Index

Page no.

2 Brief introduction of the company

4 Organization hierarchy of the company
6 Financial Highlights:
• Sales / Total income
• PBDIT
• PBDT
• PAT
• Dividend pay out
• DPS
• PPS
• BVPS
• Net worth
• Total assets
19 Accounting policies
24 Ratios Analysis
• Liquidity Ratios
• Leverage Ratios
• Profitability Ratios
• Turnover Ratios
• Valuation Ratios
49 Share holding pattern
54 Cash flow statement analysis
56 Awards & achievements
58 Environment protection measures
60 Social responsibilities
62 Human resource analysis
64 Conclusion
66 Bibliography
68 Annexure

1
Introduction of the company

2
The history of Crompton Greaves goes back to 1878 when Col. R.E.B. Crompton
founded R.E.B.Crompton & Company. The company merged with F.A Parkinson in the
year 1927 to form Crompton Parkinson Ltd., (CPL). Greaves Cotton and Co (GCC) was
appointed as their concessionaire in India. In 1937, CPL established, it's wholly owned
Indian subsidiary viz. Crompton Parkinson Works Ltd., in Bombay, along with a sales
organization, Greaves Cotton & Crompton Parkinson Ltd., in collaboration with GCC. In
the year 1947, with the dawn of Indian independence, the company was taken over by
Lala Karamchand Thapar, an eminent Indian industrialist. Crompton Greaves is
headquartered in a self-owned landmark building at Worli, Mumbai.

3
Organization hierarchy of the
company

4
When two or more persons work together towards a common goal, authority and
responsibility are allocated among them so that their efforts may become effective. This
is the task of organizing. It is known as designing of organizational structure.

Top Management
Top management consists of those executives who have the authority to take the
important policy decision. Top management is referred to as top level or highest level or
director level. It is made up of the board of directors, managing directors and the other
key officers.

Top management is found invariably in all types of business organization. It is made up

of the owner himself in the individual proprietorship, active partner in the partnership,
firm and director and chief executive in a joint stock company. The managing committee
is treated as top-management in co-operative society. At the top level management, there
is more of management than administration. The degree of the success of the business
unit mainly depends on the degree of efficiency of its top level management.

CORPORATE INFORMATION
Board of Directors
G Thapar CHAIRMAN
SM Trehan MANAGING DIRECTOR
S Bayman
O Goswami
S Labroo
M Pudumjee
SP Talwar
V von Massow
CHIEF FINANCIAL OFFICER BR Jaju
COMPANY SECRETARY W Henriques
AUDITORS Sharp & Tannan
SOLICITORS Crawford Bayley & Co.

5
Financial Highlights

6
Over the last five years, Crompton Greaves Ltd (‘Crompton Greaves’ or ‘the Company’)
Has successfully executed several initiatives: Creating synergies, integration, growth and
a transformation from being a first-rate Indian company to a world leader in its business
lines. Thus, despite operating in an increasingly competitive global environment, the
Company has been consistently reaping benefits from these efforts and achieving higher
growth and Profitability.

BANKERS
Union Bank of India IDBI Bank Ltd
State Bank of India Standard Chartered Bank
Corporation Bank ABN Amro Bank NA
Canara Bank Calyon Bank

Bank of Maharashtra ICICI Bank Ltd

7
 Total income

Year Total income

RS. MILLION
1999 16939.10

2000 16905.40

2001 13831.90

2002 16158.40

2003 17398.50

2004 18880.70

2005 22002.54

2006 44115.51

2007 60393.18

2008 72490.80

80000

60000

40000

20000

8
 Net Sales
Year Net Sales
RS. MILLION
1999 15549.10
2000 15258.30
2001 12543.40
2002 14785.70
2003 15870.20
2004 17113.20
2005 19886.86
2006 41265.10

2007 56395.60
2008 68323.37

80000

60000

40000

20000

PBDIT

9
Year PBDIT
RS. MILLION
1999 1650.20
2000 353.50
2001 -435.70
2002 1566.70
2003 1702.70
2004 1845.90
2005 1942.77
2006 3895.01

2007 5879.58
2008 8115.93

10000
8000

6000
4000

2000
0

-2000

PBDT

10
Year PBDT
RS. MILLION
1999 241.20
2000 -1463.20
2001 -729.10
2002 68.80
2003 372.00
2004 895.20
2005 1284.44
2006 2773.17

2007 4359.56
2008 6152.39

7000
6000
5000
4000
3000
2000
1000
0
-1000
-2000

PAT

11
Year PAT
RS. MILLION
1999 231.20
2000 -1465.70
2001 -731.60
2002 41.30
2003 281.70
2004 708.30
2005 1171.21
2006 2320.27

2007 2865.00
2008 4098.22

5000
4000
3000
2000
1000
0
-1000
-2000

Dividend pay out

12
Year Dividend pay
out
RS. MILLION
1999 130.50
2000 -
2001 -
2002 -
2003 -
2004 366.56
2005 366.56
2006 366.61

2007 471.29
2008 586.51

600

400
Series1
200

0 S1
1 2 3 4 5 6 7 8 9 10

Dividend %

13
Year Dividend
In %
1999 25.00
2000 -
2001 -
2002 -
2003 -
2004 70.00
2005 70.00
2006 70.00

2007 70.00
2008 80.00

80
60
40
Series1
20
0 S1
1 2 3 4 5 6 7 8 9 10

EPS

14
Year EPS
In RS.
1999 0.63
2000 -4.00
2001 -2.00
2002 0.11
2003 0.77
2004 1.92
2005 3.27
2006 6.35

2007 7.69
2008 11.10

12
10
8
6
4
2
0
-2
-4

Book Value per Share

15
Year BVPS
In RS.
1999 15.02
2000 9.97
2001 7.26
2002 6.49
2003 7.94
2004 9.29
2005 11.43
2006 20.26

2007 25.29
2008 33.91

35
30
25
20
15
10
5
0

Net worth

16
Year Net worth
RS. MILLION
1999 5483.00
2000 3655.60
2001 2661.00
2002 2380.60
2003 2911.90
2004 3404.80
2005 4189.61
2006 7427.42

2007 9270.31
2008 12429.74

14000
12000
10000
8000
6000
4000
2000
0

Total assets

17
Year Total assets
RS. MILLION
1999 12829.20
2000 12165.70
2001 8934.20
2002 8087.70
2003 7504.10
2004 6844.00
2005 7347.84
2006 11765.87

2007 18599.02
2008 20971.75

25000

20000

15000

10000

5000

18
 Accounting policies

Fixed Assets

19
(a) Fixed assets are stated at cost net of tax / duty credit availed, if any, except for land
and buildings added prior to 30th June, 1985 which are stated at revalued cost as at that
date based on the report of technical expert (in case of Parent Company).
(b) Lump sum fees paid for acquisition of technical know-how relating to plant and
machinery is capitalised as intangible asset.
(c) Fixed assets are eliminated from financial statements, either on disposal or when
retired from active use. The retired assets are disposed off immediately. The capitalised
cost of such disposed / retired assets are removed from the fixed assets records.
(d) Pre-operative expenses, including interest on borrowings till the date of
commissioning, for the projects, where applicable, incurred till
The projects are ready for commercial production, are treated as part of the project cost
and capitalised.
(e) Internally manufactured / constructed fixed assets are capitalised at factory cost,
including excise duty, where applicable.
(f) Machinery spares which are specific to particular item of fixed assets and whose use is
irregular are capitalised as part of the cost of machinery.

Impairment of Assets
(a) The carrying amount of assets, other than inventories is reviewed at each balance
sheet date, to determine whether there is any indication of impairment. If any such
indication exists, the recoverable amount of the assets is estimated.
(b) An impairment loss is recognized, whenever the carrying amount of assets or its cash
generating units exceeds its recoverable amount.
The recoverable amount is the greater of the asset’s net selling price and value in use
which is determined based on the estimated future cash flow generated from the
continuing use of an asset and from its disposal at the end of its useful life, discounted to
their present values.
(c) An impairment loss is reversed, if there has been a change in the estimates made to
determine and recognize the recoverable amount
in the earlier year.

Intangible Assets and Amortization

Intangible assets are recognized as per the criteria specified in the Accounting Standard -
Intangible Assets and are amortized as under:
(a) Leasehold land: Over the period of lease;
(b) Specialized software: Over a period of three - five years;
(c) Lump sum fees for technical know-how: Over a period of five years from the year of
commercial production;
(d) Goodwill on consolidation: Over the period of ten years.
(e) Other intangible assets: Over the period of five years

Investments
(a) Long term investments are carried at cost after providing for any diminution in value,
if such diminution is of other than temporary nature.

20
(b) Current investments are carried at lower of cost or market value. The determination of
carrying costs of such investments is done on the basis of specific identification.

Inventories
Inventories are valued at lower of cost or net realizable value, after providing for
obsolescence and damage as under:
(a) Raw materials, packing materials: At Cost, on FIFO / Weighted average basis stores
and spares
(b) Work-in-progress - Manufacturing: At Cost plus appropriate production overheads
(c) Work-in-progress - Contracts: At Cost till certain percentage of completion and
thereafter at realizable value
(d) Finished goods - Manufacturing: At Cost, plus appropriate production overheads,
including excise duty paid / payable
on such goods
(e) Finished goods - Trading: At Cost, on Weighted average basis.

Foreign Currency Transactions, Forward Contracts and Derivatives

(a) The reporting currency of the Company is Indian Rupee.
(b) Foreign currency transactions are recorded on initial recognition in the reporting
currency, using the exchange rate at the date of transaction. At each balance sheet,
foreign currency monetary items are reported using the closing rate. Exchange
differences that arise on settlement of monetary items are recognized as income or
expense in the period in which they arise.
(c) The Company uses foreign exchange forward contract to hedge its exposure to
movements in foreign exchange rates. The use of these contracts reduces the risk or cost
and the company does not use these contracts for trading or speculation purposes. Cash
flows arising on account of roll over / cancellation are recognized as income / expense of
the period in line with the movement in the underlying exposures.
(d) Derivative transactions are considered as off-balance sheet items and cash flows
arising there from are recognized in the books of account as and when the settlements
take place / over the tenor thereof in accordance with the terms of the respective
contracts.
(e) In accordance with the requirement of Accounting Standard (AS) 11The effects of
changes in foreign exchange rates, operations of foreign subsidiaries which are
considered as non-integral operations, their financial statements are converted in Indian
Rupees at the following exchange rates:
(i) Revenue and Expenses: At the average exchange rate during the year
(ii) Current Assets and Current Liabilities: Exchange rate prevailing at the end of the
year.
(iii) Fixed Assets: Exchange rate prevailing at the end of the year.
(iv) Share Capital: At the original rate when the capital was infused.
(v) The resultant translation exchange differences are accumulated in the Foreign
Currency Translation Reserve.

Revenue Recognition

21
(a) Revenue from sale of products are recognized when all the significant risk and reward
of ownership of the products are passed on to the customers, which is generally on
despatch of goods and acceptance.
(b) Service income is recognized as per the terms of the contract with the customer, when
the related services are performed.
(c) Sales include excise duty and price variation and is recognized in terms of contracts
with the customers. Sales exclude value added tax
/ Sales tax, brokerage and commission.
(d) Revenue from contracts is recognized based on percentage completion after providing
for expected losses.
(e) Excise duty in respect of finished goods is included in the valuation of finished goods.
Employee Benefits
Employee benefits including contributions towards social security, retirement benefit
schemes are accounted for based on the regulatory framework in the respective countries
and employment rules / contracts applicable to the specific companies.

Depreciation
(a) Depreciation on the fixed assets is provided at the minimum rates and in the manner
specified in Schedule XIV of the Companies Act,
1956, on written down value method except in the case of parent Company, where
depreciation on buildings and plant and equipment is provided on straight line method.
(b) Building constructed on leasehold land are depreciated at normal rate as prescribed in
Schedule XIV to the Companies Act, 1956, where the lease period of land is beyond the
life of the building. In other cases, amortized over the lease period.
(c) In the case of revalued assets, the difference between the depreciation based on
revaluation and the depreciation charged on historical cost is recouped out of revaluation
reserve.
(d) In case of impaired assets, the depreciation is charged on the adjusted cost computed
after impairment.
(e) In case of foreign subsidiaries, depreciation on fixed assets has been provided at the
rates required/permissible by the Generally Accepted Accounting Principles of the
respective countries. However, the depreciation rates are higher than the rates specified in
the
Schedule XIV of the Companies Act, 1956.

Research and Development

(a) Revenue expenditure on research and development is charged under respective heads
of account.
(b) Capital expenditure on research and development is included as part of fixed assets
and depreciated on the same basis as other fixed assets.

Borrowing Costs

22
(a) Borrowing costs that are attributable to the acquisition, construction or production of a
qualifying asset are capitalised as part of the cost of such asset till such time as the asset
is ready for its intended use or sale.
(b) All other borrowing costs are recognized as expense in the period in which they are
incurred.

Leases
(a) Assets acquired under leases where the company has substantially all the risks and
rewards of ownership are classified as finance leases. Such assets are capitalised at the
inception of the lease at the lower of the fair value or the present value of minimum lease
payments and a liability is created for an equivalent amount. Each lease rental paid is
allocated between the liability and the interest cost, so as to obtain a constant periodic
rate of interest on the outstanding liability for each period.
(b) Assets acquired on leases where a significant portion of the risks and rewards of
ownership are retained by the lessor are classified as operating leases. Lease rentals are
charged to the profit and loss account on accrual basis

Taxes on Income
(a) Tax on income for the current period is determined on the basis of estimated taxable
income and tax credits computed in accordance with the provisions of relevant tax laws
and based on the expected outcome of assessments/appeals.
(b) Deferred tax is recognized on timing difference between the accounting income and
the taxable income for the year and quantified using the tax rates and laws enacted or
substantively enacted as on the Balance Sheet date.
(c) Deferred tax assets are recognized and carried forward only to the extent that there is
reasonable certainty supported by convincing evidence that sufficient future taxable
income will be available against which such deferred tax assets can be realized.

Provisions, Contingent liabilities and Contingent assets`

(a) Provisions are recognized for liabilities that can be measured only by using a
substantial degree of estimation, if
i) The Company has a present obligation as a result of past event;
ii) A probable outflow of resources is expected to settle the obligation; and
iii) The amount of the obligation can be reliably estimated.
(b) Reimbursements by another party, expected in respect of expenditure required to
settle a provision, is recognized when it is virtual certain that reimbursement will be
received if obligation is settled.
(c) Contingent liability is disclosed in the case of
i) A present obligation arising from past event, when it is not probable that an outflow of
resources will be required to settle the obligation;
ii) A possible obligation, unless the probability of outflow of resources is remote.
(d) Contingent assets neither disclosed nor recognized.
(e) Provision, contingent liabilities and contingent assets are reviewed at each balance
sheet date.

23
 Ratio Analysis

(A) LIQUIDITY RATIOS

24
(1) Current Ratio:

This is most widely used ratio shows the proportion of current assets to
Current liabilities. It is also known as Working Capital Ratio.

Current Assets
Current Ratio = ------------------------
Current Liabilities

Year 2006 2007 2008

11336.87 14608.45 16562.24
Current Ratio -------------- = 1.41 ------------- = 1.39 -------------- = 1.28
8023.62 10474.20 12952.93

Analysis:

This ratio indicates that the firm capacity to meet short-term obligations is
decreasing. From 1.41 in the year 2006 it has decrease to 1.39 in the year
2007 and again to 1.28 in the year 2008.

(2) Quick Ratio:

25
 To remove the defect of current ratio, quick ratio is used. It is a variant of current
which is designed to show the amount of funds available to meet immediate
payments. It is obtained by dividing the liquid assets by liquid liabilities.

Liquid assets
Quick ratio = -----------------------
Liquid liabilities

Here, Liquid assets = Current assets – Stock (Inventory)

Liquid liabilities = Current liabilities – Bank overdraft

Year 2006 2007 2008

9418.78 12138.35 13932.73
Quick ratio ----------- = 1.17 ----------- = 1.16 ------------- = 1.07
8023.62 10474.20 12952.93

Analysis:

This ratio indicates that the firm capacity to meet immediate obligations is
decreasing. From 1.17 in the year 2006 it has decrease to 1.16 in the year 2007
and again to 1.07 in the year 2008.

(B) LEVERAGE RATIOS

26
 (1) Debt-Equity ratio :

This ratio is only another form of proprietary ratio and establishes relationship
between the outside long-term liabilities and owner’s fund. It shows the
proportion of long-term external equities and internal equities. i.e. proportion of
funds provided by long-term creditors and that provided by shareholders or
proprietors.

Total debt
Debt-Equity ratio = ------------------
Owner’s fund

Year 2006 2007 2008

Debt-Equity ratio 10521.31 13174.53 13828.52
------------ = 1.96 ------------ = 1.95 -------------- = 1.48
5363.77 6742.97 9307.47

Analysis:

This ratio decreasing this means that outside creditors claim in the business is
reducing and that of owners is increasing. From 1.96 in the year 2006 it has
increase to 1.95 in the year 2007 and again to 1.48 in the year 2008.

(2) Capital employed to net worth ratio:

27
 This ratio helps in finding the relation ship between capital employed in the firm
and net worth of the firm.

Capital Employed
Capital employed to Net worth ratio = ---------------------------
Net Worth

Year 2006 2007 2008

7861.46 9443.3 8755.9
Capital employed to ------------ = 1.46 ------------ = 1.40 ------------ = 0.94
Net worth ratio 5363.77 6742.97 9307.47

Analysis:

The higher this ratio, the stronger the financial of the business, as it
signifies that proprietors have provided larger funds to purchase assets.
But in this case it is decreasing. From 1.46 in the year 2006 it has decrease
to 1.40 in the year 2007 and again to 0.94 in the year 2008.

(2) Fixed interest coverage ratio:

28
 This ratio is helpful in finding the firm’s capacity to meet fixed interest
charge.

EBIT
Fixed interest coverage ratio = -----------------
Interest

Year 2006 2007 2008

2653.42 3767.09 5534.22
Fixed interest -------------- = -------------- = -------------- =
coverage ratio 263.67 10.06 303.50 12.41 271.14 20.41

Analysis:

This ratio shows the share of interest in profit. Higher this ratio shows
weak financial condition. But in this case it is increasing. From 10.06 in
the year 2006 it has increase to 12.41 in the year 2007 and again to
20.41in the year 2008.

(C) PROFITABILITY RATIOS

29
(1) Gross Profit Ratio:

It is the basic measure of profitability of business. It expresses relationship

between gross profit earned to net sale. It is also known as ‘Gross margin’.

Sales – Cost of Goods Sold

Gross Profit Ratio = ------------------------------------- * 100
Net Sales

Here,
Cost of goods sold = Opening stock + Purchases – Closing stock

Year 2006 2007 2008

17312.72 15001.66 18802.34
Gross Profit Ratio -------------- * 100 = -------------- * 100 = -------------- * 100 =
25205.93 68.69 33676.04 44.55 38757.56 48.51

Analysis:

The higher this ratio shows more efficiency of a firm. But in this case it is
decreasing. From 68.69 in the year 2006 it has decrease to 44.55 in the year 2007
and again to 48.51 in the year 2008.

(2) Net Profit Ratio:

30
 This ratio measures the relation between the net profits and sales of the firm. The
net profit is obtained after charging operating expenses, interest, depreciation and
taxes to the gross profit.

PAT
Net Profit Ratio = ----------------- * 100
Net Sales

Year 2006 2007 2008

1630.48 1923.73 3139.22
Net Profit Ratio -------------- * 100 = -------------- * 100 = -------------- * 100 =
25205.93 6.47 33676.04 5.71 38757.56 8.10

Analysis:

The decrease in this ratio shows better picture of the firm. But in this case
it is increasing. From 6.47 in the year 2006 it has decrease to 5.71 in the
year 2007 and again increase to 8.10in the year 2008.

(3) Operating Profit Ratio:

31
 This ratio shows relationship between profit and net sales. It helps to ascertain
operating efficiency.

EBIT – Other income

Operating Profit Ratio = ---------------------------
Net Sales

Year 2006 2007 2008

2326.15 3418.34 4837.91
Operating Profit -------------- = -------------- = -------------- =
Ratio 25205.93 0.092 33676.04 0.102 38757.56 0.125

Analysis:

The decrease in this ratio shows better picture of the firm. But in this case it is
increasing. From 0.092 in the year 2006 it has increase to 0.102 in the year 2007
and again increase to 0.125 in the year 2008

(4) Operating Ratio:

32
 It is a ratio that shows relationship between cost of goods sold plus operating
expenses to sales. Operating expenses includes administrative and selling and
distribution expenses.

Operating Ratio = 1 - Operating Profit Ratio

Year 2006 2007 2008

Operating Ratio 1 - 0.092 = 0.908 1 - 0.102 = 0.898 1 - 0.125 = 0.875

Analysis:

This ratio shows the operating efficiency of the firm lower this ratio indicates
higher profits. And in this case it is decreasing. From 0.908 in the year 2006 it has
decrease to 0.898 in the year 2007 and again to 0.875 in the year 2008.

(5) Expenses Ratio:

33
 For the purpose of ascertaining relationship between operating expenses and net
sales, expenses ratios are computed.

Total Expenses
Expenses Ratio = ---------------------- * 100
Net sales

Year 2006 2007 2008

23585.22 30954.76 34597.35
Expenses Ratio -------------- * 100 = -------------- * 100 = -------------- * 100 =
25205.93 93.57 33676.04 91.92 38757.56 89.27

Analysis:

The lower this ratio shows a desirable positioning of the firm. And in this case it
is decreasing. From 93.57 in the year 2006 it has decrease to 91.92 in the year
2007 and again to 89.27 in the year 2008.

(6) Return on Shareholder’s funds:

34
 Profit is earned in business for the owner’s and so they are naturally interested in
the return they get on their money invested in company’s business. This is
measured by Return on Shareholder’s funds.

PAT
Return on Shareholder’s funds = ------------------------------ * 100
Shareholder’s funds

Year 2006 2007 2008

1630.48 1923.73 3139.22
Return on -------------- * 100 = -------------- * 100 = -------------- * 100 =
Shareholder’s funds 5363.77 30.40 6742.97 28.53 9307.47 33.73

Analysis:

This ratio shows how profitably the funds provided by the owners are used
in the business. And in this case it is unstable it decrease to 20.53 in the
year 2007 from 30.40 in the year 2006 and again increase to 33.73 in the
year 2008.

(7) Return on Total Assets:

35
 The return on total assets implies how the funds supplied by both owners and
creditors are utilized in business. Thus it measures the overall profitability of the
business.

PAT
Return on Total Assets = ---------------------- * 100
Total Assets

Year 2006 2007 2008

1630.48 1923.73 3139.22
Return on Total Assets -------------- * 100 = -------------- * 100 = -------------- * 100 =
15996.08 10.19 20293.3 9.48 21715.2 14.46

Analysis:

This ratio shows how profitably the assets provided by the owners are
used in the business. And in this case it is unstable it decrease to 9.48 in
the year 2007 from 10.19 in the year 2006 and again increase to 14.46 in
the year 2008.

(8) Return on capital employed:

36
 Perhaps the most widely used ratio for measuring the profitability of any
enterprise is Return on capital employed.

PAT
Return on capital employed = -------------------------------- * 100
Total capital employed

Year 2006 2007 2008

1630.48 1923.73 3139.22
Return on capital -------------- * 100 = -------------- * 100 = -------------- * 100 =
employed 7861.46 20.74 9443.3 20.37 8755.9 35.85

Analysis:

This ratio is useful in measuring the managerial efficiency of operating th

business. And in this case it is unstable it decrease to 20.37 in the year
2007 from 20.74 in the year 2006 and again increase to 35.85 in the year
2008.

(D) TURNOVER RATIOS

37
(1) Inventory turnover ratio:

The ratio signifying the efficiency of sales is the stock turnover. It shows the
number of times the average stock is turned over during the year.

Cost of Goods Sold

Inventory turnover ratio = --------------------------------
Average inventory

Year 2006 2007 2008

18220.48 19023.13 20651.53
Inventory turnover -------------- = -------------- = -------------- =
ratio 514.275 35.43 596.12 31.91 821.91 25.12

Analysis:

This ratio shows how stock is turned into sales. And in this case it is decreasing.
From 35.43 in the year 2006 it has decrease to 31.91 in the year 2007 and again to
25.12 in the year 2008.

(2) Fixed assets turnover ratio:

38
 To ascertain the efficiency and profitability of business, the total fixed assets are
compared to sales.

Net sales
Fixed assets turnover ratio = ----------------------
Net Fixed assets

Year 2006 2007 2008

25205.93 33676.04 38757.56
Fixed assets -------------- = -------------- = -------------- =
turnover ratio 3637.90 6.93 4333.76 7.77 5152.96 7.52

Analysis:

Higher this ratio indicates that the fixed assets are used efficiently in the firm.
And in this case it is increasing. From 6.93 in the year 2006 it has increase to 7.77
in the year 2007 and again to 7.52 in the year 2008.

(3) Working capital turnover ratio:

39
 This ratio is computed to ascertain how efficiently working capital is utilized in
business. It is computed by dividing Net sales by Net working capital.

Net Sales
Working capital turnover ratio = --------------------------------
Net working capital

Year 2006 2007 2008

25205.93 33676.04 38757.56
Working capital -------------- = -------------- = -------------- =
turnover ratio 3313.25 7.61 4134.25 8.15 3609.31 10.74

Analysis:

This ratio is increasing which show a better position of the firm. it is

increasing, From 7.61in the year 2006 it has increase to 8.15 in the year
2007 and again to 10.74 in the year 2008.

(4) Total assets turnover ratio:

40
 The funds used in business are employed in both fixed assets and current assets
both, and profit is earned with the help of both. Hence it would be useful to know
the proportion of total assets to sales.

Net Sales
Total assets turnover ratio = --------------------------
Total Assets

Year 2006 2007 2008

25205.93 33676.04 38757.56
Total assets -------------- = --------------- = -------------- =
turnover ratio 15996.08 1.58 20293.3 1.66 21715.20 1.78

Analysis:

The higher this ratio indicates more efficient utilization of assets in the firm. And
in this case it is increasing. From 1.58 in the year 2006 it has increase to 1.66 in
the year 2007 and again to 1.78 in the year 2008.

(5) Net worth turnover ratio:

41
 This ratio is computed to ascertain how efficiently capital employed is utilized in
business. It is computed by dividing Net sales by Net worth.

Net Sales
Net worth turnover ratio = ----------------------
Net Worth

Year 2006 2007 2008

25205.93 33676.04 38757.56
Net worth -------------- = -------------- = -------------- =
turnover ratio 5363.77 4.70 6742.97 4.99 9307.47 4.16

Analysis:

The higher this ratio indicates more efficient utilization of capital in the firm. And
in this case it is increasing. From 4.70 in the year 2006 it has increase to 45.99 in
the year 2007 and decrease to 4.16 in the year 2008.

(6) Debtors turnover ratio:

42
 The debtor turnover suggests the number of times the amount of credit sale is
collected during the year.

Net Sales
Debtors turnover ratio = ---------------------------------------
Debtors + Bills Receivables

Year 2006 2007 2008

25205.93 33676.04 38757.56
Debtors -------------- = -------------- = -------------- =
turnover ratio 6596.41 3.82 8038.9 4.19 9562.2 4.05

Analysis:

The higher this ratio indicates the weak credit collection policy of the firm. And
in this case it is increasing. From 3.82 in the year 2006 it has increase to 41.99 in
the year 2007 and decrease to 4.05 in the year 2008.

(E) VALUATION RATIOS

43
(1) Dividend yield ratio:

This ratio shows relationship between Dividend per share and Market value per
share. It helps to ascertain efficiency of a firm.

Dividend per share

Dividend yield ratio = ----------------------------------
Market value per share

Year 2006 2007 2008

Dividend yield ratio -------------- = -------------- = -------------- =

Analysis:

(2) Dividend pay-out ratio:

44
 It is proportion of actual dividend received to earning per share or the amount
which belong to the equity share holders.

Dividend per share

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

Year 2006 2007 2008

Dividend pay-out -------------- = -------------- = -------------- =

ratio 4.45 5.25 8.56

Analysis:

(3) Price earning ratio:

45
 It shows the relation between the market price of the share and the earning per
share.

Market price per share

Price earning ratio = -----------------------------------
Earning per share

Year 2006 2007 2008

Price earning ratio -------------- = -------------- = -------------- =

4.45 5.25 8.56

Analysis:

(4) Earning per share:

46
 This ratio shows relationship between profit and no. of equity share. It helps to
ascertain efficiency of a firm.

PAT
Earning per share = ------------------------------
No. of equity shares

Year 2006 2007 2008

1630.48 1923.73 3134.22
Earning per share -------------- = -------------- = -------------- =
625000000 0.00 625000000 625000000 0.00
0.00

Analysis:

(5) Dividend per share:

47
 Dividend per share is the amount of actual dividend paid to equity shareholders
divided by the number of equity shares outstanding.

Interim equity dividend + Final Equity dividend

Dividend per share = ----------------------------------------------------------------
No. of Equity Shares

Year 2006 2007 2008

Dividend per share ----------------- = ---------------- = ---------------- =

625000000 625000000 625000000

Analysis:

48
Share holding pattern

49
 Shareholding Pattern as of Quarter ended : 31st December 2008 as per Clause 35 of
listing agreement
Code : CG
Face Value : Rs. 2.00/-
Cat. Category Share Number Total Number No Of Total shareholding
code Holder of share of Shares sharesHeld in as a percentage of
Holders Demat Form total number of
shares
As a % As a % of
of (A+B+C)1
(A+B)1
(A) Share Holding of Promoters and promoters Group
1 Indian
(a) Individuals/Hindu 1 220,715.00 220,715.00 0.0604 0.0602
Undivided Family
(b) Central 0 0.00 0.00 0.00 0.00
Government/State
Govts
(c) Bodies Corporate 5 143,440,675.00 143,440,675.00 39.2834 39.1309
(d) Financial 0 0.00 0.00 0.00 0.00
Institutions / Banks
(e) Any Other 0 0.00 0.00 0.00 0.00
Sub Total (A)(1) 6 143,661,390.00 143,661,390.00 39.3438 39.1911
2 Foreign
(a) Individuals (Non- 0 0.00 0.00 0.00 0.00
Resident
Individuals/Foreign
Individuals)
(b) Bodies Corporate 0 0.00 0.00 0.00 0.00
(c) Financial 0 0.00 0.00 0.00 0.00
Institutions / Banks
(d) Any Other 0 0.00 0.00 0.00 0.00
Sub Total (A)(2) 0 0.00 0.00 0.00 0.00
Total 6 143,661,390.00 39.3438 39.1911
Shareholding of 143,661,390.00
Promoter and
Promoter Group
(A)=(A)(1)+(A)(2)

50
(B) Public
shareholding
1 Institutions
(a) Mutual Funds/UTI 125 74,842,533.00 74,837,265.00 20.4967 20.4172
(b) Financial 35 826,415.00 777,681.00 0.2263 0.2254
Institutions / Banks
(c) Central 0 0.00 0.00 0.00 0.00
Government/State
Govts
(d) Venture Capital 0 0.00 0.00 0.00 0.00
Funds
(e) Insurance 7 12,056,089.00 12,046,489.00 3.3017 3.2889
Companies
(f) Foreign 126 59,982,645.00 59,910,545.00 16.4271 16.3634
Institutional
Investors
(g) Foreign Venture 0 0.00 0.00 0.00 0.00
Capital Investors
(h) Any Other 0 0.00 0.00 0.00 0.00
(specify)
Sub-Total (B) (1) 293 147,707,682.00 147,571,980.00 40.4519 40.2949
2 Non-institutions
(a) Bodies Corporate 1,503 14,979,371.00 14,830,475.00 4.1023 4.0864
(b) i) Individuals 56,431 26,249,380.00 19,941,358.00 7.1888 7.1609
shareholders
holding nominal
Shares capital up to
Rs 1lakh
ii. Individual 36 8,208,385.00 8,014,114.00 2.2480 2.2393
shareholders
holding nominal
share capital in
excess of Rs. 1
lakh
(c) Non Residents
i NRI Rep 742 676,262.00 630,512.00 0.1852 0.1845
ii NRI Non -Rept 1,021 489,318.00 406,402.00 0.1340 0.1335
iii OCB 4 40,350.00 40,000.00 0.0111 0.0110
iv Foreign Bodies 5 23,129,963.00 23,129,963.00 6.3345 6.3099
v Foreign National 2 1,550.00 1,550.00 0.004 0.004

51
VI Any Other 0 0.00 0.00 0.00 0.00
Sub-Total (B)(2 ) 59,744 73,774,579.00 66,994,374.00 20.2043 20.1258
Total Of Public 60,037 221,482,261.00 214,566,354.00 60.6562 60.4207
Shareholding
Public Group
(B)=(B)(1)+(B)(2)
Total (A+B) 60,043 365,143,651 358,227,744 100.00 99.6118
(C) Shares held by 2 1,422,941.00 1,419,441.00 xxxx 0.3882
Custodians and
against which
Depository
Receipts have
been issued

GRAND TOTAL 60,045 366,566,592.00 359,647,185.00 xxxx 100.00

(A)+(B)+(C)

Pie Chart

52
 Total Shareholding
of Promoter and
Promoter Group

Total Of Public
Shareholding
Public Group

Shares held by
Custodians and
against which
Depository
Receipts have
been issued

53
 Cash flow statement analysis

A statement showing inflow of cash and outflow of cash during the last year and as a
result the balance of cash at the end of the year, is known as “Cash Flow Statement”.
This statement helps management to know the actual liquid position or position of cash

54
on hand and also to ascertain whether the business is able to get enough cash to meet the
liabilities as and when they arise.

Analysis:

The company is having a healthy liquid position it has sufficient cash to meet its
immediate liabilities as an when they arise

55
 Awards & achievements

Energy savings, reduction of waste, re-use/ recycling of materials are key

pillars in this area. Every manufacturing unit of Crompton Greaves has the ISO 14001
and OHSAS 18001 Certification. With its focus on reduction of pollution, the Company
has also self-initiated a PUC Certification check for all vehicles entering its plant
complexes. At some plants, windmills have been installed on a trial basis, which supply
energy to the internal pathways within the complex.

During 2007-08, Crompton Greaves received the prestigious Greentech Gold

Award, 2007, in the Engineering Sector. This is a recognition for the Company’s

56
environmental management systems and development of green products and process
technologies. The Award acknowledged the Company’s efforts in Developing eco
friendly products, packaging And processes, such as dry type transformers, BLDC motors
and fans, CFL lamps and energy Efficient luminaries, reduction of heating cycles By
more than 50% through new brazing and Sintering process technologies and premium
efficiency motors as well as motors for ecofriendly vehicles.

The Crompton Greaves Global R&D Centre, which has over 30 years of work to its
credit, is manned by 130 people — of whom 16 Hold doctorates and 77 more are
qualified Technical personnel

Crompton Greaves’ Global R&D Centre filed a total of 212 IPRs: 63 for patents, 144 for
design IPRs and 5 for trademarks

57
 Environment protection measures

Energy savings, reduction of waste, re-use/ recycling of materials are key pillars in this
area. Every manufacturing unit of Crompton Greaves has the ISO 14001 and OHSAS
18001 certification. With its focus on reduction of pollution, the Company has also self-
initiated a PUC Certification check for all vehicles entering its plant complexes. At some
plants, windmills have been installed on a trial basis, which supply energy to the internal
pathways within the complex.

Crompton Greaves has also chosen three days every year, to be dedicated to CSR, with
the intense involvement of all employees. These are:

58
THE WORLD ENVIRONMENT DAY, 5 JUNE.

In 2007, activities included an intensified tree plantation drive in the immediate vicinities
of the plants, talks on environment and videos on global warming, creation of compost
vermiculture pits, as well as quiz and painting competitions and street plays to spread the
‘Green’ message to the greatest extent possible.

BLOOD DONATION DAY, 1 OCTOBER.

Blood Donation Camps were organised at all the Company’s units and office locations
through various reputed blood banks. Wide publicity to the event and strong management
support resulted in approximately 1,100 bottles of blood being donated by the employees.

WORLD AIDS DAY, 1 DECEMBER.

The Company renewed its dedication to be considerate to employees afflicted with

HIV/AIDS, and to continuously create increased awareness about the illness. The
activities included organisation of a rally, distribution of literature and thematic cultural
programmes for employees as well as casual labour, truckers and the surrounding
communities.

59
 Social responsibilities

It is the Crompton Greaves’ expressed intention that it will conduct its business and
achieve commercial success, together with social responsibility to the communities that
surround its locations and society at large. The Company’s CSR efforts during 2007-08
have continued to revolve around its CSR Statement of Intent, which focuses on three
areas: the Workplace, the Communities and the Environment

60
61
 Human resource analysis

Crompton Greaves has always fostered an integrated approach towards HR — that of

aligning its human capital in all its facets with business and organisational
transformation. Hence, the HR imperatives at Crompton Greaves encompass a wider
canvas. It consists of HR management; productive and harmonious industrial relations;
raising productivity through the Crompton Greaves Production System (CGPS); business
excellence initiatives; and influencing the Company’s thrust on Corporate Social
Responsibility.

62
Crompton Greaves’ efforts have focused on health and safety. These involve periodic
medical check-ups for all its employees, and an innovative hospitalization insurance
scheme together with a serious illness coverage.

63
 Conclusion

The quality of households is enhanced when their money is invested into products such as
fans and lighting for basic comforts. Their lives are literally touched by delight.
Similarly, Crompton helps electricity boards and other utilities to reach electricity to the
last home and factory. Therefore, every individual in India who uses electricity can be
considered as Crompton customer. Hence, the company continues to further and
consolidate the initiatives that Colonel Crompton set into motion by focusing on meeting
increasing customer demands for products that are eco-friendly, energy efficient and with
intelligent monitoring and control systems.

All economic indicators point towards the manufacturing sector being the future driver of

64
India's economic growth. India is today preferred destination for sourcing various
engineering goods not only due to low cost but also due to high quality of products.
Although, the climate for the manufacturing sector is bright, the concern is the threat of
imminent competition from global players who are already in the process of setting up
manufacturing facilities in India. The market is expected to remain competition with an
added element of competition from imported products.

However, several measures that the company has already taken and it's plans for the
future, together with business impact of the Pauwels acquisition, will equip the company
to respond in adequate measure to this competitive pressure.

65
 Bibliography

Principles & practice of accountancy: R.L. Gupta & V.K. Gupta, S. Chand & Co.

Advanced accounts volume II: M. C. Shukla, T. S. Grewal & S. C. Gupta, S. Chand &
Co.
Advanced accounting with accounting standards and problems & solutions: Ravi M.
Kishore, Taxmann

66
67
Annexure

68