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A Project report On Financial analysis Of

VOLTAS LIMITED
For the subject Of Accounting for managers Submitted
In the partial fulfillment of MBA programmer 2010-12

Submitted to Mrs. Disha bhagat (assistant professior) K.P Patel school OF mgt & computer studies
Submitted by

SANDIP. A. BHAVSAR
Roll no. – 39

As a student of business administration have prepared the following project report in the practical fulfillment of the course requirement on practical studies. This report include analysis of balance sheet, profit and loss A/c, trends analysis as well as types of ration are calculated in this report, it shows the clear picture of the company’s liquidity and current position. The objective of preparing this report to know about its financial statement and accounting policies. It creates difficulties and challenges’ for the management student in the business world. It is golden opportunity for me to present and prepare this report.

In the MBA first semester, I have to prepare project report on “VOLTAS LIMITED” the project report is shows whole financial picture of the company. Behind this project report same person give me the ideas, guidance, inspiration for the preparing this project report. I take opportunity to thank to my respected director sir, Mr. M.S.TRIVEDI SIR, me to prepare this project report I m also thankful to PROF. DISHA MADAM for her best help in suggestions’, ideas and inspiration for completing this project report.

SANDIP A. BHAVSAR MBA -1 ST SEM, ROLL NO. 39

No.

Particular

Page no.

1. 2. 3. 4. 5. 6. 7.

Company profile Ratio analysis Table of ratio Horizontal profit & loss A/c. Vertical balance sheet Trends analysis Conclusion

5 9 32 33 34 36 38

Name of the company:“VOLTAS LIMITED COMPANY” Address of the company:Voltas house ‘A’ Dr Baba sahib ambedkar road Chinohpkli Mumbai – 400033 Board of director:Chairmen ishant hessian Managing director A son Directors Nasser manger NJ jhavari SD khulkarni Ravikant N.D. khurody N.N. Tata

Banker’s name:State bank of India Bank of India Punjab national bank Citibank N.A BNP Paribas Export – import bank of India ABN- ammo bank N.V Company secretary’s name:V.P military

Auditor’s name:-

Chairman: N.J jhaveri Nasser money S.D kulkarni

Products name:-

Electro mechanical projects & services Engineering products & services unitary Cooling products for compared and commercial use.

Name of subsidiary company:-

Metro polis FZE. VIL oversees Enterprises B.V Voice Antilles N.V Weathermalar limited Auto Akron limited Universal comfort products pvt ltd

Human resources & social responsibilities:-

Human resources capabilities are key sources to the company competition advantage. The company strengthened its producers of the talent acquisition development and retention in to gram itself to for expansions Voltas achievements have been match possible because of the employ addiction and commitment.

Meaning:A ratio is a define as an inculcated quitrent of two mechanical expressation and us the relationship between two or make valuable it can be measured in terms of percentage (%) proportion (:) or in times. The important and use of ratio has increase and become popular. During last few years only of prospects insulates creditor and earn mgt if relationship between various are related with items in this financial statement an established. They can provide useful to judge accurately the financial health and ability of business of make profit this relationship between two items of financial statement is known as a ration.

Utility:-

1. Profitability:The gross profit ratio, net profit ratio and ratio of return on investment give a good idea of the profitability of the business on the basis of the ratio ingested get an idea about the overall of effeminacy of the business.

2. Liquidity:The current ratio, liquid ratio, acid test ratio or quick ratio will tell whether the business will about to meet its current liabilities and when they mature.

3. Efficiency:-

The turnover ratio are excellent guides to because the efficiency of the managers. The stock turn over will indicates the efficiency collection department and asset turnover those the efficiency with which the asset are use in the business.

4. Inter firm comparison:This is inter firm comparison which shows the strength and weakness of the firm s compare to the other firm and will 9indicates corrective measures.

5. Useful for budgetary control:Regular budgetary reports are prepared in a business were the system of budgetary is in use if various ratios are presented in this report it will give a fairly good idea about various aspect of financial position.

A. Gross profit ratio:The ratio measured the gross earning of the company as compared to its net sales if the ratio is less it show the inefficiency of companies management.

Formula:-

Gross profit =

gross profit Net sales

*100

2010

2009

2008

396.98 4541.79 8.74%

*100

265.62 *100 4033.29 6.58%

253.68 3044.54

*100

8.33%

Interpretation:The gross profit ratio of Voltas at the end of 31-3-2009 is 6.58%. This shows when the sales are 100 against which gross earning is 6.58. it also shows that the sales is 100 against which gross earning is 6.58.it also shows that the margin of 6.58 rupees is available for a sale of every Rs 100 from which operating exp of business are to be recoververed. The gross profit ratio of Voltas of the end of 31-3-2010 is 8.74% this shows that when the sales are 100 gross profit is 8.74 Rupees. This means that’s there is increase in gross profit ratio of current year as compared to previous year.

B. Net profit ratio:-

This ratio is useful to measure the overall profitability performance of the business and shows the efficiency of the company to earn amount of make profit earned on its net sales. Higher the ratio better is for the company.

Formula:-

Net profit = net profit * 100 Net sales

2010 344.22 4541.79 7.57% *100

2009 252.59 *100 4033.29 6.26%

2008 208.37 3044.54 6.84% *100

Interpretation:-

The net profit ratio of Voltas the end of 31-3-10 is 7.57%. This means when the sales are 100 the net profit is Rs.7.57. The net profit ratio of Voltas tells that the ratio tells that ratio of sales revenue left to proprietors is manually 100 compared to previous years. This ratio therefore suggests that a particular share of selling price is absorbed by cost of sales and other operating expenses and the remainder is deft for the owners of the business..

C. current ratio:it is also known as working capital asset which is the mesure of capability if the company to pay of the liability , which are dui within 12 months period as compare to its current assets. Idle ration is 2:1 Chore commission ratio is 1.33:1

Formula:-

Current ratio =

current asset Current liability

2010 2569.50 2069.84

2009 2515.04 2066.45

2008 1580.51 1421.59

1.24 times

1.21 times

0.12 times

Interpretation:The company’s current ratio is 1.24 for the year ended 2008-2009-2009 1.21,0.12 respectively this indicates that for every Rs 1 of current liability available rs 1.24,1.21,0.12 current assets. This means the better liquid position of the company and suggesting a very comfortable one which shows increase as compared that previous year.

D.

return on net worth:the ratio measured the net profit earn the equity share holders funds it is the measured overall profitability of the company after discharging cost of borrowed capital and income tax payable to the government . it is also known as return on equity ratio.

Formula:-

Return on net profit ratio =

(PAT-pref dividend) *100 Net worth

2010

2009

2008

291.42 995.22

*100

195.13 728.99

*100

180.87 538.32

*100

29.28 %

26.76 %

33.59 %

Interpretation:-

In the year 2009 the equity share holders return is 26.76% and in the year 2010 is29.28 % it shows the higher ratio indicates that higher dividend more internal accruals means here 2009 is 26.76 % and in the year 2010 is 29.28 % it shows increase in the ratio so it indicates batter growth prospects.

E. Debt equity ratio:It measures the portion of debt taken by the company as compare to the owners funds. Formula:-

Debt equity ratio =

Debt Equity

2010 19.08 33.07

2009 128.44 33.07

2008 47.67 33.07

0.57 times

3.88 times

1.44 times

Interpretation:Debt equity ratio of Voltas at the end of 31st march 2008 is 1.44 times this means when owners have invested rs 1 in the business against that 1.44 is the borrowed from the out sliders creditors. Debt equity ratio of Voltas at the end of 31st march 2009 is 3.88 this means that when share holder invested rs1 in the company that 3.88 borrowed from the out sides creditors. Debt equity ratio of the current year is increase in previous year. Debt equity ratio of Voltas at the end of 31st march 2010 is 0.58 that means when owner have invested rs 1 in the business against that 0.58 borrowed from out sides creditors, debt equity ratio of the current year decrease in the previous year. That means long term liability has increase to same extent.

F. Return on share holders’ funds:It measures the return (that is a net profit after tax) that the share holders get as compare to their investment. Formula:-

Return on share holders’ funds = net profit after tax Share holders fund

2010

2009

2008

344.22 3307

*100

252.59 3307

*100

208.37 3307

*100

10.40 %

7.63 %

6.30 %

Interpretation:For every rs.100 of the equity share funds the net profit after tax earn by the compared in the year 2008-09 and 2009-10 are 7.63% & 10.40 % respectively. This situation is representing that 2008-09 year company maintain it return on share holders trying to the minimize the companies funds.

G. Stock turnover ratio:The number of times the average stock is turned over during the years is known as the stock turnover. It is computed by dividing the cost of goods sold by the average stock of the year average stock is the average of the opening and closing stock of the year. The ratio is the very important to judging ability of the management with which it can move the stock. The higher the turnover ratio, the more profitable the business would be.

Formula:-

Stock turnover ratio = cost of goods sold Average stock

2010

2009

2008

4144.81 4541.79

3767 4033.29

2790.86 3044.54

0.91 times

0.93 times

0.91 times

Interpretation: Stock turnover of the volts at the end of the 31st march 2009 is 0.93 the stock is turn over during the year the sock turnover of the Voltas at the end of 31st march 2010 is 0.91. it means 0.91 times the stock is the turn over during the year as the ratio decrease it indicates accumulation of slow moving absolute and low quality goods which is the danger signal to the management.

H. Fixed asset turnover ratio:-

It measures the sale of the business as compared to its capital employed.

Formula:-

Fixed asset ratio =

sales Fixed assets

2010

2009

2008

4541.79 306.39 14.82 times

4033.29 293.93 13.72 times

3044.54 263.02 11.57 times

Interpretation: Fixed asset turnover of the Voltas at the end of 31st march2009 is 13.72 the fixed asset is turn over during the year the fixed asset turnover of Voltas at the end of the 31st march 2010 is 14.82times it means 14.82 times the fixed asset is turn over during the year , as the ratio increase it indicates accumulation of the fast moving absolute and high quality assets.

I. Earnings per share(EPS):It measure the earning available to the equity share holder as compare to their investment done per share, higher the earning per share better for the company and as well as the shareholders because the many investors always looking better financial position of the company.

Formula:-

Earnings per share = P.A.T – pref share dividend No. Of equity share

2010

2009

2008

291.42 – 0 33.7 8.81 Rs.

195.13 - 0 33.7 5.90 Rs

180.87 - 0 33.7 5.46 Rs

Interpretation:-

Earning per share means earning on the invested each rupees here the companies share is 2008-09 &2009-10 was 5.90 & 8.81 similarly which increase from the previous year it indicates we can conclude that companies capital productivity has increase and it is batter for the company.

J. Debt service coverage ratio:It measures the company’s capacity to meet the installment and interest of the liability. Higher is the ratio found well for the company.

Formula:-

D.S.C.R = PAT +deprecation + interest + amortization Installment + Interest

2010

2009

2008

291.42+16.39+321.39 329.31 1.93 times

195.13+16.59+249.25 249.25 1.84 times

180.87+13.56+196.10 196.10 1.99 times

Interpretation:-

Interest coverage ratio of the Voltas at the end of 31st march2009 is 1.84 and in the end of 31st march 2010 is 1.93 times it indicates that current year ratio is increase in the previous year that means greater the ability of the company to service interest and less financial risk.

SUMARRY OF RATIO

NO.

RATIO

200 8
8.33

200 9
6.58

201 0
8.74

1.

Gross profit ratio

2.

Net profit ratio

6.84

6.26

7.57

3. 4. 5. 6. 7. 8. 9. 10.

Current ratio Return on net worth Debt equity Stock turnover ratio Fixed asset turnover ratio Earnings per share Debt service coverage ratio Return on share holders fund

0.12 33.59 1.44 91.66 11.57 5.46 1.99 6.30

1.21 26.76 3.88 93.86 13.72 5.90 1.84 7.63

1.24 29.28 0.57 91.25 14.82 8.81 1.93 10.40

HORIZONTAL PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH 2010

FOR THE YEAR ENDING 31ST MARCH 2010 Sales and services Loss-excise duty Net sales and services Other income Cost of sales, services EBIT Financial items Depreciation on the fixed asset EBT Provision for tax

2008 Rs. _ _

%

2009 RS.

%

2010

%

_ _

_ _

_ _

_ _

_ _

4541.79 100

4033.29 100

3044.54 100

396.98 4144.81

8.74 91.25

265.62 3767.66

6.58

253.68

8.33 91.66

93.41 2790.86

472.60 6.96 16.39

10.40 332.67 0.15 0.36 4.86 16.59

8.24 0.12 0.41

299.57 5.96 13.56

9.83 0.19 0.44

449.25 157.42

9.89 3.46

311.22 116.08

7.71 2.87

280.04 99.17

9.19 3.25

EAT

291.42

6.41

195.13

4.83

180.87

5.94

BALANCE SHEET: COMMONSIZE STATEMENT OF BALANCE SHEET AS ON 31ST MARCH 2010

Particulars

March Marc h 2010 2009

`marc h 2008

Incdec 200809

%

Incdec 200910

%

Sources of fund Eq share capital Reserve & surplus Loans & funds Secured loans Total Uses of funds Fix assets Gross block 12.46 4.24 306.39 293.93 263.02 30.71 11.48 19.08 128.44 47.67 80.77 169.4 (109.3 85.14 4 6) 33.07 33.07 33.07 -

962.15 695.92 505.25 190.6 37.74 266.23 38.26 7

1014.3 857.44 585.99 271.4 46.32 156.87 18.30 1 5

Accumulated 139.31 130.53 122.28 dep Net block Capital work in progress Investment Net C.A 7.61 9.65 9.75

8.25

6.75

8.78 3.68 (2.04)

6.73 2.25 21.14

167.07 163.39 140.75 22.64 16.09 (9.10) 48.53

339.97 235.30 267.93 (32.1 11.99 104.17 44.18 3) 0.59 54.39 2.17

Current 2.569.5 2515.0 1580.1 934.8 asset,loan&a 0 4 5 9 dv --C.L Total net C.A Total Notes Bookvalue of 343.49 239.32 268.44 (29.1 inv. 2) Market value of inv. Contingent liability 115.60

2069.8 2066.4 1421.5 644.8 45.36 4 5 9 6 499.66 448.59 158.56 290.0 182.9 3 2

3.39 51.07

0.16 11.38

1014.3 857.44 585.99 271.4 46.33 156.87 18.30 1 5 1085 104.57 45.53 82.13 54.74 245.3 9 21.15

33.47 103.54 (70.0 67.67 7)

313.54 258.80 227.47 131.3 13.77 3

PARTICULA RS
Equity share capital Index Reserve and surplus Index Secured loan

2008

2009

2010

33.07 1 505.25 1 19.08 1

33.07 1 695.92 1.38 128.44 6.37 293.93 1.12 130.53 1.07 163.39 1.16 9.65 0.51 255.80 0.95 2515.04

33.07 1 962.15 1.90 47.67 2.50 306.39 1.16 139.31 1.14 167.07 1.90 7.67 0.41 339.97 1.97 2569.50

Gross block Index Depreciation accumulated Index Net block Index Capital W i P Index Investments Index Current assets Loan & advances Index Current liabilities & provision`

263.02 1 122.28 1 140.75 1 18.75 1 267.93 1 1580.15

1 1421.54

1.59 2066.45

1.63 2069.84

Index Total net current assets Index

1 158.56

1.45 448.54

1.46 499.66

1

9.14

3.15

Due to the prepare this report I learn so many thing and points from this report.

I get a detail knowledge about the company ratio analysis horizontal and the profit and loss accounts and vertical balance sheet etc and I study company level knowledge and environment.

The company “Voltas limited” is the kindly famous in the market and has earned good name. Company

Providing the batter quality products, and services. Most of all the ratio of company good like profitability, financial etc.

Company should try to the maintain this situation and improve in the future and stay in the market for longer time period.

BILIGRAPHY
➢ ➢

I collect all information to prepare this project report for company web site www.voltas.com References books of accounts ambries gupta.