Submitted to Lovely Professional University

In partial fulfillment of the Requirements for the award of Degree of Master of Business Administration Submitted by: NARENDER KUMAR RS1903A23 REG. NO. 10904044




I, Narender Kumar, Roll No-

student of Masters of Business

Administration from Lovely Professional University, Phagwara hereby declare that I have completed Summer Internship on “ESTIMATION OF FINANCIAL STRENGTH OF ESCORTS” as part of the course requirement. I further declare that the information presented in this project is true and original to the best of my knowledge.

Signature of the Candidate

Presentation In charge (Faculty)



This report is the result of efforts put in by many people who contributed to it by offering valuable suggestions, encouraging advices, constructive criticism and proper guidance. At this level of understanding it is often difficult to understand the wide spectrum of knowledge without proper guidance and advice. Their support and surveillance throughout the project stand out as beacon of inspiration to us. I take this opportunity to express my heartfelt gratitude to my industry guide, Taranjeet Singh, for offering v a l u a b l e suggestions, encouraging advices, constructive criticism and p r o p e r guidance. I would also like to thank my faculty guide Mrs. Upma Sonik, for her continuance guidance, her immense interest, valuable guidance, constant inspiration and kind cooperation throughout the period of work undertaken and furnishing me with the in-depth theoretical knowledge. I would also express my sincere gratitude to Mr. Vijay Nehra, Pulak Sinha, Rajesh Jauhari, Rajender Bhardwaj, S.K. Bali and other members of Escorts who were always very helpful and encouraging. I also acknowledge my profound sense of gratitude to my friends and parents for their moral support to carve out this project



ABOUT THE PROJECT The project is based on the analysis of Escorts and its competitors in the market. these two have been used. Projected ratios.e. ratios calculated from the past financial statements of the same company. financial statements of the same firm. Ratio analysis involves comparison for a useful interpretation of the financial statements. Ratios for coming two years are also being projected which might help the company to take appropriate measures so that it can withstand and gives a better competition to its competitors. Ratios help to summarize large quantities of financial data and to make qualitative judgment about the firm’s financial performance. ratios developed using the projected.Since liquidity ratios and Activity ratios help to measure the firm’s ability to meet current obligations and firm’s efficiency in utilizing its assets respectively. a ratio is used as benchmark for evaluating the financial position and performance of a firm.. i. These relationships establish references to understand how well company is performing and where it stands if compare with its competitors. 5|Page . Ratio of the major competitor at the same point in time. The basic purpose of the project is to assess the financial health of the company and then making a comparison with its competitors through which we can identify the strength of Escorts against its competitors. i.e.e. Ratio analysis A ‘ratio’ is defined as the indicated quotient of two mathematical expressions and as the relationship between two or more things. i. Competitor’s ratios. Performa. Single ratio in itself does not indicate favorable or unfavorable condition. TYPES OF RAT IO:There are mainly five types of ratios. Therefore in this report it is compared with: – – – Past ratios. One of the best way to establish a relationship with company’s performance and competitors is by using ”RATIO ANALYSIS”. In Financial analysis.

4. 2. The study has great significance and provides benefits to various parties whom directly or indirectly interact with the company.Objective of the project:➢ To evaluate current performance of the company and comparing it with its past performances. activity and profitability. 6|Page . The study is also beneficial to employees and offers motivation by showing how actively they are contributing for company’s growth. It is beneficial to management of the company by providing crystal clear picture regarding important aspects like liquidity. 3. ➢ To assess the long-term and short-term financial soundness of the company. ➢ To make a comparison of Escorts performance with its competitors. SIGNIFICANCE OF THE STUDY 1. ➢ To find out various reasons which are responsible for the differences in the performance of Escorts and its competitors. The investors who are interested in investing in the company’s shares will also get benefited by going through the study and can easily take a decision whether to invest or not to invest in the company’s shares. leverage.

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the first tractor FORD 3000 rolled out of the factory. They also offer brakes. in January 1960. Escorts Tractors ltd. made a technical and financial joint venture with the global giant Ford Motor Company. Ltd. The company manufactures and exports Tractors and Tractor Parts. shock absorbers. In the year 1951 Escorts established India‟s first private institute of Farm Mechanization at Delhi and in year 1953 Escorts (Agents ltd. in Lahore. rail fastening systems. merged to form Escorts Agents Pvt. HISTORY ➢ Escorts ltd. the company was converted into a public limited company in December 1959 and subsequently the name was changed to Escorts Ltd. Also. Gear boxes. was incorporated in the year 1944 as Escorts Agents ltd. couplers. Diesel Engines. they set up their second plant at 8|Page . USA for manufacturing Ford Tractors in India. And in February 1. 1971. Connecting rods and Spindles. Engine blocks. Shafts.COMPANY PROFILE INTRODUCTION Escorts ltd.) and Escorts ( Agriculture and Machines) ltd. Crankshafts. Gears. Cylinder Heads. is one of the pioneer manufacturer and exporter of Agri Machineries. ➢ In year 1961. composite brake blocks and vulcanized rubber parts. ➢ 1n 1977. the company set up their first independent R&D center namely Escorts Scientific Research Center at Faridabad. The company through their subsidiaries operates in the ITES and financial services sectors.

they made collaboration with Jeumont Schneider of France and Dynapac of Sweden to manufacture EPABX systems and vibratory road compactors respectively. Germany. their joint venture partner in Escorts Claas Ltd. in which the company is getting out of all the unrelated business and to remain focused on the three core businesses.2 million. They signed a MoU with Long Manufacturing Company of USA for setting up a joint venture in USA. Uttrakhand for manufacturing of new range of railway equipment. they entered into an agreement with Claas KgaA. the company signed a MoU with a Polish Company POL-MOT for assembling. Carraro India Ltd. the company entered into an agreement with Fortis Healthcare Ltd to divest their shares in Escort Heart Institute and Research Centre Ltd for a consideration of Rs 520 crore. they made collaboration with JCB Excavators Ltd.. became the subsidiary companies.. ➢ During the year 2006-07. they set up a subsidiary namely. the company embarked on entering into the manufacturing of shock absorbers for commercial vehicles. In September 2005. In 1984. Escorts Heart Centre Ltd. ➢ During the year 2005-06. UK for manufacturing of Excavators. 9|Page . Escorts Heart and Super Speciality Institute Ltd. ➢ In 1980. the company sold their 26% shareholdings in Yamaha Motors Escorts Ltd. to divest their share in Escorts Telecommunication Ltd.. ➢ During the year 2001-02. manufacturing and marketing of Farm Machinery. Also. in the Information Technology Sector. In 1979. Automatrix India Pvt Ltd and Escorts Research and Development Ltd. In 1998. company signed an agreement with the Japanese bike giant Yamaha to manufacture motorcycles with Yamaha technology. During the year. In September 1999. the company entered into an agreement with Idea Cellular Ltd. for sale of their 60% equity in the joint venture for a consideration of Euro 13. Also. tha company set up a new manufacturing facility in Rudrapur.Bangalore for manufacturing piston assemblies. the company forayed into healthcare and set up Escorts Hospital and Research Center in Faridabad. ➢ In 1997. Escosoft Technologies Ltd. the company made a joint venture agreement with New Holland and launched Farmtrac Tractor. The company sold their stake in in the software companies and all divested 49% stake in joint venture. ➢ 1n 1999. ➢ ➢ In January 2004. they made a joint venture with First Pacific Company of Hong Kong and formed Escotel Mobile Communications. the company launched Powertrac tractors.

Over a million tractors and over 16. Escorts is today in the league of premier corporate entities in India. It has been a harbinger of new technologies. UK for the manufacturing of Ford agricultural tractors in India. In the over six decades of their inception.  In 1996. globally competitive indigenous engineering capabilities. over 1600 sales and service outlets and footprints in over 40 countries have been instrumental in making Escorts the Indian multinational.. transmissions. hydraulics.  In 1969. which will help it to be a key driver of manufacturing excellence in the global arena. Escorts has been much more than just being one of the India‟s largest engineering companies. Today. Following the globally accepted best manufacturing practices with relentless focus on research and development. Escort is fast on the path of an internal transformation. In today‟s Global Market Place. gears. Technologies Escorts AMG has three recognized and well accepted tractor brands.. Escorts is rightly placed to be the dependable outsourcing partner of world‟s leading engineering corporations looking at outsourcing manufacture of engines. was established with equity participation of Ford Motor Co. complemented by a highly satisfied customer base. implements and attachments to tractors and shock absorbers for heavy trailers and armoured tanks. a prime mover on the industrial front. which are on distinct and separate technology platforms. at every stage introducing products and technologies that help take the country forward in key growth areas.Throughout the evolution of Escorts. 10 | P a g e . technology has always been its greatest ally for growth.  In 1965. Technological and business collaboration with world leaders all over the years. ESCORTS (AGRI MACHINERY GROUP) Background  In 1960. are testimony to the manufacturing excellence of Escorts. formally merged with the parent company Escorts Ltd. Basildon. Escorts set up the strategic Agri Machinery Group (AMG) to venture into tractors. a separate company Escorts Tractors Ltd. Escorts Tractors Ltd.000 construction and material handling equipments that have rolled out from the facilities of Escorts. the company rolled out its first batch of tractors under the brand name of Escort. when the world is looking at India as an outsourcing destination.

INTERNATIONAL SUBSIDIARIES Escorts AMG has two international subsidiaries. with single reduction and epicyclic reduction transmissions from 34 to 75 hp. in Poland. WEAKNESSES ➢ High prices as compared to the market 11 | P a g e .z. ➢ Excellent distributorship network across India.  Farmtrac North America LLC in USA  Farmtrac Tractors Europe Sp. SWOT ANALYSIS STRENGTHS ➢ Company is having good image in the market. Farmtrac: World class premium tractors. ➢ The use of latest technology. ➢ Good quality standards of production.o. India‟s No. 1 economy range-engineered to give spectacular diesel economy.o. ➢ Provide better services all the time. ➢ Always able to deliver the product in time. Pioneering brand of tractors introduced by Escorts with unbeatable advantages.  Powertrac: Utility and Value-for-money tractors. offering straight axle and hub-reduction tractors from 34 to 55 hp.  Escort: Economy tractors having hub-reduction transmission and twin cylinder engines from 27 to 35 hp.

➢ Even now. Agriculture in India is unique in its characteristics.OPPORTUNITIES ➢ The growing domestic demand for food grains and agri products promises a very good future for company‟s core business. So this sector is having wide scope to enhance its sales which results in an increase in its market share. where over 250 crops are cultivated in its varied agro-climatic regions. ➢ India being a major exporter of grains and other Agri products can increase demand both for domestic and international market resulting more sale in this sector especially TRACTORS. ➢ New technologies are invented for the production of the tractors which can help the company to produce tractors at a much cheaper rate and in less time. THREATS ➢ The sales of tractors are seasonal according to the requirement of the farmers. unlike 25-30 crops 12 | P a g e . ➢ Many of the farmers are illiterates and does not know the various uses of tractors. LITERATURE REVIEW India is mainly an agricultural country. the farmers are unaware about the schemes and the upliftment made by the government. ➢ Government launching new schemes for the farmers to buy latest technologies for their farming techniques. ➢ Government upliftment towards the loan waiver scheme can also help the farmers to attract towards the tractors.

approximately 25 percent of India‟s GDP.5 percent of national income. irrigation pumps. It is also employed for carrying out various operations related to raising of crops by attaching suitable implements and to provide the necessary energy for performing various crop production operation involved in the production of agricultural crops. Tractor is used for multitude of uses. it is used in agriculture for both land reclamation and for carrying out cultivation of various crops.grown in many of the developed nations of the world. supporting two-thirds of the work force and employ about 62 percent of the population. Tractors are capital intensive. Tractors are part of agricultural machinery industry and forms an integral part of farm mechanization and plays a very crucial role in increasing productivity. therefore. Irrigation played a major role in increasing the productivity. The increase in production of food grains was possible as a result of adoption of quality seeds. 13 | P a g e . the total food grain production increased from a mere 50. Increased cropping intensity and higher quantity of inputs can no longer be effectively managed by animal power alone and. about 18 percent of total exports. farmers adopted tractors. harvesters and power threshers extensively. in construction industry and for haulage operation. higher dose of fertilizer and plant protection chemicals. labour displaying used as a mode of transport.8 million tonnes during 1950-51 to 217 million tonnes in 2009-10 and productivity increased from 522 kg/ha to more than 1. As a Green Revolution in the sixties. Agriculture is one of the most important sectors of the Indian economy contributing 18. in electricity generation.500 kg/ha.

 1981 to 1990 Five new manufacturers began production during this period but only one among them survived due to increased competition in the market place.000 by 1980. UK and total production climbed steadily to 33.000 in 1975 reaching 71.000 by 1960. 20.000 units when 14 | P a g e . There were 8. Tractor came to India through imports and later on the manufacturing started with the help of foreign collaborators the manufacturing process started in the year 1961-62.  1961 to 1970 Home production began in 1961 with five manufacturers producing a total of 880 units per year.HISTORY At the time of independence the level of mechanization was low so the government started investing in establishing agricultural research farms and colleges and large scale irrigational schemes to improve the situation. By 1970 annual production had exceeded 20.40.  1971 to 1980 Six new manufacturers were established during this period although three companies (Kirloskar Tractors. Despite the aggressiveness the production of tractors grew slowly in the first three decades. began local manufacturing of Ford tractors in 1971 in joint collaboration with Ford. By 1985 annual production exceeded 75.46.000 units per year and the tractors in use had risen to over 52. In1947 Central and State Tractor Organizations were set up to develop and promote the supply and use of tractors in agriculture and till 1960. By 1965 this had increased to over 5.000 units per year and by 1990 it crossed the mark of 1.000.000 units working in the country. The five year plans during the 1950‟s and 1960‟s aggressively promoted rural mechanization through joint ventures and tie-ups between industrialists and international tractor manufacturers.000 in 1955 and 37.000 with over 1. the demand was met entirely through imports. Harsha Tractors and Pittie Tractors) did not survive.500 tractors in use in 1951. The history of tractors in India can be described in following phases: 1945 to 1960 War surplus tractors and bulldozers were imported for land reclamation and cultivation in mid 1940‟s. Escorts Ltd.

000. In 1998 Bajaj Tempo. Haryana and eastern Uttar Pradesh) tractors sales began a slow and slight decline. But sales remained in a slump. Larsen and Toubro have established a joint venture with John Deere. already well established in the motor industry.000 units and the national tractor population had passed the two million mark.  1999 to present Facing market saturation in the traditional markets of the North West (Punjab. Then India-which was a net importer till seventies became the exporter in the 1980s mainly to the African countries. Manufacturers headed towards the eastern and southern India markets in an attempt to reverse the decline. Annual production exceeded 255. 1 15 | P a g e . and began exploring the potential for overseas markets. Looking to South American export markets Mahindra and Mahindra are also developing a joint venture with Case for tractors in the 60-200 hp range. By 2002 sales went below 200. once again there was a slight increase in sales due to stronger and national and to some extent international markets.000.  1997 to 1999 Five new manufacturers have started production since 1997. USA for the manufacture of 35-65 hp tractors at a plant in Pune. But by 2006 sales once again were down to 216. obtaining of the license was not necessary for the tractor manufacturing in India. began tractor production in Pune.2 million.the total in use was about 1. India now emerged a one of the world leaders in the tractor production.  1991 to 1997 Since 1992. By 2004.000 and now in 2007-08 have slid further to just over 200. Maharashtra and Greeves Ltd will produce Same tractors under similar arrangements with Same Deutz Fahr of Italy. In April of the same year New Holland Tractor (India) Ltd launched production of 70 hp tractors with matching equipment. The company made a $US 75 million initial investment in a state of the art plant at Greater Noida in Uttar Pradesh state with an initial capacity of 35000 units per year.

U. Consequently. it now occupies a place of pride in India‟s automobile industry.R. 31-40 HP. In India tractor industry has played a vital role in the development. It is a typical sector where both imported technology and indigenous developed technology have developed towards meeting the overall national requirements. Indian tractor industry is comparatively young as compared to the world standards and has expanded at a spectacular pace during last four decades.000 tractors are produced and 2. SEGMENT WISE ANALYSIS 16 | P a g e .000 are sold. The medium horse power category tractors.00. The spectacular achievement reflects the maturity and dynamism of tractor manufacturers and also the policies adopted by the government to enable it to effectively meet the demand.A.. the southern region is still under penetrated. On an average around 4.000 crores.S. U. While the northern region is now almost saturated in terms of new tractor sales. Also the penetration levels are not uniform throughout the country.60. But because of its very low penetration level in India as compared to the world standards it drops to the eighth position in terms of total tractor in use. and only a few Western European countries exceed the current production of tractors in India but in terms of growth.S. The tractor industry in India has made a significant progress in terms of production and capacity as well as indigenization of technology. About 20 percent of world‟s tractor production occurs in India only. HOME MARKET Tractor market in India is about Rs 6.S.Present Scenario India‟s gross cropped area which is 42 percent of the total geographical area is next only to Unites States of America and Russia along with fragmented land holdings has helped India to become the largest tractor market in the world. are the most popular in the country and fastest growing segment. India‟s growth are unmatched even with countries of long history of tractor manufacturing.

21-30hp 31-40hp 41-50hp 50 hp and above India tractor market is characterized by medium horse-power tractors which consists of mostly 31-40hp tractors and the market share gabbed by this segment is 47% of total market share. 17 | P a g e . It has the market share of about 23%. The reason of the popularity of this segment tractor is that the major tractor demanding states like Haryana. The tractors of 21-30hp and above 50hp category have the market shares of 20% and 10% respectively. Growth of the industry depends on the growth of this category. This is the most popular and fastest growing segment in India and dominates the market. Punjab and U. The other category with the second largest market share is of 41-50hp.P have plenty of alluvial soil which does not require deep tilling.

Uttar Pradesh. one out of four tractor is being purchased here. Haryana. Gujarat. Andhra Pradesh. Karnataka.7% as compared to last year with major contributors are Uttar Pradesh. There is a growth of 35. Orissa. Uttar Pradesh has the largest tractor market in India. Bihar. This region has benefitted from the nonavailability of labor and non-agricultural use of tractor in construction and infrastructure purposes. The northern region remains the largest tractor market in India with sales crossing 167000 units in 2009-10. Punjab and Rajasthan. Punjab and Madhya Pradesh. Maharashtra.BY SALES ANALYSIS More than 90% of the tractor industry is concentrated in the 12 states namely Haryana. 18 | P a g e . Tamil Nadu. Rajasthan.

900 tractors during 2009-10. Africa.8% over last year however in this region financers are reluctant to finance tractors. 19 | P a g e .The performance of the southern region was modest except Andhra Pradesh who showed a decline. because of fall in sales total southern market grew at a modest rate of 11. It the major market in southern region. The industry exported a total of around 37. EXPORTS Export market for tractors has been grown significantly in India.7% over last year with sale of 92000 units. African countries are also a major importer of Indian Tractors as Indian Tractors are increasingly gaining acceptance in the international markets. Western region has also reported a growth of 35. Exports are increasing considerably in which USA has absorbed a major share. Bihar is the major market in the eastern region which has grown constantly over last few years. Exports to the South-Asian countries like Malaysia and Turkey are growing rapidly as well.9% over last year. In the eastern region sales has gone up by 53. South America and some Asian countries being the top destinations. with the USA.

6 1. HMT MGTL Sonalika (International Tractors Ltd.7 2008-2009 2009-2010 Tractors Ltd.6 1.4 (Punjab 9.8 1.5 & 28.1 0.5 12.2 0. John Deere New Holland India VST Tillers Tractors Others 0. At present Mahindra & Mahindra is the leading player in the Tractor industry with a market share of around 40%.3 15.2 4.5 1.4 1.7 8.2 40.9 0.8 13.KEY PLAYERS AND THEIR MARKET SHARES Many tractor companies are present in Indian market in various segments. Major players operating in this industry with their market shares are:Company’s name Market share ( in percentage ) 2007-2008 Escorts ltd.9 0.7 7.2 0.) FUTURE OUTLOOK 20 | P a g e .2 7.3 0. 12.5 8.9 0.2 7.2 9 5.7 28.3 Mahindra Mahindra Swaraj Eicher TAFE Tractor & farm equipment Ltd.1 10.4 8.8 8.6 21.6 0.1 5.6 14.) Force Motors Ltd.3 0.

In the next 2-3 years. ✔ Government sponsorship of major and monumental projects like the interlinking of rivers/national policy on water resources and implementation is a foregone need. with the expected increase in agricultural production. which has led to exploitation and depletion.The demand in the tractor industry is expected to grow mainly due to the agricultural sector. primary haulage. without having to depend on the yearly variations and unpredictability of monsoons. Also. DRIVERS OF TRACTOR GROWTH Many factors influence tractor demand. Also. demand for tractors is expected to increase significantly in the eastern states. Exports are expected to increase significantly as several Indian Players are targeting the „hobby farming‟ segment in the United States. the shift in trend for demand towards higher horsepower (HP) tractors is expected to continue. The primary usage (agriculture) is dependent upon the following drivers: Expansion and Extension of Agricultural land ✔ From the past 20 years. Most exports are likely to be through overseas partnerships or joint-ventures. Almost all growth has resulted from exploration of groundwater. lakes and retention dams. such as natural water storages. 21 | P a g e . tractor usage has been low. tractors of most Indian manufacturers comply with the emission standards accepted in the US. Primary demand emanates from agricultural growth and secondary demand from dual use of tractors. the incremental progress that will be made during the process of implementation will catapult Indian agriculture to more than the targeted 4 percent of the GDP. which is considerably large. There is an immediate need to expand agri-land by conversion of wasteland. where traditionally. ✔ Availability of water is another important factor in guaranteeing a predictable agricultural yield. it is evident that irrigated and arable land has not increased. In the last four decades. This will be further strengthened by the launch of several new models. Even if the final completion is a generation away. ponds. very few additions have occurred with respect to direct-irrigation potential. The short term focus must be on increasing and maintaining natural water.

Reduced cropping cycle requires deep tilling which translates into higher demand for tractors. future job-opportunity. therefore. The government must initiate a long-term policy of zero or marginal interest rates to enhance the use of agricultural mechanization. 22 | P a g e . so the demand of tractor is well maintained during the drought period also. Mechanized operations and the use of tractors ia preferred to eliminate drudgery and delay and also to avoid the labour shortage during the harvesting. This purpose can be very well fulfilled by the tractor. in order to increase farming income and to attract a new crop of young farmers. ✔ Insufficient animal power To meet the power demand of farmers the availability of the animal power is not sufficient. The government must enable farmers to move away from low-yield to higher value crops in a judicious manner.Value additions in farming ✔ Land is limited. ✔ ✔ Return on Investment (ROI) increases in farming will attract educated youth and will become another satisfying. ✔ Improved irrigational facilities Improvement in the irrigational facilities had reduced in the reliance on the monsoon and allows for the quick yielding varieties of food grains. ✔ Deep – Tilling Agronomists believe that there is a need for more tilling due to the depletion of moisture and repeated cultivation of land. ✔ We have to look at the world as the source and the consumer. It has reduced the cropping cycle from traditional 5-6 months to 3-4 months. It must be our aim to get the maximum yield from every acre of farmable land. Credit and Money availability has always been a big factor in the tractor industry‟s and mechanization‟s fortunes.


✔ Buying capacity – reduction in average age of tractor buyers from the age group of above 40 to younger individuals. ✔ Increasing demands ✔ Higher expectations on comfort levels ✔ Better finish (paint finish like cars) ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ Fuel economy Likes on new models Awareness about latest technologies Longer life - resale value New product development Application of electronics – The recent developments in applications of electronics on agricultural tractors like GPS and Auto Cruise Systems have helped farmers greatly. Alternate Energy – alternate energy source development and tractor development are interdependent. Increased focus on agri-based energy policy in near future. Production of fuel oil and biomass power Lucrative alternate markets for farm produce Reduce the country‟s dependence on imported fuels Alternate energy development – most important agenda for power train research and development.

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RISK FACTORS OF TRACTOR INDUSTRY There are various risk factors that are related to the tractor industry. Some of them are – Dependency on Monsoon High product life Lack of access to financing Suboptimal irrigation infrastructure Increasing fragmentation of land The performance of the tractor industry is closely and directly related to the performance of agricultural sector. Even now, there is a heavy dependency on monsoon and a large majority of farms are still rain fed. The phase of first monsoon from June to September of 2008-09 was 98% of the Long Period Average, resulting in good crop. However, the second half of the year, resulted in deficient north-east rainfall in 30 of the 36 meteorological districts. Apart from the dependency on monsoons the irrigation infrastructure is also suboptimal. Furthermore, there is a huge pressure on the existing agricultural land. The Net Sown Area across States has either remained constant or changed slightly and efficient land utilization is approaching the peak level in all states. PROFILES OF KEY INDIAN PLAYERS Mahindra & Mahindra Ltd. (M & M) Mahindra & Mahindra, headquartered in Mumbai, India, is principally involved in the manufacture, distribution, sale of farm equipments and utility vehicles. The company‟s operations are divided into four business segments: automotive, farm equipment, financial services and IT services. M&M‟s farm equipment sector has market leadership in the domestic market for last 24 years. The farm equipment segment has significant presence across six continents and manufactures agricultural tractors and implements that are used in conjunction with tractors and industrial engines at its Kandivli and Nagpur plants in Maharashtra. One of the top five tractor brands in

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the world, the company has its own state of the art plants in India, USA, China and Australia and a capacity to produce 1,50,000 tractors per year. TRACTORS AND FARMS EUIPMENT LIMITED (TAFE) TAFE is a US $750 million tractor major incorporated in 1960 at Chennai in India, in collaboration with Massey Ferguson (which is now owned by AGCO Corporation, USA). TAFE acquired the Eicher Tractors business, its engine plant at Alwar and transmissions plant at Parwanoo through a wholly owned subsidiary “TAFE Motors and Tractors Limited”. This company has four plants involved in tractor manufacturing at Mandidheep (Bhopal), Kallidaipatti (Madurai), Doddabalbur (Bangalore) and in Chennai. Apart from being among the top five tractor manufacturers in the world, TAFE is also involved in making diesel engines, gears, panel instruments, engineering plastics, hydraulic pumps, plantations and passenger car distribution through other divisions and wholly owned subsidiaries.

Escorts Agri Machinery Group (AMG) Escorts Ltd. set up the strategic Agri Machinery Group (AMG) in 1960 to venture into tractors. The company rolled out its first brand of tractors „Escort‟ in 1965. In 1969 a separate company “Escorts Tractors Ltd.” was established with equity participation of Ford Motor Co., Basildon, UK for the manufacture of Ford agricultural tractors in India. In the year 1996, Escorts Tractors Ltd. formally merged with the parent company, Escorts Ltd. Since its inception, the company has manufactured over 1 million tractors. JOHN DEERE Deere & Company, founded in 1837, grew from a one-man blacksmith shop into a worldwide corporation that today does business in more than 160 countries and employs approximately 50,000 people worldwide. To expand its global presence in the agricultural equipment sector, John Deere established a green field project in 1999 under a 50:50 joint venture with Larsen & Toubro (L&T) – an engineering company of repute from India. A state of the art tractor manufacturing plant for 5,000 series John Deere tractor was set up at Sanaswadi, near Pune, in the state of Maharashtra. These tractors were introduced in India in early 2,000. In 2005, Deere and company acquired 25 | P a g e

nearly all the remaining shares in this joint venture. NEW HOLLAND New Holland AG‟s entry into India was facilitated by FIAT‟s acquisition of Ford-New Holland in 1991. dye casting and plastic processing machinery. 4 zonal offices and 270 authorized dealers spread across the country. North America and Latin America. 40. The tractor plants in Pinjore. In 2000. Mexico. metal forming presses. North and South Africa and South East Asia. the capacity of the Noida plant rose to 12. HMT comprises of six subsidiaries under the ambit of a holding company. HMT Limited HMT Limited incorporated in 1953 by the Government of India as a machine tool manufacturing company. The new enterprise. which also manages the tractor business directly. South-East Asia. New Holland India exports fully-built tractors to 51 countries in Africa.000 tractors for the domestic and export markets. New Holland AG‟s parent company FIAT bought 70 percent of holdings of Case New Holland Global. printing machinery. Tractors manufactured in Sanaswadi are also exported to USA. diversified over the years into watches. It also exports subassemblies and other tractor parts to the facilities of CNH Global.000 tractors in the 35-75 HP range. 55 and 70 HP capacities for domestic markets. tractors. 50. Australia.000 tractors per year and in 2007 the company can manufacture close to 24. The factory currently produces modern tractors of 35. 42. with a capacity of 5. West Asia. John Deere Equipment Private Ltd. 47. Turkey. The company has received awards for export excellence in 2005 and 2006 from the Engineering Export Promotion Council. By 1998 New Holland AG (India) completed the construction of a new plant in Noida. In 1999. Hyderabad and Mohali with a capacity of 20. Today.000 per annum. operates through a network of 15 area offices. produce a wide range of tractors from 25-75 26 | P a g e . near Delhi. around the world. CNC systems and bearings.

turnover of 5. RESEARCH METHODOLOGY The methodology to be adopted for the project is explained as under: – The initial step of the project was to study about the company and then evaluating the financial position of the company on the basis of ratio analysis. The company also manufactures a primary and secondary tillage implements. For Escorts Ltd. located in the free shrubs of Punjab and Himachal Pradesh. interpretations were made. engines and various farm equipments. the group stands tall with an approx. The information is collected through secondary sources during the project. DATA COLLECTION The data has been collected in a structured form with the help of staff members of the organization considering various factors concerned with the secrecy and privacy of the organization data. That information was utilized for calculating performance evaluation and based on that. other products include of Multi Utility Vehicles. spread in acres. 27 | P a g e . Sonalika (International Tractors Limited) Established in 1969. planting and harvesting equipment. Sonalika since the inception has tried to understand customer need to be facilitating them with its value for money products. Sonalika is one of the top 3 tractor manufacturing company in India. The data was taken directly from the finance department. – Then in the next step.000 crore INR. the financial position of the company is measured with its competitors through which we would be able o identify the trend and the direction in which company and industry is moving. Today.horsepower (HP) to suit various farming requirements. land shaping. The company has a state of art manufacturing facilities.

data tables and charts. DATA ANALYSIS AND DATA INTERPRETATION DATA ANALYSIS Analysis of the data has been done both qualitatively and quantitatively and well supported by various graphs. These ratios are used to judge the ability of the enterprise to pay its short-term obligations or commitments as and when due. RATIO ANALYSIS OF ESCORTS LIQUIDITY RATIOS “Liquidity” refers to the ability of the firm to meet its current liabilities. Liquidity ratios therefore are also known as “short-term solvency ratios. These ratios are then used for comparison with its own ratios and with the ratios of its competitors.secondary data has been collected from annual reports of the company and data of other companies has been taken from the internet as it was available only within the organization. 28 | P a g e . Various ratios have been used and calculated for the analysis of the company for previous five years. Not only previous ratios are used but ratios of coming two years are also calculated by using the „least square method‟ for the analysis of the company and to determine its financial health.

Significance: Current ratio is a measure of the ability of a firm to meet its short-term obligations and commitments as and when it is due. It indicates margin of safety available to short-term creditors. The higher the 29 | P a g e . A liquidity ratio primarily includes two ratios: ✔ Current ratio ✔ Quick ratio or Acid-test ratio or Liquid ratio Current Ratio The ratio which establishes the relationship between current assets and current liabilities of a business is known as Current ratio. The ratio is calculated by applying the following formula: Current ratio = Current Assets/Current Liabilities Current Assets‟ includes those assets which are either consumed or converted into cash within a period of one year. A current ratio of 2:1 is considered to be an ideal ratio. Current ratio helps management to focus their attention on efficient management of working capital. „Current Liabilities‟ are the liabilities which are to be paid within a period of one year.Short-term creditors of the company are primarily interested in the liquidity ratios of the firm as they want to know how promptly or readily a firm can meet its current liabilities. It is calculated to assess short-term financial position and liquidity of the firm.

83 + 0.ratio the better it is.The above graph for current ratio reveals that the ratio is continuously increasing till 2008 and then there was a minor decrease in 2009.004 X Interpretation. 4 for 2010 & 2011 respectively in all cases) Quick ratio : Y = 0. It is a measure of relationship between liquid assets (quick assets) and current liabilities. S Q C 1 0 e u . This shows that the company has a good position and has the ability to meet its current obligations with the help of current assets in future.09 + 0.011 X (where X=3. Quick ratio Quick ratio is also known as acid-test ratio or liquid ratio. p 7 i 9 1 0 r 8 6 4 2 ’ 9 c 2 7 5 3 4 r 1 0 k e 1 0 9 8 7 6 5 n r t a t r i a o t i o Projected ratios for year 2010 and 2011 by using method of ‘Least Square’. But projected current ratio shows that there would be an increase in ratio in the coming years 2010 and 2011. 30 | P a g e . Equations for regression line or trend line using time series: Current ratio : Y = 1. because the company will be able to pay it liabilities.

projected ratio shows that quick ratio will also increase in coming years. stock and prepaid expenses are excluded from current assets. These ratios are called turnover ratios which involve comparison between the level of sales and investment in various accounts. But the major point to note is that the company does not match to an ideal ratio of 1:1 in its whole period of five years which shows that company does not have very sound position to meet its short-term liabilities and it needs to be taken care off. Interpretation. Quick ratio = Current assets – prepaid expenses – stock/Current liabilities Significance. These ratios are used to measure the speed at which these various elements can be converted into sales or cash. stock and prepaid expenses are not included in quick assets. debtors. stock.„Quick assets‟ are those assets which are quickly convertible into cash without loss of value and time.e.e. Some important turnover ratios are: ✔ Debtors turnover ratio ✔ ✔ ✔ ✔ Creditors turnover ratio Stock turnover ratio Fixed assets turnover ratio Total asset turnover ratio 31 | P a g e . graph reveals that quick ratio is also continuously increasing for first four years and then decrease to its lowest level in 2009.It is a much better test of short-term financial position or liquidity of the firm because of non-liquid current assets i. Similar like current assets. While calculating quick assets. fixed assets etc. ACTIVITY RATIOS Activity ratios measure how effectively the firm employs its resources. i.In the case of acid-test or quick ratio. It is used to measure ability of the firm to pay its current liabilities as and when it is due without depending upon cash generated from sale of stock.

By comparing the debtor turnover ratio of the current year with the previous year. since it means speedier collection and lesser amount being blocked up in debtors and vice-versa.5 X 32 | P a g e . provision for bad and doubtful debts are not deducted from total debtors. The higher the ratio. it may be assessed whether the sale policy of the management is efficient or not. S 7 5 D 3 R C 1 8 6 4 2 0 e . While calculating this ratio.74 – 0. Debtors turnover Ratio=Net Credit Sales/ Avg debtors+Avg B/R Significance. Average accounts receivables includes debtors and bills receivables. the better it is. so that it may not give a false impression that debtors are collected quickly.Debtors turnover ratio This ratio expresses the relationship between „net credit sales‟ and „average accounts receivables‟. Equations for regression line or trend line using time series: Debtor turnover ratio : Y = 5.This ratio indicates the speed with which the amount is collected from debtors. a r 4 2 0 p 7 2 0 4 b 5 6 9 8 1 3 t e ’ 7 8 t 4 9 5 6 2 i d 1 0 o i 1 0 9 8 7 6 5 r t s o r t s u r t n u o r v n e o r v e r Projected ratios for year 2010 and 2011 by using method of ‘least square’.

Hence. Creditors + Avg. A high creditors turnover ratio or a lower credit period ratio signifies that the creditors are being paid promptly. Accounts payable arises on account of credit purchases of goods. Interpretation. B/P Net cr Net credit purchases = total purchases – cash purchases – purchase returns Significance. there is need to apply strict credit policies which results in improvement of the ratio and thus improving the collection Creditors turnover ratio This ratio expresses the relationship between „net credit purchases‟ and average accounts payable. And in this case. a very favorable ratio to this effect shows that the business is not taking the full advantage of credit facilities allowed by the creditors.Creditors turnover ratio : Y = 3.99 – 0.Creditors turnover ratio is the one which reveals about the speed with which the amount is to be returned to the creditors and the number of creditors. A projected ratio also reveals that the ratio will go down in the coming years instead of moving up. However. Creditors turnover ratio = Net Credit Purchases/ Avg. the 33 | P a g e . to prevent such conditions to occur in the future.15 X InterpretationDebtor turnover ratio reveals about the speed with which the amount is collected from debtors. This situation enhances the worthiness of the company. This ratio has been fallen for two consecutive years after 2006 and then shows a little improvement which can be interpret from the increase in the ratio. Fall in this ratio is alarming for the company as it means debtors are taking more time to pay which might result in increase in bad and doubtful debts which in turn affects the net profit of the company.This ratio indicates the speed with which amount is paid to the creditors.

the better it is for the business.lesser the value the more efficient is the management of credit. The higher the ratio. Stock Significance. Projected ratios also give a positive sign which means that the ratio is continuously improving year by year and thus shows an effective management of credit.This ratio indicates the rate at which stock of finished goods are converted into sales. Stock Stock turnover ratio = Cost of goods sold Avg. It also determines how many times stock is purchased or replaced during a year. This ratio is very sound for the company as it is continuously decreasing except in 2008 where a marginal increase was occurred. 34 | P a g e . Concerns having too much stock turnover ratio may be operating with low margin of profit and low turnover may be due to overinvestment in stock. since it means the stock is being sold quickly. Stock turnover ratio This ratio indicates the relationship between „cost of goods sold‟ and „average stock‟ kept during the year.

if it increases in first year and it falls in another. In 2009 the ratio is increased in comparison to 2008 which is good for the company.1 8 6 4 2 0 S e 3 1 4 2 0 t p . the stock will be efficiently used and yields a good profit for the company which helps in improving its other profitability ratios also. o ’ 8 9 5 3 c 1 0 9 6 3 4 7 k 1 0 9 8 7 6 5 t u r n o v e r r a t i o Regression equation : Y = 11. as. And we can also say that. 35 | P a g e .Value of stock turnover ratio shows a zigzag trend.52 + 0.446 X Interpretation. Projected ratio also shows an increasing trend which means that the company will stock into sales more quickly than previous years.

Total asset turnover ratio This ratio indicates the ability of the firm to utilize its total assets to generate sales or in other words we can say.814 + 0. 36 | P a g e . This is not the only thing which is related to this ratio. how well the assets are used in order to generate revenue.027 X Fixed asset turnover ratio : Y = 2. a i p 8 9 7 3 2 4 0 5 t x ’ 2 a 9 8 6 5 4 3 i e 1 0 l o d 1 0 9 8 7 6 5 a s s e t s t t u u r r n n o o v v e e r r Asset turnover ratio = Net Sales /Total assets Regression equations: Total asset turnover ratio : Y = 0. Total S T R F 4 3 2 1 0 e o . This depicts that the assets are being utilized efficiently and effectively.19 X Interpretation. projected ratio in this case also shows an increasing trend. After looking at the projected ratios we can say that the image of the company will definitely improved and it will strongly compete with its competitors. similarly like stock turnover ratio shows an increasing trend but having a decline in 2008 if compared to its previous year and then again starts rising.15 – 0.Total asset turnover ratio. Total assets comprised of all assets including fixed assets and current assets. Thus to maintain its position company has to maintain and further improve its assets turnover so as to stand against the competitors and giving them a strong competition.

Higher ratio indicates efficient utilization of fixed assets while a low ratio indicates under utilization of fixed assets. this ratio shows an increase in 2010 but decrease in 2011. Projected ratio also shows this type of pattern. Interpretation.Apart of showing an increasing trend for total assets and stock turnover. This ratio is showing a more or less zigzag type of pattern.This ratio measures efficiency and extent of utilization of fixed assets. Investments are excluded from fixed assets as they do not affect sales. SOLVENCY RATIOS 37 | P a g e . fixed asset turnover is showing a different kind of pattern. To prevent a decrease in the ratio in the coming years management has to think over the utilization of fixed assets otherwise this will lead to a problem and will give a chance to competitors to move up. the ratio is used to measure the fulfillment of that objective.Fixed asset turnover ratio This ratio shows the relationship between net sales of the firm and its fixed assets. This means that company in not utilizing its fixed assets properly. Fixed asset turnover ratio = Net Sales/ Fixed Assets Significance. Since investments are made for the purpose of efficient sales.

preference share capital. underwriting commission.These ratios are calculated to judge the ability of the firm to pay in time its long term debts. It establishes proportion between external long-term funds provided by outsiders and shareholder‟s funds. share issues expenses etc. Solvency ratios disclose the firm’s ability to meet the interest costs regularly and long term indebtedness at maturity. financial institutions. securities premium. such as debentures.This ratio is calculated to determine long-term financial soundness of the business. The ratio shows the degree of the indebtedness of the company. Significance. capital reserve. general reserve. However. discount on issue of shares and debentures. 38 | P a g e . It reveals the composition of the total long term capital. It helps to judge the ability of the firm to meet its long term obligations. The lower is the ratio. Debt-Equity ratio = Debt ( long term liabilities)/ Equity (shareholder‟s funds) Debt means long term liabilities payable after one year. public deposits. accumulated losses and fictitious assets like preliminary expenses. These ratios reveal as to how much amount in a business have been invested by proprietors and how much amount has been raised from the outside sources. credit balance of P/L account etc. Equity (Shareholder’s funds) refers to equity share capital. should be deducted. more risky it is as it may put the firm into difficulty in meeting its long term obligations to outsiders. the better is the long-term solvency of the business as it reflects more security available to lenders whereas higher the ratio. long-term loans from banks. mortgage loans etc. Some of the important solvency ratios are: Debt-Equity ratio Interest Coverage ratio Debt-Equity ratio This ratio indicates the relationship between debts (long term liabilities) and equity (shareholder funds).

The company has reduced the debts to a large extent because of which ratio is continuously improved from 1.The debt-equity ratio of a company is showing a declining trend continuously over a period of five years and even in the projected years 2010 and 2011.48 X Interpretation.S D R I 3 2 1 0 e a n .48 – 0.18.18 X Interest coverage ratio: Y = 1.02 to 0. This ratio is being calculated by using the following formula: Interest Coverage ratio = EBIT/ Interest payable 39 | P a g e . The decrease of debt in the company means reduction of risks and fewer burdens on the company to pay fixed expenses of interest. ’ 0 8 6 t 7 3 1 2 i e 5 1 0 4 6 o r 1 0 9 8 7 6 5 E e q s u t i t c y o v r e a r t a i g o e Regression equations: Debt-Equity ratio: Y = 0. Interest Coverage ratio The ratio is used to determine how easily a company can pay interest on its outstanding debts or in other words it is measure of the number of times the company can make the payment of interst on its debt with its earnings before interest and taxes (EBIT). So according to this ratio.53 + 0. 0 p 1 3 b 4 9 0 8 7 2 t 5 . we can say that the long-term financial position is sound as company is very less bounded by fixed obligations. In the projected years the ratio comes out to be negative which means that there would be no chances of nay debts in the future which is a much good sign for the company.

Ratios that measure profitability of the enterprise in relation to sales or funds employed in the business are known as profitability ratios. Profitability ratios can be divided into two parts: ➢ Related to sales ➢ Related to investment 40 | P a g e . Interpretation. on the basis of these two ratios we can say that long term position of the company is improving and satisfactory.A high interest coverage ratio is desirable from both the creditors and management point of view. But the minor decrease would not affect the company position as its ratio would be above the standard ratio of 2:1. it can be said that the company is not generating enough revenue to pay its interest payments.5 the ability of the company to pay its debts may be put to question and when the ratio is below 1.Significance.This ratio after showing a decline in 2006 shows an increase continuously in a period of five years. The lower ratio indicates that the company is burdened more by its debts. This means that the company is improving its position significantly. it is projected that the company might face a minor decrease in its interest coverage ratio but after that it will show a continuous increasing trend. A high ratio assures the lender of receiving regular interest payment. Hence. When the ratio is below 1. PROFITABILITY RATIOS As we know that the main objective of every business is to earn profit and thus profit is the measurement of the efficiency of that business. In 2010.

41 | P a g e .Return capital margin OperatingPROFITABILITY RATIOS Grossprofit margin eturnRelatedmargin NetRelated to sales Return on totalemployed on profit worth profit net assets on to investment On the basis sales ➢ Gross profit margin This ratio expresses the relationship between gross profit and sales and is usually expressed in percentage.

gross profit margin will grow very sharply as depicted by the projected ratios. s 1 0 3 9 s 1 0 9 8 7 5 6 p r o f i t m a r g i n Regression equation: Y = 5. 42 | P a g e . 4 1 3 8 0 5 o ’ 0 6 7 2 .Gross profit ratio = Gross Profit * 100/ Net Sales Gross profit = Net sales – cost of goods sold Cost of goods sold = opening stock + net purchases + direct expenses – closing stock Net sales = total sales – sales return Significance.46 X – 0. but also to allow proper returns to owners. Knowledge of gross profit margin helps a firm to decide how much the selling price can be reduced during the time of competition. This increase in gross-profit margin indicates that the rate in increase in cost of goods sold are less than rate of increase in sales.It indicates gross margin on goods sold. But initially the increase in margin was low which was because of slowdown in tractor and agriculture industry. hence increased efficiency. 0 5 1 2 r p . It is clear indicator of efficiency and competence of management. S 7 3 G 2 1 5 0 g e . No ideal ratio is fixed but normally a higher ratio is always considered a good sign so as to cover not only the remaining operating and non-operating expenses etc.75 InterpretationThe gross-profit margin of the company is continuously increasing over a period of five years except a minor decline in 2008. A low ratio may indicate unfavorable purchase and sales policy. In the coming years.

In the initial periods the gross profit margin was improved but the net profit margin was declined. A firm with a high net profit ratio is an advantageous position to survive in case of rising cost of production and falling selling processes. It also indicates the ability of the firm to face the adverse economic conditions in future.✔ Net profit ratio:. 0 t ’ 6 9 3 8 0 1 p 1 0 9 8 7 6 5 r o f i t m a r g i n Regression equation: Y = 1.72 + 0.17 X Interpretation. S N 5 4 3 2 1 0 n 0 . This ratio shows the relationship between net profit and net sales. 43 | P a g e . Net profit ratio = net profit * 100/ net sales Significance. better it is.Net-profit margin shows a declining trend during first three years but after that the margin starts increasing. it may be because of the increase in operating expenses related to sales. the gross-profit margin was negative but net profit margin is positive which may be because of high non-operating income. 1 e p 4 2 1 5 . so in order to avoid this decrease company might have to take appropriate measures which could prevent this upcoming downward situation. Projected ratios reveals that the net-profit margin of the company will decrease in coming two years 2010 and 2011.Net profit is that part of profit that is left after deducting overheads and interest payable from gross profit. Higher the ratio.It measures the rate of return on sales. In 2005.

to earn maximum profit by incurring minimum cost.17 sep'06 5. distribution expenses etc. A lower operating ratio is considered very healthy sign. bank charges etc.87 sep'11 17. Operating ratio = cost of goods sold + operating expenses *100 /net sales Significance. tax provision. selling and administration.3 sep'09 9. operating ratio 20 15 10 5 0 -5 -10 operating ratio sep'05 -8. It indicates optimum use of resources i.The operating ratio is the yardstick to measure the operational level of business. It is very useful for inter-firm as well as intra-firm comparisons.34 44 | P a g e .79 sep'08 5.23 sep'07 5. Operating expenses are those expenses which have been incurred in running the business operations such as office.e.✔ Operating ratio This ratio expresses the relationship between cost of goods sold and operating expenses on one hand and net sales on the other. these expenses do not include the financial expenses such as interest.16 sep'10 13.

In the coming years 2010 and 2011.This ratio measures the overall efficiency of the business and one of the important test of profitability of a business. Because of its continuous improvement or continuous increase in operating-profit margin. E 1 9 0 1 0 9 8 7 5 6 Regression equation: Y = 2.69 X 45 | P a g e .03 + 4. Significance. The higher the ratio.46 + 3. 2 6 3 0 C ’ 7 1 2 8 4 . the more efficient the management is considered to be in using the funds employed.The operating profit ratio also shows an increasing trend during its period except in 2008 where a slight decrease occurred. S 9 6 4 3 2 1 0 R e 6 . As it reveals overall efficiency of the business.47 X Interpretation. this margin will increase steeply. the company now has a very sound position in the industry. 0 1 2 O p . On the basis of investments ✔ Return on Capital Employed (ROI) It is the ratio which measures the overall efficiency of the business.Regression equation: Y = 3. it assumes significance from the point of view of investors. It shows how well the management has utilized the funds employed by owners and others. It is ascertained by comparing profit earned and capital employed o earn that profit and expressed in percentage.

taxes and dividend.This ratio measures how efficiently the funds of equity shareholders are being utilized in the business. Since. 8 3 N N ' 3 1 9 5 6 2 E 1 0 8 E 1 0 9 8 7 6 5 Regression equation: Y = 2. O 2 O p 5 6 2 9 .96 – 0. The higher the ratio the better it is since.11 X 46 | P a g e . we can say that the company is using its funds more effectively and efficiently. the profit available for the equity shareholders is the profit left after payment of interest. ✔ Return on Net Worth (RONW) This ratio measures the profitability of the funds belonging to equity shareholders. s 1 R 8 6 4 2 0 R e 0 . It is a true indicator of the management efficiency since it shows the earning capacity of the equity shareholders fund. This shows that the company is making sufficient return on the capital employed and hence. It is calculated by using the following formula: RONW = Profit after tax – preference dividend * 100/ Shareholders Equity Significance.Return on capital employed (ROCE) has shown a continuous increasing trend not only during a period of five years but also during 2010 and 2011.Interpretation. equity shareholders will get higher dividend in this case.

This ratio indicates how well a company uses its total assets. 5 0 O p 1 2 4 6 . On the other side.Interpretation. But in last two years apart from the projected one. ✔ Return on Total assets (ROTA) This ratio measures the company‟s earning before interest and taxes against its total assets.61 X 47 | P a g e . the ratio is improved because of increase in net-profit. T ’ 6 8 7 2 0 A 1 0 3 1 0 9 8 7 6 5 Regression equation: Y = 5. company should take appropriate measures which leads to improvement in net-profit which further leads to an improvement in RONW.This ratio has shown a decreasing trend in the first three years but in 2008 and 2009 it has shown a sign of improvement. The downward trend in the initial stages was because of falling net profit because of which return to shareholders decline as there was no profit to distribute among them. Hence. However. S 3 6 4 2 1 5 0 R e . It also measures the profitability of the investment which reflects the managerial efficiency. it does not reveal the profitability of different sources of funds used in purchasing the total assets and also the interest paid to creditors is not deducted from the net-profit.1 – 0. RRet Return on Total assets=Profit before interest and tax * 100/ Total asset assets Significance. projected ratio reveals a negative impact of ratio as ratio is decreasing because of decrease in net profits. The higher the ratio. the better is the profit earning capacity of the firm.

Thus. When EPS is calculated for number of years it gives us indication whether the earning power of the company has increased or not. and then shows an increasing trend. STOCK MARKET RATIOS Market ratios measure investor response to owning a company‟s stock and also the cost of issuing stock. But in this case also. It measures the net profit earned per share.Interpretation. 48 | P a g e . managerial efficiency in investment is not there. projected ratio is showing a negative impact as in 2010 and 2011 the ratio starts decreasing again.This ratio is showing a declining trend over a period of three years. Hence we can say that. The prospective investors invest their money into a company after evaluating its EPS.The EPS is one of the important measures of company’s economic performance and prospects of the company. of Equity shares Significance. The ratio is calculated by using the following formula: EPS=Net profit after interest. Types of market ratios are: ➢ Earning per share (EPS) ➢ Price-Earning ratio (P/E) ➢ Earning retention ratio Earning per share This ratio measures the relationship between net profit and number of equity shares. in this case also management has to take appropriate actions or measures and think more than once to invest their money which will result in an improvement in this ratio. tax and preference dividend /No. A higher EPS means better capital productivity and it affects the market price of shares.

the company‟s EPS starts increasing which was because of earning of profits which leads to its improvement in performance. Price Earnings Ratio = Current market price of a share/ Earnings per share 49 | P a g e . 0 5 P p 9 1 8 3 . but afterwards it will continuously grow which will be indicator of its better performance.Earning per share of the company in initial stages shows a declining phase for three consecutive years. according to the projected ratios for two years company might face a decrease in its EPS in year 2010 as compare to 2009. this might be because of losses that company had to suffer which leads to put pressure on the reserves of the company.82 X Interpretation. But. Price Earnings Ratio (P/E ratio) This ratio explains the relationship between current market price of share and earning per share.68 + 0.S 6 9 3 1 5 0 E e . S ’ 6 4 9 8 1 0 7 1 0 9 8 7 6 5 Regression equation: Y = 3. But after 2007.

Projected ratio reveals that company has to face some decline in 2010 initially after that the growth will be continually increasing. A high P/E ratio reflects high earnings potential and low P/E ratio reflects low earnings potential. 0 5 E ’ 1 2 4 7 3 0 1 0 6 7 . In Sept‟07 the company had a very large negative value which was because of huge losses that company had to face during that period. The earning ratio is the opposite of the dividend payout ratio and thus can also be calculated as: Earning Retention ratio = Net income – Dividends/ Net income == 1.63 + 1. Earning Retention ratio The percentage of earning credited to retained earnings is known as retention ratio.07 X Interpretation. as. This ratio reflects the market assessment of the future earnings potential of the company.47 which again falls in 2009. As per the present scenario.Dividend payout ratio 50 | P a g e .Significance.This ratio gives the idea of the payback period of the investment. 3 r 1 0 8 7 6 5 9 a a t i o Regression equation: Y = 2. the proportion of net income that is not paid out as dividends. company‟s P/E ratio shoots up to 51. In other words. The P/E ratio reflects the confidence in the company’s equity. 7 0 5 1 / p 9 8 . investors may have problem in deciding whether to invest amount in buying company’s share or not because of fluctuating P/E ratio. if it moves up in one year it would falls down in another year. S 6 3 P 1 5 0 P e .In the initial stages P/E ratio is showing a zigzag trend. But now the condition is better as after 2007 which was the worst time for the company.

Bu in 2010. S s R 1 9 8 E e 9 1 0 a p . After looking at the projected ratios we can say that the image of the company will definitely improve in future and it will strongly compete with its competitors COMPARATIVE ANALYSIS OF ESCORTS WITH ITS COMPETITORS 51 | P a g e . But it is seen from the above graphs that in the initial four years company did not pay any dividend to its shareholders and retained all its capital for further business operations which may be because of losses that company had faced in its bad time. because of good profitscompany declared dividends for its shareholders which is a sign of improvement. A higher ratio means a stronger financial position of the company.This ratio tells about the amount that is retained by the company to reinvests in the business after paying dividend to shareholders. t 0 r ’ 9 8 i n 1 0 ‘ 2 9 o i 1 9 8 7 6 0 n 5 g R e t e n t i o n R a t i o Regression equation: Y = 97.Significance. afterwards growth will be much better.98 – 2.02 X Interpretation. Projected ratios also depicts that in the coming years company will pay dividend to shareholders and thus shows indirectly that company will earn better profits. company might pay dividend to its shareholders which might be less than as in 2009.This ratio is the indicator of the amount of earnings that has been distributed as dividend to shareholders as well as amount of earnings retained for further business operations. But in 2009.

A ratio under 1 suggests that the company would be unable to pay off its obligations when they arise. a h i n d r Interpretation. the more capable the company is of paying its obligations.Liquidity Ratios – ➢ Current ratio S V H M E 6 5 4 3 2 1 0 e S M a . ➢ Quick ratio 52 | P a g e . After analyzing the ratios of four competitors we can say HMT is the one whose ratio is above the ideal ratio of 2:1 and is improving as compared to sept‟08. s p 8 6 7 T 4 5 h 9 2 1 0 c t ’ 6 9 2 8 1 i 7 5 3 4 o ’ 0 T n r 0 5 i d t 9 8 7 6 l r s l a e l r & t s d M . And lower current ratio can also show the efficient working capital management if the company is not facing any liquidity crisis. inventory and receivables).Current ratio is mainly used to give an idea of the company‟s ability to pay back its short-term liabilities (debt and payables) with its short-term assets (cash. The higher the current ratio. So. If we consider the current ratio HMT has the strongest position but short term solvency cannot be decided on the basis of this ratio only because a company might be having a huge investment in the stock and prepaid expenses which are difficult to realize in very short term. Current ratio of Mahindra & Mahindra is continuously falling down since last 5 years while the ratio of VST Tillers is continuously improving except a fall in sept‟06. for this purpose we calculate the quick ratio. But if we talk about Escorts the ratio is not at all satisfactory as compared to ideal ratio and is continuously improving but it again falls down last year.

s u p 1 4 2 5 T 0 h 9 8 7 c i ' ’ 6 8 4 2 i 7 9 3 5 o c 0 T n r k i d t l r s R l a e l t r & t i s d o M .Quick ratio is a rigorous measure of a firm‟s ability to service short-term liabilities. But ratio of HMT is much higher than the standard ratio and hence. it has the ability to meet its short term liabilities with its quick assets. an acid-test ratio (quick ratio) of 1:1 is considered satisfactory. This ratio is calculated after deducting those assets from current assets which cannot be converted into cash immediately like inventory and pre-paid expenses. Generally. Mahindra & Mahindra and Escorts Activity Ratios – ➢ Debtor turnover ratio 53 | P a g e . Ratio of Escorts is also continuously improving except a shortfall in last year sept‟09 while ratio of Mahindra & Mahindra is continuously moving up and down. On the basis of liquidity ratios we can say that HMT has the strongest short term position followed by VST Tillers. a h i n d r a Interpretation. The reason behind such high current and quick ratio of HMT might be that the company invests too much in the inventory and prepaid expenses and also maintains a huge cash and bank balance followed by large number of debtors. however it is not stable and moving up and down but still manages to be around the standard. According to this ratio only VST Tillers is the one which is close to the ideal ratio.S V 3 5 H 1 M E Q 6 4 2 0 9 8 7 6 e S M a .

There is a continuous short-fall in the ratio except in sept‟07 when there was a increase but still it manages its ratio to be higher than others. An escort also has a satisfactory debtor turnover ratio as it is improving if we compare it with last year. HMT is at the lowest position according to this ratio. h 0 1 4 8 c b ' ’ 4 2 3 i 7 8 6 9 o t 0 T 7 5 2 n r o i d t r l r s l a e l T r & t u s d r M . s e 5 0 p 6 7 2 9 T . Ratio of VST Tillers is also continuously improving except a decline in sept‟08. Mahindra & Mahindra has the highest ratio among all four competitors which shows that it is able to collect receivables from debtors very quickly as compared to others.S 8 V 2 H M 4 6 7 E D 1 5 0 9 8 7 6 S M 2 3 4 a . In this case. A high ratio is indicative of shorter time-lag between credit sales and cash collection. Escorts and HMT. HMT has the lowest debtor ratio and is moving up and down continuously which means that HMT is unable to collect its receivables rapidly and this might be the reason which result in higher current and quick ratio. n a o h v i e n r d r r a t i o Interpretation.This ratio measures how rapidly receivables are collected from debtors. ➢ Stock turnover ratio 54 | P a g e . A low ratio shows that debts are not being collected rapidly. On the basis of this ratio Mahindra & Mahindra is on the top followed by VST Tillers.

Mahindra & Mahindra also shows a continuous improvement over a period of five years which is not shown by any of its competitors. But if we consider HMT we can say that ratio is not at all static and is continuously moving up and down year after year but has shown an improvement as compare to its previous year. Total asset turnover ratio 55 | P a g e . Both of them are very strong competitors according to this ratio and sell their inventory efficiently.S V 3 6 H 9 8 M E 2 1 5 0 e S M 4 2 .Stock Turnover ratio shows that whether the stock has been efficiently utilized or not. a 1 3 s 5 0 p 1 3 7 5 8 T 0 9 h . Ratios of both companies were increased till sept‟07 and after that decrease and then again show an improvement. c t ’ 6 4 7 1 2 i 9 5 3 o ’ 0 T 5 n 9 6 3 4 7 r 0 5 i d t 9 8 7 6 l r s l a e l r & t s d . Interpretation. or the speed at which the inventory can be converted into sales. among four competitors VST and Escorts shows a similar trend. According to this ratio.

S E M H V 1 8 6 4 2 0 e 4 s a M . If we consider Escorts we can say that the company is utilizing its total assets better as compared to previous years as the ratio is improving continuously till sep’07 and after having a shortfall in sep’08 it again rises and thus shows an overall improvement. Escorts needs to utilize its assets more efficiently as compared to VST Tillers. HMT is at the bottom in utilizing its total assets for generating sales and shows a continuous decline except a marginal increase in Sep’06. In order to improve its position. Interpretation. VST Tillers is the one which is most efficient in the industry and which utilized its total assets better as compared to its competitors in generating sales. Mahindra & Mahindra is the one whose efficiency decreases continuously since 5 years and had not shown any improvement even in a single year. Whereas. Moreover. Among the four competitors. ➢ Fixed asset turnover ratio 56 | P a g e . S 0 % p 8 c 9 3 h 2 7 1 T 0 % t ’ o 6 i 2 3 9 4 5 7 % ’ 0 r n T 0 5 t d i 9 8 7 6 s r l a l l e t & r d s . the company is showing an increasing trend in 5 years except a shortfall in sept’08 where it decreased by a low margin.This ratio indicates how efficiently a firm has utilized its total assets to generate sales.

In case of Mahindra & Mahindra and Escorts. Ratio of VST Tillers improved a little in 2009 but in case of HMT the ratio still falls down.This ratio measures the ability of the company to generate net sales from their fixed assets. Mahindra & Mahindra has a better position if we compared it with Escorts according to this ratio Thus we can say that. the ratio was continuously decreasing since 2 years. Solvency Ratios – 57 | P a g e . Interpretation.' S 3 V 7 H 5 M 1 E 8 6 4 2 0 0 5 e S M a . After analyzing these graphs and ratios we can said that VST Tillers and HMT have highest ratio as compared to the other two which means that both company were utilizing their fixed assets more efficiently than any of its competitors but the efficiency of both VST and HMT decreased drastically from 6 to 3 and 1 respectively in year 2008. in order to compete with the competitors Escorts should utilize its fixed assets more efficiently and effectively in generating sales. s 6 p 4 2 7 T 9 8 h 3 5 c ' i o T n r i d t l r s l a e l r & t s d .

The ideal ratio is 2:1. The D/E ratio indicates the margin of safety to the creditors. None of the company (Mahindra & Mahindra and VST) has such a continuous improvement if compared to Escorts. A high ratio indicates that company has higher debts as compared to owner‟s capital and increase of debt in the company is risky as company has to pay the interest to creditors even if it faces losses in any particular year. But if we consider HMT there is drastic change. According to this ratio.This ratio helps us in ascertaining the debt proportion as compared to the shareholders funds and is a measure of long-term financial solvency of a firm.➢ Debt-Equity ratio S V 4 H M E 1 5 0 e S 4 M a . its ratio is moved to1 from 14 which is a much good sign for the company but still it needs further improvement because if its previous ratios are considered then company might have to encounter serious difficulties in raising funds in future. T 7 2 5 h 1 3 4 0 c t ’ 4 0 5 7 9 1 i 8 6 2 o ’ 0 T 1 6 n r 0 5 i d t 9 8 7 6 l r s l a e l r & t s d . all the companies have a very sound position except HMT. Interpretation. s 5 0 p 8 . Escorts is the one whose ratio is continuous decreasing or we can say there is a continuous improvement which is a good sign for the company. ➢ Interest-coverage ratio 58 | P a g e .

Profitability Ratios – 59 | P a g e . this might be because of huge loss in the industry or might be having a less profit. On the basis of this ratio.5 times better than other competitors. h 8 7 2 c 0 't 4 0 6 8 i 7 3 1 2 o ' 0 8 T 4 7 5 n r 0 5 i d t 9 8 7 6 l r s l a e l r & t s d . Whereas Mahindra & Mahindra is the one which was on top till 2007 but after 2007 its net profit started declining and the proportion of debt in its capital structure is also increased because of which interest payment increased and the ratio falls.s V H M 3 E 1 8 6 4 2 0 e 5 1 S M 4 7 3 a . Its ratio is almost double if compared to Sep‟08. VST Tillers is the one which has the highest interest coverage ratio in Sep ‟09 which is almost 3. Interpretation. This ratio is continuously improving in case of Escorts but its position is not satisfactory as compared to its competitors. VST Tillers has the safest long term position and Escorts has to improve its profit in order to improve this ratio as this ratio is fully dependent on the profit before interest. s 0 2 p 3 9 T . HMT has the worst position in the market and now unable to pay off the interest from its net profit. On the basis of this ratio.This ratio is used to determine how easily a company can pay interest on its outstanding debts.

T % 0 t ’ o 4 8 i . 6 3 5 7 1 2 % ’ 0 9 r 8 n 2 3 4 7 1 T 0 5 6 t d 1 i 9 8 7 6 s r l a r l l a e t r d & s . the ratio is continuously improving except a shortfall in the year 2008. Moreover. Position of Escorts is also continuously improving which can be seen from the above graph except a minor shortfall in 2008. While position of Mahindra & Mahindra has shown a declining trend overall. 71 ➢ Net profit ratio 60 | P a g e . HMT is the only one which is facing huge-huge losses and its losses are increasing every year which makes it to stand at the bottom position among its competitors. there had been a rise in year 2007 then it again falls for two consecutive years which made its position unsatisfactory as compared to its competitors. Interpretation. 4 M 3 1 S 0 % 5 p 4 3 c 1 h 8 9 5 .On the basis of sales – ➢ Gross – Profit ratio S 7 3 e 6 8 m H V 1 5 0 e s a 2 . The above data shows that VST has the highest gross-profit margin among its competitors which indicates its strongest position in the market.This ratio is a measure of profits in relation to sales.

In some cases we have seen that net-profit is positive irrespective of positive gross-profit margin.S 5 V H 6 7 M 4 1 3 E 2 0 e S M 1 a . Net profit margin of Escorts is also continuously improving except a decline in 2007. Interpretation. this is because company has earned huge profit from its investing and non-operating activities which made its net profit margin positive irrespective of negative gross-profit margin. HMT shows an increasing trend for three years which means that its net-profit margin increases for three years but after 2007 company is facing huge losses which results in negative net-profit margin ratio. s 0 2 4 6 p 7 4 T 6 8 h 1 5 . The net-profit margin for Escorts was declined for 2 consecutive years till 2007 but from last 2 years company starts to recover from its losses and now starts earning a profit which result in positive net profit margin ratio from negative one. If we look at Mahindra & Mahindra we can say that initially its net-profit margin increases for 3 consecutive years till 2007 but then it starts decreasing. VST Tillers is showing the highest net-profit margin among its competitors and also shows a continuous improvement since last 5 years except a minor decline in 2008. c 0 t ’ 4 . ➢ Operating profit ratio 61 | P a g e . It might be possible that company would be the one which faces highest netprofit margin ratio within 2 years as the increase in margin is too satisfactory. 0 2 1 7 5 i 6 9 3 8 o ' ’ 0 T 8 4 9 2 3 n 1 r 0 5 i 4 1 d t 9 8 7 6 l r s l a e l r & t s d .This ratio measures the relationship between net-profits and sales of a firm.

Escorts also shows a continuous improvement trend except having a shortfall in 2005. On the basis of investments – 62 | P a g e . This ratio helps to assess whether the company would be able to stand in the market or not. Escorts is in better position among its competitors and if it makes little more efforts then surely Escorts would be the top most company in this sector. This shows that VST is the company which has a strongest financial position among its competitors. c 0 ’ 3 0 . Ratio of Mahindra & Mahindra is satisfactory as compared to the competitors other than VST Tillers but its ratio is decreasing continuously from last 2 years.Operating profit ratio indicates the earning capacity of the business from its core operations and it does not include non-operating items. These ratios indicate that VST is the one whose profit margin is continuously improving.S V H 8 M 7 5 3 1 E 2 0 e 6 S 7 M 1 a . it is nowhere in the competitor list as it makes huge-huge losses every year and never gives a positive margin in last 5 years. 3 s 0 2 4 p 6 1 9 T h 3 7 4 . Now considering HMT. not only operating profit margin but net profit and gross profit margin also. a h i n d r a Interpretation. 7 i 9 4 6 o 0 6 7 T 4 1 5 n 2 r 9 7 5 i 1 6 8 d t l r s l a e l r & t s d M .

a h i n d r a Interpretation. Mahindra & Mahindra follows the VST but it is far behind it. In case of Escorts the ratio is continuously increasing since 2007 whereas in case of HMT the ratio is continuously decreasing since 2007. o T n 1 r i d t l r s l a e l r & t s d M . h 2 6 3 c 0 ' 7 9 3 6 i 2 8 4 . It is positive bur has reached to all time low in these five years.This ratio indicates how efficiently a firm is utilizing the funds of investors and creditors in order to earn the adequate return. its ROCE is almost one-fourth of VST and the ratio has also been declining in the last few years. In this case also. ratio of VST is continuously increasing except in 2008 where there was a minor fall as compared to its previous year. However. 1 s 0 5 p 4 T . Efficiency of utilizing the money of creditors and investors has been improved in the Escorts and VST but the difference is very huge whereas this efficiency has reduced in Mahindra & Mahindra and HMT Ltd. HMT also shows a negative return in the last year performance. both HMT and Escorts shows an opposite trends. ➢ Return on Net Worth 63 | P a g e .➢ Return on Capital Employed ( ROCE ) S V 8 H 1 2 M 9 6 3 4 E 5 0 9 6 e 7 S M 8 4 2 a .

we can say that ratio of Escorts is continuously improving.This ratio measures how efficiently the funds of equity shareholders are being utilized in the business. 8 3 c 0 ' 7 4 5 8 i 1 9 6 2 o T n r i d t l r s l a e l r & t s d M . Mahindra & Mahindra shows a continuous increasing trend for three consecutive years but after that it shows a decrease in its performance. The higher the ratio the better it is because the equity shareholders will get higher dividend in this case. we said that the company which is facing a negative performance or decreasing trend is HMT and is even unable to pay the dividend to its shareholders. On the basis of this ratio we can say that VST is at the top followed by Escorts.S 3 V 8 H M 1 6 E 4 2 0 7 6 e 5 S 1 M 9 8 a . Mahindra & Mahindra and then HMT at the last position. After comparing all the four companies. Till now. ➢ Return on Total Assets 64 | P a g e . But two companies VST and Escorts are very close to one another as compared with their trends because both of them shows a continuous increasing trend except in year 2006 where Escorts shows a negative trend. s 0 2 4 p 4 T h 2 9 . a h i n d r a Interpretation.

h 1 2 4 6 c ' 3 5 4 9 6 i 8 7 2 o T n r i d t l r s l a e l r & t s d . Interpretation. s 0 5 p 7 0 3 T .This ratio measures the profitability of the investment which reflects the managerial efficiency. But if we compare Escorts with Mahindra & Mahindra. HMT does not stand anywhere in between these competitors as its ratios gives a negative response. This might be the result of increase in total assets of the company with a slight increase in the return which results in such decrease. And position of Escorts is continuously improving and gives a very strong competition to Mahindra & Mahindra but is far behind VST. The higher the ratio. VST Tillers has the highest ROTA as compared to other competitors and the profit earning capacity of the firm is continuously increasing except in year 2008 where the company faces a decline as compared to 2007. Overall we can say that VST has the strongest profitability position. the better is the profit earning capacity of the firm. Market Ratios – 65 | P a g e . Escorts is the better one as it shows a positive increase in trend in last year which is opposite in case of Mahindra & Mahindra. ratio of Mahindra & Mahindra shows an increasing trend for initial three years but after that it decreases. Similarly.S V 9 H 7 M 6 4 E 2 1 5 0 9 7 6 e S 8 M 2 4 a . HMT is again at the lowest position because of gradual fall down.

2009 the ratio is almost become double as compared to year 2008. s 0 1 p 2 1 T h 8 3 . c 0 t ’ 5 7 3 2 0 1 i 9 8 o ’ 0 1 8 T 3 4 5 9 n 7 r 0 5 i d t 9 8 7 6 l r s l a e l r & t s d . VST has the highest EPS and is continuously increasing over a period of five years and in the last year i.EPS is a good indicator of profitability of a company and it tells about the earning power of the company. Escorts shows a continuous improvement but the improvement is not enough as its EPS is much far behind the EPS of other competitors company and thus company has to take measures to improve the net profit of the company which will ultimately enhance the EPS and then image of the company. Interpretation. in year 2007 and 2008 it shows an increasing trend while in 2009 it decreases. ➢ Price Earning ratio 66 | P a g e . For Mahindra & Mahindra the earning per share (EPS) is moving up and down continuously. If we talk about Escorts the ratio is improving drastically as there is a huge increase in the earning power of the company from negative to positive.e. Whereas HMT is now facing a negative phase which keep it out of the competition.➢ Earning per Share S V H M 9 E 6 5 4 3 2 1 0 e 2 S M 6 5 8 4 a .

Ratios of both companies are almost matching with each other. Furthermore. Interpretation. S 0 % 5 1 p c h 9 . P/E ratio of VST has shown a decreasing trend except in 2008 where it shows a minor increase otherwise it decreases over a period of five years. both Mahindra & Mahindra and Escorts almostly stands together followed by VST Tillers and the HMT. Mahindra & Mahindra is the better one because decrease in ratio of Mahindra & Mahindra is much less as compared to decrease in ratio of Escorts in last year. 3 r 7 1 n 4 2 6 T % 0 5 9 t d i 9 8 7 6 3 s r l a l l e t & r d s . In this case Mahindra & Mahindra and Escorts both have a very tough competition with each other. according to ratio. the company is showing a negative P/E ratio in 2008 and 2009. it is the only company which decreases in all five years not evens a minute increase in any of the single year. Thus. But if we compare amongst the two.S E M H 3 4 6 7 V 1 5 0 e 7 s 2 6 a 4 8 M .This ratio helps the investors to decide whether they have to buy the shares of a company at a particular market price or not. 67 | P a g e . 1 6 5 2 T % 0 t ’ 2 o 5 7 8 i 3 6 1 9 4 % 0 ’ 0 . If we talk about HMT.

While if we consider VST. FINDINGS OF THE STUDY 68 | P a g e . If we consider Escorts and HMT. the amount given to shareholders as dividend is also continuously decreasing for the first three years then there is a little rise in 2008 which is again followed by decreasing amount for shareholders.➢ Earning Retention ratio 7 S V H M E 1 8 6 4 2 0 5 6 4 0 e S M 8 3 a 9 s 2 . The highest amount of dividend is paid by Mahindra & Mahindra in 2009. we can say that both did not pay any dividend to shareholders and thus retain the whole amount as retained earnings. The amount which is saved as retained earnings will be used to expand the operations further which results in further increase in net profits and thus helps in improving all other ratios. The amount of dividend paid by Mahindra & Mahindra is continuously decreasing but last year the amount is increased. 0 p T h . But in 2009 Escorts had paid some dividend to its shareholders. InterpretationThis ratio indicates the percentage of company’s earnings that are not paid out in dividends but credited to retained earnings for further operations. c 0 9 7 5 t ’ 0 5 1 7 i 8 o 2 6 3 8 ’ 0 6 2 T 3 n 9 r 0 5 i d t 9 8 7 6 l r s l a e l r & t s d .

The current ratio has shown in a fluctuating trend as 1.59 to 4. 7. and 0. and 0.75. So the return on total assets ratio is increased from 4. because the earning per share is increased.47 to 15. The return on investment is increased from 6. 1. 5. 4. The company’s present liquidity position is satisfactory. 6.04. The earnings per share was high in the year 2005 i. CONCLUSION 69 | P a g e .89. Price Earnings ratio is reduced as compared to the last year. 2.97 during the period 2005 to 2009 which indicates a continuous increase up to the year 2008 but after that the status of current assets is low as compare to current liabilities.45. It increased in the year 2009 as compared with the previous year from 0.53. It indicates that the company is efficiently utilizing the fixed assets.7. The net profit ratio is in fluctuation manner. 3. In the current year the net profit is increased due to the increase in operating and maintenance fee.22 to 6.18. 2.03. So the earning per share is increased up to 9.83.1. The quick ratio is also in a fluctuating trend throughout the period 2005 – 09 resulting as 0.28 compared with the previous year. The net profit is increased in the current year.e.04. It is reduced from 51. 1. 0..26. 2. 0. 2.26. 1. 5. The fixed assets turnover ratio is also in a fluctuating trend from the year 2005 – 09 (2.15. Both the profit and shareholders’ funds increase cause an increase in the ratio. That is decreased in the following years because number of equity shares are increased and the net profit is decreased.89. and 1. 8.22 to 9.

Escorts is still in backward position if compared it with Mahindra & Mahindra and VST Tillers. the analysis shows that with the continuous improvement in performance of Escorts. the main thing to be noted is that the company has improved its performance very well as compared to its previous year’s ratios. RECOMMENDATIONS 70 | P a g e . After analyzing the ratios of Escorts and its competitors.  But we can also say that because of its continuous improvement Escorts is also giving them a tougher competition and will definitely acquire a better position in the future.  But on the other side.

Vikas Publication Pvt.B –Financial Management (2003). allowing good credit facility and also by reducing cost so as to provide a competitive price in the market. Proper marketing strategies can also help the company in having good sales. So if the company wants to increase the value they have to increase the market share. ✔ Payment policies: Payment policies followed by Escorts should be reviewed time to time and steps should be taken for prompt payments so that the good vendor database can be maintained. The company should invest in the government securities and debentures so that the company should be risk free up to some percentage. Attempts to reduce down the debtor’s turnover ratio to 30 days should be made which would ensure better availability of funds for business operations. ✔ Investments: The Company has invested in various fields which is good as it has diverse its risk but there are some loop holes in the investment too. ✔ Proper training: The personnel must be given training for proper use of equipments and materials so as to avoid damages which will result in saving the repair and maintenance cost. BIBLIOGRAPHY Publications: • Rao S. ✔ Collection period: Escorts has a low debtor turnover ratio and a very high collection period of 90 days which implies excessive blockage of funds as debt which might result in stagnation of the business. Ltd(VPPL). The company didn’t invest in either of the risk free return. 71 | P a g e . This can be achieved by creating a competitive edge over its competitors. Many investors before investing see the market share in the market. The company has to increase its sales by various means like maintaining good relationships with the customers.✔ Market share: The Company’s main motive should be to increase their market share. The company should also invest in the risk-free return also.

. Jaico Publishing House. Himalaya Publishing House. (1966) “A Model of Demand for Money by Firms. No. “Financial Management. Ltd. Articles and Journals: • • • • • Miller.(1981) “Lending Decision in a Quantitative Framework: Traditional Approaches and a New Approach.S and L. (1972). Helfert –Techniques of Financial Analysis (2005). “Quarterly Journal of Economics. Sachdeva.• • • Srivastave R. Gitman. Stone. and Melvin Mc Fetridge. Howard E. Erich A. Links: • 72 | P a g e . Vol-2. summer. Tata McGraw Hill Publishing Co. Vol-1. Vol-1. Brealey & Myres –Principles of Corporate Finance (1993). Paul E. 3. K.”Montana Business Forum.M –Essentials of Business Finance(2001).”Financial Management. Bernell K.” Ven Auken. Merton H.J. and Daniel Orr.. ‘Ratio Analysis.(1972) “The Use of Ratio Analysis in Estimating Financial Performance. (1986) “The Financing of Current Assets.” Business Journal. P-80 Nix. Vol-8.

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