PREFACE

No professional curriculum is considered complete with out work experience.

Every individual who is doing management studies has to go this phase of practical study
before he/she considers himself/herself fully qualified as potential managers.

I got an opportunity to do project with ESCORTS LTD.. I undertake the project of RATIO
ANALYSIS.

People affiliated with management studies have a different view on this aspect and
management that “class studies have nothing to do with practical work”. But during my
research I realized that the project report a crucial part as it prepares a MBA for the
impending responsibility that awaits him/her in future. It integrates the theoretical aspect
with the practical life and help in understanding the business solution in better way.

TABLE OF CONTENTS
CHAPTER 1: INTRODUCTION AND OBJECTIVE OF PROJECT
CHAPTER 2 : COMPANY PROFILE

CHAPTER 3:- REVIEW OF LITERATURE

CHAPTER 4:- RESEARCH METHODOLOGY

OBJECTIVE OF THE STUDY
RESEARCH DESIGN
DATA COLLECTION
HYPOTHESIS OF THE STUDY
RELEVANCE OF THE STUDY
LIMITATIONS OF THE STUDY

CHAPTER 5:- DATA ANALYSIS & INTERPRETATION

CHAPTER 6:- CONCLUSION & RECOMMENDATION

CHAPTER 7: BIBLIOGRAPHY
INTRODUCTION AND OBJECTIVE OF PROJECT
 Ratio analysis
A ‘ratio’ is defined as the indicated quotient of two mathematical expressions and as
the relationship between two or more things. In Financial analysis, a ratio is used as
benchmark for evaluating the financial position and performance of a firm. Ratios
help to summarize large quantities of financial data and to make qualitative
judgment about the firm’s financial performance.
Ratio analysis involves comparison for a useful interpretation of the financial
statements. Single ratio in itself does not indicate favorable or unfavorable
condition. Therefore in this report it is compared with:

 Past ratios, i.e. ratios calculated from the past financial statements of the
same company.
 Competitor’s ratios, i.e. Ratio of the major competitor at the same point in
time.
 Projected ratios, i.e., ratios developed using the projected, Performa,
financial statements of the same firm.

Since liquidity ratios and Activity ratios help to measure the firm’s ability to meet
current obligations and firm’s efficiency in utilizing its assets respectively, these two
have been used.
 OBJECTIVE OF RATIO ANALYSIS

 It is helpful in analysis of financial statement.

 It helps in simplification of accounting data.
 Helpful in comparative studies.
 It helps in locating weak spots of the business.
 Helpful in forecasting.
 Estimate about trends in business
 To have effective control.
 To study about the financial soundness.
 Helps in fixation of ideal standards.

NOTE: As, separate financial reports are not maintained for AMG, figures have
been taken from the balance sheet of Escorts.
COMPANY PROFILE
Introduction

FROM

TO
The Indian Tractor Industry:

1945 to 1960.
War surplus tractors and bulldozers were imported for land reclamation and
cultivation in mid 1940's. In 1947 Central and State Tractor Organisations were set
up to develop and promote the supply and use of tractors in agriculture and till
1960, the demand was met entirely through imports. There were 8,500 tractors in
use in 1951, 20,000 in 1955 and 37,000 by 1960.

1961 to 1970.
Local production began in 1961 with five manufacturers producing a total of 880
units per year. By 1965 this had increased to over 5000 units per year and the
tractors in use had risen to over 52000.
By 1970 annual production had exceeded 20000 units with over 146000 units
working in the country.

1971 to 1980.
Six new manufacturers were established during this period although three
companies (Kirloskar Tractors, Harsha Tractors and Pittie Tractors) did not
survive. Escorts Ltd began local manufacturing of Ford tractors in 1971 in
collaboration with Ford, UK and total production climbed steadily to 33000 in 1975
reaching 71000 by 1980. Credit facilities for farmers continued to improve and the
tractor market expanded rapidly with the total in use passing the half million mark
by 1980.

1981 to 1990.
A further five manufacturers began production during this period but only one of
these survived in the increasingly competitive market place. Annual production
exceeded 75000 units by 1985 and reached 140000 in 1990 when the total in use was
about 1.2 million. Then India - a net importer up to the mid-seventies - became an
exporter in the 80's mainly to countries in Africa.

1991 to 1997.
From 1992 it was not necessary to obtain an industrial licence for tractor
manufacturing in India. By 1997 annual production exceeded 255000 units and the
national tractor park had passed the two million mark. India had now emerged as
one of the world leaders in wheeled tractor production.

1997 to 1999.
Five new manufacturers had started production since 1997. In 1998 Bajaj Tempo,
already well established in the motor industry, began tractor production in Pune. In
April of the same year New Holland Tractor (India) Ltd launched production of 70
hp tractors with matching equipment.

The Industry today

Tractor manufacturing is now firmly established in India and is highly competitive
with rapid advancements being made in technical design and quality with increasing
attention to export markets. Of the 16 companies that began operations before
1990s, eight are considered major manufacturers (Eicher, Escorts Ltd, Sonalika,
Mahindra and Mahindra, John Deere, Swaraj, VST, and TAFE).

Market share in 2013-2014 in %

 Escorts 12.80
Mahindra n Mahindra 28.40
Eicher 7.30
Tafe 15.10
HMT 1.20
Sonalika 8.4
John Deere 8.1
Ptl 9.20
Nhi 6.50
Others 1.30

ABOUT
ESCORTS

The Escorts Group is amongst India's leading engineering

conglomerates operating in the high growth sectors of agri-machinery,
construction & material handling equipment, railway equipment and
auto components.

Having pioneered the farm mechanization in the country, Escorts has

played a pivotal role in the agricultural growth of India for over five
decades. One of the leading tractor manufacturers of the country,
Escorts offers a comprehensive range of tractors, more than 45 variants
starting from 25 to 80 HP. Escorts’ Farmtrac and Powertrac are the
widely accepted and preferred brands of tractors.

A leading material handling and construction equipment manufacturer,

Escorts manufactures and markets a diverse range of equipment like
cranes, loaders, vibratory rollers and forklifts. Escorts today is the
world's largest Pick 'n' Carry Hydraulic Mobile Crane manufacturer.
 Escorts Group

Agri Machinery

Escorts
Communication
s

Construction
Equipments

Railway
Equipments

Escorts has been a major player in the railway equipment business in India for
nearly five decades. There product offering includes brakes, couplers, shock
absorbers, and rail fastening systems, composite brake blocks and vulcanized
rubber parts.
In the auto components segment, Escorts is a leading manufacturer of auto
suspension products including shock absorbers and telescopic front forks. Over the
years, with continuous development and improvement in manufacturing technology
and design, new
reliable products have been introduced. The Escort Group has also been operating
in the ITES and financial services sectors.

Technological and business collaboration with world leaders over the years, globally
competitive indigenous engineering capabilities, over 1600 sales and service outlets
and footprints in over 40 countries have been instrumental in making Escorts the
Indian multinational. Today, when the world is looking at India as an outsourcing
destination,
Escorts is rightly placed to be the dependable outsourcing partner of world's leading
engineering corporations looking at outsourcing manufacture of engines,
transmissions, gears, hydraulics, implements and attachments to tractors, and shock
absorbers for heavy trailers and armored tanks.
In today's Global Market Place, Escorts is fast on the path of an internal
transformation, which will help it to be a key driver of manufacturing excellence in
the global arena.

THE FOUNDING PHILOSOPHY

Around six decades back two young men were out on a journey together armed with
little beyond intelligence, business acumen and determination and dreams aplenty.
They believed that India could only achieve total freedom with a breakthrough in
the field of agriculture and mechanization would have to rule the fields. Their
youthful enthusiasm had kindled the hope that one day they would make a mark of
their own. They were in fact writing the first chapter of what has come to be widely
recognized as one of the greatest success stories in Indian industry.

Escorts came into being with a vision. A vision that eschewed easy paths to
profitability, and sought instead for ways to make a contribution. A vision that led
two young brothers, Yudi and Hari Nanda, to branch out of their family's
prospering transport business and institute ventures that were to become the
foundations of Escorts Limited. On 17th October 1944, Escorts Agents Limited was
born at Lahore (now in Pakistan) with Mr. Yudi Nanda as Managing Director and
Mr. Hari Nanda as Chairman. It was a trend setting marketing house driven by the
same business philosophy, which had given their family enterprise an unrivalled
reputation: customer concern.

Not long afterwards, the driving ambition to go beyond the expected led Hari Nanda
to the first of his many successful business insights - the discovery of the great
business potential that lay in India's villages. This led to the launch, in 1948, of
Escorts (Agriculture and Machines) Ltd., with Yudi Nanda as Director. Though
separate business entities then, both companies had two great strengths in common:
the dynamic Nanda brothers and the

unifying force of the name they gave their companies; Escorts, literally 'escorting'
their products and services to the customer while most other businessmen were just
selling.

Tragically, Mr. Yudi Nanda died in an accident in 1952 - but his spirit remained
embedded in the foundations of the company. Mr. H P Nanda then took on the
mantle to realize the dreams, which he had always seen with his brother.

Escorts (Agents) Ltd., and Escorts (Agriculture and Machines) Ltd. merged in 1953
to create a single entity -Escorts Agents Pvt Ltd. Having initially started with a
franchise for Westinghouse domestic appliances, by this time the Company had
already expanded its marketing and service operations, representing internationally
known German and American organizations such as MAN, AEG, Haniel & Leug,
Knorr Bremse, MIAG and BMA for sophisticated electrical and mechanical
engineering equipment and Minneapolis Moline and Wisconsin for agricultural
tractors, implements and engines. Escorts made a
major trust into the agricultural arena by taking on the marketing and service
franchise for Massey Ferguson tractors in Northern India, which soon comprised
75% of MF's all-India sales - a signal tribute to Escorts' inherent strengths. Its first
industrial venture came up in 1954, in partnership with Goetzewerke of Germany
for the manufacture of piston rings and cylinder liners - followed by production of
pistons in collaboration with MAHLE of Germany, in 1960. The company's
incorporation in its present name, Escorts Limited, was effected on 18th January,
1960.

Escorts' next major industrial activity was the assembly of tractors in 1961 in
technical cooperation with URSUS of Poland. Subsequently this led to the
manufacture of the country's first indigenous tractors under Escorts' own brand
name, which were to play a pivotal role in the Green Revolution. This went on to lay
the foundations that even today are the Company's core strengths -relevant, world-
standard technology through strategic international alliances; a broad based
marketing and service network yet unrivalled; powerful symbiotic relationships
with suppliers and dealers and above all, the crusade to make a difference.
Beyond the growth of the organization, these principles have ensured that Mr. H. P.
Nanda's contribution to the cause of

industry and the consumer will endure. He pioneered the revolutionary concept of
'interdependence' between ancillary and large industries, institutionalizing vendor
development and in the process building Faridabad and the entire belt of townships
in the region. He introduced the discipline of service going before marketing,
reassuring the customer that Escorts would stay with them, that they were here for
the long run. He built lasting alliances with an array of the world's most respected
names in tractors, industrial equipment, two-wheelers, construction equipment and
telecommunications. Going further, he created institutions devoted to value
engineering and training, not only as investments in the company's future but also as
catalysts for the enhancement of Indian industry as a whole: The Escorts R&D Centre
and The Escorts Institute of Farm Mechanization. His concern extended to the society in
which he worked, and he manifested it by establishing the Escorts Medical Center at
Faridabad, Escorts Heart Institute and Research Centre at New Delhi, as well as
numerous village development programmes. And above all, he imbued the corporation
with his own pioneering, entrepreneurial spirit, instilling both a conscience.
Board of Directors of Escorts Limited

CHAIRMAN & MANAGING

DIRECTOR MR. RAJAN
NANDA

JOINT MANAGING DIRECTOR

MR. NIKHIL
NANDA

DIRECTORS DR. M.G.K. MENON

DR. S.A. DAVE

DR. P.S. PRITAM

DR. S.C. BHARGAVA

VICE PRESIDENT -

LAW & COMPANY SECRETARY MR. G. B.

MATHUR

EXEC. VICE PRESIDENT & GROUP

FINANCE CHIEF OFFICER MR. R.K.
BUDHIRAJA

LOGO RATIONALE
The hexagonal nut (in
red) represents a
geometric perfection. The
nut has been a functional
device that has stayed at the core of mankind’s engineering adventures. In spite of
modern technologies coming in, it still remains unarguably a symbol of technology
and all that holds it together. Locked into the nut is a spanner (in white), the turning
force for the symbol of technology. The two pictorial elements are configured
together to form an 'E', a pneumonic for Escorts.

A doctrine of corporate and engineering openness, the Escorts logo allows an aisle, a
pathway through which new ideas can walk in any time freely, giving Escorts the
character to listen and absorb new and fresh thoughts.

The symbol with its three meanings makes a rebus or visual pun and is rendered in
red, the color of energy and dynamism. Every time it is used, it represents the
Escorts seal of quality and excellence.

ABOUT AGRI MACHINERY GROUP

Background

In 1960, Escorts set up the strategic Agri Machinery Group (AMG) to venture into
Tractors.
In 1965, they rolled out their first batch of tractors under the brand name of escort.

In 1969 a separate company, Escorts Tractors Ltd., was established with equity
participation of Ford Motor Co., Basildon, UK for the manufacture of Ford
agricultural
Tractors in India.
In the year 1996 Escorts Tractors Ltd. formally merged with the parent company,
Escorts ltd.
Since inception, we have manufactured over 1 million tractors.

Technologies

Escorts AMG has three recognized and well-accepted tractor brands, which are on
distinct and separate technology platforms.

Farmtrac: World Class Premium tractors, with single reduction and epicyclic
reduction transmissions from 34 to 75 HP.

Powertrac: Utility and Value-for-money tractors, offering straight-axle and hub-

reduction tractors from 34 to 55 HP. India’s No.1 economy range – engineered to
give spectacular diesel economy.

Escort: Economy tractors having hub-reduction transmission and twin-cylinder

engines from 27 to 35 HP. Pioneering brand of tractors introduced by Escorts with
unbeatable advantages.
 International Subsidiaries

 Escorts AMG has two international subsidiaries

 Farmtrac North America LLC in the U.S.A

 Farmtrac Tractors Europe Sp.z o.o.in Poland

 They now cater to 41 countries

AGRI MACHINERY’S FUNCTIONAL DEPARTMENT

DETAILS OF ESCORTS TRACTORS

Farmtrac 30 Hero [26-30 HP Category]

Escort Series

Escorts 325 Josh [25-30 HP Category]

Escorts Jawan MPT [25-30 HP Category]

Escorts 335 Josh [31-40 HP Category]

Farmtrac Series

Farmtrac 35 Champion [31-40 HP Category]

Farmtrac 45 [40-45 HP Category]

Farmtrac 50 [45-55 HP Category]

Farmtrac 60 [50-60 HP Category]

Farmtrac 70 [60-70 HP Category]

Farmtrac 80 [71-80 HP Category]

PRODUCT KNOWLEDGE

Segmentation of Tractors
The Indian tractor industry, in line with the tractor industry worldwide, is
segmented on the bases of the power delivered by the engine. i.e., horsepower (HP).
However the average tractor size in India is 35hp, while it is much higher in
developed countries. While in the international market, the tractors with an engine
power of less then 50 hp are classified as small tractors, those with less than 30 hp
are classified as small tractors but, in India, 31-40 hp as medium range tractors and
those over 40 hp as large tractors.
 Tractor: Segment-Wise Break-Up On The Basis Of HP

Small tractors
The 21-30 hp small tractors account for 20 % of the total demand. These tractors
are suitable for soft soil condition of northern states such as Punjab haryana and
western part of Uttarpradesh.

Medium range tractors

The medium range segments comprising 31-40 hp tractors for around 50 % of the
total tractor sales. These tractors are best suited for the Indian soil condition and
haulage requirements.

Large tractors
The rich farmers with large land holdings, especially in Punjab and Haryana, prefer
the above 40 hp tractors. Most of the replacement demand is from these segments,
as the farmers upgrade to high- powered tractors.
 REVIEW
OF
LITERATURE
Ratio analysis

A ‘ratio’ is defined as the indicated quotient of two mathematical expressions and as

the relationship between two or more things. In Financial analysis, a ratio is used as
benchmark for evaluating the financial position and performance of a firm. Ratios
help to summarize large quantities of financial data and to make qualitative
judgment about the firm’s financial performance.
Ratio analysis involves comparison for a useful interpretation of the financial
statements. Single ratio in itself does not indicate favorable or unfavorable
condition. Therefore in this report it is compared with:

 Past ratios, i.e. ratios calculated from the past financial statements of the
same company.
 Competitor’s ratios, i.e. Ratio of the major competitor at the same point in
time.
 Projected ratios, i.e., ratios developed using the projected, Performa,
financial statements of the same firm.

Since liquidity ratios and Activity ratios help to measure the firm’s ability to meet
current obligations and firm’s efficiency in utilizing its assets respectively, these two
have been used
OBJECTIVE OF RATIO ANALYSIS

 It is helpful in analysis of financial statement.

 It helps in simplification of accounting data.
 Helpful in comparative studies.
 It helps in locating weak spots of the business.
 Helpful in forecasting.
 Estimate about trends in business
 To have effective control.
 To study about the financial soundness.
 Helps in fixation of ideal standards.

NOTE: As, separate financial reports are not maintained for AMG, figures have
been taken from the balance sheet of Escorts.

Limitations of Ratio analysis

 It is difficult to decide on the proper basis of comparison.

 The comparison is rendered difficult because of differences in situations of
two companies or of one company over years.
 Price level changes make the interpretation of ratios invalid.
 The differences in the definition of items in the balance sheet and profit and
loss account make the interpretation of ratios difficult.
 The results are based on highly summarized information. Consequently,
situations that require control might not be apparent or situations that do not
want significant efforts might be unnecessarily highlighted.
TYPES OF RATIO

There is four types of ratio which is used for calculating the firm financial position

RATIO
ANALYSIS

LIQUIDITY ACTIVITY PROFITABILITY LEVERAGE

RATIO RATIO
RATIO RATIO

Liquidity Ratios

Liquidity ratios measure the ability of the firm to meet its current obligations. It is
necessary to strike a proper balance between high liquidity and lack of liquidity. A
high degree of liquidity means that a firm’s fund will be unnecessarily tied up in
current assets. Whereas lack of liquidity, implies failure of a company to meet its
obligations due to lack of sufficient liquidity.
The ratios, which are used for the analysis of Escorts liquidity position in this
report, are:

 Current Ratio
 Quick Ratio

CURRENT RATIO

LIQUIDITY
RATIOS
QUICK RATIO

Activity Ratios

Activity Ratios are used to evaluate the efficiency with which the firm manages and
utilizes its assets. These ratios are also called turnover ratios as they indicate the
speed with which the firm manages and utilizes its assets.

Activity ratios, which are used to analyze Escorts effectiveness in Asset utilization,
are:

 Inventory Turnover
 Debtor Turnover
 Net Assets Turnover
 Current Asset Turnover
  Creditor Turnover

INVENTORY TURNOVER

DEBTOR TURNOVER

ACTIVITY NET ASSEST TURNOVER

RATIOS
CURRENT ASSEST
TURNOVER

CREDITOR TURNOVER

Profitability Ratio

A company should earn profits to survive and grow over a long period of time.
Profit is the measurement of the efficiency of the business.
Generally there are two types of profitability ratios calculated:
 Profitability in relation to sales.
 Profitability in relation to investment.
Profitability ratios, which are used to analyze Escorts profitability, are:

 Gross Profit Ratio

  Net Profit Ratio
 Operating profit Ratio
 Return On Equity
 Rate of Return

GROSS PROFIT RATIO

NET PROFIT RATIO

PROFITABILITY
RATIO
OPERATING PROFIT
RATIO

RETURN ON EQUITY

RATE OF RETURN

LEVERAGE RATIOS

Long term creditors like the debentures holders; financial institutions etc. are
interested in the firm’s long-term financial strength. These ratios are they become
due.

To judge the financial position of the firm, financial leverage, or capital structure
ratio are calculated. These ratios indicate mix of funds provided calculated to assess
the ability of the firm to meet its long-term liability as and when
by owners and lenders.

Leverage ratio for find the long term liability of Escorts are
  Debt –Equity Ratio
 Debt to total fund ratio
 Proprietary ratio

DEBT EUITY
RATIO

LEVERAGE DEBT TO TOTAL

RATIO FUND RATIO

PROPRIETARY
RATIO
DATA ANALYSIS
&
INTERPRETATION
 Performance at a glance
(AMG)

Financial

performance

Profit Before Tax (in crores)

2014-15
2012-13 2013-14
26.14
PBT 34.44 -17.33
Profit after tax (in crores)

2012-13 2013-14 2014-15

PAT 19 -6.44 11.87

Current ratio
Current ratio is calculated by dividing current assets by current liabilities:

Current ratio = Current Assets

Current Liabilities

2012-13 2013-14 2014-15

Current Ratio
1.13 1.30 1.29

Significance:- As a conventional rule a current ratio of 2 to 1 or more is considered

satisfactory because in a worse situation, even if the value of current assets become
half, the firm will be able to meet its obligation. Current ratio refers to the margin
of safety for creditors therefore higher the current ratio, the greater the margin of
safety.

Quick Ratio

Quick ratio establishes a relationship between quick or liquid assets and current
liabilities. An asset is liquid if it can be converted into cash immediately or
reasonably soon without a loss of value. Inventories are considered to be less liquid
therefore for calculating quick ratio they are deducted from current assets.

Quick Ratio = Current Assets – Inventory

Current Liabilities

2012-13 2013-14 2014-15

Quick ratio 0.81 1.04

0.98
.

Comment:-Escorts’ quick ratio in the current year has decreased in comparison to

previous year. Although quick ratio is more penetrating test of liquidity than current
ratio, yet it should be used cautiously as all debtors may not be liquid and cash may
be immediately needed to pay operating expenses.

Significance: Generally, the quick ratio of 1:1 is considered to be satisfactory. Quick

ratio thus more rigorous test of liquidity than the current ratio and, when used
together with current ratio, it gives a better picture of short term financial position
of the firm
Inventory Turnover

It indicates the efficiency of the firm in producing and selling its product. It is
calculated by dividing Sales by average inventory. In a manufacturing company
inventory of finished goods is used to calculate inventory turnover.

Inventory Turnover = Sales

Average Inventory

2012-13 2013-14 2014-15

Inventory turnover 10.15 13.10 9.87

Significance:-
This ratio indicates whether or not the stock has been efficiently utilised. It shows
the speed with which the stock is rotated into sales. The higher the ratio, the better it
is, since it indicates that the stock is selling quickly. In business where stock
turnover is high goods can be sold at low margin of profit and even then the
profitability can be high.

Comments:
Escorts Inventory turnover ratio of the company is good it means that there is
proper outflow of the stock and goods do not remain in the go down for a long time

Debtors Turnover Ratio

Debtors’ turnover indicates the number of times debtors’ turnover each year. Higher
the value of Debtors turnover, the more efficient is the management of credit. The
liquidity position of the firm depends on the quality of the debtors to a great extent.
Two ratios being used in the report to analyze liquidity of debtors are:

 Debtors Turnover
 Collection Period

Debtors Turnover = Net credit sales

Average debtor

2012-13 2013-14 2014-15

Debtors turnover 0.26 0.31 0.16

Collection Period
= Debtors x no
of days

Gross Sales

2012-13 2013-14 2014-15

Collection period 49.00 65.50 77.13

NOTE: For calculating the collection period, the number of days have been taken
as 365 instead of 300.

Significance: This ratio indicates the speed with which the amount is collected from
debtors. The higher the ratio, the better it is, since it indicates that amount from
debtors is being collected more quickly. The less the risk from bad debt, and so the
lower the expenses of collection and increase in the liquidity of the firm

Comment: Likewise the collection period has also increased which is not a good
indication.
The shorter the average collection period, the better the quality of debtors, since a
short collection period implies prompt payments by debtors. Although Escorts has a
zero debt credit policy but through channel finance facility by means of hundi it is
giving credit up to 90 days, comparing this with the average collection period, its
collection and credit efficiency appears to be satisfactory.

Net Assets Turnover Ratio

A firm’s ability to produce a large volume of sales for a given amount of net assets is
the most important aspect of its operating performance. Unutilized or underutilized
assets increase the firm’s need for costly financing as well as expenses for
maintenance and upkeep. Net assets turnover is calculated by dividing sales by net
assets.

Net assets turnover = Sales

Net Assets

2012-13 2013-14 2014-15

NAT 1.12 1.34 1.22

Significance: This ratio is of particular importance in manufacturing concerns
where the investment in assets is quite high. This ratio reveals how effectively the
assets are being utilised, compared with previous year.

Comment:-. The net assets turnover of 1.22 implies that it is producing Rs. 1.22 sales
for one rupee of capital employed.
It should be interpreted cautiously because the denominator of the ratio includes
fixed assets net of depreciation. Thus old assets with lower book value may create a
misleading impression of high turnover without any improvement in sales.

Current Assets and net working capital turnover ratio

This ratio shows the efficiency with which the firm is utilizing its current assets.

Current Assets Turnover = Sales

Current Assets

2012-13 2013-14 2014-15

Current assets turnover ratio 2.57 2.62 2.35

 Note :- Lone and advances are not taking when we calculate current assets

Net working capital turnover ratio = Sales / Net Working

Capital

2012-13 2013-14 2014-15

Net working capital turnover ratio 13.00 11.19 10.51

Comment:-
Interpreting
the
reciprocals
of these ratios Escorts need Rs 0.095 investments in current assets for generating a
sale of one rupee.

In case of working capital turnover Escorts has significantly improved. It needs Rs

0.095 of net current assets for generating sale of one rupee which has increase from
Rs 0.089

Creditors turnover ratio

Creditors turnover = Net credit purchase

Average Creditors

2012-13 2013-14 2014-15

0.46
C.T 0.37 0.52
 Profitability Ratio

GROSS PROFIT RATIO:

Gross margin, Gross profit margin or Gross Profit Rate can be defined as the
amount of contribution to the business enterprise, after paying for direct-fixed and
direct-variable unit costs, required to cover overheads (fixed commitments) and
provide a buffer for unknown items. It expresses the relationship between gross
profit and sales revenue.

The ratio shows the relationship between gross profit and sales.

Gross Profit Ratio = Gross profit x 100

Net Sales
Net Sales = Sales – Sales Return

2012-13 2013-14 2014-15

GPR 14 12.86 15.70

Significance:
This ratio
measures the
margin of profit
available in on
sales. No ideal
standard is fixed
for this ratio, but it should be adequate enough to meet not only operating expenses
but also to provide for depreciation, interest on loans, dividends and creation of
reserve.

Comment:- As the figure constitute that the Gross profit of the company is
continuously increases which is very significant result but still company have to find
out new way to increase there profit

Net Profit Ratio:

Profit margin, net margin, net profit margin or net profit ratio all refer to a measure
of profitability. It is calculated by finding the net profit as a percentage of the revenue.

(a) Net Profit Ratio = Net Profit x 100

Net Sales

2012-13 2013-14 2014-15

NPR 1.08 -0.31 0.60

Significance:-
The profit
margin is mostly
used for internal
comparison. It is difficult to accurately compare the net profit ratio for different
entities. A low profit margin indicates a low margin of safety: higher risk that a
decline in sales will erase profits and result in a net loss.

OPERATING PROFIT RATIO:

In business, operating margin, operating income margin, operating profit margin or

return on sales (ROS) is the ratio of operating income divided by net sales, usually
presented in percent

Operating Profit Ratio = Operating Net Profit x 100

Net Sales

Operating net profit = net profit+ non operating expenses-non operating income

2012-13 2013-14 2014-15

OPR 3.51 0.007 1.57
RETURN ON EQUITY (ROE):

Equity shareholders of a company are more interested in knowing the earning

capacity of their funds in the business. As such, this ratio measures the profitability
of the funds belonging to the equity shareholders. Since the profit available to equity
shareholders will be the profit left after payment of interest, taxes and dividend on
preference share capital.
Net profit after interest, tax an Preference dividend

= Return on Equity Shareholder’s Funds x 100

Equity Shareholder’s Fund

For e.g.: Net worth =1crore

Loan @10%=30 lacks
Tax rate =30%
Share =1 lacks
Profit =10 lacks (before interest and tax)
Profit after interest but before tax =10 lacks- 3 lacks=7 lacks
Profit after tax =7lacks- 2.10lacks=4.9lacks
Return on equity = 4.9-2=2.9 lacks
Equity Shareholder’s Funds = Equity Share Capital + All Reserves + P/L a/c
balance - fictitious assets - debit balance of the P/L a/c

2012-13 2013-14 2014-15

ROE 1.87 -0.58 0.99

Significance:
This ratio
measures how
efficiently the equity shareholder’s funds are being used in the business. It is true
measure of the efficiency of the management since it shows what the earning
capacity of the equity shareholders funds. The higher the ratio, the better it is,
because in such a case equity shareholders may be given a higher dividend..

Comment:-Escorts Equity shareholder fund is increase in current year in compare

to previous year so it is good because the earning of share holder is increase . But
the graph is fluctuating; this shows that the shareholders are not getting constant
return on their investments. So company have to stable there Equity shareholder
fund ratio
Rate of return:
In finance, rate of return (ROR), also known as return on investment (ROI), rate of
profit or sometimes just return, is the ratio of money gained or lost (whether realized
or unrealized) on an investment relative to the amount of money invested. The
amount of money gained or lost may be referred to as interest, profit/loss, gain/loss,
or net income/loss. The money invested may be referred to as the asset, capital,
principal, or the cost basis of the investment. ROI is usually expressed as a
percentage rather than a fraction

Profit before interest, tax and dividend = Profit after interest but before tax +
interest paid - interest income

2012-13 2013-14 2014-15

ROR 11.72 4.61 6.82

Significance:
This ratio helps
in taking
decisions
regarding capital
investment in the
new projects. The
new projects will be commenced only if the rate of return on capital employed/ net
worth in such projects is expected to be more than the rate of borrowings.

Comment: The rate of return of Escorts is increase current year in compare to

previous year which is significance.
 LEVERAGE RATIOS

DEBT-EQUITY RATIO:

Several debt ratios may be used to analyse the long term solvency of the firm. The
firm may be interested in knowing the portion of the interest-bearing debt (also
called funding debt) in the capital structure. It indicates the proportion of funds
which are acquired by long term borrowing in comparison to shareholders funds.

Debt Long Term Loan

Debt Equity Ratio = OR
Equity Shareholder’s Funds

Long-term Loans: - Debentures + Mortgage Loans + Bank Loan+ Loan from

Financial Institutions and Public Deposits.
Shareholders Funds: - Equity Share Capital + Preference Share Capital + Share
Premium + General Reserves + Capital Reserves + Credit Balance of Profit and
Loss Accounts and Accumulated Losses and Fictitious Assets are deducted.

Year 2012-13 2013-14 2014-15

Debt Equity Ratio 0.60 0.42 0.39
Significance: The normally accepted debt equity ratio is 2:1. If this ratio is higher
than 2:1, it means that long term borrowing is more than twice in comparison to
funds to provide by owners and it will indicate a risky financial position.
Comment:-As we can see that the firm debt-equity ratio is continuously decrease so
we can say that the firm financial position is good to ay it’s long term debt

DEBT TO TOTAL FUNDS RATIO

This ratio expresses the relationship between long term debt and shareholder’s
fund. It indicates the proportion of funds which are acquired by long term
borrowings in comparison to shareholder’s funds. This ratio is calculated to assess
the ability of the firm to meet its long term liabilities.

Debt Long term loans

Or
Debt to total funds Ratio =
Debt + Equity Long term loans + Shareholder’s Fund

Long Term Loans = Debentures + Mortgage Loans + Bank Loans + Loan from
Financial Institutions + Public Deposits.

Shareholder’s fund = Equity Share Capital + Preference Share Capital + Share

Premium + General Reserve + Capital Reserve + Other Reserves + Credit Balance
of P/L account - Accumulated Losses -Fictitious Assets - Debit balance of P/L
account.
 FOR E.G.= long term loan= 1 lack
Share holder fund=2 lack
Debt Equity ratio= .33
Or
Long term loan = 2 lack
Share holder fund = 1 lack
Debt equity ratio= .666

Year 2012-13 2013-14 2014-15

Debt To Total 0.65 0.74 0.76
Fund Ratio

Significance: -
Debt to total
funds ratios of
0.67:1 (or 67%)
is considered
satisfactory. A
higher ratio than this is generally considered as the indicator of risk. Because it
means that the firm depends too much on outsides loans for the existence. Any
withdrawal of funds by the lenders will put the company in difficulties.
Comment: Debt-Equity ratio of Escorts is going to increase which is not satisfactory.
From the above example we can say that the debt equity ratio is less than in
compare to previous year .this graph shows that the long term loan is greater than
the share holder fund which is not good for the company.

PROPRIETORY RATIO:

This ratio indicates the proportion of total funds provided by owners or

shareholders.

Equity Shareholder’s Funds

Proprietary Ratio = or
Debt + Equity Shareholder’s Funds + Long-Term loans

Year 2012-13 2013-14 2014-15

Proprietary Ratio 0.40 0.42 0.29

Significance: -
The ratio should
be 33% or more
that that. A
higher
proprietary ratio is generally treated as an indicator of sound financial position
from long term point of view. Because it means that firm is less dependent on
external sources of finance. On the other hand lower the ratio, the less secured are
the long term loans and the face the risk of losing their money.

RESEARCH
METHODOLOGY

Research Methodology
1. OBJECTIVE OF THE RESEARCH

 How the consumers perceive the brand Reebok vis-à-vis competitors.

 Do the comparative analysis of Reebok with competitive brands on

certain attributes.

 To know the similarities and dissimilarities between the various brands

under consideration.

 To make a multi-dimensional perceptual map for the brands under

consideration.

 To gauge the store image of Reebok vis-a-vis

competitors.

 To know the effectiveness of Reebok advertising

 To study the ratio analysis of ESCORTS LTD.

 To compare the correct items with the preplanned items with a view to
attain equilibrium between ends and means , output and effort.

 To correct the deviations from preplanned path through the media of Observation,
research planning control and decision making.

 To establish divisional and departmental responsibility.

To know the straights, weakness, threats and opportunities of the Company

  Information related to the brand through brochures, visiting the
manufacturing unit at Naurangpur.

 Information on brand position

2. Information regarding various tools to be used to measure attitudes &

analyse the collected data

OBJECTIVE OF THE STUDY

 To know employees preferences regarding welfare facilities provided by the
company.

 To study the information regarding the welfare policies provided by the

company to the employees.

 To check the role of management while providing welfare schemes.

 The study aims at providing relevant information for marking the

necessary amendment in the welfare policies of the company.

 To know how employees are availing the welfare schemes.

 To know the formalities fulfilled before availing the welfare schemes.

 FOCUS OF THE STUDY

 Although every effort has been in to collect the relevant information through the
sources available, still some relevant information could not be gathered.

 Busy Schedule of Concerned Executives: The concerned executives were having

very busy schedule because of which they were reluctant to give appointment.

 Time: The time duration could not provide ample opportunity to study every detail
of working capital management of the company.

 Unawareness: Executives were unaware of many terms related to working capital

study while asking to them.

 Confidential Information: As the company on account of confidential report has not

disclosed some figures. Moreover, in some cases separate accounts of division are
not separately maintained thereby, leading to restrictions in study.
 RESEARCH PROBLEM

A researcher experiences some difficulty either in a theoretical and practical situation

and wants to obtain a solution.

Major components of a research problem:

 If someone goes for a research then there should be a problem for which he go and
solved it.

 The problem should be helpful for achievement of objective.

 There are alternative means to achieve objectives, and the researcher must know
about the favorable and unfavorable means of the objective.

 There is a doubt in the mind of the researcher, so that researcher can achieve his
objective.

 The environment should be problem pertaining so that he can found the problem
and for solving it he can do research.

Research Methodology
 “Research is a systematized effort to gain new knowledge.” It is a systematic study
consisting of a problem formulating a hypothesis collecting the facts and data,
analyzing the facts and reaching for certain conclusions, which can be in the form of
either solution towards a problem.

1. RESEARCH DESIGN:

A research design is the arrangement of conditions for collection and analysis of data
in a manner that aims to combine relevance to the research purpose with economy in
procedure. The research design used in my study is basically descriptive in nature.

i) Descriptive Research: The research design in my study is descriptive. Its studies are
concern with describing the characteristics of a particular group or individual.
Studies concerned with specific prediction with narration of facts and characteristics
concerning individual, group or situations are examples of descriptive research .it is
also known as social research.

2. SAMPLE DESIGN:

A sample design is a definite plan for obtaining a sample from a given population. It
refers to the technique or the procedure the researcher would adopt in selecting items
for the sample i.e. the size of the sample. Stratified sample method is adopted to select
the sample.

3. SAMPLE UNIT:
 Sample is made on the basis of the stratified sampling, in this type of sampling
simple random and sub sample are drawn from different data which are equal o some
characteristics. The first step in stratified sampling choosing a strata on the basis of
existing information.

4. SOURCES OF DATA COLLECTION :

The study made in use of both primary and secondary sources.

 PRIMARY DATA COLLECTION: The survey has been undertaken on the lines of
interaction with employees of different plants and managers of the company with the
help of structured questionnaires.

 SECONDARY DATA COLLECTION: Secondary data have been collected from

various sources involving induction manual, internet etc that were of considerable
help to me,
 FINDINGS
,SUGGESTIONS AND
CONCLUSIONS
 FINDINGS OF THE STUDY

 Current assets have increased by 30.89 crores.

 Large no. of assets are financed by debts.
 Current assets are less than current liabilities.
 Rotation of inventory has increased.
 Twice increment in profit margin.
 Attempt should be made to reduce cost and expenses.
 Current assets should be increased.
 More aggressive strategies should be adopted.
 Tie-up with banks and financial institutions.
 Special efforts should be made to analyse loans and advances
 RECOMMENDATIONS & SUGGESTIONS

LOANS AND ADVANCES

Special efforts should be made to analyze loans & advances, which are between 35% to
56% of current assets. This can be classified between production / operation relation related
and non-production / operation related. No production related cases might be financed from
other sources like debenture etc. and treated separately.

INVENTORY
Inventory should be reviewed constantly to identify show / dead / obsolete item and then
disposed. Optimum level should be revised periodically, keeping in view, distance of suppliers,
production lead time of supplier, transport problem if any and reliability of suppliers. This will
help to avoid obsolesce and dead inventory.

DEBTORS
A study may be conducted if required by experts to pinpoint reason behind ESCORTS LTD.
high correction period of 95 days in 2009-10 against 50 days of Mahindra & Mahindra. It is
due to quality of products, quality of customer, the segment of customers marketing effort,
distribution pattern or other reasons.

CREDITORS
Though high payout days may be apparently beneficial for the company. It has it very heavy
long term cost like high interest cost, bad credit ratings and shyness of good quality / standard
suppliers.

 Creating awareness among the customer is must.

 It should give more emphasis on the sales promotion.
 Dealers should be given some advantage on selling of MPT
 Fuel efficiency should be increased.
 It should be converted into a single cylinder tractor.
 It should make its existing customer satisfied.
 Proper accessories should be provided to the customer.

CONCLUSION
The study allowed us get answers regarding the service awareness among people

and the problems it faces. The key findings and analysis of the survey showed the

following

 A large number of clients and customers call the branch frequently to handle

company issues , this shows the keenness of the customers to call the branch

for almost every small issue. The service Straight to company does provide

an answer to the problem of the customers.

 The service provided by straight to company does offer the main

requirements of the customers for which they visit or call the branch

 Few of the respondents were aware about the service which was desired by

100% respondents clearly showing that there has been a falter in its

promotion and awareness strategies.

BIBLIOGRAPHY
 BIBLIOGRAPHY

World Wide Web

www.escortsagri.com
www.mahindra.com
www.businessfinancemag.com
www.gtnews.com
www.investopedia.com
www.planware.com
www.icraindia.com
www.myiris.com/share/company
www.contentlinks.asiancerc.com/sbicap/market.asp
www.wikipedia.com

Articles other than Web

MIS reports of Escorts