BIBLIOGRAPHY

 Brad L.M, Inventory Control. Journal of Finance, Volume 1,Issue 3,1st August, Page no (29-34)  Brito L.K &Laan G.B, Inventory Systems. Journal of Finance, Volume 1,Issue 3,1st August, Page no (29-34)  Carlin P & Pham M.S,Financial Management. Journal of Finance, Volume 5,Issue 1,1st April, Page no (38-42)  Charles Dominick Inventory Management. Journal of Finance, Volume 4,Issue 3,1stMay, Page no (26-30)  Enyi Working Capital Management. Journal of Finance, Volume 1,Issue 3,1st June, Page no (29-34)  Garca&Martnez, Working Capital Management. Journal of Finance, Volume 1,Issue 3,1st August, Page no (7-11)  Kannadhasan, Financial Position. Journal of Finance, Volume 1,Issue 3,1st August, Page no (6-14) REFERENCES  Chandra Prasanna; Financial Management: Theory and Practice; Tata McGraw Hill.  Pandey I.M., Financial Management; Vikas Publishing House Pvt. Ltd.  Rustagi R.P.; Principles of Financial Management. WEBSITES  http://www.owmnahar.in/  http://www.economywatch.com/business-and-economy/textile-industryoverview.html  http://www.economywatch.com/business-and-economy/textile-mills.html  http://www.faqs.org/abstracts/

 journal.org/submissions/isfa2009_submission_13.doc+abstract+of+working +capital&cd=24&hl=en&ct=clnk&gl=in Annual Reports of OWM and CMA Data

RATIO ANALYSIS

NATURE OF RATIO ANALYSIS It is a technique of analysis and interpretation of financial statements. It is the process of establishing and interpreting various ratios for helping in making certain decisions however ratio analysis is not an end in itself. It is only the means of better understanding of financial strength and weaknesses of firm. Calculation of mere ratios does not serve any purpose unless appropriate ratios are analyzed and interpreted .The ratios may be used as a symptom like blood pressure, pulse rate, or the body temperature and their interpretation depends on the caliber and the competence of analyst. Ratios help to summarize large quantities of financial data and to make qualitative judgments about the firm financial performance. For example current ratio, calculating by dividing the current asset by current liabilities indicates a qualitative relationship quantified relation between the current asset and current liabilities .This relationship is and index of yardstick, which permits a qualitative judgement to be formed about the firm ability to meet its current obligations. It measures the firm liquidity .The greater the ratio the greater is the firms liquidity and vice versa. The point to note is that the ratio reflecting a quantative relationship helps to form a qualitative judgement such is the nature of all financial ratios METHODOLOGY IN RATIO ANALYSIS y Selection of the relevant data from the financial statements depending on the objective of the analysis. y Calculation of the appropriate ratios from the above data.

y Comparison of the calculated ratios with the ratios of the same firm in the past, or the ratios developed forum the projected financial statements or the ratios of the industry to which it belongs. y Interpretation of the ratios.

MEANING OF RATIO

Ratios are the most frequently used in practice to access the financial performance and condition. The absolute accounting figure reported in financial statement does not provide any meaningful understanding unless it is related to some other relevant information ego Rs 500 crore net profits may look impressive, but firms performance can be said good or bad only when it is related with investments. The relationship between two accounting figures, expressed mathematically, is known as a financial ratio. For a layman ratio means %age of one in terms of other e.g. raw material in terms of sales. A ratio can be defined as "indicated quotient of two mathematical expressions" and as "title relationship between two and more numbers" According to accountants Handbook by Wixon, Kell and Bedford, a ratio is an expression of the quantitative relation between two numbers. According to Kohler a ratio is the relation of amount a to b expressed as a:b.

Ratios can be expressed in two ways:Times:- When another divides one value, the unit used to express the quotient is termed as times Percentage:- If 100 is multiplied to the quotient obtained, the unit of expression is termed as percentage.

CLASSIFICATION OF RATIOS Numerous ratios can be computed from a single set of financial statements; however only a selected few may be useful in given situation. In general, ratios may be classified on the following basis:1. Classification according to statement from which ratio is derived: The ratio may be classified on the basis of source of information for computing them. y Balance sheet Ratios: These ratios establish a relation between two items of balance sheet. For example the ratio of current asset to current liabilities; fixed asset to share holders fund etc. y Income Statement Ratios: The information for computing these ratios is taken from income statement. These ratios focus on relationship between two items or group of items, all of which are derived from the income statement; e.g Gross profit ratio, Net profit ratio etc. y Inter statement ratios or combined ratios;The ratios present the relationship between two items, one is taken from balance sheet and the other from income statement; debtor turnover, asset turnover etc. 2. Classification according to importance -.Another way of classifying ratio is classification according to classification of each ratio. Some ratio are more important than other.

y Primary Ratios: The Primary ratio is one, which is of primary importance to the concern. For e.g. Return on Capital employed. y Secondary Ratios: This classification is done to facilitate inter firm comparison and to focus on some factors of combinations of factors responsible for the success or failure of the organization. When such factors are isolated by means of other ratios, they are called secondary ratios. 3. Functional Classification: According to functional classification ratios are classified according to the test satisfied by each ratio. The commodity used financial ratios can be grouped into four categories as follows: y Liquidity Ratios: Liquidity refers to the ability of the firm to discharge its short term financial obligations as they become due. The liquidity of firm depends upon its ability to arrange cash in case of need. The liquidity ratio portray the capacity of the business to meet its short term obligations out of its short term resources. y Leverage Ratios/Solvency Ratios: These ratios measures the owners stake in the business Vis a Vis that of outsiders. These ratios through light on long term solvency of the business as reflected in its ability to assure long term creditors as regard, payment of interest whenever it falls due and return of principal on maturity. y Profitability Ratios: The profitability ratios highlight the end result of business and throw light on efficiency in operation. Profitability ratios are computed either comparing profits with investments or profits with sales. y Activity Ratios: These ratios throw light on the efficiency with which the resources of the business are managed.

MEANINGRatio analysis is techniques of analysis and interpretation of financial statements. It is the process of establishing and interpreting various ratios for helping in making certain decisions. However, ratio analysis is not an end in itself. It is only a means of better understanding of financial strengths and weaknesses of a firm. Calculation of mere ratios does not serve any purpose, unless several appropriate ratios are analysis and interpreted. There are a number of ratios which can be calculated from the information given in the financial statements, but the analyst to select the appropriate data and calculate only a few appropriate ratios from the same keeping in mind the objective of analysis. The ratios may be used as a symptom like blood pressure the pulse rate or the body temperature and their interpretation depends upon the caliber and competence of the analyst. The following are the four steps involved in the ratio analysis:

y Selection of relevant data from the financial statements depending upon the objective of the analysis

y Calculation of appropriate ratios from the above data. y Comparison of the calculated ratios with the ratios of the same firm in the past, or the ratios development from projected financial statements or the ratios of some other firms or the comparison with ratio of the industry to which the firm belongs.

Interpretation of the ratios.

Debt Coverage Ratios Interest Cover Total Debt to Owners Fund Financial Charges Coverage Ratio

3.10 1.54 4.32

1.61 1.26 3.29

1.66 1.57 3.94

6.04 1.16 8.53

3.64 0.56 6.46

Debt Coverage Ratios Interest Cover Total Debt to Owners Fund

3.10 1.54

1.61 1.26

1.66 1.57

6.04 1.16

3.64 0.56

RESEARCH METHODOLOGY RESEARCH Research in common parlance refers to a search for knowledge. One can also define research as a scientific and systematic search for pertinent information on a specific topic. Research is an academic activity as such the term should be used in a technical sense. Research refers to:  Defining and redefining problem  Formulating hypothesis or suggested solutions  Collecting, organizing and evaluating data  Making deductions and reaching conclusions  At last carefully testing the conclusions to determine whether they fit the formulating hypothesis. Scope of Study Scope of research is only restricted NAHAR SPINNING MILLS LUDHIANA. Research Design The research design is a pattern or an outline of the research projects working, it is a statement of only the essential elements study, those that provide the basic guidelines for the details of the project. Further a research design is an arrangement of conditions for collection and analysis of data in that aim to combine relevance to research purpose with economy in procedure. It constitutes the blueprint for collection, measurement and analysis of data. Research design stands for advance planning of the methods to be opted for collecting the relevant data and the

techniques to be used in their analysis, keeping in view of the objectives of their research. The present study, being conducted, followed a Descriptive Design. It produces a picture of phenomenon in which decision maker is in trusted. As in this detailed study of Financial Statements is done.

SOURCES OF DATA The sources of data means from where we have gathered the data. There are mainly two sources of data. These are: PRIMARY DATA: Depending upon the nature of the problem, primary data can be collected through variousmethods. As the data relating to the project is collected by direct

investigation i.e. consulting various company personnels in Finance department. SECONDARY DATA: The secondary data are those data which have already been collected by someone else and which have already been passed through statistics process. I got published data as maintained by company like company manuals, annual reports balance sheets etc. Data collected through websites also. TOOLS USED IN RESEARCH The following methods of analysis are generally used:  Trend analysis  Ratio analysis

LIMITATIONS OF STUDY  Analysis is only a mean not an end as it has been done on the basis of my own interpretation and up to my best knowledge but every analyst has his/ her own interpretations and suggestions.  Study was limited to the information provided by the officials.  More details could not be drawn out due to the tight schedules of the officials.  Only 5 year data is taken for study.  Research is done based on only internal information available.

Mar '10 Investment Valuation Ratios

Mar '09

Mar '08

Mar '07

Mar '06

 According to me, the only areas in which NAHAR SPINNING MILLS can improve is taking care of its large inventory, which i guess is the greatest problem for OWM .A major portion of the current assets is inventory. Steps should be taken so as to reduce the margin of non moving and potential inventory. Decrease in inventory level is advisable.

 At the end I would like to conclude that even companys other ratios are quite good but its net profit ratio is not too good. All other ratios are satisfactory. So in order to maintain a good net profit ratio it would try to

find out the reasons of low profits rather this is low due to more indirect expenses or any other reason.

Face Value Dividend Per Share Operating Profit Per Share (Rs) Net Operating Profit Per Share (Rs) Free Reserves Per Share (Rs) Bonus in Equity Capital

5.00 1.50 52.46 307.91 141.60 --

5.00 0.50 36.60 277.38 128.94 --

5.00 1.50 32.93 254.14 136.69 --

5.00 2.50 49.42 252.86 135.11 --

10.00 5.00 36.93 288.42 343.67 --

Profit & Loss Account Ratios Material Cost Composition 50.89 Imported Composition of 1.09 Raw Materials Consumed Selling Distribution Cost 6.39 Composition Expenses as Composition of 63.92 Total Sales

52.37 1.54 7.27 65.20

52.11 2.47 7.08 62.78

47.39 2.57 6.08 64.63

55.11 7.15 4.48 60.76

Profit & Loss Account Ratios Material Cost Composition 50.89 Imported Composition of 1.09 Raw Materials Consumed Selling Distribution Cost 6.39 Composition Expenses as Composition of 63.92 Total Sales

52.37 1.54 7.27 65.20

52.11 2.47 7.08 62.78

47.39 2.57 6.08 64.63

55.11 7.15 4.48 60.76

In 1992, as a measure of backward integration, the company diversified into the Spinning Industry. Today it has an installed spindlage of 346096 spindles. Simultaneously the company also established an ultra modern facility to manufacture 12.5 Million pieces of Hosiery Garments. Today Nahar Spinnings T-shirts are being exported to reputed international brands such as GAP, Arrow, Chaps, Old Navy, Pierre Cardin, Philips Van Heusen, Izod, Quicksilver, Price Costco etc. As a measure of further value addition Nahar Spinning has put up a plant for the manufacture of fine count mercerized yarn & fabrics catering to both, the domestic hosiery garment market as well as export markets. To make use of the emerging opportunities on the Global Textile Scenario and also to have a focused business approach, the company went in for the Scheme of Demerger and Arrangement to restructure its businesses. The Scheme was approved by the Hobble Punjab & Haryana High Court vide its Order dt. 21st December, 2006. As per the scheme, companys Investment Activities stand demerged and transferred to Nahar Capital and Financial Services Limited. This has drawn a visible line between two segment i.e., One Industrial (Textile) business and Secondly Investment and Financial Activities.

Further as per the scheme Textiles Business of Nahar Exports Limited stand demerged and transferred to the company (post demerger of investment business) in accordance with the terms of the scheme. Thus upon implementation of the Scheme the spindlage capacity of the company stand increased to 3.46 Lacs spindles. The Company's mantra "World is our markets" is truly reflected in its operations. The Company is one of the largest integrated textile player in India. The Management vision coupled with company's inherent strength in terms of cost and quality has enabled the company to become the second largest Cotton Yarn manufacturer in India.

Spinning a web of pure enchantment seems to be the aim and objective of NAHAR SPINNING, reckoned to be the blue-chip in the NAHAR firmament. Starting out as a tiny worsted spinning & hosiery unit in Ludhiana, it was incorporated as Private Limited company in December 1980 & became a Public Limited company in 1983. The steady growth in manufacture & export of woolen/cotton hosiery, knitwears& woolen textiles enabled the company to earn the recognition as an Export House followed by a Recognized Trading House by the Government of India in a short span of 8 years. Its turbo-charged performance brought them a host of fresh laurels they include the National Export Trophy and "Gold Trophy" by the Apparel Export Promotion Council and "Gold Trophy" by 'Cotton Textile Export Promotion Council' in recognition of its excellent Export performance.

Regd. Office: Nahar Tower, 373, Industrial Area-A Ludhiana-141 003. Phone: +91-161-2600701-05, 2606977-80 Fax: +91-161-601956, 2222942 Email: secnsm@owmnahar.com

Works: Industrial Area A, Ludhiana, (Punjab) DhandariKalan, G.T.Road, Ludhiana (Punjab) Village Simrai, Mandideep, Distt. Raisen (M.P.) Village Lalru, Distt. Patiala (Punjab) VillageJalalpur, Distt. Patiala (Punjab)

MANAGEMENT Board of Directors:

y y y y y y y y y y

Sh. JawaharLalOswal (Chairman) Sh. Dinesh Oswal (Managing Director) Sh. Kamal Oswal Sh. Dinesh Gogna Sh. S.K. Sharma Dr. (Mrs.) H.K. Bal Sh. Amarjeet Singh Dr. O.P. Sahni Prof. K.S. Maini Dr. Suresh Kumar Singla

Finance Controllers:
y y

Sh. Anil Kumar Garg Sh. P.K. Vashishth

Company Secretary:
y

Sh. Brij Sharma

Auditors: M/s Gupta Vigg& Co. Chartered Accountants 101, Kismat Complex, G.T. Road, Miller Ganj, Ludhiana-141 003.

Our Achievements Installed Capacity of 346096 spindles | ISO-9002 certified | Golden Trading House Installed Capacity of Mercerizing plant - 2040 MT | Garment - 12.5 Million pieces New Expansions 90000 spindles at a capital outlay of Rs.300 Crores. 1980 Incorporated as a Private Limited Company 1984 Recognized as an Export House by Govt. of India 1985 Raises funds through maiden Public Issue to finance modernisation& expansion 1988 Recognized as a Trading House by Govt. of India 1991-92 Turnover crosses the Rs.100 crore mark 1992 Set up a Spinning Unit with 50400 spindles. Raises capital through a Rights Issue. 1994 Increased spindlage capacity by another 25000 spindles. 1995-96 Turnover crosses the Rs. 200 crore mark 1996 Receives ISO-9002 certification 1996-97 Turnover crosses the Rs. 300 crore mark 1999 Accorded Golden Trading House Status by Government of India

1999-2000 Mercerizing-cum-dyeing plant and a 100% EOU Spinning Unit with 28224 spindles. 2003-2004 The Cotton Textile Export Promotion Council awarded TEXPROCIL SILVER TROPHY to the company for its outstanding Export performance in yarns 2006-2007 The Apparel export promotion councill awarded AEPC achievment award to the company for achieving highest exports in garment. 2008 Apparel Export promotion council awarded Gold Trophy for achieving highest Export of Cotton Garments. 2009 The Cotton Textiles Export Promotion Council (TEXPROCIL) awarded Gold Trophy for highest export of Cotton Yarn (Counts 50s and below) 2009 Turnover crosses Rs.1000 croremark. 2010 Decides to increase capacity by adding another 90000 spindles. Cash Flow Indicator Ratios Dividend Payout Ratio Net 11.79 Profit Dividend Payout Ratio Cash 5.11 Profit Earning Retention Ratio 88.02 Cash Earning Retention 94.86 Ratio AdjustedCash Flow Times 6.99

-3.54 -97.95 6.23

52.65 7.11 12.79 92.48 9.83

16.40 7.74 82.58 92.04 4.55

33.83 14.57 21.01 80.67 6.76

Mar '06 Earnings Per Share Book Value 16.78 353.65

Mar '07 17.82 144.01

Mar '08 3.33 145.67

Mar '09 -4.61 140.70

Mar '10 14.83 153.78

27.01.2011 More

Liquidity And Solvency Ratios Current Ratio 0.75 Quick Ratio 2.27 Debt Equity Ratio 1.54 Long Term Debt Equity Ratio 0.63

0.87 3.10 1.26 0.72

0.78 2.65 1.57 0.75

0.86 2.14 1.16 0.60

0.75 1.78 0.56 0.27

Profitability Ratios Operating Profit Margin(%) 17.03 Profit Before Interest And 10.69 Tax Margin(%) Gross Profit Margin(%) 10.74 Cash Profit Margin(%) 10.97 Adjusted Cash Margin(%) 10.97 Net Profit Margin(%) 4.79 Adjusted Net Profit 4.79 Margin(%) Return On Capital 8.84 Employed(%) Return On Net Worth(%) 9.64 Adjusted Return on Net 9.49 Worth(%) Return on Assets Excluding 153.78 Revaluations Return on Assets Including 153.78 Revaluations Return on Long Term 13.78 Funds(%)

13.19 5.56 5.58 10.23 10.23 -1.65 -1.65 5.24 -3.27 5.25 140.70 140.70 6.89

12.95 4.54 4.56 9.13 9.13 1.30 1.30 3.44 2.28 1.38 145.67 145.67 5.07

19.54 11.59 17.93 14.86 14.45 7.01 6.60 9.86 12.38 11.65 144.01 144.01 13.28

12.80 5.07 12.15 13.31 10.05 5.74 2.46 3.32 4.75 2.03 2.80 2.80 4.07

JOINT

PROJECT REPORT ON A STUDY ON RATIO ANALYSIS OF NAHAR SPINNING MILLS LTD

In partial fulfillment of the requirements for the degree of

BACHELOR OF BUSINESS ADMINISTRATION (Session 2010-11)

SUBMITTED TO:

SUBMITTED BY: GAURAV SOOD

Mr. AMANDEEP SINGH

Neha Sharma
BBA

GURU NANAK INSTITUTE OF MANAGEMENT AND TECHNOLOGY, LUDHIANA

STUDENT DECLARATION
I hereby declare that the project titled A Study on Ratio Analysis of NAHAR SPINNING MILLS LTD submitted to Punjab Technical University, Jalandhar, for the partial fulfillment of Bachelor of Business Administration is bonfide piece of project carried out by me under the guidance of Mr.DEEPAK is one of my original work and not submitted for any other degree, diploma or other similar titles.

PREFACE
This project is the result of forty days training in A Study on Ratio Analysis of NAHAR SPINNING Mills Ltd. Training is an integral part of Bachelor of Business Administration degree and it aims to provide a first experience of industry to students. This practical experience helps the students to view the real business world closely. I was really fortunate of getting an opportunity to pursue my summer training in reputed, well established, fast growing and professionally managed organization. Project entitled A Study on Ratio Analysis of NAHAR SPINNING Mills Ltd required a lot of extensive study as I did a lot of study in Finance department to get required information. It gave me a great deal of exposure and practical experience.

CERTIFICATE OF ORIGINALITY
This is certify that Neha Sharma has done the project entitled A Study on Ratio Analysis of NAHAR SPINNING Mills Ltd under my supervision for the degree of Bachelor of Business Administration. The work done by him is a sole efforts and has not been submitted as or its part of any other degree.

___________
Mr. DEEPAK (Project Guide)

ACKNOWLEDGEMENT
It is always difficult to acknowledge, so precious adapt as that of learning, as it is only a debt that is difficult to repay expect through gratitude. There are occasions where mere expressions of words stand nowhere near the feeling felt. The completion of this training with its report is such one occasion.

I take this opportunity to express my warmest appreciations and give special recognition to all those individual who have contributed immensely to make this project report.

The formal statement of acknowledgement will hardly meet the ends of justice in the matter of expressing a sense of gratitude to my college authorities and whole team of finance dept. of NAHAR SPINNING Mills Ltd for giving practical dimensions to my theoretical studies in the form of training and framing report which is suitable and highly beneficial.

Above all, I accord cordial regards to my loving parents and grateful to almighty for bringing me up in an atmosphere of life and confidence and infusing in me the spirit to the face challenges of life bravely that made me really work towards the goal of success.

Last but not least the least. I express my gratitude to all those to have helped me, guided me, encouraged me but have been inadvertently left out.