This action might not be possible to undo. Are you sure you want to continue?
Finance is a process of organizing the flow of funds so that a business can carry out its objectives in the most efficient manner and meet its obligations as they fall due. The main objective of every business concern is wealth maximization. To attain that goal, the business concern has to generate wealth. And for this purpose they have to manage their day-to-day activities in a proper and preplanned way. The ratio analysis is a yardstick to evaluate the progress. Hence the topic entitled “Financial Analysis of Vimal Oils and Foods Limited” has been undertaken for a detailed study. Vimal Oil & Foods Ltd. (VOFL), the flagship company of Vimal Group, was started in 1993 with the holy hand of Param Punjay Pramukh Swami Maharaj (Head BAPS), in Mehsana, Gujarat, with a small 50-ton refinery, and today it has evolved into a fully integrated and automatic oil-processing unit with an annual turnover or Rs. 630 crores, listed with Ahmedabad and Bombay Stock Exchange. VOFL is always committed to quality and integrity, and that’s what reflects in our products that never fail to delight our customers. With a single goal of offering our customers a superior range of products that they can choose as per their needs. In that quest, we have broadened our business horizons by introducing cottonseed oil, groundnut oil, mustard oil, Soyabean oil, Sunflower oil, Corn oil and table margarine. VISION:
Our vision is to be a globally recognized company producing and marketing the best world class quality food products by adopting latest environment friendly technology.
MISSION: Vimal oils is leading edible oil and food product company in india and our mission is to discover, develop, innovate and successfully reach to each and every Indian family with the bestpure healthy oils and food products to fulfill our mission statement “ Healthy u, Happy u.
OBJECTIVE OF THE STUDY: 1. To study the financial position of the firm using ratio analysis as a tool, this includes calculation and evaluation of various results of the company for the past 5 year. 2. To give suggestions required for the improvement. To put in to practice the theoretical aspect of ratio analysis. 3. To measure short-term financial position and obligations of the firm in terms of current assets, current liabilities. 4. Finally to gain knowledge and experience during the study.
SCOPE OF THE STUDY: 1. It also gives an analysis on the financial condition and performance of the organization an indication of the trend of the organization. 2. The study covers information about the financial statement of the company for the past three years calculated ratios. 3. Finally this project will save as a foundation document based upon which the management students and others who may want to broaden their horizon.
LIMITATION OF THE STUDY: 1. The study undertaken is purely on the basis of the date furnished in the financial statements of the firm over the years. 2. Financial statements represent just one part of the information spectrum. 3. Financial statements are based on historical data and do lack current information.
METHODOLOGY: The methodology used for the study is data collection method. The study is based on the secondary data which are collected from the sources such as magazines, newspapers, internet and books as mentioned in bibliography. The primary data are not taken for the study.
Mehsana . in Mehsana. Gujarat. Nr. DETAILS OF VIMAL OILS AND FOODS LIMITED The details of Vimal Oils and Foods Limited are mentioned below: Sr. and today it has evolved into a fully integrated and automatic oil-processing unit with an annual turnover or Rs. Highway. FACTORY 7. Ahmedabad – 380 054. Near The Grand Bhagwati. 630 crores. Patel Shri Harnarayan J. listed with Ahmedabad and Bombay Stock Exchange.CHAPTER II COMPANY PROFILE Vimal Oil & Foods Ltd. R R S & Associates Chartered Accountants Ahmedabad. AUDITORS NAME 9. Bank of India Bank of Baroda Dena Bank IDBI Bank Bombay Stock Exchange www. LISTING WEBSITE Table 1: Details of Vimal oils and foods limited . NO. the flagship company of Vimal Group. 5. Patel M/s. BOARD OF DIRECTORS 8. 4. Patel Shri Mukesh N. Shri Jayesh C. TYPE OF INFORMATION COMPANY NAME INDUSTRY INCORPORATION YEAR RESGISTERED OFFICE DETAILS VIMAL OILS AND FOODS LIMITED EDIBLE OIL INDUSTRY 1992 4th Floor.384 002. 11. Patel Chairman & Managing Director Shri Mahendra V. (VOFL). was started in 1993 with the holy hand of Param Punjay Pramukh Swami Maharaj (Head BAPS). BANKER/S NAME 10. with a small 50-ton refinery. Heritage. Sarkhej-Gandhinagar Highway. Palavasna Railway Crossing.vimaloil. At : Village Hanumant Heduva.com 6. 2. 1.
ORGANISATION STRUCTURE OF VOFL: Vice President(Purchase ) Chandrakant Panchal Raw Material Team (7) Finance & Account Manager Jitendra Patel Sales and Marketing Head Yogesh Patel Factory Incharge Umesh Patel Account Team (10) Regional Heads (16) Packaging Manager Suresh Chaudhary Sales Team (85) Production Team (150) Figure 1: Organizational Chart of Vimal Oils and Foods Ltd.Members approve delisting from Delhi Stock Exchange.In 2003. The Company is engaged in the production of edible oil in its edible oil refinery which commenced commercial production with a 50 TPD capacity in September. It received the certificate of commencement of business on 19 May 1992 from the Registrar of Companies. Vimal is promoted by a group of qualified entrepreneurs viz. HISTORY OF THE COMPANY: Vimal Oil & Foods (Vimal) was incorporated on 14th May 1992. Mehsana (North Gujarat). Shri G K Patel. Shri J C Patel and Shri K S Patel from Mehsana (Gujarat).93. Gujarat. Shri Chandubhai I Patel .09. Presently the company is engaged in the production of edible oils in its edible oil refinery which commenced commercial production on 25. Dist. . The company has embarked upon a project for setting up a 200 TPD solvent extraction and 50 TPD edible refined oil plant at village Hanumant Heduva. 1993.
128. a by-product under the solvent extraction to various foreign countries. 1994.2005 to 31. 2005 which is valid from 01. Tal: Kalyanpur. In the year 2003. The Company is exporting the De-oiled Cake (DOC). 2. In the year 1995. 1994 to part finance the project for setting up a 200 TPD Solvent Extraction Plant which was commenced in December.03. Palvasna Railway Crossing. The Company has set up a Milk Powder plant in the year 1997 at Village: Hanumant Heduva. Mouj: Kalyanpur. The Company has been presented with the Export Awards in the years 1998. Highway and Mehsana.2009.The Company has adhered to the Quality Management System Standard of ISO 9001: 2000 issued by the Det Norske Veritas (DNV).00.75. refining capacity was enhanced to 80.The Company has obtained One Star Export House status from the office of the Joint Director General of Foreign Trade.04. 10/. additional Oil Refinery capacity of 100 TPD was commenced. Dist: Jamnagar.for cash at par aggregating Rs. 1999 and 2001.000 TPA (approx. The said expansion was funded by term loan and internal accruals.The Company made the Public Issue of 27. Ahmedabad on 18th October. .000/. 300 TPD). the Company has set up a Wind Mill at Survey No. 50.in March. Nr. 000 Equity Shares of Rs. In the year 1995.
3. but liquidity ratios by establishing a relationship between cash and other current assets to current obligations.18 1.19 2011 1.2 TIMES 1.1 LIQUIDITY RATIOS Liquidity ratios measure the ability of the firm to meet its current obligations.24 1. 3.15 2010 1.18 2008 1. Formula: Current Assets / Current liabilities CURRENT RATIO 1.21 Figure: 3.1 Current Ratio (Source: capital line database) . In fact analysis of liquidity needs the preparation of cash budgets and cash and fund flow statements.1 CURRENT RATIO 2007 1.CHAPTER III DATA ANALYSIS AND INTERPRETATION Financial Analysis Financial analysis is the process of identifying the financial strengths and weaknesses of the firm by properly establishing relationships between the items of the balance sheet and the profit & loss account / Income statement.14 1.1.1 Current Ratio: Definition: Current ratio is the relationship between current assets and current liabilities.22 1.12 1.16 1. provide a quick measure of liquidity.1.22 2009 1.
1Fixed Asset Turnover Ratio: Definition: This ratio shows the firm’s ability in generating sales from all financial resources committed to total assets.2. Hence the companies will always have to establish a tradeoff between the debtors and creditors to manage their working capital.2. Current ratio shows the amount of rupees available to meet the current obligations.1. The better the management of assets. decreasing trend from the year 2008 to 2010 and again increased in 2011. 3.1 determines the current ratio. The current ratio should be ideally around 2:1. the larger the amount of sales. But the range of variation lies in the range of ideal ratio. This industry is a capital intensive industry.2 Inventory Turnover Ratio: Definition: It indicates the number of times inventory is replaced during the year. These ratios are also called turnover ratios because they indicate the speed with which assets are being converted or turned over into sales. The reason for the decline seen in the ratio is that the current liabilities are increasing at a greater rate than the current assets. 3. The increase in current liabilities is due to the lenient credit terms that are provided to the customers. It is a test of efficient inventory management. Activity ratios are employed to evaluate the efficiency with the firms manages and utilizes its assets. So the ideal ratio normally varies from 1. Formula: Cost of goods sold / Average inventory .2ACTIVITY RATIOS Funds of creditors and owners are invested in various assets to generate sales and profits.Interpretation: Figure 3. Here we see an increasing trend from 2007 to 2008.5:1 to 2:1. It measures the relationship between the cost of goods sold and the inventory level. However the ideal ratio varies from industry to industry. Formula: Sales / Fixed Assets 3.
The net assets turnover should be interpreted cautiously.72 of sales is produced for one rupee of capital employed in net assets and the chart reflects there is slowly upward trend up to 2011.78 4 17.11 15. It is a test of the liquidity of the debtors of a firm.67 5. which implies that Rs.75 14.3 Debtors Turnover Ratio: Definition: It shows how quickly receivables or debtors are converted into cash. the asset turnover ratio is increasing uniformly over the period. it is 23.95 15.2. 23. Assets turnover ratio measures how efficiently assets are used to maximize sales. The net assets in the denominator of the ratio include fixed assets net of depreciation.85 2 23. Formula: Credit Sales / Average debtors Activity ratio 25 20 times 15 10 5 0 FIXED ASSET TURNOVER INVENTORY TURNOVER DEBTOR TURNOVER 1 21.52 6 Figure: 3.21 19. For 2011.72 22.3.81 6. Thus old assets with lower book values may create a misleading impression of high turnover without any improvement in sales.2 Activity Ratios (Source: capital line database) Interpretation: The figure 8 represents the activity ratios in which. . A firm’s ability to produce a large volume of sales for a given amount of net assets is the most important aspect of its operating performance.72.01 8.13 5 23.38 13.37 3 18.03 11. For Vimal oil and foods .
1 Interest Coverage Ratio: Definition: It is used to test the firm’s debt servicing capacity. It shows the number of times the interest charges are covered by funds that are ordinarily available for their payment.Inventory turnover ratio measures the efficiency of inventory management. or capital structure ratios are calculated. The chart reflects there is slowly upward trend up to 2011. financial leverage. Hence we can say that inventory is converted into sales at a faster pace. These ratios indicate mix of funds provided by owners and lenders.3 CAPITAL STRUCTURE OR LEVERAGE RATIOS To judge the long-term financial position of the firm. Formula: EBIT/ Interest 3.2 Long term Debt-Equity Ratio: Definition: It is a relationship describing the long term lenders contribution of each rupee of the owner’s contribution . A chart shows slowly decreasing trend of Vimal Oils and Foods debtor turnover ratio upto 2011.3. We can see that vis-à-vis industry Vimal Oil and Foods inventory turnover is greater which indicates better management of inventories. Debtors turnover ratio and collection period measure the speed with which the accounts receivable are collected. 3.3. A reduction in collection period would mean faster conversion of debtors into cash and so the company can meet its working capital requirement in a better manner. 3. Therefore ideally an increasing trend is expected. Inventory turnover ratio is more stabilize one with less fluctuation over a period of time which indicates effective inventory management.
3 Debt-Equity Ratio: Definition: It is a relationship describing the lenders contribution of each rupee of the owner’s contribution.32 6 1.3.43 2.71 2.57 Figure 3.Formula: Long term debt / Net Worth 3.37 2. And a lower ratio indicates a firm using .4 1.33 4 0.04 1. Formula: Total debt / Net Worth Leverage ratio 3 2.64 2.5 1 0.5 2 times 1.14 3 0.45 2.53 2.03 2 0.3 : Leverage Ratios (Source: capital line database) Interpretation: In the figure 3. However too high a ratio implies unused debt capacity.32 times in 2011 would imply that even if the firm’s EBIT were to decline to one-twenty sixth of the present level. For example and interest coverage ratio of 2. the operating profits available for servicing the interest on loan would still be equivalent to the claims of the lenders.3. Interest coverage ratio indicates the extent to which a fall in EBIT is tolerable such that the ability of the firm to service its interest payments would not be adversely affected.58 1.5 0 Long term debt equity ratio Debt equity ratio interest coverage ratio 1 0.57 5 0.2 1.
2 Return on capital employed: Definition: It is the relationship between profit after tax and total capital employed. Here for the year 2010. The trend observed in this ratio is similar to that of the long term debt to equity ratio because here inclusion of just short term fund provider.4 PROFITABILITY RATIOS The profitability ratios are calculated to measures the operating efficiency of the company. So we can say that Vimal oil and foods is not conservative but is using its debt capacity in a good manner.4. Formula: EBIT (1-tax rate) / Capital employed . the claim of the all creditors is high and if it is low. Debt to equity ratio is ratio of the total debt to the net worth. Formula: EBIT (1-tax rate) / Net Worth 3. 3. Vimal oil and foods is progressing with growing ability to service its interest payments from 2010 till 2011 with faster rate. the claim of all creditors is low. Generally two major types of profitability ratios are calculated: Profitability in relation to sales Profitability in relation to investment 3. If it is high. The trend of a ratio of Vimal oil and foods shows that it is increasing but it is lower than average of industry. This ratio describes the relationship between the all ender’s contribution and the owner’s contribution.4. the lender’s contribution is 2.1 Return on Net worth: Definition: It is the relationship between profit after tax and net worth.excessive debt.37 times to that of the owner’s.
Capital employed represents pool of funds supplied by shareholders and lenders. Over here the RONW has increased from 2007 till 2011 but decreasing trend is there with the industry .96 14 2010 15. This ratio therefore measures what actually a firm has earned in comparison to the investments made. .Profitabilty 30 25 Percentage 20 15 10 5 0 ROCE RONW 2007 15.4 Profitability Ratios (Source: capital line database) Interpretation: Figure 3. Return on capital employed is found by dividing EBIT (1-tax rate) by capital employed.6 24. The shareholder’s equity or new worth will include paid-up share capital.25 Figure: 3. Thus from the overall profitability ratios we can see that the profitability of the company is increasing.4 represents the profitability ratios in which.68 12. RONW indicates how well the firm has used the resources of owners. The movement of this ratio is almost similar to the trend of return on net worth ratio.01 23. which is a good indication for the company.2 2008 17.58 2009 16. share premium and reserved and surplus less accumulated losses.72 17. Return on equity is calculated to see the profitability of owner’s investment.74 2011 13.
A higher profit margin indicates a more profitable company that has better control over its costs compared to its competitors.2 Net Profit Margin: Definition: The net profit margin ratio is measured by dividing profit after tax by sales. 3.3 Operating Profit Margin: Definition: The operating profit margin ratio is measured by dividing Operating Profit by sales. Formula: Gross profit / sales 3.5 PROFIT MARGIN RATIO: Profit margin. net profit margin or net profit ratio all refer to a measure of profitability.3.5. Formula: Operating Profit / Sales . The profit margin is mostly used for internal comparison. Formula: Profit after tax / Sales 3.5. net margin. Profit margin is displayed as a percentage. It is calculated by finding the net profit as a percentage of the revenue.1 Gross Profit Margin: Definition: The first profitability ratio in relation to sales is the gross profit margin.5.
15 1.51 2.76 0.6 EPS Definition: EPS indicates earning power available with share holders.87 3 1. Formula: PAT / Total number of ordinary shares outstanding.71 0. Net Profit Margin and Operating Profit Margin is increasing over the period of time which shows the sign of good management.3 0. Hence it implies that the firm is able to produce at relatively lower cost and withstand adverse economic condition.69 2 2.45 4 3 2.9 Figure: 3.5 Profit Margin ratio (Source Capital line Database) Interpretation: Gross Profit Margin.Profit margin 3.72 5 2.61 0. 3.5 0 operating profit margin Gross profit Margin Net Profit Margin 1 2.5 2 1.5 3 Percentage 2. The EPS calculations made over years indicate whether or not the firm’s earning power on per-share basis has changed or over that period.88 1.92 0.5 1 0. .95 2.
3.6.7 DIVIDEND PAYOUT Definition: Dividend payout shows how much percentage of earning to be distributed to share holders in the form of dividends.28 2011 9.EPS 14 12 10 RUPEES 8 6 4 2 0 EPS 2007 7.53 2008 12. Formula: DPS / EPS . From chart we can see that EPS has a increasing trend from 2007 till 2008 then it has decreased in 2009 and again its showing increasing trend from 2010 upto 2011.6 : Earnings per share (Source: capital line database) In the figure 3.81 Figure 3. the EPS shows how much rupees available to share holders from net profit.22 2010 9.28 2009 6.
Divident Payout ratio 25 20 percentage 15 10 5 0 Divident Payout ratio 2007 15. ROE is thus a products of RONA (reflecting operating efficiency) and financial leverage ratios (reflecting financial efficiency).7: Dividend Payout Ratio (Source: capital line database) From the figure 3. It indicates the firms earning power. Also. some firms resort to vertical integration for cost reduction and synergic benefits. It is a product of the asset turnover. All the firms would like to improve their RONA.7. To improve profit margin. 3. we can say that we can say that Vimal oils and foods is following a very stable dividend policy. firms may have to trade-off between asset turnover and gross profit margin. gross profit margin and operating leverage. RONA = Asset turnover * Gross profit margin * Operating Leverage A firm can convert its RONA into an impressive ROE through financial efficiency.94 2008 14.29 2010 16.29 Figure 3. Financial leverage and debt-equity ratios affect ROE and reflect financial efficiency. In practice competition puts a limit on RONA. ROE = Operating Performance * Leverage Factor .16 2011 15.66 2009 19.8 DUPONT ANALYSIS Return on Net Asset (RONA) or Return on Capital Employed (ROCE) is the measure of the firm’s operating performance. Earning not distributed to shareholders is retained in the business.
From the interpretation of Current ratios.69 13.64 0.42 0. financial efficiency and retention shows the overall performance. .54 3.83 17.77 6.11 18.02 2004 2.14 0.05 5.89 9.14 28.15 25.73 2007 2.57 3. EPS. Equity Growth = ROE * Retention Ratio The combined effect of three aspects .73 0.12 35. liquidity ratios.78 3.06 5.97 2006 2.83 5.56 5.92 0.53 0.18 17.21 2.86 4.74 2011 2.15 23.14 23.48 5.15 7. profitability ratios. RATIOS .54 4.99 0. It is advisable to investor to make Investment in Vimal Oils and Foods Ltd which ensures stable earnings in the form of dividends.13 2005 2.82 4.29 9.3 6.17 14.31 14 2010 3.45 0.15 16. activity ratios. The computation of ratios clearly shows the interaction between operating ratios. Dividend payout.93 6.The firm can convert its ROE into growth in equity through retention.operating efficiency.19 31.2 2008 2.67 0.58 2009 3.78 24.25 Table 14 : Du Pont Analysis (Source: capital line data base) CONCLUSION: From financial analysis we can conclude that Vimal Oils and Foods Ltd is having a very strong financial capability.2 4.04 12. DuPont analysis and leverage analysis it is clear that Vimal Oils and Foods Ltd is financially viable and has a capability to meet contractual obligation effectively that arise over a period of time. profitability ratios and leverage ratios for obtaining return on the shareholder’s earnings.55 23.03 4.DUPONT MODEL –Vimal Oils and Foods Ltd PBIDT/Sales(%) Sales/Net Assets PBDIT/Net Assets PAT/PBIDT(%) Net Assets/Net Worth ROE(%) 2003 2.
M. FINANCIAL MANAGEMENT.vimaloil. . VOFL. (2012. (2010).com. from www. Retrieved April 6. VOFL. PANDEY. 2012. about us. (2010-11). ANNUAL REPORT . VIKAS.2010-11. I. April 4).Bibliography: VOFL.
This action might not be possible to undo. Are you sure you want to continue?
We've moved you to where you read on your other device.
Get the full title to continue reading from where you left off, or restart the preview.