A PROJECT REPORT ON ANALYSIS OF FINANCIAL STATEMENT OF LIBERTY SHOES LIMITED

Submitted in partial fulfillment of the requirement for the award of Masters of Business Administration (MBA)

Submitted by: _________________ MBA 3rd SEMESTER

Under the guidance of: ____________________

BHARATI VIDYAPEETH INSTITUTE OF MANAGEMENT & RESEARCH, NEW DELHI

An ISO 9001:2008 Certified Institute NAAC Accredited Grade A University Ranked in Top 50 B schools in India by Business India CRISIL Grading MBA Programme

A * - National Level, A ** - State level Recipient of B school leadership award from star news

ACKNOWLEDGEMENT
This project would not be completed today if it was not for the help and support that I received throughout its development and completion. First and foremost, I would like to express my deepest appreciation and gratitude to my mentor in the company _____________ for her good will, time, devotion, guidance and help during the realization of this project. Thank you. These times were exceptional to me and I have learned a great deal. Special Thanks to my parents who taught me to work hard in life; it made me what I am today. Finally, I would like to express gratitude all those who have contributed to the achievement of this work. Thank you

PREFACE
LIBERTY shoes Ltd. Is the only Indian company that is among the top five manufacturers of leather footwear in the world with a turnover exceeding US $100 million. This report is all about study of Inventory Management of Liberty shoes Ltd. In this, I studied annual reports of different years of Liberty shoes Ltd. My objective is to study Financial Analysis of Liberty shoes Ltd. With the help of Ratio Analysis. For this report, research design used is exploratory research design. Exploratory research design main purpose is to formulate a problem for more precise investigation. In this, I define clearly what I want to measure and employ adequate method for measuring it. Data is collected from annual reports of different years of Liberty shoes Ltd., manual, websites and books. The study contains certain limitations because enough data was not available but all the efforts have been made to collect the relevant information through the source available. The Company is highly dependent on external debt, which bring in inflexibility in companys operation. But still the company is in stronger position because the profits have increased with sales.

TABLE OF CONTENT

Particulars Acknowledgement Preface INTRODUCTION RESEARCH METHODOLOGY CONCEPTUAL DISCUSSION DATA ANALYSIS Findings & Recommendations Conclusion Bibliography Questionnaire

Page No.

CHAPTER-1 INTRODUCTION

LIBERTY SYMBOL

INTRODUCTION TO FOOTWEAR INDUSTRY

Footwear is a man made outer covering of foot. It is genially made out of leather but the same can be made with synthetic material. When the human being came into existence, they were needed to protect themselves from heat, cold dampness, dust and roughness of ground while walking, standing, or even running. So they innovate shoes for the protection of their feet.

The importance of footwear is highly recognized in western and other advanced countries, so the footwear industry grew in full swing that originated big companies like Nike, Reebok, Gucci, and Addidas etc. But the scenario in India is somewhat different and regretfully as the industry could not develop itself despite the fact that India being second largest populated country in the world, surplus manpower and resource of raw material, whatever the reason being. Till the mid of 20th century, the bulk of shoe industry was in cottage sector. Professional cobblers were responsible for production of every type of shoes. But in the past one decade the situation has completely changed because new generation of professionals did not adopt this line as shoemaker and preferred to join white-collar jobs. It resulted in the diversification from schedule caste to other class of people as industrial workers. Up to eighties, Bata was the main source of supply of footwear to the cites and towns with higher standard of living. But taking into consideration the growing standard of living and demand, many new footwear companies came into light like Liberty,Corona, Action, Lakhani etc. Production of footwear at this movement is mainly at Agra, Karnal, Faridabad, Delhi, Kolkatta, Kanpur, Mumbai, Madras, and Banglore etc.

Footwear industry in India can never be a heavy industry in general and small entrepreneurs with small investments in machinery and capital could remain for all purposes the backbone of industry. It is the ideal industry for entrepreneurs without much of investment in the industry assuring growing demand and profits. Availability of raw material and manpower is not a problem. So the small sector has to play a vital role in industry development. Depending upon the styles, type and purpose, the footwear can be broadly classified into three groups: Chappal or open type footwear. Sandal or strap attached footwear. Boot & shoe or closed type footwear covering most part of the feet.

COMPANY INFORMATION

Board of Directors
Adesh gupta CEO & Executive Director Shammi bansal Executive Director Adarsh Gupta Executive Director Harish Kumar goel Director(Law & Taxation) Sunil bansal Director Amitabh Taneja Independent Director Prem Chand Garg Independent Director Raghu Goel Independent Director Siddharth Sanghi Independent Director Surendra Kumar Arya Independent Director Vivek Bansal Independent Director

Audit committee
Sunil Bansal Prem Chand Garg Raghu Dayal Vivek Bansal

Share transfer committee

Adarsh Gupta Sunil Bansal Prem Chand Garg

Remuneration/Selection Committee
Raghu Dayal Prem Chand Garg

Membership & certificate

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Confederation of India industry (CII) Federation of India chambers of commerce & industry (FICCI) PHD chamber of commerce and industry (PHDCCI) The associated chambers of commerce and industry of India

(ASSOCHAM) Federation of Indian export organization (FIEO) Council for leather export (CLE) ISO 9001

Company secretary & Vice President

Munish kakra

GROUP DATA AT A GLANCE

Year of Establishment Employment Business Investment Status of Business 1954 More than 5000 employees US $ 100 Million Flagship company of the Group, Liberty Shoes Ltd., a public limited company listed in all major stock exchanges of India. Present Activities Second largest footwear manufacturer in the country having fully integrated plants to manufacture various kind of footwear with Annual Production of over 10 million pairs. Annual Turnover Brand Equity Over US$ 125 Million Mother Brand LIBERTY is ranked among Top 100 brands in the country. Other 10 Successful National brands, known for its respective segment of footwear Infrastructure Various plants spread over 200 acres of land in and around Karnal, Libertypuram, Gharaunda in Haryana, Dehradun & Roorkee in Uttarakhand, Pounta Sahib in Himachal Pradesh supported by strong Marketing Network having Export Markets 14 Branch offices 02 Overseas offices 300 Liberty Exclusive Distributors 350 Liberty Exclusive Retail Stores 20 Overseas showrooms

All over the world, mainly with Europe in Germany United Kingdom France Spain

Technology

Hungary Libertys patented technology HUMANTECH is a

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combination of human craftsmanship and technological excellence with following technologies available in the world for Footwear Industry. Cemented Construction Direct PVC Injection Direct PU Injection Direct EVA Injection Direct TPU Injection

INTRODUCTION
Liberty Group, come a long way since it began its operations a little over 50 years ago in the cityof Karnal, Haryana. The emphasis since the very beginning has been to offer great products at value for money / affordable prices. This led to the development of Liberty Patented HUMANTECH approach which synergise traditional workmanship with state of the art technology to provide the best quality at the most competitive price. Liberty group companies, set various benchmarks in Footwear Manufacturing within the Groups Production facilities and also to Industry.

HISTORY:
Liberty Group started operation in 1954 and today comprises of five firms, namely Liberty Footwear Company, Liberty Enterprises, Liberty Leathers, Liberty Group marketing Division and Liberty Shoes Limited. The group has an annual turnover of Rs.500 Crores approximately. Liberty has its own studio for design and development of footwear. It manufactures footwear both for export and domestic markets. The company has carved a name for itself in the international market and is Indias largest exporter of footwear to Germany. Liberty Shoes Limited, the public company of the group started commercial production in 1993 and is the countrys leading footwear manufactures today. The 11

company has state of the art production facilities at Libertypuram to manufacturer high quality footwear and its contribution in Liberty Groups total sale is over 30% and its rising steadily.

CORPORATE PHILOSPHY:

Steeped in a philosophy that has at its core innovation, technology and advancement, we, at Liberty, pride ourselves over and above everything else on our healthy and heart-felt respect for the human ethos. That which projects itself in the expectancy and excitement with which one greets the arrival of the new combined with a sincere and deep regard for the old. That which is appreciative of and adopts at every stage the unique balance between modernization and tradition. Liberty as a brand is constantly evolving to keep pace with the changing trends, styles, beliefs and aspirations of people while maintaining the sanctity of certain traditions like workmanship and good value. CORPORATE SAGA: With people as its leitmotif, Liberty has for over 50 years always stayed in touch with the aspirations of every successive generation even as it developed the largest range in the industry catering to every income bracket and age segment. Using the patented 'Humantech' approach that combines the best of talent with the latest in technology. From the price-conscious, value for money seeking buyer to the trendy, global, price-indifferent customer, from the with it all attitude teenager to the conservative seen it all adult just about everybody today finds a good reason for being in Liberty. Liberty is today consolidating and expanding its following which extends from the fashion alleys to the sidewalks with styles that compliment the newest most happening trends and also by turning footwear selling into a byword for personalized service in an ambience and shoe stations in India and abroad.

THE CREDO:

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To ensure that the method we use is the latest technology world-over. To follow the highest standard of honest workmanship in whatever we make. To walk that extra miles to ensure customer satisfaction worldwide. To remain a true cosmopolitan to the spirit. To remain a great corporation to associate with, to work for, to know that: We Are About People.

LIBERTY RANGE:
The family brand style personified with something for every need. Be it formal or casual, at office or at the beach, a conference or a soiree - Liberty fits in effortlessly.

MANUFACTURING:

What gives Liberty the edge is vertically integrated manufacturing infrastructure on technology basis with completely in-house state of the art production facilities which includes 8 DESMA machines for PU Direct Injection, 15 Machines for PVC Direct Injection, 3 Machines for EVA Injection, 3 PU Injection units for unit sole, six lines for cement lasted injection and one machine for the latest TPU Injection. Above production facilities are maintained with focus on environment cleanliness ISES 2000 norms, provides a complete range of family footwear of all seasons and occasions, covers the entire domain of industrial safety and health footwear requirements. Liberty also has the ISO: 9001-2000 certification for its Quality, Management System, a testimony to all the system and procedures in place. Liberty is a technology driven company HUMANTECH Libertys patented technology is combination of human craftsmanship and technological excellence.

Liberty has production facilities at the following locations:

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Gharaunda, Haryana, (Approx.95 K.M. from Delhi) Libertypuram, Haryana (Approx.102 K.M. from Delhi) Karnal, Haryana, (Approx.124 from Delhi) Satiwala, Pounta Sahib, Himachal Pradesh (Approx 225 K.M. from Delhi) Batamandi, Paunta Sahib, Himachal Pradesh (Approx 229 K.M. from Delhi) Dehradun, Uttranchal (Approx. 300 K.M. from Delhi) Roorkee, Uttranchal (Approx. 150 K.M. from Delhi)

GROUP COMPANIES: Liberty Retail Revolutions Limited

Liberty Retail Revolutions Limited, the company behind the Revolutions store is a 100% subsidiary of Liberty Shoes Limited The company is producing more than 50,000 pairs of footwear a day covering virtually every age group and income category. Products are marketed across the globe through 150 distributors, 350 exclusive showrooms and over 6000 multibrand outlets, and sold in thousands every day in more than 25 countries including fashion-driven, quality-obsessed nations like France , Italy , and Germany.

Setting new benchmarks in the retail business in India Liberty Retail Revolutions caters to the aspirations of the style-driven in India with an exclusive chain of upmarket showrooms, Revolutions Concept Stores, at fashion centres across India. Its a concept that has opened new frontiers in retail selling - never seen before fashion hubs, catering to individual styles and looks, in an ambience as magical and exciting as the products lined up a world class range in footwear fashion and accessories.

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Liberty Whiteware Limited

The newest member of the Liberty Group introduced a range of ceramic sanitary ware and accessories of European design thats inspired by a lifestyle of sheer elegance. Where beauty and functionality achieve perfect harmony. Form compliments finesse. And tradition blends seamlessly into innovation. Produced at a Rs.50 crore state-of-the-art plant at Neemrana Industrial Area of Rajasthan the Beach range of fine bathroom products and accessories including WCs, bidets, washbasins, and shower trays, comprising five distinctive collections each with its own definitive character and style. BRANDS This family brand is style personified with something for every need. Be it formal or casual, at office or at the beach, a conference or a soiree Liberty fits in effortlessly. COOLERS Theyre cool and theyre hot. Theyre hap and theyre happening. Perfect for those hot summer days. When the sun blisters and the heat strokes, they keep the feet cool and comfortable. But why limit the pleasure to summers?! Heres one brand of sandals that stays cosy and comfy all year round. FOOTFUN Something for those little feet as they learn to walk. Airy, light and comfortable with lycra uppers and no laces. In fairy-tale colors and designs. FORCE-10 The flair, the style and ease that forces the world to take notice. A happening range of sports

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shoes in far out colors that provides the perfect footnote to a head-turning presence.

FORTUNE Genuine leather uppers and extra light poly soles help complete the power dressing in men with lan and panache.

GLIDERS Cool and comfortable, trendy and with it. A range of stunning brogues and smart lace ups that will be noticed and talked about every step of the way. Unmistakably a part of Generation You. SENORITA Walk tall, walk light and walk with amazing style. Rediscover the little girl that lurks not far behind in every woman, laughing and loving every moment of life. TIPTOPP Its what Mrs. Junejas of the world love to be seen in. Strappy styles and comfortable heels. And colors that become the envy of all and sundry. Perfect for conquering the neighbourhood in designs that are the latest rage the world over. WARRIOR Smart, stylish professional gear crafted from leather uppers and direct injection P.U. soles with steel toe caps and offering the widest range of styles in safety shoes. To master the art of being confident and surefooted on slippery grounds and danger ones. 16

WINDSOR The premium is on lightness, style and comfort which makes it ideal for men who take every challenge effortlessly in their stride.

FREEDOM A new introduction in the safety footwear segment in Nitrile PVC material, offering customers with waterproof, fire retardant and shock free product in economic range. A safety footwear for industrial use.

RESEARCH & DEVELOPMENT:

Our 2-way channel partners dig their feed back deep and constantly. Hammering String of creative workman at the manufacturing center to produce not just faceless shows dancing down conveyor belts but shoes with character. So the centers have poled 53 years of the research and continuous flow of emotions to redefine the R & D center at Libertypuram. Fusing technology with the sweat of sagacity. Some call it Research & Development Wing some put a price to investments in the Emotional Technology that it comes out as. We call the process HUMANTECH and it priceless. Liberty also very active in the area of Research & Development and has a number of firsts to its credit like: 1. Liberty pioneered the PU (Polyurethane) technology in India in footwear industry in 1982 and today is the largest producers of footwear with this technology in Asia. 2. Liberty has developed new material TPE (Thermo-Plastic-Elastomer) for high quality formal footwear.

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3. Liberty has developed a high quality Eva Compound for beach footwear. 4. Liberty was the first company commissioning a latest CAD/ CAM System. 5. Die Less Leather cutting machine which is directly attached with its Design & Development Section for speedy process of development of new models of footwear. 6. Liberty is the only factory in India having water proofing technology approved by SYMPATEX, a name known for water proofing technology worldwide. 7. Liberty Management is very thin in size comparing with a huge work force in front line operation.

DESIGN & DEVELOPMENT:

Liberty has well established state of the art design centers which are constantly engaged in designing and developing latest trend setting footwear for the young fashions conscious Indian consumers. On an average 4000 new styles are developed every year out of which roughly 1200 styles are selected and introduced in the market in two seasons i.e. spring / summer and fall, winter.

FINANCIAL
If you think a company that has helped 50 million people think on their feet in style is big stuff, you have seen very little yet. For us the future plans are not something that can be termed as crystal gazing but neatly enclosed ideas idea and deliverables in continuum. We are fast building new brands and products, improving the all times favorites and expending our marketing infrastructure and honing to our skills to further the delight of the consumer. With an over all 25% boom planned each year for the next 5 year you could says that India is only true blue footwear manufacturing multinational is just peaking over the edge.

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DISTRIBUTION NETWORK:
We have distribution network rivals the human arterial system. An reticulate network of retailer showrooms, and exclusive outlets with a reach like blue green marine octopus a structured 2-way feeder-feed back system that both gives and receives an organization of our size would have gone out-of-orbit without a firm support system. Thanks to the vision and drive of our corporate think tank, we now have a sales network that brings the breath-taking world of super footwear right at your feet within seconds. A virtual room service at zero cost, if you will. A marketing system that we have conceived and created, it is understandably, the envy of competition.

MORE STORES FROM LIBERTY:

Liberty group is expecting to add Rs.70 crores from its footwear retail business. The company will invest Rs.7 Crores towards expending Revolution - its exclusive footwear showroom. This year company will add 10 more stores to take it to 25. The company has also entered the manufacturing of white ware segment of sanitary and bathroom products. Liberty is looking at introducing new design this season too. The company has expended its retail presence in over 100 stores across small and big cities.

LIBERTY PLANS TO EXPANDS GLOBAL PRESENCE

Liberty group has also establish manufacturing plant in Uttrakhand state and opening 25 exclusive outlets across the country as well as in 7 overseas centers. Each outlet is estimated to see an investment of Rs.7.5 million. With a turnover of Rs.500 crores the company is emerging as an multinational brands with about 350 Exclusive distributors all over the world. as opposed to the earlier model of expending retail outlets we plan to bring down the number of retailer from 5000 to 4000. We do not want retail presence for name shake; the

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ideas to have real brand presence, Liberty plans to open super premium at Singapore, Kualampur, Dhaka, Columbo and Dubai . The currently exports about 25% of footwear production to Germany, Italy, France, United States and the Middle East.

STRENGTH:
At Liberty we upgrade and re-engineer our design every 6 months so that you have something new, with it and futuristic every time you visit us. Our shoes are much more than just B.E. Witching leather work. We understand that a shoe for you is an extension of your personality. And for one who keeps moving onto to stables of desire loaded with exciting world fashions trends we craft the dreams with the help of Capital Fashion Technologists shut away not in dream bars but with their heart minds on the pules of future fashion.

LIBERTY SHOES LIMITED AN INNER VIEW LOCATION:

The company has entered into a lease agreement for 410 cannals and 17 marlas (248500sq. yards) of land on national highway no.1 main G.T. road in Libertypuram, Kutail, district Karnal. The site is around 115 KM from Delhi on national highway between Chandigarh and Delhi. The site is 15KM from Karnal and is well connected with major cities and has all basis infrastructure facilities.

BUILDING:
It mainly consists of eight huge halls meant for manufacturing operation facility, raw material and finished goods storage, cutting sections, PVC Sole Section, PU Sole Section, Administrative Block etc. the design and finishing of building is among the best. The total area of the building is 170 lacks sq.feet (approx) and total cost of building is around 550 lacks. The building is of RC framed structure.

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MACHINARY:
Five (new technology) injection-moulding machines are being used by the company for production purpose. All the machines are imported from Italy and Germany. Production of shoes as well as quality of shoes has been increased and problems of pasting, sole cracking have been reduced substantially by this technology. Recently one new computerized machine has been purchased for cutting leather. It has also been imported from Italy

INNOVATIVE APPROACHES:
Entire production units of Liberty are interlinked by SAP, a unique ERP Solution implemented for the first time in India in a Footwear Industry with all modules related with Finance, Logistics & supply chain. It is rare to see such clean, state of the art production facility in India with following management systems and tools. 1. KAIZEN is implemented since 2000 and in practice throughout the organization. 2. 5 S Concept is introduced and in practice since 2001 and presently in matured stage. The impact of 5 S implementation is visible in all dept. and shop floors of the organization. We may even consider these units are the model units for any Footwear Industry 3. LEAN awareness is existing in all production floors of the organisation. Value streams are standardized for most of the regularly produced articles. Now the Group is in the process of integrating Lean Concept with PP Module of SAP for controlling the flow. 4. ISO 9001:2000 CERTIFICATION is awarded to QMS of one of its units and Group is in the process of getting for other units. Group is having an appointed MR exclusively for monitoring the Quality System. DNV is the Certifying agency and auditors of the QMS

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5. WASTE MANAGEMENT SYSTEM is established in one of their unit and it is a pilot project. Wastage Identification, handling and disposal are documented and monitored by frequent internal audits. 6. WATER MANAGEMENT SYSTEM is existing in the group. Water wastage is almost nil- and water is re-cycled in most of their operations. 8. ISES-2000 norms are followed to ensure the best Social, Health and Environmental Standards. This standard is monitored by Indo German Export Promotion Council of India. 9. Liberty is the Committee member for setting the standard for Safety Shoes. The recently released IS: 15298:2000 for Safety shoes is followed by Liberty and it is the first in Shoe Industry have applied for Certification to use ISI Mark. 9. ENGERGY MANAGEMENT SYSTEM of Liberty is unique in Footwear Industry. Liberty Units have got lot of incentives / discounts from Haryana State Electricity Board for maintaining maximum Power Factor.

INTERNATIONAL EXPERIENCE:
1. Liberty has more than 25 years of experience in Export Business and enjoying Status Holder status as Recognized Export House of India. In 80s when Soviet Market was invaded by Indian Exporters, Liberty was the Market Leader in USSR. 2. Liberty is having its own office in Russia and Hungary for more than 2 decades. 3. Libertys major operations are mainly with Europe, Middle East, East African, South African countries and USA. 4. Major brands of Europe, SALAMANDER, JELA, DEICHMANN, ROMIKA and USA brands like TODDWELSH are selling only Liberty Shoes under their brand umbrella.

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CONTRIBUTION TO INDUSTRY:
1. Liberty has pioneered in bringing PU Technology to India. Liberty has given a presentation on Footwear foot prints for the future in Asia Pacific Customer Conference 2000 organized by Huntsman Polyurethane at Singapore on this technology. 2. SYMPATEX is a patented technology on Water Proofing recognized world wide. Liberty is the only company in India having recognition/approval of SYMPATEX on Waterproofing. 3. Safety Shoes are brought to Indian Market for the first time and an exclusive brand WARRIOR was launched by Liberty in Industrial Segment shoes. Our safety shoes are meeting all DIN / EN standards in respective segments. 4. PU technology was introduced to Government Sector, Liberty has set the standard as member of the BIS Committee. BIS Standard IS: 15298: 2000, applicable for Safety shoes is the Standard on which Liberty is producing Safety shoes for more than one decade. 5. Liberty Enterprises is the model unit for above Standard and complete testing facility is available only with Liberty in India after FDDI. 6. Liberty is the First Footwear Manufacturing facility in India awarded with the latest ISO 9001:2000 Certification. 7 The first and only footwear Industry in India, having SAP ERP with all modules related to Inward/Outward supply chain, Materials, Finance and Costing 8. Liberty has pioneered blend of NITRILE Rubber with PVC in 1996 to make it more versatile for cold countries usage. 9. Liberty has developed new material TPE (Thermo Plastic Elastomer) for high quality formal footwear. This material has better properties than PVC or TPR conventionally used for formal. 10. Liberty is expanding its operation by manufacturing non woven hags which are environment clean.

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SOCIAL CONTRIBUTION:
1. Liberty Footwear Training Institute formed by our Directors is developing the local public as technicians of Footwear Industry. 2. Management of Liberty Sponsors the children of Liberty Employees for higher studies, gives training and employment after graduation in FDDI. 3. Social and Environmental Standard ISES-2000 is in practice with Liberty. This standard is being monitored by Indo German Export Promotion Project in India. 4. The products being used by Liberty are Eco-friendly and providing latest technology to Industry when Indian Markets related with Environment & Safety are not even aware about the new standards and technology.

NATIONAL AND INTERNATIONAL AWARDS

Leather Export Promotion Merit Award (1975), till 1982. Haryana Government Export Award (1978-79). International Asian Award, Jakarta (1982). European Awards, Paris (1987). National Award for best Export of Leather Garments (1987-88). International Award for Good Quality, Brussels, Belgium (1988). Leather Export Award for Government of India (1991-92). National Productivity Award from president (1997). Council of Leather Export (CLE), Indias apex body of leather products exporters, during the international leather fair held at Chennai, conferred is highest award the DOYEN OF INDUSTRY upon Mr.P.D.Gupta on 5th Feb., 98. Worldwide Prestige Award (WPA)-2001.

CORPORATE GOALS
Liberty wants to develop a spirit of cooperation between individuals & group within the company.

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Liberty wants to attain & maintain good relations between its union & management. Liberty will endeavor to keep highly qualified employees by appropriate training and thus raise their morale & competence. Liberty will try to practice management of highest standard of competence & professionalism. Liberty will strive to remain or become the technological as well as market leaders in footwear industry and leather product industry. Liberty wants to be known for the quality for its products & services.

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CHAPTER-2 RESEARCH METHODOLOGY

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RESEARCH METHODOLOGY

Research is an important pre-requisite for a dynamic organization to be prcised. Research is more systematic activity directed towards the discovery and development of organized body of knowledge. Some of the characteristics of research methodology are as follows: 1. Research is directed towards a solution of problem. It may attempt to answer a question or determine the relation between two or more variables. 2. Research involves gathering new data for primary of first hand sources or using existing data for new purposes. 3. Research is based on observable experience or empirical evidence. 4. Research strives to be objective and logical applying every possible test to validate the proceed are employed the data collection and conclusion research. Primary Data Information collected for the specific purpose at hand or specifically for the currently undertaken. Secondary Data Information that already exists somewhere, have been collected for another purpose. I used secondary data for this project. I refer some books and also some websites for the project. These books and websites are mentioned in the bibliography.

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OBJECTIVE OF THE STUDY Main Objective The project is designed to give an overview of Inventory Management. Sub Objective The study on Inventory is very important for a firm. The objectives of this study are as follows: To determine the changes in the Inventory position of the company. To determine the increase or decrease in Inventory level. To determine the various ratios for analyzing the Inventory level of the company. To spot out strengths & weakness of business. To determine the absolute figures for the last two years

SCOPE OF THE STUDY This report covers: 1) Credit Administration at LIBERTY SHOES 2) Various types of Bank Finance 3) Term Loans Financing 4) Working Capital Financing 5) Appraisal Process of Term Loans and Working Capital 6) Post Sanction Processes 7) Case Study describing actual appraisal of a Term Loan proposal and a Working Capital Financing Proposal.

Data Collection
This report is based on primary as well secondary data, however primary data collection was given more importance since it is overhearing factor in attitude studies. One of the most important users of research methodology is that it helps in identifying the problem, collecting, analyzing the required information data and providing an alternative solution to the problem .It also helps in collecting the vital information that is required by the top

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management to assist them for the better decision making both day to day decision and critical ones.

1.

DATA SOURCES:

(A) Primary Data Primary data are those, which were collected afresh & for the first time and thus happen to be original in character. However, there are many methods of collecting the primary data. All have not been used for the purpose of this project. The ones that have been used are: Face to face (Interviewing) Observation

(B) Secondary Data When an investigator uses the data that has been already collected by others is called secondary data. The secondary data could be collected from the journals, reports and various publications. The advantage of the secondary data can be economical, both in the terms of money and time spent. In this report secondary data was collected through: Company balance sheets Reports and records Flow charts and tables Websites

Primary data was collected through questionnaires Sample size Sample area Sample method Duration of Study: : : : 20 New Delhi Random sampling method

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The study was carried out for a period of two months, from 22 nd MAY 2012 to 12th JULY 2012

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Sampling: (A) Sampling procedure: The sample was selected of them who are the customers/visitors of Infosys It was also collected through personal visits to persons, by formal and informal talks and through filling up the questionnaire prepared. The data has been analyzed by using mathematical/Statistical tool. Secondary source of data 1. Reports from the clients 2. Old data of existing clients

LIMITATIONS
Although every effort have been made to collect the relevant information through the source available, still some relevant information could not be gathered. 1. The time duration could not provide ample opportunity to study every detail of management in the company. 2. There are restrictions not to visit some specific areas. 3. The concered executives were having very busy schedule. 4. The company on account of confidential reports has not disclosed some figures 5. Estimates are based upon predictions.

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CHAPTER-3 CONCEPTUAL DISCUSSION

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CONCETUAL DISCUSSION
Literature Review
Financial statements refer to such statements which contains financial information about an enterprise. They report profitability and the financial position of the business at the end of accounting period. The team financial statement includes at least two statements which the accountant prepares at the end of an accounting period. The two statements are: The Balance Sheet Profit And Loss Account

They provide some extremely useful information to the extent that balance Sheet mirrors the financial position on a particular date in terms of the structure of assets, liabilities and owners equity, and so on and the Profit and Loss account shows the results of operations during a certain period of time in terms of the revenues obtained and the cost incurred during the year. Thus the financial statement provides a summarized view of financial position and operations of a firm Meaning of Financial Analysis The first task of financial analysis is to select the information relevant to the decision under consideration to the total information contained in the financial statement. The second step is to arrange the information in a way to highlight significant relationship. The final step is interpretation and drawing of inference and conclusions. Financial statement is the process of selection, relation and evaluation. Features of Financial Analysis To present a complex data contained in the financial statement in simple and understandable form. To classify the items contained in the financial statement inconvenient and rational groups.

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To make comparison between various groups to draw various conclusions.

Purpose of Analysis of financial statements To know the earning capacity or profitability. To know the solvency. To know the financial strengths. To know the capability of payment of interest & dividends. To make comparative study with other firms. To know the trend of business. To know the efficiency of mgt. To provide useful information to mgt

Procedure of Financial Statement Analysis The following procedure is adopted for the analysis and interpretation of financial statements:The analyst should acquaint himself with principles and postulated of accounting. He should know the plans and policies of the managements that he may be able to find out whether these plans are properly executed or not. The extent of analysis should be determined so that the sphere of work may be decided. If the aim is find out. Earning capacity of the enterprise then analysis of income statement will be undertaken. On the other hand, if financial position is to be studied then balance sheet analysis will be necessary. The financial data be given in statement should be recognized and rearranged. It will involve the grouping similar data under same heads. Breaking down of individual components of statement according to nature. The data is reduced to a standard form. A relationship is established among financial statements with the help of tools & techniques of analysis such as ratios, trends, common size, fund flow etc. The information is interpreted in a simple and understandable way. The significance and utility of financial data is explained for help indecision making.

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The conclusions drawn from interpretation are presented to the management in the form of reports.

Analyzing financial statements involves evaluating three characteristics of a company: its liquidity, its profitability, and its insolvency. A short-term creditor, such as a bank, is primarily interested in the ability of the borrower to pay obligations when they come due. The liquidity of the borrower is extremely important in evaluating the safety of a loan. A long-term creditor, such as a bondholder, however, looks to profitability and solvency measures that indicate the companys ability to survive over a long period of time. Long-term creditors consider such measures as the amount of debt in the companys capital structure and its ability to meet interest payments. Similarly, stockholders are interested in the profitability and solvency of the company. They want to assess the likelihood of dividends and the growth potential of the stock. Comparison can be made on a number of different bases. Following are the three illustrations:

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Ratio Analysis:
Meaning of Ratio Analysis: Ratio analysis is the method or process by which the relationship of items or group of items in the financial statement are computed, determined and presented. Ratio analysis is an attempt to derive quantitative measure or guides concerning the financial health and profitability of business enterprises. Ratio analysis can be used both in trend and static analysis. There are several ratios at the disposal of an analyst but their group of ratio he would prefer depends on the purpose and the objective of analysis. While a detailed explanation of ratio analysis is beyond the scope of this section, we will focus on a technique, which is easy to use. It can provide you with a valuable investment analysis tool. This technique is called cross-sectional analysis. Cross-sectional analysis compares financial ratios of several companies from the same industry. Ratio analysis can provide valuable information about a company's financial health. A financial ratio measures a company's performance in a specific area. For example, you could use a ratio of a company's debt to its equity to measure a company's leverage. By comparing the leverage ratios of two companies, you can determine which company uses greater debt in the conduct of its business. A company whose leverage ratio is higher than a competitor's has more debt per equity. You can use this information to make a judgment as to which company is a better investment risk. However, you must be careful not to place too much importance on one ratio. You obtain a better indication of the direction in which a company is moving when several ratios are taken as a group.

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Objective of Ratios: Ratios are worked out to analyze the following aspects of business organizationA) Solvency Long term Short term Immediate

B) Stability C) Profitability D) Operational efficiency E) Credit standing F) Structural analysis G) Effective utilization of resources H) Leverage or external financing Forms of Ratio: Since a ratio is a mathematical relationship between two or more variables / accounting figures, such relationship can be expressed in different ways as follows A) As a pure ratio: For example the equity share capital of a company is Rs. 20, 00,000 & the preference share capital is Rs. 5, 00,000, the ratio of equity share capital to preference share capital is 20, 00,000: 5, 00,000 = 4:1. B) As a rate of times: In the above case the equity share capital may also be described as 4 times that of preference share capital. Similarly, the cash sales of a firm are Rs. 12,00,000 & credit sales are Rs. 30,00,000. So the ratio of credit sales to cash sales can be described as 2.5 (30, 00,000/12, 00,000) = 2.5 times are the credit sales that of cash sales.

37

C) As a percentage: In such a case, one item may be expressed as a percentage of some other items. For example, net sales of the firm are Rs.50, 00,000 & the amount of the gross profit is Rs. 10, 00,000, then the gross profit may be described as 20% of sales (10, 00,000/50, 00,000) Steps in Ratio Analysis The ratio analysis requires two steps as follows: 1) Calculation of ratio 2) Comparing the ratio with some predetermined standards. The standard ratio may be the past ratio of the same firm or industrys average ratio or a projected ratio or the ratio of the most successful firm in the industry. In interpreting the ratio of a particular firm, the analyst cannot reach any fruitful conclusion unless the calculated ratio is compared with some predetermined standard. The importance of a correct standard is oblivious as the conclusion is going to be based on the standard itself. 1) Liquidity ratios: It shows the relationship between the current assets & current liabilities of the concern e.g. liquid ratios & current ratios. 2) Leverage ratios: It shows the relationship between proprietors funds & debts used in financing the assets of the concern e.g. capital gearing ratios, debt equity ratios, & Proprietary ratios. 3) Activity ratios: It shows relationship between the sales & the assets. It is also known as Turnover ratios & productivity ratios e.g. stock turnover ratios, debtors turnover ratios. 4) Profitability ratios: It shows the relationship between profits & sales e.g. operating ratios, gross profit ratios, operating net profit ratios, expenses ratios

38

It shows the relationship between profit & investment e.g. return on investment, return on equity capital.

5) Coverage ratios: It shows the relationship between the profit on the one hand & the claims of the outsiders to be paid out of such profit e.g. dividend payout ratios & debt service ratios. Based on User 1) Ratios for short-term creditors: Current ratios, liquid ratios, stock working capital ratios 2) Ratios for the shareholders: Return on proprietors fund, return on equity capital 3) Ratios for management: Return on capital employed, turnover ratios, operating ratios, expenses ratios 4) Ratios for long-term creditors: Debt equity ratios, return on capital employed, proprietor ratios.

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Importance of Ratio Analysis:

As a tool of financial management, ratios are of crucial significance. The importance of ratio analysis lies in the fact that it presents facts on a comparative basis & enables the drawing of interference regarding the performance of a firm. Ratio analysis is relevant in assessing the performance of a firm in respect of the following aspects: 1) Liquidity position 2) Long-term solvency 3) Operating efficiency 4) Overall profitability 5) Inter firm comparison 6) Trend analysis 1) Liquidity position With the help of Ratio analysis conclusion can be drawn regarding the liquidity position of a firm. The liquidity position of a firm would be satisfactory if it is able to meet its current obligation when they become due. A firm can be said to have the ability to meet its short-term liabilities if it has sufficient liquid funds to pay the interest on its short maturing debt usually within a year as well as to repay the principal. This ability is reflected in the liquidity ratio of a firm. The liquidity ratio is particularly useful in credit analysis by bank & other suppliers of short term loans. 2) Long-term solvency Ratio analysis is equally useful for assessing the long-term financial viability of a firm. This respect of the financial position of a borrower is of concern to the longterm creditors, security analyst & the present & potential owners of a business. The long-term solvency is measured by the leverage/ capital structure & profitability ratio analysis s that focus on earning power & operating efficiency. Ratio analysis reveals the strength & weaknesses of a firm in this respect. The leverage ratios, for instance, will indicate whether a firm has a reasonable proportion of various sources of finance or if it is heavily loaded with debt in

40

which case its solvency is exposed to serious strain. Similarly the various profitability ratios would reveal whether or not the firm is able to offer adequate return to its owners consistent with the risk involved. 3) Operating efficiency Yet another dimension of the useful of the ratio analysis, relevant from the viewpoint of management, is that it throws light on the degree of efficiency in management & utilization of its assets. The various activity ratios measure this kind of operational efficiency. In fact, the solvency of a firm is, in the ultimate analysis, dependent upon the sales revenues generated by the use of its assetstotal as well as its components. 4) Overall profitability Unlike the outsides parties, which are interested in one aspect of the financial position of a firm, the management is constantly concerned about overall profitability of the enterprise. That is, they are concerned about the ability of the firm to meets its short term as well as long term obligations to its creditors, to ensure a reasonable return to its owners & secure optimum utilization of the assets of the firm. This is possible if an integrated view is taken & all the ratios are considered together. 5) Inter firm comparison Ratio analysis not only throws light on the financial position of firm but also serves as a stepping-stone to remedial measures. This is made possible due to inter firm comparison & comparison with the industry averages. A single figure of a particular ratio is meaningless unless it is related to some standard or norm. One of the popular techniques is to compare the ratios of a firm with the industry average. It should be reasonably expected that the performance of a firm should be in broad conformity with that of the industry to which it belongs. An inter firm comparison would demonstrate the firms position vice-versa its competitors. If the results are at variance either with the industry average or with those of the competitors, the firm can seek to identify the probable reasons & in light, take remedial measures.

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BALANCE SHEET Sources of funds Owner's fund Equity share capital Share application money Preference share capital Reserves & surplus Loan funds Secured loans Unsecured loans Total Uses of funds Fixed assets Gross block Less : revaluation reserve Less : accumulated depreciation Net block

Mar ' 12

Mar ' 11

Mar ' 10

Mar ' 09

Mar ' 08

17.04 132.21

17.04 124.59

17.04 114.50

17.04 105.30

17.04 97.78

90.02 1.61 240.88

95.56 4.45 241.63

75.04 10.00 216.59

82.65 16.44 221.44

103.32 15.06 233.19

153.31 -

145.95 -

136.53 -

131.73 -

126.06 -

66.41 86.90

59.47 86.48

53.25 83.28

47.08 84.64

40.61 85.46

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BALANCE SHEET Capital work-in-progress Investments Net current assets Current assets, loans & advances Less : current liabilities & provisions Total net current assets Miscellaneous expenses not written Total Notes: Book value of unquoted investments Market value of quoted investments Contingent liabilities Number of equity sharesoutstanding (Lacs)

Mar ' 12 0.05 16.22

Mar ' 11 1.05 17.94

Mar ' 10 17.50

Mar ' 09 0.13 20.34

Mar ' 08 1.55 20.34

230.08

197.74

171.99

171.02

180.59

92.38 137.70

61.58 136.16

56.19 115.80

54.70 116.32

54.75 125.84

240.88

241.63

216.59

221.44

233.19

16.22

17.94

17.50

20.34

20.34

11.43

27.35

18.70

9.58

9.71

170.40

170.40

170.40

170.40

170.40

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PROFIT LOSS ACCOUNT Mar ' 12 Income Operating income Expenses Material consumed Manufacturing expenses Personnel expenses Selling expenses Adminstrative expenses Expenses capitalised Cost of sales Operating profit Other recurring income Adjusted PBDIT Financial expenses Depreciation Other write offs Adjusted PBT Tax charges Adjusted PAT Non recurring items Other non cash adjustments Reported net profit 184.07 25.23 36.79 57.11 303.20 29.34 0.25 29.58 11.73 7.39 10.47 -0.35 10.82 -3.24 0.05 7.63 332.54

Mar ' 11

Mar ' 10

Mar ' 09

Mar 08

297.32

260.71

241.69

248.79

165.76 32.84 35.68 16.47 22.22 272.97 24.35 0.64 24.99 8.22 6.81 9.96 -0.21 10.17 0.12 -0.21 10.08

146.18 28.28 27.03 15.76 18.15 235.40 25.31 0.49 25.80 9.00 6.79 10.01 -0.35 10.36 -0.68 -0.47 9.20

135.80 25.92 20.92 16.79 16.29 215.72 25.97 1.04 27.01 12.59 6.59 7.83 -0.26 8.09 -0.54 -0.02 7.52

133.19 27.00 22.61 18.25 16.21 217.26 31.54 0.59 32.13 13.41 6.38 12.34 0.12 12.23 3.82 -0.09 15.96

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PROFIT LOSS ACCOUNT Mar ' 12 Earnigs before appropriation Equity dividend Preference dividend Dividend tax Retained earnings 49.30 49.30

Mar ' 11 47.67 47.67

Mar ' 10 43.59 43.59

Mar ' 09 40.39 40.39

Mar 08 38.87 38.87

CASH FLOW Profit before tax Net cash flow-operating activity Net cash used in investing activity Netcash used in fin. activity Net inc/dec in cash and equivlnt Cash and equivalnt begin of year Cash and equivalnt end of year

Mar ' 12 18.40

Mar ' 11 17.69

Mar ' 10 17.85

Mar ' 09 19.50

Mar ' 08 29.05

10.78

10.36

15.41

27.13

22.81

-6.94 -11.95

-11.40 -0.35

-2.62 -13.54

-4.01 -21.76

-9.17 -13.30

-7.98

-1.34

-1.01

1.36

0.34

17.54

4.13

5.15

3.79

4.15

9.56

2.79

4.13

5.15

4.49

RATIOS Per share ratios Adjusted EPS (Rs)

Mar ' 12

Mar ' 11

Mar 10

Mar 09

Mar 08

6.35

5.97

6.08

4.75

7.18

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RATIOS Adjusted cash EPS (Rs) Reported EPS (Rs) Reported cash EPS (Rs) Dividend per share Operating profit per share (Rs) Book value (excl rev res) per share (Rs) Book value (incl rev res) per share (Rs.) Net operating income per share (Rs) Free reserves per share (Rs) Profitability ratios Operating margin (%) Gross profit margin (%) Net profit margin (%) Adjusted cash margin (%) Adjusted return on net worth (%)

Mar ' 12 10.68 4.48 8.81 -

Mar ' 11 9.96 6.04 10.03 -

Mar 10 10.06 5.40 9.39 -

Mar 09 8.62 4.41 8.28 -

Mar 08 10.92 9.42 13.16 -

17.22

14.29

14.85

15.24

18.51

87.59

83.11

77.20

71.80

67.38

87.59

83.11

77.20

71.80

67.38

195.15 -

174.48 73.09

153.00 67.17

141.84 61.77

146.00 57.36

8.82 6.60 2.29 5.47

8.19 5.90 3.45 5.69

9.70 7.10 3.52 6.56

10.74 8.01 3.09 6.04

12.67 10.11 6.43 7.46

7.24

7.18

7.87

6.60

10.64

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RATIOS Reported return on net worth (%) Return on long term funds (%) Leverage ratios Long term debt / Equity Total debt/equity Owners fund as % of total source Fixed assets turnover ratio Liquidity ratios Current ratio Current ratio (inc. st loans) Quick ratio Inventory turnover ratio Payout ratios Dividend payout ratio (net profit) Dividend payout ratio (cash profit)

Mar ' 12

Mar ' 11

Mar 10

Mar 09

Mar 08

5.10

7.26

6.99

6.14

13.97

9.21

12.02

14.20

15.75

19.74

0.61 0.61

0.06 0.70

0.01 0.64

0.05 0.81

0.13 1.03

61.96 1.38

58.61 2.04

60.73 1.91

55.24 1.83

49.23 1.97

2.49 2.49 1.59 4.19

3.21 0.83 1.89 3.93

3.06 0.81 1.82 3.98

3.13 0.77 1.90 3.84

3.30 0.73 1.91 3.52

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RATIOS Earning retention ratio Cash earnings retention ratio Coverage ratios Adjusted cash flow time total debt Financial charges coverage ratio Fin. charges cov.ratio (post tax) Component ratios Material cost component (% earnings) Selling cost Component Exports as percent of total sales Import comp. in raw mat. consumed Long term assets / total Assets Bonus component in equity capital (%)

Mar ' 12 100.00 100.00

Mar ' 11 100.00 100.00

Mar 10 100.00 100.00

Mar 09 100.00 100.00

Mar 08 100.00 100.00

5.03

5.89

4.96

6.75

6.36

2.52

3.04

2.87

2.15

2.40

2.28

3.08

2.78

2.12

2.67

54.57 -

56.92 5.54

56.68 6.04

51.30 6.94

56.34 7.33

14.24

14.45

14.11

15.63

17.99

8.30

7.84

5.50

5.08

6.84

0.30

0.34

0.36

0.38

0.37

50.00

50.00

50.00

50.00

50.00

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CHAPTER-4 DATA ANALYSIS

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ANALYSIS AND INTERPRETATION 1. LIQUIDITY RATIOS 1.1 CURRENT RATIO = CURRENT ASSETS/CURRENT LIABILTIES YEAR Current Assets Current Liabilities Current Ratio
2 1.8 1.6 1.4 1.2 1 0.8 0.6 0.4 0.2 0 2009-2010 2010-2011 2011-2012

2009-2010 1,34,94,75,847 75,67,58,438 1.78

2010-2011 1,81,20,38,152 1,37,98,19,154 1.31

2011-2012 1,80,59,34,193 1,32,78,92,788 1.36

Current Assets Current Liabilities Current Ratio

INTERPRETATION 1. IDEAL CURRENT RATIO IS 2:1. 2. The current ratio has increased from 1.47 to 1.78 between the years 20042005 and2009-2010. Then it decreased to 1.31 in the year 2010-2011 and then increased 1.36 in the year 2011-2012. 3. This shows that the short term liquidity of the company is not good.

1.2 QUICK RATIO = QUICK ASSETS/CURRENT LIABILITIES

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YEAR Quick Assets Current Liabilities Quick Ratio

1.2 1 0.8 0.6 0.4 0.2 0

2009-2010 81,29,79,812 75,67,58,438 1.07

2010-2011 1,05,02,99,837 1,37,98,19,154 0.76

2011-2012 1,04,40,61,085 1,32,78,92,788 0.79

Quick Assets Current Liabilities Quick Ratio

2009-10

2010-11

2011-12

INTERPRETATION 1. THE IDEAL QUICK RATIO IS 1:1 2. The quick ratio of the company has increased from 0.94 to1.07 between the year 2004-2005 and2009-2010. Then decreased to 0.76 and0.79 in the year 2010-2011 and 2011-2012. 3. This means that the company cannot meet its short term obligations.

1.3 CASH RATIO = CASH AND BANK/CURRENT LIABILITIES YEAR Cash Current 2009-2010 2,94,45,561 75,67,58,438 51 2010-2011 4,62,40,483 1,37,98,19,154 2011-2012 4,49,26,777 1,32,78,92,788

Liabilities Cash Ratio

0.039

0.033

0.034

0.039 0.038 0.037 0.036 0.035 0.034 0.033 0.032 0.031 0.03 Cash Current Liabilities Cash Ratio

2009-10

2010-11

2011-12

INTERPRETATION 1. The cash ratio has first increased from 0.032 to 0.039 between the year 2004-2005 and2009-2010 and then decreased in the year 2010-2011 and then increased by 0.001 in 2011-2012. 2. This reveals that the cash position of the company is not sound.

2. ACTIVITY RATIOS INVENTORY TURNOVER RATIO = NET SALES / INVENTORY YEAR Net Sales Inventory Inventory Turnover Ratio 52 2009-2010 2,21,11,97,993 53,64,96,035 4.12 2010-2011 2,37,54,48,269 76,17,38,315 3.12 2011-2012 2,57,89,34,907 76,18,73,108 3.38

4.5 4 3.5 3 2.5 2 1.5 1 0.5 0

Net Sales Inventory Inventory Turnover Ratio 2009-10 2010-11 2011-12

INTERPRETATION 1. This shows that the company is somehow efficient in generating the inventory into sales. 2. The inventory turnover ratio has decreased from 4.75 to 3.12 between the years 2004-2005 and 2010-2011and increased to 3.38 in 2011-2012.

2.1 DEBTORS TURNOVER RATIO = SALES/DEBTORS YEAR Sales Debtors Debtors Turnover Ratio 2009-2010 2,21,11,97,993 48,33,85,817 4.57 2010-2011 2,37,54,48,269 72,08,94,474 3.29 2011-2012 2,57,89,34,907 72,41,47,983 3.56

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5 4 Sales 3 2 1 0 2009-10 2010-11 2011-12 Debtors Debtors Turnover Ratio

INTERPRETATION 1. The debtor turnover ratio has first increased from 4.12 to 4.57 between the year 2004-2005 and2009-2010 and then decreased in the year 2010-2011 and then increased in 2011-2012. 2. This shows that the debtor management system is try to maintain their position.

AVERAGE COLLECTION PERIOD = NUMBER OF WORKING DAYS / DEBTORS TURNOVER RATIO YEAR Number of Working Days Debtors Turnover Ratio Average Collection Period 2009-2010 365 4.57 80 days 2010-2011 365 3.29 110 days 2011-2012 365 3.56 102 days

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INTERPRETATION 1. The average collection period has decreased from 89 days to 80 days between the year 2004-2005 and2009-2010 and then increased in the year 2010-2011 and again decreased in 2011-2012. 2. More the average collection period less efficient is the debtor management system.

WORKING CAPITAL TURNOVER RATIO = SALES / NET WORKING CAPITAL YEAR Sales Net Working Capital Working Capital Turnover Ratio 2009-2010 2,21,11,97,993 59,27,17,409 3.73 2010-2011 2,37,54,48,269 43,22,18,998 5.50 2011-2012 2,57,89,34,907 47,66,97,765 5.41

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6 5 4 3 2 1 0 2009-10 2010-11 2011-12 Working Capital Turnover Ratio Sales Net Working Capital

INTERPRETATION 1. The working capital turnover ratio has first decreased from 5.32 to 3.73 between the year 2004-2005 and2009-2010 and then increased to 5.50 in the year 2010-2011 and then decreased by 0.09 in the year 2011-2012.

3. PROFITABILITY RATIOS OPERATING PROFIT RATIO = OPERATING PROFIT X 100 SALES YEAR Operating Profit Sales Operating Profit Ratio 2009-2010 31,48,62,163 2,21,11,97,993 14.24 2010-2011 31,28,91,662 2,37,54,48,269 13.17 2011-2012 32,99,64,549 2,57,89,34,907 12.79

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14.5 14 13.5 13 12.5 12

2009-10

2010-11

2011-12

INTERPRETATION 1. The operating profit first increases to 14.24% in the year2009-2010 and then decreases to 13.17% and 12.79% in the year 2010-2011 and 20112012. 2. This shows that the operating cost of the company has increased from 2004-2005 to 2011-2012.

NET PROFIT RATIO = NET PROFIT AFTER TAX X 100 NET SALES YEAR Net Profit After Tax Net Sales Net Profit Ratio 2009-2010 18,49,28,514 2,21,11,97,993 8.36 2010-2011 17,01,94,555 2,37,54,48,269 7.16 2011-2012 16,05,13,611 2,57,89,34,907 6.22

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10 8 6 4 2 0 2009-10 2010-11 2011-12 Net Profit After Tax Net Sales Net Profit Ratio

INTERPRETATION 1. The net profit ratio first increases from 5.03 to 8.36 in the year 2004-2005 and2009-2010 and then decreases to 7.16 in the year 2010-2011 and too decreasing in 2011-2012. 2. This reveals that the efficiency in manufacturing, administering and selling the products is decreasing.

4. LONG TERM SOLVENCY RATIOS DEBT EQUITY RATIO = OUTSIDERS FUNDS/SHAREHOLDERS FUNDS YEAR Outsiders funds 4 Shareholders funds Debt Equity Ratio 81,67,40,225 0.32 98,85,72,605 0.39 3,95,92,73,396 0.29 2009-2010 25,80,06,52 2010-2011 38,70,96,269 2011-2012 1,14,81,89,285

58

0.4 0.35 0.3 0.25 0.2 0.15 0.1 0.05 0 2009-10 2010-11 2011-12 Outsiders funds Shareholders funds Debt Equity Ratio

INTERPRETATION 1. The debt equity ratio is decreasing which means that the companys dependence on the external debt is decreasing. 2. This shows greater flexibility in the companys operation.

INTEREST COVERAGE RATIO YEAR Net profit before interest and taxes Interest Interest Coverage Ratio =

NET PROFIT BEFORE INTEREST AND TAXES FIXED INTEREST CHARGES 2010-2011 26,65,57,054 2011-2012 24,44,21,752

2005-2006 27,48,63,625

4,74,18,093 5.8

8,81,68,867 3.02

13,34,56,945 1.83

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6 5 4 3 2 1 0 2009-10 2010-11 2011-12

INTERPRETATION 1. The interest coverage ratio first increases between the year 2004-2005 and2009-2010 and then decreases in the year 2010-2011 and in 20112012. 2. A low ratio indicates excessive use of debt.

FINDINGS AND RECOMMENDATIONS

1. In India as most of the population is under low-income group, they wear unbranded or local brand shoes. So the company which can capture this income group especially living in villages and small towns will be the winner. 2. As the exclusive showroom play an important role in making and marking the image of company. So there should be policy for exclusive showroom. 3. Quality control operations should be modernized effectively as people are more educated and give more preference to quality.

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4. Television has become the most effective mode of advertising. New trend of naming programs before the actual name of programs give more insertion in the minds of people as there was performance on Zee T.V called LIBERTY PUBLIC DEMAND. 5. There should be some special brands, which should be available only in exclusive showrooms to attract the crowd there. 6. There should be no bargain with the quality of the product. 7. Showroom owners tend to heavily tend to heavily depend on the brand image rather than theyre own skills and knowledge regarding product. So the big companies should try to internationalize their products and image and should give a psychological feeling of being a universal brand. 8. Regular meeting should be organized by the companies to educate the showroom owners regarding new innovation, their features as well as new policies.
9.

Claim policy regarding replacement etc. should be clearly made by the company and followed in spirit of the world.

CONCLUSIONS
1. Most of customers felt Liberty as a premium product company (which is true to much extent), which is out of reach of common man. It is suggested that an economical range of footwear should also be introduced to capture the low-income group people who account for most of the population in villages & small towns. 2. Companies should control, review and improve their discount policy so as to improve companys image.

61

3. New designs and colors should be introduced in Ladies section, as ladies every time demand something new. 4. More attention should be paid to customers complaints and efforts should be made to remove them. 5. The placement of defected pairs should be paid more attention so as to remove dissatisfaction among the exclusive showroom owners. 6. A Company persons should regularly visit exclusive showrooms and listen to the problems and find solution to them as is done by Bata Company. 7. Some special planning on appointment of dealers should be there to avoid the complications. 8. Trough inspection of stock should be done to avoid mixing of inferior quality stock with fresh stock, which is send to dealers. 9. The company should allow at the most two exclusive showrooms in one city. That too should be atleast 23 K.M apart to attract customers from all the localities.

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BIBLIOGRAPHY
BOOKS Pandey, I.M., Financial Management, Ed. 2007, VIkas Publishing House Private Ltd., New Delhi. Gupta, Shashi K., Management Accounting, Ed.2007, Kalyani Publishers, New Delhi. KOthari, C.R., Research Methodology, Ed.2007, New Age International (P) Limited, Publishers, New Delhi. MANUAL Annual Reports

WEBSITES www.liberyshoes.com www.libertyfreedom.com

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QUESTIONNAIRE
Question 1) What is the liking of people towards LIBERTY SHOES? Answer a) Y-yes b) n- no c) c- cant say Question 2) Response of people about LIBERTY SHOES? Answer a) y-yes b) n-no c) c-cant say Question 3) Response of people that LIBERTY SHOES will give a healthy competition to small leagues? Answer a) y- yes b) n- no c) c- cant say Question 4) Response of people that LIBERTY SHOES will bring a revolution in the industry? Answer a) y-yes b) n-no c) c- cant say Question 5) Factors why people like LIBERTY SHOES? Answer a) 1-affordability b) 2-shape c) 3-design d) 4-other design Question 6) Proportion of people who will shift to LIBERTY SHOES? Answer a) Y-yes b) n-no c) c-cant say Question 7) Why would people prefer LIBERTY SHOES? Answer a) 1-comfort b) 2-safety c) 3-reputation d) 4-other reasons 64

Question 8) Response about LIBERTY SHOES? Answer a) 1-very good b) 2-good Question 9) LIBERTY SHOES is made for villages or cities? Discuss Answer a) 1-town/cities b) 2-villages c) 3-both d) 4-cant say Question 10) What do you think about the service supply of beverages at outlets? (a) Very good (b) good (c) normal (d) bad (e) very bad

Question 11) How many times you face the shortage of popular brand of Liberty Shoes at outlets in a week? (a) 1time (b) 2times (c) 3 times (d) more than 3 times Question 12) Which type of scheme provided by Liberty Shoes attract you? (a) Daily Scheme on brands (b) Monopoly discount (c) Monthly card scheme (d) Display schemes Question 13) How is the behavior of Liberty Shoes official? (a) Very good (b) good (c) normal (d) bad (e) very bad

Question 14) Did advertisement of Liberty Shoes affect sell? (a) Yes (b) No

Question 15) What sort of others problems you are having? Ans.

THANK YOU

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