KMS COUCH BUILDERS TITLE: FINANCIAL STATEMENT ANALYSIS.

AREA OF TOPIC CHOSEN FINANCE In our present day economy, finance is defined as the provision of money at the time when it is required. Every enterprise, whether big, medium of small, needs finance to carry on its operations and to achieve its targets. Finance is a source of every organization. Finance refers to the management of flows of money through an organization. It concerns with the application of skills in the manipulation, use and control of money.

MEANING OF BUSINESS FINANCE Literally speaking, the term Business Finance connotes finance of business activities. It is composed of two words i) Business, ii) Finance Thus, it is essential to understand the managing of the two words, business & finance which is the starting point to develop the whole concept & meaning of the term business finance.

The word Business literally means a state of being busy. All creative human activities relating to the production and distribution of goods & services for satisfying human wants are known as business. It also includes all those activities which indirectly help in production and exchange of goods, such as, transport, insurance, banking and warehousing, etc. Broadly speaking, the term business includes industry, trade and commerce.

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INTRODUCTION: Financial analysis refers to an assessment of the viability, stability and profitability of a business, sub-business or project. Study and analysis of balance sheet is done for past 2 consecutive years. The current study is undertaken for the purpose of knowing the financial performance of the company. The study focuses attention mainly on the level of financial performance. Financial performance is done by analyzing financial statements. Financial statements are prepared primarily for decision making. They play a dominant role in setting the framework of managerial decisions. Finance both in theory and practice as experienced strong development over recent decades. Large firms in India and elsewhere in a world have been respective to the advancement made in modern financial theory and the increasing globalization of markets , theories in finance have develop rapidly do greatly to the assumption of perfect capital market. Finance management brings together the notion of perfect market theory and the word of market in perfection and adapts continuously to the present contingencies. A purpose of finance management is to provide manager with a valuable decision making frame work one that take agency, control and governance issues into account in the decision making process. Financial statements are prepared primarily for decision making. They play a dominant role in setting the frame work of managerial decisions. The finance manager has to adhere to the five Rs with regard to money. This right quantity of money for liquidity consideration of right quality. Whether owned or borrowed funds. At the right time to preserve solvency from the right sources and at the right cost of capital.

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MEANING AND CONCEPTS OF FINANCIAL ANALYSIS;

The term financial analysis, also known as analysis and interpretation of financial statements, refers to the process of determining financial strengths and weakness of the firm by establishing strategic relationship between the items of the balance sheet, profit and loss account and other operative data. In the words of Myers, Financial statement analysis is largely a study of relationship among the various financial factors in a business as disclosed by a single set of statements, and a study of the trend of these factors as shown in a series of statements.

Limitations of the study are time constraint and dependence on secondary data. The suggestions given were, to make use of assets and sources optimal and better liquidity position. This study mainly focus on the above: The financial position of the company. The growth over the year. The company performance.

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REVIEW OF LITERATURE 1. PERFORMANCE EVALUATION AND RATIO ANALYSIS OF PHARMACEUTICAL COMPANY IN MALAYSIA Author: Hossan Faruk; Ahsan Habib; [2010] Keywords: Financial analysis; ratio analysis; Beximco company financial analysis; square company financial analysis; Abstract: The thesis applies performance evaluation of pharmaceutical company in Malaysia. It means evaluate how well the company performs. The main aim is achieved through ratio analysis of two pharmaceutical (Beximco and Square pharmaceutical) companies in Malaysia. The main data collection from the annual financial reports on Beximco and square pharmaceutical companies in 2007 to 2008.Different financial ratio are evaluated such liquidity ratios, asset management ratios, profitability ratios, market value ratios, debt management ratios and finally measure the best performance between two companies. The mathematical calculation was establish for ratio analysis between two companies from 2007-2008.It is most important factors for performance evaluation. The graphical analysis and comparisons are applies between two companies for measurement of all types of financial ratio analysis. Liquidity ratio is conveying the ability to repay short-term creditors and it total cash. It determines perform of short term creditor of both pharmaceutical companies under the three categories such as current ratio, quick ratio and cash ratio. Asset management ratio is measurement how to effectively a company to use and controls its assets. Its also quantify into seven categories for both pharmaceutical companies such as account receivable turnover, average collection period, inventory turnover, account payable turnover ,account payable turnover in days ,fixed asset turnover ,total asset turnover. Profitability ratio is evaluate how well a company is performing by analyzing and how profit was earned relative to sales, total assets and net worth for both pharmaceutical companies. Debt coverage ratio is performing that the property insufficient to collect their mortgage for both companies and market value is perform the stockholder to analysis their future market value of the stock market. Overall analyses are measurement the best one between Beximco and Square pharmaceutical companies.

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2. FINANCIAL PERFORMANCE IN HONG KONG LISTED HOTELS: THE EFFECT OF VALUE-ADDED CREATION AND COST-LEADERSHIP SEEKING Author: Lin Zhang Wai Fong Chow [2010] Keywords: value creation cost leadership; competitive strategies; financial performance and statement analysis; Abstract: We structure a literature review which we provide with broader definitions of the majorconcepts: value creation, cost efficiency (leadership), competitive strategies, financialperformance and statement analysis. The literature review focuses mainly on Hong Kongcontext and literatures supporting the similar business strategies among similar size ofcompanies from various industries.The study takes forms as a quantitative study with a deductive approach. A set offinancial performance data will be collected and examined, to show how companyperformance is correlated to its strategies and what an outcome is. We aim at providinganother perspective of investment analysis approach to the potential investors, so theycould embrace the whole picture of available information.We develop two groups of hypothesis; the first group is company's strategy measures thatshow no effect on financial performance, the second group is company's strategymeasures that show some effect on financial performance.The result indicates while normally staff cost and cost of sale are recognized as costleadership measure under product industry, it implies positive contribution to valuecreation financial performance in service industry, instead of having influence onprofitability. Also, the wealth generated from previous sale revenue margin will havepositive impact on company's competiveness in the hotel industry.Keywords: value creation cost leadership, competitive strategies, financial performanceand statement analysis

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3. THE FINANCIAL PERFORMANCE OF ETHICAL FUNDS : A COMPARATIVE ANALYSIS OF THE RISK-ADJUSTED PERFORMANCE OF ETHICAL AND NON-ETHICAL MUTUAL FUNDS IN UK Author: Shalom [2009]

Keywords: Socially responsible investments; ethical funds; corporate social responsibility; risk-adjusted performance; management fee; Abstract: The review of the ethical funds literature shows the significant growth of the Socially Responsible Investments (SRI) in the last few decades. The increase of the interest towards SRI indicates that ethical issues have become more essential for the investors. However the number of surveys reveals that financial performance remains of an important concern for the socially responsible investors. Therefore the benchmark analysis of the expected returns and management fees of the ethical mutual funds is chosen as a topic for this thesis research. The risk-adjusted measures are used to analyze and compare the performance of the ethical and non-ethical mutual funds in United Kingdom. The analysis does not indicate the significant difference in the expected returns between the two groups of funds. However this study concludes that on average ethical funds charge higher management fees. Thus investing in ethical funds is more costly but gives about the same returns as investing in conventional funds.

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4. PERSISTENCY & TRENDS : STOCK PRICE IMPACT OF INTERIM REPORTS Author: Fredrik ; Vladimir Keywords: Financial statement analysis; Market behaviour; Interim reports; Fourth quarter reports; Persistent trends; Trend analysis; Stockholm stock exchange; Analysts; Expectations.; Abstract: Problem: Interim and annual reports are some of the most crucial sources of information regarding companies performances. Interested parties such as analysts and investors assess this information and compare it with expectations. Analysts expectations of companies interim reports are of great importance when analysing the future development of share movement. Possible deviations between analysts expectations and actual presented results from the individual companies might change the perceptions of specific future stock prices. Furthermore business sectors have different characteristics and might respond differently to unexpected earnings news. Over- and underperformance of the presented results in relation to analysts expectations could create specific stock price movements over a forthcoming period depending on the nature of the report. The authors label this phenomenon as persistent trends. Results: The authors presented empirically founded evidence for the existence of persistent trends following the presentation of both positive and negative reports. The authors also rejected the presence of a uniform response to deviating earnings information in the business sectors.

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5. A VALUE RELEVANT FUNDAMENTAL INVESTMENT STRATEGY : THE USE OF WEIGHTED FUNDAMENTAL SIGNALS TO IMPROVE PREDICTABILITY Author: Eliasson; Malik; Benjamin sterlund; Keywords: Fundamental analysis; Financial statement analysis; Financial analysis; Abstract: The aim of this study is to investigate the possibility to improve the investment model defined in Piotroski (2000) and the subsequent research carried out on this model. Our model builds further upon the original fundamental score put forth by Piotroski. This further developed model is tested in two different contexts; firstly, a weighted fundamental score is developed that is updated every year in order to control for any changes in the predictive ability of fundamental signals over time. Secondly, the behavior of this score is analyzed in context of recession and growth cycles of the macro economy. Our findings show that high book-to-market portfolio consist of poor performing firms, as shown by Fama and French (1995) and is thereby outperformed by both Piotroski's F_score and our own developed scores. The score based on a rolling window correlation is performing a little better then F_score, but the score based on correlations for prior Up and Down periods is not. The conclusions we draw from the results are that improvements have to be made, both to F_score and our own developments, to sort winners from loser to get an even more profitable zero-investment hedge strategy.

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STATEMENT OF THE PROBLEM: The project is titled ANALYSIS OF FINANCIAL STATEMENTS AT KMS COACH BUILDERS LTD a company that had shown a growth with steady pace of increased profits and turnover in recent years. The study is conducted to evaluate the performance and market standing of the KMS in order to give a better scope to the investors, shareholders, creditors and the management themselves about the rating of the KMS and its performance in the market.

SCOPE OF THE STUDY The study covers comparative income statement and balance sheet it primarily depends on the accuracy of balance sheet and data found in annual report.

OBJECTIVES OF THE STUDY 1. To study the liquidity position of the company 2. To study the operational performance of the company 3. To know the solvency position of the company. 4. To study the profitability position of the company.

RESEARCH METHODOLOGY The study is mainly based on data provided in the annual report of the company for the year 2009-10 to 2010-11.Secondary data was used to obtain the required information. Secondary data has been collected from secondary sources like company records, company reports, and published studies. Significant tools popular with my studies are company websites, annual reports and other books and magazines.

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DATA COLLECTING METHODOLOGY Primary data: Primary data are those, which are collected by Means of interacting with the Management, branch managers, Officials and staff of the organization and this happens to be Original in character. Secondary data: Secondary data are also the sources of information, which have already been collected and proposed. It includes data available in the textbooks, annual reports, internet and websites of the company.

LIMITATIONS: 1. The information provided in the financial statement is compiled on the financial basis of historical costs. 2. The accuracy of analysis depends on data collected from financial statements. 3. The findings and analysis of the reports is prepared from the information available in the annual reports and book of accounts. 4. Despite of the limitations, maximum care was exercised to make the study scientific & meaningful.

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INDUSTRY PROFILE
BUS HISTROY Any of a class of large, self-propelled, wheeled vehicles designed to carry passengers, generally on a fixed route can be termed a bus. Developed at the beginning of the 20th century, to provide greater route flexibility, it was the natural outgrowth of the horse-driven coach. In the present moment, buses are defined as vehicles that accommodate more than 10 passengers. DEVEPLOMENT In 1830, Sir Gold worthy Gurney of Great Britain designed a large stagecoach driven by a steam engine that may have been the first motor-driven bus. It was Germany's turn next to design an eightpassenger omnibus, driven by a four-horsepower single-cylinder engine in 1895. Sightseeing companies were the first to introduce buses in the United States. One type of these open vehicles built by Mack Inc., in 1904 had a nominal seating capacity of 15 with a four-cylinder gasoline engine developing 36 horsepower at street speeds of up to 20 miles per hour (32 kilometers per hour). Technically, the early bus resembled the motor truck. Until the 1920s the bus consisted of a bus body mounted on a truck chassis. 1921 saw the development of a chassis specifically meant for a bus. This was manufactured in the United States and was made by the Fageol Safety Coach Company of Oakland, Calif. This new frame was one foot lower than a truck frame. In 1926 Fageol developed the first integral-frame bus, with twin engines mounted amidships under the floor. The integral frame utilized the roof, floor, and sides of the bus as structural members. Mack and Yellow Truck & Coach of the United States were among the other early bus manufacturers in the United States, both of which built gasolineelectric models. In these buses a gasoline engine drove a direct-current generator, and the output of the generator provided electrical power for the driving motors on the rear wheels. This electrical system performed the functions of a transmission by multiplying driving torque and providing a means of connecting and disconnecting the engine from the drive wheels. Transcontinental bus service was introduced in the United States in 1928. The first rear engine in an integral-frame bus was introduced in 1931. Two-stroke-cycle diesel engines were first used in buses in 1938 and were found in most city and intercity models for the next 40 years. EWCM/RCN/AN Page 11

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Introduced in 1953, air suspensions continue to be employed on integral-frame bus models. They consist of multiple heavy rubber bellows, air springs, mounted at each axle. The air springs are supplied with air from a reservoir in which pressure at about 100 pounds per square inch (690 kilopascals) is maintained. An advantage gained from this type of suspension is that as the load increases or decreases, the level and height of the vehicle remain constant. A bus (archaically also omnibus, multibus, or autobus) is a road vehicle designed to carry passengers. A bus can generally seat a maximum of anywhere from 8 to 300 passengers. Buses are the most widely used form of public transportation, although they are also used in tourism and as private transport. The most common type of bus is the single-decker bus, with larger loads carried by doubledecker buses and articulated buses, and smaller loads carried by minibuses and minibuses. A more luxurious version of the bus is the coach. Buses are usually powered by a diesel engine, although early buses were horse drawn and there were experiments with steam propulsion. Trolleybuses use power drawn from overhead power lines. In common with the car industry bus manufacturing is increasingly a globalized activity, with the same design of bus appearing on roads around the world. CLASSFICATION OF BUSES Single Decker The most common design of bus is a rigid single-decker bus with two axles, or if needed, a second rear axle. The mini buses is a lighter and smaller purpose built development of the single deck bus, which emerged in the 1990s. The minibus, originally developed from van conversions, fulfills the lowest capacity needs of buses. Minibuses today are both still derived from vans, or built specifically as minibuses. Double Deckers Where more capacity is needed, a double-decker bus or articulated bus may be used, the prevalence of which varies from country to country. A double-decker is a rigid vehicle with an extra upper deck; the two conjoined for access by a staircase usually in modern vehicles a spiral staircase EWCM/RCN/AN Page 12

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near the front, but often at the rear on older vehicles, which may have an open platform. Larger double Decker might have both front and rear staircases.

Articulated buses Articulated buses take the form of single-decker bus with a 'trailer' portion attached. In articulated buses, drive can be through the front or rear section's axles. In modern articulated buses one can walk between the front and rear sections through an "accordion joint". In the UK and Australia they are often called bendy buses.

Low-floor buses For many new fleets, particularly in local transit systems, there is an increasing shift to low-floor buses (primarily for easier accessibility).High-floor buses, whose design allows for luggage compartments underneath the passenger seating area, are used for longer-distance intercity travel (see Coaches). The move to the low-floor design has all but eliminated the mid-engine design, although some coaches still have mid mounted engines.

Bi-articulated An uncommon departure from the standard rigid or articulated buses, there also exist limited instances of bi-articulated buses, and passenger-carrying trailers either towed behind a conventional bus (a bus trailer), or hauled as a trailer by a truck (a trailer bus).

Open top A bus may be "open top", that is to say, it has little or no roof. The aim is for passengers to get a better feel for of the outdoors, and a better view. Typically they are used as tourist buses on short city tours. The coach building is generally done when the vehicle is first made, but sometimes an open top bus is converted from a double-decker that has scraped or lost its roof on a low bridge or other impediment, since its chassis will generally be intact.

Coaches

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A coach or motor coach describes a more luxurious version of a bus, designed for more comfortable or longer-distance travel. In the UK, an old-fashioned word for it is a char banc. Coaches can come in the same general configurations as buses, as single- or double-deckers, articulated, or small 'mini-coaches'. Coaches have a higher floor level than buses, to let luggage be stored in compartments under the passenger floor.. Coaches do not generally allow for standing passengers, and feature upholstered, high-backed, individual seats. Coaches often have passenger comforts such as reclining seats, hand luggage storage, toilets, and audio-visual entertainment systems. As a low-cost version of a coach, buses may be fitted with coach-style, higher-backed, more comfortable seats, termed 'dual-purposed' bodywork. These may be used on long-distance public transport services, or as low-cost charter coaches. Increasingly in some areas individual upholstered coach-style seating, either fully high-backed or standard bus-seat height, is being deployed on higher-specification transit buses, sometimes with leather upholstery.

Trolleybuses A trolleybus is essentially an electrically powered bus that is attached to and draws power from overhead lines. The trolleybus can be seen as a branch of, and a parallel development to, the conventional bus, and is exclusively used for public transport (apart from some systems recreated in transport museums). Trolleybuses appeared at nearly the same time as combustion engine powered buses, with a system in Dresden, Germany, in 5 May 1901. As with conventional buses, double-deck and articulated versions of the trolleybus have been developed. NOTABLE FEATURES OF BUSES

Accessibility Increasingly in some countries, buses and coaches are designed with accessibility features, often in response to regulations and recommendations laid out in disability discrimination laws. While such access laws apply to public transport, accessible features are also often adopted by private operators as a customer service Differentiator or due to the accessible designs becoming the market standard for new buses and coaches.

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Historically, accessible buses were specially modified standard buses, as mobility buses, produced by post manufacture, or niche manufacturers. Later, many standard bus types have become accessible, although mobility buses are still in production, usually as minibus-size vehicles. Mobility buses can be modified with a side or rear wheelchair lift, additional doors, wider doors, or an extendible access ramp. For standard buses, a major part of accessibility is achieved by the low-floor bus design, although for coaches, accessibility is being achieved through wheelchair lifts due to their higher floor level. Easier access for wheelchairs, pushchairs and the elderly can also be achieved through the use of kneeling air suspension and electrically or hydraulically extended under-floor ramps. Other accessibility features include wide entrances and interior gangways for wheelchairs and baby carriages; brightly colored interior fittings; and clear destination displays to aid the visually impaired.

Public transport Public transport forms the major use of buses and coaches, designed for the transport of the general public as a public service, rather than the private hire or use of buses for transport or other purposes. The use and design of public transport buses varies around the world, and utilizes the entire range of bus designs and capacities. The design of buses and coaches is often specialized to a particular type of service. Buses may operate fixed routes, or be used as flexible services. Public buses can be organized in large fleets or as small concerns, and be publicly or privately owned and operated. The transit bus is the predominant design of public bus, which features specific features to allow use as a public transport vehicle. Transit buses have utilitarian fittings designed for efficient movement of large numbers of people, and often have multiple doors. A dual purpose bus is a transit bus fitted with coach style higher backed more comfortable seats, used on longer distance routes where standing passengers are not likely to be present. Specially adapted mobility buses may be used on specialist services for the transport of passengers with mobility issues. High capacity bus rapid transit (BRT) services may use the bi-articulated bus, an extension of the articulated bus concept with two trailer sections. BRT schemes (and other uses) may also use tram style buses, which certain bus manufacturers have tried to emulate the tram with modified articulated bus designs, with features such as a pilot style driving position and streamlined styling, for example the Wright Streetcar and the Iris bus Civis. Guided buses are fitted with technology to allow them to run in designated guide ways, allowing the controlled alignment at bus stops and less space taken up by guided EWCM/RCN/AN Page 15

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lanes than conventional roads or bus lanes. Guidance can be mechanical, optical or electromagnetic. Guidance is often, but not exclusively, employed as part of a BRT scheme. Extensions of the guided technology include the Guided Light Transit and Transport systems, although these are more often termed 'rubber tyred trams' as they have limited or no mobility away from their guide ways.

Schools In some countries, particularly the U.S., buses used to transport school children have evolved in to a specific design with specified mandatory features. These buses feature things such as the school bus yellow livery and crossing guards. Other countries may mandate the use of seat belts. As a minimum many countries require that a school bus displays a sign, and may also adopt yellow liveries. School buses are also often older buses cascaded from service use, retro-fitted as a school bus, with more seats and/or seatbelts. School buses may be operated by local authorities or private contractors. Schools may also own and operate their own buses for other transport needs, such as class field trips, or to transport associated sports, music or other school groups.

Private charter Due to the costs involved in owning, operating and driving buses and coaches, many bus and coach uses come about from the private hire of vehicles from charter bus companies, either for a day or two, on a longer contract basis, where the charter company provides the vehicles and qualified drivers. Charter bus operators may be completely independent businesses, or charter hire may be a subsidiary business of a public transport operator who might maintain a separate fleet or use surplus buses, coaches, and dual purpose coach seated buses. Many private taxicab companies also operate larger minibus vehicles to cater for group fares. Companies, private groups and social clubs may hire buses or coaches as a cost effective method of transporting a group to an event or site, such as a group meeting, racing event, or organized recreational activity such as a summer camp. Entertainment or event companies may also hire temporary shuttles buses for transport at events such as festivals or conferences. Party buses are used by companies in a similar manner to limousine hire, EWCM/RCN/AN Page 16

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for luxury private transport to social events or as a touring experience. Sleeper buses are used by bands or other organizations that tour between entertainment venues and require mobile rest and recreation facilities. Some couples hire preserved buses for their wedding transport instead of the traditional car. Buses are often hired for parades or processions. Victory parades are often held for triumphant sports teams, who often tour their home town or city in an open-top bus. Sports teams may also contract out their transport to a team bus, for travel to away games, to a competition or to a final event.

These buses are often specially decorated in a livery matching the team colors. Private companies often contract out private shuttle bus services, for transport of their customers or patrons, such as hotels, amusement parks, university campuses or private airport transfer services. This shuttle usage can be as transport between locations, or to and from parking lots. High specification luxury coaches are often chartered by companies for executive or VIP transport. Charter buses may also be used in Tourism and for promotion (See Tourism and Promotion sections).

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Company Profile
Bus is the most common mode of transport used by public for both Inter City as well as for Intra City operations. Untill recent days people considered it a luxury if the bus comes at its stipulated time. The commuter had no option, but to travel in whatever mode of transport available. But the position has gradually changed during the last 5 years. More number of buses are being inducted into the system. Today the passenger has options in most of the prominent cities and routes. Accordingly the passenger is attaching more importance to comfort and aesthetics. Hence there is demand for comfortable aesthetically built attractive buses.

As regards to urban areas, pollution levels in major cities are crossing the limits due to traffic pollution. The cities are also getting congested due to high concentration of vehicles. Hence the Governments are motivating the public to use public transport by offering them comfortable, safe and good looking buses. We, at KMS Coach Builders are devoted to make this happen.

Pathway of KMS:

KMS Coach Builders,based in Bangalore was established during November 2006 with its works situated at # 125 /1 B Industrial Area, Kengeri on Bangalore Mysore Highway. Initially, it was started as a Proprietorship concern. In order to support the growing activities, the proprietorship concern was converted into a Private Limited Company during June 2007. This led to the emergence of KMS Coach Builders Pvt. Ltd. We are one of the leading companies engaged in bus body manufacturing and supplying to various government and private organizations across the country. Our contemporary designs, quality products, market leading prices and prompt timely deliveries have made a big impact on the bus body building industries situated in Bangalore. Since its emergence in this business domain, KMS has EWCM/RCN/AN Page 18

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been successfully fulfilling the growing demands of several leading Transport Corporations of the India.

KMS is dedicated to manufacture bus bodies of latest in design and robust in construction. With the complete knowledge of current market trends backed by sincere efforts of our dedicated workforce, we have constructed buses for some of the most reputed State Transport Corporations in India. KMS is also constructing buses for several prominent schools & colleges situated in and around Bangalore. Some of the worth mentioning customers we are serving are listed as below:

Bangalore Metropolitan Transport Corporation. Karnataka State Transport Corporation, Bangalore. North Eastern Transport Corporation, Gulbarga. Metropolitan Transport Corporation Ltd., Chennai The Tamil Nadu Transport Corporation (Salem) Ltd. Salem. Andhra Pradesh State Transport Corporation, Hyderabad. Apart, from above listed State Transport Corporations, we are also constructing buses for the two leading O.E. Manufacturers of India viz.,

Ashok Leyland Ltd., TATA Motors Ltd., KMS initially started with a monthly production capacity of 15 20 buses. With the growing list of customers, first phase of expansion was completed during June 2007. Since this expansion was also not sufficient to meet the demand, the second phase of expansion was completed during Dec 2007.

With further increase in the customer base, the present infrastructure is also falling short of requirement. Hence, third phase of expansion is under process and with this KMS is expecting to increase the production capacity to 100 buses a month. Within three years of inception, KMS has commissioned three phases of expansion.

Following are the facilities available at KMS to construct the bus bodies matching with international standards:

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Modern Painting Booth with baking facility. 10 Tank process zinc plating & Hot Phosphating plant. Machine shop comprising of Heavy duty shearing machine and press brake to fabricate components. Water Shower Plant for Roof Leakage test. CO2, Mig- Mag welding equipments. Diesel Generators for uninterrupted power supply. Hydraulically operated Panel Stretching Equipment. Centralised Screw Compressor for operation of pneumatic tools.

Our Team: KMS possesses a team of experienced, qualified, and innovative engineers, technicians and other professionals who are experts in their respective areas. Our workforce makes all out efforts to ensure the delivery of the buses as per the delivery commitments. Highly skilled workforce aided by competent Engineers is dedicated to qualitative production to ensure complete satisfaction of our cherished customers. Exclusive Assortment of Buses: KMS has constructed the following types of buses for its esteemed clients:

Meghadoota Airconditioned Luxury Class Buses. Rajahamsa Luxury Class Non A/c. buses. Moffussil type buses for STUs with tubular structure. City type double door buses with 2 x 2 seats SUVARNA improvised city type buses (Volvo city type) with passenger friendly features. Suburban type double door buses with 3 x 2 seats. Staff & School Buses for educational institutions. Semi Low Floor Buses for city operations. Quality our Endeavour: We are the team of professionals who give utmost importance to quality. At KMS, quality is a way of life and not merely a word. The company, right from its inception has been focusing to develop new methods of manufacturing and designing bus bodies to satisfy customers demands.

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quality raw materials for manufacturing our products and comply with all the quality norms in the manufacturing processes. Our qualified and experienced Engineers strictly monitor each step right from procurement of raw materials to the delivery of final product. We strive to achieve 100% satisfaction of our valued customers. We are an ISO 9001/2008 certified company which stands to certify our commitments to quality.

Innovation: Innovation and research are our driving forces. Our company is entirely dedicated to manufacture bus bodies which offer comfort and security to passengers. In order to accomplish this goal of providing buses for better travelling, our designers at KMS have developed a new version and a PROTO which is already offered to well known Ashok Leyland. This model was later supplied to BMTC by Ashok Leyland. BMTC has approved this model and named these buses as SUVARNA. These buses are being operated to Bangalore International Airport from different parts of city.

BMTC has inducted over 300 buses of this type to its fleet within a short span of 6 months. Adding to this, BMTC has inducted a new series of BIG 10 buses which is also a feather from the cap of KMS.We are the first bus body builder in Bangalore to construct Semi Low Floor buses as per the specification of JN NURM for BMTC & KSRTC. These innovations in bus body designing and ability to satisfy customers demands are our indistinguishable assets.

Business type Year established Total employees

Manufacturer 2006 101-500 people

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Bus body building KMS is continuously making its mark in bus body building industry. In a short span of two years, we have served to several transport giants across south India. The company understands the changes our society is going through and manufactures buses which suit to these modern times.

We always make sure that passengers should feel comfortable and secure while travelling in buses without compromising on the quality of buses. We offer buses which are aesthetic, comfortable, safe and durable. Apart from these qualities, timely delivery & competitive rates are also guaranteed at KMS.

Management

We, at KMS Coach Builders Pvt. Ltd., have excellent management system for carrying out the entire fabrication and building process. Our superior team of experts works dedicatedly for completing their assigned tasks and make sure that the output is delivered within the specified time-frame.

The complete processes right from obtaining the material and components until the final delivery of the bus body are performed under the vigil eye of the expert supervisors to ensure superb quality output. Expertise management of over all functioning of our organization makes us a leading manufacturer of bus bodies, which are supplied to government as well as private companies. With prompt and smooth functioning, backed by effective management, we have gained trust and admiration of our clientele.

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Infrastructure

KMS owns an excellent infrastructural facility for carrying out the bus body building process. Our fabrication facility is well-equipped with contemporary machinery and technology to ensure quality output is derived out of the entire process. We have our facility well-organized for carrying out different production stages efficiently.

We have all the tools and techniques for building bus body, and constantly upgrade our facilities for remaining abreast with the latest trends and market. Effective management, superior infrastructure, and skilled personnel aid us in meeting the customers requisites effectively and stay ahead of our competitors. Even, we regularly train our personnel for smooth and effective production as per the latest techniques and machines. Production We carry out our bus body production process effectively and make sure that no possibility of any flaws remains. The entire production stages are carried out smoothly under expert supervision to make sure the clients requisites are met within the stipulated time-frame. The production goes flawless which assure superior quality, durability and higher performing capability of the output bus body.

Also, we are backed by constant supply of quality raw material procured from reliable vendors along with committed team of employs which makes it easier to complete the production and deliver the final output within the agreed time-frame. Quality and durability are gien extreme importance throughout the production process, which has gained us our clienteles trust and appreciation for our final output bus bodies.

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FINANCIAL ANALYSIS Financial analysis is the process of identifying the financial strengths and weakness of the firm and establishing between the items of the balance sheet and profit and loss account This analysis includes comparative financial statements and ratio analysis. COMPARATIVE FINANCIAL STATEMENTS Comparative financial statements refer to the statements of the financial affairs Of a business, which are prepared in such a way as to provide time perspective to the various elements contained in such statements for the purpose of analysis, comparative financial statements use the following information Absolute data in money values as given in the financial statements, for current period and the preceding period. Increase or decrease in absolute data in money values in the current period. Increase or decrease in absolute data in terms of percentage. Comparisons of absolute data expressed in ratios where its considered necessary.

There are important comparative financial statements: Comparative income statement Comparative balance sheet.

RATIO ANALYSIS Financial ratio analysis is the calculation and comparison of ratios, which are derived from the information in a companys financial statements .the level and historical trends of these ratios can be used to make inferences about a companys financial conditions, its operations and attractiveness as a investments. The information in the statements is used by. Trade creditors, to identify the firms ability to meet their claims i.e. liquidity positions of the company. Investors, to know about the present and future profitability of the company and its financial structure.

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Mangament, in every aspects of the financial analysis. It is the responsibility of the management to maintain sound financial condition in the company. The term RATIO refers to the numerical and quantitative relationships between two items or variables. The relationship exposed as.

Percentage Fractions Proportion of number Ratio analysis is defined as the systematic use of the ratio to interpret the financial statement .so that the strengths and weakness of a firm, as well as its historical performances and current financial condition can be determined .ratio reflects a quantitative judgment.

Steps in ratio analysis

1.

The first task of the financial analysis is to select the information relevant to the decision

under consideration from the statements and calculates appropriate ratios. 2. To compare the calculated ratios with ratios of the same firm relating to the past or with the

industry ratios. It facilities in assessing success or failure of the firm. 3. Third step is to interpretation, drawing of inferences and report writing conclusions are drawn

after comparison in the shape of report or recommended courses of action.

TYPES OF RATIOS

1) LIQUIDITY RATIOS

Liquidity Ratios refers to the firms ability to satisfy its short term obligations or current liabilities as they become due, liability will be usually of one year. It reflects the financial strength/solvency of a firm. A firm should ensure that it does not suffer from lack of liquidity and also that it does not have excess liquidity. A failure of company to meet its obligation due to lack of sufficient EWCM/RCN/AN Page 25

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liquidity, will result in poor credit worthiness. A very high degree of liquidity is also bad because, idle asset earn nothing. The firm funds will be unnecessary tide up in current assets. Therefore, it is in necessary to strike a proper balance between high liquidity and lack of liquidity. A. CURRENT RATIO

The current ratio is also known as working capital ratio, the current ratio is an indication of a firms market liquidity, is a measure of firms short-term solvency. It indicates the availability of current assets in rupee for every rupee of current liability. A ratio greater than one means that the firm has more current assets than current liabilities against them. As conventional rule, a current ratio of 2:1 is considered satisfactory. If current liabilities exceed current assets (the current ratio is below 1), then the company may have problems meeting is short- term obligations. If the current ratio is too high, then the company may not be efficiently utilizing its current assets. The current ratio is calculated as follows.

CURRENT ASSETS CURRENT RATIO = CURRENT LIABILITIES

Acid Test Ratio

The acid test ratio is also known as liquid or quick ratio. The idea behind this ratio is that stocks are sometimes become problem because of we find difficult to sell or use. It is often referred to as quick ratio because it is a measurement of a firms ability to convert its current assets quickly into cash that to without any loss of value in order to meet its current liabilities. The term quick assets refers to current assets which can be converted into cash immediately or at a short notice without diminution of value. Included in this category of current assets are cash, bank balance, short term marketable securities, debtors and receivables. Thus, the current assets which are excluded are prepared expenses and inventory. Generally, an acid-test ratio of 1:1 is considered satisfactory as a firm can easily meet all current claims.

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Quick Assets Quick Ratio = --------------------------Current Liabilities Quick Assets = (current assets - inventory)

c. Cash Ratio Since cash is the most liquid assets, a financial analyst may examine cash ratio and its equivalent to current liabilities. Trade investments or marketable securities are equivalent of cash; therefore, they may be included in the computation of cash ratio. Cash + Marketable securities Cash Ratio = -----------------------------------------Current Liabilities 2) LEVERAGE/ CAPITAL STRUCTURE/ DEBT/ SOLVANCY The second category of financial ratio is Leverage Ratio. The debt position of a company indicates the amount of other peoples money being used to generate profits. The more debt a firm has the greater is the risk creditors claims must be satisfied before the earnings can be distributed to shareholders, lenders are also concerned about the firms indebtedness. To judge the long term financial position of the firm, financial leverage or capital structure ratios are calculated. These ratios indicate mix funds provided by the owners and lenders. As a general rule there should be an appropriate mix of debt and owners equity in financing the firms assets. There are two aspects of the long term solvency of a firm i. Ability to repay the principal when due.

ii. Regular payment of the interest. Accordingly there are 2 different, but mutually dependent and interrelated, type of leverage ratios. First ratio which are based on the relationship between borrowed fund and owners capital.

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a. Debt-equity Ratio Debt equity measures the ratio of long term or total debt to share holders equity. The relationship between borrowed funds and owners capital is popular measure of the long term financial solvency of a firm.

Total Debt Debt Equity Ratio = Net Worth Net Worth = share capital + reserve + retained profits. b) Proprietary ratio A variant to the debt equity ratio is the proprietary ratio, which is also known as equity ratio. This ratio establishes relationship between shareholders funds to total assets of the firm. Shareholders fund Proprietary ratio = Total assets c) Fixed assets net worth ratio The ratio establishes the relationship between fixed assets and shareholders funds, share capital plus reserves, surpluses and retained earnings. The ratio can be calculated as follows; Fixed assets (after depreciation) Fixed assets to net worth ratio = Shareholders fund

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d) Interest coverage ratio Net income to debt service ratio are simply debt service ratio is used to test the debt servicing capacity of a firm. The ratio is also known as interest coverage ratio or coverage ratio. This ratio is calculated by dividing by Net profit before interest and taxes by fixed interest charges. EBIT Interest coverage ratio = FIXED INTREST CHARGES

3) ACTIVITY /EFFICIENCY/ASSET UTILISATION/TURNOVER RATIO Activity ratio are concerned with measuring the efficiency in assets management, it measures how quickly a firm converts non-cash asset to cash asset (sales). The greater is the rate of turn over or conversion the more efficient is the utilization of assets, other things being equal. For this reason such ratio is also designated as turnover ratio. It may be defined as the test of relationship between sales and various assets of firm. Depending on the various types of assets, there are various types of activity ratio.

1)

Inventory or Stock Turnover Every firm has to maintain a certain level of inventory of finished goods so as to be able to meet the requirements of the business. But the level of inventory should neither be too high nor too low. It is harmful to hold more inventories so it is advisable to dispose of inventory as early as possible.

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SALES INVENTORY TURN OVER RATIO = --------------------------------AVERAGE INVENTORY

2) Debtors Turnover Ratio Credit is one of the important elements of sales promotion. The volume of sales can be increased by following a liberal credit policy. Trade debtors are expected to be converted in to cash within a short period and or included in current assets. Hence, the liquidity position of concern to pay its short-term obligations in time depends upon the quality of its trade debtors. NET CREDIT ANNUAL SALES DEBTORS TURNOVER RATIO = AVERAGE TRADE DEBTOR a) Working Capital It indicates the velocity of the utilization of net working capital. Yhis indicates the no of times the working capital is turned over in the course of a year. A higher ratio indicates efficient utilization of working capital and lower ratio indicates inefficient utilization. Sales Working Capital Turnover = ------------------------------Net Working Capital

4. PROFITABILITY RATIOS The primary objective of a business undertaking is to earn profits. Profit earning is considered essential for the survival of the business. A business needs profits not for its existence but also for expansion and diversification. Generally , profitability ratios are calculated either in relation to investment

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General profitability ratios are Gross profit ratio Operating profit ratio Net profit ratio

1. GROSS PROFIT RATIO Gross profit is the difference between sales and the manufacturing cost of goods sold. The gross profit margin reflects the efficiency with which management produces each unit of product. This ratio indicates the average spread between the cost of goods sold and the sales revenue. A high gross profit margin ratio is a sign of good management. Sales Cost of Goods Sold Gross Profit Margin = ---------------------------------------------Sales Gross Profit = Sales Cost Of Goods Sold.

2. Operating profit ratio This ratio is calculated by dividing operating profit by sales.

Operating profit Operating profit ratio = Net sales x100

3. Net profit ratio. Net profit ratio establishes a relationship between net profit (after taxes) and sales and indicates the efficiency of the management in manufacturing, selling, administrative and other activates of the firm. This ratio is the overall measure of firms profitability and is calculated as.

Net profit after tax Net profit ratio= EWCM/RCN/AN x100 Page 31

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Net sales

4. overall profitability ratio

Profits are the measure of overall efficiency of a business. The higher the profit, the more efficient is the business considered. Thus , overall profitability or efficiency of a business can be measured in terms of profits related to investments made in the business. a) Return on equity capital Ordinary share holders are the real owners of the company. They assume the highest risk in the company. Ordinary shareholders are more interested in the profitability of a company and the performance of a company should be judged on the basis of return on equity capital of a company.

Net profit after tax- preference dividend Return on equity capital = Equity share capital b) Return on total assets Profitability can be measured in terms of relationship between net profit and assets. This ratio is also known as profit-to assets ratio. It measures the profitability of investments. The overall profitability can be known. Net profit after tax Return on assets = Total assets c) Earning per share Earning per share are all a small variation of return on equity capital and are calculated by dividing the net profit after taxes and preference dividend by the total number of equity shares. Earnings available to equity shareholders Earning per share= NO. equity shares d) Dividend payout ratio Dividend pay out ratio is calculated to find the rxtent to which earnings per share have been retained in the business. It is an important ratio because pouching back of profits enables a company to grow and pay more dividends in future.

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Dividend per equity share Dividend pay out ratio= Earning per share

Analysis and interpretation In this chapter , the various collected data has been analyzedand interpreted. The various tools used in this comparative financial statements, trend analysis and ratio analysis. In comparative financial statements again it is compared foe balance sheets as well as profit and loss account. In trend analysis the percentage varied in all components with respect to precious years has been done. Finally in ratio analysis various ratios like liquidity ratios profitability ratios, assets movement ratios have been found out.

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Comparative balance sheet
PARTICULAR 2009-10 2010-11 2010-11 INCERASE/DECREASE IN Rs SOURCES OF FUNDS Shareholders funds Share capital Reserves surplus 5,75,96,850 62,50,54,850 68,26,51,700 Loans and funds Secured loans Unsecured loans Deferred tax(net) TOTAL Application of funds Fixed assets Gross block Accumulated depreciation Net block Capital work in-progress 56,26,38,721 28,37,62,441 27,88,76,280 1,78,89,997 29,67,66,277 Investment Current assets Loans and funds Inventories Receivables Cash and bank balances Loans and advances Sub-total(A) Current liabilities and provisions Current liabilities Provisions Sub-total(B) Net current assets(A-B) Miscellaneous expenditure the extent not written off Total 79,57,26,413 102,67,820 23,10,40,407 29.04 36,40,69,573 4,70,86,462 41,11,56,035 44,70,58,185 70,47,551 48,81,98,992 7,11,61,106 55,93,60,098 58,67,86,110 35,23,776 12,41,29,419 2,40,74,644 14,82,04,063 13,97,27,925 (35,23,775) 34.10 51.13 36.04 31.25 (50.00) 33,57,17,559 30,32,08,487 16,96,74,585 4,96,13,589 85,82,14,220 51,14,38,308 36,23,14,806 18,73,87,909 8,50,05,185 1,14,61,46,208 17,57,20,749 5,91,06,319 1,77,13,324 3,53,91,596 28,79,31,998 52.34 19.49 10.44 71.33 33.55 4,48,54,400 69,23,58,476 30,94,66,616 38,28,91,860 35,65,074 38,64,56,934 5,00,00,000 12,97,19,755 2,57,04,175 10,40,15,580 (1,43,24,923) 8,96,90,657 51,45,600 23.04 9.06 37.30 (80.07) 30.22 11.47 2,39,04,286 5,52,92,606 3,38,77,821 79,57,26,413 56,47,104 6,56,29,850 3,42,30,358 102,67,66,820 (1,82,57182) 1,04,37,244 3,52,537 23,10,40,407 (76.38) 18.88 1.04 29.04 5,75,96,850 86,35,62,433 92,11,59,283 0.00 23,85,07,583 23,85,07,583 0.00 38.16 34.94 IN %

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Analysis and interpretation: Share capital remains constant since no fresh issue of share made. Reserves and surplus shows an increasing trend of 38.16%in 2010-11 This shows that the company has transferred good %of profits to reserve and surplus account Secured loans are decreased by a gradual increase in unsecured loans and disinvestment. There is a gradual increase inboth current assets and current liabilities Miscellaneous expenditure, is decreased in the year2010-2011

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Comparative income statement
PARTICULAR 2009-10 2010-11 2010-11

INCERASE/DECERASE IN RS INCOME Sales Other income TOTAL EXPENDITURE Material consumed Personal and other expenses 123,78,42,995 41,89,82,721 181,08,92,176 50,42,43,618 57,30,49,181 8,52,60,897 46.30 20.35 188,58,08,040 2,78,36,530 191,36,44,570 274,13,60,356 4,82,26,975 278,95,87,331 85,55,52,316 2,03,90,445 89,59,42,761 45.37 73.25 45.77 IN %

Finance charges Depreciation TOTAL

53,38,233 2,89,93,059 169,11,57,008

52,97,747 2,81,49,745 234,85,83,286

(40.486) (8,43,314) 65,74,26,278

(0.76) (2.91) 38.87

PROFIT OF THE YEAR

22,24,87,562

44,10,04,045

21,85,16,483

98.22

Add/(Less):PRIOR adjustment

years

1,12,097

3,70,448

2,58,351

230.47

PROFIT FOR INCOME TAX Current tax Income tax prior period 7,83,00,000 3,596 15,02,00,000 7,19,00,000 91.83 -

Deferred tax Fringe benefit tax

(38,07,957) 40,78,800

3,52,762 17,10,497

41,60,719 (23,68,303)

109.26 (58.06)

TOTAL TAX PROFIT AFTER TAX

7,85,74,439 14,40,25,220

15,22,63,259 28,91,11,234

7,36,88,820 14,5086,014

93.78 100.74

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Analysis and interpretation: Sales shows an increasing trend of 45.37%during the year 2010-2011. Indicates the better financial soundness of the company. Even other also show a significant increase of 45% However there is a increase even in expenditure by 38%

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Ratio analysis Liquidity ratios a.Current ratio Current ratio=Current assets/Current liabilites This is the most widely used ratio. It is the ratio of current asset to current liability generally 2:1 is considered ideal for a concern. The current ratio considers a margin of safety for creditors. The higher the ratio the greater the margin of safety; the larger the amount of current asset in relation to current liability the more the firms ability to meet its obligation The current ratio is a crude and quick measure of firms liquidity.

PARTICULAR

2009-10

2010-11

CURRENT ASSETS

808600631

1061141023

CURRENT LIABILITES

411156035

559360098

CURRENT RATIO

2.00

1.90

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CURRENT RATIO

2 1.95 1.9 1.85 2009-10 2010-11 CURRENT RATIO

Analysis The current ratio of the company is decreased to 1.90 in the year 2010-11compared to the previous year of 2.00 in the year 2009-10. INTERPRETATION The current ratio of the company is decreased to 1.90 in the year 2010-11compared to the previous year of 2.00 in the year 2009-10. Current ratio measures the degree to which current assets cover current liabilities. The ideal ratio is 2:1. From the above table, we can observe that the liquidity position of the company is satisfactory which shows the improvement in the efficiency of current assets management. Thus the firm is efficiently utilizing its current assets.

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1. QUICK (ACID TEST OR LIQUID) RATIO: This is the ratio of liquid assets to liquid liability 1:1 ratio is considered ideal ratio for a Concern because it is wise to keep the liquid assets at least equal to liquid liability at all Times. Liquid assets are those assets are those assets which are readily converted into cash and will include cash balances, bill receivables, sundry debtors and short term investments. Inventories and prepaid expenses are not included in liquid assets. Liquid liabilities except bank overdraft. Current Asset-Inventory (Quick Assets) Quick Ratio= ---------------------------------------------------------------------Current Liabilities (Quick Liabilities) QUICK RATIO PARTICULAR LIQUID ASSETS CURRENT LIABILITES LIQUID RATIO 1.15 0.98 2009-10 472883072 411156035 2010-11 549702915 559360098

QUICK RATIO

1.2 1.1 1 0.9 0.8 2009-10 2010-11

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Analysis From the above we can observe that the ratio was high during the year2009-10. And it decreased to 0.98 which indicates the firm is liquid and has ability to meet its current liabilities. INTERPRETATION As a rule of thumb Quick ratio of 1:1 is considered satisfactory. It is generally thought if the quick assets are equal to current liabilities, then the concern may be able to meet is short term obligations. From the above we can observe that the ratio was high during the year2009-10. And it decreased to 0.98 which indicates the firm is liquid and has ability to meet its current liabilities.

1. CASH RATIO (ABSOLUTE LIQUIDITY RATIO) Since cash is most liquid asset to get an idea about absolute liquidity of a concern, both receivables and inventories are excluded from current assets and only absolute liquid asset Such as cash, bank and realizable securities are taken into consideration. Standard norm is 0.5:1. This is still more rigorous test of liquidity.

Cash ratio=Cash /Current liabilities ABSOLUTE LIQUID RATIO PARTICULAR CASH AND ITS EQUIVALENTS CURRENT LIABILITES CASH RATIO 0.41 0.34 411156035 559360098 2009-10 169674585 2010-11 187387909

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ABSOLUTE LIQUID RATIO

0.5 0.4 0.3 0.2 0.1 0 2009-10 2010-11 ABSOLUTE LIQUID RATIO

Analysis The cash ratio of the company is decreased to 0.34 in the year 2010-11 compared to the previous ratio of 0.41 in the year 2009-10 INTERPRETATION The cash ratio of the company is decreased to 0.34 in the year 2010-11 compared to the previous ratio of 0.41 in the year 2009-10. The acceptable norm for cash ratio is 0.5. from the above table we can infer that the company is not able to meet its cash requirements. thus liquid ratio is unfavorable for the year 2010-11.

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CAPITAL TURN OVER RATIO This ratio shows the efficiency of capital employed in the business by computing how Many times capital employed is turned over in a stated period. The ratio is ascertained As follows: Capital Turnover Ratio=Sales/capital employed

PARTICULAR CAPITAL EMPLOYED SALES CAPITAL TURNOVER RATIO

2009-10 761848592

2010-11 992536237

1885808040 2.48

2741360356 2.76

CAPITAL TURN OVER RATIO

2.8 2.7 2.6 2.5 2.4 2.3 2009-10 2010-11 CAPITAL TURN OVER RATIO

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Analysis From the above table we can see that the capital turnover is increased to 2.76 in the year 201011compared to previous year ratio of 2.48 in the year 2009-10 INTERPRETATION From the above table we can see that the capital turnover is increased to 2.76 in the year 201011compared to previous year ratio of 2.48 in the year 2009-10. This is another ratio to judge the efficiency and effectiveness of company. The sales are greatly with the previous year. Due to huge increase in net profit, the capital employed has also increased with the previous year. Due to huge increase in net profit, the capital employed had also increased along with sales. Both have effected in the increment of capital turn over. Thus, it is showing a very positive trend. WORKING CAPITAL TURNOVER RATIO

This ratio reveals number of times working capital is turned over in a stated period. The Ratio of sales to working capital can be judged as follows:

Working capital ratio = sales/working capital

The higher the ratio lowers the investment in working capital and greater are the profit. However, a very high turnover of working capital is a sign of over trading and may put The concern to financial difficulties a low working capital is not effectively used.

PARTICULAR NET WORKING CAPITAL SALES WORKING CAPITAL TURNOVER RATIO

2009-10 444531058

2010-11 572942031

1885808040 4.24

2741360356 4.78

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WORKING CAPITAL TURN OVER RATIO

4.8 4.6 4.4 4.2 4 3.8 2009-10 2010-11 WORKING CAPITAL TURN OVER RATIO

Analysis In the year 2010-11 working capital has been increased when you compare in the year 2009-10

INTERPRETATION It indicates the velocity of the utilization of net working capital. This indicates the number of times the working capital is turned over in the course of a year. From the above table we can say company is taking proper measures for effective management of working capital.

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TOTAL ASSETS TURN OVER RATIO PARTICULAR SALES TOTAL ASEETS TOTAL ASEETS TURNOVER RATIO 2009-10 1885808040 1206882448 1.56 2010-11 2741360356 1586126918 1.73

1.75 1.7 1.65 1.6 1.55 1.5 1.45 2009-10 2010-11

ANALYSIS The total assets turnover ratio is increased to 1.73 in the year 2010-11 from a previous year low of 1.56 in the year 2009-10. The standard for the ratio 2:1.

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INTERPRETATION The total assets turnover ratio is increased to 1.73 in the year 2010-11 from a previous year low of 1.56 in the year 2009-10. The standard for the ratio 2:1. From the above we can infer that assets are comparatively higher to its turnover indicating over-stocking or under-stocking of fixed assets. This ratio further indicates overstocking. STOCK TURNOVER (INVENTORY TURNOVER RATIO) Stock turnover ratio establishes efficiency of the firm in selling its product. It establishes relationship between sales and inventory of a particular period. The ratio reveals number of times finished stock is turned over during a given accounting Period. Higher the ratio better it is because it shows that finished stock is rapidly Turnover. A Low stock turnover is not desirable because it reveals that obsolete stock or the carrying of too much stock. This ratio is calculated as follow. Stock turnover ratio = sales/inventory

Inventory turnover ratio PARTICULAR Sales Average inventory ITR 2009-10 1885808040 300553059 6.27 2010-11 2741360356 423577933 6.73

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inventory turover ratio

6.8 6.6 6.4 6.2 6 2009-10 2010-11

INTERPRETATION Stock turnover is increased to 6.73 in the year 2010-11 from 6.27 in the year 2009-10. Inventory ratio measures the velocity of stock. The standard ratio is 5 to 7 times of inventory to sales. From the above table we can observe that the ratio is satisfactory in all the years which show the efficient management of inventory of the firm.

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Debtors turnover ratio PARTICULAR Net credit sales Average debtors DTR 2009-10 1885808040 272584534 6.92 2010-11 2741360356 332761646 8.24

Debtors turn over ratio

8.5 8 7.5 7 6.5 6 2009-10 2010-11

INTERPRETATION Debtors turnover ratio indicates who promptly the company is collecting debtors. There is no thumb rule which may be used to interpret the debtors turnover ratio as it may differ from a concern to another depending upon the nature of concern. Comparing to the company standard of 9-10 times a year the debtors turnover is not up to their standard. Thus company is not efficient in managing debtors.

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CREDITORS TURN OVER RATIO Net credit annual purchase Creditors turn over = Average turn over ratio

PARTICULAR DTR NO of days ACP(DAYS)

2009-10 1304956181 320203900 4.08

2010-11 1986081295 426134282 4.66

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creditors turnover ratio

4.8 4.6 4.4 4.2 4 3.8 3.6 2009-10 2010-11

Analysis The creditors turnover is increased to 4.66 times in the year 2010-11compared to previous year low of 4.08 times in the year 2009-10

INTERPRETATION The creditors turnover is increased to 4.66 times in the year 2010-11compared to previous year low of 4.08 times in the year 2009-10. A low creditors turnover reflects liberal credit terms granted by suppliers while a high creditors turnover ratio indicates that account have settled rapidly. Thus , from the above table we can infer the company is enjoying liberal credit terms from the suppliers.

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SOLVENCY RATIO INTREST COVERAGE RATIO PARTICULAR INTREST EBIT INTREST COVERAGE RATIO 2009-10 5338233 204367086 38.27 2010-11 5297747 407424650 76.87

Solvency ratios

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INTEREST COVERAGE RATIO

80 60 40 20 0 2009-10 2010-11 INTREST COVERAGE RATIO

Analysis The operating profits company is 76.87 times higher than their interest liability comparing to the previous year interest coverage ratios of 38.27 times 2009-10.

INTERPRETATION The operating profits company is 76.87 times higher than their intrest liability comparing to the previous year interest coverage ratios of 38.27 times 2009-10. This a good sign to the company. The lenders are secured to a greater extent. DEBT EQUITY RATIO PARTICULAR Long term debts Share holders funds Debt equity ratio 2009-10 79196892 682651700 0.12 2010-11 71376954 921159283 0.08

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debt equalty ratio

0.15 0.1 debt equalty ratio 0.05 0 2007-2008 2008-2009

Analysis From the above we see that debt-equity is decreased to0.08 in the year 2010-11 from previous ratio of 0.12 in the year 2009-10.

INTERPRETATION From the above we see that debt-equity is decreased to0.08 in the year 2010-11 from previous ratio of 0.12 in the year 2009-10. It is calculated to know the extent to which debt financing has been used against The firms assets. A low ratio is viewed can only be taken as unsatisfactory because they find neglected opportunities for using low cost outsiders fund to acquire fixed assets. The ratio 1:1 is advisable. It can be inferred that the company concentration on returning debts borrowed seems to be more and it would like to operate on its own capital rather than borrowed funds. Fixed assets ratio PARTICULAR EWCM/RCN/AN 2009-10 2010-11 Page 54

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Fixed assets Capital employed Fixed assets ratio 296766277 682651700 0.43 386456934 921159283 0.42

fixed assets ratio

0.43 0.425 fixed assets ratio 0.42 0.415 2007-2008 2008-2009

Analysis There is a decreasing trend during the years. Thus the firm has to achieve the ideal ratio in the company years for the better utilization of the shareholders fund

INTERPRETATION Generally the purchase of fixed assets should be financed by shareholders funds. If the ratio is less than 100% it implies that owners funds are more than fixed assets and shareholders provide a part of working capital. The ratio is satisfactory when it is between 60to65percentage. There is a decreasing trend during the years. Thus the firm has to achieve the ideal ratio in the company years for the better utilization of the shareholders fund.

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Proprietory ratio 1. PROPRIETARY RATIO; A variant to debt equity ratio is the proprietary ratio, which is also known as Equity Ratio or Shareholders to total Equities ratio. This ratio establishes the relationship between shareholders funds to total assets of the firm.

Proprietary Ratio=Proprietary funds /Tangible assets

PARTICULAR Shareholders funds Total tangible assets Proprietary ratio

2009-10 682651700 1199834897 0.57

2010-11 921159283 1582603142 0.58

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proprietary ratio

0.58 0.575 proprietary ratio 0.57 proprietary ratio 0.565 2009-10 2010-11

Analysis The proprietary ratio is increased to 0.58 in the year 2010-11 from previous year ratio of 0.57 in the year 2009-10. The ratio represents the relationships of owners fund to total asset INTERPRETATION The proprietary ratio is increased to 0.58 in the year 2010-11 from previous year ratio of 0.57 in the year 2009-10. The ratio represents the relationships of owners fund to total asset. When the ratio is high the risk is low. The ratio below 50% may be alarming for the creditors since they have to lose heavily in the event of companys liquidation on account of heavy losses. The table shoes high ratio is the long-term solvency position of the company.

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Profitability ratio A company should earn profit to survive and grow over a long period of time. Profit is the difference between revenue and expense over a long period of time. Profit is the Ultimate output of a company and it will have no future it is fails to make sufficient Profit. The profitability ratios are calculated to measure the operating efficiency of the Company. Besides management of a company, creditors want to get interest and Repayment of principal regularly. Owners want to get reasonable return on their Investment. These ratios are calculated to enlighten the end result of the business Activities which is the sole criterion of the overall efficiency of the business concern. Generally two major types of profitability ratios are calculated. Profitability in relation to sales. Profitability in relation to investment Gross profit ratio Gross profit ratio:This ratio tells gross margin on trading and is calculated as under Gross profit ratio = gross profit/sales *100 Gross profit should be adequate to cover fixed expenses, dividends and building up of Reserves. An important factor which will affect the ratio of gross profit to sales is that Of Practice of increasing or reducing the sale price of goods sold by marks up and Marks downs. It is important that a business keep up its margin of gross profit Otherwise it may not cover its operating expenses and thus provide an adequate relation to proprietors.

PARTICULAR Gross profit Net sales g/p ratio(%)

2009-10 586010346 1885808040 31.07

2010-11 852089333 2741360356 31.08

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gross profit ratio

31.08 31.075 gross profit ratio 31.07 31.065 2007-2008 20008-20009

Analysis The gross profit is increased to 31.08% in the year 2010-11 from previous year low of 31.07% in the year 2009-10. INTERPRETATION The gross profit is increased to 31.08% in the year 2010-11 from previous year low of 31.07% in the year 2009-10. The ratio indicates the extent to which selling price may declaim without resulting in losses on operations of a firm. It reflects the efficiency with which a firm produces its products. It also helps in ascertaining whether the average of makeup on the goods is maintained. The table shows low gross profit ratio, which generally indicates considerable increase in expences due to some unfavorable reasons.

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Net profit ratio This ratio is very useful to the proprietors and prospective investors because it reveals the overall profitability of the concern. This is the ratio of net profit after taxes to net Sales. Sales are calculated as follows. Net profit ratio = Net profit/sales *100 particular NPAT NET SALES NET PROFIT RATIO% 2009-10 144025220 1885808040 7.64 2010-11 289111234 2741360356 10.55

NET PROFIT RATIO

15 10 NET PROFIT RATIO 5 NET PROFIT RATIO 0 2009-10 2010-11

Analysis The net profit ratio is increased to 10.55% in the year 2010-11 from the previous year ratio of 7.64% in the year 2009-10.

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INTERPRETATION The net profit ratio is increased to 10.55% in the year 2010-11 from the previous year ratio of 7.64% in the year 2009-10. The ratio indicates the percentage of net profit earned by the enterprises on the sales. This ratio indicates the firm capacity to face the adverse economic conditions. The net profit has increased during 2010-11 as compared to previous year.

OPERATING PROFIT RATIO Particular EBIT NET SALES OPERATING RATIO% PROFIT 2009-10 204367086 1885808040 12.38 2010-11 407424650 2741360356 15.89

OPERATING PROFIT RATIO

20 15 10 5 0 2009-10 2010-11 OPERATING PROFIT RATIO

Analysis The operating profit ratio of the company is increased to 15.89% in the year 2010-11 from previous year ratio of 12.38% in the year 2009-10. EWCM/RCN/AN Page 61

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INTERPRETATION The operating profit ratio of the company is increased to 15.89% in the year 2010-11 from previous year ratio of 12.38% in the year 2009-10. There is no ideal ratio for operating profit if the ratio is higher it will be better. Sales registered a steady increase throughout the years and operating profit also increased which resulted in increase in operating profit. OPERATING COST RATIO Particular COGS+O/E NET SALES Operating cost ratio 2009-10 1652447895 1885808040 87.62 2010-11 2305785961 2741360356 84.11

operating cost ratio

88 86 operating cost ratio 84 82 2009-10 2010-11

Analysis From the above table we can see that the operating cost is decreased to84.11% during the year 2010-11 from 87.62%in the year 2009-10. EWCM/RCN/AN Page 62

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INTERPRETATION Lower the ratio, the better it is. Higher the ratio, the less favorable it is because it would have smaller margin of operating profit for the payment of dividends and the creation of reserves. From the above table we can see that the operating cost is decreased to84.11% during the year 2010-11 from 87.62%in the year 2009-10. Thus its showing optimal level of efficiency by reducing operating cost.

RETURN ON NET WORTH Particular NPAT Share holders funds RONW % 2009-10 144025220 682651700 21.10 2010-11 289111234 921159283 31.40

RETURN ON NET WORTH

40 30 20 10 0 2009-10 2010-11 RETURN ON NET WORTH

Analysis . The return on net worth is increasing at a greater rate from 21.10% in the year 2009-10 to 31.40% during the year 2010-11. EWCM/RCN/AN Page 63

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INTERPRETATION From the above table we can infer that return on shareholders is fairly good owing to the fact that only 8% of capital is employed is through debt. The return on net worth is increasing at a greater rate from 21.10% in the year 2009-10 to 31.40% during the year 2010-11. Overall profitability ratio

RETURN ON TOTAL ASSETS Particular NPAT TOTAL ASSETS ROTA % 2009-10 144025220 1206882448 11.93 2010-11 289111234 1586126918 18.23

RETURN ON TOTAL ASSETS

20 15 10 5 0 2009-10 2010-11 RETURN ON TOTAL ASSETS

Analysis

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. Return on assets of the KMS COUCH BUILDERS LTD for the year 2009-10 was 11.93% and the year 2010-11 was 18.23%

INTERPRETATION This is the ratio between net profit and total assets. Here, the return on assets seems to be good at 18.23% indicating firm is making efficient use of its asset base. Return on assets of the KMS COUCH BUILDERS LTD for the year 2009-10 was 11.93% and the year 2010-11 was 18.23% RETURN ON CAPITAL EMPLOYED This ratio is considered to be the most important ratio because it reflects the overall Efficiency with which capital is used. This ratio is an indicator of earning capacity of Capital employed in the business. By capital employed we mean fixed assets plus Working capital and for net profit; amount is taken for interest, tax and dividend. This Ratio is a helpful tool for making capital budgeting decision a profit yielding higher Return as favored. This ratio is computed as: Return of capital employed = Net profit/capital employed *100 Particular EBIT Capital employed ROCE % 2009-10 204367086 716994192 28.50 2010-11 407424650 942536247 43.23

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RETURN ON CAPITAL EMPLOYED

50 40 30 20 10 0 2009-10 2010-11 RETURN ON CAPITAL EMPLOYED

EBIT Return on capital employed = Capital employed x 100

Analysis The return on capital employed is increasing to 43.23%in the previous year 2010-11from 28.50%in the year 2009-10. This is the ratio between operating profits and capital employed.

INTERPRETATION The return on capital employed is increasing to 43.23%in the previous year 2010-11from 28.50%in the year 2009-10. This is the ratio between operating profits and capital employed. The ratios is generally calculated as percentage multiplying with 100. The operating profit is increased due to the increase in the sales and the capital employed is increased because of reserve&surplus. So, the ratio is increased in the current year. EWCM/RCN/AN Page 66

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EARNING PER SHARE

Particular NPAT NO OF SHARES OUTSTANDING EPS 2009-10 144025220 5759685 25.01 2010-11 289111234 5759685 50.20

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EARNING PER SHARE

60 40 EARNING PER SHARE 20 0 2009-10 2010-11

Analysis The earnings per share of the increased into a new high of rs.50.20 in the year 2010-11 from rs25.01 in the year2009-10. Interpretation The earnings per share of the increased into a new high of rs.50.20 in the year 2010-11 from rs25.01 in the year2009-10. Net profit after tax is increased due to the huge increase in the sales. That is the amount which is available to the shareholders to take. There are shares 57,59,685 of rs. 10each. The share capital is constant from the year 2008-09. Due to the huge increase per share is greatly increased in 2009-10.

DIVIDEND PAYOUT RATIO

Particular DIVIDEND SHARE EWCM/RCN/AN PER EQUITY

2009-10 5.00

2010-11 7.50

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EPS DPR % 25.01 20 50.20 14.94

DIVIDEND PAYOUT RATIO

20 15 10 5 0 2009-10 2010-11 DIVIDEND PAYOUT RATIO

Analysis From the above table it is clear that the company has retained greater part of its profit to future. Thus it has resulted in low dividend payout ratio of 14.94%in the year 2010-11

Interpretation Dividend payout ratio is calculated to find the extent to which earning per share have been retained in the business. From the above table it is clear that the company has retained greater part of its profit to future. Thus it has resulted in low dividend payout ratio of 14.94%in the year 2010-11

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FINANCIAL STATEMENT

BALANCE SHEET
2011 2010

particular

Sources of funds Shareholders funds Share capital Reserves and surplus 5,75,96,850 86,35,62,433 92,11,59,283 5,75,96,850 62,50,54,850 68,26,51,700

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Loans funds Secured loans Unsecured loans Deferred tax Total 56,47,104 6,57,29,850 3,42,30,358 102,67,66,820 2,39,04,286 5,52,92,606 3,3877821 79,57,26,413

Application of funds Fixed assets Gross block Accumulated depreciation Net block Capital work in-progress 69,23,58,476 30,94,66,616 38,28,91,860 35,65,074 38,64,56,934 Investment Current assets Loans and advances Inventories Receivables Cash and loans balances Loans and advances Sub-totals(A) Current provisions Current liabilities Provisions Sub-total (B) Net current assets(A-B) Miscellaneous extent not written off 102,67,66,820 Total 79,57,26,413 expenditure the 48,81,98,992 7,11,61,106 55,93,60,098 58,67,86,110 35,23,776 36,40,69,573 4,70,86,462 41,11,56,035 44,70,58,185 70,47,551 liabilities and 51,14,38,308 36,23,14,806 18,73,87,909 8,50,05,185 1,14,61,46,208 33,57,17,559 30,32,08,487 16,96,74,585 4,96,13,589 85,82,14,220 5,00,00,000 56,26,38,721 28,37,62,441 27,88,76,280 1,78,89,997 29,67,66,277 4,48,54,400

PROFIT AND LOSS ACCOUNT AS ON 31/3/2009

PARTICULARS 2009 2008

INCOME Sales Other income 274,13,60,356 4,82,26,975 188,58,08,040 2,78,36,530

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Total 278,95,87,331 191,36,44,570

Expenditure

Materials Consumed Personal expenses Finance charges Depreciation and other

181,08,92,176 50,42,43,618

123,78,42,995 41,89,82,721

52,97,747 2,81,49,745

53,38,233 2,89,93,059

Total

234,85,83,286

169,11,57,008

Profit for the year Add/(less):prior adjustment years

44,10,04,045 3,70,448

22,24,87,562 1,12,097

Profit for income tax Current tax Income tax prior period Deferred tax Fringe benefit tax 3,52,762 17,10,497 15,02,00,000 7,83,00,000 3,596 (38,07,957) 40,78,800

Total tax

15,22,63,259

7,85,74,439

Profit after tax

28,91,11,234

14,40,25,220

Finding of the study 1. The current ratio has shown in a fluctuating trend as 2.00 and 1.90 during 2010-11 of which indicates a continuous increase in both current assets and current liabilities 2. The quick ratio is also in a fluctuating trend throughout the period 2009-10 resulting as 1.15and 0.98 respectively. The company present liquidity position is satisfactory. 3. The absolute liquid ratio is decreased from 0.41to 0.34 from 2009-10. The firms cash ratio is not up to industry standard. EWCM/RCN/AN Page 72

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4. The debt-equity ratio of the company is decreased from the year to year. It indicates that debt has increased as proportion increased to share holders fund. 5. The proprietary ratio is showing a fluctuating trend. The proprietary ratio is increased compared with the last year. So , the long term solvency of the firm is increased. 6. The working capital turnover ratio is increased from 4.24 to 4.78 in the year 2010-11 7. The capital turnover ratio is increased from 2.48 to 2.76. 8. Debtors turn over ratio shows that the company has changed its credit policy to collect from its debtors. 9. The net profit is increased greatly in the current year. So the return on total assets ratio is increased from 11.93%to18.23% 10. The return on capital employed is increased from 28.50% to 43.23%compared with the previous year. Both the profit and shareholders funds increase cause an increase in their shareholders. 11. The return on shareholders funds ratio is increased from the year to year expect 2010-11. it shows the company has in better condition to pay the return on investment of their shareholders. 12. Earnings per share of the company have increased from year to year. It indicates that dividend of the shareholders will be secured. Suggestions: 1. The liquidity position of the company is fluctuating from past 2 year. Through it is satisfactory,it is not a good sign to the company. Thus ,the company has to maintain stability in the liquidity of the company. 2. The company cash is not up to industry standard. Thus the company should maintain an adequate cash and bank balance in order to meet the emergency requirements. 3. The credit policy of the company is mot up to their standards. The debtors should be adequately monitored to reduce the delay in collections. 4. The working capital of the company has maintained the standard levels. It must maintain the same for future years. 5. The company has to increase its debt portion in its capital structure by back of shares in order to take advantage of trading on equity to maximize the value of the shareholders. 6. Gross profit of the company is low compared to previous year. Thus, the company has to reduse the expenses in order to increase the profits.

Conclusion

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Kms is a manufacturing unit which produces buses. The company vision is to be economical and competitive in the market.it has achieved its goals and attained market leadership through employees to be BEST IN THE FIELD. The company products are marketed under the brand name looking at the overall market scenario and economic situations the performance of the industry seems to be bright. The company has been doing their activity effectively and efficiently. The company has a sound longterm solvency. The company year position is well due to rise in the profit level from the last years position. Further it is suggested that company should try to maintain and to tune its volume of business. The company can adapt the suggestions if found necessary.

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