REPORT OF SUMMER INTERNSHIP

PROJECT

Company’s name: - “Garden Silk Mills Ltd.”

Duration: - 2 month (1st march to 24th April

2010)

Sub-Mitted By: - BHAVIN RAYKA

M. B. A (III Trimester)
IIPM (Ahmedabad)

1
 PREFACE

Practical training is a part of MBA syllabus to bridge

gap between theoretical study of management and its application
in the corporate world.

It gives me immense pleasure to prepare this report on

Garden Silk Mills Ltd. This is the outcome of the information
received from executive of the company.

I am glad to represent this report on practical training

and to my knowledge all the facts and figures included in this
report are correct and up to the level as provided by the
company.

The main purpose of the training as a subject at this

level is to develop. The student about the Industrial environment
and business practices. If provides lot of knowledge to the
students. It help as to develop entrepreneurships skills.

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 ACKNOWLEDGEMENT

The post graduate level management course of MBA includes

the practical training to support other theoretical object.

I heartily thanks the Dean of IIPM(Ahmedabad) Mr. Pabitra

Ranjan for providing an opportunity for training.

It is an occasion of great pleasure and a matter of deep felt

personal satisfaction to present this complied statement of the
project work under go at a company of great esteemed Garden
Silk Mills limited. First and foremost, we believe that the full
credit, of having complete the prescribed training should to the
Co-coordinator of Mrs. Shruti institute of IIPM studies which was
kind enough to entertain my request for placement and facilitated
our request for placement.

First of all I would like to thank MR. Praful. A. Shah

(General Manager) and Mr. Bipin Bhai Modi (Finance Directore)
for allowing me to undergo the training for project work in such a
prestigious company.

I am also thankful to the staff of the Garden Silk Mills Limited

for give me a practical knowledge help me for satisfactory
completing my project report.

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 I take this opportunity to thank all those who directly or
indirectly were instrumental in the completion of my project.

– Bhavin Rayka

DECLARATION

I undersigned there by declare that the project report on “Garden

Silk Mills Ltd.” prepared & submitted to Mrs. Shruti

This is my own work & the report prepared there in this based on
the knowledge & the work done by me in the company during the
project work.

I further declare that it is the result of my finding &research in

the subject & is original in nature. It is not submitted either in part
or in whole to any other institute or university for any degree.

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 INDEX
NO. PARTICULER PAGE
NO.

1 INDUSTRY OVERVIEW

➢ INTRODUCTION 7

➢ HISTORY OF TEXTILE INDUSTRY 15

➢ CURRENT SCENARIO FOR TEXTILE INDUSTRY 20

➢ LATEST NEWS IN TEXTILE INDUSTRY 23

➢ POLYESTER INDUSTRY 25

➢ PER CAPITA CONSUMPTION 28

2 COMPANY OVERVIEW

➢ INTRODUCTION 31

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 ➢ HISTORY 32

➢ ACTIVITY OF COMPANY 34

➢ ACHIVEMENT OF COMPANY 35

➢ GENERAL INFORMATION OF COMPANY 36

➢ CATEGORIES OF SHAREHOLDERS 38

➢ ORGANIZATION STRUCTURE 39

3 RATIO ANALYSES

➢ IMPORTANCE 41

➢ LIMITATION 43

➢ UTILITY OF RATIO 45

4 CALCULATION OF RATIO ANALYSES 47

5 FINDING & SUGGESTION 62

6 ANNEXURE 71

7 BIBLOGRAPHY 65

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7
 Introduction of
TEXTILE Industry

8
 Definition of Textile
“Pertaining of weaving or to woven fabrics; as textile arts;
woven, capable of being woven; formed by weaving; as textile
fabric.”

“Descriptive of textiles as defined of the raw materials,

process, machinery, building, craft, technology, personnel used
in, and the organizations and activities connected with their
manufacture.” A Latin word originated from texere , it means “to
weave”. Any cloth or fabric made by weaving or knitting.”

Indian Textile Industry

Textile is one of the India’s largest industries after
agriculture. It provides direct employment to about 350 lacks
people.

Besides this, there are a large number of ancillary industries,

which are dependent upon this sector such as manufacturing
various machines, accessories, stores, ancillary item and
chemicals. Known globally for its skill and craftsmanship, the
Indian textile industry from soaring to the height it is capable, but
this is expected to change post January 2005, as the quota
restriction have been removed.

Textiles covers the following sub-segment: - 1) Fiber

intermediates; P-X, DMT, PTA, MEG, Caprolactum, Wood pulp etc.
2) Fibers: ginning and pressing of cotton manufacture of PFY, NFY,
Rayon fiber etc. 3) Synthetic fiber/filament processing vise,
drawing, texturising, twisting etc. 4) Yarn: spinning cotton &

9
blends on rotors and ring frames. 5) weaving/Knitting. 6)
Processing and 7) Distribution.

The Indian textile industry is large and divers, unique for its
coverage of the entire gamut of activities ranging from production
of raw material to providing the consumers high value added
products, such as fabrics and garments. The key segment of
Indian textiles are divided into Fiber, Yarn, Fabrics and made-ups.
The multi- fiber base of Indian textile comprise natural fibers from
polyester, viscose, acrylic, polypropylene and nylon. Though
primarily cotton based textile industry has a growing polyester
sector and is active in processing linen wool and silk.

TEXTILE INDUSRY

The textile industry occupies a unique place in our country.

One of the earliest to come into existence in India. It accounts
for 14% of the total Industrial production, contributes to
nearly 30% of the total exports and is the second largest
employment generator after agriculture.

Textile industry is providing one of the most basic needs of

people and the holds importance; maintaining sustained growth
for improving quality of life. It has a unique position as a self-
reliant industry, from the production of raw materials to the
delivery of finished product, with substantial value-addition at
each stage of processing; it is a major contribution to the
country’s economy.

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 Its vast potential for creation of employment opportunities in
the agriculture, industrial, organized and decentralized sectors &
rural and urban areas, particularly for women and the
disadvantaged are noteworthy.

Although the development of textile sectore was earlier

taking place in terms of general policies in recognition of the
importance of this sector, for the first time a separate policy
statement was made in 1985 in regard to development of textile
sector. The textile policy of 2000 aims at achieving the
target of textile and apparel exports of US $50 billion by
2010 of which the share of garments will be US $25 billion.
The main market for Indian textile and apparel are USA,
UAE, UK, Germany, France, Italy, Russia, Canada.
Bangladesh, Japan.

The main objective of the textile policy 2000 is to provide

cloth of acceptable quality at reasonable price for the vast
majority of the population of the country, to increasingly
contribute to the provision of sustainable employment and the
economic growth of the nation; and to compete with confidence
for an increasing share of the global market.

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 -:Animal Sources Fibers:-

WOOL
Sheep are the primary source of wool in military textile.
Wool consists mainly of a protein called keratin. This is made up
of amino acids. Keratin contains 3 – 4 % sulfur which is an insect
attractant. Wool fibers absorb more moisture and accept dyes
better than vegetable fibers. Wool is not a strong fiber and
weakens considerably when wet.

SILK

Silk is an animal (insect) fiber that is derived from the

cocoon filament of the silkworm (Bombay mori). Because it is
basically protein, silk is easily affected by alkalis and various
inorganic acids. Like wool, it easily absorbs moisture and will take
dyes readily. These dyes, however, are not as light-fast as those
on wool. Silk is as strong as a steel wire the same diameter but is
very light sensitive. Therefore, it will break down faster than wool

12
when exposed to ultra –violet rays. The most commonly
encountered military artifacts composed of silk are scarves,
medal ribbons and escape maps.

-: Vegetable Source Fibers:-

COTTON
Cotton is a vegetable fiber derived from lint on the cotton
seed. It can survive in moderate alkaline condition but is
adversely affected by acids. Cotton does not transmit moisture
like linen and is very absorbent in its processed state. It is this
characteristic clock wise twist ; for this reason , it is commonly
spun in a ‘Z’ twist.

LINEN
Linen is a spun and woven vegetable-based fiber derived
from flax stalks and branches. Linen fiber lie close together and
are durable. They withstand moderate alkaline condition because
13
of their cellulose content, but are readily affected by acids.
Moisture easily passes through the fiber of linen, causing in the
overall strength. Linen does not take dye well and is usually left in
a blenched or unclenched white state.

Agents of Deterioration
All textile are deteriorated by light ,insect, microorganism,
and air pollution. Which alone or together , causes considerable
loss of tensile strength and pliability. The oxygen on the
atmosphere affect all organic substance to varying degrees.
Prolonged exposure to normal atmospheric condition will cause
textiles to weaken and disintegrate. The speed of the
deterioration varies according to environment and the nature of
the fibers . the main factors that promote the decay of textile can
be categorized into three groups.

ORGANIC
All organic source textile are subject to attack by molds,
mildew and bacteria. The environment that favor the the growth
of these organism are as damp heat, stagnant air, and dirty
storage conditions. Animal source textiles are particularly
susceptible to attack by insect and rodents.

PHYSICAL
Excessive heat causes desiccation and Embrittlement;
exposure to ultra violet light causes a type of deterioration known
as “tendering,” as well as the photochemical degradation of
susceptible dyes. Environment that are too damp or too dry can
lead to mold growth or desiccation of a textile. Improper handling

14
or storage can cause stress on the fabric which leads to tearing or
separation.

CHEMICAL
Exposure to gases from adhesives or paints can cause
tendering. In some cases, these gases are converted to acids, a
primary cause for the deterioration of some textiles. A coat of
paint or layer of adhesives in a display case for example, may
produce fumes or “off gas” for months after it appear to be dry. In
larger cities, air pollution may be a serious threat to textile as well
as human health.

Traditionally, the textile industry is very energy, water, and

chemical intensive. About 60% of the energy is used by dyeing
and finishing operations. Environment problems associated with
the textile industry are typically those associated with water
pollution. Natural impurities extracted from the fiber being
processed along with chemical used for processing are the two
main sources of pollution. Effluents are generally hot, alkaline,
strong smelling and colored by chemicals used in dying process.
Some of the chemical discharged are toxic. Other environment
issue now considered equally important and relevant to the
textile industry includes air emissions, notably volatile organic
compounds (VOC).

• HOW TEXTILE INDUSTRY CAN HELPFUL TO INDIAN

ECONOMY:

The textile industry has been one of the oldest and most
important sectors of the Indian economy. It is the second largest
employment provider in the country next to agriculture. It
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contributes to almost one third of foreign exchange earnings,
contributing to 3% of the GDP. India has also been a significant
player in the Global Textile markets. It is the third largest
producer of cotton, the largest producer of jute, the second
largest producer of silk and 5th largest producer of synthetic
fiber/yarn. India’s export of textile and readymade garments grew
by 10% in 2001-2002 and now stand at over $14 billion. Export of
synthetic of synthetic and rayon textile rose by 23%. There has
also been a remarkable increase in export of polyester/viscose
yarn by more than 35%, polyester yarn by 9% and polyester spun
yarn by 28%. During this period, polyester filament fabrics
increased registered an 18% growth and polyester-viscose fabrics
increased by 10%.

The handicrafts of India have a huge market in the U.S. The

traditional specialized arts and crafts of India like textile, metal
craft, and wood craft are imported on a large scale and are
acclaimed for their finesse and elegance.

History of Textile Industry

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 The textile industry, with its extremely long and rich history,
has had a massive impact on the world economy and the very
evolution of modern society. Weaving is believed to be one of the
oldest surviving crafts in the world today, the actual origins of
which are thought to date back to Neolithick times 12,000 years
ago. Even before that same principle was used to interlace
branches and twigs to form protective fences, shelters and
baskets. Once the Practicality of interlacing these kinds of
materials probably produced the first basic fabrics and cloths.

The history of textile is almost as old as that of human

civilization and as time moves on the history of textile has further
enriched itself. In the 6th and 7th century BC, the oldest recorded
indication of using fiber comes with the invention of flax and wool
fabric at the excavation of Swiss lake inhabitants. In India the
culture of silk was introduced in 400AD, while spinning of cotton
traces back to 3000BC. In China, the discovery and consequent
development of sericulture and spin silk method got initiated at
2640BCwhile in Egypt the art of spinning linen and weaving
developed in 3400BC. The discovery of machine and their
widespread application in processing natural fiber was direct
outcome of the industrial revolution of the 18th and 19th centuries.
The discoveries of various synthetic Fiber like nylon created a
wider market for textile products and gradually led to invention of
new and improved sources of natural fiber. The development of
transportation and communication facilitated the path of
transaction of localized skills and textile art among various
countries.

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 ➢ Early spinning

There seems little doubt that one of the earliest textile

fibers available for spinning into yarn and then weaving into cloth
was wool from sheep. The two stage spinning process requires
that a fleece is opened to form a silver of fibers which can be
drawn out to Produced an increasingly fine thread. This is then
twisted to form a yarn. Our early ancestors probably twisted a few
fibers from a lock of wool to form an extending length of yarn,
which would be wound into a ball. At a later stage the yarn was
would on to a stick and a simple flywheel added at the lower end
to produce a spindle. From this the spinning wheel developed,
invented first in India and then reaching Europe Some Time in the
late 14th century

➢ The First Loom

The first “loom” is thought to have been something as
simple as the straight branch of a tree running reasonably parallel
to the ground. The lengthwise warp threads were hung from this,
weighted at their lower ends and the weft threads interlaced to
form a very rough cloth. A framework later replaced the tree
branch to from a vertical loom, as used by the ancient Greeks,
which was then switched to a horizontal orientation. The ancient
Egyptians are said to have invented the shuttle for holding the
weft and to have attached the warp threads to two sticks in order
to part the threads so that the shuttle could pass through.

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➢ Mechanization

For centuries both the spinning and weaving processes were

traditionally carried out by hand in the home on a cottage
industry basis-weaving by men and spinning by women(hence the
term “spinster”). The impetus for a major reorganization in textile
production came in the 1700s as inexpensive, good quality
textiles, imported from India and the Far East, gradually began
replacing European goods in international markets. The need was
to increase domestic production and lower costs by substituting
the laborious hand processes for more efficient machine
operations. Many
Important invention took place during this period, often having
important spin-off effects on other parts of the overall process of
manufacture.
In 1733 John Key of Bury, England, introduced his “Flying
Shuttel” which speeded up the weaving process so much that
output was often doubled. The problem was that the supply of
yarn from the spinners was sufficient to keep pace with the
increase in production. The first improvement to the early
spinning machines came in 1737 when Lewis Paul and John Wyatt
invented the roller method of spinning which made the spinning
of yarn possible without having to work it with the fingers.
It 1764, A Blackburn weaver and Carpenter, James
Hargreavers invented the famous spinning jenny which by 1766
had been improved to accommodate up to 100 spindles and so
vastly accelerated the spinning operation. This was followed by sir
Richard Arkwright’s spinning Frame, Which was powered by water
and became known as the water Frame. Soon After in 1779 came
the spinning Mule, Invented by the spinner Sumuel Crompton
from Bolton, Combining the features of both the spinning jenny

19
and the water frame. The advances in spinning technology led in
turn to a bottleneck in weaving, as yarn was now being produced
much faster than it could be woven. The solution was to harness
steam power to drive the looms and it was Edward Cartwright, an
Anglican clergyman, who worked out how to do this. By the mid
1780s he had produced the first steam powered loom.

• Industrial revolution
The mechanization of spinning and weaving led to radical
changes in the organization of the textile industry. Much of the
new machinery was too large and expensive to be run in a
domestic environment and the advent of steam power meant that
factories and mills sprang up near the coalfields in the northern
England counties of Yorkshire and Lancashire – a period which
marked the end of the cottage industry and the start of the
industrial revolution.

The industrial revolution brought massive social and

economic change to people’s lives and to the traditional
handworkers was seen as a threat to their very livelihood. They
felt anger and resentment they feared - feelings which were
exacerbated by a time of deep economic recession following the
Napoleonic wars. The potential for violence turned into physical
attacks on the mills and factories Between 1811 – 1813 when
workers known as luddites began to smash the machinery they
blamed for their troubles. Yet the process of industrialization went
on unabated and there were further developments in the textile
industry with the introduction of the jacquard loom for weaving
intricate patterns and experimentation with synthetic dye – stuffs.

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By the mid 19th century Britain was leading the way as the
greatest textile manufacturing country in the world.

• Hopton Mills
The location of interface fabrics’ manufacturing plant in a
picturesque valley near Mirfeld is steeped in textile history. It was
the Wheatley family who arrived in the valley early in the 16th
century to begin their trade as clothiers and who built the oldest
part of the current premises in 1812 as a totally vertical textile
mill. But it was young Henry Wheatley who founded the company
Henry Wheatly and sons in 1790 and who pioneered the
manufacture of a superb range of ladies’ apparel fabrics in
cashmere and other rare fibers. The business developed within
the cycles of the textile industry through the industrial revolution
until the family sold the business in 1964. John Wheatley bell and
his son David Wheatley bell are the 6th and 7th generation of the
family business; they are still landowners in the valley and are
shareholders in the Hopton Estaes.

Interface fabrics – or more accurately Camborne fabrics as

the company was previously known - first became associated with
Hopton mills in 1980. At this time david Wheatley Bell, using his
initiative to keep the mill productive, sold his looms to Hopton
weavers let, who then moved to hopton mills and became tenants
of Henry Wheatley & song. Hopton weavers operated as
commission weavers and they began to undertake some of
Camborne’s weaving, with some of the company’s finishing being
handled by Henry Wheatley’s finishing department which was
under-utilized. This relationship continued until august 1984 when
the parent company, Allied textiles, decided that the mill no
longer fitted into its corporate plan and Camborne were able to

21
purchase the freehold site and buildings. Camborne’s ownership
of Hopton mills was the company’s first experience of direct
involvement in weaving and cloth finishing.

Current Scenario for Textile

Industry

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 Developing countries with both textile and clothing
capacity may be able to prosper in the new competitive
environment after the textile quota regime of quantitative
import restrictions under the multi-fiber arrangement
(MFA) came to an end on 1st January, 2005 under the world
trade organization (WHO) Agreement on Textiles and
Clothing.

As a result, the textile industry in developed countries will

face intensified competition in both their export and domestic
market. However, the migration of textile capacity will be
influenced by objective competitive factors and will be hampered
by presence of distorting domestic measures and weak domestic
infrastructure in several developing and least developed
countries.

The elimination of quota restriction will open the way

for the most competitive developing countries developing
countries to develop stronger clusters of textile expertise,
enabling them to handle all stages of the production chain
from growing natural fibers to producing finished clothing,
the OECD paper says that while low wages can still give
developing countries a competitive edge in world markets, time
Fectors now play a far more crucial role in determining
international competitiveness. Countries that aspire to
maintain an export-led strategy in textile and clothing
need to complement their cluster of expertise in
manufacturing by developing their expertise in the higher
value-added service segments of the supply chain such as
design, sourcing or retail distribution. To pursue these
avenues, national suppliers need to place greater
emphasis on education and training of services-related
skills and to encourage the establishment of joint

23
structures where domestic suppliers can share market
knowledge and offer and more integrated solutions to
prospective buyers.

The textile industry is undergoing a major reorientation

towards non-clothing applications of textiles, known as technical
textile, which are growing roughly at twice rate of textile for
clothing applications and now account for more than half of total
textile production. The processes involved in producing technical
textile require expensive equipments and are, for the moment,
concentrated in developed countries. Technical textile have many
applications including bad sheets; filtration and abrasive
materials; furniture and healthcare upholstery; thermal protection
and blood-absorbing materials; seatbelts; adhesive tape, and
multiple other specialized products and applications. India must
take adequate measures for capturing its market by promoting
research and development in this sector.

The mood in the Indian textile industry given the phase-out

of the quota regime of the multi-fiber arrangement (MFA) is
upbeat whit new investment flowing in and increased
orders for the industry as a result of which capacities are
fully booked up to April 2005. As a result of various initiatives
taken by the government, there has been new investment of
Rs.50, 000 Crore in the textile industry in the last five
years. Nine textile majors invested Rs.2, 600 crore and
plan to invest another Rs.6, 400 crore. Further, India’s
cotton production increased by 57% over the last Five
years; and 3 million additional spindles and 30,000
shuttles-lees looms were installed.

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 The industry expects investment of Rs.1, 40,000 crore in this
sector in the post-MFA phase. A vision 2010 for textile formulated
by the government after intensive interaction with the industry
and export promotion councils to capitalize on the upbeat mood
aims to increase India’s share in world’s textile trade from
the current 4% to 8% by 2010 and to achieve export value
of US $ 50 billion by 2010 vision 2010 for textiles
envisages growth in Indian textile economy from the
current US $ 37 billion to $ 85 billion by 2010; creation of
12 million new jobs in the textile sector; and
modernization and consolidation for creating a globally
competitive textile industry.

There will be opportunities as well as challenges for the

Indian textile Industry in the post-MFA era. But India has
natural advantages which can be capitalized on strong raw
material base –cotton, man-made fibers, just, silk; large
production capacity (spinning – 21% of world capacity and
weaving – 33% of world capacity but of low technology); vast pool
of skilled manpower; entrepreneurship; flexibility in production
process; and long experience with US/ED (European Union). At the
same time, there are constraints relating to fragmented industry,
constraints of processing, quality of cotton, concerns over power
cost, labor reforms and Other Infrastructural constraint and
bottlenecks.

Further, for the benefit of exporters, there should be a state-

owned cargo shipping mechanism. Several initiatives have
Already been taken by the government to overcome some of
these concerns including rationalization of fiscal duties;
technology up gradation through the technology Up gradation
Fund scheme (TUFS); setting up of Apparel parks; and
liberalization of restrictive regulatory practices.

25
 Shri Kamal Nath, Uninon Minister of commerce & industry,
has said that India will take up the issue of non-tariff barriers
(NTBs) in the world Trade Organization (WTO) Doha round of
multilateral trade negotiations, which are expected to
gather steam from march 2005 onwards.

On the eve of republic day president Kalam said that. “India is

presently exporting six billion U.S. Dollars worth of garments,
whereas with the WTO regime in place, regime in place, we can
increase the production and export of generation of 18 to 20
billion U.S. dollars within the next five years. This will enable
generation of employment in general and in rural areas in
particular. By tripling the export of apparels, we can add more
than 5 million direct jobs and 7 million indirect jobs in the allied
sector, primarily in the cultivation of cotton. Concerted efforts are
needed in cotton research, technology, transfer of technology,
modernization and upgrading of ginning and an aggressive
marketing strategy.”

Latest News in Textile Sector

1 Ministry of finance has added 165 new textile products under

duty drawback schedule. The new products included wool
tops, cotton yarn, acrylic yarn, viscose yarn, various blended
yarn/fabric, fishing nets etc. Further, the existing entries in
the drawback scheduled relating to garment have been
expanded to create separate entries of garment made up of
(1) cotton; (2) manmade fiber and (3) MMF.

26
2 After the phasing out of quota regime under the multi-fiber
pact, India can envisage its textile sector becoming $ 100b
industry by 2010. This will include exports of $ 50b. The
proposed targets would be achieved provided targets would
be achieved provided reforms are initiated in textile sector
and local manufacturers adopt measures to improve their
competitiveness. A 5-pronged strategy aiming to attract FDI
by making reforms in local market, replacement of existing
indirect taxes with a single nationwide VAT, liberalization of
contract norms for textile and garments units, elimination of
restrictions that cause poor operational and organizational
performance of manufacturers, was suggested.
3 The union minister Shankarsinh Vaghela said that the Board
for Industrial and Financial Reconstruction (BIFR) had
approved rehabilitation schemes for sick NTC mills at a cost
Rs.3, 900 crore. Of the 66 mills, 65 unviable mills have been
closed after implementing voluntary retirement scheme
(VRS) to all employees. According to him, the government
has already constituted assets sale committees comprising
representatives of Central and state governments, operative
agency, BIFR, NTC and the concerned NTC subsidiary to
effect sale of assets through open tender system.
4 Proposals for modernization of NTC mills have been made to
the consultative committee members, including formation of
a committee of experts to improve management of these
mills. Even the present status of jute industry was under the
scanner of the consultative committee.
5 The government had announced change from the value-
based drawback rate hitherto followed to a weight-based
structure for textile exports that will discourage raw material
exports and also curtail the scope for misusing the drawback
claims by boosting value of exports.

27
6 NCDEX launched its silk contract (raw silk and cocoon) on
Thursday, January 20, 2005. With this launch, the total
number of products offered by NCDEX goes up to 27. The
launch of the silk contract will offer the entire suite of fibers
to the entire value chain ranging from farmers to textile
mills. With the objective of protection the interests of those
affected but WTO agreements and globalization process,
government of India jointly with NCDEX has adopted a policy
of encouraging future contract of silk. The ministry of textile
and the central silk board (CSB) had decided to introduce
futures trading in mulberry cocoons and raw silk on NCDEX.
The basic purpose is to mitigate the risk associated with the
changing prices through an efficient price discovery
mechanism. Futures trading on the NCDEX will provide an
alternative trading avenue for farmers, weavers and traders
and help them make a better price discovery for their
produce. It will also help them to reduce risks associated
with price volatility through hedging CDEX. The basic
purpose is to mitigate the risk associated with the changing
prices through an efficient price discovery mechanism.
Futures trading on the NCDEX will provide an alternative
trading avenue for formers, weavers and traders and help
them make a better price discovery for their produce.

28
 Polyester Industry

Due to population explosion, the growing demand for

clothing need of people cannot be met by natural fibers like
cotton alone because of the limited availability. Thus, man-made
fiber has a crucial role to play and therefore, India market is fast
gearing up to replace cotton by polyester cloth and synthetic
fabrics. Polyester is the only fiber that will be able to address the
global demand growth for fabric because:

Arable land for cotton production is limited. Output of cotton

fiber depends upon monsoon & other factors. 100% Polyester
fabric is in fashion due to bright colors.

Post January 2005 scenario, cotton yarn exports are

expected to increase thus reducing its availability in the domestic
markets. The increase in cotton yarn exports will leave more
space for polyester in the domestic markets. Polyester products
and its blends have emerged as the ‘fiber or mass consumption’
because of its versatility, good process ability, environment
friendly properties and comparative cost effectiveness. As a
result, demand for synthetic fibers/yarns derived from
petrochemicals is increasing.

Advantages of Polyester Vis a-Vis Cotton

For some years now, polyester has been eating into cotton’s
share of the market, bringing it down from 68% in 1992-93 to
49% in 2002-03. As per the CRIS INFAC annual review report on

29
Man Made Fiber - November 2003, this trend is likely to continue
because:

1) Domestic Markets Follow International

Trends:
Domestic markets trend generally follow the
international markets. In 2002, around 55% of the fiber
consumption in the global markets was in the form of
synthetic, followed by cotton and cellulosic at 38% and 5%
respectively. By contrast, the share of synthetics in the
domestic markets was 47%, with cotton at 49% and
cellulosic at 4% in 2002-03.

2)Limited Cotton Production Growth in the

Domestic Markets:
India is among the top three cotton-producing countries.
However, as per the estimates
of CRIS INFACE, domestic cotton production will increase only
marginally in the medium term, given the historical crop data –
cotton production over the past decade has increased at a mere
1.3% CAGR, with relatively stable average yield levels. Acreage
for cotton production is limited and yield levels are expected to
increase only marginally.
Thus total production will only increase marginally. On the
other hand, among man-made fibers (synthetics and cellulosic),
polyester has shown the maximum growth in terms of production

30
and demand. Going forward, the capacity additions that are
scheduled in the medium term will ensure easy availability.

3)Increase in Cotton Yarn Exports Will Leave

More Space for Polyester in the Domestic
markets:
Cotton Tarn exports are expected to increase in the medium
term, especially after 2005, reducing its availability in the
domestic markets. India is amongst the largest exporters of
cotton yarn in the world. The increase in cotton yarn exports will
leave more space for polyester in the domestic markets.
4)Price-Competitiveness of Polyester to
Improve against Cotton Yarn:
Cotton yarn is expected to become even less price
competitive in comparison to polyester, with excise and
customs duties on polyester getting cut, and the price
differential between the two narrowing.

5)Healthy GDP Growth to Increase Purchasing

Power:
GDP growth helps in estimating the purchasing power parity
of a country.
CRIS INFAC estimates that India’s GDP will grow at a healthy
5-6 % in the next five years. The GDP growth has averaged 5.84%
form 1981-82 to 2002-03.
An average GDP growth of 5.5% is expected to give a 6.85 %
growth in fabric production. However, the relatively high elasticity

31
of demand could cause fluctuations in demand growth. Synthetics
are likely to grow at a higher rate, assuming that cotton crop
would continue to grow at a CAGR of 2.5%, as it has done for the
past 50 years.

Per Capita Consumption

1)India has a Long Way to go:

The average per capita consumption (PCC) of fabric in India
is much lower than in its neighboring countries. India has a huge
potential markets, given that its PCC is as low as 1.4 kg as
compared china (5 kgs), Pakistan (3 kgs) and Indonesia (5 kgs).
India has the advantage of large and growing domestic markets,
and a good GDP growth.

2)Rapid Urbanization - higher spend on clothing:

32
 Of the total domestic population, about 70% is rural.
Behavioral patterns suggest that of the fabric demand in this
segment is need-based. The urban demand, on the other hand, is
also driven by fashion trends, and favors more sophisticated
textile, and variety in designs and colors. The average urban
spend on apparel is higher them rural spend. However, over the
years, the clothing pattern in India has shifted. Man’s clothing
consumption has moved from the traditional cotton-based wear to
synthetic fabrics.

Cotton dhotis are giving way to trousers (mostly made of

polyester or polyester blends). Likewise, women are moving
from cotton saris to synthetic saris or Punjabi suits made of
synthetic.

3)Non-Apparel Segment to Drive Polyester

Demand:
In India, fiber is used mostly for apparel (93%), with demand
from the home textile, automotive and industrial segment
accounting for the remaining 7%. By contrast, worldwide, the
last three market segments account for 59% of end use. In
India, the demand from the non-apparel segment is in a growth
phase; it’s expected to grow at a high 20% per annum.
Polyester, given its high tenacity and strength, is the most
suitable fabric for these applications. Thus, demand for
polyester is expected to increase steeply from these segments.

• Unique Characteristics of Polyester Fiber Vis a

Vis Cotton Fiber
Polyester yarns is a substitute for cotton and other synthetic
yarns because of its numerous advantage: Properties: PFY is more
durable, done not fade on exposure to sunlight or soap, has

33
better abrasion resistance, drape and crease recovery properties,
and is wrinkly resistant. Hence, it is a preferred material for
synthetic fibers Improvements: Modifications in the properties of
PFY have allowed it to be used as a substitute for other natural
and synthetic fibers. Some of the disadvantages it had, such as
poor comfort and a dull appearance, have been overcome by
textile and the application of finishes during processing Price
competitiveness: Compared to other yarns, PFY prices are lower.
Some of the unique features of polyester fiber are:

• Strength
• Resistance to stretching and shrinking
• Resistance to most chemicals
• Quick drying
• Crisp and resilient when wet or dry
• Wrinkle resistant
• Mildew resistant
• Abrasion resistant
• Retains heat-set pleats and crease
• Easily washed

34
35
 Introduction Of
The Company

Garden Vareli group of companies, one of the leading

industrial groups in India, plays a leading role in the field of
fashion fabrics. With annual sales exceeding $ 90 million, they
sell their products under a single banner of quality ‘GARDEN’.

Garden Silk Mills Ltd. Is one of the leading & oldest

manufacturer of synthetic in India. Garden Silk Mills LTD. has
been export their product of European markets since late 1970s.
The company has made vertical and horizontal integration from
establishment.

The company has a three production plant s: one at village

Vareli, near kadodra junction, N.H.No.8, the second at village
Jolva, near Bardoli, and another at Garden Mills complex, Sahara
Gate, Surat. Today the company has total 293 its own retail and
authorized outlets all over in India.

The company has achieved a very good brand name in India

and International market of Sarees &Dress materials.

36
 History of The Company

The origins of the business go back to 1920 when Mr.

Amichand Shah installed the first Hattersley looms in Surat. Since
1920 the company expanded not only by increasing the
production capacity and workforce of the business but also by
pioneering new material and proceses.

The present Chairman and Managing director of Garden Silk

Mills Ltd. Mr. Praful Shah is the youngest son of Mr. Amichand
Shah. Mr. Praful Shah taken qualification in USA in 1965 after
which he joined the company, up to that date Garden Silk Mills
Ltd. had activities of the company to including processing cloth by
introducing Dyeing, Printing and Finishing processes. As a result
of this, the company was able to supply finished textile for the
first time.

In the 1970s, the company recruited fine arts graduates

from leading institutions. An art studio was set up. The company
started introducing its own design supplying these design to the
market. Prior to this, the design produced had been a function of
customer demand and from this manufacturer. This was the first
step in building a vertically integrated synthetic textile
manufacturer and designer.

This move in the early 1970s coincided with the opening of

the first retail shop in Surat. The extension of the policy of vertical

37
integration into the retailing sector had advantages of uniform
pricing, close market monitoring, improving communication
between manufacturer and consumer, and above all exerting
downward pressure on the final selling price. The dedicated retail
network now extends to some 293 authorized outlets.

In the late 1970s, the company started exporting its product

to European markets, given the size of the domestic market ; the
proportion of products that are exported remains low at
approximately two percent. The company is in the process of
further developing markets in Africa, Central and Eastern Asia.

In 1980, the company developed a new site Vareli, some 12

kilometers away from Surat. This has become the main
manufacturing plant and investment of more than Rs.2.0 billion
has been made. Most of this expenditure has been targeted at the
expansion and modernization of plant and equipment, particularly
in the weaving and yarn preparatory sections. As a result, the
Company today has one of the most modern and sophisticated
textile plants in India.

In 1995 the company had decided to further its policy of

vertical integration by setting up a new plant, also near Surat,
from which manufacturing of polyester filament yarn, one of its
principal raw-materials, from polyester chips, is going on. This
plant had become on stream at a cost of approximately 655
million rupees.

38
 Activities of the company

The company is primarily engaged in the manufacture of

synthetic textile, sarees and dress materials mainly made of
polyester yarns and certain intermediate products. Garden Silk
Mills Ltd. has been, and continues to be, the initiator of the
majority of new textile varieties woven and processed in Surat, is
at present, the consumer of approximately 50 percent of
polyester yarn in India. The company believes that designs are a
key factor in its market and used to produce some 200 different
printed designs each month.

The company`s lead in different and improved fabric

construction and the emphasis it places on design together with
its modern and efficient plant is key to its future success. The

39
company operates in a highly fragmented market where no
individual manufacture has a material market share. It is also the
leading integrated textile manufacturer house, which undertakes
all processes from yarn manufacture to the retailing of dress
materials and sarees .

The company, and its wholly owned subsidiary, Garden

Finance are also engaged in providing to the Indian corporate
sector trade and asset finance including the discounting of Bills of
exchange. The company also has a small engineering division,
which assembles a limited range of textile manufacturing
machines.

Achievements of the Company

The company was first to setup a polyester filaments

yarn project in South Gujarat. The project is capable of producing
multi-filament & micro-filament yarn having a capacity of 5000
Tons per annum in collaboration with NON-VAL LEASINA AG of
Switzerland. This project has a special significance for the
company, as polyester filament yarn is the basic raw material for

40
the product manufactured by the company. The company was
also first in producing of two-for-one Twister in India.

The company`s production facilities boast of one of India`s

most sophisticated textile plants at Vareli, Surat(Western
India).Its weaving plant comprising Nissan and Tsudakoma water
jet looms-the highest number of water jet looms under one roof in
India – and rapier looms, automatic shuttle change looms etc,
high-tech yarn preparatory machines, have a capacity of over 42
Lac meters/month of greige fabric. The plant has an ISO 9002
certification by BVQI. The company also markets high quality
dyed and printed fabrics that gets manufactured from associated
firms.

General Information of the company

• Board Of Director :-

Praful A. Shah
Chairman & Management

41
 Soly J. Bhesania
Wholetime Director

Harshad F. Shah
Wholetime Director

Shilpa P. Shah
Wholetime Director

Sanjay S. Shah
Wholetime Director

Rajen P. Shah

Arunchandra N. Jarivala

J.P.Shah

Alok P.Shah

Yatish Parekh

Sunil Sheth

Smita Shah

Madanlal Lankapati

Ravinder Singh
Nominee of IFCI Limited

42
• Company Secrerary
Kamlesh Vyas

• Auditor
Natvarlal Vepari & Co.
Chartred Accountants

• Bankers
Bank of Baroda
Allhabad Bank
State Bank of Saurashtra
Bank of India

• Registered Office
Garden Mills Compound,
Sahara Gate,
Surar-395010.

• Corporate Office
Manek Mahal,
90, Veer Nariman Road,
Mumbai-400020

• Plants
1. Garden Mills Compound, Sahara Gate, Surat
2. Village- Vareli, Ta- Palsana, Dist- Surat
3. Village- Jolva, Ta-Palsana, Dist- Surat.

43
 Categories of Shareholder

Category No. of Holding

Shares Strength

Held (%)
Promoters 1942391 50.73
Mutual Funds % UTI 3186803 8.32
Bank Financial Ins. & Insurance Co. 639757 1.67
FIIs (including foreign bank & GDR) 275682 0.72
Private Bodies Corporate 2141945 5.59
NRI`s/OCB`s 910433 2.38
Indian public 10248256 26.76
GDR 1360925 3.55
Others 102868 0.27
Total 38290560 100.00

44
45
46
47
48
 Ratio Analysis

A ratio refers to the establishments of relationship

between any two interrelated variables. Ratio analysis
stands for the process of determining and presenting the
relationship of items and group of items in the financial
statement.

Importance of Ratio Analysis

1. Useful in Financial position analysis : -

Accounting ratio revels the financial position of the
concern. This helps the bank, insurance companies and other
financial institution in lending and making investment decision.

2. Useful of simplifying accounting figures : -

Accounting ratios simplify summaries and systematic the
accounting figures in order to make them more under stable and
in lucid form. They highlight the inter-relationship which exists
between various segments of the business as expressed by
accounting statements.

3. Useful in assessing the operational efficiency : -

Accounting ratio will help to have an idea of the working of
a concern. The efficiency of the firm becomes evidnt when

49
analysis is based on accounting ratios. They diagnose the
financial health by evaluating liquidity.

4. Useful in Forecasting puposes : -

If accounting ratio are calculated for a number of
years, then a trend is established. This trend helps in setting up
future plans and forecasting.

5. Useful in locating the week spot of the buzz : -

Accounting ratio are of great assistance in locating the weak
spots in the business even though the overall performance may
be efficient. Weakness in financial structure due to incorrect
policies in the past or present are revealed through accounting
ratios.

50
 Limitation of Accounting Ratios

1. False result: -
Accounting ratio can be correct only if the data are correct.
Sometimes, the information given in the financial statement is
affected by showing position better than what actually.

2. No idea of probable happening in future:

-
Ratios are an attempt to make an analysis of the past
statement, so they are historical documents. Now-a-days keeping
in view the complexities of the business, it is important to have an
idea of the probable happening in future.

3. Variation in accounting methods : -

The two firms’ results are comparable with the help of
accounting ratio only if they follow the same accounting methods.
Comparison will become difficult if the two concern follow the
different method of providing depreciation or valuing stock.

4. Price level changes: -

51
 Changes in price level make comparison for various years
difficult. Because of rising prices fixed assets being shown at cost
and not at market price.

5. No common standards: -
It is very difficult to lay a common standard for comparison
because circumstances differ from concern to concern and nature
of each industry is different.

6. Different meaning assign to the same term: -

Different firms, in order to calculate ratio may assign
different meanings. This may effect the calculation of ratio
in different firms and such ratio when used for comparison
may lead to wrong conclusion.

7. Ignorance qualification factors: -

Accounting ratio are tools of quantitative analysis only. But
sometimes qualification factors may surmount the
quantitative aspects. The calculation derived from the ratio
analysis under such circumstances may get distorted.

52
 UTILITY OF RATIO ANALYSIS

1.PROFITABILITY:
Useful information about the trend of profitability is available
from profitability ratios. The gross profit ratio, net profit ratio and
ratioof return on investment give a good idea of the profitability
of business. On the basis of these ratio investors can get an idea
about the overall efficiency of managers and bank as well as
other creditors draw useful conclusion about repaying capacity of
the borrowers.

2. LIQUIDITY:
In fact, the use of ratios mode ascertain the liquidity of
business. The current ratio, liquid ratio and acid test ratio will tell

53
whether the business will be able to meet its current liabilities
and when they matter. Banks and other lender will be able to
conclude from these ratio whether the firm will be able to pay
regularly the interest and loan installments.

3.EFFICIENCY:
The turnover ratio are excellent guide to measure the
efficiency of manager for example, the stock turnover will indicate
how efficiency is being made the debtors turnover will indicate
the efficiency of collection department and assets turn over
shows the efficiency with which the assets are used in business.
Such ratio related to present a good picture of the success or
otherwise of the business.

4.INTER FIRM COMPARISON:

The absolute ratios of a firm are not of much use, unless
they are compared with similar ratio of other firm’s belongings to
the same industry. This is inter firm comparison, which shows the
strength and weakness of the firm as compared to other firms
and will indicate correctives measures.

5.INDICATE TREND:
The ratio of the last three to five years will indicate the trend
in the respective fields. For example, the current ratio of a firm is
lower than the industry average, but is the ratio of last five years
shows an improving trend, it is an encouraging trend reverse may
also be true. A particular ratio of a company for one year may
compare favorably with industry average but, if its trend shows a
deteriorating position. It is not desirable. Only ratio analysis will
provide this information.

6.USEFUL FOR BUDGETARY CONTROL:

54
 Regular budgetary report in a business whether the system
of a budgetary control is in use. It various ratios are presented in
these reports, it will give a fairly good idea about various aspect
of financial position.

7.USEFUL FOR DECISION-MAKING:

Ratio guides the management in making some of the
important decisions. Suppose, the liquidity ratio shows an
unsatisfactory position, the management may decide to get
addition liquid funds. Even for capital expenditure decisions, the
ratio of return on investment will guide the management. The
efficiency of various department can be judge on the basis of
their profitability ratios and efficiency of each department can
thus be determined.

DATA ANALYSIS

1)Gross profit ratio: -

This ratio establishes the relationship between gross profit

on sales and net sales terms of percentage indicating the
percentage of gross profit earned on sales.

55
 Gross Profit
Gross profit ratio = ------------------------ * 100
Net Sales

(Rs. In Lacs)
Year Gross profit Net Sales Ratio (%)
(a) (b) (a/b)
2008-09 16181.06 138475.35 11.70%
2007-08 18316.07 182338.89 10.05%
2006-07 12073.95 107923.89 11.19%

Interpretation: -
Gross profit of the company is increasing day by day. It is
increase to 11.70% in 2008-09 as compare to 2007-08 is 10.05%
but 2007-08 ratio is decreases as compare the 2006-07i.e.
11.19%.
2). Net Profit Ratio
This ratio establishes the relationship between the amount
of net profit or net income and the amount of sales revenue.

Net profit

Net profit ratio=___________ * 100

Net sales

Ye Gross profit Net sales Ratio (%)

ars
(a) (b) (a/b)

56
2008-09 4958.47 138475.35 3.58%
2007-08 4000.37 182338.89 2.19%
2006-07 2210.45 107923.89 2.05%

Interpretation
The Net profit of the company is increasing day by day. It is
increase to 3.58% in 2008-09 as compared to previous year i.e.
2007-08 ratios is 2.19% and 2006-07 i.e. 2.05%

3). Return on Assets ratio

Net Profit

Return on Assete ratio = _________ * 100

Total assets

Years Net profit Net assets Ratio (%)

(a) (b) (a/b)

2008-09 4958.47 56073.42 8.84%
2007-08 4000.37 52418.31 7.63%
2006-07 2210.45 27726.65 7.96%

57
Interpretation
If company in 2008 the return on assets ratio is 7.63 and
now in current year 2008-09 the return on assets ratio is 8.84%.
Here the diff. both years is 1.21. In 2008-09 this ratio is inc. as
compare to preavouse year the value is 1.21. So the company
increasing the profit as compare to 2007-08.And the compare to
2007-08. And the companies get profits very will 2008-09.

4). Return on equity ratio

Net Profit

Return on equity ratio = __________ *100

Total equity

Years Net profit Total equity Ratio (%)

(a) (b) (a/b)

2008-09 4958.47 45512.27 11.40%

2007-08 4000.37 39225.77 10.20%
2006-07 2210.45 34243.37 6.45%

Interpretation
In the company total equity is invest in current
year and then finished the financial year in 31st march at the time
company the find out the invested equity is the equity as a totally
get in by this year and the diff. between total equity and balance
sheet equity is both are same so company get the result is no

58
profit no loss but inc. the equity in current year value so,
company get profit.

5). Current ratio

The current ratio establishes the relationship between the
current assets and the current liabilities. The ideal ratio is 2:1.

Current Assets

Current ratio = ____________

Current liabilities

Years Current assets Current lia. Ratio

(a) (b) (a/b)

2008-09 56073.42 26225.81 2.14
2007-08 52418.31 19676.56 2.66
2006-07 27726.65 12037.62 2.30

Interpretation
In last three year the current ratio is 2.14 to 2.66 which was
very good for the company but the last year it was 2.14 while it
the 2007-08 i.e. 2.66. So, company should take corrective action
for increase the ratio.

6). Quick ratio

Current assets – inventory

Quick ratio = ------------------------------

59
 Current liabilities – B.O.D

Years Curr. Ass.- Curr. Ratio

inve Lia.B.O.D
(a/b)
(a) (b)
2008-09 34318.31 26335.81 1.30
2007-08 33842.42 19676.56 1.72
2006-07 18018.57 12037.62 1.49

Interpretation
In the three year the quick ratio is between 1.30 to 1.72
which was higher than 1:1 and it is satisfactory but in the last
year it was 1.30 while it was highest in the 2007-08 I.e.1.72. So
company should take corrective action for inc. the ratio.

7). Assets turnover ratio

Net sales

Assets turnover ratio =--------------------

Total Assets

Years Net Sales Total Assets Ratio

(a) (b) (a/b)

2008-09 138475.35 56073.42 2.46
2007-08 182338.89 52418.31 3.47

60
2006-07 107923.89 27726.65 3.89

Interpretation
In 2008-09, total assets turnover ratio was 2.46 times, which
implies that company has generated 2.46 of sale for 1 rupees
invested in fixed and current assets tighter and highest ration
3.89 times which implies that the company has generated sales
of only 3.89 sales for every 1 rupees invested.

8). Inventory turnover ratio

Cost of goods sold (sales+income-G.p)

Inventory turnover ratio = ---------------------

Ending inventory

Years Cost of goods Ending inven. Ratio

sold (a)
(b) (a/b)
2008-09 1229999.15 31755.11 5.65
2007-08 165407.61 18575.89 8.9
2006-07 96383 9708.08 9.92

Interpretation

61
 Here inventory turnover ratio in 2008-09 is 5.65 timing
while in the years 2007-08 is 8.9 times which is near to 2006-07
ratios i.e. 9.92. but in the year 2008-09 are 5.65 times which is
less year of 2007-08 and 2006-07 show less effective utilization of
inventory.

9). Debt equity ratio

Debt

Debt equity ratio = -------------------

Equity

years Debt (a) Equity (b) Ratio (a/b)

2008-09 90397.23 43512.27 2.07
2007-08 80214.80 39225.77 2.04
2006-07 63907.86 34243.37 1.86

Interpretation
In last three year the debt equity ratio is between 1.86 to
2.07 which shows that the clime of creditor of creditor are less
than that of owners but the climes of creditors is inc. in the last
three year.

62
10). Debt total assets ratio
Debt

Debt Total assets ratio =------------------- *100

Total assets

Years Debt Total assets Ratio

(a) (b) (a/b)

2008-09 90397.23 56073.42 1.61
2007-08 80214.80 52418.31 1.53
2006-07 63907.86 27726.65 2.30

Interpretation:

Here debt total assets ratio in 2008-09 is 1.61 for this

ratio is very less as compare to 2006-07 is 2.3. This shoes
repayment of debt and effective utilization of total assets.

11). Equity ratio

Equity

Equity ratio =----------------*100

Total assets

Years Equity Total assets Ratio

63
 (b)

(a) (a/b)
2008-09 3829.06 56073.42 6.82
2007-09 3829.06 52418.31 7.36
2006-07 3829.06 27726.65 13.81

Interpretation:

Here equity ratio is day by day dec. this ratio measures

the relationship between equity and assets. Where 2008-09 year
ratio is 6.82 is lowest in business then highest ratio is 13:81 in
2006-07 year.

12). Time interest earned

E.B.I.T

Time interest earned =-------------------

Interest

Years E.B.I.T (A) Interest (b) Ratio (a/b)

2008-09 16181.06 4698.15 3.44
2007-08 18316.07 5702.01 3.21
2006-07 12073.95 4020.11 3.01

64
Interpretation:
Here is time interest earned ratio is 2008-09 ratio
is 3.44 time is always inc. as compare the previous year. So this
ratio is favorable is the previous year. It means the company as
enough profit to pay interest earned.

13). Earning per share

Net profit

Earning per share = -------------------

No. of share

Years Net profit No. of share Ratio

(a) (b) (a/b)

2008-09 4958.47 382.90 12.90
2007-08 4000.37 382.90 10.45
2006-07 2210.45 382.90 5.77

Interpretation:
Among all these year in 2008-09 has highest earning
per share. And it is very good for the 2008-09 year other
year is very poor with the comparing of previous year.

65
 14). Dividend par share
Dividend

Dividend par share = -------------------

No. of share

Years Dividend No. of Ratio

share
(a) (a
(b /b)
)
2008- 671.87 382.90 1.76
09
2007- 671.97 382.90 1.76
08
2006- 654.92 382.90 1.71
07

Interpretation:
This ratio indicates what percentage of the firm
earning. In this ration is how mane dividend on the per equity
share. 2008-09 and 2007-08 is same ratio 1.76 that is the higher
them as compare to the year of 2006-07 i.e.1.71. So basically
ratio is inc. continually.

15). Debtor turnover ratio

Debtor

66
 Debtor turnover ratio = ---------------- *365

Credit sales

Years Debtor Credit sales Ratio

(a) (b) (a/b)

2008-09 6747.31 138475.35 17.78
2007-08 10490.29 182338.59 21.59
2006-07 4844.93 107923.89 16.38

Interpretation:
Debtor turnover ratio is also known as receivables
turnover ratio it is relationship between the net credit sales of the
year and debtors turnover ratio was 16.38timea in 2006-07.
Which shows speedy collection of money but it was lower in 2007-
08 i.e. 21.59.so company corrective measures.

67
68
 FINDING

 In last three year the current ratio is between 2.30% to

2.14% which were very good for company.

 In last three, the claim of creditors are less than that of

owner, but the claims of creditors is decrease in last year.

 The earnings per share ratio were almost during last four
year.

 In last three years the net profit is between 2.05% to 3.58%

which was very good for the company.

 In last three year, the return on equity ratio is between

6.45% to11.40%, which was very good for the company.

 Debt equity ratio is determining to a certain the soundness

of long term financial policy of the company. In case the
ratio is lower than 1.

 Debtor turnover ratio is also known as receivable turnover

ratio this ratio is lower so, take should corrective measures.

69
 Suggestion

 In last year, the current ratio was 2.14%, while it was highest
in 2007-08 i.e. 2.66%, so company should take corrective
action for increase the ratio.

 In last, quick ratio was 1.30% while I was highest in 2007-08

i.e. 1.72% so company should take corrective action for
increase the ratio.

 The assets turnover ratio in 3.89% was highest and decline

day by day. So company should take care to increase ratio.

 As far as cash management is concerned , cash inflow is

efficiently undertaken, but improvement in cash outflow i.e.
payment and disbursement of cash requires considerable
attention.

 Company should try to increase the debt equity ratio.

70
71
72
Comparative Profit & loss A/C for the year ended
31st march, 2008-09

(Rs. In
lacs)

Particulars 2008-09 2007-08 2006-07

Income

Sales & job charges 138475.3 182338.8 107923.8

5 9 9
Less : Excise Duty on Sales
5314.52 14711.19 12437.94
133160.8 167627.7 95485.95
Income from Financial Operation 3 0
Other income 9.00 106.00 64.00

696.66 1278.79 469.06

Total 133866. 169012.49
96019.0
49 1

73
Expenditure

Consumption of RM 93031.96 123242.8 62771.75

3
(Increase)/ Decrease in Stock (829.01) 1219.76
(4440.31)
Purchases 1099.62 1299.29
4447.02
Excise Duty 160.51 160.51
160.51
Mfg.& Other Expenses 24382.86 20933.27
27446.88
Total 117685. 150696. 83945.0
43 42 6
Profit before Financial 16181.06 18316.07 12073.95
charges, Dep. &Tax
4698.15 5702.01 4020.11
Less : Financial Charges(Net)
Profit before Dep. &Tax 11482.91 12614.06 8053.84

Less : Depreciation 4483.60 5740.12 4866.13

Profit before Tax 6999.31 6873.94 3187.71

Less : Provision for

Current Tax 762.15 760.03 65.00

Wealth Tax ---- ---- 10.00

Deferred Tax 1233.69 2058.54 842.26

Fringe Benefit Tax 45.00 55.00 60.00

Profit after tax 4958.47 4000.37 2210.45

Add : Balance B/F 7850.84 5842.44 2882.91

74
 Tran From debenture 1125.00 0.00 ----
redemptions reserve
Balance for Appropriation 13934.3 9852.81 5093.36
1
Appropriation

Proposed Dividend 574.36 574.36 574.36

Tax on proposed Dividend 97.61 97.61 80.56

Transfer to General Reserve 260.00 205.00 120.00

Balance Carried to Balance 13002.34 7850.84 4318.44

Sheet
Total 13934.3 9852.81 5093.36
1

75
Comparative Balance Sheet as on 31st march
2008-2009

(Rs. In Lacs)

Particulars 2008-09 2007-08 2006-07

Source of Fund

Shareholder`s Fund

Share Capital 3829.06 3829.06 3829.06

Reserve & Surpluse 39683.21 35396.71 30414.31

43512.27 39225.77 34243.37

Loan Funds

Secured Loan 83809.02 67986.85 49321.99

Un Secured Loan 6588.21 12227.95 14585.87

90397.23 80214.80 63907.86

Deferred Tax Liability 10365.2 9131.52 5212.72

1
Total 144274. 128572. 103363.

76
 71 09 95

APPLICATION OF FUND

1. Fixed Assets
Gross Block (freehold land,
133863.9 112888.3 106157.8
buli., vehicle, plant &
8 5 6
machinery, equipment)
Less : Depreciation
Net Block
48818.29 44407.21 33648.12
Capital WIP
85045.69 68481.14 72509.74

13837.95 10352.87 2496.08

98883.64 78834.01 75005.82

2. Investment 5157.77 7818.38 7286.35

3. Current Assets, Loans &

Adv.
21755.11 18575.89 9708.08
Inventories
Sundry Debtors 6747.31 10790.29 4844.93
Cash & Bank Balance
7287.86 7616.56 2844.30
Loan & Advances
20283.14 15435.57 10329.64

56073.42 52418.31 27726.65

Less :

Current Liabilities 11984.62 7476.21 5426.15

Provision 3875.98 3068.83 1398.75

77
 15860.60 10545.04 6824.90

Net Current Assets 40212.82 41873.27 20902.05

Miscellaneous Expenditure 20.48 46.43 169.73

Total 144274.7 128572.0 103363.9

1 9 5

78
 BIBLOGRAPHY

 BOOKS
• Management Accounting
By. J.Made Gowda
• Management Accounting
By. Bhagwati & Pillai (Second Edition)
• Financial Management
By. M. Y. Khan & P.K . Jain
• Financial Management and policy
By. V. k. Bhalla

 Annual report of garden silk mills limited

 Websites
• www.gardenvareli.com
• www.corporateinformation.com

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