A Study on Financial Statement Analysis At National Small

Industrial Corporation (NSIC)

A Project Report Submitted to
JawaharlalNehru Technological University, Hyderabad

In partial fulfillment of the requirements

for the award of the degree of
MASTER OF BUSINESS ADMINISTRATION

By
REJINTHALA.SINDHU

16881E0046

Under the guidance of

G. RAMESH
Associate Professor
Department of Management studies

Department of Management Studies

VARDHAMAN COLLEGE OF ENGINEERING
(Permanently Affiliated to JNTUH, Hyderabad, Approved by AICTE and Accredited by
NAAC with ‘A’ grade & ISO 9001:2008 certified)
Shamshabad - 501 218, Hyderabad
2016 – 2018
 DECLARATION

I hereby declare that this project report entitled “Financial Statement Analysis At National
Small Industrial Corporation(NSIC)” is a genuine project work carried out by me in MBA
degree course of Jawaharlal Nehru Technological University, Hyderabad under the
guidance of Mr.G.Ramesh, Associate professor, department of management studies and
has not been submitted to any other course/degree/diploma or university for the award of
degree by me.

Signature of the Student

 Department of Management Studies
VARDHAMAN COLLEGE OF ENGINEERING
(Permanently Affiliated to JNTUH, Hyderabad, Approved by AICTE and Accredited by
NAAC with ‘A’ grade & ISO 9001:2008 certified)

Shamshabad - 501 218, Hyderabad

Certificate
This is to certify that the project work entitled “Financial Statement Analysis At National
Small Industrial Corporation” is the bonafide work done By REJINTHALA.SINDHU regd NO:-
16881E0046 under my guidance in the Department of Management studies, VARDHAMAN
COLLEGE OF ENGINEERING, Shamshabad is submitted to Jawaharlal Nehru Technological
University, Hyderabad in partial fulfillment of the requirements for the award of
MBAdegreeduring 2016 -2018.

Guide: Head of the Department:

G. Ramesh Dr.V.Sreehari
Associate Professor, Professor & Head,
Dept of Management studies, Dept of Management studies,
Vardhaman College of Engineering, Vardhaman College of Engineering,
Hyderabad. Hyderabad.

Viva-Voce held on……………………………………………

_________________ ________-
_____________
Internal Examiner External Examiner
 ACKNOWLEDGEMENT

The satisfaction that accompanies the successful completion of the task would be put
incomplete without the mention of the people who made it possible, whose constant
guidance and encouragement crown all the efforts with success.

I thankful to my guide G.Ramesh, Associate Professor, Management studies for his

sustained inspiring guidance and cooperation throughout the process of this project. His
wise counsel and suggestions were invaluable.

I would like to thank Dr.H.Vani, Assistant Manager,NSIC for her expert guidance and
encouragement at various levels of my Project.

I would like to thank Dr.V.Sreehari Professor & HOD for constant encouragement and
support.

I show gratitude to Dr.S.SaiSathyanarayana Reddy, Principal for provided all the facilities
and support.

I avail this opportunity to express our deep sense of gratitude and hearty thanks to
DrTeegalaVijender Reddy,Chairman, Sri TeegalaUpender Reddy, Secretary&Sri E.Prabhakar
Reddy,Treasurer of VCE, for providing congenial atmosphere and encouragement.
I express my deep sense of gratitude and thanks to all the Teaching and Non-Teaching Staff
of our college who stood with me during the project and helped me to make it a successful
venture.
I place highest regards to my Parents, my Friends and Well wishers who helped a lot in
making the report of this project.

REJINTHALA.SINDHU
(16881E0046)
 INDEX
S.NO :CHAPTER PAGE NO:
1. CHAPTER-I
INTRODUCTION
 Need of the study
 Scope of the study
 Objectives of the study
 Methodology of the study
 Limitations of the study
2. CTAPTER-II
 Industry profile
 Company profile
3.CHAPTER-III
 Review of literature
4.CHAPTER-IV
 Data analysis & interpretation
5.CHAPTER-V
 Findings
 Suggestions
 Conclusion
 Bibliography
INTRODUCTION
FINANCIAL STATEMENT ANALYSIS
INTRODUCTION:
Financial Statements are records that give a sign of the association's money related status. It
quantitatively portrays the money related wellbeing of the organization. It helps in the
assessment of the organization's prospects and dangers to make business choices. The goal
of the money related proclamations is to give data about the budgetary position, execution
and changes in monetary position of a venture that is helpful to an extensive variety of
clients in settling on financial choices.

Financial explanations ought to be justifiable, significant, dependable and practically

identical. They give an exact photo of an organization's condition and working outcomes in a
consolidated frame. Revealed resources, liabilities and value are straight forwardly
identified with an association's budgetary position. While announced pay and costs are
straightforwardly identified with an association's budgetary execution. Investigation and
elucidation of the money related proclamations helps in deciding the liquidity position, long
haul dissolvability, budgetary reasonability, benefit and soundness of a firm. There are four
fundamental kinds of the budgetary articulations: Balance sheets, wage explanations,
income proclamations and articulations of held profit.

The investigation of budgetary explanation is a procedure of assessing the connection

between segment parts of money related proclamation to acquire a superior
comprehension of firm monetary position. These announcements incorporate the pay
proclamation, monetary record, explanation of money streams, and an announcement of
changes in value. Monetary articulation investigation is a strategy or process including
particular strategies for assessing dangers, execution, budgetary wellbeing, and future
prospects of an association.

Investigation is a procedure of basically analysing the bookkeeping data given money

related proclamations. Budgetary articulation examination is an imperative piece of general
monetary investigation, in light of the announcements which are the finished results of
bookkeeping framework, viz., Balance Sheet and Profit and Loss Account.

Monetary proclamation investigation includes the examination of both the connections

among money related explanation numbers and the patterns in those numbers after some
time. One reason for budgetary proclamation investigation is to utilize the past execution of
an organization to anticipate how it will do later on. Another object is to assess the
execution of an organization with an eye toward distinguishing issue territories. In total,
budgetary articulation examination is both determination distinguishing where a firm has
issues and forecast foreseeing how a firm will perform later on.
OBJECTIVES OF THE STUDY
 To break down the Over-all money related position of the association.
 Assessment of the Operational effectiveness of the organization.
 To decide the long haul liquidity and Solvency position of NSIC.
 To break down the productivity and viability with which association deals with its
assets and resources.
 To look at the execution of the organization for various periods.
NEED OF THE STUDY
 To comprehend the importance, noteworthiness and restriction of the Financial
Statement examination.
 To figure liquidity, dissolvability, benefit and movement proportions of the
association.
 To make a relative report and give answers for the authoritative change.
 To survey the general money related quality.

SCOPE OF THE STUDY

 This think about plainly characterizes the money related status of the worry amid the
working time frame.
 The contemplate report being made here draws out the money related structure and
the situation of the NSIC contrasting from various years
 The money related examination causes us to break down the monetary foundation
and use of the salary earned through the association procedure.
 The data acquired from auxiliary information is restricted to the NSIC.
METHODOLOGY OF THE STUDY
The project evaluates the financial performance one of the company with help of the
most appropriate tool of financial analysis like ratio analysis and comparative balance sheet.
Hence, it is essentially fact finding study.

Primary Data:
Primary data is the first hand information that is collected during the period of
research. Primary data has been collected through discussions held with the staffs in the
accounts department. Some types of information were gathered through oral conversations
with the cashier.

Secondary Data:
Secondary data studies whole company records and company’s balance sheet in
which the project work has been done. In addition, a number of reference books, journals
and report were also used to formulate the theoretical model for the study. And some
information was also drawn from the websites.
LIMITATIONS OF THE STUDY
 The money related subtle elements of the organization are gathered for a long time
as it were
 NSIC is a legislature of India venture, can't be contemplated in 3months so time is
considered as primary limitation.
 Most of the data has been kept private and all things considered isn't passed on as
 Some portion of strategy of the organization.
 In this examination, just chose proportions are ascertained.
 It is affected by the value level changes
INDUSTRY
PROFILE
MICRO, SMALL AND MEDIUM ENTERPRISES (MSME’s)
INTRODUCTION:
Micro, Small and Medium Enterprises (MSME) sector has emerged as a highly vibrant and
dynamic sector of the Indian economy over the last five decades. MSMEs not only play
crucial role in providing large employment opportunities at comparatively lower capital cost
than large industries but also help in industrialization of rural & backward areas, thereby,
reducing regional imbalances, assuring more equitable distribution of national income and
wealth. MSMEs are complementary to large industries as ancillary units and this sector
contributes enormously to the socio-economic development of the country.

Khadi is the proud legacy of our national freedom movement and the father of the nation.
Khadi and Village Industries (KVI) are two national heritages of India. One of the most
significant aspects of KVI in Indian economy is that it creates employment at a very low per
capita investment. The KVI Sector not only serves the basic needs of processed goods of the
vast rural sector of the country, but also provides sustainable employment to rural artisans.
KVI today represent an exquisite, heritage product, which is 'ethnic' as well as ethical. It has
a potentially strong clientele among the middle and upper echelons of the society.

Coir Industry is an agro-based traditional industry, which originated in the state of Kerala
and proliferated to the other coconut producing states like Tamil Nadu, Karnataka, Andhra
Pradesh, Orissa, West Bengal, Maharashtra, Assam, Tripura, etc. It is an export oriented
industry and having greater potential to enhance exports by value addition through
technological interventions and diversified products like Coir Geotextiles etc. The
acceptability of Coir products has increased rapidly due to its 'environment friendly' image.

Ministry of Micro, Small & Medium Enterprises (M/o MSME) envision a vibrant MSME
sector by promoting growth and development of the MSME Sector, including Khadi, Village
and Coir Industries, in cooperation with concerned Ministries/Departments, State
Governments and other Stakeholders, through providing support to existing enterprises and
encouraging creation of new enterprises.
The Micro; Small and Medium Enterprises Development (MSMED) Act was notified in 2006
to address policy issues affecting MSMEs as well as the coverage and investment ceiling of
the sector. The Act seeks to facilitate the development of these enterprises as also enhance
their competitiveness. It provides the first-ever legal framework for recognition of the
concept of "enterprise" which comprises both manufacturing and service entities. It defines
medium enterprises for the first time and seeks to integrate the three tiers of these
enterprises, namely, micro, small and medium. The Act also provides for a statutory
consultative mechanism at the national level with balanced representation of all sections of
stakeholders, particularly the three classes of enterprises; and with a wide range of advisory
functions. Establishment of specific funds for the promotion, development and enhancing
competitiveness of these enterprises, notification of schemes/programmes for this purpose,
progressive credit policies and practices, preference in Government procurements to
products and services of the micro and small enterprises, more effective mechanisms for
mitigating the problems of delayed payments to micro and small enterprises On 9 May
2007, subsequent to an amendment of the Government of India (Allocation of Business)
Rules, 1961, erestwhile Ministry of Small Scale Industries and the Ministry of Agro and

Rural Industries were merged to form the Ministry of Micro, Small and Medium Enterprises
(M/o MSME). This Ministry now designs policies and promotes/ facilitates programmes,
projects and schemes and monitors their implementation with a view to assisting MSMEs
and help them to scale up.

The primary responsibility of promotion and development of MSMEs is of the State

Governments. However, the Government of India, supplements the efforts of the State
Governments through various initiatives. The role of the M/o MSME and its organizations is
to assist the States in their efforts to encourage entrepreneurship, employment and
livelihood opportunities and enhance the competitiveness of MSMEs in the changed
economic scenario.

SCHEMES & PROGRAAMMES:

The schemes/ programmes undertaken by the Ministry and its organizations seek to
facilitate/provide:

i) adequate flow of credit from financial institutions/banks;

ii) support for technology upgradation and modernization;
iii) integrated infrastructural facilities;
iv) modern testing facilities and quality certification;
v) access to modern management practices;
vi) entrepreneurship development and skill upgradation through appropriate training
facilities;
vii) support for product development, design intervention and packaging;
viii) welfare of artisans and workers;
ix) assistance for better access to domestic and export markets and
Organisational Setup
The M/o MSME is having two Divisions called Small & Medium Enterprises (SME) Division
and Agro & Rural Industry (ARI) Division. The SME Division is allocated the work, inter- alia,
of administration, vigilance and administrative supervision of the National Small Industries
Corporation (NSIC) Ltd., a public sector enterprise and the three autonomous national level
entrepreneurship development/training originations. The Division is also responsible for
implementation of the schemes relating to Performance and Credit Rating and Assistance to
Training Institution, among others. SME Division is also responsible for preparation and
monitoring of Results- Framework Document (RFD) as introduced in 2009 by the Cabinet
Secretariat under Performance Monitoring and Evaluation System (PMES). The ARI Division
looks after the administration of two statutory bodies viz. the Khadi and Village Industries
Commission (KVIC), Coir Board and a newly created organization called Mahatma Gandhi
Institute for Rural Industrialization (MGIRI). It also supervises the implementation of the
Prime Minister's Employment Generation Programme (PMEGP).

The Implementation of policies and various programmes schemes for providing

infrastructure and support services to MSME's is undertaken through its attached office,
namely

1. The Office of the Development Commissioner (010 DC (MSME)),

2. National Small Industries Corporation (NSIC),
3. Khadi and Village Industries Commission (KVIC); the Coir Board, and
4. Three training institutes viz., National Institute for Entrepreneurship and Small
Business Development (NIESBUD),
5. NOIDA, National Institute for Micro, Small and Medium Enterprises (NI-MSME),
Hyderabad, Indian Institute of Entrepreneurship (lIE), Guwahati and
6. Mahatma Gandhi Institute for Rural Industrialization (MGIRI), Wardha a society
registered under Societies Registration Act, 1860.

The National Board for Micro, Small and Medium Enterprises (NBMSME) was established by
the Government under the Micro, Small and Medium Enterprises Development Act, 2006
and Rules made thereunder. It examines the factors affecting promotion and development
of MSME, reviews existing policies and programmes and make recommendations to the
Government in formulating the policies and programmes for the growth of MSME.
National Small Industries Corporation Limited (NSIC)
NSIC, established in 1955, is headed by Chairman-cum-Managing Director and managed by a
Board of Directors.The main function of the Corporation is to promote, aid and foster the
growth of micro and small enterprises in the country, generally on commercial basis.
NSIC provides a variety of support services to micro and small enterprises catering to their
different requirements in the areas of raw material procurement; product marketing; credit
rating; acquisition of technologies; adoption of modern management practices, etc.
NSIC implements its various programmes and projects throughout the country through its 9
Zonal Offices, 39 Branch Offices, 12 Sub Offices, 5 Technical Services Centres, 3 Technical
Services Extension Centres, 2 Software Technology Parks, 23 NSIC-Business Development
Extension Offices and 1 Foreign Office.

Khadi& Village Industries Commission

The Khadi& Village Industries Commission (KVIC), established under the Khadi and Village
Industries Commission Act, 1956 (61 of 1956), is a statutory organization engaged in
promoting and developing khadi and village industries for providing employment
opportunities in rural areas, thereby strengthening the rural economy. The Commission is
headed by full time Chairman and consists of 10 part-time Members. The KVIC has been
identified as one of the major organizations in the decentralized sector for generating
sustainable rural non-farm employment opportunities at a low per capita investment. This
also helps in checking migration of rural population to urban areas in search of the
employment opportunities. The main functions of the KVIC are to plan, promote, organize
and assist in implementation of the programmes/projects/schemes for generation of
employment opportunities through development of khadi and village industries. Towards
this end, it undertakes activities like skill improvement, transfer of technology, research &
development, marketing, etc.
Coir Board

The Coir Board is a statutory body established under the Coir Board Industry Act, 1953 (NO.
45 of 1953) for promoting overall development of the coir industry and improving the living
conditions of the workers engaged in this traditional industry. The activities of the Board for
development of coir industries, inter-alia include undertaking scientific, technological and
economic research and development activities; collecting statistics relating to exports and
internal consumption of coir and coir products; developing new products and designs;
organizing publicity for promotion of exports and internal sales; marketing of coir and coir
products in India and abroad; preventing unfair competition between producers and
exporters; assisting the establishment of units for manufacture of the products; promoting
co-operative organization among producers of husks, coir fibre, coir yarn and manufactures
of coir products; ensuring remunerative returns to producers and manufacturers, etc.

The Board has promoted two research institutes namely, Central Coir Research Institute
(CCRI), Kalavur, Alleppey, and Central Institute of Coir Technology (CICT), Bengaluru for
under taking research activities on different aspects of coir industry which is one of the
major agro based rural industries in the country. The two major strengths of the coir
industry are it being export oriented and generating wealth out of the waste (coconut husk).
COMPANY
PROFILE
NATIONAL SMALL INDUSTRIES CORPORATION (NSIC)
INTRODUCTION:
National Small Industries Corporation (NSIC), is an ISO 9001-2008 certified Government of
India Enterprise under Ministry of Micro, Small and Medium Enterprises (MSME). NSIC has
been working to promote, aid and foster the growth of micro, small and medium
enterprises in the country. NSIC operates through countrywide network of offices and
Technical Centres in the Country. To manage operations in African countries, NSIC operates
from its office in Johannesburg, South Africa. In addition, NSIC has set up Training cum
Incubation Centre managed by professional manpower.

MISSION: “To promote and support Micro, Small & Medium Enterprises (MSMEs) Sector”
by providing integrated support services encompassing Marketing, Technology, Finance and
other services.

VISION: “To be a premier Organization fostering the growth of Micro, Small and Medium
Enterprises (MSMEs) Sector”.

Schemes of NSIC
NSIC facilitates Micro, Small and Medium Enterprises with a set of specially tailored scheme
to enhance their competitiveness. NSIC provides integrated support services under
Marketing, Technology, Finance and other Support service.

1) Marketing Support
Marketing has been identified as one of the most important tool for business development.
It is critical for the growth and survival of MSMEs in today's intensely competitive market.
NSIC acts as a facilitator and has devised a number of schemes to support enterprises in
their marketing efforts, both domestic and foreign markets. These schemes are briefly
described as under :

a) Consortia and Tender Marketing

Small Enterprises in their individual capacity face problems to procure & execute large
orders, which deny them a level playing field vis-a'-vis large enterprises. NSIC forms
consortia of Micro and Small units manufacturing the same product, thereby pooling in their
capacity. NSIC applies the tenders on behalf of single MSE/Consortia of MSEs for securing
orders for them. These orders are then distributed amongst MSEs in tune with their
production capacity.

b) Single point Registration for Government Purchase

The units registered under Single Point Registration Scheme of NSIC are eligible to get the
benefits under “Public Procurement Policy for Micro & Small Enterprises (MSEs) Order
2012” as notified by the Government of India, Ministry of Micro Small & Medium
Enterprises, New Delhi vide Gazette Notification dated 23.03.2012.

 Issue of the Tender Sets free of cost;

 Exemption from payment of Earnest Money Deposit (EMD),
 In tender participating MSEs quoting price within price band of L1+15 per cent shall
also be allowed to supply a portion upto 20% of requirement by bringing down their
price to L1 Price where L1 is non MSEs.

c) MSME Global Mart B2B Web Portal for MSMEs

With increase in competition and melting away of international boundaries, the demand for
information is reaching new heights. NSIC, realizing the needs of MSMEs, is offering
InfomediaryServices which is a one-stop, one-window bouquet of aids that will provide
information on business & technology and also exhibit the core competence of Indian
MSMEs. B2B Webportal is offering following benefits to the members of Informediary
Services.

 Interactive database of MSMEs

 Self web development tool
 National Tenders on email
 Centralized mail system
 Popular Products Section
 Unlimited global Trade Leads

d) Marketing Intelligence
Collect and disseminate both domestic as well as international marketing intelligence for the
benefit of MSMEs. This cell, in addition to spreading awareness about various programmes
/schemes for MSMEs, will specifically maintain database and disseminate information.

2) Credit Support
NSIC facilitates credit requirements of small enterprises in the following areas:
 a) Financing for procurement of Raw Material (Short term)
NSIC's Raw Material Assistance Scheme aims at helping Small Enterprises by way of
financing the purchase of Raw Material (both indigenous & imported). The salient features
are:

1. Financial Assistance for procurement of Raw Materials upto 90 days.

2. Bulk purchase of basic raw materials at competitive rates.
3. NSIC facilitates import of scares raw materials.

b) Financing for Marketing Activities (Short term)

NSIC facilitates financing for marketing actives such as Internal Marketing, Exports and Bill
Discounting.

c) Finance through syndication with Banks

In order to ensure smooth credit flow to small enterprises, NSIC is entering into strategic
alliances with commercial banks to facilitate long term / working capital financing of the
small enterprises across the country. The arrangement envisages forwarding of loan
applications of the interested small enterprises by NSIC to the banks and sharing the
processing fee.

3) Performance and Credit Rating Scheme for small industries

Need of a Performance and Credit Rating Mechanism for Micro and Small Enterprises) was
highlighted in Union Budget’ 04-05. A scheme for Micro and Small Enterprises has been
formulated in consultation with Indian Banks’ Association (IBA) and Rating Agencies. NSIC
has been appointed the nodal agency for implementation of this scheme through
empanelled agencies.

Benefits of Performance and Credit Rating

 An independent, trusted third party opinion on capabilities and credit-worthiness of

Micro and Small Enterprises
 Availability of credit at attractive interest
 Recognition in global trade
 Prompt sanctions of Credit from Banks and Financial Institutions

4) Technology Support
Technology is the key to enhancing a company's competitive advantage in today's dynamic
information age. Small enterprises need to develop and implement a technology strategy in
addition to financial, marketing and operational strategies and adopt the one that helps
integrate their operations with their environment, customers and suppliers.

NSIC offers small enterprises the following support services through its Technical Services
Centres and Extension Centres:

1. Advise on application of new techniques

2. Material testing facilities through accredited laboratories
3. Product design including CAD
4. Common facility support in machining, EDM, CNC, etc.
5. Energy and environment services at selected centres

NSIC Technical Services Centres are located at the following places:

NAME OF THE CENTRE FOCUS AREA

Chennai Leather & Foot ware
Howrah General Engineering
Hyderabad Electronics & computer Application
New Delhi Machine Tools & related activities
Rajkot Energy Audit & Energy conservation
activities
Aligarh Lock cluster & die and Tool making
Neemka(Haryana) Machine Tools & related activities

International Consultancy Services

For the last five decades, NSIC has acquired various skill sets in the development process of
small enterprises. The inherent skills are being networked to offer consultancy services for
other developing countries. The areas of consultancy are as listed below:

1. Capacity Building
2. Policy & Institutional Framework
3. Entrepreneurship Development
4. Business Development Services

Incubation of unemployed youth for setting up of New Micro & Small

enterprises
This programme facilitates setting up of new enterprises all over the country by creating self-
employment opportunities for the unemployed persons. The objective of this scheme is to facilitate
establishment of new small enterprises by way of providing integrated services in the areas of
training for entrepreneurial skill development, selection of small projects, preparation of project
profiles/reports, identification and sourcing of plant, machinery and equipments, facilitating
sanction of credit facility and providing other support services in order to boost the development of
small enterprises in manufacturing and services sectors.

International Cooperation
NSIC facilitates sustainable international partnerships. The emphasis is on sustainable
business relations rather than on one-way transactions. Since its inception, NSIC has
contributed to strengthening enterprise-to-enterprise cooperation, south cooperation and
sharing best practices and experiences with other developing countries, especially those in
the African, Asian and Pacific regions. The features of the scheme are:

1. Exchange of Business / Technology missions with various countries.

2. Facilitating Enterprise to Enterprise cooperation, JVs, Technology Transfer & other
form of sustainable collaboration.
3. Explore new markets & areas of cooperation:
4. Identification of new export markets by participating in sector- specific exhibitions all
over the world.
5. Sharing of Indian experience with other developing countries

Quality Policy

 We shall endeavour to provide effective and prompt service so as to achieve total

customer satisfaction at all times. We shall continuously upgrade our service quality,
Communication facilities and the skill sets to meet customer requirements
efficiently.
 We shall constantly adapt, innovate and refine our processes in line with global
business trends to maintain credibility and leadership in our field.
 We commit ourselves for fair play, transparency and sincere endeavour for the
promotion and growth of Micro, small & Medium Enterprises.
 We shall strive to achieve operational efficiency by attaining better productivity and
profitability. We shall abide by statutory and legal regulations while carrying out our
activities.

Quality Objective

 To enhance reach of the Corporation resulting in growth in its business

 To achieve operational efficiency and self-sustenance by attaining better
productivity and profitability.
 To upgrade the professional skills of all employees keeping in pace with business
needs.
 To provide safe, clean, hygienic & congenial work environment for effective
contribution by every employee.
  Additional NTSC/NTSECs Objectives are as below:
o To provide training for skill upgradation of trainees leading to opportunities
for their employment/self employment.
o To provide common facility services to industries for enhancing their
competitiveness and quality.

THEORETICAL FRAMEWORK OF THE STUDY

MEANING OF FINANCIAL STATEMENT ANALYSIS:
The term 'Financial Statement Analysis’ incorporates both 'examination' and 'elucidation'. A
refinement should, in this way, be made between the two terms. While the term
'examination' is utilized to mean the disentanglement of budgetary information by
deliberate order of the information given in the money related proclamations, 'elucidation'
implies, clarifying the importance and essentialness of the information so rearranged
notwithstanding, both investigation and translation are interlinked and complimentary to
each different investigation is futile without understanding and translation without
investigation is troublesome or even unimaginable the majority of the creators have utilized
the term examination just to cover the significance both examination and translation as the
target of examination is it consider the connection between different things of monetary
articulations by translation.

DEFINITION:
As indicated by Myers " Financial Statement Analysis is to a great extent an investigation of
relationship among different monetary factors in a business as unveiled by a solitary
arrangement of articulation and an investigation of pattern of these elements as appeared
in a progression of proclamations."

OBJECTIVES & IMPORTANCE:

The essential target of monetary proclamation investigation is to comprehend and analyse
the data contained in the money related articulation with a view to judge the benefit
budgetary soundness of the firm and to make gauge about future prospects of the firm. The
reason for examination relies on the individual intrigued by such investigation and his
protest. However the accompanying reason or goals of monetary proclamations
investigation might be expressed to bring out essentialness of such examination.

 To survey the winning limit or productivity of the firm.

 To survey the operational productivity and administrative adequacy.
 To survey the here and now also long haul dissolvability of the firm.
 To recognize the purposes behind change in gainfulness and money related position
of the firm.
  To make between firm correlations.
 To make figures about future prospects of the firm.
 To survey the advance of the firm over some undefined time frame.
 To help in basic leadership and control.
 To control or decide the profit activity.
 To demonstrate vital data for allowing credit.

TYPES OF FINANCIAL ANALYSIS:

1. On the basis of material used
2. On the basis of modus operandi
3. On the basis of time horizon.

1.On the basis of Material Used:

According to material used, financial analysis can be two types.

a) External Analysis:this examination is finished by outcast's who don't approach the

nitty gritty inside bookkeeping records of the business firm. These untouchables
incorporate speculators, leasers, credit organizations, government offices and overall
population. For money related investigation hence spare just a restricted reason,
however the current changes in the administration controls requiring business firms
to make accessible more nitty gritty data to people in general through reviewed
distributed records.

b) Internal Analysis: : This examination is finished by people who approach the definite
inside bookkeeping records of the business firm is referred to as inward
investigation, for example, examination can consequently be performed by
administrators and workers of the association and in addition government offices
which have statutory forces vested in them money related examination for
administrative purposes.

2) on the basis modus operandi:

According to the method of operation followed in the analysis can be two types.

a) Horizontal analysis:It alludes to the correlation of money related information of an

organization for quite a long while. The figures of this sort of examination are
introduced on a level plane over various segments. This examination makes it
conceivable to concentrate consideration on things that have changed essentially
amid the period under survey. It is likewise called as Dynamic Analysis.
b) Vertical Analysis: It alludes to the investigation of relationship of the different things
in the money related articulations of one bookkeeping period. In this kind of
investigation the figures from budgetary articulations of a year are contrasted and a
 base year chose from that year's announcement. It is likewise called as Static
Analysis

3) On the basis of time horizon:

According to the method of operation followed in the analysis can be two types

a) Short term AnalysisShort term investigation measures the liquidity position of a firm
i.e, here and now paying limit of a firm or the company's capacity to meet the
present commitments.
b) Long term analysis:long term analysis involves the firm’s ability to meet the interest
costs and repayment schedules of its long term obligations. The solvency stability
and profitability are measured under this type of analysis.

METHODS OR DEVICES OF FINANCIAL ANALYSIS

Various techniques or gadgets are utilized to contemplate the connection between various
articulations.

1) RATIO ANALYSIS
Proportion Analysis is a standout amongst the most capable instruments of budgetary
Analysis. It is utilized as a gadget to break down and translate the money related strength of
the venture. Proportions are considered as on the helpful guides accessible to the
Management in surveying the position and reaching inferences with respect to effectiveness
and money related status of a business concern.

MEANING OF RATIO
A proportion is characterized as "the demonstrated remainder of two scientific
articulations" and as the "connection between at least two things".

ADVANTAGES OF RATIO ANALYSIS:

 Helps in basic leadership.
 Helps in money related determining and arranging.
 Helps in conveying money related qualities and shortcoming and
 Helps in co-appointment and control
 Helpful in near examination of the execution.

LIMITATIONS OF RATIO ANALYSIS:

 Qualitative elements are disregarded.
 Effect of window dressing.
 Absence of standard college acknowledged wording.
Effect of value level changes

TYPES OF RATIOS:
Ratios are grouped into various classes according to the financial activity or function they
evaluate. There are four important categories. They are

 Liquidity ratios
 Turnover ratios or Activity ratios
 Profitability ratios
 Leverage ratios
1. LIQUIDITY RATIOS:
Liquidity proportions measures the capacity of the firm to meet its present
commitments. It builds up the connection amongst money and other current advantages for
current commitments and give a measure liquidity position to the administration of the
firm.

Current ratio:
The Current ratio is a measure of the company's transient dissolvability. It
demonstrates the accessibility of current resources in rupees for each one rupee of current
obligation. A proportion more prominent than one implies that the firm has more present
resources than current liabilities of the firm. The present proportion is ascertained by
partitioning the present resources by current liabilities. The perfect current proportion is 2:1

Current ratio=Current assets/ Current liabilities

a) Quick ratio:
Quick ratiobuilds up the connection between fast or fluid resources advertisement
liabilities. A benefit is fluid on the off chance that it can be changed over into money
promptly or sensibly soon without lost esteem. Brisk resources incorporates account
holders, charges receivables and attractive securities. The perfect brisk proportion is 1:1

Quick ratio= Quick assets / Current liabilities

Quick assets= Current assets- Inventories
2. TURNOVER RATIOS
 Turnover proportions are utilized to assess the proficiency with which the firm
oversees and uses its advantages. These proportions are called Turnover proportions since
they show the speed with which resources are being changed over or transformed over into
deals. These are additionally called as Activity proportion.

a)Fixed assets turnover ratio:

This proportion demonstrates the company's capacity in using the settled resources
of the organization. The capacity of the organization in producing wage from the settled
resources can be known by figuring this proportion.

Fixed assets turnover= Net sales / Net Fixed assets

b)Working Capital Turnover Ratio
The working capital turnover proportion is likewise alluded to as net deals to working
capital. It demonstrates an organization's adequacy in utilizing its working capital. The working
capital turnover ratio is calculated as follows: net annual sales divided by the average
amount of working capital during the same 12 month period.

Working Capital Turnover Ratio = Sales/Capital employed

3) Profitability Ratio:
The productivity proportions of a business concern can be estimated by the benefit
proportions. These proportions feature the final product of business exercises by which
alone the general effectiveness of a specialty unit can be judged.

a)Return on Capital Employed:

Profit for capital utilized or ROCE is a productivity proportion that measures how effectively
an organization can create benefits from its capital utilized by contrasting net working
benefit with capital utilized. This is the reason ROCE is a more helpful proportion than
return on value to assess the life span of an organization.

Return on Capital Employed = Operating profit / Capital Employed * 100

b)Return on Equity:
It is figured as Net benefit after inclination profits/Shareholders Equity where investors
value is computed by subtracting complete liabilities from add up to resources. This
proportion measures how the organization is utilizing the investor's reserve and higher the
proportion the better it is the extent that speculators are concerned.

Return on equity= Profit after tax /Shareholder’s fund*100

3) Leverage ratios:
Use proportions are additionally called long haul dissolvability proportions or capital
structure proportions. The term 'dissolvability' infers the capacity of an organization to meet
the installments related with its long haul obligations. In this way dissolvability proportions
are the measure of the organization's capacity to meet its long haul commitments. By and
large, use proportions are communicated in extents.

a)Debt-Equity Ratio:
Obligation value proportion is computed to determine the soundness of the organization's
long haul money related position. Obligation value proportion demonstrates the reach out
to which it relies on obtained stores for its reality. It depicts the extent of its aggregate
assets gained by method for outside financing.

Debt-Equity Ratio = Total Debt/Shareholders' fund

b) Debt To Total Capital Ratio
Obligation to add up to capital proportion demonstrates the connection between long haul
obligation and aggregate capital utilized by the organization. Add up to capital incorporates
long haul liabilities in addition to investors' value. Add up to capital is likewise viewed as
perpetual capital or capital utilized or long haul finance.

Debt to total capital ratio = Long term debt/Total capital

2) COMPARATIVE FINANCIAL STATEMENTS:
The relative budgetary articulations are proclamations of the money related position at
various timeframes. The components of money related position are appeared in a similar
frame in order to give a thought of budgetary position at least two periods.

From reasonable perspective, by and large, two monetary proclamations (accounting report
and wage explanation) are set up in similar frame for budgetary investigation purposes. Not
just the examination of the figures of two periods yet in addition be connection between
asset report and salary proclamation empowers a top to bottom investigation of money
related position and agent comes about.

a)Comparative Balance Sheet:

The near accounting report investigation is the investigation of the pattern of similar things,
gathering of things and figured things in at least two monetary records of a similar business
venture on various dates. The progressions in intermittent monetary record things mirror
the lead of a business. The progressions can be seen by examination of the monetary record
toward the start and toward the finish of a period and these progressions can help in
framing a feeling about the advance of an endeavor.

b) Comparative Income Statement:

The Income articulation gives the consequences of the activities of a business. The near
salary articulation gives a thought of the advance of a business over some stretch of time.
The adjustments in outright information in cash esteems and rates can be resolved to
dissect the productivity of the business.

DATA ANALYSIS
AND
INTERPRETATION
LIQUIDTY RATIOS
1) CURRENT RATIO:
The Current ratio is a measure of the firm’s short term solvency. It indicates the availability
of current assets in rupees for every one rupee of current liability.The standard current ratio
is 2:1
Formula:
Current Ratio=Current Assets/ Current Liabilities

CURRENT ASSETS CURRENT CURRENT RATIO

YEAR LIABILTIES
2012-2013 211195.76 166769.7 1.2664

2013-2014 252723.39 193598.75 1.3054

2014-2015 305919.42 244398.38 1.2517

2015-2016 330813.58 267888.7 1.2349

2016-2017 324931.7 258987.15 1.2546

CURRENT RATIO
1.32

1.3

1.28

1.26

1.24

1.22

1.2

1.18
2012-2013 2013-2014 2014-2015 2015-2016 2016-2017

INTERPRETATION:
The Ideal ratio of Current ratio is 2:1. If a company’s current ratio is in this range, then it
generally indicates good short-term financial strength. If the current ratio is too high, then
the company may not be efficiently using its current assets or its short-term financing
facilities.When compared to all the years the current ratio is high in the year 2013-2014
i.e,1.3054. It has been decreased in the year 2016-2017 i.e, 1.2546.Therefore,the liquidity
position of the company is not good.

2) QUICK RATIO:

Quick ratio establishes the relationship between quick or liquid assets and liabilities. An
asset is liquid if it can be converted into cash immediately or reasonably soon without a loss
of value. The ideal ratio is 1:1

Formula:
Quick Ratio = Quick Assets / Current Liabilities

YEAR QUICK ASSETS CURRENT QUICK RATIO

LIABILTIES
2012-2013 211125.29 166769.7 1.266

2013-2014 252679.58 193598.75 1.3052

2014-2015 305856.51 244398.38 1.2515

2015-2016 330727.2 267888.7 1.2346

2016-2017 324242.18 258987.15 1.252

QUICK RATIO
1.32

1.3

1.28

1.26

1.24

1.22

1.2

1.18
2012-2013 2013-2014 2014-2015 2015-2016 2016-2017

INTERPRETATION:
The Ideal ratio of Quick ratio is 1:1.A high Acid test ratio is an indication that the firm is Liquid and
has ability to meet its current or Liquid liabilities in time and on the other hand a low Quick ratio
represents that the firm’s liquidity position is not good. In all the 5 Years, the company is maintaining
the Quick ratio more than 1. The quick ratio is high in the year 2013-2014 i.e, 1.3052. Therefore,
company is efficiently able to meet its current or Liquid Liabilities.

PROFITABILITY RATIOS
1)RETURN ON EQUITY:
This ratio measures how the company is using the shareholder’s fund and higher the ratio
the better it is as far as investors are concerned.It is calculated as Net profit after preference
dividends/ Shareholders Equity
Formula:
Return On Equity= Net Profit After Tax / Equity

YEAR NET PROFIT EQUITY RETURN ON

AFTER TAX EQUITY
2012-2013 6235.5 45213.71 0.1379

2013-2014 7593.8 50964.68 0.149

2014-2015 8859.97 69086.6 0.1282

2015-2016 10146.44 75907.34 0.1337

2016-2017 10639.84 82911.36 0.1283

RETURN ON EQUITY
0.155

0.15

0.145

0.14

0.135

0.13

0.125

0.12

0.115
2012-2013 2013-2014 2014-2015 2015-2016 2016-2017

INTERPRETATION:
A company is said to create value for shareholders if its ROE is greater than the cost of
capital. If ROE is less than the cost of capital, the investors do not gain anything by investing
in the company. The Return on Equity is high in the year 2013-2014 i.e,0.149when
compared to other years. The ROE has been decreased from the year 2015-2016 to 2016-
2017 by 0.54.Therefore, the investors are able to gain by investing in the company.

2) RETURN ON CAPITAL EMPLOYED:

Return on capital employed or ROCE is a profitability ratio that measures how efficiently a
company can generate profits from its capital employed by comparing net operating profit
to capital employed.
Formula:
Return On Capital Employed= EBIT / Capital Employed

YEAR EBIT CAPITAL RETURN ON

EMPLOYED CAPITAL
EMPLOYED
2012-2013 22312.00 55021.09 0.4055

2013-2014 27705.62 64176.57 0.4317

2014-2015 33038.63 80547.83 0.4102

2015-2016 37231.25 87430.67 0.4258

2016-2017 36212.02 94280.38 0.3841

RETURN ON CAPITAL EMPLOYED

0.44

0.43

0.42

0.41

0.4

0.39

0.38

0.37

0.36
2012-2013 2013-2014 2014-2015 2015-2016 2016-2017

INTERPRETATION:
The Companies returns should always be high than the rate at which they are borrowing to
fund the assets. It shows how efficiently a company uses its capital employed as well as its
long-term financing and vice-versa. The company is having high return on capital employed
in the year2013-2014 when compared to other years. Therefore, the company is able to use
efficiently its capital employed.

SOLVENCY RATIO/ LEVERAGE RATIOS

1)DEBT-EQUITY RATIO:

Debt-equity ratio is calculated to ascertain the soundness of the company's long-term

financial position. Debt-equity ratio indicates the extend to which it depends upon
borrowed funds for its existence.

Formula:

Debt-Equity Ratio = Debt/ Equity

YEAR DEBT EQUITY DEBT EQUITY

RATIO
2012-2013 176577.08 45213.71 3.9054

2013-2014 206810.64 50964.68 4.0579

2014-2015 255859.61 69086.6 3.7035

2015-2016 279412.03 75907.34 3.681

2016-2017 270356.17 82911.36 3.2608

DEBT- EQUITY RATIO

4.5
4
3.5
3
2.5
2
1.5
1
0.5
0
2012-2013 2013-2014 2014-2015 2015-2016 2016-2017
INTERPRETATION:
The Ideal ratio of Debt-Equity ratio is 2:1. If the debt is less than 2 times the Equity, it means
the creditors are relatively less and the financial structure is sound. If the debt is more than
2 times the Equity, the state of long term creditors are more and indicate weak financial
structure. In all the 5 years, the Debt-Equity ratio is more than 2:1. Therefore, the state of
long term creditors are more

2) DEBT-TOTAL ASSETS RATIO:

The debt to total assets ratio is an indicator of financial leverage. It tells you the percentage
of total assets that were financed by creditor, liabilities, debt.
Formula:
Debt To Total Assets Ratio= Debt / Total Assets

YEAR DEBT TOTAL ASSETS DEBT TO TOTAL

ASSETS RATIO
2012-2013 176577.08 221790.79 0.7961

2013-2014 206810.64 264775.32 0.7811

2014-2015 255859.61 324946.21 0.7874

2015-2016 279412.03 355319.37 0.7864

2016-2017 270356.17 353267.53 0.7653

DEBT- TOTAL ASSETS RATIO

0.8
0.795
0.79
0.785
0.78
0.775
0.77
0.765
0.76
0.755
0.75
0.745
2012-2013 2013-2014 2014-2015 2015-2016 2016-2017
INTERPRETATION:
A Company with a Debt-Total Assets is greater than 1 means the company has more
liabilities than assets and the company is extremely leveraged and highly risky to invest in or
lend to. A company with a Debt-Total Assets is less than 1 shows that it has more assets
than liabilities and could pay off its obligations by selling its assets. In all the 5 years, the
company is maintaining debt to total assets less than 1, it indicates that the company is able
to pay off its obligations by selling assets. Therefore, it is less risky.

TURNOVER RATIOS
1)WORKING CAPITAL TURNOVER RATIO
The working capital turnover ratiois also referred to as net sales to working capital. It
indicates a company's effectiveness in using its working capital.
Formula:
Working Capital Turnover Ratio= Net Sales/ Working Capital

YEAR NET SALES WORKING WORKING

CAPITAL CAPITAL
TURNOVER RATIO
2012-2013 148140.61 44426.06 3.3345
2013-2014 209670.12 59124.64 3.5462
2014-2015 250697.55 61521.04 4.075
2015-2016 262863 62924.88 4.1774
2016-2017 231187.2 65944.55 3.5058

WORKING CAPITAL TURNOVER RATIO

4.5
4
3.5
3
2.5
2
1.5
1
0.5
0
2012-2013 2013-2014 2014-2015 2015-2016 2016-2017

INTERPRETATION:
A high turnover ratio indicates that management is being extremely efficient in using a
firm's short-term assets and liabilities to support sales. Conversely, a low ratio indicates
that a business is investing in too many accounts receivable and inventory assets to
support its sales, which could eventually lead to an excessive amount of bad debts and
obsolete inventory . The turnover ratio is high in the year 2015-2016 i.e 4.1774 when
compared to other years. Therefore,the company is efficiently utilising its short term
assets and liabilities.
2)FIXED ASSETS TURNOVER RATIO
This ratio shows the firm’s ability in utilising the fixed assets of the company. The ability of
the company in generating income from the fixed assets can be known by calculating this
ratio.

Formula:
Fixed Assets Turnover Ratio= Net Sales / Fixed Assets

YEAR NET SALES FIXED ASSETS FIXED ASSETS

TURNOVER RATIO
2012-2013 148140.61 8986.51 16.4848

2013-2014 209670.12 10569.81 19.8367

2014-2015 250697.55 12154.69 20.6256

2015-2016 262863 17173.7 15.3061

2016-2017 231187.2 20351.81 11.3595

FIXED ASSETS TURNOVER RATIO

25

20

15

10

0
2012-2013 2013-2014 2014-2015 2015-2016 2016-2017

INTERPRETATION:
A high fixed assets turnover ratio indicates better utilization of fixed assets and a low ratio
means inefficient or under-utilization of fixed assets. The company is having high fixed
assets turnover ratio in the year 2013,2014&2015 i.e, 16.48, 19.83 & 20.6256.Therefore, the
company is utilising there fixed assets to a maximum extent. The fixed assets turnover ratio
is less in the year 2016-2017 when compared to other years.

COMPARATIVE BALANCESHEET 2016-2017

PARTICULARS MAR-2016 MAR-2017 INCREASE(+) OR PERCENTAGE OF
DECREASE(-) CHANGE (%)
ASSETS
CURRENT ASSETS:
Cash and other Bank 4512.4 9512.77 5000.37 110.814
balances
Trade Receivables 11886.22 12273.42 387.2 3.2576
Short Term Loans& 314128.76 302284.04 -11844.72 3.7707
Advances
Current Investment
Inventories 86.38 689.52 603.14 698.24
Other Current Assets 199.82 171.95 -27.87 13.9476
Total Current Assets 330813.58 324931.7 -5881.88 -1.788
NON-CURRENT ASSETS
FIXED ASSETS:
Tangible Assets 6964.68 7597.56 632.88 9.087
Intangible Assets 162.99 148.11 -14.88 9.129
Capital work-in-progress 10046.03 12606.141 2560.111 25.4838
Non-Current Investments 7.78 7.55 -0.23 -2.9563
Deferred Tax Assets(net) 5228.48 5447.73 219.25 4.1934
Long term loans & 1995.73 2457.66 461.93 23.1459
Advances
Other Non-Current Assets 100.1 71.08 -29.02 28.991
TOTAL NON-CURRENT 24505.79 28335.831
ASSETS
TOTAL ASSETS 355319.37 353267.53 -2051.84 -0.5775
LIABILITIES AND CAPITAL:
CURRENT LIABILTIES
Short Term Borrowings 235708.71 221221.88 -14486.83 -6.1461
Trade payables 11796.59 13000.82 1204.23 10.2083
Other Current Liabilities 15322 19337.18 4015.18 26.2053
Short Term Provisions 5061.4 5427.27 365.87 7.2286
TOTAL CURRENT LIABILTY 267888.7 258987.15 -8901.55 -3.3229
NON-CURRENT
LIABILITIES
Long Term Borrowings 5566.42 4926.51 -639.91 -11.4959
Other Long Term Liabilities 410.02 580.61 170.59 41.6053
Long Term Provisions 5546.89 5861.9 315.01 5.679
TOTAL LIABILITIES 279412.03 270356.17 -9055.86 -3.2410
SHARE-HOLDER’S EQUITY
Share Capital 53298.8 53298.8 - -
Reserves& Surplus 22608.54 29612.56 7004.02 30.9795
TOTAL LIABILTIES& 355319.37 353267.53 -2051.84 -0.5775
SHARE-HOLDERS EQUITY
Interpretation:
1. The Comparative Balance sheet of the company reveals that the fixed assets are less
in the year 2015-2016 when compared to 2016-2017, due to decrease in the value of
the fixed assets by Rs13994.7890 which shows investment in fixed assets is down in
the year 2015-2016.
2. The percentage of total debts is negative during the year 2016-2017 due to decrease
in the value of secured and unsecured loan. Their shows that the outsider fund is less
in the year 2017 in compare to 2016.
3. The Share Holders fund of the company has been increased by 30.9795 due to the
increase in the reserve fund by 30.9795. In the year 2015-2016, the company has
utilised reserves and surplus for the payment of dividends to shareholders either in
cash or by way of bonus.
4. The percentage of outsider’s fund is less than that of the year of shareholders fund
in the year 2015-2016 which means the company uses long term debt to purchase
fixed assets.
5. The percentage change in current assets is more than percentage change in current
liabilities which show current assets is more than current liabilities.This further
confirms that the company has used long-term finances even for the current assets
resulting into an improvement in the liquidity position of the company.
COMPARATIVE BALANCESHEET 2015-2016
PARTICULARS MAR-2015 MAR-2016 INCREASE(+) OR PERCENTAGE OF
DECREASE(-) CHANGE (%)
ASSETS
CURRENT ASSETS:
Cash and other Bank 5529.69 4512.4 -1017.29 -18.3969
balances
Trade Receivables 6735.46 11886.22 5150.76 76.4723
Short Term Loans& 293166.58 314128.76 20962.18 7.1503
Advances
Current Investment 0 0 0 0
Inventories 62.91 86.38 23.47 37.3073
Other Current Assets 424.78 199.82 -224.96 -52.9592
Total Current Assets 305919.42 330813.58 24894.16 8.1375
NON-CURRENT ASSETS
FIXED ASSETS:
Tangible Assets 5861.39 6964.68 1103.29 18.823
Intangible Assets 108.34 162.99 54.65 50.443
Capital work-in-progress 6184.96 10046.03 3861.07 62.4268
Non-Current Investments 7.78 7.78 - -
Deferred Tax Assets(net) 4765.43 5228.48 463.05 9.7169
Long term loans & 1976.05 1995.73 19.60 0.9959
Advances
Other Non-Current Assets 122.84 100.1 -22.74 -18.5119
TOTAL NON-CURRENT 19026.79 24505.79 5479 28.7962
ASSETS
TOTAL ASSETS 324946.21 355319.37 30373.16 9.3471
LIABILITIES AND CAPITAL:
CURRENT LIABILTIES
Short Term Borrowings 219252.14 235708.71 16456.57 7.5058
Trade payables 6822.66 11796.59 4973.93 72.9031
Other Current Liabilities 14642.15 15322 679.85 4.6431
Short Term Provisions 3681.43 5061.4 1379.97 37.4846
TOTAL CURRENT LIABILITY 244398.38 267888.7 23490.32 9.6115
NON-CURRENT
LIABILITIES
Long Term Borrowings 5260.9 5546.89 285.99 5.4361
Other Long Term Liabilities 760.15 410.02 -350.13 46.0606
Long Term Provisions 5440.18 5546.89 106.71 1.9615
TOTAL LIABILITIES 255859.61 279412.03 23552.42 9.2052
SHARE-HOLDER’S EQUITY
Share Capital 53298.8 53298.8 - -
Reserves& Surplus 15787.8 22608.54 6820.74 43.2026
TOTAL LIABILTIES& 324946.21 355319.37 30373.16 9.3471
SHARE-HOLDERS EQUITY
Interpretation:
1. The Comparative Balance sheet of the company reveals that the fixed assets are less
in the year 2014-2015 when compared to 2015-2016, due to decrease in the value of
the fixed assets by Rs5019.01 which shows investment in fixed assets is down in the
year 2014-2015.
2. The percentage of total debts is positive during the year 2015-2016 due to increase
in the value of secured and unsecured loan. Their shows that the outsider fund is
more in the year 2016 in compare to 2015.
3. The Share Holders fund of the company has been increased by 43.2026 due to the
increase in the reserve fund by 43.2026. In the year 2014-2015, the company has
utilised reserves and surplus for the payment of dividends to shareholders either in
cash or by way of bonus.
4. The percentage of outsider’s fund is less than that of the year of shareholders fund
in the year 2015-2016 which means the company uses long term debt to purchase
fixed assets.
5. The percentage change in current assets is less than percentage change in current
liabilities which show current assets is less than current liabilities. This further
confirms that the company has not properly using the current assets resulting into
an required improvement in the liquidity position of the company.
COMPARATIVE BALANCESHEET 2014-2015
PARTICULARS MAR-2014 MAR-2015 INCREASE(+) OR PERCENTAGE OF
DECREASE(-) CHANGE (%)
ASSETS
CURRENT ASSETS:
Cash and other Bank 2934.16 5529.69 2595.53 88.459
balances
Trade Receivables 5677.04 6735.46 1058.42 18.6439
Short Term Loans& 243886.37 293166.58 49280.21 20.2062
Advances
Current Investment 0 0 0 0
Inventories 43.80 62.91 19.11 43.6301
Other Current Assets 182.01 424.78 242.77 133.3828
Total Current Assets 252723.38 305919.42 53196.04 21.049
NON-CURRENT ASSETS
FIXED ASSETS:
Tangible Assets 6003.96 5861.39 -142.57 -2.3746
Intangible Assets 94.12 108.34 14.22 15.1084
Capital work-in-progress 4471.73 6184.96 1713.23 38.3125
Non-Current Investments 7.78 7.78 0 0
Deferred Tax Assets(net) 0 4765.43 4765.43 100
Long term loans & 1327.33 1976.05 648.72 48.8741
Advances
Other Non-Current Assets 146.45 122.84 -23.61 -16.1215
TOTAL NON-CURRENT 12051.37 19026.79 6975.42 57.88
ASSETS
TOTAL ASSETS 264774.75 324946.21 60171.46 22.7255
LIABILITIES AND CAPITAL:
CURRENT LIABILTIES
Short Term Borrowings 174818.80 219252.14 44433.34 25.4168
Trade payables 4698.41 6822.66 2124.25 45.2121
Other Current Liabilities 10931.89 14642.15 3710.26 33.9398
Short Term Provisions 5346.90 3681.43 -1665.47 -31.1483
TOTAL CURRENT LIABILITY 195798.38 244398.38 48600 24.8215
NON-CURRENT
LIABILITIES
Long Term Borrowings 7605.75 5260.9 -2344.85 -30.83
Other Long Term Liabilities 226.31 760.15 533.84 235.88
Long Term Provisions 3180.20 5440.18 2259.98 71.0641
TOTAL LIABILITIES 206810.64 255859.61
SHARE-HOLDER’S EQUITY
Share Capital 46298.80 53298.8 7000 15.1192
Reserves& Surplus 4665.88 15787.8 11121.92 238.367
TOTAL LIABILTIES& 257775.32 324946.21 67170.89 26.0579
SHARE-HOLDERS EQUITY
Interpretation:
1. The Comparative Balance sheet of the company reveals that the fixed assets are less
in the year 2015-2016 when compared to 2016-2017, due to decrease in the value of
the fixed assets by Rs13994.7890 which shows investment in fixed assets is down in
the year 2015-2016.
2. The percentage of total debts is negative during the year 2016-2017 due to decrease
in the value of secured and unsecured loan. Their shows that the outsider fund is less
in the year 2017 in compare to 2016.
3. The Share Holders fund of the company has been increased by 30.9795 due to the
increase in the reserve fund by 30.9795. In the year 2015-2016, the company has
utilised reserves and surplus for the payment of dividends to shareholders either in
cash or by way of bonus.
4. The percentage of outsider’s fund is less than that of the year of shareholders fund
in the year 2015-2016 which means the company uses long term debt to purchase
fixed assets.
5. The percentage change in current assets is more than percentage change in current
liabilities which show current assets is more than current liabilities. This further
confirms that the company has used long-term finances even for the current assets
resulting into an improvement in the liquidity position of the company.
COMPARATIVE BALANCESHEET 2013-2014
PARTICULARS MAR-2013 MAR-2014 INCREASE(+) OR PERCENTAGE OF
DECREASE(-) CHANGE (%)
ASSETS
CURRENT ASSETS:
Cash and other Bank 5705.14 2934.16 -2770.98 -48.5699
balances
Trade Receivables 4949.42 5677.04 727.62 14.7011
Short Term Loans& 194154.01 243886.37 49732.36 25.6149
Advances
Current Investment 0 0 0 0
Inventories 70.46 43.8 -26.6 -37.8371
Other Current Assets 406.48 182.01 -224.47 -55.2229
Total Current Assets 205285.51 252723.38 47437.87 23.1082
NON-CURRENT ASSETS
FIXED ASSETS:
Tangible Assets 5896.36 6003.96 107.6 1.8249
Intangible Assets 22.19 94.12 71.93 324.155
Capital work-in-progress 3067.96 4471.73 1403.77 45.7558
Non-Current Investments 7.78 7.78 0 0
Deferred Tax Assets(net) 0 0 0 0
Long term loans & 1897.33 1327.33 -570 -30.0422
Advances
Other Non-Current Assets 159.52 146.45 -13.07 -8.1933
TOTAL NON-CURRENT 11051.14 12051.37 1000.23 9.0509
ASSETS
TOTAL ASSETS 216336.65 264774.75 48438.1 22.3901
LIABILITIES AND CAPITAL:
CURRENT LIABILTIES
Short Term Borrowings 139651.91 174818.8 35166.89 25.1818
Trade payables 4108.60 4698.41 589.81 14.3555
Other Current Liabilities 12383.24 10931.89 -1451.35 -11.7203
Short Term Provisions 5172.39 3149.65 -2022.74 -39.1065
TOTAL CURRENT LIABILITY 161316.14 193598.75
NON-CURRENT
LIABILITIES
Long Term Borrowings 6769.30 7605.75 836.45 12.3565
Other Long Term Liabilities 374.41 394.54 20.13 5.3765
Long Term Provisions 2663.67 5208.6 2544.93 95.5422
TOTAL LIABILITIES 171123.52 206807.64 35684.12 20.8528
SHARE-HOLDER’S EQUITY
Share Capital 46298.08 46298.8 0 0
Reserves& Surplus -1085.09 4665.88 5750.97 530
TOTAL LIABILTIES& 216336.51 257772.32 41435.81 19.1534
SHARE-HOLDERS EQUITY
Interpretation:
1. The Comparative Balance sheet of the company reveals that the fixed assets are less
in the year 2012-2013 when compared to 2013-2014, due to decrease in the value of
the fixed assets by Rs1583.30 which shows investment in fixed assets is down in the
year 2012-2013.
2. The percentage of total debts is negative during the year 2012-2013 due to decrease
in the value of secured and unsecured loan. Their shows that the outsider fund is less
in the year 2013 in compare to 2014.
3. The Share Holders fund of the company has been increased by 530 due to the
increase in the reserve fund by 530. In the year 2012-2013, the company has utilised
reserves and surplus for the payment of dividends to shareholders either in cash or
by way of bonus.
4. The percentage of outsider’s fund is less than that of the year of shareholders fund
in the year 2015-2016 which means the company uses long term debt to purchase
fixed assets.
5. The percentage change in current assets is more than percentage change in current
liabilities which show current assets is more than current liabilities. This further
confirms that the company has used long-term finances even for the current assets
resulting into an improvement in the liquidity position of the company
COMPARATIVE BALANCESHEET 2012-2013
PARTICULARS MAR-2012 MAR-2013 INCREASE(+) OR PERCENTAGE OF
DECREASE(-) CHANGE (%)
ASSETS
CURRENT ASSETS:
Cash and other Bank 14528.77 5705.14 -8823.63 -60.7321
balances
Trade Receivables 4479.88 4949.42 469.54 10.4811
Short Term Loans& 148380.33 194154.01 45773.68 30.8489
Advances
Current Investment 0 0 0 0
Inventories 100.72 70.46 -30.26 30.0437
Other Current Assets 399.88 406.48 6.600 1.6505
Total Current Assets 167889.58 205285.51 37395.93 22.2741
NON-CURRENT ASSETS
FIXED ASSETS:
Tangible Assets 5833.36 5896.36 63 1.08
Intangible Assets 11.08 22.19 11.11 1.0027
Capital work-in-progress 2017.08 3067.96 1050.88 52.0991
Non-Current Investments 7.78 7.78 0 0
Deferred Tax Assets(net) 0 0 0 0
Long term loans & 978.64 1897.33 918.69 93.8742
Advances
Other Non-Current Assets 180.31 159.52 -20.79 -11.5301
TOTAL NON-CURRENT 9028.25 11051.14 2022.89 22.4062
ASSETS
TOTAL ASSETS 176917.83 216336.65 39418.82 22.28
LIABILITIES AND CAPITAL:
CURRENT LIABILTIES
Short Term Borrowings 111773 139651.91 27878.91 24.9424
Trade payables 3687.19 4108.6 421.41 11.429
Other Current Liabilities 13175.00 12383.24 -791.76 -6.0096
Short Term Provisions 6556.35 5172.39 -1383.96 -21.1087
TOTAL CURRENT LIABILTY 135191.54 161316.14 26124.6 19.3241
NON-CURRENT
LIABILITIES
Long Term Borrowings 5969.23 6769.3 800.07 13.4032
Other Long Term Liabilities 335.54 374.41 38.87 11.5843
Long Term Provisions 2516.45 2663.67 147.22 5.8503
TOTAL LIABILITIES 144012.76 171123.52 27110.76 18.8252
SHARE-HOLDER’S EQUITY
Share Capital 38798.80 46298.8 7500 19.3305
Reserves& Surplus -5827.85 -1085.09 -4742.76 81.3810
TOTAL LIABILTIES& 176983.71 216336.51 39352.80 22.2353
SHARE-HOLDERS EQUITY
Interpretation:
1. The Comparative Balance sheet of the company reveals that the fixed assets are less
in the year 2011-2012 when compared to 2012-2013, due to decrease in the value of
the fixed assets by Rs1124.99 which shows investment in fixed assets is down in the
year 2011-2012.
2. The percentage of total debts is negative during the year 2011-2012 due to decrease
in the value of secured and unsecured loan. Their shows that the outsider fund is less
in the year 2012 in compare to 2013.
3. The Share Holders fund of the company has been increased by 100.7115271 due to
the increase in the reserve fund by 81.3810 and increase in share capital by 19.3305.
In the year 2012-2013, the company has utilised reserves and surplus for the
payment of dividends to shareholders either in cash or by way of bonus.
4. The percentage of outsider’s fund is less than that of the year of shareholders fund
in the year 2011-2012 which means the company uses long term debt to purchase
fixed assets.
5. The percentage change in current assets is more than percentage change in current
liabilities which show current assets is more than current liabilities. This further
confirms that the company has used long-term finances even for the current assets
resulting into an improvement in the liquidity position of the company.
FINDINGS:

1. The Return on Equity has decreased continuously from 2014-2015 to 2016-2017 but it has
increased in the year 2013-2014. The decrease in the ratio indicates there is no better
investment.

2. We notice that there has been a gradual decrease in the debt-equity ratio of the company
from 2014-2015 to 2016-2017 and then there has been a sudden increase in the ratio in the
year 2013-2014. This declining trends indicating deteriorating capital structure
position and long-term solvency of the company. This situation demands immediate
measures to rectify and rationalize capital structure.

3. We notice that the return on capital employed has decreased from 2014-2015 to 2016-2017
but it has increased in the years 2013-2014. A higher return on capital employed shows
effective use of capital.

4. We can notice that the debt to total funds ratio is fluctuating in the past four financial years.
Companies that has fluctuating trend of ratio may have unpredictable business environments
as they can’t afford financial commitments, that they can’t meet in case of sudden down
turns.

5. The current ratio in the year 2013-2014 and then decreases from the year 2014-2015
to 2016-2017 and it has a downward trend. The table shows the current ratio is less
than 2 in all the years. This shows that company is not enjoying the credit
worthiness.

6. The liquidity ratio during the study period is higher than the standard (i.e.)1:1. It was
increased in the year 2013-2014 and then reduced from 2014-2015 to 2016-2017.
Hence the company is not controlling its stock position.

7. The fixed assets turnover ratio has an increasing trend from 2012-2013 to 2014-2015
and has a decreasing trend in the year 2015-2016 and 2016-2017. This results that
the company is not efficiently not utilising its fixed assets.
 8. The working capital turnover ratio has been increasing from 2012-2013 to 2015-2016
and it has been decreased in the year 2016-2017 as the net sales has been decreased
in the year 2016-2017 and the company is maintaining more working capital than
required.

SUGGESTIONS:

1. Company should try to increase the return on capital employed in order to make use of the
capital efficiently

2. We suggest that company should increase the ratio of return on equity for better investment

3. We suggest the company to use its debt more efficiently in financing the assets.

4. We suggest that should ideally use the company’s assets in order to attain better optimum
position.
5. The current ratio of the company is notbetter in all the 5 years. So that the company
has to maintain proper current assets to pay off the current liabilities.
Conclusion

If properly analysed and interpreted, financial statements can provide valuable insight into
firm’s performance. Analysis of financial statements is of interest to lenders (short term as
well as long term) investors, security analysts, managers and others. Financial statement
analysis may be done for variety of purpose, which may range from a simple analysis of the
short-term liquidity position of the firm to a comprehensive assessment of strength and
weakness of the firm in various areas. It is helpful in assessing corporate excellence, judging
credit worthiness, forecasting bond ratings, predicting the bankruptcy and assessing market
risk.

I have studied the attached Balance sheet and Profit and Loss Account of NSIC at 31st march
2017. The financial statements are the responsibility of the company’s management the
analysis and interpretation of financial statements is essential to bring out the mystery
behind the figure in financial statements. Proper books of accounts require by law have
been kept by the company in so far as it appears.
BILBILOGRAPHY

 Dr.S.N. Maheshwari, Financial Management(Principles & Practices), Sultan Chand &

Sons Publishers.

 M.Y.KHAN, P.K.JAIN (1981), Financial Management and Cost Accounting (Third

Edition) New Delhi: MCGRAW – Hill Publishing Company Limited.

 I.M Pandey Financial Management New Delhi Vikas Publishing House Private Ltd-
Ninth Edition 2004

WEBSITES:

 WWW.google.com

 WWW.NSIC.CO.IN

 WWW.MSME.GOV.IN