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AU FINANCIERS (INDIA) PVT.LTD.
FINANCIAL STATEMENT ANALYSIS
Submitted by
Surendra Kumar
Batch: 2009-2011
Last but not the least, I thank everybody of accounts & HR team, who
helped directly or indirectly in completing the project that will go a long way
in my career, the project is really knowledgeable & memorable one.
Surendra Kumar
Executive Summary
AU Financiers (India) Private Limited is registered with Reserve Bank of
India (RBI) as Non-Banking Finance Company (NBFCs). AU Financiers is
fast growing company with roots in Rajasthan, and branches spread in
Maharashtra and Gujarat and planning to increase our presence to pan India.
This company provides financial solution to our customer like Vehicle
finance, Small secured loan, life insurance & General Insurance. This
company comes under Assets Finance Company (AFC) & Companies
extensive network in semi-urban and rural areas of Rajasthan, Maharashtra
and Gujarat has brought the benefit of growth to people outside the usual
scope of organized finance and allowed us to propagate the motto of
inclusive growth.
This Project will help us to understand the shortage of the fund, means by
doing this we can know that when fund will short and accordingly we can
manage fund for further investment activities. By making month wise fund
flow statement we can know shortage and excess of the fund.
This project gives the importance of fund management tools and principles.
It also engaged in small secured business loan products for personal and
business needs. Our excellent track record of high quality lead generation,
high collection ratio and low delinquencies has attracted the attention of high
quality stakeholders and today, besides the promoters, our principal investor
is Motilal Oswal Private Equity Advisors Private Limited. The support of
our investors and our enhanced management bandwidth has given us the
impetus to forge ahead in new geographies and expand our product
portfolio.
The company has disbursed more than Rs.850 crores till January 2010.
The company is making continuous efforts to provide financial
assistance not only to the people of Rajasthan but also to the people of
Maharashtra and Gujarat.
CRISIL is continuously monitoring our performance. On the basis of
performance analysis and sustainable growth shown by the company,
company’s rating has been improved to BBB/Stable from BBB/+.
2008- Private Equity Investment from Motilal Oswal Venture Capital
Advisors Private Limited.
BOARD OF DIRECTORS
He being born and brought up in business class family; always had a vision to
become a successful entrepreneur. His commitment and dedication has turned
no stone upturn. He has been able to identify the undetected diversified area
with his creative thinking and long term vision towards life.
NUMBER OF PEOPLE
The number of employers is increasing year by year at fastest speed, like in
2006-07 the no. of employees was 155 but in 2010 it is 685.
500
400 304
253
300
155
200
100
0
06-07 07-08 08-09 09-10 As on May 10
No. of Customers
DEPARTMENTS
Marketing Department.
Accounts Department.
Collection Department.
AUM to
%
Net NW
AUM Increase
Particulars Worth
in NW
(in times)
2003-04 1.09 4.15 3.81 --
2004-05 2.74 43.01 15.70 151.38%
2005-06 2.84 79.77 28.09 3.65%
2006-07 8.83 136.74 15.49 210.92%
2007-08 24.24 210.77 8.70 174.52%
Vehicle Financing:-
Commercial vehicle loans will continue to remain the mainstay for the
Company. Company primarily offer our services for financing various types
of heavy commercial vehicle, light commercial vehicle, multi-utility offer our
services for financing various types of heavy commercial vehicle, light
commercial vehicle, multi-utility vehicle, cars, three wheeler loading, three
wheeler passenger, tractor etc. of different reputed brands like Mahindra &
Mahindra, Tata Motors, Piaggio vehicles, Force Motors, Maruti, Chevrolet,
Toyota, etc.
Features:
• Touch & Feel Policy
• Takeover/ Top-up Loans
• Simple documentation
• Quick credit decision
• Speedy approval & Disbursement
• Loan approval on NIP also i.e. Non Income Proof
• Wide repayment options such as Cash/FPDC/RPDC/ECS
• Variable guarantor facility i.e. guarantor can be Existing Customer/Family
These are secured loans provided to customers that would meet urgent
economic need of the customers. This new business will be built under a new
brand called shubharambh. One of the unique aspects of this service is that we
also provide loans against Gram Panchayat registered properties which in our
knowledge are not provided by any financial institution.
Features:-
Features:-
• Loan starting from as little as Rs. 50,000
• Flexibility to choose an EMI based loan
• Fastest processing in the industry
• Providing proper guidance and consultancy to the customer
General Insurance:-
Company creating awareness in the rural areas. The Company has
arrangements with multiple insurance companies to offer advisory services for
General and Life insurance products. It understands our customer, their basic
Features:
• New insurance policies
• Renewal of existing policies
• Several options under one roof
• Fair & prompt assistance
• Hassle free claim settlement
• Efficient pre & post advisory services
Life Insurance
Life is full of unexpected surprises; unpredictable events can strike without
warning and disrupt the smooth rhythm of life. Therefore, It offer you a peace
of Mind by advising various life insurance plans for your unique & specific
needs. You must always ensure the financial security of your family and we
are here to give you complete financial solutions. Company understands the
needs of our clients and meets their requirement with best available product
with in well defined time frames and quality assurance.
• Protection plans
• Investment plans
• Child plans
• Endowment plans
• Retirement/pension Plans
• Health plans
Competitors
Mahindra & Mahindra financial services Ltd.
Meghma Finance Ltd.
Bajaj Auto Finance Ltd.
Shriram finance.
Baid Finance Ltd.
HDFC bank.
Hinduja Finance Pvt. Ltd.
And Unorganized Sector
BRAND
AU means gold which is precious and worthy across all cultures and times. It
symbolizes in service, wealth and happiness. Financiers mean those who
finance. As the name of the company suggests, we are the company who
finance thorough imperil service to create happiness in the lives our precious
and worthy customers. We have launched the new logo of our company which
is having manifolds.
Secondly, it is made up with 4 F’s which means- Fast, Fair, Flexible &
Friend.
Red color which a very emotionally intense color is associated with energy,
strength, courage, power, determination as well as passion, desire, and love.
STRENGTHS
Relationship based origination model:
Company has in house collection team with expert legal advisors who on
regular basis follows up with delinquent accounts. Company has layered
process which includes telecalling, personal visit, legal actions, repossession
of vehicles etc.
Many analysts believe that the rural economy will grow strongly in the
coming years. There is strong focus by the Government of strengthen the rural
economy. AU Financiers could be a significant beneficiary of this trend. As it
diversifies its loan products and offers other forms of secured financing it
could augur very well for growth prospects of the Company.
AU has a strong, highly motivated and enthusiastic team with rich experience
and knowledge of on-the-ground business. The core team has worked with
each other for the past several years. The team has been able to establish
strong relationships in the marketplace, as well as with various
authorities/establishments.
NETWORK
AUFIPL is the first Rajasthan based NBFC which is functioning in many
states. AUFIPL continually delivers its promise to provide you quality and
hassle-free services through a vast network of virtually connected offices/
branches.
75
52
49
44
37
32 34
21 22
16 17 15
10
6
1 0 2 0 1
2006-07 2007-08 2008-09 2009-10 As on May 10
It also coordinates with the other institutions of the World Bank Group for its
activities. IFC’s operations are carried out by its departments, most of which
are organized by world region or global industry/sector. IFC has over 3,400
staff, of which 51% work in field offices and 49% at headquarters in
Washington, D.C.
IFC continues to develop new financial tools that enable companies to manage
risk and broaden their access to foreign and domestic capital markets. IFC has
launched a broad and targeted set of initiatives to help private enterprises cope
with the global financial and economic crisis.
Why AU Financiers?
AU Financiers ensures that all team members are adequately rewarded for the
efforts put in. company regularly organizes trips to various exotic locations in
India and abroad for our top performers.
Job Security
Culture
AU Financiers encourages healthy living. All offices are no-smoking areas.
There are no night shifts. Company also organizes yoga sessions to improve
the health and well-being of our team members.
Open Communication
The entire top management and the leaders at AU Financiers are always
accessible. They are ever-willing to help and hear you out whenever you need
Good Compensation
Core values
Company employees are the fixed assets of our company.
Recognize and reward individual ability and performance appropriately.
Recruit and promote on the basis of merit and performance.
Create and maintain a safe and healthy working environment.
SOCIAL RESPONSIBILITY
Akshay Patra Foundation runs “Nutritious food for children in schools” a well
1. Saving of fuel with better fuel efficiency with new technology vehicles.
2. Improvement by way of reduction in remission of polluting gases by
funding of EURO certification vehicles.
3. Funding of vehicles run on LPG / CNG with little or no atmospheric
pollution. Company has been financing following vehicles which leads to
lower emission of pollutants and Higher fuel efficiency and with sophisticated
technology.
Chapter-2 INTRODUCTION
Introduction of study
First task is to analyze and select the information which is requiring taking
decision.
Second task is to arrange the information in a way to highlight significant
relationship.
Final task is the interpretation and drawing of inferences and conclusions.
Purpose of study
The present study is made as a part of the MBA Programme for training in
the form of on the job training with the following activities.
1. To know the financial position of the Au- financier’s (India) Pvt. Ltd.
2. The company has the strength to fulfill its obligation or not
3. Find out strength and weakness of Au-Financier’s (India) Pvt. Ltd.
Place of Study
All the activities are carried out in the Au-Financier’s (India) Pvt. Ltd.
Scope of Study
Methodology
Tools
There are some of the tools, which are relevant for the study of ration
analysis and performance of Au-Financiers (India) Pvt. Ltd.
Comparative Statements.
Trend Analysis
Common size statements
Funds flow analysis.
Cash flow Analysis
Cost volume profit Analysis
Ratio analysis.
Limitation
It is only based on mathematical interpretation of the figures and ignores the
factors such as management style, motivation of workers leadership etc.
It is affected by the price level changes
It does not give any clue for future.
The first step involves selection of information (data) relevant to the purpose
of analysis of financial statements. The second step involved is the
methodical classification of the data and the third step includes drawing of
inferences and conclusions.
The following procedure is adopted for the analysis and interpretation of
financial statements.
1. Balance Sheet
2. Income Statement
1. For studying the Financial Position and short term Financial Position
of a concern, one sees the working capital in both the years. The
excess of current assets over current liabilities will give the figure of
working capital. The increase in working capital means improvement
in the current financial position of the business. An increase in current
assets accompanied by the increase in current liabilities of the same
amount will not show any improvement in short term financial
position. One should study the increase or decrease in current assts
and current liabilities and this will enable him to analyze the current
financial position.
2. The second aspect which should be studies in current financial
position is the liquidity position of the concern. If liquid assets like
Limited Use of Single Ratio:- A single ratio, usually, does not convey
much of a sense.
To make a better interpretation a number of ratios have to be calculated
which is likely to confuse the analyst than help him on making any
meaningful conclusion.
5. Personal Bias:- Ratio are only means of financial analysis and not an
end in itself. Ratios have to e interpreted and different people may
interpret the same ratio in different ways.
Classification of Ratios:
The use of ratio analysis is not confined to financial manager only.
There are different parties interested in the ratio analysis for knowing the
financial position of a firm for different purposes. In view of various users of
ratios, there are many types of ratios which can be calculated from the
Liquidity
Leverage Ratios Activity Ratios Profitability
Ratios
Ratio
Liquidity Ratio:
(A)
1. Current Ratio
2. Liquid Ratio
3. Cash Ratio
(B)
1. Debtors Turnover Ratio
2. Creditors Turnover Ratio
3. Inventory Turnover Ratio
1. Debt/Equity Ratio
2. Debt to total capital Ratio
3. Invest Coverage
4. Cash Flow/Debt
5. Capital Gearing
Profitability Ratio;
1. Return on investments
2. Return on capital
3. Return on Equity capital
4. Return on Total Resources
5. Earnings per share
6. Price-Earning Ratio
Chapter -4
3. Ratio Analysis
I have studied the financial statement of Au-Financier (India) Pvt. Ltd. by using
comparative statements device. It shows as under.
Fixed Assets.
Owen Assets. 191.32 764.46 573.14 299.57
Current Liabilities
Sundry Creditors 114.37 211.56 97.19 84.98
Represented By
Equity Share Capital 1,000.02 1,393.29 393.27 39.33
Secured Loans
Term Loan 4,740.06 6,337.53 1,597.47 33.70
Unsecured Loans
From Banks 4.13 - (4.13) (100.00)
Others - - - #DIV/0!
Deferred Tax - - - -
Liability
The comparative balance sheet reveals that during 2010 there has been an increase
in current assets of Rs. 13,032.86 Lacs i. e. 125.13% in the current liabilities have
increased by Rs.1,341.53 Lacs i. e. 162.78% so the current financial position has
increased.
The liquid Assets that is case in hand, cash in bank shows an decrease in 2010
over 2009 this will not improve the liquidity position of the concern.
The other assets loans & advances have increase by Rs. 11,144.76 Lacs it’s show
that company business improved. and long term liabilities increase in form of
secured loan then it show that company have good relationship with the banks in
India and mostly it shows that the company depends on banks
Reserve and surplus have increased from Rs.891.50/- Lacs to Rs.2,612.23/- Lacs and
the profit has increased from Rs.608.82/- Lacs to Rs.1,338.93/- Lacs. i.e. 119.92 %.
It shows that the profitability of the Company has improved.
Income
Interest on own books 546.82 1,556.14 1,009.32 184.6
Less : Dividends - - - - -
Pref. (Rs.)
- - - - -
Equity (Rs.)
The comparative income statement reveals that there has been increase in
Operating Expenses 103.23% Provision for Credit Loss on Securitisation 149.23%,
Loan Written Off 69.23% and debtors off 52.27 Lacs but the other expenditure decrease
Provision for NPAs 385.53% and Provision for Overdue Debtors 163.44%. so the total
expenditure is increased by Rs. 106.02%
There is a sufficient progress in the Company and the overall profitability of the
bank is good.
Ratio Analysis
Profitability Ratio
The primary objective of business undertaking is to earn profit is the words of lord Keynes :profit
is the engine that drives the Business enterprise”. Profit is not only needed for its existence but
also for its expansion and diversification. The investors want an adequate return on their
investment, workers want higher wages, creditor want high security for their interest and loan
soon.
Following are the important overall profitability ratios, which relevant to the Business Concerns
are:
1. Return on Assets
2. Return on Capital Employed
3. Return on Equity Capital
4. Earning per Share (EPS)
1. Return on Assets:
30000
25000
20000
10000
5000
0
2008 2009 2010
Interpretation :
The return on assets of Au. Financier’s (India) Pvt. Ltd. is not satisfactory. The assets
are not utilized properly.
It is widely used to measure the overall profitability and the efficiency of the business.
Return on Capital Employed = Net Profit*100/Total capital employed
Capital Employed:
25000
20000
15000
Capital Employed
Net Profit
10000
5000
0
2008 2009 2010
Interpretation:
The return on capital employed of Au. Financier’s (India) Pvt. Ltd. is in good trend.
The equity share holders are the real owner of the company. They assume high risk in
the company.
Return on Equity Capital = Net Profit * 100/Equity capital
3000
2500
2000
1000
500
0
2008 2009 2010
Interpretation:
The return on equity share capital of Au Financiers (India) Pvt. Ltd.. Provides a higher rate of
dividend to its equity share holders.
It is samall variation of return on equity capital. It shows the profit available to each share holder.
Earning per Share = Net Profit / Equity Share Holders
Diagram
Interpretation:
Chapter 5.
Findings
Suggestions
Findings
The current assets have increased in 2010 by Rs. 13,608.08/- lacs i. e. 125.59 %
The case and bank balance decreased by Rs. 899.93/- lacs i.e. 24%
The company provide loan and advances to its customers more than 2009 in 2010 Rs. 11,144.76/-
lacs.
The other assets loans & advances have increase by Rs. 11,144.76 Lacs
Term deposits are increased in the year 2010 by Rs. 2350.63 lacs.
Current liabilities are increased in the year 2010 than previous year Rs. 1,341.53437 lacs i.e.
162.78%
Total capital employed increased by Rs 12,266.55/- lacs in the year 2010
Net income of the company increase in the year than previous year 119.92%
The company have good relationship with the banks.
Suggestions
It should be increase advertisement mostly in rural areas because more population of the
Rajasthan does not know about the company in urban area.
The company should focus more on advancing loans and money to customers.
It should reduce the cost of management.
It should recover its money from defaulters in a limited time.
It should control the non operation expenses and other expenditure.
It should ready for the coming competitive as all financier’s Companies are going to be
privatized.
To increase the net profit at higher rate, carefully designed risk management systems and
increasingly higher aspiration levels of customer services should be taken.
Chapter – 6
Conclusion
If properly analyzed and interpreted, financial statements can provide valuable insight
into a 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 a variety of purpose, which may range from a simple
analysis of the short term liquidity position of the firm to a comprehensive assessment of
the strength and weakness of the firm in various areas. It is helpful in assessing corporate
excellence, judging credit worthiness, forecasting bond ratings, predicting bankruptcy
and assessing market risk.
I have studied the attached balance sheet and Profit and Loss Account of Au Financiers
(India) Pvt. Ltd. At 31st March 2010
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.
The transactions of Company, which have come to my notice, have been within the
powers of Company.
Proper books of account s require by law have been kept by the Company in so far as it
appears from my observation of those books.
Proper returns have been received from the Company’s branches.
The balance sheet and profit and loss account are in agreement with the books of account.
Reference
Reference from Journal, Magazine, Newspaper, Annual Report:
Website
www.Au.fin.com.
www.managementparadise.com