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A.S.B.P. COLLEGE OF BUSINESS ADMINISTRATION , UNJHA.

1.1 HISTORY

A.S.B.P. COLLEGE OF BUSINESS ADMINISTRATION , UNJHA.

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 thats 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. Despite the considerable success the company has achieved, it continues to invest substantial resources in exploring and adopting the latest technological advancements in their chosen field. Which is what enables their R&D to constantly come up with new, innovative solutions. The Manufacturing facility comprises an integrated, continuous plant, set up by Alfa Laval. All the packaging is done in-house. In fact the Company has gone in for backward integration, by manufacturing its own packs. Be it Tins, HDPE jars, PET bottles or corrugated boxes. This works out to be very cost-effective, and also retains the quality of the product. The products are lab-tested at every stage, staring with the raw material, and ending with final packaging. With the immense experience of the Vimal Group, VOFL has earned a solid reputation for its vision, entrepreneurial spirit and competitive edge. But the focus on the commercial aspects of their ventures, has not made the company lose their human touch. The organization cares for its people, as much as it does for its products. And when we say people, we refer to all its stakeholders: the staff, suppliers, clients, shareholders...all the way to its end-users the customers, More so, as their products are meant for human consumption. In fact, VOFLs motto has always been to launch brands that will make Healthy U, Happy U The Group has not only expanded its business through integration and market A.S.B.P. COLLEGE OF BUSINESS ADMINISTRATION , UNJHA. 3

Strategic Location one of the major advantages of VOFL is its strategic location. The company has intentionally set up base in the middle of an oil-seed belt. This way, it is ensured of a regular supply of raw material. Having a port close by is an added plus advantage. Finally, its location on a national highway, provides several logistic advantages. VOFL has clearly segmented its wide product range, comprising oils of cottonseed, groundnut, soyabean, sunflower, mustard, palm and corn products. Years of experience and market research not to mention a powerful gut feeling has enabled the Company to launch the right product, in the right market, at the right time, in the right manner. Little wonder then, that almost every product has been a runaway success.

1.2 COMPANY AT A GLANCE Name of the company


Vimal Oil & Food Ltd.

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Location of the company:Near Palawasna, Railway crossing Highway, Mehsana-384 002

Address of the registered office:Vimal House, 31, G.I.D.C. Estate. Highway; Mehsana.

Classification of Industry :Large Scale Industry.

Bankers:1. Bank of India 2. The mehsana urban co- operative bank ltd.

Corporate Office:1, National Chambers 1st floor


Opp. Mangal Murti Complex, Ashram Road, Ahmedabad 380009

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EXISTING MANAGING BODY

NAME
Mr. Chandubhai j. Patel Mr. Ganpatibhai k. Patel Mr. Kantilal m. Guru Mr. Narayanbhai s. Patel Mr. Khengerbhai Patel Mr. Dineshchandra patel Mr. Dahyabhai patel Mr. Jayeshbhai c. Patel Mr.Jayantibhai.M.Patel

DESIGNATION
Chairmen Managing Director Director Director Director Director Director Managing Director Director

1.3 OBJECTIVES OF THE COMPANY


This is an independent intergovernmental, science and technology-based organization, in the United Nations family, that serves as the global focal point for nuclear cooperation;

A.S.B.P. COLLEGE OF BUSINESS ADMINISTRATION , UNJHA.

Assists its Member States, in the context of social and economic goals, in planning for and using nuclear science and technology for various peaceful purposes, including the generation of electricity, and facilitates the transfer of such technology and knowledge in a sustainable manner to developing Member States;

Develops nuclear safety standards and, based on these standards, promotes the achievement and maintenance of high levels of safety in applications of nuclear energy, as well as the protection of human health and the environment against ionizing radiation;

Verifies through its inspection system that States comply with their commitments, under the Non-Proliferation Treaty and other non-proliferation agreements, to use nuclear material and facilities only for peaceful purposes.

A.S.B.P. COLLEGE OF BUSINESS ADMINISTRATION , UNJHA.

1.4Vision
Based on quality and reliability, Vimal group is to become the most preferred brand in the region.

Our vision is to grow rapidly with the help of newer technologies and tapping latent needs of the consumers. It is our firm belief that if we can provide what consumers need, in a way they need, there is hardly a reason why Vimal brand will not soon become one of the most preferred and trusted brands. For this we will keep re-assessing and build upon our strengths and improve upon our weaknesses. As part of the Vimal group, we, the Promoters & the employees should never compromise on the promises of quality and innovation. And the goals are ours to reach.

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`1.5Mission
Continue to provide value added products in an ethical and competitive way to the community. Businesses are to generate profits. The difference with us is how we define profit. We believe that any exchange of goods and services should leave both- the giver and taker- satisfied and pleased. This generates trust. This in turn is, key to the growth and even survival of a company. On the other hand, adapting to changing times whether it is new technology or consumer needs makes a business profitable. This profitability allows continuity and growth of the business. In short, it is a two way process. For overall development.

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INTRODUCTION
The primary objective of financial reporting is to provide information to present and potential investors and creditors and other in making rational investment, credit and other decisions. Effective decision making requires evaluation of the past performance of companies and used by investors, creditors, and professional analysis for analyzing and interpreting the information contained in financial statements. Any successful business owner is constantly evaluating the performance of his or her company, comparing it with the company's historical figures, with its industry competitors, and even with successful businesses from other industries. To complete a thorough examination of your company's effectiveness, however, you need to look at more than just easily attainable numbers like sales, profits, and total assets. You must be able to read between the lines of your financial statements and make the seemingly inconsequential numbers accessible and comprehensible.

OBJECTIVE OF FINANCIAL STATEMENT ANALYSIS


Financial statement analysis is the collective name for the tools and techniques that are intended to provide relevant information to decision-makers. The purpose of financial statement analysis is to assess a companys financial health and performance. Financial statement analysis consists of comparisons for the same company over period of time and comparisons of different companies either in the same industry or in different industries. Financial statement analysis enables investors and creditors to

(1) Evaluate past performance and financial position


The starting point in the analysis of a company is to look at the record. Information about past performance is useful in judging future performance. For Example, trends of past sales, earning, cash flow, profit margin, and return on investment provide a basis for evaluating the efficiency of a companys performance and aid in assessing its prospects. An assessment of current status will show where the company stands at present, such as the companys inventories, borrowings, and cash position. To a large extent, the expectation of investors and creditors about future performance are shaped by their evaluation of past performance and current position. Individual investors are often passive and they rarely intervene in the working of a company as long as the company is reasonably successful. Their evaluation of the company helps them assess prospects for their investments, and investors who are dissatisfied with institutional investors are generally more A.S.B.P. COLLEGE OF BUSINESS ADMINISTRATION , UNJHA. 10

actives and may insist on major management changes when the company does not fare well. Creditors are concerned with managements compliance with loan indentures and may take legal action if covenants are broken.

(2) Predication of future performance


Investors and creditors use information about the past to assess the prospects of a company. Investors expect an adequate return from the company in the form of dividends and market price appreciation. Creditors expect the company to pay interest and repay the principal in accordance with the terms of lending. Therefore, they are interested in predicting the earning power and debtpaying ability of the company. Investor and creditors try to balance expected risks and returns. The returns they receive should be commensurate with the risks they perceive. If future returns are expected to fluctuate widely, they are much more difficult to predict then when results are expected to fluctuate within a narrow range. Thus, investors and creditors would invest in, or lend to, high-risk ventures only if they expect adequately high returns and would accept low returns only if the expected risk is low.

SOURCE OF INFORMATION
Individual investors and creditors must often depend upon published sources of information about a company. The most common sources of information about listed companies are company reports, stock exchange, business periodicals, and information services.

1) Company Reports:Every company publishes an annual report, which contains valuable financial and other information about the company. Annual reports are the beginning and ending points in obtaining information about individual companies. As a starter they provide an overview of the companys business, its status and its performance for a series of years. At the end of the information gathering process, annual reports are used to corroborate the vast array of company-specific data assembled from various sources.

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The typical Indian Company includes the following documents in its annual report: Directors report Financial statements Schedules and notes to the financial statements Auditors report In addition, some companies provide financial highlights and a summary of financial performance for the past five or ten years. The annual report is sent to the shareholders of the company, free of charge. Listed companies are also required to publish a quarterly statement of financial results within one month from the end of the quarter. These statements are typically not audited unlike the annual financial statements and are published in leading newspapers.

2) Stock Exchanges:Listed companies must file copies of their annual reports, as well as additional documents such as a statement of distribution of share ownership and the quarterly statement, with the stock exchanges in which they are listed. The Bombay Stock Exchange (BSE) is the oldest with it. The National Stock Exchange (NSE) is the other leading stock exchange in India. Both BSE and NSE have number publications giving useful financial and other information about companies. Listing agreements require that companies keep stock exchanges promptly informed of major developments affecting them, such as change of management, bonus and dividend decisions, strikes, and plant closures.

3) Business Periodicals:Business newspaper and magazines are important and, often, timely sources of financial and business news. The Economic Times is the oldest and the most widely read financial daily in the country. Business Line, Business Standard, and Financial Express are the other leading financial dailies in India. All these papers give daily stock prices and carry news items and analytical write-ups on companies. Most general newspapers devote a few pages to business news. Financial and business magazines such as Business India, Business World and Business Today regularly carry studies of companies and industries.

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4) Information Services:In recent years, a number of information services have sprung up. Periodical Company and industry studies are brought out by CRISIL and ICRA. These studies contain condensed financial statements of companies as well as other information such as management, foreign collaboration, major competitors, and industry overview. Several useful studies of financial ratios are also available, notably the ones published by the Center for Monitoring Indian Economy (CMIE). Economic reports and forecasts are available from the government and the Reserve Bank of India and from private sources. Industry-specific data come from the government, trade associations, and a variety of other sources. Analysts in stock brokerage firms and investment advisory services prepare periodic reports on companies and industries for their clients and sometimes for outsiders. Sophisticated users of financial statements invariably seek more information for their purpose. For example, banks and financial institutions often demand additional information for processing loan requests. Similarly, credit rating agencies need considerably more information from companies requesting rating than that available from published reports. In additions, there are many agencies that undertake private information search for a fee. Professional analysts collect information from company executive during plant visits and field trips.

5) Internet & intranet:


Search engines like Google go a long way in providing useful information for such projects. Days have gone when you have to wait for hours to gather information related to any particular topic. Information technology and Internet has brought the global world at your fingertip. Local area networks are also key source of information now a day. Increasing interdependence among the various sub units of the business has made LAN networks a future to consider as a useful source of secondary information.

USERS OF 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 relationships between the items of the balance sheet and the profit and loss account. Financial analysis can be undertaken by management of the firm, or by parties outside the firm, viz. Owners, creditors, investors and others. The nature of analysis will differ depending on the purpose of the analyst.

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TRADE CREDITORS:
Trade creditors are interested in firms ability to meet their claims over a very short period of time. Their analysis will, therefore, confine to the evaluation of the firms liquidity position.

SUPPLIERS OF LONG-TERM DEBT


Suppliers of long term debt, on the other hand, are concerned with the firms longterm solvency and survival. They analyze the firms profitability over time, its ability to generate cash to be able to pay interest and repay principal and the relationship between various sources of funds. Long term creditors do analyze the historical financial statements, but they place more emphasis on the firms projected, or Performa, financial statements to make analysis about its future solvency and profitability.

INVESTORS
Investors, who have invested their money in the firms share, are most concerned about the firms earnings. They restore more confidence in those firms that show steady growth in earnings. As such, they concentrate on the analysis of the firms present and future profitability. They are also interested in the firms financial structure to the extent it influences the firms earnings ability and risk.

MANAGEMENT
Management of the firm would be interested in every aspect of the financial analysis. It is their overall responsibility to see that the resources of the firm are used most effectively and efficiently, and that the firms financial condition is sound.

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TECHNIQUES OF FINANCIAL STATEMENT ANALYSIS


Very few numbers in financial statements are significant in themselves, but meaning inferences can be drawn from their relationship to other amounts or their change from one period to another. The tools of financial statement analysis help in establishing significant relationships and changes. The most commonly used analytical techniques are: 1) 2) 3) 4) 5) HORIZONTAL ANALYSIS (Comparative Analysis) TREND ANALYSIS (Index Analysis) VERTICAL ANALYSIS (Common size Analysis) RATIO ANALYSIS DU PONT ANALYSIS

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INTRODUCTION
Trend analysis involves calculation of percentage changes in financial statement items for a number of successive years. It is an extension of horizontal analysis to several years. Trend analysis is carried out by first assigning a value of 100 to the financial statement items in the following years as a percentage of the base-year value. Trend analysis over longer periods helps in identifying certain basic changes in the nature of the business. Since many large corporations publish a summary of operating results and selected financial indicators for five years or more, it is possible to perform trend analysis using published reports.

USE OF THE TREND ANALYSIS:


Provide information related to well-observed behavior of accounting an entity. Easier to understand. Most preferred method, reliable for well-established firm.

TREND ANALYSIS:
For carrying out the trend analysis, I have selected 2005-06 as the base year. All the financial data of the year 2005-06 have been arbitrarily assigned the value of 100.The values of other financial data is expressed in terms of these data as reference data. This analysis is carried out in two phases as balance sheet analysis and profit and loss account analysis.

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BALANCE SHEET ANALYSIS:


SOURCES OF FUNDS: SHAREHOLDERS FUND:
( Rs. In Crores) YEAR 2005-06 2006-07 2007-08 2008-09 2009-10 RUPEES 10.64 12.14 14.93 24.5 35.79 PERCENTAGE 100 114.32 140.32 230.26 336.37

SHARE HOLDER FUNDS

350 300 250 200 150 100 50 0 2005-06 2006-07 2007-08 2008-09 2009-10

From the graph given above we can analyze that there is a continuous increase in the Shareholders fund of the company over the last four financial years. As compared to 2005-06 share holder fund increase as approximatly 226 % in the year 2009-10 so average 56% every year increase in share holder fund.

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LOAN FUNDS: (Rs. In Crores)


YEAR 2005-06 2006-07 2007-08 2008-09 2009-10 RUPEES 22.98 38.68 47.24 64.22 65.53 PERCENTAGE 100 168.32 205.57 279.46 285.16

From the above graph we can analyze that there is a continuous Increase in the loan fund of the company until the previous financial year. In the present financial year there is a sudden increment in the percentage of the loan funds. As compared to 2005-06 Loan fund increase as approximatly 185 % in the year 2009-10 so average 46% every year increase in Loan fund. A.S.B.P. COLLEGE OF BUSINESS ADMINISTRATION , UNJHA. 19

TOTAL SOURCES OF FUNDS: (Rs. In Crores)


YEAR 2005-06 2006-07 2007-08 2008-09 2009-10 RUPEES 33.62 53.38 62.17 88.72 101.32 PERCENTAGE 100 158.77 184.92 263.89 301.37

From the above graph we can analyze that due to an overall increase in the equity funds used there is an overall increase in the sources of funds available to the company. This shows that on a whole the company is expanding. As compared to 2005-06 Sources of fund increase as approximatly 201% in the year 2009-10 so average 50% every year increase in Sources of fund which show company expanding every year.

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APPLICATIONS OF FUNDS: FIXED ASSETS: (Rs. In Crores)


YEAR 2005-06 2006-07 2007-08 2008-09 2009-10 RUPEES 11.77 11.81 14.55 20.36 30.02 PERCENTAGE 100 100.34 123.62 172.98 255.06

From the above graph we can analyze that there is a steady growth of the fixed assets for the company. This shows efficient utilization of the sources of funds by the company. As compared to 2005-06 Fixed Assets increase as approximately 155 % in the

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year 2009-10 so average 39% every year increase in fixed assets which shows company has made long term investment into the company.

C.A., LOAN AND ADVANCES: (Rs. In Crores)


Year 2005-06 2006-07 2007-08 2008-09 2009-10 RUPEES 49.30 73.10 123.05 124.34 151.51 PERCENTAGE 100 148.28 249.59 252.21 307.32

From the above graph we can analyze that there is a continuous growth in the C.A., loan and advances of the company. However the major contributors to this growth in the current assets are debtors and other current assets. Inventories contribute a very little portion of the same. The rise in quantity of debtors is a major cause of concern. As compared to 2005-06 current Assets and loan and advances increase as approximately 207 % in the year 2009-10 so average 52% every year increase in current assest, loan & advances which show company has made more investment in working capital.

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C.L., PROVISIONS: (Rs. In Crores)


YEAR 2005-06 2006-07 2007-08 2008-09 2009-10 RUPEES 27.44 31.62 76.74 55.99 80.22 PERCENTAGE 100 115.23 279.66 204.05 292.35

From the above graph we can analyze that there is a an increase and decrease in current liabilities and provision in last four years. As compared to 2005-06 Current liabilities increase as approximately 192% in the year 2009-10 so average 48% every

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year increase in C.L & Provision which shows decrease in working capital of the company.

NET CURRENT ASSETS: (Rs. In Crores)


YEAR 2005-06 2006-07 2007-08 2008-09 2009-10 RUPEES 21.86 41.48 46.31 68.35 71.29 PERCENTAGE 100 189.75 211.85 312.67 326.12

From the above graph we can analyze that there is a continuous rise in the net current asset of the company. This also indicates that major part of the company is financed into its day-to-day operations. As compared to 2005-06 net current assets

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increase as approximately 226% in the year 2009-10 so average 57% every year increase in net current assets. Which shows net increase in working capital.

PROFIT & LOSS ANALYSIS:


INCOME: (Rs. In Crores)
YEAR 2005-06 2006-07 2007-08 2008-09 2009-10 RUPEES 245.68 363.6 491.55 635.56 623.91 PERCENTAGE 100 147.99 200.08 258.69 253.95

From the above graph we can analyze that there is a continuous rise in the income levels of the company. Income of the company is dependent mostly on sales of its products. As compared to 2005-06 Sales increase as approximately 153 % in the year

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2009-10 so average 38% every year increase in Sales. This shows company has more operating income and operating profit increase.

EXPENDITURE: (Rs. In Crores)


YEAR 2005-06 2006-07 2007-08 2008-09 2009-10 RUPEES 239.13 355.79 480.39 616.58 609.88 PERCENTAGE 100 148.79 200.89 257.84 255.04

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From the above graph we can analyze that there is a continuous rise in the total expenditure of the company. As compared to 2005-06 Expenditure increase as approximately 155 % in the year 2009-10 so average 39% every year increase in Expenses. The expenses is increase because of more increase in manufacturing expenses which shows decrease in operating profit of the company.

PROFIT BEFORE TAX: (Rs. In Crores)


YEAR 2005-06 2006-07 2007-08 2008-09 2009-10 RUPEES 1.92 3.36 4.60 8.81 4.39 PERCENTAGE 100 175 239.58 458.85 228.65

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From the above graph we can analyze that there is a fluctuation in the profit before taxation. Obviously a sharp rise in the profits is not experienced for the present financial year. This is not a good sign for the company. As compared to last year profit before tax is reduce so it is not good for the company. As compared to 2005-06 Profit before tax increase as approximately 128 % in the year 2009-10 so average 32% every year increase in profit before tax.

NET PROFIT: (Rs. In Crores)


YEAR 2005-06 2006-07 2007-08 2008-09 2009-10 RUPEES 1.25 2.03 2.44 5.68 2.92 PERCENTAGE 100 162.4 195.2 454.4 233.6

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From the above graph we can analyze that there is a fluctuation in the profit before taxation. Obviously a sharp rise in the profits is not experienced for the present financial year. This is not a good sign for the company. As compared to last year Net profit is reduce so it is not good for the company. As compared to 2005-06 Net profit increase as approximately 133 % in the year 2009-10 so average 33% every year increase in net profit.

BAL. TO BALANCE SHEET: (Rs. In Crores)


YEAR 2005-06 2006-07 2007-08 2008-09 2009-10 RUPEES 0.66 1.65 4.14 8.21 9.00 PERCENTAGE 100 250 627.27 1243.94 1363.64

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From the above graph we can analyze that there is a fluctuation in the BL to BL sheet of the company. This present financial year shows a strong net profit for the company compare to the year 2005-06.

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HORIZONTAL ANALYSIS:
INTRODUCTION:
Financial statements present comparative information for the current year and the previous year. A simple approach to financial statement analysis, known as Horizontal analysis, is to calculate amount changes and percentage changes from the previous year to the current year. While an amount change in itself may mean something, converting amount changes to percentages is more useful in appreciating the order of magnitude of the change.

USE OF THE HORIZONTAL ANALYSIS:


To obtain the changes among various accounting information in respect to a base year. This information provides insights related to variances in two results. This variance facilitates decision-making. These changes can be obtained for a series of years. It helps in formation of financial strategies.

HORIZONTAL ANALYSIS:
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For carrying out the horizontal analysis, I have selected the two financial years of 2008-09 and 2009-10. This analysis is carried out in two phases as the balance sheet analysis and profit and loss account analysis.

BALANCE SHEET ANALYSIS:


SOURCES OF FUNDS: SHAREHOLDERS FUNDS:
YEAR 2007-08 2008-09 2009-10 VALUE (in crores) 14.93 24.5 35.79 CHANGE (%) _ 64.10 46.08

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Due to changes in the shareholders funds, the total change occurring in the equity funds is not similar to the changes occurring as a result of the changes in the reserves and surplus of the company. As compared to 2007-08 it increase 64.1% in 2008-09 and As compared to 2008-09 it increase 46.08% in 2009-10. So company has more contribute from their own fund.

LOAN FUNDS:
YEAR 2007-08 2008-09 2009-10 VALUE (in crores) 47.24 64.22 65.53 CHANGE (%) 35.94 2.04

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From the above table we can observe that the increment in the total loan funds is mainly due to the increment in the unsecured loan funds being used by the company As compared to 2007-08 it increase 35.94% in 2008-09 and As compared to 2008-09 it increase 2.04% in 2009-10. Which shows company has more amount collected from outside sources.

TOTAL SOURCES OF FUNDS:


YEAR 2007-08 2008-09 2009-10 VALUE (in crores) 62.17 88.72 101.32 CHANGE (%) 42.71 14.20

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As compared to 2007-08 it increase 42.71% in 2008-09 and As compared to 2008-09 it increase 14.2% in 2009-10. Which shows company has growing fastly.

APPLICATIONS OF FUNDS: FIXED ASSETS:


YEAR 2007-08 2008-09 2009-10 VALUE (in crores) 14.55 20.36 30.02 CHANGE (%) 39.93 47.45

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Due to the increase in the depreciation value of the fixed assets then also there is a increment of about the value of fixed assets as compared to last financial year. As compared to 2007-08 it increase 39.93% in 2008-09 and As compared to 2008-09 it increase 47.45% in 2009-10. Which show company has more invested in long term sources of fund.

C.A., LOAN AND ADVANCES:


YEAR 2007-08 2008-09 2009-10 VALUE (in crores) 123.05 124.34 151.51 CHANGE (%) 1.05 21.85

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From the above table we can observe that the increase in the current assets as compared to the previous financial year . However here the analysis of the quality of the current assets for the company is major concern. As compared to 2007-08 it increase 1.05% in 2008-09 and As compared to 2008-09 it increase 21.85% in 2009-10. Which show company has more invested in working capital.

C.L., PROVISIONS:
YEAR 2007-08 2008-09 2009-10 VALUE (in crores) 76.74 55.99 80.22 CHANGE (%) (27.04) 43.28

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From the above table we can observe that the decrease in the current liabilities of the company is around 4.32 percent as compared to the previous financial year. This decrease is mostly provided due to the decrease in the creditors of the company. As compared to 2007-08 it increase( 27.04)% in 2008-09 and As compared to 2008-09 it increase 43.28% in 2009-10. Which show company has less invested in working capital.

NET CURRENT ASSETS:


YEAR 2007-08 2008-09 VALUE (in crores) 46.31 68.35 CHANGE (%) 47.59

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2009-10

71.29

4.30

Net current assets are obtained as the difference between the current assets and the current liabilities. From the above table we can observe that the increase in the working capital of the company as compared to the previous financial year . As compared to 2007-08 it increase 47.59% in 2008-09 and As compared to 2008-09 it increase 4.3% in 2009-10. Which show company has more invested in liquid assets and increase working capital.

PROFIT & LOSS ANALYSIS:


INCOME:
YEAR VALUE (in crores) CHANGE (%)

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2007-08 2008-09 2009-10

491.55 635.56 623.91

29.30 (1.84)

From the above table we observe that there is an increase in the total income of the company compare to previous year. It shows the good efficiency of the company. As compared to 2007-08 it increase 29.3% in 2008-09 and As compared to 2008-09 it increase (1.84)% in 2009-10. Which show company has less operating profit due to reduce in operating income.

EXPENDITURE:
YEAR 2007-08 2008-09 VALUE (in crores) 480.39 616.58 CHANGE (%) 28.35 40

A.S.B.P. COLLEGE OF BUSINESS ADMINISTRATION , UNJHA.

2009-10

609.88

(1.09)

From the above table we observe that there is an increase in the total expenditure of the company compare to previous year. It shows inverse effect on the company. . As compared to 2007-08 it increase 28.35% in 2008-09 and As compared to 2008-09 it increase (1.09)% in 2009-10. So company has more invested from their own fund.

PROFIT BEFORE TAX:


YEAR 2007-08 2008-09 VALUE (in crores) 4.60 8.81 CHANGE (%) 91.52 41

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2009-10

4.39

(50.17)

From the above table we observe that the increase in the profit before taxation is significantly high as compared to the previous financial year. . As compared to 2007-08 it increase 91.52% in 2008-09 and As compared to 2008-09 it increase (50.17)% in 2009-10. So company has more invested from their own fund.

NET PROFIT:
YEAR 2007-08 2008-09 VALUE (in crores) 2.44 5.68 CHANGE (%) 132.79

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2009-10

2.92

(48.59)

From the above table we can observe that the increase in the net profit is significantly higher as compared to previous financial year. . As compared to 2007-08 it increase 132.79% in 2008-09 and As compared to 2008-09 it increase (48.59)% in 200910. So company has more invested from their own fund.

BAL. TO BALANCE SHEET:


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YEAR 2007-08 2008-09 2009-10

VALUE (in crores) 4.14 8.21 9.00

CHANGE (%) 98.31 9.62

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VERTICAL ANALYSIS:
INTRODUCTION:
Vertical analysis is the proportional expression of each item on a financial statement to the statement total. The results of vertical analysis are presented in the form of common-size-statements in which all the elements within each statement are expressed in percentage of some common number and always add up to 100 per cent. The items in the profit and loss account are usually expressed as percentages of sales, while the balance sheet items are given as percentages of total shareholders funds and liabilities or of total assets. Vertical analysis helps in making comparisons of companies that differ in size since the financial statements are expressed in comparable common-size form. Further, a comparison of common-size statements for several years may reveal important changes in the components from one year to the next.

USE OF THE VERTICAL ANALYSIS:


Give information related to proportion of factors contributing to the assets or the liabilities. Help on focusing which expenses contribute the most, and which contributes the least. Helps in providing information related to high return & low return assets. Help in formation of strategies to achieve high return from assets. Helps in formation strategies to eliminate necessary expenses.

VERTICAL ANALYSIS:
For carrying out the vertical analysis the financial years selected are 200708, 2008-09 and 2009-10 The entire vertical analysis is carried out in the various phases as explained below step by step.

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BALANCE-SHEET ANALYSIS:
SOURCES OF FUNDS:
In this analysis the total sources of funds are assumed to be 100 percent and the percentage formation by the debt and equity funds is calculated.

TYPESOF FUNDS
SHAREHOLDER FUNDS RESERVE & SURPLUS SECURED LOAN UNSECURED LOAN TOTAL

2007-08
RS. 4.55 10.38 40.29 6.95 62.17 % 7.32 16.70 64.81 11.17 100

2008-09
RS. 9.55 14.95 52.71 11.51 88.72 % 10.76 16.85 59.41 12.98 100

2009-10
RS. 19.55 16.24 65.53 0.00 101.32 % 19.30 16.03 64.67 100

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The graph given above shows the changes occurring in the sources of funds being used by the company in the last three financial years. Analyzing point by point we can observe that there is an decrease of about 19.30 percent in the shareholders funds forming the total sources of funds. Talking about R&S the total holding of it from total sources of fund in the year 2009-10 is 16.03% and in year 2007-08 is 16.70% and secured loan the total holding of it from total sources of fund in the year 2009-10 is 64.67% and in year 2007-08 is 64.81% and unsecured loan the total holding of it from total sources of fund in the year 2009-10 is 0% and in year 2007-08 is 11.17%.

APPLICATION OF FUNDS:
In this analysis the total application of funds are assumed as 100 and the percentage formation by each of the individual components is carried out by calculation.

TYPESOF FUNDS

2007-08
RS. 14.55 % 23.40 74.49 2.11 100

2008-09
RS. 18.25 68.35 0.00 86.6 % 21.07 78.93 100

2009-10
RS. 27.14 71.29 0.00 98.43 % 27.57 72.43 100

FIXED ASSETS NET CURRENT 46.31 ASSETS MISC.EXP. 1.31 TOTAL 62.17

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From the above graph we can observe that comparing the two financial years there is a reduction in the fixed assets constitution in the application of funds. There is an increase in the net current assets constitution of the application of funds. This shows that the company is expanding its operations on a whole. Another important point to be noted is that the investment also increases. This shows that the company is using a very aggressive mode of financing in the recent two financial years. To finalize we can say that the company constitutes a majority of its funds on the net current assets or the day-to-day operations financing. So the company needs to manage this working capital arrangement properly.

PROFIT AND LOSS ANALYSIS:


INCOME:

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In carrying out this financial analysis we have assumed the total income of the company equal to 100 percent and by calculation we want to obtain how much percentages each of the components constitutes to the total incomes.

INCOME
OPERATING INCOME OTHER INCOME TOTAL

2007-08
RS. 490.96 0.59 491.55 % 99.88 0.12 100

2008-09
RS. 635.38 0.18 635.56 % 99.97 0.03 100

2009-10
RS. 623.49 0.42 623.91 % 99.93 0.07 100

From above graph we can conclude that net sales of the company increases by 0.05 percent in the year 2009-10 which indicates higher achievement of sales and overall contribution made by the net sales is 99.88 percent in the year 2007-08 and in the year 2009-10 is 99.93 percent. Talking about other income we can observe that there is reduction of 0.05 percent in the year 2009-10 which is not a good sign for the company and overall contribution made by the other income is 0.12percent in the year 2007-08 and in the year 2009-10 is 0.07 percent.

EXPENDITURE:

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In carrying out this financial analysis we have assumed the total expenditure of the company equal to 100 percent and by calculation we want to obtain how much percentages each of the components constitutes to the total expenses.

EXPENDITURE

2007-08
RS. % 73.87 7.68 0.96 4.96 2.73 1.26 6.12 2.42 100

2008-09
RS. 602.20 5.92 1.51 4.88 2.07 1.24 7.62 3.13 628.57 % 95.80 0.94 0.24 0.78 0.33 0.20 1.21 0.5 100

2009-10
RS. 596.87 5.64 1.77 3.85 1.75 1.65 8.01 1.47 621.01 % 96.11 0.91 0.29 0.62 0.28 0.27 1.29 0.23 100

CONSUMPTION OF 465.83 RAW MATERIAL MANUFACTURING 6.84 EXPENSES PERSONAL EXP. 0.86 SELLING EXP. ADMINISTRATIVE EXP. DEPRICIATION INTEREST TAX TOTAL 4.42 2.43 1.12 5.45 2.16 89.11

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From the above graph we can observe that there is a reduction in the formation of each type of the expenses except the purchase, employees, interest and depreciation expenses. There is a negligible reduction in the raw material and manufacturing expenses, as they constituted the total funds. However these reductions are quite ineffective as to comment on the financial strategy. Another important point to be noted is the rise in the value of the employees and purchase expenses that contributed to the total funds. However these can lead to two alternatives. One of the alternatives is that there is increase in the demand of certain product categories and hence their production has increased and so does have their purchase expenses in the total funds. Another important point to be noted is the negligible reduction in the manufacturing, selling and administration expenses of the company. These expenses include marketing promotional and laboratory as well as administrative expenses. So without further analysis it is difficult to comment on the same.

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RATIO ANALYSIS
LIQUIDITY RATIOS: These ratios would include the following ratios explained as below: 1) CURRENT RATIO: Current ratio is obtained by dividing the current assets of the company by the current liabilities. Generally a current ratio of 2:1 is considered as ideal for the firm. The current assets of the company would include cash, inventories, debtors, loans and advances paid etc. This ratio measures the short term solvency of the firm.

CURRENT RATIO = CURRENT ASSETS CURRENT LIABILITIES

Year 2007-08 2008-09 2009-10

Current Ratio 1.60 2.22 1.89

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Ideol ratio of any company should be 2:1 but here the ratio is 1.89:1, which indicates favorable relationship between current assets and current liabilities.

2) QUICK RATIO:
Quick ratio is considered to be a better measure of the liquidity of a company as compared to the current ratio. This is because the current ratio includes inventories, which cannot be readily converted into cash. The ideal quick ratio is assumed to be 1:1 for any company.

QUICK RATIO = CURRENT ASSETS-STOCK CURRENT LIABILITIES

Year 2007-08 2008-09 2009-10

Quick Ratio 1.12 1.31 1.49

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For any company better quick ratio would be 1:1 but here the quick ratio is 1.49:1, which tells us about liquid position of the company, is not very well.

PROFITABILITY RATIOS: 1) GROSS PROFIT RATIO:


The gross profit margin reflects the efficiency with which the management produces each unit of the product. This ratio indicates the average spread between the cost of goods sold and the sales. It is calculated as follows:

GROSS PROFIT RATIO = GROSS PROFIT SALES Year 2007-08 2008-09 2009-10 1

X 100

Gross profit ratio(%) 3.73 4.29 3.36

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Here we can observe that company has 3.36% gross profit, which can be good for the company so that company can fulfill his day-to-day requirement and other operation, which are carried by the company.

2) NET PROFIT RATIO:


This ratio establishes the relationship between net profit and sales and indicates the efficiency of the management in manufacturing administering and selling the products. It is calculated as follows:

NET PROFIT RATIO = NET PROFIT SALES Year 2007-08 2008-09 2009-10

X 100

Net profit ratio(%) 0.50 0.89 0.47

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Here we can observe that company has 0.47% NET profit, which can be good for the company so that company can fulfill his requirement also they can use for distribution of dividends and also for future projects.

3) OPERATING EXPENSE RATIO:


This ratio gives an indication about the operating efficiency of the firm. It is calculated as follows:

OPERATING RATIO = COGS (+) OPERATING EXPENSES X 100 SALES

Year 2007-08 2008-09

Operating Ratio(%) 97.85 97.04

exp.

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2009-10

97.82

From the above calculation we can observe that operating expenses are 97.82% that is not good for the company and cause of less net profit so company should try to minimize it so it has a handsome profit.

4) RETURN ON CAPITAL EMPLOYEED:


This ratio indicates normally expressed in the percentage. The term capital employed includes share capital,reserves & long term loans such as debenture.

R.O.C.E. = PBIT X 100 C.E

Year 2007-08 2008-09 2009-10

R.O.C.E ratio (%) 18.64 21.28 12.23


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As this year the profit of the company is not good then also they provide their shareholders 12.23% return on their funds, which creates a good image against all shareholders.

5) RETURN ON SHARE HOLDERS FUND:It also indicates whether the return on proprietors funds is enough in relation to the risks that they undertake. This ratio shows what amount of dividend is likely to be received on shares. R.O.S.F= PAT-PREF. DIV.

x100

EQUITY SH.HOLDERS FUND Year 2007-08 2008-09 2009-10 R.O.S.H. ratio (%) 16.34 29.13 14.05

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LEVERAGE RATIO:
These ratios would include the following ratios as explained below:

1) DEBT-EQUITY RATIO:
This ratio indicates to how many times do the creditors contributes for each time of the owners contribution. It is calculated as follows:

DEBT EQUITY RATIO = LONG TERM DEBT X 100 EQUITY FUND

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Year 2007-08 2008-09 2009-10

Debt (%) 3.16 3.29 3.15

equity

ratio

We can observe through above that company has used more proportion of equity fund compare to debt fund and reason may be not of paying fixed interest and paying of dividend more.

2) PROPREITORY RATIO:
This ratio indicates to how much contribution is made by the owner of the company. It is calculated as follows:

PROPREITORY RATIO = PROPRITORS FUND X 100 TOTAL ASSETS Year 2007-08 2008-09 Debt equity (%) 0.1085 0.1347 ratio

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2009-10

0.1145

Here we can see that contribution made by the proprietor to the total value of the assets is 0.1145%, which shows major contribution in the assets, is of the proprietor.

EFFICIENCY RATIOS:
The various ratios under this topic are calculated as under:

1) TOTAL ASSETS TURNOVER RATIO:


The amounts invested in business are invested in all assets jointly and sales are effected through them to earn profits. So in order to find out relation between total assets to sales.

TOTAL ASSETS TURNOVER = SALES T.A

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Year 2007-08 2008-09 2009-10

T.A. TURN OVER RATIO (TIMES) 3.57 4.39 3.43

We can observe that Total assests turnover is 3.43 times which is good for the company and if it is low then it indicate high cost of inventory holding which directly lead to increase in cost and low profits.

2) WORKING CAPITAL TURNOVER RATIO:


This ratio indicates the number of times the debtors turnover each year. It is calculated as follows:

WORKING CAPITAL TURNOVER = SALES NET C.A

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Year 2007-08 2008-09 2009-10

W.C. TURN OVER RATIO (TIMES) 10.60 9.30 8.75

Here we can observe that W.C. turnover is 8.75 times which is not much good for the company situation but if it would be some more then it would shows greater efficiency of the company.

3) DEBTORS RATIO:
The ratio shows the number of days taken to collect the dues of credit sales. It shows the efficiency or otherwise of the collection policy of the enterprise.

DEBTORS RATIO = DEBTORS CREDIT SALES Year 2007-08

X 365

DEBTORS (DAYS) 41

RATIO

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2008-09 2009-10

32 40

s .
Here we can observe that Debtors ratio is 40 days which is good for the company situation but if it would be some less then it would shows greater efficiency of the company.

4)CREDITORS RATIO:The debtors ratio gives us the number of days within which amount due for credit sales is collected.

CREDITORS RATIO = SUNDRY CREDITORS CREDIT PURCHASE Year 2007-08 CREDITORS RATIO (DAYS) 60

X 365

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2008-09 2009-10

34 49

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DUPONT ANALYSIS:
The Dupont analysis is carried out for the four financial years and its explanation is described by each and every phase.

2007-08:
RETURN ON TOTAL ASSETS (4%)

NET PROFIT MARGIN X (0.005)

ASSETS TURNOVER (8.07) 67

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PAT- PREF. DIV. (2.44)

SALES (490.96)

SALES (490.96)

TOTAL ASSETS. (60.86)

FIXED ASSETS (14.55)

INVT. (0.00)

NET C.A.. (46.31)

From the above analysis we can observe that the return on investment for any company is a function of the net profit margin and the asset turnover ratios of the company. We can observe that the net profit margin of the company is dependent on the sales while the asset turnover ratios of the company are also dependent on the sales. We can observe that for the year 2007-08 the net profit margin is of 0.005 percent which shows that out of the revenue earned of Rs 100 the net profit earned is about 0.005 paisa. We can observe that for the year 2007-08 the asset turnover ratios for the company is 8.07 percent which reveals that for an Rs 1 investment in the assets of the company the sales obtained is of Rs 0.807. We can also observe that the return on assets for the company is about 14.55 percent, which shows that for the investment of Rs1 in the company assets the profit obtained by the company is about 14.6 paisa.

2008-09:
RETURN ON TOTAL ASSESTS (6%)

NET PROFIT MARGIN X (0.009)

ASSESTS TURNOVER (7.16)

PAT-PREF. DIV. (5.68)

SALES (635.38)

SALES (635.38)

TOTAL ASSESTS (88.71) 68

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FIXED ASSETS (20.36)

INVT. (0.00)

NET C.A. (68.35)

From the above analysis we can observe that the return on investment for any company is a function of the net profit margin and the asset turnover ratios of the company. We can observe that the net profit margin of the company is dependent on the sales while the asset turnover ratios of the company are also dependent on the sales. We can observe that for the year 2008-09 the net profit margin is of 0.009 percent which shows that out of the revenue earned of Rs 100 the net profit earned is about 0.009 paisa. We can observe that for the year 2008-09 the asset turnover ratios for the company is 7.16 percent which reveals that for an Rs 1 investment in the assets of the company the sales obtained is of Rs 0.716. We can also observe that the return on assets for the company is about 20.36 percent, which shows that for the investment of Rs1 in the company assets the profit obtained by the company is about 20.4 paisa.

2009-10:
RETURN ON TOTAL ASSESTS (3%)

NET PROFIT MARGIN X (0.005)

ASSESTS TURNOVER (7.16)

PAT-PREF. DIV. (2.92)

SALES (623.49)

SALES (623.49)

TOTAL ASSESTS (101.31) 69

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FIXED ASSETS (30.02)

INVT. (0.00)

NET C.A.. (71.29)

From the above analysis we can observe that the return on investment for any company is a function of the net profit margin and the asset turnover ratios of the company. We can observe that the net profit margin of the company is dependent on the sales while the asset turnover ratios of the company are also dependent on the sales. We can observe that for the year 2009-10 the net profit margin is of 0.005 percent which shows that out of the revenue earned of Rs 100 the net profit earned is about 0.005 paisa. We can observe that for the year 2009-10 the asset turnover ratios for the company is 7.16 percent which reveals that for an Rs 1 investment in the assets of the company the sales obtained is of Rs 0.716. We can also observe that the return on assets for the company is about 30.02 percent, which shows that for the investment of Rs1 in the company assets the profit obtained by the company is about 30 paisa.

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FINDINGS
At the end of the financial analysis of the company the following are the various findings:

As per the study the company share holders fund increases average 59% in
last 4 years. This reasonable but tries to increase in future. The share holders fund is increases because of increases share capital in the year 2008-09 and 2009-10.

As per the study the companies loan fund or external sources increases
average 46.25% in last 4 years. It is reasonable increases loan fund because of there is more increase in secured loan and reduce unsecured loan.

As per the study the total sources of fund is increases approximately 31% in
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holders fund is increases double then secured loan so it is good for company because company use more internal sources than external sources.

As per the study the company fixed assets increase an average 39% in last 4
year it is good for business because firms long term investment is increases. Fixed assets is increases because of more investment in fixed assets and capital working progress.

As per the study the companies has not made any investment in government
securities and shares of Subsidiaries Company.

As per the study companies current assets is more increase as compare to


current liabilities so there is increase investment in net current assets or working capital as an average 57% in last 4 years. Companys current assets increases average 52 % but current liabilities increase average 48% in last 4 year.

As per the studies company net profit increases average 58% in last 4 year
because there is more increases in income average 63% as compare to increases in expenditure average 64%. It is good for the company and tries to increases it in future by increases its operating income. As per the studies companies return on total assets increase in 2008-09 from 4% to 6%. But it reduce in 2009-10 at 3% So it is not good for the company and tries to increase it in future by increase net profit.

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RECOMMENDATIONS AND SUGGESTIONS


Company will try to increase its share holders fund by increasing reserves and new public issue. This is done because share holders fund is use to invest in long term fixed assets and current assets by internal source.. Company will try to increase its reserves by increasing net profit because reserves are use for future expansion and provision. Company will increase

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its net profit by increase its operating income and reduce it operating expenses. Company will try to reduce its loan fund by reducing secured loan because more use of secured loan there is more interest expenses. If more interest expenses company profit will reduces. Company will tries to increase its investment into fixed assets by purchase of fixed assets like Plant and Machinery, Building and other fixed assets and capital working progress. Company will tries to made investment in government securities and purchase of shares of Subsidiaries Company. Investment increases by company though purchase or government securities as compare to shares of subsidiary company because investment in government, securities is less risky than shares of subsidiary. Company will tries to increase its investment in working capital by increasing current assets and decrease in current liabilities. Increase current assets by increase in cash and bank, investors, debtors. Company will try to increase its operating income by increase in sales and also reduce its expenditure. Expenditure increase due to increase in manufacturing expenses. So company has tries to reduce its manufacturing expenses. Increase in income and reduce in expenditure there is increase profitability of the company. Company will try to increase its return on investment by increasing net profit.net profit increase through more increase in operating income as compare to increase in operating expenditure.

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CONCLUSION
Meaning of conclusion is to end or in other words at the end to conclude whole the description in a few words. After completing our training in vimal oil Ltd, which is one of the units of VIMAL OIL & FOODS COMPANY. I conclude that the Vimal Ltd is a welldeveloped unit and is progressing day by day. All the department of the company is very well. Organized and present condition of the company is very good.

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However, they were fully co-operated during my visit. Thus, the company has enough funds to implement new development projects like increase in production capacity etc. The Companys employees and all the staff were very co-operative. Company has the better future and it can increase its market share and is developing day to day. We can observe that net profit of the company is increasing from the last financial years, which indicate good future and better working of the company. Lastly we wishes all the best for the future development of the company.

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BIBLIOGRAPHY

BIBLIOGRAPHY
Prasanna Chandra, Financial Management- Theory and Practice, Fourth Edition, Tata-McGraw Hill Publications. R.Narayanswamy, Financial Accounting- A Managerial Perspective, Second Edition, Prentice-Hall Publications. Annual Reports of VIMAL OIL & FOODS Ltd.

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Website: www.vimal oil.com.

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ANNEXURE BALANCE SHEET


As at 2009-10 SOURCES OF FUNDS Shareholders
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As at 2008-09

As at 2007-08

Rs. In Crores As at As at 2006-07 2005-06

fund Pref.Sh.Capital Share capital Res.& Surplus Loan Funds Secured loan Unsecured Loan TOTAL APPLICATION OF FUNDS Fixed Assets Gross Block Less: Depreciation Net Block Add: Capital work in progress Investments Current assets loan & advances Less: Curr.liabilities & Provisions Net current assets Misc.Exp.not written off TOTAL Application Of Fund

15.00 4.55 16.24 35.79 65.53 0.00 65.53 101.32

5.00 4.55 14.95 24.5 52.71 11.51 64.22 88.72

0.00 4.55 10.38 14.93 40.29 6.95 47.24 62.17

0.00 4.55 7.59 12.14 26.77 11.97 38.68 53.38

0.00 4.55 6.09 10.64 21.15 1.83 22.98 33.62

39.67 12.53 27.14 2.88 30.02 0.00 151.51 80.22 71.29 0.00 101.31

29.13 10.88 18.25 2.11 20.36 0.00 124.34 55.99 68.35 0.00 88.72

24.27 9.72 14.55 0.00 14.55 0.00 123.05 76.74 46.31 1.31 62.17

20.41 8.60 11.81 0.00 11.81 0.00 73.10 31.62 41.48 0.08 53.38

19.42 7.65 11.77 0.00 11.77 0.00 49.30 27.44 21.86 0.00 33.63

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PROFIT & LOSS ACCOUNT


Rs in crores.

As at 2009-10 INCOME Operating Income Other Recurring income Total Income EXPENDITURE Consumption of raw material Personal Exp. Selling Exp. Manufacturing Exp. Administrative Exp. 596.87 1.77 3.85 5.64 1.75 623.49 0.42 623.91

As at 2008-09 635.38 0.18 635.56

As at 2007-08 490.96 0.59 491.55

As at 2006-07 363.17 0.43 363.6

As at 2005-06 244.97 0.71 245.68

602.20 1.51 4.88 5.92 2.07

465.83 0.86 4.42 6.84 2.43

345.25 0.64 5.03 3.74 1.14


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229.16 0.64 5.51 2.82 1.00

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Total Expenditure PBDT Less:provision for dep. Other write off Financial Exp. Profit before tax Less:Prov. For tax -Curr. Tax Net profit Non Recurring Item Other non cash adj. Reported Net Profit Profit & Loss A/c Profit befor appropriation Less:equity Divi. Dividend Tax Bal.carried to balance sheet

609.88 14.03 1.65 0.00 8.01 4.39 1.47 2.92 (0.12) 0.03 2.83 7.71 10.54 1.32 0.22 9.00

616.58 18.98 1.24 1.31 7.62 8.81 3.13 5.68 (0.09) 0.00 5.59 3.64 9.23 0.87 0.15 8.21

480.39 11.17 1.12 0.00 5.45 4.60 2.16 2.44 1.04 (0.05) 3.43 1.35 4.78 0.55 0.09 4.14

355.79 7.82 1.00 0.00 3.45 3.36 1.34 2.03 0.08 (0.09) 2.02 0.15 2.17 0.46 0.06 1.65

239.13 6.54 0.99 0.00 3.63 1.92 0.67 1.25 (0.20) 0.00 1.05 0.44 1.49 0.73 0.10 0.66

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