Vignesh Main Project Final-1 PDF

COMPARATIVE BALANCESHEET
CHAPTER-I
Introduction to Comparative Statement Analysis
1.1 Introduction :
Business concern needs finance to meet their requirements in the economic world. Any
kind of business activity depends on the finance. Hence, it is called as lifeblood of business
organization. Whether the business concerns are big or small, they need finance to fulfil their
business activities.
In the modern world, all the activities are concerned with the economic activities and
very particular to earning profit through any venture or activities. The entire business activities
are directly related with making profit. (According to the economics concept of factors of
production, rent given to landlord, wage given to labour, interest given to capital and profit
given to shareholders or proprietors), a business concern needs finance to meet all the
requirements. Hence finance may be called as capital, investment, fund etc., but each term is
having different meanings and unique character Increasing the profit is the main aim of any
kind of economic activity.
1.2 Finance:
Finance may be defined as the art and science of managing money. It includes financial
service and financial instruments. Finance also is referred as the provision of money at the time
when it is needed. Finance function is the procurement of funds and their effective utilization
in business concerns.
The concept of finance includes capital, funds, money, and amount. But each word is
having unique meaning. Studying and understanding the concept of finance become an
important part of the business concern.
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1.3 Definition of Finance:
“Finance is the art and science of managing money”.
---- Khan and Jain.
“Finance can broadly be defined as the activity concerned with planning, raising, controlling,
administering of the funds used in the business”.
---- Guthuman and Dougall.
1.4 Financial Management:
Financial management is an integral part of overall management. It is concerned with
the duties of the financial managers in the business firm. It means planning, organizing,
directing and controlling the financial activities such as procurement and utilization of funds of
the enterprise. It means applying general management principles to financial resources of the
enterprise.
Definition:
“It is concerned with the efficient use of an important economic resource namely, capital
funds”.
---- Solomon.
“Financial Management deals with procurement of funds and their effective utilization in the
business”
---- S.C. Kuchal.
1.5 Scope of Financial Management:
Financial management covers wide area with multidimensional approaches. The
following are the important scope of financial management.
1.5.1 Financial management and economics:

Financial management also uses the economic equations like money value discount
factor, economic order quantity etc. Financial economics is one of the emerging area, which
provides immense opportunities to finance, and economical areas.
1.5.2 Financial Management and Accounting:
Accounting records includes the financial information of the business concern. Hence,
we can easily understand the relationship between the financial management and accounting.
1.5.3 Financial Management and Mathematics
Modern approaches of the financial management applied large number of
mathematical and statistical tools and techniques. They are also called as econometrics.
1.5.4 Financial Management and Production Management
Production management is the operational part of the business concern, which helps to
multiple the money into profit.
1.5.5 Financial Management and Marketing:
Produced goods are sold in the market with innovative and modern approaches. For
this, the marketing department needs finance to meet their requirements.
1.5.6 Financial Management and Human Resource:
Financial management is also related with human resource department, which provides
manpower to all the functional areas of the management.
1.6 Objectives of Financial Management:
Effective procurement and efficient use of finance lead to proper utilization of the
finance by the business concern. It is the essential part of the financial manager. Hence, the
financial manager must determine the basic objectives of the financial management.
Objectives of Financial Management may be broadly divided into two parts such as:
 Profit maximization.

 Wealth Maximization.
1.6.1 Profit maximization:
Main aim of any kind of economic activity is earning profit. A business concern is also
functioning mainly for the purpose of earning profit. Profit is the measuring techniques to
understand the business efficiency of the concern. It is also the traditional and narrow
approach, which aims at, maximizes the profit of the concern.
1.6.2 Wealth Maximization:
Wealth maximization is one of the modern approaches, which involves latest
innovations and improvements in the field of the business concern. The term wealth means
shareholder wealth or the wealth of the persons those who are involved in the business concern.
It is also known as “Value maximization” or “Net present worth maximization”. This objective
is a universally accepted concept in the field of business.
1.6.3 Welfare maximization:
Welfare maximization is the appropriate objective for an enterprise. The concepts of
wealth Maximization universally accepted in financial decision making.
1.7 Financial decisions:
Investment decisions
Financing decisions
Dividend decisions
1.7.1 Investment decisions:
The decisions relates to the determination of the total amount composition, the
business risk and the image of the firm’s perceived by the investor.

1.7.2 Financing decisions:
After taking the investment decision, the firm commits itself to the new investment,
and hence it must decide upon the best means of financing these commitments. The cost of
raising funds for investing is very crucial in making the financial decisions.
1.7.3 Dividend decisions:
This refers to the reimbursement of profit to the investors who have supplied funds.
1.8 Financial Functions :
The finance functions of raising funds, investing them in assets and distributing returns
earned from assets to shareholders are respectively known as financing, investment and
dividend decisions. While performing these functions, a firm attempts to balance cash inflows
and outflows. This is called as liquidity decision.
The finance functions can be broadly divided in following categories.
 Investment or long-term asset mix decision
 Financing or capital mix decision
 Dividend or profit allocation decision
 Liquidity or short-term asset mix decision
1.9 Goals of Financial Management :
Maximize the value of the firm to its equity shareholder. This means that the goals of the
firm should be to maximize the market value of its equity shares (Which represent the value
of the firm to its equity shareholders).
 Maximization of profits .
 Maximization of earnings per share .
 Maximization of return on equity(defined as equity earnings/net worth) .
 Maintenance of liquid assets in the firm .

 Ensuring maximum operational efficiency through planning, directing and
controlling of the utilization of the funds i.e., through the effective employment of
funds.
 Enforcing financial discipline in the use of financial resources through the
coordination of the operation of the various divisions in the organization.
 Building up of adequate reserves for financing growth and expansion
 Ensuring a fair return to the shareholders on their investment
1.10 Financial Statement Analysis:
A financial statement is an official document of the firm, which explores the entire
financial information of the firm. The main aim of the financial statement is to provide
information and understand the financial aspects of the firm, which provides useful
information to both internal and external parties.
1.10.1 Definition:
“Financial statements provide a summary of the accounting of a business enterprise,
the balance-sheet reflecting the assets, liabilities and capital as on a certain data and the
income statement showing the results of operations during a certain period”.
---- John N. Nyer
1.11 Nature of Financial Analysis :
Financial statement may refer as any formal & original statements which disclose
financial information relating to any business concern or industry or any non-business concern
etc. Financial statements are prepared for the purpose of presenting a periodical review or
report on the progress by the management and it deals with
a) the results achieved during the period under review and
b) the position of investments in the business concern.

Thus the term has now widely been used to represent two statements of accounts, which are
being prepared at the end of a particular fixed period. These two are: Balance Sheet, which
discloses the financial position i.e. status of investment (and therefore also called statement of
financial position) and profit & loss account or income statement which shows the results
during the period. Recently, one additional third statement is also being prepared, which is
called surplus statement or retained earnings statement, which shows an account of retained
earnings used in the business. A statement of changes in financial position" is also sometimes
added to the above statements.
A numbers of schedules are also being attached to supplement all the main data and
information contained in the financial statements. These schedules are considered to be a part
& parcel of the above: statements for the purpose of their analysis & interpretation. Thus it
seems quite desirable to describe the nature and objective of each of the financial statements.
1.12 Need and Objectives of Financial Analysis :
Understandably, all active and concerned participants are interested, to a varying extent,
in the financial affairs of a business enterprise. After all, financial statements are the blue
prints of its financial affair For example, to the owners of the enterprise, they reveal its
progress as evidenced by earnings and current financial conditions; to the prospective
investors they serve as a mirror reflecting a potential investment opportunity; to the creditor,
they act as a magic eye highlighting the credit worth, i.e. assurance whether the company will
honor obligations as and when they mature.
Besides, that the economist may judge the extent to which the current economic climate
has affected the business activity and its financial position. A financial analyst can probe deep
into these statements as also into the financial policies pursued by the management and offer
constructive suggestions to overcome the financial malady, if any then it is diagnosed. To

avoid hostile feelings of the public at large, financial statement at macro level should reflect
that there is no undue concentration of economic power in the hands of a few business houses.
To the government, financial statements offer a basis of taxation and also an understanding of
cost-price-profit behavior including their relationship. Finally, these statements act as a
beacon to management for ensuring goal oriented and effective performance of the business
enterprise.
Thus, financial statement is prepared and analyzed to communicate useful financial
information to interested parties. If this objective is not met out, these statements have no
purpose to serve. But a careful analysis and interpretation by the users of financial statements
will usually clarify many points pertaining to the performance of an undertaking. Evidently,
it is essential that the consumers of these statements too become proficient in the utilization
of available analytical technique
The purpose of the statement analysis is to establish and present the relationship and
trends which enter the data contained in the financial statements. Based upon this analysis, the
users will draw their own conclusions and act accordingly. The “American Accounting
Association” in its conference in June 1941 observed that:
“Every corporate statement should be based on accounting principles which are
sufficiently uniform, objective and well-understood to justify opinions as to the condition and
progress of business enterprise. The purpose of periodic financial statement of corporation is
to furnish information that is necessary for the formulation of dependable judgments.”
The objective of financial analysis is a detailed cause and effect study of the profitability
and financial position. In the opinion of Anthony, the overall objective of a business is to earn
a satisfactory return on the funds invested by it, consistent with maintaining a sound financial
position. To repeat, much can be learned about the business performance and finance position

through careful examination of financial statements. Financial analysis spotlights the
significant facts and relationship concerning managerial performance, corporate efficiency,
financial strength and weakness as also credit-worthiness that would have otherwise been
buried in a heap of detail. Frequently, the technique of analysis is applied to the study of
accounting data with a view to determining the continuity of the business, credit ratings and
testing the efficiency of operations.
1.13 Advantages of Financial Analysis :
Now a days, it is widely accepted that the forms of business concerns and their transactions
have become more complicated and complex. Now one cannot depend upon the intuitions for
having a control over them and for drawing any decision in respect of their movements.
Therefore, today it has become necessary that all quantitative facts relating to the concern
must be intelligibly analyzed and interpreted and decision should be taken on that basis,
because the analysis and interpretation of data highlights upon the important facts and
relationships concerning various aspects of financial life of a business concern.
 Conclusions taken on the basis of intuition may be wrong and defective, because intuition
is mostly inspired by the conscience and the dictates of the conscience may sometimes
be illusory. On the other hand, analysis and interpretation are based on some logical and
scientific methods and hence, decisions taken on that basis seldom proved to be
misleading and wrong.
 Decision taken on the basis of intuition or conclusions derived through one’s personal
nature so they carry either no meaning or negligible value to other persons. Sometimes,
these could be understood by other people as well. On the other hand, decisions based
'on scientific analysis and interpretation are relative and easily read and understood by
other people.

 The user or analyst, as an individual, has very limited personal experience. He can easily
understand the complexities of business activities and their length and mutual
multidirectional relationships only by observation and external experience. Thus, it
becomes necessary that financial statements, which contain the above facts in an implicit
form, should rather be analyzed in an intelligible way.
 Even to verify and test the accuracy and correctness of the decisions already taken on the
basis of intuition, analysis and interpretation are essential.
1.14 Limitations of Financial Analysis :
As every analysis has their own limitations, this analysis also is not free from the
limitations. These financial statements furnish only information and that is also in the form of
figures. Figures will not speak as it is the duty of the analyst or interpreter to make these figures
speak of good or bad of the business affair Although these statements convey meaningful and
useful information to various interested groups in the affairs of the concern, yet the conclusions
& decisions taken on the basis of this information may not be regarded as final and accurate.
Again, as mentioned in connection with the nature of financial statements, these statements
suffer from several limitations, which must be considered while making the use of the
information furnished by these statements. Generally, the following limitations should be taken
into account while analyzing the financial statements
a) Furnished information is not precise, because the formation of above statements is
based on practical methods and rules used and propounded on the basis of experiences
of several years of the accountancy profession. Therefore, information originating
from them can't be precisely measured.
b) Financial statement does not represent the correct financial position of the concern,
because it is affected by the several economic, social and financial factors, but only a

single financial factor is recorded or considered in these statements.
c) In fact, it is far away from truth and exactness. Unless financial position is studied with
reference to social and economic factors, absolute exactness cannot be ascertained.
d) Balance sheet is considered to be a static document, and it reflects the position of the
concern at a moment of time. The real position of the concern may be changing all to
the time. As a result of this limitation, there is the possibility of window-dressing in the
financial statement.
e) Balance sheet is not a valuation- statement i.e. that the values shown in it are not real
values of assets. In full accordance with the accounting principles, fixed assets are
shown in the Balance Sheet at their historical cost i.e. original cost as reduced by the
amount of depreciation. And the amount of depreciation in whatever scientific manner
it may have been determined is purely an estimate. Thus, the values of assets shown
in balance sheet are not those at which assets may be sold. It is thus clear that the true
position of the concern cannot be gauged from the Balance sheet.
f) Information conveyed by these statements may not be comparable on account of
difference between dates of preparation of these statements. At the same time, there is
a difference in methods of accounting operations of the concern. Thus, to a great
extent, the success of the business concern depends upon the energy, abi1ity,
knowledge, experience and efficiency of the management, which is done by manpower
but this is not shown in the statements in monetary value.
In the words of Kennedy Muller, " Analysis and interpretation of financial statement is
an attempt to determine the significance and meaning of the financial statement data, so that
the forecast may be made of the prospects for future earnings, ability to pay interest charges,
and debt maturities of long term as well as short term profitability of a sound dividend policy”.

It is only by interpreting both the statements, we make the data appearing in the report to speak
the story of actual progress and financial position of a concern in a clear and simple language
easily understood by a person who is perhaps the most typical shareholder in our country.
Primarily the process of analysis includes two steps, one is „Approximation of figures‟ and
second is 'Arrangement of facts duly reclassified'.
This analysis could be made in following manner:-
1.15 Techniques Of Financial Statement Analysis:
1.15.1Comparative Statement Analysis:
This statement helps to understand the comparative position of financial and operational
performance at different period of time. It again classified into two major parts such as
Comparative Income Statement Analysis and Comparative balance sheet analysis
1.15.2 Trend analysis:
Trend analysis helps to understand the trend relationship with various items, which
appear in the financial statements. . In this analysis, only major items are considered for
calculating the trend percentage.
1.15.3 Common Size Analysis:
Common size statement, balance sheet and income statement are shown in analytical
percentages. This statement is useful in analysis of the performance of the company by
analysing each individual element to the total figure of the statement. These statements will
also assist in analysing the performance over a year and also with the figures of competitive
firm in industry for making analysis of relative efficiency.

1.15.4 Funds Flow Statement:
Funds flow statement is one of the important tools, which is used in many ways. It helps
to understand the changes in the financial position of a business enterprise between the
beginning and ending financial statement dates. It is also called as statement of sources and
uses of funds.
1.15.5 Cash Flow Statement:
Cash flow statement is a statement which shows the sources of cash inflow and uses of
cash out-flow of the business concern during a particular period of time. It is the statement,
which involves only short-term financial position of the business concern.
1.15.6 Ratio Analysis:
Ratio analysis is a commonly used tool of financial statement analysis. Ratio is a
mathematical relationship between one number to another number. Ratio is used as an index
for evaluating the financial performance of the business concern.
1.16 Meaning of Comparative Statements :
The comparative financial statements are statements of the financial position at different
periods; of time. The elements of financial position are shown in a comparative form so as to
give an idea of financial position at two or more periods.
Any statement prepared in a comparative form will be covered in comparative
statements.From practical point of view, generally, two financial statements (balance sheet and
income statement) are prepared in comparative form for financial analysis purposes. Not only
the comparison of the figures of two periods but also be relationship between balance sheet and
income statement enables an in depth study of financial position and operative results.
1.16.1 The comparative statement may show:
 Absolute figures (rupee amounts).

 Changes in absolute figures i.e., increase or decrease in absolute figures.
 Absolute data in terms of percentages.
 Increase or decrease in terms of percentages.
The analyst is able to draw useful conclusions when figures are given in a comparative
position. The figures of sales for a quarter, half -year or one year may tell only the present
position of sales efforts. When sales figures of previous periods are given along with the
figures of current periods then the analyst will be able to study the trends of sales over different
periods of time. Similarly, comparative figures will indicate the trend and direction of
financial position and operating results.
The financial data will be comparative only when same accounting principles are used
in preparing these statements.
In case of any deviation in the use of accounting principles this fact must be mentioned
at the foot of financial statements and the analyst should be careful in using these statements.
1.16.2 Types of Comparative Statements:
The two comparative statements are :
(i) Balance sheet, and
(ii) Income statement.
(i) Comparative Balance Sheet:
The comparative balance sheet analysis is the study of the trend of the same items,
group of items and computed items in two or more balance sheets of the same business
enterprise on different dates.’ The changes in periodic balance sheet items reflect the conduct
of a business.
The changes can be observed by comparison of the balance sheet at the beginning and
at the end of a period and these changes can help in forming an opinion about the progress of

an enterprise. The comparative balance sheet has two columns for the data of original balance
sheets. A third column is used to show increases in figures. The fourth column may be added
for giving percentages of increases or decreases.
(ii) Comparative Income Statement:
The Income statement gives the results of the operations of a business. The
comparative income statement gives an idea of the progress of a business over a period of
time. The changes in absolute data in money values and percentages can be determined to
analyse the profitability of the business. Like comparative balance sheet, income statement
also has four columns.
First two columns give figures of various items for two year third and fourth columns
are used to show increase or decrease in figures in absolute amounts and percentages
respectively.

Review of Literature :
Philipp Bagus and David Howden (2017), entitled ‘The Federal Reserve System and Euro
system’s Balance Sheet Policies during the Financial Crisis: a Comparative Analysis’ stated
that, this article is completely about the deterioration of the balance sheet and its impact on
currencies of the two countries America and Europe. Central banks of these two countries have
altered their balance sheet practices as per the recent changes and turmoil in the economy
Rohit Bansal (2014), entitled, ‘A Comparative Financial Study: Evidence from Selected Indian
Retail Companies’ stated that Hindustan Unilever Limited (HUL) is India's largest fast moving
consumer goods company with a heritage of over 80 years in India and touches the lives of two
out of three Indians. The objective of this research is to measure the financial and accounting
performance of Indian leading IT companies for the period of 2009 to 2013. Required
information derived from these financial statements was summarized.
Dr. Donthi Ravinder, Muskula Anitha (2013) entitled ‘Financial Analysis – A Study’ stated
that this study is to know the financial performance of Bambino Agro Industries Limited,
Sardhar Patel Road, Secunderabad, by using comparative statement analysis, to examine the
liquidity position of the company, to study the operational performance and efficiency of the
company in terms of utilization of funds and other resources, to evaluate the profitability
position of the company, to know the long - term solvency position of the company, to know
the short - term solvency position of the company.
Anand Pawar and M. Pandya Nayak (2013), entitled ‘financial performance analysis :a case
study of BSNL’, stated that the telecom industry contributed a lot for the development of the
economy. BSNL is inevitable while speaking about Indian telecom performance. Their study
concluded that liquidity position of the unit is strong thereby reflecting its ability to repay its
short term liabilities. They suggested that the unit should deliberately move towards new

projects and successfully deliver value to them for further development of the unit.
Ratish kakkad (2012) entitled ‘Comparative Financial statement Analysis & Innovation in
Private sector Pharmaceutical Companies in India-An empirical Analysis’ stated that, this
article is a comparison of the performances of two pharmaceutical firms which had a good brand
image. Author of this article had concentrated on the performance and growth of the firms due
to large scope for the growth of pharmaceutical industries in India because of huge population
who are dependent on pharmacy.
Naresh Nayak (2017) entitled ‘Comparative analysis is the study of trend of the same items
and computed items into or ore financial statements of the same business enterprise on different
dates. Efficient management of finance is very important for the success of an enterprise. The
term financial performance is very vibrant term. The subject matter of financial performance
has been varying very quickly. In present time greater significance is given to financial
performance.
Dr. Promod Kumar (1992) published a book in 1991 “Analysis of financial statement of
Indian Industries” The study covered the 17 private sector, 5 state owned public sector and 1
central public sector companies. He studied analysis of activities, assessment of profitability,
return on capital investment, analysis of financial structure, analysis of fixed assets and working
capital. In his research he revealed various problems of industries and suggested remedies for
the problems. He also suggested for the improvement of profitability and techniques of cost
control .
Manish Roy Tirkey & Shaban. E. A. Salem (2013) says this study is conducted purely based
on secondary data obtained through website of the specified private banks. By using the
Comparative analysis tool we can analyse the performance of both the banks and we can easily
find out the strength and weakness of the banks and their position in the market. Comparative

analysis is used in this study and particularly those which are related to the financial statement
for this purpose balance sheet of 2009-2012 of both the banks are used and from them to
calculate the required information .
Renu & Dr.S.Sekar (2014) presents the financial analysis is the process of identifying the
financial strength and weakness of the firm establishing relationship between the items of
balance sheet and the profit and loss account. The study was undertaken in Standard Chartered
Finance Limited with a view to have an insight in the financial performance of the firm. In the
present study efforts have been taken to determine the financial condition and performance of
the firm.
Laitinen (2006) presents a framework for the financial statement analysis of a network of small
and medium-sized enterprises. The objective is to make an approach towards a systematic
network financial statement analysis. The data for the study are drawn from the public financial
statements of the partner firms. The proportion of income statement items and balance sheet
items is traced by a simple estimation to the resources used by the network and identified by
each firm.
Al-Aameri and Alrikabi (2014) was focusing on one of the important techniques in financial
analysis, namely, the trend analysis , for the purpose evaluating the performance of petroleum
projects company, and to find out the main strength and weakness points, so as to suggest the
remedial actions for treatment of negative points and enhance the positive one. The paper’s
contains detail study for the data included in financial statements to explain the financial
performance of the company, and that will help the management for planning the future
according to the previous performance, and also contain the converting process of the data of
financial statements to meaningful information through several techniques, the financial
statement analysis among them.

W.H.Beaver, M.Correia And M.F.Mcnichols (2011) says financial statement analysis
has been used to assess a company’s like- live hood of financial distress - the probability that it
will not be able to repay its debts. Financial statement analysis was used by credit suppliers to
assess the credit worthiness of its borrower. Today, financial statement analysis is ubiquitous
and involves a wide variety of ratios and a wide variety of users, including trade suppliers, banks,
credit- rating agencies, investors and management, among other Financial distress refers to the
inability of a company to pay its financial obligations as they mature.
Nissim and Penman (2003) stated that the financial statement analysis distinguishes leverage
in financing activities from leverage in operations. Analysis and interpretation of financial
statements are an attempt to determine the significance and meaning of the financial statement
data so that forecast may be made of the prospects for future earnings, ability to pay interest
and debt maturities (both current and long term) and probability of a sound dividend policy.
John Myer (2016) a renowned authority on Financial Statements Analysis, has referred that in
the initial years of 20thcentury, the bankers and securities exchange authorities were
extensively relying on the financial statements of the companies for analysis, monitoring and
control of the activities and performance of businesses. Another authority has aptly said that:
Accounting is a systematic means of writing the economic history of an organization.
Upma Singh (2016) states that the financial statement is the lifeblood of any business. People
rely on these financial statements to know the condition, performance and ability to efficiently
sustain past and future operations of a particular business. The above topic throws light on
credentials of financial statement analysis in both theoretical and pragmatic ways. Through this
I want to highlight the ways, methods and techniques to analyse the financial statements to
determine the position of business, its profitability, future earnings, ability to pay interest, etc.

in more detailed manner, which is helpful to extrapolate and forecast the future of a business
concern.
Hamptors John (2016) entitled the financial statement is an organized collection of data
according to logical and consistent accounting procedures. Its purpose is to convey an
understanding of 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 service of activities over a given period
of time, as in the case of an income statement. Financial statements are the summary of the
accounting process, which, provides useful information to both internal and external parties.
Gibson,Charles H. (2013) investigates the effects of accounting principles and accounting
assumptions of the financial analysis, since the financial analysis process comes after the
disclosure of accounting system output. The research reveals that there are both positive and
negative effects of accounting principles and assumptions on the accounting measurement
process. So the research seeks how to remove the negative effects of these principles and make
the results of the financial analysis more accurate and realistic.
Sedlacek (2009) understands the financial analysis of the company as a method of the
company’s financial management evaluation, during which the data obtained is graded,
aggregated and compared to each other. Furthermore, the relationships between them are
quantified, looking for the causal connection between the data and their development is
determined. This increases the explanatory power of data processing and its informative value.
Thus it focuses on identifying problems, strengths, weaknesses and foremost the company’s
value processes.
Doron Nissim & Stephen H Penman (1999) in his research article on financial performance
he has pointed that this paper outlines a financial statement analysis for use in equity valuation.
Standard profitability analysis is incorporated, and extended, and is complemented with an

analysis of growth. The perspective is one of forecasting payoffs to equities. So financial
statement analysis is presented first as a matter of Performa analysis of the future, with
forecasted ratios viewed as building blocks of forecasts of payoffs.
Bhattacharya Asish K (2007) explained in detail the analysis of financial statements of Ranbaxy Ltd.
They provided insights into two widely used financial tools, trend analysis and common size
statements analysis. The objective of the paper was to help the reader understand how these tools
should be used to analyses the financial position of a firm. To demonstrate the process of financial
analysis, Ranbaxy Ltd.’s balance sheet and income statements were analysed.

1.3 Statement of The Problem :
A financial statement is the lifeblood of any business. People rely on these financial
statements to know the condition, performance and ability to efficiently sustain past and future
operations of a particular business .The present study has thrown major concentration in
comparative statements from the five years financial statements of the firm. Through this I
want to highlight the ways, methods and techniques to analyze the financial statements to
determine the position of business, its profitability, future earnings, ability to pay interest, etc.
in more detailed manner, which is helpful to extrapolate and forecast the future of a business
concern.

1.4 Objectives of the Study :

 To compare the financial results of the United India Insurance company.
 To examine the financial statement with the help of comparative study
 To do the comparison of balance sheets for the period of five years through the
comparative statements.
 To study the overall financial position of the company.

1.5 Research Methodology :
A. Research:
Research is the process of systematic and in depth study or search for any particular
topic subject area of investigation, collection, presentation and interpretation of data,
research is also “systematic search for a question or a solution to a problem” is called
research.
Research can be defined as the search for knowledge, or as any systematic investigation, with
an open mind, to establish novel facts, solve new or existing problems, prove new ideas, or
develop new theories, usually using a scientific method.
The primary purpose for basic research as opposed to applied 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.
B. Methodology:
Methodology is the systematic method, which is used to collect the information
required to complete this project.
Research methodology is a way to systematically solve the research problem. it may be
understood as a science of studying how research is done scientifically. So, the research
methodology not only talks about the research methods but also considers the logic behind the
method used in the context of the research study. The project evaluates the financial
performance one of the company with help of the most appropriate tool of financial analysis
like Trend analysis and comparative balance sheet.
Hence, it is essentially fact finding study. The study is based on secondary data. Data
pertaining to ratio were collected from the balance sheet and profit & loss account of Oriental

Insurance company. The necessary data were obtained from published annual report. The data
required for the study has been collected from secondary sources and the relevant information
were taken from annual reports, journals and internet etc.
1.5.2 Data Collection :
Data collection is the process of gathering and measuring information on targeted variables in
an established system, which then enables one to answer relevant questions and evaluate
outcomes. Data collection is a component of research in all fields of study
including physical and social sciences, humanities, and business. While methods vary by
discipline, the emph1asis on ensuring accurate and honest collection remains the same. The
goal for all data collection is to capture quality evidence that allows analysis to lead to the
formulation of convincing and credible answers to the questions that have been posed.
1.5.3 Importance :
Regardless of the field of study or preference for defining data (quantitative or qualitative),
accurate data collection is essential to maintaining the integrity of research. Both the selection
of appropriate data collection instruments (existing, modified, or newly developed) and
clearly delineated instructions for their correct use reduce the likelihood of errors occurring.
A formal data collection process is necessary as it ensures that the data gathered are both
defined and accurate and that subsequent decisions based on arguments embodied in the
findings are valid. The process provides both a baseline from which to measure and in certain
cases an indication of what to improve.
1.5.4 Types of Data:
 Primary data
 Secondary data
Primary Data:

Primary data are those which are collected fresh and for first time, and thus happens to be
original in character, and not applicable in the present study.
Secondary data:
Secondary Data which is in secondary in nature i.e., already collected information this
secondary data is collected through company’s websites and other related articles.
The present study purely depends on secondary data only:
 Various books
 Various websites
 Various journals
1.5.5 Data Analysis :
The process of evaluating data using analytical and logical reasoning to examine each
component of the data provided. This form of analysis is just one of the many steps that must
be completed when conducting a research experiment. Data from various sources is gathered,
reviewed, and then analyzed to form some sort of finding or conclusion. There are a variety
of specific data analysis method, some of which include data mining, text analytics, business
intelligence, and data visualizations.
Techniques Used For Data Analysis :
A. Comparative Statement Analysis
(i) Balance sheet, and
(ii) Income statement.

1.6 Limitations of The Study :
 As the study is based on secondary data, the inherent limitation of the secondary data
would have affected the study.
 The study based on historical data, so it cannot be reliable.
 The result of the study cannot be generalized for other organization and we cannot
predict the future financial position of the company based on the study.
 Change in the book keeping procedures by a firm may often mislead the financial
analysis.
 The study has been carried out for the period of five years and it is not sufficient enough
to analyze the entire aspect of the company.

1.7 Scope of The Study :
 The study reveals the financial performance of United India Insurance company
Limited.
 The study mainly involves Comparison of balance sheets & profit & loss accounts
along with trend analysis used in assessing the financial position of the company.
 The scope of the present study confined to only United India Insurance company
Limited in India from 2013 to 2018.
 The scope is limited to secondary data, the inherent limitation of the secondary data
would have affected the study.
 The result of the study cannot be generalized for other organization and we cannot
predict the future financial position of the company based on the study .

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CHAPTER – II
INDUSTRY AND COMPANY PROFILE
2.1 Brief History of Insurance Sector:
The insurance sector in India has completed all the facets of competition from being an
open competitive market to being nationalized and then getting back to the form of a
liberalized market once again. The history of the insurance sector in India reveals that it has
witnessed complete dynamism for the past two centuries approximately. With the
establishment of The Oriental Life Insurance Company in Kolkata, the business of Indian life
insurance started in the year 1818.
2.1.1 Important Milestones in the Indian life Insurance Business :
1912: The Indian Life Assurance Companies Act came into force for regulating the life
insurance business.
1928: The Indian Insurance Companies Act was enacted for enabling the government to
collect statistical information on both life and non-life insurance businesses.
1938: The earlier legislation consolidated the Insurance Act with the aim of safeguarding the
interests of the insuring public.
1956: 245 Indian and foreign insurers and provident societies were taken over by the central
government and they got nationalized.
LIC was formed by an Act of Parliament, viz. LIC Act, 1956. It started off with a
capital of ₹ 5 crore and that too from the Government of India. The history of general insurance
business in India can be traced back to Triton Insurance Company Ltd. (the first general
insurance company) which was formed in the year 1850 in Kolkata by the British.

2.1.2 Important milestones in the Indian General Insurance Business :
1907: The Indian Mercantile Insurance Ltd. was set up which was the first company of its
type to transact all general insurance business.
1957: General Insurance Council, an arm of the Insurance Association of India, framed a code
of conduct for guaranteeing fair conduct and sound business patterns.
1968: The Insurance Act improved for regulating investments and set minimal solvency levels
and the Tariff Advisory Committee was set up.
1972: The General Insurance Business (Nationalization) Act, 1972 nationalized the general
insurance business in India. It was with effect from 1st January 1973.
107 insurers integrated and grouped into four companies viz. the National Insurance
Company Ltd., the New India Assurance Company Ltd., the United India Insurance company
Ltd. and the United India Insurance Company Ltd. GIC was incorporated as a company.
2.1.2 Insurance Industry, as on 1.4.2000, comprised mainly two players:
(1) Life Insurers:
 Life Insurance Corporation of India (LIC)
(2) General Insurers:
 General Insurance Corporation of India (GIC)
(with effect from Dec'2000, a National Reinsurer) GIC had four subsidiary companies, namely
i) The Oriental Insurance Company Limited
ii) The New India Assurance Company Limited
iii) National Insurance Company Limited
iv) United India Insurance Company Limited.
(With effect from Dec'2000, these subsidiaries have been de-linked from the parent company
and made as independent insurance companies)

Year: 2000-2001: (From 2nd April '2000 to 31st December'2001)
Insurance Industry in the year 2000-2001 had 16 new entrants, namely:
The Insurance sector in India is governed by Insurance Act, 1938, the Life Insurance
Corporation Act, 1956 and
General Insurance Business (Nationalization) Act, 1972, Insurance Regulatory and
Development Authority (IRDA) Act, 1999 and other related Acts. With such a large
population and the untapped market area of this population, insurance happens to be a very
big opportunity in India.
Today it stands as a business growing at the rate of 15-20 per cent annually. Together
with banking services, it adds about 7 per cent to the country's GDP .In spite of all this growth
the statistics of the penetration of the insurance in the country is very poor. Nearly 80% of
Indian populations are without Life insurance cover and the Health insurance. This is an
indicator that growth potential for the insurance sector is immense in India. It was due to this
immense growth that the regulations were introduced in the insurance sector and in
continuation "Malhotra Committee" was constituted by the government in 1993 to examine
the various aspects of the industry. The key element of the reform process was Participation
of overseas insurance companies with 26% capital. .The competition that LIC started facing
from these companies were threatening to the existence of LIC. Since the liberalization of the
industry, the insurance industry has never looked back and today stand as the one of the most
competitive and exploring industry in India. The entry of the private players and the increased
use of the new distribution are in the limelight today. The use of new distribution techniques
and the IT tools has increased the scope of the industry in the longer run.
2.1.3. Insurance Sector Reforms :

In 1993, Malhotra Committee, headed by former Finance Secretary and RBI Governor
R.N. Malhotra, was formed to evaluate the Indian insurance industry. The Malhotra committee
was set up with the objective of complementing the reforms initiated in the financial sector.
The reforms were aimed at "creating a more efficient and competitive financial system
suitable for the requirements of the economy keeping in mind the structural changes currently
underway and recognizing that insurance is an important part of the overall financial system
where it was necessary to address the need for similar reforms. In 1994, the committee
submitted the report and some of the key recommendations included:
1) Structure
 Government stake in the insurance Companies to be brought down to 50%.
 Government should take over the holdings of GIC and its subsidiaries so
that these subsidiaries can act as independent corporations.
 All the insurance companies should be given greater freedom to operate.
 Private Companies with a minimum paid up capital of ₹1bn should be
allowed to enter the industry.
 No Company should deal in both Life and General Insurance through a
single entity.
 Foreign companies may be allowed to enter the industry in collaboration
with the domestic companies.
 Postal Life Insurance should be allowed to operate in the rural market.
 Only One State Level Life Insurance Company should be allowed to operate
in each state.
3) Regulatory Body
 The Insurance Act should be changed.

 An Insurance Regulatory body should be set up.
 Controller of Insurance (Currently a part from the Finance Ministry) should
be made independent.
4) Investments
 Mandatory Investments of LIC Life Fund in government securities to be
reduced from 75% to 50%.
 GIC and its subsidiaries are not to hold more than 5% in any company (There
current holdings to be brought down to this level over a period of time).
5) Customer Service
 LIC should pay interest on delays in payments beyond 30 days.
 Insurance companies must be encouraged to set up unit linked pension plans.
 Computerization of operations and updating of technology to be carried out in the
insurance industry. The committee emphasized that in order to improve the
customer services and increase the coverage of the insurance industry should be
opened up to competition.
But at the same time, the committee felt the need to exercise caution as any failure on the part
of new players could ruin the public confidence in the industry. Hence, it was decided to allow
competition in a limited way by stipulating the minimum capital requirement of ₹100 crores.
The committee felt the need to provide greater autonomy to insurance companies in order to
improve their performance and enable them to act as independent companies with economic
motives. For this purpose, it had proposed setting up an independent regulatory body.
2.1.4 Insurance Regulatory and Development Authority – IRDA :
Insurance sector has been opened up for competition from Indian private insurance
companies with the enactment of Insurance Regulatory and Development Authority Act, 1999

(IRDA Act). As per the provisions of IRDA Act, 1999, Insurance Regulatory and
Development Authority (IRDA) was established on 19th April 2000 to protect the interests of
holder of insurance policy and to regulate and ensure orderly growth of the insurance industry.
IRDA Act 1999 paved the way for the entry of private players into the insurance market which
was hitherto the exclusive privilege of public sector insurance companies/ corporations. Under
the new dispensation Indian insurance companies in private sector were permitted to operate
in India with the following conditions:
 Company is formed and registered under the Companies Act, 1956;
 The aggregate holdings of equity shares by a foreign company, either by itself or
through its subsidiary companies or its nominees, do not exceed 26%, paid up
equity capital of such Indian insurance company.
 The company's sole purpose is to carry on life insurance business or general
insurance business or reinsurance business.
 The minimum paid up equity capital for life or general insurance business is ₹100
crores.
 The minimum paid up equity capital for carrying on reinsurance business has been
prescribed as ₹200 crores.
 The Authority has notified 27 Regulations on various issues which include
Registration of Insurers, Regulation on insurance agents, Solvency Margin, Re-
insurance, Obligation of Insurers to Rural and Social sector, Investment and
Accounting Procedure, Protection of policy holders' interest etc. Applications were
invited by the Authority with effect from 15th August, 2000 for issue of the Certificate
of Registration to both life and non-life insurer The Authority has its Head Quarter at
Hyderabad.

2.1.5 Insurance Companies :
IRDA has so far granted registration to 12 private life insurance companies and 9 general
insurance companies. If the existing public sector insurance companies are included, there are
currently 13 insurance companies in the life side and 13 companies operating in general
insurance business. General Insurance Corporation has been approved as the "Indian reinsurer"
for underwriting only reinsurance business. Particulars of the life insurance companies and
general insurance companies including their web address are given below:
2.1.6 India Insurance Policies at a Glance :
Indian insurance companies offer a comprehensive range of insurance plans, a range that
is growing as the economy matures and the wealth of the middle classes increases. The most
common types include: term life policies, endowment policies, joint life policies, whole life
policies, loan cover term assurance policies, unit-linked insurance plans, group insurance
policies, pension plans, and annuities. General insurance plans are also available to cover motor
insurance, home insurance, travel insurance and health insurance.
Due to the growing demand for insurance, more and more insurance companies are now
emerging in the Indian insurance sector. With the opening up of the economy, several
international leaders in the insurance sector are trying to venture into the Indian insurance
industry.
Insurance business is divided into four classes:
1) Life Insurance
2) Fire Insurance
3) Marine Insurance and
4) Miscellaneous Insurance.

2.1.7 Protection of the Interest of Policy Holders:
IRDA has the responsibility of protecting the interest of insurance policyholder. Towards
achieving this objective, the Authority has taken the following steps:
 IRDA has notified Protection of Policyholders Interest Regulations 2001 to
provide for: policy proposal documents in easily understandable language;
claims procedure in both life and non-life; setting up of grievance redressal
machinery; speedy settlement of claims; and policyholders' servicing. The
Regulation also provides for payment of interest by insurers for the delay in
settlement of claim.
 The insurers are required to maintain solvency margins so that they are in a
position to meet their obligations towards policyholders with regard to
payment of claims.
 It is obligatory on the part of the insurance companies to disclose clearly the
benefits, terms and conditions under the policy. The advertisements issued by
the insurers should not mislead the insuring public.
 All insurers are required to set up proper grievance redress machinery in their
head office and at their other offices.
 The Authority takes up with the insurers any complaint received from the
policyholders in connection with services provided by them under the
insurance contract.
2.1.8 The 2020 Vision :
Government of India has set out a goal where it would be in 2020 in different
dimensions. India has professed to commit itself to a long term goal: quadrupling real Gross
Domestic Product (real GDP) by the year 2020 (Planning Commission, 2003). To make this

vision a reality, simple arithmetic shows that it requires a 7%-8% growth in real GDP. The
ask rate is critically dependent on how the economy is able to absorb macroeconomic shocks.
2.1.9 The Role of Insurance and Risk Management :
Insurance has the fundamental role of smoothing out fluctuation of cash flows. For
households, life insurance can reduce the drastic fall in income of the family if the insured
person dies. Through pension plans, a fall in retirement income can also be mitigated.
Similarly, companies may be able to avoid bankruptcy through the use of risk management in
general and insurance in particular. What role does the insurance sector play in this story of
saving and investment in India? In general, saving is channelled into several specific financial
institutions. For most countries, a substantial proportion is invested in banks. Some of it is
invested in longer term markets for capital such as stocks and bonds. In many cases, a
significant portion goes to the insurance sector. It could take the form of life insurance,
pension plans, health insurance and others.
In general, when various components of the insurance market develop, insurance sector
takes on a bigger share of the GDP. A tentative conclusion is that a rise of one percent of real
GDP leads to a rise of two percent of rise insurance demand in the context of India. Thus,
rough estimates would suggest that quadrupling of GDP in India by 2020 will lead to an eight-
fold rise in insurance demand. Of course, this rise in demand will not be spread equally across
different segments of the market. For example, there will be bigger impact on the life and
pension markets. This effect will be tempered by a smaller rise in fire, auto, marine and fire
insurance sub-sector.

Insurance Regulatory and Development Authority of India

Table No. 2.1
Insurance Regulatory and Development Authority of India
Flash Figures -- Non-Life Insurers (Provisional & Unaudited)
'Gross Direct Premium Underwritten For And Up to The Month Of January, 27019
(₹ crores)
For The Month Of
Up To January 2019 Market
January
Share Up
Growth Over The
to The
S.No. Insurer Corresponding Period
Month Of
2018-19 2017-18 2018-19 2017-18 Of Previous Year (%)
January,
2019 (%)
Acko General
73,950.00
1 Insurance Limited 14.78 0.09 103.67 0.14 0.07
Bajaj Allianz
General Insurance 15.93
1,662.95 1,354.18 9,328.34 8,046.46 6.70
2 Company Limited
Bharti AXA General
Insurance Company 30.62
208.64 165.25 1,849.28 1,415.80 1.33
3 Limited
Cholamandalam MS
395.72 321.28 3,564.72 3,451.87 2.56
4 Company Limited
DHFL General
204.30
Edelweiss General
Insurance Company NA NA NA
20.50 77.03 0.06
6 Limited
Future Generali
India Insurance 27.12
279.33 184.28 2,024.77 1,592.74 1.46
7 Company Limited
Go Digit General
2,039.24
HDFC Ergo General
insurance Company 19.29
732.29 605.41 7,272.36 6,096.24 5.23
9 Limited
ICICI Lombard
1,452.23 1,136.83 12,455.53 10,567.70 8.95
10 Company Limited
IFFCO Tokio
459.65 460.02 5,617.88 4,133.94 4.04
11 Company Limited
Kotak Mahindra
30.48 19.61 238.05 145.78 0.17
12 Company Limited
Liberty General
39.07
Magma HDI General
120.86 70.25 745.08 415.45 0.54
14 Limited
National Insurance
(12.96)
15 Company Limited 1,103.85 1,732.30 11,719.14 13,464.51 8.42
Raheja QBE General
12.16 6.93 86.61 59.71 0.06
16 Limited
Reliance General
439.07 347.99 5,313.44 4,357.88 3.82
17 Limited
Royal Sundaram
235.09 229.40 2,671.51 2,159.39 1.92
18 Company Limited
SBI General
348.09 262.62 3,677.97 2,777.44 2.64
19 Limited

For The Month Of

Up To January 2019 Market
January
Share Up
Growth Over The
to The
S.No. Insurer Corresponding Period
Month Of
2018-19 2017-18 2018-19 2017-18 Of Previous Year (%)
January,
2019 (%)
Shriram General
200.29 181.73 1,863.76 1,666.51 1.34
20 Limited
Tata AIG General
783.77 474.70 6,457.31 4,434.08 4.64
21 Limited
The New India
Assurance Company 14.24 5.41
1,707.56 1,985.95 19,809.99 18,792.40
22 Limited
The Oriental
1,167.96 1,080.89 10,746.35 9,477.07 7.72
23 Limited
United India
Insurance Company (3.83)
2,296.81 2,257.58 13,699.15 14,244.61 9.85
24 Limited
Universal Sompo
438.85 335.94 2,453.15 1,630.51 1.76
25 Company Limited
General Insurers
Total 14,333.58 13,346.09 1,23,544.77 1,09,695.56 88.79 12.63
Aditya Birla Health
59.68 17.16 375.22 189.27 0.27
26 Limited
Apollo Munich
Health Insurance 27.46
355.72 296.65 1,643.64 1,289.58 1.18
27 Company Limited
Cigna TTK Health
37.13 32.17 392.90 265.13 0.28
28 Limited
Max Bupa Health
96.12 71.95 722.84 577.21 0.52
29 Limited
Religare Health
145.38 104.29 1,473.60 837.04 1.06
30 Limited
Star Health & Allied
501.10 374.12 3,900.81 2,917.16 2.80
31 Limited
Reliance Health
NA NA NA
32 Insurance Limited 0.59 1.14 0.00
Stand-alone Pvt
Health Insurers 1,195.72 896.34 8,510.15 6,075.39 6.12 40.08
Agricultural
Insurance Company (9.90)
437.09 385.19 6,086.69 6,755.69 4.37
33 of India Limited
1.38
34 ECGC Limited 112.12 105.58 998.04 984.41 0.72
Specialized PSU
Insurers 549.21 490.77 7,084.73 7,740.10 5.09 -8.47
GRAND TOTAL 16,078.51 14,733.20 1,39,139.65 1,23,511.05 100.00 12.65

Note: Compiled on the basis of data submitted by the Insurance companies
NA: Not Applicable

2.2 Company Profile :
United India Insurance Company Limited was incorporated as a Company on18th February
1938. General Insurance Business in India was nationalized in 1972. 12Indian Insurance
Companies, 4 Cooperative Insurance Societies and Indian operations of 5 Foreign Insurers,
besides General Insurance operations of southern region of Life Insurance Corporation of India
were merged with United India Insurance Company Limited. After Nationalization United
India has grown by leaps and bounds and has18300 work force spread across 1340 offices
providing insurance cover to more than 1Crore policy holders. The Company has variety of
insurance products to provide insurance cover from bullock carts to satellites.
United India has been in the forefront of designing and implementing complex covers to large
customers, as in cases of ONGC Ltd, GMR- Hyderabad International Airport Ltd, and Mumbai
International Airport Ltd Tirumala - Tirupati Devasthanam etc. They have been also the
pioneer in taking Insurance to rural masses with large level implementation of Universal Health
Insurance Programme of Government of India & Vijaya Raji Janani Kalyan Yojana ( covering
45 lakhs women in the state of Madhya Pradesh) , Tsunami Jan Bima Yojana (in 4 states
covering 4.59 lakhs of families) ,National Livestock Insurance and many such schemes
United India Insurance co is formed as a subsidiary of General Insurance Corporation of India.
Their quarter is in Chennai. Now they are the second largest insurer in India and the largest in
rural insurance and Insurance of major power plants. They have carved a niche for themselves
in this segment because of their deep rooted commitment combined with experience and
expertise over 7 decades. Investment Information and Credit Rating Agency of India Limited
(ICRA) has awarded them with ‘iAAA’ rating indicating sound financial position and highest
claims paying capacity.

The solvency margin is pegged at 3.32 and the net profit of the company for2008-09 showed
a healthy Rs. 745.485 crores. With over 1350 offices spanning the length and breadth of the
country they have been at advantage to serve customers better. Besides this their core strength
lies in their human resources. Having a work force of 17000+ people and an army of 2000
officers committed to the service of their customers, they are in a position to make light of the
fact that they issue more than 1crore policies in a year and settle more than 8 lac
claims annually.
They have 25 Regional Offices, 1 Regional Cell, 2 Large Corporate Brokers Unit, 362
Divisional Offices, 684 Branch Offices and 288 Micro Offices spread around the country. They
have 17488 personnel working with them. There are 4451 officers (Class I) 2013 Development
Officers (Class II) 8508 Staff Senior Assistant and Assistant (Class III),2516 Sub staff, Drivers,
Peons and thousands of agents.
Board of Directors
1. Shri G.Srinivasan , Chairman Cum Managing Director
2. Smt. Socratic Likhi, Director, Govt of India
3. Shri M. S. Sundara Rajan,Chairman & Managing Director, Indian Bank
4. Shri. Milind. A. Kharat , Director & General Manager , UIIC
5. Shri.V.Harshavardhan , Director & General Manager , UIIC
6. Shri A V Ratnam ,Director
7. Shri Abhijit Bandyopadhyay ,Director
CORPORATE MISSION
 To provide insurance protection to all
 To ensure customer satisfaction
 To function on sound business principles

 To help minimize national waste and to help develop the Indian economy
CORPORATE VISION
 The most preferred insurer in India, with global footprint & recognition
 Trusted brand admired by all stakeholders
 The best-in-class customer service provider leveraging technology & multiple channels
 The provider of a broad range of innovative products to meet the needs of all customer
segments
 Great place to work with highly motivated and empowered employees
 Recognized for its contribution to the society
Their Bank assurance tie-ups
 Andhra Bank
 State Bank of Hyderabad
 Indian Bank
 Canara Bank
 Syndicate Bank
 State Bank of Travancore
 State Bank of Indore
 State Bank of Patiala
 Bank of Maharashtra
 Bank of Rajasthan
 Federal bank
Their Corporate Client
 Oil and Petro-Chemical Majors
 Oil and Natural Gas Corporation Ltd

 Indian Oil Corporation
 Hindustan Petroleum Corporation Ltd.
 Haldia Petrochemicals Ltd
 Gujarat State Fertilizer Corporation
 Gujarat Narmada Valley Fertilizer Corporation.
Power and Energy Sector
 Nuclear Power Corporation Kaiga, Kudankulam
 Karnataka State Electricity Board, Bellary
 Punjab State Electricity Board
 Tiesta Uraj Ltd
 Chattisgarh State Electricity Board
 National Hydro Power Corporation
 National Thermal Power Corporation
 BHEL Power Projects: Chandrapura, Bakreshwar, Jaindal Super Power Plant Raigarh,
Sudan, Dadr
 GVK Industries
 Tata Power
 Neyveli Lignite Corporation
 Damodar Valley Corporation
 Tanir Bavi Power Company Pvt. Ltd
 Tehri Hydro Development Corporation
 Subansiri Lower Hydro Electric Project

CHAPTER – III
Results and Discussion

Comparative Statement Analysis:
This statement helps to understand the comparative position of financial and operational
performance at different period of time. It again classified into two major parts such as
comparative income statement analysis and comparative balance sheet analysis .
(i) Income statement and ,
(ii) Balance sheet .
1.Comparative Income Statement:
The Income statement gives the results of the operations of a business. The comparative
income statement gives an idea of the progress of a business over a period of time. The
changes in absolute data in money values and percentages can be determined to analyze the
profitability of the business. Like comparative balance sheet, income statement also has four
columns. First two columns give figures of various items for two years. Third and fourth
columns are used to show increase or decrease in figures in absolute amounts and
percentages respectively.
2.Comparative Balance Sheet:
The comparative balance sheet analysis is the study of the trend of the same items, group of
items and computed items in two or more balance sheets of the same business enterprise on
different dates.’ The changes in periodic balance sheet items reflect the conduct of a business.
The changes can be observed by comparison of the balance sheet at the beginning and at the
end of a period and these changes can help in forming an opinion about the progress of an
enterprise. The comparative balance sheet has two columns for the data of original balance
sheets. A third column is used to show increases in figures. The fourth column may be added
for giving percentages of increases or decreases.

Comparative Balance sheet of United India Insurance Company Limited of the year
2013-14
Increase/Decrease Increase/decrease
Particulars 2013 2014
₹ %
Equity &
liabilities:
Share holders fund
Share capital 15,00,000 15,00,000 - -
Reserves & surplus 4,80,26,309 5,21,05,280 -40,78,971 -8.49
Total shareholders
4,95,26,309 5,36,05,280 -40,78,971 -8.23
funds (A)
Long term
liabilities:
Fair value change
4,80,26,309 4,29,22,835 51,03,474 10.62
account
borrowings - - - -
Total long term
4,80,26,309 4,29,22,835 51,03,474 10.62
liabilities (B)
Short term
liabilities:
Current liabilities 10,49,98,571 11,05,73,484 -55,74,913 -5.3
provisions 4,12,54,295 4,96,42,568 -83,88,273 -201.91
Total current
14,62,52,816 16,02,16,568 -1,39,63,186 -95.46
liabilities (C)
Total liabilities
24,38,05,474 25,67,44,167 -1,23,38,688 -5.3
(A+B+C)
Non current assets:
investments 18,76,62,793 20,92,87,983 -2,16,25,195 -11.52
loans 33,37,534 32,68,229 69,305 2.07
fixed assets 11,10,292 11,45,135 -34,843 -3.13
Total fixed assets
19,21,10,619 21,37,01,352 -2,15,90,733 -11.23
(A)
Current assets:
Cash &bank balance 1,33,23,534 1,56,08,144 -22,84,610 -17.14
loans &advance 2,78,14,360 2,74,34,671 3,80,189 1.36
Total current assets
4,11,38,394 4,30,42,315 -19,04,411 -4.62
(B)
Total assets (A+B) 23,32,49,013 25,67,44,167 2,34,95,154 -10.07

Interpretation:
From the above table the comparative balance sheet of the company reveals that during 2013-
2014
 The fixed assets has been increased to .11.23%.
 Fair value change account has been decreased to 10.62%.
 Reserves & Surplus has been increased to 8.49%.
 Loans have been decreased by 2.07%.
 The Current Assets have been increased by 4.62%.
 The Investments have been increased by 11.52% in 2014 when compared to 2013

2014-15
₹ %
Equity &
liabilities:
Share holders
fund:
Share capital 15,00,000 15,00,000 - -
Total shareholders
5,36,05,280 5,58,90,343 -22,85,063 -4.38
funds (A)
Long term
liabilities:
Fair value change
4,29,22,835 5,88,72,972 -1,59,50,137 -37.16
account
borrowings - - - -
Total long term
4,29,22,835 5,88,72,972 -1,59,50,137 -37.16
liabilities (B)
Short term
liabilities:
provisions 4,96,42,568 5,60,70,704 -64,28,136 -12.94
Total current
16,02,16,568 17,25,03,735 -1,22,87,683 -7.66
liabilities (C)
Total liabilities
25,67,44,167 28,72,67,050 -3,05,22,893 -11.88
(A+B+C)
Non current assets:
investments 20,92,87,983 24,15,43,745 -3,12,55,757 -15.41s
Loans 32,68,229 31,15,101 1,53,128 4.68
fixed assets 11,45,135 14,04,437 -2,59,302 -22.64
Total fixed assets
21,37,01,352 2,60,63,283 -3,23,61,738 -15.14
(A)
Current assets:
loans &advance 2,74,34,671 2,50,27,885 24,06,786 8.77
4,30,42,315 4,12,03,767 18,39,048 4.27
(B)
Total assets (A+B) 25,67,44,167 28,72,67,050 -3,05,22,883 -11.87

Interpretation:
From the above table the comparative balance sheet of the company reveals that during 2014-2015
 The fixed assets has been increased to 22.64%.
 Fair value change account has been increased to 37.16%.
 Reserves & surplus has been increased to 4.38%.
 The current Assets have been decreased by 4.27%.
 The Investments have been increased by 15.41% in 2015 when compared to 2014.

2015-16
₹ %
Equity &
liabilities:
Share holders
fund:
Share capital 15,00,000 15,00,000 - -
Total shareholders
funds (A) 5,58,90,343 5,13,11,975 -14,21,632 -2.54
Long term
liabilities:
Fair value change
5,88,72,972 4,13,58,645 1,75,14,327 29.74
account
Borrowings - - - -
Total long term
5,88,72,972 4,13,58,645 1,75,14,327 29.74
liabilities (B)
Short term
liabilities:
Provisions 5,60,70,704 6,08,72,679 -48,01,975 -8.56
Total current
17,25,03,735 18,14,09,797 -89,06,062 -5.16
liabilities (C)
Total liabilities
28,72,67,050 28,00,80,417 71,86,633 2.5
(A+B+C)
Non current assets:
Investments 24,15,43,745 23,23,82,394 91,61,351 3.79
Loans 31,15,101 28,94,353 2,20,748 7.08
fixed assets 14,04,437 14,43,725 -39,281 -2.79
Total fixed assets
2,60,63,283 23,67,20,472 93,42,811 3.79
(A)
Current assets:
Cash &bank balance 1,61,75,882 1,19,37,909 42,37,978 26.18
loans &advance 2,50,27,885 3,14,22,036 -63,94,151 -25.54
4,12,03,767 4,33,59,940 -21,56,173 -5.23
(B)
Total assets (A+B) 28,72,67,050 28,00,80,412 71,86,638 2.5

Interpretation:
 Fixed assets have been increased to 2.79%.
 Fair value change account decreased to 29.74%.
 Reserves & Surplus have been increased to 2.61%.
 Loans have been decreased to 7.08%.
 Current Assets have been increased to 5.23%.
 Investments have been decreased to 3.79% in 2016 when compared to 2015.

2016-17
₹ %
Equity &
liabilities:
Share holders
fund:
Share capital 15,00,000 15,00,000 - -
Reserves & surplus 5,58,11,975 3,66,68,707 1,91,43,268 34.29
Total shareholders
funds (A) 5,13,11,975 3,81,68,707 1,91,43,268 33.4
Long term
liabilities:
Fair value change
4,13,58,645 93,11,910 1,75,14,327 24.67
account
Fair value change –
2,89,96,546 4,76,41,671 -1,86,45,125 -64.3
policy holder
Borrowings - - - -
Total long term
4,13,58,645 5,69,95,581 -1,56,36,936 -37.8
liabilities (B)
Short term
liabilities:
Current liabilities 12,05,37,118 16,91,70,362 -4,86,33,244 -40.34
Provisions 6,08,72,679 7,38,85,447 -1,30,12,768 -21.37
Total current
17,25,03,735 24,30,55,809 -6,16,46,012 -33.98
liabilities (C)
Total liabilities
28,00,80,417 33,82,20,047 -5,81,39,680 -20.75
(A+B+C)
Non current assets:
Investments 23,23,82,394 27,12,52,752 -3,88,70,358 -16.72
Loans 28,94,353 25,88,177 3,06,176 10.57
fixed assets 14,43,725 15,20,685 -76,960 -5.33
Total fixed assets
23,67,20,472 27,53,61,614 -3,86,41,142 -16.32
(A)
Current assets:
Cash &bank balance 1,19,37,909 1,91,64,266 -1,79,70,472 -150.53
loans &advance 3,14,22m036 7,38,85,477 -4,24,63,441 -135.13
4,33,59,940 9,30,49,743 -4,96,84,803 -114.54
(B)

Total assets (A+B) 28,00,80,412 28,00,80,412 -8,83,30,945 -31.53

Interpretation:
From the above table the comparative balance sheet of company reveals that during 2016-17
 Fixed Assets have been increased to 16.32%.
 Fair value change account have been decreased by 24.67%.
 Reserves % Surplus have been decreased by 34.29%.
 Current Assets have been increased to 114.54%.
 Investments have been Increased to 6.72% in 2017 when compared to 2016

2016-17
₹ %
Equity & liabilities:
Share holders fund:
Share capital 15,00,000 15,00,000 - -
Reserves & surplus 3,66,68,707 4,66,98,414 -1,00,29,707 -27.35
Total shareholders funds

3,81,68,707 4,66,98,414 -1,00,29,707 -26.27
(A)
Long term liabilities:
Fair value change

93,11,910 75,99,594 17,12,316 18.38
account
Fair value change –

4,76,41,671 3,43,87,111 1,32,54,560 27.82
policy holder
borrowings - 90,00,000 -90,00,000 -
Total long term

5,69,95,581 5,09,86,705 59,66,876 10.47
liabilities (B)
Short term liabilities:
Current liabilities 16,91,70,362 - 16,91,70,362 100
Provisions 7,38,85,447 - 7,38,85,447 100
Total current liabilities

24,30,55,809 - 24,30,55,809 100
(C)
Total liabilities
33,82,20,047 9,91,85,119 23,89,94,978 70.67
(A+B+C)
Non current assets:
Investments 27,12,52,752 29,81,51,003 -2,68,98,251 -9.91
Loans 25,88,177 26,50,047 -61,870 -2.39
fixed assets 15,20,685 18,43,795 -3,23,110 -21.24
Total fixed assets (A) 27,53,61,614 30,26,44,845 -2,72,83,237 -9.9
Current assets:

loans &advance 7,38,85,477 3,89,91,576 3,48,93,901 47.22
Total current assets (B) 9,30,49,743 5,85,39,174 3,45,10,509 37.08
Total assets (A+B) 28,00,80,412 36,11,84,019 72,27,338 1.96
Interpretation:
 Fixed Assets have been increased to 9.90%.
 Fair value change accounts have been decreased by 18.38%.
 Reserves & Surplus have been increased to 27.35%.
 Loans have been increased to 2.39%.
 Current Assets have been decreased by 37.08%.
 Investments have been increased to 9.91% in 2018 when compared to 2017.

CHAPTER - IV
Findings and Suggestions

4.1 Findings :
 During the study period 2017-18, the Reserves & surplus are in fluctuated as
compared to previous years. .
 During the study period the fixed assets are in increasing as compared to previous
years.
 During the study period 2014-15, 2017-18 the Current assets have been decreased as
compared to previous year.
 During the study period the Investment have been decreased in 2015-16 when
compared to previous year.
 During the study period 2017-18 the loans have been increased when compared to
previous years.

4.2Suggestions:
 The company should focus on profitability in order to earn more profits by reducing
investments on fixed assets and have to concentrate more on investments.
 To increase the level of insurance penetration United India Insurance company should
focus on bringing products that suit to the rural customers.
 The company if possible should invest in advertising, conduct road shows, and spend
money on hoardings, so that it can better propagate awareness about its various
insurance products.
 The company should have to pay the current liabilities much faster.
 Customer friendly documentation i.e.it should be made easier and faster.
 All the hidden charges should be clearly be stated in the form and explained by the
agent.

CHAPTER V
5.1 Conclusion
In today’s competitive world, customer satisfaction has become an important aspect to retain
the customers, not only to grow but also to serve. Increased competition, wide range of product
offerings and multiple distribution channels cause companies to value satisfied and highly
profitable customers.. The entry of private sector insurance companies into the Indian
insurance sector triggered off a series of changes in the industry. Even with the stiff
competition in the market place, it is evident from the study that products offered by the United
India Insurance company are creative, innovative and of the liking of the customers, moreover
they are satisfied by the true knowledge provided by the company.
From the financial comparative statement analysis and the overall performance of the United
India Insurance company is good but need to improve their performance in a satisfactory
manner.

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COMPARATIVE BALANCESHEET

Introduction to Comparative Statement Analysis

kind of economic activity.

important part of the business concern.

SITAMS, CHITTOOR Page 1

1.3 Definition of Finance:

“Finance is the art and science of managing money”.

---- Khan and Jain.

administering of the funds used in the business”.

---- Guthuman and Dougall.

1.4 Financial Management:

Financial management is an integral part of overall management. It is concerned with

---- S.C. Kuchal.

1.5 Scope of Financial Management:

Financial management covers wide area with multidimensional approaches. The

following are the important scope of financial management.

1.5.1 Financial management and economics:

SITAMS, CHITTOOR Page 2

provides immense opportunities to finance, and economical areas.

1.5.2 Financial Management and Accounting:

1.5.3 Financial Management and Mathematics

Modern approaches of the financial management applied large number of

1.5.4 Financial Management and Production Management

multiple the money into profit.

1.5.5 Financial Management and Marketing:

this, the marketing department needs finance to meet their requirements.

1.5.6 Financial Management and Human Resource:

manpower to all the functional areas of the management.

1.6 Objectives of Financial Management:

SITAMS, CHITTOOR Page 3

1.6.1 Profit maximization:

approach, which aims at, maximizes the profit of the concern.

1.6.2 Wealth Maximization:

Wealth maximization is one of the modern approaches, which involves latest

is a universally accepted concept in the field of business.

1.6.3 Welfare maximization:

Welfare maximization is the appropriate objective for an enterprise. The concepts of

wealth Maximization universally accepted in financial decision making.

1.7 Financial decisions:

1.7.1 Investment decisions:

SITAMS, CHITTOOR Page 4

1.7.2 Financing decisions:

1.7.3 Dividend decisions:

1.8 Financial Functions :

and outflows. This is called as liquidity decision.

The finance functions can be broadly divided in following categories.

 Investment or long-term asset mix decision

 Financing or capital mix decision

 Dividend or profit allocation decision

 Liquidity or short-term asset mix decision

1.9 Goals of Financial Management :

of the firm to its equity shareholders).

 Maximization of earnings per share .

 Maximization of return on equity(defined as equity earnings/net worth) .

 Maintenance of liquid assets in the firm .

SITAMS, CHITTOOR Page 5

 Ensuring maximum operational efficiency through planning, directing and

 Enforcing financial discipline in the use of financial resources through the

coordination of the operation of the various divisions in the organization.

 Building up of adequate reserves for financing growth and expansion

 Ensuring a fair return to the shareholders on their investment

1.10 Financial Statement Analysis: