A STUDY ON “FINANCIAL PERFORMANCE AT WAAREE

ENERGIES LTD. INDUSTRIES – FOR FY 2017 TO FY 2021”

SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENT

OF
BACHELOR OF COMMERCE DEGREE COURSE
OF
BANGALORE UNIVERSITY

BY
Mr. Hitesh K S

REG NO: 19SKC41016

UNDER THE GUIDANCE OF

Dr. Ravi.V

AIMS SCHOOL OF BUSINESS

(AIMS INSTITUTE OF HIGHER EDUCATION)

PEENYA, BANGALORE-560058

2021-2022
 DECLARATION

I, Hitesh K S hereby declare that dissertation titled “FINANCIAL PERFORMANCE AT

WAAREE ENERGIES LTD. INDUSTRIES – FOR FY 2017 TO FY 2021” is based on an

original study conducted by me under the guidance of Dr. Ravi.V.

This project report has not formed a basis for the award of any other Degree/Diploma of any

University or Institution

Place: Bangalore Hitesh K S

Date: 19SKC41016
 CERTIFICATE FROM THE COLLEGE

AIMS SCHOOL OF BUSINESS

(AIMS INSTITUTE OF HIGHER EDUCATION)

1st Cross, 1st Stage, Peenya Industrial Area Bengaluru – 560058, Karnataka

Certified that this project titled, “FINANCIAL PERFORMANCE AT WAAREE ENERGIES

LTD. INDUSTRIES – FOR FY 2017 TO FY 2021”, is based on an original project study

conducted by Mr. Hitesh K S under the guidance of Dr. Ravi.V

This project report has not formed a basis for the award of any other Degree/Diploma of any

University or Institution.

Program Director Principal

Place: Bangalore Place: Bangalore

Date: Date:
 CERTIFICATE FROM GUIDE

This is to certify that the project report titled “FINANCIAL PERFORMANCE AT WAAREE

ENERGIES LTD. INDUSTRIES – FOR FY 2017 TO FY 2021” is an original work of Mr.

Hitesh K S bearing university register Number 19SKC41016 is being submitted in partial

fulfillment for the award of the Bachelor Degree in Business Administration of Bangalore

university.

The report has not been submitted earlier either to this university or to any Institution for the

fulfillment of the requirement of course of study. Mr. Hitesh K Sis guided by Dr. Ravi. V . who

is the Faculty Guide as per the regulation of Bangalore University.

Place: Bangalore Dr.Ravi.M

Date:
 ACKNOWLEDGEMENT

The successful completion of the project would be incomplete without mention of the people who made it

possible. In spite of my commitment and hard work there are some special people who guided me towards

the completion of project. Here I avail this opportunity to thank them.

I express my sincere thanks to the Dr. Kiran Reddy Meka, Founder Principal, AIMS Institutes of

Higher Education and Dr Ravi V , Professor & Director- B..COM for having supported me to

successfully complete this project work.

I would like take opportunity to thank and express my deep sense of gratitude to my guide Dr.Ravi.V

Department of Management Studies and other faculty members for their valuable guidance at all stages

of the study, their advice, constructive suggestions and continuous encouragement without which it would

have not been possible to complete the project.

I would like to thank my parents, family members, friends for their constant support and encouragement.

Hitesh KS
19SKC41016

B.Com 6TH Semester

LIST OF CONTENT

CHAPRTE TITLE PAGE

NUMBER NUMBER

INTRODUCTION 1

1 PART – A 2-21

PART – B
22-39

2 RESEARCH DESIGN 40

2.1 Title of the study 41

2.2 Statement of the problem 41

2.3 Objectives of the study 41

2.4 Scope of the study 42

2.5 Operational definition of concepts 42

2.6 Source of data 43

2.7 Methodology 44

2.8 Plan of analysis 44

2.9 Reference period 45

2.10 Limitations of the study 45

2.11 Chapter scheme 46-47

3 COMPANY PROFILE 48-63

4 DATA ANALYSIS AND INTERPRETATION 64-85

5 SUMMAARY OF FINDINGS AND

CONCLUSION 86-89

6 SUGGESTONS 90-91

BIBLIOGRAPHY 92
LIST OF TABLES

TABLE NO. TITLE PAGE NO.

4.1 Sales and Profit 67

4.2 Calculation of working capital ratio 70

4.3 Stock Turnover Ratio 73

4.4 Debtors Turnover Ratio 76

4.5 Creditors Turnover Ratio 79

4.6 Gross profit ratio 82

4.7 Operating ratio 83

4.8 Leverage ratio 84

4.9 Net asset turnover ratio 85

LIST OF GRAPHS

GRAPH NO. TITLE PAGE NO.

Sales and profit

4.1 68
Current Assets and Current Labilities
4.2 71
Stock Turnover Ratio and Inventory Conversion period
4.3 74

Debtors Turnover Ratio and Average Collection period

4.4 77
Creditors Turnover Ratio and Average Payment period
4.5 80
 CHAPTER 1

INTRODUCTION
 PART-A

ABOUT INDUSTRY

Renewable energy is helpful energy that’s collected from renewable resource, which are naturally

replenished on somebody’s timescale, including carbon-neutral source like sunlight, wind, rain,

tides, waves, and geothermal heat. This kind of energy source stands in contrast to fossil fuels,

which are being employed much more quickly than they’re being replenished. Although most

renewable energy is sustainable, some isn’t, as example some biomass is unsustainable.

Renewable energy often provides energy in four important areas electricity generation, sir and

water heating or cooling, transportation, and rural (off-grid) energy services.

Based on REN21’s (Renewable Energy Policy Network for the 21 st century) 2017 report,

renewables contributed 19.3% to human ‘global energy consumption and 24.5% to their generation

of electricity in 2015 and 2016 respectively. This energy consumption is split as 8.9% coming

from traditional biomass, 4.2% as heat (modern biomass, geothermal and solar heat), 3.9% from

hydroelectricity and therefore the remaining 2.2% is electricity from wind, solar, geothermal, and

other varieties of biomass. In 2017, worldwide investments in renewable energy amounted to

$279.8 billion with China accounting for 455 of the world investments, and therefore the US and

Europe both around 15%. Globally there have been an estimated 10.5 million jobs related to the

renewable energy industries, with solar photovoltaics being the biggest renewable employer.

Renewable energy systems are rapidly becoming more efficient and cheaper and their share total

energy consumption is increasing. As of 2019, over two-third of worldwide. Growth in

consumption of coal and oil could end by 2020 because of increased uptake of renewables and gas.

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 As 2020, in most countries, photovoltaic solar and onshore wind are the most cost-effective types

of building new electricity generation plants.

As of 2011, small solar PV system provide electricity to some million households, and micro-

hydro configured into mini-grids serves more. Over 44 million households use biogas made in

household scale digesters for lighting and cooking, and over 166 million households depend on a

brand new generation of more efficient biomass cook stove. United nation eighth Secretary –

General Ban Ki-moon has said that renewable energy has the power to lift the poorest nations to

new levels of prosperity. At the national level, a minimum 0f 30 nations round the world have

already got renewable energy contributing quit 20% of energy supply. National renewable energy

markets are projected to still grow strongly within the coming decade and beyond, and a few 120

countries have various policy targets of all electricity generated for the EU Union by 2020. Some

countries have much higher long-term policy targets of up to 100% renewables. Outside Europe,

a various group of 20 or more other countries targets renewable energy shares with the 2020-2030

time range from 10% to 50%.

HISTORY OF RENEWABLE

Prior to event of coal within the mid – 19th century, nearly all energy used was renewable. Almost

without a doubt the oldest known use of renewable energy, within the kind of traditional biomass

to fuel fires, dates from over 1000,000 years ago. The employment of biomass for fire failed to

become commonplace until many thousands of years later. Probably the second-oldest usage of

renewable energy is harnessing the wind to drive ships over water. This practice may be traced

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 back some7000 years ago, to ships within the gulf and on the Nail. From hot springs, heat has been

used for bathing since Paleolithic times and for space heating since ancient Roman times. Getting

in the time of recorder history, the first source of traditional renewable energy was human labor,

animal powder, water power, wind, in grain crushing windmills, and firewood, a standard biomass.

In 1860s and 1870s, there have been already fears that civilization would run out of fossil fuels

and therefore the need was felt for an improved source

In 1873 professor Augustin Mouchot wrote: The time will arrive when the industry Europe will

cease to seek out those natural resources, so necessary for it. Petroleum springs and coal mines

aren’t inexhaustible but are rapidly diminishing in many places, well mean, return to the ability of

water and wind? Or will he emigrate were the foremost powerful source of warmth sends its rays

to all? History will show what’s going to come.

TYPES OF RENEWABLE ENERGYS

WIND POWER

In 2020, worldwide installed wind generation capacity was 733 GW (gigawatt). Air flow is

accustomed run wind turbines. Modern utility-scale wind turbines range from around 600kw to

9 MW (megawatt) of rated power. The facility of the wind speed, so as wind speed increases,

power output increases up to the utmost output for the actual turbine. Areas where winds are

stronger and more constant, like offshore and high–altitude sites, are preferred locations for wind

farms. Typically, full load hours of wind turbines very between 16 and 57 percent annually but

may be higher in particularly favorable offshore sites.

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Wind-generated electricity meets nearly 4% of world electricity demand in 2015, with nearly

63GW of recent alternative energy capacity installed. Wind energy was the leading source of the

latest capacity in Europe, the US and Canada, and therefore the second largest in China. In

Denmark, while Ireland, Portugal and Spain each meets nearly 20%.

Globally, the long-term technical potential of wind energy is believed to be five times total current

global energy production, or 40 times electricity demand, assuming all practical barriers needed

were overcome. This could require wind

turbines to be installed over large areas,

particularly in areas of upper wind resources,

like offshore. As offshore wind speeds average

~90% greater than that of land, so offshore

resources can contribute substantially more

energy than land-stationed turbines.

HYDROPOWER

Since water is about 800 times denser than air, even a slow flowing stream of water, or moderate

sea swell, can yield considerable amounts of energy. Hydropower is produced in 150 countries,

with the Asia-Pacific region generating 32 percent of

worldwide hydropower in 2010. For countries having the

most important percentage of electricity from renewables,

the highest 50 are primarily hydroelectric. China is that the

largest hydroelectricity producer, with 721 terawatt-hours

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of production in 2010, representing around 17 percent of domestic electricity use. There are now

three hydroelectricity stations larger than 10GW.

The three Gorges Dam in China, Itaipu Dam in Venezuela. Wave power, which converting the

energy of tides, are two sorts of hydropower with future potential, however, they’re not yet widely

employed commercially. An indication project operated by the Ocean renewable public utility on

the coast of Maine, and connected to the grid, harnesses

tidal power from the bay of Fundy, location of the

world’s highest tidal current. Ocean thermal energy

conversion, which uses the temperature difference

between cooler deep and warmer surface water,

currently has no economic feasibility.

SOLAR ENERGY

At the top of 2020, global installed solar capacity was 714GW. Solar energy, radiant light and

warmth from the sun, is harnessed employing a range of even revolving technologies like solar

heating, photovoltaics, concentrated alternative energy (CSP), concentrator photovoltaics (CPV),

solar architecture and artificial photosynthesis. Solar technologies are broadly characterized as

either passive solar or active solar counting on the way they capture, convert, and distribute

alternative energy. Passive solar techniques include orienting a building to the Sun, selecting

materials with favorable thermal mass or light dispersing properties, and designing spaces that

naturally circulate air. Active solar technologies encompass solar thermal energy, using solar

6|Page
collectors for heating, and alternative energy,

converting sunlight into electricity either

directly using photovoltaics (PV), or indirectly

using concentrated alternative energy(CSP).

A photovoltaic system converts light into

electrical energy (DC) by taking advantage of

the photoelectric effect. Solar PV has changed into a multi-billion, fast-growing industry,

continues to enhance its cost-effectiveness, and has the foremost potential of any renewable

technologies along with CSP. Concentrated solar energy (CSP) systems use lenses or mirrors and

tracking systems to focus an oversized area of sunlight into little beam. Commercial concentrated

solar energy plants were first developed within the 1980s. CSP-Stirling has out and away the very

best efficiency among all solar power technologies.

In 2011, the international energy agency said that “the development of affordable, inexhaustible

and clean alternative energy technologies will have huge longer term benefits. It’ll increase

countries’ energy security through

dependence on an indigenous,

inexhaustible and mostly impart-

independent resource, enhance

sustainability, reduce pollution,

lower the prices of mitigating

temperature change, and keep fuel

prices not up to otherwise. These

advantages are global. Hence, the

7|Page
extra costs of the incentives for early deployment should be considered learning investments, they

need to be wisely spent and want to be widely shared’. Australia has the biggest proportion of solar

electricity within the world, in 2020, solar supplied 9.9% of electricity demand.

TYPES OF SOLAR ENERGY

• Photovoltaic Systems: one of the most common ways to use solar power is to use

photovoltaic system or as they are also known solar cell systems, which produce electricity

directly from sunlight. The basic principle behind this technology is similar to what we see

in clock or calculators that are powered by the sun.

The semiconductor materials used in these solar energy systems absorb sunlight which

creates a reaction that generates electricity to be exact, the solar energy knocks the electrons

loose from their atoms which makes then flow through the semiconductor material and

produce energy. Today, solar panel technology can absorb and convert into energy most

of the visible light spectrum and about half of the ultraviolet and infrared light spectrum.

Solar cells are typically combined into modules that hold about 40 cells and as a whole

can measure up to several meters on the side. Because of their adjustable size and share,

these flat-plate photovoltaic arrays can be

mounted at a fixed angle facing south, or

they can be mounted on a tracking device

that follows the sun, allowing them to

capture the most sunlight over the course of

a day.

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 • Thin Film Solar Cells: this type of technology can also be run with thin film solar cells

which use layers of semiconductor materials only a few micrometers thick. This has

made it possible for solar cells to double as

rooftop shingles, roof tiles, building facades,

or the glazing for skylights or atria

maximizing use of the available space from

where sunlight would be captured.

• Solar water heating systems: A third type of solar energy is solar hot water which as

the name suggests involves the heating up of water using the sun’s heat. The idea behind

this comes straight from nature: the shallow water of a lake or the water on the shallow

end of a beach is usually warmer compared to deeper

water.

This is because the sunlight can heat the bottom of the

lake or seashore in the shallow areas, which in turn, heats

the water. So, a system has been developed to imitate

this: solar water heating systems for buildings are made up of two parts, the solar

collector and a storage tank.

• Solar power plants: A fourth way we can harness the sun’s power for energy is solar

electricity, this is usually used in industrial applications. As most of us know, most

power plants use non-renewable fossil fuels to boil water.

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 The steam from the boiling water makes a large turbine rotate which in turn activates

the generator to produce electricity.

This way of generating electricity is

bad for both the environment and

our health given the emission of

greenhouse gases and air pollutants

from the burning of fossil fuels.

• Passive solar heating: A further way that solar power can be harnessed is through the

method of passive solar heating and daylighting. This is not a new concept – indeed,

ancient civilizations such as the

Anasazi Indians in Colorado had

developed passive solar design in their

dwelling. The impact of the sun is easy

to understand: step outside on a warm

sunny day and you can feel the sun.

With proper design, buildings can

also “feel” the sun’s energy.

These materials heat up during the day and slowly release the heat at night when heat is

most needed. Other design features such as a sunspace, which resemble greenhouses,

concentrate a lot of warmth which with the right ventilation can be used to heat an entire

building. Such features maximize the direct gains from the sun’s heat but also sunlight

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 itself. The even better news is that on particularly hot days, there are ways to ensure

these features do not overheat building

GEOTHERMAL ENERGY

At the end of 2020, global geothermal capacity was 14 GW. High temperature geothermal energy

is from thermal energy generated and stored in the Earth. Geothermal energy is the energy that

determines the temperature of matter. Earth’s geothermal energy original formation of the planet

and from radioactive decay of minerals (in currently uncertain but possibly roughly equal

proportions). The geothermal gradient, which is difference in temperature between the core of the

planet and its surface, drives a conduction of thermal energy in from of heat from the core to the

surface. The adjective geothermal originates from the Greek roots “geo”, meaning earth, and

“thermos”, meaning heat.

The heat that is used for geothermal energy can be from deep within the Earth, all the way down

to Earth’s core-4,000 miles (6400 km) down. At the core, temperatures may reach over 9,000 °F

(5000°C). Heat conducts from the core to the surrounding rock. Extremely high temperature and

pressure cause some rock to milt, which is commonly known as magma.

THERMAL ENERGY

Thermal power is the "biggest" source of power in India. There are different types of thermal

power plants based on the fuel that are used to produce the steam such as coal, gas,

and diesel, natural gas. About 71% of electricity consumed in India is generated by thermal power

plants.

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 • COAL: A large thermoelectric plant like this burns a lot of coal in this case, about 11

million tons per year. Coal that has been ground into a fine powder by a pulverizer is blown

into a furnace-like device, called a boiler, and burned. The heat produced converts water,

which runs through a series of pipes in the boiler, to steam. The high-pressure steam turns

the blades of a turbine, which is connected by a shaft to a generator. The generator spins

and produces electricity. More than 62% of India's electricity demand is met through the

country's vast coal reserves. Public sector undertaking National Thermal Power

Corporation (NTPC) and several other state level power generating companies are engaged

in operating coal-based thermal power plants. Apart from NTPC and other state level

operators, some private companies also operate the power plants. Although new plants are

unlikely to be built, if more coal is burnt in existing plants it will increase greenhouse gas

emissions by India.

• GAS-BASED: As hot combustion gas expands through the turbine it spins the rotating

blades. The rotating blades perform a dual function: they drive the compressor to draw

more pressurized air into the combustion section, and they spin a generator to produce

electricity.

• OIL- BASED: The burning of fuels such as oil, fires a boiler to generate high-temperature,

high-pressure steam. This steam is used to drive a steam turbine. A generator attached to

the steam turbine generates electricity.

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 BIOENERGY

At the end of 2020, bioenergy global capacity was 127 GW. Biomass is biological material derived

from living, or recently living organisms. It most often refers to plants or plant-derived materials

which are specifically called lignocellulosic biomass. As an energy source, biomass can either be

used directly via combustion to produce heat, or indirectly after converting it to various forms of

biofuel. Conversion of biomass to biofuel can be achieved by different methods which are broadly

classified into thermal, chemical, and biochemical methods. Wood remains the largest biomass

energy source today, examples include forest residues – such as dead trees, branches and tree

stumps, yard clippings, wood chips and even municipal solid waste.

SOLAR WATER HEATER

Solar water heating plant may be a nature and generic technology. Wide spread use and utilization

of Solar Water Heater can save significantly conventional energy getting used for heating purposes

in homes, swimming pools, hostels, ashrams, restaurants, canteens, hotels, guest house, hospitals,

nursing homes, factories, plants, and each commercial and non-commercial establishments.

The system that helps heating water by using the energy from sun,

popularly referred to as Sun Rays. The energy is completely free with

an inexpensive onetime cost for the device. A 100 liter’s capacity of

solar water utility can replace an electrical geyser for residential use

and might prevent emission of 1.5 heaps of carbonic acid gas annually.

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A solar water utility features a reflector to store solar power or sun rays, an insulated vessel to

store predicament, supporting stands and a black absorbing surface inside the collector absorbs

radiation and transfers inside the collector absorbs radiation and transfers the warmth energy to

water flowing through it. Heated water is collected during a tank which is insulated to forestall

heat loss. Circulation of water from the tank through the collector and back to tank continues

automatically because of thermos siphon system.

There are two sorts of solar water heaters. Flat plant heater is one where radiation is absorbed by

flat plate collectors which encompass an insulated outer metallic box covered on the highest with

Toughened glass. Evacuated Tube Collector is one were the collector is created of double layer

borosilicate glass tubes evacuated for providing insulation.

FLAT PLAT SOLAR

Flat plat collectors are an extension of the idea to place a collection in an oven like box with glass

directly facing the sun. Most flat plat collectors have two horizontal pipes at top and bottom, called

risers. The risers are welded to thin absorber fins. Heat-transfer flued is pumped from the hot water

storage tank or heat exchanger into collectors’ bottom header, and it travels up the risers, collecting

heat from the absorber fins, and then exits the collector out of the top header. Serpentine flat plate

collectors differ slightly from this “harp” design, and instead use a single pipe that travels up and

down the collector. However, since they cannot be properly drained of water, serpentine flat plate

collectors cannot be used in drain back systems.

The type of glass used in flat plate collectors is almost always low iron, tempered glass. Such glass

can withstand significant hail without breaking, which is one of the reasons that flat-plate

collection is considered the most durable collector type.

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Unglazed or formed collectors are similar to flat-plat collectors, except they are not thermally

insulated nor physically protected by a glass panel. Consequently, these types of collectors are

much less efficient when water temperature exceeds ambient air temperatures. For pool heating

applications, the water to be heated is often colder than the ambient roof temperature, at which

point the lack of thermal insulation allows additional heat to be drawn from the surrounding

environment.

EVACUATED TUBE

Evacuated tube collectors (ETC) are a way to reduce the heat loss, inherent in flat plates. Since

heat loss due to convection cannot cross a vacuum, it forms an efficient isolation mechanism to

keep heat inside the collector’s pipes. Since two flat glass sheets are generally not strong enough

to withstand a vacuum, the vacuum is created between two concentric tubes. Typically, the water

in an ETC is therefore surrounded by two concentric tubes of glass separated by a vacuum that

admits heat from the sun but that limits heat loss. The inner tube is coated with a thermal absorber.

Vacuum life varies from collector to collector, from 5 years to 15 years.

Flat plate collectors are generally more efficient than ETC in full sunshine conditions. However,

the energy output of flat plate collectors is reduced slightly more than ETCs in cloudy or extremely

cold conditions. Most ETCs are made out of annealed glass, which is susceptible to hail, failing

given roughly golf ball-sized particles. ETCs made from “coke glass”, which has a green tint, are

stronger and less likely to lose their vacuum, but efficiency is slightly reduced due to reduced

transparency. ETCs can gather energy from the sun all day long at low angles due to their tubular

shape.

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 HISTORY OF SOLAR WATER HEATER IN INDIA

Solar water heater, introduced in India in 1980‟s, is at the beginning of the growth phase in terms

of product life-cycle. The demand for solar water heaters depends mainly on irradiation availability

and hot water requirement. But in real life scenario demands for solar water heaters depends on

cost of the system, urbanization, hike in energy price, supply chain improvements, services,

demand for energy saving equipment, policy compulsion from the state and central government

and incentives for solar water heater installation. The proper data regarding sale of solar water

heater are not available over a period of time in region-wise and segment-wise. Uses of solar water

heaters are concentrated in South Indian states like Karnataka and Maharashtra.

The first serious attempts to deploy the technology were made with the formation of Department

of Non-Conventional Energy Sources (DNES) in 1982, though the history of research and pilot-

demonstration go back to 1960s. The total installed collector area increased from 119000 m 2 in

1989 to 525000 m2 in 2001, and to estimated 3.1 million m2 by December 2009.

The first serious attempts to deploy the technology were made with the formation of Department

of Non-Conventional Energy Sources (DNES) in 1982, though the history of research and pilot-

demonstration go back to 1960s. The total installed collector area increased from 119000 m2 in

1989 to 525000 m2 in 2001; and to estimated 3.1 million m2 by December 2009.

❖ 1995-2000: The average annual growth during this period was 8.2%. A study reported that

in 2001, almost 80% of the solar water heaters installations were in the commercial and

industrial sectors.

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 ❖ 2001-2004: The average annual growth rate this period was 20.6%. The market for

residential systems became pre-dominant.

❖ 2004-2008: The average annual growth rate this period was 24.6%.

Solar potential in residential sector

20

18

16

14

12

10

0
Pessimistic Realistic Optimistic
Scenario Scenario Scenario

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Pessimistic scenario: The cumulative installation of solar water heaters in residential sector is

expected to grow from 2.56 million m2 in 2010 to 10.23 million m2 in 2020.

Realistic scenario: The cumulative installation of solar water heaters in residential sector is

predictable to grow from 2.58 million m2 in 2010 to 15.74 million m2 in 2022. The deployment of

solar water heaters during 2010-2020 in residential sector would be 13.16 million m2.

Optimistic scenario: The cumulative installation of solar water heaters in residential sector is

expected to grow from 2.74 million m2 in 2010 to 20.28 million m2 in 2022. The deployment of

solar water heaters during 2010-2022 in residential sector would be 17.54 million m2.\

POLICY MADE IN INDIA

The highlights of the present policy environment are as follows.

❖ Several of the municipal corporations have issued orders making solar water heaters use

compulsory for new multi-story housing and houses constructed on plots having area more

than 5oo sq. yards (4500 Sqft)

❖ A few of the municipal corporations are offering rebate in property tax.

❖ A few of electricity distribution companies offer rebate in monthly electricity bills.

❖ Several states offer upfront subsidy for residential systems.

❖ IREDA (Indian Renewable Energy Development Agency Limited) through banks is

operating an interest subsidy scheme to offer concessional finance for installation of solar

water heaters.

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Residential sector is the largest sector both in terms of installations as well as sales. As per industry

estimates, currently, almost 70-80% of the solar water heater sales occur in the residential sector.

In the year 2001, almost 80% of the solar water heater installations in India were in the commercial

and industrial sectors, since then, residential sector has overtaken commercial and industrial

sectors and has become the main driver of growth in India.

ADVANTAGES OF SOLAR WATER HEATER

• Zero-cost

Ideally, the solar panel uses energy from the sun. This means we do not have to pay a

single penny to the power grid for using electricity. Being a renewable source of energy,

it is completely free and available each day. All we need to do is figure is how to fine-

tune our panel to optimize the performance in cloudy weather. You can contact the best

solar water heater suppliers to know more about how solar water heater can be effective

in all the seasons.

• Efficient

One of the primary reasons solar panel has great outweigh than any other form of energy

is that when it comes to heating water is the efficiency, they bring to us. Efficiency here

means the solar panels convert almost up to 80% radiation into the heat energy without

making use of any external fuels.

• Cheap installation

You will spend a lot less to install a solar panel in comparison to a PV panel. A good way

to earn rewards is by transferring the unused unit back to the electricity grid. They are a

one-time investment for long term benefits.

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 • Save space

If there is thought of space for mounting a solar PV panel, we do not need to worry about

it as well. If the room is not enough, we can go for a thermal panel.

• Save for environment

The world is accepting 'green' and there is no greener energy than solar panels. They have

no dependency on fuels, have zero-emission, and lower carbon footprints.

• Low maintenance

Solar water heaters do not require high maintenance. It only demands simple cleaning. As

it does not contain any moving parts, there will be no tear and break which would need

regular repairing attention. The manufacturer of solar water heater guarantee that it will

work for almost 20-25 years but tend to work longer.

DISADVANTAGES OF SOLAR WATER HEATER

Maintenance is one disadvantage, although most systems don’t require a high degree of care.

However, scaling occurs when there are minerals suspended in domestic water, which build up as

calcium deposits in the system. Adding water softeners or mild acidic substances such as vinegar

can avoid scaling. It only must be done every three to five years, but this can vary depending on

the water quality.

Other disadvantages:

• Compared to photovoltaic panels, solar thermal panels only heat water.

• Solar heaters require sufficient roof space to accommodate them.

• Solar water heaters require direct sunlight to function.

• The system does not function on cloudy, rainy, or foggy days.

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 • Annual maintenance is recommended to check the pump and antifreeze.

Installation requires the use of a new hot water cylindes.

PART-B

INTRODUCTION OF FINANCAL ANALYSIS

Finance is a language of any business. Among the expertise necessary for understanding and

handling a business is proficiency within the language of finance, i.e. the capacity to be ready

to read and comprehend financial information and also to be ready to display data through

financial report. The ability to be ready to comprehend financial information is critical for any

business manager. The goals and aim of all businesses are established in financial terms with

their result also being gauged in financial terms with their results also being measure in

financial terms. Finance also incorporates examining the information enclosed inside financial

statements with the aim to facilitate valuable information to help in management decisions.

This makes financial analysis one potent aspect of the role of finance. A company’s accounts

and statements contain an excellent deal of knowledge. Exploring the total connotations

enclosed inside the statement lies at the center of economic analysis.

As the analysis of financial reports also means an understanding of the function of business

decision-making which incorporates observation, assessment, forecasting, and formulation of

diagnosis all the processes that took place in any organization, summarized within the

financial statements.

Financial analysis is necessary a part of all commercial operations because it facilitates

litigable insights into the health and capacity of the organization within the future. Alongside

providing imperative date to the lenders and investors that might sway the value of stock or

21 | P a g e
 rate of interest, this information also enables company managers to live their performance in

terms of the expectations or growth of the industry.

MEANING OF FINANCIAL ANALYSIS

The term Financial Analysis refers to the method of determining financial strengths and

weaknesses of a priority by establishing strategic relationship between the items of the

Balance Sheet and Profit and Loss Account.

Financial analysis also referred as analysis and interpretation of financial statements. The term

analysis is used to mean the simplification of financial data by methodical classification of

information given in the Financial Statements. Interpretation means explaining the meaning

and significance of the data so simplified. In other words, presenting the data in an

understandable manner is named analysis and marking comments on the analysis is called

interpretation.

DEFINITION OF FINANCIAL ANALYSIS:

According to John. N. Myer “Financial Analysis is a largely a study of

relationship among the various financial factors in a business as disclosed by a

single set of statement and a study of the tread of these factors as shown in a

series of statements.

According to Metcalf and Titard “Financial Statements Analysis is a process of

evaluating the relationship between component parts of financial statements to

obtain a better understanding of a firm’s position and performance

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 METHOD OF FINANCIAL ANALYSIS

1. Horizontal Analysis: Horizontal analysis refers to a comparison of financial data of

a firm once a period of time. The figures of the various years are compared with one year.

This type of analysis is also called dynamic analysis.

2. Vertical analysis: Vertical analysis refers to the study of relationship of the various

items in the financial statements of one accounting year. Under this type of analysis, the

figures from financial statement of a year are compared with a base selected from the same

year statement. It is also known as Static Analysis.

3. External Analysis: External analysis refers to the analysis is done by outsiders who

do not have access to the detailed accounting records of the business enterprise. These

outsiders include investor, creditor, government agencies and the general public.

4. Internal Analysis: Internal analysis refers to analysis done by persons who have

access is the detailed accounting records of a business firm. These include executives and

employees of the organization.

5. Multi-Company Comparison: This contains the calculation and comparison of the

key financial ratios of two organizations, usually within the same industry. The intent is

to determine the comparative financial strengths and weaknesses of the two firms, based

on their financial statements.

6. Industry Comparison: This is similar to the multi-company comparison, except that

the comparison is between the results of a specific business and the average result of an

23 | P a g e
 entire industry. The intent is to see if there are any unusual result in comparison to the

average method of doing business

7. Valuation Analysis: This involves the use of several methods to derive a range of

possible valuations for a business. Examples of these methods are discounted cash flows

valuation, a comparison to the prices at which comparable companies have sold, a

compilation of the valuations of the subsidiaries of a business, and a compilation of its

individual asset values.

OBJECTIVES OF FINANCIAL ANALYSIS

1. Reviewing the performance of an organization over the past periods: To

predict the long run prospects of the organization, past performance is analyzed. Past

performance is analyzed by reviewing the trend of past sales, profitability, cash flows,

return on investment, debt-equity structure and operating expenses, etc.

2. Assessing the current position and operational efficiency: Examining the

present profitability and operational efficiency of the enterprise so the financial health of

the organization will be determined. For long-term decision making, assets and liabilities

of the organization are reviewed. Analysis helps find out the earning capacity and

operating performance of the organization.

3. Predicting growth and profitability prospects: The higher management is

worried with future prospects of the organization. Financial analysis helps them in

reviewing the investment alternatives for judging the earning potential of the enterprise.

24 | P a g e
 With the assistance of the monetary statement analysis, assessment and prediction of the

bankruptcy and probability of business failure may be done.

4. Loan decision by financial institutions and banks: Financial analysis helps the

financial institution, loan agencies and banks to come to a decision whether a loan are

often given to the organization or not. It helps them in determining the credit risk, deciding

the terms and conditions of a loan if sanctioned, rate of interest, maturity date etc.

TOOLS AND TECHNIQUES OF FINANCIAL ANALYSIS

1. COMPARATIVE STATEMENTS: Comparative statement deals with the comparison

of various items of the Profit and Loss Account and Balance Sheets of two or more periods.

Separate comparative statements are prepared for Profit and Loss Account as comparative

statement and Balance Sheet. As a rule, any finance may be presented within the kind of

comparative statement like comparative record, comparative profit and loss account,

comparative cost of production statement, comparative statement of working capital and the

like.

2. COMPARATIVE INCOME STATEMENT: Three important information are

obtained from the comparative income statement. They are Gross Profit, Operating Profit and

Net Profit. The changes or the improvement in profitability of the business concern is find out

over a period of time, if the changes or improvement is not satisfactory, the management can

find out the reasons for it and some corrective action can be taken.

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3. COMPARATIVE BALANCE SHEET: The financial condition of the business

concern can be find out by preparing comparative balance sheet. The different items of balance

sheet for two different years are used. The assets are classified as current assets and fixed assets

for comparison. Likewise, the liabilities are classified as current liabilities, long term

shareholders’ net worth includes equity share capital, preference share capital, reserves and

surplus and the like.

4. COMMON SIZE STATEMENT: A vertical presentation of financial data is followed

for preparing common-size statement contents aren’t taken into consideration. But only

percentage is taken into account for preparing common size statement. The total assets or total

liabilities or sales is taken as 100 and balance items are compared to the total assets, total

liabilities or sales in terms of percentage. Thus, a common size statement shows the relation of

each component to the whole.

5. TREND ANALYSIS: The ratio of various items for various are discover than compared

under this analysis. The analysis of the ratios over the period of years given a plan of whether

the business is trending upward or downward. This analysis is otherwise called Pyramid

Method.

6. AVERAGE ANALYSIS: Whenever, the trend ratio is calculated for an organization,

such ratio is compared on the industry average. These both trends may be presented on the

graph paper also within the shape of curves. This presentation of facts within the shape of

images makes the analysis and comparison more comprehensive and impressive.

7. STATEMENT OF CHANGES IN WORKING CAPITAL: The extent of

increase or decrease of assets is identified by preparing the statement of changes in working

26 | P a g e
 capital. The amount of working capital is calculated by subtracting the sum of current liabilities

from the sun of current assets. It doesn’t detail the explanations for changes in assets.

8. FUND FLOW ANALYSIS: Fund flow analysis deals with detailed sources and

application of funds of the business organization for a selected period. It indicates where funds

come from and the way they’re used during the financial under review. It highlights the

changes within the financial structure of the organization.

9. CASH FLOW ANALYSIS: Cash flow analysis is based on the movement of cash and

bank balances. In other words, the movement of financial rather than movement of capital

would be considered within the cash flow analysis. There are two forms of cash flows. They’re

actual cash flows and notional cash flows.

10. RATIO ANALYSIS: Ratio analysis is a trial of developing meaningful relationship

between individual items (or group of items) within the balance sheet or profit and loss account.

Ratio analysis isn’t only useful to internal parties of concern but also useful to external parties.

Ratio analysis highlights the liquidity, solvency, profitability and capital gearing

11. COST VALUE PROFIT ANALYSIS: This analysis discloses the prevailing

relationship among sales, cost and profit. The cost is divided into two. They are fixed cost and

variable cost. Cost analysis enables the management for better profit planning.

RATIO ANALYSIS

Ratio analysis is a trial of developing meaningful relationship between individual items (or group

of items) within the balance sheet or profit and loss account. Ratio analysis isn’t only useful to

internal parties of concern but also useful to external parties. Ratio analysis highlights the liquidity,

solvency, profitability and capital gearing.

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 BENEFITS OF RATIO ANALYSIS

• FORECASTING AND PLANNING: The tread in costs, sales, profit, and other facts

is known by computing ratio of relevant accounting figures of previous years. This trend

analysis with the help of ratios is also useful for forecasting and planning business activities.

• BUDGETING: Budget is an estimate of future activities on the idea of past experience.

Accounting ratio helps to estimate budgeted figures. For instance, sales budget could also be

prepared with the assistance of research of past sales.

• MEASUREMENT OF OPERATING EFFICIENCY: Ratio analysis indicates the

degree of efficiency within the management and utilization of the assets. Different activity

ratio indicates the operational efficiency. In fact, solvency of a firm depends upon the sales

revenues generated by utilizing its assets.

• COMMUNICATION: Ratio are effective means of communication and play an

important role in informing the position of and progress made by the business organization to

the owners or other parties.

• CONTROL OF PERFORMANCE AND COST: Ratio can also be used for control

of performances of the various divisions or departments of an undertaking still as control of

cost.

• INTER-FIRM COMPARISON: Comparison of performance of two or more firms reveals

efficient and inefficient firms, thereby enabling the inefficient firms to adopt suitable measures

for improving their efficiency. The most effective way of inter-firm comparison is to match

the relevant ratio of the organization with the common ratio of the industry.

28 | P a g e
• INDICATION OF LIQUIDITY POSITION: Ratio analysis helps to assess the

liquidity position i.e., short-term debt paying ability of a firm. Liquidity ratio indicate the

power of the firm to pay and help in credit analysis by banks, creditors and other suppliers of

short-term loans.

• INDICATION OF LONG–TERM SOLVENCY POSITION: Ratio analysis is

additionally sued assess the long-term debt-paying capacity of the firm. Long-term solvency

position of a borrowing could be prime concern to the long-term creditors, security analysts

and therefore the present and potential owners of a business. it’s measured by the

leverage/capital structure and profitability ratio which indicate the earning power and operating

efficiency.

• SIMPLIFICATION OF FINANCIAL STATEMENT: A ratio analysis makes it

easy to understand the link between various items and help in understanding the financial

statement.

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CALSSIFICATION OF RATIO ANALYSIS

CASSIFICATION OF
RATIO ANALYSIS

TRADITIONAL FUNCTIONAL SIGNIFICATION

CLASSIFICATION CLASSIFICATION CLASSIFICATION

1. BALANCE SHEET RATIO 1. PRIMARY

RATIO
1. LIQUIDITY RATIO
2. PROFIT AND LOSS 2.
2. LEVERAGE RATIO SECONDARY
ACCOUNT RATIO RATIO
3. ACTIVITY RATIO
3. COMPOSITE/MIXED 4.PROFITABILITY RATIO
RATIO

o TRADITIONAL CLASSIFICATION: The traditional classification or statement

ratio are classified according to the statements like balance sheet, profit and loss account,

intra statement.

o FUNCTIONAL CLASSIFICATION: The functional classification is classified by

financial management or according to the test satisfied, various ratio like liquidity ratio,

leverage ratio, activity ratio and profitability ratio.

30 | P a g e
 o SIGNIFICATION CLASSIFICATION: This classification is according to their

signification or importance. Some ratio is more important than other and the firm may

classify them as primary and secondary.

FUNCTIONAL CLASSIFICATION

FUNCTIONAL
CLASSIFICATION

LIQUIDITY LEVERAGE ACTIVITY PROFITABIL

RATIO RATIO RATIO ITY RATIO

1. EQUITY RATIO
2. DEBT TO A. In relation to sales
CAPITAL RATIO 1. GROSS PROFIT RATIO
3. INTEREST 2. OPERATING PROFIT
1. CURRENT RATIO COVERAGE 1. INVENTORY
TURNOVER RATIO RATIO
2. LIQUID RATIO 4. CAPITAL
2. DEBTORS 3. NET PROFIT RATIO
3. ABSOLUTE GEARING
TURNOVER 4. EXPENSE RATIO
RATIO
3. FIXED ASSET
4. INTERNAL TURNOVER RATIO
MEASURE B. In relation to investments
4. TOTAL ASSET
5. DEBTOR TURNOVER RATIO 1. RETURN ON
TURNOVER RATIO INVESTMENTS
5. WORKING CAPITAL
6. CREDITORS TURNOVER RATIO 2. RETURN ON CAPITAL
TURNOVER RATIO 3. RETURN ON EQUIT
6. PAYABLES
7. INVENTRORY TURNOVER RATIO CAPITAL
TURNOVER RATIO 4. RETURN ON TOTAL
7. CAPITAL EMPLOYED
TURNOVER RESOURCES
5. EARNINGS PER SHARE
6. PRICE-EARNING RATIO

31 | P a g e
LIQUIDITY RATIO: These are the ratio which measure the short-term solvency or financial

position of a firm. These ratios are calculated to comment upon the short-term paying capacity of

a concern or the firm’s ability to meet its current obligation.

LEVERAGE RATIO: long-term solvency ratio conveys a firm’s ability to meet the

interest costs and repayments schedules of its long-term obligations. Leverage ratio

shows the proportions of debt and equity in financing of the firm. These ratios

measure the contribution of financing by owns as compared to financing by outsiders

Net Income + Depreciation

𝑆𝑜𝑙𝑣𝑎𝑛𝑐𝑦 𝑅𝑎𝑡𝑖𝑜 =
Liabilities

ACTIVITY RATIO: These ratios are calculated to measure the efficiency with which the

resources of a firm have been employed. These ratios are also called turnover ratios because they

indicate the speed with which assets are being turned over into sales.

• PROFITABILITY RATIO: These ratios measure the result of business operations or

overall performance and effectiveness of the firm. The various profitability ratio has been

given in chart exhibition the classification of ratio according to test.

• CURRENT RATIO OR WORKING RATIO: Current ratio has defined as the relationship

current assets and current liabilities. This ratio, also known as working capital ratio, is a

measure of general liquidity and is most widely used to make the analysis of a short-term

financial position or liquidity of the firm. It is calculated by dividing the total of current assets

by total of the current liabilities.

Current Assets
Current Ratio =
Current Liability
32 | P a g e
 Standard Ratio = 2:1

The two basic components of this ratio: current assets and current liabilities. Current assets

include cash and those assets which can be easily converted into cash within a short period

of time generally cash and equivalents, short-term investment, bills receivable etc. Current

liabilities are those obligations which are payable within a short period of generally one

year and include outstanding expenses, bills payable etc. BOD (bank over draft) should

also generally be included in current liabilities because it represents short-term

arrangement with the bank and is payable within a short period. But where bank overdraft

is permanent or long-term arrangement with the bank, it should be excluded

• QUICK OR ACID TEST OR LIQUID RATIO: Liquid ratio is referring to the ability of a

firm to pay its short-term obligations as and when they become due. Quick ratio may have

defined as the relationship between liquid assets and current liabilities.

Liquid Assets
Quick/Acid Test Ratio =
Current Liabilities
*Quick / Liquid Assets = Current Asset – Stock and Prepaid Expanses

Quick Liabilities = Current Liabilities – Bank Over Draft

Standard Ratio= 1:1

• ABSOLUTE LIQUIDITY RATIO: This ratio is calculated to analyze the short term

solvency or financial position of the firm. It is calculated to exclude the receivables from the

current and liquid assets and to know the absolute liquid assets.

Absolute Liquid Assets

Absolute Liquidity Ratio =
Current Liabilities 0

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 Absolut Liquid Assets = Cash and Bank + Short Term Securities

Standard Ratio = 0.5:1

• STOCK OR INVENTRY TURNOVER RATIO: Inventory turnover ratio is normally

calculated as sales or average inventory or cost of goods sold. It would indicate whether

inventory has been efficiently used or not. The purpose is to see whether only the required

minimum funds have been locked up in inventory. Turnover ratio indicates the number of time

the stock has been turned over during the period and evaluates the efficiency with which a firm

is table to manage its inventory.

The ratio is calculated by dividing the cost of goods sold by the amount of average inventory

at cost

Cost of Goods Sold

Inventory Turnover Ratio=
Average Inventory at Cost or Closing Stock

Opening stock + Closing Stock

Average Inventory =
2

*Closing inventory for newly established company

Inventory Conversion Period

Inventory turnover ratio also be of interest to see average time taken for clearing the stock.

This can be possible by calculating inventory conversion period. This period is calculated

by dividing the number of days’ inventory turnover.

Days in a year
Inventory Conversion Period =
Inventory Turnover ratio

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• Receivable or Debtors Turnover ratio: Debtors turnover ratio is also known as account

receivable turnover ratio. This indicates the number of times average debtors have been

converted into cash during a year. This also referred to as the efficiency ratio that measures the

company’s ability to collect revenue. It also helps interpret the efficiency in using a company’s

assets in the most optimum way.

Credit Revenue from Operations

Debtors Turnover Ratio =
Average Trade Receivable

Average Trade Receivable

Opening Trade Receivable + Closing Trade Receivable

=
2

Average collection period: The average collection period represents the average number

of days for which a firm has to wait before its receivables are converted into cash.

No. of Working Days

Average Debt Collection Period =
Debtors Turnover Ratio

• Payable or Creditors Turnover ratio: A creditors turnover ratio is also known as account

payable ratio. it is a short term liquidity measure used to quantify the rate at which a company

pays off its suppliers. It shows how many times a company pays off its accounts payable during

a period.
Net Credit Purchases
Creditors Turnover Ratio =
Average Trade Payables

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 Average Trade Payables

Opening Creditors + Closing Creditors

=
2

• Average payment Period : The average payment period represents the average number of days

taken by the firm to pay its credit. Generally, lower than ratio, the better is the liquidity position of the

firm and higher the ratio, less liquid is the position of the company. But higher payment period also

implies greater credit period enjoyed by the firm and consequently larger the benefit from

credit suppliers.
No. of Working Days
Average Payment Period =
Payables Turnover Ratio

• Working Capital Turnover ratio: The working capital ratio is measure of liquidity, revealing

whether a business can pay it obligations. The ratio is the relative proportion of an entity’s

current assets to its current liabilities, and show the ability of business to pay for its current

liabilities with its current assets. The ratio is used by lenders and creditors when deciding

whether to extend credit to a borrower. Current Assets

Working Capital Turnover ratio =
Current Liabilities

• Gross Profit Ratio: Gross profit ratio measures the relationship of gross profit to net revenue

from operation (net sales) and is usually represented as a percentage. It is calculated by dividing

the gross profit by sales.

Gross Profit
Gross Profit Ratio = 𝑋 100
Net sales

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 The gross profit ratio indicates the extent to which selling prices of goods per unit may decline

without resulting in losses on operations of a firm. It reflects the efficiency with which a firm

produces its products. A comparison of gross profit ratio over time or for different firms in the

industry is a good measure of profitability.

• Operating Ratio: Operating ratio establishes the relationship between coast of revenue from

operations and other operation expenses on the one hand and the revenue from operations on

the other. It measures the cost of operations per rupee on sales. The ratio is calculated by

dividing operating costs with the net revenue from operations and its generally represented as

a percentage.
Operating cost
Operating Ratio =
Sales

Operating ratio indicates the percentage of net revenue from operations that is consumed by

operating coast. Obviously, higher the operating ratio, the less favorable it is, because, it would

have a small margin to cover interest, income tax, dividend and reserves. There is no rule of

thumb for this ratio as it may differ from to depending upon the nature of its business and its

capital structure.

• Net Profit Ratio: Net Profit ratio establishes a relationship between net profit (after tax) and

revenue from operations (sales) and indicate the efficiency of the management in

manufacturing, selling, administrative and other activities of the company.

Net Profits
Net Profit Ratio:
Net Sales
× 100

37 | P a g e
 The two basic elements of the ratio are net profit and net sales. The net profit is obtained after

deduction income-tax and, generally, non-operating income and expenses are excluded from the

net profit for calculating this ratio. And net sales are the sum of a company’s gross sales minus

its returns, allowances, and discounts. Thus, income such as interest on investment outside the

business, profit on sales of fixed assets, etc. are excluded. The ratio is very useful as if the profit is

not sufficient, the firm shall not be able to achieve a satisfactory return on its investment. This

ratio also indicates the firm’s capacity to face adverse economic conditions such as price

competition, low demand, etc.

38 | P a g e
 CHAPTER 2

RESEARCH DESIGN

39 | P a g e
TITLE OF THE STUDY

A STUDY ON “FINANCIAL PERORMANCE OF WAAREE ENERGIERS – FOR FY

2018 TO FY 2022”.

STATEMENT OF THE PROBLEM

Technical of financial analysis is one of the most important of any organization. Those

organizations which are capable of managing the financial and relative activity effectively, can

take lead in industry. Such organization are able to see the owner’s wealth is maximized which is

main objective of every business. This study is undertaken to explore and estimate the ratio

analysis for calculation of financial performance at G C Solar Industry, has performed for last five

years and further analyzed its performance so as to drive conclusion, interpretation and give

suggestion and recommendation.

OBJECTIVE OF THE STUDY

▪ To understand the performance of solar industry in India.

▪ To familiarize the financial performance of the company.

▪ To assess the financial performance of the company.

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SCOPE OF THE STUDY

This study highlights the review of financial analysis of the organization. The study helps in putting

practical theoretical aspect of the study into real life working experience. The financial analysis

helps in understanding the annual report of the organization. The study helps in understanding how

organization maintains the financial record. The study also helps to understand the different

techniques used financial analysis which were used in organization.

The tools used to study financial analysis is ratio analysis technique. It helps in simplifying

complex accounting statement and financial data into simple ratios.

OPERATIONAL DEFINITION OF CONCEPTS

Ratio analysis is a quantitative procedure of obtaining a look into a firm’s functional efficiency,

liquidity, revenues, and profitability by analysis its financial records and statement. It is the process

of establishing and interpreting various ratio for helping in making certain decisions. Ratio analysis

only means of better understanding of financial strengths and weaknesses of a firm. Ratio analysis

tells investors and analysis employ ratio to evaluate the financial health of companies by

scrutinizing and current financial statements. Comparative data can demonstrate likely future

performance. This data can also compare a company’s financial standing with industry averages

while measuring how a company stacks up against others within same sector. Ratio measure a

company today against its historical numbers, ratios are typically not used in insolation but rather

in combination with other ratio.

41 | P a g e
SOURCE OF DATA

The secondary data were collected for addressing the research problem and fulfilling the objective

of the study

SECONDARY DATA

Secondary data refers to data that is collected by someone other than the user. Common sources

of secondary data for social science include censuses, information collected by government

departments, organizational records and data that was originally collected for others research

purposes. Secondary data can provide a baseline for primary research to compare the collected

primary data result to and it can also be helpful in research design. The secondary data is obtained

from the following

• Collection of data from annual records, internal published book or profile of “Waaree

Energies Ltd”

• Annual report of the company auditor’s report, director report and note to account.

• Through magazines, journals, and other books provided by library, websites.

• Through manual provided by finance department.

Data collection instrument

The instrument used in the collection of data is must vital and important, as it is the effective and

efficiency way of collection relevant data.

• Then data has collected through company records and reports, which is secondary in

nature.

• Further the data is obtained from interaction with the concerned officers in the department,

department manual and other publication of the company.

42 | P a g e
 METHODOLOGY

Five years ‘annual report were used to analysis of ratio analysis were used as tools of analysis

based upon the company financial position performance was evaluate suggestion were made.

Regarding ratio analysis, ratio will be evaluating by information from the balance sheet for five

years, then we find out different types ratios that shows company’s position.

PLAN OF ANALYSIS

The data collected from annual report of the company through analysis, interpretation has been

done so has avoided wrong interpretation.

• Planning of the study

• Collection of data from primary and secondary data

• Executive of collected data

• Making the financial table and calculations

• Analysis the data

• Interpretation

LIMITATIONS OF STUDY

• The financial data being confidential to any company hence this is major limitation entire
preparing this project.

• The physical interaction between the company was limited due to pandemic.

• Also the physical observation of inside factory was not permitted.

• The given data could not fulfill all the types of ratio in the analysis.

43 | P a g e
CHAPTER SCHEME

➢ CHAPTER 1: INTRODUCTION

The chapter includes a background of financial analysis classification of financial analysis,

determining the financial analysis process, classification of ratio analysis, different types

of ratio analysis tools and techniques, formula for the finding out ratios, advantages of the

ratio analysis

➢ CHAPTER 2: RESEARCH DESIGN

The chapter research design includes title of the study, research design includes two

methodologies primary data and secondary data collection, scope of the study, statement

of the problem, objective of the study, plan of action, methodology, data collection

instruments, lenition of the study and an over view if chapter schemes.

➢ CAHPTER 4: COMPANY PROFILE

This chapter contains a complete profile of the organization including history, nature of the

business, mission, vision, objectives, technical consultancy, awards and achievements,

reports, products and services

➢ CHAPTER 4: DATA ANALYSIS AND INTERPRETATION

This chapter provides an analysis of the data collection with interpretation with tune with

objectives.

➢ CHAPTER 5: SUMMARY OF FINDING AND CONCLUSION

This chapter provides summary of findings and conclusion

➢ CHAPTER 6: SUGGESTION

This chapter provides some necessary suggestion

➢ BIBLIOGRAY
44 | P a g e
 CHAPTER 3

COMPANY PROFILE

45 | P a g e
 WAAREE ENERGIES LTD

HEAD OFFICE: # Waaree Energies Ltd. 602, Western Edge-I, Off Western Express

Highway, Borivali (E), Mumbai - 400066. Maharashtra, India.

MANUFACTURING UNIT : Gujarat – Tumb Survey No. 38/1, Tumb Village, Tumb,

Umbergaon, Valsad, Gujarat - 396150

46 | P a g e
COMPANY PROFILE

Waaree Energies Ltd. is the flagship company of Waaree Group, founded in 1989 with

headquarters in Mumbai, India. It has India's largest Solar PV Module manufacturing capacity of

2 GW's at its plants in Surat and Umbergaon in Gujarat. Waaree Energies is amongst the top

player in India in providing EPC services, project development, rooftop solutions, and solar

water pumps and also as an Independent Power Producer. Waaree has its presence in over 350

locations nationally and 68 countries internationally.

Since the dawn of human civilization, man has harnessed power of the sun for all his needs. The

mighty sun has continually dawned inspiring ideas through human history. Solar energy is radiated

energy is from the sun in the form of heat and light. It steers the climate and weather and supports

all life on Earth.

The organization is facilitated with the area of 60000 square foot and 100 employees. Direct and

indirectly working freelancers around 600 numbers and also company have dealer network

marketing at all over India around 400 nos. Company is certified by 9001:2015 for facilities and

systems in the area of research, production, management and marketing. Certification of Bureau

of India Standards (BIS) for its Solar Flat Plate collector is on the process. The organization has

competent and dedicated technical and professionals. It has certification from testing Center of

Madurai Kamaraj University for Solar Flat Plate Collector and ETC model. Under Ministry of

Non-Renewable Source of Energy, Government of India, the organization has listed in their

website as vendors for solar Thermal Heating and that are eligible for loans at subsidized interest

from all their approved banks and financial institutions.

47 | P a g e
COMPANY BACKGROUND AND HISTOEY

Organization has started from 1993 manufacturing of sheet metal Fabrication, and turned

components and rubber components also manufacturer since 2007. Later organization setup semi-

automatic solar water heater plant. The company

NATURE OF BUSINESS

• WAAREE in to contract manufacturing business.

• Organization main focus is on manufacturing on solar PV system.

COMPANY VISION AND MISSION

VISION

Our Vision is to provide high quality and cost effective sustainable energy solutions across all the

markets, reducing carbon foot print - paving way for sustainable energy thereby improving quality of

present and future human life.

MISSION

By virtue of our commitment to our stakeholders, we strive for continuous improvement in the quality of

our products & services

COMPANY MANAGEMENT PROFILE

Name Designation
Mr.Nilesh Bhogilal Gandhi Chairman & Ind.Dire(Non-Exe)
Mr.Viren Doshi Director
Mr. Hitesh Mehta Director
Mr.Mitul Mehta Ind.Non-Executive Director
Ms. Anita Jaiswal Ind.Non-Executive Director
Mr. Pujan Pankaj Doshi Managing Director

COMPANY OBJECTIVE

• To create a sustainable future through renewable energy solution for society

• To stimulating concept of Make in India to make available best quality in domestic area

• Making available of beat quality, safety and cost effective products to customers

• Adopting finest engineering and management ethics

• To sustain a cutting-edge infrastructure and a motivating working atmosphere.

• The organization as an objective of becoming of No.1 solar industries at 2030\

COMPANY CERTIFICATION
• ISO 9001-2015
• PV CYCLE
 FUNCTIONAL CHAT

material purchase

Quality Inspection

Collector Stand Assembly

Tank Assembly
Assembly
Division Division
Division

Sheet Cutting Section Cutting Angle Cutting

Cylinder Forming Frame Forming Bending

Welding Insulation Punching and

Forming

Leak Check Absorber Brazing Welding

Puff Insulation Leak Checking Cleaning

Cleaning Absorber mounting Powder Coating

Glass and
Quality Fram Quality Inspection
Inspection Mounting

Packing Cleaning Packing

Finished Collector Finished Goods

Goods Forming

Qualitry Inspection

Packing

Finished Goods

52 | P a g e
 MAJOR PRODUCT

• Solar Water Heater systems

• Solar Street Lightings

Solar street lights are raised light sources which are powers by solar panels generally

mounted on the lighting structure or integrated into the pole itself. The solar panels charge

a rechargeable battery, which powers a fluorescent or LED lamp during the night. Most

53 | P a g e
 solar lights turn on and turn off automatically by sensing outdoor light using solar panel

voltage. Solar streetlights are designed to work throughout the night. Many can stay lit for

more than one night if the sun is not in the sky for an extended period of time. Older models

included lamps that were not fluorescent or LED. Solar lights installed in windy regions

are generally equipped with flat panels to better cope with the winds.

• Solar UPS and Solar PV Modules

• Water Purifier RO System

54 | P a g e
 • SS Storage Tank

CUSTOMERS OF COMPANY

• A4 Technologies

• STAR SUPREM MARKETING

• SUN ECO TECH ENERGY

• BLACK WIND SOLAR and INVERTER

• HOME 360

• M G Electricals

• J K enterprise

• Venus Home Appliances

• Vaibhav Solar and many more…

55 | P a g e
 SUPPLIERS OF COMPANY

• Connexia Renewable Energy Pvt Ltd

• Ruby Engineering Co

• Thanvi CNC Solutions

• TECHNOS SPRAYON

• CMS Stainless Company

• Meenakshi Steel Corporation

• Rajshree Implex- Mumbai and many more…

INFRASTRUCTURE

AREA: 60000 square feet

MACHINERY LIST

MACHINES CAPACITY

Amada 52 tons

7 tons 3 meters/3mm GI sheet / SS

Rolling machine 12 tons 3 meters / 6mm / GI

30tons, 30tons, 10tons, 10tons, 20tons,

Mechanical press tank 20tons, 30tons, 150tons

56 | P a g e
 Hydraulic Press 150tons, 100tons, 50tons, 30tons

Air compressor 30/100 KVA-1 each, LG 290 lbs (3 Nos)

Gantry Crane 2 tons

Power press at fpc 20 ton

Plastic injection machine vertical 60 grams

Heating oven 1 No

Forming machine – 7 stand 5 HP and 10 HP

Painting Oven 1 No

Heating oven 1 No

FPC Copper tube / water testing 1 No

MIG(Metal Inert Gas) Welding 2 meters, 5 sets

57 | P a g e
 Seam Welding circular / horizontal seaming 2 No

welding machine ( from China)

Weighing scale electric 10 kg

Stacker Lift - Battery 750 kg

Spray Painting Gun 4 No

MANUFACTURING PROCESS

58 | P a g e
 LAB FACILITIES

59 | P a g e
 CHAPTER 4

DATA ANALYSIS

AND

INTERPRETATION

60 | P a g e
 DATA ANALYSIS AND INTERPRETION

INTRODUCTION
Analysis and interpretation of collected data is the heart of the project work. Only after analysis

we are able to reach the miscellaneous findings with related problems identified. Thesis finding

that is arrived after analysis and interpretation help to seek out hidden solution for the problem

and also the most appropriate solution for overcoming the matter and ions for overcome problems.

The analysis and interpretation can be carried out by various techniques. These techniques help in

analysis large volume of data by establishing the quality relation between various caravels data.

RATIO ANALYSIS

Ratio analysis is a technique of analysis and interpretation of financial statement. It is the process

of establishing and interpretation various ratios for helping in making certain decisions. It is only

a means of better understanding of financial strengths and weakness of the firm. Calculation of

mere ratio does not serve any purpose, unless several appropriate ratios are analyzed and

interpreted. There are number of ratios which can be calculated from the information given in the

financial statement, but the analyst has to select the appropriate data and calculate only a few

appropriate ratios from the same keeping in mind the objective of analysis.

The interpretation of ratio is an important factor. Through calculation of ratio is also important but

it is also a clerical task whereas interpretation needs skill, intelligence and foresightedness. The

inherent limitation of ratio analysis should be kept in mind while interpreting them.

61 | P a g e
 GUIDELINES FOR USE OF RATIOS

• ACCURACY OF FINANCIAL STATEMENT: The ratio is calculated from the data

available in financial statement. The reliability of ratio is linking to the accuracy of

information in these statements. Before calculating ratio one should see whether proper

concepts and conventions have been used for preparing financial statement or not.

• PURPOSE OF ANALYSIS: If the purpose is to study current financial position than

ratios relating to current assets and current liabilities will be studied. The purpose of ‘user’

is also important for the analysis of ratio.

• SELECTION OF RATIO: The ratios should match the purpose for which these are

required. Calculation of large number of ratio without determining their need in the present

context may confuse the things instead of solving them. Only those ratios should be

selected which can throw proper light on the matter to be discussed.

• USE OF STANDARD: The ratio will give an indication of financial position only when

discussed with reference to certain standards. Unless otherwise these ratios are compared

with certain standards one will not be able to reach a conclusion.

• CALIBRE OF THE ANALYST: The ratios are only tools of analysis and their

interpretation will depend upon the caliber and competence of the analyst. He should be

familiar with various financial statements and the significance of changes, etc. A wrong

interpretation may create devastation for the concern since wrong conclusions may lead to

wrong decisions. The utility of ratios is linked to the expertise of the analyst.

62 | P a g e
 TABLE NO: 4.1

SALES and PROFIT

The below table shows the company’s sales and profit for the five years from 2016 to 2020

YEARS SALES PROFIT(in ₹)

2017 9,20,55,707.50 1,06,98,917.88

2018 5,18,46,453.00 14,13,455.22

2019 7,93,89,099.35 85,68,329.03

2020 10,32,05,829.15 1,87,68,921.04

2021 8,46,28,779.10 81,95,526.00

TOTAL 41,11,25,868.10 4,76,45,149.00

The above table sowing the company’s sales and profit for the 5 years, 2017 the company sales

was in better position and in 2018 due to demonetization the company sales and profit reduced to

minimum. Than from 2019 the company was recovering, later in 2020 the pandemic again the

company was making minimal profit and sales.

63 | P a g e
 CHART NO: 4.1

The chart showing the sales and profit of the company from 2017 to 2021

120000000

100000000

80000000

60000000

40000000

20000000

0
YEARS 2017 2018 2019 2020 2021

The above graph showing sales and profit of the Waaree Energies industry from 2017 to 2021.

The X axis showing years and Y axis showing amount (in₹). The blue bar represents sales and

orange bar represents the profits of the company.

In year 2017 company’s sales was ₹9,20,55,707.50 and the profit was ₹1,06,98,917.88, in year

2018 company unexpectedly decrease its sales because in 2018 the purchasing power of people

was less because of demonetization. So, profit of company decrease to ₹14,13,455. In in the year

2019 company was again increases its sales to ₹7,93,89,099.35 and profit was ₹85,68,329.03 it

was the recovering stage of the company. In 2020 company made its highest profit of

₹1,87,68,921.04 with the sales of ₹10,32,05,829. In year 2021 company start decreases its profit to

₹81,95,526 with sales of ₹8,46,28,779 due to covid-19 pandemic whole world was lockdown no

production and sales before the two month of financial period. So the company get slight decline.

64 | P a g e
WORKING CAPITAL RATIO/ CURRENT RATIO

Working capital is the money you need to short-term operations, it is this focus on short term

that differentiates working capital from longer-term investments in fixed assets.

The working capital ratio is calculated simply by dividing total current assets by total current

liabilities. It is also called as current ratio. it is a measure of liquidity, meaning the business’s

ability to meet its payment obligations as they fall due.

TABLE NO: 4.2

CALUCATION OF WORKING CAPITAL RATIO

YEARS CURRENT CURRRENT CALUCATION WORKING

ASSETS LIABILITIES CAPITA RATIO

2016 5,19,67,254.86 80,86,927 5,19,67,254.86 6.42:1

=
80,86,927

2017 80,46,303 76,61,046 80,46,303 1.5:1

=
76,61,046

2018 2,39,50,481 1,52,10,900 2,39,50,481 1.5:1

=
1,52,10,900

2019 2,90,86,591.05 1,98,59,500 2,90,86,591.05 1.49:1

=
1,98,59,500

2020 2,76,32,261.50 1,88,66,526 2,76,32,261.50 1.56:1

=
1,88,66,526

65 | P a g e
 The above table showing a working capital ratio of G C Solar industry as working capital ratio

shows capacity of paying short-term expense the company in 2016 the ratio was 6.42:1 it tells the

current assets is too higher and the cash flow is blocked and in year 2016 because of over

production of the products. In year 2019 ratio was in normal stage 1.5:1 it shows cash flow is going

smoothly in company. From 2017 to 2020 company continued almost same ratio. This tells

company is having well cash flow after 2016. In 2020 the ratio was again started increase.

CHART NO: 4.2

CURRENT ASSETS and CURRENT LIABILITIES

CURRENT CURRENT
51967254.8

ASSETS LIABIBITIES
6

29086591.0

27632261.
2395048

5
1985950

1886652
1

2016 2017 2018 2019 2020

66 | P a g e
 The above chart showing current assets and current liabilities of the company from 2016 to 2020.

The blue bar representing current assets and orange bar represent current liabilities. In the year

2016 the company has current assets of 5crore above and current liabilities of below 1crore, in

2017 both current assets and liabilities are below 1 crore. In 2018 the current assets are between 2

and 3 crore and current liabilities between 2 and 1 crores. In 2019 the current assets in below 3

crores and current liabilities is 2 crores. And in 2020 the current assets below 3 crores and current

liabilities is below 2 crores.

STOCK TURNOVER RATIO

Inventory turnover ratio indicates the relationship between “cost of goods sold” and “average

inventory”. It indicates how efficiently the company investment in inventories is converted to

sales and therefore depicts the inventory management skills of the organization.

It is both an activity and efficiency ratio. This ratio helps to determine stock related issues such as

overstocking and overvaluation.

Net Sales
STOCK TURNOVER RATIO =
Average Inventory

High Ratio – if the stock turnover ratio is high it shows more sales are being made with each unit

of investment in inventories. Through high is favorable, a very high ratio may indicate a shortage

of working capital and lack of sufficient inventories.

Low Ratio – A low inventory turnover ratio may indicate unnecessary accumulation of stock,

inefficient use of investment over – investment in inventories, etc. this is a concern for the company

as inventory could become obsolete and may result in future losses.

67 | P a g e
 Inventory Conversion Period

Inventory turnover ratio also be of interest to see average time taken for clearing the stock. This

can be possible by calculating inventory conversion period. This period is calculated by dividing

the number of days’ inventory turnover.

Days in a year
Inventory Conversion Period =
Inventory Turnover ratio

68 | P a g e
 TABLE NO:4.3

STOCK TURNOVER RATIO

STOCK TURNOVER RATIO INVENTORY

YEAR
CONVERSION PERIOD

2017 12.07 30 days

2018 12.26 29 days

2019 13.40 27 days

2020 13.60 26 days

2021 10.50 34 days

The above table showing the inventory turnover ratio and period for the five years from 2017 to

2021, in the year 2017 the companies ITR (Inventory Turnover Ratio) is 12.07 ratio and

conversion period is 30 days, it is average according to above table. In 2018 ITR is increased to

12.26 it means the inventory conversion period will decrease because of frequent sales in

company it goes on the ITR 12.26 to 13.60 from 2018 to 2020 the conversion period goes on

decreased from 29 days to 26 days. In 2021 the ITR decreased to 10.50 the conversion period

increased to 34 days.

69 | P a g e
 CHART NO: 4.3

STOCK TURNOVER RATIO and CONVERSION PERIOD

40

35 34

30
30 29
27
26
25

20

15 13. 13.
12.0 12.2 4 6
7 6 10.
10 5

0
201 201 201 201 202
6 7 8 9 0

Inventory Turnover Inventory Conversion

Ratio Period

The above bar graph showing inventory turnover ratio and conversion period from the year 2016

to 2020. The green bar represent inventory turnover ratio and blue bar represent inventory

conversion period. The X axis showing the years and Y axis showing ratios and number of days.

By observing the graph if green bar increases the blue bar decreases, if green bar decreases the

blue bar increases. The company’s inventory turnover ratio from 2016 to 2019 is more than 10 so

the inventory conversion period is between 25 to 30 days. In the year 2020 the inventory turnover

ratio is decrease to 10 so the inventory conversion period raises to above 30 days. This show the

relationship between inventory turnover ratio and inventory conversion period

70 | P a g e
DEBTORS OR RECEIVABLE TURNOVER RATIO

Debtors turnover ratio also called as receivables turnover ratio shows how quickly the credit sales

are converted into cash. This ratio measures the efficiency of a firm in managing and collecting

the credit issued to the customers.

Net Credit Sales

Debtors Turnover Ratio =
Average Account Receivable

High Receivables Turnover

A high receivables turnover ratio can indicate that a company’s collection of accounts receivable

is efficient and the company has a high proportion of quality customers that pay their debts quickly.

A high receivables turnover ratio might also indicate that a company operates on a cash basis.

A high ratio can also suggest that a company is conservative when it comes to extending credit to

customers. Conservative credit policy. Conservative credit policy can be beneficial since it could

help the company avoid extending credit to customers who may not able to pay

Lower Accounts Turnover

A low receivables turnover ratio might be due to an inadequate collection process, bad credit

policies, or customers that are not financially viable or creditworthy. Typically, a low turnover

ratio implies that the company should reassess its credit policies to ensure the timely collection of

its receivables. However, if a company with low ratio improves its collection process, it night lead

to an influx of cash from collection on old credit or receivables

Average collection period: The average collection period represents the average number of days

for which a firm has to wait before its receivables are converted into cash.

71 | P a g e
 TABLE NO: 4.4

DEBTORS / RECEIVABLE TURNOVER RATIO

DEBTORS AVERAGE
YEARS
TURNOVER RATIO COLLECTION
PERIOD

2017 7.46 46 days

2018 7.21 50 days

2019 8.48 43 days

2020 9.45 38 days

2021 8.01 45 days

The above table showing the debtors turnover ratio and average collection period of the company.

For the period of five years from 2017 to 2021. The company’s debtor turnover ratio in 2017 is

7.46 and the collection period is 46 days, in 2018 ratio is 7.21 the collection period is 50 days, in

2019 ratio is 8.48 and the collection period is 43 days, in 2020 the ratio is 9.45 and the period is

38 days and in 2021 ratio is 8.01 the collection period is 45 days by analyzing the table we can

find companies debtors is not stable because of their customer’s delay in paying their debts.

72 | P a g e
 CHART NO: 4.4

DEBTORS TURNOVER RATIO and AVERAGE COLLECTION PERIOD

60

50
50
46 45
40 43
38

30

20

10
8.48 9.4
7.49 7.21 5 8.01

0
201 201 201 202 202
7 7 8 9 0
DEBTORS TURNOVER AVERAGE COLLECTION
RATIO PERIOD

The above graph representing the debtors or receivable turnover ratio (DTR) and average

collection period for the five years from 2016 to 2020 of the company. The blue bar representing

debtor’s turnover ratio and orange bar representing average collection period. In the year 2016 the

DTR is between 0 to 10 and the collection period is between 40 to 50 days, in 2017 the DTR is

slightly decreased from 2016 so the average collection period is increased to 50 days, in 2018 the

DTR raised and the collection period decrease from 50 days, in 2019 the DTR further increased

and the collection period again decrease, in the year 2020 the DTR increased and the average

collection period increased. The company must maintain its debtor’s turnover ratio and average

collection period according to their favorable condition.

73 | P a g e
 CREDITORS or PAYABLES TURNOVER RATIO

A credit turnover ratio is a measure of how often a particular company pays off its debts to

suppliers within a given accounting period.

Net Credit Annual Purchase

Payable turnover ratio =
Average Trade Payable

The business considering whether or not to trade with a particular partner, taking a look at the

creditors turnover ratio is an important step. A low ratio may indicate some form of financial

distress, while a shorter period of time. Where any delayed payments can result in restricted cash

flow. However, it’s important to keep in mind that a low accounts payable turnover ratio isn’t

always a warning sign. In some case, it may simply mean that a particular business has negotiated

favorable payments terms that allow for debts to be paid less frequently. This explains why larger

companies with a lot of bargaining power often have a lower creditor’s turnover ratio than you’d

expect, as their size allows them to dictate very favorable payment term.

Average payment Period

The average payment period represents the average number of days taken by the firm to pay its

credit. Generally, lower than ratio, the better is the liquidity position of the firm and higher the

ratio, less liquid is the position of the company. But higher payment period also implies greater

credit period enjoyed by the firm and consequently larger the benefit from credit suppliers.

No. of Working Days Payables

Average Payment Period =
Turnover Ratio

74 | P a g e
 TABLE NO:4.5

CREDITORS TURNOVER RATIO AND AVERAGE PAYMENT PERIOD

YEARS CREDITORS AVERAGE PAYMENTS

TURNOVER RATIO PERIOD

2017 15.84 23 Days

2018 7.13 51 Days

2019 9.24 39 Days

2020 10.42 35 Days

2021 8.14 45 Days

The above table sowing the creditors turnover ratio (CTR) and average payments period of the

company for five years from 2017 to 2021. In 2017 the CTR is 15.84 and its average payment

period is 23 days, in 2018 CTR decreased to 7.13 and payment period is 51 days, in 2019 the CTR

increased to 9.24 its payment period 39 days, in 2020 the CTR is 10.42 its payment period is 35

days, in 2021 the CTR is 8.14 its payment period is 45 days. While observing above table we see

when the credit turnover ratio increased its average payment period decreased. The company must

maintain their credit turnover ratio according to payment capacity of the company.

75 | P a g e
 CHART NO: 4.5

CREDITORS TURNOVER RATIO AND AVERAGE PAYMENT PERIOD

45
202
0 8.1
4

35
202
9 10.4
2

39
201
8 9.2
4

51
201
7 7.1
3

23
201
6 15.8
4

0 10 20 30 40 50 60

AVERAGE PAYMENTS CREDITORS TURNOVER

PERIOD RATIO

The above chart representing the data of creditors turnover ratio (CTR) and average payment

period. The blue bar represent creditors turnover ratio and orange bar represent average payment

period. Vertical line showing years from 2016 to 2020 the horizontal line showing ratio and days.

In the year 2016 the CTR is between 10 and 20 and its payment period is 23 days, in 2017 the CTR

decreased to below 10 and its payment ratio increased to 51 days, in 2018 the CTR raised to above

10 and payment ratio decreased to 39 to 35 days, in 2020 CTR again decreased to below 10 and

average payments period increased to 45 days. While observing the chart we see that if the credit

turnover ratio increases and average payment period decreases and when credit turnover ratio

decreases the average payment period increases.

76 | P a g e
 GROSS PROFIT RATIO

Gross profit ratio measures the relationship of gross profit to net revenue from operation (net

sales) and is usually represented as a percentage. It is calculated by dividing the gross profit by

sales.

Gross Profit
Gross Profit Ratio = × 100
Net sales

The gross profit ratio indicates the extent to which selling prices of goods per unit may decline

without resulting in losses on operations of a firm. It reflects the efficiency with which a firm

produces its products. A comparison of gross profit ratio over time or for different firms in the

industry is a good measure of profitability.

77 | P a g e
 TABLE NO 4.6: GROSS PROFIT RATIO

CALUCATION GROSS PROFIT

YEARS RATIO (in %)

1,06,98,917.88
= × 100
9,20,55707.50
2016 11.62%

14,13,455.22
= × 100
5,18,46,453
\2017 3%

85,68,329.03
= × 100
7,93,89,099.38
2018 10.80%

1,87,68,921.04
= × 100
10,32,05,829.15
2019 18.2%

81,92,526
= × 100
8,46,28,779.10
2020 9.7 %

The above table showing the data of gross profit ratio of the company from the year 2016 to 2020.

It is representing the company’s profit in the percentage, in year 2016 it is showing 11.62% which

is good performance, in year 2017 it is showing 3% which is less than previous, in year 2018 it is

showing 10.80% it tells company is growing its profit, in year 2019 the gross ratio is 18.2% it

shows the standard profit of the company, in the year 2020 it is 9.7% again the company faces

reduction in the profit.

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 TABLE NO 4.7: OPERATING RATIO

Operating Cost
Operating Ratio = X 100
Sales

YEAR 2017 2018 2019 2020 2021

OPERATING
RATIO 87.25% 25% 69.23% 78.18% 81.18%
(in %)

In the year 2017, the operating ratio is 87.25% it indicates that the company is gaining revenue

from their net sales, in 2017 the company was produced more goods and it consumed more ratio

on operating cost and remaining is kept as reserve for meeting their other expenses.

In the year 2018 company has not made good profit it means the company has not produced more

goods so it consumed less operating ratio so it is 25% in the year.

In 2019 the company again starts producing more goods so the contribution on operating ratio

69.23% from its net sales.

In 2020 the as raised to 78.18% it means the operating cost also raised in the year the company

operating ratio was better in the year.

In 2021 the company operating ratio is 81.18% this as increased to from previous year this shows

the company is spending more in production.

This explain company should make focus on their operating coat so that company can reduce the

cost on production and spend the money on other developing process in company.

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 TABLE NO: 4.8 SOLVENCY RATIO / LEVERAGE RATIO

Net Income + Depreciation

Solvency Ratio =
Liabilities

YEARS 2017 2018 2019 2020 2021

SOLVENCY
11.44% 1.10% 7.41% 11.23% 8.36%
RATIO

The solvency ratio shows the company’s abilities of paying long term debt. Waaree Energies

Ltd company in 2017 it as the ratio of 11.44% this shows the company can pay its long-term

debt within 5 to 7 years because the standard of solvency is 20%.

In the year 2017 the ratio drops to 1.10% in this year company lost its capability of paying long-

term liabilities due to the demonetization during the year, so company took long duration to pay

its long- term payables. The company recover it in following years.

In the year 2018 companies’ solvency ratio increased to 7.41% this shows the potential of the

company. Slowly company got increased its solvency ratio in 2018

In 2019 the solvency ratio got further increased to 11.23%. It come to a position where it started

decreasing in 2016 and this ratio is near to the standard ratio which tells us company have the

capacity of reaching 20%.

In the year 2020 the solvency ratio again decreases to 8.36% this is due to the lockdown of COVID-

19 pandemic where the company was completely shut down.

80 | P a g e
 TABLE NO:4.9 FIXED ASSETS TURNOVER RATIO

Net Sales
Fixed assets turnover ratio =
Average Fixed Asset

YEARS 2017 2018 2019 2020 2021

FIXED ASSETS
TURNOVER 2.21 3.36 4.21 4.81 5.09
RATIO

The fixed assets turnover ratio shows the efficiency of company ratio that measures how well a

company uses its fixed assets to generate sales.

The company in 2017 the fixed assets turnover ratio is 2.21 the company was making better use

assets in making profits.

In 2018 the company’s fixer assets turnover ratio is 3.36 this is increased from previous years as

it increased but in this year the profit as been decreased.

In the year 2019 the ratio as further increase to 4.21 it shows the company making using its fixed

assets very well.

In the year 2020 the ratio has been further increased to 4.81 and making good profit out of it.

In the year 2021 the company got further increased to 5.09 and it shows that the company is making

best utilization of their fixed assets.

The company is making best use of its fixed assets and making good profit and sales in the market.

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 CHAPTER – 5

FINDINGS, SUGGESTIONS AND

CONCLUSION

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 FINDINGS
To develop conceptual understanding of Financial Analysis, to examine the relevance of ratio

analysis in financial management for Waaree Energies Ltd and make suggestions for

improving the financial position of the company based on the analysis. According to the study

conducted ratio analysis or any other financial analysis tool or technique will not be needed or

helpful for the company as it is completely customer driven. As a whole it is difficult to interpret

the importance of ratio analysis in such a company where all the financial details will not be in

the form of ratio. But ratio analysis is easily understood by the uses who are in need.

Based on the study “Ratio Analysis” conducted at Waaree Energies Ltd. Following are some

of the findings.

1. The study brings the analysis of financial information of the company by using the ratio as a

major tool and technique, the company’s profit and sales are in good position from past five

years 2016-2020, but in 2017 and 2020 there is a huge reduction in sales and profit.

2. The study was done on company’s working capital ratio, which shows the short term debts of

the company. By analyzing the ratio, company has maintained its working capital very well

and its current assets is more than current liabilities. This shows company’s ability of the

paying short term debts.

3. Inventory turnover ratio of the company is indicating positive and large revenue earned. The

company is dealing with non-renewable energy (solar energy). The business in rainy season

time may go down and again make its sales grow in summer. So the company is maintaining

their stock very well but in the year 2020 ratio goes higher because of covid-19 pandemic.

4. Every company will calculate their Debtors turnover ratio to know their average debtors have

been converted into cash during year. The company receivable from 2016 to 2020 is in good

83 | P a g e
 condition but in the year 2017 and 2020 the ratio of receivable as decreased so the average

collection period as increased in those two years, the company has maintained good

relationship with their customers.

5. Creditors turnover ratio, company will take their raw materials in credit from their suppliers.

This company also took materials in the form of credit from their suppliers in the year 2016

the credit turnover ratio is more but the average payment period is less that means the

company pay the credit faster but in the year 2017 and 2020 the credit turnover ratio is less but

the average payment period is higher.

6. In operating ratio of the company is gone down in 2017 but in further years it has given better

contribution. The company is making well contribution on operating cost

7. By analyzing all this points, we came to know that the company has seen recession in 2017

and 2020, but they have grown in the following years. This shows that company has capability

of making good profit in future days.

84 | P a g e
 SUGGESTIONS

Waaree Energies Ltd is a leading solar water heater manufacture company in Bangalore south

it supplies the its product in the name of MATHRU Solar and they also supply for other solar

water heater companies. They are doing an amazing job by overcoming their limitation of

business.

• Company may take some chance and do some research so that it may give idea for

increasing their profit.

• By observing chart no 4.2 current assets and current liabilities, it shows the current assets

is more than current liabilities. The company should try to maintain the short-term

obligation.

• The company should maintain their average payment period and average collection

period within 30days or near to 30days. It helps in good circulation of cash in company.

• The company has only one outlet in Bangalore which is not near to factory so it may help

by opening near to factory.

• The company must adopt different advertising strategy so that it can give more competition

to its competitors.

85 | P a g e
 CONCLUSIONS

According to study the non-renewable energy is very important in our life; solar energy is used in

our life directly or indirectly. Converting solar energy into heat energy by using solar panels. Solar

water heater, solar street light is the main business at Waaree Energies Ltd is one of the

leading manufacturing company in South Bangalore. The company is making decent profits from

the date of the commencement of company.

My study was conducted using financial analysis tools, mainly ratio analysis. Ratio analysis is a

technique of analysis and interpretation of financial statements. Ratio analysis help in better

understanding of financial strengths and weakness of the company. The data was derived from

balance sheet and profit and loss statement of five years from 2016 to 2020.

The study covers the sales and profit, working capital ratio, inventory turnover ratio, debtor’s

turnover ratio and creditors turnover ratio, the main aspects of analyzing financial performance.

From the overall study done through financial aspects, the company achieved its target since five

years from 2016 to 2020. But in the years 2017 and 2020 company did not perform better due to

demonetization and covid-19 pandemic but company have good potential to come out from the

economic crisis.

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 BIBLIOGRAPHY

• Management Accounting by: Shashi K Gupta, Dr. R. K. Sharma, Dr. Neeti Gupta (2016)
• Waaree Energies Ltd website gcsolarindustries.com

• Corporate Finance and accounting – financial ratios

https://www.investopedia.com/terms/i/inventoryturnover.asp

• Solar Water Heaters Using in India. Journal by: Narasimhe Gowda, B. Bore Gowda, R.
Chandrashekar.
• Renewable energy- https://en.wikipedia.org /wiki/Renewable energy
• Solar Water Heating - https://en.wikipedia.org/wiki/Solar_water_heating

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