ACKNOWLEGEMENT

I am very thankful to our Principal Prof.Dr.K.R.Shimpi, for giving us a great opportunity of preparing a project report on Finance, which will really improve our skill & will give us practical knowledge. I am very thankful to our Subject Teacher Mrs.Hema Burang who has given me a chance to study & select the subject of project according to my interest & I also thank her for giving the valuable knowledge & support about project & helping me in all the way to complete my project in systematic manner. I wish to thank Mr. Mayur Bumb, Financial Controller of Perfect Circle India Ltd., Nashik who has guided me by giving valuable data regarding Project Report. I would also like to thank Mr. V. V. Dorle & Mr. P. S. Baheti for helping me in project report. I wish to thank all those who have helped me directly & indirectly to complete this project report.

Date:-17/10/08

Roshani R. Artani

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INDEX
Sr. No. 1. 2. 3. 4. 5. 6. 7. 8. 9. Content Introduction Profile of Perfect circle Ltd Ratio Analysis Comparative Study of Financial Statements Statistical Analysis of Financial Data Questionnaire Observations & Recommendations Conclusion Bibliography Page No. 3-6 7 - 15 16 - 28 29 - 31 32 - 38 40 41 42 43

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1.
A) B) C) D) E)
A)

Introduction
Need and importance of project work. Objectives of project work. Objectives of the firm. Hypothesis Project methodology

NEED AND IMPORTANCE OF PROJECT WORK

Project work is a unique method of teaching and learning for all the students in the management field. It is an educational reform of great significance. Through project works we get to learn new things on our own. It builds up our confidence and it teaches us to work and deal with things systematically. Project work is an activity with well defined objectives having specific beginning and end. It is a method of discovering truth, through critical thinking. Thus, project work is a must for all the management students or people who tend to work in the field of business management.

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B) OBJECTIVES OF PROJECT WORK

The main objective of project work is to provide students an opportunity to investigate a problem applying commerce and management in a scientific manner. It enables them to apply their conceptual knowledge, study it systematically and then present its findings and recommendations in a proper report. Project objectives are an important element in the project planning cycle. Project objectives are concerned with defining what the project is expected to achieve and to provide a measure of performance. The essential requirements for the project work are: 1. specific, not general 2. not overly complex
3. measurable, tangible, and verifiable

4. realistic and attainable 5. established with resource bounds 6. consistent with resource available
7. Consistent with organizational plans, policies and procedures.

Thus, project objectives help in completing the project on time.

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C) OBJECTIVES OF THE FIRM

1. To give the best quality products. 2. To render best quality products. 3. To know whether the profit margin is adequate or to be increased to make the business more profitable and professional. 4. To check whether the routine procedures are practiced systematically. 5. To ensure best working conditions to the employees working in the firm.
6. To create a status in the market and to stand successfully in the

competition with other existing products. 7. To maximize customer satisfaction. 8. To maximize the sales and turnover of the business. 9. To increase the goodwill in the market and society.

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D) HYPOTHESIS
I want to prove that working capital management is now a day very important in the organization. The day to day operation of the company depends upon the working capital. So that funds are properly used & not get locked in investments.

E) PROJECT METHODOLOGY
The basic purpose of research is to obtain a new knowledge. It is also directed towards solution of a problem and is based on experience and evidence. It demands accurate observations. It involves gathering of new data from primary sources or the existing ones. A project work is a method of thorough exposure to the world of work and experience. It is learning of new information, knowledge, developing skills, ability and attitude.

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Perfect Circle India Limited

PERFECT CIRCLE

2. Profile of Perfect Circle India Limited

A) About company B) Corporate profile C) Financial Highlights D) Company Highlights E) Product Introduction F) Social Responsibility G) Awards

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Perfect Circle India Limited

PERFECT CIRCLE
A) About company 1. Name of company
Perfect Circle India Limited.

2. Corporate Offices
1, Sri Aurobindo Marg, New Delhi-110016. Magnet House. N.M. Marg Ballard Estate. Mumbai-400038.

3. Registered & Administrative office

20, MIDC Estate, Satpur, Nashik-42007. Maharashtra. Tel: (0253) 2202800.

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Perfect Circle India Limited

PERFECT CIRCLE
4. Manufacturing Facilities
Piston Ring Division 20, MIDC Estate. Satpur, Nashik42007. 2. Casting Division.E-34, MIDC Estate.Satpur, Nashik422007. 3. Ductile Plant.19, MIDC Estate. Satpur, Nashik-42007.
1.

5. Board of Directors
K.N.Subramaniam Chairman C. S. Patel Padmini Khare Ranjit Barthakur Gurdeep Singh A. K. Agrawal

6. Financial Controller
Mayur Bumb

7. Bankers
1. Union Bank of India. 2. Standard Chartered Bank.

8. Auditors
Price Waterhouse & Co. Chartered Accounts, Mumbai.

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Perfect Circle India Limited

PERFECT CIRCLE
B) Corporate Profile
Perfect Circle India Limited, a very well known name in India auto component industry, started manufacturing of piston ring & casting in 1976 at its manufacturing facilities at Nashik. These facilities are state-of-the-art foundry for regular iron castings & a machining plant. The Company manufactures Piston Ring for application in Passenger Car, Jeep, Light / Heavy Commercial vehicles, Tractor & stationary engines. Piston Rings are self tensioned circular metal pieces, which are installed in piston grooves to provide the movable seal between the combustion chamber & the crankcase. Ring are critical component of the engine since they provide an effective seal to the combustion gases & prevent lubrication oil from reaching the combustion chamber. Its products are sold under the world-renowned brand name of Perfect circle piston rings, have established strong presence both in domestic as well as overseas market & are considered to be at the top end of the automotive component industry. The company has financial cum technical collaboration with Dana Corporation, USA. A fortune 500 company and a world leader in these product technologies. Certified for both QS 9000 & ISO 9002, the company was the first in India its product category to receive the ISO certification as far as back as 1993. The company also has certification for ISO 14001 & OHSAS 18001 from Bureau VERITAS Quality International, UK for environment management & health & safety respective.

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Perfect Circle India Limited

PERFECT CIRCLE
C) Financial Highlights
Sr.No. 1 2 3 4 5 6 7 8 9 Face Value per share 10 Net Worth per share 11 12 13 Earning per share Dividend per share Dividend cover ( firmer) 8.6 4 2.2 1.7 0.6 2.8 0.1 0.6 0.1 (3.4) (0.7) 98 13.3 13 9.3 8.6 Particular Sales (Rs. Million) PBD&I Million) (Rs. 2003 -04 621 114.2 50 36 18.4 8 5.8 8.9 8 2004 05 716.3 147.8 91.1 56.4 20.6 12.7 7.9 12.8 1 2007-08 2005 -06 2006 -07 692.2 74.3 12.7 2.2 10.7 1.8 0.3 0.01 1 787 (30.1) (121.3) (113.7) (3.8) (15.4) (14.4) (36.5) 1 839.6 82.8 (23.2) (24.3) 9.80 (2.72) (2.80) (8.5) 1

Profit Before Tax (Rs. Million) Profit After Tax (Rs. Million) PBDIT as % to sales PBT as % to sales PAT as % to sales Return on Net worth %

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Perfect Circle India Limited

PERFECT CIRCLE
D) Company Highlights 1. 2007 -2008
1. Sales up by 6.7% 2. Export Sales Rs. 380.7 Million 3. 45.3% Export to Total Sale

2. 2006 -2007
1. Sales up by 13.7% 2. Export Sales Rs. 387 Million 3. 49% Export to Total Sale

3. 2005-2006
1. Export sales Rs. 293.6 Million (42.4% of sale). 2. New addition in product Portfolio Shims & Plates, Ductile Castings. 3. Sale from Casting EOU commenced.

4. 2004-2005
1. 15% Overall business Growth. 2. 72% Growth in Exports, 43% of sales. 3. Rs. 1.7 Earning per share.

5. 2003-2004
1. 2. 3. 4. 5. 36% Growth in Exports. Earning per share Rs. 8.6 Consistent dividend-paying Company. ISO 14001 Certification for Environment management. OHSAS 18001 certification Health & Safety.

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Perfect Circle India Limited

PERFECT CIRCLE
E) Product Introduction 1. Piston Ring
Piston rings are self-tensioned circular metal pieces, which are installed in 7 piston grooves to provide a movable seal between the combustion chamber & the crankcase.

Function of piston rings

1. Sealing of Combustion chamber. 2. Controlling oil consumption. 3. Heat Transfer.

Types of Piston Ring

1. Compression Rings. 2. Oil Rings.

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Perfect Circle India Limited

PERFECT CIRCLE
F) Social Responsibilities
Apart from its business activities, the company believes in contributing to the betterment of the society at large. Being leading manufactures of automotive components & systems, it has always been the ethos of Anand Group of companies to promote community welfare. With this aim, Anand Group has set up its welfare wing-SNS foundation in 1976. This NGO has established its welfare centers throughout the country where its facilities are located. These centers focus on education, health, sustainable live hood & natural resource management with governance & social justice as cross cutting agenda. The programmers also focus on empowering women through activities such as vocational training life skills & academic education. Government of India has given due recognition to this welfare wing by granting 50% tax exemption under section 80G of the Income Tax Act, 1961.

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Perfect Circle India Limited

PERFECT CIRCLE
G) Awards
In recognition of the sharp focus by the company on value-added exports, Perfect Circle India Ltd. received an Award from the Engineering Exports, Promotion Council of India, and western region for its performance in achieving highest exports. Exporters of automotive components, spare parts & accessories. The National Productivity Council has awarded the company for the second time a Certificate of Merit in the Light Engineering sector for its performance in productivity. Perfect Circle India limited is the first Indian Company to achieve the various type certifications for quality system, Standard for environment & Standard for Safety & Health. 1. 2. 3. 4. 5. 6. 7. 8. OHSAA 18001: 1999 - Standard for Safety & Health. ISO14001: 2004 - Standard for environment IOS/TS 16949 - Quality system Nation Productivity Award - 1995, 96, 98. ACMA award for productivity 1997, 98. Golden peacock National Quality Award 1998. NIMA Excellence Award 2001. Excellence Award for highest growth in exports - 1996-97.

Perfect circle India Ltd. Company is certified by Bureau Veritas Quality International (BVQI) UK.

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3. Ratio Analysis
A) Definition B) Significance of Ration Analysis C) Types of Ration Analysis A) Definition
Ratio is a statistical yardstick that provides a measure of relationship between two accounting figures. Ratio analysis of financial statements stands for the process of determining & presenting the relationship of it & group of items in the statements. Ratio analysis can be need both in the trend analysis & static analysis.

B) Significance of Ratio Analysis

The significance or importance off financial ratio analysis can be judged from the following facts.

1. A useful tool in hands of analysis

Ratio are exceptionally useful tools with which one can infer the financial performance of the enterprise over a period of time with the help of ratio analysis conclusion can be drawn regarding several aspects such as financial health profitability & operational efficiency of the under taking. The financial health of the concern can be known with the help of different short term obligation & long term solvency. They indicate strengths & weakness of the firm in this respect. Ratio can also pinpoint the operating efficiency of the firm i.e. whether the management has utilized the firms assets correctly to increase the investors wealth Ratio are also indicative of overall profitability of the concern. Thus, ratio is useful tools in the hands of management & the other concerned to evaluate the firms performance over a period of time by comparing the presents ratio with past once.

2. Inter firm comparison

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Ratio analysis provides inter firm comparison or comparison with industry averages by comparison or comparison with industry averages by comparing the firms relative position & its competitors. If comparison shows a variance the possible reasons of variations may be identified & if results are negative the corrective actions may be initiated immediately, to bring them in line it is also helpful in for warning he corporate sickness & helps the management to take corrective actions.

3. Trend Analysis
Ratio analysis enables a firm to take time dimension into account. In other words, it facilitated the management to know whether the financial position is improving or deteriorating or is constant even the years by setting a trend with the help of ratios. The analyst with the help of ratio analysis can know the direction of movement whether favorable or unfavorable. An analysis of trend of strategic ratios may help the management in the task of planning forecasting controlling. Thus ratio analysis plays a very important role in the interpretation of the financial statements correctly & to make the figures comparable & more meaningful.

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C) Type of Ratios 1. Liquidity Ratio 2. Profitability Ratio 3. Turnover Ratio 4. Leverage Ratio

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1. Liquidity Ratios
1. Current ratio. 2. Acid test ratio.

1. Current ratio
The current ratio of measures its short term solvency, that is its ability to meet short term obligation. As a measure of short terms / current financial liquidity it indicates the rupees of current assets available for each rupee of current liability / obligation. The higher is the current ratio, the larger is the amount of rupees available per rupee of current liability, & the more is the firms ability to meet current obligations, & the greater is the safety of short term creditors. Thus current ratio in a way is a measure of margin of safety to the creditors. It is however, important to note important to note that a very high ration of current assets to current liabilities may be indicative of slack management practices, as it might signal excessive inventories for the current requirement & poor credit management in terms of over extended accounts receivables. At the same time the firm a may not be making full use of its current borrowings capacity. There fore a firm should have a reasonable current ratio. Although there is no hard & fast rule, conventionally a current ratio of 2:1 is considered satisfactory. The logic underlying the conventional rule is that even with a drop out of 50% in the value of current assets, a firm can meet its obligations. That is a 50% margin of safety is assumed to be sufficient to wards off the worst situations. The rule of thumb (a current ratio 2:1) cannot, how ever be applied mechanically. What is a satisfactory ratio will different funds to finance current assets, the nature of industry & so on.

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2. Acid Test Ratio

It is a rigorous measure of a firms ability to service sort term liabilities. The usefulness of the ratio lies in the fact that it is widely accepted as the best available test of liquidity position of a firm. The ratio provides, in a sense a check on the liquidity position of a firm as shown by its current ratio. The quick ratio is more rigorous & penetrating test of the liquidity position of a firm. Yet it is not a conclusive test. Both the current & quick ratio should be considered in relation to the industry average to infer whether the firms short term financial position is satisfactory or not.

FORMULAE
Current Assets 1. Current Ratio = Current Liabilities

Quick Assets 2. Quick Ratio = Current Assets

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2. Profitability Ratios 1. Operating Net Profit Ratio 2. Operating Ratio 3. Gross Profit Ratio 4. Net Profit Ratio

1. Operating Net Profit Ratio

This ratio establishes the relationship between operating net profit & sales. The concept of operating net Profit is different from the concept of net profit. Operating net profit = Net profit + Non operating expenses (-) non operating income. Alternatively this profit can be also be calculated by deducting only operating expenses from gross profits.

2. Operating Ratio
This ratio is reciprocal to the operating net profit to sales ratio. The cost of the good sold + operating expenses are compared to net sales. Non operating expenses & non operating incomes are excluded from this ratio. The higher this ratio, the lower is the margin of operating profit. The ratio can be further analyzed to find out the percentage of each type of expense to sales.

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3. Gross Profit Ratio

The gross profit is the difference between net sales & cost of goods sold. This ratio shows the margin left after meeting the manufacturing costs. It measures the efficiency of production as well as pricing. A high gross profit ratio means a high margin for covering other expenses, other than cost of goods sold. Therefore, higher the ratio the better it is. It is also important for a business to maintain this ratio on a higher side; otherwise it will be difficult to cover other expenses.

4. Net Profit Ratio

This ratio shows the earnings left for shareholders (equity & preference) as a percentage of net sales. It measures the overall efficiency of all the functions of a business firm like production, administration, selling, financing, pricing, tax management etc. This ratio is very useful for prospective investors because it reveals the overall profitability of the concern. Higher the ratio, the better it gives idea of improved efficiency of the concern

FORMULAE
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Operating net profit 1. Operating Net Profit Ratio = Sales X 100

Cost of goods sold + operating expense 2. Operating ratio = Net sales X 100

Gross profit 3. Gross profit ratio = Sales X 100

Net profit 4. Net profit ratio = Sales X 100

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3. Turnover Ratio 1. Working capital turnover ratio 2. Debtors turnover ratio 3. Creditors turnover ratio 4. Inventory turnover ratio 5. Fixed assets turnover ratio 1. Working capital turnover ratio
This ratio compares the net sales with net working capital. The indication given by this ratio is the number of times working capital is turned around in a particular period. The higher the ratio, the better is the utilization of working capital as well as lowers the investment in working capital. However a very high working capital turnover ratio is a sign of overtrading & a firm may face shortage of working capital.

2. Debtors turnover ratio

This ratio indicates the credit policy followed by a business firm. The higher the ratio, lower is the collection period. While low ratio indicates higher collection period. An average collection period which is shorter than the credit period allowed by the firm needs to be analyzed carefully. It may mean efficient credit management or excessive conservatism in credit granting that may result in loss of some desirable sales.

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3. Creditors turnover ratio

This ratio indicates the credit period allowed by the creditors. A high turnover ratio indicates that payment to creditors is quite prompt but it also implies the full advantage of credit allowed by creditors is not taken. A low ratio indicates that payment to creditors is not quite prompt & it needs to be improved.

4. Inventory turnover ratio

This ratio establishes relationship between cost of goods sold during a given period & the average amount of inventory held during that period. The indication given by this ratio is the number of times finished stock is turned over during a given accounting period. Higher the ratio, the better it is because it shows rapid turnover of stock. A low turnover ratio is indicative of slow moving stock.

5. Fixed assets turnover ratio

This ratio indicates the number of times fixed assets are being turned over during a particular period. It is one of the indications of efficiency of using fixed assets in the business. For manufacturing concerns, this ratio is very important. The reason is that like current assets, fixed assets also contribute towards making sales. A high while low ratio indicates that fixed assets are not being used efficiently.

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FORMULAE

Net Sales 1. Working capital turnover ratio = Working capital

Credit sales 2. Debtors turnover ratio = Debtors + Bills Receivable

Credit Purchases 3. Creditors turnover ratio = Creditors + Bills Payable

Cost of goods sold 4. Inventory turnover ratio = Average stock Inventory

Net Sales 5. Fixed assets turnover ratio = Net fixed assets

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4. Leverage Ratio 1. Proprietary ratio 2. Debt-Equity ratio 1. Proprietary ratio

It is primarily the ratio between proprietors funds & total assets. It indicates the strength of the funding of the company. As a very rough measure, it may be suggested that 2/3 to 3/4 of the total assets should be financed by proprietors funds. However, the optimum ratio is different in different lines of business. A high ratio will definitely indicate high financial strength but a very high ratio will indicate inadequate utilization of external equities.

2. Debt-Equity ratio
This ratio is calculated to measure the comparative proportions of outsiders funds & shareholders funds invested in the company. The DebtEquity ratio indicates how many rupees have come from borrowings for every rupee of shareholders funds. Shareholders funds consist of equity share capital, preference share capital & reserves & surplus. A low ratio will indicate that the management of the firm is following a conservative policy which is quite satisfactory from creditors angle. But a very conservative policy may not be very much satisfactory for shareholder because the company is sacrificing the benefits of trading on equity in this case.

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FORMULAE

Proprietors funds 1. Proprietary Ratio = Total assets Debt +Preferred long term 2. Debt-Equity Ratio = Shareholders equity

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4. Comparative Study of Financial Statements

A) Balance sheet for last 4 Years

B) Profit & Loss A/C for 4 Years

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A) Balance sheet for last 4 Years

(Fig. in, 000)
Particulars Sources of Funds Shareholders' Funds Share Capital Reserves & Surplus Loan Funds Secured Loans Unsecured Loans Deferred Tax Liability (Net) Total Application of Funds Fixed Assets Net Block Capital Work-inprogress Total Current Assets, Loans, Advances Inventories Sundry Debtors Cash and Bank Balances Loans and Advances Less: Current Liabilities & Provisions Current Liabilities Provisions Net Current Assets Miscellaneous Expenditure Total 31/03/2005 31/03/2006 31/03/2007 31/03/2008

3,33,37 40,88,69 10,39,19 11,63,91 4,08,39 70,33,55

3,33,37 39,20,36 33,70,38 11,46,91 3,94,95 91,65,97

3,33,37 27,81,43 41,68,01 18,95,96 2,43,94 94,22,71

3,33,36 25,36,97 35,34,83 16,97,58 2,32,96 83,35,70

22,64,09 4,71,38 27,35,47

34,91,29 11,80,62 46,71,91

51,41,90 1,14,64 52,56,54

47,74,22 7,16 47,81,38

8,62,51 10,37,04 11,78,42 25,94,06

9,89,09 14,69,82 5,86,09 30,64,74

10,87,26 14,70,98 1,30,50 31,07,59

9,99,02 15,71,23 1,28,61 26,45,92

11,43,76 2,30,19 42,98,08 ---70,33,55

14,07,92 2,17,76 44,94,06 ---91,65,97

15,29,23 1,00,93 41,66,17 ---94,22,71

16,90,95 99,50 35,54,33 ---83,35,71

B) Profit & Loss Account A/c

(Fig. in, 000) 30 | P a g e

Particulars

31/03/ 2005 31/03/ 2006

31/03/ 2007

31/03/ 2008

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Income Sales Net Other Income Total Expenditure Cost of Materials Personnel Expenses Other Expenses Depreciation Finance Charges Total Profit/(Loss) for the year Before Tax Provision for Tax Current Tax Deferred Tax Fringe Benefit Tax Total Short Provision for tax in respect of earlier years(Net) Profit/(Loss) after Tax Profit and Loss Account Balance Brought Forward from last Balance Sheet Add: Transfer from Debenture Redemption Reserve Profit Available for Appropriation Appropriations Transfer to General Reserve Interim Dividend-Equity Tax on Interim Dividend Proposed Dividend -Equity Tax on Proposed Dividend Balance carried to Balance Sheet Earning per Share (In Rs.) Basic & Diluted of face value of Re.1

65,99,53 3,64,77 69,64,30 16,36,49 8,98,77 29,51,70 3,65,70 2,00,62 60,53,28 9,11,02

63,91,34 2,85,34 66,76,68 17,65,55 10,13,87 31,53,12 3,94,04 2,22,17 65,49,75 1,26,93

71,70,43 2,06,94 73,77,37 21,38,09 13,31,56 42,08,24 5,29,78 3,82,63 85,90,30 (12,12,93)

76,97,29 2,01,03 73,77,37 217372 130297 359346 57796 48184 812995 (2,31,63)

3,75,00 (70,15) 6,06,17 42,30 5,63,87 5,88,13 5,75,69 17,27,69 1,14,00 83,34 10,93 1,16,68 16,36 13,86,38 1.69

58,00 (13,44) 35,00 47,37 25,37 22,00 13,86,38

(1,51,01) 75,06 (11,36,98) (11,36,98) 12,16,11 (10,98) 13,50 (2,34,15) 8,36 (2,42,51) 79,13

14,08,38 2,21 83,34 11,69 83,34 11,69 12,16,11 0.07 -

79,13

(1,63,38) (1,63,38) -0.73

79,13 -3.41

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5. Statistical Analysis of Financial Data

A) Current Ratio B) Gross Profit Ratio C) Net Profit Ratio D) Working Capital Turnover Ratio E) Fixed Assets Turnover Ratio F) Pie Chart of Distribution of Income at Last year

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A) Current Ratio Formula

Current Assets 1. Current Ratio = Current Liabilities
(Fig. in, 000)

Particular Current Assets Current Liabilities Ratio

5 4 3 2 1 0 2004 2005

2004

2005

2006 61,09,74 16,15,68 3.78

2007

2008

60,31,33 56,72,03 13,73,66 13,73,95 4.39 4.12

57,96,33 53,44,78 16,30,16 17,90,45 3.55 2.98

2006

2007

2008

Ratio

Conclusion
Current ratio indicates the financial liquidity. Here, the current ratio is declining but there is no hard and fast rule, conventionally a current ratio of 2:1 is considered satisfactory.

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B) Gross Profit Ratio Formula

Gross profit Gross Profit ratio = Sales
Particular Gross Profit Sales Ratio (%)
2 5 2 0 1 5 1 0 5 0 -5 20 04 20 05 20 06 20 07 20 08 R atio (% )

X 100
2004 2005 2006 7,40,00 63,91,34 11.57 2007 -3,00,00 2008 8,30,00

11,50,00 14,80,00 55,61,60 65,99,53 20.67 22.42

71,70,43 76,97,29 -4.18

(Fig. in, 000)

0.10

Conclusion
The gross profit is the difference between net sale and cost of goods sold, This ratio shows the margin left after meeting the manufacturing cost, it measure the efficiency of production as well as pricing, a high gross profit ratio means a high margin for recovery of other expenses,, therefore higher the ratio the better it is, it is also important for the business to maintain a high ratio otherwise it will be difficult to cover the expenses. As we can see the company had a good ratio in 2004 2005, but due to unsuccessful projects its ratio fell drastically in 2007.

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C) Net Profit Ratio

Net profit Net profit ratio = Sales
Particular Net Profit Sales Ratio (%)
(Fig. in, 000)
12 6 0 -6 -12 -18 2004 2005 2006 2007 2008
Ratio

X 100

2004 3,60,06 6.5

2005 5,63,87 8.5

2006 22,00 63,91,34 0.34

2007 -11,36,98 71,70,43 -15.8

2008 23415 769729 3.04

55,61,60 65,99,53

Conclusion
This ratio shows the earnings left for the shareholders as a percentage of net sales of the company. Last year the company incurred a heavy loss because of bad investments in various projects, as we can see from the chart they have recovered for it up to some extent.

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D) Working Capital turnover ratio

Net Sales Working Capital turnover ratio = Working capital
Particular Net Sales Working Capital Ratio
(Fig. in, 000)
Working Capital = Current Assets Current Liabilities
2.5 2 1.5 1 0.5 0 2004 2005 2006 2007 2008 Ratio

2004 55,61,60 46,57,67 1.19

2005 65,99,53 42,98,08 1.53

2006 63,91,34 44,94,06 1.42

2007 71,70,43 44,66,17 1.60

2008 76,97,29 35,54,33 2.16

Conclusion
This ratio shows how many times the working capital is rotated, a high ratio indicates a high turnover, but it also indicates a risk of shortage of working capital. In 2008 the company has a 4.36 ratio which has increased by 1.5 times that of last year, which is due to recover of last years losses.

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E) Fixed assets turnover ratio

Net Sales Fixed assets turnover ratio = Net Fixed assets

Particular Net Sales Net Fixed Assets Ratio

(Fig. in, 000)

2004

2005

2006 63,91,34 1.36

2007 71,70,43 52,56,54 1.36

2008 76,97,29 47,81,38 1.60

55,61,60 65,99,53 2.24 2.41

24,80,05 27,35,47 46,71,91

2.7 1.8 0.9 0

2004

2005

2006

2007

2008

Ratio

Conclusion
This ratio shows the relation between net fixed assets and net sales, A higher ratio indicates better utilization of fixed assets, usually a company whose plant and machinery is old may show a higher ratio than the company which has purchased them recently, in this case fixed assets turnover ratio was the highest in 2005, which dropped in 2006 and 2007, and in 2008 it has again recovered.

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F) Pie Chart of Distribution of Income at last Year

(Fig. in, %)

1. 2. 3. 4. 5. 6. 7. 8. 9.

Material Cost Finance Charges Excise Duty Income Tax Dividend Depreciation Retained Earnings Personnel Expenses Other Expenses

26.5 4.7 8.7 0.9 0.0 6.6 - 14.1 16.5 52.1

9 2 3 4 5 6 8 7

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6. QUESTIONNAIRE
BRIEF HISTORY ABOUT PERFECT CIRCLE INDIA LIMITED
A. WHAT WAS THE INCORPORATION DATE OF THE COMPANY?

B. WHO ARE THE PROMOTERS OF THE COMPANY? C. WHAT WAS THE INITIAL STATUS OF THE COMPANY? D. WHAT WAS THE CAPITAL INVESTMENT? E. WHAT WAS THE INITIAL AREA OF THE COMPANY (LAND & BUILDING)?
F. WHAT WAS THE CONTRIBUTION FROM BANKS, PROMOTERS

AND SHAREHOLDERS? G. WHAT WAS THE WORKING CAPITAL? H. WHAT WAS THE BUSINESS STRATEGY? I. WHAT WAS THE RANGE OF PRODUCTS? J. WHO WERE THE BANKERS?

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CURRENT STATUS
A. WHO ARE THE CURRENT BANKERS? B. WHAT IS THE CURRENT CAPITAL INVESTMENT? C. WHAT IS THE WORKING CAPITAL STATUS NOW? D. WHAT IS THE BUSINESS STRATEGY NOW?
E. WHAT IS THE RANGE OF PRODUCTS NOW?

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7. OBSERVATIONS & RECOMMENDATIONS

A) OBSERVATIONS
PERFECT CIRCLE INDIA LIMITED, renowned name in the Indian automotive component industry, manufactures piston rings. During the completion of project I found that: 1) Current Ratio indicates the financial liquidity. The current ratio of the company is declining. 2) In the year 2004-05 the Gross Profit Ratio increased from 20.67 to 22.42, in 2007 this ratio fell to -4.18 due unsuccessful projects. Gross Profit Ratio directly or indirectly affects the Net Profit Ratio. So, same as Gross Profit Ratio, the Net Profit Ratio also declined. 3) The Working Capital Turnover ratio is fluctuating. In the year 2004 and 2005 the Fixed Assets Turnover Ratio didnt show any considerable change, but the Ratios declined in the year 2006-07 due to heavy losses.

B) RECOMMENDATIONS
1)

2)

3)

Considering the difference between the Gross Profit Ratio and Net Profit Ratio, company should decrease interest and depreciation cost. As shown, the turnover of the company is increase by only 10 crore in last four years that is 2 % of the annual growth whereas our country is growing at the rate of 7% per annum. So, company should stress on increasing the sales There should be increase in the utilization of fixed assets.

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8. CONCLUSION
A) BASED ON WORK
After doing this project I conclude that I have gained valuable experience and knowledge in understanding the financial statement and working capital of the company. The project was very important to acquire the knowledge in various senses as it provided me with a lot of information about finance I also came to know that finance is a vast stream and working capital is just a small part of it. Through this project I could recognize the depth of finance. A lot of effort is needed to control the financial working of the company.

B) BASED ON LEARNING BENEFITS

After completion of project I learnt that practical knowledge is an important as theoretical one. I also came to know the importance of finance in day to day world. The project helped me to maintain relation with the outside world.

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9. BIBLIOGRAPHY
BOOKS:

Book of financial management Annual report of the company

Website:
Official Website of GSK www. Google .com

by

Khan and Jain.

www.Perfectcircle.co.in,

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