A Project Report On Financial Analysis Of Eicher Motors Limited

A
Project Report
On
FinancialAnalysis
Of
Eicher Motors Limited
Submittted to
S.V. Institute of Management
Kadi Sarva Vishwavidyalaya
On
December 08, 2016
In Partial Fulfilment of the requirements for the
Accounting for Managers Coursein the
Master of Business Administration Programme
By
Bhavik Parmar, Anand Pillai
(Roll No.- 22, 33)
(DIV-B)

I
PREFACE
As a part of the course curriculum, the first semester M.B.A. students are required to prepare a
financial project report. The objective behind preparing this project report is to relate the
management subjects taught in the classroom to their practical application.
The preparation of this project report is based on financial analysis of annual report of five
consecutive years for a public limited company using ratio analysis, common size statement
and other financial tools.
The scope of the project report is limited to the study of the financial position of company on
the basis of the published data available.
This is our initial experience for preparing project report. We cannot claim that our report is
100% free of errors but at the same time it is our College’s assurance that we have tried our
level best effort to justify work allocated to us.
It is indeed a golden opportunity for us to present the report and indeed a matter of esteem
honour itself.
Our work in this project is, therefore a humble attempt towards this end.

II
ACKNOWLEDGEMENT
To make a project of this magnitude is impossible without a dedicated effort and perfect
guidance.
We would like to express our deep feeling of gratitude to the under mentioned officials for their
assistant, guidance and inspiration before and though out the project.
Special thanks to Prof. Kalpesh Prajapati, our project faculty, for showing us a proper way
to walk on, for providing help and guidance throughout the project; he has always been the
source of encouragement. He has ceaselessly guided us in all the aspects of the project, with
his abundance amount off experience and finer ideas.
We would like to thank Dr. Bhavin Pandya, for his guidance whenever we called for. We
have always been welcomed with very pleasant smile and full co-operation by him.
Working on the project is hard, need hard work and concentration. What made it possible is
the support we received from those around us. We thank to all the faculties of our college for
giving us guidance, encouragement and right path to work on. We thank everybody who has
directly or indirectly helped us in this project to make it successful.
Bhaviik Parmar
Anand Pillai

III
EXECUTIVE SUMMARY
This financial project we have prepared to know the practical implication of accounting and
how it is applied in real life situation. For this financial project we have taken 5 years’ Balance
Sheet and 5 years Profit and loss A/c of EICHER MOTORS LIMITED for the analysis. In
this project we have prepared following things:
1. Introduction about company
In this portion we have explain about company history, product profile and basic details like
registered office address, board of directors, bankers, auditors etc.
2. Common size statement:
Common size income statement is an income statement in which each account is expressed as
a percentage of the value of sales. This type of financial statement can be used to allow for easy
analysis between companies or between time periods of a company.
3. Trend Analysis:
A trend analysis is a method of analysis that allows traders to predict what will happen with a
stock in the future. Trend analysis is based on historical data about the stock's performance
given the overall trends of the market and particular indicators within the market.
4. Ratio Analysis
A ratio analysis is a quantitative analysis of information contained in a company's financial
statements. Ratio analysis is used to evaluate various aspects of a company's operating and
financial performance such as its efficiency, liquidity, profitability and solvency.

TABLE OF CONTENT
INDEX
SR NO. PARTICULAR PAGE NO.
I Preface I
II Acknowledgement II
III Executive summery III
Chapter 1 : Introduction About The Company 1
1.1 Company Overview 2
1.2 History 3
1.3 Group Structure 4
1.4 Milestone 5
1.5 Company Profile 7
1.6 Basic Details of the Company 8
Chapter 2 : Common Size Statements 11
2.1 Meaning of Common size statements 12
2.2 Common Size Statement Of Balance Sheet 13
2.3 Common Size Statement Of Profit And Loss A/C 15
Chapter 3 : Trend Analysis 17
3.1 Meaning of Trend Analysis 18
3.2 Trend Analysis Of Balance Sheet 19
3.3 Trend Analysis Of Profit And Loss A/C 29
Chapter 4 : Ratio Analysis 36
4.1 Meaning of Ratio Analysis
37
Chapter 4 : Recommendation and Suggestion 50
Chapter 5 : Conclusion 52
Bibliography 54
Annexure 55
List of Tables and Graphs 57

KADI SARVA VISHWAVIDAYALAYA UNIVERSITY
S.V. INSTITUTE OF MANAGEMENT, KADI 1
Chapter-1
Introduction
About The
Company

1. INTRODUCTIONTO THE COMPANY
1.1 COMPANY OVERVIEW
Eicher Motors Limited is an India-based company engaged in the business of automobile
products and related components. The Company’s product range includes commercial vehicles
(Eicher and Volvo trucks), motorcycles, and components, including gears and engineering
solutions. The Company operates in the leisure cruiser segment with engine capacity of 350
circuit current and above. During the year ended December 31, 2009, the Company sold 51,955
motorcycles. In 2009, the Company introduced Classic bike in the two categories of 350cc and
500cc. The Classic bikes are powered by a single cylinder 500 cc unit construction engine
(UCE) supported by electronic fuel injection (EFI). The UCE has an integrated assembly for
the engine, gear box and clutch to reduce friction.
Eicher Motors' subsidiaries include VE Commercial Vehicles Limited, Eicher Engineering
Solutions, Inc., Hoff Automotive Design Company and Hoff Technology Service Company.
Eicher Motors operates in three segments: Commercial Vehicles, Two Wheelers, and
Components of engineering products, as well as in the publication of city map and travel
guides. Its commercial vehicle plant is located at Dhar, MP. The company manufactures
motorcycles at a plant at Thiruvottiyur, TN, promoted under the brand Royal Enfield. The
company’s engineering component plants - located at Gurgaon, Haryana and Dewas, MP -
manufacture gears, gear boxes, and other components The company is also involved in
management consultancy services and customized. It has a joint venture agreement with Volvo
AB. The company has a strong network of 142 dealers distributed across India. Eicher Motors
is present in over 40 countries across the world. Most of the exports are to South Asia, West
Asia, and African countries.
EICHER MOTORS LIMITED
Eicher Motors Limited (EML) was incorporated in 1982 and introduced its first product, the
Canter, a 6 ton GVW truck manufactured at its state of the art plant at Pithampur, Indore in
collaboration with Mitsubishi Motors Corporation, Japan, in 1986. The maiden offering soon
created a strong customer base for itself.
From a single 6 Ton GVW truck in 1986, our range today extends from 5T to 16T GVW trucks
and the Skyline and Voila range of Buses. All our products can be offered in BS II compatible
options. We also have arguably the best CNG technology in the world in our CNG Buses.

Pioneering the concept of Built Up vehicles in the country, we make products that consistently
deliver high value to our customers and are increasingly becoming the preferred option for all
CV users, not only in India but overseas too. Eicher CVs today have significant presence in
more than 20 countries across the world.
In India, Eicher Motors has consistently outperformed the industry in terms of growth and
currently holds over 30% market share in the 6T-11T GVW segments. In the 9T GVW
segment, Eicher Motors continues to be the leader with more than 50% market share. Our well-
equipped workshops result in faster turnaround of service. A network of more than 4500 Eicher
trained private mechanics, over 133 authorized sales and service centres, and easy availability
of genuine parts across more than 300 authorized spares outlets means less downtime and
increased opportunities for our customers to earn.
Eicher Motors is now poised to further consolidate its position in the CV industry by entering
into the Medium & Heavy Commercial Vehicle segments. Strategic plans are in place to ensure
necessary investments in technology and training to constantly sharpen our development and
manufacturing edge. EML is totally committed to fulfilling the vision of being one of the top
3 CV manufacturers in the country by giving customers what they want: vehicles that are safe,
fuel efficient, easy to maintain, enhance driver comfort and in turn productivity. Vehicles that
deliver value by providing low cost of ownership and increased profitability to our customers.
Eicher has over 5000 employees located in 10 manufacturing facilities and 24 marketing offices
all around the country. The Group has around 950 vendors supplying components and sub-
assemblies which testify to the strength of the vendor base. The Group's products are brought
to the customer through its network of around 800 dealers distributed across the length and
breadth of the country.
1.2 HISTORY
Eicher Motors is a commercial vehicle manufacturer in India. The company's origins date back
to 1948, when Goodearth Company was established for the distribution and service of imported
tractors. In 1959 the Eicher Tractor Corporation of India Private Ltd was established, jointly
with the Eicher tractor company, a German tractor manufacturer. Since 1965 Eicher in India
has been completely owned by Indian shareholders. The German Eicher tractor was partly
owned by Massey-Ferguson from 1970, when they bought 30%. Massey-Ferguson bought out
the German company in 1973.
In 2005 Eicher Motors Ltd sold their tractors and engines business to TAFE Tractors (Tractors
And Farm Equipment Ltd) of Chennai, the Indian licensee of Massey Ferguson tractors.

In October 1982 a collaboration agreement with Mitsubishi for the manufacture of Light
Commercial Vehicles was signed in Tokyo and in the same period the incorporation of Eicher
Motors Limited also took place. In February 1990, Eicher Goodearth bought 26% stake
in Enfield India Ltd and by 1993 Eicher acquired a majority stake (60% equity shareholding)
in Royal Enfield India.
In July 2008, EML and Volvo Group's 50:50 joint venture VE Commercial Vehicles (VECV)
designs, manufactures and markets commercial vehicles, engineering components and
provides engineering design.
The Eicher Group has diversified business interests in manufacturing & marketing of Tractors,
Commercial Vehicles, Automotive Gears, Motorcycles, and exports of vehicles, aggregates
and components. Eicher has also invested in the potential growth areas of Management
Consultancy Services. The activities of the Group are divided into the following business units
covering all the business interests.
1.3 GROUP STRUCTURE
The Eicher Group has diversified business interests in design and development, manufacturing,
and local and international marketing of trucks, buses, motorcycles, automotive gears, and
components. Eicher has invested in the potential growth areas of management consultancy
services, customized engineering, and maps and travel guides.
VE Commercial Vehicles (VECV) Limited is a 50:50 joint venture between the Volvo Group
(Volvo) and Eicher Motors Limited (EML).VECV is divided into five business units.
 Eicher Trucks and Buses - The E Series
 Volvo Trucks India - The VE Series
 Eicher Engineering Components
 VE Powertrain
 Eicher Goodearth
 Eicher Publications
Royal Enfield Motors, the motorcycle manufacturing subsidiary, is a part of the Eicher Motors.

1.4 MILESTONES
A journey, spanning over five decades, Eicher has come a long way. These rewarding times
saw the company grow, diversify, acquire, amalgamate, consolidate and expand; winning
hearts and trust of clients, dealers/distributors and shareholders alike.
The path pursues has been illuminated with landmarks and milestones, which stand as an
edifice saluting our achievements. These milestones can be divided into 2 phases.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
INITIAL PHASE
1948 > Goodearth Company set up to sell and service imported tractors
1952-57 > Goodearth Company imported and sold about 1500 tractors in India
1958 > Eicher Tractor Corporation of India Ltd. incorporated
1959 > First indigenous Eicher tractor built
1959 > Eicher came out with India's first indigenously built tractor from its
Faridabad factory
1960 > Eicher changed name from Eicher Tractor Corporation of India Pvt. Ltd.
to Eicher Tractors India Ltd.
1965-75 > 100% indigenization achieved in Eicher Tractors
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
MID JOURNEY
1980 > Eicher Goodearth Ltd. name given to Eicher
1982 > Collaboration agreement with Mitsubishi for the manufacture of Light
Commercial Vehicles signed in Tokyo
1982 > Incorporation of Eicher Motors Ltd.
1985 > Silver Jubilee Year for Eicher
1986 > Eicher Motors Ltd. springs into operation
1987 > Eicher Tractors went public

>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
MORE RECENT
1990 > Eicher Goodearth buys 26% equity stake in Enfield India Ltd.
1991 > ECS launched; Eicher takes over Ramon & Demm
1992 > Eicher Tractors Ltd. selected as 'Company of the Year' for 1990-91 in
the four-wheeler category comprising commercial vehicles, passenger
cars, jeeps and tractors
1993 > Eicher adopts new identifier
1993 > Eicher acquires majority stake in Enfield India (60% equity
shareholding)
1994 > Enfield India Ltd. changed its name to Royal Enfield Motors Ltd.
1995 > Eicher City Map - Delhi launched
1996 > Eicher Tractors Ltd. amalgamated with Royal Enfield Motors to form
Eicher Ltd.
2005 > Eicher Motors Ltd. has disinvested the businesses of tractors and
engines to TAFE Motors & Tractors Ltd. (TMTL)
2008 > Volvo Group and Eicher Motors Ltd. established VE Commercial
Vehicles Limited (VECV)
2010 > The company launched the VE-series of Heavy Duty trucks
2012 > Royal Enfield launches the Thunderbird 500 and 350 models.
2013 > Royal Enfield opens second manufacturing facility in Oragadam, Tamil
Nadu. In September 2013, Royal Enfield globally launches the
Continental GT 535cc café racer in London, UK.
2014 > Royal Enfield opens its first concept store in Saket, New Delhi and
launches its first exclusive store in London, UK.

1.5 COMPANY PRODUCT PROFILE
Motors
It manufactures several kinds of commercial vehicles.Its 50–50 joint venture with the Volvo
group, VE Commercial Vehicles Limited, designs, manufactures and markets reliable, fuel–
efficient commercial vehicles of high quality and modern technology, engineering components
and provides engineering design solutions. It has technical and financial collaboration with
Mitsubishi Motors Corporation of Japan which led to manufacturing of CANTER range of
vehicles. It manufactures around 20000 vehicles per annum.
Motorcycles
It manufactures bullet motorcycles Royal Enfield. It manufactures six different models ranging
from 300cc to 600cc. The manufacturing plant has installed capacity of 39,000 motorcycles
per annum.
Engineering Components
The company manufactures complete range of automotive gears. The range of gears includes
Spiral bevels (Crown wheel and pinions), Straight bevels and Transmission gears.

1.6 BASIC DETAILS OF THE COMPANY

 Company Secretary & Compliance Officer
Manhar Kapoor
 Auditors
Deloitte Haskins & Sells,
Chartered Accountants
 Bankers
HDFC Bank Limited
ICICI Bank Limited
 RegisteredOffice
3rd Floor- Select Citywalk
A-3 District Centre,
Saket New Delhi – 110 017
Tel No.: (011) 29563722
Website: www.eicher.in
 Corporate Office
#96, Sector 32,
Gurgaon – 122 001, Haryana
Tel No.: (0124) 4415600
Website: www.eicher.in
 Plant Locations
 Thiruvottiyur High Road,
Thiruvottiyur,
Chennai – 600 019
Tamil Nadu.
 A-19/1, SIPCOT Industrial Growth Centre,
Oragadam, Kanchipuram – 602 105
Tamil Nadu.

 Registrar & Share Transfer Agent MCS Limited
F–65, 1st Floor,
Okhla Industrial Area, Phase I,
New Delhi – 110 020
Tel No.: (011) 41406149-52
Fax No.: (011) 41709881
e-mail: admin@mcsdel.com

Chapter-2
Common Size
Statements

2.1 COMMON SIZE STATEMENTS
Common size financial statement helps to compare the performance of a company with other
companies in the industry, regardless of asset size or sales volume. Evaluating common size
statement of a company over a period of years can be useful in trend analysis.
Common size statement is very useful ways to analyse financial statement. It consists of
balance sheet and income statement in which items are expressed in percentage rather than
absolute value.
To create a common size statement, income statement total income taken has 100%. Each line
item of the income statement is compared as a percentage of total income. To prepare a
common size balance sheet total assets are taken equal to 100%. Each line item of balance sheet
is compared as a percentage of total assets.

2.2 COMMON SIZE STATEMENT OF BALANCE SHEET
Table 2.2.1: COMMON SIZE STATEMENT OF BALANCE SHEET
COMMONSIZE STATEMENT OF BALANCE SHEET
Particular
in Rs. Cr.
Mar'16 Dec'14 Dec'13 Dec'12 Dec'11
15 months 12 months 12 months 12 months 12 months
Sources OfFunds
Total Share Capital 1% 2% 3% 4% 5%
Reserves 98% 98% 96% 93% 93%
Networth-A 99% 100% 100% 97% 97%
Secured Loans 0% 0% 0% 3% 1%
Unsecured Loans 1% 0% 0% 0% 1%
Total Debt-B 1% 0% 0% 3% 3%
Total Liabilities(A+B) 100% 100% 100% 100% 100%
ApplicationOf Funds
Gross Block 52% 51% 49% 34% 35%
Less:Accum. Depreciation 11% 10% 13% 13% 15%
NetBlock (A) 40% 41% 36% 21% 20%
Capital Work inProgress (B) 4% 5% 2% 9% 1%
Investments(C) 87% 96% 104% 100% 93%
Inventories 14% 17% 17% 12% 8%
Sundry Debtors 2% 1% 1% 1% 1%
Cash andBank Balance 2% 3% 2% 1% 1%
Total CurrentAssets 18% 21% 21% 13% 9%
Loans andAdvances 9% 18% 17% 14% 17%
Total CA, Loans & Advances 27% 39% 38% 27% 27%
CurrentLiabilities 55% 66% 67% 47% 31%
Provisions 3% 15% 13% 11% 10%
Total CL & Provisions 57% 81% 80% 58% 41%
NetCurrent Assets(D) -31% -42% -42% -31% -14%
Total Assets(A+B+C-D) 100% 100% 100% 100% 100%

INTERPRETATION:
 SOURCES OF FUNDS:
 For the analysis source of funds, we have taken the total liabilities as 100%.
 The share capital of the company is consisting of only 1.00% in current year.
 As we can see in the table that the shareholder’s funds and Reserves
constitutes a large portion of the fund’s.
 According to common size statement the reserves of the company hold large
portion that means If the Company having a more reserve & surplus its means
Company having lots of cash it’s helpful for the contingencies times.
 Secured and unsecured loan’s has minor fluctuation in five year.
 The companies secured loan’s decreasing every year and now company has no
secured loans but company has 1% unsecured loan’s against reserve is 98% that
means company already having more amount of reserve & surplus then also
takes the loans for taking the advantages of equity.
 APPLICATION OF FUNDS:
 For the analysis of application of funds, we have taken total assets as 100%.
 The net block of the company only 1% decrease in current year as compared to
last year.
 The fluctuation in investment is vary from year to year, current investment is
lowest point as compared to last five years.
 The current assets and current liabilities both decreases from last year.

2.3 COMMON SIZE STATEMENT OF PROFIT AND LOSS A/C
Table 2.3.1: COMMON SIZE STATEMENT OF PROFIT AND LOSS A/C
COMMONSIZE STATEMENT FOR PROFIT AD LOSS ACCOUNT
in Rs. Cr.
Particular Mar'16 Dec'14 Dec'13 Dec'12 Dec'11
Income
SalesTurnover 113% 110% 113% 112% 111%
Excise Duty 13% 10% 13% 12% 11%
NetSales 100% 100% 100% 100% 100%
OtherIncome 3% 4% 5% 4% 11%
Stock Adjustments 1% 1% 2% 2% 2%
Total Income 104% 105% 107% 106% 114%
Expenditure
Raw Materials 58% 63% 66% 69% 71%
Power& fuel cost 1% 1% 1% 1% 1%
Employee cost 5% 5% 7% 8% 8%
Miscellaneous Expenses 9% 8% 9% 11% 11%
Total Expenses 73% 77% 83% 88% 90%
OperatingProfit 28% 24% 18% 14% 12%
PBDIT 31% 28% 23% 18% 23%
Interest 0% 0% 0% 0% 0%
PBDT 31% 28% 23% 18% 23%
Depreciation 2% 2% 2% 2% 2%
Profit Before Tax 29% 26% 21% 17% 21%
PBT 29% 26% 21% 17% 21%
Tax 9% 8% 5% 3% 3%
ReportedNet Profit 20% 18% 16% 14% 19%

INTERPRETATION:
 For the analysis of Profit and Loss A/c we have taken the Net sales figures as 100%.
 From the analysis of common size statement, we can interpret that the miscellaneous
expenditure is constant for first two years then after it has minor changes.
 The operating profit of the company is constantly increases from last five years.
 Interest are not occurred in last five years.
 The net profit of the company increased 2% as compared to last year and decreased in
2012 and 2013 as compared to 2011.

Chapter-3
Trend
Analysis

3.1 TREND ANALYSIS
Trend analysis involves calculation of percentage changes in financial statement items for
number of successive years. It is an extension of horizontal analysis to several years. Trend
analysis is carried out by first assigning value of 100 to the financial statement items in past
financial years used as the base year. Then expressing financial statement items in the following
years as a percentage of the base year value.
By the trend analysis we can quickly get idea about company’s performance easily.

3.2 TREND ANALYSIS OF BALANCE SHEET
Table 3.2.0.1: TREND ANALYSIS OF BALANCE SHEET
TREND ANALYSISOF BALANCE SHEET
Particular
in Rs. Cr.
Sources OfFunds
Total Share Capital 101% 100% 100% 100% 100%
Reserves 414% 235% 155% 117% 100%
Networth (A) 398% 228% 152% 116% 100%
Secured Loans 0% 0% 62% 308% 100%
Total Debt (B) 158% 0% 28% 140% 100%
Total Liabilities(A+B) 392% 223% 149% 117% 100%
ApplicationOf Funds
Gross Block 572% 318% 207% 112% 100%
Less:Accum. Depreciation 293% 147% 126% 98% 100%
NetBlock (A) 779% 446% 266% 123% 100%
Capital Work inProgress (B) 2017% 1410% 331% 1433% 100%
Investments(C) 363% 229% 165% 125% 100%
Inventories 663% 453% 318% 167% 100%
Sundry Debtors 1125% 261% 296% 151% 100%
Cash andBank Balance 1494% 1445% 628% 117% 100%
Total CurrentAssets 747% 495% 334% 163% 100%
Loans andAdvances 194% 232% 146% 96% 100%
Total CA, Loans & Advances 390% 325% 212% 120% 100%
CurrentLiabilities 690% 472% 319% 177% 100%
Provisions 104% 328% 194% 127% 100%
Total CL & Provisions 546% 436% 288% 164% 100%
NetCurrent Assets(D) 833% 642% 429% 247% 100%
Total Assets(A+B+C-D) 392% 223% 149% 117% 100%

INTERPRETATION:
The interpretation of each item of the balance sheet is depicted as follow……….
 Share capital:
Table 3.2.1: Total Share Capital
Year 2016 2014 2013 2012 2011
Total share capital 101% 100% 100% 100% 100%
Figure 3.2.1: Total Share Capital
Interpretation:
The growth rate of the share capital of the company constantly remains the stable for the
four years but in 2016 only 1% incremental is we have noticed. So we can say that company
growth rate remains same for constantly five years.
100% 100% 100% 100%
101%
99%
100%
100%
100%
100%
100%
101%
101%
101%
101%
2011 2012 2013 2014 2016
Totalsharecapital
Year
Total Share Capital
Total Share Capital

 Secured loans
Table 3.2.2: Secured Loans
Year 2016 2014 2013 2012 2011
Secured Loans 0% 0% 62% 308% 100%
Figure 3.2.2. Secured Loans
Interpretation:
The growth rate of the secured loans of the company in last two year has 0%. Which means
it’s favourably effect on current liabilities. It is good indicator for the company. But in 2012
it is very high as comparing 2011 to 2016 data.
100
308
62
0 0
0
50
100
150
200
250
300
350
2011 2012 2013 2014 2016
Securedloanin%
YEAR
Secured Loans
Secured Loans

 Unsecured Loans
Table 3.2.3: Unsecured Loans
Year 2016 2014 2013 2012 2011
Figure 3.2.3. Unsecured loans
Interpretation:
The growth of the Unsecured loans is increased double as compared to last five. Which
is at 291%. But one thing is that also Company’s sales are increase with the loans fund,
it’s both good and bad effect for the company.
100%
0% 0% 0%
291%
0%
50%
100%
150%
200%
250%
300%
350%
2011 2012 2013 2014 2016
UNSECUREDLOANS
YEAR
Unsecured Loans
Unsecured Loans

 Total Current Liabilities
Table 3.2.4: Total Current Liabilities
Year 2016 2014 2013 2012 2011
Current Liabilities 690% 472% 319% 177% 100%
Figure 3.2.4: Total Current Liabilities
Interpretation:
The total current liabilities curve shows that the current liabilities increases every year.
If we compared 2016 liabilities to 2011 it is 6 times increased from last five years. Due
to decrease in the short provisions. It is financial position is good as compared to last
four year.
100%
177%
319%
472%
690%
0%
200%
400%
600%
800%
2011 2012 2013 2014 2016
CURRENTLIABILITES
YEAR
Current Liabilites
Current Liabilites

 Total Liabilities
Table 3.2.5: Total Liabilities
Year 2016 2014 2013 2012 2011
Total Liabilities 392% 223% 149% 117% 100%
Figure 3.2.5: Total Liabilities
Interpretation:
The total liabilities curves show that continuously increases from last five years.
100% 117%
149%
223%
392%
0%
50%
100%
150%
200%
250%
300%
350%
400%
450%
2011 2012 2013 2014 2016
TOTALLIABILITIES
YEAR
Total Liabilites
Total Liabilites

 Net Block
Table 3.2.6: Net Block
Year 2016 2014 2013 2012 2011
Net Block 779% 446% 266% 123% 100%
Figure 3.2.6: Net Block
Interpretation:
The total net block curve shows that the continuously increases from last five years.
Due to increases in the fixed assets of the company. It is increased around by 123%
Dec-2012 to till Mar-2016. It is indicating the positive impact on the company.
100% 123%
226%
446%
779%
0%
100%
200%
300%
400%
500%
600%
700%
800%
900%
2011 2012 2013 2014 2016
%CHANGEINNETBLOCK
YEAR
Net block
Net block

 Capital Work in Progress
Table 3.2.7: Capital Work in Progress
Year 2016 2014 2013 2012 2011
Capital Work in Progress 2017% 1410% 331% 1433% 100%
Figure 3.2.7: Capital Work in Progress
Interpretation:
The capital work in progress curve show that the fluctuation, In 2012 it is increases at
1433% then after in 2013 it is decreases at 331% then after it is continuously increases
to till 2016. It is favourable impact on non-current assets. In 2016 it is increased up to
2017% which is shows positive effect on the company profit.
100%
1433%
331%
1410%
2017%
0%
500%
1000%
1500%
2000%
2500%
2011 2012 2013 2014 2016
CAPITALWORKINPROGRESS
YEAR
Capital Work in Progress
Capital Work in Progress

 Total Current Assets
Table 3.2.8: Total Current Assets
Year 2016 2014 2013 2012 2011
Total current assets 747% 495% 334% 163% 100%
Figure 3.2.8: Total Current Assets
Interpretation:
As in the figure 3.2.8 shows that the total current assets curve is increases from last five
years. In 2012 it is increases at 163% till now it is increased at 747%.
100%
163%
334%
495%
747%
0%
100%
200%
300%
400%
500%
600%
700%
800%
2011 2012 2013 2014 2016
TOTALCURRENTASSETS
YEAR
Total currrent assets

 Net Current Assets
Table 3.2.9: Net Current Assets
Year 2016 2014 2013 2012 2011
Net Current Assets 833% 642% 429% 247% 100%
Figure 3.2.9: Net Current Assets
Interpretation:
As above chart shows that the Net current assets are continuously increases from Dec-
2011 to Mar-2016. In 2012 it is 247% increases and in 2016 it increases up to 833%.
100%
247%
429%
642%
833%
0%
100%
200%
300%
400%
500%
600%
700%
800%
900%
2011 2012 2013 2014 2016
NETCURRENTASSETS
YEAR
Net Current Assets

3.3 TREND ANALYSIS OF PROFIT AND LOSS A/C
Table 3.3.0.2: Trend Analysis of Profit and Loss A/c
TREND ANALYSISOF PROFIT AD LOSS ACCOUNT
in Rs. Cr.
Income
SalesTurnover 940% 447% 258% 159% 100%
Excise Duty 1115% 405% 302% 182% 100%
NetSales 922% 451% 254% 156% 100%
OtherIncome 232% 151% 104% 60% 100%
Stock Adjustments 370% 300% 222% 148% 100%
Total Income 842% 418% 238% 146% 100%
Expenditure
Raw Materials 758% 402% 237% 151% 100%
Power& fuel cost 714% 359% 273% 170% 100%
Employee cost 626% 315% 217% 155% 100%
Miscellaneous Expenses 741% 338% 225% 159% 100%
Total Expenses 745% 386% 235% 153% 100%
OperatingProfit 2161% 916% 392% 182% 100%
PBDIT 1217% 542% 251% 122% 100%
Interest 70% 83% 13% 13% 100%
PBDT 1232% 548% 254% 123% 100%
Depreciation 1058% 385% 234% 132% 100%
Profit Before Tax 1248% 563% 256% 123% 100%
PBT (PostExtra-ordItems) 1248% 563% 256% 123% 100%
Tax 3123% 1384% 489% 168% 100%
ReportedNet Profit 987% 449% 224% 116% 100%

 Net Sales
Table 3.3.1: Net Sales
Year 2016 2014 2013 2012 2011
Net sales 922% 451% 254% 156% 100%
Figure 3.3.1: Net Sales
Interpretation:
The growth rate of the Net sales of the company is increases around by 100% DEC-
2011 till the Mar-2016. It’s continuously increases every year which means that the
production of the company increases every year.
100%
156%
254%
451%
922%
0%
100%
200%
300%
400%
500%
600%
700%
800%
900%
1000%
2011 2012 2013 2014 2016
NETSALES
YEAR
Net sales

 Gross Sales/Sales Turnover
Table 3.3.2: Sales Turnover/Gross Sales
Year 2016 2014 2013 2012 2011
Gross Sales 940% 447% 258% 159% 100%
Figure 3.3.2: Sales Turnover/Gross Sales
Interpretation:
The growth rate of the company is increases continuously from 2011 to 2016. In 2016
the gross sales increased 9 times as compared to 2011. So, it is good for the company
and it will generate more profit from sales.
100%
159%
258%
447%
940%
0%
100%
200%
300%
400%
500%
600%
700%
800%
900%
1000%
2011 2012 2013 2014 2016
GROSSSALES
YEAR
Gross Sales

 Total Expenditure
Table 3.3.3: Total Expenditure
Year 2016 2014 2013 2012 2011
Total Expenditure 745% 386% 235% 153% 100%
Figure 3.3.3: Total Expenditure
Interpretation:
Above graph shows that the total expenditure of the company continuously increases
from Dec-2011 to Mar-2016. The expenditure includes General and administrative
expenses, selling and distribution expenses, power and fuel cost and other
manufacturing expenses, Miscellaneous expenses. The basic reason behind increases
of expenses is more production of goods.
100%
153%
235%
386%
745%
0%
100%
200%
300%
400%
500%
600%
700%
800%
2011 2012 2013 2014 2016
TotalExpenditure
Year
Total Expenditure

 Operating Profit
Table 3.3.4: Operating Profit
Year 2016 2014 2013 2012 2011
Operating Profit 2161% 916% 392% 182% 100%
Figure 3.3.4: Operating Profit
Interpretation:
The curve of operating profit shows that every year company earn more income after
their expenditure. The rate is increases every year 82%, 210%, 524%, 1254%
respectively. Operating profit is included the other income of the company.
100%
182%
392%
916%
2161%
0%
500%
1000%
1500%
2000%
2500%
2011 2012 2013 2014 2016
OperatingProfit
Year
Operating Profit

 PBDT, PBDIT, PBT, PBT (Post Extra-ord items)
Table 3.3.5: PBDT, PBDIT, PBT, PBT (Post Extra-ord items)
Year 2016 2014 2013 2012 2011
PBDT 1232% 548% 254% 123% 100%
PBDIT 1217% 542% 251% 122% 100%
PBT 1248% 563% 256% 123% 100%
PBT(Post Extra-ord items) 1248% 563% 256% 123% 100%
Figure 3.3.5: PBDT, PBDIT, PBT, PBT (Post Extra-ord items)
Interpretation:
The graph of profit for the year shows, that net profit of the company, it is representing
the PBDT, PBDIT, PBT and PBT (Post Extra-ord Items) of specific year. Company
earned more profit in last five years as we can see in the graph. In last year companies
profit increased double because of less interest and exception income of the company.
0%
200%
400%
600%
800%
1000%
1200%
1400%
2011 2012 2013 2014 2016
%CHANGEINNETPROFITELEMENTS
YEAR
PBDT PBDIT PBT PBT(Post Extra-ord Items)

 PAT/REPORTED NET PROFIT
Table 3.3.6: PAT
Year 2016 2014 2013 2012 2011
PAT 987% 449% 224% 116% 100%
Figure 3.3.6: PAT
Interpretation:
The above graph shows the Profit after tax (Net Profit) of the company for five years.
As we can see that the PAT of the company continuously increases in last five years.
As we can see in the graph companies profit becomes double from 2013, 2014 and in
2016.
2011, 100% 2012, 116%
2013, 224%
2014, 449%
2016, 987%
0%
200%
400%
600%
800%
1000%
1200%
2011 2012 2013 2014 2016
PATIN%
YEAR
PAT
PAT

Chapter-4
Ratio Analysis

4.1 RATIO ANALYSIS
Ratio analysis is an important technique of financial analysis. It is a means for judging the
financial health of a business enterprise. It determines and interprets the liquidity, solvency,
profitability, etc. of a business enterprise.
 It becomes simple to understand various figures in the financial statements through the
use of different ratios. Financial ratios simplify, summarize, and systemize the
accounting figures presented in financial statements.
 With the help of ratio analysis, comparison of profitability and financial soundness can
be made between one industry and another. Similarly, comparison of current year
figures can also be made with those of previous years with the help of ratio analysis
and if some weak points are located, remedial measures are taken to correct them.
 If accounting ratios are calculated for a number of years, they will reveal the trend of
costs, sales, profits and other important facts. Such trends are useful for planning.
 Financial ratios, based on a desired level of activities, can be set as standards for judging
actual performance of a business. For example, if owners of a business aim at earning
profit @ 25% on the capital which is the prevailing rate of return in the industry then
this rate of 25% becomes the standard. The rate of profit of each year is compared with
this standard and the actual performance of the business can be judged easily.
 Ratio analysis discloses the position of business with different viewpoint. It discloses
the position of business with liquidity viewpoint, solvency view point, profitability
viewpoint, etc. with the help of such a study; we can draw conclusion regarding the
financial health of business enterprise.

1. PROFIT MARGIN RATIO
The profit margin ratio, also called the return on sales ratio or gross profit ratio, is a profitability
ratio that measures the amount of net income earned with each dollar of sales generated by
comparing the net income and net sales of a company. In other words, the profit margin ratio
shows what percentage of sales are left over after all expenses are paid by the business.
Creditors and investors use this ratio to measure how effectively a company can convert sales
into net income. Investors want to make sure profits are high enough to distribute dividends
while creditors want to make sure the company has enough profits to pay back its loans.
𝑃𝑟𝑜𝑓𝑖𝑡 𝑀𝑎𝑟𝑔𝑖𝑛 𝑅𝑎𝑡𝑖𝑜 =
𝑁𝑒𝑡 𝑃𝑟𝑜𝑓𝑖𝑡
𝑆𝑎𝑙𝑒𝑠
× 100
Table 4.1.1: Profit Margin Ratio
Year 2016 2014 2013 2012 2011
Profit Margin (%) 20% 18% 16% 14% 19%
Figure 4.1.1: Profit Margin Ratio
Interpretation:
As per the above chart we can conclude that the operating margin is increase in year 2012,
2013, 2014 and 2016 its show that a higher value of operating margin ratio is favourable which
indicates that more proportion of revenue is converted to operating income. An increase in
operating margin ratio overtime means that the profitability is improving.
0%
5%
10%
15%
20%
2011 2012 2013 2014 2016
19%
14%
16%
18%
20%
%CHANGEINPROFITMARGIN
YEAR
Profit Margin(%)
Profit Margin(%)

2. TOTAL ASSETS TURNOVER RATIO
The asset turnover ratio is an efficiency ratio that measures a company's ability to generate
sales from its assets by comparing net sales with average total assets. In other words, this ratio
shows how efficiently a company can use its assets to generate sales.
𝑨𝒔𝒔𝒆𝒕𝒔 𝑻𝒖𝒓𝒏𝒐𝒗𝒆𝒓 𝑹𝒂𝒕𝒊𝒐 =
𝑵𝒆𝒕 𝒔𝒂𝒍𝒆𝒔
𝑨𝒗𝒆𝒓𝒂𝒈𝒆 𝒕𝒐𝒕𝒂𝒍 𝒂𝒔𝒔𝒆𝒕𝒔
Table 4.1.2: Total Assets turnover ratio
Year 2016 2014 2013 2012 2011
Assets turnover ratio(Times) 2.89 2.48 2.09 1.63 1.22
Figure 4.1.2: Total Assets turnover ratio
Interpretation:
From the above ratio, we can say that the ratio of 2011 is 1.22, if the assets are very old then
more depreciation has been deducted, then the turnover seems to be more. From the above
graph we can see that every year assets turnover ratio increases gradually. In 2016 it is 2.89
times. We can say that the company sales increases as compared to total assets. So, company
using their assets more efficiently to generate more profit from sales.
0
0.5
1
1.5
2
2.5
3
2011 2012 2013 2014 2016
1.22
1.63
2.09
2.48
2.89
ASSETSTURNOVERRATIO
YEAR
Assets turnover ratio
Assets turnover ratio

3. OPERATING PROFIT RATIO
The operating margin ratio, also known as the operating profit margin, is a profitability ratio
that measures what percentage of total revenues is made up by operating income. In other
words, the operating margin ratio demonstrates how much revenues are left over after all the
variable or operating costs have been paid. Conversely, this ratio shows what proportion of
revenues is available to cover non-operating costs like interest expense.
𝑶𝒑𝒆𝒓𝒂𝒕𝒊𝒏𝒈 𝑷𝒓𝒐𝒇𝒊𝒕 𝑹𝒂𝒕𝒊𝒐 =
𝑶𝒑𝒆𝒓𝒂𝒕𝒊𝒏𝒈 𝑷𝒓𝒐𝒇𝒊𝒕
𝑵𝒆𝒕 𝒔𝒂𝒍𝒆𝒔
× 𝟏𝟎𝟎
Table 4.1.3: Operating Profit Ratio
Year 2016 2014 2013 2012 2011
Operating Profit Margin(%) 28% 24% 18% 14% 12%
Figure 4.1.3: Operating Profit Ratio
Interpretation:
This ratio measures the relation between net profit and sales of a firm excluding the other
income of the company. Operating profit ratio indicates the management ability to operate the
business efficiency. From the above graph the operating profit of year 2011 is 12% in the year
2013 increases 18% by 28% in 2016. So rapidly the ratio is increases.
0%
5%
10%
15%
20%
25%
30%
2011 2012 2013 2014 2016
12%
14%
18%
24%
28%
%CHANGEINOPERATINGPROFITMARGIN
YEAR
Operating Profit Ratio(%)
Operating Profit Ratio(%)

4. CURRENT RATIO
The current ratio is a liquidity and efficiency ratio that measures a firm's ability to pay off its
short-term liabilities with its current assets. The current ratio is an important measure of
liquidity because short-term liabilities are due within the next year.
This means that a company has a limited amount of time in order to raise the funds to pay for
these liabilities. Current assets like cash, cash equivalents, and marketable securities can easily
be converted into cash in the short term. This means that companies with larger amounts of
current assets will more easily be able to pay off current liabilities when they become due
without having to sell off long-term, revenue generating assets.
𝑪𝒖𝒓𝒓𝒆𝒏𝒕 𝑹𝒂𝒕𝒊𝒐 =
𝑪𝒖𝒓𝒓𝒆𝒏𝒕 𝑨𝒔𝒔𝒆𝒕𝒔
𝒄𝒖𝒓𝒓𝒆𝒏𝒕 𝑳𝒊𝒂𝒃𝒊𝒍𝒊𝒕𝒊𝒆𝒔
Table 4.1.4: Current Ratio
Year 2016 2014 2013 2012 2011
Current Ratio 0.46 0.48 0.48 0.43 0.60
Figure 4.1.4: Current Ratio
Interpretation:
The standard for current ratio is 2:1, whereas the same for 2011 this company had 0.60:1
signifying that for every Rs.1 of current liabilities the company had the Rs.0.60 current assets.
For the year 2016 this company had the 0.46:1 signifying that for every Rs.1 of current
liabilities the company had the Rs.0.46 worth of current Assets. The state affairs are quite
comfortable and looking to the fact that current assets mostly comprise liquid assets. It can be
said that the company will be able to meet its current liabilities with ease, as when they arise.
0
0.2
0.4
0.6
2011 2012 2013 2014 2016
0.6
0.43
0.48 0.48 0.46
CURRENTRATIO
YEAR
Current Ratio
Current Ratio

5. QUICK RATIO-ACID RATIO
The quick ratio or acid test ratio is a liquidity ratio that measures the ability of a company to
pay its current liabilities when they come due with only quick assets. Quick assets are current
assets that can be converted to cash within 90 days or in the short-term. Cash, cash equivalents,
short-term investments or marketable securities, and current accounts receivable are considered
quick assets.
𝑸𝒖𝒊𝒄𝒌 𝑹𝒂𝒕𝒊𝒐 =
𝑸𝒖𝒊𝒄𝒌 𝑨𝒔𝒔𝒆𝒕𝒔
𝑻𝒐𝒕𝒂𝒍 𝑳𝒊𝒂𝒃𝒊𝒍𝒊𝒕𝒊𝒆𝒔
Quick Assets=Total Current Assets-Inventory-Prepaid Expenses
Table 4.1.5: Quick Assets
Year 2016 2014 2013 2012 2011
Quick Assets 0.22 0.28 0.26 0.27 0.45
Figure 4.1.5: Quick Assets
Interpretation:
In 2011 the company’s quick ratio was 0.45 and in 2012 it was further reduced at 0.27 and goes
on 0.22 in 2016 the ratio shows that the company has not sound working capital management
to meet its current liabilities.
0
0.1
0.2
0.3
0.4
0.5
2011 2012 2013 2014 2016
0.45
0.27 0.26 0.28
0.22
QUICKASSETS
YEAR
Quick Assets
Quick Assets

6. DEBT TO EQUITY RATIO
The debt to equity ratio is a financial, liquidity ratio that compares a company's total debt to
total equity. The debt to equity ratio shows the percentage of company financing that comes
from creditors and investors. A higher debt to equity ratio indicates that more creditor financing
(bank loans) is used than investor financing (shareholders).
𝑫𝒆𝒃𝒕 𝒕𝒐 𝑬𝒒𝒖𝒊𝒕𝒚 𝑹𝒂𝒕𝒊𝒐 =
𝑺𝒆𝒄𝒖𝒓𝒆𝒅 𝑳𝒐𝒂𝒏 + 𝑼𝒏𝒔𝒆𝒄𝒖𝒓𝒆𝒅 𝑳𝒐𝒂𝒏
𝑺𝒉𝒂𝒓𝒆𝒉𝒐𝒍𝒅𝒆𝒓′ 𝒔 𝑬𝒒𝒖𝒊𝒕𝒚
Table 4.1.6: Debt to Equity Ratio
Year 2016 2014 2013 2012 2011
Debt to equity ratio 0.01 0.0 0.0 0.03 0.03
Figure 4.1.6: Debt to Equity Ratio
Interpretation:
The acid-test ratio is far more forceful than the current ratio, primarily because the current ratio
includes inventory assets which might not be able to turn to cash immediately. Company with
ratios of less than 1 year 2012, 2013, 2014 and 2016 cannot pay their current liabilities and
should be looked at with extreme caution. Furthermore, if the acid-test ratio is much lower than
the current ratio, it means current assets are highly dependent on inventory.
0
0.01
0.02
0.03
2011 2012 2013 2014 2016
0.03 0.03
0 0
0.01
DEBTTOEQUITYRATIO
YEAR
Debt to equity ratio
Debt to equity ratio

7. INVENTORY TURNOVER RATIO
The inventory turnover ratio is an efficiency ratio that shows how effectively inventory is
managed by comparing cost of goods sold with average inventory for a period. This measures
how many times average inventory is "turned" or sold during a period.
This ratio is important because total turnover depends on two main components of
performance. The first component is stock purchasing. If larger amounts of inventory are
purchased during the year, the company will have to sell greater amounts of inventory to
improve its turnover. If the company can't sell these greater amounts of inventory, it will incur
storage costs and other holding costs.
𝑰𝒏𝒗𝒆𝒏𝒕𝒐𝒓𝒚 𝒕𝒖𝒓𝒏𝒐𝒏𝒗𝒆𝒓 𝒓𝒂𝒕𝒊𝒐 =
𝑪𝒐𝒔𝒕 𝒐𝒇 𝑮𝒐𝒐𝒅𝒔 𝑺𝒐𝒍𝒅
𝑨𝒗𝒆𝒓𝒂𝒈𝒆 𝑰𝒏𝒗𝒆𝒏𝒕𝒐𝒓𝒚
Table 4.1.7: Inventory Turnover Ratio
Year 2016 2014 2013 2012 2011
Inventory turnover ratio 23.25 16.19 13.33 15.64 16.41
Figure 4.1.7: Inventory Turnover Ratio
Interpretation:
As per the above chart we can see concluded that the Company’s inventory turnover ratio is
increases, its shows a lower inventory turnover ratio may be an indication of over-stocking
which may pose risk of obsolescence and increased inventory holding costs. However, a very
high value of this ratio may be accompanied by loss of sales due to inventory shortage. As
we can see in this graph the company’s inventory turnover ratio is 23.25 increased in 2016.
0
5
10
15
20
25
2011 2012 2013 2014 2016
16.41 15.64
13.33
16.19
23.25
INVENTORYTURNOVERRATIO
YEAR
Inventory turnover ratio
Inventory turnover ratio

8. DEBTOR’S TURNOVER RATIO
Debtor turnover ratio is the relationship between net sales and average debtors. It is also called
account receivable turnover ratio. Higher debtor’s turnover ratio means company rapidly
collecting their money or converting into cash and the quality of the company’s debtors is good.
Lower debtor’s turnover ratio indicates company not getting their money as fast as they
required.
𝑫𝒆𝒃𝒕𝒐𝒓′
𝒔 𝒕𝒖𝒓𝒏𝒐𝒗𝒆𝒓 𝒓𝒂𝒕𝒊𝒐 =
𝑵𝒆𝒕 𝑪𝒓𝒆𝒅𝒊𝒕 𝑺𝒂𝒍𝒆𝒔
𝑨𝒗𝒆𝒓𝒂𝒈𝒆 𝑫𝒆𝒃𝒕𝒐𝒓𝒔
Net Credit Sales = Total sales - sales return - cash sales
Table 4.1.8: Debtors Turnover Ratio
Year 2016 2014 2013 2012 2011
Debtor’s turnover ratio 217.77 265.55 185.76 203.74 173.50
Figure 4.1.8: Debtors Turnover Ratio
Interpretation:
The above debtor’s turnover ratio shows that in 2014 at 265.55 and then after it is decreases in
2016 at 217.77 but it is still near so, it is indicating better management of receivables.
0
100
200
300
2011 2012 2013 2014 2016
173.5
203.74 185.76
265.55
217.77
DEBTORSTURNOVERRATIO
YEAR
Debtors turnover ratio
Debtors turnover ratio

9. RETURN ON ASSETS RATIO
The return on assets ratio, often called the return on total assets, is a profitability ratio that
measures the net income produced by total assets during a period by comparing net income to
the average total assets. In other words, the return on assets ratio or ROA measures how
efficiently a company can manage its assets to produce profits during a period.
𝑹𝒆𝒕𝒖𝒓𝒏 𝒐𝒏 𝑨𝒔𝒔𝒆𝒕𝒔 𝑹𝒂𝒕𝒊𝒐 =
𝑵𝒆𝒕 𝑷𝒓𝒐𝒇𝒊𝒕
𝑨𝒗𝒆𝒓𝒂𝒈𝒆 𝑻𝒐𝒕𝒂𝒍 𝑨𝒔𝒔𝒆𝒕𝒔
Table 4.1.9: Return on Assets Ratio
Year 2016 2014 2013 2012 2011
Return on Assets Ratio 3.63 2.94 2.31 1.74 1.31
Figure 4.1.9: Return on Assets Ratio
Interpretation:
The above ratio shows that the significant increases in return on assets from 2011 to 2016 it is
gradually increases. So, it is proving that the company’s overall profitability increases.
0
0.5
1
1.5
2
2.5
3
3.5
4
2011 2012 2013 2014 2016
1.31
1.74
2.31
2.94
3.63
RETURNONASSETSRATIO
YEAR
Return on Assets Ratio
Return on Assets Ratio

10. RETURN ON EQUITY RATIO
The return on equity ratio or ROE is a profitability ratio that measures the ability of a firm to
generate profits from its shareholder’s investments in the company. In other words, the return
on equity ratio shows how much profit each dollar of common stockholders' equity generates.
ROE is also an indicator of how effective management is at using equity financing to fund
operations and grow the company.
𝑹𝒆𝒕𝒖𝒓𝒏 𝒐𝒏 𝑬𝒒𝒖𝒊𝒕𝒚 𝑹𝒂𝒕𝒊𝒐 =
𝑵𝒆𝒕 𝑷𝒓𝒐𝒇𝒊𝒕
𝑨𝒗𝒆𝒓𝒂𝒈𝒆 𝑺𝒉𝒂𝒓𝒆𝒉𝒐𝒍𝒅𝒆𝒓′ 𝒔 𝑬𝒒𝒖𝒊𝒕𝒚
Table 4.1.10: Return on Equity Ratio
Year 2016 2014 2013 2012 2011
Return on Equity Ratio 36.9 24.5 19.2 18.5 20.7
Figure 4.1.10: Return on Equity Ratio
Interpretation:
As we can see in figure 4.1.10 that the Return on equity ratio is increases from 2012 to till 2016
which is indicates the company using shareholders fund efficiently to generate more profit in
the business and to grow the business.
0
10
20
30
40
2011 2012 2013 2014 2016
20.7
18.5 19.2
24.5
36.9
RETURNONEQUITYRATIO
YEAR
Return on Equity Ratio
Return on Equity Ratio

11. INTEREST COVERAGE RATIO
The interest coverage ratio is a financial ratio that measures a company’s ability to make
interest payments on its debt in a timely manner. Unlike the debt service coverage ratio, this
liquidity ratio really has nothing to do with being able to make principle payments on the debt
itself. Instead, it calculates the firm’s ability to afford the interest on the debt.
𝑰𝒏𝒕𝒆𝒓𝒆𝒔𝒕 𝑪𝒐𝒗𝒆𝒓𝒂𝒈𝒆 𝑹𝒂𝒕𝒊𝒐 =
𝑷𝒓𝒐𝒇𝒊𝒕 𝑩𝒆𝒇𝒐𝒓𝒆 𝑰𝒏𝒕𝒆𝒓𝒆𝒔𝒕 𝒂𝒏𝒅 𝑻𝒂𝒙
𝑰𝒏𝒕𝒆𝒓𝒆𝒔𝒕 𝑬𝒙𝒑𝒆𝒏𝒔𝒆𝒔
Table 4.1.11: Interest Coverage Ratio
Year 2016 2014 2013 2012 2011
Interest Coverage Ratio (Times) 233.1 102.5 86.1 159.2 87.1
Figure 4.1.11: Interest Coverage Ratio
Interpretation:
From the above chart and table through we can say that in 2011 the interest coverage ratio is
87.1 then in 2012 increases to 159.2 and then after 2013 it is decreased at 86.1 and then after it
is continuously increases till 2016 which is 233.1 noted. A continues increases ratio implies
the not sound ability of the company to services its interests to the lenders. So the company
cannot rapidly raise the funds from the lenders.
0
50
100
150
200
250
2011 2012 2013 2014 2016
87.1
159.2
86.1
102.5
233.1
INTERESTCOVERAGERATIO
YEAR
Interest Coverage Ratio
Interest Coverage Ratio

12. EARNIGNS PER SHARE
Earnings per share, also called net income per share, is a market prospect ratio that measures
the amount of net income earned per share of stock outstanding. In other words, this is the
amount of money each share of stock would receive if all of the profits were distributed to the
outstanding shares at the end of the year.
𝑬𝒂𝒓𝒏𝒊𝒏𝒈𝒔 𝒑𝒆𝒓 𝒔𝒉𝒂𝒓𝒆 =
𝑷𝑨𝑻 − 𝑷𝒓𝒆𝒇𝒇𝒆𝒓𝒆𝒅 𝑫𝒊𝒗𝒊𝒅𝒆𝒏𝒅
𝑵𝒐. 𝒐𝒇 𝑬𝒒𝒖𝒊𝒕𝒚 𝑺𝒉𝒂𝒓𝒆𝒉𝒐𝒍𝒅𝒆𝒓′𝒔
Table 4.1.12: Earnings Per Share
Year 2016 2014 2013 2012 2011
Earnings Per Share (Rs.) 470.5 227.1 145.7 120.1 114.4
Figure 4.1.12: Earnings Per Share
Interpretation:
From the above table and graph shows that the ratio of 2011 is Rs.144.4. It is gradually increase,
in 2016 it goes to Rs.470.5 this shows the higher ratio compare to the other companies. Due to
high EPS, investors are highly interesting to invest in the company, so company can easily raise
the funds from the market.
0
50
100
150
200
250
300
350
400
450
500
2011 2012 2013 2014 2016
114.4 120.1
145.7
227.1
470.5
EARNINGSPERSHARE(RS.)
YEAR
Earnings Per Share (Rs.)
Earnings Per Share (Rs.)

Chapter-5
Recommendation
&
Suggestion

RECOMMENDATION AND SUGGESTION
 Growth of the company is very good but we recommend that it can still manage its
assets and liabilities well so as to take advantage of leverage and earn more on them
keeping idle.
 EPS ratio is gradually increases investors are highly interesting to invest in the
company, so company can easily raise the funds from the market.
 Interest coverage ratio continuous increases implies that the company has not sound
ability to service its interest to the lenders.

Chapter-6
Conclusion

CONCLUSION
Throughout financial project we came to know that company is working more 50 years’. Eicher
motors limited tried well to stay in market through diversifying their product in the market. At
starting they are manufacturing only tract but they tried well to predicted future and “how they
can survive in the market?” So they diversified they product and as well as market segment to
generate more profit.
For financial analysis we have found that the company’s earnings per share return is well in
the market and the profit of company also growing year by year which is well indicator for the
company.
In debtor’s turnover ratio of the company is well managed by the organization to manage
receivables to generate rapid cash in the company. So, it will beneficial to do day to day
transaction.
After analysing the quick assets ratio, we can conclude that the company has not sound working
capital management to meets its current liabilities. The main reason behind that the ratio
continuously decreases from last 5 years.
The current ratio of the company is totally worst because company had not tried to maintain
2:1 standard to meet its current liabilities with easy, whenever it will arise in the company.
From the analysis of profit margin ratio, we can say that company’s overall profitability is
increases year by year. Which is best to those who want to invest in this company to take
advantages.

BIBLIOGRAPHY
BOOKS:
Narayanswamy“FinancialAccounting (A Managerial Perspective)” Fourth
Edition
WEBSITES:
Eicher.in
https://www.equitymaster.com/research-it/company-info/detailed-financial-
information.asp?symbol=echm&name=EICHER-MOTOR-Detailed-Financial-Data
http://money.rediff.com/companies/Eicher-Motors-Ltd/10510004/ratio
http://www.moneycontrol.com/financials/eichermotors/ratios/EM
http://www.myaccountingcourse.com/financial-ratios

ANNEXURE
BALANCE SHEET OF EICHER MOTORS LIMITED
BALANCE SHEET'S OF EICHER MOTORS LIMITED
Particular
in Rs. Cr.
Sources OfFunds
Total Share Capital 27.16 27.10 27.04 27.00 26.99
Reserves 2123.62 1206.56 794.30 602.05 513.05
Networth(A) 2150.78 1233.66 821.34 629.05 540.04
Secured Loans 0.00 0.00 4.00 20.01 6.50
Unsecured Loans 22.57 0.00 0.00 0.00 7.75
Total Debt (B) 22.57 0.00 4.00 20.01 14.25
Total Liabilities(A+B) 2173.35 1233.66 825.34 649.06 554.29
ApplicationOf Funds
Gross Block 1119.35 623.01 404.59 219.45 195.73
Less:Accum. Depreciation 244.60 122.43 105.34 81.75 83.43
NetBlock (A) 874.75 500.58 299.25 137.70 112.30
Capital Work inProgress (B) 84.93 59.34 13.92 60.33 4.21
Investments(C) 1882.04 1188.58 856.35 649.39 518.01
Inventories 300.36 205.13 143.84 75.41 45.27
Sundry Debtors 46.13 10.70 12.13 6.20 4.10
Cash andBank Balance 44.52 43.05 18.71 3.50 2.98
Total CurrentAssets 391.01 258.88 174.66 85.11 52.35
Loans andAdvances 185.27 221.51 138.98 91.71 95.51
Total CA, Loans & Advances 576.28 480.39 313.66 176.82 147.86
CurrentLiabilities 1186.30 811.39 549.32 303.80 172.03
Provisions 58.35 183.84 108.52 71.38 56.06
Total CL & Provisions 1244.65 995.23 657.84 375.16 228.09
NetCurrent Assets(D) -668.37 -514.84 -344.18 -198.36 -80.23
Total Assets(A+B+C-D) 2173.35 1233.66 825.34 649.06 554.29

PROFIT AND LOSS A/C OF EICHER MOTORS LIMITED
PROFIT AND LOSS ACCOUNT
in Rs. Cr.
Income
SalesTurnover 6,983.98 3,320.23 1,917.76 1,179.30 742.83
Excise Duty 795.95 289.01 215.29 130.04 71.38
NetSales 6188.03 3031.22 1702.47 1049.26 671.45
OtherIncome 178.24 116.3 80.1 45.78 76.78
Stock Adjustments 53.22 43.17 31.96 21.27 14.4
Total Income 6419.49 3190.69 1814.53 1116.31 762.63
Expenditure
Raw Materials 3614.75 1914.63 1131.04 721.74 476.7
Power& fuel cost 46.17 23.23 17.68 11.01 6.47
Employee cost 319.64 160.9 110.9 78.86 51.04
Miscellaneous Expenses 530.21 242.07 161.08 113.49 71.55
Total Expenses 4510.77 2340.83 1420.7 925.1 605.76
OperatingProfit 1730.48 733.56 313.73 145.43 80.09
PBDIT 1908.72 849.86 393.83 191.21 156.87
Interest 1.41 1.67 0.27 0.26 2.02
PBDT 1907.31 848.19 393.56 190.95 154.85
Depreciation 137.73 50.16 30.41 17.15 13.02
Profit Before Tax 1769.58 798.03 363.15 173.8 141.83
PBT (PostExtra-ordItems) 1769.58 798.03 363.15 173.8 141.83
Tax 539.73 239.11 84.53 29.04 17.28
ReportedNet Profit 1229.85 558.92 278.62 144.76 124.55

LIST OF TABLES AND GRAPHS
Table List Graph List
Table
Number Name Ofthe Table
Graph
Number Name ofThe Graph
2.2.1
Common Size Statement Of Balance
Sheet 3.2.1 Total Share Capital
2.3.1
Common Size Statement Of Profit And
Loss A/C 3.2.2 Secured Loans
3.2.0.1 Total Share Capital 3.2.3 Unsecured Loans
3.2.1 Secured Loans 3.2.4 Total Current Liabilities
3.2.2 Unsecured Loans 3.2.5 Total Liabilities
3.2.3 Total Current Liabilities 3.2.6 Net Block
3.2.4 Total Liabilities 3.2.7 Capital Work In Progress
3.2.5 Net Block 3.2.8 Total Current Assets
3.2.6 Capital Work In Progress 3.2.9 Net Current Assets
3.2.7 Total Current Assets 3.3.1 Net Sales
3.2.8 Net Current Assets 3.3.2 Sales Turnover/Gross Sales
3.2.9 Trend Analysis Of BalanceSheet 3.3.3 Total Expenditure
3.2.0.2 Trend Analysis Of Profit And Loss A/C 3.3.4 Operating Profit
3.3.1 Net Sales 3.3.5
PBDT, PBDIT, PBT, PBT (Post Extra-Ord
Items)
3.3.2 Sales Turnover/Gross Sales 3.3.6 PAT
3.3.3 Total Expenditure 4.1.1 Profit Margin Ratio
3.3.4 Operating Profit 4.1.2 Total Assets TurnoverRatio
3.3.5
PBDT, PBDIT, PBT, PBT (Post Extra-
Ord Items) 4.1.3 Operating Profit Ratio
3.3.6 PAT 4.1.4 Current Ratio
4.1.1 Profit Margin Ratio 4.1.5 Quick Assets
4.1.2 Total Assets TurnoverRatio 4.1.6 Debt To Equity Ratio
4.1.3 Operating Profit Ratio 4.1.7 Inventory Turnover Ratio
4.1.4 Current Ratio 4.1.8 Debtors Turnover Ratio
4.1.5 Quick Assets 4.1.9 Return On Assets Ratio
4.1.6 Debt To Equity Ratio 4.1.10 Return On Equity Ratio
4.1.7 Inventory Turnover Ratio 4.1.11 Interest Coverage Ratio
4.1.8 Debtors Turnover Ratio 4.1.12 Earnings Per Share
4.1.9 Return On Assets Ratio
4.1.10 Return On Equity Ratio
4.1.11 Interest Coverage Ratio
4.1.12 Earnings Per Share

A Project Report On Financial Analysis Of Eicher Motors Limited

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