You are on page 1of 86

?   ?

    
c
O    ‘


O 
  O

    



 

 


O 
  





 !

  " 
#$%& 
'

(O &
 )

‘‘ ‘
True learning happens out of experience and observation. And for
more improvement, new tools and techniques have been developed to
meet the needs of modern business which works in complex
environment. As a part of the S.Y. B.B.A. syllabus, practical studies
help us to link classroom knowledge with practical scenario.

Business management is an activity involving planning, decision


making and most important is its implementation through interaction
among individuals with the help of discussions and exchanges of ideas
and experiences and thus results into practical application of the annual
report of three successive years which are put in together in a logical
format.

So to know basically how the professional managers workout in


industries, financial concerns can be clearly known. I hope this
presentation will be useful to all concerned.

‘
‘


  ‘

Through this acknowledgement, I express my gratitude towards all


those people who helped me in preparing this project report which has
been a great learning experience.

First of all I would like to thank the Director V   



and sincere thanks to  
 V  who guided me throughout the
project and also provided valuable suggestions and encouragement as
and when needed.

I am heart fully thankful to my  


    
   who were supportive during the preparation of this report.

‘
‘
‘
‘

‰
Index
1 General information o

Introduction of 
company
 Introduction of c
finanace
‰ Ratio analysis c
A Profit &loss a/c o
o Balance sheet o
‘
m Comparative statement oo
of p&l a/c
8 Comparative o
statement of balance
sheet ‘
 Cash flow m
10 Director¶s report m
‘
11 Auditor¶s report mo
‘
1
Conclusion 
‘
1 Bibilogarphy 

A
‘‘‘
‘
   

A.K Nanda

A S Ganguly

Anupam Puri

Deepak S Parekh

M M Murugappan

Nadir B Godrej

Narayanan Vaghul

R K Kulkarni




Bank of America N.A


Bank of Baroda
Bank of India
Central Bank
Central Bank of India
HDFC Bank Limited
State Bank of India
Union Bank of India

 
Deloitte Haskins & Sells

o



 

Gateway Building,
Apollo Bunder
 Mumbai
 
Maharashtra
  
‰00001
 
investors@mahindra.com


http://www.mahindra.com

  
  
 Auto - Cars & Jeeps



 M & M Group

   
 0
/10/1‰A

m
    
The Company was Incorporated and converted into Public Limited in 1AA at
Mumbai. The Company Manufacture Jeep type vehicles, petrol industrial engines,
industrial process control instruments and flow meters. Trading in steel and
manufacture of professional grade electronic components.

Jeeps are manufactured under a license and an agreement with Willys Motors Inc.,
Toledo, Ohio, U.S.A., for whom the Company also acts as exclusive distributors
for the whole of India for their entire range of vehicles including utility vans,
cargo/personnel carriers and pick-up trucks.


 
  
 
Few groups can identify as closely with India's destiny and
industrial progress as the Mahindra Group. In fact, Mahindra is
like a microcosm of India. Both were born around the same time,
had the same aspirations and both experienced the inevitable
troughs
And crests in the journey towards their goals. And both continue to
march on the path to progress and global recognition.

The birth of Mahindra & Mahindra began when K.C. Mahindra


visited the United States of America as Chairman of the India
Supply Mission. He met Barney Roos, inventor of the rugged
'general purpose vehicle' or Jeep and had a flash of inspiration:
wouldn't a
vehicle that had proved its invincibility on the battlefields of World
War II be ideal for India's rugged terrain and its r  rural roads?

Swift action followed thought. The Mahindra brothers joined hands


with a distinguished gentleman called Ghulam Mohammed. And, on
October
nd, 1‰A, Mahindra & Mohammed was set up as a franchise
for assembling jeeps from Willys, USA.

Two years later, India became an independent nation and Mahindra


& Mohammed changed its name to Mahindra & Mahindra.

Since then, Mahindra & Mahindra has grown steadily in size and
stature and evolved into a Group that occupies a premier position in
almost all key sectors of the economy. The Group's history is
studded with milestones.

For Mahindra & Mahindra, this translates into many more milestones to
be set up before it rests. If ever.


      

Finance is the life blood of the business. Without finance no


business or enterprise can be commenced. From the beginning of the
enterprise till its end, finance is constantly required. For implementation
of various plans and for achieving goals of business, finance is essential.
Any profitable and ambitious plan becomes dream in the absence of
finance. Shortage of finance will disturb the production planning.
Similarly excess of finance will become burden for business enterprise
for keeping it idle.

In business enterprise necessities of more and more finance increasing


for purchase of raw materials, payments of wages and for payment of
selling and other administrative expenses. Besides, finance is required
for modernization and development of business.

The three most important business activities of a business firm are


finance, production and marketing. A firm secures whatever capital it
needs invest it in activities which generates returns on invested capital
(production and marketing activities). Every business unit whether big
or small needs finance to carry its operations.

A firm¶s success, in fact its survival depends upon how efficiently it is


able to generate funds as and when needed. Thus finance holds the key
of all the activities.
c
  
 
  
Finance means money used by company provided by the
shareholders or by loans i.e, it is a study of money management and
provision of money when it is required .

ü    



 
! is a word from French language. The meaning of this
word is ever changing. In 1mth century the term ³finance´ was considered
as ³moneylenders´. But now it is considered as ³  
   ´. The meaning and definition changes according to
circumstances.

‘According to "



µFinancial Management is the business activity which is concern
with acquisition and conservation of capital funds in meeting financial
needs and overall objectives of business enterprise¶.

Thus financial management is concerned with the acquisition,


arrangement, investment, distribution and control over the business
finance. What so ever is done by finance manager is known as financial
management.

cc
‘ ‘‘‘‘
 ‘ 

Without finance no activity is possible. According to ##


 "" ³Money is a pivot, around it all economic activities are
cluster´. Acquisition and utilization of finance are the main components
of financial management. ³But utilization of finance in wrong direction
will decrease the profitability and prestige of unit. And entire success
and progress of business depends on effective finance functions.

G 
          


R‘ In the business purchase, of Raw material, Plant and Machinery,


Land and Building, benefit of scientific purchase can only be
obtained only if finance function is ideal.
R‘ The aim of business is to make profit promoter are always keeping
idea of expansion, for getting profit.
R‘  
      !# It is true but for this,
customer service centre are required. It is very clear that without
finance functions the idea of customer service centre becomes
merely a dream.
Thus, in business, finance function is an important activity.
Other activities of business depend on financial matters. That is
why finance is compared with the blood circulation or life line of
business and industry.

  
  

$ 

To understand the information contained in financial statements


with a view to know the strength or weaknesses of the firm and to make
forecast about the future prospects of the firm and thereby enabling the
financial analyst to take different decisions regarding the operations of
the firm.

   %&:

Fundamental Analysis has a very broad scope. One aspect looks


at the general (qualitative) factors of a company. The other side
considers tangible and measurable factors (quantitative). This means
crunching and analyzing numbers from the financial statements. If used
in conjunction with other methods, quantitative analysis can produce
excellent results.

     

A ratio is one figure express in terms of another figure. It is a


mathematical yardstick that measures the relationship two figures, which
are related to each other and mutually interdependent. Ratio is express
by dividing one figure by the other related figure. Thus a ratio is an
expression relating one number to another. It is simply the quotient of
two numbers. It can be expressed as a fraction or as a decimal or as a
pure ratio or in absolute figures as ³ so many times´. As accounting ratio
is an expression relating two figures or accounts or two sets of account
heads or group contain in the financial statements.

c
      %&
Financial ratios are essentially concerned with the identification of
significant accounting data relationships, which give the decision-maker
insights into the financial performance of a company. The advantages of
ratio analysis can be summarized as follows:

ù Ratios facilitate conducting trend analysis, which is important for


decision
making and forecasting.
ù Ratio analysis helps in the assessment of the liquidity, operating
efficiency,
profitability and solvency of a firm.
ù Ratio analysis provides a basis for both intra-firm as well as inter-
firm
comparisons.
ù The comparison of actual ratios with base year ratios or standard
ratios helps
the management analyze the financial performance of the firm


%         %&

Ratio analysis has its limitations. These limitations are described below:
'   

ù Ratios require quantitative information for analysis but it is not
decisive about analytical
output .
ù The figures in a set of accounts are likely to be at least several
months out of
date, and so might not give a proper indication of the company¶s current
financial
position.
ù Where historical cost convention is used, asset valuations in
the balance sheet
could be misleading. Ratios based on this information will not
be very useful for
decision-making.

'    

(
 

ù When comparing performance over time, there is need to


consider the changes
in price. The movement in performance should be in line with
the changes in
price.
ù When comparing performance over time, there is need to
consider the changes
in technology. The movement in performance should be in line
with the changes
in technology.
ù Changes in accounting policy may affect the comparison of
results between different accounting years as misleading.
cA
ù When comparing performance over time, there is need to
consider the changes in price. The movement in performance
should be in line with the changes in price.
ù When comparing performance over time, there is need to
consider the changes in technology. The movement in
performance should be in line with the changes in technology.
ù Changes in accounting policy may affect the comparison of
results between different accounting years as misleading.

' 
)   
ù Companies may have different capital structures and to
make comparison of performance when one is all equity
financed and another is a geared company it may not be a good
analysis.
ù Selective application of government incentives to various
companies may also distort intercompany comparison.
comparing the performance of two enterprises may be
misleading
ù When comparing performance over time, there is need to
consider the changes in price. The movement in performance
should be in line with the changes in price.
ù When comparing performance over time, there is need to
consider the changes in technology. The movement in
performance should be in line with the changes in technology.
ù Changes in accounting policy may affect the comparison of
results between different accounting years as misleading.

co
       
As per requirement of various users (for e.g. short term creditors,
management, investors) the ratios may be classified in following
groups:
    % *   %
(

 (   
     
Gross Profit Current Ratios Debt Equity Stock Turnover
Ratio Ratio Ratios

Net Profit Ratio Liquid Ratio Proprietary Ratio Working


Capital
Turnover
Return on share- Capital Gearing Total Assets
holders fund Ratio Turnover
Operating Ratio Long term funds Book Value Per
to fixed Assets Share
Expenses Ratio Debtors Ratio
Return on capital Creditors Ratio
employed
Earnings per
share
Dividend per
share
Price Earning

cm
      
#‘    

  ) This ratio shows the relationship between Gross Profit
and Net sales.
+
(
 ) The main Objective of computing this ratio is to find
out the efficiency with which production or purchase operation are
carried on.

  ) There are
components of this ratio which are as
under:
Gross profit is the excess of net sales over cost of cost sold
i.e. Net sales (-) cost of goods sold.Cost of goods sold =
Opening stock + Net purchase (purchase ±purchase return)
+ Direct Expenses (purchase related expenses) - Closing
stock.Net sales which is gross sales (both cash and credit)
± Sales return.
  )
š‘ This ratio is calculated by dividing the gross profit by
net sales. It is expressed as percentage. In the form of a
formula this ratio may be expressed as under:

‘ è 
? 
        
 
‘


ÿ
 ? 
!" ") )

 #$% &'( #$% &'( #$% &'(

 * 

o c 
o Ac AA
A ‰m

  c‰ o‰ c
o‰ co c A

 *   
m 
A m  o

o
A
‰
 c



 
c

  c  
     ‰



 ) Here gross profit ratio increased in
008-
0.which shows efficient use of raw material and there is
increase in manufacturing expenses. It means that a high
ratio suggests that the firm is able to buy at reasonable
prices or that the cost of production is under control.
The firm has to work better for it and reduce its cost of
production.
c
#‘
  

 )
            
   
+
(
)
The main objective of computing this ratio is to find the
overall profitability due to various factors such as
operational efficiency, trading on equity etc.


 )
There are two components of this ratio which are as
under:
1.‘Net Profit

.‘Net Sales
  )

This ratio is calculated by dividing the next profit by net


sales. It is expressed as percentage. In the form of a
formula this ratio may be expressed as under:

è 
? 
   $       
 


ÿ
 ? 
!" ") )

 #$% &'( #$% &'( #$% &'(

 * 
mmA ‰ oA 
‰A m

  c‰ o‰ c
o‰ o c A

 *   
A o
o oc
A ‰‰

o
A
‰
 c



 
c

  c  
     ‰



  ) Here in the three years the net profit ratio of
the company shows upward trend. It shows profitability of
firm and management of the firm is efficient this suggest
that company is at satisfactory position and can be helpful for
the company.


c
#
  "
"
, 


 )
This ratio measures a relationship between net profit after
interest, tax and preference dividend and equity shareholder¶s
funds.

+
(
)
The objective of calculating this ratio is to find out how
efficiently the funds supplies by the equity shareholder¶s have
been used.

 )
There are two components of this ratio they are as under:
1.‘Net Profit after Interest, Tax & Preference dividend

.‘Equity Shareholder¶s Fund which means Equity Share Capital +
Reserves & Surplus ± Fictitious Assets

  )


This ratio is computed by dividing the net profit after interest &
tax and preference dividend by equity shareholder¶s fund. It is
expressed as percentage. In the form of a formula this ratio may
be expressed as under:
è 
? 
$
  +,% '% '  
      - 
+,
  '  ' . 


ÿ
 ?
!" ") )

 #$% &'( #$% &'( #$% &'(

 *  #/0( cco m o m


m mA

' ' . 
 ‰
A‰ A
AA A mc mo

$

o
 cA ‰
o o

o
A
‰
 c



 
c

  c  
     ‰



  )
Return on equity share holder fund was 11o.m in
00m-08 which
decreased 8o.m8 and again increased to
08m.mA it indicates that
fund which is provided by the owners have been not used properly by
the firm which can be unsatisfactory for the company in the future. ‘


#‘ 
   


 )
This ratio measures a relationship between operating cost and
net sales.

+
(
)
The main objective of computing this ratio is to find out the
operating efficiency with which production or purchase &
selling operations are carried on.


 )
There are two components of this ratio which are as under:
A.‘Cost of Goods Sold
B.‘Other Operating expenses

Ex. Administrative expenses, selling & distribution expenses,


interest on short term loans, discount allowed and bed debts, net
sales (Gross Sales ± Sales Return).
  )
This ratio is calculated by dividing the operating cost by net
sales. This ratio is expressed as percentage. In the form of a
formula this ratio may be expressed as under:

;    


  
Î*   $   
  


‰
  
!" ") )

 #$% &'( #$% &'( #$% &'(

ÿ mo ‰ ‰o o c


A



Î*   -*

o m
oc
‰ c‰


  c‰ o‰ c
o‰ o c A

Î*     ‰ ‰ A ‰m o ‰

‰
 c



 
c


  c  
     ‰



 )
This ratio indicates an average operating cost incurred on sales
of goods worth rs. 100. Lower the ratio, greater is the operating
profit to cover the operating expense to pay dividend and to
create reserves & vice-versa.


A
#‘-

 

 )
This ratio measures the relationship between different types of
ratio with expenses & net sales.

+
(
)
The main objective of computing different types of expenses the
incurrence of different types of expenses.


 )
There are two components of this ratio which are as under:
1.‘Different type of expenses

.‘Net Sales
  )
This ratio is calculated by dividing different types of expenses
by the net sales. This ratio is expressed as a percentage. In the
form of a formula this ratio may be expressed as under:

    
-

   L ..
  


o
c    

  -

  L ..
  

!" ") )

 #$% &'( #$% &'( #$% &'(

  +-* o c‰ c


‰ oc cc ‰m

  c‰ o‰ c

o‰ o co A


 
-

     c o o‰

‰
 c




 


  c  
     ‰


m
z  
   -

  L ..
  

!" ") )

 #$% &'( #$% &'( #$% &'(

  
+-*
‰
‰ ‰A
o
m c

  c‰ o‰ c
o‰ o c A


 
-

  

  o  cA

o
A

‰
 c



 
c


  c  
     ‰



 )
This ratio indicates an average expenses incurred on sales of
goods worth rs. 100. Lower the ratio, greater is the operating
profit to cover operating expenses, to pay dividend and to create
reserves & surplus & vice-vers




#‘ 
    



 )
This ratio measures a relationship between not profit before
interest & tax and capital employed.

+
(
)
The objective of calculating this ratio is to find out how
efficiently the long term fund supplied by the creditors &
shareholders has been used.


 )
There are two Components of this ratio which are as under:
1.‘Net Profit Before Interest & Tax

.‘Capital Employed Which Refers to Long Term Fund Supplied
by the long term creditors & shareholders.
It comprises the long term debts & shareholder¶s fund.

ÿ
 ?
   

             
  
        
  
             

     


$
  ÿ*  +*   1 
   



Calculation of Capital Employed  Equity Share Capital +
Preference Share Capital + Reserves & Surplus + Profit & Loss
A/C Credit balance + Long term debt - Fictitious Assets.
  
!" ") )

 #$% &'( #$% &'( #$% &'(

 *  #230( c‰c c c


o

mAo 

ÿ* * ‰A‰


A A‰
‰ ‰c‰ oA

$
 c Ac cm Ao 
mA

o
A
‰
 c



 
c

  c  
     ‰



 ) It indicates firm¶s ability of generating profit per
rupee of capital employed. In this company Return on Capital Employed
is changing from 1.A1 to 1m.Ao to 
.mA in the years
00m-08,

008-0,
00-10 respectively. This shows that for the year
010 the
company has been able to utilize its capital effectively.


  
 "



 )
This ratio measures the earnings available to an equity
shareholder on a per share basis.

+
(
)
The objective of computing this ratio is to find out the
profitability of the firm on per equity share basis.


 )
There are two components of this ratio which are as under:
1.‘Net Profit after Interest, Tax & Preference dividend

.‘No. of equity Shares


  )
This ratio is calculated by regarding the net profit after interest,
tax and preference dividend by the no. of equity shares. It is
expressed as absolute figure. In the form of a formula this ratio
may be expressed as under:

è 
? 

+  * '    *  4 *   5


%  ,
  ' 

c
  

!" ") )

#$% &'( #$% &'( #$% &'(

*  '  cc m o m


m mA

%  , '  ‰m m
A‰ A A‰ 

+  * '  #$%( ‰o cA  c m m

‰
 c




 


  c  
     ‰



 ) It indicates firm¶s ability of generating profit per
Equity Share. In this company Earning per Share is changing from
‰o cA to 0.01 to m.m in
008,
00,
010 respectively. This shows
that the company is utilizing its funds effectively and this has helped
the company to increase its profitability on per share basis.


 ( 
 
 "



 )
This ratio measures relationship between dividend and no. of equity
shares.

+
(
)
The objective of computing this ratio is to find out net distributed
profit
after interest, tax and preference dividend to equity shareholders.


 )
There are two components of this ratio which are as under:
1.‘ Dividend paid to equity shareholders

.‘No. of equity shares
Calculation:-
This ratio is calculated by dividing dividend paid to equity
shareholders by no. of equity shares. It is expressed as absolute
figure. In the form of a formula this ratio can be expressed as
under:

è 
? 

65 * '     5  


%  ' 


  
!" ") )

 #$% &'( #$% &'( #$% &'(

0  5  

oc
m  A‰ A

%  ' 
 c
m
o Ao A

65 * '  #$%( cc 


c
  mc

 c




 


  c  
     ‰



  )
Dividend per share has increase from 11.8
to .m1 it means that
constant downward trend in the firm. It gives bad impression on
the share holders mind.


#‘ 

   

 )
This ratio measures relationship between market value of equity
shares & earning per share.

Î  5?
The objective of computing this ratio is to find out expected
return on investment in equity shares.


 )
There are two components of this ratio which are as under:
1.‘Market price per equity share

.‘Earnings per share
  :-
This ratio is calculated by dividing market price per equity share
by earning per share. It is expressed has an absolute this figure.
In the form of a formula this ratio may be expressed as under:

è 
? 

        & 5


 * ' 
+  * ' 

A
  
!" ") )

#$% &'( #$% &'( #$% &'(



 & *  m
c ‰ A ccA‰

+  * '  ‰‰   c o c

     

# ( co o c cA c m

‰
 c




 


  c  
     ‰



  )
This ratio indicates price earning per share with market price of
share has decreased. Here price-earning ratio is increased
from 1o.0o times to 1.m times which can be satisfactory for
the company and it effect the well being of the company.
Higher the ratio is better for the company.
o
% *    

%‘ÿ
  ?

 )
This ratio establishes a relationship between current assets &
current liabilities.

+
(
)
The objective of computing this ratio is to find the ability of
the firm to meet its short term obligation & to reflect the
short term financial strength or solvency of the firm.


 )
There are two components of this ratio which are as under:

#‘
 


Current Assets means the assets which are convertible in too cash
within a year & include the following:
‘ Cash balance, Marketable securities, Bills Receivables(less
provisions), Prepaid expenses, advanced payment of tax,
Bank balance, Debtors(less provisions), Stock of all types
(raw-materials, work in progress, Finished goods), Short term
loans and advances(debit balance), Incomes due but not
received.

The provision for bed debt & or bills is deducted from the total
amount of trade.

m
#‘
 %  

A current liability means the liabilities which are the expected to
be matured within a year and include the following.
‘ Creditors, Bills payable, short term loans & advances,
Provision for taxation, Bank overdraft, and income received
in advances, unclaimed dividend.

ÿ
 ?

   

      
   

             


c
             

è 
? 

ÿ
    ÿ
 
ÿ
  


  
!" ") )

#$% &'( #$% &'( #$% &'(

ÿ
  
A
‰ o c A
 c

ÿ
  

o AA A

 ‰ 

ÿ
   c
  c c A  c c
A  c

‰
 c



 
c


  c  
     ‰



  -

Current ratio of the firm has decreased and it shows downward trend.
The company has not satisfactory current assets for its future need.
Current assets are less than current liabilities. It means company cannot
utilized properly current assets. The ideal ratio is
:1


#‘% *   /0   1 
 

 )
This ratio establishes the relationship between quick assets and
liquid liabilities.
+
(
)
The objective of calculating this ratio is to find out the ability of
the firm to meet its short term obligations as and when due
without relying upon the realization of stock.

 )
There are two components of this ratio which are as under:
1.‘2uick assets/Liquid assets:
Which means those assets which can be converted short noticed
without a loss of value. They are:
‘ Cash balance, Marketable securities, Bills receivable,
Bankbalance & debtors.

.‘Liquid Liabilities:
Liquid Liabilities = Current liabilities ± Bank over Draft
  ?
This ratio is calculated by dividing by the liquid assets by liquid
liabilities. This ratio is usually express as a pure ratio.
Ex. 1:1
In the form of a formula this ratio may be expressed as under:

è 
? 

,
    ÿ
    &
ÿ
  & 5  

‰
  
7! !" ")

 #$% &'( #$% &'( #$% &'(

,
   co 
c co A

c

,
  

o AA A

 ‰ 

,
    coc  m‰‰cc  mmc

 c




 


  c  
     ‰



 )
Liquidity ratio of the firm has decreased from 0.81o in
00o-0m to
0.m‰‰1 in
008-0. It shows inefficient management and inefficient use
of liquid assets. Ideal ratio is 1:1 so company has satisfactory ratio.

‰c
 (   
  
This ratio measures the effectiveness with which a firm uses its
available resources. These ratios are also called turnover ratios since
they indicate the speed with which the resources are converted in to
sales. Usually the following activity ratios are calculated.
1.‘Stock Turnover Ratio

.‘Working Capital Turnover Ratio


.‘Total Assets Turnover Ratio
‰.‘Book Value per Share Ratio
A.‘Debtors Ratio
o.‘Creditors Ratio

   (
  

 
This ratio establishes a relationship between costs of goods sold
(COGS)And average inventory.
+
(

The objective of computing this ratio is to find out the efficiency
with which the inventory is utilized.

 
There are two components of this ratio they are as under:
1.‘Cost of Goods Sold which is calculated as under
‘ Opening stock + Net purchases + Direct expenses ± Closing
stock


COGS = Net Sales ± Gross Profit



.‘Average Inventory or Average Stock
.‘  
This ratio is calculation by dividing the cost of goods sold by
average inventory. This ratio is usually expressed as number of times.
 )

   (
       
‰
(

(
 
Calculation: -
7! !" ")

 #$% &'( #$% &'( #$% &'(

ÿ    mo ‰ ‰o o c


A
 m

/5  5   c  cm


 cc
‰ mc

 &
5   # (  oo  
 

o
A
‰
 c



 
c

  c  
     ‰



 
This ratios signifies that the average stock is turned over eight times
during the year. If figure for cost of sales are not available, then the ratio
may be calculated on the basis of sales. The ratio is very important in
judging the ability of management with which it can move the stock.
The higher the turnover ratio the more profitability the business would
be. Thus,a firm should have neither a very high nor a very low stock
turnover ratio.
‰‰
     (
  

Meaning:-
This ratio establishes a relationship between net sales &
working capital.
Objective
The objective of computing this ratio is to find out the efficiency
with which the working capital is utilized.

Components:)
There are two components of this ratio which are as under:
1.‘Net Sales which means Gross Profit ± Sales Return

.‘ Working Capital which means Current Assets ± Current Liabilities


Calculation:)

This ratio is calculated by dividing the net profit by the working


capital. This ratio is usually expressed as no. of times. In the
form of a formula this ratio may be expressed as under.

: )
  
å & ÿ*  0
5   
 ; 

‰A
   )
!" ") )

 #$% &'( #$% &'( #$% &'(

  c‰ o‰ c
o‰ o c A

å & *  oAA ‰ co cc ‰ o

åÿ0 co ‰m m 
c ‰A

‰
 c



 
c


  c  
     ‰



 )
This ratio indicates the firm¶s ability to generate sales per rupee
of working capital. In general, higher the ratio, the more
efficient the management & utilization of working capital and
vice-versa.

‰o
  (
  


 
This ratio measures the overall performance or activity of the
business enterprise.

+
(

The objective of calculating this ratio is to point out the efficiency
or inefficiency in the use of total assets.


 
There are two components of this ratio which
1.‘Net Sales

.‘Total Assets

  


This ratio is calculated by dividing net sales by total assets.

  
  
(
   
  

‰m
Calculation: -
7! !" ")

 #$% &'( #$% &'( #$% &'(

/+ c‰ o‰ c
o‰ o c A

    c

  c‰o om coc‰ c

0 
 5   c o  ‰ c ccm‰

 c




 


  c  
     ‰



 
An ideal total assets turnover ratio is
:1 i.e. sales are twice the
value of total assets. A lower ratio than this will signify that the assets
are not utilized properly.

‰
 

 "


 
This ratio establishes relationship between equity share capital &
reserves and surplus with no. of shares.

+
(

The objective of computing this ratio is to find out the proportion
of share capital & reserves & surplus with no. of equity shares.


 
There are two components of this ratio
1.‘Equity share capital & reserves and surplus

.‘No. of equity shares

  


This ratio is computed by dividing equity share capital & reserves
& surplus by no. of equity shares. It is expressed as an absolute figure.

 ! ;  "  # $%&'(%)


 

 "
  
 *  ! 

‰
   
!" ") )

 #$% &'( #$% &'( #$% &'(

+,% ' 8$ 5 9



*
 ‰A m A
o
 m
o mm

%  , ' 
 c
m
o Ao 

2& 5
* '  cc ‰ c  c c

o
A
‰
 c



 
c

  c  
     ‰



 
In general higher the ratio better it is because this ratio measures
relationship between share capital and reserves & surplus with no. of
equity shares. In the most of the companies the amount of equity share
capital remains constant & the value of reserves & surplus charges.
Whenever company has high amount of profits, the value of reserves &
surplus will increase. Therefore higher book value per share means high
amount of profitability.
A

   


 
This ratio establishes a relationship between debtors and bills
receivables with average daily credit sales.

+
(

The objectives of computing this ratio is to find out the efficiency
with the trade debtors are managed.


 
There are two components of this ratio
1.‘Debtors and Bills receivable

.‘Net Credit Sales
  
This ratio is calculated by dividing debtors and bills receivables by
net credit sales. This ratio is usually expressed as X no. of times (days).

  !  " ¹  +,--.  ,/0- 


 1 ,20- 
#oA

Ac
   -
!" ") )

 #$% &'( #$% &'( #$% &'(

6   8 2:$ c‰  c‰ oA c


A 

ÿ   co‰ o‰ c


o‰ o c A

6     ‰   


A 

‰
 c



 
c


  c  
     ‰



  This ratio shows average collection period for credit
sales. Debtors ratio for the company is changing from   to .
 to   in year
008,
00 and
010 respectively. 


(


 
  " 2    "
 "
"
 
"
 
   
      
3  #


   

?
This ratio establishes a relationship between creditors and bills
payable and average daily credit purchases.

Î  5?
The objective of computing this ratio is to determine the efficiency
with which creditors are managed.


 
There are two components of this ratio
1.‘Creditors and Bills Payable

.‘Net Credit Purchases
  
This ratio is calculated by dividing the creditors and Bills Payables
by Net credit purchases. This ratio is usually expressed as X no. of times
(days).
è 
? 


     
     


  "

A
  : -
!" ") )

 #$% &'( #$% &'( #$% &'(

ÿ   
cA
 o  
o 

/5   *


' c m‰ 
 o c
c o

ÿ      #(
‰ o
m

 c




 


  c  
     ‰



  -
This ratio of the firm has increased in
‰ in
00o-0m to o in
008-0. It
shows the good position of the company and company can collect debt
easily which can be a profit to the company.

%
(

 

    
  /  
   


 
Capital structure of a company consist of a verity of securities
Ex. Equity share & preference share which satisfy its share capital
requirements while by other securities such as debentures, warrants etc.
the company satisfies its access requirement of long term capital &
borrowed capital, leverage ratios are calculated. Sum of the leverage
ratios are as under.
1.‘Debt equity ratio

.‘Proprietary ratio
.‘Capital Gearing ratio
‰.‘Long term funds to fixed assets ratio

AA

 *   

 
This ratio establishes a relationship between long term debts &
shareholders funds.

+
(

The objective of computing this ratio is to find out the relative
proportion of debt & equity in financing the assets of a firm.

 
There are two components of this ratio which are as under:
1.‘Long term debt which means all types of secured and unsecured
loans.
Ex. Debtors, Loans from financial institution

.‘Shareholder¶s funds which means equity share capital +
Preference share capital + Reserves & surplus ± Fictitious
Assets
  
This ratio is calculated by dividing the long term debts of the firm
by shareholder¶s fund. This ratio is usually expressed as a pure ratio.
Ex.
:1

n  3 



 *    
! !  M z 

Ao
  
!" ") )

 #$% &'( #$% &'( #$% &'(

   
A Ac o c o c

'  '  
 ‰
A‰ A
‰
 mc‰ o‰

6 ,    Ac  ccc  c

‰
 c




 


  c  
     ‰



 
This ratio indicates the margin of safety to long term creditors. Lower
ratio means a larger safety margin for creditors & vice-versa.

Am

,  


 
This ratio measures the relationship between shareholder¶s funds &
total assets of the company.

+
(

The objective of calculating this ratio is to find out how efficiency
the properties have utilized the funds for purchasing the assets.


 
There are two components of this ratio which are as under:
1.‘Shareholder¶s funds or proprietor¶s fund

.‘Total assets or total liabilities


  
This ratio is computed by dividing shareholder¶s fund by total
assets. In the form of a formula their ratio may be expressed as under:

 )


,    "
"
,   ..
  
1   


   )
!" ") )

#$% #$% #$%


 &'( &'( &'(

 *    
 ‰o A‰ A
‰
 mc‰ o‰

   c

  c‰o om coc‰ c

 *      ‰
 m  ‰ ‰o

 c




 


  c  
     ‰



  )
This ratio indicates assets of the firm purchased out of
Owners¶ funds. Higher ratio means owners¶ funds are properly utilized
by the company and vice-versa. "   "
 # 
m#  #o  ..2..2 . . 

(
# " "3 "
"
3
  
  4
  #

A
  
   

 
This ratio measures a relationship between equity shares capital
and fixed interest bearing capital.

+
(

The objective of computing this ratio is to find out the proportion
between fixed interest bearing capital & equity share capital.


 
There are two components of this ratio which are as under:
1.‘Fixed interest bearing capital (preference share capital,
debenture, long term loan)

.‘Equity share capital
  
This ratio is calculated by dividing fixed increased bearing capital
by equity share capital. This ratio is expressed as a pure ratio. In the
form of a formula this ratio may be expressed as under:

z  4   


  
    
 !  

o
   )
!" ") )

 #$% &'( #$% &'( #$% &'(

-
 

)
    c cc

oc A c‰A o

*  "
 
 m
m
o


A

  
    ‰

c  c A cc

‰
 c




 
c


  c  
     ‰



 
Higher the ratio, more portion of borrowed capital in such
circumstances, a huge part of profit is paid to fixed charge bearing
securities. As a result dividend on equity shares and market price of
equity share will frequently fluctuate.

oc
%
    -
 
 

 
This ratio measures a relationship between long term funds to fixed
assets.
+
(

With the help of this ratio one can move how efficiently the long
term funds have been invested in fixed assets.

 
There are two components of this ratio which are as under:
1.‘Shareholder¶s funds + Long term debts

.‘Fixed assets
  
This ratio is calculated by dividing shareholder¶s funds & long
term debts by fixed assets. It is expressed as pure ratio.


%
  
! !  5 z  n  3 
-
 
  =
z  

Here, Shareholder¶s Funds = Preference share + Reserves & Surplus +


Equity Share Capital + Profit and Loss A/c credit balance ± Fictitious
Assets
And Long Term Debts = Debenture and Long Term Loan
o

   

!" ") )

 #$% &'( #$% &'( #$% &'(

   

Am o ‰A
mo
 cA

è-  
o  
co  mm m

   
  -   c oc c
oc  mc

‰
 c




 


  c  
     ‰



  )

Long-term ratio decreased from 1.0o to 1.


o. It has shown fall in
the ratio. The fixed assets should always be acquired out of long-term
funds, meaning thereby that this ratio should not be less than 100. The
company has not achieved a good ratio as it shows a downward trend.

o
  4

Ratio analysis is a part another useful way of analyzing financial
statement is to convert them into common size statement by expressing
absolute rupee amounts into percentages. When this method is pursued
the income statement exhibits each expense item or group of expense.
Items as a percentage of net sales and net sales are taken at 100 percent.
Similarly, each individual asset and liability respectively statement are
prepared. His ways are referred to as common size statement.

A) ÿ ;       9  /




  
  
  
O  
     

  
á  
 
 
   


î  m0o.0‰ ‰o.o8 1


A
.
0 m m m
  

Ô #m o.# o#     




î  


 
     m m 
 m 


î 
    mmm 
 m     


î 


  mm  
m
 


‘

·       


m)ÿ ;     2 '


   
  
  
O  
     

á      


m
m



  

 
 

 !"      

#!      m m

$!%!&##! m 
  m    m
    


#! m
  
    

 
'!#!    mm 

mmm
 
 

 
()*  m
 
    
+,  
    
#  
    
 
 
!      
))#

G 
        

oA
ë        

     
 !!!

 
  m
m
 m    
î-.%!

  m  
 
m

   
# !!!
 m 

m  
  

  
î #,!
î
 îm mm  î   
  m
/!#!  
   
#
 

     
   


G 
        

oo
 (
 

 

A simple method of tracing periodic changes in the financial


performance of a company is to comparative statements. Comparative
financial statements will contain items at least for two periods. Changes
increases or decreases in income statement and balance sheet over
period can be shown on two ways:

(1) Aggregate Changes


(
) Proportional Changes

Aggregate changes can be indicated by drawing special column for


aggregate amount or percentage or both of increase or decrease. Relative
or prepositional, changes, and other hand are shown by recording
percentage calculation in relation to a common base in special columns.
For example in the case of profit and loss statement, sales figure is
assumed to be shown. Such percentages are generally based on value of
total assets. In order to show the working capital position the current
liabilities are shown as deduction from current assets.

om
o (


  
  


  
 
O  
  

á  
 
 
   

î  m0o.0‰ ‰o.o8 1


A
.
0

Ô #m o.# o#

î   

 
    

î      mmm 
 m

î ‘

  mm  

·    


 (

"


The changes taking place and liabilities over a period of years are
reveled by comport balance sheets such comparative balance sheet may
be shown. Such percentages are generally based on value of total assets.
In order to show the working capital position the current liabilities are
shown as deduction from current assets.

 (


  
"


   
 
O  
  

á   


m
m



 

 !"   

#!   

$!%!&##! m 
  m  

#! m
  


'!#!    mm 

mmm

()*+,   m
 
 

#     


!))#
  

   

o
G 
     

ë     

 !!!   

î-.%!
 
  m
m


# !!! 
  m  


î #,!  m 

m  
 

/!#!# î
 îm mm  î 

  

   
 


G 
     

m
 " 3

Cash Flow
Particulars Mar'10 Mar'0 Mar'08
Profit Before Tax
,mAo.00 1,0
o.
0 1,
‰1.Am

 " 3 2o# 2o #. #
 
 
 ( 

 " 
  ) ) )
(
  (  2# 2 #.. 2.m#.

 " 
  )m#m oo#  #
 
 ( 

 1
 .m#  m# )m#
 "   "
* (

Cash and Cash 1,1m‰.o
1,o1.m
Equivalent - 1,A‰.o
Beginning of the
Year
Cash and 1,mA0.81 1,Ao1.8 
.88
Equivalent - End
of the Year

mc
.  
 

The Directors present their Report together with the audited accounts of
your Company for the year ended 1st March,
010.
Financial Highlights

(Rs. in crores)


010
00

Gross Income
0AA 1‰8

Less: Excise Duty on Sales 1m‰ 1o1

Net Income 18801 1o‰

Profit before Depreciation, Interest,


Exceptional items and Taxation 1AA 1o

Less: Depreciation/Amortisation m1




Profit before Interest,


Exceptional items and Taxation
m8‰ 10m1

Less: Interest (Net)¦


8 ‰A

Profit before Exceptional


items and Taxation
mAo 10
o

Add: Exceptional items 1 10


m

Profit before Taxation


8‰m 10o

Less: Provision for Tax - Current Tax


(including Fringe Benefit Tax) m‰ A8

Less: Provision for Tax -


Deferred Tax (Net) 10 1‰1

Profit for the year


088 8m

Add: Profit of Mahindra Holdings &


Finance Limited for the period
1st February,
008 to 1st March,
008 - 1

Balance of profit for the year:


088 8o8

Balance of profit for earlier years oA


mmA

Add: Amount transferred on


Amalgamation of Mahindra Holdings & ¦
Finance Limited - 1o0

Less: Transfer to Debenture


Redemption , Reserve 1 0

Profits available for appropriation A‰

mm

Less: General Reserve


10 100

Credit of Income-tax on Proposed


m
Dividend of previous year - (‰)

Proposed Dividends AA0


m

Income-tax on Proposed Dividends ; m‰ 

Balance carried forward ‰A88 oA



The Profit for the year before Depreciation, Interest, Exceptional


items and Taxation was Rs.,1A‰.A crores as against Rs. 1,o
.m
crores in the previous year, an increase of 11.‰A . Profit after tax
was Rs.
,08m.mA crores as against Rs.8o.m8 crores in the previous year
clocking an increase of 1‰.A0 . Your Company continues with its
rigorous cost restructuring exercises and efficiency improvements which
have resulted in significant savings through value engineering,
economising, optimisation of plant capacity utilisation and cost
competitiveness in almost all areas thereby enabling the Company to
take full advantage of the recovery in the economy.


 ( 


Your Directors are pleased to recommend a dividend of Rs.8.mA per


Ordinary (Equity) Share and also a Special Dividend of Rs.0.mA per
Ordinary (Equity) Share aggregating Rs..A0 per Ordinary (Equity)
Share of the face value of Rs.A each, payable to those Shareholders
whose names appear in the Register of Members as on the Book Closure
Date.The Special Dividend is being recommended in the light of the
very successful listing of Mahindra Holidays & Resorts India Limited
Equity Shares on the Stock Exchanges.
In recognition of the impressive performance of the Company, a
substantial increase is being made in the proposed dividend as compared
to the dividend of Rs.10 per Equity Share paid in the previous year. Also
the proposed dividend will be paid on a slightly enlarged capital base of
Rs.
8.
1 crores (as against Rs.
m8.8
crores in the previous year).



Despite prolonged global challenges, the Indian economy showed signs


of
recovery in most of the Sectors in the Financial Year
00-10. The risk
appetite returned to financial markets as equities and debt raising
gained momentum on the back of abundant liquidity. Even though things
looked to be on an upswing, Corporates still faced the task of
sustaining growth amidst volatilities as well as surging inflation.


  
   

From educating a girl child in Udaipur, providing healthcare to


inaccessible areas in Uttarkhand,; enabling socially disadvantaged
youth become self reliant in Pune, to planting a million trees in
India, your Company's Corporate Social Responsibility ("CSR")
initiatives continue to provide strategic interventions that help the
Nation help itself.

mA
 5 

1. We have audited the attached Balance Sheet of Mahindra &
Mahindra Limited as at 1st March,
010, the Profit and Loss Account
and the Cash Flow Statement of the Company for the year ended on that
date, both annexed thereto. These financial statements are the
responsibility of the Companys Management.

. We conducted our audit in accordance with the auditing standards


generally accepted in India. Those Standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatements

. As required by the Companies (Auditors Report) Order,


00
(CARO) issued by the Central Government in terms of Section

m(‰A)
of the Companies Act, 1Ao, we enclose in the Annexure a statement on
the matters specified in paragraphs ‰ and A of the said Order.

‰. On the basis of the written representations received from the


Directors as on 1st March,
010, and taken on record by the Board of
Directors, we report that none of the Directors is disqualified as on
1st March,
010 from being appointed as a director in terms of Section

m‰(1) (g) of the Companies Act, 1Ao.

Annexure to the Auditors Report of Mahindra & Mahindra Limited for


the
year ended 1st March,
010. (Referred to in paragraph () thereof)

# In respect of its fixed assets:

(a) The Company has maintained proper records showing full


particulars,
including quantitative details and situation of the fixed assets.

mo
(b) The fixed assets disposed off during the year, in our opinion, do
not constitute a substantial part of the fixed assets of the Company
and such disposal has, in our opinion, not affected the going concern
status of the Company.

# In respect of its inventory:

(a) As explained to us, the inventories were physically verified during


the year by the Management at reasonable intervals.

(b) In our opinion and according to the information and explanation


given to us, the procedures of physical verification of inventories
followed by the Management were reasonable and adequate in relation
to the size of the Company and the nature of its business.

# The Company has neither granted nor taken any loans, secured or
unsecured, to/from companies, firms or other parties listed in the
Register maintained under Section 01 of the Companies Act, 1Ao.

. In respect of contracts or arrangements entered in the Register


maintained in pursuance of Section 01 of the Companies Act, 1Ao, to
the best of our knowledge and belief and according to the information
and explanations given to us:

(a) The particulars of contracts or arrangements referred to Section


01 that needed to be entered in the Register maintained under the said
Section have been so entered.

(b) Where each of such transaction is in excess of Rs.A lakhs in


respect of any party, having regard to the explanations that some of
the items purchased are of special nature and suitable alternative
sources are not readily available for obtaining comparable quotations,
mm
the transactions have been mad at prices which are prima facie
reasonable having regard to the prevailing market prices at the
relevant time.

. In our opinion, the Company has an adequate internal audit system
commensurate with the size and the nature of its business.

o. We have broadly reviewed the books of account maintained by the


Company pursuant to the rules made by the Central Government for the
maintenance of cost records under Section
0(1) (d) of the Companies
Act, 1Ao in respect of manufacture of motor vehicles and tractors and
are of the opinion that prima facie the prescribed accounts and records
have been made and maintained.

m# According to the information and explanations given to us in


respect of statutory dues:

(a) The Company has generally been regular in depositing undisputed


dues, including Provident Fund, Investor Education and Protection
Fund, Employees State Insurance, Income-tax, Sales Tax, Wealth Tax,
Service Tax, Value Added Tax, Customs Duty, Excise Duty, Cess and
other material statutory dues applicable to it with the appropriate
authorities.

(b) There were no undisputed amounts payable in respect of Income-


tax, Wealth Tax, Customs Duty, Excise Duty, Cess and other material
statutory dues in arrears as at 1st March,
010 for a period of more
than six months from the date they became payable.

á   
   

/ÿÿÎ 03 ÿÎ<+03Î

The financial statements are prepared under the historical cost


convention, on an accrual basis, in accordance with generally
accepted accounting principles and applicable accounting standards
as notified under the Companies Rules
00o.

     

The preparation and presentation of financial starements in


conformity with generally accepted accounting principles requires
making of estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosures of contingent assets and
liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting year.
Differences between the actual results and estimates are recognized in
the year in which the results are known/materialized.

    

m
Sale of products are recognized when risk and rewards of ownership
of the products are passed onto the customers, which is generally on
the dispatch of goods. Sales are exclusive of sales tax. License Fee is
accounted based on terms of contract. Interest income is recognized
on time proportion basis.

       1    

Fixed assets are stated at cost of acquisition less accumulated


depreciation and impairment, if any. Cost is inclusive of freight,
duties, taxes and other directly attributable cost incurred to bring the
assets their working condition for intended use. Depreciation is
charged using straight-line method based on the useful lives of the
fixed assets as estimated by the management as specified below or the
rates specified in accordance with the provisions of Schedule XIV of
the Companies Act 1Ao whichever is higher.

Buildings -
0 to 0 years
Plant & Machinery- A-18 years
Furniture & Fixtures- 10-1A years
Office equipments- 1-A years
Moulds & Dyes - 1- years
Vehicles - ‰-8 years
Depreciation is charged on a pro-rata basis for assets purchased/sold
during the year. Individual fixed assets costing less than ` A000 are

depreciated in full, in the year of purchase. Cost of lease hold land is
amortized over the period of the lease or management estimates
whichever is lower.

  

Inventories consist of raw and packing materials, stores and spares, work
in progress and finished goods. Inventories are valued at lower of cost
and net realizable value. Cost of Inventories is determined on weighted
average basis.

  

Borrowing cost directly attributable to acquisition or construction of


qualifying assets (i.e.- those fixed assets which necessarily take a
substantial period of time for their intended use) are capitalized. Other
borrowing costs are recognized as an expense in the period in which
they are incurred.

%

c
Lease payments under operating lease are recognized as an expense in
the profit and loss a/c on a straight line basis over the lease term.

   % 

Capital expenditure on R&D is capitalized as fixed assets. All revenue


expenditure on R&D is charged off to the respective heads in P&L a/c in
the year in which it is incurred.

      

Transactions in foreign currencies are recorded at the exchange rates


prevailing on the date of transaction. Monetary items dominated in
foreign currencies are stated at the exchange closing rate. Incase of
monetary items covered by forward exchange contracts, the premium or
discount arising at the inception of such a forward exchange contract is
amortized as expense or income over the life of the contract and
difference between the year and the rate on the date of the contract is
recognized as exchange difference in P&L a/c.

 
Income tax expense comprise of current tax, fringe benefit tax(i.e:
amount of tax for the year determined in accordance with the income tax
laws) and deferred tax charge or credit (reflecting the tax effect of
timing differences between accounting income and taxable income for
the year). The deferred tax charge or credit and the corresponding
deferred tax liabilities and/or assets are recognized using the tax rates
that have been enacted or substantively enacted by the balanced sheet
date. Deferred tax rates are recognized only to the extent there is
reasonable certainty that the assets can be realized in future. However
where there is unabsorbed depreciation or carry forward losses under
taxation laws, deferred tax assets are recognized only if there is virtual
certainty of realization of such assets. Deferred tax assets are reviewed
as at each balance sheet date and are written down or up to reflect the
amount that is reasonably/virtually certain (as the case may be ) to be
realized. The Fringe benefit tax has been calculated and accounted for in
accordance with the provisions of the Income Tax Act, 1o1 and the
guidance note on accounting for fringe benefit tax issued by the Institute
of Chartered Accountants of India.


  
From the analysis of three years published data of Mahindra and
Mahindra ltd one find that it is professionally well managed company.it
has enough experience of business when I read aanual report of three
years of the company and after analysis the figure of three years I find
that current year is best for the company compared to last two years.

Company has well established Financial System and because of


that its market position is very strong.

At least, I would like to give my best wishes to the company and I also
wish company make splendid success and achieve glorious moments.

  "

‰
This report has been prepared with the help of annual reports and
website detailed information is as below:

MAHINDRA & MAHINDRA LIMITED ANNUAL


REPORT
00m-
008
MAHINDRA & MAHINDRA LIMITED ANNUAL
REPORT
008-
00
MAHINDRA & MAHINDRA LIMITED ANNUAL
REPORT
00-
010



)
333#"   "  # 

A
o