1.1.

INTRODUCTION

Financial performance analysis is the process of identifying the financial strengths and
weaknesses of the firm by properly establishing the relationship between the items of balance
sheet and profit and loss account.

The word ‘Performance is derived from the word ‘parfourmen’, which means ‘to do’,
‘to carry out’ or ‘to render’. It refers the act of performing; execution, accomplishment,
fulfilment, etc. In border sense, performance refers to the accomplishment of a given task
measured against present standards of accuracy, completeness, cost, and speed. In other
words, it refers to the degree to which an achievement is being or has been accomplished. In
the words of Frisch Kohlar “The performance is a general term applied to a part or to all the
conducts of activities of an organization over a period of time often with reference to past or
projected cost efficiency, management responsibility or accountability or the like. Thus, not
just the presentation, but the quality of results achieved refers to the performance.
Performance is used to indicate firm’s success, conditions, and compliance. Financial
performance refers to the act of performing financial activity. In broader sense, financial
performance refers to the degree to which financial objectives being or has been
accomplished. It is the process of measuring the results of a firm's policies and operations in
monetary terms. It is used to measure firm's overall financial health over a given period of
time and can also be used to compare similar firms across the same industry or to compare
industries or sectors in aggregation.

In short, the firm itself as well as various interested groups such as managers, shareholders,
creditors, tax authorities, and others seeks answers to the following important questions:

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

2. How is the Financial Performance of the firm over a given period of time?

These questions can be answered with the help of financial analysis of a firm.
Financial analysis involves the use of financial statements. A financial statement is an
organized collection of data according to logical and Conceptual Framework 50 consistent
accounting procedures. Its purpose is to convey an understanding of some financial aspects of
a business firm. It may show a position at a moment of time as in the case of a Balance Sheet,

1
or may reveal a series of activities over a given period of time, as in the case of an Income

2
Statement. Thus, the term ‘financial statements’ generally refers to two basic statements: the
Balance Sheet and the Income Statement.

The Balance Sheet shows the financial position (condition) of the firm at a given point of
time. It provides a snapshot and may be regarded as a static picture. “Balance sheet is a
summary of a firm’s financial position on a given date that shows Total assets = Total
liabilities + Owner’s equity.”

The income statement (referred to in India as the profit and loss statement) reflects the
performance of the firm over a period of time. “Income statement is a summary of a firm’s
revenues and expenses over a specified period, ending with net income or loss for the
period.” However, financial statements do not reveal all the information related to the
financial operations of a firm, but they furnish some extremely useful information, which
highlights two important factors profitability and financial soundness.

Thus analysis of financial statements is an important aid to financial performance analysis.

Financial performance analysis includes analysis and interpretation of financial statements in
such a way that it undertakes full diagnosis of the profitability and financial soundness of the
business. “The analysis of financial statements is a process of evaluating the relationship
between component parts of financial statements to obtain a better understanding of the
firm’s position and performance.”8 8 Metcalf, R. W. and P. L. Titard, Principles of
Accounting, W. B. Saunders, (Philadelphia)1976, P-157 Conceptual Framework 51 The
financial performance analysis identifies the financial strengths and weaknesses of the firm
by properly establishing relationships between the items of the balance sheet and profit and
loss account. The first task is to select the information relevant to the decision under
consideration from the total information contained in the financial statements. The second is
to arrange the information in a way to highlight significant relationships. The final is
interpretation and drawing of inferences and conclusions. In short, “financial performance
analysis is the process of selection, relation, and evaluation.”

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The analysis of financial statement represents three major steps:

The first step involves the re-organization of the entire financial data contained the financial
statements. Therefore the financial statements are broke down into individual components
and re-grouped into few principle elements according to their resemblances and affinities.
Thus the balance sheet and profit and loss accounts are completely re-casted and presented in
the condensed form entirely different from their original shape. The second step is the
establishment of significant relationships between the individual components of balance sheet
and profit and loss account. This is done through the application tools of financial analysis
like Ratio analysis, Trend analysis, Common size balance sheet and comparative Balance
sheet.

Finally, the result obtained by means of application of financial tools is evaluated.

In brief financial analysis is the process of selection, relation and evaluation of financial
statements. The tools of analysis are used for determining the investment value of the
business, credit rating and for testing efficiency of operation.

Thus financial analysis helps to highlight the facts and relationships concerning managerial
performance, corporate efficiency, financial strength and weakness and credit worthiness of
the company.

FINANCIAL PERFORMANCE ANALYSIS

Financial performance analysis is the process of identifying the financial strengths and
weaknesses of the firm by properly establishing the relationship between the items of balance
sheet and profit and loss account. It also helps in short-term and long-term forecasting and
growth can be identified with the help of financial performance analysis.

The dictionary meaning of ‘analysis’ is to resolve or separate a thing in to its element or

components parts for tracing their relation to the things as whole and to each other.

FINANCIAL STATEMENTS

‘FINANCIAL STATEMENT’ refers to formal ad original statements prepared by a business

concern to disclose its financial information

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According to John.N.Meyer, “The financial statement provides summary of accounts of a
business enterprise, the balance sheet reflecting assets, liabilities and capital as on a certain
date and the income statement showing the result of operation during a certain period”

The financial statements are prepared with a view to depict the financial position of the
concern. They are based on the recorded facts and are usually expressed in monetary terms.
The financial statement are prepared periodically that is generally for the accounting period

The term financial statement has been widely used to represent two statements prepared by
accountants at the end of specific period. They are :

 Profit and loss a/c or income statement

 Balance sheet or statement of financial position

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 1.2 INDUSTRY PROFILE

WABAG is one of the world’s leading companies in the water treatment field. WABAG’s key
competences, which are based on over 90 years of plant building experience, lie in the design,
completion and operation of drinking water and wastewater treatment plants for both the municipal and
industrial sectors. WABAG offers sustained solutions for special customer needs through a
comprehensive range of services and innovative technologies. Our plants facilitate environmentally
compatible wastewater disposal and secure access to clean drinking water for an increasing number of
people. This allows us to make an important contribution to environmental protection and enhanced
quality of life. We would like to invite you to immerse yourself in the world of WABAG and thus
become acquainted with a modern, internationally active company, which is rich in tradition.

Water.The source of life … and our success.

As one of the world’s leading suppliers of water and wastewater treatment plant design, construction
and operational management, we offer sustainable solutions that can serve as the economic basis for a
region and provide enhanced quality of life for the local population.   

Our customers have justified confidence in our blend of innovative technologies and over 90 years of
plant building experience. Indeed, it is the optimum synergy between reliable quality, long-term
experience and leading edge technology that has given us an outstanding, international reputation as a
water technology company.

We regard our endeavours aimed at the conservation and ecological utilisation of the world’s most
valuable resource as both a daily challenge and a social responsibility. Moreover, we believe that these
activities constitute a major investment in a future life that will be worth living.   

Innovation

We have risen to this challenge, which involves a continual flow of new tasks. As a company
endeavouring to conserve for coming generations what is without doubt the most important raw
material of the 21st century, we make every effort to develop new technologies and processes.
However, being innovative also involves the ongoing improvement of existing know-how, as well as

6
the recognition of future requirements and the related rapid development and implementation of new
solutions to the benefit of our customers and the environment.

To this end, we carry out a vast amount of R&D work. Current focal points include membrane
technology, biological high-performance systems, nitrate removal and sewage sludge reduction.

 Membrane technology:

 Fresh water membrane filtration – International case studies

 Five years of water recycling of the Panipat Refinery, India

 KläranlageBeiXiaoHe – Design und Betriebeines der größtenMembran – Bioreaktoren

 Pressure and Submerged Membranes in Multi Barrier Systems for the Treatment of
Surface Water

 MARAPUR – a new process combination for the optimization of MBR

 Water Reuse:

 Recycling of Refinery Effluents – Two Case Studies in India

 Five years of water recycling at the Panipat Refinery, India

 Reuse and recycling of secondary effluents in refineries employing advanced multi-

barrier systems

 Reclamation of wastewater for industrial purposes

 Water management in Windhoek, Namibia

 Adaptation of WWTP design parameters to warm climates using mass balancing of a full scale
plant

 Oxidationsverfahren in der Wasseraufbereitung und Abwasserreinigung

 Nitrate removal:

 Nitrate Removal from Drinking Water in Iran Assessment of Three Different Treatment
Processes Based On Pilot-Scale Investigations

 Biological denitrification of ground water – 8 years full scale experiences with the
BIODEN-process

 Full scale experiences with nitrate

 ElektrodialysezurNitratentfernung und Teilenthärtungbei der Trinkwasseraufbereitung

am BeispielKleylehof
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  Sludge disintegration:

 Ozone treatment of organic micro-pollutants in sewage sludge

 Sewage sludge disintegration using ozone – a method of enhancing the anaerobic

stabilization of sewage sludge

 Desalination:

 Heat Transfer in Film Evaporators, IDA, November 2009

sustainable solutions for a better life

Desalination

Sea and Brackish Water Desalination

Offering more performance.

 Thermal desalination

 Reverse osmosis

 Electrodialysis

Approximately 97.5% of the world’s available water reserves consist of seawater containing salt, which
is therefore undrinkable. Many countries of the world are suffering from an acute water shortage.
Accordingly, the desalination of sea and brackish water has gained enormously in importance and is
now a technically and economically recognised method of obtaining clean drinking water and process
water for industrial operations.

WABAG has over 30 years of experience in this sector is one of the world’s few companies to possess
a complete range of technologies for the desalination of sea- and brackish water. Indeed, WABAG is
able to offer optimised, tailor-made solutions for both the production of drinking water and industrial
desalination.

 Reverse osmosis 

 Thermal desalination

o Multi-effect distillation – MED

o Mechanical vapour compression – MVC

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 o Thermal vapour compression – TVC

o Multi-stage flash – MSF

 Electrodialysis 

 Ion exchange

WABAG has designed, installed and successfully commissioned over 100 plants worldwide.

Thermal desalination

Desalination plants separate sea and brackish water into two flows consisting of a freshwater stream
(permeate in reverse osmosis, condensate in thermal processes) with a low salt content and a stream
with a high salt concentration (brine or concentrate). Every desalination technology requires energy for
this separation process, which is supplied to the system by thermal or mechanical means (generally as
electrical power). The thermal desalination process is based on evaporation and the subsequent
condensation of the steam.

The following thermal desalination technologies of WABAG demonstrate special strengths:

 Multi Effect Distillation (MED)

 Thermal Vapour Compression (MED-TVC)

 Mechanical Vapour Compression (MED-MVC)

 Multi Stage Flash (MSF)

Another form of desalination is reverse osmosis (RO) in which the salt is filtered out by means of
special membranes and potable water is produced immediately. The major advantage of RO is its
extremely low power requirements.

Reverse osmosis

Reverse osmosis is a well-tried and tested technology for the production of desalinated water for use as
both drinking and industrial process water. WABAG supplies RO plants in differing sizes for various
types of raw water such as sea and brackish water and industrial effluent. Major attention is paid to
economic factors such as chemical consumption, energy recovery, membrane durability and process
automation. The result is optimum quality drinking, or process water at minimum cost. On the the basis
of our experience with plants of varying sizes, we offer economically advantageous and technically
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prove solutions for every application.As a system supplier, we provide the required in- and outflow
structures and place a special emphasis on efficient pre-treatment. In this connection, apart from
conventional filtration technologies, highly effective micro- and ultrafiltration systems are employed.

The process

Osmosis is a natural phenomenon, which occurs in all living cells as a control on the water balance. In
order to equalise solution strength, water diffuses through a semi-permeable membrane towards the
higher concentration. The ultimate height difference between the water columns on both sides of the
membrane is referred to as osmotic pressure.

The application of pressure greater than the osmotic pressure of a liquid reverses the water flow
direction over the membrane. In reverse osmosis, a pre-treated fluid is pressurized to a level above that
of the osmotic pressure and then additional pressure is added to raise productivity. This results in a
water flow over the membrane (permeate flow) with a salt content below that of the raw water. In
general, permeate is obtained at near atmospheric pressure and with a lower salt content, while the feed
solution remains on the other side of the membrane and has an increased salt content. This concentrated
solution is disposed of as brine.

Electro dialysis

The electro dialysis process enables specific, partial desalination and has been employed for many years
for the desalination of sea- and brackish water. On this basis, in co-operation with the Vienna University of
Agricultural Sciences, WABAG has developed the ENR®-process for the denitrification of groundwater.

The most important advantages of the process are:

 Nitrate selectivity

 A low general level of desalination

 Reduction of hardness

 Limited space requirement

 Simple operation and quick start-up.

A large-scale ENR® plant with a capacity of 3,450 m3/d was started-up in Austria during 1997. The nitrate

10
 concentration in this case has been reduced from 150 mg/l to <50 mg/l.

The process

During electro dialysis, salts are separated via ion exchanger membranes by means of an electrical field. Raw
water passes through a stack of alternately placed anionic and cationic permeable membranes.The membrane
stack is fixed between electrodes, which generate a direct current field. Due to the alternating selectivity of the
membranes, cells are formed, some containing diluted water with a low level of salinity, and others filled with
concentrated water, which is rich in inorganic salts. Thus, low-nitrate drinking water is produced together with
small amount of concentrate with a correspondingly high nitrate content.

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 1.3 COMPANY PROFILE

All our planet’s resources, perhaps none has greater influence in our lives than
water. Water shapes, renews and nourishes life.
To support the world’s growing population, consumption and industrial
activity we need more water everyday.
Nature can’t always be bountiful. Therefore, the way forward is to innovate
and create newer and sustainable solutions that can drive change in the water
landscape.
In the global movement for the optimal management, conservation and recycle
of this precious resource, WABAG acts as a reliable partner.
Our nine decades of rich experience has enabled us to design, build and
operate drinking water and waste water plants for both municipal and industrial
sectors globally.
Our customers rely on us, because we provide environmentally compatible
solutions, backed by advanced technologies, meticulous research and wide-
ranging innovations.
WABAG’s solutions support communities and industries across the world in
making the most of this precious natural resource. And in so doing, we
contribute towards sustaining life on Earth.

World of WABAG

 Top 10 Ranked among Top 10 desalination companies in the world

 9+ decades The WABAG brand is trusted and respected globally for its nine- decade-old know-
how and domain expertise
 100+ patents We have over hundred patented technologies helping us to customise projects,

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 based on customer requirements and offer solutions..
 2,300+ projects Project reference list of more than 2,250 projects built over the past three
decades, giving us expertise and experience to pre-qualify for complex and large projects
 422 Crore Cash balance reflects our balance sheet’s liquidity quotient
 3 State-of-the-art R&D centres driving consistent innovation
 5,439+ Crore Firm order book ensuring sustainable revenue inflow for the coming financial
years.
 30+ countries Presence across diverse geographies spanning three continents, minimising
geographic concentration risk
 30+ years Professionally managed Company with promoters having an average of 30 years
work experience in the industry
 2,000+ Global team strength

Our vision

 WABAG shall be a professionally managed Indian Multinational having Market Leadership in

Emerging Markets and significant position in the Global Market both in the EPC and Service
Sector of Water Business
 WABAG shall encourage and practice a culture of Caring, Trust and Continuous Learning,
while meeting Expectations of Employees, Stakeholders and Society.
 WABAG-ites shall be an Innovative, Entrepreneurial and Empowered Team committed to Total
Customer Satisfaction and Value Creation.

Our mission

 We, at WABAG, exist to provide total water solutions to our valued customers.
 Our strong, capable, agile and customer focused team shall ensure that every customer solution
is creative, priced competitively and provided in the agreed time frame with essence of quality
at optimum cost.
 We, at WABAG, always have concern for the welfare of our employees and shall do everything
it takes to attract and retain the best of the talent.

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 Global water and water treatment industry

Global water scenario

The world’s water reserves consist of around 2.5% of freshwater reserves and around 97.5% of saline
water. With a static supply of water, there is a growing demand for water all over the world. The 10
biggest water users are India, China, United States, Pakistan, Japan, Thailand, Indonesia, Bangladesh,
Mexico and the Russian Federation.

A rapidly growing global population and additional pressure on resources (more energy, more food and
better quality of life) further aggravate the water scarcity. Moreover, developing countries lack basic
infrastructure, have inadequate financial resources, combined with rapid urbanisation and increased
industrialisation that worsen the water scarcity.

Water withdrawals Water withdrawals refer to the amount of water removed from the source, a portion
of which can potentially be reused. Water withdrawal (from surface and groundwater) in developing
economies has grown in the past few years, driven by a rise in population and urbanisation, rapid
industrial development and changing consumption patterns. This is in contrast to almost constant
withdrawal levels for developed nations, such as the US and Japan.

Uneven water distribution

Water accessibility to all is prevented by an uneven distribution of fresh water reserves.

Regional imbalances in the per capita availability of water, with over 60% of accessible fresh water
supply in only 10 countries result in a water-scarce situation for emerging countries, such as China and
India, which comprise 40% of the global population, but have only 9% of total fresh water reserves.
India has nearly 16% of the world’s population, but only 3% of the world’s water reserves. Thus, India
and China face more water stress.

Water and wastewater market

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 The global water industry including sectors like desalination, wastewater treatment and water-
efficiency technologies, is expected to be worth over US$ 400 Billion.

Water usage – Profile Agriculture sector consumes highest amount of water (70%) followed by
manufacturing. An expanding middle class segment in developing nations wields pressure on more
water-intensive diary and meat rich dietary preference.

The oil and gas industry uses water extensively, where extraction results in high volumes of ‘produced
water’, which comes out of the well, along with the oil and gas. Produced water is di fficult and costly
to treat. Thermal power plants yield 80% of global electricity production and are major water users.

Wastewater scenario

The wastewater treatment sector has been growing at 5.8% CAGR. Within the wastewater sector, the
fastest growing areas are sludge management (26% CAGR) and water reuse (21% CAGR)

Wastewater is increasingly being used to generate biogas or sludge and convert it to heat or electricity.
Water reuse, recycling or the use of reclaimed wastewater and zero discharge technologies are being
increasingly accepted by industries worldwide.

Region-wise demand trend for water and wastewater market and branches are

o Latin America
o The Middle East
o North Africa and Sub-Saharan Africa
o South East Asia
o Indonesia
o Vietnam
o The Philippines
o Sri Lanka

Global water outlook

The global water industry is poised to touch US$ 529 Billion in 2016 (Source: Nomura Research
Institute, January 2015). Water usage opportunities are expected to increase with the maximum growth
occurring in emerging economies. Water demand from various industries is expected to record a higher
pace of 3% CAGR, while agriculture and municipal demand is expected to grow at 2% CAGR.

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Growing demand is likely to emanate from manufacturing, thermal electricity generation and domestic
usage. Egypt, Vietnam, India, Canada and Saudi Arabia top the list of promising markets.

Indian water and wastewater treatment industry

India faces acute water crisis and has sub-optimal water infrastructure in place. This presents a strong
growth opportunity for the country’s water treatment players. This has brought both large international
groups and niche players with successful applications serving particular market segments in the Indian
water market.

Most of the wastewater (sewage) is never treated before being discharged into the water bodies. This
pollutes the water at the source making it unsafe for consumption. Besides, drinking water from this
very water body is supplied without adequate treatment, thereby resulting in water stress for a rapidly
growing population demanding more water per capita.

Safe water demand-supply gap necessitates investments in building water infrastructure

It is estimated that the water growth rate contributed by residential, industrial, agricultural and
commercial use will be growing substantially with increasing demand from India’s population, coupled
with a steady industrial growth. For India, there are different water demand estimates available; the
Ministry of Water Resources (MoWR) and the National Commission on Integrated Water Resources
Development (NCIWRD), which put current water demand at 813 billion cubic metres and 710 billion
cubic metres per annum respectively. Current water reserves are higher at 1,123 billion cubic metres
(BCM) per annum as per the Ministry of Water Resources (MoWR). However, based on the demand
projections of MoWR, the situation could turn around in the next 10 years, when supply would just be
matching the demand.

Indian water treatment infrastructure scenario

Despite ample water reserves, the water distribution remains unequal. As against the requirement of
140 litres per capita per day, urban India receives only 105 litres of water. Rural India fares even worse.
One in four rural families across India draws water from untreated taps and uncovered wells. Poor

16
access to clean drinking water and sanitation contribute to major health concerns, particularly in rural
India.

Increasing urbanisation is aggravating India’s difficulties. India’s urban population is expected to reach
close to 600 Million by 2031, twice as much as in 2011. The number of metropolitan cities with a
population of 1 Million and above has increased from 35 in 2001 to 50 in 2011 and is likely to increase
further to 87 by 2031. Clearly, this requires higher capacity of water treatment plants.

The Government of India aims to set up 100 smart cities in the near future. This will require smart
water metering and other efficient water management and a holistic approach would be the need of the
hour.

Indian wastewater scenario

India’s total water and wastewater treatment market is growing annually by about 18% (Source: The
Guardian, Article: Treating India’s wastewater: why inaction is no longer an option, dated March
2014). Economic growth requires water especially when India is one of the largest consumers of water
in the world. Such is the importance of the wastewater and water treatment industry in India.

Today, our growing cities require approximately 740 billion cubic meters of water annually. This is
likely to go up to 1,500 billion cubic meters in 2030. Present wastewater infrastructure can treat only
30% of the household wastes. The rest is released into the ground or into open drains. Delhi is one
example, which releases 90% of all its untreated wastewater into the Yamuna River, the source for the
city’s drinking water. The Delhi government has drafted a ` 19,500 Crore master plan that aims to fix
the capital’s failing wastewater management system and reduce pollution in Yamuna. The blueprint
proposes a 10,000-km pipe network, 75 WWTPs and integration of various ongoing sewerage projects.

Municipal wastewater

India is witnessing an increasing number of cities that generate huge amounts of wastewater. As per
Central Public Health and Environmental Engineering organisation (CPHEEO) estimates, 70-80% of
total water supplied for domestic use end up generating wastewater. Maharashtra, Delhi, Uttar Pradesh,
West Bengal and Gujarat are the major contributors of wastewater. Overall in Class I cities, nearly 68%
of sewage goes untreated, which is even worse in Class II cities where nearly 90% of sewage
discharged is left untreated.

Inadequate performance of installed Sewage Treatment Plants

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 Central Pollution Control Board (CPCB) evaluated the performance of 152 STPs (funded under
National River Conservation Plan) spread over 15 states in the country with a total treatment capacity
of 4,716 MLD. Actual treatment capacity utilisation is only 66% (around 3,126 MLD) in these plants.
Moreover, treated effluents from 49 STPs exceed Biochemical Oxygen Demand (BOD) standards and
some even violate the discharge standards.

Industrial wastewater

Water is an important requirement for industries, such as power, steel, chemicals, food, paper and oil
and gas. Industrial water consumption in India accounts for 6% of annual water consumption, which is
expected to reach 18% of total water consumption by 2050, according to the Central Pollution Control
Board (CPCB). Private sector involvement is necessary to optimise water use, especially in sectors,
such as Chemicals, Food & Beverages, Mining, Microelectronics, Power Generation, Refining and
Pharmaceuticals.

For water sources to be sustainable, corporate India has to invest in effluent treatment systems. Left
untreated, industrial wastewater discharge causes pollution and affects the fresh water reserves. The
degree of treatment depends upon the regulatory requirements and the industrial needs of the customers.

Wastewater reuse scenario

Water is too precious to be used only once. Wastewater can be reclaimed for reuse by removing
contaminants. In the process, an environmentally safe fluid waste stream is generated, while its solid-
waste by-product is disposed of or reused.

Namami Gange Project

The quality of water in India’s major lifeline, River Ganga has deteriorated rapidly with indiscriminate
and callous discharge of pollutants by municipal and industrial establishments, along the river banks.
The Ganga is the world’s fifth most polluted river. Its pollution comprises domestic sewage dumped
untreated into the river and industrial pollution through untreated wastewater let into the river.

The government informed the Supreme Court that it proposes to invest over ` 51,000 Crore in river
development – for cleaning of the River Ganga. The proposal endeavours to rehabilitate and upgrade
Sewage Treatment Plants, establish additional plants, reduce industrial pollution on river banks,
develop Ganga ‘Grams’, develop ‘ghats’ and manage agricultural run-offs. There is focus on reducing

18
industrial pollution and build capacity in urban local bodies. The government also wants to conserve
flora and aquatic life and develop the river front by giving more public amenities in tourism spots like
Char Dham and Ganga Sagar. There will be an increase in research activities by establishing the Ganga
Institute of River sciences, National Ganga Monitoring, Research projects and spatial planning over the
next few years.

Domestic sewage treatment opportunity

Domestic sewage generates approximately, 2,723 MLD of sewage in 50 cities located along the Ganga,
which adds up to around 85% of the river’s pollution load. The Project proposes setting up of 70 STPs
in the five Ganga basin states by 2018. (Source: Central Pollution Control Board estimates)

Growing gap between STP capacity

The 36 Class 1 cities contribute 96% of the waste water that is generated in the country. In India, 99%
of the water treatment capacity is also installed in these same cities. However, there is an increasing gap
between installed capacity and treatment. Treatment capacity lags at 1,209 MLD as against sewage
generation of 2,723 MLD.

Industrial pollution treatment

There are 764 small-scale industries around the banks of the Ganga (and its two tributaries, Kali and
Ramganga), which consume 1,123 MLD of water and discharge 500 MLD of effluent. Almost 90% of
these industries operate in Uttar Pradesh. These include tanneries, pulp and paper industries, distilleries,
and textile and dyeing units (Source: National Mission for Clean Ganga).

Growth drivers in India

India with its huge population and depleting water resources is one of the largest markets for water
treatment. Opportunities arise from municipal segment, through more stringent norms by the
government:

 Under penetration of water treatment in India

 Multilateral agencies (World Bank, JICA and ADB) give funding support, stressing on private
participation
 Stricter disposal rules for industrial waste water Recycle treated waste water to tackle disposal
and fresh water availability issues
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  Increased O&M outsourcing by authorities for new/ existing municipal plants
 Power sector, a key user of water/waste water treatment is witnessing new projects being set up
– this shall drive demand for water treatment/reuse
 Desalination opportunities in Tamil Nadu
 Integrated Ganges Development Project to clean up the Ganga river by 2017 is a multi-year
waste water treatment opportunity – aims to set up STPs along Ganga, Yamuna and Ramganga
and rehabilitate old and non-functional plants

Fast tracking initiatives

The Supreme Court has directed the GOI to present a stage- wise plan to clean up the River Ganga and
take concrete steps in the Namami Ganga project. The Centre was told to have clear objectives for the
project and set clear milestones so that an appraisal can be done and the progress assessed.

Desalination

The current size of India’s desalination market is US$ 660 Million. The desalination business in India is
poised to reach US$ 1.9 Billion within five years, driven by industrial demand, urban growth and
freshwater scarcity issues (Source: Bloomberg).

India has a coastline of 7,517 km (4,672 miles). Coastal states of Tamil Nadu (Chennai) and Andhra
Pradesh plan to set up desalination plants. Apart from city governments, power generators also account
for 18% of the desalination capacity in India. There are upcoming opportunities for desalination plants
in the coastal states.

India water outlook

The projected water demand from India is expected to increase to 1,500 Billion cubic metres in 2030,
while the current supply of water is 740 Billion cubic metres, which would result in a large gap between
current supply and projected demand — amounting to 50% of demand shortfall. This may lead to
exploitation of alternate sources of water and result in opportunities for setting up of desalination and
water reuse plants.

Moreover, according to GWI report, India is likely to continue spending large sums on sewage
treatment, irrigation and water recycling in the forthcoming years. Although less than 10% of available
water in India is currently used by industries, industrial water demand is likely to rise by 57% in 10
years (Source: Global Water Intelligence Report). This augurs well for the water treatment business in
India.
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 2.1 NEED OF THE STUDY

 Financial performance analysis is an important tool for measuring the financial performance of
the company.
 The main aspect of financial management is working capital management and it should be done
on day-to- day basis.
 This study helps to review the financial performance of the company.
 To understand the meaning, significance and limitation of financial statement analysis.
 To calculate liquidity, solvency, profitability and activity ratios of the organization.

21
 2.2 OBJECTIVES OF THE STUDY

1. To assess profitability, liquidity and solvency ratios.

2.To analyze the financial performance of the company.

3.To provide useful suggestion to provide the financial performance of the companies.

4.To compare the financial performance and to analyze the financial changes over a period of five years

of 2013-2017.

5.To study financial position of “VA TECH WABAG LTD” based on different ratios.

6.To suggest possible future performance by analyzing its financial statements.

22
 2.3 SCOPE OF THE STUDY

This study covers the financial performance of the company and activity engaged in
manufacturing cables. Financial performance covers the aspects like liquidity, earning,
activity, and profitability of “Tubes product of India” This study further compares the
financial statement to know the relative financial position of the company. Finally, a trend
analysis also is carried out to evaluate the trends in financial statements of the company.

23
 2.4 LIMITATION OF THESTUDY

 As the study is based on secondary data, the inherent limitation of the secondary data
would have affected the study.

 The figures in a financial statements are likely to be a least several months out of date,
and so might not give a proper indication of the company’s current financial position.

 This study need to be interpreted carefully. They can provide clues to the company’s
performance or financial situation. But on their own, they cannot show whether
performance is good or bad. It requires some quantitative information for an informed
analysis to be made.

24
25
 2.5 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 literatures were reviewed.

Majocchi, Antonio, Dalla Valle, Luciana( apr 2015  Vol. 16 Issue 2, p307-324. 18p), in their study
titled “Internationalisation, cultural distance and country characteristics: a Bayesian analysis of SMEs
financial performance” discussed that “Relying on the accounting data of a panel of 403 Italian
manufacturing SMEs collected over a period of 5 years, we find results suggesting that multinationality
per se does not impact on the economic performance of international small and medium sized firms. It
is the characteristics of the country selected, i.e. the political hazard, the financial stability and the
economic performance, that significantly influence SMEs financial performance. The management
implication for small and medium sized firms selecting and entering new geographic markets is
significant, since our results show that for SMEs it is the market selection process that really matters
and not the degree of multinationality”.

Mendoza, Rufo R.( 2015, Vol. 10 Issue 1, p192-203. 12p.) in their study titled “an empirical analysis
of financial performance of micro, small, and medium enterprises in the philippines.” discussed that
“The study analyzed the financial performance of selected micro, small, and medium enterprises using
secondary data from their financial statements for the past five years. Results showed the enterprises
performed favorably in liquidity, activity, and leverage but suffered from a low-level profitability.
Using correlation, the study found out there is a significant linear relationship between liquidity and
activity, liquidity and leverage, and activity and leverage. However, each of these measures has no
significant relationship with profitability. Using t-test, the study also found out there is no significant
difference in the liquidity, profitability, and inventory turnover of the enterprises when grouped
according to organizational form, business type, and asset size. However, a significant difference exists
in the receivable turnover, asset turnover, and debt ratios. The study recommends the MSMEs should
revisit their strategies on improving profitability and use financial performance information in coming
up with vital and critical decisions. Also, they should connect financial performance to the larger
external environment of the business so they will continue to play an important role in the growth of the
economy.”

26
Nalwaya, Nidhi Vyas, Rahul ( Jan-Apr2014, Vol. 9 Issue 3, p67-73. 7p.) in their study titled
“Merger and Acquisition in the Telecom Industry: An Analysis of Financial Performance of Vodafone
Plc and Hutchison Essar” discussed that “The service sector is in the process of an unprecedented
restructuring exercise globally and merger and acquisition are preferred choice for the same. This
phenomenon is prevalent in emerging market economies like India. Companies like Airtel, Vodafone
and Hutchison etc are reckoned as global leaders in their sectors. These Indian firms have learnt that
inorganic growth is the faster mechanism. M&As are used by corporate sector to eye the units all
around the operational region which, in-turn, will help them restructure financially. The driving force is
restructuring the corporate entities financially through the medium of M&As. Mergers and Acquisitions
have emerged as a natural process of business restructuring throughout the world and financial
restructuring through mergers and acquisitions represents the most dynamic facet of corporate strategy
the researchers found it suitable to study the impact of mergers and acquisitions on financial
performance vis-a-vis Value Creation of Indian companies. For the purpose the researchers have taken
the case of merger/acquisition from the Telecom sector -- VODAFONE Plc AND HUTCHISON
ESSAR”

Movassaghi, Hormoz, Bramhandkar, Alka (2012, Vol. 13 Issue 5, p21-34. 14p. 5 Charts.) in their
study titled “Sustainability Strategies of Leading Global Firms and Their Financial Performance: A
Comparative Case Based Analysis.” discussed that “The main focus of this study is to examine the
financial performance of a select sample of corporations from around the globe who were repeatedly
selected for inclusion in the DJSI for their exemplary sustainable business practices during 2001-2007.
We were interested in probing into whether consistently high sustainability performance has come at
the cost or in support of positively growing financial performance. While the extant literature on the
link between corporate social and financial performance has examined the dynamics involved on both
theoretical and empirical grounds, usually as crosssectional data, our research contributes to the existing
literature by focusing on companies that have been recognized for their leading edge sustainability
programs over a prolonged period of time (seven years) and how the pursuit of such strategies has
affected their financial performance as measured by select conventional measures of profitability and
market valuation.

Riedl, Edward J, Srinivasan, Suraj(2010, Vol. 27 Issue 1, p289-332. 11p.) in their study titled
“Signaling Firm Performance Through Financial Statement Presentation: An Analysis Using Special
Items” discussed that “This paper investigates whether managers’ presentation of special items within
the financial statements reflects economic performance or opportunism. Specifically, we assess special

27
items presented as a separate line item on the income statement (income statement presentation) to
those aggregated within another line item with disclosure only in the footnotes (footnote presentation).
Our study is motivated by standard-setting interest in performance reporting and financial statement
presentation, as well as prior research investigating managers’ presentation choices in other contexts.
Empirical results reveal that special items receiving income statement presentation are less persistent
relative to those receiving footnote presentation. These results are consistent across numerous
alternative specifications. Overall, the findings are consistent with managers using the income
statement versus footnote presentation to assist users in identifying those special items most likely to
differ from other components of earnings — that is, for informational, as opposed to opportunistic,
motivations.

Dalton,Dan Daily, Catherine, Certo, S. Trevis, Roengpitya, Rungpen (Feb2003, Vol. 46 Issue 1,
p13-26. 14p. 2 Charts) in their study titled “meta-analyses of financial performance and equity: fusion
or confusion” discussed that “Agency theory dominates research on equity holdings--firm performance
relationships; however, extant studies provide no consensus about the direction and magnitude of such
relationships. Consistent linkages have not been demonstrated for firm performance and CEO, officer,
director, institutional, or block holder equity. We conducted a series of meta-analyses of relevant
empirical ownership-performance studies. The meta-analyses provide few examples of systematic
relationships, lending little support for agency theory. We propose a substitution theory perspective for
future ownership-performance research

T.S.Reddy and Y. Hari Prasad Reddy (2009): The statement disclosing status of investments is
known as balance sheet and the statement showing the result is known as profit and loss account”.

28
 3.1. RESEARCH METHODOLOGY

RESEARCH

Research is commonly known to be search for knowledge. Research is an art of scientific search
for specific information. According to Clifford Woody, research comprises defining and redefining
problems, formulating hypothesis or suggested solutions, collecting, organizing and evaluating data,
making deductions and reaching conclusion and further testing the conclusion whether they fit into
formulating hypothesis.

Research in common parlance refers to a search for knowledge. Once can also define research as a
scientific and systematic search for pertinent information on a specific topic. In fact, research is an art
of scientific investigation. The Advanced Learner’s Dictionary of Current English lays down the
meaning of research as “a careful investigation or enquiry especially through search for new facts in
any branch of knowledge.” Redman and Mory define research as a “systematized effort to gain new
knowledge.” Some people consider research as a movement, a movement from the known to the
unknown. It is actually a voyage of discovery. We all possess the vital instinct of inquisitiveness for,
when the unknown confronts us, we wonder and our inquisitiveness makes us probe and attain full and
fuller understanding of the unknown. This inquisitiveness is the mother of all knowledge and the
method, which employs for obtaining the knowledge of whatever the unknown, can be termed as
research.

D.Slesinger and M.Stephenson in the Encyclopedia of Social Sciences define research as “the
manipulation of things, concepts or symbols for the purpose of generalizing to extend, correct or verify
knowledge, whether that knowledge aids in construction of theory or in the practice of an art.” Research
is, thus, an original contribution to the existing stock of knowledge making for its advancement. It is the
pursuit of truth with the help of study, observation, comparison and experiment. In short, the search for
knowledge through objective and systematic method of finding solution to a problem is research. The
systematic approach concerning generalization and the formulation of a theory is also research. As such
the term ‘research’ refers to the systematic method consisting of enunciating the problem, formulating a
hypothesis, collecting the facts of data, analyzing the facts and reaching certain conclusions either in the
form of solutions towards the concerned problem or in certain generalizations for some theoretical
formulation.

29
RESEARCH DESIGN

Kothari (2004) says, the research design is the conceptual structure within which the research is
conducted; it constitutes the blueprint for the collection, measurement and analysis of data. As such the
design includes an outline of what the researcher will do from writing the hypothesis and its operational
implications to the final analysis of data. So the research design can be defined as a plan, structure and
strategy of a research to find out alternative tools to solve the problems and to minimize the variances.

Research methodology is a way to systematically solve the research problem. It may be understood as a
science of studying how research is done scientifically. In it we study the various steps that are
generally adopted by researchers in studying his research problem along with the logic behind them. It
is necessary for the researcher to know not only the research methods/techniques but also the
methodology. Researchers not only need to know how to develop certain indices or tests, how to
calculate the mean, the mode, the median or the standard deviation or chi-square, how to apply
particular research techniques, but they also need to know which of these methods or techniques, are
relevant and which are not, and what would they mean indicate and why. Researchers also need to
understand the assumptions underlying various techniques and they need to know the criteria by which
they can decide that certain techniques and procedures will be applicable to certain problems and other
will not. All this means that it is necessary for the research to design his methodology for his problem
as the same may differ from problem to problem.

TYPES OF RESEARCH
The basic types of research are as follows:
(i) Descriptive vs. Analytical: Descriptive research includes surveys and fact-finding enquiries of
different kinds. The major purpose of descriptive research is description of the state of affairs as it
exists at present. In social science and business research we quite often use the term Ex post facto
research for descriptive research studies. The main characteristic of this method is that the researcher
has no control over the variables; he can only report what has happened or what is happening. Most ex
post facto research projects are used for descriptive studies in which the researcher seeks to measure
such items as, for example, frequency of shopping, preferences of people, or similar data. Ex post facto
studies also include attempts by researchers to discover causes even when they cannot control the
variables. The methods of research utilized in descriptive research are survey methods of all kinds,
including comparative and correlational methods. In analytical research, on the other hand, the

30
researcher has to use facts or information already available, and analyze these to make a critical
evaluation of the material.
(ii) Applied vs. Fundamental: Research can either be applied (or action) research or fundamental (to
basic or pure) research. Applied research aims at finding a solution for an immediate problem facing a
society or an industrial/business organization, whereas fundamental research is mainly concerned with
generalizations and with the formulation of a theory. “Gathering knowledge for knowledge’s sake is
termed ‘pure’ or ‘basic’ research.”4 Research concerning some natural phenomenon or relating to pure
mathematics are examples of fundamental research. Similarly, research studies, concerning human
behavior carried on with a view to make generalizations about human behavior, are also examples of
fundamental research, but research aimed at certain conclusions (say, a solution) facing a concrete
social or business problem is an example of applied research. Research to identify social, economic or
political trends that may affect a particular institution or the copy research (research to find out whether
certain communications will be read and understood) or the marketing research or evaluation research
are examples of applied research. Thus, the central aim of applied research is to discover a solution for
some pressing practical problem, whereas basic research is directed towards finding information that
has a broad base of applications and thus, adds to the already existing organized body of scientific
knowledge.
(iii) Quantitative vs. Qualitative: Quantitative research is based on the measurement of quantity or
amount. It is applicable to phenomena that can be expressed in terms of quantity. Qualitative research,
on the other hand, is concerned with qualitative phenomenon, i.e., phenomena relating to or involving
quality or kind. For instance, when we are interested in investigating the reasons for human behavior
(i.e., why people think or do certain things), we quite often talk of ‘Motivation Research’, an important
type of qualitative research, This type of research aims at discovering the underlying motives and
desires, using in depth interviews for the purpose. Other techniques of such research are word
association tests, sentence completion tests, story completion tests and similar other projective
techniques. Attitude or opinion research i.e., research designed to find out how people feel or what they
think about a particular subject or institution is also qualitative research. Qualitative research is
especially important in the behavioral sciences where the aim is to discover the underlying motives of
human behavior. Through such research we can analyze the various factors which motivate people to
behave in a particular manner or which make people like or dislike a particular thing. It may be stated,
however, that to apply qualitative research in practice is relatively a difficult job and therefore, while
doing such research, one should seek guidance from experimental psychologists.

31
(iv) Conceptual vs. Empirical: Conceptual research is that related to some abstract idea(s) or theory. It
is generally used by philosophers and thinkers to develop new concepts or to reinterpret existing ones.
On the other hand, empirical research relies on experience or observation alone, often without due
regard for system and theory. It is data-based research, coming up with conclusions which are capable
of being verified by observation or experiment. We can also call it as experimental type of research. In
such a research it is necessary to get at facts firsthand, at their source, and actively to go about doing
certain things to stimulate the production of desired information. In such a research, the researcher must
first provide himself with a working hypothesis or guess as to the probable results. He then works to get
enough facts (data) to prove or disprove his hypothesis. He then sets up experimental designs which he
thinks will manipulate the persons or the materials concerned so as to bring forth the desired
information. Such research is thus characterized by the experimenter’s control over the variables under
study and his deliberate manipulation of one of them to study its effects. Empirical research is
appropriate when proof is sought that certain variables affect other variables in some way. Evidence
gathered through experiments or empirical studies is today considered to be the most powerful support
possible for a given hypothesis.
(v) Some Other Types of Research: All other types of research are variations of one or more of the
above stated approaches, based on either the purpose of research, or the time required to accomplish
research, on the environment in which research is done, or on the basis of some other similar factor.
Form the point of view of time, we can think of research either as one-time research or longitudinal
research. In the former case the research is confined to a single time-period, whereas in the latter case
the research is carried on over several time-periods. Research can be field-setting research or
laboratory research or simulation research, depending upon the environment in which it is to be
carried out. Research can as well be understood as clinical or diagnostic research. Such research follow
case-study methods or in depth approaches to reach the basic causal relations. Such studies usually go
deep into the causes of things or events that interest us, using very small samples and very deep probing
data gathering devices. The research may be exploratory or it may be formalized. The objective of
exploratory research is the development of hypotheses rather than their testing, whereas formalized
research studies are those with substantial structure and with specific hypotheses to be tested. Historical
research is that which utilizes historical sources like documents, remains, etc. to study events or ideas
of the past, including the philosophy of persons and groups at any remote point of time. Research can
also be classified as conclusion-oriented and decision-oriented. While doing conclusion oriented
research, a researcher is free to pick up a problem, redesign the enquiry as he proceeds and is prepared
to conceptualize as he wishes. Decision-oriented research is always for the need of a decision maker

32
and the researcher in this case is not free to embark upon research according to his own inclination.
Operations research is an example of decision oriented research since it is a scientific method of
providing executive departments with a quantitative basis for decisions regarding operations under their
control.

SOURCES OF DATA

This deals with different data collection methods. For data collection, the researcher has used
primary and secondary sources of data. A survey method is used by the researcher for collection of
primary data.

Applied vs. Fundamental: Research can either be applied (or action) research or fundamental (to basic
or pure) research. Applied research aims at finding a solution for an immediate problem facing a
society or an industrial/business organization, whereas fundamental research is mainly concerned with
generalizations and with the formulation of a theory. “Gathering knowledge for knowledge’s sake is
termed ‘pure’ or ‘basic’ research.”4 Research concerning some natural phenomenon or relating to pure
mathematics are examples of fundamental research. Similarly, research studies, concerning human
behavior carried on with a view to make generalizations about human behavior, are also examples of
fundamental research, but research aimed at certain conclusions (say, a solution) facing a concrete
social or business problem is an example of applied research. Research to identify social, economic or
political trends that may affect a particular institution or the copy research (research to find out whether
certain communications will be read and understood) or the marketing research or evaluation research
are examples of applied research. Thus, the central aim of applied research is to discover a solution for
some pressing practical problem, whereas basic research is directed towards finding information that
has a broad base of applications and thus, adds to the already existing organized body of scientific
knowledge.

PRIMARY DATA

Primary data are those which are collected for the first time and which could be original in
character.

SECONDARY DATA

 The Balance Sheet

 Profit and Loss account
33
TOOLS USED FOR DATA ANALYSIS

 Ratio analysis
 Trend analysis

Ratio Analysis

In order to evaluate financial condition and performance of a firm, the financial analyst needs certain
tools to be applied on various financial aspects. One of the widely used and powerful tools is ratio or
index. Ratios express the numerical relationship between two or more things. This relationship can be
expressed as percentages, fraction or proportion of numbers.

Ratio analysis plays an important role in determining the financial strengths and weaknesses of a
company relative to that of other companies in the same industry. The analysis also reveals whether the
company's financial position has been improving or deteriorating over time. Ratios can be classified
into four broad groups on the basis of items used: (1) Liquidity Ratio, (ii) Capital Structure/Leverage
Ratios, (iii) Profitability Ratios, and (iv) Activity Ratios.

Ratio analysis is the process of determining and presenting the relationship of items and groups of items
in the financial statements. Ratios are effective performance indicators when results for the current
period are compared to the past performance over several periods.

Advantages of ratio analysis:

 Forecasting: Ratio reveal the trends in costs, sales, profits and other inter – related facts, which
will be helpful in forecasting future events.
 Managerial control: Ratio can be used as’ instrument of control’ regarding sales, cost and
profit.
 Measuring efficiency: Ratios help to know operational efficiency by comparison of present
ratios with those of the past working and also with those of other firms in the industry.
 Investment decision: Ratio are helpful in computing return on investment. This helps the
management in exercising effective decisions regarding profitable avenues of investment.

34
Limitation of ratio analysis:

 Practical knowledge: the analyst should have trough knowledge and experience about the firm
and industry.
 Ratio are means: Ratios are not an end in themselves but they are means to achieve a particular
purpose or end.
 Inter-relationship: Ratio are inter related and therefore a single ratio cannot convey any
meaning. It has to be interpreted with reference to other related ratios to draw meaningful
conclusion

CLASSIFICATIONS OF RATIOS

CLASSIFICATION OF RATIO ANALYSIS

A. Solvency ratios
i. Short term solvency ratios
ii. Long term solvency ratios
B. Profitability ratios
C. Turnover ratios

A. Solvency ratio:

It means the ability of the firm to meet current obligation. The ratio establishes the relationship
between cash and other current asset to current obligation.

B. Profitability ratios

The profitability of the firm can be measured by its profitability ratios. Profits are the goal of
every business firm. Ability to make maximum utilization by a business concern is termed as
“Profitability”.

C. Turnover ratio:

Turnover ratio is the way for examining the liquidity which helps to determine how quickly
certain current assets are converted into cash.

35
RATIO USED:

The ratios are used to determine the financial position of the company.
 Current ratio
 Liquid ratio
 Operating profit ratio
 Net profit ratio
 Return on investment ratio
 Total assets Turnover ratio
 Return on assets
 expenses ratio
 net working capital to sales ratio
 Solvency ratio
 Capital turnover ratio
 Proprietary ratio

36
A. CURRENT RATIO

Current ratio is a measure of the firm’s short term solvency. It indicates the availability of
current assets in rupees for every one rupee of current liability. A ratio of greater than one means that
the firm has more current assets than current claims against the, Current ratio of 2 to 1 or more is
considered satisfactory. The current ratio is calculated by dividing current assets by current liabilities.

Current assets
Current ratio =
Current liabilities

B.LIQUID RATIO

This ratio is also termed as “Acid test ratio” or “Quick ratio”. This ratio is ascertained by
comparing the liquid assets which are immediately convertible into cash without much cost to current
liabilities. Prepaid expenses and stock are not taken as liquid assets ratio may be expressed as follows.

Liquid assets∨quick assets

Liquid ratio =
Current liabilities

C.OPERATING PROFIT RATIO

The operating margin ratio, also known as the operating profit margin, is a profitability ratio that
measures what percentage of total revenues is made up by operating income. In other words, the
operating margin ratio demonstrates how much revenues are left over after all the variable or operating
costs have been paid. Conversely, this ratio shows what proportion of revenues is available to cover
non-operating costs like interest expense.

Operating profit
Operating profit ratio= X 100
Net sales

37
D. NET PROFIT RATIO

This ratio is also called net profit to sales ratio. It is a measure of management efficiency in
operation the business successfully from the owner point of view. It indicates the return on
shareholder’s investments. Higher the ratio better is the operational efficiency of the business concern.

Net profit after tax

Net profit ratio= X 100
Net sales

E.RETURN ON INVESTMENT

A performance measure used to evaluate the efficiency of an investment or to compare the efficiency of
a number of different investments. ROI measures the amount of return on an investment relative to the
investment’s cost. To calculate ROI, the benefit (or return) of an investment is divided by the cost of
the investment, and the result is expressed as a percentage or a ratio.

Operating Profit
Return on investment=
Capital employed

F.TOTAL ASSET TURNOVER RATIO

Asset Turnover Ratio is a term that indicates the efficiency of utilization of total assets. Asset turnover

indicates how many times the total assets turnover for one year. Use of the Asset Turnover Ratio in

practice In the enterprise it used by CFO in financial analysis to analyze ratios. For the objectivity it is

suitable the industry comparison

Sales
Total assets turnover ratio=
Total assets

38
G. RETURN ON TOTAL ASSETS

This ratio is calculated to measure the productivity of total assets. The term fictitious asset refers
to preliminary expenses, debit balance of profit and loss account and other similar losses shown on
Balance sheet asset side.

Profit After Tax

Return on Total Assets = X 100
Total assets

H.EXPENSES RATIO

The expense ratio is a measure of what it costs an investment company to operate a mutual
fund. An expense ratio is determined through an annual calculation, where a fund's operating expenses
are divided by the average dollar value of its assets under management. Operating expenses are taken
out of a fund's assets and lower the return to a fund's investors.

Total expenses
Expenses ratio = X 100
Net sales

I.NET WORKING CAPITAL TO SALES RATIO

This ratio measures the number of the times working capital turns over annually in relation to net

Sales. This ratio should be viewed in conjunction with the assets to sales ratio. A high turnover rate

Can indicate overtrading (excessive sales volume in relation to the investment in the business) and

Also may indicate that the business relies extensively upon credit granted by suppliers or the bank

As substitute for an adequate margin of operating funds.

39
 Sales
Networking capital to sales ratio=
Working capital

J.SOLVENCY RATIO

Solvency ratio measure the financial soundness of business and how well the company can

Satisfy is short and long tern obligations.A high ratio indicates greater risk and lower safety to the

Owners. A high ratio makes a firm vulnerable to business cycles and its solvency becomes suspect.

Total debt
Solvency ratio=
Total tangible assets

K. CAPITAL TURNOVER RATIO

Managerial efficiency is also calculated by establishing the relationship between cost of sales or
sales with amount of capital invested in the business. Capital turnover ratio is calculated with help of
the following formula.

Cost of Sales
Capital Turnover Ratio =
Capital employed

L. PROPRIETARY RATIO

This ratio compares the shareholders funds or owners fund and total tangible assets. The total
shareholder fund is compared with the total tangible asset of the company. This ratio indicates the
general financial strength of concern. It is a test of the soundness of financial structure of the concern.

Shareholders funds
Proprietary ratio=
Total tangible assets

40
TREND ANALYSIS

It is an important tool of horizontal analysis. Under this analysis, ratios of different items of the
financial statements for various periods are calculated and the comparison is made accordingly. The
analysis over the prior year indicates the trend or direction. Trend analysis is a useful tool to know
whether the financial health of a business entity is improving in the course of time or it is deteriorating.

Trend analysis using a least square method is mostly widely used in practice. It is will help a trend line
is fitted to the data in such a manner that two condition are satisfied. This least square may be used in
straight line trend method or parabolic trend.

The straight line trend is represented by the equation:

Y = a +bX .

Where y is used to designate the trend values to distinguish them from the actual y values. a is the y
intercept or the computed trend figure of the y variable when x= 0. b represents the slope of the trend
line or amount of change in y variable that is associated with a change of on unit in x variable. The x
variable in time series analysis represents time.

Whenever we fit any straight line trend by the least squares method, three things should be specified:

1. Which year was selected as the origin?

2. What is the unit of time represented by x? If it half year, one year or five year?
3. What kind of units is y being measured? Is it production in tonnes, sales in rupees, price in
rupees, employment in thousands of workers?

In order to determine the values of the constant a and b the following two normal equations are to be
solved:

n ∑ xy−∑ x∗∑ y
b=
n ∑ x 2 – (∑ x) 2

N represents number of years for which data are given.

41
Limitations of trend analysis

Keep in mind there are situations when trend analysis is of limited use. Examples include:

 If conditions change dramatically, historical data may not apply

 Comparing data on an annual basis may not always accurately represent business performance,
since other factors may influence results
 Data collected over an extended period of time does not allow adjustments for inflation.

Spending time analyzing your business results is valuable if the insights help you to improve your
business.Genuine trend analysis will help reveal trends in your business's performance that aren't
necessarily obvious from day-to-day performance figures.

42
 DATA ANALYSIS AND INTEREPRETATION

3.2.1 Table showing the Current Ratio

Current Ratio
Sl.No Year Current Assets Current Liabilities Current Ratio
1 2017-2016 2,136.22 1,328.52 1.61
2 2016-2015 1,774.80 903.62 1.96
3 2015-2014 1,547.17 957.59 1.62
4 2014-2013 1,461.91 910.19 1.61
5 2013-2012 1,266.40 761.89 1.66

Findings:
It is found from above table that the Current Ratio for 2013 is 1.66, 2014 is 1.61,2015 is 1.62,
2016 is 1.96 and 2017 is 1.61.

Inference:
It is inference from above findings that the current ratio during the year of 2016 is 1.96.

43
3.2.1 Chart showing the Current Ratio

2
Current Ratio
1.8

1.6

1.4

1.2

0.8

0.6

0.4

0.2

0
2017-2016
2016-2015
2015-2014
2014-2013
2013-2012

44
3.2.2 Table showing the Liquid Ratio

Liquid Ratio
Sl.No Year Quick Assets Current Liabilities Quick Ratio
1 2017-2016 2092.18 1,328.52 1.57
2 2016-2015 1720.96 903.62 1.9
3 2015-2014 1486.81 957.59 1.55
4 2014-2013 1423.49 910.19 1.56
5 2013-2012 1251.04 761.89 1.64

Findings:
It is found from above table that the Quick Ratio for 2013 is 1.64, 2014 is 1.56, 2015 is 1.55,
2016 is 1.9 and 2017 is 1.57.

Inference:
It is inference from above findings that the quick ratio during the year of 2016 is 1.9.

45
3.2.2 Chart showing the liquid Ratio

Quick Ratio

2013-2012

2014-2013
Ratio

2015-2014

2016-2015

2017-2016

0 0.2 0.4 0.6 0.8 1 1.2 1.4 1.6 1.8 2

Year

46
3.2.3Table showing the Operating Profit Ratio

Operating Profit Ratio

Sl.No Year Operating Profit Net Sales Operating Margin
1 2017-2016 201.98 1,798.38 11.23
2 2016-2015 194.9 1,513.43 12.87
3 2015-2014 149.26 1,233.36 12.1
4 2014-2013 141.09 1,152.24 12.24
5 2013-2012 138.84 1,057.17 13.13

Findings:
It is found from above table that the Operating Profit Ratio for 2013 is 13.13, 2014 is
12.24,2015 is 12.1, 2016 is 12.87 and 2017 is 11.23.

Inference:
It is inference from above findings that the operating profit ratio during the year of 2013 is
13.13.

47
3.2.3 Chart showing the Operating Profit Ratio

Operating Margin
13.5

13

12.5

12

11.5

11

10.5

10
2017-2016 2016-2015 2015-2014 2014-2013 2013-2012

48
3.2.4 Table showing the Net Profit Ratio

Net Profit Ratio

Sl.No Year Net profit Net Sales Net profit Ratio
1 2017-2016 74.98 1,798.38 4.16
2 2016-2015 117.43 1,513.43 7.75
3 2015-2014 90.41 1,233.36 7.33
4 2014-2013 88.58 1,152.24 7.68
5 2013-2012 90.11 1,057.17 8.52

Findings:
It is found from above table that the Net Profit Ratio for 2013 is 8.52, 2014 is 7.68, 2015 is
7.33, 2016 is 7.75 and 2017 is 4.16.

Inference:
It is inference from above findings that the net profit ratio during the year of 2013 is 8.52.

49
3.2.4 Chart showing the Net Profit Ratio

Net profit Ratio

Net profit Ratio

7.75
8.52
7.33 7.68

4.16

2017-2016
2016-2015
2015-2014
2014-2013
2013-2012

50
3.2.5 Table showing the Return on Net worth Ratio

Return on Networth
Sl.No Year NPAIT Shareholder’s funds ROI
1 2017-2016 74.98 824.05 9.09
2 2016-2015 117.43 781.07 15.03
3 2015-2014 90.41 686.2 13.17
4 2014-2013 88.58 602.83 14.69
5 2013-2012 90.11 536.57 16.79

Findings:
It is found from above table that the Return on Investment for 2013 is 16.79.13, 2014 is
14.69, 2015 is 13.17, 2016 is 15.03 and 2017 is 9.09.

Inference:
It is inference from above findings that the Return on investment during the year of 2013 is
16.79.

51
3.2.5 Chart showing the Return on Net worth Ratio

Return on Investment

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%
2017-2016
2016-2015
2015-2014
2014-2013
2013-2012

52
3.2.6 Table showing the Total Asset Turnover Ratio

Total Asset Turnover Ratio

Sl.No Year Net Sales Average Total Assets Asset turnover ratio
1 2017-2016 1,798.38 943.92 1.91
2 2016-2015 1,513.43 1,020.01 1.49
3 2015-2014 1,233.36 748.93 1.65
4 2014-2013 1,152.24 692.08 1.67
5 2013-2012 1,057.17 591.12 1.79

Findings:
It is found from above table that the Total Asset turnover Ratio for 2013 is 1.79, 2014 is 1.67,
2015 is 1.65, 2016 is 1.49 and 2017 is 1.91.

Inference:
It is inference from above findings that the Total Asset turnover ratio during the year of 2017
is 1.91.

53
3.2.6 chart showing the Total Asset Turnover Ratio

Asset turnover ratio

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%
2017-2016
2016-2015
2015-2014
2014-2013
2013-2012

54
3.2.7 Table showing the Return on Assets Ratio

Return on assets
Sl.no Year Net income Total assets Ratio
1 2016 -2017 74.98 943.92 7.94
2 2015 -2016 117.43 1,020.01 11.51
3 2014-2015 90.41 748.93 12.07
4 2013-2014 88.58 692.08 12.79
5 2012-2013 90.11 591.12 15.24

Findings:
It is found from above table that the Return on Asset Ratio for 2013 is 15.24, 2014 is 12.79,
2015 is 12.07, 2016 is 11.51 and 2017 is 7.94.

Inference:
It is inference from above findings that the Return on Asset during the year of 2013 is 15.24.

55
3.2.7 Chart showing the Return on Assets Ratio

15.24
16
12.79

14 12.07
11.51

12

7.94
10

0
2016 -2017 2015 -2016 2014-2015 2013-2014 2012-2013

Ratio

56
3.2.8 Table showing the Expenses Ratio

Expenses ratio

Sl.no Year Total expenses Net sales Ratio

1 2016 -2017 1,565.33 1,798.38 87.04
2 2015 -2016 1,354.16 1,513.43 89.5
3 2014-2015 1,099.51 1,233.36 89.14
4 2013-2014 1,009.70 1,152.24 87.7
5 2012-2013 899.28 1,057.17 85.06

Findings:
It is found from above table that the expenses Ratio for 2013 is 85.06, 2014 is 87.7, 2015 is
89.14, 2016 is 89.5 and 2017 is 87.04.

Inference:
It is inference from above findings that the expenses ratio during the year of 2016 is 89.5.

57
3.2.8 chart showing the Expenses Ratio

Expenses Ratio

90

89

88

87
Ratio

86

85

84

83

82
2016 -2017 2015 -2016 2014-2015 2013-2014 2012-2013

58
3.2.9 Table showing the Net Working Capital to Sales Ratio

Net working capital to sales ratio

Sl.no Year CA -CL Sales Ratio
1 2016 -2017 441.84 1,798.38 0.25
2 2015 -2016 421.13 1,513.43 0.28
3 2014-2015 282.44 1,233.36 0.23
4 2013-2014 259.08 1,152.24 0.22
5 2012-2013 283.35 1,057.17 0.27

Findings:
It is found from above table that the net working capital to sales Ratio for 2013 is 0.27, 2014
is 0.22, 2015 is 0.23, 2016 is 0.28 and 2017 is 0.25.

Inference:
It is inference from above findings that the net working capital to sales ratio during the year
of 2016 is 0.28.

59
3.2.9 Chart showing the Net Working Capital to Sales Ratio

WC Ratio

0.3

0.25

0.2

Ratio

0.15

0.1

0.05

0
2016 -2017 2015 -2016 2014-2015 2013-2014 2012-2013

60
3.2.10 Table showing the Solvency Ratio

solvency ratio
sl.no year total debt tangible asset solvency ratio
1 2017-2016 119.86 1588.55 7.55
2 2016-2015 230.9 1344.87 17.17
3 2015-2014 62.6 1270.37 4.93
4 2014-2013 89.03 1220.42 7.30
5 2013-2012 54.51 1008.25 5.41

Findings:
It is found from above table that the solvencyRatio for 2013 is 5.41, 2014 is 7.30, 2015 is
4.93, 2016 is 17.17, and 2017 is 7.55.

Inference:
It is inference from above findings that the solvency ratio during the year of 2016 is 17.17.

61
3.2.10 Chart showing the Solvency Ratio

solvency ratio
20.00

18.00

16.00

14.00

12.00
solvency ratio
10.00

8.00

6.00

4.00

2.00

0.00
2017-2016 2016-2015 2015-2014 2014-2013 2013-2012

62
3.2.11 Table showing the Capital Turnover Ratio

capital turnover ratio

sl.no year sales capital employed CTO ratio
1 2017-2016 1798.38 824.05 2.18
2 2016-2015 1513.43 781.07 1.94
3 2015-2014 1233.36 686.2 1.80
4 2014-2013 1152.24 602.83 1.91
5 2013-2012 1057.17 536.57 1.97

Findings:
It is found from above table that the capital turnover Ratio for 2013 is 1.97, 2014 is 1.94,
2015 is 1.80, 2016 is 1.94, and 2017 is 2.18.

Inference:
It is inference from above findings that the capital turnover ratio during the year of 2017 is
2.18.

63
3.2.11 Chart showing the Capital Turnover Ratio

CTO ratio

2.50

2.00

1.50
CTO ratio

1.00

0.50

0.00
2017-2016 2016-2015 2015-2014 2014-2013 2013-2012

64
3.2.12 Table showing the Proprietary Ratio

proprietary ratio
sl.no year shareholder funds tangible asset proprietary ratio

1 2017-2016 824.05 1588.55 51.87

2 2016-2015 781.07 1344.87 58.08

3 2015-2014 686.2 1270.37 54.02

4 2014-2013 602.83 1220.42 49.40

5 2013-2012 536.57 1008.25 53.22

Findings:
It is found from above table that the proprietary Ratio for 2013 is 51.87, 2014 is 49.40, 2015
is 54.02, 2016 is 58.80, and 2017 is 51.87.

Inference:
It is inference from above findings that the proprietary ratio during the year of 2016 is 58.08.

65
3.2.12 Chart showing the Proprietary Ratio

proprietary ratio
60.00

58.00

56.00

54.00

52.00
ptoprietary ratio
50.00

48.00

46.00

44.00
2017-2016 2016-2015 2015-2014 2014-2013 2013-2012

66
 Comparative Balance Statement
3.2.13 Table showing Comparative balance statement of 2012-2013

(Rs in crores)

Particular 31.03.2013 31.03.201 Increase/Decrease Increase/Decrease

(Rs) 2 (Rs) %
(Rs)
Liabilities
Sources Of Funds
Total Share Capital 5.31 5.3 0.01 0.18
Equity Share Capital 5.31 5.3 0.01 0.18
Share Application Money 0.04 0 0.04 100
Reserves 531.26 460.98 70.28 15.24
Networth 536.61 466.28 70.33 15.08
Secured Loans 54.51 103.18 -48.67 -47.16
Total Debt 54.51 103.18 -48.67 -47.16
Total Liabilities 591.12 569.46 21.66 3.80

Assets
Application Of Funds
Gross Block 55.54 53.19 2.35 4.41
Less: Accum. Depreciation 16.35 14.11 2.24 15.87
Net Block 39.19 39.08 0.11 0.28
Capital Work in Progress 32.06 17.63 14.43 81.84
Investments 15.36 14.65 0.71 4.84
Inventories 15.87 34.92 -19.05 -54.55
Sundry Debtors 782.33 792.4 -10.07 -1.27
Cash and Bank Balance 171.37 183.71 -12.34 -6.71
Total Current Assets 969.57 1,011.03 -41.46 -4.10
Loans and Advances 296.83 190.03 106.8 56.20
Total CA, Loans & Advances 1,266.40 1,201.06 65.34 5.44
Current Liabilities 686.22 651.73 34.49 5.29
Provisions 75.67 51.23 24.44 47.76
Total CL & Provisions 761.89 702.96 58.93 8.38
Net Current Assets 504.51 498.1 6.41 1.28
Total Assets 591.12 569.46 21.66 3.80

Contingent Liabilities 620.66 740.41 -119.75 -16.17

Book Value (Rs) 202.13 176.04 26.09 14.82

67
Findings

 Shareholders’ funds have increased by 15.08 % i.e., 70.33

 Fixed assets have increased by 0.28% i.e., 0.11
 Net current assets increased by 1.28% i.e., 6.41
 Current liabilities also increased by 8.39% i.e., 58.93

Interpretation

From the above table the comparative balance sheet of va tech wabag during the year 2013-
2012 Sources of funds and Application of funds have increased by 3.80% i.e., Rs21.66.

68
3.2.14 Table showing Comparative balance statement of 2013-2014

(Rs in crores)

Particular 31.03.201 31.03.2013 Increase/ Increase/Decrease

4 (Rs) Decrease %
(Rs) (Rs)

Liabilities
Sources Of Funds
Total Share Capital 5.32 5.31 0.01 0.18
Equity Share Capital 5.32 5.31 0.01 0.18
Share Application Money 0.22 0.04 0.18 4.5
Reserves 597.51 531.26 66.25 12.47
Networth 603.05 536.61 66.44 12.38
Secured Loans 89.03 54.51 34.52 63.32
Total Debt 89.03 54.51 34.52 63.32
Total Liabilities 692.08 591.12 100.96 17.07

Assets
Application Of Funds
Gross Block 117.46 55.54 61.92 111.40
Less: Accum. Depreciation 15.57 16.35 -0.78 -4.77
Net Block 101.89 39.19 62.7 1.59
Capital Work in Progress 0.05 32.06 -32.01 -99.84
Investments 38.42 15.36 23.06 1.50
Inventories 14.42 15.87 -1.45 -9.14
Sundry Debtors 923.68 782.33 141.35 18.06
Cash and Bank Balance 156.43 171.37 -14.94 -8.71
Total Current Assets 1,094.53 969.57 124.96 12.88
Loans and Advances 367.38 296.83 70.55 23.76
Total CA, Loans & 1,461.91 1,266.40 195.51 15.43
Advances
Current Liabilities 835.45 686.22 149.23 21.74
Provisions 74.74 75.67 -0.93 -1.22
Total CL & Provisions 910.19 761.89 148.3 19.46
Net Current Assets 551.72 504.51 47.21 9.35
Total Assets 692.08 591.12 100.96 17.07

Contingent Liabilities 1,034.93 620.66 414.27 66.74

Book Value (Rs) 226.69 202.13 24.56 12.15

69
Findings

 Shareholders’ funds have increased by 12.38 % i.e., 66.44

 Fixed assets have increased by 1.60 % i.e., 62.7
 Net current assets increased by 9.36% i.e., 47.21
 Current liabilities also increased by 19.46% i.e., 148.3

Interpretation

From the above table the comparative balance sheet of va tech wabag during the year 2014-
2013 Sources of funds and Application of funds have increased by 17.07% i.e., Rs100.96.

70
3.2.15 Table showing Comparative balance statement of 2014-2015

(Rs in crores)

Particular 31.03.2015 31.03.201 Increase/ Increase/

(Rs) 4 Decrease Decrease
(Rs) (Rs) %

Liabilities
Sources Of Funds
Total Share Capital 10.86 5.32 5.54 104.13
Equity Share Capital 10.86 5.32 5.54 104.13
Share Application Money 0.13 0.22 -0.09 -40.90
Reserves 675.34 597.51 77.83 13.02
Networth 686.33 603.05 83.28 13.80
Secured Loans 62.6 89.03 -26.43 -29.68
Total Debt 62.6 89.03 -26.43 -29.68
Total Liabilities 748.93 692.08 56.85 8.21

Assets
Application Of Funds
Gross Block 116.85 117.46 -0.61 -0.51
Less: Accum. Depreciation 18.41 15.57 2.84 18.24
Net Block 98.44 101.89 -3.45 -3.38
Capital Work in Progress 0.55 0.05 0.5 10
Investments 60.36 38.42 21.94 57.10
Inventories 29.83 14.42 15.41 106.86
Sundry Debtors 983.31 923.68 59.63 6.45
Cash and Bank Balance 128.26 156.43 -28.17 -18.00
Total Current Assets 1,141.40 1,094.53 46.87 4.28
Loans and Advances 405.77 367.38 38.39 10.45
Total CA, Loans & 1,547.17 1,461.91 85.26 5.83
Advances
Current Liabilities 858.96 835.45 23.51 2.81
Provisions 98.63 74.74 23.89 31.96
Total CL & Provisions 957.59 910.19 47.4 5.21
Net Current Assets 589.58 551.72 37.86 6.86
Total Assets 748.93 692.08 56.85 8.21

Contingent Liabilities 948.29 1,034.93 -86.64 -8.371

Book Value (Rs) 126.41 226.69 -100.28 -44.23

71
Findings

 Shareholders’ funds have increased by 13.81 % i.e., 83.28

 Fixed assets have decreased by (3.38)% i.e., (3.45)
 Net current assets increased by 6.87% i.e., 37.86
 Current liabilities also increased by 5.20% i.e., 47.4

Interpretation

From the above table the comparative balance sheet of va tech wabag during the year 2015-
2014 Sources of funds and Application of funds have increased by 8.21 % i.e., Rs56.85.

72
3.2.16 Table showing Comparative balance statement of 2015-2016

(Rs in crores)

Particular 31.03.201 31.03.2015 Increase/ Increase/Decrease

6 (Rs) Decrease %
(Rs) (Rs)
Liabilities
Sources Of Funds
Total Share Capital 10.9 10.86 0.04 0.36
Equity Share Capital 10.9 10.86 0.04 0.36
Share Application Money 0.04 0.13 -0.09 -69.23
Reserves 770.17 675.34 94.83 14.04
Networth 781.11 686.33 94.78 13.80
Secured Loans 238.9 62.6 176.3 281.62
Total Debt 238.9 62.6 176.3 281.62
Total Liabilities 1,020.01 748.93 271.08 36.19

Assets
Application Of Funds
Gross Block 120.14 116.85 3.29 2.81
Less: Accum. Depreciation 27.57 18.41 9.16 49.75
Net Block 92.57 98.44 -5.87 -5.96
Capital Work in Progress 2.42 0.55 1.87 3.4
Investments 53.84 60.36 -6.52 -10.80
Inventories 65.46 29.83 35.63 119.44
Sundry Debtors 1,074.94 983.31 91.63 9.32
Cash and Bank Balance 123.52 128.26 -4.74 -3.69
Total Current Assets 1,263.92 1,141.40 122.52 10.73
Loans and Advances 510.88 405.77 105.11 25.90
Total CA, Loans & 1,774.80 1,547.17 227.63 14.71
Advances
Current Liabilities 842.79 858.96 -16.17 -1.88
Provisions 60.83 98.63 -37.8 -38.33
Total CL & Provisions 903.62 957.59 -53.97 -5.63
Net Current Assets 871.18 589.58 281.6 47.76
Total Assets 1,020.01 748.93 271.08 36.19

Contingent Liabilities 1,005.19 948.29 56.9 6.00

Book Value (Rs) 143.33 126.41 16.92 13.38

73
Findings

 Shareholders’ funds have increased by 13.81 % i.e., 94.78

 Fixed assets have decreased by (5.97)% i.e., (5.87)
 Net current assets increased by 47.76% i.e., 281.6
 Current liabilities also decreased by (5.63)% i.e., (53.97)

Interpretation

From the above table the comparative balance sheet of va tech wabag during the year 2016-
2015 Sources of funds and Application of funds have increased by 36.19% i.e., Rs271.08.

74
3.2.17 Table showing Comparative balance statement of 2016-2017

(Rs in crores)

Particular 31.03.201 31.03.201 Increase/ Increase/Decrease

7 6 Decrease %
(Rs) (Rs) (Rs)

Liabilities
Sources Of Funds
Total Share Capital 10.91 10.9 0.01 0.09
Equity Share Capital 10.91 10.9 0.01 0.09
Share Application Money 0.01 0.04 -0.03 -75
Reserves 813.14 770.17 42.97 5.57
Networth 824.06 781.11 42.95 5.49
Secured Loans 119.86 238.9 -119.04 -49.82
Total Debt 119.86 238.9 -119.04 -49.82
Total Liabilities 943.92 1,020.01 -76.09 -7.45

Assets
Application Of Funds
Gross Block 107.76 120.14 -12.38 -10.30
Less: Accum. Depreciation 15.58 27.57 -11.99 -43.48
Net Block 92.18 92.57 -0.39 -0.42
Capital Work in Progress 0 2.42 -2.42 -1
Investments 44.04 53.84 -9.8 -18.20
Inventories 34.39 65.46 -31.07 -47.46
Sundry Debtors 1,357.63 1,074.94 282.69 26.29
Cash and Bank Balance 94.7 123.52 -28.82 -23.33
Total Current Assets 1,486.72 1,263.92 222.8 17.62
Loans and Advances 649.5 510.88 138.62 27.13
Total CA, Loans & 2,136.22 1,774.80 361.42 20.36
Advances
Current Liabilities 1,044.88 842.79 202.09 23.97
Provisions 283.64 60.83 222.81 366.28
Total CL & Provisions 1,328.52 903.62 424.9 47.02
Net Current Assets 807.7 871.18 -63.48 -7.28
Total Assets 943.92 1,020.01 -76.09 -7.45

Contingent Liabilities 715.91 1,005.19 -289.28 -28.77

Book Value (Rs) 151 143.33 7.67 5.35

75
Findings

 Shareholders’ funds have increased by 5.49% i.e., 42.95

 Fixed assets have decreased by (0.42)% i.e., (0.39)
 Net current assets decreased by (7.28)% i.e., (63.48)
 Current liabilities also increased by 47.02% i.e., 424.9

Interpretation

From the above table the comparative balance sheet of va tech wabag during the year
2017-2016 Sources of funds and Application of funds have decreased by (7.45)%
i.e., Rs (76.09).

76
3.2.18 TREND ANALYSIS

Trend analysis using a least square method is mostly widely used in practice. It is will help a
trend line is fitted to the data in such a manner that two condition are satisfied. This least
square may be used in straight line trend method or parabolic trend.

n ∑ xy−∑ x∗∑ y
b=
n ∑ x 2 – (∑ x)2

Y = a + b X.

a =𝑦 ̅ − 𝑏𝑥̅

3.2.18 TABLE SHOWING TREND ANALYSIS FOR SALES FOR THE PAST FIVE
YEAR

Year Profit of the Year (Y) X X2 XY

2012 - 2013 1565.33 -2 4 -3130.66

2013 - 2014 1354.16 -1 1 -1354.16

2014 - 2015 1099.51 0 0 0

2015 - 2016 1009.7 1 1 1009.7

2016 - 2017 899.28 2 4 1798.56

Total 5927.98 0 10 -1676.56

INTERPRETATION

This trend ratio range is 1798.56 to -3130.66.The highest trend ratio range 2016-
17(1798.56) lowest trend ratio range 2010-2011 (-3130.66).

77
3.2.18. CHART SHOWING TREND ANALYSIS FOR SALES FOR THE PAST FIVE
YEAR

Year
1800
1600
1400
1200
1000
800
600
400
200
0
2012 - 2013 2013 - 2014 2014 - 2015 2015 - 2016 2016 - 2017

Year

78
 3.3 SUMMARY OF FINDINGS

 It is found from above table that the Current Ratio for 2013 is 1.66, 2014 is 1.61,2015
is 1.62, 2016 is 1.96 and 2017 is 1.61
 It is found from above table that the Quick Ratio for 2013 is 1.64, 2014 is 1.56, 2015
is 1.55, 2016 is 1.9 and 2017 is 1.57.
 It is found from above table that the Operating Profit Ratio for 2013 is 13.13, 2014 is
12.24,2015 is 12.1, 2016 is 12.87 and 2017 is 11.23.
 It is found from above table that the Net Profit Ratio for 2013 is 8.52, 2014 is 7.68,
2015 is 7.33, 2016 is 7.75 and 2017 is 4.16.
 It is found from above table that the Return on Investment for 2013 is 16.79.13, 2014
is 14.69, 2015 is 13.17, 2016 is 15.03 and 2017 is 9.09.
 It is found from above table that the Total Asset turnover Ratio for 2013 is 1.79, 2014
is 1.67, 2015 is 1.65, 2016 is 1.49 and 2017 is 1.91.
 It is found from above table that the Return on Asset Ratio for 2013 is 15.24, 2014 is
12.79, 2015 is 12.07, 2016 is 11.51 and 2017 is 7.94.
 It is found from above table that the expenses Ratio for 2013 is 85.06, 2014 is 87.7,
2015 is 89.14, 2016 is 89.5 and 2017 is 87.04.
 It is found from above table that the net working capital to sales Ratio for 2013 is
0.27, 2014 is 0.22, 2015 is 0.23, 2016 is 0.28 and 2017 is 0.25.
 It is found from above table that the solvency Ratio for 2013 is 5.41, 2014 is 7.30,
2015 is 4.93, 2016 is 17.17, and 2017 is 7.55.
 It is found from above table that the capital turnover Ratio for 2013 is 1.97, 2014 is
1.94, 2015 is 1.80, 2016 is 1.94, and 2017 is 2.18.
 It is found from above table that the proprietary Ratio for 2013 is 51.87, 2014 is
49.40, 2015 is 54.02, 2016 is 58.80, and 2017 is 51.87.

79
 3.4 SUGGESTIONS AND RECOMMENDATIONS

 The liquidity position of the company can be utilized in a better or other effective
purpose.
 Efforts should be taken to increase the overall efficiency in return out of capital
employed by making used of the available resource effectively
 The company can increase its sources of funds to make effective research and
development system for more profits in the years to come.
 The company financial position is very secure. It is observed that most of the ratios
are as per the industry standard
 An increase in net profit ratio year after year is an indication of improving working
conditions and vice versa.
 Efficient utilization of capital would lead to higher profitability.

80
 3.5 CONCLUSION

Thus, analysis of financial statements refers to the treatment of information contained in

the financial statement in a way so as to afford a full diagnosis of the profitability and
financial position of the firm concerned. The process of analyzing financial statements
involves the rearranging, comparing and measuring the significance of financial and
operating data. Such a step helps to reveal the relative significance and effect of items of the
data in relation to the time period and or between two organizations. Balance sheet is the
main document to access the financial sound ability of the concern. The asset details in the
balance sheet shall help the investor to decide the investment ideas. The ratio analysis is the
necessary tools to the investors to necessarily select and built an effective portfolio. The data
helps the investor in developing the strategy for effective investment management The main
objective of the present study is to identify the individual ratios which are affecting the
profitability of the industry and to categorized the financial ratios into a small number of
latent variable to represent a compact view of financial performance for a specified time
period. The study reveals that the financial performance is fair. It has been maintaining good
financial performance and further it can improve if the company concentrates on its
operating, Administrative and selling expenses and by reducing expenses.

81
 APPENDIX

Balance Sheet of VaTech Wabag

(Rs in Cr)

Particulars Mar '17 Mar '16 Mar '15 Mar '14 Mar '13 Mar'12

Liabilities
Sources Of Funds
Total Share Capital 10.91 10.9 10.86 5.32 5.31 5.3
Equity Share Capital 10.91 10.9 10.86 5.32 5.31 5.3
Share Application Money 0.01 0.04 0.13 0.22 0.04 0
Reserves 813.14 770.17 675.34 597.51 531.26 460.98
Networth 824.06 781.11 686.33 603.05 536.61 466.28
Secured Loans 119.86 238.9 62.6 89.03 54.51 103.18
Total Debt 119.86 238.9 62.6 89.03 54.51 103.18
Total Liabilities 943.92 1,020.0 748.93 692.08 591.12 569.46
1

Assets
Application Of Funds
Gross Block 107.76 120.14 116.85 117.46 55.54 53.19
Less: Accum. Depreciation 15.58 27.57 18.41 15.57 16.35 14.11
Net Block 92.18 92.57 98.44 101.89 39.19 39.08
Capital Work in Progress 0 2.42 0.55 0.05 32.06 17.63
Investments 44.04 53.84 60.36 38.42 15.36 14.65
Inventories 34.39 65.46 29.83 14.42 15.87 34.92
Sundry Debtors 1,357.6 1,074.9 983.31 923.68 782.33 792.4
3 4
Cash and Bank Balance 94.7 123.52 128.26 156.43 171.37 183.71
Total Current Assets 1,486.7 1,263.9 1,141.4 1,094.5 969.57 1,011.03
2 2 0 3
Loans and Advances 649.5 510.88 405.77 367.38 296.83 190.03
Total CA, Loans & 2,136.2 1,774.8 1,547.1 1,461.9 1,266.40 1,201.06
Advances 2 0 7 1
Current Liabilities 1,044.8 842.79 858.96 835.45 686.22 651.73
8
Provisions 283.64 60.83 98.63 74.74 75.67 51.23
Total CL & Provisions 1,328.5 903.62 957.59 910.19 761.89 702.96
2
Net Current Assets 807.7 871.18 589.58 551.72 504.51 498.1
Total Assets 943.92 1,020.0 748.93 692.08 591.12 569.46
1

Contingent Liabilities 715.91 1,005.1 948.29 1,034.9 620.66 740.41

82
 9 3
Book Value (Rs) 151 143.33 126.41 226.69 202.13 176.04

Profit & Loss account of VaTech Wabag

(Rs in Cr)

Particulars Mar '17 Mar '16 Mar '15 Mar '14 Mar '13 Mar'12

Income
Sales Turnover 1,798.3 1,513.4 1,233.3 1,152.24 1,057.1 1,003.47
8 3 6 7
Net Sales 1,798.3 1,513.4 1,233.3 1,152.24 1,057.1 1,003.47
8 3 6 7
Other Income -43.07 14.55 9.12 11.63 12.56 0.33
Stock Adjustments -31.07 35.63 15.41 -1.45 -19.05 -16.67
Total Income 1,724.2 1,563.6 1,257.8 1,162.42 1,050.6 987.13
4 1 9 8

Expenditure
Power & Fuel Cost 2.2 1.77 1.85 1.08 1.13 0.94
Employee Cost 102.58 94.1 80.6 80.19 68.87 63.98
Other Manufacturing 1,366.9 1,190.3 957.66 867.18 798.18 774.36
Expenses 6 9
Miscellaneous Expenses 93.59 67.9 59.4 61.25 31.1 32.1
Total Expenses 1,565.3 1,354.1 1,099.5 1,009.70 899.28 871.38
3 6 1

Operating Profit 201.98 194.9 149.26 141.09 138.84 115.42

PBDIT 158.91 209.45 158.38 152.72 151.4 115.75
Interest 23.34 18.85 14.92 12.36 11.52 0
PBDT 135.57 190.6 143.46 140.36 139.88 115.75
Depreciation 9.54 12.07 7.45 8.09 6.61 5.73
Profit Before Tax 126.03 178.53 136.01 132.27 133.27 110.02
PBT (Post Extra-ord Items) 126.03 178.53 136.01 132.27 133.27 110.02
Tax 51.05 61.1 45.6 43.69 43.16 34.9
Reported Net Profit 74.98 117.43 90.41 88.58 90.11 75.12
(NPAIT)
Total Value Addition 1,565.3 1,354.1 1,099.5 1,009.70 899.28 871.38
3 6 1
Equity Dividend 21.8 21.8 21.88 21.27 18.58 15.9
Corporate Dividend Tax 4.56 4.56 4.45 3.61 3.16 2.54

83
Per share data (annualised)

Shares in issue (lakhs) 545.73 544.96 542.85 265.92 265.46 264.87

Earning Per Share (Rs) 13.74 21.55 16.65 33.31 33.95 28.36
Equity Dividend (%) 200 200 200 400 350 300
Book Value (Rs) 151 143.33 126.41 226.69 202.13 176.04

BIBLIOGRAPHY

Books Reference

1. Financial Management, I.M.Pandey, Vikas Publishing House Pvt. Ltd. New Delhi,
2004
2. Financial Management - Theory and Practice Prasanna Chandra Tata McGraw Hill
Book Co., New Delhi, 2004
3. Financial Management Text & Problems M.Y. Khan & V.K. Jain, Tata McGraw Hill
Publishing Company Ltd.New, Delhi. 2004
4. Research Methodology & Technologies, C.R.Kothari, WishwaPrakshan, New Delhi,
2002
5. T.S Reddy and Hariprasad Reddy- management accounting Margham publications-
third edition 2007.
6. 3. M.Y Khan and P.K Jain-financial management-Vikas publishing house Ltd, New
Delhi.

Journal Reference

1. Majocchi, Antonio, Dalla Valle, Luciana Internationalization, cultural distance and

country characteristics apr 2015  Vol. 16 Issue 2, p307-324. 18p.
2. Movassaghi, Hormoz, Bramhandkar, Alka Sustainability Strategies of Leading Global
Firms and Their Financial Performance 2012, Vol. 13 Issue 5, p21-34. 14p. 5 Charts.
3. Mendoza, Rufo R. An empirical analysis of financial performance of micro, small,
and medium enterprises in the philippines 2015, Vol. 10 Issue 1, p192-203. 12p.

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 4. Nalwaya, Nidhi Vyas, Rahul Merger and Acquisition in the Telecom Industry: An
Analysis of Financial Performance of Vodafone Plc and Hutchison Essar  Jan-
Apr2014, Vol. 9 Issue 3, p67-73. 7p.
5. RIEDL, EDWARD J, SRINIVASAN, SURAJ Signaling Firm Performance Through
Financial Statement Presentation 2010, Vol. 27 Issue 1, p289-332. 11p .
6. S.K Bagchi (2004) accounting ratio for risk evaluation, the Management accounting
Volume no: 39, Issue No: 3, page (217-220).
7. 3. Dr.S.K Khartik (2003) liquidity management, the Management Accounting,
Volume No: 38, Issue No: 3, page (217-220).
8. 4. Dr.S.K Karthik and Titto Vargrese (2011) Profitability Analysis, the Management
Accounting, Volume No: 46, Issue No: 11, page (1067-1073).

WEBSITES:

www.Money control

www.raams.com

www.rbi.com

www. Tpi.com

www.studyfinance.com

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