QA STUDY ON FINANCIAL STATEMENT ANALYSIS AT IREL

(INDIA) LTD., OSCOM

Summer Internship Project Report

(A SIP Report Submitted in partial fulfillment of the requirements for the
Degree of Master in Business Administration (MBA))

By

Tushar Raj

Roll No. 202180001

Regd.
No.2106202060
 Under the guidance of
Dr. Amarnath Padhi
Asst. Professor
Department Of Management Studies

NATIONAL INSTITUTE OF SCIENCE AND TECHNOLOGY

Pallur Hills, Berhampur- 761008, Odisha, India
(2023)

DECLARATION

I TUSHAR RAJ do hereby declare that the Project report entitled “A Study on
Financial Statement Analysis of IREL by Adopting Different Financial
Techniques” is my original work which is submitted by me in partial fulfillment
of the requirement of Master of Business Administration under National
Institute of Science and Technology, Berhampur.

This project report has not been submitted to any other institution/
University for ward of any degree / diploma.

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Place: Berhampur

Date:

TUSHAR RAJ

Regd. no. 2106202060

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4
 CERTIFICATE

This is to certify that the project entitled “A Study on Financial Statement Analysis at IREL”

submitted by Tushar Raj bearing roll no. – 202180001 in partial fulfillment for the award of Master of

Business Administration to National Institute of Science & Technology (Autonomous) is a record of

independent research work done by him under my guidance and supervision.

I wish him a great success in his future career.

DR. AMARNATH PADHI

ASSISTANT PROFESSOR

DEPARTMENT OF MANAGEMENT STUDIES

ACKNOWLEDGEMENT
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 My hearty thanks to IREL (Indian Rare Earths Limited) for giving me an
opportunity to learn and complete my project work. I thank IREL from the bottom of my
heart that has given me a valuable chance to be associated with it.

I extend my sincere thanks and gratitude towards MR. KAIBALYA PRASAD

DASH, MANAGER OF PRODUCTION, ACCOUNTS guide who has shown confidence
in me and assigned a project. In spite of his busy schedule, he spent quality time with me,
explaining the framework and intricacies of Finance department. I feel honored to have him
as guide throughout my project and always be grateful for his affection. I am very much
indebted for his continuous support and guidance.

My special thanks go to my internal guide, Dr. AMARNATH PADHI, ASSISTANT

PROFESSOR , NIST, BERHAMPUR their cooperation and continuous guidance.

Place: Berhampur
TUSHAR RAJ
Regd. number – 2106202060

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 PREFACE

The study of this kind requires an intensive probe as it involves the study of a
singular aspect of Financial Statement Analysis. IREL, a leading public sector
undertaking provides sufficient ground for training. This is a growing industry
and its growth and development depend on the conversation, advancement, and
utilization of its resource. For this, the Financial Statement Analysis plays an
important role.

Practice makes man perfect hence; the present context is humble attempt
towards knowing the financial position of IREL. This study has put special
emphasis on “Financial Statement Analysis” being conducted by Finance
Department. This study has extensively covered all the aspect of the working
capital management adopted by IREL.

The main objective of the study

 to study the financial soundness of irel.

 to study about the organization.

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 CONTENTS
Chapters Page no.

Chapter 1: Introduction …………………………………………………… 8-11

1.1 introduction …...…………………………………………………. 9
1.2 Need of the Study ………………………………………………. 9
1.3 Objective of the Study………………………….………………. 9-10
1.4 Theoretical Framework…………………………………………… 10-11

Chapter 2: Literature Review …………………………………………… 12-15

Chapter 3: Company Profile ……………………………………………… 16-18

Chapter 4: Job Description and Functional Profile….….…………………19-21

4.1. Job Description…………………………………………… 20
4.2. Task Assigned to Me ……………………………………. 20
4.3. Design of Study……………………………………........... 20-21
4.4. Limitation of Study…………………………………........... 21

Chapter 5: Learning Experience & Insight Gained ……………………..… 22-23

Chapter 6: Recommendation and Conclusion……………….……………... 24-26

Bibliography …………………………………………………….... 27-28

Annexures ……………………………………………..….29

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CHAPTER-1

INTRODUCTION

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1.1 Introduction

 The strength of the industry depends on its financial resources and the inter-
relationship of finance department. Finance department is an asset of any
organization.

 Management the term itself refers to the mastering of physical and human
resource to carry on planned objective and control performance in order to
ensure that what is done, what is expected and so realize the objective of an
establishment.

 The quality of the alternatives which a manager selects in each case

determine the organization’s performance and the entire future of the
organization rests on the degree to which the right decisions are made by
the managers.

 My present study is confined to IREL (INDIA), OSCOM has the pride of

being the location of ODISHA. It is the largest leading mining corporation
over the country. In this context, the present study aims at getting practical
knowledge regarding inventory management, financial statement and
industrial relation at OSCOM, which helped me a lot to acquiring more
practical knowledge.

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1.2 Need of the study
There are 5 prime factors seen in an industrial organization. They are described as the 5 Ms’.
 MAN

 MONEY

 MATERIAL

 MACHINERY

 MANAGEMENT
The importance of this study is that it helped me in understanding about inventory
management and control in great details. Also helped me in acquiring more practical
knowledge.

1.3. Objective of the study

1. To provide reliable financial information about economic resources and obligation of a

business firm.

 To provide financial information it assists in estimating the earning potentials of business.

 To disclose, to the extent possible other information related to the financial statement that
is relevant to the needs of the users of statement.

 To provide reliable information about changes in net resources arising out of business
activities.

1.4. Theoretical framework

1.4.1 Meaning of financial statement

 A financial statement is a collection of data organised according to logical and
consistent accounting procedure. Its purpose is to convey an understanding of some financial
aspects of a business firm. The term financial statement generally refers to

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 two statements: i) the position statement or the balance sheet and the income statement
or the profit and loss account. These statements are used to convey management and
other interested outsiders the profitability and the financial position of a firm.
 According to John Myer, "The financial statement are composed of data which are the
result of a combination of (I) records facts concerning the business transactions (2)
Conventions adopted to facilitate the accounting technique (3) postulates, or assumptions
made to and (4) personal judgement used in the conventions and the postulates."
1.4.2 Meaning and concept of financial analysis
2 The term "Financial Statement Analysis" includes both 'Analysis' and 'interpretation'.
A distinction should, therefore, be made between the two terms. While the term
'Analysis' is used to mean the simplification of financial data by methodical
classification of the data given in the financial statements, interpretation means
explaining the meaning and significance of the data so simplified. However, both
analysis and interpretation are interlined and complimentary to each other analysis is
useless without interpretation and interpretation without analysis is difficult or even
impossible. Most of the authors have used the term 'analysis' only to cover the meaning
of both analysis and interpretation as the objective of analysis is to study the
relationship between various items of financial statements by interpretation. We have
also used the term 'Financial Statement Analysis' or simply 'Financial Analysis' to cover
the meaning of both analysis and interpretation.

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 CHAPTER – 2

LITERATURE REVIEW

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Literature Review was done by referring previous studies, articles and books to knowthe areas
of study and analyze the gap or study not done so far. There are various studies were
conducted relating to operational performance of the company from which most relevant
literatures were reviewed.

 Okafor (2006)
The perceived relevance of the financial statement are, to provide information about the
financial position, performance and changes in financial position of a firm that is useful to a
wide range of users in making management and investment decisions. These users include
managers, directors, employees, prospective investors, financial institutions, government
regulatory agencies, media, vendors and general public. Though, these financial statement
are often prepared according to national standards, corporate governance, professional ethics,
and code of ethics. This to avoid financial reporting fraud and scandals that might hinders
effective decision making process by management and other users of reports. The purpose of
ethics in financial accounting reporting with expected standards is to re-orientate corporate
organization on the need to abide by a code of conduct that facilitates public confidence in
their services

 Asllanaj (2008)
According to the Accounting Standards, financial statements are a structured financial
presentation and transactions undertaken in an organization. The main financial statements
are the means used by the accounting for the purpose of collecting, processing and
presenting economic information. The purpose of financial statements is to provide
information on the position and financial changes as a very important basis for making
managerial decisions.

 Edward J. Riedl *Suraj Srinivasan (2010)

This paper investigates whether managers’ presentation of special items within the financial
statements reflects economic performance or opportunism. Specifically, we assess special
items presented as a separate line item on the income statement (income statement
presentation) to those aggregated within another line item with disclosure only in the
footnotes (footnote presentation). Our study is motivated by standard-setting interest in

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performance reporting and financial statement presentation, as well as prior research
investigating managers’ presentation choices in other contexts.

 Pantelis Longinidis & Michael C.Georgiadis (2011)

Models that aim to optimize the design of supply chain networks have become a mainstream
in the supply chain literature. This paper aims to fill a gap in the literature by introducing a
mathematical model that integrates financial considerations with supply chain design
decisions under demand uncertainty. The proposed Mixed-Integer Linear Programming
(MILP) problem enchases financial statement analysis through financial ratios and demand
uncertainty through scenario analysis. The applicability of the model is illustrated by using a
case study along with a sensitivity analysis on financial parameters expressing the business
environment.
 Thalassinos and Liapis (2014).
In modern conditions, financial statements are the most complete, objective and reliable
information base, based on which one can form an opinion on the property and financial
position of a company.
 Ponce et al. (2015)
It is considered quite interesting. It is based on the survey and analysis of the questionnaire
of 849 information users. The researchers concluded that users of companies' financial
statements differ for their reasons for using financial statements (professional or private), in
their profession, in their experience and in their point of view (for example, suppliers are
interested in the information about the solvency of the analyzed company, investors are
interested in the profitability of the company). Therefore, it can be concluded that each user
has a certain interest.
 Korableva and Kalimullina (2016)
transformation of the balance sheet of Russian companies in accordance with international
financial reporting standards. Transformation does not require the mandatory availability of
specialized programs and can be performed using spreadsheets, for example, MS Excel. To
transform the company's reporting, it is necessary to develop a common strategy, which can
be presented in the following way.

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  Izuymov et al.(2017)
The essence of financial statements' analysis from the position of a user is to review and
evaluate the information in the reporting to obtain reliable conclusions about the past state of
an organization aiming at foreseeing its functioning in the future. Evaluation of financial
statements is a process by which the past and current financial position and performance of
the company are assessed. Because of financial statements' analysis, the company's most
important characteristics are also determined, which testify, in particular, about its success or
the risk of bankruptcy

 Tabachuk et al (2018)
the ability to automate the accounting process through the introduction of a CRMsystem.
This will automate the strategy of interaction with customers (clients) to increase sales,
optimize marketing and improve customer service by storing customer information and the
history of relationships with them, establishing and improving business procedures and
subsequent analysis of results

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 CHAPTER -3
COMPANY PROFILE

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 IREL (INDIAN RARE EARTHS LIMITED) AT GLANCE:
(A FRONT RUNNER IN ATOMIC ENERGY)

The Indian Rare Earths Limited (IREL) is a public sector undertaking under the department
of atomic energy of the government of India since 1952 which is concerned with the
extraction of Rare Earths minerals. It was registered as a private company on 15 th august
1950 with an authorized capital of RS. 1 crore only. It is an ISO 9001, ISO 14001 aldoses
18001 certified company.

Indian Rare Earths Ltd (IREL) was incorporated on august 18, 1950 as a private
limited company jointly owned by the Government of India and the Movement of
Travancore, Cochin subsequently in year 1963; it became a fully-fledged government of
India undertaking under the administrative control of department of atomic energy.

IREL is a pioneer in the field of mining and processing of beach sand minerals such as
illuminate, Rutile, Zircon, Monazite, Garnet and Sillimanite etc. It is operating three mining
and mineral processing units viz, At Chavira (Kerala), Manavalakurchi (Tamil Naidu) and
Chatrapur (Orissa). It is also operating a chemical plant, rare earth division at Udyogamandal
(Kerala) for processing monazite and producing rare earths compounds with several
diversification plans in progress, including modernization of existing plant and machinery,
the company is poised for further growth from its current level of sales turnover of
approx.Rs.2900Million with foreign exchange earnings of approx.Rs.1000 Million.

The management of the company is interested with a group of highly qualified and
experienced directors down from different field's technical marketing finance R&D and
mining aspects of its operations.

Established as Rare Earths Company, Tomboy and the Odisha sand complex (OSCOM) at
Matikhalo, Odisha. beach sand minerals business continued to be the main stay of IREL and
is expected tt, remain so in the current changing environment of liberalization which has

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promoted global participation and entry private entrepreneurs' into the field of beach sand
minerals.
The IREL started its commercial operation with commissioning of rare earths chemical
plants (RECP) in 1952 at the industrial belt of udyogmandal near the harbor city of Cochin
in Kerala. It also operates a mineral division (MD) with headquarter at Qulin and rare earths
division with the head quarter and plant at Always (Both are in Kerala). The mineral division
(MD) plants (MSSP) one at Manabarlakurchi, Tamil Nadu and other at Chaw are, Kerala. A
Thorium plant at Tomboy and the Odisha sand complex (OSCOM) at Matikhalo, Odisha.

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 CHAPTER -4
JOB DESCRIPTION
AND FUNCTIONAL
PROFILE

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4.1 Job description
As we all know that a financial analyst makes financial forecasts and provides
recommendation based on their findings to management teams or stakeholders who need
financial insight.

So far the above saying purpose one has to must possesses strong communication skills
because they often have conversation with people from many different levels of an
organization about complicated financial matters.

The information collected during my 4 weeks under study programme at IREL (INDIA)
from official document, records, manuals of different departments and sections of the
organization, also through observations of the organization. Some information is collected
directly through personal meet and some are from official documents, journals, newspapers,
available annual report.

4.2 Tasks assigned to me

3 Collecting quantitative data from different departments

4 Supporting the finance department in daily administrative works.

5 Learn about the products at IREL

4.3 Design of the study

In my research work, I have adopted diagnostic type of research design because it will help
me for description, classification and exploration of the topic and above all it will help me
for the future prediction.
4.3.1 Sources of data collection
The information was collected only from the secondary sources. For the study secondary
sources are official documents, various publications of the organization annual reports of
outdated financial statement and company websites and guidance of departmental head.

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4.3.2 Place of study
The total project work was carried out in financial department of IREL (INDIA), OSCOM,
Chatrapur, Matikhalo, Ganjam.

The data of IREL for the year 2010-11, 2011-12, 2012-13, 2013-14 used in this report have
been taken from financial statements i.e., profit & loss account and balance sheet for the
years. The procedural details have been collected from the respective manuals, booklets etc.

4.4 Limitation of the study

The time period was too short to gain some practical and overall knowledge. As the
executives are busy at their works so they could not afford much time for discussion and the
other limitations are as follows:

 The study is limited to four financial years from 2010-14 performance of the IREL.
 The data used in this study have been taken from balance sheet and their related
schedules of IREL, as per the requirement and necessity; some data are grouped and
sub-grouped.
 The study has been concluded within the boundaries of IREL.
 Due to absence of some of the primary data this data had been done mostly with the
secondary data.

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 CHAPTER -5
LEARNING EXPERIENCE
AND INSIGHTS GAIN

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A. In this course I had learned the process of analyzing financial statement so that I can

take effective decision of the organization where I will work.

B. I had also learned how to determine its creditworthiness and ability to generate wealth.

It helps me in learning about the profitability & operational efficiency of the form for

assessing financial health.

C. Through financial statement analysis I learned how to evaluate a company’s

performance or value through a company’s balance sheet, income sheet or statement

of cash flow.

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 CHAPTER -6

CONCLUSION AND
RECOMMENDATION

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 CONCLUSION:
A study is composed of aims, objectives, reading, observing, analyzing, findings and
conclusions. A conclusion is highly essential for any study as it encloses the entire study in a
single nutshell. It is that vitamin capsule which includes all the aspects of the study process.
When it turns to have a working experienced in an organization and putting them in a
boundary i.e. the project work it is very much essential to know the exact working culture of
that organization. To do so ground level understanding, dedication, sincerity, regularity are
highly essential.

After going through the balance sheets from 2011-2014, annual reports from 2011-14 and
various activities of the organization i.e. IRE Ltd, Chatrapur, Matikhalo, I found many
positives sides of the organization. As the organization is running with a handsome profit for
last few years, hence it is a quite difficult task to suggest any other things those are practiced
by the organization. But there are few areas which needs consideration for the betterment of
the organization. These changes or applications may increase the profitability and efficiency
of the organization.

IREL ltd. is a public sector undertaking under the ministry of defense of India. Profit
maximization is not its prime motive hence recommendation for the effective management
of working capital at IREL is given below because it’s financial conditions having some
limitations:

 IREL should set standard planning for stock, debtor and creditor. In the
everchanging environment and political scenario the quality standard must be of a
global one".
 Install an understanding amongst the staff about the working capital management
produces profit.
 Inventory management is a great concern for IREL especially stores and spares...The
Purchase manager should take certain steps for proper procurement of inventories.

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  Keep stock level as low as possible consistent without not running out of stocks and
not ordering stock in uneconomically small quantities.
 Vision of the organization is adaptation of new business policy.
 Explanation of plant capacity.
 To do R&D and get new technology.
I have done analysis of financial statement at IREL which helped me to understand the
financial position of this organization in practical sense.

The confidentiality nature of IREL though limited my scope of study; the available data
has given me understanding of the financial statements and analysis of financial
condition of IREL.

RECOMMENDATION

Some of the recommendation that I would like suggest about IREL were mentioned below:

 Providing employees with immense analysis to grow and develop in their

financial statement.

 Focusing on employee retention and their analyze will help the company to
grow.

 Performing training need analysis will help in assessment of employee’s

potential and areas where the need to work.

 Conform to key accounting norms and industry standard, these includes

generally accepted accounting principles.

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 CHAPTER -7
BIBLIOGRAPHY

Web sites:

(A) www.google.com

(B) www.irel.gov.in

 Riedl Edward j, and Suraj Srinivasan. "Signaling Firm Performance Through Financial
Statement Presentation: An Analysis Using Special Items." Contemporary Accounting
Research 27, no. 1 (spring 2010)

 Longinidis Pantelis & C.Georgiadis Michael( Integration of financial statement

analysis in the optimal design of supply chain networks under demand uncertainty
International Journal of Production Economics Volume 129, Issue 2, February 2011,
Pages 262-276

 Thalassinos, I.E. and Liapis,K. 2014. Segmental financial reporting and the
internationalization of the banking sector. Chapter book in, Risk Management:
Strategies for Economic Development and Challenges in the Financial System, (eds),
D. Milos Sprcic, Nova Publishers, 221-255, ISBN: 978-163321539-9; 978-
163321496-5.

 Izuymov, I.V. Liman, I.A., Korenkova, S.I., Sadykova, H.N., Ignatova, Y.V.,
Bogdanova, J.Z. 2017. Economic and legal review of pretrial warning of insolvency in
foreign legislation. Man in India, 97(20), 475-493.

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 Ponce, H.G., Hlaciuc, E., Mates, D., MǍciuc, Ǎ.G. 2015. Study on the disclosure of
information in the financial statements of Romanian companies in accordance with
IFRS in terms of comprehensive income. Paper presented at the Proceedings of the
26th International Business Information Management Association Conference, 1569-
1584. Puchkova, S.I. 2015. Business combination and consolidated financial
statements in the context of transition to IFRS. Accounting, 5, 26-29.

 Korableva, O., Kalimullina, O., Kurbanova, E. 2017b. Building the monitoring

systems for complex distributed systems: Problems & solutions. Paper presented at the
ICEIS 2017 - Proceedings of the 19th International Conference on Enterprise
Information Systems, 2, 221-228.

 Tabachuk, N.P., Ledovskikh, I.A., Shulika, N.A., Karpova, I.V., Kazinets, V.A.,
Polichka, A.E. 2018. Information competency and creative initiative of personality
and their manifestation in activity. Journal of Social Studies Education Research, 9(1),
168-186, doi:10.17499/jsser.16908.

 Asllanaj, R. R. (2008). Financial Accounting, University of Pristina, Pristina, 50-68,

581-586.

 Rizwan Ali, Yanping Liu, Gul Rukh Niazi, Corporate Governance And Performance
Of Peer Firms: A Cross-Lagged Analysis Of An Emerging Economy, Journal of
Applied Business Research (JABR): Vol. 33 No. 3 (2017)

 Okafor, G.0. (2006).The ethics of accountancy profession. Journal of Global

Accounting, September, 2006.Vol . 2, No.1 .

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 ANNEXURES

Dear sir/Madam Date -

I am Tushar Raj, student of National institute of science and Technology
(Autonomous) college doing my project work on “A Study on FINANCIAL
STATEMENT ANALYSIS AT IREL”. I request you to help me in my
research by filling the questionnaire. The information collected is completely
confidential and used only for academic purpose.

Organization name:

Designation:

Department:

Age

Gender: Male () Female ()

Experience: () Less than 3 years

() 4-8 years

() 9-15 years

() More than 15 years

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