Vous êtes sur la page 1sur 81

A PROJECT REPORT ON

RATIO ANALYSIS
A CASE STUDY OF ELECTRONICS CORPORATION OF INDIA LIMITED CHERLAPALLY, HYDERABAD- 500083

SUBMITTED TO

ALL INDIA MANAGEMENT ASSOCIATION


CENTER FOR MANAGEMENT EDUCATION
MANAGEMENT HOUSE, 14 INSTITUTIONAL AREA, LODHI ROAD, NEW DELHI- 110003.

SEPTEMBER 2010 BY DIVYA CHAMARTY


REGISTRATION NO. 420910269

GUIDED BY MR. J.S. ANAND ADDITIONAL GENERAL MANAGER


For the partial fulfilment of

Post Graduate Diploma in Management

CERTIFICATE
This is to certify that DIVYA CHAMARTY of ALL INDIA MANAGEMENT ASSOCIATION has successfully completed the project work titled RATIO ANALYSIS in partial fulfilment for the award of POST GRADUATION DIPLOMA IN BUSINESS MANAGEMENT prescribed by the ALL INDIA MANAGEMENT ASSOCIATION was carried out under my guidance. This has not been submitted to any other University or Institute for the award of any Diploma/ Degree/ Certificate.

Signature of Guide

DECLARATION
I, DIVYA CHAMARTY hereby declare that this project work titled RATIO ANALYSIS at ELECTRONICS CORPORATION OF INDIA LIMITED (ECIL) has been carried out and submitted by me under the personal guidance of Mr. SRINIVAS, faculty of ALL INDIA MANGEMENT EDUCATION.

I further declare that this is an authentic work carried out by me during the academic year 2008-2010 and has not been submitted to any other University or Institute towards the award of any degree.

Name and Address of the Student,

Signature of the Student

DIVYA CHAMARTY, Registration No: 420910269, PGDM, Final Year, All India Management Association (Divya Chamarty)

ACKNOWLEDGEMENT
I would like to begin my report by extending a sincere word of thanks to Mr. R.KRISHNA VARDHAN REDDY, Coordinator, & faculty member AIMA CME, for providing me all the guidance and support in realizing the dissertation. I also express my sincere thanks and gratitude to ECIL. This project report could not have been completed without the guidance of our project guide Mr.J.S.ANAND. I express my sincere thanks and gratitude to these persons who have helped me directly and indirectly. I would like to thank Mr. SRINIVAS (professor of Finance.) faculty member - AIMA CME, for giving me invaluable suggestion and priceless guidance without which, my project, in that he systematic and a logical approach. Last but not the least I would extend my heartiest gratitude to my parents to my parents. And friend for their constant support and endeavour that me move ahead with my work and make it a success.
Divya Chamarty, Hyderabad 500083 September, 2010

CHAPTER 1

INTRODUCTION

INTRODUCTION TO THE PROJECT AT ECIL


FINANCIAL RATIO ANALYSIS The Financial Ratio Analysis project has been undertaken at ECIL to identify the strengths and weakness of the firm. There are many users of the companys ratio analysis like Trade Creditors, Lenders, Investors and Management. The First task of financial ratio analysis is to select the relevant information contained in financial statements. The second step is to use statistical tools and calculate the different ratios. The final step is interpretation and drawing conclusions from it. Any successful business owner is constantly evaluating the performance of his or her company, comparing it with the company's historical figures, with its industry competitors, and even with successful businesses from other industries. To complete a thorough examination of one's company's effectiveness, however, one needs to look at more than just easily attainable numbers like sales, profits, and total assets. One must be able to read between the lines of their financial statements and make the seemingly inconsequential numbers accessible and comprehensible. The ratio analysis at ECIL is undertaken to provide help to the following parties MANAGEMENT It is beneficial to management of the company by providing crystal clear picture regarding important aspects like liquidity, leverage, activity and profitability. It would aid in measuring the general efficiency of the firm. It would provide as a good communication tool for the top management This understanding would help the top management in taking corrective actions. GOVERNMENT As ECIL is a Public Sector Unit, the Government would be interested to know the strengths and weakness of the company. The ratios calculated help the government in determining the short term, long term and overall financial position of the company.

Government may base its future policies based on the industrial information available from various units.

SCOPE OF THE STUDY


ECIL was setup under the Department of Atomic Energy on 11th April, 1967 with a view to generate a strong indigenous capability in the field of professional grade electronics. The initial accent was on total self-reliance and ECIL was engaged in the Design, Development, Manufacture and Marketing of several products with emphasis on three technology lines viz. Computers, Control Systems and Communications. 1. The study has great significance and provides benefits to various parties whom directly or indirectly interact with the company. 2. It is beneficial to management of the company by providing crystal clear picture regarding important aspects like liquidity, leverage, activity and profitability. 3. The study is also beneficial to employees and offers motivation by showing how actively they are contributing for the company's growth. 4. The investors who are interested in investing in the companys shares will also get benefited by going through the study and can easily take a decision whether to invest or not to invest in the company's shares.

OBJECTIVES OF THE STUDY


The major objective of the present study is to know about Financial strengths and weakness of ECIL through FINANCIAL RATIO ANALYSIS. The main objectives of resent study aimed as: To evaluate the performance of the company by using ratios as a yardstick to measure the efficiency of the company. To understand the liquidity, profitability and efficiency positions of the company during the study period. To evaluate and analyze various facts of the financial performance of the company. To make comparisons between the ratios during different periods.

OBJECTIVES 1. To study the present financial system at Electronics Corporation of India Limited. 2. To evaluate the current position of the Electronics Corporation of India Limited. 3. To determine the Profitability, Liquidity position of ECIL. 4. To analyze the capital structure of ECIL with the help of Leverage Ratio. 5. To compare performance of ECIL with its past performance. 6. To study the risk of the operations taken in ECIL. 7. To offer appropriate suggestions for the better performance of ECIL.

LIMITATIONS OF THE STUDY


1. The study provides an insight into the financial, personnel, marketing, and other aspects of ECIL. Every study will be bound with certain limitations. 2. ECIL is a public sector unit which comes under the department of atomic energy and it is confidentially attached to certain issues which are not covered in the project. 3. Time is an important limitation. The whole study was conducted in a period of 60 days, which is not sufficient to carry out proper interpretation and analysis.

METHDOLOGY OF THE STUDY


The central part of research activity is to develop an effective research strategy Methodology involves the most of suitable methods of investigations the nature of the research instruments, the sample plan and the types of data Research design The researcher will chose a design for the present research in such a way to explore the factors involved in the problem and to describe the relationships between the factors explored in the given problem. By applying the theoretical models and the related statistical tools the data will be collected by the researcher in the form of primary and secondary data .The hypothesis will be tested and this will help in giving conclusions on the problem.

The present study will use the secondary data to provide suitable solutions to the problem chosen in the study.

Data Collection Methods The information is collected through secondary sources during the project. That information was utilized for calculating performance evaluation and based on that, interpretations were made. Methodology Stage 1:- Literary Review A comprehensive review of the Annual Reports, Financial journals including a computer assisted search is undertaken to develop the project. Stage 2:- Evaluation of Organizations Financial Performance In this stage the researcher uses Statistical techniques to analyze and represent the collected data. Stage 3 Writing Up This stage involves writing up of the dissertation and covers the chapters proposed in the following section

CHAPTER 2

COMPANY PROFILE

ABOUT ECIL
ECIL was setup under the Department of Atomic Energy on 11th April, 1967 with a view to generate a strong indigenous capability in the field of professional grade electronics. The initial accent was on total self-reliance and ECIL was engaged in the Design, Development, Manufacture and Marketing of several products with emphasis on three technology lines viz. Computers, Control Systems and Communications. Over the years, ECIL pioneered the development of various complex electronic products without any external technological help and scored several 'firsts' in these fields prominent among them being country's

First Digital Computer First Solid State TV First Control & Instrumentation for Nuclear Power Plants First Earth Station Antenna First Computerized Operator Information System First Radiation Monitoring & Detection Systems First Automatic Message Switching Systems First Operation & Maintenance Centre For E-108 Exchange First Programmable Logic Controller First Solid State Cockpit Voice Recorder First Electronic Voting Machines

The company played a very significant role in the training and growth of high calibre technical and managerial manpower especially in the fields of Computers and Information Technology. Though the initial thrust was on meeting the Control & Instrumentation requirements of the Nuclear Power Program, the expanded scope of self-reliance pursued by ECIL enabled the company to develop various products to cater to the needs of Defence, Civil Aviation, Information & Broadcasting, Telecommunications, Insurance, Banking, Police, and Para-Military Forces, Oil & Gas, Power, Space, Education, Health, Agriculture, Steel and Coal sectors and various user departments in the Government domain. ECIL thus evolved as a multi-product company serving

multiple sectors of Indian economy with emphasis on import substitution and development of products & services that are of economic and strategic significance to the country.

Vision, Mission & Objectives

Vision To contribute to the country in achieving self reliance in strategic electronics.

Mission ECIL's mission is to consolidate its status as a valued national asset in the area of strategic electronics with specific focus on Atomic Energy, Defense, Security and such critical sectors of strategic national importance.

Objectives

To continue services to the country's needs for the peaceful uses Atomic Energy. Special and Strategic requirements of Defence and Space, Electronics Security Systems and Support for Civil Aviation sector. To establish newer technology products such as Container Scanning Systems and Explosive Detectors. To explore new avenues of business and work for growth in strategic sectors in addition to working for realizing technological solutions for the benefit of society in areas like Agriculture, Education, Health, Power, Transportation, Food, Disaster Management etc. To progressively improve shareholder value of the Company. To strengthen the technology base, enhance skill base and ensure succession planning in the Company. To re-engineer the Company to become nationally and internationally competitive by paying particular attention to delivery, cost and quality in all its activities. To consciously work for finding export markets for the Company's products.

Joint Venture
Electronics Corporation of India Limited (ECIL) entered into collaboration with OSI Systems Inc. and set up a Joint Venture "ECIL-RAPISCAN LIMITED". This Joint Venture manufactures the equipments manufactured by RAPISCAN, U.K and U.S.A with the same state of art Technology. Requisite Technology is supplied by RAPISCAN and the final product is manufactured at ECIL facility. ECIL-RAPISCAN have supplied many X-RAY BAGGAGE/CARGO INSPECTION SYSTEMS (XBIS) of this Technology to high profile Indian Customers like Customs, Airports Authority, Parliament House, Defence, Air lines, State Police etc. ECIL-RAPISCAN exported XBIS to Tribhuvan International Airport, Kathmandu, Nepal, X-Ray generators to USA and Malaysia. ECIL-RAPISCAN continues to receive large number of orders from existing as well as new customers. This is basically due to our strength in Latest International Technology, Quality Assurance, The exhaustive spares inventory to meet the spares requirement. Strong Manufacturing and After Sales Service set up in 10 different centres located all over India. About partners of ECIL-RAPISCAN Electronics Corporation of India. ECIL is a Government of India Enterprise employing about 5000 people and is engaged in the manufacture of security systems including XBIS, Computers, Communication, Control Systems, Instruments, Components, Special Products, Defence Products etc. for the past 34 years with annual turnover of Rs.840crores ($190 m) during 2004-2005. Rapiscan Security Products RAPISCAN Security Products, U.K. & U.S.A. is a subsidiary of OSI Systems Inc., U.S.A. RAPISCAN is a leader in the Manufacture of latest state-of-the-art XBIS and other related products which are manufactured to International

Standards and approved by the Aviation Authorities in U.S.A., U.K., and EUROPE. RAPISCAN supplied thousands of XBIS to reputed Organizations such as HEATHROW AIRPORT, MANCHESTER AIRPORT, FOREIGN POST OFFICE U.K., HER MAJESTY'S PRISONS, BUCKINGHAM PALACE, and many other customers in U.S.A., EUROPE, MIDDLE EAST, SOUTH EAST ASIA etc.

VERTICALS Nuclear Vertical


Electronics Corporation of India was created essentially to meet the Control & Instrumentation requirements of the Nuclear Power Programme of India by product ionising the R&D efforts in the Bhabha Atomic Research Centre (BARC). Right from its inception in 1967, it has been totally supporting all the plans, programmes and endeavours of the Department of Atomic Energy in the chosen areas of Electronics, Instrumentation, IT and Security. ECIL significantly facilitated Indias Nuclear Energy Programme to reach greater heights. Today the company is proud to claim that all the operating Nuclear Power Plants in the country are supported by the Instrumentation and Control Systems engineered & manufactured by ECIL for the safe and reliable operation of the Reactors. These offerings cover diverse Reactor technologies with the I & C footprints in the entire Nuclear Fuel Cycle, starting from Ore extraction to the Spent-fuel management It is a matter of pride that the company made the country selfsufficient in this vital area of electronics, which is significant in the context of technology denials clamped on the nation from time to time. ECIL thus contributed towards creating a strong and dependable indigenous Technology base in the Nuclear Power area. Products and Services: ECIL supplied hard wired relay logic systems for older power generating plants like those in Rajasthan and Tamilnadu. As newer technologies became available, ECIL graduated to supply partly computerised systems for plants at Narora and Kakrapara. ECIL provides Programmable Logic Controller and Computer based Control and Information systems for the newer power generating units at Tarapur, Kaiga and Rawatbhata, Rajasthan.

ECIL manufactures and supplies a wide range of equipment which include 1. Control Room Panels 2. Operator Information Systems 3. Programmable Controllers 4. Operator Training Simulators 5. Dual Processor Hot Standby Systems (DPHS) 6. Reactor Regulating Systems 7. Electrical SCADA. 8. Nuclear Instrumentation Modules like HV and Spectroscopy Amplifier, Module Bins and Power Supplies 9. Hand Held Survey and Contamination Monitors to detect Alpha, Beta and Gamma Radiation 10.Spectroscopy Systems using HP Germanium and Scintillation Detectors coupled with Multi Channel Analyzer to perform an array of lab experiments 11.PC based Whole Body Contamination Monitors 12.For Home Land Security applications, ECIL has developed a variety of radiological security systems like 13.Vehicle Monitoring System 14.Limb Monitor and Portal Monitors 15.Smart Radiation Monitors are under development to meet the needs of Reprocessing Plants and Nuclear Power Plants for integration into Plant environment. 16.The corporation has drawn out plans to expand its operations in design, development, manufacturing and supply of highly advanced products. 17.Radiation Detectors like Boron Lined Counters, BF3 Counters, High Temperature Fission Counters and Ionization Chamber. Depth and Diversity: ECIL has extensive experience in PLC based Control Systems and SCADA and has been supplying sub-systems for Oil and Gas pipelines and power management for over 25 years. In the nuclear area, ECIL has engineered and supplied PLC based Control System for Uranium Corporation of India Limited, Ore Processing Plant near Jamshedpur.

The Control System employs fault tolerant PLC and PC based SCADA, Human Machine Interface System with hard wired backup. ECIL has also developed systems for Control and Monitoring Spent Fuel Reprocessing at BARC, Tarapur.

This spectacular journey in the area of nuclear energy has always been marked with outstanding achievements and extraordinary accomplishments. Making this possible, our Engineers and Scientists of ECIL, whose commitment and dedication have transformed the organisation in to a national asset. ECIL geared up for the nuclear renaissance. R&D: In addition to in-house R&D activities, ECIL adopts the basic designs developed by Bhabha Atomic Research Centre and Nuclear Power Corporation of India Limited and engineers them into products and systems for industrial use. Recently, the company signed a Strategic MoU with IGCAR (Indira Gandhi Centre for Atomic Research) to meet the C&I requirements for Fast Reactors, Fuel Cycle Projects etc. and also for High Performance Computer Systems and Security. Technology Planning, Identification of Projects/Projects/Solutions, Funding and Project Monitoring happens through Technology Development Council (TDC), an institutional mechanism to promote actionable R&D and timely product ionisation to support the ambitious programmes and expansion plans of the Department of Atomic Energy. Structure: In a way all the Strategic Business Units of ECIL are tuned to the varied requirements of countrys Nuclear Power Programme, right from components to complex systems. However, keeping in view the ambitious programmes of the Department of Atomic Energy, some Divisions are totally dedicated to the Nuclear sector. They include: 1. Control and Automation Division (CAD) 2. Radiation Detectors and Instrumentation Division (RID) In addition to the above, the following Divisions offer select products and solutions in the areas of Simulators, Supervisory Control, Security, Encryption etc. They are: 1. Antenna Products and Satcom Division (AP&SD) 2. Supervisory Control and Data Acquisition (SCADA) Division 3. Instruments and Systems group (ISG)

4. Telecommunication Division (TCD) 5. Customer Support Division (CSD) 6. Components Division (CD) Quality, Safety. Information Security and Environmental compliance The infrastructure for supporting the entire life cycle of the projects meant for the Nuclear Sector is being totally modernized and expanded to with focus on end user requirements of Quality and Reliability, Safety, Information Security and Environmental compliance. Major initiatives with the support of BARC include creation of the following facilities, which are in their final stages of completion. 1. 2. 3. 4. EMI/EMC Centre of Excellence Compact Antenna test Facility PCB Facility with High Density Interconnection Technology Radiation Detectors and Instrumentation Characterisation

All the divisions of the Company are independently certified for their respective Quality Management Systems (QMS) as per ISO9001. The entire company is certified for its Environmental Management System (EMS) and Occupational Health and Safety as per OHSAS18001. The Calibration and Measurement Laboratory is Accredited as per ISO17025. The Information Security Management System (ISMS) is under certification as per ISO27001.

Space Vertical
ECIL Played a pioneering role in supporting the ambitious programs of ISRO.ECILs Antenna Products Division has its lineage that dates back to 1968, when ARVI Satellite Communication (ASCOM) group was constituted by drawing experts from various organizations to execute the design, develop, manufacture, install, test and commission the countrys 1st INTELSAT Class-A Earth Station Antenna at ARVI, Pune for providing the gateway for overseas communications for the traffic originating around Mumbai region. ASCOM Group has designed the 97ft Earth Station Antenna with a king post El over As pedestal, servo system and antenna control unit. The station was installed and commissioned in 1968. The Feed was imported. The control and servo system was developed by BARC. After the completion of the above project, Microwave Antenna System Engineers Group {MASEG (ISRO)} was formed to further the R&D activities on Microwave and satellite earth station antennas for providing communication facilities in the country.

The MASEG group got merged with ECIL in 1972, and Antenna Products Division was formed in ECIL with the aim to take up commercial production of Microwave and Earth station antennas. In 1975, ECIL delivered another 97ft Earth Station Antenna with king post pedestal (similar to ARVI Antenna) at Lachhiwala in Dehradun for providing the International gateway to the traffic originating from Delhi region. The expertise gained during the execution of above two projects has firmed up the knowledge base at ECIL to take up design and production of various types of communication antennas. Communication antennas per se can broadly be classified into 3 types. 1. for Terrestrial Communication a. Troposcatter antennas o b. Line of Sight (LoS ) antennas 2. for Satellite Communication o c. Ground/Earth Station Antennas Troposcatter Antennas : Large Bill Board antennas focus a high power radio beam at the troposphere mid way between the transmitter and receiver. A certain portion of the signal is refracted and received at a similar antenna at the receiving station.
o

Earth Station Antennas : On the earth station front, ECIL continued its progress and delivered and installed 3 Nos. of 8m earth station antennas at Port Blair, Kavaretti and Aizwal with indigenous design to bring the far flung areas of Northeast into countrys telecom network.

When the INSAT programme was initiated, ECIL developed and delivered 2 Nos. of reflectors required for 14m dia. Antennas for TTC application at MCF, Hassan with control system by jointly working with BARC. During the same period, ECIL also successfully absorbed the limited know-how from NEC, Japan in product ionising medium sized Earth station antennas of dia 11M, 7.5M and 4.5M.Several of these antennas were delivered to various users like DOT, ONGC, NTPC and MCF.

In 1987, ECIL successfully designed, developed, manufactured and installed the 11M dia full motion antenna for TTC application at MCF, Hassan. The 32m dia. Wheel & Track antenna was installed at ARVI, Pune which was executed jointly in collaboration with NEC, Japan. During this period, ECIL acquired know-how for the indigenous realization of a 32M Wheel & Track antenna employing the beam wave guide feed from NEC, Japan.

Defence Vertical
ECIL has played a pioneering role in spurring the growth of Electronics Industry in the country. Spanning miniature components to mammoth systems and encompassing control, communication & computer technologies, today, ECIL is a multi-product, multi disciplinary and multi technology organization providing cutting-edge technology solutions in the strategic areas of Atomic Energy, Defence, Space and Electronic Security systems. Multidisciplinary capabilities ECILs expertise harnesses electronics & communication technologies to meet Indias defence needs on land, sea and air. Some of the areas in which ECIL has contributed significantly to the Defence Sector are:

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

Secure and Jam- resistant communications Electronic Warfare Systems & Simulators COMINT & Interception Systems Antenna, Satellite Communication Systems (SATCOM Systems), networks Stabilized platforms for air-borne Radars C4I systems & Missile support Systems Encryption and Secrecy Systems Electronic Fuses for artillery and Navy Precision Electro-Mechanical components, sensors & Inertial Navigation Systems

Secure and Jam Resistant Communications Over the years, ECIL has been manufacturing and supplying a wide variety of Communication equipment that include state-of-the-art features like frequency hopping and encryption to the three arms of the Defence forces. They include:

1. 3060 (thirty sixty) VUHF Radio Communication system with frequency hopping & Encryption for ship to ship, ship to shore and ship to air communications on sail even in dense electro-magnetic field often encountered in battle field. 2. TR 2400 (twenty four hundred) HF Radio, Voice, Data & email Communication System with Encryption, frequency hopping and Automatic switch control etc. for long range communication needs. 3. EC2 M7 Digital VUHF radio, the Jam-immune IP enabled VHF and UHF Trans-receivers for a variety of strategic communications including ground to air ATC & network-centric communications. 4. EC4480 (forty four Eighty) Speech Secrecy Systems for HF/ VHF / UHF Radios for air borne applications.

Electronic Warfare Systems & Simulators


Indias electronic warfare capabilities received a strategic boost from ECILs Electronic Warfare systems & simulators. Some of these prestigious systems are: 1. Multi-vehicle mounted Integrated Electronic Warfare Systems for Reconnaissance, Direction finding and jamming of the enemys communication system. 2. A wide range of Jammers for use by the security and Para military forces like RCIED Jammers, cell phone Jammers, convoy Jammers etc. as an extension of Electronic Warfare technologies. 3. Panoramic Akin Electronic Warfare Simulator (PAES) for training naval crew on ECM & ECCM operations. 4. Class Room Electronic Warfare Simulator (CREWS) for training army personnel on ECM & ECCM Operations.

These high technology systems developed by ECIL are providing the lethal cutting edge to our defence forces. COMINT & Interception Systems ECILs highly versatile COMINT systems have been integrated to meet the strategic requirements of the country. 1. Tailor made COMINT systems for spectrum monitoring, direction finding, location fixing, and signal analysis etc. operating from HF to Microwave frequencies. 2. CDMA Monitoring & Interception Systems

3. Passive GSM Monitoring Systems 4. Active GSM Monitoring Systems 5. Satellite Monitoring Systems Antenna, Satcom Systems, Stabilized platforms From suitcase terminals to mammoth 300-ton structures, ECIL is Indias preferred supplier of antenna products and SATCOM systems on land, sea and air. Backed by a vibrant R&D program, ECIL has built-up valuable product development and manufacturing capability covering civil, mechanical, control, RF and network domains. Some of the products being offered include: 1. Single Axis Mono Pulse antenna with remote access control unit for tracking and command uplink for UAVs up to 250 km. range. 2. Stabilised Antenna platform unit for Multimode Radar of TEJASIndias own Light Combat Aircraft. 3. 0.35 m Ka Band suitcase Antenna System for disaster management. 4. Ku Band Stabilised Satcom Antenna System for communication between ground station and Unmanned Aerial Vehicle through satellite. 5. Ku Band ship borne antenna system for Satcom link with ground stations. 6. Portable sensitive Antenna System operating up to 18 GHz for monitoring & surveillance. 7. Closed user group VSAT networks up to 60 MBPS in Ku Band and Demand Assigned Multiple Access configuration. 8. 1.8 meter X-Band trailer mounted Mobile Antenna with shelter & Captive Diesel Generator for tracking low- earth- orbit remote sensing satellites. 9. Active RADAR seekers. C4I & Missile support Systems ECIL is a proud partner in countrys missile program, integrating ground support equipment through secure & diverse communication channels. ECIL has developed several C4I and special systems for the defence services. The systems include: 1. Missile check out facility & Squadron Control Centre for Akash Missile 2. C4I System for Mobile Autonomous Launcher and Mobile Command Post of BrahMos Missile Systems. 3. Underwater Navigation Systems

4. Civil Radar Display System linking civilian radar information to the Defence forces in real time. 5. Automatic Dependant Surveillance System, a navigational aid for aircraft flying in oceanic region using Satellite Communication and GPS technologies.

Encryption and Secrecy Systems: From robust algorithms to ruggedized, fully qualified products, ECIL houses comprehensive capability to deliver crypto products and systems to ensure secure communication of voice, video and data. 1. ABHAY Add on Voice Encryption Card for Motorolas two-way radios. 2. MELIC A device developed for voice, data & fax encryption designed to be plugged into any telephone line. 3. GAUTAM Message & file encryption unit for secure message communication from ship to shore. 4. ABHEDYA Bulk Encryption Unit that can support both framed and unframed modes of operation. 5. IPCU IP Encryption Unit accepts data from an Ethernet switch or router for secure data communication over Ethernet IP network. Electronic Fuses for artillery and Navy: The Electronic fuses, manufactured by ECIL have stood the test of time for defect-free performance, quality and reliability. ECIL has built-up adequate capacity to meet countrys needs. Today, ECIL designs and supplies a wide variety of fuses for Artillery and Naval Guns of different calibres like: 1. Proximity Fuses 2. Variable Time Fuses 3. Point Detonation Fuses The latest addition to this range is Universal Electronic fuses which can be set in proximity, time & point detonation modes by Inductive Fuse setters for a wide range of Guns & Mortars of the armed forces. Precision Electro-mechanical components, Sensors & Inertial Navigation Systems

ECIL manufactured Synchros, gyros, inertial sensor packages and electromechanical actuators support countrys aero-space and Defence programs. ECIL has dedicated facilities for design and manufacture of these Precision Electro-mechanical components and inertial navigation Systems. Some of the systems supplied to the armed forces are: 1. Indigenously developed size 23 Control & Torque Synchro compatible with NATO Synchros for L70 guns and modified to suit Russian Resolver for target designation of BMP-II. 2. Rate Gyros for Gun Control of Vijayantha, T-72 and BMP-II and also for Remotely Piloted vehicle and PTA. 3. Sensor package comprising a free gyro, two rate gyros and inclinometers for auto piloting underwater vehicles. 4. Control Local Power (Joystick) a precision Electro-mechanical subassembly for controlling azimuth & elevation of L-70 guns. 5. Gyro stabilized Horizontal Rollbar system maintained with the aid of Vertical Gyros (ships main Gyro) to provide true horizon to pilots during night landing under adverse sea conditions. 6. Solid State Cockpit Voice Recorder with 4 channel 2 hour recording conforming to FAA TSO-c123 7. Rotary type EM actuators for position control surfaces of domes & parachutes 8. Gimbals payload assembly for Electro Optic payloads in UAVs Instrumentation Systems for the Defence: Strong R & D capabilities back-up our robust and vibrant instrument development program. The instrumentation designed and developed by ECIL includes 1. Ship Installed Radica System - SIRS 4012 to monitor gamma radiation in and around the naval ships. 2. The Expandable Bathy Thermograph System - RS10A has been designed to measure and display oceanic temperature as a function of depth.

Over the years ECIL has matured in to a stable, durable and dependable partner to nations armed forces. The capabilities include design & development, engineering, manufacturing, testing & qualification, installation & commissioning, maintenance and refurbishment services. This is backed by a 5000 strong work force and a nation-wide network of marketing and service centres.

ECIL is proud to be a strategic partner and a valuable contributor to the Great Indian Defence Forces in making India a strong and secure nation.

The entire company has been involved in meeting the requirements of defence almost since its inception. The supplies to Defence touched a peak of 60% turnover during some years. Even today, the lion s share of turnover goes to Defence.

The dominant contribution of the Defence business propelled and finetuned the Strategic initiatives of the company in terms of R&D and Technology Management, Infrastructure creation, modernisation and augmentation , Project Management, Customer Relationship Management and Supply Chain Management. The infrastructure for supporting the entire life cycle of the projects meant for the Nuclear Sector is being totally modernized and expanded to with focus on end user requirements of Quality and Reliability, Safety, Information Security and Environmental compliance. Major initiatives with the support of BARC include creation of the following facilities, which are in their final stages of completion. 1. 2. 3. 4. EMI/EMC Centre of Excellence Compact Antenna test Facility PCB Facility with High Density Interconnection Technology Radiation Detectors and Instrumentation Characterisation

All the divisions of the Company are independently certified for their respective Quality Management Systems (QMS) as per ISO9001. The entire company is certified for its Environmental Management System (EMS) and Occupational Health and Safety as per OHSAS18001. The Calibration and Measurement Laboratory is Accredited as per ISO17025. The Information Security Management System (ISMS) is under certification as per ISO27001. The following Divisions are dealing with Defence Projects: 1. Communications Division (CND) 2. Electronic Warfare Division (EWD) 3. Special Products Division (SPD)

4. 5. 6. 7.

Strategic Electronics Division (SED) Servo Systems Division (SSD) Antenna Products and Systems Division (AP&SD) Instruments and Systems Group (ISG)

MANAGEMENT SYSTEMS OF ECIL

Overview
As a Public Enterprise under the Department of Atomic Energy, Quality, Safety and Environmental Management have been the areas of focus ever since inception of the company. This focus has been continuously buttressed by the Quality Assurance Agencies of the customers, regulatory agencies like the Atomic Energy regulatory Board and the Pollution Control Boards. The company developed well laid out strategies and policies for Quality, Safety, and Environment and achieved certification as per applicable International Standards. Recently the company has also initiated steps to get Certification for Information Security Management. Quality and Customer Satisfaction are an essential part of the annual MoU signed with the Government o f India. Quality Management System Standards And Quality Assurance Group (SQAG) at ECIL, is a Corporate Quality Assurance Service Facility. While the individual business groups have their own Quality Control / Quality Assurance sections, this corporate facility caters to the common requirements.

Faculty for training personnel in Product divisions on ISO awareness and on Internal Quality Audits, Helping in developing their quality system documentation, planning, conducting and managing internal quality audits and reporting of audit results. A well equipped and NABL accredited Calibration and

Measurements Laboratory equipped with standards traceable to National Standards and catering to the calibration requirements of the Product divisions in the field of electro-technical measurements. An Environmental Test laboratory meant for both component / unit / system evaluation. It has Dry / Damp heat chambers, Walk in chambers, Dust / Rain chambers, Vibration and bump test facilities. A Technical information Centre.

Equipped with such facilities with service as its motto SQAG has adapted and declared its quality policy as "To render reliable and professional services in the fields of Quality Assurance, Testing and Calibration to the satisfaction of its CUSTOMERS." Standards and Quality Assurance Group (SQAG) is a Corporate Services Group catering to the needs of all Production divisions in the following areas. 1. 2. 3. 4.

Standards Quality Assurance Environmental and Calibration Services Industrial Engineering

Standards: In this area, SQAG maintains national and international standards for reference of Product divisions. SQAG organizes and coordinates the participation of ECIL experts in various branches of standardization activity organized by Bureau of Indian Standards, Electronics Standardization Subcommittee and Electronic Components Standardization Organization of Ministry of Defence and any other organization that needs our expertise. A link is established to browse or download Defence standards through Dial-up connection to Defence Standardization cell, Hyderabad, situated at DLRL. Quality Management System:

ECIL's quality consciousness has resulted in the company receiving the ISO 9000 certification in a wide range of operations such as Control Systems, Hybrid Micro Circuits, Tantalum Capacitors, Telecom Products, Software Consultancy Projects and Customer Support Services. SQAG supports all Product divisions in maintaining Quality Management System as per ISO 9001: 2000. All Product divisions are certified to ISO 9001:2000 Quality Management System.

Environment Management System


AT A GLANCE IN ECIL In recent times, environmental concern is increasing among Public as they are facing air pollution, traffic congestion, and land pollution due to dumping the waste (including electronic waste) in open lands without proper disposal. This feeling is predominantly high at national and international level. All environmental Scientists are alerting the nations from time to time by bringing awareness and cautioning the ecological imbalances in the world. In this direction, all nations have responded in their own way. As usual, Internal Organization for Standardization (ISO) also showed their concern by constituting a Technical Committee and assigned the responsibility of formulating a standard with a view to certifying the organizations against that standard. This certification results in practical realization of prevention of pollution and conservation of energy. To this effect, ISO brought out a standard on Environmental Management System ISO 14001 in 1996. Later on it was revised in the year 2004 which is in practice. Top Management felt that, even though pollution in electronic industry is at low level which will not affect anybody, the environmental management system should be implemented in ECIL to demonstrate to customers, suppliers, employees and Society that no pollution will be created by the very existence of

the company through any act of theirs. It was therefore decided in August, 2004 to implement the EMS in the company. It was also concluded that one certificate should be obtained for the whole company covering all activities of all divisions. Since then, the environmental policy was declared and circulated to all divisions. Director (Personnel) was assigned to look after the definition, preparation of all necessary documents and implementation. Under his Chairmanship, a Management Review committee was formed with concerned heads of divisions as members and Shri Bhaskara Rao as Management Representative.

As a process of making necessary documents as per ISO 14001, EMS manual and essential documents as per the standard were drafted and finalized by our consultant from Centre for Electronics Testing and Engineering (CETE), Kamalanagar, Hyderabad`. These documents were revised as per the latest ISO 14001: 2004 standard and issued to all divisional EMS coordinators for reference in the respective divisions. An awareness training programme on Environmental Management System was arranged at corporate level for all EMS Coordinators. Later on, another programme was conducted to make EMS Coordinators aware of preparing EMS documents. The finalized documents were issued to EMS coordinators for implementations in the divisions. Internal auditors were trained for auditing the EMS. First internal audit was conducted in June, 2005. Simultaneously, an application form was sent to STQC directorate for EMS registration/certification in May, 2005.

ENVIRONMENTAL POLICY We are committed to ensuring an eco-friendly environment by Environmental Management System with Specific emphasis on

Compliance with applicable Legislative and Regulatory Requirements Pollution Control and Waste Minimization. Conservation of Resources through Optimal Utilization Promoting actionable awareness among all Employees,

Information Security Management System (ISMS)


"ECIL is committed to ensure integrity, confidentiality, availability and security of its information at all times for serving the needs of the Organisation in line with its Vision, Mission and Values, while meeting all regulatory requirements. The Objective of our ISMS is to ensure continuity of business and minimize business damage by preventing and limiting the impact of Information Security incidents"

Calibration Management System


Calibration and Measurements Laboratory (CML) of SQAG is calibrating Divisions Test and Calibration equipment at corporate level in ECIL in the Electrotechnical field.

Calibration and Measurements Laboratory is accredited to NABL since 1996. CML received accreditation for 9 parameters: Viz., DC Voltage, DC Current, AC Voltage, AC Current, DC Resistance, Capacitance, Inductance, Frequency and Oscilloscope parameters. An Environmental Test laboratory meant for both component / unit / system evaluation. It

has Dry / Damp heat chambers, Walk in chambers, Dust / Rain chambers, Vibration and bump test facilities. It went for re-certifications in 1999, 2002, 2005, 2007 and in 2009. This Laboratory is extending its spare time and capacity to calibrate the equipment of External Parties to generate external revenue.

National Accreditation Board for Testing and Calibration Laboratories (NABL), New Delhi, is the national board under Dept of Science & Technology, Ministry of Science & Technology, empowered to accord accreditation to both Testing and Calibration Laboratories

This is the only organization that can certify a laboratory after assessing its Technical and Management capabilities in India. NABL accredits all the Testing and Calibration Laboratories in any field. Viz., Chemical, Electrical, Electro-technical, Mechanical, Thermal, Fluid Flow, Medical, Radiological etc., as per International Standard ISO/IEC 17025.

The International Standard ISO/IEC 17025 defines the General requirements for the competence of Testing and Calibration Laboratories.

International Recognition to NABL:

NABL maintains its linkages with the international bodies like International Laboratory Accreditation Co-operation (ILAC) and Asia Pacific Laboratory Accreditation Co-operation (APLAC).

NABL is a full member of both ILAC and APLAC. NABL is a signatory to ILAC as well as APLAC Mutual Recognition Arrangements (MRA), which is based on mutual evaluation and acceptance of other MRA Partner laboratory accreditation systems. MRA (Mutual Recognition Arrangements) is signed by 106 Countries. This has enabled accredited laboratories to achieve a form of international recognition. Because of which the Calibration Certificates issued in an NABL accredited Laboratory is recognized in all the 106 MRA signatory Countries. This effectively reduces costs for both the exporters and the importers, as it eliminates the need for products to be retested in another country.

CHAPTER 3

THEORITICAL BACKGROUND

RATIO ANALYSIS
The term Ratio refers to the numerical and quantitative relationship between two items or variables. This relationship can be Exposed as Percentages Fractions Proportion of numbers Ratio analysis is defined as the systematic use of the ratio to interpret the financial statements. So that the strengths and weaknesses of a firm, as well as its historical performance and current financial condition can be determined. Ratio reflects a quantitative relationship helps to form a quantitative judgment. STEPS IN RATIO ANALYSIS The first task of the financial analysis is to select the information relevant to the decision under consideration from the statements and calculates appropriate ratios. To compare the calculated ratios with the ratios of the same firm relating to the pas6t or with the industry ratios. It facilitates in assessing success or failure of the firm. Third step is to interpretation, drawing of inferences and report writing conclusions are drawn after comparison in the shape of report or recommended courses of action.

BASIS OR STANDARDS OF COMPARISON Ratios are relative figures reflecting the relation between variables. They enable analyst to draw conclusions regarding financial operations. They use of ratios as a tool of financial analysis involves the comparison with related facts. This is the basis of ratio analysis. The basis of ratio analysis is of four types. Past ratios, calculated from past financial statements of the firm. Competitors ratio, of the some most progressive and successful competitor firm at the same point of time. Industry ratio, the industry ratios to which the firm belongs to Projected ratios, ratios of the future developed from the projected or pro forma financial statements

NATURE OF RATIO ANALYSIS Ratio analysis 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. It is only a means of understanding of financial strengths and weaknesses of a firm. There are a number of ratios which can be calculated from the information given in the financial statements, but the analyst has to select the appropriate data and calculate only a few appropriate ratios. The following are the four steps involved in the ratio analysis. Selection of relevant data from the financial statements depending upon the objective of the analysis. Calculation of appropriate ratios from the above data. Comparison of the calculated ratios with the ratios of the same firm in the past or the ratios developed from projected financial statements or the ratios of some other firms or the comparison with ratios of the industry to which the firm belongs. INTERPRETATION OF THE RATIOS The interpretation of ratios is an important factor. The inherent limitations of ratio analysis should be kept in mind while interpreting them. The impact of factors such as price level changes, change in accounting policies, window dressing etc., should also be kept in mind when attempting

to interpret ratios. The interpretation of ratios can be made in the following ways. Single absolute ratio Group of ratios Historical comparison Projected ratios Inter-firm comparison GUIDELINES OR PRECAUTIONS FOR USE OF RATIOS The calculation of ratios may not be a difficult task but their use is not easy. Following guidelines or factors may be kept in mind while interpreting various ratios are Accuracy of financial statements Objective or purpose of analysis Selection of ratios Use of standards Calibre of the analysis Ratios provide only a base IMPORTANCE OF RATIO ANALYSIS Aid to measure general efficiency Aid to measure financial solvency Aid in forecasting and planning Facilitate decision making Aid in corrective action Aid in intra-firm comparison Act as a good communication Evaluation of efficiency Effective tool LIMITATIONS OF RATIO ANALYSIS Differences in definitions Limitations of accounting records Lack of proper standards No allowances for price level changes Changes in accounting procedures Quantitative factors are ignored Limited use of single ratio Background is over looked

Limited use Personal bias CLASSIFICATIONS OF RATIOS The use of ratio analysis is not confined to financial manager only. There are different parties interested in the ratio analysis for knowing the financial position of a firm for different purposes. Various accounting ratios can be classified as follows: 1. Traditional Classification 2. Functional Classification 3. Significance ratios

RATIOS

Traditional Classification

Financial Classification

Significance Ratios

1.Balance Sheet or Position Statement Ratio 2. Profit & loss account or Revenue Statement Ratio 3. Composite or Income Statement Ratio

1. Liquidity Ratio 2. Liquidity Ratio 3. Activity Ratio 4. Profitability Ratio

1. Primary Ratio 2. Secondary Ratio

Table 3.1 Classification of Ratios

1. Traditional Classification

It includes the following. Balance sheet (or) position statement ratio: They deal with the relationship between two balance sheet items, e.g. the ratio of current assets to current liabilities etc., both the items must, however, pertain to the same balance sheet. Profit & loss account (or) revenue statement ratios: These ratios deal with the relationship between two profit & loss account items, e.g. the ratio of gross profit to sales etc. Composite (or) inter statement ratios: These ratios exhibit the relation between a profit & loss account and income statement item and a balance sheet items, e.g. stock turnover ratio, or the ratio of total assets to sales.

2. Functional Classification These include liquidity ratios, long term solvency and leverage ratios, activity ratios and profitability ratios. 3. Significance ratios Some ratios are important than others and the firm may classify them as primary and secondary ratios. The primary ratio is one, which is of the prime importance to a concern. The other ratios that support the primary ratio are called secondary ratios. IN THE VIEW OF FUNCTIONAL CLASSIFICATION THE RATIOS ARE 1. Liquidity ratio 2. Leverage ratio 3. Activity ratio 4. Profitability ratio

Functional Classification Liquidity Ratio Leverage Ratio Activity Ratio Profitability Ratio

LIQUIDITY RATIOS: Current Ratio Quick Ratio Absolute Liquid Ratio LEVERAGE RATIOS: Debt Equity Ratio Proprietary Ratio Fixed Asset Ratio Interest Coverage Ratio Capital Gearing Ratio

ACTIVITY RATIO Inventory Turnover Ratio Debtor Turnover Ratio Fixed Asset Turnover Ratio Working Capital Turnover Ratio Capital Employed Turnover Ratio Payables Turnover Ratio Total Assets Turnover Ratio

PROFITABILITY RATIO Gross Profit Ratio Net Profit Ratio Operating Profit Ratio

Return on Shareholders Investments Return on Assets Earnings per Share Profit per Earnings Ratio Return on Capital Employed Return on Equity Capital Return on Total Resources Earnings Per Share Price Earnings Ratio

RATIO ANALYSIS AT ECIL

LIQUID RATIOS It is extremely essential for a firm to be able to meet its obligations as they become due. Liquidity ratios measure the ability of the firm to meet its current obligations. In fact, analysis of liquidity needs the preparation of cash budgets and cash and fund flow statements; but liquidity ratios, by establishing a relationship between cash and other current assets to current obligations, provide a quick measure of liquidity. A firm should ensure that it does not suffer from lack of liquidity, and also that it does not have the excess liquidity. The failure of a company to meet its obligation due to lack of sufficient

liquidity, will result in a poor creditworthiness, loss of creditors confidence, or even legal tangles resulting in the closure of the company. A very high degree of liquidity also bad; idle asset earn nothing. The firms funds will be unnecessarily tied up in current assets. Therefore it is necessary to strike a proper balance between high liquidity and lack of liquidity. The most common ratios which indicate the extent of liquidity and the lack of liquidity are: Current Ratio Quick Ratio and Absolute Liquid Ratio 1. CURRENT RATIO Current ratio may be defined as the relationship between current assets and current liabilities. This ratio also known as Working capital ratio is a measure of general liquidity and is most widely used to make the analysis of a short-term financial position (or) liquidity of a firm.

Current Ratio = Current Asset/ Current Liability

Components of Current Ratio Current Assets Cash in hand Cash at bank Inventories Bills receivable Work-in-progress Marketable securities Short-term investments Sundry debtors Prepaid expenses

Current Liabilities Outstanding or accrued expenses Bank over draft Short-term advances Bills payable Sundry creditors Dividend payable Income-tax payable

Interpretation of Current Ratio A relatively high current ratio is an indication that the firm is highly liquid and has the ability to pay its current obligations in time as and when they become due. On the other hand, a relatively low current ratio represents the liquidity position of the firm is not good and the firm shall not be able to pay its current liabilities in time without facing difficulties. An increase in current ratio represents improvement in the liquidity position of the firm while a decrease in the current ratio indicates that there has been deterioration in the liquidity position of the firm. As a convention the minimum of two to one ratio is referred to as bankers rule of thumb or arbitrary standard of liquidity of a firm. Ideal Current Ratio is 2:1. 2. Quick Ratio Quick Ratio is also known as Acid Test or Liquidity Ratio, is a more rigorous test of liquidity than the current ratio. It 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. Components of Quick Ratio Current Assets Cash in hand Cash at bank Bills receivable Marketable securities Temporary investments Sundry debtors

Current Liabilities Outstanding or accrued expenses Bank over draft Bills payable Sundry creditors Short-term advances Dividend payable Income tax payable

Sometimes, bank overdraft is not included in the current liabilities while calculating quick or acid test ratio, on the argument that bank overdraft is generally a permanent way of financing and is not subject to be called on demand. In such cases, the quick ratio is found out by dividing the total quick assets by quick liabilities. (i.e. Current liabilities- Bank overdraft)

Quick Ratio = Quick/Liquid Assets Quick/ Liquid Liabilities Interpretation of Quick Ratio
Quick ratio is a more rigorous test of liquidity than current ratio. It measures

the firms capacity to pay current obligations immediately. A high quick ratio indicates that the firm is liquid and has the ability to meet its current liabilities and on the other the other hand a low quick ratio indicates that the firms liquidity position is not good. As a thumb rule a quick ratio of 1:1 is considered satisfactory. It is generally thought that if quick assets are equal to current liabilities then the concern may be able to meet its short term obligations. 3. ABSOLUTE LIQUID RATIO Although receivable, debtors and bills receivable are generally more liquid than inventories, yet there may be doubts regarding their realization into cash immediately or in time. Hence, absolute liquid ratio should also be calculated together with current ratio and quick ratio so as to exclude even receivables from the current assets and find out the absolute liquid assets. Absolute liquid ratio = Absolute liquid assets Current liabilities Absolute Liquid Assets Cash in hand Cash at bank Interest on Fixed Deposit Current Liabilities Outstanding or accrued expenses Bank over draft Bills payable Short-term advances Sundry creditors Dividend payable Income tax payable

Interpretation of Absolute liquid ratio Absolute liquid assets include cash in hand, Cash at bank, Interest on fixed deposits. The acceptable forms for this ratio is 50% (or) 0.5:1 (or) 1:2 i.e., Rs.1 worth absolute liquid assets are considered to pay Rs.2 worth current liabilities in time as all the creditors are nor accepted to demand cash at the same time and then cash may also be realized from debtors and inventories.

LEVERAGE RATIOS:The short time creditors, like bankers and

suppliers of raw material, are more concern with the firms current debtpaying ability. On the other hand, long term creditors, like debenture holders, financial institutions etc. are more the long term financial concerned with the firms long term financial strength. In fact, a firm should have a strong short as well as long term financial position. To judge the long term financial position of firm, financial leverage or capital structure ratios are calculated. These ratios indicate mix of funds provided by owners and lenders. As a general rule there should be an appropriate mix of debt and owners equity in financing the firms assets. The manner in which assets are financed has a number of implications. First, between debt and equity, debt is more risky from the firms point of view. The firm has a legal obligation to interest to debt holders, irrespective of the profits made by or losses incurred by the firm. If the firm fails to pay debt holders in time, they can take legal action against it to get payments and in extreme cases, can force the firm into liquidation. Second, use of debt is an advantage for shareholders in two ways: (a) they can retain control of the firm with a limited stake and (b) their earning will be magnified, when the firm earns a rate of return on the total capital employed higher than the interest rate on the borrowed funds. Leverage ratios can be calculated from the balance sheet items to determine the proportion of debt in total financing. There are different kinds of leverage ratios; Debt-equity ratio Interest coverage ratio. Proprietary Ratio 4. DEBT EQUITY RATIO Debt Equity ratio is also known as External Internal Equity ratio and is calculated to measure the relative claims of the outsiders and the owners against the firms assets. This ratio indicates the relationship between the outsiders funds and shareholders funds. There is a controversy regarding current liabilities, some authors believe that current liabilities should be included in outsiders funds whereas some believe that it should not be included.

Debt Equity Ratio = Long Term Debt Shareholders Funds


Interpretation of Debt Equity Ratio

The Debt Equity ratio is calculated to measure the extent to which debt financing has been used in a business. The ratio indicates the proportionate claims of owners and the outsiders against the firms assets. A high debt equity ratio is considered favourable from shareholders point of view and a low debt equity ratio is considered favourable from creditors point of view. As a rule, the debt equity ratio with 1:1 (or) more is considered as satisfactory position of the firm. 5. PROPRIETORS RATIO OR EQUITY RATIO A variant to the debt-equity ratio is the proprietors ratio which is also known as equity ratio. This ratio establishes relationship between shareholders funds to total assets of the firm. This ratio of proprietors funds to total funds is an important ratio for determining long term solvency of the firm. Proprietary Ratio = Shareholders Funds X 100 Total Assets

Components of Proprietors Ratio Proprietors Funds Share Capital Reserves & Surplus

Total Assets Fixed Assets Current Assets Cash in hand & at bank Inventories Bills receivable Work-in-progress Marketable securities Short-term investments Sundry debtors Prepaid expenses

Interpretation of Proprietors Ratio

The proprietary ratio establishes the relationship between shareholders funds to total assets. It determines the long-term solvency of the firm. This ratio indicates the extent to which the assets of the company can be lost without affecting the interest of the company. This ratio is expressed in percentage of owners capital to the total capital of the firm as follows. 6. INTEREST COVERAGE RATIO Debt ratios described above are static in nature, and fail to indicate the firms ability to meet interest and other fixed obligations. The interest coverage ratio is used to test the firms debt servicing capacity. The interest coverage ratio is determined by dividing earnings before interest and taxes by interest charges.

Interest Coverage Ratio =

PBIT Fixed Interest Charges

Interpretation of Interest Coverage Ratio Interest coverage ratio indicates the number of times the interest is covered by the profits available to pay the interest charges. Generally, higher the interest coverage ratio, safer is the long term creditors because even if the earnings fall the firm will be able to meet its fixed interest charges.

ACTIVITY RATIOS Funds of creditors and owners are invested in various assets to generate sales and profits. The better the management of assets, the larger the amount of sales. Activity ratios are employed to evaluate the efficiency with which the firm manages and utilizes its assets. The ratios are also called Turnover ratios because they indicate the speed with which the assets are being converted or turned over into sales. A proper balance between sales and assets generally reflects that the assets are managed well. 7. INVENTORY TURNOVER RATIO This ratio measures how many times average stock is sold during the year. Promptness of the sales indicates better performance of the business. It also

shows efficiency of the concern. Immediate sale of goods produced require further production which consequently activates the productive process and is responsible for rapid development of the business.

Inventory Turnover = Ratio

Cost of Goods Sold Average Inventory at Cost

Interpretation Inventory Turnover Ratio measures the velocity of conversion of stock into sales. A high inventory turnover ratio indicates efficient management of inventory whereas; a low inventory turnover ratio indicates inefficient management of inventory. 8. WORKING CAPITAL TURNOVER RATIO This ratio measures the relationship between working capital and sales. The ratio shows the no. of times the working capital results in sales. Working capital is the excess of current assets over current liabilities.

Working Capital Turnover = Cost of Sales Ratio Net Working capital


Components of Working Capital Current Assets Cash in hand Cash at bank Bills receivable Current Liabilities Outstanding or accrued expenses Bank over draft Bills payable

Marketable securities Temporary investments Sundry debtors Interpretation

Sundry creditors Short-term advances Dividend payable Income tax payable

Working Capital turnover ratio indicates the number of times the working capital is turned over during the year. A higher ratio indicates efficient utilisation in working capital and a low ratio indicates otherwise.

9. CAPITAL TURNOVER RATIO Sometimes the efficiency and effectiveness of the operations are judged by comparing the cost of sales or sales with amount of capital invested in the business and not with assets held in the business, though in both cases the same result is expected. Capital invested in the business may be classified as long-term and short-term capital or as fixed capital and working capital or Owned Capital and Loaned Capital. All Capital Turnovers are calculated to study the uses of various types of capital.

Capital Turnover Ratio =

Cost of Sales Capital Employed

Interpretation This is another ratio to judge the efficiency and effectiveness of the company like profitability ratio. The higher the ratio the better is efficiency of the firm. PROFITABILITY RATIOS A company should earn profits to survive and grow over a long period of time. Profits are essential, but it would be wrong to assume that every action initiated by the management of the company should be aimed at maximizing profit, irrespective of social consequences. It is unfortunate the word profit is looked upon as a term of abuse since some firms always wanted to maximize profits at the cost

of employees, customers & society. Except such infrequent cases, it is fact that sufficient profit must be earned to sustain the operation of the business to be able to obtain funds from the investors for the expansion and growth and to contribute towards the social overheads for the welfare of the society. Profit is the difference between revenues and expenses over a period of time (usually one year). Profit is the ultimate output of the company, and it will have no future if it fails to make sufficient profits. Therefore, the financial manager should continuously evaluate the efficiency of the company in terms of profits. The profitability ratios are calculated to measure the operating efficiency of the firm. Beside management of the company, the creditors and owners are also interested in the profitability of the firm. Creditors want to get interest and repayment of principal regularly. Owners want to get a required rate of return on their investment. This is possible only when the company earns enough profits.

GENERAL PROFITABILITY RATIOS


10.GROSS PROFIT RATIO This ratio shows relationship between the gross profit and sales. Gross profit ratio shows the margin of profit on sales. This indicates how much profit is earned on your products without considering selling and administration costs

Gross Profit Ratio =

Gross Profit X 100 Net Sales

Interpretation The Gross Profit Ratio indicates the extent to which selling prices of the goods may decline without resulting in losses on operation of a firm. There is no standard norm for gross profit ratio and it varies from business to business. 11.NET PROFIT RATIO

Net profit ratio establishes a relationship between net profit (after tax) and sales and indicates the efficiency of the management in manufacturing, selling administrative and other activities of the firm. It also indicates the firms capacity to face adverse economic conditions such as price competitors, low demand etc.

Net Profit Ratio =

Net Profit after Tax X 100 Net Sales

Interpretation The net profit ratio is the overall measure of the firms ability to turn each rupee of income from services in net profit. If the net margin is inadequate the firm will fail to achieve return on shareholders funds. High net profit ratio will help the firm service in the fall of income from services, rise in cost of production or declining demand. 12.OPERATING PROFIT RATIO Operating ratio establishes the relationship between cost of goods sold and other operating expenses on the one hand and the sales on the other .Operating profit ratio are calculated by dividing operating profit by sales.

Operating Profit Ratio =

Operating Profit X 100 Net Sales

Interpretation The operating profit ratio is used to measure the relationship between net profits and sales of a firm. Higher ratio indicates the better efficiency because a major part of it consists of operating expenses.

OVERALL PROFITABILITY RATIOS


13.RETURN ON SHAREHOLDERS INVESTMENTS Return on share holders investment, popularly known as Return on investments (or) return on share holders or proprietors funds is the relationship between net profit (after interest and tax) and the proprietors funds. The ratio is generally calculated as percentages by multiplying the above with 100. Return on shareholders investments = Net Profit X 100

Shareholders funds
Interpretation ROI is an important ratio for measuring the overall efficiency of the firm. This ratio indicates the extent to which the company has increased its earnings over the years. Higher the ratio the better the efficiency of the firm. 14.EARNINGS PER SHARE Earnings per share is a small verification of return of equity and is calculated by dividing the net profits earned by the company and those profits after taxes and preference dividend by total no. of equity shares. The Earnings per share is a good measure of profitability when compared with EPS of similar other components (or) companies, it gives a view of the comparative earnings of a firm.

Earnings per Share = Net Profit after Interest and Tax X 100 No. Of Equity Shares

Interpretation Earnings per share ratio are used to find out the return that the shareholders earning from their shares. After charging depreciation and after payment of tax, the remaining amount will be distributed by all the shareholders. Higher the ratio the better the efficiency of the firm. 15.RETURN ON ASSETS

Profitability can be measured in terms of relationship between net profit and assets. This ratio is also known as profit-to-assets ratio. It measures the profitability of investments. The overall profitability can be known.

Return on Assets =

Net Profit Total Assets

Interpretation The ratio indicates the return on total assets in the form of profits. Higher the ratio the more the profits

CHAPTER 4

DATA ANALYSIS &

INTERPRETATION

LIQUIDITY RATIO

1. CURRENT RATIO Current Ratio = Current Asset/ Current Liability

Current Ratio Year 2005 2006 2007 2008 2009 Interpretation A relatively high current ratio is an indication that the firm is highly liquid and has the ability to pay its current obligations in time as and when they become due. On the other hand, a relatively low current ratio represents the liquidity position of the firm is not good and the firm shall not be able to pay its current liabilities in time without facing difficulties. It is submitted that indirect norms are not considered due to lack of information. No specific industry standards are available hence general standards are considered As a rule, the current ratio with 2:1 (or) more is considered as satisfactory position of the firm. In 2009 the cash and bank balance has decreased when compared to the previous years, because of the increase in expenses and the percentage increase in current liabilities has decreased due to decrease in loans and Current Assets 98,40,952 1,30,22,901 1,60,68,195 1,99,60,029 2,47,65,346 Current Liabilities 80,27,370 88,29,246 96,37,002 1,02,88,675 1,15,18,766 Current Ratio 1.22 1.46 1.66 1.94 2.15

advances. When compared to previous years, Debtors are raised and for that the provision is created, hence there is an increase in provision for tax. The huge increase in sundry debtors resulted an increase in the ratio, which shows the comfortable position of the firm. Graphical Representation

Current Ratios
2.5 2.15 2 1.66 1.5 1.22 1 1.46 1.94

0.5

0 2005 2006 2007 2008 2009

2. QUICK RATIO

Quick Ratio = Quick/Liquid Assets Quick/ Liquid Liabilities

Quick Ratio Year 2005 2006 2007 2008 2009 Quick Assets 26622.90 88292.46 96370.02 119441.66 524703.36 Current Liabilities 80273.70 88292.46 96370.02 102886.75 115187.66 Quick Ratio 0.33 1.39 1.59 1.39 1.65

Interpretation Quick ratio is a more rigorous test of liquidity than current ratio. It measures the firms capacity to pay current obligations immediately. A high quick ratio indicates that the firm is liquid and has the ability to meet its current liabilities and on the other the other hand a low quick ratio indicates that the firms liquidity position is not good. It is submitted that indirect norms are not considered due to lack of information. No specific industry standards are available hence general standards are considered As a rule, the quick ratio with 1:1 (or) more is considered as satisfactory position of the firm. Compare to previous years, the Quick ratio is increased because the sundry debtors are increased due to the increase in the corporate tax and for that the provision created is also increased. So, the ratio is also increased with the 2009. .

Graphical Representation

Quick Ratio
1.8 1.6 1.4 1.2 1 0.8 0.6 0.4 0.2 0 2005 2006 2007 2008 2009 0.33 Quick Ratio 1.39 1.59 1.39 1.65

3. ABSOLUTE LIQUID RATIO

Absolute liquid ratio = Absolute liquid assets Current liabilities


Absolute Liquid Year 2005 2006 2007 2008 2009 Absolute Liquid Assets 18,94,094 17,50,227 24,95,423 29,31,845 25,57,889 Ratio Current Liabilities 80,27,370 88,29,246 96,37,002 1,02,88,675 1,15,18,766 Absolute Liquid Ratio 0.23 0.19 0.25 0.28 0.22

Interpretation The current assets which are ready in the form of cash are considered as absolute liquid assets. Here, the cash and bank balance and the interest on fixed assets are absolute liquid assets. It is submitted that indirect norms are not considered due to lack of information. No specific industry standards are available hence general standards are considered As a rule, the absolute liquid ratio with 0.5:1 (or) more is considered as satisfactory position of the firm. All the ratios are below the satisfactory level. The highest level reached was during 2008. In the year 2009 the cash and bank balance decreased because of an increase in expenses and the current liabilities increased due to increase in taxes. Graphical Representation

Absolute Liquid Ratio


0.3 0.25 0.25 0.2 0.15 0.1 0.05 0 2005 2006 2007 2008 2009 0.23 0.19 0.22 0.28

Absolute Liquid Ratio

LEVERAGE RATIOS
4. DEBT EQUITY RATIO

Debt Equity Ratio = Long Term Debt Shareholders Funds

Debt Equity Ratio Year 2005 2006 2007 2008 2009 Interpretation The Debt Equity ratio is calculated to measure the extent to which debt financing has been used in a business. The ratio indicates the proportionate claims of owners and the outsiders against the firms assets. A high debt equity ratio is considered favourable from shareholders point of view and a low debt equity ratio is considered favourable from creditors point of view. No specific industry standards are available hence general standards are considered As a rule, the debt equity ratio with 1:1 (or) more is considered as satisfactory position of the firm. The ratios fall below the standards, the highest debt equity ratio was attained during the year 2005. Compared to 2008 the debt financing has increased in 2009 but the percentage increase in shareholders funds is more than percentage increase in debt hence the ratio falls below the standard The capital structure of the company consists of more equity and less debt. Long Term Debt 19,41,963 18,72,173 16,57,448 17,75,603 24,97,619 Shareholders Funds 32,18,298 36,34,574 46,40,772 55,99,868 56,79,590 Debt Equity Ratio 0.60 0.51 0.35 0.31 0.43

Graphical Representation

Debt Equity Ratio


0.7 0.6 0.5 0.4 0.3 0.2 0.1 0 2005 2006 2007 2008 2009 0.35 0.31 0.6 0.51 0.43 Debt Equity Ratio

5. PROPRIETORS RATIO OR EQUITY RATIO Proprietors Ratio = Shareholders Funds X 100 Total Assets

Proprietary Ratio Year 2005 2006 2007 2008 2009 Shareholders Funds 32,18,298 36,34,574 46,40,772 55,99,868 56,79,590 Total Assets 1,06,78,259 1,39,26,528 1,71,05,384 2,13,19,072 2,63,32,398 Proprietary Ratio 30.13 26.09 27.13 26.26 21.56

Interpretation The proprietary ratio establishes the relationship between Shareholders funds to total assets. It determines the long-term solvency of the firm. This ratio indicates the extent to which the assets of the company can be lost without affecting the interest of the company. The shareholders funds include capital and reserves and surplus. The reserves and surplus is increased due to the increase in balance in profit and loss account, which is caused by the increase of income from services. There is no increase in the capital over the years. Total assets are also increased than previous years because of the increase in current assets The percentage increase in total assets over the previous year is more than that of shareholders funds hence the proprietary ratio has decreased in 2009. Graphical Representation

Proprietary Ratio
35 30 25 20 Proprietary Ratio 15 10 5 0 2005 2006 2007 2008 2009 30.13 26.09 27.13 26.26 21.56

6. INTEREST COVERAGE RATIO

Interest Coverage Ratio =

PBIT Fixed Interest Charges

Interest Coverage Ratio Years 2005 2006 2007 2008 2009 Interpretation Interest coverage ratio indicates the number of times the interest is covered by the profits available to pay the interest charges. Generally, higher the interest coverage ratio, safer is the long term creditors because even if the earnings fall the firm will be able to meet its fixed interest charges. The interest coverage ratio has increased from 2005- 2007 In 2009 the profit has decreased due to increase in expenses. Due to inflation the expenses of the company and the fixed interest charges has increased which resulted in the decrease of the ratio. PBIT 6,29,701 6,22,280 20,70,177 23,40,538 5,03,672 Fixed Interest Charges 37,935 17,954 28,389 1,88,303 2,15,651 Interest Coverage Ratio 16.59 34.65 72.92 12.42 2.33

Graphical representation

Interest Coverage Ratio


80 70 60 50 40 30 20 10 0 2005 2006 2007 2008 2009 16.59 12.42 2.33 34.65 Interest Coverage Ratio 72.94

ACTIVITY RATIOS
7. INVENTORY TURNOVER RATIO

Inventory Turnover = Ratio

Cost of Goods Sold Average Inventory at Cost

Inventory Turnover Ratio Years 2005 2006 2007 2008 2009 Cost of Goods Sold 29,58,357 56,44,094 66,74,185 67,38,942 92,23,251 Average Inventory at Cost 5,92,618 1,63,237 1,74,747 1,91,673 2,73,626 Inventory Turnover Ratio 4.99 34.50 38.19 35.15 33.70

Interpretation Inventory Turnover Ratio measures the velocity of conversion of stock into sales. A high inventory turnover ratio indicates efficient management of inventory whereas; a low inventory turnover ratio indicates inefficient management of inventory. Cost of goods sold includes Raw material consumed during the year, wages and the manufacturing expenses. The raw material consumption and manufacturing expenses have increased considerably from 2005- 2007, as a result cost of goods sold (COGS) has increased gradually and the inventory levels decreased. Hence the inventory turnover ratio has increased. In the year 2008-2009, due to recession the production has decreased and the COGS levels did not increase considerably and the inventory levels increased. So, there is a decrease in inventory turnover ratio compared to previous years.

Graphical Representation

Inventory Turnover Ratio


40 35 30 25 20 15 10 5 0 2005 2006 2007 2008 2009 4.99 Inventory Turnover Ratio 38.19 34.5 35.15 33.7

8. WORKING CAPITAL TURNOVER RATIO

Working Capital Turnover = Cost of Sales Ratio Net Working capital


Working Capital Turnover Ratio Years 2005 2006 2007 2008 2009 Interpretation Working Capital turnover ratio indicates the number of times the working capital is turned over during the year. A higher ratio indicates efficient utilisation in working capital and a low ratio indicates otherwise. Income from services is greatly increased due to the extra invoice form Operations & Maintenance fee and the working capital are also increased greater due to the increase in current assets. The percentage increase in cost of sales is less than percentage increase in working capital hence the ratio decreased in 2008-2009 Cost of Sales 29,58,357 56,44,094 66,74,185 67,38,942 92,23,251 Net Working Capital 98,40,952 41,93,655 64,31,193 96,71,354 1,32,46,580 Working Capital Turnover Ratio 0.30 1.34 1.03 0.69 0.69

Graphical Representation

Working Capital Turnover Ratio


1.4 1.2 1 0.8 0.6 0.4 0.2 0 2005 2006 2007 2008 2009 0.3 0.69 0.69 Working Capital Turnover Ratio 1.34

1.03

9. CAPITAL EMPLOYED TURNOVER RATIO

Capital Turnover Ratio =

Cost of Sales Capital Employed

Capital Turnover Ratio Years 2005 2006 2007 2008 2009 Cost of Sales 29,58,357 56,44,094 66,74,185 67,38,942 92,23,251 Capital Employed 32,18,298 36,34,574 46,40,772 73,69,363 82,08,795 Capital Turnover Ratio 0.91 1.55 1.43 0.91 1.12

Interpretation This is another ratio to judge the efficiency and effectiveness of the company like profitability ratio. The higher the ratio the better is efficiency of the firm. The income from services has greatly increased compared with the previous year and total capital employed has also increased. The percentage increase in cost of sales is more than that of the capital employed, hence, the capital turnover ratio has increased Graphical Presentation

Capital Turnover Ratio


1.6 1.4 1.2 1 0.8 0.6 0.4 0.2 0 2005 2006 2007 2008 2009 0.91 0.91 Capital Turnover Ratio 1.12 1.55 1.43

PROFITABILITY RATIOS GENERAL PROFITABILITY RATIOS


10. GROSS PROFIT RATIO

Gross Profit Ratio =

Gross Profit X 100 Net Sales


Ratio Net Sales 72,78,087 68,04,638 94,84,903 98,16,983 1,05,28,811 Gross Profit Ratio 59.35 17.05 29.63 31.35 12.39

Gross Profit Years 2005 2006 2007 2008 2009 Interpretation Gross Profit 43,19,730 11,60,544 28,10,718 30,78,041 13,05,560

The Gross Profit Ratio indicates the extent to which selling prices of the goods may decline without resulting in losses on operation of a firm. There is no standard norm for gross profit ratio and it varies from business to business. The net sales have increased over the years because sales returns have decreased. The gross profit has increased considerably over the years but in the year 2009 the cost of goods sold has increased due to inflation as a result the gross profit decreased. Hence the gross profit ratio also decreased.

Graphical Representation

Gross profit Ratio


59.35 60 50 40 29.63 30 20 10 0 2005 2006 2007 2008 2009 17.05 12.39

31.35 Gross profit Ratio

11.NET PROFIT RATIO

Net Profit Ratio =

Net Profit after Tax X 100 Net Sales

Net Profit Ratio Years 2005 2006 2007 2008 2009 Net Profit After Tax 371280 422665 1283704 1341466 134837 Net Sales 7278087 6804638 9484903 9816983 10528811 Net Profit Ratio 5.10 6.21 13.53 13.66 1.28

Interpretation The net profit ratio is the overall measure of the firms ability to turn each rupee of income from services in net profit. If the net margin is inadequate the firm will fail to achieve return on shareholders funds. High net profit ratio will help the firm service in the fall of income from services, rise in cost of production or declining demand. The net profit has increased from 2005-2008 because the income from services is increased. This increment resulted in an increase in net profit ratio till 2008. In 2009 due to recession and inflation the net profit has decreased considerably as a result the net profit ratio also decreased. Graphical Representation

Net Profit Ratio


14 12 10 8 6 4 2 0 2005 2006 2007 2008 2009 1.28 5.1 6.21 Net Profit Ratio 13.53 13.66

12.OPERATING PROFIT RATIO

Operating Profit Ratio =

Operating Profit X 100 Net Sales

Operating Profit Ratio Years 2005 2006 2007 2008 2009 Interpretation The operating profit ratio is used to measure the relationship between net profits and sales of a firm. The operating profit ratio has decreased compared with the last year because operating expenses have increased due to inflation. The net sales over the years have increased considerably as a result the operating profit has decreased. Operating Profit 36,92,701 6,22,280 21,00,177 23,16,067 5,03,678 Net Sales 72,78,087 68,04,638 94,84,903 98,16,983 1,05,28,811 Operating Profit Ratio 50.73 9.14 22.14 23.59 4.78

Graphical Representation

Operating Profit Ratios


60 50.73 50 40 30 20 9.14 10 0 2005 2006 2007 2008 2009 4.78 23.59 Operating Profit Ratios

22.14

OVERALL PROFITABILITY RATIOS


13. RETURN ON SHAREHOLDERS INVESTMENTS Return on shareholders investments = Net Profit X 100

Shareholders funds

Return Years 2005 2006 2007 2008 2009 Net Profit 3,71,280 4,22,665 12,83,704 13,41,466 1,34,837

on

Shareholders Shareholders funds 32,18,298 36,34,574 46,40,772 55,99,868 56,79,590

Investments Return on Investments 11.53 11.62 27.66 23.95 2.37

Interpretation ROI is an important ratio for measuring the overall efficiency of the firm. This ratio indicates the extent to which the company has increased its earnings over the years. The ROI has increased considerably from 2005- 2007 but it has decreased in 2008 & 2009. During the year 2009 net profit has decreased due to the increase in the expenses as a result of inflation and the shareholders funds have increased because of reserve & surplus. So, ROI for the current year has decreased. Graphical Representation

Return on Investments
30 25 20 15 10 5 0 2005 2006 2007 2008 2009 2.37 11.53 11.62 Return on Investments 27.66 23.95

14.EARNINGS PER SHARE

Earnings per Share = Net Profit after Interest and Tax X 100 No. Of Equity Shares
Earnings Year 2005 2006 2007 2008 2009 per Share No. Of Equity Shares 1458812 1548812 1548812 1633712 1633712 Earnings per Share 0.25 0.27 0.82 0.82 0.0825

Net Profit after Interest and Tax 371280 422665 1283704 1341466 134837

Interpretation Earnings per share ratio are used to find out the return that the shareholders earning from their shares. After charging depreciation and after payment of tax, the remaining amount will be distributed by all the shareholders. Net profit after tax is decreased due to the huge increase in expenses. Due to the huge decrease in net profit the earnings per share is greater decreased in 2009.

Graphical Representation

Earnings per Share


0.9 0.8 0.7 0.6 0.5 0.4 0.3 0.2 0.1 0 2005 2006 2007 2008 2009 0.25 0.27 0.0825 Earnings per Share 0.82 0.82

15.RETURN ON ASSETS

Return on Assets =

Net Profit Total Assets

Return on Assets Year 2005 2006 2007 2008 2009 Interpretation Net Profit 3,71,280 4,22,665 12,83,704 13,41,466 1,34,837 Total Assets 1,06,78,259 1,39,26,528 1,71,05,384 2,13,19,072 2,63,32,398 Return on Assets 0.034 0.030 0.075 0.062 0.005

The ratio indicates the return on total assets in the form of profits. The net profits have increased over the years because of the Increment in the income from services due to the increase in Operations & Maintenance fee. During the year 2009 the net profits have decreased because of an

increase in overall expenses due to inflation. The total assets have increased because of sundry debtors as a result the return on investments has decreased during the current year. Graphical Representation

Return on Assets
0.08 0.07 0.06 0.05 0.04 0.03 0.02 0.01 0 2005 2006 2007 2008 2009 0.005 0.034 0.03 Return on Assets 0.075 0.062

SWOT ANALYSIS:

STRENGTH: The company produces a range of products to carter the needs of government departments under various public sector undertakings The company has virtual monopoly in certain defence related products Continuous innovation in R&D and process innovation. The company is having excellent infrastructure and skilled people. Weakness: Rising private participation in electronic and defense production. Low Cost Carriers Fuel Demand for Aircraft As a PSU decision making is delayed due to various formalities involved. Opportunities: Indian market offers opportunities for: - Outsourcing - Joint Ventures - Companies with unique technologies especially with control instrumentation or services India is looking for: - Technology transfer - Strategic alliances/ partnering in the field of: - Design, machining and manufacturing of equipment - Electronics

- Mechanical - Avionics

THREATS: Private Electronic companies from foreign. With the downtrend in important tariff, the domestic industry is not in a position to compete with foreign suppliers due to higher overhead low volumes, inferior technology and quality.

CHAPTER 5

SUGGESTIONS AND CONCLUSIONS

SUGGESTIONS The liquidity position of the company can be improved by investing stock or inventory. The company gives a large sum of money in terms of loans and advances which will decrease the cash and bank balances which is required by the company to pay off debts. Further there is a large amount of debt to be paid to creditors, which are decreases the liquidity position of the company. The expenses of the company have increased considerably which can be reduced by increasing the stock levels and by not investing in unnecessary things. The net profits of the company have decreased this year due to increase in the operating expenses. In order to increase the profits ECIL has to consolidate and reduce the overheads and employee cost which are the major components of total expenditure. Operating Cycle of the company has to be reduced which results in higher turnover and better working capital efficiency. The company is saddled with surplus work force leading to huge wage bill. The companys manpower has to be reduced in a phased manner by way of attractive retirement schemes.

As the company is having qualified and skilled workforce, it can utilise this asset to develop new products and technologies. On an average for 3 years debtors constitute 43% of total current assets. This shows its difficulty to manage the accounts receivable, the company should collect debts as early as possible by implementing new collection strategies. Company should go for new technological innovation and train its employees accordingly so it can compete with private sectors and MNCs. Conclusion From the accounting year 2005- 2008 the Companys profits increased, but in 2009 the profits decreased due to inflation and the growth is slow due to recession. The company has good liquidity position and also the company has good turnover ratio with which the company can improve its condition. From overall point of view the company s performance is satisfactory.