➢

A
PROJECT REPORT
ON
“FINANCIAL STATEMENT ANALYSIS OF HALDIRAMS PVT. LTD.”

IN THE PARTIAL FULFILLMENT OF DEGREE BACHELOR OF COMMERCE(H)

SESSION (2019-22)

SUBMITTED TO SUBMITTED BY
Ms. RAHNUMA MALIK BHOLA MANDAL
(ASST.PROFESSOR) B. COM.(H) 6TH SEM.
ROLL NO. 1913358600

DROAN COLLEGE OF EDUCATION AND TECHNOLOGY

(AFFILIATED TO KUMAUN UNIVERSITY, NAINITAL)

1
 ➢
CERTIFICATE
[from faculty guide]
I have a pleasure in certifying that BHOLA MANDAL, is a bonafide student of
6th semester of the Bachelor Of Commerce (HONS.) of DROAN COLLEGE OF
EDUCATION AND TECHNOLOGY under university roll no. 1913358600. He
has completed his project entitled FINANCIAL STATEMENT ANALYSIS OF
PVT. LTD. Under my guidance, In the year 2019-2022, in the final fulfillment
of BACHELOR OF COMMERCE(H).

Signature of Project Guide

(Ms. RAHNUMA MALIK)

2
 ➢
STUDENT’S DECLARATION
I hereby, declare that the project report titled, “FINANCIAL STATEMENT
ANALYSIS OF HALDIRAM’S PVT. LTD.” is my original work and has not been
published or submitted for any degree, diploma or other similar titles
elsewhere. This has been undertaken for the purpose of partial fulfillment of
BACHELOR OF COMMERCE(H) in DROAN COLLEGE OF EDUCATION AND
TECHNOLOGY.

Date:- BHOLA MANDAL

B.COM. (H) 6TH SEM.
ROLL NO. 1913358600

3
 ➢

ACKNOWLEDGEMENT
It is really a matter of pleasure for me to get an opportunity to thank all the
persons who contributed directly and indirectly for the successful completion
of the project report, “FINANCIAL STATEMENT ANALYSIS OF HALDIRAM’S
PVT. LTD.”

First of all, I am extremely thankful to my college DROAN COLLEGE OF

EDUCATION AND TECHNOLOGY for providing me this opportunity and for all
its contribution and cooperation. I also express my gratitude to my project
mentor and guide Ms. RAHNUMA MALIK. I am highly thankful to my
respected project guide for giving me the encouragement and freedom to
conduct my project. I am also grateful to all my faculty members for their
valuable guidance and suggestions for my entire study. I would also like to
thank HALDIRAMS team for extending their valuable time and cooperation.

4
 ➢

PREFACE

This project report attempts to bring under one cover, the entire work and
dedication put in by me in the completion of the project work on FINANCIAL
STATEMENT ANALYSIS OF HALDIRAM’S PVT. LTD.

I have expressed my experiences in my own simple way. I hope who goes

through it will find it interesting and worth reading. All constructive feedback
is cordially invited.

5
 ➢

TABLE OF CONTENTS

1 - COMPANY INFORMATION
➢ Introduction
➢ Company Profile
➢ History of the Company
➢ Product Profile
2 - FINANCIAL HIGHLIGHTS
➢ Company balance sheet
➢ Profit & loss A\c
➢ Cash flow
➢ Share capital
➢ Reserves & Surplus

3 - CONCLUSION AND RECOMMENDATION

➢ Conclusion
➢ Recommendation

4 - BIBLIOGRAPHY
➢ Bibliography.

6
 ➢

INTRODUCTION
Financial Statements report what actually happened to assets,

earnings and dividends. Investors use financial statements to

predict future earnings/dividends. Management uses financial

statements to help anticipate future conditions and as starting

point for planning actions that will affect future event.

A Complete set of Financial Statements (Decision Tool),

including the beginning and ending net worth statements,

the income statement, the cash flow statement, the

statement of owner equity and the financial performance

measures can help you to do a comprehensive financial

analysis of your business. To help you assess the financial

health of your business, Financial Performance Measures

allows you to give your business a check-up. Interpreting

7
 ➢
Financial Performance Measures helps you to understand

what these performance measures mean for your

business.

As I have already mentioned analysis of financial statement

is a study of relationship among various financial facts and

figures which actually contain a whole lot of historical data.

The complex figures as given in these financial statements

are broken up into simple and valuables elements and

significant relationships are established between the

elements of the same statements or different financial

statements. This process of dissection, establishing

relationships and interpretation thereof to understand the

working and financial position of a firm is called the analysis

of financial statements.

As in all things financial, beauty is often in the eye of the

beholder. It pays to do your own work! Making good

investment decisions does not require scholars. It requires

financial analysis.

I have chosen ‘Analysis of Financial Statements’ as my project

title. This report analyzes the different financial statements of

8
 ➢
Shree bhageshwari paper millLtd. and compares the trends over

the past 4 years. The data in this report provides useful way to

analyze financial statements and evaluate the firm’s performance

over the period. Financial statements which mainly consist of

Balance Sheet, Income Statement, Cash Flow Statement and

Statement of Retained Earnings summarize the results of the

firm’s activities at a point in time and on operations over some

past period which is very helpful in analyzing the performance of

the company during past.

"Analysis of Financial Statements" is a powerful business handbook for

investors, bankers, and other professionals who rely on financial statement

understanding and analysis. For investors who need to evaluate why

increased sales didn't lead to higher stock prices...for bankers who need to

know the underlying reasons a customer wants to borrow funds...for any

business person who needs to analyze and understand financial

statements...Let "Analysis of Financial Statements" be your guide to

understanding the language of financial statements.

Analysis of financial statement is the systematic numerical

calculation of the relationship between one fact with the other to

9
 ➢
measure the profitability, efficiency, solvency and the growth

potential of the business.

It is just a heart of industry. No doubt, fixed tangible asset like

land and building, plant & equipment provide a strong structural

base but working capital is all the more needed as a 'motor force'

to make the fixed tangible more effective and turn out what is

mostly needed.

There might be many business in the world, where besides

investment in fixed assets, funds would not be needed for

carrying on day to day operations of the business. But in most

companies, it is essential that a certain proportion of funds be

kept invested in the form of different current assets like

inventories, receivables, cash and marketable securities. The

mode of administration of finance and working capital

determines to a very large extent to overall success or failure of

the operations of an enterprises. The analysis of financial

performance is of vital importance for the success of a business.

The manner of management of finance to a very large extent

determines the success of operation of a concern because

problem of trade off between risk and return is involved.

10
 ➢

Sales of Audit
A sales audit is a review of a company's entire sales process, from
the use of particular types of software, to the staff, to
management strategies. This type of audit is different from a
financial audit in which a company evaluates their operating
costs against their sales revenues. A sales audit evaluates the
effectiveness of every aspect of the sales process and helps
companies determine whether or not their methods are cost
effective and beneficial in generating revenue. Some businesses
choose to perform this process themselves, often with the aid of
specialized audit software, and others prefer to have an outside
consultant objectively carry out the evaluation.

Sales auditors may begin by analyzing the atmosphere in which

a company works, both externally and internally. The external
environment refers to the market size in which a company
markets their product, the market demand for that product, and
the growth trends in that area. The internal environment refers to
the culture of the company itself, including the ways in which the
sales team interact with one another and the nature of their
relationships with their managers. This typically provides a basis
for the sales auditor to evaluate the sales performance a company
desires versus what they are actually achieving.

11
 ➢

Audit of Sales:

1. Checking Sales order approved

2. Any Amendment in the Sale Order the same is approved

3. Sales order terms and conditions

4. Invoice has been raised correctly

5. S.O. quantity and rates are matching with the invoice

6. Tax rated are charged is correct or not

7. Delivery Chalan preparaed as per Invoice

8. D.C. checked and signed by Stores authority along with Invoice

9. Whether all the materials are Dispatched in good condition

10. Any damage is notified to the buyer or any rejections and return

11. Return has been received properly in the stores

12. The Credit has been raised for the same

13. Tax rated are charged accounted as correct out put vat a/c

14. Sales register has been maintained correctly with all the Sales entries

with serially numbered and maintained

12
 ➢

RESEARCH
METHODOLOGY

13
 ➢

RESEARCH METHODOLOGY

Research Methodology may be defined as a way to

systematically solve the research problem. Research

Methodology constitutes of research method, used in context of

research study and explanation of using a particular method or

technique and way other techniques are not used.

It also includes the reasons for taking up a particular problem, the data

collection, its analysis and interpretation.

For this particular project the steps followed or the Methodology

followed is as given below :

❑ State of Problem

❑ Extensive Literature Survey

❑ Designing of Study

14
 ➢
❑ Data Collection

❑ Analysis of data

❑ Conclusion & Interpretation of Research

1. Problem Defined :

Finance management is one of the important part of

business. Presently in a very tough competitive scenario

every business organisation wants to reduce costs in

manufacturing their products so that they can offer quality

product at competitive rates to the consumers. Also every

business concern try to manage their receivables not

making very much human efforts. Working capital

management is one of the problem areas of many

organisations as it affects their profitability as well as their

present operations. I personally feel that many small

Indian organisations are facing working capital problems

and so they are even struggle for their survival. In my

project I try to analyse the working capital management of

15
 ➢
the company SHREE BHAGESHWARI PAPER

MILLLTD.

2. Extensive Literature Survey :

For the purpose I made a through study of the topic to get

in depth knowledge of the subject. I concerned various

books and newspapers like Economic Times, Business

Standard, Magazines, Journals etc., to get a first head view

regarding the problem.

3. Designing of Study :

We know that to get the best output from the research it

has to be conceptually so that minimum difficulties arise

during the conduct of the research. To make my research

successful I planned the methodology that I have to adopt

while doing my project.

4. Collection of Data :

This is the fourth step in the research process. This

consisted of actually gathering the data from various

16
 ➢
primary and secondary sources. The methods used for

collection of data are as follows:

a) For the collecting of primary data I decided to meet

different managers of different levels of the company and

others employees from different departments and collected

related information from them. I tried to take their views

on the various subject matters.

b) Documented Sources of Data: The secondary data

was collected from various documented sources. I referred

profit and loss account, balance sheet, stock register,

debtors and creditors registers of the company and take the

required data from that. I also collected various documents

of the company, like various pamphlets of the company,

quality policy, product details and relevant information

was extracted from them. I also referred were Business

India, Business World, Business Today and Newspapers

Economic Times, Financial Express, Business Standard to

understand the current scenario of working capital

management.

5. Analysis of Data :

17
➢
Data Analysis may be defined as the process of

computation of certain parameters along with

identification of relationship pattern that may exist among

data groups.

For analysis of data, the following steps were undertaken:

a) Data Editing: A thorough scrutiny of raw collected

as done and was detected in this step.

b) Classification of Data: In this the data was arranged

in groups or classes according to the resemblance and

similarities. This process has made the comparative

analysis an easier take.

c) Calculation: From the various figures collected

from different sources I calculate the required results.

d) Tabulation of Graphical Depiction: As we know

tabulation is an orderly arrangement of data in columns

and rows. This tabulation was done to identify the

frequency of occurrence of data. In the end graphical

depiction of this tabulated data is made to amplify the

study further.

18
 ➢
6 Conclusion :

The last step in the research was putting down the

conclusion and its interpretation as based on the study of

primary and secondary data and its analysis.

The research methodology followed is in such manner that it will make

the study informative and interesting at all the levels.

19
 ➢

OBJECTIVES OF THE STUDY

The present study, which is under taken as a summer training for

the partial fulfillment of B.B.A. course is aimed to accomplish the

following objectives. 1. To know about the financial condition

strategies of company

2. To study about the financial condition strategies.

3. To analyses financial strategies of company

4. To suggest for growth of financial conditions of the company

20
 ➢
SCOPE OF THE STUDY

The study covers following aspects :

1- Brief Profile of the Company.

2- A thorough study about the theoretical background.

3- Analysis has done on the basis of past four years financial

information or statements of the Company.

21
 ➢

ABOUT THE COMPANY

SNACKS FOOD & NAMKEEN INDUSTRY:-

The snacks food and namkeen industry sector in India has remained in the root of
traditionalism in unorganized sector for centuries, because of nature of the
business.
It was after the development of modern packing methods and invasion of the
multinationals that this sector started to grow with introduction of modern
technology and hygienic ways of preparation and packing.
As far as the India snacks food sector is concerned, we can safely say
the house of Haldiram is the only brand, which has little competition in its
field and is also giving tough competition to the multinationals in the western
fast food sector.

PROMOTERS

➢ Mr. Manohal Lal Agarwal (Chairman)

➢ Mr. Anand Agarwal (MD)
➢ Mr. Ashish Agarwal (Executive Director

"HALDIRAM" – a name associated with discerning consumers for sweets

and nankeens for the past six decades in India and abroad. It made its modest
start in the beginning of way back in 1941 in Bikaner in the State of
Rajasthan. The brand name "HALDIRAM BHUJIAWALA" was
introduced during pre-partition era-1941 and never looked back and
ventured first major step in this direction by opening up a shop in 1983 in
Chandni Chowk, the main hub of commercial centre in Delhi. The prime
focus was to serve sweets and namkeens amongst direct consumers and the
trade.

22
 ➢
BACKGROUND OF PROMOTERS & PROGRESS IN THE TRADE

The first shop opened in Chandani Chowk, Delhi in 1983 serving sweets
and namkeen under the name Haldiram Bhujiawala by two brothers
Manohar Lal Agarwal and Madhu Sudan Agarwal. The house of Haldiram
was using modern technology and packing facilities. Under the leadership
and dynamism of Mr. Manohal Lal Agarwal and with his nature of looking
ahead of times, the group has decided to go for upgraded technology in the
field of production through highly sophisticated plant and machinery. A new
company Haldiram Marketing Ltd came into existence. The company went
into production in April 1992. The company Haldiram Marketing Private
Ltd, is today one of the most sought after fast food centre in Delhi.
Mr. Manohal Lal Agarwal also sensed the change in the taste and
preferences of the Indian consumers and their inclination towards traditional
Indian fast food centre and thus opened Haldiram fast food joint at Mathura
road in April 1995. Its success can be judged by the fact that though it is not
very centrally located even then it is always flooded with consumers
relishing the preparation, many of them even come from far of places.
Within a period of three years it has undoubtedly became one of the largest
fast food selling centres in Delhi.
In 1997, company Haldiram Manufacturing Pvt Ltd was established to
manufacture all types of nankeens.
The group has opened the outlet under the brand name of Haldiram
located on the main ring road, Lajpat Nagar, New Delhi. The outlet opened
in March 99 and is performing exceedingly well and has surely surpassed
the expectations of the promoters.

Encouraged by the tremendous response of consumers, "HALDIRAM"

decided to go in for up-gradation in technology, packing, production etc. with
the installation of plant and machinery of the order of best available state-of-
the-art technology and sophistication.
Through dint of hard work, complete dedication, uncompromising quality, -
"HALDIRAM" became a part of each family and no house left without having
product of
"HALDIRAM"

23
 ➢

Age Group and Preferred Sweets (Brand wise)

Age Group
14

16-20 years
21-30 years
12 31-40 years
Above 41 years

10

0
Nathu Bikano Haldiram Agarwal Evergreen
Please rate quality of Sweets brand wise on
1-5 scale: (5 - Most Preferred, 1- Least
Preferred)

For Haldiram’s, potential liker for its sweets products comes from age group 21 – 30 years.
On second place, there are two age groups 16 – 20 years and 31 – 40 years who love
Haldiram’s sweets for its quality.

24
 ➢
Beverage and Pack Size of Namkeen

With which
100
beverage do you
take Haldiram's
namkeen? (You can
choose more than
one option.)
80

Tea/Coffee
Cold Drinks
Hard Drinks

60

40

20

0
26-35 gm 65-70 gm 200-250 gm 400-500 gm
Which pack size of Namkeen/Chips is preferred
by you?

70 % of Hard Drinkers prefer 200 – 250 gm of pack size of namkeen greatly; while 60 %
of Cold Drinkers also prefers 200 – 250 gm namkeen. Tea taker gave mix response when
question asked about which pack size they prefer.

25
Findings of the Study

• Out of 100 % (64 numbers) respondents, 65 % of female

prefers Fresh Foods which is not a category where Haldiram’s has its
products. Haldiram’s is in two categories of food articles: packed food
and ready-to-eat food. 28 % and 20 % of male respondents like to have
packed foods, respectively.
• For Haldiram’s, potential liker for its sweets products comes
from age group 21 – 30 years. On second place, there are two age
groups 16 – 20 years and
31 – 40 years who love Haldiram’s sweets for its quality.
• 70 % of Hard Drinkers prefer 200 – 250 gm of pack size of
namkeen greatly; while 60 % of Cold Drinkers also prefers 200 – 250
gm namkeen. Tea taker gave mix response when question asked about
which pack size they prefer. Out of 64 respondents, almost half of
the respondents like Haldiram’s sweets such as Soan Papdi and
Rasgulla. On second number, there in Bikano from the house of
Bikanervala. There is concern for Nathu which placed bottom rank in
the tally, taking only 3 respondents in its favour out of 64.
• 45 % of 64 respondents preferred lays as their favorite brands
in Snacks category; while rest of 55 % respondents were equally
divided among Haldiram, Bingo and Uncle Chips. It is clear that
respondent’s preference is affected by effective advertising tools such
as TV, Hoardings and Banners; and of course quality of product.
• The rapid expanse in availability (distribution channel)the
intensive promotional support in sweets and namkeen categories and
overall vibrance in terms of pricing and packaging has undoubtedly
aided this sector.

• Indians have become fervent consumers of brand snack foods

or ‘Namkeens’. In the fiscal year 2005-06, the market for branded
packaged
‘Namkeens’ has grown by a whopping 34 %.
• Organized sweets market is the new emerging category in
FMCG basket with 11.6 % in terms of value growth in fiscal year
2005-06. While the underlying factor driving sales remains
‘commodity branding’ with manufacturers packaging and branding
this product which has traditionally been purchased loose, other
sociological factors are also at play.

26
 • Retailers earned more margins ranging from 25% to 30% by
selling. Apart from the exclusive showrooms owned by Haldiram's,
the company offered its products through retail outlets such as
supermarkets, sweet shops, provision stores, bakeries and ice cream
parlors. The products were also available in public places such as
railway stations and bus stations that accounted for a sizeable amount
of its sales.
In their own words:-
“We at Haldiram were very keen to come to London to see for ourselves why
it is such a special place to Indians who now call it home. And we wanted to
service that community with a taste of their homeland – our range of snacks
and sweets. A memory, if you like.
“So the key was to establish a presence here.

“We were very impressed with the help that Think London gave us on
setting up business in London. Their wealth of expertise, the way they could
present a huge array of statistics about populations and our target market – it
all pointed to London as the best launchpad for us.

“Especially because of the city’s great connectivity, proximity to

Heathrow for logistics, availability of skilled workforce and target customers
and, crucially, a homely atmosphere for our workers – all make London the
perfect place for us.

“Think London made the whole process seamless. They advised us on

our business plan, helped us sort premises, gave us time whenever we needed
it and told us who to talk to on things like tax and employment. All for free!

“What we had dreamed of was an easy process. What we got was exactly
that.”

Pankaj Agarwal,

(Managing Director Haldiram)

27
 Balance Sheet As at 31st March, 2013
(Amount in Rs.)

PARTICULAR SCHEDULE CURRENT PREVIOUS

YEAR YEAR
SOURCES OF FUND
SHAREHHOLDERS FUNDS
Share capital 1 110,000,000 110,000,000
REVERSES &SURPLUS 2 279,252,397 226,372,466
LOAN FUNDS 541,331,653 254,345,398
Secured loans 3 180,330,038 114,711,777
Unsecured loans 4 19,280,389 26,770,654
DEFERRED TAX LIABILITY
1,130,194,477 732,200,295

28
APPLICATION OF FUNDS
FIXED ASSETS 5
Gross block 948,021,032 822,760,834
Less: Deprecation 239,698,163 165,005,003
-------------------- --------------------
708,322,868 657,755,831
Net Block 301,663,394 52,879,823
Capital Work in Progress
INVESTMENTS 6 2,144,704 2,144,704
CURRENT ASSETS, LOANS& 7
ADVANCES 129,551,762 91,855,553
Inventory 16,080,722 9,368,200
Sundry Debtors 74,190,357 42,045,083
Cash & Bank Balances 101,307,353 45,761,638
Loans and Advances

321,130,194 189,030,474

Less: CURRENT LIABILITIES & 8 207,772,770 175,108,089

PROVISIONS

NET CURENT ASEETS 113,357,424 13,922,385

MISCELLANEOUS EXPENDITURE
(to the extent not written off or adjusted)
Deferred Revenue Expenditure 4,499,522 5,129,822
Preliminary Expenses 176,564 327,730
Amalgamation Expenses 30,000 40,000
------------------- --------------------
- 1,130,194,477 732,200,295

Profit & Loss A/c for the year ended on 31st March, 2013

PARTICULAR SCHEDULE CURRENT PREVIOUS

YEAR YEAR

29
INCOME
Sales 1,623,623,720 1,167, 413,879
Less: Excise Duty 3,025,640 2,950,567

1,620,598,080
Other Income 3,088,458
Profit on Sale of fixed assets 9 10,286,752 12,567,706
Increase/(Decrease) in Finished stock 247,357 (1,067,707)
6,668,301

1,357,800,490 1,179,051,769
EXPENDITURE

Manufacturing Exp. 10 837,772,543 530,786,516

Administrative, Selling, and Other Exp. 11 599,662,388 489,483,395
Interest & Other Financial Charges 12 36,495,262 20,347,944
Loss on Sale of Fixed Assets 276,434 900,244
Deferred Revenue Exp. Written off 630,300 630,300
Amalgamation Exp. W/O 10,000 10,000
Preliminary Exp. W/O 151,166 151,166

1,474,98,093 1,042,309,565
Profit before Dep. & Tax Less: 162,802,397 136,742,204
Dep. 75,996,899 58,090,499
Profit for the year 86,805,498 78,651,706
Less: Provision for current tax 39,730,161 28,317,807
Less: Provision for FBT 1,645,568 1,209,928
Less: Provision for Wealth Tax 40,103 6,807
Add: Provision for Deferred Tax(Reversed) 2,600,240
Less: Provision for Deferred Tax (7,490,266)
Profit for the year after Tax 52,879,932
51,717,404
Profit brought forward from previous year 119,816,846
68,099,442
Profit carried over to Balance Sheet 172,696,777
119,816,846
PARTICULAR For the year ended For the year
ended 31.03.2006

31.03.2010

30
(Amount in Rs.)

Cash flow statement for the year ended 31st March, 2013
(Amount in Rs.)

31
32
Cash flow from operating Activities
Net profit before tax 8,68,05,498 7,86,51,706
Adjustment for
Dividend received 2,275 (3,500)
Depreciation 7,59,96,899 5,80,90,499
Preliminary expenses W/O 1,51,166 1,51,166
Deferred Revenue Exp. W/O 6,30,300 6,30,300
Amalgamation Exp. W/O 10,000 10,000
Interest paid 3,64,95,262 2,03,47,944
Loss on sale of Fixed Assets 2,76,434 9,00,244
Interest Received (19,00,372) (22,98,931)
Provision for Contingency 1,68,08,155 1,40,91,688
Provision for doubtful Advance ---------------- ---------------
Income tax Paid 4,41,48,958 (2,54,07,468)
Profit on sale of asset (2,47,357) (1,25,67,706)
Operating profit before working capital Change 17,08,74,752 13,25,95,941
Adjusted for :
Inventories (3,76,96,209) (71,30,779)
Trade Receivable (67,12,521) 75,44,348
Loan &Advance (1,13,96,757) 1,13,61,998
Trade Payable (3,23,35,575) 2,67,34,857
Cash Generated From operation 8,27,33,690 17,11,06,365
Cash for investing Activities
Purchases of fixed assets (37,78,25,875) (19,43,08,466)
Dividend Received 2,275 3,500
Sales of fixed assets 24,49,291 1,46,06,955
Interest Received 19,00,372 22,98,931
Exchange Fluctuation Charges -------------- -------------
Cash used in investment activity (37,34,73,937) (17,73,99,080)
Cash from Finance Activities
Interest Paid (3,64,95,262) (2,03,47,944)
Increase/Decrease in share Application Money -------------- -------------
Share Capital -------------- 3,10,16,680
Increase in Secured Lone 29,3762,522 (1,18,61,597)
Share Premium -------------- 4,65,25,020
Increase/Decrease in Unsecured Loan 6,56,18,261 (2,34,88,765)
Increase in deferred revenue -------------- (2,40,161)
Cash used in Financing activity 32,28,85,521 2,16,03,233
Net increase in cash and cash equiv 3,21,45,274 1,53,10,520
Opening Balance 4,20,45,083 2,67,34,563
Closing Balance 7,41,90,357 4,20,45,083

33
34
 Schedule ‘1’

SHARE CAPITAL

(Amount in Rs.)
PARTICULAR CURRENT YEAR PREVIOUS YEAR

AUTHORISED CAPITAL

150,000,000
15000000Equity shares of Rs. 10/-each 150,000,000

150,000,000 150,000,000

Issued, Subscribed & Paid up

Capital
11,000,000 (Pre year 11000,000)
Full paid up Equity Share of Rs. 10/- each
(Out of which 374662 Equity share of
Rs.10/- each allotted to the shareholder of
Competent Indexpo Ltd Persuant to scheme
of amalgamation) 110,000,000 110,000,000

------------------- ---------------------
110,000,000 110,000,000

35
 Schedule ‘2’

RESERVES & SURPLUS

(Amount in Rs.)
PARTICULAR CURRENT YEAR PREVIOUS YEAR

Capital subsidy 5,000,000 5,000,000

Share Premium

Opening Balance 101,555,620 55,030,300

Addition during the year ……………. 46,525,020

-------------------------- -------------------------
101,555,620 101,555,620

Profit & Loss Account

172,696,777 119,816,846

279,252,397 226,372,466

Total Of C.A. 321,130,194 189,030,474 163,318,2 17

B) Current Liabilities

Liabilities 84,319,556 111,488,311 166,570,7 72

36
 Provision 123,453,214 63,619,585 22,747,4 45

Total of C.L. 207,772,770 175,108,089 189,318,2 17

Increase/Decrease in WC 113,357,424 13,922,385 (25,971,761)

THEORY OF FINANCIAL STATEMENT

A financial statement is an organized collection of data according to logical

and consistent accounting procedures. Its purpose is conveying an

understanding of some financial aspect of a business firm. It may show a

position at a moment of time as in the case of a balance sheet, or may reveal

a series of activities over a given period of time, as in the case of an income

statement.

37
 The term financial statements generally refer to 4 basic statements;

(1) The income statement,

(2) The balance sheet. Of course, a business may also prepare

(3) A statement of retained earnings, and

(4) A statement of changes in financial position.

FINANCIAL STATEMENTS

STATEMENT
INCOME BALANCE STATEMENT OF OF
STATEMENT SHEET RETAINED CHANGES IN
EARNINGS FINANCIAL
I POSITION

INCOME STATEMENT

The income statement is generally considered to be the most useful of all

financial statement. the nature of the ‘income” which ie focus of the income

statement can be well understood if a business is taken as an organization that

uses ‘inputs” to ‘produce” output. The outputs are the goods and services that

the business provides to its customers. The values of these outputs are the

amounts paid by the customers for them. These amounts are called “revenues”
in accounting. The inputs are the economic resources used by the business in

providing these goods & services.

BALANCE SHEET

It is a statement of financial position of a business at a specified moment of

time it represent all assets owned by the business at a particular moment of

time. The important distinction between an income statement and a balance

sheet is that the income statement is for a period while balance sheet is on a

particular date. Income statement is a flow report, as contrasted with the

balance sheet which is a static report. However, both are complementary to

each other.

STATEMENT OF RETAINED EARNINGS

The term retained earning means the accumulated excess of earning over

losses and dividend. it is fundamentally a display of things that have caused

the beginning-of- the- period retained earning balance to be changed into the

one shown in the end-of –the- period balance sheet.

The statement is also termed as profit and loss appropriation account in case

of companies.
STATEMENT OF CHANGES IN FINANCIAL POSITION

The balance sheet shows the financial condition of the business at a particulars

moment of time while the income statement discloses the result of operations

of business a period of time. This information is available in the statement of

changes in financial position of the business.

 TYPES OF FINANCIAL ANALYSIS
➢ ON THE BASIS OF MATERIAL USED: According to this basis,
financial analysis can be of two types.

• External analysis: This analysis is done by those who are Outsider for
the business. The position of these analysis has improved in recent
times on account of increased governmental control over companies
and governmental regulations requiring more detailed disclosure of
information by the companies in their financial statement
• Internal analysis: This analysis is done by persons who have Access
to the books of account & other Information related to the business.

➢ ON THE BASIS OF MODUS OPERANDI: According to this basis,

Financial analysis can also be of two types:

• Horizontal analysis: financial statement for a number of years are

reviewed and analyzed. Te current year’s figures are compared with
the standard or base year. Such an analysis gives the management
considerable insight into levels and areas of strength and weakness.
It is also termed as “dynamic analysis”.
• Vertical analysis: Analysis a study is made of the quantitative
Relationship of the various items in the financial statement on a
particular date. It is also called “static analysis”.
 IMPORTANCE OF FINANCIAL STATEMENT
The information given in the financial statement is very useful to a number of
parties as given below;

➢ OWNERS; The owners provide funds for the operations of a

business and they want to know whether their funds are being properly
utilized or not. The financial statements prepared from time to time
satisfy their curiosity.
➢ CREDITORS; The creditors want to know the financial position of a
concern before giving loans or granting credit. The financial statement
helps them in judging such position.
➢ INVESTORS: prospective investors, who want to invest money in a
firm, would like to make an analysis of the financial statement of what
firm to know how safe proposed investment will be.
➢ EMPLOYEES: employees are interested in the financial position of
a concern they serve, particularly when payment of bonus depend upon
the size of the profit earned.
➢ GOVERNMENT: Central and state governments are interested in
the financial statement because they reflect the earnings for a particular
period for purpose of taxation.
➢ RESEARCH SCHOLARS: the financial statements, being a mirror
of the financial position of a firm, are of immense value to the research
scholars who wants to make a study into financial operations of a
particular firm.
➢ CONSUMERS: consumers are interested in the establishment of
good accounting control so that cost of production may be reduced with
the resultant reduction of the prices of goods they buy.
➢ MANAGERS: management is the art of getting things done through
others. This requires that the subordinates are doing work properly.
Financial statements are an aid in this respect because they serve the
manager is appraising the performance of the subordinates.
 STAGES OF FINANCIAL STATEMENT ANALYSIS

The following are the stages of financial statement analysis.

1. ESTABLISHED RELATIONSHIP: A relationship is established

among financial statements with the help of tools and techniques of

analysis such as ratio, trend, common-size, fund flow etc.

2. RE-ARRANGEMENT: Whatever information is available must be re-

arrangement with a view to derive the maximum information from the

analysis of financial statement. Re-arrangement depends upon the

purpose of analysis.

3. COMPARISION: It is also required to connect data in such a from

whereby comparison is done easily. For this purpose data of some more

years is required.

4. ANALYSIS AND INTERPRETATION: Data is analyzed as per

purpose and them interpreted. Interpretation should be precise.

5. CONCULUSION: The conclusion draws from interpretation are

presented to the management in the form of report.
 LIMITATION OF ANALYSIS OF FINANCIAL
STATEMENT
Analysis of financial statement is most important device but the person

using this device must keep in mind its limitation. The following are the

main limitation of the analysis:

➢ HISTORICAL NATURE OF FINANCIAL STATEMENT: The basic

nature of these statements is historical, i.e., relating to the past period.

Past can never be a precise and infallible index of the future and can

never be hundred per cent helpful for the future forecast and planning.

➢ FINANCIAL ANALYSIS IS ONLY A MEANS: Financial analysis is a

means to an end and not the end itself. The analysis should be used as

a starting point and the conclusion should be drawn not in isolation, but

keeping in overall picture and the prevailing economic and political

situation.

➢ FINANCIAL STATEMENT IS ESSENTIALLY INTERIM REPORT: The

profit shown by profit and loss account and the financial position as

depicted by the balance sheet is not exact. The exact position can be

known only when the business is closed down.

➢ CHANGE IN ACCOUNTING METHOD: Analysis will be effective if the

figures derived from the financial statement are comparable. Due

to change in accounting methods, the figures of the current period may

have no comparable base, and then the whole exercise of

 analysis will become futile and will be of little value.

➢ SHORTCOMING OF THE TOOL OF ANALYSIS: There are different

tools of analysis available to the analyst. Which tool is to be used in a

particular situation depends on the skill, training, and expertise of the

analyst.

➢ IGNORING QUALITATIVE ASPECT: Financial analysis does not

measure the qualitative aspect of the business. It is the quantitative

measurement of performance. It means that analysis of financial

statement measures only the one sided performance of the business.

➢ IGNORING PRICE LEVEL CHANGE: The comparability of ratio

suffers if the prices of the commodities in two different years are not the

same. Change in price affects the cost of production, sales and also

the value of assets.

➢ FINANCIAL STATEMENTS IS ONLY A TOOL, NOT THE FINAL

REMEDY: Analysis of financial statement is a tool to measure the

profitability, efficiency and financial soundness of the business. It

should be noted that personal judgment of the analyst are most

important in financial analysis. We should not rely on single ratio.

 TECHNIQUES OF FINANCIAL ANALYSIS
A financial analysis can adopt one or more of the following

techniques/tools of financial analysis:

FINANCIAL ANALYSIS
TECHNIQUES

COMPARATIVE CASH FLOW RATIO

STATEMENT ANALYSIS ANALYSIS

➢ COMPARATIVE STATEMENT: A Comparatives statement is those

in which figures reported are converted into percentages to some

 common base. In the income statement the sale figure is assumed

to be 100 and all figures are expressed as a percentage of this total.

The comparative statements show the percentages of each item to the total in

each period but not variations in respective items from period to period. On

account of this reason comparative statement are not much useful for financial

analysis. However, comparative statements are useful for studying the

comparative financial position of two or more business.

Advantages of comparative statement:

• Such statements are easily understandable;

• It helps in the comparison between two or more years or two or

more firms

• Variations are in proportions instead of being absolute

• Analysis becomes qualitative instead of qualitative

• Qualitative analysis helps in the formulation of future financial

policies.

➢ CASH FLOW STATEMENT: cash plays very important role in

the entire economic life of business. It is very essential for a business

to maintain an adequate balance of cash. Cash flow statement is a

statement of changes of financial position in business due to inflow or

outflow of cash and their statement is required for short-range business

premises. A cash flow statement summarizes the causes of change in

cash position of a business enterprise between dates of two balance

sheets. A cash flow statement is useful for short-term planning. Cash

flow analysis is an important financial tool for the management.

Advantages of cash flow statement:

• Helps in efficient cash management

• Helps in internal financial management

Discloses success or failure of cash planning

• Helps in declaring dividends etc.

CONCLUSION

The basic goal of working capital management is to manage the current assets
& current liabilities of a firm in such way that a satisfactory level of working
capital is maintained, i.e., It is neither inadequate nor excessive. This is so
because both inadequate as well as excessive working capital positions are bad
for any business. Inadequate of working capital may lead the firm to
insolvency &excessive working capital implies idle funds which earn no
profits for a Business.

1. By studding last 3 year performance of the company. We say that working

capital of the company is increment.

2. The operational performance of the company is contineuseley rising

because of the in cries in sales of the company product.

3. The data equity ratio of the company is increasing as company. Is now

paying its debt. Due to which the company liquidity reaction is falling.
RECOMMENDATION

Loans & Advances

Special efforts should be made to analyze loans & advances, which are between 35%
to 56% of current assets. This can be classified between production / operation
relation related and non-production / operation related. No production related cases
might be financed from other sources like debenture etc. and treated separately.

Cash & Bank

This is the most liquid element in current asset and target shall be fixed most
cautiously. Too high a figure of 20% of total current assets of Haldiram Pvt. Ltd.
In 2005-06 as against 11.5% of TCS may be apparently too good to look at, but this
may be lead to wastage of cash .This amount only use of payment so fallow the
creditor payment strategy.

Ratios
The company should try to improve its current situation. The ratios, which are taken
in this research to evaluate the company’s position, are Current ratio, Quick ratio
and Activity ratio. These ratios show the actual position of the company. The Quick
ratio is declining since 2006-07 till now. There is a drastic declining in the working
capital turnover ratio. This ratio goes to –be position in current year compared to
previous. The Debts collection period is 359 days for Exporters. This shows the poor
collection policy. The current ratio is 1.02 in 2005-06, which is not up to the ideal
ratio. This shows that the current assets are equal to the current liabilities. Not
satisfactory.

Inventory

Inventory should be reviewed constantly to identify show / dead / obsolete item and
then disposed until 2005-06 level is again achieved.
Optimum level should be revised periodically, keeping in view,
Distance of suppliers, production lead time of supplier, transport problem if any and
reliability of suppliers. This will help to avoid obsolesce and dead inventory.

Debtors
A study may be conducted if required by experts to pinpoint reason behind
Haldiram Pvt. Ltd. high correction period of 95 days in 2004-05 against 50 days

of TCS It is due to quality of products, quality of customer, the segment of

customers marketing effort, distribution pattern or other reasons.
Creditors
Though high payout days may be apparently beneficial for the company. It has it
very heavy long term cost like high interest cost, bad credit ratings and shyness of
good quality / standard suppliers.
BIBLIOGRAPHY

Reference Books
1. Financial Management, Khan and Jain, 2003, 6th Edition.
2. Ratio Analysis, S.K Bhattacharya, 1995, 8th Edition.
3. ICAI’s Module.

Referred Sites
1. www.google.com
2. www.answers.com
3. www.yahoo.com
4. www.amazon.com
5. www.haldiram.com