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A

SUMMER TRAINING REPORT


ON
STUDY AND ANALYSIS OF FINANCIAL
STATEMENTS
AT
JAY USHIN LIMITED

SUBMITTED IN PARTIAL FULFILMENT FOR THE

REQUIREMENT OF THE AWARD OF DEGREE OF

MASTER OF BUSINESS ADMINISTRATION (MBA)

TO

MAHARSHI DAYANAND UNIVERSITY, ROHTAK

BY

ANSHUL GUPTA

ROLL NO. 2903


MBA (3rd SEM.)
AMITY BUSINESS SCHOOL, MANESAR

BATCH (2009-2011)
DECLARATION

I, Anshul Gupta, Roll No. 2903, MBA (3rd semester) of Amity Business School, Manesar, hereby declare
that the Summer Training Report entitled, “Study & Analysis of financial statements”, at Jay Ushin Limited
is an original work and the same has not been submitted to any other institute for the award of any other
degree.

A seminar presentation of the Training Report was made on ________________ and the suggestion as
approved by the faculty was duly incorporated.

Presentation-In-Charge Signature of the Candidate

Signature: ________________

Name of the Faculty: ________________

Countersigned:-
Director of the Institute

ACKNOWLEDGEMENT

“If the words are symbol of undiluted feelings and token of gratitude then let the words play the
heralding role of expressing my feelings.”

Making a project is a result of meticulous efforts put in by many minds that contribute to the final report
formation. This is an honest effort towards putting forward whatever I have gained as a valuable experience
that will surely help me move up the learning curve towards the path I have chosen.

I am indeed thankful to honorable Prof (Dr) R C Sharma, Ex-Director, Amity Business School, Manesar,
who has provided the wonderful opportunity of getting exposed to industrial and business working know-how. I
extend my deepest thank to my mentor and guide, Dr. Vikas Madhukar, Professor, Amity Business School for
giving me the opportunity to understand the project and for providing me the necessary information whenever
required.

I would like to render my sincere thanks to Mr. S.K Aggarwal, General Manager (Finance), Mr. Aloak
Kumar Tulsiyan (Finance Controller),Mr. Abhay Harlalka, Assistant (Finance Controller) , and Satya
Prakash Sharma, Executive (Finance) Jay Ushin Limited for their immense encouragement, guidance and
invaluable lecture sessions throughout my training. They all have been an inspirational mentor guiding me
through every step of my project, thus making the entire Project a complete learning process.

Never the last, I would take the opportunity to thank to all the departmental heads of “JAY USHIN LTD.”
who gave their precious time in providing me with valuable information whenever needed.
ANSHUL GUPTA

MBA (3rd SEM)

INTRODUCTION

Finance is defined as the provision of money when it is required. Every enterprise needs finance to start
and carry out its operation. Finance is the lifeblood of an organization. So, finance should be managed
effectively.

Financial statements are the soul of every business. It defines the financial soundness of the business.
Every investor or stake holder must go through the financial statements before investing in any
organization. From the Company or Entrepreneur point of view financial statements are very important to
know how well the business operations going on. Financial statements are the end products of the
financial accounting process. The financial statements mean presenting the financial information in
concise form. Every company needs to analyze the performance of financial statements to know the
inefficiency in their business operations. Analysis of financial statements is a process of determining the
financial strength and weaknesses of a firm by establishing the strategic relationship between the items of
financial statements like balance sheet, profit & loss account and other operative data. The process of
financial statement analysis is given below:-

 Selection of information necessary for analysis of financial statements.


 Methodical classification of data.
 Interpretation, Drawing conclusion and explaining the meaning and significance of data.

The present study analyses the financial statements of Jay Ushin Ltd. to know the company liquidity,
profitability, solvency and financial soundness. Descriptive research is used in this study to know the
present financial position of the company and mainly my source of data is secondary and the tools used in
this are comparative statement, common size statement and ratio analysis. Two types of financial
statements are used balance sheet and profit loss account for analyzing and interpreting.

The subsequent chapters in present study will suggest simple steps to help you read an annual report
demystify financial statements and help you develop an investment tool-kit for evaluating companies.

SIGNIFICANCE OF THE STUDY

Analysis of financial statement is an important tool to weigh the worthiness of a company shares so
this study help the investors and shareholders gauge a company’s revenue profile, its utilization of
funds, profitability and future earnings prospects because investor’s interest lies in the appreciation
of a company’s stock price and the likely-hood of a company paying dividends.

Present study helps the creditors to know about the company ability to repay its debts and
manager’s to know the company ability to finance the future expansion. It provides information to
government for tax levies.

This study will provide a new direction to the organization by pinpointing their deficient and
efficient areas in their financial statements and providing the suggestions to the organization to
improvise upon its deficiencies.

It will help other students to know how financial statements give a complete picture of company’s
business functions, operational efficiency and their credit worthiness.
OBJECTIVE OF THE STUDY

 To know the liquidity position of the company.


 To know the solvency position of the company.
 To know the profitability of the company.
 To know determine the area of improvement in the working of company.
 To determine the financial performance of the company.
FOCUS OF THE STUDY

The core of the study consists of financial statements which include two elements: the balance
sheet, and profit & loss account, both pointer’s to a company’s financial health. They provide
valuable insight about a company to its various stakeholders like government, creditors, managers,
shareholders and investors, so the focus of study is to know the company profitability, liquidity,
solvency and financial position of a company by analyze the balance sheet and profit & loss
statement with the help of various tools and technique.
CONCEPTUALISATION

Financial statements

The financial statements are the end product of the financial accounting process. The financial
statements means presenting financial information presented in concise form and the financial
information is related to the financials of the company. The financial statements are prepared by
the firm, firstly to communicate with different parties about the financial position of the firm and
secondly to analyze the performance and operations of the firm for further planning.

Analysis of financial statements

Analysis of financial statements is a process of evaluating the relationship between component


parts of financial statement to obtain a better understanding of a firm’s position and performance.
It determine the financial strength and weakness of a firm by establishing strategic relationship
between the items of the balance sheet, profit & loss account and other operative data.

Process of Analysis

1) Selection of information necessary for analysis of financial statements.


2) Methodical classification of the data.
3) Interpretation and drawing conclusion.

Types of Analysis

 Horizontal analysis
 Vertical analysis
1) Horizontal analysis

Comparison of financial data of a company for several years. The figures for this type of analysis
are presented horizontally over a number of columns. The figures of various years are compared
with standard or base year.

Tools employed in horizontal analysis are:-

 Comparative statements.
 Trends percentage & analysis
a) Comparative statements

Comparative statements contain the changes (increase or decrease) in the financial statements of
two or more periods.

The changes are shown in absolute figures and percentage:-

 It helpful in analyzing the changes in the performance of two or more periods of a firm
 Two or more firm

There are two types of comparative statements:-

 Comparative Balance sheet


 Comparative Income statement

Comparative Balance sheet

The comparative balance sheet analysis is the study of the trend of the same items, groups of item
and computed items in two or more balance sheet of the same business enterprises on different
dates. It helps in forming an opinion about the progress of enterprises.

Comparative Income statement

This statement exhibits the working results of the enterprise for a given period of time and serves
the purpose of comparison. It gives an idea of the progress of a business over a period of time. The
working results of two or more firms or two or more periods of the same firm can be expressed in
money or percentage.

b) Trend analysis
This method determine the direction upward or down wards and involves the computation of the
percentage relationship that statement item bears to the same item in base year. The information
for a number of years is taken up and one year, generally the first year, is taken as base year.

E.g.:- If sales figure for the year 1995 to 1999 are to be studied, then the sales of 1995 will be
taken as 100 and percentage of sales for all other years will be calculated in relation to the base
year, i.e. 1995.

2) Vertical analysis

The study of relationship of the various items in the financial statements of one accounting period.
Figures from financial statements of a year are compared with a base selected from the same year’s
statement.

Tools employed in the vertical analysis are:-

 Common-size financial statements.


 Financial ratios.

A. Common size financial statement

The common size balance sheet and income statements are shown in analytical percentage. The
figures are shown as percentage of total assets, total liabilities and total sales.

There are two types of common size financial statements:-

a) Common size Balance sheet


b) Common size Income statement

Common size Balance sheet

A statement in which balance sheet items are expressed as the ratio of each asset to total assets and
the ratio of each liability is expressed as a ratio of total liabilities is called common size balance
sheet.
The common size balance sheet can be used to compare companies of different size. The
comparison of figures in different periods is not useful because total figures may be affected by a
number of factors.

Common size Income statement

The item in income statements can be shown as percentages of sales to show the relation of each
item to sales. A significant relationship can be established between items of income statement and
volume of sales.

The increase in sales will certainly increase selling expenses and not administrative and financial
expenses. In case the volume of sales increase to a considerable extent, administrative and
financial expenses may go up. In case the sales are declining the selling expenses should be
reduced at once.

A relationship is established between sales and other items in income statement end this
relationship is helpful in evaluating operational activities of the enterprises.

B. Financial ratios

A ratio: Is the mathematical relationship between two quantities in the form of a fraction or
percentage.
Ratio analysis: is essentially concerned with the calculation of relationships which after proper
identification and interpretation may provide information about the operations and state of affairs
of a business enterprise.

The analysis is used to provide indicators of past performance in terms of critical success factors of
a business. This assistance in decision-making reduces reliance on guesswork and intuition and
establishes a basis for sound judgment.

This is the mostly used tool for analysis in financial analysis. Ratio analysis expresses the
relationship in a mathematical form between two items or a group of items related to each other is
a logical manner. It is based on the fact that a single figure is not going to communicate
meaningful information but when compared with other item expresses significant information.
There are various ratios that are used in this project:-

A: Liquidity Ratios

 Liquidity refers to the ability of a firm to meet its short-term financial obligations when and
as they fall due.
 The main concern of liquidity ratio is to measure the ability of the firms to meet their short-
term maturing obligations. Failure to do this will result in the total failure of the business,
as it would be forced into liquidation.

Current Ratio
The Current Ratio expresses the relationship between the firm’s current assets and its current
liabilities.
Current assets normally include cash, marketable securities, accounts receivable and inventories.
Current liabilities consist of accounts payable, short term notes payable, short-term loans, current
maturities of long term debt, accrued income taxes and other accrued expenses (wages).

The rule of thumb says that the current ratio should be at least 2 that are the current assets should
meet current liabilities at least twice.
What does the calculated ratio tells us? In 2000, the company only had 85 cents worth of current
assets for every dollar of liabilities. This grew to 92 cents in 2002 indicating increasing trend on
liquidity; however the company is still unable to support its short-term debt from its currents
assets.

Quick Ratio
Measures assets that are quickly converted into cash and they are compared with current liabilities.
This ratio realizes that some of current assets are not easily convertible to cash e.g. inventories.
The quick ratio, also referred to as acid test ratio, examines the ability of the business to cover its
short-term obligations from its “quick” assets only (i.e. it ignores stock).

B: Asset Management/Activity Ratios


If a business does not use its assets effectively, investors in the business would rather take their
money and place it somewhere else. In order for the assets to be used effectively, the business
needs a high turnover.

Unless the business continues to generate high turnover, assets will be idle as it is impossible to
buy and sell fixed assets continuously as turnover changes. Activity ratios are therefore used to
assess how active various assets are in the business.

Note: Increased turnover can be just as dangerous as reduced turnover if the business does not
have the working capital to support the turnover increase. As turnover increases more working
capital and cash is required and if not, overtrading occurs.

Debtors Turnover Ratio: If a firms sells its goods on credit than this ratio helps to know how
quickly the debtors are collected. This is calculated as percentage by taking net credit sales or total
sales and dividing it by average debtors. With the help of this we can also calculate the amount of
days or months within which the debtors are calculated.

Working Capital Turnover Ratio: It measures the velocity or utilization of the working capital
of the firm during the year. This is calculated by dividing average net sales by average working
capital. In this if the turnover period is more than more working capital is required if it is less than
less working capital is required.

Fixed Asset Turnover Ratio: The ratio indicates the extent to which the investments in fixed
assets contribute towards sales. It measures the firm’s ability to generate net sales from fixed
assets. It is calculated by dividing net sales by average fixed assets.

Capital Turnover Ratio: It measures the relationship between net sales and the capital employed.
This ratio measures the effectiveness of the firm in utilizing its resources. This ratio is the indicator
of the overall profitability of the firm. This is calculated by dividing net sales by average capital
employed.

Total Asset Turnover Ratio: This ratio measures the ability of the firm to use its sales to generate
sales. This considers all the assets. It is calculated by dividing net sales by net fixed assets.

C: Financial Leverage (Gearing) Ratios


 The ratios indicate the degree to which the activities of a firm are supported by creditors’
funds as opposed to owners.
 The relationship of owner’s equity to borrowed funds is an important indicator of financial
strength.
 The debt requires fixed interest payments and repayment of the loan and legal action can be
taken if any amounts due are not paid at the appointed time. A relatively high proportion of
funds contributed by the owners indicate a cushion (surplus) which shields creditors against
possible losses from default in payment.

Note: -The greater the proportion of equity funds, the greater the degree of financial
strength. Financial leverage will be to the advantage of the ordinary shareholders as long
as the rate of earnings on capital employed is greater than the rate payable on borrowed
funds.
The following ratios can be used to identify the financial strength and risk of the business.

Total Debt Ratio: This indicates what percentage of the company’s assets is provided by provided
via debt. The measure gives an idea to the leverage of the company along with the potential risks
the company faces in terms of its debt-load. This is calculated by dividing total debt by total assets.

Proprietary Ratio: It relates to the proprietors funds to total assets. It helps the owners to know
the owners contribution to the total value of assets. This ratio shows the long-time solvency of the
organization it is calculated by dividing proprietor’s funds by the total tangible assets.

D: Profitability Ratios
Profitability is the ability of a business to earn profit over a period of time. Although the profit
figure is the starting point for any calculation of cash flow, as already pointed out, profitable
companies can still fail for a lack of cash.

 A company should earn profits to survive and grow over a long period of time.
 Profits are essential, but it would be wrong to assume that every action initiated by
management of a company should be aimed at maximizing profits, irrespective of social
consequences.
 Profitability is a result of a larger number of policies and decisions. The profitability ratios
show the combined effects of liquidity, asset management (activity) and debt management
(gearing) on operating results. The overall measure of success of a business is the
profitability which results from the effective use of its resources.

Note: Without profit, there is no cash and therefore profitability must be seen as a critical success
factors

Gross Profit Ratio: This ratio expresses the relationship between Gross profit and sales. It
indicated the efficiency of production or trading operation. A high gross profit ratio is a good
management as it implies that cost of production is relatively low. This is calculated by dividing
gross profit by net sales.

Net Sales: Net profit ratio establishes a relationship between net profit (after taxes) and sales. It is
determined by dividing the net income after tax to the net sales for the period and measures the
profit per rupee of sales.

Office & Administrative Expense: this ratio measures the relationship between the indirect
expenses to the net sales and here we are taking office and administrative expenses. This is
calculated by dividing administrative expenses by net sales.

Return on Assets: Profitability can be measured in terms of relationship between net profit and
total assets. It measures the profitability of investment. The overall profitability can be known by
applying this ratio. This is calculated by dividing net profit by net sales.
RESEARCH METHADOLOGY

Research Design
Descriptive research is used in this study because it will ensure the minimization of bias and
maximization of reliability of data collected. The researcher had to use fact and information
already available through financial statements of earlier years and analyze these to make critical
evaluation of the available material. Hence by making the type of the research conducted to be
both Descriptive and Analytical in nature. From the study, the type of data to be collected and the
procedure to be used for this purpose were decided.

Sources of Data
The main source of data to conduct this study is secondary data, but primary data is also used to
collect some general information.
1. Primary Data
 The information is gathered through discussion held with the executives of the finance
department in JAY-USHIN LTD.
2. Secondary Data
 Data collected from the annual report of JAY-USHIN LTD.
 Data collected from the published report of JAY-USHIN LTD.
 Articles collected from the official website of JAY-USHIN LTD.
 Data collected from the various business magazines and books.
The data collected from the above mentioned sources will be processed, analyzed, interpreted, and
presented in the study.

Methodology used
 Types of financial statement adopted
Following two types of financial statements are adopted in analyzing the firm financial
position:-
a) Balance sheet
b) Income statement

 Types of financial statement analysis


The financial statements are analyzed based on two basic analyses:-
a) Horizontal analysis- In horizontal analysis we use comparative statement and trend
analysis.
b) Vertical analysis- In vertical analysis we use common size statement and financial
ratios.

 Tools used for financial statement analysis


Following financial analysis tools are used in order to interpret the financial position of the
firm
 Ratio analysis
 Comparative analysis
 Common size analysis
 Percentage
PLAN OF THE STUDY

The structure of present study is as follows:

 Chapter 1 of this study covers the introduction of the study, significance of the study,
objectives of the study, focus of the problem, conceptualization and plan of the study. The
chapter also includes research methodology containing the nature of research, sample size
and analysis pattern used to conduct the research.
 Chapter 2 explores the significant literature published on the present study reflecting
understanding of the relevant theoretical and empirical background of the problem.
 Chapter 3 consists of industry & company profile which gives a thorough study about the
company.
 Chapter 4 consists of data analysis and inferences.
 Chapter 5 of this study contains findings and conclusions providing the end result of the
study. The last part gives the limitation of the study thus providing significant scope for
further research.
Literature Review

Timo Salmi, “A Review of the Theoretical and Empirical Basis of Financial Ratio Analysis”,
Business Economics, April (1994), this paper provides a critical review of the theoretical and
empirical basis of four central areas of financial ratio analysis. The research areas reviewed are the
functional form of the financial ratios, distributional characteristics of financial ratios,
classification of financial ratios, and the estimation of the internal rate of return from financial
statements. It is observed that it is typical of financial ratio analysis research that there are several
unexpectedly distinct lines with research traditions of their own. A common feature of all the areas
of financial ratio analysis research seems to be that while significant regularities can be observed,
they are not necessarily stable across the different ratios, industries, and time periods. This leaves
much space for the development of a more robust theoretical basis and for further empirical
research. Financial ratios are used for all kinds of purposes/ these include the assessment of the
ability of a firm to pay its debt, the evaluation of business and managerial success and even the
statutory regulation of a firm’s performance. And they became norms and affect performances. In
this paper two principles have been used to identify use of financial ratios i.e. normative use,
which measures the firm ratio with the standard and secondly the empirical use, which is for
predictive purposes
Amir et al, “Essential of Financial Analysis”, Business Economics, April (1996), Ratio analysis
is a mostly used analytical tool for measuring the performance of a firm. As the ratios are easily
calculated because of which it has a mass appeal, their interpretation is difficult to understand,
especially when ratios provide conflicting signals. Ratios are often criticized on subjectivity
grounds that the analyst picks and choose ratios to analyze the performance of the firm.

Mahalakshmi N, “How to Analyses Financial Statements”, Outlook Profit, (2009), Being able
to read, understand and interpret financial statements of companies is of similar importance to
stock market investor. Some of us may have studied accounting as a discipline. But, investing in
equities is an art one cannot master through sheer academic pursuit and excellence in college
grades. It requires skills to analyze a company’s business activities before buying the share. In
doing so regularly, one will over a period of time, be able to develop an investment tool kit to
evaluate and steer investment decisions in equities. Where and how do you begin? Certainly not by
relying on the market grapevine or mere hearsay, like “taaza khabar” (hot news), or “aaj ka tip”
(tip of the day). While it is important to have your ears to ground, sound investing begins by
reading and understanding a company’s annual report.
INDUSTRY PROFILE

EVOLUTION OF INDIAN AUTOMOBILE COMPONENTS INDUSTRY

The Indian auto components industry has a long history. It made a small beginning in the 1940s
with Hindustan Motors and Premier Automobiles. The 1950-70s period resulted in ancilliarisation
and growth with the coming up of TELCO, Bajaj, and Mahindra, on the one hand, and the
Government policies of reservation for small-scale industries, and local content requirements, on
the other. The entry of Suzuki with joint venture with the Government of India as Maruti laid
emphasis on the quality and technology of automobile components, leading to increased foreign
collaboration (Okada, 2004).Economic liberalization of the 1990s brought.

The Indian auto component industry is one of India's sunrise industries with tremendous growth
prospects. From a low-key supplier providing components to the domestic market alone, the
industry has emerged as one of the key auto components centers in Asia and is today seen as a
significant player in the global automotive supply chain. India is now a supplier of a range of high-
value and critical automobile components to global auto makers such as General Motors, Toyota,
Ford and Volkswagen, amongst others.
The entry of new generation vehicles and demand for genuine spare parts also helped in adding to
the sales for the companies. Industry experts opine that growing demand for genuine spare parts
would strengthen the sector.

As per a report by the Automotive Component Manufacturers Association of India (ACMA), the
turnover of the auto component industry is being estimated at around US$ 19.2 billion in 2009-10.
The report states that 31 per cent of the auto component industry is dominated by engine parts, 19
per cent by drive transmission and steering parts, and 12 per cent each by suspension & braking
parts and body & chassis, while equipments and electrical parts capture 10 and 9 per cent,
respectively.

According to the Investment Commission of India, India is among the most competitive
manufacturers of auto components in the world. India is also becoming a global hub for research
and development (R&D). Many international auto-component majors including Delphi, Visteon,
Bosch and Meritor have set up operations in India.

Further, increased demand for the passenger vehicles in the country created positive impact for the
auto component manufacturers. The component manufacturers registered 55 per cent growth on a
year-on-year basis during the quarter ending March 2010. The growth was attributed to the
increasing demand of the original spare parts by the customer. On an overall basis, 30 component
makers saw rise in revenue in spite of global slowdown in the auto sector. Major players like
Bosch, Motherson Sumi and Amtek Auto reported nearly 50 per cent growth in top line, with
double-digit surge in profit.

Policy Initiatives

The government has taken many initiatives to promote foreign direct investment (FDI) in the
industry.

 Automatic approval for foreign equity investment up to 100 per cent of manufacture of
automobiles and components is permitted
 The automobile industry is deli censed
 Import of components is freely allowed
Looking Ahead

According to ACMA,

 Overseas auto-component manufacturers, especially small and medium enterprises (SMEs)


should invest more in capacity enhancements and Greenfield manufacturing in India to
meet growing domestic demand for auto-components
 Investments in Auto-IT sector is a high potential area
 To encourage new wave of partnerships at the Tier 2/3 level covering the entire automotive
supply chain to address not only product technology, but also "Process Technology"

AUTO COMPONENTS OVERVIEW

 A US$15-billion industry in 2006-07; ~20% exports (US$2.9 billion)

 The Auto Components industry has experienced high growth in the past few years

 Domestic market CAGR of 30% in the last 4 years

 Exports CAGR of 40% in the last 4 years

 India’s share, 0.9% of the global Auto Components Industry, is growing rapidly

 The Indian auto component sector has been growing at 20% per annum since 2000 and is
projected to maintain the high-growth phase of 15-20% till 2015.

Investments in the auto component Industry in India

 Magneti Marelli, the auto component maker of Fiat group, has forayed into the country's
spare parts aftermarket by entering into a partnership with Carnation Auto, a multi-brand
car servicing facility. The company also plans to increase its revenue from India to around
US$ 429.66 million by 2015, and expects the country to grow faster compared to other
global markets.
 Hyundai WIA, the car component subsidiary of Hyundai Motor Company, plans to set up
an auto component facility at Nellore, Andhra Pradesh with an investment of US$ 259.72
million. The facility is expected to be set up in two phases and would become operational
by April 2011.
 Rane Group, a Chennai based auto component manufacturer, is planning to invest US$
56.11 million for augmenting capacity for meeting increasing demand during 2010-11.
 Ashok Minda Group, an auto component manufacturer plans to raise private equity of
around US$ 26.8 million for expanding its business.
 The world's largest automotive component manufacturer, Bosch, plans to invest US$ 433.5
million in India over the next three years. "India will be an important market for the
company in the immediate future," said Bernd Bohr, Chairman of the Stuttgart-based
Bosch Automotive Group..
 The Tamil Nadu government has cleared the proposal of Tyre manufacturer, JK Tyre &
Industries Ltd, for setting up a new production facility in the state, which would attract
around US$ 346 million in investment.

SWOT ANALYSIS

STRENGHTS

 Is globally cost competitive

 Adheres to strict quality controls

 Has access to latest technology

 Provides support to critical infrastructure and metal industries

WEAKNESSES

 Industry has low level of research and development capability

 Industry is exposed to cyclical downturns in the automotive industry

 Most component companies are dependent on global majors for technology

OPPORTUNITIES
 May serve as sourcing hub for global automobile majors

 Increasing globalization of the auto industry supply chains

 Significant export opportunities may be realized through diversification of export basket

THREATS

 The presence of a large counterfeit components market poses a significant threat

 Pressure on prices from OEMs continues Imports pose price based competition in the
replacement market

 Further marginalization of smaller players likely.

Favorable factors:-

In spite of several handicaps there are a number of favorable factors, which are

Trained and skilled human resources

 Wide Industry base manufacturing 97% of component required


 Growing entrepreneurship
 Growing domestic market
 Expanding global markets
 Investments by non-resident Indians
 Economic liberalization

Challenges: -

There are several challenges, which the industry has to overcome at industry level and
organizational levels. Few of these are:-

1. Small in size: - The Indian auto component industry is wide with over 400 firms in the
organized sector, but small in sales turn over which is estimated to be less than Rs. 15000
Crores for the organized sector. This sector is the fastest growing sector in Auto industry
growing at the rate of 28%. The industry also exports close to RS 180 Crores at around
12% of combined sales.  It is currently a Small and fragmented industry by global
standards.
2. Rejected parts per million (PPM):- Rejection level is very high as comparison with other
countries. An A.T.Kearney survey, found defect rates in India, even among the better
suppliers in the range of 1000-2000 PPM against the Japanese average of 100-200 PPM.
3. Lower labour productivity: - The advantage of low cost labour is negated due to lower
productivity level of Indian work force. Indian Labour productivity is lower relative to the
rest of the world.
4. Higher Cost of Finance in India: - India has one of the highest interest rates for Capital
and working capital. These can range from 12% to 18% and higher. Most of the Indian
companies work for financial institution. Where as In countries like USA Europe funds are
available at 1/3 the cost. This makes big difference on the health of the company.
5. High Cost of logistics: - The Cost to transport parts within the country is high due to high
cost of fuel, and poor turnaround of vehicles. The cost to export can be around 5 to 25 %
depending on the commodity. Ports in India are inefficient and ship turnaround times are
higher than international standards. A finished product takes additional week to leave the
Indian shores due to various documentation and other port formalities. A container load
may cost 3000 US $ to USA. It is inefficient for individual suppliers to export small
container loads.

High Cost and poor Quality of Raw materials: - Raw material like steel, polymers, castings etc
are at times 20% to 50% more expensive than other countries and the quality of these raw
materials also are not comparable to international standards. Steel is the major raw material used
for automotive applications and the same is increasing every quarter. Government may have to
think of reducing the import duties in order to bring in competition for local manufacturers.
COMPANY PROFILE

INTRODUCTION

Jay-Ushin Ltd. a JPM Group company was incorporated as a Joint Venture company with U-Shin Ltd, Japan
for manufacture of auto electrical, mechanical & electronic components for four wheelers in 1986. It is a
leading OEM manufacturer of automotive assemblies in India. Its products include lock sets, latches,
switches & body parts. The company is a major OE supplier  to almost all makers of four wheeler as well
as two wheelers in India includes Maruti Suzuki Limited, Hyundai Motors India Ltd., General Motors,
Honda Siel, Honda Motor Cycle & Scooters Division, Mahindra & Mahindra and Tata Motors Ltd..

U-Shin Ltd. engages in the design, development, manufacture, sale, and export of various system devices
and control machines for automotive, industrial machinery, and home security units. It also offers
mechanical, electrical systems, and components for automotive, industrial machinery, and home security
unit. The company operates in three divisions: Automotive Parts, Industrial Equipments, and Home Security
Unit. The Automotive Parts division offers steering lock unit, lock sets, keyless entry, door latches, heater
control panels, door handles, switches, and sensors. The Industrial Equipments division provides
equipments for agricultural/constructive/industrial machines, equipments for telecommunication, meter
gauge for medical use, harness, cable wire, lump, operator's seat, electric fuel pump, electric measurement,
and communication device. The Home Security Unit division offers security system for home, hotel, and
office buildings; touch keys; handle sets; and electronic locks. The company, formerly known as YUHSHIN
SEIKI KOGYO CO., LTD., was founded in 1926 and is headquartered in Tokyo, Japan.
MANAGEMENT STRUCTURE

 J.P. Minda - Chairman


 Ashwani Minda - Managing Director
 Anil Minda - Technical Director
 Shiv Raj Singh - Director
 Ashok Panjwani - Director
 Yukichi Harada - Director
 Virendra kumar - Director

CONTACT ADDRESS

 Registered office- GI-48, G.T. Karnal road, industrial area, Delhi-110033.


 Factory address- GP-14, HSIDC Industrial estate, sector-18 Gurgaon, (HR)-122001.
 Factory address- Plot no-4, sector-3, IMT Manesar, Dist. Gurgaon, (HR)-122050.

GROUP ORGANISATION STRUCTURE

T
M
N
A
H
C
E I
N
G
C
A
H
C
G
A
L R
I
D
C
E
R
I
N
A
M T
O
R
JAY-USHIN EQUITY STRUCTURE

JPM-GROUP COMPANIES

Minda family
U-shin
public

MILESTONES OF JAY-UHIN LTD.

 1959:- Started manufacturing auto components with Hindustan motors, fiat & Bajaj.
 1986:- Joint venture with U-SHIN LTD. (Japan) & established JAY-USHIN LTD. & start
supplies to Maruti Udyog Ltd.
 1998:- Start of Chennai plant, supply to Hyundai motors, and incorporation of JPM tools
ltd. and award of ISO 9001 certification by TUV, Germany.
 1999:- T.A. with NS INC. of Japan for instrument cluster.
 2001:- Converted to J.V. with NIPPON SEIKI as JNS instrument ltd.
 2004:- Award of ISO/TS: 16949:2002 to JAY-USHIN LTD. QCDDM award from HMSI.
 2005:- Award of 100 PPM from HYUNDAI motors ltd.
 2006:- Start of Manesar plant, start of Pune plant and QCDDM award from HMSI.
 2008:- Quality & delivery award from HMSI three star awards from Hyundai.

JAY-USHIN PRODUCT RANGE

 Lock set Scooter


 Activa
 Dio
 Eterno
 Aviator
 Pleasure
 Lock set Motor cycle
 Unicorn
 Shine
 Stunner
 Splendor
 Heat
 Zeus

 Switches Scooter
 Active
 Dio
 Beat
 Lead
 Eterno
 Aviator
 Pleasure
 Switches motor cycle
 Unicorn
 Shine
 Stunner
 Heat
 Zeus

Lock sets, Switches & Door latch-4 wheelers & 2 wheelers


 Power window switch
 Mirror switch
 Head lamp leveling switch
 A/C Blower switch
 Combination switch
 HVAC Panel

CUSTOMERS OF JAY-USHIN

TWO WHEELERS CUSTOMER

FOUR WHEELERS CUSTOMER


MAIN COMPETITORS OF JAY-USHIN

 Munjal showa
 Denso
 Thermax
 Rico
 Sona stearing
 Lumax
 Bosch
 Exide
 Amtek auto

JAY-USHIN SALE GRAPH


SALE
3500

3000

2500

2000 SALE

1500

1000

500

0
2004-05 2005-06 2006-07 2007-08 2008-09 2009-10

JAY-USHIN MARKET SHARE(IN MILLIONS)


SHARE

80

70

60

50 SHARE

40

30

20

10

0
Lock set switches heater control latches

MISSION OF COMPANY

 Design capability
 Process improvement
 Productivity
 Value engineering
 On time delivery
 First time right

VISION OF COMPANY

 To lead the market in product quality, selling and satisfaction of customers.

ANALYSIS OF THE STUDY


CURRENT RATIO
Year Current assets Current liability Current ratios
2006 278445912 266316624 1.04
2007 396743125 471888113 0.84
2008 546084083 525614824 1.03
2009 690895007 707190527 0.97

Current ratios
1.2

0.8
Current ratios
0.6

0.4

0.2

0
2006 2007 2008 2009

INTERPRETAION

Generally according to a rule of thumb 2:1 is best current ratio for any company ability to meet its
current liabilities or current obligations successfully but this ratio is differing from company to
company so 1:1 is considered satisfactory.

According to my analysis the current ratio of company in four year is near about 1:1 so company
position to meets its current obligation is quite satisfactory.

LIQUIDITY RATIO

Year Liquid assets Current liability Liquidity ratio


2006 197117145 266316624 0.74
2007 227955271 471888113 0.48
2008 308804866 525614824 0.58
2009 424888171 707190527 0.60

Liquidity ratio
0.8
0.7
0.6
0.5
Liquidity ratio
0.4
0.3
0.2
0.1
0
2006 2007 2008 2009

INTERPRETATION

This ratio measures the ability to meet its short term obligation as and when they arise. Generally
its benchmark is 1:1 i.e. it should be in accordance with its liabilities. This depicts how good a
company is to meet its current liabilities in a crunch situation.

If we see the ratio of past four years than its average is equal to 0.6 which is insufficient for a
company to bear the current liabilities in difficult situations. The company should try to increase
its cash and cash equivalents so that the ratio can be increased.

DEBTOR’S TURNOVER RATIO

Years Total sales Debtors Debtor’s Turnover ratio Average collection period
2006 1038506437 113184333 9.175355011 39.78
2007 1531762921 132373452 11.5715266 31.54
2008 2376887407 164929878 14.41150285 25.32
2009 2508829356 255136529 9.833281678 37.11
Debtor’s Turnover ratio Average collection period
16 45
14 40
35
12
30
10 Debtor’s Average collection
25 period
8 Turnover ratio
20
6 15
4 10
2 5
0 0
2006 2007 2008 2009 2006 2007 2008 2009

INTERPRETAION

This ratio indicates the speed with which the amount is collected from debtors. The higher the
ratio, the better it is, the more quickly the debtor pay, the less the risk from bad debts, and so the
lower the expenses of collection and increases in the liquidity of the firm. A lower debtor turnover
ratio will indicate the inefficient credit sales policy of the management. It is difficult to set up a
standard for this ratio. It depends upon the policy of the management and nature of industry.

But according to this analysis the debtor turnover ratio of four year is avg. 11 times which is good
and debt collection period is avg. 33 days which is also good. This show company sales policy is
efficient.

FIXED ASSETS TURNOVER RATIO

Yea
rs Total Sales Net Fixed Assets Fixed Assets Turnover Ratio
2006 1038506437 359412833 2.88
2007 1531762921 438264393 3.49
2008 2376887407 542613271 4.38
2009 2508829356 82998167 3.67
Fixed Assets Turnover Ratio
5
4.5
4
3.5
3
Fixed Assets Turnover Ratio
2.5
2
1.5
1
0.5
0
2006 2007 2008 2009

INTERPRETAION

This ratio is particular importance in manufacturing concerns where the investment in fixed assets
is quite high. This ratio reveals how efficiently the fixed assets are being utilized. Compared with
the previous year, if there is increase in this ratio, it will indicate that there is better utilization of
fixed assets.

According to this analysis in 2006 the fixed turnover ratio is near about 3 times which is increase
up to 4.3 in 2008 which is good. But it is downfall in 2009 up to 3.6 times which show concern.
Because the investment in fixed assets is increased but the return is not increased.

TOTAL ASSETS TURNOVER RATIO

Years Net Sale Total Assets Total Assets Turnover Ratio


2006 1038506437 638458745 1.62
2007 1531762921 835607518 1.83
2008 2376887407 1089297354 2.18
2009 2508829356 1374493174 1.82
Total Assets Turnover Ratio
2.5

1.5
Total Assets Turnover Ratio

0.5

0
2006 2007 2008 2009

INTERPRETAION

This ratio shows how the resources of the organization are utilized for increasing the
turnover/profits. This shows the relationship between the net sales and the total assets. From this
ratio one can understand how the assets are performing in achieving the objective of the company.

During all the study period years the relationship between sales to total assets is high. The ratio is
increase from 1.6 (2006) to 2.2 (2008) but decrease in 2009 up to 1.8 which is quite concern and
management need to pay attention for efficient utilization of its current assets.

WORKING CAPITAL RATIO

Years Net Sale Working Capital Working Capital Ratio


2006 1038506437 -75144988 -13.82
2007 1531762921 12129288 126.28
2008 2376887407 20469259 116.11
2009 2508829356 -16295520 -153.95
Working Capital Ratio
150

100

50

0 Working Capital Ratio


2006 2007 2008 2009
-50

-100

-150

-200

INTERPRETAION

This ratio is of particular importance in non manufacturing concerns where current assets play a
major role in generating sales. This ratio reveals how efficiently working capital has been utilized
in making sales. In other words, it shows the number of times working capital has been rotated in
producing sales. A high working capital turnover ratio shows efficient use of working capital.
However, a very high turnover ratio of working capital is also dangerous, as it is a sign of over-
trading. But it is differ company to company.

According to the above analysis there is negative ratio in 2006 and 2009 which shows the current
liability is more than current assets. But in the year 2007 and 2008 the ratio is high which is good
but in specific condition it is dangerous.

STOCK TURNOVER RATIO

Year Cost of Goods Sold Average Stock Stock Turnover Ratio


2006 1038506437 81328767 12.76
2007 1531762921 168787854 9.07
2008 2376887407 237279217 10.01
2009 2508829356 266006836 9.43
Stock Turnover Ratio
14

12

10

8 Stock Turnover Ratio


6

0
2006 2007 2008 2009

INTERPRETAION

This ratio indicates whether stock has been efficiently used or not. It shows the speed with which
the stock is rotated into sales or the number of times the stock is turned into sales during the year.
The higher the ratio, the better it is, since it indicates that stock is selling quickly. In a business
where stock turnover ratio is high, goods can be sold at a low margin of profit and even then, the
profitability may be quite high.

According to above analysis the avg. stock turnover ratio in 4 year is high which shows that
company efficiently used the stock and sells the stock.

GROSS PROFIT RATIO

Year Net Sale Gross Profit Ratio Gross Profit Ratio


2006 1038506437 50167112 5%
2007 1531762921 66448644 4%
2008 2376887407 116715420 5%
2009 2508829356 98216368 4%
Gross Profit Ratio
6%

5%

4%

Gross Profit Ratio


3%

2%

1%

0%
2006 2007 2008 2009

INTERPRETAION

Gross profit ratio reveals profit earning capacity of the business with reference to its sales. Increase
in gross profit ratio will mean reduction in cost and decrease in gross profit ratio will mean
increase in cost or sales at lesser prices. Higher gross profit ratio is always in the interest of the
business.

Above graph shows the gross profit ratio is not high and it is not consistent and fluctuate so
company need to pay attention to increase its gross profit by decreasing its cost or sales at higher
prices.

NET PROFIT RATIO

Year Net Sale Net Profit Net Profit Ratio


2006 1038506437 12307580 1%
2007 1531762921 6673012 0.4%
2008 2376887407 44889859 2%
2009 2508829356 20313927 0.8%
Net Profit Ratio
3%

2%

2%
Net Profit Ratio

1%

1%

0%
2006 2007 2008 2009

INTERPRETAION

Net profit ratio shows the operational efficiency of the business. Decrease in the ratio indicates
managerial inefficiency and excessive selling and distribution expenses.

Above graph shows that in 2006 the net profit ratio is 1% which is decline in 2007 up to .4% and
again it is rise in 2008 but it again decline in 2009 which shows there is a fluctuation in net profit
ratio due to the negligence of management. Company must control its cost to increase its net profit.

EXPENSE RATIO

Year Net Sale Expenses Expense Ratio


2006 1038506437 1006027388 96.87
2007 1531762921 1492999074 97.46
2008 2376887407 2292172862 96.43
2009 2508829356 2452342580 97.74
Expense Ratio
98

97.5

97
Expense Ratio

96.5

96

95.5
2006 2007 2008 2009

INTERPRETAION

Expense ratio shows the relation between expense and sales. Lower the expense ratio, better it is,
which means the company profit, is increased.

Above analysis shows that the expense ratio is high in all four year. So company must control its
expense to minimize its expense ratio.

Debt Equity Ratio

Year Debt Equity Debt Equity Ratio


2006 231224682 125172157 1.84
2007 205462541 115824525 1.77
2008 373119377 171163348 2.17
2009 455577608 157631329 2.89
Debt Equity Ratio
3.5

2.5

2 Debt Equity Ratio


1.5

0.5

0
2006 2007 2008 2009

INTERPRETAION

This ratio is calculated to know about the organizations repayment capacity of long term debts. A
ratio of 1:1 may be usually considered to be a satisfactory ratio although; there cannot be any ‘rule
of thumb’ for all the types of business. A low ratio is considered as favorable from the long-term
creditor’s point of view because a high proportion of owner’s funds provide a large margin of
safety for them.

Above analysis shows that debt equity ratio is high in all four year so it is not good for company. It
shows that claim of outsiders are greater than those of owners.

PROPRIETORY RATIO

Year Share Holder Fund Total Assts Proprietary Ratio


2006 125172157 356396839 35%
2007 115824525 321287066 36%
2008 171163348 544282725 31%
2009 157631329 613208937 25%
Proprietory Ratio
40%

35%

30%

25%
Proprietory Ratio
20%

15%

10%

5%

0%
2006 2007 2008 2009

INTERPRETAION

This ratio reveals the owner contribution to the total value of assets. This ratio shows the long term
solvency of the business. It shows the financial strength of the company. Higher the ratio better it
is for the long term solvency position of the company.

Above analysis shows that the proprietary ratio is high but it is not consistent in all the year. It is
decline after 2007. So company need to pay attention.

EARNING PER SHARE

Year Net Profit Number of Equity Share Earnings Per Share


2006 12308000 3864500 3.18
2007 6673000 3864500 1.72
2008 44890000 3864500 11.61
2009 20314000 3864500 5.25
Earning Per Share
14

12

10

8 Earning Per Share


6

0
2006 2007 2008 2009

INTERPRETAION

This ratio is helpful in the determination of the market price of the equity share of the company.
The ratio is also helpful in estimating the capacity of the company to declare dividends in equity
share. Higher the ratio, the best for the company goodwill and position.

Above graph shows that in 2008 the company earning per share is very high Rs. 11. But in 2009 it
decline sharply up to Rs. 5 per share. So company need to maintain in earning per share ratio.

COMPARATIVE BALANCE SHEET 2005-06 & 2006-07

Particulars 2005-06 2006-07 Increase/Decrease Percentage Change


Sources of Funds
Shareholder's Funds
share capital 38645000 38645000 0 0
reserve and surplus 77179525 86527157 9347632 12.11
Total(A) 115824525 125172157 9347632 12.11
Loan Funds
secured loans 168180916 134161911 34019005 20.23
unsecured loans 63043766 71300630 8256864 13.1
Total(B) 231224682 205462541 25762141 11.14
Current liabilities & Provisions
current liabilities 226086690 429885827 203799137 90.14
Provisions 40229934 42002286 1772352 4.4
Total (C ) 266316624 471888113 205571489 77.19
Creditors for finance lease(D) 1226088 0 1226088 100
Deferred Tax Liability(E) 23866826 33084707 9217881 38.62
Total (A+B+C+D+E) 638458745 835607518 197148773 30.88
 
Application of Funds
fixed assets 498132164 554383091 56250927 11.29
less: Depreciation 159312372 177373171 18060799 11.34
Add: Capital work in progress 20593041 61254473 40661432 197.45
Total (A) 359412833 438264393 78851560 21.94
Current Assets
Inventory 81328767 16878754 64450013 79.25
Sundry Debtors 113184333 132373452 19189119 16.95
Cash & Bank Balances 15911506 14924368 -987138 -6.2
Loans & Advances 68021306 80657451 12636145 18.58
Total (B) 278445912 396743125 118297213 42.48
Investment (c ) 600000 600000 0 0
Total (A+B+C ) 638458745 835607518 197148773 30.88

INTERPRETAION: - COMPARATIVE BALANCE SHEET 2005-06 & 2006-07

The Share capital has remained constant from the past year. Whereas the Reserves and Surplus has
been increased 12.11% from the past year. Secured loan has been paid to the extent of 20.3% and
unsecured loan has increased by 13.1%. The current liabilities have increased by 90.14% from the
past year and provision has increased by 4.4%
The net fixed assets have been increased by 21.94%. Sundry Debtors have only been increased by
16.95% whereas the cash and bank balance has gone down into negative from the previous year by
-987138 i.e. -6.2%. Loans and Advances have been increased by 18.58% and total assets have
been increased by 30.88%.
.

COMPARATIVE BALANCE SHEET 2006-07 & 2007-08

Particulars 2006-2007 2007-2008 Increase/Decrease Percentage Change


Sources of Funds
Shareholder's Funds
share capital 38645000 38645000 0 0
reserve and surplus 86527157 118986329 32459172 37.51
Total(A) 125172157 157631329 32459172 25.93
Loan Funds
secured loans 134161911 313879939 179718028 133.96
unsecured loans 71300630 59239438 -12061192 -16.91
Total(B) 205462541 373119377 167656836 81.6
Current liabilities & Provisions
current liabilities 429885827 462241350 32355523 7.53
Provisions 42002286 63373474 21371188 50.88
Total (C ) 471888113 525614824 53726711 11.38
Creditors for finance lease(D) 0 0 0 0
Deferred Tax Liability(E) 33084707 32931824 152883 0.46
Total (A+B+C+D+E) 835607518 1089297354 253689836 30.36
 
Application of Funds
fixed assets 554383091 731452416 177069325 31.94
less: Depreciation 177373171 225402549 48029378 27.08
Add: Capital work in progress 61254473 36563404 24691069 40.31
Total (A) 438264393 542613271 104348878 23.81
Current Assets
Inventory 16878754 237279217 220400463 1305.79
Sundry Debtors 132373452 164929878 32556426 24.59
Cash & Bank Balances 14924368 16764190 1839822 12.33
Loans & Advances 80657451 127110798 46453347 57.59
Total (B) 396743125 546084083 149340958 37.64
Investment (c ) 600000 600000 0 0
Total (A+B+C ) 835607518 1089297354 253689836 30.36

INTERPRETAION: - COMPARATIVE BALANCE SHEET 2006-07& 2007-08

The Share capital has remained constant from the past year. Whereas the Reserves and Surplus has
been increased 37.51% from the past year. Unsecured loan has been paid to the extent of 16.91%
and secured loan has increased by 133.96%. The current liabilities have increased by 57.53% from
the past year and provision has increased by 50.88%
The gross net fixed assets have been increased by 23.81%. Sundry Debtors have only been
increased by 24.59% whereas the cash and bank balance has also up by 12.33%. Loans and
Advances have been increased by 57.59% and total assets have been increased by 30.36%.
COMPARATIVE BALANCE SHEET 2007-08 & 2008-09
Particulars 2007-2008 2008-2009 Increase/Decrease Percentage Change
Sources of Funds
Shareholder's Funds
share capital 38645000 38645000 0 0
reserve and surplus 118986329 132518348 13532019 11.37
Total(A) 157631329 171163348 13532019 11.37
Loan Funds
secured loans 313879939 400095001 86215062 27.47
unsecured loans 59239438 55482607 -3756831 -6.34
Total(B) 373119377 455577608 82458231 22.1
Current liabilities & Provisions
current liabilities 462241350 637236751 174995401 37.86
Provisions 63373474 69953776 6580302 10.38
Total (C ) 525614824 707190527 181575703 34.54
Creditors for finance lease(D) 0 0 0 0
Deferred Tax Liability(E) 32931824 40561691 7629867 23.17
Total (A+B+C+D+E) 1089297354 1374493174 285195820 26.18
Application of Funds
fixed assets 731452416 918815832 187363416 25.61
less: Depreciation 225402549 283953512 58550963 25.98
Add: Capital work in progress 36563404 48135847 11572443 31.65
Total (A) 542613271 682998167 140384896 25.87
Current Assets
Inventory 237279217 266006836 28727619 12.11
Sundry Debtors 164929878 255136529 90206651 54.69
Cash & Bank Balances 16764190 17633295 869105 5.18
Loans & Advances 127110798 152118347 25007549 19.67
Total (B) 546084083 690895007 144810924 26.52
Investment (c ) 600000 600000 0 0
Total (A+B+C ) 1089297354 1374493174 285195820 26.18
INTERPRETAION: - COMPARATIVE BALANCE SHEET 2007-08& 2008-09
The Share capital has remained constant from the past year. Reserves and Surplus have increased
11.37%. The borrowed funds have been increased by 22.1% in which the unsecured loan has been
decreased by -6.34% and secured loan has increased by 27.47%. The current liability has been
increased by 37.86% and provisions by 10.38%. The total liabilities have been increased by
26.18%.
The net bock of assets has been increased by 25.87% as compared to the last year. Whereas the
Sundry Debtors has increased 54.69% over the past year. And the cash and bank balances have
increased by 5.18%. Total assets has been increased by 26.18%.
COMPARATIVE INCOME STATEMENT 2005-06 & 2006-07

Increase/Decreas Percentage
Particulars 2005-2006 2006-2007 e Change
Income        
Sales 1211557800 1785841364 574283564 47.4
Less: Excise duty 173051363 254078443 81027080 46.82
Net Sales 1038506437 1531762921 493256484 47.5
Rent 13608809 19130922 5522113 40.58
Other Income 4079254 8553875 4474621 109.69
Total Income 1056194500 1559447718 503253218 47.65
Expenditure        
Purchases of trading goods 1155506 419915 -735591 -63.66
Raw material & component consumed 746949618 1121523035 374573417 50.15
other operational expenses 74916425 117676812 42760387 57.08
Power & Fuel 13285063 23681999 10396936 78.26
Employee Remuneration & Benefit 83713882 107757267 24043385 28.72
Repair & Maintenance 12869890 19349068 6479178 50.34
Insurance 1404201 1728937 324736 23.13
Legal & Professional 3594975 1956272 -1638703 -45.58
Travelling & Conveyance 25016265 38195076 13178811 52.68
Printing & Stationary 1799345 1998311 198966 11.06
Communication 2519220 3046009 526789 20.91
Fees & Subscription 1523224 9777342 8254118 541.88
Sales Expenses 8716913 13049669 4332756 49.7
Royalty 9784886 11745031 1960145 20.03
Other Expenses 1446076 1887738 441662 30.54
Increased/Decreased in fin. And work in process -1924389 -2160939 236550 12.29
Finance charges 19256288 21367532 2111244 10.96
Depreciation 31308515 41346585 10038070 32.06
Tax & others. 6551017 18429047 11878030 181.32
Total Expenditure 1043886920 1552774706 508887786 48.75
Net Profit 12307580 6673012 -5634568 -45.78

INTERPRETATION: -COMPARATIVE INCOME STATEMENT 2005-06 & 2006-07


The total income was increased by 47.65% i.e. Rs 503253218. The operational expenses have been
increased by 50.62% and Employee Remuneration and Benefit has been increased by 28.72%.
Administrative expense has been increased by 50.09%. Financial expenses have been increased by
10.96% and depreciation and tax has been increased by 32.06% and 181.32% respectively.

COMPARATIVE INCOME STATEMENT 2006-07 & 2007-08


Increase/Decreas Percentage
Particulars 2006-2007 2007-2008 e Change
Income        
Sales 1785841364 2872182535 1086341171 60.83
Less: Excise duty 254078443 497375758 243297315 95.76
Net Sales 1531762921 2374806777 843043856 55.04
Rent 19130922 24530137 5399215 28.22
Other Income 8553875 7470738 -1083137 -12.66
Total Income 1559447718 2406807652 847359934 54.34
Expenditure        
Purchases of trading goods 1155506 0 -1155506 -100
Raw material & component consumed 1120787444 1801929314 681141870 60.77
other operational expenses 117676812 162530372 44853560 38.11
Power & Fuel 23681999 21242085 -2439914 -10.3
Employee Remuneration & Benefit 102621267 153880532 51259265 49.95
Repair & Maintenance 19349068 27567123 8218055 42.47
Insurance 1728937 1645627 -83310 -4.82
Legal & Professional 1956272 2081930 125658 6.42
Travelling & Conveyance 38195076 41382153 3187077 8.34
Printing & Stationary 1998311 2796911 798600 39.96
Communication 3046009 4257879 1211870 39.78
Fees & Subscription 9777342 10030318 252976 2.59
Sales Expenses 13049669 11147603 1902066 14.57
Royalty 11745031 11969306 224275 1.91
Director Remuneration 5136000 7414708 2278708 44.37
Other Expenses 1887738 5515333 3627595 192.17
Increased/Decreased in fin. And work in process -2160939 -10932514 8771575 405.91
Finance charges 21367532 35633552 14266020 66.76
Depreciation 41346585 48320812 6974227 16.87
Tax & others. 18429047 23504749 5075702 27.54
Total Expenditure 1552774706 2361917793 809143087 52.11
Net Profit 6673012 44889859 38216847 572.71

INTERPRETATION: -COMPARATIVE INCOME STATEMENT 2006-07 & 2007-08


The total income has increased from the past year by 847359934 i.e. 53.34%. Whereas the
operational expenses has been decreased over the past year by 724839924 i.e.58.47%. Employee
remuneration and benefits has been increased by 49.95%. The depreciation has been increased by
16.87%, while the tax has been increased over the past year by 27.54% respectively. While the net
profit has been increased by 572.71%.

COMPARATIVE INCOME STATEMENT 2007-08 & 2008-09


Increase/Decreas Percentage
Particulars 2007-2008 2008-2009 e Change
Income        
sales (including operating income) 2874263165 2933409690 59146525 2.06
Less: Excise duty 497375758 424580334 -72795424 -14.64
Net Sales 2508829356 2376887407 -131941949 -5.26
Rent 24530137 32065734 7535597 30.72
Other Income 7470738 9663858 2193120 29.36
Total Income 2408888280 2550558948 141670668 5.88
Expenditure        
Raw material consumed 1790996801 1907903041 116906240 6.53
Manufacturing Expenses 262167317 244079017 -18088300 6.9
Administrative Expenses 102013956 116650095 14636139 14.35
Personnel Expenses 101395721 119589679 18193958 17.94
Finance Charges 35599067 64120748 28521681 80.12
Depreciation 48320812 60980970 12660158 26.2
Tax 23504749 16921471 -6583278 -28
Total Expenditure 2361917793 2530245021 168327228 7.13
Net Profit 46970487 20313927 -26656560 -56.75

INTERPRETATION: -COMPARATIVE INCOME STATEMENT 2007-08 & 2008-09

The total income has from the increased past year by 141670668 i.e. 5.88%. Whereas the
operational expenses has been increased over the past year by 98817940 i.e. 4.81%. Administrative
expense and personnel expense has been increased over the past year is 14.35% and 17.95%. The
depreciation has been increased by 26.2%, while the tax has been reduced over the past year by
-28%. While the net profit has been decreased by -56.75%.

COMMON SIZE BALANCE SHEET 2005-06

Particulars 2005-06 Percentage change


Sources of Funds    
Shareholder's Funds
share capital 38645000 6
reserve and surplus 77179525 12.1
Total(A) 115824525 18.1
Loan Funds
secured loans 168180916 26.34
unsecured loans 63043766 9.9
Total(B) 231224682 36.24
Current liabilities & Provisions
current liabilities 226086690 35.41
provisions 40229934 6.3
Total (C ) 266316624 41.71
Creditors for finance lease(D) 1226088 0.2
Deffered Tax Liability(E) 23866826 3.75
Total (A+B+C+D+E) 638458745 100
Application of Funds
fixed assets 498132164 78
less: Depreciation 159312372 25
Add: Capital work in progress 20593041 3.22
Total (A) 359412833 56.29
Current Assets
Inventory 81328767 12.74
Sundry Debtors 113184333 17.73
Cash & Bank Balances 15911506 2.5
Loans & Advances 68021306 10.65
Total (B) 278445912  
Investment (c ) 600000 0.1
Total (A+B+C ) 638458745 100

INTERPRETATION: - COMMON SIZE BALANCE SHEET 2005-06

The share capital is the part of the total liabilities is 6% and Reserves and Surplus has almost 12%
part in the funds of the company. The borrowed Fund is 36.24% of the Total Liabilities, out of
which secured loan is 26.34% and unsecured loan is 10%.. The total amount in current liabilities
and provisions is 41.71%.
The Application of Funds has been done in Net Fixed Assets and the Current Assets Loans and
Advances. In Net Fixed Assets 56.29% has been invested whereas in Current Assets maximum
part of it has been in Sundry Debtors i.e. 17.73%, the cash and Bank balance is at 2.5% of the total
Assets and Loans and Advances stands at 10.65%.
COMMON SIZE BALANCE SHEET 2006-07

Particulars 2006-2007 Percentage change


Sources of Funds    
Shareholder's Funds
share capital 38645000 4.62
reserve and surplus 86527157 10.35
Total(A) 125172157 14.97
Loan Funds
secured loans 134161911 16.05
unsecured loans 71300630 8.53
Total(B) 205462541 24.58
Current liabilities & Provisions
current liabilities 429885827 51.44
provisions 42002286 5.03
Total (C ) 471888113 56.47
Creditors for finance lease(D) 0 0
Deffered Tax Liability(E) 33084707 3.96
Total (A+B+C+D+E) 835607518 100
Application of Funds
fixed assets 554383091 66.34
less: Depreciation 177373171 40.47
Add: Capital work in progress 61254473 7.33
Total (A) 438264393 52.45
Current Assets
Inventory 16878754 20.2
Sundry Debtors 132373452 15.84
Cash & Bank Balances 14924368 1.79
Loans & Advances 80657451 9.65
Total (B) 396743125 47.48
Investment (c ) 600000 0.07
Total (A+B+C ) 835607518 100

INTERPRETATION: - COMMON SIZE BALANCE SHEET 2006-07

The Share capital has remained constant as compared to the last year at Rs 38645000 and the
Reserves and Surplus forms the major part of the shareholders fund and is at 10.35% of the total
liabilities. The borrowed fund i.e. secured and unsecured loan is at 16.05% and 8.53%
respectively.. The current Liabilities and Provisions have 56.47% in the total liabilities.
The net block of assets has been increased as compared to the last year by Rs 78851560and has
52.53% in the total assets. Whereas in Current Assets, Loans & Advances forms 9.65% of the total
Assets in which maximum share is of Inventory i.e. 20.2% and the investment has .07% of the total
assets.
COMMON SIZE BALANCE SHEET 2007-08
Particulars 2007-2008 Percentage change
Sources of Funds    
Shareholder's Funds
share capital 38645000 3.55
reserve and surplus 118986329 10.92
Total(A) 157631329 14.47
Loan Funds
secured loans 313879939 28.81
unsecured loans 59239438 5.44
Total(B) 373119377 34.25
Current liabilities & Provisions
current liabilities 462241350 42.43
provisions 63373474 5.82
Total (C ) 525614824 48.25
Creditors for finance lease(D) 0 0
Deffered Tax Liability(E) 32931824 3.02
Total (A+B+C+D+E) 1089297354 100
Application of Funds
fixed assets 731452416 67.15
less: Depreciation 225402549 20.69
Add: Capital work in progress 36563404 3.36
Total (A) 542613271 49.81
Current Assets
Inventory 237279217 21.78
Sundry Debtors 164929878 15.14
Cash & Bank Balances 16764190 1.54
Loans & Advances 127110798 11.67
Total (B) 546084083 50.13
Investment (c ) 600000 0.06
Total (A+B+C ) 1089297354 100
INTERPRETATION: - COMMON SIZE BALANCE SHEET 2007-08

The Share Capital has remained same from the last year and Reserves and Surplus has been
increased from the last year and has the 10.92% of the Total Liabilities and the Total Loan Fund is
34.25% out of which secured loan has 28.81%.and unsecured Loan is 5.44%.. Whereas the Current
liabilities are 42.43% of total Liabilities.
The Net Block of assets has been 49.81% and the Current Assets have been 50.13% and Loans and
Advances are 11.67% which has been increased from last year by Rs 46453347
COMMON SIZE BALANCE SHEET 2007-08
Particulars 2008-2009 Percentage change
Sources of Funds    
Shareholder's Funds
share capital 38645000 2.81
reserve and surplus 132518348 9.64
Total(A) 171163348 12.45
Loan Funds
secured loans 400095001 29.11
unsecured loans 55482607 4.04
Total(B) 455577608 33.15
Current liabilities & Provisions
current liabilities 637236751 46.36
provisions 69953776 5.09
Total (C ) 707190527 51.45
Creditors for finance lease(D) 0 0
Deffered Tax Liability(E) 40561691 2.95
Total (A+B+C+D+E) 1374493174 100
Application of Funds
fixed assets 918815832 66.85
less: Depreciation 283953512 20.66
Add: Capital work in progress 48135847 3.5
Total (A) 682998167 49.69
Current Assets
Inventory 266006836 19.35
Sundry Debtors 255136529 18.56
Cash & Bank Balances 17633295 1.28
Loans & Advances 152118347 11.07
Total (B) 690895007 50.26
Investment (c ) 600000 0.06
Total (A+B+C ) 1374493174 100
INTERPRETATION: - COMMON SIZE BALANCE SHEET 2008-09
The Share Capital has remained same from the last year and Reserves and Surplus has almost
9.64% part in the funds of the company. The borrowed Fund is 33.15% of the Total Liabilities,
out of which secured loan is 29.11% and unsecured loan is 4.04%.. The total amount in current
liabilities and provisions is 51.45%.
The Application of Funds has been done in Net Fixed Assets and the Current Assets Loans and
Advances. In Net Fixed Assets 49.69% has been invested whereas in Current Assets maximum
part of it has been in Inventory i.e. 19.35%, the cash and Bank balance is at 1.28% of the total
Assets and Loans and Advances stands at 11.07%.

COMMON SIZE INCOME STATEMENT 2005-06


Particulars 2005-2006 Percentage Change
Income    
sales 1211557800 114.71
Less: Excise duty 173051363 -16.38
Net Sales 1038506437 98.32
Rent 13608809 1.29
Other Income 4079254 0.39
Total Income 1056194500 100
Expenditure    
Purchases of trading goods 1155506 0.11
Raw material & component consumed 746949618 71.55
other operational expenses 74916425 7.18
Power & Fuel 13285063 1.27
Employee Remuneration & Benefit 83713882 8
Repair & Maintenance 12869890 1.23
Insurance 1404201 0.13
Legal & Professional 3594975 0.34
Travelling & Conveyance 25016265 2.4
Printing & Stationary 1799345 0.17
Communication 2519220 0.24
Fees & Subscription 1523224 0.14
Sales Expenses 8716913 0.83
Royalty 9784886 0.94
Other Expenses 1446076 0.14
Increased/Decreased in fin. And work in
process -1924389 -0.18
Finance charges 19256288 1.84
Depreciation 31308515 3
Tax & others. 6551017 0.63
Total Expenditure 1043886920 100
Net Profit 12307580  

INTERPRETATION: - COMMON SIZE INCOME STATEMENT 2005-06

The Total Income for the year stands at Rs 106 Cr. approx. the total Expenditure is 98.83%. The
major expenses are done at raw material and component consumed Rs 746949618 that is 71% of
the total income and Operational Expenses are 7% of the total Income. Other Expenses like
Depreciation, Tax are around 4%. The Net Profit is .12%.

COMMON SIZE INCOME STATEMENT 2006-07

Particulars 2006-2007 Percentage Change


Income    
sales 1785841364 114.52
Less: Excise duty 254078443 -16.29
Net Sales 1531762921 98.22
Rent 19130922 1.23
Other Income 8553875 0.55
Total Income 1559447718 100
Expenditure    
Purchases of trading goods 1155506 0.07
Raw material & component consumed 1120787444 72.18
other operational expenses 117676812 7.58
Power & Fuel 23681999 1.52
Employee Remuneration & Benefit 102621267 6.6
Repair & Maintenance 19349068 1.25
Insurance 1728937 0.11
Legal & Professional 1956272 0.12
Travelling & Conveyance 38195076 2.46
Printing & Stationary 1998311 0.13
Communication 3046009 0.2
Fees & Subscription 9777342 0.63
Sales Expenses 13049669 0.84
Royalty 11745031 0.76
Director Remuneration 5136000 0.33
Other Expenses 1887738 0.12
Increased/Decreased in fin. And work in
process -2160939 -0.14
Finance charges 21367532 1.4
Depreciation 41346585 2.66
Tax & others. 18429047 1.19
Total Expenditure 1552774706 100
Net Profit 6673012 0.43

INTERPRETATION: - COMMON SIZE INCOME STATEMENT 2006-07

The total income for the year stands at Rs 156 Cr. approx and the major part of expenses is raw
material& component used that are Rs 1120787444 and 45.56% of the total income. The other
major expenses that are done are on other Operational Expenses that is 7.58%. Expenses on
Depreciation and Tax together are 4% of the Total Income. The total Expenses are 99.57% and the
Net Profit is .43% of the total Income.
COMMON SIZE INCOME STATEMENT 2007-08

Particulars 2007-2008 Percentage Change


Income    
sales (including operating income) 2874263165 119.31
Less: Excise duty 497375758 -20.65
Net Sales 2376887407 98.67
Rent 24530137 1.02
Other Income 7470738 0.31
Total Income 2408888280 100
Expenditure    
Raw material consumed 1790996801 75.83
Manufacturing Expenses 262167317 11.1
Administrative Expenses 102013956 4.32
Personnel Expenses 101395721 4.3
Finance Charges 35599067 1.51
Depreciation 48320812 2.04
Tax 23504749 1
Total Expenditure 2361917793 100
Net Profit 46970487 1.95

INTERPRETATION: - COMMON SIZE INCOME STATEMENT 2007-08


The Total Income for the year stands at Rs 240Cr. approx. the total Expenditure is 98%. The major
expenses is raw material consumed that is 75.83% of the total income and manufacturing Expenses
is 11.1% and Administrative Expenses are 4.32% of the total Income. Other Expenses like
Depreciation, Tax are around 3%. The Net Profit is 2% which has been increased from the last
year Net Profit.

COMMON SIZE INCOME STATEMENT 2008-09

Particulars 2008-2009 Percentage Change


Income    
sales (including operating income) 2933409690 115.01
Less: Excise duty 424580334 -16.65
Net Sales 2508829356 98.36
Rent 32065734 1.26
Other Income 9663858 0.39
Total Income 2550558948 100
Expenditure    
Raw material consumed 1907903041 75.4
Manufacturing Expenses 244079017 9.65
Administrative Expenses 116650095 4.61
Personnel Expenses 119589679 4.73
Finance Charges 64120748 2.53
Depreciation 60980970 2.41
Tax 16921471 0.67
Total Expenditure 2530245021 100
Net Profit 20313927 0.8

INTERPRETATION: - COMMON SIZE INCOME STATEMENT 2008-09


The Total Income for the year stands at Rs 255Cr. approx. The major expenses is raw material
consumed that is 75.4% of the total income and manufacturing Expenses is 9.65% and
Administrative Expenses are 4.61% of the total Income. Other Expenses like Depreciation, Tax are
around 3%. The Net Profit is .8% which has been decreased in percentage from the last year Net
Profit.

FINDINGS OF THE STUDY

 Liquidity position of the company is not good in four year because Current assets have been
increased heavily by 148% from past four years. But cash & bank balance increased only by
11% due to Average collection period is decreases from past four years and Gross profit ratio
is decreased by 20% from past four years.

 Company profitability is worse in four year because The Company is not utilizing its
resources efficiently to generate the profit due to decreased in Stock turnover ratio by 24%
from past four years and Net profit ratio is also heavily fluctuate and decrease by 20% from
past four years and Operational expenses have been increased heavily by 132%.

 Long term solvency position is concern for company because its debt equity ratio is high
and working capital ratio also decreased heavily from the past four year.
 The financial performance of the company is not good enough for bright and secure future
there is lot of areas need improvement regarding their functioning.

SUGGESTIONS OF THE STUDY

 Company has to reduce its operational inefficiencies by reducing the cost.


 Company has to increase the efficiencies in using the resources like fixed assets and stock.
 Company has to raise its cash & bank balance by reducing debt collection period to
improve its liquidity position.
 Company has to control the fluctuation or improve the instability in financial results.
 Company needs a regular and efficient analysis of their financial performance.
 Company has to improve its net profit by reducing cost and increasing revenue.
 Company has to adopt suitable method for inventory management which helps in increasing
the stock turnover ratio.
 Company has to control its debt by generating more profit to control solvency position.
CONCLUSION OF THE STUDY

Finance is the life blood of every business. Without effective financial management a company
cannot in this competitive world. In conclusion I can say that it was a project which helped me
understand the functioning of a finance department in an organization. It helped me get an inside
view as to what is done in a finance department.

Jay Ushin Ltd. has the potential to cater to the needs of the customer in every possible way. But it
lags in few things that it needs to concentrate financially and operationally, Even though it
provides Business to Business services. The firm financial data shows that in four year there is no
increase in financial efficiency, profitability and liquidity position, which is concern for the
company.
Company has enough resources like land, labor, capital, technology and potential customers but
fail to improve its profitability because company has lack in operational efficiency.
LIMITATION OF THE STUDY

 Analysis and interpretation are based on secondary data.


 Inter firm comparison was not possible due to non availability of competitor data.
 Some figures have been round off to nearest rupees.
 Price level changes are not considered.
 The study is base only four year data.
 Time is too short to study and analysis.
BIBLIOGRAPHY OF THE STUDY

 Amir et al, “Essential of Financial Analysis”, Business Economics, April (1996),


 Annual Report of Jay Ushin Ltd. from 2005-2009.
 Mahalakshmi N, “How to Analyses Financial Statements”, Outlook Profit, (2009),

 Pandey I M (2006), Financial Management, Vikas publishing house Pvt. Ltd, 8th Edition,
New Delhi
 Pandey I M (2006), Working Capital Management, Vikas Publishing house Pvt Ltd, 8th
Edition, New Delhi.
 Reddy T.S et al (1999), Financial Management, Tata Mc Graw hill Publishing Company
Ltd., 3rd edition, New Delhi.
 Sahaf M.A (2006), Management and Accounting, Tata McGraw Hill Publishing Company
Ltd, 4th Edition, New Delhi.
 Timo Salmi, “A Review of the Theoretical and Empirical Basis of Financial Ratio
Analysis”, Business Economics, April (1994),

WEBSITES

 http://google.com
 http://investopedia.com  
 http://jpmgroup.com   
 http://moneycontrol.com 
 http://ushingroup.com    

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