Sudha Final Project

A
STUDY ON
BALANCE SHEET ANALYSIS
IN
THIRUMALA COTTON &AGRO PRODUCTS PVT LTD
Project report is submitted in a partial fulfilment of the requirements for

The award of the degree
Of
MASTER OF BUSINESS ADMINISTRATION
By
KURUBA SUDHASHARAN
(Reg. No: - 198091E0039)
Under the Guidance of
Mr. Dr G.C VENKATAIAH MBA,

M.COM, PHD
Department of Management Studies
RGMCET, Nandyal.
DEPARTMENT OF MANAGEMENT STUDIES
Rajeev Gandhi Memorial College of Engineering & Technology,
(Autonomous)
Approved by AICTE, New Delhi, Affiliated by JNTU Anantapur,
Accredited by NAAC of UGC
Nandyal-5
2019– 2021
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Rajeev Gandhi Memorial College of Engineering & Technology,
(Autonomous)
Approved by AICTE, New Delhi, Affiliated by JNTU Anantapur,
Nandyal-518501.
DEPARTMENT OF MANAGEMENT STUDIES
CERTIFICATE
This is to certify that the project report entitled “A STUDY ON BALANCE
SHEET ANALYSIS”, towards “THIRUMALA COTTON & AGRO
PRODUCTS PVT LTD” is being submitted by KURABA SUDHASHARAN,
(Reg No: - 19091E0010) in partial fulfilment for the award of the degree of Master
of Business Administration of Jawaharlal Nehru Technological University,
Anantapur is a record of bonafide work by carried out by under my supervision. The
result embodied in this report has not been submitted to any other university/institute
for the award of any Degree or Diploma.
Project Supervisor Head of the department

Mr Dr. G C VENKATHAIAH
MBA, M.COM, Phd
Dept. of Management Studies Dr. ALIYSULTANA
Head- Dept. of Management Studies
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DECLARATION
I hereby declare that the project work entitled “A STUDY ONBALANCE SHEET
ANALYSIS” is a bonafied work carried out by me under the supervision of “Mr. Dr. G C
VENKATHAIAH” “TIRUMALA COTTON &AGRO PRODUCTS PVT. LTD”. This
work has not been submitted to any other university or institution for the award of any
degree/diploma.
Place: KURABA SUDHARSHAN

Date: Reg No – 19091E0039
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ACKNOWLEDGEMENT
It gives me great pressure, having done a project of an interesting & knowledge topic
like “A STUDY ON BALANCE SHEET ANALYSIS WITH REFERENCE TO
TIRUMALA COTTON AND AGRO PRODUCTS PVT LTD,
CHILAKALURIPETA”. This project has immensely enlarged my knowledge as far as
academics are concerned. There are many people associated with this project without which
this project would not have reached its successful completion.
It would like to express my gratitude to all those who gave me the possibilities to
complete this report. I would like to thank Dr. P.V.NAGANJANEYULU, Principal,
Dr.SK.J.SHAREEF, HOD, SRI MITTAPALLI COLLEGE OF ENGINEERING AND
COLLEGE authorities for providing me the opportunity to work in one of the prestigious
organizations TUMMALAPALEM and college authorities for providing me the
opportunity to work one of the prestigious organizations.
I want to thank, TIRUMALA COTTON AND AGRO PRODUCTS PVT LTD and
accounting manager, Mr.M.MOHANA RAO for giving me permission to commence this
report in the first instance to do the necessary research work and for being my company
guide.
With a deep sense of gratitude I would like to express my heartiest gratefulness to my

faculty guide M.SARASWATHI and other faculty members of M.B.A Dept, SMCE.
Whose help stimulating suggestions and encouragement helped me in all the times of
research for writing this report.
I extend my sincere gratitude towards my parents, who have always encouraged me and give
great support. They have been a great source of motivation in the completion of my project.
Above all I thank the almighty for my successful completion of this project.
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CONTENT PAGE
CHAPTER CONTENTS PAGE NO
CERTIFICATE Ⅰ
DECLARATION Ⅱ
CERTIFICATE FROM THE COMPANY Ⅲ
ACKNOWLEDGEMENT Ⅳ
PREFACE Ⅴ
CHAPTER-1 INTRODUCTION
CHAPTER-2 REVIEW OF LITERATURE
CHAPTER-3 A STUDY ON INVENTORY MANAGEMENT

3.1 NEED &IMPORTANT OF THE STUDY
3.2 OBJECTIVES OF THE STUDY
3.3 SCOPE OF THE STUDY
3.4 LIMITATIONS OF THE STUDY
CHAPTER-4 RESEARCH METHODOLOGY

4.1 SOURCES OF DATA COLLECTION
4.2 RECRUITMENT VS SELECTION
4.3 COMPANY RECRUITMENT POLICY
CHAPTER-5 DATA ANALYSIS AND INTERPRETATION
CHAPTER-6 6.1 FINDINGS, SUGGESTIONS & CONCLUSION

6.2 SCOPR OF FURTHER RESEARCH
 QUESTIONNAIRES FOR ASSOCIATES
 BIBLIOGRAPHY
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CHAPTER - I
INTRODUCTION
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INTRODUCTION
Financial Statements provide rich information about the operational results of a

business unit and much can be learnt form a careful examination of these statements. A
forecast of future earnings of business can also prepared based on the analysis and
interpretation of financial statement.
Financial statements as used in corporate business houses, refer to a set of reports and
schedules, which an accountant prepares at the end of the period of time for a business
enterprise. The financial statements are the means with help of which the accounting system
performs its main function of providing summarized information about the financial affairs of
the business. These statements comprise balance sheet or position statement and profit and
loss account or income statement. In India every company has the present its financial
statements in the form and contents as prescribed under section 211 of the companies Act
1956.
According to Myers financial statement analysis is largely a study of relationship

among the various financial factors in a business as disclosed by a single set to statements
and a study of the trends of these factors as shown in a series of statements
DEFINITIONS:
(1) Financial Management is defined as “that business activity which is concerned with
the acquisition and conservation of capital funds in meeting the financial needs and
overall objectives of business enterprises”
-WHEELER.
(2) “Business finance can be broadly defined as the activity concerned with the planning,
raising, controlling and administrating the funds used in the business”.
-GUTHMANN AND DOUGALL.
(3) “Finance Management is concerned with the efficient use of an important economic
resources, namely capital funds”.
- SOLOMON.
-
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(4) “Financial management is an area of financial decision making harmonizing
individual motives and enterprises goals”.
-WESTON & BRIGHAN.
Financial management is concerned with the effective use of an economic resource

namely capital fund.
Financial Functions:
Initially the finance managers were considered advent of an event requiring funds.
The finance manager was given a target amount of funds to rise and was given a target
amount of funds to raise and was given the responsibility of procuring those funds. So his
function was limited to raising funds as and when the need arise. Once the funds were
procured, his function was over.
However, over a period the scope of his function has tremendously widened. His
presence is required at every moment whenever any decision having involvement of funds is
to he taken. Now it is the F.M require looking into the financial implication, of any decision
in the firm.
The functions of F.M are to manage the funds. Any act , procedures, decision relating to
funds comes under the purview of the F.M. since every activity in the business organization,
be it purchases , production .marketing or capital expenditure has a financial implication, the
finance function is interlinked with all other areas. In particular, the F.M has to focus his
attention on:
1. Procurement the required quantum of funds as and when necessary, at the lowest cost.
2. Investing those funds in various assets in the most profitable way, and
3. Distribute returns to the shareholders in order to satisfy their expectations from the
firm.
The FM is usually faces with the following distinct scenario
1. What should be the size of a firm and how fast should it grow?
2. What are the various types of assets to be acquired? (Investment decision)
3. What should be the pattern of raising funds from various sources? (Financing decision)
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Depending upon the nature and size of the firm, the finance manager is required to perform
all or some of these functions from time to time. While performing the functions he is
required to take different decisions, which can be broadly classified into three groups:-
1. Those relating to the resource allocation (the investment decision)

2. Those covering the financing of these investments (the financing or capital structure
decisions)
3. Those determining how much cash to be taken out and how much to be reinvested
(the dividend decision)
Financing decision:
Requirement of funds at a proper time is most important. Identifying the right
source and amount that can be raised from each source and costs and other consequences
involved have to be done.
Investment Decision:
This relates, to investment in capital assets and current assets. Evaluating of
different capital investment proposals and selection of the best, keeping in view the
overall objectives of enterprise. Investment in current assets depends upon the credit and
inventory policy of the business. Credit policy depends upon the production, prices of raw
materials and availability of funds etc.
Dividend decision: -
Determining of dividend policy is an important task. The dividend decision
involves what percentage of profits to be paid to the share holders. A number of factors
effecting the dividend decision such as market price of the share, earnings, tax position etc.
OBJECTIVES OF FINANCIAL MANAGEMENT:

Financial decisions can be make keeping in view the basic objective of maximization of
owner’s economic welfare. It can be achieved through two widely accepted criteria.
PROFIT MAXIMISATION:
The efficiency of the firm is measured through the volume of profits earned by it. It
means maximizing the rupee income of the firm. Profit maximization objective may be
started in terms of return on investment or profit - to - sales ratios. This would help in
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profitable utilization of society’s economic resources, since the financial manager is
responsible for the efficient utilization of resources, increasing of revenues, controlling costs,
Minimizing risks.
WEALTH MAXIMISATION:
Wealth maximization objective is a widely recognized criterion with which the
performance of business enterprise is devalued. The word “wealth” refers to the net present
worth of the firm. The net present worth is the difference between gross present worth and
the amount of capital investment required to achieve the benefits. Gross present worth
represents the present value of expected cash flows (benefits) discounted at a rate.
FINANCIAL ANALYSIS STATEMENTS:

It is a process of identifying the financial strengths and weakness of a firm from the
available accounting data and financial statement. The analysis is done by properly
establishing the relationship between the items of balance sheet and profit and loss A/c
According to “Smith and Ashburn” financial statement are the end products of
financial accounting prepared by the accountant, that purport to reveal the financial
position of the enterprise, the result of its activities and an analysis of what has been
done with the earnings.
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LIMITATIONS OF FINANCIAL STATEMENTS:
The following are the limitations of the financial statements:
 Financial statements are essentially interim reports and therefore, cannot be final
because the final gain or loss can be computed only at the termination of the
business. Financial statements only reflect the progress and position of the business at
frequent intervals during its life. The decision regarding the period of these
statements is a matter of personal judgment and it gives rise to the problem of
allocating expenditure over various periods.
 Financial statements though expressed in exact monetary terms are not absolutely final
and accurate. As the balance sheet is prepared on the basis of a going concern asset
valuation represents neither the realizable value nor replacement cost.
 Financial statements take into consideration only the financial factors. They fail to
bring out the significance of non-financial conditions of an enterprise. For example,
public image of the enterprise the caliber of its management efficiency and loyalty
of its workers.
 It is not always possible to discover false figures in financial statements

unscrupulous management generally resort to window dressing in the preparation
of such statements.
 Quite often financial statements do not disclose current worth of the business only
historical facts are presented and the true current worth is not reflected.
 Financial statements are prepared primarily for shareholders. Other interested parties
have to generally make many adjustments before they use them profitably.
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Importance of Financial Statements:
The most important objective of financial statements is to present information for

the use of different categories of persons as mentioned below:
1. The management: The bigness of modern business and the multiplicity of factors
affecting the business operations call for an increasingly scientific and analytical approach
in the management of such businesses. This is possible only when up-to-date,
accurate and systematic financial records are available to the management team.
Financial accounts and statements are of a very great help in understanding the
progress, position and prospects of the business vis- a -vis the industry.
2. The public: Business is a social entity. Various groups of the society, though not
directly connected with business, are interested in the progress, position and
prospects of a business enterprise. These groups are financial analysts, lawyers, trade
associations, lab our unions financial press, students and teachers. It is only through the
published financial statements that these people can analyze, judge and comment upon
the business enterprise. It should be noted that these financial statements are available
to the public in case of joint stock companies.
3. The shareholders and lenders: The financial statements serve as a useful guide for the
shareholders and probable shareholders, the suppliers, and the lenders and probable
lenders of the company. it is through a critical examination of the financial statements
that these groups can come to know about the efficiency and effectiveness of the
management and position, progress and prospects of the company. For this purpose it
is necessary that the financial statements should contain accurate, complete, and
systematic facts and figures so that these people can get a full and accurate idea
regarding the present position of the company.
4. The labor and trade unions: In India, workers are entitled to bonus under the payment
of Bonus act, depending upon the size of the profit as disclosed by audited profit and
loss account. Thus, the profit and loss account becomes greatly important to the
workers. In wage negotiations also the size of profits and the profitability achieved are
generally relevant.
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TYPES OF FINANCIAL STATEMENTS ANALYSIS:
A distinction can be drawn between various types of financial analysis either on the
basis of material used for the same or according to the modus operandi or according to
the objective of the analysis.
(a) According to nature of the analyst and the material used by the
firm.
1. External Analysis:
It is made by those who do not have access to the detailed records of the company.
This group, which has to depend almost entirely on published financial statements,
includes investors, credit agencies and governmental agencies regulating the
business in nominal way. The position of the external analyst has been improved in
recent time owing to the governmental regulations requiring business undertaking
to make available detailed information to the public through audited accounts.
2. Internal Analysis:
The internal analysis is accomplished by those who have access to the books of
accounts and all other information related to business. While conducting this
analysis, the analyst is a part of the enterprise he is analyzing. Analysis for
managerial purposes is an internal type of analysis and is conducted by executives
and employees of the enterprise as well as governmental and court agencies, which
may have regulatory, and other jurisdiction over the business.
(b) According to modes operating analysis
1. Horizontal Analysis:
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When financial statement for a number of years are reviewed and analyzed, the analysis
is called `horizontal analysis'. As it is based on data from year to year rather than a one
date or period of time as a whole, this is also known as dynamic analysis. This is very
useful for long-term trend analysis and planning
2. Vertical Analysis:
It is frequently used for referring to ratios developed for one date or one accounting
period. Vertical analysis is also called `Static Analysis' this is not very conducive to
proper analysis of the firm's financial position and its interpretation, as it does not enable
to study data in perspective. This can only be provided by a study conducted over a
number of years so that comparisons can be affected. Therefore, vertical analysis is not
very useful.
c. According to the objective of the Analysis on this basis the

analysis can be long-term and short-term analysis:
1. Long-term Analysis:
This analysis is made in order to study the long-term financial stability, solvency, and
liquidity as well as profitability and earning capacity of the business. The objective of
making such an analyst is to know whether in the long-term the concern will be able to
earn a minimum amount, which will be sufficient to maintain a reasonable rate of
return on the investment so as to provide the funds required for modernization,
growth., and development of the business.
2. Short-term Analysis:
This analysis is made to determine the short-term solvency, stability, liquidity, and earning
capacity of the business. The objective is to know whether in the short-run a business
enterprise will have adequate funds readily available to meet its short- term
requirements and sufficient borrowing capacity to meet contingencies in the near
future.
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NATURE OF FINANCIAL ANALYSIS:
The focus of financial analysis is on the key figures contained in the Financial
Statements and the significant relationship that exists between them. “Analyzing
financial statements is a process of evaluating the relationship between the component
parts OF the financial statements to obtain a better understanding of a firm’s position
and performance”.
The type of relationship to be investigated depends upon the objective and purpose of
evaluation. The purpose of evaluation of financial statements differs among various
groups creditors, shareholders, potential investors, management and so on.
Steps:
The first task of the financial analyst is to select the information relevant to the
DECISION under consideration from the total information contained in the financial
statements. The second step involved in financial analysis is to arrange the information in
such a way as to highlight significant relationships. The final step is the interpretation and
drawing of inferences and conclusions. In brief, financial analysis is the process of
selection, relation and evaluation.
TYPES OF FINANCIAL ANALYSIS:
Financial analysis may be classified on the basis of methodology of analysis. On the

basis of the parties who are doing the analysis, financial analysis is classified into
external analysis and internal analysis.
External Analysis:
When the parties external to the business like creditors, investors is done by
them to know the credit-worthiness of the concern, its financial viability, its
profitability, etc.
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Internal Analysis:
This analysis is done by persons who have control over the books of accounts
and other information of the concern. Normally this analysis is done by management
people to enable them to get relevant information to take vital business decision.
On the basis of methodology adopted for analysis, financial analysis may

be either horizontal analysis or vertical analysis.
Horizontal Analysis:
When financial statements of a number of years are analyzed, then the analysis
is known as horizontal analysis. In this type of analysis figures of the current year are
compared with the standard or base year. His type of analysis will give an insight into
the concern’s performance over a period of years. This analysis is otherwise called a
dynamic analysis as it extends over a number of years.
Vertical Analysis:
This of analysis established a quantitative relationship of the various items in
the financial statements on a particular date. For e.g. the ratios of various expenditure
items in of sales for a particular year can be calculated. The other name for this analysis is
‘static analysis’ as it relies upon one year figures only.
TOOLS OF FINANCIAL ANALYSIS:
The following are the important tools of financial analysis which can be appropriately
used by the financial analysts:
1. Common-size financial statements.

2. Comparative financial statements.
3. Trend percentages.
4. Ratio analysis.
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COMMON-SIZE Financial statements:
In this type of statements figures in the original financial statements are converted into
percentages in relation to a common base. The common base may be sales in the case of
income statements (P/L A/C) and total of assets or liabilities in the case of balance
sheet. For e.g. in the case of common size income statement, sales of the traditional
financial statement are taken as 100 and ever other items in the income statement is
converted into percentages with reference to sales. Similarly in the case of common-size
balance sheet, the total of asset/liability side will be taken as 100 and each individual
asset/liability is converted into relevant percentages.
Comparative Financial Statements:
This type of financial statements is ideal for carrying out horizontal analysis.
Comparative financial statements are so designed to give them perspective to the review and
analysis of the various elements of profitability and financial position displayed in such
statements. In these statements figures for two or more periods are compared to find out
the changes both in absolute figures and in percentages that have taken place in the
latest year as compared to the previous years. Comparative financial statements can
prepared both for income statement and balance sheet.
Trend percentage:
Trend percentages are immensely helpful in making a comparative study of the

financial statements for several years. The method of calculating trend percentages
involves the calculation of percentage relationship that each item bears to there same
item in the base year. Any year may be taken as the base year. It is usually the earliest
year. Any intervening year may also be taken as the base year. Each item of base year is
taken as 100 and on that basis the percentages for each of the items of each of the years
are calculated. These percentages can also be taken as index Numbers showing relative
changes in the financial data resulting with the passage of time.
The method of trend percentages is a useful analytical device for the

management since by substituting percentages for large amounts; the brevity and
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readability are achieved. However, trend percentages are not calculated for all of the
items in the financial statements. They are usually calculated only for major items since the
purpose is to highlight importing changes.
While calculating trend percentages, care should be taken regarding the

following matters:
 The accounting principles and practices followed should be constant throughout

the period for which analysis is made. In the absence of such consistency, the
comparability will be adversely affected.
 The base year should be carefully selected. It should be a normal year and be
representative of the items show in the statement.
 Trend percentages should be calculated only for items having logical

relationship with one another.
RATIO ANALYSIS:
Of all the tools of financial analysis available with a financial analyst the most
important and the most widely used tool is ratio analysis. Simply stated ratio analysis
is an analysis of financial statements done with the help of ratios. A ratio expresses the
relationship the exists between two numbers and in financial statement analysis of
financial statement analysis a ratio shows the relationship between two interrelated
accounting figures. But the accounting figures may be taken from the balance sheet and
resulting the resulting ratio is called a balance sheet ratio or both the figures may be
taken from profit and loss account when the resulting ratio is called as profit and loss
account ratio and composite ratio is ratio which is calculated by taking one figure from
profit and loss account and the other figure from balance sheet. A detailed discussion
on ratio analysis is made available in the pages to come.
 Trend percentages should be calculated only for items having logical

relationship with one another.
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3.4 FINANCIAL STATEMENTANALYSIS:
The basis for financial ANALYSIS and decision making is the financial information.
Financial information needed to predict, compare and evaluate the firm’s financial
performance. it is also required to aid in economic decision making, investment and
financing decision-making. The financial information of an enterprise is contained in
the financial statement.
A firm communicates financial information to the user through financial

statement and report. The financial statement contains summarized information of the
firms financial affairs, organized systematically. They are mean to present the firm
financial situation to users. Preparations of the financial statement is the responsibility
of top management. As investors and financial analysis to examine the firm’s
performance in order to make investment decisions use this statement, they should be
prepared very carefully and contain as much information as possible.
Two basis financial statements prepared for the purpose of external reporting to
owner, investor and creditors are
 Balance sheet
 Profit and loss account
For internal management purposes i.e. planning and controlling, much more
information than contained in the published financial statement is needed.
OBJECTIVES:
 The basic objective of financial statement is to assist in decision making
 To provides reliable financial information about economic resources and obligations of

a business enterprise.
 To provide reliable information about changes in net resources of an enterprise
that result from the profit directed activities.
 To provide financial information that assists in estimation the earning potential of
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the enterprise.
 To provide other needed information about, changes in economic resources and
obligations.
 To disclose to the extent possible, other information related to the
financial statement that is relevant to statement uses.
BALANCE SHEET:
 Balance sheet is one of the significant finance statements.
 It indicates the financial condition or the state of a business at a particular moment of
time.
 It contains the information about resources and obligations of a business entity and
about its owner’s interests at a particular point of time.
Balance sheet contains:

 Assets
 Labilities Assets:
 Assets:
Assets Represents economic resources and valuable possessions owned by the firm.
These possessions should be capable of being measured in monetary terms. They
represent future benefits.
They represent
 Stored purchasing power Ex: Cash
 Money claims a stock Ex: Receivables
 Tangible and Intangible items that can be sold or used business to generate earnings.
Tangible items include land, building, plant equipment or stocks of material and
finished goods. And all such other items which have physical substance. Intangible
items will not have physical existence, but they add value to the firm Eg: patents, copy
rights, trade name or good will.
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They are classified as
1. Current Assets
2. Long Term Assets
1. Current Assets:
current assets, some times also called liquid assets, are those resource of the firm
which are either held in the form of cash or are expected to be converted into cash with
in the accounting period or the operating cycle of the business.
Current assets include cash marketable-securities, book debts and stock of raw
material, work in progress and finished goods.
a) Cash: It is the most liquid current assets. It is the current purchasing power in the hands
of the firm.
b) Marketable securities: They are temporary or short-term investments in

shares, debentures, bonds and other securities.
c) Book debts or Accounts-receivables: They are the amounts due from

debtors to whom goods or services have been sold on credit. These amounts are generally
realizable in to cash with in the accounting period.
d) Bills- receivables: It represents the promises made in writing by debtors to pay

definite sums of money after some specified period of time.
e) Restock: It includes raw materials, work-in-process and finished goods in

the case of manufacturing firms.
f) Loan and Advances:
They are also included in current assets in India. They include dues from employees or
associates, advances for current supplies and advances against acquisition of capital
assets.
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g) Prepaid Expenses and accrued income:
They are also including in current assets. Prepaid expenses are the expenses of future
period paid in advance.
2) Long term Assets:
a. Fixed Assets: They from a major group in the firm. They include land, building,
machinery, equipment, furniture, patents, copy rights, trade marks, trade names and good
will.
b. Investments: Long-term investments represent the firm’s investment in share,

debentures. These investments are held for a period of time greater than the accounting
period.
C. Other Assets: All other assets left are grouped as other assets.
LIABILITIES:
Liabilities are debts payable in future by the firm to its creditors. They
represent economic obligation to pay cash or provide good or service in some
future period. Generally, they are created by borrowing money or

purchasing or services on credit. EX: - creditors, bills payable, wages and
salaries payable.
They are of two types.
1. Current liabilities.
2. Long term liabilities.
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1. Current liabilities:
Current liabilities are debts payable with in an accounting period. Current assets
are converted into cash to pay current liabilities.
a. sundry creditors:
It represents current liabilities towards supplies from whom the firm has purchased raw
materials on credit. This liability also knows as accounts payable.
b. Bills payable:
They are the promises made in writing by the firm to make payment of a specific date.
They have a life of less than a year; therefore, they are shown as current liability in the
balance sheet.
c. Bank borrowing:
It forms a substantial of current liability of a large number of companies in India.
d. Provisions:
They are other type of current labilities. They include Provision for taxes, or
provision for dividends
E, Others: Expenses payable and income received in advance are other examples of
current liabilities.
Long term liabilities:
Long term liabilities, sometimes are also called fixed liabilities. They usually represent
borrowing for a long period of time. Secured loan or mortgages is long term borrowing
with fixed assets pledged as securities.
OWNERS EQUITY:
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The financial interest of owners is called owner’s equity. Owner’s Equity
represents owner’s equity represents owners Claim against the business entity as of the
balance sheet date. In case of a company, owners of firm are called shareholder or
stockholder. Owner’s equity is referred to as shareholder’s equity.
Shareholders has two parts: -

 Paid-up share Capital
 Reserves and Surplus
Benefits of Balance Sheet:

 It is a measure of the it gives a concise summary of resources and
obligation
 The firm’s liquidity.
 It is a measure of the firm’s solvency.
Profit and loss Account:
Creditors, particularly bankers and financial analysts in India have recently started to the
firm’s earning capacity as a measure of its financial strength. The income statement
reflects the earning capacity and potential of the firm or the profit and loss account is
the “score board” of the firm’s performance during a particular period of time. The
profit and loss account reflects the result of operations for a period of time. The profit and
loss account presents the summary of revenues, expenses and net income of a firm for a
period of time.
Functions of profit and loss account:

 It gives a concise summary of the firm’s revenues and expenses during a period of
time.
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CHAPTER 2
REVIEW OF
LITRATURE
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REVIEW OF LITERATURE
Literature Review was done by referring previous studies, articles and books to know the
areas of study and analyze the gap or study not done so far. There are various studies were
conducted relating to operational performance of the company from which most relevant
literature were reviewed.
Kennedy and Muller (1999), has explained that “The analysis and interpretation of financial
statements are an attempt to determine the significance and meaning of financial statements
dataso that the forecast may be made of the prospects for future earnings, ability to pay
interest and debt matures (both current and long term) and profitability and sound dividend
policy.”
T S Reddy and Y. Hari Prasad Reddy…show more content…

Without subjecting these to data analysis, many fallacious conclusions might be drawn
concerning the financial condition of the enterprise. Financial statement analysis is
undertaken by creditors, investors and other financial statement users in order to determine
the credit worthiness and earning potential of an entity.
Susan Ward (2008), emphasis that financial analysis using ratios between key values help
investors cope with the massive amount of numbers in company financial statements. For
example, they can compute the percentage of net profit a company is generating on the funds
it has deployed. All other things remaining the same, a company that earns a higher
percentage of profit compared to other companies is a better investment option.
M Y Khan & P K Jain (2011), have explained that the financial statements provide a
summarized view of the financial position and operations of a firm. Therefore, much can
relearnt about a firm from a careful examination of its financial statements as invaluable
documents / performance reports. The analysis of financial statements is, thus, an important
aid to financial analysis.
Elizabeth Duncan and Elliott
27
PROJECT WORK
BALANCE SHEET
28
3.1 NEED FOR THE STUDY
The present study is undertaken mainly to analyze the financial performance of Tirumala
Cotton & Agro Products Pvt Ltd during the period 2014-2018. The Balance Sheet analysis,
which is one of the important tool for management in efficient cash planning and short-term
analysis.
29
3.2 OBJECTIVES OF THE STUDY
 To access the ability of an enterprise to generate and use cash and cash equivalents.
 To examine the relationship between profitability and net cash flow and the impact of
changing prices.
 To study and analyze the balance sheets of the Tirumala Cotton & Agro Products Pvt Ltd
for the last 5 years.
 To determine the financial position of the company.
 To study and examine the financial performance of the company.
30
3.3 SCOPE OF THE STUDY
 This study is a great help to the organization itself to know the lacuna in the
financial statement.
 Reports of these type three lights on the different issues of the financial
management with help of which academicians and research scholars can make an
insight into and explore the different aspect, which are covered here.
 Creditors and other also require analyses of financial statement for different
purposes
31
LIMITATIONS OF THE STUDY
 More level of interaction with finance department staff due to COVID – 19.
 The source of data based on annual reports only.
 The analysis done only for a period of five years i.e., 2014 – 2019.
 It is only for academic purpose.
32
CHAPTER – 4
INDUSTRY PROFILE
&
COMPANY PROFILE
33
INDUSTRY PROFILE
Profile of Cotton & Textile Industry:
The textile industry occupies a unique place in our Country .One of the earliest to
come into existence in India, it accounts or 14% of the total Industrial production, contributes
to nearly 30% of the total exports and is the second largest employment generator after
agriculture.
India contributes to about 25% share in the world trade of cotton yarn. India, the
world’s third-largest producer of cotton and the second- Largest producer of cotton yarns and
textiles, is poised to play an increasingly important role in global cotton and textile markets
as a result of domestic and multilateral policy reform.
Indian textile industry contributes about 22 % to the world spindle age and about
6% to the world rotor capacity installed. India has second highest spindle age in the world
after China with an installed capacity of 38.60 million spindles. Indian textile industry has the
highest loom age (including handlooms) in the world and contributes about 61% of the world
loom age. It contributes about 12% to the world production of textile fibers and yarns. India
is one of the largest consumers of cotton in the world, ranking second next to China in
production of cotton yarn and fabrics and first in installed spinning and weaving capacity.
Textile industry is providing one of the most basic needs of people and the holds
importance; maintaining sustained growth for improving quality of life. It has a unique
position as a self-reliant industry, from the production of raw materials to the delivery of
finished products, with substantial value-addition at each stage of processing; it is a major
Contribution to the country's economy.
Its vast potential for creation of employment opportunities in the agricultural,
industrial, organized and decentralized sectors & rural and urban areas, particularly for
women and the disadvantaged is Noteworthy.
Although the development of textile sector was earlier taking place in terms of
general policies, in recognition of the importance of this sector, for the first time a separate
Policy Statement was made in 1985 in regard to development of textile sector. The textile
policy of 2000 aims at achieving the target of textile and apparel
34
exports of US $ 50 billion by 2010 of which the share of garments will be US $ 25 billion.
The main markets for Indian textiles and apparels are USA, UAE, UK, Germany, France,
Italy, Russia, Canada, Bangladesh, and Japan.
The main objective of the textile policy 2000 is to provide cloth of acceptable
quality at reasonable prices for the vast Majority of the Population of the country, to
increasingly contribute to the provision of sustainable employment and the economic growth
of the nation; and to compete with confidence for an increasing share of the global market
vast pool of skilled manpower; entrepreneurship; flexibility in production process; and long
experience with US/EU (European Union).
At the same time, there are constraints relating to fragmented industry, constraints of
processing, quality of cotton, concerns over power cost, labour reforms and other
infrastructural constraints and bottlenecks. E.g., cost of power was Rs.8 per garment in India
whereas in China it was only Rs.2 per garment.
Further, for the benefit of exporters, there should be a state-owned cargo shipping
mechanism. Several initiatives have already been taken by the government to overcome some
of these concerns including rationalization of fiscal duties; technology up gradation through
the Technology Up gradation Fund Scheme (TUFS); setting up of Apparel Parks; and
liberalization of restrictive regulatory practices.
Current scenario:
Developing countries with both textile and clothing capacity may be able to
prosper in the new competitive environment after the textile quota regime of quantitative
import restrictions under the multi-fiber arrangement (MFA) came to an end on 1st January,
2005 under the World Trade Organization (WTO) Agreement on Textiles.
The mood in the Indian textile industry given the phase-out of the quota regime of
the multi-fiber arrangement (MFA) is upbeat with new statement lowing in and increased
orders for the industry as a result of which capacities are fully booked up to April 2005. As a
result of various initiatives taken by the government, there has
35
been new investment of Rs.50, 000 crore in the textile industry in the last five years.
Nine textile majors invested Rs.2, 600 crore and plan to invest another Rs.6, 400
crore. Further, India's cotton production increased by 57% over the last five years; and 3
million additional spindles and 30,000 shuttles-less looms were installed.
The industry expects investment of Rs.1, 40,000 crore in this sector in the post-MFA
phase. A Vision 2010 for textiles formulated by the government after intensive interaction
with the industry and Export Promotion Councils to capitalize on the upbeat mood aims to
increase India's share in world's textile trade from the current 4% to 8% by 2010 and to
achieve export value of US $ 50 billion by 2010 Vision 2010 for textiles envisages growth in
Indian textile economy from the current US $ 37 billion to $ 85 billion by 2010; reaction of
12 million new jobs in the textile sector; and modernization and consolidation for creating a
globally competitive textile industry.
There will be opportunities as well as challenges for the Indian textile industry
in the post-MFA era. But India has natural advantages which can be capitalized on strong raw
material base - cotton, man-made fibers, jute, silk; large production capacity (spinning -
21% of world capacity and weaving - 33% of world capacity but of low technology);
Investment in Indian Textile Industry:

The scenario of investment in the Indian textile industry started to change after the
inception of the special “Textile Package” during the 2003-2004 budgets. The
recommendations made in the budget included the reforms that are required to be made in the
fiscal policy of the Indian textile Industry for attracting investment in this industry. The
policy matters associated with restructuring of debt for financial viability of this industrial
sector are also being addressed in this budget. A fund was set up in accordance with the
recommendations of the aforesaid budget with an initial principal amount of Rs.3000 crores.
This fund was meant for restructuring of the textile sector.
36
Factors responsible for wooing the investors in Indian textile industry:
 The size of the textile along with apparel market in India is quite big.
 Performance of this industry has been consistent right from the start of the new
millennium.
 Availability of the skilled labor in India is comparatively cheap in relation to the same
in other parts of the world.
 The policies related to the Foreign Direct Investment in India are comparatively
lenient and are transparent in nature among all the developing countries.
 There is no limit on foreign direct investment in the textile industry and hence
100% direct investment can be done by the foreign capitalists in the Indian textile
industry.
 Foreign Investments done in the Indian Textile Industry through the automatic route
offers a hassle-free way of investing. These investments are not required to be
approved by the government or the apex bank of India, RBI. The foreign investors are
only required to make a notification to the regional office of the apex bank only after
receiving the receipt of the remittance. This notification is required to be done
within thirty days from the date of receiving the remittance.
The ministry concerned with the development of Textile Industry in India has formed a
special cell for attracting FDI in this sector.
Objectives of this special cell for wooing FDI are:

 This cell helps the willing foreign companies to find out viable partners meant for
floating a joint venture company in order to produce textile products.
FDI special cell acts as the mediator between the foreign investor and the
37
 different organizations for setting up the textile industry. The specialized helps that
are given by this cell involve advisory support along with assistance.
 At the time of operation of the textile industry set by the foreign investor certain
problems may crop up. These problems are sorted out by the FDI cell.
 FDI cell monitors as well as maintains the data related with the total
production of the textile sector. They also collect the stratified data of production by
both domestic industry as well as the industry set up by the foreign investor. It has
been found out that the percentage share of the textile industry in the total foreign
investment done was 1.02%.
A major development has occurred in the textile industry when Blackstone, an

investment management company of USA has bought 50.1% stake of the domestic apparel
manufacturing company called Gokaldas Exports. The deal was sealed at the price of Rs 275
per share. After the completion of the stake transfer the promoters of the Gokaldas Exports,
the Hindujas, were left with a share amounting to 20%.
As a part of domestic textile sector expansion, the companies of Indian origin are also
not far behind in making investments. Arvind Mills Limited is expanding its production as
well as capacity base through the construction of two new industrial set ups in Bangalore and
Ahmadabad.
Another textile company of India named Super Spinning Mills is also acquiring two
sick units of Madurai for enhancing their production capacity for meeting the needs generated
by the USA market. up a textile plant in the state of Gujarat at the initial capital of US$ 220
million.
Growth of Indian Textile Industry:

Growth along with the investment of an industry depends heavily on the economic
health of the country. Indian economy grew rapidly during the fiscal year 2007-2008 posting
a growth rate of 9.4% p.a. Not only this, India has been
38
performing significantly in the last three years where its average yearly rate of growth has
been estimated to be 8%.
The fruits of economic growth have trickled down to people of the state which can be
evidenced from the rising per capital income of India. Statistics reveal that during 2002-2008
(up to March 2008) the per capital income of India has increased by sixty two percent and has
reached the level of Rs 25,778 or US$ 581.37 per annum.
One of the most beneficial classes of this economic growth saga has been the middle
income section of the society. The total strength of this class in absolute terms has been found
out to be 216 million which is expected to rise to 351 million by 2010. The major demand
that is being generated is by a new class of people from the booming IT-BPO sector who are
still at their prime age and are outwardly fashion savvy. This has generated huge demand for
fashionable dresses which has consequently led to the emergence of some world class Indian
designers with their latest fashion apparels.
Propensity of consumption (after excluding all spending on essential items like

housing, health, education, etc.) by the average Indian people has increased at the rate of 5%
to a total amount of US$ 219 billion in the year 2005. At this time, the organized retail sector
has been able to tap a market of around US$ 8.2 billion which is projected to increase to US$
25 billion by 2010.
Textile industry is one of the major contributors to the total output of the act growing
Indian industrial sector which is at present revolving around 4%. Textile sector's contribution
to GDP of India is also significant which currently amounts to 4%. It has been found out that
Indian textile industry s one of the major sources of foreign exchange earnings for India and
contributes around 16-17%.
From the above discussion it is quite clear to us that the market size of India is
growing at a very high pace. That is why the foreign investors are flocking to India for
investment purposes in order to get hold of a chunk of this expanding pie. With increasing
demand for the products of Indian Textile Industry, new players are jumping in the league to
get a slice of the profitable pie and the already existing textile mills are raising their capacity
for increasing their
39
supply. Hence, the expansion process of the domestic industry is also not far behind.
Thus, it can be said that the whole Indian economy is on a growing trend which
has its obvious impact on every possible sector including the Indian Industry.Indian
Textile Industry is going through a major change in its outlook after the expiry of Multi-
FiberAgreement.
Multi Fiber Agreement was introduced in the year 1974 as a short term measure
directed towards providing a limited time period to the developed countries for adjusting
their textile industries in accordance with that of the developing countries. The textile
industries are characterized by their labor intensive nature of commodity production.
Availability of surplus labor is abundant in the developing countries. These countries
have comparative advantage in the production of textile related products and hence are
able to supply goods at a very low price. The basic idea behind this policy was to
eradicate all sorts of quota system from the apparel and textile industry all over the world
so that a level playing field could be established.
Now, this era after MFA is being looked upon by the experts as a means through
which the Indian textile and apparel industry is going to grow a much faster pace and would
consequently be able to leave a mark on the whole world. Integration of this Indian industry
with that of the whole world started from the last period of 1980s. It came up to the top ten
league of countries involved in export of textile as well as apparel products after 1998.
According to the statistics of United Nations Statistical Division, 2005 it was clear that
during the entire 1990s, the average compounded growth rate of clothing item export was
moreorless.
Now, let us see some of the figures in order to understand the absolute as well as
relative change in the textile industry in terms of projections from the financial year 2002-
2003 up to 2007-2008 where the final financial year represents the projected figure.
National Textile Policy:

The National Textile Policy was formulated keeping in mind the following objectives:
 Development of the textile sector in India in order to nurture and maintain its
40
 position in the global arena as the leading and exporter of clothing.
 Maintenance of a leading position in the domestic market by doing away with import
penetration.
 Injecting competitive spirit by the liberalization of stringent controls.
 Encouraging Foreign Direct Investment as well as research and development in this

sector.
 Stressing on the diversification of production and its up gradation taking into

consideration the environmental concerns.
 Development of a firm multi-fiber base along with the skill of the weavers and the
craftsmen.
Such goals are set to meet the following targets:
 The size of textile and apparel exports must reach a level of US 50 billion by the year
2010.
 The Technology up gradation Fund Scheme should be implemented in a strict

manner.
 The garments industry should be removed from the list of the small scale industry
sector.
 The handloom industry should be boosted and encouraged to enter into foreign
ventures so as to compete globally. The National Textile Policy has also formulated
rules pertaining to certain specific sectors. Some of the most important items in the
agenda happen to be the availability and productivity along with the quality of the raw
materials. Special care is also taken to curb the fluctuating price of raw materials.
Steps have also been taken to raise silk to the international standard preamble.
 To comprehend the purpose of textile industry that is to provide one the most
basic needs of the people and promote its sustained growth to improve the quality of life.
41
 To acknowledge textile industry as a self-reliant industry, from producing raw
materials to delivery of finished products; and its major contribution to the economy
of the country.
 To understand its immense potentiality for creating employment opportunities in

significant sectors like agriculture, industry, organized sector, decentralized sector,
urban areas and rural areas, specifically for women and deprived. Recognize the
Textile Policy of 1985, which boosted the annual growth rate of cloth production by
7.13%, export of textile by 13.32% and per capita availability of fabrics by 3.6%.
 To analyze the issues and problems of textile industry and the guidelines provided by
the expert committee set up for this specific purpose.
To give a different specification to the objectives and thrust areas of textile industry.
 To produce good quality cloth for fulfilling the demands of the people with
reasonable prices.
 To maintain a competitive global market.
 Trust areas
Government of India is trying to promote textile industry by giving emphasis on several

areas of textile, which are as below:
 Innovative marketing strategies
 Diversification of product
 Enhancement of textile oriented technology
 Quality awareness
 Intensifying raw materials
 Growth of productivity
 Increase in exports
 Financing arrangements
 Creating employment opportunities
 Human Resource Development
42
Government of India has set some targets to intensify and promote textile industry. To
materialize these targets, efforts are being made, which are as follows:
 Textile and apparel exports will reach the US $ 50 billion mark by 2010
 All manufacturing segments of textile industry will come under TUFS (Technology
Up gradation Fund Scheme)
 Increase the quality and productivity of cotton. The target is to increase 50%
productivity and maintain the quality to international standards.
 Establish the Technology Mission on jute with an objective to increase cotton
productivity of the country
 Encourage private organization to provide financial support for the textile industry
 Promote private sectors for establishing a world class textile industry
 Encourage handloom industry for producing value added items
 Encourage private sectors to set up a world class textile industry comprising various
textile processing units in different parts of India
 Regenerate functions of the TRA (Textile Research Associations) to stress on
research works government policy on cotton and man made fiber.

One of the principal targets of the government policy is to enhance the quality and production
of cotton and man-made fiber. Ministry of Agriculture, Ministry of Textiles, cotton growing
states is primarily responsible for implementing this target.
Other trust areas:

Information technology:
Plays a significant role behind the development of textile industry in India. IT (Information
Technology) can promote to establish a sound commercial network for the textile industry to
prosper.
Human Resource Development:
Effective utilization of human resource can strengthen this textile industry to a large extent.
Government of India has adopted some effective policies to properly utilize the manpower of
the country in favor of the textile industry.
43
Financing arrangement:
Government of India is also trying to encourage talented Indian designers and technologists
to work for Indian textile industry and accordingly government is setting up venture capital
fund in collaboration with financial establishments.
Acts:
Some of the major acts relating to textile industry include
a) Central Silk Board Act, 1948
b) The Textiles Committee Act, 1963
c) The Handlooms Act, 1985
d) Cotton Control Order, 1986
The Textile Undertakings Act, 1995 Government of India is earnestly trying to
provide all the relevant facilities for the textile industry to utilize its full potential and achieve
the target. The textile industry is presently experiencing an average annual growth rate of 9-
10% and is expected to grow at a rate of 16% in value, which will eventually reach the target
of US $ 115 billion by 2012..
44
COMPANY PROFILE
Started our business activity in 1979 with cotton trading and today we are proud to have an
annual turnover of USD$25 million. We have vision to expand our operations with annual
turnover of USD$100 million in the next 7 years.
Tirumala Group is started by our visionary Managing Director Mr. P Raghava Rao and
Chairperson K. Hanumanth Rao along with other family members. The Group has acquired
strong trust among the people and its employees throughout the years.
Cotton fiber trading

Cotton Ginning and pressing (automated Jumbo gins and Pressing)
Cotton seed vegetable oil extraction with double refinery and solvent extraction
Captive Hydel power generation
Yarn spinning
OUR VISION
Our vision is for a global organization with
Integrity in operations
Excellence in quality and services
Building strong relationship with partners and customers
Socially responsible towards community and environment.
OUR Mission:
To excel as an organization for total Quality, satisfied customer, innovation and committed
social responsibility.
QUALITY POLICY
Our quality policy is to produce and deliver consistent products and services on time that
meet our customer requirements. We achieve this by reliable quality systems and process that
are continuously monitored and improved.
45
Ginning and Pressing:
We have started a state of art Ginning and Pressing facility in Northern part of Andhra
Pradesh. The operations at this facility are taken utmost care to minimize the contamination
and foreign matter by mechanical means as well as manually.
The cotton is also thoroughly blended to neutralize any variations with in the lot. This helps
to improve the uniformity and minimize between lot to lot variations. After taking
precautionary measures for contaminated free cotton; fibers would be used for processing.
The process of our ginning and pressing is

Hand picking of the contamination on the conveyer system
Blending of the cotton to avoid variation (stack mixing)
Ginning (suitable settings are followed to minimize the fiber damage)
Pressing (the material is transported to the baling press through ducts)
Yarn spinning
Throughout these years we have build a strong rapport and trust in our customer base. This
helps us to have a long-term relationship with our customers.
Cotton Seed Vegetable Oil
The facility is in operation since 1992. Cotton seed is processed in scientific manner and the
current capacity of the plant is 350 tons/day. Cotton seed processing machinery is updated
with state of art technology. High capacity and efficient machinery was installed first in India
in 2006. So many energy efficient measures are being taken in electricity and heat recovery.
Many environmentally friendly systems are adopted. Machinery up-gradation leads us to save
energy about 25% in the processing.
In the cotton seed processing, we produce linters of 75% cellulose, Hulls, vegetable
oil and de-oiled cake of 40% protein content.
46
Hydel Power:
Hydel power generation is started in the year 2000. The total capacity of the Hydel generation
is 2.4 MW of Green Power. The power plants are located on the irrigation canal of Nagarjuna
Sagar dam right bank canal. Steps are being taken to claim the VER credits as per the Kyoto
Protocol.
47
On an average we could generate about 10 million units per year. The whole generation is
used for the captive consumption.
Spinning:
With ample experience in yarn spinning and trading for the past 10 years we started our yarn
spinning division in the year 2006. The present capacity of the plant is 21322 spindles and
having the compact yarn spinning facility as well.
With state of art machinery, good raw material sourcing and quality control systems in place
we spin yarn with excellent properties. All of the processing conditions are monitored and
controlled with utmost care so as to minimize the process induced yarn faults.
We have in-house quality testing facility with latest testing equipment and the material is
conditioned before testing as per the requirement. The lab has latest Uster tester (Model UT5
S400) with hairiness module and Pioneer online yarn strength tester.
Our automatic winding machine Schlaforst AC 338 Gold and AC-5 are with Uster
Quauntum2 electronic eye clearer (EYC). Ultimate yarn quality is monitored and corrective
actions are taken in the process by using online Uster quantum expert. Individual winding
drums quality is monitored by using this online system.
With all the required precautions we promise consistent and good quality yarn to domestic
and export markets.
Contact Information :
Timmapuram, Chilakaluripet - 522 616,
Guntur - District,
Andhra Pradesh, South India, Phone : +91 9885 4573 94, Office : +91 8647 254091, +91
8647 254631, Fax : +91 8647 254858
48
RESEARCH-5
METHODOLOGY
49
METHODOLOGY OF THE STUDY
The data and information required for the present study is mainly acquired from the
annual reports of Tirumala Cotton & Agro Products Pvt Ltd. For the period 2015-2019,
information was also extracted from internet, brochures, News papers, journals and
Magazines.
Primary data:-
The information was collected from personal interviews and discussions with various
officials in the firm.
Secondary data:-
Financial data, websites data, and company analysis and annual data and news
communication.
Data analysis
The process of analyzing the data will begin with the first collecting the data, which is
obtained from the annual reports and then tabulating it.
Then the tabulated data is then depicted in diagrammatic form that is in terms of a
graph like bar charts, pie charts. The data is analyzed mainly from the annual reports. Data
interpretations done with the help of statistical tools like ratios.
50
51
52
53
54
55
CHAPTER – 6
DATA ANALYSIS
AND
INTERPRETATION
56
DATA ANALYSIS & INTERPRETATION
Tirumala Cotton & Agro Products Pvt Ltd
Comparative Balance Sheet as on 31st March 2014-15
31-03-2014 31-03-2015 Increase/ % of
Particulars Decrease Chang
Rs. Rs. Rs. Rs. (Rs) e
l. SOURCES OF FUNDS:
1. SHAREHOLDERS FUNDS
(a) Share Capital 7990000 7990000 -- --
(b) Reserves & Surplus 3135340 7257313 4121973 56.80
(c) Deferred Tax (Liability) -- 1400224 1400224 100.00

2. LOAN FUNDS
(a) Secured Loans 12820439 39637234 26816795 67.66
(b) Unsecured Loans -- 9500000 9500000 100.00
TOTAL 23945779 65784771

ll. APPLICATION OF FUNDS:
1. FIXED ASSETS:
(a) Gross Block 27505278 82072040
(b) Less: Depreciation 5281908 16328078
(c) Net Block 22223370 65743962 43520592 66.20
(d) Capital Work-in-progress -- -- -- --

2. INVESTMENTS -- 5000000 5000000 100.00

3. CURRENT ASSETS, LOANS AND
ADVANCES:
(a) Inventories 3574375 2934680 -639695 -21.80
(b) Cash and Bank balances 17344694 31899521 14554827 45.63
(c) Loans and Advances 18361536 38212350 19850814 51.95
(d) Sundry Debtors -- -- -- --
39280605 73046551 33765946 46.23
Less:
CURRENT LIABILITIES &
PROVISIONS:
(a) Current Liabilities 37140209 76711611 39571402 51.58
(b) Provisions 426687 1301381 874694 67.21
37566896 78012992 40446096 51.85

Net Current Assets 1713709 -4966441 -6680150 134.51
57

4.Derrered Tax (Assets) -- -- -- --

5.MISCELLANEOUS
EXPENDITURE 8700 7250 -1450 -20.00
(To the extent not written off or
adjusted)
TOTAL 23945779 65784771
50000000
43520592
40446096
40000000
36316795
33765946
30000000
20000000
10000000
5522197 5000000
-1450
0
S.Funds Loan Funds Fixed Assets Investments C. Assets C.Liabilities Net Current Miscellaneou
-6680150
-10000000
58
BALANCE SHEETS AS ON 2014-15
1. Share holders’ funds are increased by Rs.55,22,197 during the year mainly
because of profit earned during the year and deferred tax
2. Fixed assets are increase by Rs.4,35,20,592 due to purchase during the year
after deducting current year depreciation of Rs.1,63,28,078.
3. Investments are increased by Rs.50,00,000 due to purchase of investments in

this year.
4. In this year Current liabilities are increased by Rs.3,95,71,402 and provisions

are increased by Rs.8,74,694 these changes are indicates changes of total
Current Liabilities & Provisions of Rs.4,04,46,096
5. The working capital decreased during the year is Rs.66,80,150 it indicates net
changes in Current assets and Current liabilities.
59
31-03-2015 31-03-2016 % of
Increase or
Particulars Chang
Decrease(Rs)
Rs. Rs. Rs. Rs. e
(a) Share Capital 7990000 7990000 -- --
-
(c) Deferred Tax (Liability) 1400224 687672 -712552 103.62

2. LOAN FUNDS
(a) Secured Loans 39637234 34524533 -5112701 -14.81
(b) Unsecured Loans 9500000 9500000 -- --
TOTAL 65784771 61310956

1. FIXED ASSETS:
(a) Gross Block 82072040 105407989
(c) Net Block 65743962 66493962 750000 1.13

-
2. INVESTMENTS 5000000 664772 -4335228 652.14

3. CURRENT ASSETS, LOANS
AND ADVANCES:
(a) Inventories 2934680 3533074 598394 16.94
(c) Loans and Advances 38212350 32178673 -6033677 -18.75
73046551 106559853 33513302 31.45
Less:
PROVISIONS:
(b) Provisions 1301381 2574570 1273189 49.45
78012992 112413431 34400439 30.60

Net Current Assets -4966441 -5853578 -887137 15.16


5.MISCELLANEOUS 7250 5800 -1450 -25.00
60
EXPENDITURE
adjusted)
TOTAL 65784771 61310956
40000000
34400439
35000000 33513302
30000000
25000000
20000000
15000000
10000000
5000000
638886 750000
-1450
0
S.Funds Loan Funds Fixed Assets Investments C. Assets C.Liabilities Net-887137

Current Miscellaneou
-5000000
-4335228
-5112701
-10000000
61
1. Share holders funds are increased by Rs.6,38,886 during the year mainly
because of profit earned during the year and deferred tax
2. Fixed assets are increase by Rs.7,50,000 due to purchase during the year after
deducting current year depreciation of Rs.3,89,14,027.
3. Investments are decreased by Rs.43,35,228 due to sale of investments during

this year.

are increased by Rs.1,273,189 these changes are indicates changes of total
Current Liabilities & Provisions of Rs.3,44,00,439.
5. The working capital decreased during the year is Rs.8,87,137 it indicates net
changes in Current assets and Current liabilities.
62
31-03-2016 31-03-2017 Increase or % of
Particulars Decrease Chang
Rs. Rs. Rs. Rs. (Rs) e
(a) Share Capital 7990000 32990000 25000000 75.78
(c) Deferred Tax (Liability) 687672 -157401 -845073 536.89

2. LOAN FUNDS
(a) Secured Loans 34524533 17002778 -17521755 -103.05
(b) Unsecured Loans 9500000 2500000 -7000000 -280.00
TOTAL 61310956 63452202

1. FIXED ASSETS:
(a) Gross Block 105407989 112992537
(c) Net Block 66493962 54433348 -12060614 -22.16

2. INVESTMENTS 664772 723352 58580 8.10

ADVANCES:
(a) Inventories 3533074 6062448 2529374 41.72
(b) Cash and Bank balances 70848106 32877357 -37970749 -115.49
(c) Loans and Advances 32178673 30933164 -1245509 -4.03

106559853 69872969 -36686884 -52.51
Less:
PROVISIONS:
(a) Current Liabilities 109838861 59160420 -50678441 -85.66
(b) Provisions 2574570 2421397 -153173 -6.33
112413431 61581817 -50831614 -82.54

Net Current Assets -5853578 8291152 14144730 170.60


5.MISCELLANEOUS
EXPENDITURE 5800 4350 -1450 -33.33
63
adjusted)
TOTAL 61310956 63452202
40000000
30000000 26663001
20000000
14144730
10000000
58580 -1450
0
-10000000
-12060614
-20000000
-24521755
-30000000
-40000000 -36686884
-50000000
-50831614
-60000000
64
1. During the year share Capital of the company is increase by Rs. 2,50,00,000
due to "Issue of New Shares", Reserves and surplus are increased by Rs.
25,08,704 due to profit earned during the year and decrease in Deferred tax
liability Rs.8,45,073 due payment of tax, these changes are reflected in
Shareholders Funds.
2. Fixed assets are decreased by Rs.1,20,60,614 due to depreciation during the

year after setoff purchase of fixed assets of Rs.75,84,548.
3. Investments are increased by Rs.58,580 due to purchase of investments in this

year.
4. In this year Current liabilities are decreased by Rs.5,06,78,441 and provisions

are decreased by Rs.1,53,173 these changes are indicates changes of total
Current Liabilities & Provisions of Rs. 5,08,31,614.
5. The working capital increased during the year is Rs.1,41,44,730 it

indicates net changes in Current assets and Current liabilities.
65
31-03-2017 31-03-2018 Increase or
% of
Particulars Decrease
Change
Rs. Rs. Rs. Rs. (Rs)
(a) Share Capital 32990000 104790000 71800000 68.52
(c) Deferred Tax (Liability) -157401 753014 910415 120.90

2. LOAN FUNDS
(a) Secured Loans 17002778 18111334 1108556 6.12
(b) Unsecured Loans 2500000 -- -2500000 -100.00
TOTAL 63452202 185359762

1. FIXED ASSETS:
(a) Gross Block 112992537 111993174
(c) Net Block 54433348 74348516 19915168 26.79
(d) Capital Work-in-progress -- 24941425 24941425 100.00

2. INVESTMENTS 723352 23000000 22276648 96.85

ADVANCES:
(a) Inventories 6062448 12825449 6763001 52.73
(d) Sundry Debtors -- 17427754 17427754 100.00

69872969 124401689 54528720 43.83

Less:
PROVISIONS:
(a) Current Liabilities 59160420 52067003 -7093417 -13.62
(b) Provisions 2421397 9267765 6846368 73.87
61581817 61334768 -247049 -0.40

Net Current Assets 8291152 63066921 54775769 86.85

4.Derrered Tax (Assets)

5.MISCELLANEOUS
EXPENDITURE 4350 2900 -1450 -50.00
66
adjusted)
TOTAL 63452202 185359762
140000000
123299004
120000000
100000000
80000000
60000000 54528720 54775769

44856593
40000000
22276648
20000000
1391444 -247049 -1450

0
-20000000
67
5,05,88,589 due to profit earned during the year and increase in Deferred tax
liability Rs.9,10,415 due to provision for tax, these changes are reflected in
Shareholders Funds.
2. Fixed assets are increase by Rs.4,48,56,593 due to purchase and capital work-
in-progress during the year after deducting current year depreciation of
Rs.3,76,44,658.
3. Investments are increased by Rs.2,22,76,648 due to purchase of investments in

this year.
4. In this year Current liabilities are decreased by Rs.70,93,417 and provisions

are increased by Rs.68,46,368, these changes are indicating changes of total
Current Liabilities & Provisions of Rs. 2,47,049.
5. The working capital increased during the year is Rs.5,47,75,769 it indicates

net changes in Current assets and Current liabilities.
68
Comparative Balance Sheet as on 31st December 2018-19
31-03-2018 31-03-2019 Increase
or % of
Particulars
Decrease Change
Rs. Rs. Rs. Rs. (Rs)
(a) Share Capital 104790000 136283720 31493720 23.11
(c) Deferred Tax (Liability) 753014 1033442 280428 27.14

2. LOAN FUNDS
(a) Secured Loans 18111334 88148463 70037129 79.45
(b) Unsecured Loans -- 16800000 16800000 100.00
TOTAL 185359762 371365513

1. FIXED ASSETS:
(a) Gross Block 111993174 163312858
(c) Net Block 74348516 117576022 43227506 36.77
(d) Capital Work-in-progress 24941425 28051678 3110253 11.09

2. INVESTMENTS 23000000 103000000 80000000 77.67

3. CURRENT ASSETS, LOANS
AND ADVANCES:
(a) Inventories 12825449 59458435 46632986 78.43
-
(b) Cash and Bank balances 40057643 12196274 27861369 -228.44
(d) Sundry Debtors 17427754 59493398 42065644 70.71
124401689 203838725 79437036 38.97
Less:
PROVISIONS:
(b) Provisions 9267765 8674216 -593549 -6.84
61334768 81102362 19767594 24.37

Net Current Assets 63066921 122736363 59669442 48.62


5.MISCELLANEOUS
EXPENDITURE 2900 1450 -1450 -100.00
adjusted)
69
TOTAL 185359762 371365513
120000000
99168622
100000000
86837129
80000000 79437036
80000000
60000000
46337759
40000000
19767594 18035442
20000000
-1450
0
-20000000
70
6,73,94,474 due to profit earned during the year and increase in Deferred tax
liability Rs.2,80,428 due to provision for tax, these changes are reflected in
Shareholders Funds.
2. Fixed assets are increase by Rs.4,63,37,759 due to purchase and capital work-
in-progress during the year after deducting current year depreciation of
Rs.4,57,36,836.
3. Investments are increased by Rs.8,00,00,000 due to purchase of investments in

this year.

are decreased by Rs.5,93,549, these changes are indicating changes of total
Current Liabilities & Provisions of Rs. 1,97,67,594.
5. The working capital increased during the year is Rs.5,96,69,442 it indicates

net changes in Current assets and Current liabilities.
71
Common-size Balance Sheet as on 31 march 2015
31-03-2015 %On
Particulars Total
Rs. Rs. Assets
(a) Share Capital 7990000 12.15
(b) Reserves & Surplus 7257313 11.03
(c) Deferred Tax (Liability) 1400224 2.13

2. LOAN FUNDS
(a) Secured Loans 39637234 60.25
(b) Unsecured Loans 9500000 14.44
TOTAL 65784771

1. FIXED ASSETS:
(a) Gross Block 82072040
(b) Less: Depreciation 16328078
(c) Net Block 65743962 99.94
(d) Capital Work-in-progress -- --

2. INVESTMENTS 5000000 7.60

ADVANCES:
(a) Inventories 2934680 4.46
(b) Cash and Bank balances 31899521 48.49
(c) Loans and Advances 38212350 58.09
(d) Sundry Debtors -- --
73046551 111.04
Less:
PROVISIONS:
(a) Current Liabilities 76711611 116.61
(b) Provisions 1301381 1.98
78012992 118.59

72
Net Current Assets -4966441 -7.55

4.Derrered Tax (Assets) -- --

5.MISCELLANEOUS
EXPENDITURE 7250 0.01
adjusted)
TOTAL 65784771
73
90000000
80000000 78012992
73046551
70000000 65743962
60000000
49137234
50000000
40000000
30000000
20000000 16647537
10000000
5000000
7250
0
-4966441
-10000000
74
31-03-2016 %On
Particulars Total
Rs. Rs. Assets

2. LOAN FUNDS
(a) Secured Loans 34524533
(b) Unsecured Loans 9500000
TOTAL 61310956

1. FIXED ASSETS:
(c) Net Block 66493962 108.45


ADVANCES:
106559853 173.80
Less:
PROVISIONS:
75
112413431 183.35

Net Current Assets -5853578 -9.55


5.MISCELLANEOUS
adjusted)
TOTAL 61310956
76
120000000
112413431
106559853
100000000
80000000
66493962
60000000
44024533
40000000
20000000 17286423
664772 5800
0
S.Funds Loan Funds Fixed Assets Investments C. Assets C.Liabilities Net Current
-5853578 Miscellaneou
-20000000
77
31-03-2017 %On
Particulars Total
Rs. Rs. Assets
(c) Deferred Tax (Liability) -157401 -0.25

2. LOAN FUNDS
TOTAL 63452202

1. FIXED ASSETS:
(c) Net Block 54433348 85.79


ADVANCES:
69872969 110.12
Less:
PROVISIONS:
78
61581817 97.05

Net Current Assets 8291152 13.07


5.MISCELLANEOUS
adjusted)
TOTAL 63452202
79
80000000
69872969
70000000
61581817
60000000
54433348
50000000
43949424
40000000
30000000
19502778
20000000
10000000 8291152
723352 4350
0
80
31-03-2018 %on
Particulars Total
Rs. Rs. Assets
(a) Share Capital 104790000 56.53

2. LOAN FUNDS
(b) Unsecured Loans -- --
TOTAL 185359762

1. FIXED ASSETS:
(c) Net Block 74348516 40.11
(d) Capital Work-in-progress 24941425 13.46

2. INVESTMENTS 23000000 12.41

ADVANCES:
(d) Sundry Debtors 17427754 9.40
124401689 67.11
Less:
PROVISIONS:
81
61334768 33.09



5.MISCELLANEOUS
adjusted)
TOTAL 185359762
82
180000000
167248428
160000000
140000000
124401689
120000000
99289941
100000000
80000000
61334768 63066921
60000000
40000000
23000000
18111334
20000000
2900
0
83
31-03-2019 %on
Particulars Total
Rs. Rs. Assets
(a) Share Capital 136283720 36.70

2. LOAN FUNDS
TOTAL 371365513

1. FIXED ASSETS:
(c) Net Block 117576022 31.66
(d) Capital Work-in-progress 28051678 7.55

2. INVESTMENTS 103000000 27.74

ADVANCES:
(d) Sundry Debtors 59493398 16.02
203838725 54.89
Less:
PROVISIONS:
84
81102362 21.84



5.MISCELLANEOUS
adjusted)
TOTAL 371365513
85
300000000
266417050
250000000
203838725
200000000
145627700
150000000
122736363
104948463 103000000
100000000
81102362
50000000
1450
0
86
CHAPTER – 7
FINDINGS, SUGGESTIONS
&
CONCLUSION
87
7.1 FINDINGS
 Share capital of the company is increased by Rs.2,50,00,000, Rs.7,18,00,000,

Rs.3,14,93,730 in years of 2014-2019 respectively by issuing new shares.
 Company Reserves and surplus are mainly increased profits earned, these
profits are increased by 57%, 16%, 23%, 82%, 52% in years of 2014-
2019respectively.
 Company's fixed assets are increased by 217% in the year 2016-17 it is nearly
50% high comparative to 2013-14. Increase in fixed asset indicates business
expansion.
 During the year company's Investments are increased by Rs.10,30,00,000 it is

nearly 4 times to previous year investment (Rs.2,30,00,000).
 Company's current assets are increased by 46%, 31%, 53%, 44%, 39% for the
years 2014-2019 respectively. It indicates company solvency position. In last
five years company current assets are increase by nearly 40%.
 Company maintain negative working capital in 2015-16, 2016-17 later on it

maintain positive working capital balance it good company to maintain
positive working capital, and also company working capital increased year by
year.
 Company written-off its miscellaneous expenditure every year by Rs.1,450.
88
SUGGESTIONS
 Company getting new share capital by issuing shares in last three years.
Company issuing shares last three years continuously, it's not good for the
company. It indicates company inability to expect fund requirements.
 In other hand it is good to the company to getting new capital to run and enter
into different new projects.
 There is no consistency in profits of the company, the profit earning of the

company varies year by year, the change of profit earning is more then 30%.
 Company maintain negative working capital in later on it maintain positive

working capital balance it good company to maintain positive working capital.
when we won’t required working capital we may lose many opportunities.
 To get ability to satisfy short term needs of funds to the company to maintain
operations of the company smoothly, company has maintain sufficient
working capital.
89
CONCLUSION
Company having good fixed assets or long-term asset’s structure and it increasing its
assets year to year. It’s may help to the company in the long run and it indicates
company growth in upcoming years. But the company doesn’t invest its current
liabilities in fixed assets why because if we invest short-term funds or current
liabilities in fixed assets or ling-term assets we may lose solvency possession of the
company and we may unable to reach current funds requirements.
90
BIBLIOGRAPHY
91
BIBILOGRAPHY
FINANCIAL MANAGEMENT -- I.M. PANDEY
FINANCIAL MANAGEMENT THEORY AND PRACTICE -- M.Y. KHAN
P.K.JAIN
COST AND MANAGEMENT ACCOUNTING -- R.P. TRIVEDI
MANON
TRIVEDI
FINANCIAL MANAGEMENT -- K.GUPTHA
WEBSITE
www.google.com
www.encyclopedia.com
92
ANNEXURE
93
BALANCE SHEETS

Balance Sheet as on 31st March 15
2014-15
Particulars
Rs.
(a) Share Capital 7990000
(b) Reserves & Surplus 7257313
(c) Deferred Tax (Liability) 1400224

2. LOAN FUNDS
TOTAL 65784771

1. FIXED ASSETS:
(c) Net Block 65743962
(d) Capital Work-in-progress --

2. INVESTMENTS 5000000

3. CURRENT ASSETS, LOANS AND ADVANCES:
(a) Inventories 2934680
(b) Cash and Bank balances 31899521
(c) Loans and Advances 38212350
(d) Sundry Debtors --
73046551
Less:
CURRENT LIABILITIES & PROVISIONS:
(a) Current Liabilities 76711611
(b) Provisions 1301381
78012992

Net Current Assets -4966441

94
4.Derrered Tax (Assets) --

5.MISCELLANEOUS EXPENDITURE 7250
(To the extent not written off or adjusted)
TOTAL 65784771

2015-16
Particulars
Rs.

2. LOAN FUNDS
95
TOTAL 61310956

1. FIXED ASSETS:


106559853
Less:
112413431

Net Current Assets -5853578


TOTAL 61310956
96
2016 - 2017
Particulars
Rs.
(c) Deferred Tax (Liability) -157401

2. LOAN FUNDS
TOTAL 63452202

1. FIXED ASSETS:


ADVANCES:

69872969
97
Less:
61581817

Net Current Assets 8291152


TOTAL 63452202

Particulars 2017 - 2018
98
Rs.

2. LOAN FUNDS
(b) Unsecured Loans --
TOTAL 185359762

1. FIXED ASSETS:
(d) Capital Work-in-progress 24941425


(d) Sundry Debtors 17427754

124401689
Less:
61334768



TOTAL 185359762
99
Balance Sheet as on 31st march 2019
2018-19
Particulars
Rs.

2. LOAN FUNDS
TOTAL 371365513

1. FIXED ASSETS:
(c) Net Block 117576022
(d) Capital Work-in-progress 28051678


100
(d) Sundry Debtors 59493398
203838725
Less:
81102362



TOTAL 371365513
101

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A

Project report is submitted in a partial fulfilment of the requirements for

MASTER OF BUSINESS ADMINISTRATION

Mr. Dr G.C VENKATAIAH MBA,

DEPARTMENT OF MANAGEMENT STUDIES

Rajeev Gandhi Memorial College of Engineering & Technology,

Approved by AICTE, New Delhi, Affiliated by JNTU Anantapur,

Accredited by NAAC of UGC

Approved by AICTE, New Delhi, Affiliated by JNTU Anantapur,

DEPARTMENT OF MANAGEMENT STUDIES

Project Supervisor Head of the department

Place: KURABA SUDHARSHAN

With a deep sense of gratitude I would like to express my heartiest gratefulness to my

CHAPTER CONTENTS PAGE NO

CHAPTER-2 REVIEW OF LITERATURE

CHAPTER-3 A STUDY ON INVENTORY MANAGEMENT

CHAPTER-4 RESEARCH METHODOLOGY

CHAPTER-5 DATA ANALYSIS AND INTERPRETATION

CHAPTER-6 6.1 FINDINGS, SUGGESTIONS & CONCLUSION

Financial Statements provide rich information about the operational results of a

According to Myers financial statement analysis is largely a study of relationship

Financial management is concerned with the effective use of an economic resource

1. Those relating to the resource allocation (the investment decision)

OBJECTIVES OF FINANCIAL MANAGEMENT:

FINANCIAL ANALYSIS STATEMENTS:

The following are the limitations of the financial statements:

 It is not always possible to discover false figures in financial statements

The most important objective of financial statements is to present information for

(b) According to modes operating analysis

c. According to the objective of the Analysis on this basis the

TYPES OF FINANCIAL ANALYSIS:

Financial analysis may be classified on the basis of methodology of analysis. On the

On the basis of methodology adopted for analysis, financial analysis may

TOOLS OF FINANCIAL ANALYSIS:

1. Common-size financial statements.

Comparative Financial Statements:

Trend percentages are immensely helpful in making a comparative study of the

The method of trend percentages is a useful analytical device for the

While calculating trend percentages, care should be taken regarding the

 The accounting principles and practices followed should be constant throughout

 Trend percentages should be calculated only for items having logical

 Trend percentages should be calculated only for items having logical

A firm communicates financial information to the user through financial

 Profit and loss account

 To provides reliable financial information about economic resources and obligations of

Balance sheet contains:

b) Marketable securities: They are temporary or short-term investments in

c) Book debts or Accounts-receivables: They are the amounts due from

d) Bills- receivables: It represents the promises made in writing by debtors to pay

e) Restock: It includes raw materials, work-in-process and finished goods in

f) Loan and Advances:

2) Long term Assets:

b. Investments: Long-term investments represent the firm’s investment in share,

future period. Generally, they are created by borrowing money or

They are of two types.

2. Long term liabilities.

It forms a substantial of current liability of a large number of companies in India.

Long term liabilities:

Shareholders has two parts: -

Benefits of Balance Sheet:

Profit and loss Account:

Functions of profit and loss account:

T S Reddy and Y. Hari Prasad Reddy…show more content…