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A

PROJECT REPORT
ON

“A STUDY OF RATIO ANALYSIS OF PATEL ENGINEERING WORKS


NAGPUR.
(For The Period of 2013 to 2018)

SUBMITTED TO

R.T.M. Nagpur University, Nagpur


In partial fulfillment of the requirement
For the award of degree of
BACHELOR OF BUSINESS ADMINISTRATION

SUBMITTED BY
SHIVAM .K.YODHA
ENROLLMENT. No.:- 20172025504864

UNDER THE GUIDANCE OF


PROF. REENU MEHTA
MBA, M.Com, NET. (Mgmnt-Commerce)

VMV COMMERCE, ARTS, JJP SCIENCE COLLEGE, WARDHAMAN


NAGAR,
NAGPUR – 08
2018-2019

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CERTIFICATE

This is to certify that the project entitled “A STUDY OF RATIO ANALYSIS OF


PATEL ENGINEERING WORKS NAGPUR (For the Period of 2013 to 2018)”.
In partial fulfillment of BACHLER OF BUSINESS ADMINISTRATION, had not been
submitted for any other Examination and does not form part of any other course under gone
by the candidate.

It is further certified that they had completed their project as prescribed by


RASHTRASANT TUKADOJI MAHARAJ NAGPUR UNIVERSITY, NAGPUR.

Prof. REENU MEHITA Prof. MEENALRAJDEV

(PROJECT GUIDE) (COORDINATOR)

DATE:

PLACE: NAGPUR

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DECLARATION

I SHIVAM .K. YODHA here-by declare that with the exception of the suggestion and
guidance received from my supervisor of this project titled. “A STUDY OF RATIO
ANALYSIS OF PATEL ENGINEERING WORKS FROM 2013 TO 2018. Has
completed by me in practical fulfillment of BBA final year (Bachler of Business
Administration) degree of examination prescribed by Rashtrasant Tukdoji Maharaj Nagpur
University Nagpur” and had not been submitted for any other examination &does not the
part of any other course undergone by us.

STUDENT SIGNITURE

SHIVAM K. YODHA

PLACE: NAGPUR

DATE:

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ACKNOWLEDGEMENT

With immense pride and sense of gratitude, I take this golden opportunity to express my
sincere regards to the PROF. MEENAL RAJDEV.

I am extremely thankful to my project guide PROF. REENU MEHTA for the project
guideline throughout the project. My sincere regards to her for giving me her outstanding
guidance, enthusiastic suggestion and invaluable encouragement which helped me to
complete the project.

I will be failing in my duty if I do not thank the non-teaching staff of the college for their
cooperation. I would like to thank all who helped me in making this project a complete
successful one.

PLACE: NAGPUR

DATE: SHIVAM .K. YODHA

(BBA FINAL YEAR)

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INDEX

CHAPTER PAGE
CHAPTER NAME
NO. NO.

1 Executive summary 6-7

Introduction
2  Introduction to Topic 8-19
 Company Profile

3 Objective of the study 20-21

Research methodology
 Research Design
 Research Technique
 Research Method
 Sample Design

 Sample Technique
4  Sample Method 22-29
 Sample Area
 Sample unit
 Scope
 Limitations
 Method of Data Collection
 Primary Data
 Secondary Data

5 Data analysis & Interpretation 30-42

6 Conclusion, Suggestion & Recommendation 43-46

Appendix

7  Bibliography 47-53
 Balance sheet
 income
5
EXECUTIVE SUMMARY

6
EXECUTIVE SUMMARY

First of all we should know about the project topic the ratios play an important role in
knowing the financial ratios. Ratio analysis is a technique of analyzing the financial statement
of industrial concerns. Ratio analysis is one of the most powerful tools of financial analysis
which helps in analyzing and interpreting the health of the firm. Ratios are proved as the basic
instrument in the control process and act as back bone in schemes of the business forecast.
The ability of the firm to meet its current obligation. The limit or extent to which the firm has
used its borrowed funds, through ratio analysis the firm is utilizing in generating sales revenue
and operating efficiency and performance of the company.

The main objective of the study is to find out various kinds of ratio which help to know
about the financial structure of Patel engineering works ltd.

As per my finding in project the earning per share of the company is tremendously
increasing in the last couple of years. The net profit ratio of the company is also good. On the
other hand the companies need to check the policies regarding debt to equity ratio and
working capital management ratio.

In the last segment of the project I describe about what are the measures company has to take
into consideration to meet objective of the company. Like increase in the net profit ratio,
current ratio, asset turnover ratio, working capital ratio etc.

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INTRODUCTION

8
INTRODUCTION

Financial statement information is used by both external and internal users, including
investors, creditors, managers, and executives. These users must analyze the information in
order to make importance. Several methods of performing financial statement analysis exist.
This article discusses two of these methods: horizontal analysis and vertical analysis.
Financial analysis: is a process which involves reclassification and summarization of
information through the establishment of ratios and trends. Analysis of financial statement:
refers to the examination of the statement for the purpose of acquiring additional information
regarding the activities of the business the users of the financial information often find
analysis desirable for the interpretation of the firms activities.

RATIO ANALYSIS

Ratio analysis is a technique of analyzing the financial statement of industrial concerns.


Now a day this technique is sophisticated and is commonly used in business concerns. Ratio
analysis is not an end but it is only means of better understanding of financial strength and
weakness of a firm.

Ratio analysis is one of the most powerful tools of financial analysis which helps in
analyzing and interpreting the health of the firm. Ratios are proved as the basic instrument in
the control process and act as back bone in schemes of the business forecast.

With the help of ratio we can determine

 The ability of the firm to meet its current obligation.

 The limit or extent to which the firm has used its borrowed funds.

 The efficiency with which the firm is utilizing in generating sales revenue.
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 The operating efficiency and performance of the company.

Meaning and Definition of Ratio:-

A ratio is simple arithmetical expression of relation of one number to another. It may be


defined as the indicated quotient of two mathematical expressions.

According to Wixon, Kell and Bedford, “A ratio is an expression of the quantitative


relationship between two numbers”.

According to Kohler, “A ratio is relation, of the amount, a, to another, b, expressed as the


ratio of a top; a: b; or as a simple fraction, integer, decimal fraction or percentage”.

In simple language ratio is one number expressed in terms of another and can be worked out
by dividing one number into another.

Mode of Expression:-

This relationship (i.e., ratio) may be expressed in either of the following way:

A. In Proportion
B. In Rate or Times or Coefficient
C. In Percentage
1. In Proportion: In this form the amount of two items are being expressed in a common
denominator. The example of this form of expression is relationship between current
asset and current liability as “2:1”.
2. In Rate or Times or co-efficient: In this form, a quotient obtained by dividing one
item by another item is taken as unit of expression. The example of this form is sales
divided by stock. It comes 60; thus 6 times ratio between sales and stock. It is important
to note that when ratio is expressed in this form, it is called as ‘turnover’ and it is
written in ‘times’.
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3. In Percentage: In this form, a quotient obtained by dividing one item by another is
multiplied by one hundred and it becomes the ‘percentage’ form of expression. For
example, the relationship between gross profit and sales may be expressed as 25%.

Meaning and Definition of Ratio Analysis:-

One of the most important financial tools which have come to be used very frequently
for analyzing the financial strengths and weaknesses of enterprise is ratio analysis. Ratio
Analysis is technique of analysis and interpretation of financial statement. It is process of
establishing and interpreting various ratios for helping in making certain decision.

According to Myer, “Ratio analysis is a study of relationship among the various financial
factors in businesses”.

Ratio analysis represents the figure of financial statement in simple and intangible form. Ratio
analysis, in this way, is the process of establishing meaningful relationship between two figure
and financial statement.

Nature of Ratio Analysis:-

Though ratio analysis is ‘all the rage’ among the user of accounting information, it is better to
understand the ratio so that they can be employed judiciously under appropriate condition.
They are:

1. The relation between two or more financial data brought out by an accounting ratio
is not an end in itself. They are means to get to know the financial position of an
organization.
2. An individual ratio may not be capable of providing the answer required for the
various problem facing an executive
3. Ration analysis will tend to be more meaningful when certain standard and norms
are laid down so that what the ratio indicate can be compared with the said
standards. This provides a base for decision-making and assist in taking measures
to rectify any drawback or deficiency.
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Steps in Ratio Analysis

There are five step involved in the ratio analysis:

1. Selection of relevant data from the financial statement depending upon the objective of

analysis.
2. Calculation of appropriate ratio from the above data.

3. Comparison of calculated ratios with the ratio of the same firm in the past, or the ratios

developed from projected financial statement or ratio of some other firms or the
comparison with ratios of the industry to which the firm belongs.
4. Interpretation of ratios.

5. Projection through ratios.

Classification of Ratios:-

Ratios can be classified into different categories depending upon the basis of
classification.

I. TRADITIONAL CLASSIFICATION
Traditional Classification has been on the basis of financial statements, on which
ratio may be classified as follows.

1. Profit & Loss account ratios.

E.g. Gross Profit Ratio, Net Profit Ratio, Operating Ratio, Operating Profit Ratio,
Expenses Ratio, Stock Turnover Ratio, etc.

2. Balance sheet ratio.

E.g. Current Ratio, Quick Ratio, Absolute Liquid Ratio, Working Capital Turnover
Ratio Debt Equity Ratio, Proprietary Ratio, Capital Gearing Rationed.

3. Composite/Mixed ratio.

E.g. Return on Capital Employed, Return on Equity or Shareholder Fund, Earning Per
Share (EPS), Price Earnings Ratio, Capital Turnover Ratio, Debtors Turnover Ratios,
Creditors Turnover Ratio, Fixed Assets Turnover Ratio etc.
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FUNCTIONAL CLASSIFICATION OF RATIOS

Functional ratios

1. Liquidity ratios

a) Current Ratio

b) Quick Ratio

2. Leverage Ratios

i. Debt-equity Ratio

ii. Current Asset to Proprietor’s fund Ratio

iii. Total Debt Ratio

iv. Proprietary/Equity Ratio

v. Capital Gearing Ratio

III. PROBABILITY RATIOS

i. Gross profit Ratio


ii. Operating profit Ratio
iii. Return on investment
iv. Operating Ratio
v. Earnings Per Share
vi. Price Earnings Ratio

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IV. ACTIVITY RATIO

i. Inventory Turnover Ratio


ii. Asset Turnover Ratio
a. Fixes Asset Turnover Ratio
b. Current Asset Turnover Ratio
iii. Working Capital Turnover Ratio.
iv. Debtors/Receivable Turnover Ratio
v. Creditors/Payable Turnover Ratio
vi. Capital Turnover Ratio
1. Liquidity Ratio: These are the ratios, which measures the short term solvency or
financial position of a firm. These ratios are calculated to comment upon the short term
paying capacity of a concern or at the firm’s ability to meet its current obligation. The
various liquidity ratios are current ratio, liquid ratio and absolute liquid ratio. Further to see
the efficiency with which the liquid resources have been employed by the firm, debtor’s
turnover and creditor’s turnover ratios are calculated.
2. Solvency/Leverage Ratio: Leverage ratios are the financial statement ratio which
shows the degree to which the business is leveraging itself through its use of borrowed
money. By using a combination of assets, debt, equity and interest payment, leverage ratio
are used to understand a company’s ability to meet it long term obligations.
3. Turnover/Activity Ratio: Activity ratio are calculated to measure the efficiency with
which the recourses of the firm have been employed. These ratio are also called activity
ratio because they indicate the speed with which asset are being turned over into sales,
e.g., debtors turnover ratio.
4. Profitability Ratio: These ratio measures the result of business operations or overall
performance and effectiveness of the firm, e.g., gross profit ratio, operating ratio, return on
capital employed.

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COMPANY PROFILE

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COMPANY PROFILE

Patel Engineering Limited (PEL) wet its feet in the industry during the year 1949.
PEL is a dynamic and progressive Indian Engineering company committed to providing
the entire range of civil engineering services involved in the design, construction of Power
Houses, Hydroelectric Projects, Commercial Building, Industrial Complexes, Dams,
Tunnels, Underground Structures, Steel and Concrete Structures, Bridges, Marine Works,
Flyovers and National Highways in India and abroad. ISO 9002: 2000 certification
Company and access to internationally renowned Licensors & Contractors make it the
ideal engineering solutions partner for a wide spectrum of services covering a variety of
industries. During the year 1993-94, the company had commenced production in plastic
products through its subsidiary ENPRO. In the period of 1997-98, the company had
entered into joint ventures with ENERGOPROJECT, Yugoslavia. PEL had established a
separate entity in the year 1999-2000 in the name and style of ASI Civil Constructors
under the laws of the state of California as a regular corporation with a fiscal year end of
March 31st- ASI RCC, Inc., purchased all of the stock of this entity for $ 80,000 cash. In
the same year 1999-00, the company had assigned 4A 3(best) rating by the world
renowned Dun & Bradstreet with 16 times the market’s capitalization. PEL had achieved a
break-through in highways and road projects. In 2001 the company had been accredited
with ISO 9002 certification. The Company had secured contract for construction of Indian
first Roller Compacted Concrete Dam for the Ghaghara Hydro Electric project in the year
2002 and also in same year, PEL had incorporated a wholly owned subsidiary in USA
under the name of Patel Engineering Inc to protect the parent company in India against all
claims, litigations that may emanate in the executed projects overseas. Totally 5,418 kms
of the National Highway Development project had been completed as of 31st January of
the year 2005. In the year 2006-07 alone, PEL had incorporated 18 subsidiaries, out of
that; two companies namely Patel KNR Infrastructure Pvt Ltd and Patel Engineering Pvt
Ltd were incorporated as a special purpose vehicle. In December of the year 2007, it
bagged an order worth Rs 1,188.5 million for double lake tapping and other civil works of

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Koyna Dam Foot Power House for the Water Resources Department, Government of
Maharashtra. During the year 2007-08, the company acquired 51% stake in Michigan
Engineers (Michigan), a Mumbai based urban Infrastructure Company and 96% stake in
Patel Energy, which entered into an MOU with Gujarat Power Corporation, Government
of Gujarat for establishing a 1,200 MW imported coal-based power project at Ghogha,
Bhavnagar. In June of the year 2008, the company bagged the USD 280 million
TaumSauck upper reservoir dam reconstruction project, the largest RCC dam in Missouri,
USA. Patel Engineering is planning to increase its presence in export markets especially in
USA and Africa and has lined up Rs 4 billion for its expansion plan, which would be
invested over the next two years into equipment and allied areas to strengthen its overseas
operations. The company is already having a subsidiary, ASI Contractor Inc., in the US
through which it implements projects in the region

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HISTORY PATEL ENGINEERING LTD.

Patel Engineering Limited (PEL) wet its feet in the industry during the year 1949. PEL is a
dynamic and progressive Indian Engineering company committed to providing the entire
range of civil engineering services involved in the design, construction of Power Houses,
Hydroeletric Projects, Commercial Building, Industrial Complexes, Dams, Tunnels,
Underground Structures, Steel and Concrete Structures, Bridges, Marine Works, Flyovers
and National Highways in India and abroad. ISO 9002: 2000 certification Company and
access to internationally renowned Licensors & Contractors make it the ideal engineering
solutions partner for a wide spectrum of services covering a variety of industries. During the
year 1993-94, the company had commenced production in plastic products through its
subsidiary ENPRO. In the period of 1997-98, the company had entered into joint ventures
with ENERGOPROJECT, Yuguslavia. PEL had established a separate entity in the year
1999-2000 in the name and style of ASI Civil Constructors under the laws of the state of
California as a regular corporation with a fiscal year end of March 31st- ASI RCC, Inc.,
purchased all of the stock of this entity for $ 80,000 cash. In the same year 1999-00, the
company had assigned 4A 3(best) rating by the world renowned Dun & Bradstreet with 16
times the market's capitalization. PEL had achieved a break-through in highways and road
projects. In 2001 the company had been accredited with ISO 9002 certification. The
Company had secured contract for construction of India's first 'Roller Compacted Concrete'
Dam for the Ghatghr Hydro Electric project in the year 2002 and also in same year, PEL had
incorporated a wholly owned subsidiary in USA under the name of Patel Engineering Inc to
protect the parent company in India against all claims, litigations that may emanate in the
executed projects overseas. Totally 5,418 kms of the National Highway Development project
had been completed as of 31st January of the year 2005. In the year 2006-07 alone, PEL had
incorporated 18 subsidiaries, out of that; two companies namely Patel KNR Infrastructure

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Pvt Ltd and Patel Engineering Pvt Ltd were incorporated as a special purpose vehicle. In
December of the year 2007, it bagged an order worth Rs 1,188.5 million for double lake
tapping and other civil works of Koyna Dam Foot Power House for the Water Resources
Department, Government of Maharashtra. During the year 2007-08, the company acquired
51% stake in Michigan Engineers (Michigan), a Mumbai based urban Infrastructure
Company and 96% stake in Patel Energy, which entered into an MOU with Gujarat Power
Corporation, Government of Gujarat for establishing a 1,200 MW imported coal-based
power project at Ghogha, Bhavnagar. In June of the year 2008, the company bagged the
USD 280 million TaumSauck upper reservoir dam reconstruction project, the largest RCC
dam in Missouri, USA. Patel Engineering is planning to increase its presence in export
markets especially in USA and Africa and has lined up Rs 4 billion for its expansion plan,
which would be invested over the next two years into equipment and allied areas to
strengthen its overseas operations. The company is already having a subsidiary, ASI
Contractor Inc., in the US through which it implements projects in the region.

SERVICES OFFERED BY THE COMAPNY

Patel Engineering Limited (PEL) wet its feet in the industry during the year 1949. PEL is a
dynamic and progressive Indian Engineering company committed to providing the entire
range of civil engineering services involved in the design, construction of Power Houses,
Hydroelectric Projects, Commercial Building, Industrial Complexes, Dams, Tunnels,
Underground Structures, Steel and Concrete Structures, Bridges, Marine Works, Flyovers
and National Highways in India and abroad.

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OBJECTIVES OF THE
STUDY

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OBJECTIVES OF THE STUDY

 To understand the Liquidity, profitability and efficiency positions of the company


during the Study period.
 To evaluate the performance of the company by using ratios as yardstick to measure
the efficiency of the company.
 To make comparisons between the ratios during different periods.
 To check the solvency of the company.

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RESEARCH
METHODOLOGY

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RESEARCH METHODOLOGY

1} RESEARCH METHODOLOGY

Research methodology is an important tool in any research work. It acts as


guideline and road in completion of research. It is scientific search for data and information
on as particular topic research is search for knowledge.

Research methodology is a way to systematically solve the research problem. It may


be understood as a science of studying now research is done systematically. In that various
steps, those are generally adopted by a researcher in studying his problem along with the
logic behind them. It is important for research to know not only the research method but also
know methodology.

DEFINITION:-

“The procedures by which researcher goes about their work of describing, explaining and
predicting phenomenon are called methodology. Methods comprise the procedures used for
generating, collecting and evaluating data. All this means that it is necessary for the
researcher to design his methodology for his problem as the same may differ from problem
to problem”.

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TYPES OF RESEARCH

Primary Research Vs Secondary Research

Conducting primary research occurs when a company is gathering


information directly for themselves. This type of research is often conducted through the
medium of questionnaires, observations and interviews. This method can often be very
useful to companies because the results are specific to that particular business. The findings
can also be regarded as being reliable and accurate because the companies have conducted
the research independently.
Secondary research differs from primary research because it involves a company using
research that has been conducted by someone else. For example, an organization may use
findings through a relevant journal, website or newspaper article.

Basic / Fundamental Research Vs Applied Research

Basic research whether in business or any other field has as its basic goal, to expand
one's knowledge? Basic questions such as, How can we increase production and save money
at the same time, might be a question for business. If, we increase production, we also
increase the cost of payroll by hiring additional production employees. How can this save
money? Curiosity lies at the heart of all business and it is this curiosity,

Applied research is solutions designed from basic research information, aimed at the
solution of business problems within the company. The goal of applied research is change
for the better, improvements in business management and practice aimed at improving the
human condition.

Qualitative Research Vs Quantitative Research

Qualitative research is merely explained in words and descriptions of what the studies
found. For example, if the researcher found that they found the people in debt to be very
funny, care-free, friendly individuals, Quantitative research is of course, the complete

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opposite, and again, the clue is in the name. It is called quantitative research because it works
with numbers, quantities and statistics.

Research design

Research design is a pre-planned sketch for the explanation of a problem. It is the first
step to take and the whole research. Study will conduct on the basis of this research design. It
gives us a due that how the further process would be taking place and how would be the
research study carry into classification, interpretation and suggestions. This is a guideline for
the whole work.

 Research Technique

A research technique is a systematic plan for conducting research.

Here, research techniques are base for secondary data.

 RESEARCH METHOD:-
 Analytical Research Method

 SAMPLING TECHNIQUE:-

 Sampling technique refers to the rules and procedures by which some elements of the
population are included in the sample. Some common sampling techniques are simple
probability sampling, and non-probability sampling.

 SAMPLING METHOD :-
NON Probability Sampling:-Convenience sampling is used in exploratory research
where the researcher is interested in getting an inexpensive approximation of the truth. As
the name implies, the sample is selected because they are convenient. This no probability
method is often used during preliminary research efforts to get a gross estimate of the results,
without incurring the cost or time required to select a random sample.
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 SAMPLE AREA :-

THE SAMPLING AREA WAS NAGPUR CITY.

 SAMPLING UNIT:-

PATEL ENGINEERING WORKS NAGPUR.

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DATA COLLECTION

Data collection is the systematic approach to gathering and measuring information from a
variety of sources to get a complete and accurate picture of an area of
interest. Data collection enables a person or organization to answer relevant questions,
evaluate outcomes and predictions about future probabilities and trends.

Data taken for the study purpose fall in two categories.

 Primary Data
Primary data means original data that has been collected specially for the purpose in mind. It
means someone collected the data from the original source first hand. Data collected this
way is called primary data.

 Secondary Data
Secondary data. ... Common sources of secondary data for social science include censuses,
information collected by government departments, organizational records and data that was
originally collected for other research purposes. Primary data, by contrast, are collected by
the investigator conducting the research.

 PRIMARY DATA

There is no Primary Data; the research is based on Secondary data only.

 SECONDARY DATA

For this study Secondary data are collected by the different books, journals,
documents and reports.

Balance Sheet

Annual Reports

Website of the company

The Project report covers the analytical study of financial data. Financial of the firm
helping in assessing the financial position of the firm .It’s also helps in Process of budgeting
that is in estimating the income which in terms helps in planning future expenses of the firm
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such as investment, expansion plan and other day to day expenses. It helps the management
in decision making process at various levels, strategic, tactical and operational level decision
making.

Scope

 It helps the management in effectively discharging its functions/operations such as


planning, organizing, controlling, directing and forecasting.
 Ratio analysis is used as a benchmark for effective control of performance of business
activities.

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LIMITATION

1. The study is limited for the period of 2013-2018, so that whatever data collected for
that period on that period only.
2. Financial accounting information is affected by estimates and assumptions.
Accounting standards allow different accounting policies, which impairs
comparability and hence ratio analysis is less useful in such situations.

3. Ratio analysis explains relationships between past information while users are more
concerned about current and future information.

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DATA ANALYSIS AND
INTERPRETATION

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DATA ANALYSIS AND INTERPRETATION
CURRENT RATIO

Current Ratio=Current assets


Current liability

Particulars 2014 2015 2016 2017 2018


Current 3953.57 4153.30 5293.91 5219.80 3772.84
Assets
Current 1096.18 1033.67 1223.55 1404.39 1523.37
Liability
Current 3.61 4.02 4.33 3.72 2.48
Ratio

CURRENT RATIO
5

4.5 4.33
4.02
4 3.72
3.61
3.5

3
2.48 CURRENT
2.5 RATIO
2

1.5

0.5

0
2014 2015 2016 2017 2018

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INTREPRETATION:-High current ratio indicates that company will be able to pay the
debt maturity within a year. Low current ratio indicates that company will not be able to
meet its short debts.From the above graph we can see that the current ratio of the company is
having an increasing trend till 2016 but for next two years it has shown a decreasing trend,
which means that company was able to pay the debt maturity till 2016 only.

DEBT EQUITY RATIO

Debt Equity Ratio= Total liability


Total shareholder equity

PARTICULARS 2014 2015 2016 2017 2018


DEBT 3283.83 3731.91 4103.70 3850.00 2376.56
SHARE HOLDER’S FUND 7.62 7.68 7.68 15.70 15.70
DEBT EQUITY RATIO 430.95 4.9 2.88 2.49 3.69

DEBT EQUITY RATIO


6

5.02 4.9
5

4 3.69

2.88 DEBT EQUITY


3
2.49 RATIO

0
2014 2015 2016 2017 2018

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INTERPRETATION: - Higher the ratio less secured the creditors, lower the ratio
creditors enjoy higher degree of safety.

From the above graph we can see that debt equity ratio of the company is continuously
decreasing which means company is doing well till 2017but now it has started to increase
which is not a good sign for the company.

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TOTAL ASSET TO DEBT RATIO

Total asset to debt ratio = Total asset


Debt

Particulars 2014 2015 2016 2017 2018


Total 3718.84 3953.10 4885.40 4653.43 3058.55
Assets
Debt 3516.34 4080.75 4833.63 4474.10 2402.80
Total 1.06 0.82 1.01 1.04 1.27
Assets to
debt ratio

TOTAL ASSET TO DEBT RATIO


1.4
1.27
1.2
1.06 1.04
1.01
1 TOTAL
0.82
ASSET TO
0.8
DEBT
0.6 RATIO

0.4

0.2

0
2014 2015 2016 2017 2018

INTERPRETATION: - It indicates the percentage of the total asset created by the


company through short term and long term debt. Higher ratio less safe is the creditors and
vice versa.
From the above graph we can see that total asset to debt ratio is rising every year this
means that the creditors are less secured.

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PROPRIETARY RATIO

PROPRIETARY RATIO=stockholders equity* 100


Total assets

Particulars 2014 2015 2016 2017 2018


Share holders fund 7.68 7.68 7.68 15.70 15.70

Total Asset 3718.84 3953.10 4885.40 4653.43 3058.55


Proprietary ratio 0.21 0.19 0.16 0.34 0.51

PROPRIETARY RATIO
0.6

0.51
0.5

0.4
0.34

0.3
PROPRIETA
RY RATIO
0.21
0.19
0.2 0.16

0.1

0
2014 2015 2016 2017 2018

INTERPRETATION:- High Ratio means company is less dependent on outside funds and
company is quite solvent. Low ratio means company is more dependent on outside funds and
solvency may be in danger. Form the above chart we can see that in 2014 company
maintained a good ratio and it is increasing continuously.

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TOTAL ASSET TURNOVER RATIO

TOTAL ASSET TURNOVER RATIO= sales revenue


Total assets

Particulars 2014 2015 2016 2017 2018


Net sales 2703.96 2472.81 2472.81 2925.55 2038.90
Total 3718.84 3953.10 4885.40 4653.43 3058.55
assets
Total asset 0.73 0.62 0.53 0.623 0.67
turnover
ratio

TOTAL ASSET TURNOVER RARIO


0.8
0.73
0.7 0.67
0.62 0.623
0.6
TOTAL
0.53 ASSET
0.5 TURNOVER
RARIO
0.4

0.3

0.2

0.1

0
2014 2015 2016 2017 2018

INTERPRETATION: - it indicates how efficiently the assets are employed overall. It


indicates relationships between the amount invested in the assets and the results accrues in
terms of sale. Higher turnover ratio means company is using its assets more efficiently, lower
ratio means that the company isn’t using its assets efficiently and most likely have
management problems. In this company’s ratio is continuously rising means company is
using its assets well.
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NET PROFIT RATIO

NET PROFIT RATIO=Net profit after tax


Net sales

Particulars 2014 2015 2016 2017 2018

Net profit 25.00 11.89 18.69 41.82 59.08


Net sales 2703.96 2472.81 2614.94 2925.55 2038.90

Net profit ratio 0.92% 0.48% 0.71% 1.43% 2.90%

3.50%

3.00% 2.90%

2.50%

2.00%

1.43% Net Profit ratio


1.50%

1.00% 0.92%
0.71%
0.48%
0.50%

0.00%
2014 2015 2016 2017 2018

INTERPRETATION: - Higher the ratio indicates higher efficiency of the business and
better utilization of total resources.

From the above graph it seems that the company’s ratio is increasing from 2014to 2018.

37
FIXED ASSET TURNOVER RATIO

FIXED ASSET TURNOVER RATIO=net sales revenue


Average fixed assets

Particulars 2014 2015 2016 2017 2018


Net sales 2703.96 2472.81 2614.94 2925.55 2038.90
Fixed 3857.53 5242.42 5004.57 4606.82 4040.97
assets
Fixed 0.71 0.47 0.57 0.63 0.51
asset
turnover
ratio

FEXED ASSET TURNOVER RATIO


0.8
0.71
0.7
0.63
0.6 0.57 FEXED
0.51 ASSET
0.5 0.47 TURNOV
ER RATIO
0.4

0.3

0.2

0.1

0
2014 2015 2016 2017 2018

INTERPRETATION: - it indicates efficiency in the utilization of fixed asset like plant


and machinery by management.

38
The higher the ratio, the better, a high ratio indicates that the business has less money tied up
in fixed assets. A declining ratio may indicate that the business is over invested in plant,
equipment, or other fixed assets.

GROSS PROFIT RATIO

GROSS PROFIT RATIO= Revenue* 100


Cost of Goods sold

Particulars 2014 2015 2016 2017 2018


Gross 372.80 430.67 389.10 528.85 455.90
profit
Sales 2703.96 5242.42 2614.94 2925.55 2038.90
Gross 13.78 8.20 14.88 18.07 22.36
profit
ratio

39
GROSS PROFIT RATIO
25
22.37

20
18.07

14.88 GROSS PROFIT


15 13.78 RATIO

10 8.2

0
2014 2015 2016 2017 2018

INTERPRETATION: - Decrease in ratio indicates reduction in selling price or increase


in the cost of distribution or decline in the business activity. Increase in the ratio indicates
increase in the selling price or reduction in the cost of distribution.

From the above table we can see that gross profit ratio is continuously increasing from 2016
to 2018 but in 2015there is a slight decrease.

Earnings Per share = Net Profit / Total no of shares outstanding

Particular 2014 2015 2016 2017 2018


Net profit 25.00 11.89 18.69 41.82 59.08
Total no. of
share 15.70 15.70 7.68 7.68 7.62
outstanding
Ratio 1.59 0.76 2.43 5.44 7.75

40
Earning per share

8 7.75

7
Earning per
6 5.44
share
5

3 2.43

2 1.59

1 0.76

0
2014 2015 2016 2017 2018

INTERPRETATION:-Earnings per share (EPS) are the portion of a company's profit


allocated to each share of common stock. Earnings per share serve as an indicator of a
company's profitability. From last couple of year the profitability ratio of the company is
increasing. From last couple of year the EPS of the company’s tremendously increase.

41
WORKING CAPITAL TURNOVER RATIO

WORKING CAPITAL= sales revenue


Average working capital

Particulars 2014 2015 2016 2017 2018


Sales 2703.96 2472.81 2614.94 2925.55 2038.90
Working capital 2857.57 3119.63 4070.36 3815.80 2249.47
ratio 0.94 0.79 0.64 0.77 0.91

WORKING CAPITAL TURNOVER RATIO

1 0.94
0.91
0.9
0.79 0.77
0.8

0.7 0.64 WORKING


CAPITAL
0.6
TURNOVER
0.5 RATIO
0.4

0.3

0.2

0.1

0
2014 2015 2016 2017 2018

INTERPRETATION: - This ratio indicates company’s effectiveness in using its


working capital.

High working capital turnover ratio states that the company is effective in using the firm’s
short term assets and liabilities to support sales and vice versa.

CURRENT ASSETS TO PROPREITORY RATIO

42
CURRENT ASSETS TO PROPREITORY RATIO = CURRENT ASSETS*100
SHAREHOLDERS FUND

Particulars 2014 2015 2016 2017 2018


Current assets 3953.57 4153.30 5293.91 5219.80 3772.84
Share holder 7.68 7.68 7.68 15.70 15.70
ratio 514.78 540.79 689.31 332.47 240.31

800

689.31
700

600
540.79
514.78 current asset
500 to share
holder fund
400 ratio
332.47
300
240.31

200

100

0
2014 2015 2016 2017 2018

INTERPRETATION: - Current Assets to Proprietors’ Fund Ratio establish the relationship


between current assets and shareholder’s funds. As I study the current assets to proprietary
ratio is continuously decreasing.

43
CONCLUSION

44
CONCLUSION

 As I study the project, we come to a conclusion that the company has earned profits
which is continuously increasing.
 The net profit ratio of the company is continuously rising; debt equity ratio is static for
first two years then after that it is decreased.
 The working capital turnover ratio is lowest at the year 2016 but it is now started to
increase.
 The current ratio of the company is decreasing it means that company is highly
depends on external fund providers.

45
RECOMMENDATIOS
AND SUGGESTIONS

46
RECOMMENDATIONS AND SUGGESTIONS

 After analyzing and interpretation of the financial statement it would be suggested that
the company should focus on its future development and should keep in mind that
there is scope of development.
 The debt ratio is rising every year this means that the creditors are less secured and
company should try to maintain its ratio.
 The current ratio of the company is continuously decreasing so that’s why the
company is not able to pay the debt of the company.
 Earnings per share of the company given splendid response. So the company needs to
maintain it.
 The Gross profit ratio, Net profit ratio is very impressive of the company which needs
to maintain by the management of the company.
 Total Asset to Debt ratio of Patel engineering works is increasing every year which
means that the creditors are less secured and they need to cope up with this ratio
problem,

 Because proprietary ratio falling every year. The company needs to increase their
owned capital in the company.
 The current ratio of the company is falling from 2016 till the last year which is not
beneficial as well as good for the company.

47
BIBLOGRAPHY

48
BIBLIOGRAPHY
 Books
1) Ravi M. Kishore, Cost and Management Accounting, Taxmann’s.
2) Pandey I. M. - Financial Management- Vikas Publishing House Pvt. Ltd. - Ninth
Edition 2006
3) Srivastava R., Financial management(2014) , Oxford Publications
4) Khan and Jain - “Management, vikas publication” New Delhi.
5)
Management of banking service 2nd edition person
6)
Modern Banking Theory and practice - kindle edition
7)
Principle and system of Banking Kindle Edition – GS popliAnuradhajain Author
8)
Principle of Banking and Insurance – Thakur Publication

 Internet Sources:

www.wikipedia.org

www.ndtv.com

www.indiafoline.com

www.equitymaster.com

https://m.moneycontrol.com

www.patelengineeringworks.com

https://m.moneycontrol.com

www.capitalmarket.com

49
ANNEXURE

50
ANNEXURE

BALANCE SHEET OF PATEL ENGINEERING WORKS


(For The Period of 2014 to 2018)
Balance Sheet of Patel Engineering ------------------- in Rs. Cr. -------------------
Company
Mar '18 Mar '17 Mar '16 Mar '15 Mar '14

12
12 months 12 months 12 months 12 months
months

Sources Of Funds

Total Share Capital 15.70 15.70 7.68 7.68 7.68

Equity Share Capital 15.70 15.70 7.68 7.68 7.62

Preference Share Capital 0.00 0.00 0.00 0.00 0.06

Reserves 2,210.42 2,167.31 1,673.27 1,691.63 1,606.69

Net worth 2,226.12 2,183.01 1,680.95 1,699.31 1,614.37

Secured Loans 2,376.56 3,850.00 3,853.37 3,449.06 2,901.98

Unsecured Loans 0.00 0.00 250.33 282.85 381.85

Total Debt 2,376.56 3,850.00 4,103.70 3,731.91 3,283.83

Total Liabilities 4,602.68 6,033.01 5,784.65 5,431.22 4,898.20

Mar '18 Mar '17 Mar '16 Mar '15 Mar '14

12
12 months 12 months 12 months 12 months
months

Application Of Funds

Gross Block 678.52 725.88 555.11 557.10 555.75

Less: Accumulated. Depreciation 429.99 432.46 374.58 342.63 308.88

51
Net Block 248.53 293.42 180.53 214.47 246.87

Capital Work in Progress 1.72 5.29 3.06 4.23 20.70

Investments 494.90 491.87 596.48 605.70 589.64

Inventories 2,685.23 4,258.71 3,770.10 3,096.39 2,319.70

Sundry Debtors 198.56 189.88 206.62 435.13 371.93

Cash and Bank Balance 117.71 52.46 36.71 81.56 107.24

Total Current Assets 3,001.50 4,501.05 4,013.43 3,613.08 2,798.87

Loans and Advances 2,992.77 3,653.88 3,059.72 2,985.00 3,061.77

Total CA, Loans & Advances 5,994.27 8,154.93 7,073.15 6,598.08 5,860.64

Current Liabilities 2,129.04 2,905.56 2,062.70 1,986.59 1,814.89

Provisions 7.68 6.94 5.88 4.67 4.78

Total CL & Provisions 2,136.72 2,912.50 2,068.58 1,991.26 1,819.67

Net Current Assets 3,857.55 5,242.43 5,004.57 4,606.82 4,040.97

Total Assets 4,602.70 6,033.01 5,784.64 5,431.22 4,898.18

Contingent Liabilities 2,739.89 2,836.84 3,186.09 2,776.43 2,354.95

Book Value (Rs) 141.80 139.05 218.86 221.25 211.73

52
PROFIT AND LOSS ACCOUNT OF PATEL ENGINEERING WORKS
(For The Period of 2014 to 2018)

Profit & Loss account of Patel ------------------- in Rs. Cr. -------------------


Engineering Company

Mar '18 Mar '17 Mar '16 Mar '15 Mar '14

12 12 12 12 12
months months months months months

Sales Turnover 2,038.90 2,925.55 2,614.94 2,472.81 2,703.96

Net Sales 2,038.90 2,925.55 2,614.94 2,472.81 2,703.96

Other Income 177.05 262.38 210.52 195.42 146.31

Total Income 2,215.95 3,187.93 2,825.46 2,668.23 2,850.27

Expenditure

Raw Materials 207.20 244.95 251.23 201.57 374.87

Power & Fuel Cost 42.07 38.66 29.39 43.60 55.05

Employee Cost 138.70 128.89 113.20 95.70 96.13

Other Manufacturing
1,018.97 1,736.33 1,542.64 1,548.10 1,685.21
Expenses

Selling and Admin


0.14 0.09 0.00 0.00 0.00
Expenses

Miscellaneous Expenses 175.92 247.78 289.38 153.17 119.90

Total Expenses 1,583.00 2,396.70 2,225.84 2,042.14 2,331.16

53
Mar '18 Mar '17 Mar '16 Mar '15 Mar '14

12 12 12 12 12
months months months months months

Operating Profit 455.90 528.85 389.10 430.67 372.80

PBDIT 632.95 791.23 599.62 626.09 519.11

Interest 536.24 637.91 588.54 552.29 428.63

PBDT 96.71 153.32 11.08 73.80 90.48

Depreciation 44.47 46.01 44.73 51.92 54.23

Profit Before Tax 52.24 107.31 -33.65 21.88 36.25

PBT (Post Extra-


52.24 107.31 -33.65 21.88 36.25
ordinary Items)

Tax -6.82 65.49 -14.96 9.98 11.25

Reported Net Profit 59.08 41.82 -18.69 11.89 25.00

Total Value Addition 1,375.79 2,151.75 1,974.61 1,840.57 1,956.29

Per share data


(annualized)

Shares in issue
1,569.95 1,569.95 768.06 768.06 762.44
(lakhs)

Earnings Per Share


3.76 2.66 -2.43 1.55 3.28
(Rs)

Book Value (Rs) 141.80 139.05 218.86 221.25 211.73

54