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MBA PROGRAMME

MADDI LKSHMAIAH & CO. LTD

INTRODUCTION
Every organization irrespective of nature and mission may be viewed as
financial entity. Management of the organization is confronted with issue and
decisions about sources of finance, its capital structure and credit policy. In order to
take strategic decisions the management needs to assess the progress and the
performance of the organization.
Financial statements provides summery of the accounts of a business
enterprises. But the accounts stated in the balance sheet and income statements are not
self-explanatory, those statements required treatment in order as certain the financial
health of the organization. There are many tools used to know about financial position
and result operation. The main tools analysis of common size statements and ratio
analysis. All the tools help to know the operations of the organizational particular
position and also over period of time.
The focus of financial analysis is on key figures in the financial statements and
the significant relationship that exists between them.

The analysis of financial

statements is a process of evaluating the relationship between the component parts of


financial statements to obtain a better understanding of the firms position and
performance. Financial analysis is the process of selection relation and evaluation. A
financial statement is a compilation of data which is logically and consistently
organized according to the accounting principles.
An understanding of some financial aspects of a business firm. It may show a
position at a moment in time as in the case of a balance sheet or may reveal a series of
activities over a given period of time, as in the case of an income statement. Financial
statements are the major financial situations to stock holders, credited and the general
public. The majority of firms include extensive financial statements in their annual
reports of them.
Financial statements are prepared primarily for decision making. They play a
dominant role in setting the frame weak of managerial decision.
But the information provided in the financial statements is not an end in itself
as no meaningful conclusions can be drawn from these statements alone. However,
the information provided in the financial statements is of use in making decisions
through analysis and interpretation of financial statements.

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Financial analysis is the process of identifying the financial strengths and


weakness of the firm by properly establishing relationship between the items of the
balance sheet and the profit and loss amount.

There are various methods or

techniques used in analyzing financial statements such as comparative statements,


schedule of changes in working capital; funds flow and analysis ration analysis.
Management creditors, investors and others to from judgment and about the
operating performance and financial position of the users of financial statements can
get further insight about financial strengths and weaknesses of the firm. Management
should be particularly interested in financial statements of the firm to make their best
use and to be able to spot out financial weaknesses of the firm to take suitable
corrective actions. The future plans of the firm should be laid down in view of the
financial strengths and weaknesses of the firm by properly establishing relationship
between the items of the balance sheet and the profit and loss account. Financial
analysis can be undertaken by management of the firm, by parties outside the firm
owners, creditors investors and others.
Meaning of Financial Statements:
A financial statement is a collection of data organized according logical and
consistent accounting procedures. Its purposes are to convey an understanding of
some financial aspects of a business firm. It may shows a position at a moment
intimae as in the case of an Income statement thus the term financial statements
generally refers to the statements. The position statement or the balance sheet and the
Income statement or the profit and loss account. These statements are used to convey
to management and other interested out standers the profit ability and financial
position to a firm.
Financial statements are the outcome of summarizing process of
accounting. In the words of John N. Her, the financial statements provide a summary
of the accounts of business enterprise, the balance sheet reflecting the asset, liabilities
and capital as on a certain date and the income statement showing the results of
operations during a certain periods. Financial statements are prepared as an end result
of financial accounting and are the major sources of financial information of an
enterprise smith and Asborne define financial statements as the product of financial
accounting in asset of financial statements prepared by the accountant of a business
enterprise that purpose to reveal the financial position of the enterprise. The results of
list recent activities and an analysis of what has been done with earning.
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Financial statements are also called financial reports. In


the words of Anthony, financial statements essentially are interring reports. Presented
annually and reflect a division of the life of an enterprise on to more or less arbitrary
accounting period more frequently a year.

FINANCIAL STATEMENT ANALYSIS:


A financial statement is an organized collection of data according to logical
and consistent procedures. Its purpose is to convey an understanding of some
financial aspects of a business firm. It may, show a position of a moment is time as in
the case of a balance sheet, or many reveal a series of activities of over a given period
of time, as in the case of an income statement.
Types of Financial Statements:
Financial statements primarily comprise two basic statements.
1) The position statement or the balance sheet and
2) The income statement or the profit and loss account.
However, specified that a complete set of financial statements must include.
1) A balance sheet
2) An income statement
3) A statement of changes in financial position
Techniques of Financial Analysis:
The analysis and interpretation of financial statement is used to determine the
financial position and result of operations as well. A number of methods or devices
are used to study the relationship between different statements. An effort is made to
use those devices, which clearly analyze the position of the enterprise. The following
methods of analysis are generally used.
1.
2.
3.
2.
3.
4.

Comparative statement
Common size statement
Trend analysis
Funds flow statement
Cash flow statement
Ratio analysis

1. Comparative Statement:
Comparative statements are those statements which are designed to provide
time perspective to the consideration of various elements of financial position

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embodied in such statements. Both the income statement and balance sheets be
prepared in the form of comparative financial statements.
Comparative Income Statements:
The income statement describes net profit or net loss account of operations. A
comparative income statement will show the absolute figures for two or more periods.
The absolute change from one period to another and if change in terms percentages.
Since the two or more period can quickly ascertain whether sales have increased or
decreased whether cost of sales has increased or decreased etc.
Comparative Balance Sheet:
The comparative balance sheet analysis is the study of the extend of the same
items groups of items and computed items in two or more balance sheet of the same
business enterprise on different dates. The changes in periodic balance sheet the
conduct of a business.
The changes can be observed by comparison of the balance sheet at the
beginning and at the end of a period and these changes can help in forming an opinion
about the progress of an enterprise. The comparative balance sheet has two columns
for the data of original balance sheet. A third column is used to show in increasing
figures. The fourth column may be added for giving percentages of increases or
decreases.
2. Common Size Statement:
Common size statements financial tool of studying key changes and trends in
financial position of a company. In common size statement, each item is stated as a
percentage of the total of which that item is a part each percentage exhibits the
relation of the individual item to its respective tool. The common size percentage
method represents a type of ratio analysis. This statement component percentage
or100 percent statement.
1. State the total of the statement as 100.
2. Compute the ratio of each item to the total in the statement. Common size
statement can be used both for vertical and horizontal analysis.
Common Size Balance Sheet:
Common size balance sheet is prepared by stating the total assets as 100 and
reducing individual assets into percentages of the total. The common size balance
sheet percentage shows the relation of each asset item to total assets and of each
liability and owners equity item to total liabilities and owners equity. Comparison of
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common size statement of a single enterprise over the years is valuable in that it
reveals the changing proportions of components within groups of assets and liabilities.
3. Trend Analysis:
The financial statements may be analyzed by computing trends of series of
information. This method determines the direction upwards or downward and
involves. The computation of the percentage relationships that each statement item
bears to the same item in base year. The information for a number of years is taken
one year. The figures of the base year are taken as 100 and trend ratios for other years
are calculated on the base of the year. The analyst is able to see the trend of figures
whether upward or downward.
4. Funds Flow Statement:
The statement of changes in financial position a business enterprise. The
sources and uses of working capital between dates of two balance sheets are known as
the funds flow statement. A projected statement of changes in working capital is
immensely useful in the firms long range planning. The flows of in order to plan the
repayment schedules of its long-term debt. The major sources of working capital are
the firms net profit from operations. The ultimate success of a company depends
upon its ability to earn profit. The expense items that do not involve working capital
should be added to not profit.
5. Cash Flow Statement:
The statement of cash flows is useful for short run planning. A firm needs
sufficient cash to pay debts nature in the near future to pay interest and other expenses
and to pay dividend to share holders. A statement of changes in financial position on
cash basis, commonly known as the cash flow statement. Summarizes the causes of
changes in cash position between dates of the two balance sheets. It indicates the
sources and user of cash. The cash flow statement is similar to the funds flow
statements expect that it focuses attention on cash instead of working capital or funds.
This statement analyses changes in non-current accounts as well as current accounts
to determine the flow of cash.
6. Ratio Analysis:
Financial ratios are useful measure to provide a snapshot of a companys
financial position. A tool used by individuals to conduct a quantitative analysis of
information in a companys financial statement.
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Ratios are calculated from current year numbers and are then compared to
previous year, other companies, the industry, or even the economy to judge the
performance of the company. Ratio analysis is predominately used by proponents of
fundamental analysis.
Financial ratios give out a detail report about with reference to firms
performance and financial situation.
Financial ratios are exercised to examine the trend and for comparing the
firms financial status with the other firms. Thus, by such means, it will not be
difficult to come across the potential problems.

CLASSIFICATIONS OF RATIOS:
Ratios are variously classified into different types based upon the endues as
well as the nature of base adopted. Generally ratios are classified into four categories:
Liquidity Ratios
Leverage Ratios
Activity Ratios
Profitability Ratios
A. Liquidity Ratios:
Liquidity Ratios measure the firms ability to meet its current obligations. We
analyze the liquidity needs by the preparation of cash budgets, cash and funds flow
statements, but we can calculate liquidity ratios, by establishing a relationship
between cash and other current assets to current obligations, provide a quick measure
of liquidity. A firm should ensure that it does not suffer from the lack of liquidity and
that it does not have excess liquidity. There should be a proper balance between high
liquidity and lack of liquidity to measure the liquidity of the firm. The following
ratios are calculated the most common ratios which indicate the extent of liquidity or
lack of it.
(i) Current Ratio:
It may be defined as the relationship between current assets and current
liabilities. This ratio is known as working capital ratio. It is a measure of general
liquidity and is most widely used to make the analysis of a short-term financial
position or liquidity of a firm. It is calculated by dividing the total of current assets by
total of the current liabilities. Thus,
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Current Ratio = Current Assets / Current Liabilities


A current ratio of 2:1 is considered as ideal. If current ratio is less than 2, it
indicates that the business does not enjoy adequate liquidity. However, a high current
ratio of more than 3 indicates that the firm is having funds and has not invested them
properly.
(ii) Quick Ratio:
It is also known as acid test or liquid ratio is more rigorous test of liquidity
than the current ratio. Quick ratio may be defined as the relationship between the
quick/ liquid assets and current/ liquid liabilities. An asset is said to be liquid if it can
be converted into cash within a short period without loss of value. Inventories cannot
be termed to be liquid assets because they can not be converted into cash immediately.
Quick or Acid Test Ratio = Quick Assets / Current Liabilities
A quick ratio of 1 is considered as ideal. A quick ratio of less than 1 is indicative
of inadequate liquidity of the business. A very high quick ratio is also not advisable.
B. Leverage Ratio:
The short term creditors like bankers and suppliers of raw material are more
concerned with the firms current debt paying ability. On the other hand long-term
creditors like debenture holders, financial institutions etc. are more concerned with
the firms long- term financial strengths in fact a firm should have a strong short-term
as well as long-term financial position of the firm like financial leverage or capital
structure are also calculated their ratios indicated mix of fund provided by owners and
lenders.
(i) Debt-Equity Ratio
(ii) Interest coverage ratio
(i) Debt-Equity Ratio:
It reflects the relative claims of creditors and share holders against the assets
of the business. Debt, usually, refers to long term debt. Equity includes equity and
preference share capital and reserves.
Long term debt
Debt- Equity Ratio =
Share holders founds
Shareholders Found = Equity+ General Reserve+ Dividend Reserve+ Net Profit
A debt equity ratio of 2:1 is considered ideal. A firm with a debt equity ratio of
2 or less eposes its creditors to relatively lesser risk. A firm with a high debt equity
ratio exposes its creditors to greater risk.
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(ii) Interest Coverage Ratio:


It indicates the ability of a firm to meet its interest obligation. It used to test
the firms debt servicing capacity.
EBIT
Interest Coverage Ratio =
Interest
Where,
EBIT=Earnings before interest and taxes
EBIT=net profit+ Interest+ taxes
C. Activity Ratios (or) Turnover Ratios:
Turnover ratio is also referred to as activity ratios or asset management ratios,
measure how efficiently the assets are employed by a firm. These ratios are based on
the relationship between the level of activity, represented by sales or cost of goods
sold, and levels of various assets. The following are the various types of turnover
ratios.
(i) Inventory Turnover Ratio:
Stock turnover ratio indicates the number of times the stock has turned over
into sales in a year.
Inventory Turnover Ratio = Cost of Goods Sold / Average Stock
Cost of Goods Sold = Sales-Gross Profit
Or
Cost of Goods Sold = Opening Stock + Purchases Closing Stock
Average Stock = Opening Stock + Closing Stock/2
In case, information regarding cost of goods sold is not known, sales may be
taken in the numeration. Similarly, if average stock cant be calculated, closing stock
conversion period. It is calculated as number of effective days in a year divided by
number of days.

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NEED FOR THE STUDY


This study will help to find out the weak area of operation and also to find out
the performance in a year. This study will help the organization to see where they are
lacking and how is the performance.
This study will help the organization in the future forecasting and also in
implementing the strategies for the future action. This will help the organization to
find out the competitors movement.
This study will help the company to find out there position among the
competitors, who are the major players and what is the future focus of the steel
industry.
Appropriate financial analysis is the key for the success of a business
organization without which we cant anticipate a proper direction for the business.
The present study financial statements analysis of Maddi Lakshmaiah & Co. helps
me towards a real life scenario of financial management so that can have a practical
knowledge of ratio analysis, comparative statements, common size statements and
trend analysis.
This certainly does through light on financial performance and its
evaluation of the company. So that I can come out with my application of theoretical
knowledge and thereby have practical insight into the financial management and there
by I come out with meaningful findings and suggestions

OBJECTIVES OF THE STUDY


The present study is intended to examine the overall financial performance of
the Maddi Lakshmaiah & Co. Ltd. From the beginning of the study to till now. The
following are the specific objectives of the study.
To present theoretical frame work relating to financial statements analysis.

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The study and analysis the financial performance of the Maddi Lakshmaiah & Co.
Ltd. in terms of liquidity, solvency, operating and profitability against the
conventional financial norms and identity the short comings.
To comparative study in regard to one firm with another firm or one department
with another department of the financial analysis.
To analyze the findings and suggestions of the firm.
To study financial statement analysis is needed to know the financial status of the
company.

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SCOPE OF THE STUDY

The study of financial performance evaluation is confined to the financial


position of Maddi Lakshmaiah & Co. Ltd.
Performance Evaluation is confined only for the period 5 years i.e., from 2009
to 2013.
The Financial Performance Evaluation is carried out on the basis of secondary
data i.e., the annual reports of Maddi Lakshmaiah & Co. Ltd.
To find out the financial stability of the organization using the different ratios.
The study has been focused on ratio analysis, common size analysis,
comparative analysis and trend analysis in Maddi Lakshmaiah & Co. Ltd.

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RESEARCH METHODOLOGY

Methodology is a systematic procedure of collecting information in order to


analyze and verify phenomena. The study carried with the co-operation of the
management who permitted to carry on the study and provided the requisite data. The
data is collected from the following sources.
Sources of Data:
The financial statements are so many sources. The primary source is the data
provided by the firm itself in its annual reports and required disclosures. The annual
report comprises the income statements. The balance sheet and the statements of cash
flows. There are three types of the data
1. Primary data
2. Secondary data
1. Primary Data:
It is the information collected directly without any references. In this study it
is to gathered through interviews with concerned officers and staff. Either individually
(or) collectively. Some of the information were verified and supplemented through
personal observation.
The Data Collection Includes:
Interviewing of a few financial department heads officers and management
bodies and staff members of the company from part of primary data.
2. Secondary Data:
1
The secondary data collected from already published sources such as
pamphlets of annual reports, returns and internal records.
The data collection includes:
1) Annual reports, published records and reference books.
2) Executive and staff of financial accounting department.
3) Executives of other departments.

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Techniques used to analyze the data:


A number of methods or devices are used to study the relationship between
different statements. An effort is made to use those devices, which clearly analyze the
position of the enterprise. Those device (or) techniques.
1)
2)
3)
4)
5)

Common size balance sheet


Comparative balance sheet
Comparative income and expenditure A/C
Ratio Analysis
Trend analysis

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LIMITATIONS OF THE STUDY

Some of the important limitations of financial analysis are however summed


up as below:
It is only a study of internal reports.
Financial analysis is based upon only monetary information and non-monetary
factors are ignored.
It does not consider changes in price level.
As the financial statements are prepared on the basis of a going concern, it
does not give exact position. Thus accounting concept and conventions cause
a serious limitation to financial analysis.
Changes in accounting procedures by a firm may often make financial analysis
misleading.
Analysis is only a means and not an end itself. The analyst has to make
interpretation and drawn his conclusions. Different people may interpret the
same analysis in different ways.
The project period is limited to 45 day which not sufficient to have completed
analysis of financial position.

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INDUSTRY PROFILE
In The Beginning:
Tobacco is a plant that grows natively in north and South America. It is in the
same family as the potato, pepper and the poisonous nightshade, a very dead plant.
The seed of a tobacco plant is very small. A 1 ounce sample contains about 300,000
seeds! It is believed that tobacco began growing in the America about 6,000 B.C. . As
early as 1 B.C., American Indians began using tobacco in many different ways, such
as in religious and medicinal practices. Tobacco was believed to be a cure-all, and was
used to dress wounds, as well as a pain killer. Chewing tobacco was believed to
relieve the pain of a toothache.
Soon after, sailors brought tobacco back to Europe, and the plant was being
grown all over Europe. The major reason for tobaccos growing popularity in Europe
was its supposed healing properties. Europeans believed that tobacco could cure
almost anything, from bad breath to cancer. In 1571, a Spanish doctor named Nicolas
Monads wrote a book about the history of medicinal plants of the new world. In this
he claimed that tobacco could cure 36 health problems.
In 1588, a Virginian named Thomas Harriet promoted smoking tobacco as a
viable way to get ones daily dose of tobacco. Unfortunately, he died of nose cancer
(because it was popular then to breathe the smoke out through the nose).
During the 1600s, tobacco was so popular that it was frequently used as
money! Tobacco was literally as good as gold!. This was also a time when some of
the dangerous effects of smoking tobacco were being realized by some individuals. In
1610 sir Francis Bacon noted that trying to quit the bad habit was really
hard!
In 1632, 12 years after the mayflower arrived on Plymouth Rock, it was illegal
to smoke publicly in Massachusetts! This had more to do with moral beliefs of the
day, than health concerns about smoking tobacco.
In 1760, Pierre Lorillard establishes a company in New York City to process
tobacco, cigar, and snuff. Today, P.Lorillard is the oldest tobacco company in the U.S.
TOBACCO: A GROWTH INDUSTRY:
In 1776, during the American revolutionary war, tobacco helped finance the
revolution by serving as collateral for loans the Americans borrowed from France!
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Over the years, more and more scientists begin to understand the chemical in tobacco,
as well as the dangerous health effects smoking produces. In 1826, the pure form of
nicotine is finally discovered. Soon after, scientists conclude that nicotine is
dangerous poison.
In 1836, New Englander Samuel Green stated that tobacco is an
insecticide, a poison, and can kill a man. In 1847, the famous Phillip Morris is
established, selling hand rolled Turkish cigarettes. Soon after in 1849, J. E. Liggett
and Brother are established in St. Louis, Mo. (the company that has settled out of the
big lawsuits recently). Cigarettes became popular around this time when soldiers
brought it back to England from the Russian and Turkish soldiers. Cigarettes in the
U.S. were mainly made from scraps left over after the production of other tobacco
products, especially chewing tobacco.
Chewing tobacco became quite popular at this time with the cowboys of the
American West. In 1875, R. J. Reynolds Tobacco Company (better known for its
Reynolds wrap aluminum foil) was established to produce chewing tobacco. It wasnt
until the 1900s that the cigarette became the major tobacco product made and sold.
Still, in 1901 3.5 billion cigarettes were sold, while 6 billion cigars were sold.
Along with the popularity of cigarettes however, was a small but growing antitobacco campaign, with some states proposing a total ban on tobacco. In 1902, the
British Phillip Morris sets up a New York headquarters to market its cigarettes,
including a now famous Marlboro brand. The demand for cigarettes grew however,
and in 1913 R.J. Reynolds began to market a cigarette brand called Camel.

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WAR & CIGARETTES: A DEADLY COMBO:


The cigarette exploded during world war (1914-1918), where cigarettes were
called the soldiers smoke.
By 1923, Camel controls 45% of the U.S. market! In 1924, Phillip Morris
begins to market Marlboro as a womans cigarette that is a Mild as May.
To battle this, American Tobacco Company, maker of the lucky strike brand,
begins to market its cigarette to women and gains 38% of the market. Smoking rates
among female teenagers soon triple during the years between 1925-1935. In 1939,
American Tobacco Company introduces a new brand, Pall Mall, which allows
American to become the largest tobacco company in the U.S.
During World War II (1939-1945), cigarette rates are at an all time high.
Cigarettes were included in a soldiers C-Rations (like food). Tobacco companies sent
millions of cigarettes to the soldiers for free, and when these soldiers came home, the
companies had a steady stream of loyal customers. During the 1950s, more and more
evidence was surfacing that smoking was linked to lung cancer.
In 1952 P. Lorillard markets its Kent brand with the Micronized filter, which
contained asbestos! This was fortuneless discontinued in 1956. In 1953, Dr. Ernst L.
Winders find that putting cigarette tar on the backs of mice causes tumors! In 1954,
RJ Reynolds introduces the Salem brand, which is the first filter-tipped menthol
cigarette.
HEALTH HAZARDS REVEALED:
In 1964, the surgeon generals report on Smoking and Health came out. This
report assisted in allowing the government to regulate the advertisement and sales of
cigarettes. The 1960s in general was a time when much of health hazards of smoking
were reported. In 1965, television cigarette ads are taken off the air in Great Britain.
In 1966, those health warnings on cigarette packs begin propping up. In 1968, Bravo,
a non-tobacco cigarette brand was marketed. Made primarily of Lettuce, it failed
miserably.
Because of the negative press about tobacco, the major tobacco companies
begin to diversify their products. Phillip Morris begins to buy into the Miller Brewing
company, makers of Miller Beer, Miller Late, and Red Dog Beer. RJ Reynolds
Tobacco Company drops the Tobacco Company in its name, and becomes RJ
Reynolds industries. It also begins to buy into other products, such as aluminum.
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American Tobacco Company also drops Tobacco from its name, becoming
American Brands, Inc. In 1971, television ads for cigarettes are finally taken off the
air in the U.S. cigarettes, however, are still the most heavily advertised product second
to automobiles. In 1977, the first national great American Smoke out takes place.
VFC

Tobacco

Traditional/NLS/Mysore

20 millions

VAL

Tobacco

HDBRG

12 millions

LSB

Tobacco

LSB

10 millions

AL

Tobacco

25 millions

The tobacco purchased from the tobacco board auction platforms will be
graded further wherever required grading is a process of a manual separation of one
variety of leaf from the other .in tobacco is done mainly on the basis if color. Each
grade will generally have unique quality parameters.
The graded tobacco is further processed either manually or on machines, this
processing is called DEBUTTING and STRIPPING workers separate the butt of the
tobacco leaf from the leaf. This process can also on machines .The machines
processing ism called THRESHING.
After stripping/threshing, the tobacco will be further processed for
stabilization of moisture in it this process is called REDRYING. In this process the
tobacco first of all will be dried completely a then will be given steam at the required
temperature. After refrying process the tobacco will be packed in the required packing
say bale packing /case packing etc.
The packed tobacco is ready for exports. In India, the first threshing plant
which is working uninterruptedly for the last 25/30 years an imported one by Maddi
Lakshmaiah &co ltd.
This is created at Ganapavaram tie plant is still running at high
efficiency levels in the country with 98% average efficiency level for the last 3 years.
There are 2 plants owned by ITC which can be compared with this plant in the
country. ITC uses their threshing plants for their own consumption.
Average efficiency level for the last 3 years, there are 3 plants owned
by ITC which can be compared with this plant in the country. ITC uses their threshing
plants for their own consumption.

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Tobacco industry is fetching more Rs 9000 cores of revenue to the central


govt. it is providing employment to lakhs of people directly and millions of people
indirectly and is also contributing RS 1000 cores of forex reserves to the country.
Through the central govt. is announcing several restrictions on advertisement and
consumption of cigarettes in the country. It is encouraging the farmers by providing
subsidized, fertilizers and by supporting through tobacco board.
The major players in tobacco industry in India are as under:
Name of the company

ITC ltd.

VST industries ltd.

GTC industries ltd.

Godfrey Phillips India


ltd.

Occupation
Cigarette manufacturing &
un manufactured tobacco
exports
Cigarette manufacturing &
un manufactured tobacco
exports
Cigarette manufacturing &
un manufactured tobacco
exports
Cigarette manufacturing &
un manufactured tobacco
exports

% of business in
India

50%

12%

6%

8%

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COMPANY PROFILE
ML Company is a demand limited company (m/s
Maddi Lakshmaiah and Company Limited). Which was
originally incorporated on 8th day of October 1970 under
the name, maddi lakshmaiah and company private limited
having delay passed the necessary special resolution on the
23rd day of march 2002 , in terms of sec31(1)/44 of the
companies act 1956 the name of the company changed to
CEO of Maddi Lakshmaiah

Maddi Lakshmaiah And Company Limited.

The group is founded by Sri Maddi lakshmaiah, a mechanical engineer


after 15 years of versatile experience in tobacco industry in 1970 at Chilakaluripet
, Gnter dist, A.P .the group has 5 major concern namely;
1) Maddi Lakshmaiah & Co Ltd (MLCO)
2) ML Agro Products (MLAP)
3) K.S Subbaiah Pillai & Co Ltd (KSSP)
4) ML Exports (MLE)
5) Coromandal Agro Products & Oils Ltd (CAPOL)
Expecting capo which is engaged in edible oils all are engaged in tobacco
industry. MLCO & MLAP have concentrated on processing activities where as KSSP
& MLE are leading exporters and are recognized by govt. of India as export house.
SHARE HOLDING PATTERN& MANAGEMENT OF GROUP:
The group has been successfully improving its business in all of its activities
such as domestic sales, export sales, tobacco processing & other tobacco development
activities, warehousing facilities etc.
The group has 2 tobacco processing plants and one solvent extraction plant in
south India. The group owns around 1, 00,000 sq. mats of warehousing complexes in
south India.

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HISTORY OF THE COMPANY:


ML group of companies (ML group) was founded by Mr.Maddi lakshmaiah in
1970. He joined in his family business in 1952.after completing of his engineering
degree. The joint family business started payback in 1943 dealing with tobacco
exports, well before India.
ML group of companies (ML group) a pioneer in Indian
unmanufactured tobacco industry has been exporting tobacco to all over the world for
the past 3 decades it has solidified its relationship with overseas tobacco merchants&
manufactures.
Maddi Lakshmaiah & co ltd, was set up at Chilakaluripet, a village in
Andhra Pradesh that products some of the best tobacco in the country. Today it has
evolved into a diversified, multi products conglomerate known as ML group that is
recognized world over for its excellence. The company processes tobacco and another
agro based products that are used both in the country and exported to the most quality
conscious of world markets.
An emphasis on total quality and dedication to the interests of its
clients world wide is a hallmark of ML group. The group is performing excellently
well from the date of its incorporation and has been exporting large volume of
tobacco to Russia.
CIS countries, U.K, Europe, African countries, china, Latin
American countries, middle east countries, Bangladesh & Nepal etc. The group
established its branches in Russia & European countries and has strong ties up with
African and Latin American countries and especially with the neighbor giant china.
GROWTH OF THE COMPANY:
Our ML company has developed strong relationship with overseas
manufacturing in Europe, Russia and Middle East through there is very good demand
from Russia market. Our company is not exporting much because of the poor
economic conditions of the country. ML Company is now exporting cigarettes to
Middle East and U.S.A by manufacturing the cigarettes on job work basis.
The company foresees a very bright future for this company in tobacco in the
coming years. ML group is the first tobacco company who exported tobacco to china
and is the first company who imported tobacco also from china. These are no
imported of tobacco in Indian tobacco history before this and after till now. The group
maintains good relationship with the Chinese tobacco monopoly.

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One of the trade delegates that accompanied our horrible prime minister to
during his recent visit to china is from ML Company. There ambassadors of china
have visited our company in the fast as our guests and expressed their satisfaction on
our infrastructure facilities.
NATURE OF ACTIVITY:
This factory products good quality tobacco.
The production capacity per each day is 1 lakh 20 tones
The production current assets capacity per year is around 1.5 million tones.
Achievements/Awards:
Maddi Lakshmaiah Company has no particulars /peculiar/, achievements/
awards.
Other than that are of the concern of lakshmaiah Group Maddi i.e.
(CAPOL,Chirala , Prakasam Dist ) got several achievement awards.
ML EXPORTS:
(Exporting to the world):
ML exports is a totally export oriented unit, with clients in a variety of markets
around the world. The company enjoys a reputation for excellent delivery schedules
and transparent business practice in global markets.
Maddi Lakshmaiah & Co Ltd was set up at Chilakaluripet, a village in Andhra
Pradesh that produces some of the best tobacco in the country. Today it has evolved
into a diversified, multi products conglomerate known as ML Group that is
recognized world over for its excellence. The company processes tobacco and another
agro based products that are used both in the country and exported to the most quality
conscious world markets.
An emphasis on total quality and dedication to the interests of its clients
world wide is a hallmark of ML group. The group is performing excellently well from
the date of its incorporation and has been exporting large volume of tobacco to
Russia, CIS countries, U.K, Europe, African countries, China, Latin American
countries, Middle East countries, Bangladesh & Nepal etc. The group established its
branches in Russia & European countries and has strong tie up with African and Latin
American countries and especially with the neighbor giant China. The group is
founded by Sri Maddi Lakshmaiah, a mechanical engineer after 15 years of versatile
experience in tobacco industry in 1970 at Chilakaluripet , Guntur dist, A.P .the group
has 5 major concern namely;
Maddi Lakshmaiah & Co Ltd (MLCO).
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ML Agro Products (MLAP).
K.S Subbaiah Pillai & Co Ltd (KSSP).
ML Exports (MLE).

Coramandal Agro Products & Oils Ltd (CAPOL)


Expecting CAPOL which is engaged in edible oils all are engaged in tobacco
industry. MLCO & MLAP have concentrated on processing activities where as KSSP
& MLE are leading exporters and are recognized by government of India as export
house.
VISION:
Descriptions of some thing can organization corporate culture, business
technology an activity in the future.
The company is trying to develop world class information technology building
in Bangalore, china and Hyderabad in the coming 5 years time.
The company is going for sheet tobacco plant in joint venture with on of the
Indian best tobacco cigarette manufacturer.
The company is also contemplating for 100% tobacco joint venture association
with one of the best cigarette manufacturer.
The company exports with second strongest country china, Russia and
Germany.
The ambassadors are coming to Maddi Lakshmaiah Company limited in
August.
The ambassadors of South Africa are hold up and the company is having top
joint venture with U.K.

MISSION:
A mission statement is an enduring statement of purpose that distinguishes one
business from others similar firms. This statement identifies the scope of firms
operations in product and market terms.
M.L & company limited mission is to produce good quality of tobacco and get
number one position in India in producing and exporting tobacco.
BOARD OF DIRECTORS:
Managing Director
Director
Director
Director
Executive Director
Executive Director

:
:
:
:
:
:

Sri Maddi Lakshmaiah


Sri Maddi Seetha Devi
Sri Maddi Venkateswara Rao (M.B.A in USA)
Sri Maddi Ramesh
Sri Mallavarapu Rama Mohana Rao
Sri Meaden Sekhar

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MANAGEMENT TEAM:

Managing Director
Director
General Director
Personnel Manager
Leaf Manager
Finance Manager
Export Manager
Production Manager
Circle Manager
Factory coordinator

:
:
:
:
:
:
:
:
:
:

M. Venkateswara Rao
M. Lakshmaiah
M. Rama Mohana Rao
B. Babu Rao
M. Rama Mohana Rao
M. Shekhar
M. Shekhar
K.S. Rami Reddy
Anji Babu
P. Subba Rao

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POLICIES:
Policies can be considered a guide to action it is desirable that persons
responsible for implementation of policies use discretion and judgment in appraising
and deciding among alternative courses of action.
The company has well defined policies for exports the quality tobacco.
To conduct its operation with honesty integrity and transparency.
Employment policy is formulation and adoption.
This company shall maintain quality leadership by providing products and
services that completely and consistently meet the agreed.
Requirements of all customs and unsure fitness for use of all products there by
ensuring total confidence to every customer.
Employment policy formulation and adoption.
Canteen, cleaning, security maintenance of good industrial relation.
Responsibilities:
The M.L Company managing director M.Venkateswara Rao is under the
complete administrative control of the managing direction and he is reported by the
director and he is reported by general manager.
The general manager of ML Company is M. Ram Mohan Rao assisted by fine
general manager i.e., personal manager, leaf manager or department manager, finance
manager, exports manager and production manager.
The personal department manager B. Babu Rao is headed by who reports
directly to G.M. he looks after the areas of personnel & administration under there
may be a personal offices welfare officer and a safely officer.
The finance manager M.Shekhar is assisted by a team of experienced
management and non management staff who tekes care of the finance is accounts
activities of the organization. The export manager M.Shakhar deals all the matters
regarding the export departments and directly reports to managing director.
The production manager K.S.Rami Reddy is headed by the G.M. is assisted by
a plant engineer and staff of the production department.
OBJECTIEVES OF THE COMPANY:
To serve the nations vital interest in the tobacco related sectors.
To maintain vicinity of supplies through M.L is tobacco& marketing network
at optimum costs and provide up to date technical assistance to the consumer
to conceive the valuable energy resources.
To earn a reasonable return on investment.

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To work towards achievement of self reliance in the field of tobacco, threshing


formulation& distribution system.
To create strong research& development in the field of tobacco and stimulate
R&D of development of exports.
To maximize utilization of the existing facilities in order to improve efficient
and increased productivity.
To import training, conduct seminary, workshop and educational courses on
computers. Computer maintenance software development and software
exports and to develop and design software in India.
Abroad and to start software technology part in India or abroad and to offer
relationship management solutions for individuals and organizations both
individually and through strategic alliances with others companies.
To employ experts to investigate and examine into the conditions, prospects,
value character and circumstance of any business concern and under taking
and generally of any assets property or right.
To carry on all kinds of agency business.
To carry on business as merchants in all kinds of goods.
To improve ,manage, work develop, lease mortgage abandon or otherwise deal
with all or any part of the property, rights and concessions of the company.

ORGANISTION STRUCTURE:
The company (ML Company) is under the complete administrative control of
the managing director and he is reported by the director and he is reported by general
manager.
The general manager (ML Company) is assisted by 5 general managers.
Manager personnel.
Manager leaf department.
Manger finance.
Manager exports.
Manager production.
The personnel department is headed by personnel manager who reports
directly to G.M. he looks after the areas of personnel& administration under may by a
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personnel officer, welfare officer and a safety officer. The leaf manager is headed by
G.M and assisted by circle manager, a branch manager, buyers, factory co-ordinate
and shift in charge. ML group was a multifaceted corporate leader of which the group
consists of 5concern namely.
Maddi Lakshmaiah And Co Ltd:
Tobacco threshers, packers & exporters real estate &leasing.
ML. Agro Products:
Tobacco threshers, packers &exporters.
K.S. Subbaiah Pillai & Co (India) Ltd:
Tobacco export.
ML Exports:
Exports house.
Coromandal Agro Products &Oils Ltd.:
Bulk producers of oils
TURN OVER OF THE COMPANY:
The turnover of ML company for the following years of 2007-2013 are as
follows:
Table No:1:
S. No.

No. of Years

Amount In Rs In Lakhs

2007

2370

2008

1693

2009

2020

2010

2372

2011

3358

2012

3400

2013

3800

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MARKETING POSITION OF THE COMPANY:


In ML Company the methods of purchasing of tobacco is of various types i.e.
1. Which tenders rise in market document will be filled up by various companies
or merchants can purchase them.
2. They have good contracts with various merchants (mediators between
manufacture & exporters) in reputed companies Gnter.
3. Every year they were producing 1000 tones of various varieties /grades of
tobacco.
4. They usually do their business with the international reputed companies like.
Universal
Demon
Standard commercial.
The company has some direct contracts with other countries and they directly
ask them at the time of requirement.
Profit After Tax:
Table No:2:
SNO

NO OF YEARS

2007

AMOUNT IN Rs. IN
LAKHS
270

2008

203

2009

312

2010

262

2011

134

2012

103

2013

123

The above table represents the profit for the following years after paying all
the taxes.
MARKETING CHANNELS:
Normally they send samples/verities.
At the time of requirement, they send samples through carriers.
Participating in exhibitions- every year ML company was taking participation
in 5-6 exhibitions.
The people who have connection in tobacco may visit tobacco stalls usually,
even from Europe, Russia & china.
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People like manufactures, dealers, bankers, merchants of tobacco may visit the
tobacco exhibitions.
ANOTHER MODE:
The other mode of marketing (channel) is through business delegations
tobacco board of central govt., ministry of commerce govt. of India, Guntur. The
tobacco board usually.
Regulation crop.
They register the foreigners.
They fix the crop size.
The board explores marketing possibilities with the help of exporters.
They get the business through reputation.
Customers usually approach them because of the good will of the company.
MODE OF PAYMENT:
Exporters normally receive payment from their buyers through L.CS (letters

of credit).
Some time through advance payment ion terms of D.A & D.P.
Document against payment
Document against acceptance.
After customers checkers in the madras port it may send to abroad.
Shipment of tobacco is through Chennai port only.

CREDIT:
1. Some parties asks/needs some time for payment with in certain period from
the date of bill of payment (up to 180 days).
2. In India there is a rule that on credit basis, the payment must be done with in
180 days from the date.
MARKET RANGE:
ML Company was marketing 7-10 million kilos of tobacco every year. But the
market range is not fixed. The market range depends on supply &demand forces.
1. When there is demand, the company produces more.
2. In the tobacco field, the marketing/market range may be flexible
internationally supply demand.
MAJOR COPETETORS:
M.L Group
Mittapalli Group
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Bommidala Group
I.T.C and some other small companies
FINANCIAL INFORMATION:
1. Cash payments will be checked by cashiers.
2. Cash bills and credit bills may get from trashing factory and engineering
department.
3. Concerned accounts may be generalized by the accountants and may be sent to
concerned heads.
4. Credit bills payment will be given in the form of cheques or DDs
LAND MARKS:
Maddi Lakshmaiah Company was the first India company entered with china
to did business.
It was the first company to import tobacco and export tobacco.
Ambassadors have already come here and 4th one is coming in this august.

NEGOTIATIONS:
The company is trying to develop world class information technology building
in Bangalore, china and Hyderabad in the coming 5 years time and 100%
tobacco joint venture association with one of the best cigarette manufacture.
The company exports with the second strongest country china, Russia and
India.
The finance manager is assisted by a team of experienced management and
non management staff who takes care of the finance & accounts activities of
the organization.
The export manager (ML Company) deals all the matters regarding the exports
department and directly reports to the managing director.
Future Plans:
1. The company (Maddi lakshmaiah) for an ECB for 50 million dollars and
development of regular trade and also infrastructure projects in India.
2. Maddi Lakshmaiah Company is also working on joint venture basis with UK
based commodities Company for supply of agree products to South Asian
countries.
3. The company already entered into joint venture with an US based company by
name CARGIL for the south Indian need.
4. They have worked for joint venture arrangements with Yugoslavian Govt. for
their requirement for India.
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5. This for above 5 million dollars of investment in supply of 5000 tonnes every
year.
ANALYSIS ON CAPITAL BUDGETING IN M.L. & CO LIMETED:
IMPORTANCE OF INVESTMENT DECISION:
Investment decisions require special attention because of the following reasons:
They influence the firms growth in the long term.
They affect the risk of the firm.
They involve commitment of large amount of funds
They are irreversible or reversible at substantial loss and most difficult
decisions to make.
INVESTMENT EVALUATION CRITERIA:
Three steps are involved in the evaluation of investment:
1. Estimation of cash flows.
2. Estimation of the required rate of return (the opportunity cost of capital).
3. Application of a decision rule for making the choice.

ORGANIZATIONAL STRUCTURE

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SWOT ANALYSIS
Strength:

Effective communication
Online growth
Loyal customers
Strong brand equity
Strong management team
Strong financial position
Pricing

Weakness:

Diseconomies to scale
Low R&D
No online presence
Not diversified

Opportunity:

Acquisition
Financial markets (raise money through debt, etc.)
Online
Product and services expansion
Take overs

Threats:

Competition
Cheaper technology
External changes(government ,politics, taxes, etc)
Maturing categories, products, or services
Exchange rate fluctuations

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DATA ANALYSIS & INTERPRETATION


COMMON SIZE BALANCE SEET OF M.L. COMPANY LTD., AS ON 31-3-2008:

As on 31-3-2008

Percentage in
liabilities/assets

Capital

13000000

1.74

Reserves & surplus

151136957

20.34

Secured loan

379475270

51.08

Unsecured loan

193040880

25.98

Net deferred tax liability:

6247531

0.84

TOTAL

742900638

100

Particulars
Sources of funds
Shareholders funds

Loan fund

Application of funds:
Fixed assets
Gross block

726114635

Less-depreciation

151280668

Net block

574833967

78.03

Capital work-in-progress

5165550

0.70

Investments

2983165

0.40

Current assets, loans &


advances:
Inventories

239880075

Sundry debtors

35992686

Cash & bank balances

7150276

Other current assets

69640943

Loans & advances

12529745

Less-current liabilities &


provisions
Current liabilities

202449314

Provisions

9073986

Net current assets

153670425

20.68

TOTAL

742900638

100

COMMON SIZE BALANCE SEET OF M.L. COMPANY LTD., AS ON 31-3-2009:

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As on 31-3-2009

Percentage in
liabilities/assets

Capital

13000000

1.69

Reserves & surplus

194200158

25.30

Secured loan

478682475

62.37

Unsecured loan

81595729

10.63

Net deferred tax liability:

5523986

0.7

TOTAL

773002348

100

Particulars
Sources of funds
Shareholders funds

Loan fund

Application of funds:
Fixed assets
Gross block

738903208

Less-depreciation

188015262

Net block

550887496

71.77

Capital work-in-progress

1855829

0.24

Investments

2983165

0.39

Current assets, loans &


advances:
Inventories

236975762

Sundry debtors

36258591

Cash & bank balances

13998934

Other current assets

93687132

Loans & advances

10864119

Less-current liabilities &


provisions
Current liabilities

158452146

Provisions

21580520

Net current assets

211751872

27.39

TOTAL

773002348

100

COMMON SIZE BALANCE SEET OF M.L. COMPANY LTD., AS ON 31-3-2010:

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As on 31-3-2010

Percentage in
liabilities/assets

Capital

13000000

1.49

Reserves & surplus

345901071

39.69

Secured loan

429126132

49.24

Unsecured loan

83386203

9.56

Net deferred tax liability:

42151888

4.61

TOTAL

913565294

100

Particulars
Sources of funds
Shareholders funds

Loan fund

Application of funds:
Fixed assets
Gross block

77255360

Less-depreciation

260653520

Net block

511900080

58.74

Capital work-in-progress

1550361

0.18

Investments

2983165

0.34

Current assets, loans &


advances:
Inventories

327412543

Sundry debtors

22361498

Cash & bank balances

73891461

Other current assets

151568707

Loans & advances

13966691

Less-current liabilities &


provisions
Current liabilities

143360960

Provisions

90860140

Net current assets

354979800

TOTAL

913565294

100

COMMON SIZE BALANCE SEET OF M.L. COMPANY LTD., AS ON 31-3-2011:

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As on 31-3-2011

Percentage in
liabilities/assets

Capital

13000000

1.19

Reserves & surplus

424599303

37.34

Secured loan

600691795

52.98

Unsecured loan

51737891

4.55

Net deferred tax liability:

46984472

4.13

TOTAL

1137013461

100

Particulars
Sources of funds
Shareholders funds

Loan fund

Application of funds:
Fixed assets
Gross block

827717465

Less-depreciation

303798208

Net block

523919257

Capital work-in-progress

Investments

2983165

50.2
0.26

Current assets, loans &


advances:
Inventories

341906868

Sundry debtors

83013158

Cash & bank balances

156007572

Other current assets

219855601

Loans & advances

16218624

Less-current liabilities &


provisions
Current liabilities

125982205

Provisions

127893051

Net current assets

563126567

49.52

TOTAL

1137013461

100

COMMON SIZE BALANCE SEET OF M.L. COMPANY LTD., AS ON 31-3-2012:

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As on 31-3-2012

Percentage in
liabilities/assets

Capital

13000000

1.29

Reserves & surplus

512362240

51.19

Secured loan

398172603

39.78

Unsecured loan

28192253

2.8

Net deferred tax liability:

49104631

4.90

TOTAL

1000831727

100

Particulars
Sources of funds
Shareholders funds

Loan fund

Application of funds:
Fixed assets
Gross block

831482484

Less-depreciation

292580912

Net block

538901572

53.84

Capital work-in-progress

3698112

0.36

Investments

2983165

0.29

Current assets, loans &


advances:
Inventories

286746201

Sundry debtors

187578498

Cash & bank balances

27637213

Other current assets

8063870

Loans & advances

9096384

Less-current liabilities &


provisions
Current liabilities

135873828

13.57

Provisions

Net current assets

455248338

45.48

TOTAL

1000831727

100

COMMON SIZE BALANCE SEET OF M.L. COMPANY LTD., AS ON 31-3-2013:

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As on 31-3-2013

Percentage in
liabilities/assets

Capital

13000000

1.14

Reserves & surplus

590704185

51.86

Secured loan

438254754

38.47

Unsecured loan

35892612

3.15

Net deferred tax liability:

61117474

5.36

TOTAL

1138969025

100

Particulars
Sources of funds
Shareholders funds

Loan fund

Application of funds:
Fixed assets
Gross block

981830657

Less-depreciation

326591828

Net block

655238829

57.52

Capital work-in-progress

3718810

0.32

Investments
Current assets, loans &
advances:
Inventories

4423165

0.38

357607317

Sundry debtors

92904975

Cash & bank balances

54394425

Other current assets

70889326

Loans & advances


Less-current liabilities &
provisions
Current liabilities

7838168

108045990

Provisions

Net current assets

475588221

41.75

TOTAL

1138969025

100

9.48

COMPARATIVE BALANCE SEET OF M.L. COMPANY LTD., AS ON 2006-07 to


2007-08:

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Particulars

2006-07

2007-08

Absolute
increase/
(decrease)

Sources of funds
Shareholders funds
Capital
Reserves & surplus
Loan fund
Secured loan

13000000
130270036

13000000
151136957

20866921

390364244

379475270 (10888974)

2.78

199239493

193040880

(6198613)

3.11

5796209

6247531

451322

7.7

738669987

742900638

4230656

0.57

Gross block

711551528

726114635

14563107

2.04

Less-depreciation

105478021

145033137

39555116

37.5

Net block
Capital work-inprogress
Investments
Current assets, loans
& advances:
Inventories

606073507

581081498 (24992009)

Unsecured loan
Net deferred tax
liability:
Total

%
increase/
(decrease)

16.01

Application of funds:
Fixed assets

4.12

5165550

5165550

2983165

2983165

187934102

239880075

51946063

27.6

Sundry debtors

26860540

35992686

9132146

33.9

Cash & bank balances

6059037

7150276

1091239

18.0

Other current assets

48679846

69640943

20961097

Loans & advances

11723019

12519745

806726

Current liabilities

139624184

202449314

62825130

44.9

12018960

12018960

9073986

(2944974)

24.5

Net current assets

129613310

153670425

24057115

18.56

Total

73866982

742900638

206442802

27.9

Less-current liabilities
& provisions

COMPARATIVE BALANCE SEET OF M.L. COMPANY LTD., AS ON 2007-08 to


2008-09

S.C.R ENGINEERING COLLEGE


39

MBA PROGRAMME
MADDI LKSHMAIAH & CO. LTD

Particulars
Sources of funds
Shareholders
funds
Capital
Reserves & surplus
Loan fund
Secured loan
Unsecured loan
Net deferred tax
liability:
Total
Application of
funds:
Fixed assets
Gross block
Less-depreciation
Net block
Capital work-inprogress
Investments

2007-08

2008-09

Absolute
increase/
(decrease)

%
increase/
(decrease)

13000000
151136957

13000000
194200158

43063201

28.49

379475270
193040880

478682475
81595729

99207205
(111445151)

26.14
57.73

6247531

5523986

(723545)

11.58

742900638

773002348

30101710

4.05

726114635
145033137
581081498

738903208
188015262
550887496

12788573
42982125
(30194002)

1.76
29.63
5.19

5165550

1855829

3309721

64.07

2983165

2983165

239880075
35992686

236975762
36258591

2904313
265905

1.21
0.74

7150276

13998934

6848658

95.78

69640943

93687132

24046189

34.53

12519745

10864119

(1665626)

13.29

202449314
9073986
153670425
742900638

158452146
21580520
211751872
773002348

(43997168)
12506534
58081447
30101710

21.73
137.83
37.79
4.05

Current assets,
loans & advances:
Inventories
Sundry debtors
Cash & bank
balances
Other current
assets
Loans & advances
Less-current
liabilities &
provisions
Current liabilities
Provisions
Net current assets
Total

COMPARATIVE BALANCE SEET OF M.L. COMPANY LTD., AS ON 2008-09 to


2009-10

S.C.R ENGINEERING COLLEGE


40

MBA PROGRAMME
MADDI LKSHMAIAH & CO. LTD

Particulars

2008-09

2009-10

Absolute
increase/
(decrease)

%
increase/
(decrease)

Sources of funds
Shareholders funds
Capital
Reserves & surplus

13000000
194200158

13000000
345901071

151700913

78.12

Secured loan

478682475

429126132

(49556343)

10.35

Unsecured loan
Net deferred tax
liability:
Total

81595729

83386203

1790474

2.19

5523986

42151888

36627902

663.07

773002348

913565294

107602946

13.92

Gross block

738903208

77255360

661647848

89.54

Less-depreciation

188015262

260653520

72638258

38.63

Net block
Capital work-inprogress
Investments
Current assets, loans
& advances:
Inventories

550887496

511900080

(38987416)

7.08

1855829

1550361

(305468)

16.46

2983165

2983165

2986165

236975762

327412543

90436781

38.16

Sundry debtors

36258591

22361498

(13897093)

38.33

Cash & bank balances

13998934

73891461

59892527

472.84

Other current assets

93687132

151568707

57881575

61.78

Loans & advances

10864119

13966691

3102572

28.56

Current liabilities

158452146

143360960

(15091186)

9.53

Provisions

21580520

90860140

69279620

321.03

Net current assets

211751872

354979800

143227928

67.64

Total

773002348

913565294

107602946

13.92

Loan fund

Application of funds:
Fixed assets

Less-current liabilities
& provisions

COMPARATIVE BALANCE SEET OF M.L COMPANY LTD, AS ON 2009-10


to 2010-11

S.C.R ENGINEERING COLLEGE


41

MBA PROGRAMME
MADDI LKSHMAIAH & CO. LTD

2009-10

2010-11

Absolute
increase/
(decrease)

%
increase/
(decrease)

Capital

13000000

13000000

Reserves & surplus


Loan fund
Secured loan

345901071

424599303

78698232

22.75

429126132

600691795

171565663

39.98

Unsecured loan
Net deferred tax
liability:
Total

83386203

51737891

(31648312)

37.95

42151888

46984472

4932584

11.65

913565294

1137013461

223548167

24.47

Gross block

77255360

827717465

50163865

6.45

Less-depreciation

260653520

303798208

38312104

17.53

Net block

511900080

523919257

16851761

3.04

Capital work-in-progress

1550361

1550361

Investments
Current assets, loans &
advances:
Inventories

2983165

2983165

327412543

341906868

14494325

4.43

Sundry debtors

22361498

83013158

60651660

271.23

Cash & bank balances

73891461

156007572

82116111

111.31

Other current assets

151568707

219855601

68286894

45.05

Loans & advances

13966691

16218624

2251933

16.12

Current liabilities

143360960

125982205

(17378755)

12.12

Provisions

90860140

127893051

37032911

40.76

Net current assets

354979800

563126567

208146767

58.64

Total

913565294

1137013461

223548167

24.47

Particulars
Sources of funds
Shareholders funds

Application of funds:
Fixed assets

Less-current liabilities &


provisions

COMPARATIVE BALANCE SEET OF M.L. COMPANY LTD., AS ON 2010-11 to


2011-12

Particulars

2010-11

2011-12

Absolute
increase/
(decrease)

%
increase/
(decrease)

S.C.R ENGINEERING COLLEGE


42

MBA PROGRAMME
MADDI LKSHMAIAH & CO. LTD

Sources of funds
Shareholders funds
Capital
Reserves & surplus
Loan fund
Secured loan

13000000
424599303

13000000
512362240

87762937

20.67

600691795

398172603

(202519192)

33.71

51737891

28192253

(23545638)

45.51

46984472

49104631

2120159

4.51

Unsecured loan
Net deferred tax
liability:
Total
Application of
funds:
Fixed assets

1137013461

1000831727 (136181734)

Gross block

827717465

831482484

3765019

0.46

Less-depreciation

303798208

292580912

(35767176)

13.93

Net block
Capital work-inprogress
Investments

523919257

538901572

32002157

5.60

3698112

3698112

2983165

2983165

Inventories

341906868

286746201

(55160667)

16.13

Sundry debtors

83013158

187578498

106565340

128.37

Cash & bank balances

156007572

27637213

(128370359)

82.28

Other current assets

219855601

8063870

(56078269)

25.51

Loans & advances

16218624

9096384

(7122240)

43.94

Current liabilities

125982205

135873828

9891623

7.85

Provisions

127893051

1278930

Net current assets

563126567

455248338

107878229

19.15

11.977

Current assets, loans


& advances:

Less-current liabilities
& provisions

Total
1137013461 1000831727 136181734
11.97
COMPARATIVE BALANCE SEET OF M.L. COMPANY LTD., AS ON 2011-12 to
2012-13

Particulars

2011-12

2012-13

Absolute
increase/
(decrease)

%
increase/
(decrease)

Sources of funds
S.C.R ENGINEERING COLLEGE
43

MBA PROGRAMME
MADDI LKSHMAIAH & CO. LTD

Shareholders funds
Capital

13000000

13000000

Reserves & surplus


Loan fund
Secured loan

512362240

590704185

78341945

15.29

398172603

438254754

40082151

10.06

Unsecured loan
Net deferred tax
liability:
Total

28192253

35892612

7700359

27.31

49104631

61117474

12012843

24.46

1000831727

1138969025

138137298

13.80

Gross block

831482484

981830657

150348173

18.08

Less-depreciation

292580912

326591828

34010916

8.66

Net block
Capital work-inprogress
Investments
Current assets, loans
& advances:
Inventories

538901572

655238829

116337257

21.58

3698112

3718810

20698

0.56

2983165

4423165

1440000

48.27

286746201

357607317

70861116

24.71

Sundry debtors

187578498

92904975

(94673523)

(50.47)

Cash & bank balances

27637213

54394425

26757212

96.81

Other current assets

8063870

70889326

62825456

25.51

Loans & advances

9096384

7838168

(1258216)

13.83

Current liabilities

135873828

108045990

(27827838)

20.48

Provisions

Net current assets

455248338

475588221

20339883

4.46

Total

1000831727

1138969025

138137298

13.80

Application of funds:
Fixed assets

Less-current liabilities
& provisions

TREND ANALYSIS OF M.L. COMPANY.LTD. FROM 2006-07 TO 2007-08


Particulars
Share capital
Reserves& surplus

2006-2007
13000000
130270036

%
100
100

2007-08
13000000
151136957

%
100
116.02

390364244

100

379475270

97.2

loan fund
Secured loans

S.C.R ENGINEERING COLLEGE


44

MBA PROGRAMME
MADDI LKSHMAIAH & CO. LTD

Unsecured loans

199239493

100

193040880

96.88

Current liabilities

139624184

100

202449314

144.99

Provision

12018960

100

9073986

75.49

Deffered tax

5796209

100

6247531

107.78

Total funds

890313126

100

954423938

107.21

Net fixed assets

606073509

100

581081498

95.87

Investments

2983165

100

2983165

Current liabilities &


provisions

Other liabilities

Application of funds

Capital work in
progress
Current assets &
advances

5165550

Inventory

187934012

100

239880075

127.64

Sundry debtors

26860540

100

35992686

1339.74

Cash & bank

6059037

100

7150276

118.01

Other current assets

48679846

100

69640943

143.05

Loans & advances

11723019

100

12529745

106.88

Total

890313126

100

954423938

107.21

TREND ANALYSIS OF M.L. COMPANY.LTD. FROM 2006-07 TO 2008-09


Particulars

2006-07

2008-09

Share capital

13000000

100

13000000

100

Reserves& surplus

130270036

100

194200158

149

390364244

100

478682475

122.6

loan fund
Secured loans

S.C.R ENGINEERING COLLEGE


45

MBA PROGRAMME
MADDI LKSHMAIAH & CO. LTD

Unsecured loans

199239493

100

81595729

40.9

Current liabilities

139624184

100

158452146

113.4

Provision

12018960

100

21580520

179.5

Deffered tax

5796209

100

5523986

95.3

Total funds
Application of
funds

890313126

953035014

107

Net fixed assets

606073509

100

556411482

91.8

Investments
Capital work in
progress
Current assets &
advances
Inventory

2983165

100

2983165

100

187934012

100

236975762

126

Sundry debtors

26860540

100

36258591

134.9

Cash & bank

6059037

100

13998934

231

Other current assets

48679846

100

93687132

192.4

Loans & advances

11723019

100

10864119

92.6

Total

890313126

953035014

107

Current liabilities
& provisions

Other liabilities

1855829

TREND ANALYSIS OF M.L COMPANY.LTD FROM 2006-07 TO 2009-10


Particulars

2006-07

2009-10

Share capital

13000000

100

13000000

100

Reserves& surplus

130270036

100

345901071

265.5

Secured loans

390364244

100

429126132

109.9

Unsecured loans

199239493

100

83386203

27.8

Loan Fund

S.C.R ENGINEERING COLLEGE


46

MBA PROGRAMME
MADDI LKSHMAIAH & CO. LTD

Current liabilities &


provisions
Current liabilities

139624184

100

143360960

102.6

Provision

12018960

100

90860140

755.9

Deffered tax

5796209

100

42151888

727.2

Total funds

890313126

1147786394

128.9

Other liabilities

Application of funds
Net fixed assets

606073509

100

554051968

91.4

Investments

2983165

100

2983165

100

Capital work in
progress

1550361

Current assets &


advances
Inventory

187934012

100

327412543

174.2

Sundry debtors

26860540

100

22361498

83.3

Cash & bank

6059037

100

73891461

1219.5

Other current assets

48679846

100

151568707

311.3

Loans & advances

11723019

100

13966691

119.1

Total

890313126

1147786394

128.9

TREND ANALYSIS OF M.L COMPANY.LTD FROM 2006-07 TO 2010-11


Particulars

2006-07

2010-11

Share capital

13000000

100

13000000

100

Reserves& surplus

130270036

100

424599303

325.9

Secured loans

390364244

100

600691795

153.8

Unsecured loans
Current liabilities &
provisions

199239493

100

51737891

255.9

loan fund

S.C.R ENGINEERING COLLEGE


47

MBA PROGRAMME
MADDI LKSHMAIAH & CO. LTD

Current liabilities

139624184

100

125982205

90.2

Provision

12018960

100

127893051

1064.0

Deffered tax

5796209

100

46984472

810.6

Total funds

890313126

1390888717

156.2

Other liabilities

Application of funds
Net fixed assets

606073509

100

570903729

94.1

Investments

2983165

100

2983165

100

Capital work in
progress
Current assets &
advances

Inventory

187934012

100

341906868

181.9

Sundry debtors

26860540

100

83013158

309

Cash & bank

6059037

100

156007572

2574.7

Other current assets

48679846

100

219855601

451.6

Loans & advances

11723019

100

16218624

138.3

Total

890313126

1390888717

156.2

TREND ANALYSIS OF M.L COMPANY.LTD FROM 2006-07 TO 2011-2012


Particulars

2006-07

2011-12

Share capital

13000000

100

13000000

100

Reserves& surplus

130270036

100

512362240

393.3

Secured loans

390364244

100

398172603

102

Unsecured loans

199239493

100

28192253

14.4

loan fund

Current liabilities &


provisions

S.C.R ENGINEERING COLLEGE


48

MBA PROGRAMME
MADDI LKSHMAIAH & CO. LTD

Current liabilities

139624184

100

135873828

97.3

Provision

12018960

100

Deffered tax

5796209

100

49104631

847.1

Total funds

890313126

1136705555

127.6

Other liabilities

Application of funds
Net fixed assets

606073509

100

538901572

88.9

Investments

2983165

100

29830165

100

Capital work in progress

3698652

Current assets &


advances
Inventory

187934012

100

286745201

152.5

Sundry debtors

26860540

100

187578498

698.3

Cash & bank

6059037

100

27637213

456.3

Other current assets

48679846

100

9096384

18.6

Loans & advances

11723019

100

8063870

68.78

Total

890313126

1136705555

127.6

TREND ANALYSIS OF M.L COMPANY.LTD FROM 2006-07 TO 2012-2013


Particulars

2006-07

2012-13

Share capital

13000000

100

13000000

100

Reserves& surplus

130270036

100

590704185

453.4

Secured loans

390364244

100

438254754

112.26

Unsecured loans

199239493

100

35892612

18.01

loan fund

Current liabilities &


provisions

S.C.R ENGINEERING COLLEGE


49

MBA PROGRAMME
MADDI LKSHMAIAH & CO. LTD

Current liabilities

139624184

100

108045990

77.38

Provision

12018960

100

Deffered tax

5796209

100

61117474

1054.43

Total funds

890313126

1247015015

140.06

Other liabilities

Application of funds
Net fixed assets

606073509

100

655238829

108.11

Investments

2983165

100

4423165

148.27

Capital work in
progress

3718810

Current assets &


advances
Inventory

187934012

100

357607317

190.28

Sundry debtors

26860540

100

92904975

345.88

Cash & bank

6059037

100

54394425

897.74

Other current assets

48679846

100

70889326

145.62

Loans & advances

11723019

100

7838168

66.86

Total

890313126

1247015015

140.06

LIQUIDITY RATIOS:
It is extremely essential for a firm to be able to meet its obligation as they
become due. Liquidity ratios measure the ability of the firm to meet its current
obligations (liabilities). In fact, analysis of the liquidity needs the preparation of cash
budgets and cash and funds flow statements. The most common ratios which indicate
the extend of liquidity or lack of it, are: (i) current ratio and (ii) quick ratio. Other
ratio includes cash ratio, interval measure and net working capital ratios.
CURRENT RATIO:
The current ratio is a measure of the firms short-term solvency. It indicates the
availability of current assets in rupees for every one rupee of current liability. Current
ratio is calculated by dividing current assets by the current liabilities.
Current Ratio = Current Assets/Current Liabilities
S.C.R ENGINEERING COLLEGE
50

MBA PROGRAMME
MADDI LKSHMAIAH & CO. LTD

Current assets include cash and those assets that can be converted into cash
with in one year, such as marketable securities, debtors, inventories and prepaid
expenses are also included in current assets.
Current liabilities include creditors bills payable, accrued expenses, shortterm loans, income tax , liability and long term debt maturing in the current year.

YEARS

Current assets
(A)

Current liabilities
(B)

Ratio
C=A/B

2009

391784538

180032666

2.17

2010

589200900

234221100

2.51

2011

817001823

243875256

3.21

2012

519122166

135873828

3.82

2013

583634211

108045990

5.40

Graphical Representation:

INTERPRETATION:
The above table and chart shows the current ratio.
It is maximum (5.40) in the year 2013 and minimum(1.72) in the year 2009.

S.C.R ENGINEERING COLLEGE


51

MBA PROGRAMME
MADDI LKSHMAIAH & CO. LTD

But the liquidity position of the company is satisfactory. It is more than


standard ratio i.e. 2:1 during the period of study.

S.C.R ENGINEERING COLLEGE


52

MBA PROGRAMME
MADDI LKSHMAIAH & CO. LTD

QUICK RATIO:
It is also known as acid test or liquid ratio is more rigorous test of liquidity
than the current ratio. Quick ratio may be defined as the relationship between the
quick/ liquid assets and current/ liquid liabilities.
An asset is said to be liquid if it can be converted into cash within a short
period without loss of value. Inventories cannot be termed to be liquid assets because
they can not be converted into cash immediately.
Quick or Acid Test Ratio = Quick Assets / Current Liabilities
A quick ratio of 1 is considered as ideal. A quick ratio is less than 1 is
indicative of inadequate liquidity of the business. A very high quick ratio is also not
advisable

YEARS

Quick assets
(A)

Current
liabilities (B)

Ratio
A/B

2009

261788357

180032666

1.45

2010

475094955

234221100

2.03

2011

304375965

243875256

1.25

2012

286746201

135873828

2.11

2013

226026894

108045990

2.09

S.C.R ENGINEERING COLLEGE


53

MBA PROGRAMME
MADDI LKSHMAIAH & CO. LTD

Graphical Representation:

INTERPRETATION:
The above table shows the quick ratio of the company.
It is maximum (2.11) in the year 2012 and minimum (1.25) in the year 2011.
The convention rule for quick ratio is 1:1.

S.C.R ENGINEERING COLLEGE


54

MBA PROGRAMME
MADDI LKSHMAIAH & CO. LTD

LEVERAGE RATIOS:
The short term creditors like bankers and suppliers of raw material are more
concerned with the firms current debt paying ability. On the other hand long-term
creditors like debenture holders, financial institutions etc. are more concerned with
the firms long- term financial strengths in fact a firm should have a strong short-term
as well as long-term financial position of the firm like financial leverage or capital
structure are also calculated their ratios indicated mix of fund provided by owners and
lenders.
(i) Debt-Equity Ratio
(ii) Interest coverage ratio
(i) Debt-Equity Ratio:
It reflects the relative claims of creditors and share holders against the assets
of the business. Debt, usually, refers to long term debt. Equity includes equity and
preference share capital and reserves.
Debt- Equity Ratio=

Long term debt


Share holders founds

Shareholders Found = Equity+ General Reserve+ Dividend Reserve+ Net Profit


A debt equity ratio of 2:1 is considered ideal. A firm with a debt equity ratio of
2 or less eposes its creditors to relatively lesser risk. A firm with a high debt equity
ratio exposes its creditors to greater risk.
DEBT-EQUITY RATIO:
YEARS

Debt
(A)

Equity
(B)

Ratio
(A/B)

2009

560278204

207200158

2.70

2010

512512335

358901071

1.43

2011

652429686

437500303

1.49

2012

426364256

525362240

0.81

2013

474147366

603704185

0.79

S.C.R ENGINEERING COLLEGE


55

MBA PROGRAMME
MADDI LKSHMAIAH & CO. LTD

Graphical Representation:

INTERPRETATION:
The above table shows the debt equity ratio.
In the fallowing years the ratio is fluctuating. It is highest (2.70)in the year
2009 and lowest (0.79)in the year 2013.
The overall debt equity ratio of the company is satisfactory.

S.C.R ENGINEERING COLLEGE


56

MBA PROGRAMME
MADDI LKSHMAIAH & CO. LTD

INTEREST COVERAGE RATIO:


It indicates the ability of a firm to meet its interest obligation. It used to test
the firms debt servicing capacity.
EBIT
Interest Coverage Ratio=
Interest
EBIT = Earnings before interest and taxes
EBIT = Net Profit+ Interest+ Taxes
YEARS

EBIT (A)

Interest (B)

Ratio
(A/B)

2009

60103469

49132743

1.22

2010

25141569

40357291

0.62

2011

120583786

46543858

2.59

2012

260447088

36690054

7.09

2013

127756648

434244778

0.29

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Graphical Representation:

INTERPRETATION:
The above table shows the interest coverage ratio of the company.
In the fallowing years the ratio is fluctuating. It is maximum (7.09) in the year
2012 and minimum (0.29) in the year 2013.
The overall interest coverage ratio of the company is satisfactory.

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ACTIVITY RATIOS:
Turnover ratio is also referred to as activity ratios or asset management ratios,
measure how efficiently the assets are employed by a firm. These ratios are based on
the relationship between the level of activity, represented by sales or cost of goods
sold, and levels of various assets. The following are the various types of turnover
ratios.
(i) Inventory Turnover Ratio:
Stock turnover ratio indicates the number of times the stock has turned
over into sales in a year.
Inventory Turnover Ratio = Cost of Goods Sold / Average Stock
Cost of Goods Sold = Sales-Gross Profit
Or
Cost of Goods Sold = Opening Stock + Purchases Closing Stock
Average Stock = Opening Stock + Closing Stock/2
YEARS

Cost of goods sold (A)

Average stock(B)

Ratio
A/B

2009

322992689

202872506

1.59

2010

318416449

224788820

1.42

2011

128972737

268562016

0.48

2012

527362718

321269530

1.64

2013

712371342

299984106

2.37

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Graphical Representation:

INTERPRETATION:
The above table represents the inventory turnover ratio of the company
In the present year i.e. 2013 the ratio is very high (2.37) when compare to
previous years.
The overall inventory turnover ratio of the company is satisfactory.

DEBTORS TURNOVER RATIO:


Debtors turnover indicates the number of times debtors turnover ratio
expresses the relationship between debtors and sales. It is calculated as:
Credit sales
Debtors Turnover Ratio =
Average debtors

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Net credit sales imply credit sales after adjusting for sales
returns. In case information on credit sales is not available, sales can be taken in the
numeration.
YEARS

Sales(A)

Debtors(B)

Ratio
A/B

2009

255762587

35992686

7.11

2010

257993866

36258591

7.12

2011

280678564

22361498

12.55

2012

588655944

83013158

7.09

2013

678175554

189578498

3.58

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Graphical Representation:

INTERPRETATION:
The above table represents the debtors turnover ratio of the company
The highest ratio is 12.55 in the year 2011, and the lowest ratio is 3.58 in
2013.
The overall debtors turnover ratio of the company is Satisfactory.

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FIXED ASSETS TURNOVER RATIO:


By this ratio we can identified the efficiency of utilizing the fixed assets in the
firm separately to generate the sales. The ratio is defined as:
Fixed Assets Turnover Ratio = Net Sales / Net Fixed Assets

YEARS

Net sales (A)

Net fixed assets (B)

Ratio
(A/B)

2009

255762587

581081498

0.44

2010

257993866

556411482

0.46

2011

280678564

554051968

0.51

2012

588655944

570903729

1.03

2013

678175554

538901572

1.26

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Graphical Representation:

INTERPRETATION:
The above table represents the fixed assets turnover ratio of the company.
The highest ratio is 1.26 in the year 2013, and the lowest ratio is 0.44 in 2009.
The fixed assets turnover ratio of the company is not satisfactory.

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TOTAL ASSETS TURNOVER RATIO:


(iv) Total Assets Turnover Ratio:
This ratio shows the firms ability in generating sales from all financial
resources committed to total assets.
Total Assets Turnover Ratio = Net Sales / Total Assets
Years

Net Sales (A)

Total Assets (B)

Ratio
(A/B)

2009

255762587

954423938

0.27

2010

257993866

953035014

0.27

2011

280678564

1147786394

0.24

2012

588655944

1390888717

0.42

2013

678175554

1136705555

0.60

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Graphical Representation:

INTERPRETATION:
The above table represents the Total Assets turnover ratio of the company.
The highest ratio is 0.60 in the year 2013, and lowest ratio is 0.24 in the

years 2011.
In the present year i.e. 2011 the ratio is very high when compare to previous

years.
The overall Total assets turnover ratio of the company is satisfactory.

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PROFITABILITY RATIOS:
Profitability reflects the final result of business operations. There are two types
of profitability ratios: profit margins ratios and rate of return ratios. Profit margins
ratios show the relationship between profit and sales.
The two popular profit margin ratios are: gross profit margin ratio and net
profit margin ratio. Rate of return ratios select the relationship between profit and
investment the important rate of return measures are: return on total assets, earning
power, and return on equity. Generally, there are two types of profitability ratios.
Profitability in relation to sales
Profitability in relation to investment
(i) Gross Profit Ratio:
It is calculated by dividing the gross profit by sales.
Gross Profit
Gross Profit Ratio =

x 100
Net Sales

YEARS

Gross Profit (A)

Net Sales (B)

Ratio (A/B)

2009

67230102

255762587

0.26

2010

6042253

257993866

0.02

2011

151705827

280678564

0.54

2012

61293226

588655944

0.10

2013

34195788

678175554

0.05

Graphical Representation:

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INTERPRETATION:
The above table represents the gross profit ratio of the company.
The highest ratio is 0.54 in the year 2011, when compare to previous years.
The lowest gross profit ratio is 0.02 in the year 2010
The overall gross profit ratio of the company is satisfactory.

PROFIT RATIO:
Net profit is obtained when operating expenses, interest and taxes are
subtracted from the gross profit. This ratio indicates the managements efficiency in
manufacturing, administering and selling the products. This ratio is the overall
measure of the firms ability to turn each rupee into net profit.
Net profit
Net Profit Ratio =

x 100
Sales

YEARS

Net Profit (A)

Sales (B)

Ratio (A/B)

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2009

24342875

255762587

9.52

2010

58618826

257993866

22.72

2011

260447088

280678564

92.79

2012

120583786

588655944

20.48

2013

127756648

678175554

18.84

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Graphical Representation:

INTERPRETATION:
The above table represents the net profit ratio of the company.
The highest ratio is 92.79 in the year 201,
The lowest net profit ratio in the year 2009 i.e., 9.52.
The overall net profit ratio of the company is satisfactory.

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Return On Net Worth:


This ratio indicates how well the firm has used the resources of owners. And
also gives the shareholders and idea if the return of founds .as well as useful for interfirm and inters industry comparisons.
Profit after tax
ROE =
x 100
Net worth
YEARS

PAT (A)

Equity (B)

Ratio
(A/B)

2009

21044577

164136957

12.82

2010

42096494

207200158

20.32

2011

151667926

358901071

42.26

2012

78698232

437599303

17.98

2013

84123989

525362240

16.01

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Graphical Representation:

INTERPRETATION:
The above table represents the return on net worth of the company.
The highest ratio is 42.26 in the year 2011,
The lowest return on net worth in the year 2009 i.e. 12.82.
The overall return on net worth of the company is satisfactory.

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RETURN ON CAPITAL EMPLOYED:


The ratio is calculated by dividing the net profit with total capital employed in
the firm. Net profit means profit means profit after tax but with interest. Capital
employed is founded by subtracting intangible assets from investment.
Net profit + Interest
Return on Capital Employed Ratio =
x 100
Capital employed (or) Return on investment

Years

Net Profit (A)

Capital Employed
(B)

Ratio
(A/B)

2009

58618826

13000000

4.51

2010

24342875

13000000

1.87

2011

120583786

13000000

9.28

2012

260447088

13000000

20.03

2013

127756648

13000000

9.83

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Graphical Representation:

INTERPRETATION:
The above table represents the return on capital employed of the company.
The highest ratio is 20.03 in the year 2012,
The lowest return on capital employed in the year 2010 i.e. 1.87
The overall return on capital employed of the company is satisfactory.

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Earnings Per Share:


Year

Ratio

2009

3.23

2010

1.61

2011

11.67

2012

6.05

2013

14.66

Graphical Representation:

Interpretation:
The above table represents the earning per share of the company.
The highest ratio is 14.66 in the year 2013.
In the previous year 2013 the ratio is very high when compared with the
previous years.
The lowest earnings per share in the year 2010 i.e. 1.61.
The overall earnings per share of the company is satisfactory.

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FINDINGS
Based on the analysis of various ratios applied in analyzing. In financial data
relating Maddi lakshmaiah & co ltd and conclusions arrived at the fallowing findings
are as fallows:
It was observed that the current ratio of Maddi lakshmaiah & co ltd. is
fluctuating for the period of study the company.
In the year 2010, the quick ratio is very high, a high quick ratio is not
advisable to the company.
The study reveals that the debt ratio of the company is high in the year 2010
through this we can say it is in a not satisfactory position.
The study reveals that the inventory turnover ratio of the company is very low
in the year 2009. The reason for this low ratio is sales are not satisfactory in
that year.
The debtor turnover ratio of the

company is not effective in the period of

study the company.


The fixed assets turnover ratio is very low in the year 2011 compared to the
other succeeding years.
The gross profit ratio is good indicator of the company. But the gross profit
ratio of the company is very low in the year 2010 compared to the other
succeeding years.
The net profit ratio of the company is not satisfactory for the period of the
study of the company.
From the profit after taxation, most of the amount transfers to the provision
under different heads. So that it is good indicates for future expansion.
It was found that the standard debt equity ratio of the company.

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SUGGESTIONS
Based on the analysis of various ratios applied in analyzing. In financial
data relating Maddi lakshmaiah & co ltd. and conclusions arrived at the following
suggestions are as fallows:
The company has maintained a satisfactory current ratio due to increase in
current assets more than current liabilities.
The quick ratio 1:1 is considered as ideal. So, I am suggested to company
maintain the quick ratio is not below the one.
The company should maintain the same interest coverage ratio in future also.
The debtors turnover ratio of the company is not effective in the period of
study. I suggest that maintain the debtors turnover ratio is 10-12 debt
collection period is 30-60 days.
The Maddi lakshmaiah & co ltd. has maintained the same equity share capital
from begin to till onwards. It is very good indicator to Maddi lakshmaiah & co
ltd.
Increase the more facilities for the Maddi lakshmaiah & co ltd
Employees and optimize the uses of management expenditure and general
expenditure.
The Maddi lakshmaiah & co ltd. has to go for search of new markets and to be
innovative in their productive work.

CONCLUSION
To study all aspects of the company, it stands good position and it should
improve. Company should reduce the taking of loans; it is hard to pay interest.
Common size balance sheets and comparative balance sheets were showing position
good. Comparative income statements were good except one year (2010). The gross
profit of the company is well. Net profit is increased except one year (2010).
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BIBLIOGRAPHY
Reference Text Books:
Financial Management
Financial Management
Financial Accounting And Analysis
Financial Management
Advanced Financial Accounting
Financial Management
Financial Management

I.M.Pandey
My Khan,P.K Jain
G.Prasad
Prasanna Chandra
S.N. Maheswari
Sarma & Gupta
Dr .S. P. Gupta

Web Sites:
www. indiafinancialanalysis.com
www.financialmarketresearch.com
www.en.wikipedia.org

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