“A STUDY TO FIND OUT THE FINANCIAL ANALYSIS OF

THE KITEX GARMENTS LTD”

Project Report submitted to

UNIVERSITY OF CALICUT

In partial fulfillment of the requirement for the award of the degree of

BACHELOR OF BUSINESS ADMINISTRATION

Submitted by

ALEN SAVIO
(CCASBBAR13)

Under the supervision of

PROF. PG THOMAS

DEPARTMENT OF MANAGEMENT STUDIES

CHRIST COLLEGE (AUTONOMOUS), IRINJALAKUDA

MARCH 2021
 CHRIST COLLEGE (AUTONOMOUS), IRINJALAKUDA

CALICUT UNIVERSITY

DEPARTMENT OF MANAGEMENT STUDIES

CERTIFICATE

This is to certify that the project report entitled “A STUDY TO FIND OUT THE
FINANCIAL ANALYSIS OF THE KITEX GARMENTS LTD” is a bonafide
record of project done by ALEN SAVIO, Reg. No. CCASBBAR13, under my
guidance and supervision in partial fulfillment of the requirement for the award
of the degree of BACHELOR OF BUSINESS ADMINISTRATION and it has
not previously formed the basis for any Degree, Diploma and Associateship or
Fellowship.

Prof. C.L.BABY JOHN PROF. PG THOMAS

Co-ordinator Project Guide
 DECLARATION

I, ALEN SAVIO, hereby declare that the project work entitled “A

STUDY TO FIND OUT THE FINANCIAL ANALYSIS OF THE

KITEX GARMENTS LTD” is a record of independent and bonafide
project work carried out by me under the supervision and guidance of PROF. PG
THOMAS, Assistant Professor, Department of Commerce, Christ College,
Irinjalakuda.

The information and data given in the report is authentic to the best of my
knowledge. The report has not been previously submitted for the award of any
Degree, Diploma, Associateship or other similar title of any other university or
institute.

Place: Irinjalakuda ALEN SAVIO

Date: CCASBBAR13
 ACKNOWLEDGEMENT

I would like to take the opportunity to express my sincere gratitude to all people
who have helped me with sound advice and able guidance.

Above all, I express my eternal gratitude to the Lord Almighty under whose
divine guidance; I have been able to complete this work successfully.

I would like to express my sincere obligation to Rev.Dr. Jolly Andrews,

Principal-in-Charge, Christ College Irinjalakuda for providing various facilities.

I am thankful to Prof. C.L.Baby John, Co-ordinator of Management Studies, for

providing proper help and encouragement in the preparation of this report.

I am thankful to Prof. Aslam P.S, Class teacher for his cordial support, valuable
information and guidance, which helped me in completing this task through
various stages.

I express my sincere gratitude to Prof. PG Thomas, whose guidance and support

throughout the training period helped me to complete this work successfully.

I would like to express my gratitude to all the faculties of the Department for
their interest and cooperation in this regard.

I extend my hearty gratitude to the librarian and other library staffs of my college
for their wholehearted cooperation.

I express my sincere thanks to my friends and family for their support in

completing this report successfully.
 TABLES OF CONTENTS

CHAPTER NO. CONTENTS PAGE NO:

LIST OF TABLES

LIST OF FIGURES

CHAPTER 1 INTRODUCTION 1–3

CHAPTER 2 REVIEW OF LITERATURE 4 – 10

INDUSTRY AND
CHAPTER 3 11 – 15
COMPANY PROFILE

DATA ANALYSIS AND

CHAPTER 4 16 – 35
INTERPRETATION

FINDINGS, SUGGESTIONS
CHAPTER 5 36 – 37
& CONCLUSION

BIBLIOGRAPHY

ANNEXURE
 LIST OF TABLES

TABLE
TITLE PAGE NO:
NO:

4.1 Table showing current ratio 21

4.2 Table showing cash ratio/absolute liquidity ratio 22

4.3 Table showing fixed asset turnover ratio 23

4.4 Table showing working capital turnover ratio 24

4.5 Table showing total asset turnover ratio 25

4.6 Table showing current turnover ratio 26

4.7 Table showing stock turnover ratio 27

4.8 Table showing net profit ratio 28

4.9 Table showing return on investment 29

Table showing the comparative balance sheet from

4.10 30
2015-16 to 2016-17

Table showing the comparative balance sheet from

4.11 31
2016-17to 2017-18

Table showing the comparative balance sheet from

4.12 32
2017-18 to 2018-19

Table showing the comparative balance sheet from

4.13 33
2018-19 to 2019-20
 LIST OF CHARTS

FIGURE
TITLE PAGE NO:
NO:

4.1 Chart showing current ratio 21

4.2 Chart showing cash ratio/absolute liquidity ratio 22

4.3 Chart showing fixed asset turnover ratio 23

4.4 Chart showing working capital turnover ratio 24

4.5 Chart showing total asset turnover ratio 25

4.6 Chart showing current turnover ratio 26

4.7 Chart showing stock turnover ratio 27

4.8 Chart showing net profit ratio 28

4.9 Chart showing return on investment 29

 CHAPTER 1
INTRODUCTION
1.1 INTRODUCTION
Financial management is that managerial activity which is concerned with
planning and controlling of the firm‟s financial resources. Though it was a
branch of economics till 1890, it is treated as a separate discipline now.

Financial management maybe defined as the area of function in an organization

which is concerned with profitability, expenses, cash and credit, so that the
“organization may have the means to carry out its objective as satisfactorily as
possible”. The recent trend towards globalization of business activity has
created new demands and opportunities in managerial finance.

Financial statements are written records that convey the business activities and
the financial performance of a company. Financial statements are often audited
by government agencies, accountants, firm etc. to ensure accuracy and for tax,
financing, or investing purposes. Financial statements include:

• Balance sheet
• Income statements
• Cash flow statements

Financial performance is an important aspect which influences the long term

stability, profitability, and liquidity of an organization. Financial performance
is the achievement of the company‟s financial performance for certain period
covering the collection and allocation of finance measured by capital adequacy,
liquidity, solvency, efficiency, leverage and profitability.

For financial analysis, ratio analysis is the widely used tool. Usually financial
ratios are said to be the parameters of the financial performance. The evaluation
of financial performance had been taken up for the study with
“KITEX GARMENTS LTD” as the project. Analysis of financial performance
is of greater assistance in locating the weak spots at the KITEX GARMENTS
LTD even though the overall performance may be satisfactory.

1
1.2 STATEMENT OF PROBLEM
Analyzing financial performance is the process of evaluating the common
parts of financial statements to obtain a better understanding of firm‟s
position and performance. Financial performance analysis helps to evaluate
past and current performance and financial position, and to predict future
performance.

The problem identified for the study is to find out the financial analysis of
the KITEX GARMENTS LTD by analyzing liquidity, activity and
profitability position. The main motto of the company is to make maximum
profit and profit is essential for expansion, diversification, and activities
and for making their future operations, manages their funds efficiently and
effectively and utilizes their work force at maximum in order to attain a
maximum profit to survive in the present competitive world.

1.3SCOPE OF STUDY
The study mainly attempts to analyze the financial performance of the
company selected for the study. KITEX GARMENTS LTD is taken for the
study among the leading companies. The period of study is 5 years from
the financial year 2015-16 to 2019-20. The study is conducted on the basis
of balance sheet and statement of profit and loss of KITEX GARMENTS
LTD from the financial year 2015-16 to the financial year 2019-20.

1.4SIGNIFICANCE OF THE STUDY

This study is conducted to analyze the financial performance of the KITEX
GARMENTS LTD. The financial authorities can use this for evaluating
their performance which helps to analyze financial statements and help to
apply the resources of the company properly for the development of the
company. This study can be used to evaluate the financial performance of
the KITEX GARMENTS LTD.

2
1.5 OBJECTIVES OF THE STUDY

1.5.1MAIN OBJECTIVE
To analyze the financial performance of the company.
1.5.2SUB OBJECTIVES
 To evaluate the financial efficiency of KITEX GARMENTS
LTD.
 To understand the profitability position of the firm.
1.6RESEARCH DESIGN
The research design is an important component of dissertation or thesis
proposal.
A research design is the set of methods and procedures used in collecting
and analyzing measures of the variables specified in the problem research.
A research design is a framework that has been created to find answers to
research questions. It constitutes the blueprint for the collection,
measurement, and analysis of data. It provides insights about “how” to
conduct research using a particular methodology. Every research has a list
of research questions which need to be assessed which can be done with
research design.

1.6.1NATURE OF STUDY
The study is designed in analytical way.

1.6.2NATURE OF DATA
The study is mainly based on secondary data.
1.6.3SOURCES OF DATA
Secondary data involves company‟s records and company‟s balance sheet in
which the project work has been done. Along with company records and
balance sheet many other reference books, websites, reports etc. have been
used.

3
1.6.4PERIOD OF STUDY
The period of study is 5 years from the financial year 2015-16 to 2019-
20.
1.7TOOLS FOR ANALYSIS
• Ratio analysis
• Graph
• Comparative balance sheet
• Chart
1.8LIMITATION
I. Errors in the secondary data would have affected the study.
II. Time and resources available for the study is limited.

1.9CHAPTERIZATION

Chapter 1- introduction

Chapter 2- review of literature

Chapter 3- industry profile and company profile

Chapter 4- data analysis and interpretation

Chapter 5- finding, suggestions and conclusion

4
 CHAPTER 2
REVIEW OF LITERATURE
2.1 CONCEPTUAL REVIEW

Conceptual literature deals with concepts and theories. Empirical literature

deals with studies made earlier. It contains facts and observations. Review of
literature is an important part of study. It contains information which is
practically as well as theoretically important.

‘Financial performance’ a subjective measure of how well a firm can use

assets from its primary mode of business and generate revenues. Financial
performance analysis is the process of identifying the financial strengths and
weakness of the firm by properly establishing the relationship between the
items of balance sheet and profit and loss account. Financial statement analysis
provides us sufficient guidelines about the behavior of the financial
performance.

2.1.1 FINANCIAL STATEMENT ANALYSIS

The financial statement provide some extremely useful information to the

extent that the balance sheet mirrors the financial position on a particular date
in terms of the structure of the asset, liabilities and owners‟ equity, and so on
the profit and loss account shows the results of operations during a certain
period of time in terms of the revenues obtained and the cost incurred during
the year. Thus, the financial statements provide the summarized view of the
financial positions of the firm. Therefore much can be learnt about a firm from
a careful examination of its statements. The analysis of the financial statements
is thus an important aid to financial analysis. It provides internal and external
stakeholders with the opportunity to make informed decisions regarding
investing. Financial statement analysis also provides lending institutions with
an unbiased view of a business‟s financial health, which is helpful for making
lending decision.

5
The analysis of financial statements is a process of evaluating the relationship
between component parts of financial statements to obtain a better
understanding of the firm‟s position and performance. The first task of the
financial analyst is to select the information relevant to the decision under
consideration from the total information contained in the financial statements.
The second step is to arrange the information in a way to high light significant
relationships. The final step is interpretation and drawing of inferences and
conclusion. In brief, the financial analysis is the process of selection, relation
and evaluation.

2.1.2 RATIO ANALYSIS

Ratio analysis can be defined as the process of ascertaining the financial ratios
that are used for indicating the on-going financial performance of a company
using different types of ratios such as liquidity, profitability, activity, debt,
market, solvency, efficiency, and coverage ratios and few examples of such
ratios are return on equity ratio, dividend pay-out ratio, debt equity ratio, and so
on.

Ratio analysis is a process used for the calculation of financial ratios or in other
words, for the purpose of evaluating the financial wellbeing of a company. The
values used for the calculation of financial ratios of a company are extracted
from the financial statement of that same company.

Ratio analysis lays the framework for financial analysis. Ratio analysis is also
used by the readers of the financial statements for gaining a better
understanding of the wellbeing of a company. A few basic types of ratios used
in ratio analysis are profitability ratios, debt or leverage ratios, activity ratios or
efficiency ratios, liquidity ratios, solvency ratios, earnings ratios, turnover
ratios and market ratios.

6
TYPES OF RATIO ANALYSIS

Types of ratios are given below:

1. LIQUIDITY RATIOS: This type of ratio helps in measuring the ability

of a company to take care of its short-term debt obligations. A higher liquidity
ratio represents that the company is highly rich in cash.

The types of liquidity ratios are: –

A. Current Ratio: The current ratio is the ratio between the current assets and
current liabilities of a company. The current ratio is used to indicate the
liquidity of an organization in being able to meet its debt obligations in the
upcoming twelve months. Generally current ratio of 2:1 is considered
satisfactory or ideal. It is calculated as follows:

Current Ratio =

B. Cash ratio:

This ratio is also known as cash position ratio or super quick ratio. It is a
variation of quick ratio. This ratio establishes the relationship absolute liquid
assets and current liabilities. Absolute liquid assets are cash in hand, bank
balance and readily marketable securities. Both the debtors and bills receivable
are excluded from liquid assets as there is always an uncertainty with respect to
their realization. In other words, liquid assets minus debtors and bills receivable
are absolute liquid assets. It is calculated as follows:

Cash ratio/ absolute liquidity ratio =

7
2. ACTIVITY RATIOS:
An activity ratio is a type of financial metric that indicates how efficiently a
company is leveraging the assets on its balance sheet, to generate revenues and
cash. Commonly referred to asefficiency ratios, activity ratios help analysts
gauge how a company handlesinventory management, which is a key to its
operational fluidity and overall fiscal health.

A. Fixed asset Turnover ratio:

Fixed asset explains the purchase of fixed asset for the business. Without fixed
asset it cannot make sales and profit. These sales depends on how fixed assets
are utilised in the business for knowing whether fixed asset are effectively
utilised or not fixed asset turnover ratio is used. Fixed asset turnover ratio
establishes the relationship between net sales and fixed asset ratio. Higher the
ratio indicate better utilisation and lower ratio indicate lower utilisation of fixed
assets. it computer as follows:

Fixed asset turnover ratio =

In computing fixed assets turnover ratio, fixed assets are generally taken at
written down value at the end of the year. However, there is no rigidity about it.
It may be taken at the original cost or at the present market value depending on
the object of comparison. In fact, the ratio will have automatic improvement if
the written down value is used. It would be better if the ratio is worked out on
the basis of the original cost of fixed assets. We will take fixed assets at cost
less depreciation while working this ratio.

B. Working Capital Turnover Ratio:

Working capital offer to the ratio with current asset will change with the change
in sales of a company. This means working capital is related with the sales. The
relation between sales and working capital is called working capital turnover
ratio. This ratio shows how many times working capital is rotated to generate

8
sales. Standard working capital turnover ratio is 7 or 8 times. It is calculated as
following:

Working capital turnover ratio =

C. Total asset turnover ratio:

Total asset turnover ratio measures the ability of the organization to efficiently
create sale and used to evaluate the operations of the business. Ideally a
company with high total asset turnover ratio can operate with fewer assets than
an efficient competitor and so requires a less debt and equity to operate. This is
calculated by dividing sales by total asset i.e. the formula is as follows:

Total asset turnover ratio = D.

current asset turnover ratio:

An activity ratio measuring the firm‟s ability to generate sales through current
assets (cash, inventories) it can be calculated by dividing the firm‟s net sales by
average current assets. A high current asset turnover ratio indicates a high use
of current assets of the company. The increasing sign is good because it means
that the company is working on the consistent improvement of its policies in
the inventory, accounts receivable, cash and other asset management. In fact,
increasing current asset turnover leads to the decrease of the financial resources
amount, needed for the company's operations maintenance. This means that
bigger part of the financial resources can be used for current operations
intensification or making investments. The decrease of the current assets
turnover indicates the firm's increasing need of sources of finance. If the access
to sources of finance is limited, this will cause the increase of the company's
financial expenses. The formula is:

Current asset turnover ratio =

9
E. Stock turnover ratio

Inventory turnover ratio shows the relationship between costs of goods sold and
average inventory or stock. It is also called merchandise turnover ratio. It is
obtained by dividing cost of goods sold by average stock. It indicates the
number of times the stock is turned over or converted into sales. It is used to
test the efficiency in inventory management. Generally, ratio of 8 times is
considered as satisfactory. The formula for calculation:

Stock turnover ratio =

3. PROFITABILITY RATIO:
Profitability ratios measure a company‟s ability to earn a profit relative to its
sales revenue, operating costs, balance sheet assets, and shareholders‟ equity.
These financial metrics can also show how well companies use their existing
assets to generate profit and value for owners and shareholders. Profitability
ratios can attract new investors. Investors want to know that a company has the
potential to turn a healthy profit before they invest any cash in it. Reviewing a
company‟s profitability ratios is a simple way to analyse whether a business is
performing well in that area. Profitability ratios can help you measure the
financial wellbeing of your company.

A.Net Profit Ratio: Net profit ratios are calculated in order to determine the
overall profitability of an organization after reducing both cash and non-cash
expenditures. It is also known as net margin. This measures the relationship
between net profits and sales of a firm.

The formula used for the calculation of net profit ratio is-

Net profit margin = × 100

10
 B. Return on investment

It is a profitability ratio based on investment. When a firm invest money in the

business it naturally expects return from the investment. Therefore, the firm
want to know how much profit is earned from its investment. It establishes the
relationship between profit and return and investment. The ratio is also called
accounting rate of return. It computed as follows-

Return on investment =

2.1.3 COMPARATIVE BALANCE SHEET ANALYSIS

A comparative balance sheet analysis is a simple way of comparing the data on

two or more balance sheets that have different dates. We can compare several
balance sheets from a bank, each of which has the same date but on different
months or different years. For example, we can analyse the month-end totals
for each month in a year or year-end totals over several years to chart market
trends and how this affects your company's growth. A comparative balance
sheet analysis is a method of analysing a company's balance sheet over time to
identify changes and trends. Public companies are required to include the
information needed for a comparative balance sheet analysis in their quarterly
and annual reports to the SEC, though it can be useful to pull together more
data on its own for a longer-term analysis. Comparative balance sheet is a
balance sheet which provides financial figures of Assets, Liability and equity
for the “two or more period of the same company” or “two or more than two
company of same industry” or “two or more subsidiaries of same company” at
the same page format so that this can be easily understandable and easy to
analyse.

11
2.2 EMPIRICAL LITERATURE

1. Sneha Lata &Dr. Robin Anand (2017) they conducted financial

performance of Mahindra & Mahindra Ltd before merger and after merger with
the Korean company from the year 2007-2017. They used tools such as ratio
analysis, arithmetic mean, standard deviation and t-test. Company‟s profit
margin has been pulled back after merging that from 18% it went down to
13%.The merger made for increasing profit has declined the value of business
of Mahindra & Mahindra Ltd and the reason they are stating are that sometimes
other merger took place in the recent years may be the reason for decline.

2. Dr. A Ramya &Dr. S Kavitha (2017) they studied financial

performance of Maruti Suzuki Ltd from 2010-2015. Profitability ratio and
activity ratio is used for the study. They found that gross profit ratio, current
ratio, asset turnover ratio, net profit turnover ratio all declined when we reach
2014-2015. They also come to conclusion that the calculation in the financial
statement is prepared by desired management and policies that it cannot
produce complete picture about its performance.

3. Imran Khan (2016), Here he studies the financial performance of

Britannia from 2011-2012 to 2015-2016 and has used ratio analysis as the tool
for the same. Through his study he found that sales, operating profit margin,
net profit margin are in an increasing trend and debt equity ratio and return on
assets how decrease. He also put up some suggestions like current asset should
be increased, debt capital should be increased.

4. Anupa Jayawardhana (2016) she studied on financial performance of

Adidas from the year 2010-2014. She uses tools like horizontal analysis, trend
analysis, vertical analysis financial ratio and key ratio. She comes to conclusion
that they should reduce their operating expenses and capital should be invested
in productive asset.

12
5. Dr. M Ravichandran& M Venkat Subramanian (2016) studied on
Force Motors formerly known as Bajaj Tempo from 2010-2015. They used
ratio analysis, comparative financial statement analysis. The company‟s
financial performance is good that it shows an increase in reserve and surplus
and decrease in borrowings. They suggest that it can further improve by
concentrates on its operating, administrative and selling expenses and by
reducing the expenses.

6. Krishnaveni M & Vidhya R(2015) They has selected 87 companies

out of 242 companies in capital line database to discuss the standard current
ratio of automobile industry is matched with factor and four stages like engine
parts, lamps, gears, and accessories with standard norm. Their study concludes
that current and liquidity ratio of automobile industry is matched with factor
and four sectors but other sectors have to improve the repaying capacity to
strengthen the financial aspects.

7. Anu B (2015) made an attempt to examine the relationship between

capital structure indicators, market price per share and also to test the
relationship between debt equity and market price per share of selected
companies. They study concludes that all three companies support the
hypothesis that there is relation between debt, equity and MPS

8. Suragi Pradeepta Ketal (2014) undertook a study to forecast the future

trend of automobile industry. The study highlighted the 6 different experiments
have been carried out for a period of 12 years data to estimate values for the
next 3 years. In each experiment graph has been plotted using spread sheet and
then linear trend has been drawn and expanded to calculate future values.

9. AnantLodha (2014) in his project studied on company accounts of the

year 2012, 2013. He uses tools like swot analysis, ratio analysis, du-point
analysis, cross sectional analysis and cash flow analysis. And finally he come
to a conclusion that company is depending on owners fund rather than

13
borrowed fund that its profits are increasing in growing rate and its net income
are 4% higher than its expenses.

10. Rapheal Nisha (2013) tries to evaluate the financial performance of

Indian tire industries. The study was conducted for a period 2013 to2012 to
analyse the performance with financial indicators, sales trend, export trend
production trend etc. the result suggest the key to success industry is to
improve labour productivity and flexible and capital efficiency.

14
 CHAPTER 3
INDUSTRY PROFILE
3.1 INDUSTRY PROFILE

New innovation in clothing production, manufacture and design came during

industrial revolution- these new wheels, looms and spinning process changed
manufacture forever. There were various stages from a historical perspective-
where the textile industry evolved from being domestic small-scale industry, to
the stage of supremacy it holds now. The cottage was the first stage in history
where textile was produced on domestic basis.

Clothing manufacture during industrial revolution formed a big part of the

exports made by Great Britain. They accounted almost for 25% of the total
exports made at that time doubling in the period between 1701-1770 had grown
10 times, however wool was the major export items at that point of time. In
industrial revolution era a lot of effort was made to increase the speed of the
production through inventions such as flying shuttle in 1773, flyer and bobbin
system and the roller spinning machine by john Wyatt and Lewis Paul in 1738.

During this period the cloth was made of the materials including wool, flax and
cotton. The material depended on the area where the cloth was being produced
and the time they were being made. In the latter half of the medieval period in
the northern part of Europe, Cotton comes to be regarded as important fibre.
During the later phase of 16th century cotton was grown in warmer climes of
America and Asia.

During industrial revolution new machines such as spinning wheels and

handlooms came into picture. Making cloth material quickly became an
organised industry as compared to domesticated activity it had been associated
with before. A number of new innovations led to industrialization of textile
industry in Great Britain. In the initial phase, textile mills were located in and
around the rivers since they were powers by the water wheels. After the steam
engine was invented, the dependence on river ceased to great extent. In the later
phase of 20th century shuttle was used in textile industry were developed and

15
became faster and thus more efficient. The led to replacement of old shuttle
with new one.

Today, modern technology, electronics and innovation have led to competitive

low priced textile industry offering almost any type of cloth or design a person
could desire. With its low cost labour base, china has to dominate the global
textile industry.

Indian scenario

India‟s textiles sector is one of the oldest industries in Indian economy dating
back several centuries. Even today, textiles sector is one of the largest
contributors to India‟s exports with approximately 11 per cent of total exports.
The textiles industry is also labour intensive and is one of the largest
employers. The industry realized export earnings worth US$ 41.4 billion in
2014-15, a growth of 5.4 per cent, as per the cotton textiles export promotion
council (Texprocil). The textile industry has two segments. First, the
unorganised sector consists of hand loom, handicrafts and sericulture, which
are operated on a small scale and through traditional tools and methods. The
second is the organised sector consisting of spinning, apparel and garments
segment which apply modern machinery and techniques such as economic
scale.

The Indian textiles industry is extremely varied, with the hand-spun and
handwoven textiles sectors at one end of the spectrum, while the capital
intensive sophisticated mills sector at the other end of the spectrum. The
decentralized power looms/hosiery and knitting sector form the largest
component of the textiles sector. The close linkage of the textile industry to
agriculture (for raw materials such as cotton) and the ancient culture and
tradition of the country in terms of textiles make the Indian textiles sector
unique in comparison to the industries of other countries. The Indian textiles
industry has the capacity to produce a wide variety of products suitable to
different market segments, both within India and across the world.

16
Competitors in textile industry

• Arvind LTD.
• Vardhman textiles LTD.
• Welspun India LTD.
• Raymond LTD.
• Trident LTD.
• K P R mill LTD.
• Page industries LTD.
• Nitin spinners LTD.

3.2 COMPANY PROFILE

3.2.1 INTRODUCTION TO ANNA GROUP OF COMPANIES

More than three decades age in 1968, when MR.M.C Jacob founded the Anna
aluminium company, he made a break with the past. Belonging to an affluent
family of plantation owners, he ventured in to the risk world of manufacturing
industry and hoped for the best, while working very hard to make his maiden
venture to great success. Today the group involved in manufacturing of
aluminium sheets, circles, vessels and utensils, spices, and fabric, school bags,
garments and marine exports etc. The „Anna‟ range vessels and utensils are
highly popular in domestic market and in the Middle East, U.S.A, Africa, and
Australia.

Anna group, a multi core success story began in 1968 is now spread heading
the thrust in to new millennium. From a company devoted to the manufacture
of aluminium vessels and utensils, it involved spices and fabric, school bags,
garments and marine exports. It has emerged as multidimensional giant with
interest in various fields ranging from textile to spices to baggage. Anna group,
where quality the buzz word has opened new platform of exciting challenges.
Today Anna ranges of products are very popular in domestic market and
overseas.

17
Anna-Kitex group is one of leading industrial group in the state of Kerala
employing more than 12500 personnel for the past 40 years. The group is
engaged in the manufacturing of diverse products like garments, textiles,
school bags, travel bags, umbrellas, aluminium utensils, kitchen appliance,
brand spices, curry powders and ready to eat food which is marketed in the
famous brands of kitex, Scooby-day, Anna aluminium, chackson and Saras.
The Anna- kitex group is a pioneer in the fashion industry Anna group, where
quality- Buzzword- has built success.

Anna range of vessels and utensils are highly popular in the Middle East,
U.S.A, Africa, and Australia. The organisation comes under Anna group are
follows:

a. Kitex limited
b. Anna aluminium company
c. Sara‟s spices
d. Kitex garments
e. Scoobeeday products pvt.ltd

Kitex limited

Anna group‟s weaving unit, kitex limited was established in 1975. The
company is engaged in the production of fabrics made of cotton and other
blends, grey cloth, bed sheets and lungies. Through the years, the company has
carved a niche for itself in this highly competitive industry with its tradition of
world class quality.

Kitex is engaged in production of fabrics made of cotton and other blends, grey
cloth, bed sheets and lungies are available in four various types-executive,
medium super, and medium and economy all are priced differently. Kitex white
gives us an array of white dhothies single as well as double. It begins with
streaks of colours and gold to add to the looks our dhotis. We also have
beautiful and wide range of bed sheets under the label of sweet dreams.

18
Through the years the company has carved a niche for itself in this highly
competitive industry with its tradition of world class quality.

Kitex has a well-organized production department and is committed to improve

percentage of quality in all the production process. Kitex follows a line
organizational structure and their span of management is narrow due to this
they have the advantage like reinforcing authority relationship by emphasis of
status given, preventing cross communication etc.

Kitex products are marketed through 2000 authorized dealers. Kitex fabrics are
now exported to many parts of the world. At the drawn of the new millennium
Kitex entered in to luggage and baggage industry under the brand name of
scoobeeday.

Vision of the company

a. To reach the excellent quality standards in the coming year

b. To keep in place with modern technologies and concepts
c. To organize supply of materials with minimum cost to maximum extent
possible without any compromise in quality
d. A world class manufacturing company focusing on all round business
excellence through total quality management system with committed
leadership effective team work delighted customers and satisfied
employees in an environment friendly organization.

Mission of the company

Fabrics and processed fabrics as per the customer specification efficiently in a

professional and environment friendly manner, on time, and at the right cost
with at most customer satisfaction to become a world class organization
through continuous improvement.

19
Products of the company

1) Lungies
2) Dhothies
3) Bed sheets
4) Scoobee products
5) Trawellday bags
6) Agna and Adonis inner wear
7) Dago Bert shirting and suiting

Company details

Name :Kitex Company

Address :Kizhakambalam, Aluva

Registered office :Kizhakambalam

Nature of incorporation : public limited company

Nature of business : industrial products & consumer products

Brand name of the product: Kitex

Chairman and managing director: Sabu M. Jacob

20
 CHAPTER 4
DATA ANALYSIS AND INTERPRETATION
4.1. LIQUIDITY RATIO

4.1.1. CURRENT RATIO

Current ratio=

Table 4.1 Table showing current ratio

year Current asset Current liability ratio
2015-2016 434.91 218.06 1.99
2016-2017 354.95 72.16 4.92
2017-2018 376.55 69.89 5.39
2018-2019 495.17 166.32 2.98
2019-2020 555.51 171.01 3.25
(Source: compiled from annual report)

Generally current ratio of 2:1 is considered as standard. Current assets double

current liabilities are considered to be satisfactory. From the above table the
current ratio of the company reveals that during 2015-2016 it showed
satisfactory level that is 1.99. But during 2016-2017 to 2019-2020 it reveals
more than standard current ratio.
Chart 4.1 Chart showing current ratio

Current ratio
6

3
ratio
2

0
2015-2016 2016-2017 2017-2018 2018-2019 2019-2020

(Source: compiled from annual report)

21
4.1.2 CASH RATIO/ ABSOLUTE LIQUIDITY RATIO

Cash ratio/ Absolute liquidity ratio=

Table 4.2 Table showing cash ratio/ absolute liquidity ratio

year Cash and cash Current liability Ratio
equivalents

2015-2016 249.91 218.06 1.15

2016-2017 134.53 72.16 1.86
2017-2018 96.91 69.89 1.39
2018-2019 98.95 166.32 0.59
2019-2020 107.29 171.01 0.63
(Source: compiled from annual report)

It is the relationship between absolute liquid asset and current liabilities. If the
ratio is more than 1 it means there is enough fund in form of cash to meet the
liabilities.in 2015-16, 2016-17, 2017-18, the ratio is more than 1 which means
cash management of the company is efficient.in the year 2019 ratio is declined
to 0.59 and later it climbed up to 0.63 in the year 2020.

Chart 4.2 Chart showing cash ratio/ absolute liquidity ratio

Cash ratio/Absolute liquidity ratio

2

1.5

1
Ratio

0.5

0
2015-2016 2016-2017 2017-2018 2018-2019 2019-2020

(Source: compiled from annual report)

22
4.2 ACTIVITY RATIO

4.2.1 FIXED ASSET TURNOVER RATIO

Fixed asset turnover ratio=

Table 4.3 Table showing fixed asset turnover ratio

year Net sales Net fixed assets Ratio
2015-2016 545.82 174.23 3.13
2016-2017 545.90 186.49 2.89
2017-2018 557.25 205.66 2.71
2018-2019 606.80 254.26 2.39
2019-2020 739.21 254.24 2.91
(Source: compiled from annual report)

Fixed asset turnover ratio measures the efficiency with which the firm has been
using its fixed asset to generate sales.Generally Fixed Asset turnover ratio of 4
times is considered as satisfactory. Here these values are below the standard. In
the year 2015-16 it was 3.13 and in 2016-17 it was 2.89 later in 2017-15 it was
2.71. It climbed up to 2.91 in the year 2019-20.

Chart 4.3 Chart showing fixed asset turnover ratio

Fixed asset turnover ratio

3.5
3
2.5
2
1.5 Ratio

1
0.5
0
2015-2016 2016-2017 2017-2018 2018-2019 2019-2020

(Source: compiled from annual report)

23
4.2.2 WORKING CAPITAL TURNOVER RATIO

Working capital turnover ratio=

Table 4.4 Table showing working capital turnover ratio

year Net sales Working capital Ratio
2015-2016 545.82 216.85 2.52
2016-2017 545.90 280.79 1.94
2017-2018 557.25 306.66 1.82
2018-2019 606.80 328.85 1.85
2019-2020 739.21 384.5 1.92
(Source: compiled from annual report)

Generally, a working capital turnover ratio is 7 or 8 times is considered as

ideal. Here working capital turnover ratio was obtained by the company in the
year 2015-2016 which was 2.52.but after the year ratio started declining 1.94,
1.82,1.85, 1.92 in the year 2016-17, 2017-18, 2018-19, 2019-20 respectively.
All values are below the standard.

Chart 4.4 Chart showing working capital turnover ratio

Working capital turnover ratio

3

2.5

1.5
Ratio
1

0.5

0
2015-2016 2016-2017 2017-2018 2018-2019 2019-2020

(Source: compiled from annual report)

24
4.2.3 TOTAL ASSET TURNOVER RATIO

Total asset turnover ratio=

Table 4.5 Table showing total asset turnover ratio

year Net sales Total asset Ratio
2015-2016 545.82 456.81 1.19
2016-2017 545.90 447.74 1.22
2017-2018 557.25 499.63 1.12
2018-2019 606.80 650.18 0.93
2019-2020 739.21 737.50 1.00
(Source: compiled from annual report)

Total asset turnover ratio means how efficiently a firm uses its goods to
generate sales. In the year 2015-2016 it was 1.19. In the next year 2016-2017 it
increased to 1.22. . The ratio gets fluctuated in every year. After the year 2016-
2017 the ratio are declining to1.12, 0.93, and 1.00 in 2017, 2018, 2019
respectively.

Chart 4.5 Chart showing total asset turnover ratio

Total asset turnover ratio

1.4

1.2

0.8

0.6 Ratio

0.4

0.2

0
2015-2016 2016-2017 2017-2018 2018-2019 2019-2020

(Source: compiled from annual report)

25
4.2.4 CURRENT ASSET TURNOVER RATIO Current

asset turnover ratio=

Table 4.6 Table showing current turnover ratio

Year Net sales Current asset Ratio
2015-2016 545.82 434.91 1.25
2016-2017 545.90 354.95 1.54
2017-2018 557.25 376.55 1.48
2018-2019 606.80 495.17 1.23
2019-2020 739.21 575.51 1.33
(Source: compiled from annual report)

Current asset turnover ratio shows how well the current asset of the company is
utilized.. The current asset turnover ratio is 1.54 in the year 2016-17 which is
highest ratio among the all 5 years. Then we can see that the ratios falls to 1.33
in the year 2019-2020. But it is higher ratio when it is compared to P.Y
20182019. The ratio from 2015-16 to 2019-20 is fluctuating year by year

Chart 4.6 Chart showing current turnover ratio

Current turnover ratio

1.8
1.6
1.4
1.2
1
0.8 Ratio
0.6
0.4
0.2
0
2015-2016 2016-2017 2017-2018 2018-2019 2019-2020

(Source: compiled from annual report)

26
4.2.5 STOCK TURNOVER RATIO

Stock turnover ratio=

Table 4.7 Table showing stock turnover ratio

Year Net sales Inventory Ratio
2015-2016 545.82 13.02 41.92
2016-2017 545.90 40.50 13.48
2017-2018 557.25 87.82 6.34
2018-2019 606.80 128.88 4.71
2019-2020 739.21 130.33 5.67
(Source: compiled from annual report)

Stock turnover ratio measures how efficiently a company can control its
merchandise. Generally, ratio of 8 times is considered as satisfactory. In the
present study the stock turnover ratio shows a declining rate. In 2015 it was
41.92 and then in 2017 it falls to 6.34 and then to 5.67 which shows a better
growth than the P.Y.

Chart 4.7 Chart showing stock turnover ratio

Stock turnover ratio

45
40
35
30
25
20 Ratio
15
10
5
0
2015-2016 2016-2017 2017-2018 2018-2019 2019-2020

(Source: compiled from annual report)

27
4.3 PROFITABILITY RATIO 4.3.1

NET PROFIT RATIO

Net profit ratio=

Table 4.8 Table showing net profit ratio

Year Net profit Total revenue Ratio
2015-2016 112.09 565.63 19.82
2016-2017 92.22 549.37 16.79
2017-2018 70.02 559.92 12.51
2018-2019 81.27 629.28 12.91
2019-2020 103.37 778.40 13.28
(Source: compiled from annual report)

Net profit ratio shows how effectively cost control strategies are implemented
by the management.Net profit ratio is at 19.82 in the year 2015-16 and for the
next two years the net profit shows a decreasing trend that is 16.79 and 12.51.
But in the year 2018-19 the ratio is increased to 12.91 and in 2019-2020 the
ratio is again increased to 13.28 which is better than P.Y

Chart 4.8 Chart showing net profit ratio

Net profit ratio

25

20

15

Ratio
10

0
2015-2016 2016-2017 2017-2018 2018-2019 2019-2020

(Source: compiled from annual report)

28
4.3.2 RETURN ON INVESTMENT

Return on investment=

Table 4.9 Table showing return on investment

year Profit before Capital employed Ratio
interest and tax
2015-2016 206.09 391.08 52.69
2016-2017 173.62 462.28 37.56
2017-2018 137.47 512.32 26.83
2018-2019 160.92 583.11 27.59
2019-2020 170.49 638.74 26.69
(Source: compiled from annual report)

ROI evaluates the performance or potential return from a business or

investment. The higher return on investment is always preferred by every
company. The table shows a higher ROI, but it is in decreasing trend. In the
year 2015-2016 it was 52.69 which further decreased to 26.69 during
20192020.

Chart 4.9 chart showing return on investment

Return on investment
60

50

40

30
Ratio

20

10

0
2015-2016 2016-2017 2017-2018 2018-2019 2019-2020

(Source: compiled from annual report)

29
4.4 COMPARATIVE BALANCE SHEET

Table no.4.10 showing the comparative balance sheet from 2015-16 to 2016-17

Particulars 2015-2016 2016-2017 Increase/decrease Increase/decrease

in amount in percentage
Share capital 4.75 4.75 0 0%
Reserves and 360.24 439.84 79.6 22.09%
surplus
Long term 8.29 3.14 -5.15 -62.12%
borrowings
Deferred tax 20.61 17.64 -2.97 -14.41%
liabilities
Other long 0.00 9.80 9.80 9.80%
term
liabilities
Long term 4.57 7.42 2.85 62.36%
provisions
Total 33.47 37.99 4.52 13.50%
noncurrent
liabilities
Total current 218.06 72.16 -145.9 -66.91%
liabilities
T.L and 616.53 554.74 -61.79 -10.02%
capital
Fixed assets 174.23 188.49 14.26 8.18%
Total 181.61 199.80 18.19 10.02%
noncurrent
assets
Inventories 13.02 40.50 27.48 211.06%
Trade 96.01 131.15 35.14 36.60%
receivables
Cash and 249.91 134.53 -115.38 -46.17%
equivalents
Short term 56.72 0.02 -56.7 -99.96%
loans and
advances
Other current 19.25 48.75 29.5 153.25
assets
Total C.A 434.91 354.95 -79.96 -18.38
Total assets 616.53 554.74 -61.79 -10.02
30
 Table no.4.11showing the Comparative balance sheet from 2016-17 to 2017-
18
Particulars 2016-17 2017-2018 Increase/decrease Increase/decrease
in amount in percentage
Share capital 4.75 6.65 1.9 40%
Reserves and 439.84 492.05 52.21 11.87%
surplus
Long term 3.14 0.63 -2.51 -79.93%
borrowings
Deferred tax 17.64 15.72 -1.92 -10.88%
liabilities
Other long 9.80 8.25 -1.55 -15.80%
term
liabilities
Long term 7.42 6.76 -0.66 -8.89%
provisions
Total 37.99 31.36 -6.63 -17.45%
noncurrent
liabilities
Total current 72.16 69.89 -2.27 -3.14%
liabilities
T.L and 554.74 599.94 45.2 8.14%
capital
Fixed assets 188.49 205.66 17.17 9.11%
Total 199.80 223.39 23.59 11.81%
noncurrent
assets
Inventories 40.50 87.82 47.32 116.84%
Trade 131.15 123.01 -8.14 -6.21%
receivables
Cash and 134.53 96.91 -37.62 -27.96%
equivalents
Short term 0.02 0.02 0 0%
loans and
advances
Other current 48.75 68.79 20.04 41.11%
assets
Total current 354.95 376.55 21.6 6.08%
asset
Total asset 554.74 599.94 45.2 8.14%

31
 Table no.4.12showing theComparative balance sheet from 2017-18 to 2018-19
Particulars 2017-18 2018-19 Increase/decrease Increase/decrease
in amount in percentage
Share capital 6.65 6.65 0 0%
Reserves and 492.05 556.84 64.79 13.17%
surplus
Long term 0.63 0.00 -0.63 -100%
borrowings
Deferred tax 15.72 13.39 -2.33 -14.82%
liabilities
Other long 8.25 6.70 -1.55 -18.78%
term
liabilities
Long term 6.76 7.78 1.02 15.09%
provisions
Total 31.36 27.86 -3.5 -11.16%
noncurrent
liabilities
Total 69.89 166.32 96.43 137.97%
current
liabilities
T.L and 599.94 757.68 157.74 26.29%
capital
Fixed assets 205.66 254.26 48.6 23.63%
Total 223.39 262.51 39.12 17.51%
noncurrent
assets
Inventories 87.82 128.88 41.06 46.75%
Trade 123.01 165.32 42.31 34.39%
receivables
Cash and 96.91 98.95 2.04 2.11%
equivalents
Short term 0.02 0.00 -0.02 -100%
loans and
advances
Other current 68.79 102.02 33.23 48.31%
assets
Total 376.55 495.17 118.62 31.50%
current asset
Total asset 599.94 757.68 157.74 26.29%

32
 Tableno.4.13 showing the Comparative balance sheet from 2018-19to2019-20
Particulars 2018-2019 2019-2020 Increase/decrease Increase/decrease
in amount in percentage
Share capital 6.65 6.65 0 0%
Reserves and 556.84 634.73 77.89 13.99%
surplus
Long term 0.00 0.00 0 0%
borrowings
Deferred tax 13.39 6.85 -6.54 -48.84%
liabilities
Other long 6.70 5.80 -0.9 -13.43%
term
liabilities
Long term 7.78 10.07 2.29 29.43%
provisions
Total 27.86 22.71 -5.15 -18.49%
noncurrent
liabilities
Total 166.32 171.01 4.69 2.82%
current
liabilities
T.L and 757.68 835.09 77.41 10.22%
capital
Fixed assets 254.26 254.24 -0.02 -0.007%
Total 262.51 279.58 17.07 6.50%
noncurrent
assets
Inventories 128.88 130.33 1.45 1.13%
Trade 165.32 251.57 86.25 52.17%
receivables
Cash and 98.95 107.29 8.34 8.43%
equivalents
Short term 0.00 0.00 0 0%
loans and
advances
Other current 102.02 66.32 -35.7 -34.99%
assets
Total 495.17 555.51 60.34 12.19%
current asset
Total assets 757.68 835.09 77.41 10.22%

33
Interpretation:

Comparative balance is a statement that shows the financial position of an

organisation over different period for which comparison is made or required. In
comparative balance sheet, comparison is made on the basis of just previous
year. That means it shows the changes in the items on it on the basis of just
previous year. In case of current assets and current liabilities, the comparative
balance sheet from 2018-2019 to 2019-2020 shows that current assets increased
to 12.19% and current liabilities 2.82%. Also in the case of comparative
balance sheet from 2016-17 to 2017-18, current assets increased to 6.08% and
current liabilities decreased to -3.14%. In the case of other two comparative
balance sheets, the current liabilities show higher percentage than the current
assets. When we analyse the comparative balance sheet from 2015-2016 to
2016-17, it shows negative value in case of current assets and current liabilities.
Thus it results that, company need to improve their short term financial position
because these values get fluctuated every year.

In the case liquid assets (cash and equivalents), shows an increase in the
comparative balance sheets from 2017-18 to 2018-19 and from 2018-19-
201920.In the case of first two comparative balance sheets, show negative
value for liquid assets. But it started improving from year 2017-2018 to 2018-
19. This means that, there is an improvement in the liquidity position of the
company.

If we analyse the fixed assets, long term liabilities and capital, the share capital
of the company is increased only in the comparative balance sheet of 2016-17
to 2017-18 to 40%. The share capital is constant for others.

In the case of reserves and surplus of the company, it is in an increasing rate,

when we analyse the last two comparative balance sheets, which means that
there is an improvement in the profitability of the company.

34
So, it can be interpreted that, the company‟s overall financial position is
satisfied except the short term financial position of the company. Company
should improve their short term financial position.

35
 CHAPTER 5
FINDINGS, SUGGESTIONS, AND CONCLUSION
5.1 FINDINGS

• Current assets double current liabilities are considered to be

satisfactory.But during 2016-2017 to 2019-2020 it reveals more than
standard current ratio.
• Absolute ratio is satisfactory. Therefore it can be said that company has
enough fund in form of cash to meet the liabilities.
• A higher fixed asset turnover ratio shows how efficiently a firm uses its
fixed assets to generate sales. But here, ratio is below the standard.
• Working capital turnover ratio of the company is not much good.
Working capital turnover ratio shows a value which is below the
standard in every financial year.
• Stock turnover ratio shows a decreasing trend, it shows the company is
inefficient in utilizing the resources.
• A higher total asset turnover ratio is favourable, as it indicates a more
efficient use of assets. Here the ratio gets fluctuated.
• Current asset turnover ratio gets fluctuated year by year. It shows a
mixed growth.
• The cost controlling strategies followed by the company is not much
good. Here the net profit ratio is decreasing.
• Return on investment is satisfactory.
• Comparative balance sheets show a satisfying result if we ignore the
short term financial position of the company. The values of the short
term financial position get fluctuated every year.

36
5.2 SUGGESTIONS

• The company have to improve their short term financial position.

• It is advisable to take more efforts to increase the overall efficiency of
the business.
• They should have good systematic plan on utilization of the resources
provided to them and should use its available resources to its best
• Company must try to use working capital effectively for generating sales
and increasing activity ratio.

5.3 CONCLUSION

Kitex ltd is one of the growing companies in India.The company shows a

fluctuating trend in its financial position over the years. A steady increase
cannot be seen but also it never moves to a loss making situation. The company
is trying to improve their performance but hasn‟t reached in its fullest. More
effort should be given to protect the smooth functioning of the company.

37
BIBLIOGRAPHY
 Bibliography

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2006

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 Lata, S., & Anand, D. (2017). In International Conference on Recent Innovation in Science,
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Journal of Business and Management, 19(7), 93-101.

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Khan, I. (2016). Britannia analysis of financial performance. Retrieved from
https://www.slideshare.net/ImranKhan994/britannia-analysis-offinancialperformance.

 Anant Lodha (2014). ITC Financial Report. Retrieved from

https://www.slideshare.net/anantlodha/itc-financial-report .

www.moneycontrol.com

 www.kitexgarments.com
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