 110,051,016 88,040,813
Tax on dividend 18,703,170 14,962,537
Balance carried to balance sheet 1,297,073,051 1,049,344,350

1,485,827,237 1,202,347,700

Earnings per share (Rs.)

Basic 7.93 5.94
Diluted 7.93 5.94
73
(Refer note 11 on Schedule 20)

Significant accounting policies 20

Notes to the financial statements 21

74
HINDUSTAN SANITARYWARE & INDUSTRIES LIMITED
Consolidated Balance Sheet as at 31 March 2010
(Amount in Rs.)

Schedule As at As at
31-Mar-2010 31-Mar-2009
SOURCES OF FUNDS
Shareholders' fund
Head Office/Branch Office 0 0
Share Capital 1 110,054,841 110,054,841
Share Application Money
Reserves and surplus 2 4,562,848,829 2,279,877,067

4,672,903,670 2,389,931,908

Loan funds
Secured 3 3,137,369,919 4,331,935,800
Unsecured 4 1,788,911,429 375,481,776

4,926,281,348 4,707,417,576

Deferred tax liability (net) 541,184,735 423,094,498

(Refer note 10 on Schedule
20)

10,140,369,753 7,520,443,982

APPLICATION OF
FUNDS
Fixed assets 5
Gross block 10,358,983,362 6,466,704,742
Less: Depreciation 2,680,012,066 2,241,942,874

Net block 75
7,678,971,296 4,224,761,868
Capital work-in-progress(including
spares) 80,649,663 1,251,510,404

7,759,620,959 5,476,272,272