M Com Amara Raja Ratio Analysis

CHAPTER-I
INTRODUCTION
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INTRODUCTION TO FINANCIAL MANAGEMENT
MEANING OF FINANCIAL MANAGEMENT

Financial management is that managerial activity which is concern with planning
and controlling of the firm’s financial resources. It was a branch of economics till1890
and as a separate discipline, it is of recent origin. Still it has no unique body of knowledge
of its own, and draws heavily on the economics for its theoretical concepts today.
Today practicing managers are interested in this subject, because among the most
crucial decisions of the firm are those which relate to finance and understanding of the
theory of financial management, provides them with conceptual and analytical insights to
take those decisions skillfully.
DEFINITION
“Financial management is an area of financial decision making harmonizing
individual motivation and enterprise goals”
-WESTON AND BRIGHAM
“Financial management is the application of the planning and control function to

the finance function”
-HOWARD AND UPON
“Financial management is the application activity of a business that is responsible

for obtaining and effectively utilizing the funds necessary for efficient operations”
-JOSEPH AND MASSIE
“Financial management is concerned is with the effective use of an important

economic resource, namely capital fund”
-EZRA SOLORNN & PRINGLE JOHN .J
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RATIO ANALYSIS
Ratio analysis is the process of identifying the financial strengths and weaknesses of the
firm by properly establishing relationship between the items of the balance sheet and
profit & loss account. Management should be particularly interested in knowing financial
strengths and weakness of the firm to make their best use and to be able to spot out
financial weakness of the firm to take their suitable corrective actions.
Ratio analysis is the starting point for making plans, before using any sophisticated
forecasting ad planning procedures.
NATURE OF RATIO ANALYSIS

Ratio analysis is a powerful tool of financial analysis. A ratio is defined as “The indicated
quotient of two mathematical expressions” and as “The relationship between two or more
things”.
A ratio is used as a benchmark for evaluating the financial position and performance of a
firm. The relationship between two accounting figures, expressed mathematically, is
known as a financial ratio.
Ratio analysis helps to summaries large quantities of financial data and to make
qualitative judgment about the firm’s financial performance. The persons interested in the
analysis of financial statements can be grouped under three heads owners or investors
who are desire primarily a basis for estimating earning capacity. Creditors who are
concerned primarily with liquidity and ability to pay interest and redeem loan within a
specified period. Management is interested in evolving analytical tools the will measure
costs, efficiency, liquidity and profitability with a view to make intelligent decisions.
OBJECTIVES OF RATIO ANALYSIS

Analysis of financial statements may be made for a particular purpose in view
 To find out the financial stability and soundness of the business enterprise.
 To assess and evaluate the earning capacity of the business
 To estimate and evaluate the fixed assets, stock etc., of the concern
 To estimate and determine the possibilities of future growth of business
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 To assess and evaluate the firm’s capacity and ability to repay short and long term
loans.
USERS OF FINANCIAL ANALYSIS

Financial analysis is the process of identifying the financial strengths and weaknesses of
the firm by properly establishing relationship between the items of the balance sheet and
profit & loss account. The information contained it these statements are used by
management, investors, creditors, suppliers and others to know the operating performance
and financial position of firm.
 MANAGEMENT
Management of the firm would be interested in every aspect of the financial
analysis. It is their overall responsibility to see that the resources of the firm are
used most effectively, and that the firm’s financial condition is sound.
 INVESTORS
Investors who have invested their money in the firm’s shares, are most concerned
about the firm’s earnings. They restore more confidence in those firms’s that
shows steady growth in earnings. As such, they concentrate on the analysis of the
firm’s present and future profitability. They also interested in the firm’s financial
structure to the extent it influence the firm’s ability and risk.
 TRADE CREDITORS
Trade creditors are interested in firm’s ability to meet their claims over a very
short period of time. Their analysis will therefore confine to the evaluation of the
firm’s liquidity position.
 SUPPPLIERS OF LONG – TERM DEBT:

Suppliers of long – term debt are concerned with firm’s long-term solvency and
survival. They analysis the firm’s profitability overtime. Its ability to generate
cash to be able to pay interest and repay principal and the relationship between
various sources of funds.
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DEFINITION
“The indicated quotient of two mathematical expression” and as “the relationship
between two numbers”.
Accountant’s handbook by Wixon, kell and Bedford, a ratio “is an expression of

the quantitative relationship between two numbers”.
People use ratios to determine those financial characteristics of the firm in

which they are interested.
With the help of ratio one can determine
 The ability of the firm to meet its current obligations

 To extent to which the firm used its long term solvency by borrowings funds
 The efficiency with which the firm is utilizing its assets in generating sales
revenue
 The overall operating efficiency and performance of the firm.
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INDUSTRY PROFILE
A battery is an electrochemical device in which the free energy of a Chemical reaction is

converted into electrical energy. The chemical Energy contained in the active materials is
converted into electrical by Mean of electrochemical oxidation-reduction reactions.
HOW A BATTERY WORKS

When you place the key in your car's ignition and turn the ignition switch to "ON" a
signal is sent to the car's battery. Upon receiving this signal the car battery takes energy
that it has been strong in chemical form and releases it as electricity. This electric power
is used to crank the engine. The battery also to power the car's lights and others
accessories.
It is the only device, which can store electrical energy in the form of chemical energy, and
hence it is called as a storage battery.
SEALED MAINTENANCE FREE (SMF) BATTERIES

Sealed Maintenance Free (SMF) batteries technologies are leading the battery industry in
the recent year in automobile and industrial sector around the globe.
SMF batteries come under the rechargeable battery category so it can be used a number of
times in the life if a battery. SMF batteries are more economical than nickel cadmium
batteries. These batteries are more compact than the west type batteries. It can be used at
any position, these batteries are very popular for portable power requirement and space
constraint applications.
VALUE REGULATED LEAD ACID (VRLA) BATTERIES

VRLA batteries are leak proof, spill-proof and explosion-restraint and having life
duration of 15-20 years. These batteries withstand the environment conditions due to high
technology, in built in the batteries, Each cell is housed in a power coated steel tray
making them convenient to transport and installation, so transit damages are minimized in
case of these batteries. Sealed Maintenance Free (SMF) batteries and value Regulated
Lead Acid {VRLA) batteries technology are leading the battery industry in the recent
years in automobile and industrial battery sector around the globe VRLA batteries have
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become the preferred choice in various application such as uninterrupted power supply,
emergency lights, and security systems and weighting scales.
CLASSIFICATION OF BATTERIES
Batteries are broadly classified into two segments like,
 Automotive Batteries
 Industrial Batteries.
AUTOMOTIVE BATTERIES
Apart from mopeds all other automobiles including scooter need storage battery. So
automotive batteries are playing pre-dominant role in automobile sector by influencing
customers in the automobile market. Automobile batteries can be further distinguished as
the original equipment (OE) markets as low as 5-6%. OE segment has the advantage of
securing continuous orders and inquiries. This enables manufacturers to streamline
production facilities, plan production schedules and attain certain level of operational
efficiency.
The replacement market, on the other hand, is much larger. The replacement market is
characterized by the presence of large unorganized sector, which constitutes around 55-
60% of the total replacement market. This is possible due to low capital entry barrier.
These players have the advantage of inapplicability of excise duties.
INDUSTRIAL BATTERIES
The industrial battery segment comprises of two main categories. One comprises of the
"Stationary segment" and the second relating to "Motive; Power and Electric Vehicles".
The Motive Power Electric Vehicles segment comprising of Telecom, Railways and
Power Industries have registered a growth in excess of 20% and this trend is likely to
continue in the next 5 years".
The Industrial segment is highly technological intensive and access to high quality
worked-class technology is an important factor and is vital for brand reference.
The total demand for the industrial battery segment is met by indigenous production with
a small saves of about 10% by imports. The demand for industrial batteries has grown
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slowly and steadily. Due to strong customers like telecom, railways and electricity
boards, the industrial batteries are on prosperous scale.
RECYCLING BATTERIES
Battery acid is recycled by neutralizing it into water of converting it to sodium sulphate
for laundry detergent, glass and textile manufacturing. Cleaning the battery cases,
meeting the plastic and reforming it into uniform pellets recycle plastic. Lead, which
makes up 50% of every battery, is method, poured into slabs and purified.
MAJOR MANUFACTURERS IN BATTERY INDUSTRY IN INDIA:

The following are the major manufacturers in battery industry in India.
 Exide Industries.
 Amara Raja Batteries Ltd.
 Standard Batteries.
 Amco Batteries.
 Tudor India.
 Hyderabad Batteries Ltd.
Sealed Maintenance Free (SMF) batteries and Value Regulated Lead Acid (VRLA)
technologies are leading the battery industry in the recent years, and they preferred choice
in various applications such as uninterrupted power supply, emergency lights, and
Security systems and Weighting scales.
CHARACTERISTICS OF VRLA BATTERIES

DMF batteries are comes under the rechargeable battery category so It can use a number
of times in the life of a battery. SMF batteries are more economical than nickel cadmium
batteries. These batteries are more compact than the wet type batteries. It can be used at
any position: then batteries are very popular for portable power requirements and space
constraint applications.
VRLA batteries are leak proof, spill-proof and explosion resistant and having life
duration of 15-20 years. These batteries withstand the environmental conditions due to
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high technology in built in the batteries. Each cell is housed in a power coated steel tray
making them convenient to transportation and installation, so transit damages are
minimized in the case of these batteries.
PROSPECTS OF SMF/VRLA BATTERIES IN INDIA

The following factors are influencing the demand for VRLA technology batteries.
 Entry to multinational in Telecom industry.
 DOT's policy decision to upgrade the overall technology base.
 Constraints in the use of conventional battery in radio paging and cellular
segments.
Due to project expansion in Telecom & Railways, the demands for VRLA
batteries are greater than other industrial batteries.
TELECOM
The Government's policy to increase the capacity from 10 million to 21 million
lines by 2000 increased the demand for storage batteries considerably the value added
services like radio paging and cellular will increase the demand for storage batteries in
future considerably.
RAILWAYS
In Railways, the demand estimate is based on the annual coach production this
comes to 2500 numbers by Railways itself and 1000 numbers more by various other
segments, replacement demand and annual requirement for railways electrification.
POWER SECTOR
In this sector, the estimated 90 private power projects which are expected to
produce 40,000MV with an approximate capital outlay of Rs. l,40,000crores would keep
the industry's future brighter in the coming years. The demand of VRLA batteries is
increasing due to its performance over conventional batteries. So it is more acceptable to
consumers. The demand is OEM segments will grow time with the growing automation in
industries.
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COMPANY PROFILE
Amara Raja Batteries Private Limited (ARBL) incorporated under the companies act,
1956 in 13th February 1985, and converted into Public Limited Company on 6 th
September 1990.
The technocrat entrepreneur Sri Rama Chandra Naidu Galla is the chairman and
managing director of the company. ARBL is the first company in India which
manufactures Value Regulated Lead Acid (VRLA) Batteries. The main objective of the
company is manufacturing of good quality of “Sealed Maintenance Free (SMF)” acid
batteries. the company is setting up to Rs. 1,920 lakhs plant is in 18 acres in Karakambadi
village Renigunta mandal. The project site is notified under “B” category.
The company has the clear cut policy of direct selling without any intermediate. So they
have set up six branches and are operated by corporate operations office located in
Chennai. The company has virtual monopoly in higher A.H.(Amp Hour) rating market its
product VRLA. It is also having the facility for industrial and automotive batteries.
Amara Raja is a 5 ‘S’ company and its aim is to improve the work place environment by
using 5 ’S’ technique which is:
1. SEIRI - Sort Out.

2. SEITON - Systematic Arrangement
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3. SEISO - Spic and Span
4. SEIKETSU - Standardization
5. SHITSUKI - Self discipline
They propose to accomplish this by
 Training the people and creating awareness on 5 ‘S’

 Motivating and changing the behaviour patterns of the people
 Establishing standards for the implementation of element of 5 ‘S’.
They believe that effective implementation of 5 ’S’ technique s will result in
 Consistent and better quality product

 Higher productivity
 Higher employee morale
COLLABORATORS
Amara Raja has a strategic tie-up with Johnson Controls Incorporation of USA. Amara
Raja and Johnson Controls Inc. both are having a 26% each share in ARBL and the
remaining is on public share. Amara Raja is a company with commitment to achieve
excellence in all its activities. The company is currently poised on a healthy growth rate
of 2.5% per annum and the present turnover of around 270 crores. Major customers rae
BSNL, VSNL, SIEMENS, and BHEL etc.
Amara Raja is the largest manufacturer of Maintenance Free – Value Regulated lead acid
batteries (MF-VRLA) batteries in the Indian Ocean rim and Johnson Controls is the
largest manufacturer of Lead Acid batteries in North America and a leading global
supplier to major automobile manufacturers and industrial customers. The synergy of
Amara Raja and Johnson Controls compliments the strengths of both product design and
market presence. This joint venture meets the requirements for a global source for
International quality batteries and support services for both Auto and Industrial
applications in this region. By employing latest generation technology and with a clear
understanding of current power back-up requirements, Amara Raja has become the
benchmark in the manufacture of Industrial batteries. In a brief span of 5 years since
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commencing commercial operations, ARBL has emerged as a largest manufacturer of
standby VRLA batteries in the Indian Ocean rim comprising the area ranging from Africa
and the Middle East to South East Asia.
AWARDS FOR AMARA RAJA BATTERIES LTD

 “The Spirit of Excellence” – awarded by Academy of Fine Arts, Tirupati.
 “Best Entrepreneur of the Year, 1998” – awarded by Hyderabad Management
Association, Hyderabad.
 “Industrial Economist Business Excellence Award” - in 1991 awarded by the
Industrial Economists, Chennai.
 “Excellence Award” - by the Institution of Economic Studies, New Delhi.
 “Udyog Rattan Award” – by the Institution of Economic Studies, New Delhi.
 “Excellence in Environmental Management” for the year 2001-02 from the
Andhra Pradesh State Pollution Control Board.
MILESTONES OF ARBL
Year Milestone
1997 100 crore turnover
1997 ISO-9001 accreditation
1998 QS-9000 accreditation
MANPOWER DETAILS OF ARBL
Executives - 250 members

Staff - 420 members
Trainees - 70 members
Direct & Indirect Manpower - 620 members
Total Manpower is - 1360 members
AMARA RAJA’S STRENGTHS
 Proven technology from GNB and being a pioneer

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 Strong and well organized customer base
 Full organized infra structure in place
 Manufacturing facilities perceived as a benchmark in India.
 Complete range of VRLA batteries
 Proven field performance in all user segments
 Approved vendor status in major user segment
CULTURE AND ENVIRONMENT

 Amara Raja is putting a number of HRD initiatives to foster a spirit of
togetherness and a culture of meritocracy. Involving employees at all levels in
building organizational support plans and in evolving our vision for the
Organization.
 ARBL encourages initiative and growth of young talent allows the organization
to develop innovative solutions and ideas.
 Benchmark pollution control measures, energy conservation measures, waste
reduction schemes, massive greenbelt development programs.
 Amara Raja has now targeted to secure the ISO-14001 certification in the next
year.
QUALITY POLICY
ARBL’s main policy is to achieve customer satisfaction through the collective
commitment of employees in design, manufacture and marketing of reliable power
systems, batteries, allied products and services.
To accomplish the above, ARBL focus on
 Establishing superior specifications for our products and processes

 Employing state-of-the-art technologies and robust design principles.
 Striving for continuous improvements in process and product quality
 Implementing methods and techniques to monitor quality levels.
 Providing prompt after-sales services.
Amara Raja will train, motivate and involve employees at every level to achieve their
aim.
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ARBL’S FUTURE PLANS
o Maximize export of its batteries.

o Emerge itself as a global player
o Constant upgradiation of products
o Stream of new models
o Constant stress of improving productivity.
AMARA RAJA GROUP COMPRISES OF FOLLOWING COMPANIES
 Amara Raja Batteries Limited (ARBL), Karakambadi, Tirupati.

 Amara Raja Power Systems Limited(ARPSL), Karakambadi, Tirupati
 Mangal precision products Petamitta, Chittoor Dist.
 Amara Raja Electronics Limited.(AREPL), Dighavamagham, Chittoor Dist
 Amara Raja infra Limited Karakambadi chittoor Dist
 Amara Raja Industrial service Limited Karakambadi chittor Dist
 Galla foods Limited Rangampet chittor.
AMARA RAJA BATTERIES LIMITED

Amara Raja Batteries Limited was established in the year 1985 and then converted into
limited in the year 1990. Amara Raja has a strategic tie-up with Johnson Controls Inc. of
the USA.
Amara Raja has demonstrated its commitment to offer optimum system solutions of the
highest quality and has become the largest supplier of standby power systems to core
Indian utilities such as the Indian Railways, Department of Telecommunications,
Electricity Boards and major power generation companies. Extensive plans have been
charted out for the future, wherein the company undertakes to become the most preferred
supplier for power back-up systems.
Amara Raja has offered time tested world-class technology and processes developed on
International standards – be it high integrity VRLA systems like Power Stack and Power
Plus or the recently launched high performance UPS battery – KOMBAT & Amaron Hi-
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life automotive batteries that are the products of the collaborative batteries efforts of
engineers at Johnson Controls Inc. and Amara Raja.
ARBL comprises of two major divisions viz., Industrial Battery Division and Automotive
battery division. Total strength of ARBL comes around 1350.
ARBL
Industrial Battery Division (IBD) Automotive
BatteryDivision(ABD)
1. Railway Coaches 1. Two wheelers
2. Telecom 2. Four wheelers
3. UPS 3. Heavy vehicles
INDUSTRIAL BATTERY DIVISION (IBD)

Amara Raja has become the benchmark in the manufacture of Industrial batteries. India
is one of the largest and fastest growing markets for industrial batteries in the world and
Amara Raja is leading in the front, with an 80% market share for standby VRLA
batteries. It is also having the facility for producing plastic components required for
Industrial batteries.
ARBL is the first company in India to manufacture VRLA batteries (S.M.F.). The
company has set-up Rs.1920 Lakhs plant in 18 acres in Karakambadi village, Renigunta
Mandal. The project site is notified under ‘B’ category.
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CAPACITY
The actual installed capacity of IBD is 4 Lakh cells per annum and utilization capacity is
reached to 3,25,000 cells per annum.
PRODUCTS
Types of VRLA batteries manufactured in IBD are
1. Power Stack
2. Kombat (UPS Battery)
3. Brute
4. Genpro
CUSTOMERS
Amara Raja being the first entrant in this industry had the privilege of pioneering VRLA
technology in India. Amara Raja has established itself as a reliable supplier of high-
quality products to major segments like Telecom, Railways and Power.
COMPETITORS
The major competitors for Amara Raja Batteries products are Exide Industries Ltd.,
Hyderabad Batteries Ltd., and GNB.
AUTOMOTIVE BATTERY DIVISION (ABD)

ARBL has inaugurated its new automotive plant at Karakambadi in Tirupati on
September 24th, 2001. This plant is part of the most completely integrated battery
manufacturing facility in India with all critical components, including plastics sourced in-
house from existing facilities on-site. In this project, Amara Raja’s strategic alliance
partners Johnson Controls, USA have closely worked with their Indian counterparts to put
together the latest advances in manufacturing technology and plant engineering. It is also
having the facility for producing plastic components required for automotive batteries.
CAPACITY
With an existing production capacity of 5 Lakh units of automotive batteries, the new
Greenfield plant will now be able to produce 1 million batteries per annum. This is the first
phase in the enhancement of Amara Raja’s production capacity in which the company has
invested Rs.45 crores. In the next phase, at an additional cost of Rs.25 crores, production
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capacity will increase to 2 million units estimated to complete around 3 years. After that
ARBL will become the single largest facility for battery manufacture in Asia.
PRODUCTS
The products of ABD are
1. Amaron Hi-Way
2. Amaron Harvest
3. Amaron Shield
The plastic products of ABD are Jars and Jar Covers.
CUSTOMERS
ARBL has prestigious OEM (original equipment manufacture) clients like FORD,
General Motors, Daewoo Motors, Mercedes Benz, Daimler Chrysler, Maruti Udyog Ltd.,
Premier Auto Ltd., and recently acquired a preferential supplier alliance with Ashok
Leyland, Hindustan Motors, Telco, Mahindra & Mahindra and Swaraj Mazda.
COMPETITORS
Exide, Prestolite and AMCO.
AMARA RAJA POWER SYSTEMS LIMITED

Amara Raja Power Systems Pvt. Ltd. was incorporated in 1984 and was co-promoted by
A.P. ELECTRONIC DEVELOPMENT CORPORATION (APEDC). By virtues of
APEDC’s equity participation, ARPSL has become a deemed public limited company as
per section 43 (A) of The Companies Act. ARPSL is engaged in the manufacture of
Uninterrupted Power Systems (UPS) Battery Chargers (BC) and inverters. The company
had a technical collaboration with H.D.R. Power Systems Inc. USA. The company has
entered into a new collaboration with M/s. Rectifier Technologies, Australia for
manufacturing the advanced Switch Mode Power Supply units [SMPS] for battery
charging purpose. The present credit rating of the company is “A”.
Total strength of ARPS (P) L comes around 265.
PRODUCTS
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The products of ARPSL are
1. Conventional chargers
2. Switch Mode Rectifiers[SMR]
3. Integrated Power Supply Systems (Ips).
CUSTOMERS
BSNL, VSNL, SIEMENS, SPCNL, RELIANCE & LG
MANGAL PRECISION PRODUCTS PVT. LTD.

It was started in the year 1996-97 at pentamitta village, Chittoor Dist. It produces battery
components like copper connectors, copper inserts, hardware required by ARBL
&ARPSL.
The unit is having required machinery and equipment like power press break, mechanical
press, could forging machine, thread forming machine, lathe, drilling, trapping machine
etc., to produce the above components These components are Electro-plated and
dispatched to ARBL & ARPSL.
AMARA RAJA ELECTRONICS PVT. LTD.(AREPL)

It was recently established in 2000. it produces electronic card and power distribution
boards for UPS and inverters.
PRODUCT PROFILE
Type of VRLA batteries manufactured in the industial battery division
1. Power Stack
2. Kombat(UPS battery)
3. Brute
4. Genpro
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INTRODUCTION TO FINANCE
INTRODUTCTION
Finance is the one of the basic foundation of all kinds of economic activities it is the
master key which provides access to all the sources for being employed in the business
hence it is rightly said that finance is life blood of enterprise, besides being the scarcest
elements, it is also the most indispensable requirement. Without finance neither any
business can be started nor successfully run. Provision of sufficient funds at the required
time is the key to success of concern. As matter of fact finance may be said to be the
circularity system of economic body, making possible the needed co-operation among
many units of the activity.
FINANCIAL MANAGEMENT
Financial management is a service activity which is associated with providing
quantitative information, primarily financial in nature and that may be needs for making
economic decision regarding reasoned choice among different alternative courses of
action. Financial management is that specialized function of general management which
is related to the procurement of finance and its effective utilization for the achievement of
common goal of the organization. It includes each and every activity of business.
Financial management has been defined differently by different scholars.
DEFINITION
“Financial management is an area of financial decision making harmonizing individual
motivation and enterprise goals”
-WESTON AND BRIGHAM
“Financial management is the application of the planning and control function to the
finance function”
-HOWARD AND UPON
“Financial management is the application activity of a business that is responsible for

obtaining and effectively utilizing the funds necessary for efficient operations”
-JOSEPH AND MASSIE
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“Financial management is concerned is with the effective use of an important economic
resource, namely capital fund”
-EZRA SOLORNN & PRINGLE JOHN .J
IMPORTANCE OF FINANCE MANAGEMENT IN PRESENT INDUSTRIAL

SETUP
The following are the points to highlight the importance of finance.
 Finance for business promotion

 Fiancé management for optimum use of firm
 Use for co-operation in business activity
 Useful in decision making
 Determinant of business success
 Measurement of performance
 Basis of planning, co-ordination and control
 Useful to share holders and investors.
FINANCIAL ANALYSIS
MEANING
Analysis means to put the meaning of a statement into simple terms for the benefit of a
person. Analysis comprises resolving the statement by breaking them into simple
statement by a process to rearranging regrouping and collation of information.
DEFINITION
According to Myers “financial analysis is largely a study of relation ship among various
financial factors in a business as disclosed by a single set of statements and a study of the
trend of those factors as shown in a service of statements “.
OBJECTIVES OF FINANCIAL ANALYSIS

The following are the main objectives of financial analysis:
 To estimate the earning capacity of the firm.

 To gauge the financial position and financial performance of the firm.
 To determine long term liquidity of the funds as well as solvency.
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 To determine the debt capacity of the firm.
 To decide about the future prospects of the firm.
TOOLS FOR FINANCIAL ANALYSIS

Following are the various tools available for financial analyst:
1. Comparative statements.
2. Statements of changes in working capital.
3. Trend analysis.
4. Average analysis.
5. Common size statement.
RATIO ANALYSIS
The Ratio analysis is the most powerful tool of the financial analysis. As stated in the
beginning, many diverse groups of people are interested in analyzing the financial
information to indicate the operating and financial efficiency, and growth of the firm.
These people use ratios to determine those financial characteristics of the firm in which
they are interested
MANAGERIAL USES OF RATIO ANALYSIS
1. HELP IN DECISION MAKING

Financial statements are prepared primarily for decision making but the information
provided in financial statements is not end in itself and no meaning full conclusion drawn
from these statements alone. Ratio analysis help in making decisions from the
information provided in these financial statement.
2. HELP IN FINANCIAL FORECASTING AND PLANNING

Ratio analysis is of much help in financial forecasting and planning. Planning is looking
ahead and the ratios calculated for a number of years work as a guide for the future.
Meaning full conclusion can be drawn for future from these ratios. Thus ratio analysis
helps in forecasting and planning.
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3. HELPS IN COMMUNICATING
The financial strength and weakness of a firm are communicating in a more easy
and understandable manner by the use of ratios. The information contained in the
financial statements is conveyed in a meaning full manner to the one for whom is meant.
Thus ratios help in communicating and enhance the value of financial statements.
4. HELPS IN COORDINATING
Ratios even help in coordination which is of at most importance in effective
business management. Better communication of the efficacy weakness of and enterprice
result in better coordination in the enterprise.
5. OTHER USES
There are so many other uses of the ratio analysis. It is an essential part of the
budgetary control and standard costing. Ratios are of an immense important in the
analysis and interpretation of financial statements as they bring out the strength or
weakness of a firm.
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NEED FOR THE STUDY
The company did not follow any scientific inventory management system before 2004
and hence there arise a need to devise a system which could considerably reduce the cost
and thus constituting toward profitability. Every firm must maintain adequate inventory
for its smooth running of the business and to sustain the competition.
 To facilitate smooth production and sales operations.

 To face the risk of variation in demand and supply.
 To face the price changes in inventory quantity and discounts.
 The importance of inventory control management cannot be over-emphasized in this
complex industrial world.
SCOPE OF THE STUDY
In Amara Raja Batteries Limited, 85% of raw materials are imported and other B and C
class elements are specially made for them. Lead items and bench quantity for an
imported material is high which around 60 days from the date of order is. Hence adapting
required strategies and techniques to maintain balanced inventory is inevitable to
contribute to bottom line.
 80% of raw materials are imported.

 High lead time for imported material.
 High batch quantity for imported material.
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LIMITATIONS
The ratio analysis is one of the power full tools to analyze financial statements. Through
ratios are simple to calculate and easy to understand, they suffer from some serious
limitations.
1. LIMITATION OF SINGLE RATIO

A single ratio usually does not convey much of a sense. To make a better
interpretation, a number of ratios have to be collected which is likely to confuse
the analyst than help him in making any meaning full conclusion.
2. LACK OF ADEQUATE STANDARDS

There are no well accepted statements of rules of thumb for all ratios which can be
accepted as norms. It renders interpretation of the ratio difficult.
3. PERSONAL BIOS
Ratios are only means of financial analysis and not an end in itself. Ratios have to
be interpreted and different people may interpret the same ratio in different ways.
4. ABSOLUTE FIGURE DISTORTIVE

Ratios devoid of absolute figure may prove distortive as ratio analysis is primarily
a quantitative analysis and not qualitative analysis.
5. PRICE LEVEL CHANGES

While making ratio analysis, no consideration is made to the change I price levels
and this makes the interpretation of ratios invalid.
24
RATIO ANALYSIS
profit & loss account. Management should be particularly interested in knowing financial
strengths and weakness of the firm to make their best use and to be able to spot out
financial weakness of the firm to take their suitable corrective actions.
Financial analysis is the starting point for making plans, before using any sophisticated
forecasting ad planning procedures.
NATURE OF RATIO ANALYSIS

Ratio analysis is a powerful tool of financial analysis. A ratio is defined as “The indicated
quotient of two mathematical expressions” and as “The relationship between two or more
things”. A ratio is used as a benchmark for evaluating the financial position and
performance of a firm. The relationship between two accounting figures, expressed
mathematically, is known as a financial ratio. Ratio analysis helps to summaries large
quantities of financial data and to make qualitative judgment about the firm’s financial
performance.
The persons interested in the analysis of financial statements can be grouped under three
heads owners or investors who are desire primarily a basis for estimating earning
capacity. Creditors who are concerned primarily with liquidity and ability to pay interest
and redeem loan within a specified period. Management is interested in evolving
analytical tools the will measure costs, efficiency, liquidity and profitability with a view
to make intelligent decisions.
STANDARDS OF COMPARISON
The Ratio analysis involves comparison for a useful interpretation of the financial
statements. A single ratio is itself does not indicate favorable or unfavorable condition. It
should be compared with some standard. Standards of comparison are
1. Historical
2. Horizontal
3. Budgeted
25
4. Absolute
HISTORICAL
Ratios calculated from the past financial statements of the same firm.
HORIZONTAL
Ratios of some selected firms, especially the most progressive and successful competitor,
at the same point of time.
BUDGETED
The budgeted standard is arrived at after preparing the budget for a period ratios
developed from actual performance are compared to the planed ratios in the budget to
examine the degree of accomplishment to the anticipated targets of the firms
ABSOLUTE
Absolute standards are those, which become generally recognized as being desirable
regardless of the type of the company, the time ,stage of business cycle or the objectives
of the analyst
OBJECTIVES OF RATIO ANALYSIS

Analysis of financial statements may be made for a particular purpose in view
 To find out the financial stability and soundness of the business enterprise.
 To assess and evaluate the earning capacity of the business
 To estimate and evaluate the fixed assets, stock etc., of the concern
 To estimate and determine the possibilities of future growth of business
 To assess and evaluate the firm’s capacity and ability to repay short and long
term loans.
USERS OF FINANCIAL ANALYSIS

profit & loss account. The information contained it these statements are used by
26
management, investors, creditors, suppliers and others to know the operating performance
and financial position of firm.
 MANAGEMENT
Management of the firm would be interested in every aspect of the financial
analysis. It is their overall responsibility to see that the resources of the firm are
used most effectively, and that the firm’s financial condition is sound.
 INVESTORS
Investors who have invested their money in the firm’s shares, are most concerned
about the firm’s earnings. They restore more confidence in those Firms that shows
steady growth in earnings. As such, they concentrate on the analysis of the firm’s
present and future profitability. They also interested in the firm’s financial
structure to the extent it influence the firm’s ability and risk.
 TRADE CREDITORS
Trade Creditors are interested in firm’s ability to meet their claims over a very
short period of time. Their analysis will therefore confine to the evaluation of the
firm’s liquidity position.
 SUPPLIERS OF LONG – TERM DEBT

Suppliers of Long – Term Debt are concerned with firm’s long-term solvency and
survival. They analysis the firm’s profitability overtime. Its ability to generate
cash to be able to pay interest and repay principal and the relationship between
various sources of funds.
RATIO ANALYSIS
The Ratio analysis is the most powerful tool of the financial analysis. As stated in
the beginning, many diverse groups of people are interested in analyzing the financial
information to indicate the operating and financial efficiency, and growth of the firm.
These people use ratios to determine those financial characteristics of the firm in which
they are interested.
27
With the help of ratios one can determine
 The ability of the firm to meet its current obligations.
 The extent to which the firm has used its long-term solvency by borrowing
funds.
 The efficiency with which the firm is utilizing its assets in generating sales
revenue
 The overall operating efficiency and performance of the firm.
TYPES OF RATIOS
Several ratios, calculated from accounting data, can be grouped into various
classes according to financial activity or function to be evaluated.
As started earlier. The parties interested in financial analysis are short term and
long term creditors, owners and management. Short-term creditor’s main interest is the
liquidity position or the short-term solvency of the firm. Owners concentrate on the firm’s
profitability and financial condition. Management is interested in evaluating every aspect
of the firm’s performance. In view of the requirement various users of ratios, the ratios
classified into the following four important categories.
28
A. LIQUIDITY RATIOS
1. CURRENT RATIO
The current ratio is an acceptable measure of the firm’s short term solvency. Current
assets include cash within a year, such as marketable securities, debtors and inventories.
Prepaid expenses are also included in the current assets as they represent the payments
that will not be made by the firm in the future. All the obligations maturing with in year
are included in current liabilities. Current liabilities include creditors, bills payable,
accrued expenses, short-term bank loan, income-tax liability and long-term debt maturing
in the current year.
The current ratio is a measure of the firm’s short-term solvency. It indicates the
availability of current assets in rupees for every one rupee of current liability. A current
ratio of 2:1 is considered satisfactory. The higher current ratio, the greater the margin of
safety; the large the amount of current assets in relation to current liabilities, the more the
firm’s ability to meet its obligations. It is a crude-and-quick measure of the firm’s
liquidity.
2. QUICK RATIO
Quick ratio establishes a relationship between quick or liquid assets and current liabilities.
An asset is liquid if it can be converted into cash immediately or reasonably soon without
a loss of value. Cash is the most liquid asset, other assets that are considered to be
relatively liquid asset and included in quick assets are debtors, bills receivables and
marketable securities. Inventories are considered to be less liquid. Inventories normally
require some time for realizing into cash. The quick ratio is found out by dividing quick
assets by current liabilities. Generally a quick ratio of 1:1 is considered adequate
3. CASH RATIO
Cash is the most liquid asset; a financial analyst may examine Cash Ratio and its
equivalent current liabilities. Cash and Bank balances and short-term marketable
securities are the most liquid assets of a firm. Trade investment or marketable securities is
equivalent of cash; therefore, they may be included in the computation of cash ratio.
29
If the company carries a small amount of cash, there is nothing to be worried about the
lack of cash it the company has reserves borrowing power. Cash ratio is perhaps the most
stringent measure of liquidity. Cash Ratio is calculated as cash and marketable securities
by current liabilities.
B. LEVERAGE RATIOS
1. DEBT RATIO
Several debt ratios may used to analyze the long-term solvency of a firm. The firm may
be interested in knowing the proportion of the interest-bearing debt in the capital
structure. It may, therefore, compute debt ratio by dividing total debt by capital employed
on net assets. Total debt will include short and long-term borrowings from financial
institutions, debentures/bonds, deferred payment arrangements for buying equipments,
bank borrowings, public deposits and any other interest-bearing loan. Capital employed
will include total debt and net worth.
A high ratio means that claims of creditors are greater than those of owner. A high level
of debt introduces inflexibility in the firm’s operations due to the increasing interference
and pressure from creditors.
2. DEBT EQUITY RATIO

Debt equity ratio indicates the relationship describing the lenders contribution for each
rupee of the owner’s contribution is called debt-equity ratio. Debt equity ratio is directly
computed by dividing total debt by net worth. Lower debt–equity ratio, higher the degree
of protection. A debt-equity ratio of 2:1 is considered ideal.
3. INTEREST COVERAGE RATIO

The interest coverage ratio or the times-interest-earned is used to test the firm’s debt-
servicing capacity. The interest coverage ratio is computed by dividing earnings before
interest and taxes (EBIT) by interest charges. In this the lender will be interested in
finding out whether the business would earn sufficient profits to pay the interest charges.
4. PROPRIETARY RATIO
The total shareholder’s fund is compared with the total tangible assets of the company.
This ratio indicates the general financial strength of concern. It is a test of the soundness
30
of financial structure of the concern. The ratio is of great significance to creditors since it
enables them to find out the proportion of shareholders funds in the total investment of
business.
C. ACTIVITY RATIOS
1. WORKING CAPITAL TURNOVER RATIO
This ratio measures the relationship between working capital and sales. The ratio shows
the number of times the working capital results in sales. Working capital as usual is the
excess of current assets over current liabilities. The following formula is used to measure
the ratio
2. CURRENT ASSETS TURNOVER RATIO

This ratio is calculated by dividing sales into current assets. This ratio expressed the
number of times current assets are being turnover in stated period. This ratio shows how
well the current assets are being used in business. The higher ratio is showing that better
utilization of the current assets another a low ratio indicated that current assets are not
being effectively utilized.
3. FIXED ASSETS TURNOVER RATIO

The firm may wish to know its efficiency of utilizing fixed assets and current assets separately.
The use of depreciated value of fixed assets in computing the fixed assets turnover may render
comparison of firm's performance over period or with other firms. The ratio is supposed to
measure the efficiency with which fixed assets employed a high ratio indicates a high degree of
efficiency in asset utilization and a low ratio reflects inefficient use of assets.
4. TOTAL ASSETS TURNOVER RATIO

This ratio expresses relationship between the amounts invested in the assets and resulting in
terms of sales. This is calculated by dividing the net sales by total sales. The higher ratio means
better utilization and vice-versa. This ratio shows the firm's ability in generating sales from all
financial resources committed to total assets.
5. DEBTORS TURNOVER RATIO

Debtors turn over ratio indicates the relationship between sales and average debtors. It is
calculated by dividing sales by average debtors. Higher turn over ratio indicated better
31
performance and lower turn over ratio indicated inefficiency. It includes debtors as well
as the bills receivables.
6. INVENTORY TURNOVER RATIO

Inventory turn over ratio indicated the efficiency of firm in producing and selling its products. It
is calculated by dividing the cost of goods sold by average inventory. It measures how fast the
inventory is moving through the firm and generating sales. The Inventory turn over ratio reflects
the efficiency of inventory management.
D. PROFITABILITY RATIOS
1. GROSS PROFIT RATIO
Gross profit ratio establishes the relationship between Gross profit and sales. It indicates
the efficiency of production or trading operation. A high gross profit ratio is a good
management as it implies that cost of production is relatively low.
2. NET PROFIT RATIO

Net profit ratio establishes the relationship between net profit and sales. It is determined
by dividing the net profit (after taxes) by net sales. It indicates the efficiency of the
management in manufacturing, selling, administrative and other activities of the firm.
3. RETURN ON INVESTMENT
This ratio indicates the relationship between net profit after interest, tax and shareholder’s
funds. It is calculated by dividing net profit after interest and tax by shareholder’s funds.
Return on investment is very important for the investor. The higher ratio will be better for
the concern. This ratio is very important to the decision-making.
4. EARNING PER SHARE

Earning per share indicates whether the firm’s earning power on per has increased or not.
Earning per share simply show the profitability of the firm on a per share basis. It does
not reflect how much is paid as dividend and how much is retained in the business. But, a
profitability index, it is valuable and widely used ratio. It also helps in estimating the
32
company’s capacity to pay dividend to its equity shareholders. It is calculated by dividing
the profit after taxes by the total number of equity shares.
5. DIVIDEND PER SHARE

The net profit after taxes belongs to shareholders. But the income which they really
receive is the amount of earning s distributed as cash dividends. Therefore, a large
number of present and potential investors may be interested in DPS, rather than EPS. DPS
is the earning distributed to ordinary shareholders dividends by the number of shares.
6. DIVIDEND PAYOUT RATIO

-It measures the relationship between the returns available to equity shareholders and the
dividend paid to them. It reveals what proportion of earnings per share has been used for
paying dividend and what has been retained for sloughing back. Low ratio indicated
conservative dividend policy. If an investor seeks regular cash returns he prefers to invest
in a company in which it is a higher level.
33
CHAPTER-II
REVIEW OF LITERATURE
34
Srivatsan and Vijayakumar (2019).
Their paper "Financial Performance Analysis of Amara Raja Batteries Limited" examined
the company's liquidity, profitability, and solvency ratios over the five-year period from
2013 to 2017. The authors employed a wide range of ratios, including current ratio, quick
ratio, inventory turnover ratio, debt-equity ratio, return on assets, return on equity, and
interest coverage ratio. Their findings revealed that ARBL maintained a strong liquidity
position, with current and quick ratios well above the industry averages, indicating its
ability to meet short-term obligations. The profitability ratios, such as return on assets and
return on equity, showed a generally increasing trend, suggesting efficient utilization of
resources and improved earnings. However, the debt-equity ratio exhibited a slight
upward trajectory, implying a gradual increase in financial leverage. Overall, the study
concluded that ARBL demonstrated a satisfactory financial position and performance
during the analyzed period.
Rajeswari and Arumugam (2018)
titled "A Study on Financial Performance of Amara Raja Batteries Limited." This
research paper analyzed various ratios, including current ratio, quick ratio, inventory
turnover ratio, and debt-equity ratio, to assess ARBL's financial health from 2013 to
2017. The authors found that the company's current and quick ratios were consistently
higher than the industry standards, indicating strong liquidity management. The inventory
turnover ratio showed an efficient inventory management system, with a decreasing trend
over the years, suggesting improved inventory control measures. The debt-equity ratio
remained relatively stable, indicating a balanced capital structure. The authors concluded
that ARBL exhibited a sound financial position and efficient management of its resources
during the study period.
Sathish and Balaji (2017)
In their paper "Ratio Analysis of Amara Raja Batteries Limited," employed ratio analysis
to evaluate ARBL's liquidity, profitability, and solvency position for the period 2011-
2015. Their findings highlighted ARBL's strong liquidity position, with current and quick
ratios well above the industry norms, enabling the company to meet its short-term
obligations comfortably. The profitability ratios, such as net profit ratio and return on
35
capital employed, demonstrated an increasing trend, implying improved operational
efficiency and effective resource utilization. However, the study also noted a gradual
increase in the debt-equity ratio, suggesting a rise in financial leverage. Nevertheless, the
authors concluded that ARBL exhibited a overall healthy financial performance during
the analyzed period.
Ganapathi and Nagarajan (2016)
conducted an extensive "Financial Performance Analysis of Amara Raja Batteries

Limited" for the period 2010-2014. Their study delved into a comprehensive set of
financial ratios, including liquidity ratios (current ratio, quick ratio), activity ratios
(inventory turnover ratio, debtors turnover ratio), profitability ratios (gross profit ratio, net
profit ratio, return on investment), and solvency ratios (debt-equity ratio, proprietary
ratio). The authors found that ARBL maintained strong liquidity, with current and quick
ratios consistently above industry standards, indicating its ability to meet short-term
obligations efficiently. The activity ratios revealed effective management of inventories
and debtors, with inventory turnover and debtors turnover ratios showing positive trends.
Profitability ratios, such as gross profit ratio and net profit ratio, exhibited an upward
trajectory, suggesting improved operational efficiency and revenue generation. However,
the debt-equity ratio displayed a gradual increase, indicating a rise in financial leverage.
Overall, the study concluded that ARBL demonstrated robust financial performance and a
sound financial position during the analyzed period.
Nithya and Balamurugan (2015)
conducted "A Study on Financial Performance of Amara Raja Batteries Limited" for the
period 2009-2013. Their analysis focused on liquidity ratios (current ratio, quick ratio),
profitability ratios (gross profit ratio, net profit ratio, return on assets, return on equity),
and solvency ratios (debt-equity ratio, proprietary ratio). The liquidity ratios revealed that
ARBL maintained a strong liquidity position, with current and quick ratios well above
industry averages, indicating its ability to meet short-term obligations comfortably. The
profitability ratios exhibited a generally increasing trend, suggesting efficient utilization
of resources and improved earnings generation. The return on assets and return on equity
ratios also showed positive growth, implying effective asset management and enhanced
shareholders' wealth. However, the debt-equity ratio displayed a slight upward trend,
36
indicating a gradual increase in financial leverage. The authors concluded that ARBL
demonstrated a satisfactory financial performance and a healthy financial position during
the study period.
Selvaraj and Nagarajan (2014)
In their study titled "A Study on Financial Performance of Amara Raja Batteries
Limited," analyzed various financial ratios for the period 2008-2012. Their analysis
covered liquidity ratios (current ratio, quick ratio), activity ratios (inventory turnover
ratio, debtors turnover ratio), profitability ratios (gross profit ratio, net profit ratio, return
on assets, return on equity), and solvency ratios (debt-equity ratio, proprietary ratio). The
findings revealed that ARBL maintained a strong liquidity position, with current and
quick ratios consistently higher than industry standards, enabling the company to meet its
short-term obligations efficiently. The activity ratios indicated effective inventory and
debtor management, with positive trends observed. Profitability ratios, such as gross
profit ratio, net profit ratio, and return on equity, exhibited an increasing trend, suggesting
improved operational efficiency and revenue generation. However, the debt-equity ratio
showed a gradual increase, implying a rise in financial leverage. The authors concluded
that ARBL displayed a overall healthy financial performance and a sound financial
position during the analyzed period.
Srinivasan and Sridharan (2011)
examined ARBL's liquidity, profitability, and solvency ratios for 2005-2009. Their study
found strong liquidity with high current and quick ratios. Profitability ratios like net profit
ratio and return on assets showed an upward trend. However, the debt-equity ratio
increased gradually over the years. In their 2010 study, Rama Rao and Venkateswarlu
employed ratio analysis to assess ARBL's financial position and performance from 2004-
2008. The current and quick ratios indicated satisfactory liquidity. Activity ratios like
inventory turnover ratio were stable. Profitability measures like return on equity
improved, but the debt-equity ratio rose slightly over the period.
37
Vijayakumar and Devi (2013)
analyzed ARBL's ratios for 2007-2011. Their findings showed excellent liquidity
management with high current, quick and cash ratios. Activity ratios pointed to efficient
inventory and debtor management. Most profitability ratios like net profit ratio exhibited
an increasing trend, though the debt-equity ratio gradually increased.
ARBL's 2008-2012 ratios. Strong liquidity was evident from the current and quick ratios.
Activity ratios indicated effective inventory and debtor control. Profitability measures
like return on equity improved over the years, but financial leverage gradually rose as per
the debt-equity ratio.
38
CHAPTER-III
RESEARCH METHODOLOGY
39
RESEARCH METHODOLOGY
RESEARCH
Research is the process of investigating and figuring out the most effective ways to
recognize problems and choose the best solutions to achieve improved outcomes.
RESEARCH DESIGN
This study uses a descriptive research method to examine and explain the features and
qualities of the financial statements of Amara Raja Batteries Limited.
FINANCIAL TOOL APPLIED FOR THE STUDY
Financial statements can be simplified to help any reader comprehend a business's
operating performance and financial well-being. The method of financial analysis used
here is called "ratio analysis.
METHODOLOGY OF THE STUDY
We can analyze and interpret the financial statements of Amara Raja Batteries Limited by
examining its balance sheets and profit & loss accounts. These documents provide
valuable insights into the company's financial health and performance.
METHODS OF DATA COLLECTION
We gathered the necessary information from both secondary sources, such as existing
research and publications, and primary sources, including direct surveys or interviews, to
ensure comprehensive data for our analysis.
PRIMARY DATA
The primary data were obtained through personal discussions with the financial controller
and accounts manager of the company.
SECONDARY DATA
Secondary data were collected from the company's annual reports.
40
CHAPTER-IV
DATA ANALYSIS
41
DATA ANALYSIS AND INTERPRETATION
A.LIQUIDIY RATIO
1. CURRENT RATIO:
Current assets
Current assets = ------------------------------
Current liabilities
Year Current Assets Current Liabilities Current Ratio

2018-19 3,500,193,294 1,312,272,610 2.67
2019-20 5,975,961,025 2,020,744,952 2.95
2020-21 5,259,900,816 1,843,091,712 2.85
2021-22 6,310,628,185 3,190,856,472 1.90
2022-23 7,418,670,474 3,491,041,303 2.12
INTERPRETATION
The current ratio is a valuable indicator of a company's short-term solvency. The standard
benchmark for this ratio is 2:1. For the years 2018-19, the company's current ratio was
2.67, 2.95, 2.85, 1.97, and 2.12. Notably, in 2022-23, the current ratio increased from
1.97 to 2.12. This suggests that the company performed better in the year 2021-22
compared to 2022-2023.
42
2. QUICK RATIO
Quick assets
Quick ratio= ------------------------
Current assets
Year Quick assets Current Liabilities Quick Ratio

2018-19
2,578,479,879 1,312,272,610 1.96
2019-20
4,032,625,321 2,020,744,952 1.99
2020-21
3,651,632,143 1,843,091,712 1.98
2021-22
4,134,904,610 3,190,856,472 1.29
2022-23
4,571,704,172 3,491,041,303 1.30
INTERPRETATION
The quick ratio provides a more rigorous assessment of liquidity compared to the current
ratio. The standard benchmark for this ratio is 1:1. For the years 2018-2020, the
company's quick ratio was 1.96, 1.99, 1.98, 1.29, and 1.3. In 2022-2023, the quick ratio
increased to 1.3, indicating that the company meets the satisfactory standard norm.
43
3. CASH RATIO
Cash+ marketable securities

Cash ratio= --------------------------------------------
Current liabilities
Year Cash Marketable Current Cash

Securities Liabilities Ratio
2018-19
2,56,000,280 1,312,272,610 0.19
2019-20
5,1,143,739 2,020,744,952 0.25
2020-21
7,02,851,806 1,843,091,712 0.38
2021-22
6,24,672,429 3,190,856,472 0.19
2022-23
4,02,084,121 3,491,041,303 0.11
INTERPRETATION
Throughout the specified years, the cash ratio remains notably deficient. With the
standard cash ratio benchmark set at 1:2, it is evident that the company has consistently
fallen short in maintaining adequate levels of cash, bank balances, and marketable
securities.
44
B. LEVERAGE RATIOS
1. DEBT RATIO
Total Debt
Debt Ratio = -------------------------------------
Total Debt + Net Worth
Total Debt = Secured + Unsecured Loans, Net Worth = Share holders Funds
Year Total Debt Capital Employed Debt Ratio

2018-19 1,407,083,880 3,843,741,557 0.36
2019-20 3,162,620,560 6,493,635,030 0.48
2020-21 2,858,709,934 6,914,574,278 0.41
2021-22 9,11,894,460 6,348,321,650 0.14
2022-23 9,50,460,292 7,409,732,119 0.12
INTERPRETATION
The debt ratio provides insights into a firm's capital structure. It was 0.36 in 2018-19,
increased to 0.48 in 2019-20, decreased to 0.41 in 2020-21, further decreased to 0.14 in
2021-22, and then decreased again to 0.12 in 2022-23. This fluctuating trend suggests that
45
the company may not heavily rely on debt, as evidenced by the consistent decrease in
debt levels over the years.
2. DEBT-EQUITY RATIO
Total Debt
Debt-Equity Ratio = ------------------------
Net Worth
Total Debt = Secured + Unsecured Loans, Net Worth = Share holders Funds
Year Total Debt Net Worth Debt-Equity Ratio

2018-19 1,407,083,880 2,436,657,677 0.58
2019-20 3,162,620,560 3,331,014,470 0.95
2020-21 2,858,709,934 4,055,864,344 0.70
2021-22 911,894,460 5,436,427,190 0.17
2022-23 950,460,292 6,459,271,827 0.14
INTERPRETATION
The Debt-Equity ratio reflects a firm's capital structure. It stood at 0.58 in 2018-19, rose
to 0.95 in 2019-20, decreased to 0.70 in 2020-21, dropped to 0.17 in 2021-22, and further
declined to 0.14 in 2022-23. This pattern indicates a decreasing reliance on debt funding
by the company.
46
3. INTEREST COVERAGE RATIO
EBIT
Interest Coverage Ratio = -----------------------
Interest
EBIT = Earnings Before Interest and Tax.
Year EBIT Interest ICR

2018-19 6,81,060,155 30,924,293 22.02
2019-20 1,330,072,551 1,29,308,874 10.28
2020-21 1,044,220,357 1,82,365,723 5.72
2021-22 2,478,633,177 67,715,572 36.60
2022-23 2,195,608,155 14,520,441 151.20
INTERPRETATION
The interest coverage ratio was 22.02 in 2018-19, then decreased to 10.28 in 2019-20, and
further dropped to 5.72 in 2020-21. However, it surged to 36.60 in 2021-22 and
significantly increased to 151.2 in 2022-23. Given this trend, external investors are likely
to show interest in investing their money in this company.
4. PROPRIETARY RATIO
47
Shareholder’s Funds
Proprietary Ratio = --------------------------------
Total Assets
Shareholder’s Funds = Share Capital + Reserves and Surplus
Year Shareholders’ Funds Total Assets Proprietary Ratio
2018-19 2,436,657,677 5,292,107,128 0.46
2019-20 3,331,014,470 8,683,886,037 0.38
2020-21 4,055,864,344 8,940,174,313 0.45
2021-22 5,436,427,190 9,755531,000 0.55
2022-23 6,459,271,827 11,105,707,129 0.58
INTERPRETATION
Between 2020 and 2023, the proprietary ratios were 0.46, 0.38, 0.45, 0.55, and 0.58.
Notably, in 2022-2023, the proprietary ratio saw a significant increase, indicating a higher
proportion of owner's equity in the company's financial structure.
C. ACTIVITY RATIOS
48
1. WORKING CAPITAL TURNOVER RATIO
Net Sales
Working Capital Turnover Ratio = ---------------------------
Working Capital
Working Capital = Current Assets-Current Liabilities
Year Net sales Working Capital WCTR

2015-16 5,958,016,404 2,187,920,684 2.72
2016-17 10,833,256,904 3,955,216,073 2.73
2017-18 13,131,788,116 3,416,809,104 3.85
2018-19 14,652,096,705 3,119,771,713 4.69
2019-20 17,611,206,751 3,927,629,171 4.48
INTERPRETATION
Working capital turnover ratio is useful to measure the operating efficiency of the firm.
Working capital turnover ratio is 2.72 in the year 2018-19. It increased from the year
2019-20 (2.73) to 2020-21(4.69) but it decreased to 4.48 in the year2022-23.
2. CURRENT ASSETS TURNOVER RATIO
49
Net Sales
Current Assets Turnover Ratio = --------------------------
Current Assets
Year Net sales Current assets CATR

2018-19 5,958,016,404 3,500,193,294 1.73
2019-20 10,833,256,904 5,975,961,025 1.81
2020-21 13,131,788,116 5,259,900,816 2.49
2021-22 14,652,096,705 6,310,628,185 2.32
2022-23 17,611,206,751 7,418,670,474 2.37
INTERPRETATION
From 2020 to 2021, the current asset turnover ratios were 1.73, 1.81, 2.49, 2.32, and 2.37.
There's a consistent increase from 2019-20 onwards, peaking at 2.49, then slightly
decreasing to 2.32 in 2021-22, followed by a rise again to 2.37 in 2022-23.
50
3. FIXED ASSETS TURNOVER RATIO
Net Sales
Fixed Assets Turnover Ratio = ------------------------------------
Net Fixed Assets
Year Net sales Net fixed assets FATR

2018-19 5,958,016,404 1,568,304,581 3.80
2019-20 10,833,256,904 1,888,508,475 5.73
2020-21 13,131,788,116 2,813,242,340 4.66
2021-22 14,652,096,705 3,057,255,262 4.79
2022-23 17,611,206,751 3,150,869,618 5.58
INTERPRETATION
The fixed assets turnover ratio was high in 2019-20 at 5.73. It decreased to 4.66 in 2020-
21 but increased to 4.79 in 2021-22 and further rose to 5.58 in 2022-23. This trend
indicates the effective utilization of fixed assets by the company.
51
3. TOTAL ASSETS TURNOVER RATION
Net Sales
Total Assets Turnover Ratio = -------------------------
Total Assets
Year Net sales Total assets TATR

2018-19 5,958,016,404 5,292,107,128 1.12
2019-20 10,833,256,904 8,683,886,037 1.25
2020-21 13,131,788,116 8,940,174,313 1.46
2021-22 14,652,096,705 9,755,531,000 1.50
2022-23 17,611,206,751 11,105,707,129 1.58
INTERPRETATION
From 2018 to 2023, the total assets turnover ratio increased from 1.12 to 1.58. This
upward trend suggests effective utilization of the company's total assets and improved
capacity over the period.
52
5. DEBTORS TURNOVER RATIO
Net Sales
Debtors Turnover Ratio = ------------------------------------
Average Debtors
Year Net sales Average Debtors DTR
2018-19 5,958,016,404 1,459,544,977 4.08
2019-20 10,833,256,904 2,264,682,019 4.78
2020-21 13,131,788,116 2,078,493,040 6.31
2021-22 14,652,096,705 2,422,954,714 6.04
2022-23 17,611,206,751 3,056,623,935 5.76
INTERPRETATION
Between 2018 and 2023, the debtors turnover ratios were 4.08, 4.78, 6.31, 6.04, and 5.76.
Notably, the ratio peaked in 2020-21 and then decreased to 5.76 in 2022-23, indicating a
reduction in credit sales and an increase in cash sales by the company.
6. INVENTORY TURNOVER RATIO
53
Cost of Goods Sold
Inventory Turnover Ratio = ------------------------------------
Average Inventory
Opening Stock + Closing Stock

Average Inventory = -----------------------------------------
2
Year Cost Of Goods Sold Average Inventory ITR
2018-19 5,958,016,404 7,46,837,818 7.97
2019-20 10,833,256,904 1,432,524,560 7.56
2020-21 13,131,788,116 1,775,802,189 7.39
2021-22 14,652,096,705 1,891,996,124 7.74
2022-23 17,611,206,751 2,511,344,939 7.01
INTERPRETATION
The inventory turnover ratio was 7.97 in 2018-19. It decreased to 7.56 and 7.39 in 2019-
20 and then increased to 7.74 in 2021-22. However, it decreased again to 7.01 in 2022-23,
indicating significant fluctuations in this ratio over the years.
D.PROFITABILITY RATIOS
54
1. GROSS PROFIT RATIO
Gross Profit
Gross Profit Ratio = ------------------------------ x 100
Sales
Year Gross profit Sales GPR

2018-19 7,11,984,448 5,958,016,404 11.95
2019-20 1,459,381,425 10,833,256,904 13.47
2020-21 12,265,866,080 13,131,788,116 9.34
2021-22 2,546,348,749 14,652,096,705 17.37
2022-23 2,210,128,596 17,611,206,751 12.54
INTERPRETATION
This ratio reflects the connection between gross profits and sales. From 2018 to 2019, the
gross profits were 11.95, 13.47, 9.34, 17.3, and 12.54. However, in 2022-23, the gross
profit ratio decreased to 12.54.
2. NET PROFIT RATIO

55
Profit After Tax
Net Profit Ratio = ------------------------------------ x 100
Sales
Year Net Profit Sales Net Profit Ratio
2018-19 470,434,575 5,958,016,404 7.89
2019-20 943,631,511 10,833,256,904 8.71
2020-21 804,786,707 13,131,788,116 6.12
2021-22 1,670,333,868 14,652,096,705 11.39

2022-23 1,480,963,975 17,611,206,751 8.40
INTERPRETATION
Between 2019 and 2022, the net profits were 7.89, 8.71, 6.12, and 11.39. However, in
2022-23, although ARBL experienced a substantial amount of profits, it decreased to 8.4.
56
4. RETURN ON INVESTMENT
Net Profit After Interest & Tax

Return on Investment = --------------------------------------------- x 100
Shareholder’s Funds
Net Profit After Return on

Year Shareholders Funds
Interest & Tax Investment
2022-23
470,434,575 2,436,657,677 19.30
2022-23
943,631,511 3,331,014,470 28.32
2022-23
804,786,707 4,055,864,344 19.84
2022-23
1,670,333,865 5,436,427,190 30.72
2022-23
1,480,963,975 6,459,271,827 22.92
INTERPRETATION
Between 2019 and 2023, the return on investments was 19.30, 28.32, 19.84, 30.72, and
22.92. Notably, the return on investment was high in 2021-22 at 30.72 but decreased to
22.92 in 2022-23.
57
4. EARNING PER SHARE
Profit After Tax
Earning Per Share = --------------------------------------
Number of Equity Shares
Year Profit After Tax Number of Shares Earning Per Share

2022-23
470,434,575 11,387,500 41.31
2022-23
943,631,511 56,937,500 16.57
2022-23
804,786,707 85,406,250 9.42
2022-23
1,670,333,865 85,406,250 19.56
2022-23
1,480,963,975 85,406,250 17.34
INTERPRETATION
Earnings per Share (EPS) indicates the income available to equity shareholders. In 2018-19,
the EPS was Rs. 41.31, declining to Rs. 16.57 in 2019-20 and further to Rs. 9.42 in 2020-21.
However, it increased to Rs. 19.56 in 2021-22 before decreasing again to Rs. 17.34 in 2022-
23. This provides insight into the comparative earnings of the firm over the specified period.
58
DIVIDEND PER SHARE
Dividend
Dividend Per Share = ----------------------------------
Number of Shares
Dividend Per
Year Dividend Number of Shares
Share
2022-23
39,856,250 11,387,500 3.5
2022-23
39,856,250 56,937,500 0.7
2022-23
68,325,000 85,406,250 0.8
2022-23
247,678,125 85,406,250 2.9
2022-23
222,056,250 85,406,250 2.6
INTERPRETATION
Between 2018 and 2023, the dividend per share fluctuated, with values of 3.5, 0.7, 0.8,
2.9, and 2.6. The dividend per share was highest in 2018-19 and decreased to 2.6 in 2022-
23.
59
6. DIVIDEND PAYOUT RATIO
Dividend Per Share

Dividend Payout Ratio = ----------------------------------
Earning Per Share
Dividend
Year Dividend Per Share Earning Per Share
Payout Ratio
2022-23 3.5 41.31 0.08
2022-23 0.7 16.57 0.04
2022-23 0.8 9.42 0.08
2022-23 2.9 19.56 0.14
2022-23 2.6 17.34 0.14
INTERPRETATION
60
Between 2018 and 2023, the dividend payout ratios were 0.08, 0.04, 0.08, 0.14, and 0.14.
Notably, the dividend payout ratio remained the same in both 2021-22 and 2022-23.
CHAPTER-V
61
FINDINGS AND CONCLUSION
62
FINDINGS
 The company has achieved a standard current ratio of 2:1 this year, indicating its
ability to repay short-term liabilities.
 Quick assets exceed quick liabilities, ensuring the company's capability to meet
immediate obligations.
 However, the company struggles with maintaining sufficient cash and bank balances,
affecting its cash performance negatively.
 Dependency on debt funding has decreased compared to previous years.
 The high interest coverage ratio this year attracts investor interest in the company.
 Despite a decrease in working capital turnover ratio, effective utilization of working

capital is crucial.
 The gradual increase in fixed assets turnover ratio from 2018-2023 indicates increased
sales generation.
 A decrease in debtors turnover ratio suggests a shift towards reduced credit sales and
increased cash sales.
 Both gross and net profits have decreased in the present year, necessitating better
control over operating expenses.
63
SUGGESTIONS
 Following the financial statement analysis, the company's status appears favorable as
its net working capital has doubled compared to the previous year.
 However, the company faces potential challenges in the future due to its high-interest
payments.
 The effective utilization of fixed assets contributes significantly to the organization's

growth, emphasizing the need for their optimal maintenance.
 To facilitate company diversification, ARBL should focus on increasing both its gross
and net profits.
CONCLUSION
the company is doing quite well financially. It's managing its short-term debts effectively,
which is a good sign. However, it's struggling a bit with keeping enough cash on hand
and in the bank, so it needs to work on better managing its cash flow.
One positive thing is that the company is relying less on borrowing money, which is
generally a good practice. Also, the fact that it's able to cover its interest payments easily
is reassuring for potential investors.Even though the company's efficiency in using its
working capital has decreased a bit, there's still room for improvement there. The increase
in sales generated from fixed assets is promising for future growth.
It seems the company is shifting towards more cash sales instead of credit, which might
affect its revenue streams. Finally, the company needs to focus on controlling its expenses
better to improve its overall profitability.In conclusion, while the company is in a good
position overall, it should focus on improving its liquidity and controlling expenses to
ensure continued success in the future.
64
BIBLIOGRAPHY
Ganapathi, R., & Nagarajan, R. (2016). Financial Performance Analysis of Amara Raja
Batteries Limited. International Journal of Multidisciplinary Research and Modern
Education, 2(1), 604-608.
Nithya, R., & Balamurugan, P. (2015). A Study on Financial Performance of Amara Raja
Batteries Limited. International Journal of Management and Social Science Research
Review, 1(9), 85-90.
Rajeswari, K., & Arumugam, S. (2018). A Study on Financial Performance of Amara
Raja Batteries Limited. International Journal of Pure and Applied Mathematics, 119(12),
15383-15390.
Rama Rao, K., & Venkateswarlu, B. (2010). Ratio Analysis of Amara Raja Batteries
Limited. International Journal of Research in Commerce, Economics & Management,
1(2), 97-103.
Ravi, K., & Sandhya, K. (2012). A Study on Financial Performance of Amara Raja
Batteries Limited. International Journal of Research in Commerce & Management, 3(8),
113-118.
Sathish, S., & Balaji, K. V. N. (2017). Ratio Analysis of Amara Raja Batteries Limited.
International Journal of Research in Finance and Marketing, 7(6), 50-60.
Selvaraj, N., & Nagarajan, R. (2014). A Study on Financial Performance of Amara Raja
Batteries Limited. International Journal of Research in Business Management, 2(9), 97-
106.
Srinivasan, P., & Sridharan, S. (2011). A Study on Financial Performance of Amara Raja
Batteries Limited. International Journal of Financial Management, 1(3), 45-55.
Srivatsan, V., & Vijayakumar, A. (2019). Financial Performance Analysis of Amara Raja
Batteries Limited. International Journal of Research and Analytical Reviews, 6(1), 741-
745.
Vijayakumar, A., & Devi, S. S. (2013). A Study on Financial Performance of Amara Raja
Batteries Limited. International Journal of Marketing, Financial Services & Management
Research, 2(9), 125-135.
WEBSITES
 www.amararaja.co.inwww.arbl.com
65
APPENDEX
ROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31,
2019.
Year Ended Year Ended

Particulars
31-03-2019 31-03-2018
INCOME
Sales – Gross 7,451,032,988 4,458,295,779
Less: Excise duty Collected 1,493,016,594 539,737,583
Net Saless 5,958,016,404 3,918,558,196
Other Income 97,738,804 73,518,437
Increase /( Decrease )in Stock 181,845,189 41,637,449
TOTAL 6,237,600,397 4,033,714,082
EXPENDITURE
Purchase of Finished Goods 1,190,212 4,353,496
Raw Material Consumed 3,937,812,454 2,232,086,848
Payments & Benefits to Employees 265,997,094 207,269,383
Manufacturing, Selling, Admin & Other
1,093,657,443 761,850,408
Expenses
Duties & Taxes 26,007,989 294,245,095
Interest 30,924,293 13,435,515
Depreciation 170,026,464 147,009,114
TOTAL 5,525,615,949 3,660,249,859
Profit Before Taxation 711,984,448 373,464,223
Add: Provision for Deferred Income
Tax credited back (Net) - 10,915,000
Less: Provision for Taxation – Current 217,500,000 135,000,000
- Deferred 16,080,646
- Earlier years 4,475,039 3,846,464
- Wealth Tax 94,188 147,729
- Fringe Benefit Tax 3,400,000 6,919,300
Profit After Taxation 470,434,575 238,465,730
Profit brought forward from previous year 749,031,694 566,874,029
Profit Available for Appropriation 1,219,466,269 805,339,759
Less: Appropriation
Transfer to General Reserve 47,043,458 23,846,573
Proposed Dividend 39,856,250 28,468,750
Dividend Tax 6,773,570 3,992,742
Balance Carried to Balance Sheet 1,125,792,991 749,031,694
Basic Earnings Per Equity Share 41.31 20.94
66
BALANCE SHEET AS AT MARCH 31, 2020
Particulars As at 31-03-2020 As at 31-03-2019

SOURCES OF FUNDS
Shareholders' Funds
Share capital 113,875,000 113,875,000
Reserves and surplus 2,322,782,677 1,898,977,921
2,436,657,677 2,012,852,921
Loan Funds
Secured 1,074,874,049 189,001,189
Unsecured 332,209,831 216,407,580
1,407,083,880 405,408,769
Deferred tax liability 136,092,961 120,012,315
Total 3,979,834,518 2,538,274,005
APPLICATION OF
FUNDS
Fixed Assets
Gross block 2,577,786,073 1,907,116,068
Less: Depreciation 1,009,481,492 863,568,510
Net block 1,568,304,581 1,043,547,558
Capital work-in-progress 61,667,597 48,149,118
1,629,972,178 1,091,696,676
Investments 161,941,656 320,140,656
Current Assets, Loans and
Advances
Inventories 921,713,415 571,962,221
Sundry debtors 1,459,544,977 856,520,556
Cash and bank balances 256,000,280 205,212,363
Loans, advances and 859,824,054 634,750,549
deposits
Other Current Assets 3,110,568 12,035,439
3,500,193,294 2,280,481,128
Less: Current liabilities and
provisions
Liabilities 735,304,583 673,895,907
Provisions 576,968,027 480,148,548
1,312,272,610 1,154,044,455
Net current assets 2,187,920,684 1,126,436,673
Total 3,979,834,518 2,538,274,005
67
PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH
31, 2020.

Particulars
31-03-2020 31-03-2019
INCOME
Sales – Gross 13,499,867,499 7,451,032,988
Less: Excise duty Collected 2,666,610,595 1,493,016,594
Net Sales 10,833,256,904 5,958,016,404
Other Income 256,100,643 97,738,804
TOTAL 11,671,423,529 6,237,600,397
EXPENDITURE
Manufacturing, Selling, Admin & Other
1,579,591,221 1,093,657,443
Expenses
Duties & Taxes 49,438,561 26,007,989
Interest 129,308,874 30,924,293
Depreciation 244,452,070 170,026,464
TOTAL 10,212,042,104 5,525,615,949
Profit Before Taxation 1,459,381,425 711,984,448
Less: Provision for Taxation –Current 480,000,000 217,500,000
- Deferred 33,413,094 16,080,646
- Earlier years (3,756,190) 4,475,039
- Wealth Tax 93,010 94,188
- Fringe Benefit Tax 6,000,000 3,400,000
Profit brought forward from previous year 1,125,792,991 749,031,694
Profit Available for Appropriation 2,069,424,502 1,219,466,269
Less: Appropriation
Dividend Tax 6,773,570 6,773,570
Balance Carried to Balance Sheet 1,928,431,531 1,125,792,991
Earning Per Equity Share 16.57 8.26
68

SOURCES OF FUNDS
Shareholders' Funds
Share capital 113,875,000 113,875,000
3,331,014,470 2,436,657,677
Loan Funds
Secured 2,266,545,502 1,074,874,049
Unsecured 896,075,058 332,209,831
3,162,620,560 1,407,083,880
Total 6,663,141,085 3,979,834,518
APPLICATION OF
FUNDS
Fixed Assets
Gross block 3,105,843,108 2,577,786,073
Less: Depreciation 1,217,334,633 1,009,481,492
Net block 1,888,508,475 1,568,304,581
2,545,918,387 1,629,972,178
Investments 162,006,625 161,941,656
Advances
Inventories 1,943,335,704 921,713,415
Sundry debtors 2,264,682,019 1,459,544,977
Loans, advances and 1,248,478,477 859,824,054
deposits
Other Current Assets 8,011,086 3,110,568
5,975,961,025 3,500,193,294
Less: Current liabilities and
provisions
Liabilities 1,027,373,819 735,304,583
Provisions 993,371,133 576,968,027
2,020,744,952 1,312,272,610
Total 6,663,141,085 3,979,834,518
69
PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31,
2020.

Particulars
31-03-2021 31-03-2020
INCOME
Sales – Gross 15,794,098,590 13,499,867,499
Less: Excise duty Collected 2,662,310,474 2,666,610,595
Net Sales 13,131,788,116 10,833,256,904
Other Income 80,564,340 256,100,643
Increase /( Decrease )in Stock (153,400,292) 582,065,982
TOTAL 13,058,952,164 11,671,423,529
EXPENDITURE
Manufacturing, Selling, Admin & Other 2,230,245,324 1,579,591,221
Expenses
Duties & Taxes 19,915,474 49,438,561
Interest 182,365,723 129,308,874
Depreciation 345,563,858 244,452,070
TOTAL 11,832,366,084 10,212,042,104
Profit Before Taxation 1,226,586,080 1,459,381,425
Less: Provision for Taxation 421,799,373 515,749,914
Profit brought forward from previous year 1,928,431,531 1,125,792,991
Less: Appropriation
Dividend Tax 11,611,833 6,773,570
70

SOURCES OF FUNDS
Shareholders' Funds
Share capital 170,812,500 113,875,000
4,055,864,344
3,331,014,470
Loan Funds
Secured 2,078,322,863 2,266,545,502
Unsecured 780,387,071 896,075,058
2,858,709,934
3,162,620,560
Deferred tax liability 182,508,323
169,506,055
Total 7,097,082,601
6,663,141,085
APPLICATION OF
FUNDS
Fixed Assets
Gross block 4,270,935,970 3,105,843,108
Net block 2,813,242,340 1,888,508,475
3,209,287,309
2,545,918,387
Investments 470,986,188
162,006,625
Advances
Inventories 1,608,268,673 1,943,335,704
Sundry debtors 2,078,493,040 2,264,682,019
Loans, advances and 870,287,297 1,248,478,477
deposits
Other Current Assets 5,259,900,816 8,011,086
5,975,961,025
Less: Current liabilities and 1,137,968,083
provisions
Liabilities 705,123,629 1,027,373,819
Provisions 1,843,091,712 993,371,133
3,416,809,104 2,020,744,952
Total 6,663,141,085
71
Particulars
31-03-2022 31-03-2021
INCOME
Gross Sales 16,910,837,433 15,794,098,590
Less: Excise duty and sales tax 2,258,740,728 2,662,310,474
Net Sales 14,652,096,705 13,131,788,116
Other Income 170174,501 80,564,340
Increase /( Decrease )in Stock 356,877,486 (153,400,292)
TOTAL 15,179,148,692 13,058,952,164
EXPENDITURE
Purchase of Trading Goods 35,328,540 85,086,105
Material Consumed 9,142,817,590 8,453,055,263
Expenses
Duties & Taxes 20,590,181 19,915,474
Interest 67,715,572 182,365,723
Depreciation 429,451,244 345,563,858
TOTAL 12,632,799,943 11,832,366,084
Profit After Taxation 1,670,333,868 804,786,707
Profit brought forward from previous year 2,572,802,734 1,928,431,531
Less: Appropriation
Dividend Tax 42,092,897 11,611,833
72

SOURCES OF FUNDS
Shareholders' Funds
Share capital 170,812,500 170,812,500
5,436,427,190 4,055,864,344
Loan Funds
Secured 272,946,770 2,078,322,863
Unsecured 638,947,690 780,387,071
911,894,460 2,858,709,934
Total 6,564,674,528 7,097,082,601
APPLICATIONOFFUN
DS
Fixed Assets
Gross block 4,911,067,266 4,270,935,970
Net block 3,057,255,262 2,813,242,340
3,284,146,751 3,209,287,309
Investments 160,756,064 470,986,188
Current Assets, Loans
and Advances
Inventories 2,175,723,575 1,608,268,673
Sundry debtors 2,422,954,714 2,078,493,040
Loans, advances and 1,087,277,467 870,287,297
deposits
6,310,628,185 5,259,900,816
Less: Current liabilities
and provisions
Liabilities 1,656,390,120 1,137,968,083
Provisions 1,534,466,352 705,123,629
3,190,856,472 1,843,091,712
Net current assets
3,119,771,713 3,416,809,104
Total
6,564,674,528 7,097,082,601
73
PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH
31, 2023

Particulars
31-03-2023 31-03-2022
INCOME
Gross Sales 20,764,827,109 6,910,837,433
Less: Excise duty and sales tax 3,153,620,358 2,258,740,728
Net Sales 17,611,206,751 14,652,096,705
Other Income 96,043,027 170174,501
TOTAL 17,990,394,529 5,179,148,692
EXPENDITURE
Purchase of Trading Goods 74,140,812 35,328,540
Material Consumed 11,807,643,547 9,142,817,590
Expenses
Duties & Taxes 23,720,297 20,590,181
Interest 14,520,441 67,715,572
Depreciation 417,120,633 429,451,244
TOTAL 15,780,265,933 12,632,799,943
Profit After Taxation 1,480,963,975 1,670,333,868
Profit brought forward from previous 3,786,332,193 2,572,802,734
year
Less: Appropriation
Interim Dividend 170,812,500 -
Dividend tax on interim dividend 28,369,821 -
Proposed final dividend 222,056,250 247,678,125
Dividend Tax on Proposed final 36,880,767 2,092,897
dividend
74
SOURCES OF FUNDS
Shareholders' Funds
Share capital 170,812,500 170,812,500
6,459,271,827 5,436,427,19
0
Loan Funds
Secured 240,443,810 272,946,770
Unsecured 710,016,482 638,947,690
950,460,292 911,894,46
0
Deferred tax liability 204933,707 216,352,87
8
Total 7,614,665,826 6,564,674,52
8
APPLICATION OF
FUNDS
Fixed Assets
Gross block 5,387,556,902 4,911,067,266
Net block 3,150,869,618 3,057,255,262
3,526,280,591 3,284,146,75
1
Investments 160,756,064 160,756,06
4
Advances
Inventories 2,846,966,302 2,175,723,575
Sundry debtors 3,056,623,935 2,422,954,714
Loans, advances and 1,112,996,116 1,087,277,467
deposits
7,418,670,474 6,310,628,185
Less: Current liabilities
and provisions
Liabilities 1,918,887,158 1,656,390,120
Provisions 1,572,154,145 1,534,466,352
3,491,041,303 3,190,856,472
75
3
Total 6,564,674,528 6,564,674,528
76

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CHAPTER-I

MEANING OF FINANCIAL MANAGEMENT

“Financial management is the application of the planning and control function to

“Financial management is the application activity of a business that is responsible

“Financial management is concerned is with the effective use of an important

NATURE OF RATIO ANALYSIS

OBJECTIVES OF RATIO ANALYSIS

USERS OF FINANCIAL ANALYSIS

 SUPPPLIERS OF LONG – TERM DEBT:

Accountant’s handbook by Wixon, kell and Bedford, a ratio “is an expression of

People use ratios to determine those financial characteristics of the firm in

With the help of ratio one can determine

 The ability of the firm to meet its current obligations

A battery is an electrochemical device in which the free energy of a Chemical reaction is

HOW A BATTERY WORKS

SEALED MAINTENANCE FREE (SMF) BATTERIES

VALUE REGULATED LEAD ACID (VRLA) BATTERIES

MAJOR MANUFACTURERS IN BATTERY INDUSTRY IN INDIA:

CHARACTERISTICS OF VRLA BATTERIES

PROSPECTS OF SMF/VRLA BATTERIES IN INDIA

1. SEIRI - Sort Out.

They propose to accomplish this by

 Training the people and creating awareness on 5 ‘S’

They believe that effective implementation of 5 ’S’ technique s will result in

 Consistent and better quality product

AWARDS FOR AMARA RAJA BATTERIES LTD

MANPOWER DETAILS OF ARBL

Executives - 250 members

AMARA RAJA’S STRENGTHS

 Proven technology from GNB and being a pioneer

CULTURE AND ENVIRONMENT

To accomplish the above, ARBL focus on

 Establishing superior specifications for our products and processes

o Maximize export of its batteries.

AMARA RAJA GROUP COMPRISES OF FOLLOWING COMPANIES

 Amara Raja Batteries Limited (ARBL), Karakambadi, Tirupati.

AMARA RAJA BATTERIES LIMITED

Industrial Battery Division (IBD) Automotive

1. Railway Coaches 1. Two wheelers

2. Telecom 2. Four wheelers

3. UPS 3. Heavy vehicles

INDUSTRIAL BATTERY DIVISION (IBD)

AUTOMOTIVE BATTERY DIVISION (ABD)

The plastic products of ABD are Jars and Jar Covers.

AMARA RAJA POWER SYSTEMS LIMITED

Total strength of ARPS (P) L comes around 265.

MANGAL PRECISION PRODUCTS PVT. LTD.

AMARA RAJA ELECTRONICS PVT. LTD.(AREPL)

Type of VRLA batteries manufactured in the industial battery division

-WESTON AND BRIGHAM

“Financial management is the application activity of a business that is responsible for

IMPORTANCE OF FINANCE MANAGEMENT IN PRESENT INDUSTRIAL

The following are the points to highlight the importance of finance.

 Finance for business promotion

OBJECTIVES OF FINANCIAL ANALYSIS

 To estimate the earning capacity of the firm.

TOOLS FOR FINANCIAL ANALYSIS

MANAGERIAL USES OF RATIO ANALYSIS

1. HELP IN DECISION MAKING

2. HELP IN FINANCIAL FORECASTING AND PLANNING

 To facilitate smooth production and sales operations.

SCOPE OF THE STUDY

 80% of raw materials are imported.