Neha Print Final

DISSERTATION REPORT
ON
The study of financial soundness of TVS motor Co.
Submitted in partial fulfillment of the requirements for the award of the degree of
MASTER OF BUSINESS ADMINISTRATION
IN
FINANCIAL MANAGEMENT
Submitted By
NAME: Neha Jain. A
Under the esteemed guidance of
Prof. Siva Balasubrahmanyam D V
Department of MBA, AGBS, Chennai-86
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DECLARATION
I NEHA JAIN. A studying in II year MBA program at amity global business school, cathedral road, Chennai,
hereby declares that this report is an original work of mine and I have not verbatim copied/ duplicated
any material excepting some vital company information / statistics, which are provided by the company
itself.
Signature of the student
Date:
Place: CHENNAI
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ACKNOWLEDGEMENT
I express my profound gratitude and sincere thanks to Director Dr. E. Illamathian of AMITY GLOBAL
BUSINESS SCHOOL CHENNAI for providing me the opportunity to undergo MASTERS OF BUSINESS
ADMINISTRATION course during the academic year 2014-2016.
I would like to express my gratitude to the Deputy Director Dr.Vengadamani for her kind words which
has inspired me a lot in completing this work.
My sincere thanks to Prof. Siva Balasubrahmanyam D V
, for helping me and guiding me in bringing out this report in a presentable fashion.
I am very thankful to all staff members of the department for guiding me during my project period.
NEHA JAIN. A
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AMITY GLOBAL BUSINESS SCHOOL, CHENNAI
BONAFIDE CERTIFICATE
This is to certify that the project work titled A STUDY ON FINANCIAL SOUNDNESS OF TVS
MOTORS CO. is a bona-fide work of Neha jain A Reg no. A31001914051 who carried out the
same under my supervision. Certified further that to the best of my knowledge the work
reported herein does not form part of any other project work or dissertation on the basis
of which a degree or award was conferred on an earlier occasion of this or any other
candidate. This project work is submitted to AMITY GLOBAL BUSINESS SCHOOL,
CHENNAI as partial fulfillment of requirement for the award of degree of master of
business administration during the period march 2016 is an original work.
------------------------------
Prof. Siva Balasubrahmanyam D V
Faculty guide
-------------------------------- ---------------------------------------
Dr. MRS. VENGADAMANI Dr. MR. E. ILAMATHAIAN
Dean
Submitted for the viva voce examination held on----------------
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TABLE OF CONTENTS
SERIAL CONTENT PAGE

NUMBER
NUMBER
1 INTRODUCTION 5
2 INDUSTRY PROFILE 9
3 COMPANY PROFILE 14
4 OBJECTIVES OF THE STUDT 21
5 RESEARCH METHODOLOGY 24
6 THEORITICAL FRAMEWORK 26
7 DATA ANALYSIS AND INTERPRETATION 34
8 FINDING, SUGGESTIONS AND CONCLUSIONS 114
9 ANNEXURES 118
10 BIBLIOGRAPHY 131
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CHAPTER – I
1.1 INTRODUCTION OF THE STUDY
Introduction of Financial Statement
Financial statement is a collection of data organized according to logical and consistent

accounting procedures. Its purpose is to convey an understanding of some financial aspects of a
business firm. It may show a position at a movement in time, as in the case of 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 outcome of summarizing process of accounting. In the

words of John N .Myer “the financial statements provide summary of accounts of a business
enterprise, the balance sheet reflecting the assets, liabilities and capital as on a certain date and
the income statement showing the results of operations during a period. Financial statements are
prepared as an end result of accounting and are the major sources of financial information of an
enterprise . Smith and Asburne define financial statements as “the end product of financial
accounting in a set of final statements prepared by the accountant of a business enterprise that
purport to reveal the financial position of the enterprise, the result of its current activities , and an
analysis what has been done with earnings”
Financial statements are also called financial reports. In the words of Anthony “financial
statements, essentially are interim reports , presented annually and reflect a division of the life of
an enterprise into more or less arbitrary accounting period more frequently a year”
Financial statements is an organized collection of data according to logical and

consistent accounting procedures. Its purpose is to convey an understanding of some financial
aspects of a business firm. It may show a position at a moment of 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.
Thus, the term financial statement generally refers to the basis statement;
 The income statement

 The balance sheet
 A statement of retained earning
 A statement of charge in financial position in addition to the above two statement.
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Nature of Financial Statements
The financial statements basically refer to balance sheets and Income statements. Of
course these two basic statements are supported by a number of schedules, supplementary
statements, explanatory notes, etc. Therefore all these are financial statements. They show with
supporting figures, earn or loss incurred during an accounting period and also the assets,
liabilities and capital at the end of the last day of the accounting period. These statements reflect
a combination of recorded facts, accounting convention and personal judgments. It is therefore
obvious that the figure included in the financial statements is influenced by these factors. They
are as follows-
Recorded Facts: Financial statements contain the fact relating to the business transaction
already recorded in the book of accounts. The unrecorded facts, whatever important they might
have not included in financial statements. The examples are human resources, which are not
shown in these statements because they are not recorded in the books.
Accounting Convention: Accounting convention implies certain accounting principle which has
been satisfied by the long user. In other words they refer usages and customary practices in
social and economic life of human being which have been generally accepted in building up the
accounting principles. For examples, on account of convention of conservation provision is made
for expected losses but expected profits are ignored. It means that the real business position of
the firm is better than what is shown in the financial statements.
Accounting Assumption Or Concepts: GAAPs or Generally Accepted Accounting Principles

are in the form of guidelines and rules which are to be used as standard for recording business
transaction in the book of accounts and their fair presentation in the financial statements.
Because their statements have to prepare in conformity with GAAPs, these GAAPs include
principles, concepts and assumption. Consequently the figures recorded in the financial
statements are influenced by GAAP. For examples Inventory valuation states those year-end
inventories are to be valued at lower of cost or market price. That means the value of year-end
inventory which appears in the financial statements is influenced by these principles.
Personal Judgment: It is true that Generally Accepted Accounting Principles and concepts are
followed in preparing financial statements but their application in most of the cases depends on
personal judgment of the accountant. For examples, the choice of selecting methodof
depreciation lies on the accountant. Similarly the method of valuing inventory also depends on
the personal judgment of the accountant.
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Objectives of Financial Statements
 To provide reliable financial information about economic resources and obligations of
business firm.
 To provide other needed information about changes in such economic resources and
obligations.
 To provide reliable information about changes in net resources (resources less
obligations) arising out of business activities.
 To provide financial information that assists in estimating the earning potentials business.
 To disclose, to the extent possible, other information related to the financial statements
that is relevant to the needs of the users of these statements.
Financial Statement Analysis

Financial statement analysis is the process of reviewing and analyzing a company's
financial statements to make better economic decisions. These statements include the income
statement, balance sheet, statement of cash flows, and a statement of retained earnings.
Users of Financial Statement Analysis

There are a number of users of financial statement analysis. They are:
Creditors: Anyone who has lent funds to a company is interested in its ability to pay back the
debt, and so will focus on various cash flow measures.
Investors: Both current and prospective investors examine financial statements to learn about a
company's ability to continue issuing dividends, or to generate cash flow, or to continue growing
at its historical rate (depending upon their investment philisophies).
Management: The company controller prepares an ongoing analysis of the company's financial
results, particularly in relation to a number of operational metrics that are not seen by outside
entities (such as the cost per delivery, cost per distribution channel, profit by product, and so
forth).
Regulatory authorities: If a company is publicly held, its financial statements are examined by
the Securities and Exchange Commission (if the company files in the United States) to see if its
statements conform to the various accounting standards and the rules of the SEC.
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1.2 INDUSTRY PROFILE
HISTORY OFAUTOMOBILE INDUSTRY

Starting in the late 1700's, European engineers began tinkering with motor powered
vehicles. Steam, combustion, and electrical motors had all been attempted by the mid 1800's. By
the 1900's, it was uncertain which type of engine would power the automobile. At first, the
electric car was the most popular, but at the time a battery did not exist that would allow a car to
move with much speed or over a long distance. Even though some of the earlier speed records
were set by electric cars, they did not stay in production past the first decade of the 20th century.
The steam-driven automobile lasted into 1920's. However, the price on steam powered engines,
either to build or maintain was incomparable to the gas powered engines. Not only was the price
a problem, but the risk of a boiler explosion also kept the steam engine from becoming popular.
The combustion engine continually beat out the competition, and the early American automobile
pioneers like Ransom E. Olds and Henry Ford built reliable combustion engines, rejecting the
ideas of steam or electrical power from the start.
Automotive production on a commercial scale started in France in 1890. Commercial production

in the United States began at the beginning of the 1900's and was equal to that of Europe's. In
those days, the European industry consisted of small independent firms that would turn out a few
cars by means of precise engineering and handicraft methods. The American automobile plants
were assembly line operations, which meant using parts made by independent suppliers and
putting them together at the plant. In the early 1900's, the United States had about 2,000 firms
producing one or more cars. By 1920 the number of firms had decreased to about 100 and by
1929 to 44. In 1976 the Motor Vehicle Manufacturers Association had only 11 members. The
same situation occurred in Europe and Japan.
The first automobile produced for the masses in the US was the three-horsepower, curved-dash
Oldsmobile; 425 of them were sold in 1901 and 5,000 in 1904--this model is still prized by
collectors. The firm prospered, and it was noted by others, and, from 1904 to 1908, 241
automobile-manufacturing firms went into business in the United States. One of these was the
Ford Motor Company which was organized in June 1903, and sold its first car on the following
July 23. The company produced 1,700 cars during its first full year of business. Henry Ford
produced the Model T to be an economical car for the average American. By 1920 Ford sold
over a million cars.
At the beginning of the century the automobile entered the transportation market as a toy for the
rich. However, it became increasingly popular among the general population because it gave
travelers the freedom to travel when they wanted to and where they wanted. As a result, in North
America and Europe the automobile became cheaper and more accessible to the middle class.
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This was facilitated by Henry Ford who did two important things. First he priced his car to be as
affordable as possible and second, he paid his workers enough to be able to purchase the cars
they were manufacturing. This helped push wages and auto sales upward. The convenience of
the automobile freed people from the need to live near rail lines or stations; they could choose
locations almost anywhere in an urban area, as long as roads were available to connect them to
other places. Many states in the US established motor fuel taxes that were used only to build and
maintain highways helping the auto highway system become self-supporting.
Popularity of the automobile has consistently moved with the state of the economy, growing
during the boom period after World War I and dropping abruptly during the Great Depression,
when unemployment was high. World War II saw a large increase in mass transit because
employment was high and automobiles were scarce. The rapid growth of car owners after World
War II, particularly in the United States and Western Europe demonstrated the population's favor
towards automobiles. During the war, automobile motors, fuel, and tires were in short supply.
There was an unsatisfied demand when the war ended and plenty of production capacity as
factories turned off the war machine. Many people had saved money because there was little to
buy, beyond necessities, in the war years. Workers relied heavily on mass transportation during
the war and longed for the freedom and flexibility of the automobile.
A historian has said that Henry Ford freed common people from the limitations of their
geography. The automobile created mobility on a scale never known before, and the total effect
on living habits and social customs is endless. In the days of horse-drawn transportation, the
practical limit of wagon travel was 10 to 15 miles, so that meant any community or individual
farm more than 15 miles from a city, a railroad, or a navigable waterway was isolated from the
mainstream of economic and social life. Motor vehicles and paved roads have narrowed the gap
between rural and urban life. Farmers can ship easily and economically by truck and can drive to
town when it is convenient. In addition, such institutions as regional schools and hospitals are
now accessible by bus and car.
Yet, the effect on city life has been, if anything, more prominent than the effect on the farms.
The automobile has radically changed city life by accelerating the outward expansion of
population into the suburbs. The suburban trend is emphasized by the fact that highway
transportation encourages business and industry to move outward to sites where land is cheaper,
where access by car and truck is easier than in crowded cities, and where space is available for
their one or two story structures. Better roads were constructed, which further increased travel
throughout the nation. As with other automobile-related phenomena, the trend is most noticeable
in the United States but is rapidly appearing elsewhere in the world.
Before the automobile, people both lived in the city and worked in the city, or lived in the
country and worked on a farm. Because of the automobile, the growth of suburbs has allowed
people to live on the outskirts of the city and be able to work in the city by commuting. New jobs
due to the impact of the automobile such as fast food, city/highway construction, state
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patrol/police, convenience stores, gas stations, auto repair shops, auto shops, etc. allow more
employment for the world's growing population.
Recent Developments in the Automobile Industry

The automobile industry plays an important role in overall business cycle developments.
Although the industry accounts for only a small share of industrial output in most OECD
economies (around 5½ per cent in the median OECD economy), it is comparatively volatile and
can thus, at times, make a large contribution to aggregate fluctuations in economy-wide activity.
And with the location of final assembly and motor parts production having become increasingly
internationalized over time, disruptions to supply in one country, as in the aftermath of the
earthquake and tsunami in Japan this March, can potentially have adverse near-term effects in
others.
This note takes stock of recent developments in global car production and sales and explores the
extent to which they are contributing to the softening of global activity in the second quarter of
2011. The main findings are the following:
 A sharp downturn in motor vehicle and parts production accounts for a sizable proportion
(well above the direct share of output in total production) of the observed slowing in the
growth of economic activity since the early part of 2011. The direct impact of the decline
in vehicle and parts production in the second quarter is equivalent to a reduction in the
annualized rate of GDP growth of 2½ percentage points in Japan, around ½ percentage
point in China and between 0.1 to 0.2 percentage points in the United States, the United
Kingdom and France.
 There are clear signs of global supply-chain effects, with production disruptions in Japan
in the aftermath of the earthquake and tsunami having direct effects on production, sales
and prices in other countries.
 In the major economies, the level of new car sales in April and May is estimated to have
been 4¾ per cent below that in the previous two months. This points to some possible
underlying weakness in car demand, and thereby private consumption, in the second
quarter of this year, even allowing for the impact of shortages in availability and rising
car prices due to supply-side disruptions and the effects from the phasing-out of earlier
schemes to support car demand.
 At current low levels, car sales are well-below estimated longer-term trend levels in many
OECD economies, suggesting that scope remains for strong, pent-up demand for cars to
emerge as the recovery progresses.
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Automobile Industry in India
 With the increasing growth in demand on back of rising income, expanding middle class
and young population base, in addition to a large pool of skilled manpower and growing
technology, will propel India to be among the world's top five auto-producers by 2015.
 The automobile industry accounts for 22 per cent of the country's manufacturing gross
domestic product (GDP). The auto sector is one of the biggest job creators, both directly
and indirectly. It is estimated that every job created in an auto company leads to three to
five indirect ancillary jobs.
 India is expected to become a major automobile manufacturing hub and the third largest
market for automobiles by 2020, according to a report published by Deloitte.
 India is currently the seventh-largest automobiles producer in the world with an average
annual production of 17.5 million vehicles, and is on way to become the fourth largest
automotive market by volume, by 2015.
Top Automobile Companies in India

Starting from the era when there was too slim of a variety of cars available in Indian market,
Indian automobile industry has come up a long way to have a diverse array of cars these days. There are a
number of top automobile companies running their operations in India, which again have a range of
models in different segments of cars. However, while looking for top 10 automobile companies in India
one name that would always lead the list is Maruti Suzuki India. Maruti Suzuki has consistently been the
dominant leader in the Indian automobile industry. However, there are also other big names like Tata
Motors, Mahindra and Mahindra, Hyundai Motors, Hindustan Motors etc.
During its early days, the most of the Indian car auto manufacturers banked upon foreign
technologies. But the scenario has changed over the years and currently, the Indian auto manufacturers
are using their own technology. Due to the growing pace of Indian automobile market, a number of car
manufacturers including the global leaders have locked their horns in the Indian auto market.
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After the recent setback due to the global recession, the Indian automobile market has again
started to grow up. Though the auto sales except commercial vehicles started creeping up since the
beginning of this financial year, it's only the month of September 2009 when the market saw buoyant
sales. It fuelled optimism in the industry. The retail trade also started soaring up. The auto sales saw a
9.6% rise in the month of September with a sale of 1,092,262 units. The passenger vehicle sales also grew
by 20.32%. The two wheeler market was also augmented by 7.67% during the same period with a total
sale of 838,150 units. The same trade is applicable for the three-wheeler market, which saw a growth of
13.51% (with sale of 41,137 units) during the same period.
Automobile companies in India

 Tata Motors
 Maruti Suzuki
 Hyundai
 Ashok Leyland
 Mahindra & Mahindra
 Hero Moto Corp
 Eicher Motors
 Force
 General Motors
 Ford Motor
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1.3 COMPANY PROFILE
TVS was established in 1911 by Shri. T V Sundaram Iyengar. As one of India's

largest industrial entities, it epitomizes Trust, Value and Service. Today, there are over fifty
companies in the TVS Group, employing more than 50,000 people worldwide and with a
turnover in excess of USD 6 billion. With steady growth, expansion and diversification, TVS
commands a strong presence in manufacturing of two-wheelers, auto components, logistics and
computer peripherals. We also have vibrant businesses in the distribution of heavy commercial
vehicles passenger cars, finance and insurance.
TVS Motor Company is the third largest two-wheeler manufacturer in India and one
among the top ten in the world, with annual turnover of more than USD 1.4 billion in 2011-2012,
and is the flagship company of the, USD 7.29 billion, TVS Group.
TVS Motor Company Ltd (TVS Motor), member of the TVS group, is the largest
company of the group in terms of size and turnover.
Manufacturing Locations
The company has four manufacturing plants, three located in India (Hosur, Tamil
Nadu and Mysore, Karnataka and Nalagarh, Himachal Pradesh) and one in Indonesia
(Karawang).
TVS Motor Company – Mission

We are committed to being a highly profitable, socially responsible, and leading
manufacturer of high value for money, environmentally friendly, lifetime personal transportation
products under the TVS brand, for customers predominantly in Asian markets and to provide
fulfillment and prosperity for employees, dealers and suppliers.
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Vision Statement
Driven by the customer
TVS Motor will be responsive to customer requirements consonant with its core competence and
profitability. TVS Motor will provide total customer satisfaction by giving the customer the right
product, at the right price, at the right time.
The Industry Leader
TVS Motor will be one among the top two two-wheeler manufacturers in India and one among
the top five two-wheeler manufacturers in Asia.
Global overview
TVS Motor will have profitable operations overseas especially in Asian markets, capitalizing on
the expertise developed in the areas of manufacturing, technology and marketing. The thrust will
be to achieve a significant share for international business in the total turnover.
At the cutting edge
TVS Motor will hone and sustain its cutting edge of technology by constant benchmarking
against international leaders.
Committed to Total Quality
TVS Motor is committed to achieving a self-reviewing organization in perpetuity by adopting

TQM as a way of life. TVS Motor believes in the importance of the process. People and projects
will be evaluated both by their end results and the process adopted.
The Human Factor
TVS Motor believes that people make an organization and that its well-being is dependent on the
commitment and growth of its people. There will be a sustained effort through systematic training and
planning career growth to develop employee’s talents and enhance job satisfaction. TVS Motor will
create an enabling ambience where the maximum self-actualization of every employee is achieved. TVS
Motor will support and encourage the process of self-renewal in all its employees and nurture their sense
of self-worth.
Responsible Corporate Citizen
TVS Motor firmly believes in the integration of Safety, Health and Environmental aspects with
all business activities and ensure protection of employees and environment including
development of surrounding communities. TVS Motor strives for long-term relationships of
mutual trust and interdependence with its customers, employees, dealers and suppliers.
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Products
 Motorcycles
 Scooters
 three-wheeler vehicles and
 spare parts
Board of Directors
1. Mr. Venu Srinivasan - Chairman & Managing Director
2. Mr..Sudarshan Venu - Joint Managing Director
3. Mr. H. Lakshmanan - Director
4. Mr. T. Kannan - Director
5. Mr. C.R. Dua - Director
6. Mr. R. Ramakrishnan - Director
7. Mr. Prince Asirvatham - Director
8. Mr. Hemant Krishan Singh - Director
9. Dr. Lakshmi Venu - Director
Key Managerial and Senior Management Personnel

1) Mr. K N Radhakrishnan - President & Chief Executive Officer
2) Mr. S G Murali - Chief Financial Officer
3) Mr. Harne Vinay Chandrakant - President - NPI
4) Mr. K.S. Srinivasan - Company Secretary
Awards and Recognition

 TVS is India's most trusted brand in the 2 wheeler category
 TVS Motor Company Ltd is a winner of the CII ITC Sustainability Awards 2012,
Certificate of Commendation for Significant Achievement.
 TEAM TECH 2007 Award - TVS Motor Company bags TEAM TECH 2007 Award of
Excellence for Integrated use of Computer Aided Engineering Technologies
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Company‘s Product
Their product range includes the following:
1. Domestic range
 Apache series RTR

 Sport
 Star city
 Tvs king
 Scooty pep
 Scooty streak
 Wego
 Jupiter
 Max 4R
 Scooty zest 110
 Phoenix 125
2. International range
 Apache 180
 Apache 160
 Apache 150
 Max 100
 Rockz
 Metro
 Star LX
 Jive
 Neo x31
 Victor Glx 125
 Victor Glx 100
 XL HD-2 Stroke
 Star Hlx 100
 Star Hlx 125
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Company‘s Product
1. Domestic range
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2. International range
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1.4 NEED FOR THE STUDY
The Financial Statements are mirror which reflects the financial position and strengths or
weakness of the concern. This study is needed to know the productivity of the company
to efficiently manage its income and expenditure. The study helps to measure the profit
level and leverage of the company. It is required to know how the funds are effectively
utilized in the company and understand the past and present performance of the company.
The study has great significance and provides benefits to various parties who directly or
indirectly interact with the company. The investors who are interested in investing in the
company’s shares will also get benefited by going through the study and can easily take a
decision whether to invest or not to invest in the company’s shares.
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1.5 OBJECTIVES OF THE STUDY
PRIMARY OBJECTIVE
 To study the Financial Performance of TVS MOTORS LIMITED, for the financial years
2010 – 2011 to 2013 – 2014.
 To appraise financial soundness of the company.
SECONDARY OBJECTIVE
 To evaluate the operational efficiency of the company by using Income statement.

 To measure profitability of a company by using Income statement.
 To identify financial strength and weakness of the company by using Liquidity and
Solvency ratios.
 To analyze the performance of the business by using Turnover ratios.
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1.6 SCOPE OF STUDY
 It helps the management to know the current financial position of the company.
 The scope of the study involves the various factors that affect the financial efficiency of
the company. To increase the profit and sales growth of the company. This study finds
out the operational efficiency of the organization and allocation of resources to improve
the efficiency of the organization.
 It helps management to decide dividend declaration to the shareholders.
 The data of the past five years are taken into account for the study. The performance is
compared within those periods.
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1.7 LIMITATION OF THE STUDY
 The period of study is limited to 5years from the year 2009-10 to 2013-14.
 The analysis was made with the help of the secondary data collected from the company.
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CHAPTER –II
RESEARCH METHODOLOGY
Research
Research can be defined as the search for knowledge or any systematic investigation to
establish facts. The primary purpose for applied research (as oppose to basic research) is
discovering, interpreting, and the development of methods and systems for the advancement of
human knowledge on a wide variety of scientific matters of our world and the universe.
According to Clifford woody research comprises defining and redefining problems,

formulating hypothesis or suggested solutions; collecting, organizing and evaluating data;
making deductions and reaching conclusions; and at the last carefully testing the conclusions to
determine whether they fit the formulating hypothesis.
Research Methodology
Research is a diligent and systematic inquiry or investigation into a subject in order to

discover or revise facts, theories, applications, etc., Methodology is the system of methods
followed by a particular discipline. Thus Research methodology is the way how we conduct our
research.
Research Problem
The research problem in this study is to analyze the financial performance of the
organization.
Research Design
The Analytical Form of research method is adopted for study.
The major purpose of analytical research is description of state of affairs of the

institution as it exists at present. The nature and characteristics of the financial statements of
TVS MOTOR COMPANY LIMITED have been described in this study.
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Nature of the data
The data required for the study has been collected from secondary source. The relevant
information were taken from annual reports, journals and internet.
Methods of data collection

This study is based on the annual report of TVS MOTOR COMPANY LIMITED.
Hence the information related to profitability, short term and long term solvency and turnover
were very much required for attaining the objectives of the present study. In order to fulfill the
objectives of the study the data has been collected from both
 Primary Data
 Secondary Data
a) Primary Data
To generate primary data for the analysis, direct personal interview and discussion
was made with company assistant manager of finance, accountants and other officials.
The data collected from the interview are coordinated and analyzed in an integrated
fashion throughout the project.
b) Secondary Data
For gathering secondary data various other source were used, they are-
 Different accounting record of the company.

 Magazines and journals.
 Internets and other publication.
Tools applied
To have a meaningful analysis and interpretation of various data collected, the
following tools were made for this study.
1) Ratio analysis
2) Comparative statement
3) Common size statement
4) Trend statement
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CHAPTER – III
3.1 THEORETICAL FRAMEWORK

FINANCIAL PERFORMANCE
The word ‘Performance is derived from the word ‘parfourmen’, which means ‘to do’, ‘to carry
out’ or ‘to render’. It refers act of performing; execution, accomplishment, fulfillment, etc. In
border sense, performance refers to the accomplishment of a given task measured against preset
standards of accuracy, completeness, cost, and speed. In other words, it refers to the degree to
which an achievement is being or has been accomplished. In the words of Frich Kohlar “The
performance is a general term applied to a part or to all the conducts of activities of an
organization over a period of time often with reference to past or projected cost efficiency,
management responsibility or accountability or the like. Thus, not just the presentation, but the
quality of results achieved refers to the performance. Performance is used to indicate firm’s
success, conditions, and compliance.
Financial performance refers to the act of performing financial activity. In broader sense,
financial performance refers to the degree to which financial objectives being or has been
accomplished. It is the process of measuring the results of a firm's policies and operations in
monetary terms. It is used to measure firm's overall financial health over a given period of time
and can also be used to compare similar firms across the same industry or to compare industries
or sectors in aggregation.
FINANCIAL PERFORMANCE ANALYSIS
In short, the firm itself as well as various interested groups such as managers, shareholders,
creditors, tax authorities, and others seeks answers to the following important questions:
1. What is the financial position of the firm at a given point of time?
2. How is the Financial Performance of the firm over a given period of time?
These questions can be answered with the help of financial analysis of a firm. Financial analysis
involves the use of financial statements. A financial statement is an organized collection of data
according to logical and Conceptual Framework consistent accounting procedures. Its purpose is
to convey an understanding of some financial aspects of a business firm. It may show a position
at a moment of 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. Thus, the term ‘financial statements’
generally refers to two basic statements: the Balance Sheet and the Income Statement.
The Balance Sheet shows the financial position (condition) of the firm at a given point of time. It
provides a snapshot and may be regarded as a static picture.
26
“Balance sheet is a summary of a firm’s financial position on a given date that shows Total
assets = Total liabilities + Owner’s equity.”
The income statement (referred to in India as the profit and loss statement) reflects the
performance of the firm over a period of time.
“Income statement is a summary of a firm’s revenues and expenses over a specified period,
ending with net income or loss for the period.”
However, financial statements do not reveal all the information related to the financial operations
of a firm, but they furnish some extremely useful information, which highlights two important
factors profitability and financial soundness. Thus analysis of financial statements is an
important aid to financial performance analysis. Financial performance analysis includes analysis
and interpretation of financial statements in such a way that it undertakes full diagnosis of the
profitability and financial soundness of the business.
“The analysis of financial statements is a process of evaluating the relationship between

component parts of financial statements to obtain a better understanding of the firm’s position
and performance interested in the liquidity of the firm (appraisal of firm’s liquidity) interested in
the cash-flow ability of the firm (appraisal of firm’s capital structure, the major sources and uses
of funds, profitability over time, and projection of future profitability)
The financial performance analysis identifies the financial strengths and weaknesses of the firm
by properly establishing relationships between the items of the balance sheet and profit and loss
account. The first task is to select the information relevant to the decision under consideration
from the total information contained in the financial statements. The second is to arrange the
information in a way to highlight significant relationships. The final is interpretation and drawing
of inferences and conclusions. In short, “financial performance analysis is the process of
selection, relation, and evaluation.”
AREAS OF FINANCIAL PERFORMANCE ANALYSIS
Financial analysts often assess firm's production and productivity performance, profitability
performance, liquidity performance, working capital performance, fixed assets performance,
fund flow performance and social performance. However in the present study financial health of
GSRTC is measured from the following perspectives:
1. Working capital Analysis
2. Financial structure Analysis
3. Activity Analysis
4. Profitability Analysis
27
SIGNIFICANCE OF FINANCIAL PERFORMANCE ANALYSIS
Interest of various related groups is affected by the financial performance of a firm. Therefore,
these groups analyze the financial performance of the firm. The type of analysis varies according
to the specific interest of the party involved.
Investors: interested in present and expected future earnings as well as stability of these earnings
(appraisal of firm’s profitability and financial condition)
Management: interested in internal control, better financial condition and better performance
(appraisal of firm’s present financial condition, evaluation of opportunities in relation to this
current position, return on investment provided by various assets of the company, etc)
TYPES OF FINANCIAL PERFORMANCE ANALYSIS
Financial performance analysis can be classified into different categories on the basis of material
used and modes operandi as under:
A Material used: On the basis of material used financial performance can be analyzed in
following two ways:
1.External analysis: This analysis is undertaken by the outsiders of the business namely
investors, credit agencies, government agencies, and other creditors who have no access to the
internal records of the company. They mainly use published financial statements for the analysis
and as it serves limited purposes.
2. Internal analysis: This analysis is undertaken by the persons namely executives and
employees of the organization or by the officers appointed by government or court who have
access to the books of account and other information related to the business.
B Modus operandi: On the basis of modus operandi financial performance can be analyze in the
following two ways:
1. Horizontal Analysis
In this type of analysis financial statements for a number of years are reviewed and analyzed.
The current year’s figures are compared with the standard or base year and changes are shown
usually in the form of percentage. This analysis helps the management to have an insight into
levels and areas of strength and weaknesses. This analysis is also called Dynamic Analysis as it
based on data from various years.
2. Vertical Analysis
In this type of Analysis study is made of quantitative relationship of the various items of
financial statements on a particular date. This analysis is useful in comparing the performance of
28
several companies in the same group, or divisions or departments in the same company. This
analysis is not much helpful in proper analysis of firm’s financial position because it depends on
the data for one period. This analysis is also called Static Analysis as it based on data from one
date or for one accounting period.
TECHNIQUES/TOOLS OF FINANCIAL PERFORMANCE ANALYSIS
An analysis of financial performance can be possible through the use of one or more tools /
techniques of financial analysis:
ACCOUNTING TECHNIQUES
It is also known as financial techniques. Various accounting techniques such as Comparative

Financial Analysis, Common-size Financial Analysis, Trend Analysis, Fund Flow Analysis,
Cash Flow Analysis, CVP Analysis, Ratio Analysis, Value Added Analysis etc. may be used for
the purpose of financial analysis. Some of the important techniques which are suitable for the
financial analysis of GSRTC are discussed hereunder:
1.Ratio Analysis
In order to evaluate financial condition and performance of a firm, the financial analyst needs
certain tools to be applied on various financial aspects. One of the widely used and powerful
tools is ratio or index. Ratios express the numerical relationship between two or more things.
This relationship can be expressed as percentages (25% of revenue), fraction (one-forth of
revenue), or proportion of numbers (1:4). Accounting ratios are used to describe significant
relationships, which exist between figures shown on a balance sheet, in a profit and loss account,
in a budgetary control system or in any other part of the accounting organization. Ratio analysis
plays an important role in determining the financial strengths and weaknesses of a company
relative to that of other companies in the same industry. The analysis also reveals whether the
company's financial position has been improving or deteriorating over time. Ratios can be
classified into four broad groups on the basis of items used: (1) Liquidity Ratio, (ii) Capital
Structure/Leverage Ratios, (iii) Profitability Ratios, and (iv) Activity Ratios.2. Common-Size
Financial Analysis
Common-size statement is also known as component percentage statement or vertical statement.

In this technique net revenue, total assets or total liabilities is taken as 100 per cent and the
percentage of individual items are calculated like wise. It highlights the relative change in each
group of expenses, assets and liabilities.
3. Trend Analysis
Trend analysis indicates changes in an item or a group of items over a period of time and helps to
drown the conclusion regarding the changes in data. In this technique, a base year is chosen and
29
the amount of item for that year is taken as one hundred for that year. On the basis of that the
index numbers for other years are calculated. It shows the direction in which concern is going.
30
3.2 REVIEW OF LITERATURE
Literature Review was done by referring previous studies, articles and books to know the areas
of study and analyze the gap or study not done so far. There are various studies were conducted
relating to analysis of financial statement of the company from which most relevant literature
were reviewed.
 Janet Y . Murray, Masaaki Kotabe & Albert R$. Wildst (1995) study investigated the
moderating effects of sourcing – related factors on the relationship between sourcing
strategy and a product’s strategic and financial performance. The results lent some
support to the contingency model of global sourcing strategy in that product innovation,
process innovation and asset specificity were significant moderator variables for
financial, but not strategic, performance. However, the results provided no support for
bargaining power of suppliers and transaction frequency as moderator variables. In other
word, in achieving high financial performance for a product depended on the levels of
product innovation, process innovation and asset specificity.”
 Kennedy and Muller (1999) has pointed that the analysis and inferences /interpretation
of financial statements are an attempt to determine the significance and meaning of
financial statements data so that the forecast may be made of the prospects for future
earnings, ability to pay interest and pay interest and debt maturates(both current and long
term) and profitability and sound dividend policy.
 Dr.Devang P. Mehta (2003) conducted a study to investigate the perceived financial
performance of commercial printing firms for conducting business-to-customer (B2C)
activities using Web technology. Financial performance was measured using four
financial indicators: sales, profit, costs, and return-on-investment (ROI). The diffusion of
innovations theory states that an innovation theory states that an innovation brings
changes to a company. Web technology is an innovation that affects company’s
performance.
 Jonas Elmerraji(2005) in his research has pointed that ratios can be invaluable tool for
making an investment decision. Even so, many new investors would rather leave their
decisions to fate than try to deal with the intimidation of financial ratios. The truth is that
ratios aren’t that intimidating, even if you don’t have a degree in business or finance,
using ratios to make informed decisions about an investment makes a lot of sense, once
you know how use them.
 John J.Wild, K.R.Subramanyam & Robert F.Halsey (2006) in his research on
financial performance has pointed that the financial statement analysis is the application
of analytical tools and techniques to general-purpose financial statement and related data
to derive estimates and inferences useful in business analysis. Financial statement
analysis reduces reliance on hunches, guesses, and intuition for business decisions. It
decreases the uncertainty of business analysis.
31
 I.M.Pandey(2007) in his research on financial performance has pointed that the financial
statements contain information about the financial consequences and sources and uses of
financial resources, one should be able to say whether the financial condition of a firm is
good or bad; whether it is improving or deteriorating. One can relate the financial
variables given in financial statements in a meaningful way which will suggest the
actions which one may have to initiate to improve the firm’s financial condition.
 Susan Ward(2008) has pointed that emphasis that financial analysis using ratios between
key values help investors cope with the massive amount of numbers in company financial
statements. For Example, they can compue the percentage of net profit a company is
generating on the funds it has deployed. All other things remaining the same, a company
that earns a higher percentage of profit of profit compared to other companies is a better
investment option.
 Rachchh Minaxi A (2011) in his research on financial performance has pointed &
suggested that the financial statement analysis involves analyzing the financial statements
to extract information that can facilitate decision making. It is the process of evaluating
the relationship between component parts of the financial statement to obtain a better
understanding of an entity’s position and performance.
 Priyaaks (Mar 2012) in his research on financial performance has pointed that financial
statement analysis is the process of examining relationship among financial statement
elements and making comparisons with relevant information. It is a tool in decision
making processes related to stocks, bonds, and other financial instruments.
 T.S.Reddy and Y. Hari Prasad Reddy (2009) have stated that ”the statement disclosing
status of investments is known as balance sheet and the statement showing the result is
known as profit and loss account”
 Peeler J. Patsula(2006), states that a sound business analysis tells others a lot about good
sense and understanding of the difficulties that a company will face. We have to make
sure that people know exactly how we arrived to the final financial positions. We have to
show calculation but we have to avoid anything that is too mathematical. A business
performance analysis indicates the further growth and the expansion. It gives a
physiological advantage to the employees and a planning advantage.
 White et al (2003) present ratio and financial analyses, used by users of financial
statements. Ratio can be classified in 5 groups (some examples of ratios given)
Liquidity ratios: Analyses ability to meet obligations.
Current ratio = Current Assets / Current Liabilities.
Quick Ratio = Cash + Marketable Securities + Accounts Receivable /Current
Liabilities
Cash Ratio = Cash + Marketable Securities / Current Liabilities
Solvency ratios:
Debt to Assets = Total Debt /Total Assets
32
Debt to Equity = Total Debt / Total Equity
Debt to Equity (market adjusted) = Debt (book value) / Equity (market value)
Times Interest Earn (Coverage) = EBIT / Interest Expense
Profitability ratios Analysis of profitability
Return on Assets = EBIT /Average Total Assets
Return on Equity =Pre-tax Income / Average Equity
Other valuation ratios used for securities valuation
Earning per share = Earning Available for Common Shareholders / Number of
Shares
Price-to-Earnings Ratio = Market Value of Equity / Net Income
Dividend Payout Ratio = Dividends / Net income
Price-to-Book ratio = Market Value of Equity /Book Value of Equity
According White et al(2003), the latter – ratios for securities valuation-are widely
used by investors, as they link market and book values.
 Greninger et al(1996), identified and refined financial ratios using a Delphi study in the
areas of liquidity, saving, asset allocation, inflation protection, tax burden, housing
expenses and, insolvency. Based on the Delphi findings, they proposed a profile of
financial well-being for the typical family and individual.
 Salmi, T . and T. Martikainen (1994), in his “ A review of the theoretical and

empirical basis of financial ratio analysis” has suggested that A systematic framework of
financial statement analysis along with observed separate research trends might be useful
for furthering the development of research. If the research results in financial ratio
analysis are to be useful for the decision makers, the results must be theoretically
consistent and empirically generalizable.
 M Y Khan & P K Jain (2011), explained that he financial statement provide a

summarized view of the financial position and operation of a firm. Therefore, much can
be learnt about a firm from a careful examination of its financial statements as invaluable
documents / performance reports. The analysis of financial statements is, thus an
important aid to financial analysis
33
CHAPTER - IV
DATA ANALYSIS AND INTERPRETATION
INTRODUCTION OF ANALYSIS
Ratio Analysis
Ratio analysis is a powerful tool of financial analysis. It is used as benchmark for

calculating the financial position and performance of a firm. The absolute accounting figure
reported in the financial statements does not provide the meaningful performance of financial
position in the firm, ratio helps to summarize the large quantity of data to make qualitative
judgment about the firm’s performance.
Types of Ratios
Ratios are calculated from the accounting data are grouped into various classes according
to financial activity. In view of the requirement of various users of ratios it is classified into four
important categories;
a) Liquidity Ratio
b) Leverage Ratio
c) Activity Ratio
d) Profitability Ratio
a) Liquidity Ratio
These ratios portray the capacity of the business unit to meet its short term obligation
from its short-term resources (e.g.) current ratio, quick ratio.
b) Leverage Ratio
Many financial analyses are interested in the relative use of debt and equity in the
firm. The term ‘solvency’ refers to the ability of a concern to meet its long-term
obligation. Accordingly, long-term solvency ratios indicate a firm’s ability to meet the
fixed interest and costs and repayment schedules associated with its long-term borrowing.
(E.g.) Debt equity ratio, Proprietary ratio etc.
34
c) Activity Ratio
Activity ratios measure company sales per another asset account—the most common
asset accounts used are accounts receivable, inventory, and total assets. Activity ratios measure
the efficiency of the company in using its resources. Since most companies invest heavily in
accounts receivable or inventory, these accounts are used in the denominator of the most popular
activity ratios.
d) Profitability ratio
The profitability ratios of a business concern can be measured by the profitability

ratios. These highlight the end result of business activities by which alone the overall efficiency
of a business.
2. Comparative Financial Statements
Comparative Financial Statement Analysis is a form of horizontal analysis where

Financial Statements of two or more years or of two or more different companies or of a
company and its industry are compared, analyzed and interpreted. Therefore, this technique of
analysis is also called Inter-period Analysis (when Financial Statements of two or more years are
taken into consideration) or Inter-firm Analysis (when Financial Statements of two or more
companies are taken into consideration).
The following are the most commonly used forms of such analysis
a) Comparative Balance Sheet

b) Comparative Income Statement
a)Comparative Balance Sheet
A comparative balance sheet presents side-by-side information about an entity's

assets, liabilities, and shareholders' equity as of multiple points in time. For example, a
comparative balance sheet could present the balance sheet as of the end of each year for the past
three years. Another variation is to present the balance sheet as of the end of each month for the
past 12 months on a rolling basis. In both cases, the intent is to provide the reader with a series of
snapshots of a company's financial condition over time, which is useful for developing trend line
analyses (though this works better when the reader has the entire set of financial statements to
work with and not just the balance sheet).
35
b)Comparative Income Statement
Comparative income statement is the part of financial statement analysis. This

statement is made for analysis of company's revenue position. For making this statement, we
take two years income statement. We compare it’s all figures. By comparing it’s all figures, we
find increase or decrease in its all items. After this, we calculate % of increase or decrease by
taking previous year as base year. It means, we divide increase or decrease figure by previous
year figure. Following is the example of comparative Income statement.
3) Common-Size Statement
 Common-size financial statements present the financial statement amounts as a

percentage of a base number. For example, the common-size income statement will
report the revenue and expense amounts as percentages of net sales. The common-size
balance sheet will report each asset, liability, and owner equity amount as a percentage of
total assets.
 Common-size financial statements allow you to compare the financial statements of large
companies with the financial statements of smaller companies, because you are
comparing percentages instead of dollars. For example, a small retailer can compare her
cost of goods sold (perhaps 78%) to a much larger retailer's cost of goods sold (perhaps
80%). Similarly, one company's inventory might be 33% (of total assets) while a
competitor's might be 28%.
 Common-size financial statements are related to a technique known as vertical analysis.
The following are the most commonly used forms of such analysis
 Common Size Income Statement
An income statement in which each account is expressed as a percentage of the

value of sales. This type of financial statement can be used to allow for easy analysis between
companies or between time periods of a company
 Common Size Balance Sheet
A balance sheet that displays both the numeric value of all entries and the percentage
each entry is relative to the total value of related entries. On a common size balance sheet, an
asset is compared to total assets, a liability to total liabilities and stockholder equity to total
stockholder equity.
4)Trend Analysis
Trend analysis is the process of comparing business data over time to identify any
consistent results or trends. You can then develop a strategy to respond to these trends in line
with your business goals.
36
4.1 RATIO ANALYSIS
Liquidity Ratio
This ratio portrays the capacity of the business unit to meet its short term obligation from
its short- term resources .
4.1.1 Current Ratio
Current ratio may be defined as the relationship between current assets and current
liabilities. It is the most common ratio for measuring liquidity. It is calculated by dividing current
assets and current liability. Current assets are those, the amount of which can be realized with in
a period of one year. Current liabilities are those amounts which are payable with in a period of
one year.
Current Assets
Current Ratio = -----------------------------
Current liabilities
Table 4.1.1
Current Ratio
Year Current Assets Current Liabilities Current Ratio

(Cr) (Cr)
2010 1017.64 894.69 1.13
2011 1128.5 1118.42 1.00
2012 1386.61 1356.08 1.02
2013 1365.5 1482.02 0.92
2014 1556.09 1710.04 0.91
Source: Annual Reports of Company
37
Chart 4.1.1
Current Ratio
Current Ratio
1.13
1.2 1 1.02
0.92 0.91
1
0.8
0.6
0.4
0.2
0
2010 2011 2012 2013 2014
Interpretation
An Ideal current ratio is 2:1 i.e., where the current asset is greater than current liabilities it
is considered as a satisfied one.
In the present analysis the current ratio is not satisfied from the above table. It was assessed
that the current ratio for the year 2013, 2014 is less than the current liabilities.
38
4.1.2 LIQUID RATIO
The term ‘liquidity’ refers to the ability of a firm to pay its short-term obligation
as and when they become due. The term quick assets or liquid assets refers current assets which
can be converted into cash immediately it comprises all current assets except stock and prepaid
expenses it is determined by dividing quick assets by current liabilities.
Liquid Assets
Liquid Ratio = --------------------------
Current liabilities
Table 4.1.2
Liquid Ratio
Liquid Current
Year Assets Liabilities Liquid Ratio
(Cr) (Cr)
2010 631.08 894.69 0.70
2011 907.7 1118.42 0.81
2012 1068.18 1356.08 0.78
2013 1017.79 1482.02 0.68
2014 1117.44 1710.04 0.65
39
Chart 4.1.2
Liquid Ratio
Liquidity Ratio
1 0.81 0.78
0.8 0.7 0.68 0.65
0.6
0.4
0.2
0
2010 2011 2012 2013 2014
Interpretation
From the above table it was analyzed that liquid ratio has increased from 0.70 in 2010 to
0.81 in 2011 and decreased by 0.65 in 2014. It was due to the improper maintenance of liquid
assets. The liquid ratio was below the rule of thumb of 1:1 i.e., quick assets were less than the
current liabilities.
40
4.1.3 CASH POSITION RATIO
This ratio is also called as ‘Absolute Liquidity Ratio’. This ratio is calculated when
liquidity is highly restricted in terms of cash and cash equivalents. It measures liquidity in terms
of cash and near cash items and short-term current liabilities. This ratio obtained by dividing
cash and bank and marketable securities by current liabilities.
Cash and Bank Balance + Marketable Securities
Cash Position Ratio = ---------------------------------------------------------------------
Current liabilities
Table 4.1.3
Cash Position Ratio
Current
Year Cash and Bank Balance Liabilities Cash Position Ratio
(Cr) (Cr)
2010 63.68 894.69 0.07
2011 19.09 1118.42 0.01
2012 137.48 1356.08 0.1
2013 79.6 1482.02 0.05
2014 98.47 1710.04 0.05
41
Chart 4.1.3
Cash Position Ratio
Cash Position Ratio

0.1
0.1
0.08 0.07
0.06 0.05 0.05
0.04
0.02 0.01
0
2010 2011 2012 2013 2014
Interpretation
The above table shows the cash position ratio for the study period between 2010 – 2014.
There is a fluctuation in the cash position ratio. In 2011 the cash position is 0.01 which is lesser
when compared to other years. In 2012 it reaches to 0.1 and in 2013 and 2014 it was 0.05
42
LEVERAGE RATIOS
Many financial analyses are interested in the relative use of debt and equity in the firm.
The term ‘Solvency’ refers to the ability of a concern to meet its long-term obligation.
Accordingly, long term solvency ratio indicates a firm’s ability to meet the fixed interest and
costs and repayment schedules associated with its long-term borrowings.
4.1.4 DEBT RATIO
Debt ratio is used to analyze the long-term solvency of a firm. It is a ratio which relates
the total tangible assets with the total borrowed funds. In a sense, it is the ‘other side of the coin’
for proprietary ratio. Total debt includes both short-term and long-term borrowings. It shows the
proportion of assets needed repay the debts. A higher ratio indicates the greater risk and lower
safety to the owners.
Total Debt
Debt Ratio = -----------------------------------
Total Tangible Assets
Table 4.1.4
Debt Ratio

Year Total Debt Debt Ratio
(Cr) (Cr)
2010 1183.42 63.68 18.58
2011 1056.73 19.09 55.35
2012 1145.28 137.48 8.33
2013 917.55 79.6 11.52
2014 625.89 98.47 6.35
43
Chart 4.1.4
Debt Ratio
Debt Ratio
60 55.35
50
40
30
18.58
20 11.52
8.33 6.35
10
0
2010 2011 2012 2013 2014
Interpretation
The above table shows the debt ratio for the study period between 2010– 2014. It was
18.58 in 2010 and then reached its highest in 2011 it was 55.35. And again decreased in 2012 it
was 8.33. In 2013 it was 11.52. In 2014 the debt level of the company decreased to 6.35 which is
a positive indication of the company. A lower ratio indicates the low risk and greater safety to
the owners.
44
4.1.5 FIXED ASSETS RATIO
The ratio establishes the relationship between fixed assets and long-term funds. The
objectives of calculating this ratio is to ascertain the proportion of long-term funds invested in
fixed assets.
Fixed Assets
Fixed Assets Ratio = -----------------------
Long-term Funds
Table 4.1.5
Fixed Assets Ratio
Long-term Funds
Year Fixed Assets Fixed Assets Ratio
(Cr) (Cr)
2010 1168.46 1638.88 0.71
2011 1293.76 1506.24 0.86
2012 1472.22 1505.6 0.98
2013 1593.02 1545.16 1.03
2014 1517.18 1522.2 0.99
45
Chart 4.1.5
Fixed Assets Ratio
Fixed Assets Ratio
1.2 1.03
0.98 0.99
1 0.86
0.8 0.71
0.6
0.4
0.2
0
1 2 3 4 5
Interpretation
An ideal fixed assets ratio is 0.67. This ratio should not generally be more than 1, which
implies that the fixed assets were purchased with short-term funds. If the ratio is less than 1
means part of the working capital has been financed by long-term funds.
The above table shows the fixed asset ratio for the study period between 2010– 2014. In
2010 it was 0.71 and increased in 2011 and the ratio is 0.86.it was increased by 1.03 in 2013 and
slightly decreased in 2014 and the ratio is 0.99.
46
4.1.6 DEBT EQUITY RATIO:
It expresses the relationship between the external equities and internal equities or the
relationship between borrowed funds and ‘owners’ capital. It is a popular measure of the long
term financial solvency of a firm. This relationship is shown by the debt equity ratio. This ratio
indicates the relative proportion of debt and equity in financing the assets of a firm. This ratio is
computed by dividing the total debt of a firm by its equity (i.e.) net worth.
Total Long-Term Debt
Debt Equity Ratio = ----------------------------------
Shareholders Fund
Table 4.1.6
Debt Equity Ratio
Shareholders Fund
Year Total long term Debt Debt Equity Ratio
(Cr) (Cr)
2010 1183.42 633.04 1.87
2011 1056.73 682.69 1.55
2012 1145.28 725.28 1.58
2013 917.55 898.28 1.02
2014 625.89 1160.83 0.54
47
Chart4.1.6
Debt Equity Ratio
Debt Equity Ratio
1.87
2
1.55 1.58
1.5
1.02
1
0.54
0.5
0
2010 2011 2012 2013 2014
Interpretation
An ideal Debt Equity ratio is 1.2. The ratio is high in 2010 and 2012. It shows that a large
share of financing is done by the creditors of the firm and it is more risky to the creditors. In
2013 it decreased by 1.02 and in 2014 the ratio is decreased by 0.54.
48
4.1.7 PROPRIETARY RATIO
This ratio compares the shareholder’s funds or owner’s funds and total tangible assets.
In other words this ratio expresses the relationship between the proprietors’ fund and the total
tangible assets. This ratio shows the long-term solvency of the business; it is calculated by
dividing the shareholders funds by the total tangible funds.
Shareholders fund
Proprietary ratio = ---------------------------------
Table 4.1.7
Proprietary ratio
Shareholders fund Total Tangible Assets

Year Proprietary ratio
(Cr) (Cr)
2010 633.04 906.78 0.69
2011 682.69 1137.22 0.60
2012 725.28 1305.93 0.55
2013 898.28 1121.47 0.80
2014 1160.83 1322.83 0.88
49
Chart 4.1.7
Proprietary ratio
Proprietary ratio
1 0.88
0.8
0.8 0.69
0.6
0.55
0.6
0.4
0.2
0
2010 2011 2012 2013 2014
Interpretation
This ratio is to be more than 0.5. The high ratio indicates safety to the creditors and the low
ratio shows greater risk to the creditors. The ratio below 0.5 is alarming to the creditors.
The above table shows the proprietary ratio is more than 0.50 in all years. So this indicates
the lesser risk to creditors.
50
4.1.8 CAPITAL GEARING RATIO
This ratio is used to analyze the capital structure of the company. This ratio establishes
the relationship between fixed interest and dividend bearing funds and equity shareholders fund.
Capital gearing ratio shows the proportion of various items of the long-term term finance
employed in the business. Its main emphasis is to indicate the proportion between owners fund
and the non-owners funds.
Long-term Loans + Debentures +Preference Share Capital
Capital Gearing Ratio = -------------------------------------------------------------------------------
Equity Shareholders Fund
Table 4.1.8
Capital Gearing Ratio
Long-term Loans Equity Shareholders Fund

Year Capital Gearing Ratio
(Cr) (Cr)
2010 1005.84 23.75 42.35
2011 823.55 47.51 17.33
2012 780.32 47.51 16.42
2013 646.88 47.51 13.62
2014 361.37 47.51 7.61
51
Chart 4.1.8
50 42.35
40
30
17.33 16.42
20 13.62
7.61
10
0
2010 2011 2012 2013 2014
Interpretation
The above table shows the capital gearing ratio. In 2010 it was 42.35 and in 2011 it
decreased to 17.33 and from 2012 onwards slightly decreased to 16.42 and again decreased in
2013 it was 13.62. Finally, in 2014 it reaches 7.61.
52
ACTIVITY RATIOS
These ratios are also called as performance ratios. Activity ratio highlights the operational
efficiency of the concern. The term operational efficiency refers to be effective, profitable and
rational use of the resources available to the concern.
4.1.9 STOCK TURNOVER RATIO
The inventory turnover reflects the efficiency of the inventory management. It indicates
the efficiency of the firm in producing and selling its product. A high inventory turnover is a
indication of good inventory management. It is calculated by dividing the cost of goods sold by
the average inventory. The higher inventory turnover larger the amount of profit.
Cost of goods Stock
Stock Turnover Ratio = ------------------------------
Average Stock
Opening Stock + Closing Stock
Average Stock = ---------------------------------------
Table 4.1.9
Stock Turnover Ratio
Cost of goods Stock Average Stock

Year Stock Turnover Ratio
(Cr) (Cr)
2010 4522.33 353.76 12.78
2011 6254.82 472.08 13.25
2012 7192.88 641.95 11.21
2013 7116.51 658.59 10.81
2014 8071.92 650.92 12.40
53
Chart 4.1.9
12.78 13.25
14 12.4
11.21 10.81
12
10
8
6
4
2
0
2010 2011 2012 2013 2014
Interpretation
In above table the stock turnover ratio is very high in 2011 i.e. 13.25 times and in 2010
and 2014 it was 12.78 and 12.4 times. But it is low in 2012 and 2013 i.e. 11.21 and 10.81 times
respectively. Usually high inventory indicates the efficient management of the inventory because
most frequently the stocks are sold.
54
4.10 STOCK TURNOVER PERIOD
Inventory turnover ratio or stock turnover can be related to ‘time’. The ratio can be
expressed in the terms of days or months.
Months or Days in a year
Stock Turnover Period = ------------------------------------
Stock Turnover ratio
Table 4.1.10
Stock Turnover Period
Months in a Year Stock Turnover ratio Stock Turnover in

Year Months
(Cr) (Cr)
2010 12 12.78 0.94
2011 12 13.25 0.91
2012 12 11.20 1.07
2013 12 10.81 1.11
2014 12 12.40 0.97
55
Chart 4.1.10
Stock Turnover Period
Stock Turnover in Months
1.2 1.07 1.11

0.94 0.97
1 0.91
0.8
0.6
0.4
0.2
0
2010 2011 2012 2013 2014
Interpretation
In 2010, 2011, 2014 due to the increase in sale of stock, the stock holding period is less i.e.,
the stock has been disposed or sold on the average 0.94, 0.91, 0.97 months and in 2012 and 2013
the months has been increased by 1.07 and 1.11 months.
The increase in the stock turnover period as much as possible or in the effect decrease the
days or months for which items remains stock.
56
4.1.11 DEBTORS TURNOVER RATIO
Debtor’s turnover ratio explains the number of times the debt is converted into cash within
a short period of time. This ratio establishes the relation between the credit sales and the debtors.
Total Sales
Debtors turnover Ratio = ---------------------------
Closing Debtors
Table 4.1.11
Debtors turnover Ratio
Sales Debtors
Year Debtors turnover Ratio
(Cr) (Cr)
2010 4543.64 225.76 20.13
2011 6433.27 286.08 22.49
2012 7419.84 249.32 29.76
2013 7406.22 302.4 24.49
2014 8379.01 352.92 23.74
57
Chart 4.1.11

29.76
30
24.49 23.74
25 22.49
20.13
20
15
10
0
2010 2011 2012 2013 2014
Interpretation
The above table shows the debtors turnover ratio. In 2010 it was 20.13 times and
increasing up to 29.76 times in 2012. In 2014 it falls to 23.74 times. The higher turnover ratio is
better liquidity of debtors. If the lower ratio delays then the collection period is considered to be
long.
58
4.1.12 AVERAGE COLLECTION PERIOD
The average number of days for which the debtor remains outstanding is called an
average collection period (ACP). An average collection period measures the quality of the
debtors. Since it indicates the speed of their collection.
Months or Days in a Year
Average Collection Period = ------------------------------------
Debtor Turnover Ratio
Table 4.1.12
Average Collection Period
Month in the Year Debtors Turnover Ratio Average Collection

Year Period
(Cr) (Cr)
2010 12 20.13 0.60
2011 12 22.49 0.53
2012 12 29.76 0.40
2013 12 24.49 0.49
2014 12 23.74 0.51
59
Chart 4.1.12

0.6
0.6 0.53 0.51
0.49
0.5 0.4
0.4
0.3
0.2
0.1
0
2010 2011 2012 2013 2014
Interpretation
The above table shows the average collection period in 2010 it was 0.6 months and decreased
in 2011 to 2014 is 0.53, 0.4, 0.49, 0.51 months. If the average collection period is very low; then
the creditors easily get the money.
60
4.1.13 WORKING CAPITAL TURNOVER RATIO
Working capital turnover ratio indicates the velocity of the utilization of net working
capital. This ratio indicates the number of times; the working capital is turned over in the course
of a year. It is a good measure for over-trading and under-trading.
Sales
Working Capital Turnover Ratio = -----------------------------
Net Working Capital
Table 4.1.13
Working Capital Turnover Ratio
Sales Net Working Capital Working Capital

Year Turnover Ratio
(Cr) (Cr)
2010 4543.64 1017.64 4.46
2011 6433.27 1128.5 5.70
2012 7419.84 1386.61 5.35
2013 7406.22 1365.5 5.42
2014 8379.01 1556.09 5.38
61
Chart 4.1.13
5.7
6 5.35 5.42 5.38
5 4.46
4
3
2
1
0
2010 2011 2012 2013 2014
Interpretation
During the year the sales is 5 to 6 times more than the working capital. It was 4.46 times in year
2010 and increased in 2011 it was 5.7 times and in 2012 it was 5.35 times, in 2014 it slashed to
5.38 times. A higher ratio is the indication of the lower investment of the working capital and
more profit.
62
4.1.14 FIXED ASSETS TURNOVER RATIO
This ratio determines the efficiency of the utilization of fixed assets and the profitability
of a business concern. Higher ratio indicates the efficiency of utilization of fixed assets. A lower
ratio is the indication of underutilization of fixed assets.
Sales
Fixed Assets Turnover Ratio = -----------------------------
Net Fixed Assets
Table 4.1.14
Fixed Assets Turnover Ratio
Sales Net Fixed Assets Fixed Assets Turnover

Year Ratio
(Cr) (Cr)
2010 4543.64 1168.46 3.89
2011 6433.27 1293.76 4.97
2012 7419.84 1472.22 5.04
2013 7406.22 1593.02 4.65
2014 8379.01 1517.18 5.52
63
Chart 4.1.14
5.52
6 4.97 5.04
4.65
5 3.89
4
3
2
1
0
2010 2011 2012 2013 2014
Interpretation
The above table shows the fixed assets turnover ratio is 3.89 times in 2010 and increased by
every year. In 2011 and 2012 it was 4.97 and 5.04 times. And in 2013 it slightly decreased by
4.65 times and again increased in 2014 it was 5.52 times. Higher ratio is more efficiency in the
utilization of fixed assets.
64
4.1.15 CAPITAL TURNOVER RATIO
Managerial efficiency is also calculated by establishing the relationship between cost

of sales or sales with amount of capital invested in the business.
Sales
Capital Turnover Ratio = ----------------------------
Capital employed
Table 4.1.15
Capital Turnover Ratio
Sales Capital employed Capital Turnover

Year Ratio
(Cr) (Cr)
2010 4543.64 1638.88 2.77
2011 6433.27 1506.24 4.27
2012 7419.84 1505.6 4.93
2013 7406.22 1545.16 4.79
2014 8379.01 1522.2 5.50
65
Chart 4.1.15
6 5.5
4.93 4.79
5 4.27
4
2.77
3
2
1
0
2010 2011 2012 2013 2014
Interpretation
The above table shows the capital turnover ratio. In 2010 the ratio is 2.77 times and increased
till 2012 and the ratio is 4.93 times and again it has decreased in 4.79 times. In 2014 the ratio is
5.5 times .The sales between 2.77 to 5.5 times more than the proprietor’s funds. It shows the
firms maintenance of the better utilization of own funds.
66
PROFITABILITY RATIO
4.1.16 RETURN ON SALES
The profitability ratios are used to calculate the efficiency of operation of the company.
Profits are the ultimate goal for every company and it should be continuously evaluated in terms
of profits.
Net income before Taxes
Return On Sales = ----------------------------------
Sales
Table 4.1.16
Return On Sales
Net income before tax Sales

Year Ratio
(Cr) (Cr)
2010 21.31 4543.64 0.0046
2011 178.45 6433.27 0.0277
2012 226.96 7419.84 0.0305
2013 289.71 7406.22 0.0391
2014 307.09 8379.01 0.0366
67
Chart 4.1.16
Return On Sales
Sales Ratio
0.0391
0.04 0.0366
0.035 0.0305
0.0277
0.03
0.025
0.02
0.015
0.01
0.0046
0.005
0
2010 2011 2012 2013 2014
Interpretation
From the above table the return on sales ratio from 2010 to 2014. It was increased by every
year and reaches to 0.0366.
68
4.1.17 RETURN ON ASSETS
This ratio is also known as the profit-to-assets ratio. This ratio establishes the relationship
between the net profits and assets. These two terms have conceptual differences, the ratio may be
calculated; taking the meaning of the terms according to the purpose and intent of analysis.
Net Profits after Taxes
Return On Assets = -----------------------------------
Total Assets
Table 4.1.17
Return On Assets Ratio
Net income Total Assets

Year Ratio
(Cr) (Cr)
2010 33.51 2748.83 0.012
2011 127.58 2961.98 0.043
2012 132.33 3345.9 0.039
2013 198.35 3364.6 0.058
2014 186.88 3631.58 0.051
69
Chart 4.1.17
Return On Assets
Return on Assets
0.058
0.06 0.051
0.05 0.043
0.039
0.04
0.03
0.02 0.012
0.01
0
2010 2011 2012 2013 2014
Interpretation
The above table shows the return on assets in 2010 the ratio is 0.012 and slightly increased
by 0.043 in 2011. From 2013 to 2014 it decreased and reached to 0.051.
70
4.1.18 RETURN EQUITY
This is also known as the return on net worth or the return on proprietor’s fund. The
preference shareholders get the dividend on their holdings at a fixed rate and before dividend to
equity shareholders, the real risk remains with equity shareholders. Moreover, they are the
owners of total profits earned by the firm after paying dividend on preference shares. Therefore
this ratio attempts to measure the firm’s profitability in terms of return to equity shareholders.
This ratio is calculated by dividing the profit after taxes and preference dividend by the equity
capital.
Net Profits after Taxes
Return On Equity = ------------------------------------------------------
Shareholders or Owner’s equity
Table 4.1.18
Return On Equity
Net income Equity Shareholders

Year Ratio
(Cr) (Cr)
2010 33.51 23.75 1.41
2011 127.58 47.51 2.69
2012 132.33 47.51 2.79
2013 198.35 47.51 4.17
2014 186.88 47.51 3.93
71
Chart 4.1.18
Return On Equity
Return on Equity
5 4.17 3.93
4
2.69 2.79
3
2 1.41
0
2010 2011 2012 2013 2014
Interpretation
Return on shareholder fund determines the profitability from the shareholders point of view.
From the above, it shows that in 2010 the company shows 1.41 ratio it has risen to 2.69 and
again increased by 2.79 in 2012. In 2013 increased by 4.17 and in 2014 it reaches up to 3.93.
72
4.2 Comparative Statement
4.2.1 Comparative Income Statement (2009-2010-2011)
Increase or Decrease in2011 over

Particulars 2009-2010 2010-2011 2010
Amount Percentage
Income
Sales Turnover 4,820.60 6,994.33 2173.73 45.09
Excise Duty 276.96 561.06 284.1 102.57
Net Sales 4,543.64 6,433.27 1,889.63 41.59
Other Income 99.18 134.22 35.04 35.33
Stock Adjustments 3.4 143.27 139.87 4113.82
Total Income 4,646.22 6,710.76 2,064.54 44.43
Expenditure
Raw Materials 3,265.31 4,935.82 1,670.51 51.15
Power & Fuel Cost 62.54 85.85 23.31 37.27
Employee Cost 290.02 380.28 90.26 31.12
Other Manufacturing
49.11 60.56
Expenses 11.45 23.31
Selling and Admin
626.86 722.92
Miscellaneous
103.08 125.36
Preoperative Expense
0 0
Capitalized 0 0
Total Expenses 4,396.92 6,310.79 1,913.87 43.53
Operating Profit 150.12 265.75 115.63 77.02
PBDIT 249.3 399.97 150.67 60.43
Interest 89.31 87.53 -1.78 -1.99
PBDT 159.99 312.44 152.45 95.28
Depreciation 136.73 133.63 -3.1 -2.26
Other Written Off 1.95 0.36 -1.59 -81.53
Profit Before Tax 21.31 178.45 157.14 737.40
Extra-ordinary items -0.17 2.6 2.77 -1629.41
PBT (Post Extra-
21.14 181.05
ordinary Items) 159.91 756.43
Tax -12.2 50.51 62.71 -514.01
Reported Net Profit 33.51 127.58 94.07 280.72
73
Interpretation
 The Sales level has been increased by 41.59% when compared with previous year 2009 –
2010
 Other income of the company has been increased by 35.33%
 Selling expense and Administration expense has been increased by 15.32% when
compared with the previous year
 Miscellaneous Expenses has been increased by 21.61%
 The Net Profit of the year has been increased by 280.72% which is a positive sign of the
company
74
4.2.2 Comparative Income Statement (2010 – 2011 & 2011 – 2012)
Increase or Decrease in 2012 over

Particulars 2010-2011 2011-2012 2011
Amount Percentage
Income
Sales Turnover 6,994.33 7,419.84 425.51 6.08
Excise Duty 561.06 0 -561.06 0
Net Sales 6,433.27 7,419.84 986.57 15.33
Other Income 134.22 14.4 -119.82 -89.27
Stock Adjustments 143.27 23.8 -119.47 -83.38
Total Income 6,710.76 7,458.04 747.28 11.13
Expenditure
Raw Materials 4,935.82 5,482.71 546.89 11.08
Power & Fuel Cost 85.85 103.26 17.41 20.27
Employee Cost 380.28 430.46 50.18 13.19
Other Manufacturing
60.56 0
Expenses -60.56 -1
Selling and Admin
722.92 0
Expenses -722.92 -1
Miscellaneous
125.36 968.1
Expenses 842.74 672.25
0 0
Capitalized 0 0
Total Expenses 6,310.79 6,984.53 673.74 10.67
PBDIT 399.97 473.51 73.54 18.38
Interest 87.53 88.26 0.73 0.83
PBDT 312.44 385.25 72.81 23.30
Depreciation 133.63 158.29 24.66 18.45
Other Written Off 0.36 0 -0.36 -1
Extra-ordinary items 2.6 0 -2.6 -1
PBT (Post Extra-
181.05 226.96
Tax 50.51 94.63 44.12 87.34
75
Interpretation
 The Sales level has been increased by 15.33 % when compared with previous year 2010 –
2011
 Other income of the company has been decreased by 89.27 %
 Selling expense and Administration expense has been decreased compared with the
previous year
 Miscellaneous Expenses has been increased by 72.25 %
 The Net Profit of the year has been increased by 03.72% which is a positive sign of the
company
76

Particulars 2011-2012 2012-2013 2012
Amount Percentage
Income
Sales Turnover 7,419.84 7,406.22 -13.62 -0.18
Excise Duty 0 0 0 0
Net Sales 7,419.84 7,406.22 -13.62 -0.18
Other Income 14.4 130.38 115.98 805.41
Stock Adjustments 23.8 9.47 -14.33 -60.21
Total Income 7,458.04 7,546.07 88.03 1.18
Expenditure
Raw Materials 5,482.71 5,305.33 -177.38 -3.23
Power & Fuel Cost 103.26 105.44 2.18 2.11
Employee Cost 430.46 473.88 43.42 10.08
Other Manufacturing
0 0
Expenses 0 0
Selling and Admin
0 0
Expenses 0 0
Miscellaneous
968.1 1,092.70
Expenses 124.60 12.87
0 0
Capitalized 0 0
Total Expenses 6,984.53 6,977.35 -7.18 -0.10
Operating Profit 459.11 438.34 -20.77 -4.52
PBDIT 473.51 568.72 95.21 20.10
Interest 88.26 103.41 15.15 17.16
PBDT 385.25 465.31 80.06 20.78
Depreciation 158.29 175.6 17.31 10.93
Other Written Off 0 0 0 0
Extra-ordinary items 0 0 0 0
PBT (Post Extra-
226.96 289.71
Tax 94.63 91.36 -3.27 -3.45
77
Interpretation
 The Sales level has been decreased by 00.18% when compared with previous year 2011 –
2012
 Other income of the company has been increased by 805.41 %
 The Net Profit of the year has been increased by 49.89 % which is a positive sign of the
company
78

Particulars 2012-2013 2013-2014 2013
Amount Percentage
Income
Sales Turnover 7,406.22 8,379.01 972.79 13.13
Excise Duty 0 0 0 0
Net Sales 7,406.22 8,379.01 972.79 13.13
Other Income 130.38 49.19 -81.19 -62.27
Stock Adjustments 9.47 -16.73 -26.2 -76.66
Total Income 7,546.07 8,411.47 865.40 11.46
Expenditure
Raw Materials 5,305.33 5,935.04 629.71 11.86
Power & Fuel Cost 105.44 89.33 -16.11 -15.27
Employee Cost 473.88 541.02 67.14 14.16
Other Manufacturing
0 0
Expenses 0 0
Selling and Admin
0 0
Expenses 0 0
Miscellaneous
1,092.70 1,309.94
Expenses 217.24 19.88
0 0
Capitalized 0 0
Total Expenses 6,977.35 7,875.33 897.98 12.86
PBDIT 568.72 536.14 -32.58 -5.72
Interest 103.41 80.09 -23.32 -22.55
PBDT 465.31 456.05 -9.26 -1.99
Depreciation 175.6 148.96 -26.64 -15.17
Other Written Off 0 0 0 0
Extra-ordinary items 0 0 0 0
PBT (Post Extra-
289.71 307.09
Tax 91.36 120.21 28.85 31.57
Reported Net Profit 198.35 186.88 -11.47 -5.78
79
Interpretation
 The Sales level has been increased by 13.13 % when compared with previous year 2012 –
2013
 Other income of the company of the firm has been decreased by 62.27 %
 The Net Profit of the year has been decreased by 05.78% which is a positive sign of the
company
80
4.3.1 Comparative Balance Sheet (2009 – 2010 & 2010 – 2011)
Particulars 2009-2010 2010-2011 Increase or Decrease in2011 over 2010

Amount Percentage
I. Sources Of Funds
Total Share
23.75 47.51
Capital 23.76 100.04
Equity Share
23.75 47.51
Capital 23.76 100.04
Share Application
0 0.75
Money 0.75 0
Preference Share
0 0
Capital 0 0
Initial.
Contribution 0 0
Settler 0 0
Preference Share
Application 0 0
Money 0 0
Employee Stock
0 0
Option 0 0
Reserves 609.29 634.43 25.14 4.12
Net worth 633.04 682.69 49.65 7.84
Secured Loans 1,005.84 823.55 -182.29 -18.12
Unsecured Loans 177.58 233.18 55.6 31.30
Total Debt 1,183.42 1,056.73 -126.69 -10.70
Minority Interest 0 5.64 5.64 0
Policy Holders
0 0
Funds 0 0
Group Share in
0 0
Joint Venture 0 0
Total Liabilities 1,816.46 1,745.06 -71.40 -3.93
81
II. Application Of Funds
Gross Block 2,212.30 2,444.87 232.57 10.51
Less: Revaluation
0 0
Reserves 0.00 0
Less:
Accumulated 1,043.84 1,151.11
Depreciation 107.27 10.27
Net Block 1,168.46 1,293.76 125.30 10.72
Capital Work in
29.43 57.61
Progress 28.18 95.75
Investments 386.56 220.8 -165.76 -42.88
Inventories 341.64 602.53 260.89 76.36
Sundry Debtors 225.76 286.08 60.32 26.71
Cash and Bank
63.68 19.09
Balance -44.59 -70.02
Total Current
631.08 907.7
Assets 276.62 43.83
Loans and
472.03 457.99
Advances -14.04 -2.97
Fixed Deposits 61.27 24.12 -37.15 -60.63
Total CA, Loans
1,164.38 1,389.81
& Advances 225.43 19.36
Deferred Credit 0 0 0.00 0
Current
894.69 1,118.42
Liabilities 223.73 25.00
Provisions 72.02 98.5 26.48 36.76
Total CL &
966.71 1,216.92
Provisions 250.21 25.88
Net Current
197.67 172.89
Assets -24.78 -12.53
Minority Interest 0 0 0.00 0
Group Share in
0 0
Joint Venture 0.00 0
Miscellaneous
34.34 0
Expenses -34.34 -1
Total Assets 1,816.46 1,745.06 -71.40 -3.93
82
Interpretation of Comparative Balance sheet of 2010 – 2011
 Share capital has been increased by 100.04 % when compared with the previous year
2009 – 2010
 Reserves were increased by 4.12 % i.e., in Rupees (Cr) 25.14
 Total Debts are decreased by 10.70%
 Inventories has been increased by 76.36%
 Sundry Debtors have been increased by 26.71%
 Cash and cash equivalent have been decreased by 70.02%
 Short term loans and advances have been decreased 2.97%
 An overall financial position of the company is considered as an satisfied one.
83
4.3.2 Comparative Balance Sheet (2010 – 2011& 2011 – 2012)

Amount Percentage
Sources Of Funds
Total Share
47.51 47.51
Capital 0 0
Equity Share
47.51 47.51
Capital 0 0
Share Application
0.75 0
Money -0.75 -1
Preference Share
0 0
Capital 0 0
Initial.
Contribution 0 0
Settler 0 0
Preference Share
Application 0 0
Money 0 0
Employee Stock
0 0
Option 0 0
Reserves 634.43 677.77 43.34 6.83
Net worth 682.69 725.28 42.59 6.23
Secured Loans 823.55 780.32 -43.23 -5.24
Unsecured Loans 233.18 364.96 131.78 56.51
Total Debt 1,056.73 1,145.28 88.55 8.37
Minority Interest 5.64 5.96 0.32 0
Policy Holders
0 0
Funds 0 0
Group Share in
0 0
Joint Venture 0 0
Total Liabilities 1,745.06 1,876.52 131.46 7.53
84
Application Of Funds
Gross Block 2,444.87 2,745.05 300.18 12.27
Less: Revaluation
0 0
Reserves 0.00 0
Less:
Accumulated 1,151.11 1,272.83
Net Block 1,293.76 1,472.22 178.46 13.79
Capital Work in
57.61 185.72
Progress 128.11 22.37
Investments 220.8 318.43 97.63 44.21
Inventories 602.53 681.38 78.85 13.08
Sundry Debtors 286.08 249.32 -36.76 -12.84
Cash and Bank
19.09 137.48
Balance 118.39 620.16
Total Current
907.7 1,068.18
Assets 160.48 17.6798502
Loans and
457.99 301.35
Advances -156.64 -34.20
Fixed Deposits 24.12 0 -24.12 -1
Total CA, Loans
1,389.81 1,369.53
& Advances -20.28 -1.45
Current
1,118.42 1,356.08
Provisions 98.5 113.3 14.80 15.02
Total CL &
1,216.92 1,469.38
Net Current
172.89 -99.85
Assets -272.74 -157.75
Group Share in
0 0
Miscellaneous
0 0
Expenses 0.00 0
Total Assets 1,745.06 1,876.52 131.46 7.53
85
Interpretation of Comparative Balance sheet of 2011 -2012
 Share capital remains the same level when compared with previous year
 Reserves were increased by 6.83% i.e., in Rupees (Cr) 43.34
 Total Debts are increased by 8.37%
 Sundry Debtors have been decreased by 12.84%
 Cash and cash equivalent have been increased by 620.17%
 Short term loans and advances have been decreased 34.20%
 An overall financial position of the company is considered as an satisfied one.
86
4.3.3 Comparative Balance Sheet (2011 – 2012 & 2012 – 2013)

Amount Percentage
Sources Of Funds
Total Share
47.51 47.51
Capital 0 0
Equity Share
47.51 47.51
Capital 0 0
Share Application
0 0
Money 0 0
Preference Share
0 0
Capital 0 0
Initial.
Contribution 0 0
Settler 0 0
Preference Share
Application 0 0
Money 0 0
Employee Stock
0 0
Option 0 0
Reserves 677.77 850.77 173 25.52
Net worth 725.28 898.28 173 23.85
Secured Loans 780.32 646.88 -133.44 -17.10
Unsecured Loans 364.96 270.67 -94.29 -25.83
Total Debt 1,145.28 917.55 -227.73 -19.88
Minority Interest 5.96 6.89 0.93 0
Policy Holders
0 0
Funds 0 0
Group Share in
0 0
Joint Venture 0 0
87
Gross Block 2,745.05 3,013.38 268.33 9.77
Less: Revaluation
0 0
Reserves 0.00 0
Less:
Accumulated 1,272.83 1,420.36
Net Block 1,472.22 1,593.02 120.80 8.20
Capital Work in
185.72 36.16
Progress -149.56 -80.52
Investments 318.43 347.71 29.28 9.19
Inventories 681.38 635.79 -45.59 -6.69
Sundry Debtors 249.32 302.4 53.08 21.28
Cash and Bank
137.48 79.6
Balance -57.88 -42.10
Total Current
1,068.18 1,017.79
Assets -50.39 -4.71
Loans and
301.35 369.92
Advances 68.57 22.75
Fixed Deposits 0 0 0.00 0
Total CA, Loans
1,369.53 1,387.71
& Advances 18.18 1.32
Current
1,356.08 1,482.02
Provisions 113.3 59.86 -53.44 -47.16
Total CL &
1,469.38 1,541.88
Net Current
-99.85 -154.17
Assets -54.32 54.40
Group Share in
0 0
Miscellaneous
0 0
Expenses 0.00 0
Total Assets 1,876.52 1,822.72 -53.80 -2.86
88
 Share capital remains the same level when compared with previous year
 Reserves were increased by 25.52% i.e., in Rupees (Cr) 173
 Total Debt are decreased by 19.88%
 Inventories has been decreased by 6.69%
 Cash and cash equivalent have been decreased by 42.10%
 Short term loans and advances have been increased 22.75%
 An overall financial position of the company is considered as an satisfied one
89
4.3.4 Comparative Balance Sheet (2012 – 2013 &2013 – 2014)

Amount Percentage
Sources Of Funds
Total Share
47.51 47.51
Capital 0 0
Equity Share
47.51 47.51
Capital 0 0
Share Application
0 0
Money 0 0
Preference Share
0 0
Capital 0 0
Initial.
Contribution 0 0
Settler 0 0
Preference Share
Application 0 0
Money 0 0
Employee Stock
0 0
Option 0 0
Reserves 850.77 1,113.32 262.55 30.86
Net worth 898.28 1,160.83 262.55 29.22
Secured Loans 646.88 361.37 -285.51 -44.13
Unsecured Loans 270.67 264.52 -6.15 -2.27
Total Debt 917.55 625.89 -291.66 -31.78
Minority Interest 6.89 0 -6.89 0
Policy Holders
0 0
Funds 0 0
Group Share in
0 0
Joint Venture 0 0
90
Gross Block 3,013.38 2,968.01 -45.37 -1.50
Less: Revaluation
0 0
Reserves 0.00 0
Less:
Accumulated 1,420.36 1,450.83
Net Block 1,593.02 1,517.18 -75.84 -4.76
Capital Work in
36.16 48.21
Progress 12.05 33.32
Investments 347.71 438.65 90.94 26.15
Inventories 635.79 666.05 30.26 4.75
Sundry Debtors 302.4 352.92 50.52 16.70
Cash and Bank
79.6 98.47
Balance 18.87 23.70
Total Current
1,017.79 1,117.44
Assets 99.65 9.79
Loans and
369.92 510.1
Advances 140.18 37.89
Fixed Deposits 0 0 0.00 0
Total CA, Loans
1,387.71 1,627.54
& Advances 239.83 17.28
Current
1,482.02 1,710.04
Provisions 59.86 134.82 74.96 25.22
Total CL &
1,541.88 1,844.86
Net Current
-154.17 -217.32
Assets -63.15 40.96
Group Share in
0 0
Miscellaneous
0 0
Expenses 0.00 0
Total Assets 1,822.72 1,786.72 -36.00 -1.97
91
 Share capital remains the same level when compared with the previous year
 Reserves were increased by 30.86% i.e., in Rupees (Cr) 262.55
 Total Debts are decreased by 31.78%
 Cash and cash equivalent have been increased by 23.71%
 Short term loans and advances have been increased 37.89%
 An overall financial position of the company is considered as an satisfied one
92
4.4.1 Common Size Income Statement (2009 – 2010 & 2010 – 2011)
Particulars 2009 -2010 2010 -2011

Amount Percentage Amount Percentage
Income
Sales Turnover 4,820.60 103.7531585 6,994.33 104.2256019
Excise Duty 276.96 5.960974728 561.06 8.360602972
Net Sales 4,543.64 97.79218375 6,433.27 95.8649989
Other Income 99.18 2.13463848 134.22 2.000071527
Stock
3.4 143.27
Adjustments 0.073177766 2.134929576
Total Income 4,646.22 100 6,710.76 100
Expenditure
Raw Materials 3,265.31 70.27885033 4,935.82 73.55083478
Power & Fuel
62.54 85.85
Cost 1.346040437 1.279288784
Employee Cost 290.02 6.242063441 380.28 5.666720312
Other
Manufacturing 49.11 60.56
Expenses 1.056988261 0.902431319
Selling and
626.86 722.92
Admin Expenses 13.49182777 10.77255035
Miscellaneous
103.08 125.36
Expenses 2.218577683 1.868044752
Preoperative
Expense 0 0
Capitalized 0 0
Total Expenses 4,396.92 94.63434792 6,310.79 94.0398703
Net Profit or Loss 249.30 5.365652078 399.97 5.960129702
Total 4,646.22 100 6,710.76 100
93
Interpretation
 In 2010 – 2011 the Common six income statement reveals the following details
 The sales figure increasing during the year when compare to 2010. It increased about
Rupees (Cr) 1889.63
 Administration and Selling expense have been increased by Rupees (Cr) 96.06
 The other income is increased by 35.04
 The Net profit is increased from 5.36 % to 5.96 % during the year 2011
94
4.4.2 Common Size Income Statement (2010 – 2011& 2011 – 2012)
Particulars 2010 -2011 2011 -2012

Income
Sales Turnover 6,994.33 104.2256019 7,419.84 99.48780108
Excise Duty 561.06 8.360602972 0 0
Net Sales 6,433.27 95.8649989 7,419.84 99.48780108
Other Income 134.22 2.000071527 14.4 0.193080219
Stock
143.27 23.8
Adjustments 2.134929576 0.319118696
Total Income 6,710.76 100 7,458.04 100
Expenditure
Raw Materials 4,935.82 73.55083478 5,482.71 73.51408681
Power & Fuel
85.85 103.26
Cost 1.279288784 1.384546074
Employee Cost 380.28 5.666720312 430.46 5.771757727
Other
Manufacturing 60.56 0
Expenses 0.902431319 0
Selling and
722.92 0
Admin Expenses 10.77255035 0
Miscellaneous
125.36 968.1
Expenses 1.868044752 12.98062225
Preoperative
Expense 0 0
Capitalized 0 0
Total Expenses 6,310.79 94.0398703 6,984.53 93.65101287
Total 6,710.76 100 7,458.04 100
95
Interpretation
Rupees (Cr) 986.57
 Administration and Selling expense have been decreased
 The other income is decreased by 119.82
 The Net profit is increased from 5.96 % to 6.35 % during the year 2012
96
4.4.3 Common Size Income Statement (2011 – 2012 & 2012 – 2013)
Particulars 2011 -2012 2012 -2013

Income
Sales Turnover 7,419.84 99.48780108 7,406.22 98.14671743
Excise Duty 0 0 0 0
Net Sales 7,419.84 99.48780108 7,406.22 98.14671743
Other Income 14.4 0.193080219 130.38 1.727786782
Stock
23.8 9.47
Adjustments 0.319118696 0.125495788
Total Income 7,458.04 100 7,546.07 100
Expenditure
Raw Materials 5,482.71 73.51408681 5,305.33 70.30586782
Power & Fuel
103.26 105.44
Cost 1.384546074 1.397283619
Employee Cost 430.46 5.771757727 473.88 6.279825128
Other
Manufacturing 0 0
Expenses 0 0
Selling and
0 0
Admin Expenses 0 0
Miscellaneous
968.1 1,092.70
Expenses 12.98062225 14.48038515
Preoperative
Expense 0 0
Capitalized 0 0
Total Expenses 6,984.53 93.65101287 6,977.35 92.46336172
Total 7,458.04 100 7,546.07 100
97
Interpretation
 The sales figure decreasing during the year when compare to 2012. It increased about
Rupees (Cr) 13.62
 Administration and Selling expense remains Nil
 The other income is increased by 115.98
 The Net profit is increased from 6.35 % to 7.54% during the year 2013
98
4.4.4 Common Size Income Statement (2012 – 2013 & 2013 - 2014)
Particulars 2012 -2013 2013 -2014

Income
Sales Turnover 7,406.22 98.14671743 8,379.01 99.61409837
Excise Duty 0 0 0 0
Net Sales 7,406.22 98.14671743 8,379.01 99.61409837
Other Income 130.38 1.727786782 49.19 0.584796712
Stock
9.47 -16.73
Adjustments 0.125495788 -0.19889508
Total Income 7,546.07 100 8,411.47 100
Expenditure
Raw Materials 5,305.33 70.30586782 5,935.04 70.55889161
Power & Fuel
105.44 89.33
Cost 1.397283619 1.062002242
Employee Cost 473.88 6.279825128 541.02 6.431931636
Other
Manufacturing 0 0
Expenses 0 0
Selling and
0 0
Admin Expenses 0 0
Miscellaneous
1,092.70 1,309.94
Expenses 14.48038515 15.5732589
Preoperative
Expense 0 0
Capitalized 0 0
Total Expenses 6,977.35 92.46336172 7,875.33 93.62608438
Total 7,546.07 100 8,411.47 100
99
Interpretation
Rupees (Cr) 972.79
 Administration and Selling expense remains Nil
 The other income is decreased by 81.19
 The Net profit is increased from 7.54% to 6.37% during the year 2014
100
4.5.1 Common Size Balance Sheet (2009 – 2010 & 2010 – 2011)
Particulars 2009 - 2010 2010 – 2011

Amount % Amount %
Sources Of Funds
Total Share Capital 23.75 1.30749 47.51 2.72254
Equity Share Capital 23.75 1.30749 47.51 2.72254
Share Application Money 0 0 0.75 0.04298
Preference Share Capital 0 0 0
Initial Contribution Settler 0 0 0 0
Preference Share
0 0
Application Money 0 0
Employee Stock Option 0 0 0 0
Reserves 609.29 33.5427 634.43 36.3558
Net worth 633.04 34.8502 682.69 39.1213
Secured Loans 1,005.84 55.3736 823.55 47.1932
Unsecured Loans 177.58 9.77616 233.18 13.3623
Total Debt 1,183.42 65.1498 1,056.73 60.5555
Minority Interest 0 0 5.64 0.3232
Policy Holders Funds 0 0 0 0
Group Share in Joint
0 0
Venture 0 0
Total Liabilities 1,816.46 100 1,745.06 100
101
Gross Block 2,212.30 121.792 2,444.87 140.102
Less: Revaluation
0 0
Reserves 0 0
Less: Accumulated.
1,043.84 1,151.11
Net Block 1,168.46 64.3262 1,293.76 74.1384
Capital Work in Progress 29.43 1.62018 57.61 3.30132
Investments 386.56 21.281 220.8 12.6529
Inventories 341.64 18.808 602.53 34.5278
Sundry Debtors 225.76 12.4286 286.08 16.3937
Cash and Bank Balance 63.68 3.50572 19.09 1.09395
Total Current Assets 631.08 34.7423 907.7 52.0154
Loans and Advances 472.03 25.9863 457.99 26.2449
Fixed Deposits 61.27 3.37304 24.12 1.38219
Total CA, Loans &
1,164.38 1,389.81
Advances 64.1016 79.6425
Deferred Credit 0 0 0 0
Current Liabilities 894.69 49.2546 1,118.42 64.0906
Provisions 72.02 3.96485 98.5 5.64451
Total CL & Provisions 966.71 53.2194 1,216.92 69.7351
Net Current Assets 197.67 10.8822 172.89 9.9074
Minority Interest 0 0 0 0
0 0
Venture 0 0
Miscellaneous Expenses 34.34 1.89049 0 0
Total Assets 1,816.46 100 1,745.06 100
Interpretation
 The Share Capital in the year 2010 is 1.31% and it is increased by 2.72 in 2011
 Reserves in the year 2010 is 33.54% and it is increased by 36.35% in 2011
 Total Debts in the year 2010 are 65.15% has been decreased by 60.55% in 2011
 Net Current Assets in 2010 is 10.88% is decreased by 9.91% in 2011
102
4.5.2 Common Size Balance Sheet (2010 – 2011 & 2011 - 2012)
Particulars 2010 - 2011 2011 - 2012

Amount % Amount %
Sources Of Funds
Share Application Money 0.75 0.04298 0 0
Initial. Contribution Settler 0 0 0 0
Preference Share
0 0
Reserves 634.43 36.3558 677.77 36.1185
Net worth 682.69 39.1213 725.28 38.6503
Secured Loans 823.55 47.1932 780.32 41.5834
Unsecured Loans 233.18 13.3623 364.96 19.4488
Total Debt 1,056.73 60.5555 1,145.28 61.0321
Minority Interest 5.64 0.3232 5.96 0.31761
0 0
Venture 0 0
103
Gross Block 2,444.87 140.102 2,745.05 146.284
Less: Revaluation
0 0
Reserves 0 0
Less: Accumulated.
1,151.11 1,272.83
Net Block 1,293.76 74.1384 1,472.22 78.4548
Investments 220.8 12.6529 318.43 16.9692
Inventories 602.53 34.5278 681.38 36.3108
Sundry Debtors 286.08 16.3937 249.32 13.2863
Total Current Assets 907.7 52.0154 1,068.18 56.9235
Fixed Deposits 24.12 1.38219 0 0
Total CA, Loans &
1,389.81 1,369.53
Advances 79.6425 72.9824
Current Liabilities 1,118.42 64.0906 1,356.08 72.2657
Provisions 98.5 5.64451 113.3 6.03777
Total CL & Provisions 1,216.92 69.7351 1,469.38 78.3035
Net Current Assets 172.89 9.9074 -99.85 -5.321
0 0
Venture 0 0
Miscellaneous Expenses 0 0 0 0
Total Assets 1,745.06 100 1,876.52 100
Interpretation
 The Share Capital in the year 2011 is 2.72% and it is decreased by 2.53 % in 2012
 Reserves in the year 2011 is 36.35% and it is decreased by 36.11% in 2012
 Total Debts in the year 2011 are 60.55% has been increased by 61.03% in 2012
 Net Current Assets in 2011 is 9.91% is decreased by 5.32% in 2012
104
4.5.3 Common Size Balance Sheet (2011 - 2012& 2012 – 2013)
Particulars 2011 - 2012 2012 - 2013

Amount % Amount %
Sources Of Funds
Share Application Money 0 0 0 0
Preference Share
0 0
Reserves 677.77 36.1185 850.77 46.6758
Net worth 725.28 38.6503 898.28 49.2824
Secured Loans 780.32 41.5834 646.88 35.4898
Unsecured Loans 364.96 19.4488 270.67 14.8498
Total Debt 1,145.28 61.0321 917.55 50.3396
Minority Interest 5.96 0.31761 6.89 0.37801
0 0
Venture 0 0
105
Gross Block 2,745.05 146.284 3,013.38 165.323
Less: Revaluation
0 0
Reserves 0 0
Less: Accumulated.
1,272.83 1,420.36
Net Block 1,472.22 78.4548 1,593.02 87.398
Investments 318.43 16.9692 347.71 19.0764
Inventories 681.38 36.3108 635.79 34.8814
Sundry Debtors 249.32 13.2863 302.4 16.5906
Total Current Assets 1,068.18 56.9235 1,017.79 55.8391
Fixed Deposits 0 0 0 0
Total CA, Loans &
1,369.53 1,387.71
Advances 72.9824 76.134
Provisions 113.3 6.03777 59.86 3.2841
Net Current Assets -99.85 -5.321 -154.17 -8.4582
0 0
Venture 0 0
Total Assets 1,876.52 100 1,822.72 100
Interpretation
 The Share Capital in the year 2012 is 2.53% and it is increased by 2.60% in 2013
 Reserves in the year 2012 is 36.11 % and it is increased by 46.68% in 2013
 Net Current Assets in 2012 is 5.32 % is increased by 8.46% in 2013
106
4.5.4 Common Size Balance Sheet (2012 – 2013 & 2013 - 2014)
Particulars 2012 - 2013 2013 – 2014

Amount % Amount %
Sources Of Funds
Share Application Money 0 0 0 0
Preference Share
0 0
Reserves 850.77 46.6758 1,113.32 62.3108
Net worth 898.28 49.2824 1,160.83 64.9699
Secured Loans 646.88 35.4898 361.37 20.2253
Unsecured Loans 270.67 14.8498 264.52 14.8048
Total Debt 917.55 50.3396 625.89 35.0301
Minority Interest 6.89 0.37801 0 0
0 0
Venture 0 0
107
Gross Block 3,013.38 165.323 2,968.01 166.115
Less: Revaluation
0 0
Reserves 0 0
Less: Accumulated.
1,420.36 1,450.83
Net Block 1,593.02 87.398 1,517.18 84.9143
Investments 347.71 19.0764 438.65 24.5506
Inventories 635.79 34.8814 666.05 37.2778
Sundry Debtors 302.4 16.5906 352.92 19.7524
Total Current Assets 1,017.79 55.8391 1,117.44 62.5414
Fixed Deposits 0 0 0 0
Total CA, Loans &
1,387.71 1,627.54
Advances 76.134 91.0909
Provisions 59.86 3.2841 134.82 7.54567
Net Current Assets -154.17 -8.4582 -217.32 -12.163
0 0
Venture 0 0
Total Assets 1,822.72 100 1,786.72 100
Interpretation
 The Share Capital in the year 2013 is 2.60% and it is increased by 2.66% in 2014
 Reserves in the year 2013 is 46.68% and it is increased by 62.31% in 2014
 Net Current Assets in 2013 is 8.46% is increased by 12.163% in t2014
108
4.6 TREND ANALYSIS
4.6.1 Trend Income Statement (2009 – 2010 to 2013 – 2014)
Particulars Trend Percentage Base year 2009-2010

2009-2010 2010-2011 2011-2012 2012-2013 2013-2014
Sales 100 141 163 163 184
Total Income 100 144 160 162 181
Total expenditure 100 143 158 158 179
Net profit 100 380 394 591 557
Sales
200
180
160
140
120
100
80
60
40
20
0
2009-10 2010-11 2011-12 2012-13 2013-14
109
Income
200
180
160
140
120
100
80
60
40
20
0
2009-10 2010-11 2011-12 2012-13 2013-14
200
180
160
140
120
100
80
60
40
20
0
Year 2009-10 2010-11 2011-12 2012-13 2013-14
110
Net Profit
700
600
500
400
300
200
100
0
2009-10 2010-11 2011-12 2012-13 2013-14
Interpretation
If we take 2009 -2010 (as base year 100%) the sales, total income, total expenditure, and
net profit during the study period were analysed by taking trend as a tool. The above table shows
the movement of variables during the study period. The entire variable shows the lower trend
during the 2009 – 2010.
111
4.6.2 Trend Balance Sheet (2009 – 2010 to 2013 – 2014)
Particulars Trend Percentage Base year 2009-2010

2009-2010 2010-2011 2011-2012 2012-2013 2013-2014
Equity Share Capital 100 200 200 200 200
Reserves 100 104 111 132 182
Total Debt 100 89 96 77 52
Provisions 100 136 157 83 187
Current Liabilities 100 125 151 165 191
Fixed assets 100 110 125 136 129
Loans and Advances 100 97 63 78 108
Inventories 100 176 199 186 194
Sundry Debtors 100 126 110 133 156
Cash and Bank
Balance 100 29 215 125 154
Interpretation
 Trend Percentages of Balance Sheet is done by taking 100 as base for the financial years
2009 – 2010.
 Loan and advance have been decreased during the period 2011 – 2014.
 Current Liabilities were increased during the study period.
 Therefore the balance sheet total shows an increasing trend in the figures.
112
CHAPTER – V
FINDINGS, SUGGESTIONS
AND CONCLUSIONS
113
5.1 FINDINGS
The report was prepared to analyze the financial performance analysis of TVS Motors
Limited and to know the overall financial position of the company. These are the overall findings
are given below.
 The Current ratio is less than the ideal ratio 2:1 in all the five years.
 The liquid ratio is less than ideal 1:1 in all the five years.
 There is a fluctuation in the cash position ratio for all the years.
 The Debt ratio is decreasing by every year. This shows the reduction of the company’s
loan amount highly in the year 2014 when compared to the year 2013.
 In the fixed asset ratio, the ratio was increasing till 2013, and again decreased in 2014. So
the fixed asset is fluctuating.
 The Debt equity ratio is increasing till 2012 and again decreased in 2014.
 The Proprietary ratio is increasing every year.
 Capital gearing ratio is very low in 2014 i.e., 7.61%
 During the year 2011 the stock turnover ratio is 13.25 times which shows the higher
position of goods sold. But in 2013 it was only 10.81 times which means more of stocks
are held up with company for longer period.
 The stock turnover period was normal in 2010, 2011, 2014 and high in the year 2012 and
2013.
 The debtor turnover ratio is decreased in 2014 when compared to the previous years.
 Average collection period is high in 2010 i.e., 0.60 months. This shows the companies
collection period is short.
 During all the year of the study period the sales is 5 to 6 times more than the working
capital. A higher ratio indicates the lower investment of working capital and more profit.
 The sale is 5 to 6 times more than the fixed assets. The ratio shows the company is more
efficiency in utilization of fixed assets.
 Capital turnover ratio is increased in 2014.
 The return on equity is fluctuating in all the years.
 Share capital has been increased in 2011 to 2014.
 Reserve has been increased every year.
 Provisions is increased by 57% in the year 2012 and in the year 2013 it is decreased by
83%.
 In 2014 current liabilities has been increased by 191%.
 Fixed assets have been increasing every year.
 Inventories have been increasing by every year which is a positive indication to the
company’s growth.
 The sales have been increasing every year.
114
 In all the five years the total income exceeds the total expenditure.
 The Net profit after tax increasing every year when compared with the previous year.
 The trend income includes sales, total income, total expenditure and net profit shows the
positive trends in all the five years.
115
5.2 SUGGESTIONS
Following are few of the suggestions that are given below which will be very useful for the
growth of the company.
 The company should try to maintain its current ratio of an ideal ratio 2:1
 The management should take a proper decision to improve the liquidity position for the
future period
 The company should concentrate more on the inventory management
 The company should maintain their working capital to meet its requirement in future
 The company is suggested to maintain sufficient amount of cash and bank balances to
pay its quick liabilities which will increase its credit worthiness
 The company should conduct monthly meeting to know about its financial performance.
If the performance is not up to their required level they should take necessary changes to
reach the good performance level.
116
5.3 CONCLUSION
Financial statement is very much in consideration for decision making. In deciding what to
do and what not to do they are required to analyze the data as per their requirements. Thus in our
project we try to give brief outline of various analytical tools like ratio analysis, comparative
statements, common size statements and trend analysis.
“ A STUDY ON FINANCIAL PERFORMANCE ANALYSIS WITH REFERENCE TO TVS

MOTORS LIMITED ” was conducted with the help of annual reports. Various tools are used in
the study to know the overall company’s financial position. The result shows it is satisfactory in
liquidity, solvency and profitability. The company has stable growth and its shows a greater
efficiency in all areas it works. If the company utilizes its working capital then the company can
reach to greater heights.
Based on the analysis and interpretation I tried to give my findings and suggestions for the
company as per my best knowledge.
Finally the study helped me to acquire practical knowledge.
117
ANNEXURES
118
BALANCE SHEET OF TVS MOTORS LIMITED AS AT 31st MARCH 2010
BALANCE SHEET AS AT 31ST MARCH 2010 31 St March '10 31 St March '09

Sources Of Funds
Total Share Capital 23.75 23.75
Equity Share Capital 23.75 23.75
Share Application Money 0 0
Preference Share Capital 0 0
Initial . Contribution Settler 0 0
Preference Share Application Money 0 0
Employee Stock Option 0 0

Reserves 609.29 606.2
Net worth 633.04 629.95
Secured Loans 1,005.84 835.94
Unsecured Loans 177.58 284.05
Total Debt 1,183.42 1,119.99
Minority Interest 0 0
Policy Holders Funds 0 0
Group Share in Joint Venture 0 0
Total Liabilities 1,816.46 1,749.94
119
Gross Block 2,212.30 2,172.40
Less: Revaluation Reserves 0 0
Less: Accumulated. Depreciation 1,043.84 925.71

Net Block 1,168.46 1,246.69
Capital Work in Progress 29.43 41.15
Investments 386.56 193.3
Inventories 341.64 365.88
Sundry Debtors 225.76 192.69
Cash and Bank Balance 63.68 67.38
Total Current Assets 631.08 625.95
Loans and Advances 472.03 448.56
Fixed Deposits 61.27 0.05
Total CA, Loans & Advances 1,164.38 1,074.56
Deferred Credit 0 0
Current Liabilities 894.69 825.4
Total CL & Provisions 966.71 892.18
Net Current Assets 197.67 182.38
Miscellaneous Expenses 34.34 86.42
Total Assets 1,816.46 1,749.94
120
PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED ON 31ST MARCH 2010
31st march 2010 31st march 2009

Income
Sales Turnover 4,820.60 4,061.58
Excise Duty 276.96 314.86
Net Sales 4,543.64 3,746.72
Other Income 99.18 68.13
Stock Adjustments 3.4 -53.7
Total Income 4,646.22 3,761.15
Expenditure
Raw Materials 3,265.31 2,775.54
Power & Fuel Cost 62.54 55.49
Employee Cost 290.02 240.11
Other Manufacturing
49.11 34.23
Expenses
Selling and Admin Expenses 626.86 446.79
0 0
Capitalized
Total Expenses 4,396.92 3,638.60
Operating Profit 150.12 54.42
PBDIT 249.3 122.55
Interest 89.31 78.63
PBDT 159.99 43.92
Other Written Off 1.95 1.95
Profit Before Tax 21.31 -91.18
Extra-ordinary items -0.17 0.05
PBT (Post Extra-ordinary
21.14 -91.13
Items)
Tax -12.2 -27
Reported Net Profit 33.51 -64.18
121

Sources Of Funds
Share Application Money 0.75 0
Initial. Contribution Settler 0 0
Reserves 634.43 609.29
Net worth 682.69 633.04
Secured Loans 823.55 1,005.84
Total Debt 1,056.73 1,183.42
Minority Interest 5.64 0
122
Gross Block 2,444.87 2,212.30
Less: Accumulated. Depreciation 1,151.11 1,043.84
Net Block 1,293.76 1,168.46
Total Current Assets 907.7 631.08
Fixed Deposits 24.12 61.27
Deferred Credit 0 0
Current Liabilities 1,118.42 894.69
Total CL & Provisions 1,216.92 966.71
Net Current Assets 172.89 197.67
Miscellaneous Expenses 0 34.34
Total Assets 1,745.06 1,816.46
123

Income
Excise Duty 561.06 276.96
Net Sales 6,433.27 4,543.64
Stock Adjustments 143.27 3.4
Total Income 6,710.76 4,646.22
Expenditure
Raw Materials 4,935.82 3,265.31
Other Manufacturing
60.56 49.11
Expenses
Selling and Admin Expenses 722.92 626.86
0 0
Capitalized
PBDIT 399.97 249.3
Interest 87.53 89.31
PBDT 312.44 159.99
Other Written Off 0.36 1.95
Profit Before Tax 178.45 21.31
Extra-ordinary items 2.6 -0.17
181.05 21.14
Items)
Tax 50.51 -12.2
Reported Net Profit 127.58 33.51
124

Sources Of Funds
Reserves 850.77 677.77
Net worth 898.28 725.28
Secured Loans 646.88 780.32
Total Debt 917.55 1,145.28
Minority Interest 6.89 5.96
125
Gross Block 3,013.38 2,745.05
Net Block 1,593.02 1,472.22
Total Current Assets 1,017.79 1,068.18
Fixed Deposits 0 0
Deferred Credit 0 0
Current Liabilities 1,482.02 1,356.08
Total CL & Provisions 1,541.88 1,469.38
Net Current Assets -154.17 -99.85
Miscellaneous Expenses 0 0
Total Assets 1,822.72 1,876.52
126

Income
Excise Duty 0 0
Net Sales 7,406.22 7,419.84
Stock Adjustments 9.47 23.8
Total Income 7,546.07 7,458.04
Expenditure
Raw Materials 5,305.33 5,482.71
Other Manufacturing
0 0
Expenses
Selling and Admin Expenses 0 0
Miscellaneous Expenses 1,092.70 968.1
0 0
Capitalized
PBDIT 568.72 473.51
Interest 103.41 88.26
PBDT 465.31 385.25
Other Written Off 0 0
Extra-ordinary items 0 0
289.71 226.96
Items)
Tax 91.36 94.63
127

Sources Of Funds
Reserves 1,113.32 850.77
Net worth 1,160.83 898.28
Secured Loans 361.37 646.88
Total Debt 625.89 917.55
Minority Interest 0 6.89
128
Gross Block 2,968.01 3,013.38
Net Block 1,517.18 1,593.02
Total Current Assets 1,117.44 1,017.79
Fixed Deposits 0 0
Deferred Credit 0 0
Current Liabilities 1,710.04 1,482.02
Total CL & Provisions 1,844.86 1,541.88
Net Current Assets -217.32 -154.17
Miscellaneous Expenses 0 0
Total Assets 1,786.72 1,822.72
129

Income
Excise Duty 0 0
Net Sales 8,379.01 7,406.22
Stock Adjustments -16.73 9.47
Total Income 8,411.47 7,546.07
Expenditure
Raw Materials 5,935.04 5,305.33
Other Manufacturing
0 0
Expenses
Selling and Admin Expenses 0 0
Miscellaneous Expenses 1,309.94 1,092.70
0 0
Capitalized
PBDIT 536.14 568.72
Interest 80.09 103.41
PBDT 456.05 465.31
Other Written Off 0 0
Extra-ordinary items 0 0
307.09 289.71
Items)
Tax 120.21 91.36
130
BIBLIOGRAPHY
 T S REDDY and Y. Hari Prasad Reddy. “Financial and Management Accounting” , 4 th

edition, Margham Publishers, 2008- Chennai.
 I M Pandey, “ Financial Management” 9th Edition, Vikas publishing house pvt ltd reprint
– 2009 – New Delhi.
 S N Maheswari “ Financial Management Principles and practices” 11th edition, sulthan
chand and sons Educational Publishers – 1992 – New Delhi
 C.R.Kothari “Research Methodology” Methods and technique – second revised edition
 Annual Reports of TVS Motors Limited
131

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DISSERTATION REPORT

The study of financial soundness of TVS motor Co.

MASTER OF BUSINESS ADMINISTRATION

NAME: Neha Jain. A

Under the esteemed guidance of

Prof. Siva Balasubrahmanyam D V

Department of MBA, AGBS, Chennai-86

Signature of the student

My sincere thanks to Prof. Siva Balasubrahmanyam D V

Prof. Siva Balasubrahmanyam D V

Dr. MRS. VENGADAMANI Dr. MR. E. ILAMATHAIAN

Submitted for the viva voce examination held on----------------

SERIAL CONTENT PAGE

1.1 INTRODUCTION OF THE STUDY

Introduction of Financial Statement

Financial statement is a collection of data organized according to logical and consistent

Financial statements are the outcome of summarizing process of accounting. In the

Financial statements is an organized collection of data according to logical and

 The income statement

Accounting Assumption Or Concepts: GAAPs or Generally Accepted Accounting Principles

Financial Statement Analysis

Users of Financial Statement Analysis

HISTORY OFAUTOMOBILE INDUSTRY

Automotive production on a commercial scale started in France in 1890. Commercial production

Recent Developments in the Automobile Industry

Top Automobile Companies in India

Automobile companies in India

TVS was established in 1911 by Shri. T V Sundaram Iyengar. As one of India's

TVS Motor Company – Mission

The Industry Leader

At the cutting edge

Committed to Total Quality

TVS Motor is committed to achieving a self-reviewing organization in perpetuity by adopting

The Human Factor

Responsible Corporate Citizen

Key Managerial and Senior Management Personnel

Awards and Recognition

Their product range includes the following:

 Apache series RTR

 To evaluate the operational efficiency of the company by using Income statement.

According to Clifford woody research comprises defining and redefining problems,

Research is a diligent and systematic inquiry or investigation into a subject in order to

The Analytical Form of research method is adopted for study.

The major purpose of analytical research is description of state of affairs of the

Methods of data collection

 Different accounting record of the company.

3.1 THEORETICAL FRAMEWORK

FINANCIAL PERFORMANCE ANALYSIS

1. What is the financial position of the firm at a given point of time?

“The analysis of financial statements is a process of evaluating the relationship between

AREAS OF FINANCIAL PERFORMANCE ANALYSIS

1. Working capital Analysis

2. Financial structure Analysis

TYPES OF FINANCIAL PERFORMANCE ANALYSIS

TECHNIQUES/TOOLS OF FINANCIAL PERFORMANCE ANALYSIS

It is also known as financial techniques. Various accounting techniques such as Comparative

Common-size statement is also known as component percentage statement or vertical statement.

 Salmi, T . and T. Martikainen (1994), in his “ A review of the theoretical and

 M Y Khan & P K Jain (2011), explained that he financial statement provide a

DATA ANALYSIS AND INTERPRETATION

Ratio analysis is a powerful tool of financial analysis. It is used as benchmark for

The profitability ratios of a business concern can be measured by the profitability

2. Comparative Financial Statements

Comparative Financial Statement Analysis is a form of horizontal analysis where