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Jay Swaminarayan A Summer Internship Project Report On Financial Analysis of Power Build Limited ( Ratio Analysis )
Submitted for the particular fulfillment of Master of Business Administration ( MBA )( 2010-11 )
AT

POWER BUILD LIMITED ANAND

Prepared by Varin. A. Patel M.B.A-|| (2010-2012) Enrollment No. - 107550592029 Guidance by Mehul shah Sir Submitted to
Sardar Patel College of Administration and Management Approved by All India Council for Technical Education ( AICTE ) Affiliated with Gujarat Technological University S.P.E.C Campus, Vidyanagar-Vadtal Road, Bakrol

July - 2011
PREFACE

The Practical training in the industrial units is an inspirable part of the MBA programme and also it has shown a great, importance in overall development of the students. One aspects of industrial training is to set up a bridge between the theoretical and practical knowledge in the company. After the completion of the second semester the student have to go for training for six to eight weeks. The student can select specialization subject for training like Finance, Marketing, HRM. I have selected Finance as I want to carry out my last two semester in finance specialization. Finance is the lifeblood of any business unit . Finance management that deals with financial matter of the company. I being student of M.B.A programme as a part of my study is required to under go an industrial training programme for six to eight weeks in Power Build Limited (PBL) which is one of the leading manufacturers of the machineries. I have tried my level best to represent all the relevant data and information relating to my project work & here submitting my detailed report on Finance and specially on RATIO ANALYSIS. I am also thankful to the POWER BUILD LIMITED that gives me the golden opportunity to carry on my training as such a great organization. I have prepared the detail report regarding all the important areas of management such as Finance department. I have tried my best to collect all necessary information relating to the project work.

ACKNOWLEDGMENT
Industrial training is very helpful in building career. I have a great pleasure and excitement in presenting the report for industrial & practical training at M.B.A level in Power Build Limited Vallabh Vidhyanagar. The objective of the training was to acquaint student to industrial environment and acquire a detailed study of it.

I am very thankful to the authorities of the Power Build Ltd. who have always stood by and encourage me all the time here until. I would specially like to thank MR.DIPAK P PATEL the H.R & Administration Manager, MR SUBODH ROA account deo head, Mr DHAVAL PATEL for providing me valuable support.

I am grateful to our DIRECTOR SIR P.T.Trivedi for giving us the permission for the training programme. And also to our project guide MR.Mehul Shah for providing me his guidance throughout the project.

I personally feel that for the development of students IQ and knowledge this type of training is must and the institute is carefully fulfilling this responsibility so I am also thankful to Gujarat Technological University.

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01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

Table of Content

Chapter
Chapter 1 Chapter 1.1 Chapter 1.2 Chapter 2 Chapter 2.1 Chapter 2.2 Chapter 2.3 Chapter 3 Chapter 3.1 Chapter 3.2 Chapter 4 Chapter 5 Chapter 6 Chapter 7 Introduction

Particular

Page No

Industry Overview Company Overview Research Methodology Objective of the study Sources of data & Methodology Limitation of study Data Analysis & Interpretation Introduction & Classification of Ratios Calculation of ratios Human Resource Department Summary & findings Conclusion Bibliography

7 11 27 28 29 30 31 33 42 87 93 95 96

List of Tables

Sr No
01 02 03 04 05 05.1 06 07 08 09 09.1 10 11 12 13 14 15 16 Current Ratio Quick Ratio Net working capital Ratio Inventory turnover Ratio Debtors turnover Ratio Average collection Period Fixed Asset turnover Ratio Current Asset turnover Ratio Total Asset turnover Ratio Creditors turnover Ratio Average Payment Period Debt Equity Ratio Debt Asset Ratio Interest coverage Ratio Gross Profit Ratio Net Profit Ratio Return on Capital Employed Earning Per Share

Particular

Page No

List of Charts

Sr No
01 02 03 04 05 06 07 08 09 10 Current Ratio Quick Ratio Net working capital Ratio Inventory turnover Ratio Debtors turnover Ratio Fixed Asset turnover Ratio Debt Equity Ratio Debt Asset Ratio Gross Profit Ratio Net Profit Ratio

Particular

Page No

Chapter 1.1
Introduction of the Industry
Vithal Udyognagar was established in 1963 at the instance of visionary Late Shri H. M. Patel. The Vithal Udyognagar Industries Association (VUIA) was established in 1970 and has been providing a proactive atmosphere for industries to grow and prosper. Vithal Udyognagar Industries Association (VUIA) has emerged as an active organization in the Trade and Industry in Vallabh Vidyanagar region. Having established itself as a dynamic and vibrant organization of trade and industry in Gujarat, VUIA plays the role of a catalyst in the success of industries in the estate. A facilitator, VUIA catalyses change by working closely with government on policy issues, enhancing efficiency, competitiveness and expanding business opportunities for industry through a range of specialized services. Major emphasis is laid on projecting a positive image of the association towards, the government, workers and other organizations.

Mission & Vision

Promote trade, industry and profession so as to achieve sustainable all round economic growth in the region. Deal with concerns, issues and problems of the business community and effectively resolve the same by opening a dialogue with concerned government or non-governmental authorities. Create a proactive partnership between government (local and state) with our business community. The Vitthal Udhyognagar Industrial Association (VUIA) works to create and sustain an environment conducive to the growth of industry in the estate. VUIA is a non-government, not-forprofit, industry led and industry managed organization, playing a proactive role in creating a bridge between the industry, regulatory authorities and customers.

Objectives

To provide most effective contribution to the cause of Small and Medium Scale Industries. To achieve social harmony and peace amongst entrepreneurs, workers and employees with collective prosperity through partnership of trust. To participate in policy formulation process and support efforts with the Government of Gujarat. To attain and sustain acceptable levels of Health, Hygiene, Pollution standards and Environmental condition for people of this estate.

Preamble
Vitthal Udyognagar Industries Association (V.U.I.A.) is an Association of Industries located in Vitthal Udyognagar, adjoining to Vallabh Vidyanagar Township in Charotar area of Anand district in Gujarat State.

Charotar and ITS People

The fertile tract with abundant water resources and green trees between rivers MAHI and VATRAK in Kheda District is know as CHAROTAR. People of Charotar are hardy and hard working. Their outstanding character is that they possess robust commonsense and are down to earth practical. They are generally bold, enterprising, informal and straightforward. They neither mince words nor hesitate to call spade a spade. Being resourceful and dynamic, they are quick to move with changing times. Being warm-hearted, they easily make friends. In adversity the can be no better friend than the one from Charotar. He can be difficult person too, if you cross swords with him and yet reconciliation with him is always possible since he is generally lion-hearted and inclined to forget and forgive.

Origin of Vitthal Udyognagar

Having observed that youth from rural areas of not only Charotar but all over India migrate to cities in pursuit of higher education, Sardar Vallabhbhai Patel, who hailed from Karasmad village of Charotar inspired late Shri Bhailalbhai Patel, popularly know as Bhaikaka and Bhikhabhai Patel to take in hand a project to establish a center of higher education in rural area of Charotar. Thus came into being the educational township of Vallabh Vidyanagar, which is now the seat of Sardar Patel University. Vallabh Vidyanagar, the education township named after Sardar Vallabhbhai Patel, the First Deputy Prime Minister of independent India and the architect of its integration, can today boast of almost every faculty providing education from K. G. to Ph.D. Level. Shri H. M. Patel, I.C.S. Retd. Former Finance Minister of India, Who took over reins of the Educational Institution - Charotar Vidya Mandal from late Shri Bhaikaka in 1958 59 realised that youth of Charotar would continue to migrate, albeit few years later on graduation to the cities in search of jobs. He therefore conceived the project of establishing an industrial estate near the educational township of Vallabh Vidyanagar and named it after another illustrious son of Charotar the first Indian Chairman of the Central Legislative Council during the British regime Shri Vitthalbhai Patel, the elder brother of Sardar Vallabhbhai Patel. Shri H. M. Patel invited leading Industrialists of Charotar, who had their industries in Mumbai and elsewhere to come to Vallabh Vidyanagar and establish their units. He promised them al possible help in procuring principal infrastructure facilities such as Land, Power and Water. It was in response to his invitation that large units like Elecon Engineering Company Limited, Gujarat Manufacturing Company Limited, were established in this area. Shri H.M.Patel had initially planned the establishment of a private sector company known as Vitthal Udyognagar Industrial Development Company Private Limited, but after the formation of separate State of Gujarat on 1st May 1960 Gujarat Industrial Development Corporation was formed which took over the work of development of the industrial Estate of Vitthal Udyognagar.

Formation of VUIA
Within a few years of its establishment, the industrial Estate at V.U.Nagar started expanding. Later when the Karamsad Gram Panchayat, in whose revenue limits V.U.Nagar falls, for the first time clamped heavy Octroi Duty, all large and small industrialist rose untidily in protest and formed the present V.U.I.A. under the leadership of Shri B.I.Patel of Elecon Engg. Co. Ltd., and Shri J.V.Patel of Gujarat Machinery Manufacturers Ltd., to safeguard the industrial interests. The Association has since not looked back and grown into one of the most formidable, forceful, dynamic and vocal Associations of industries in Gujarat undertaking a variety of activities for the benefit of all the industrial Units.

How Does V.U.I.A. Function?

General Body of the members elects the Executive Committee, which in turn elects its office bearers. For each subject, field of its activity there is a sub-committee headed by a Convener who articulates the issue confronting the industrial Units and in co-ordination with the office bearers takes up the issues with the concerned Government, Semi government or Corporate authorities. Besides he also organizes periodical meetings of the concerned authorities with Association members for fruitful exchange of views and expeditious resolution of problems. On major issues the President, Vice President or General Secretary lead delegations of the Association to concerned Government Secretaries or Ministers, represent the problem personally, submit Memoranda and seek speedy solutions.

What has Association accomplished since its inception?

1. Steadily built up a formidable membership consisting of Plus 500 members as on 31.3.2003. 2. Secured exemption from Octroi duty for the units in the industrial Estate. 3. Government Notified Area Committee constituted. 4. Built an upto date Community Hall providing a variety of service facilities listed above to members. 5. Caused Manual Telephone Exchange to be replaced by an Electronic one in a new plot and building for it in Vitthal Udyognagar. 6. Effectively assisted member units in procuring key Raw Materials in short supply. 7. Through an effectively organized agitation forced the State Government and GEB to make substantial reduction in enhancement made in Industrial Tariff Rates. 8. Affiliation of V.U.I.A. in the following Federations and Associations: o Federation of Industries Association (F.I.A.), Ahmedabad. o Gujarat Chamber of Commerce and Industry (G.C.C.I.), Ahmedabad. o Federation of Association of Small Industries of India, New Delhi (FASII). o Confederation of Indian Industry (C.I.I.), Western Region, Mumbai. o Federation of Gujarat Mills & Industries (F.G.I.), Vadodara. 9. Successfully persuaded GIDC to scale down enhancement made by it in its plot and shed prices as well as rentals and water charges. 10. Successfully prevented extension of application of ESI Scheme to Industrial Units in Vitthal Udyognagar by framing and implementing VUIAs Voluntary Health Care Scheme in Collaboration with Shree Krishna Hospital of Charutar Arogya Mandal, Karamsad. Built

10 a Medical Extension Centre in the Association campus having qualified doctors, nurses and dispensary 11. Actively helped to maintain by and large a steady industrial peace in the area 12. Attained a stature and a status for the Association where its voice has to be heard and cannot easily be ignored. VUIA can, without being immodest claim that it is today one of the most dynamic, forceful and effective Industrial Associations in the State of Gujarat. 13. Running a Balwadi for primary education for the children of industrial workers of this area A new building with complete infrastructure is under construction to be made operational in June 95. 14. Has been responsible in minimizing industrial sickness by rigorously interacting with financial institutions.

Chapter 1.2

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COMPANY PROFILE

MISSION PBL is in the business of design and manufacturing power transmission and material handling products. Our products are known for their reliability, performance and competitiveness.

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In pursuit of our vision, we shall: Upgrade our products to match global benchmarks from time to time. Use latest technology and efficient methods in manufacturing. Provide efficient service and support to our customers at all times. By continually remained focused on our Customers needs & expectations. Ensure operations remain cost effective and profitable. Bring high growth in our business and an ever-increasing market share. Continuously upgrade our knowledge with multidimensional skills. Always remain environment-friendly.

Each and every employee has a role towards the success of vision and mission of PBL and draws inspiration and energy from the opportunity received through active contribution.

VISION PBL, a pioneer, continues to be the leader in Power Transmission and Material Handling Equipments.

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We provide solutions to the customer, by ensuring high quality of products and services. We are known and trusted as a reliable organization always working for customers delight. The high-spirited PBL family has the dynamism and expertise to innovate and improve products suiting to the ever-changing global needs. Continuous training and up-gradation of skills enable us in creating an environment of harmony and joy. We are proud of our contribution to the society and towards protection of the environment.

Introduction to POWER BUILD LIMITED

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Power Build Limited is a part of Elecon group of industries and was established in 1972. It manufactures the wide range of general motor, truck loaders and Automatic bag filling machine The excellent performance in the various fields over the years has brought many states, national and international market, it has collaboration with bran and lubee, Germany for manufacture of micro processor based weighing system. Power build is three decade old company engaged in manufacture of a wide spectrum of products for every application using the italist states of the art technology under supervision of experience engineers employing the most modern machinery including CNC Machine of the latest generation and maintaining uncompromising quality controls. It is the first Indian company to introduce Electric weighing and Metal detecting system. Power Build Limited is a company representing a fine blend of specialized skills and high technologies servicing almost all industries. In the year 2001 the company entered into a technical collaboration agreement with royal LENOIR FRANCE for manufacturing equipments national wide sales and services net work are prompt after sales service at short notice. Power Build ltd. is situated at Anand- Sojitra road Vallabh Vidhyanagar.

ORIGIN ABD GROWTH

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Power build ltd. was incorporated on 15th April, 1972 under the companys act 1956, 3 decades ago. Power build ltd. Manufactures mechanical power transmission equipments and mechanized material handling equipments like gear motors, truck loaders, metal detector belt weighed, etc. using the latest technology under the supervision of experienced engineers with the use of most machinery. PBL started manufacturing helical gear motors under technical collaboration from German manufacturer Rudolf Muchno KG in 1972. Having established a name in the market for Helical Geared motors & to meet the growing demand, the company introduced geared motors with the combination of helical & worm gears as well as Helical & Bevel gears. To meet with growing demand of the Indian industrial market, the company added various products. These include automatic sleighing and bag filling machines, automatic truck and wagon loaders, and microprocessor based belt weighed and weigh feeders etc. The company continues its growth to concentrate and consolidate its position as the most trusted and accepted supplier of quality products by obtaining technical know-how from industrially developed countries and also in house development of new products. With a view to have more concentrated & effective capturing of the already competitive geared motor market, the company introduced new generated, very efficient and compact drive solutions in the form of M, C, F, and K series geared motors which are assembled from a family of modular kits, thus maximizing availability in October, 2007. PBL also manufactures helical and spur gears strictly to customers requirement with an accuracy class attainable generally conforming To DIn-6 and even up to DIN for precision gears up to diameter 400 mm. In the year 2001, the modern

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company entered into a technical collaboration agreement with ROYAL LEMOIR FRANCE for manufacturing Magnetic equipments. During the 3 decades of its existence, PBL has designed and implemented several landmark projects in India as well as abroad. Power Build Ltd. Has thus, made its presence felt through consistent and satisfactory performance of its equipment in core sectors like fertilizer, cement, coal, power generation, chemical, steel plants etc. Across the country manufacturing facilities well equipped with latest generation CNC machines backed up by effective quality management system to produce power transmission and material handling equipments of high reliability. Moreover, PBL regularly upgrades its workshop facilities to keep abreast with the latest development. Performing in tandem with the superior technology is a dedicated team working in various departments. Power build ltd has workshop area exceeding 10,000 sq. meters equipped with the latest mazak and excel CNC and NC machines, tools quality control and testing equipment for production of reliable material handling power transmission equipment. It is performing in tandem with workforce of 97 employees working in various departments. First 500 numbers manufacturing Milestone achieved in the month of august 2007. power build has covered majority of the core sectors through its supplies of highly sophisticated equipment becoming ample testimony of the symbolic mark of power builds unbeatable technology. Nationwide sales and service network ensure prompt after sales services at short notice. PBL is registered with registrar of the Gujarat, Ahmadabad. This is a representing affine blend of specialized skills and high technology serving almost all industries.

Name of the Organisation Power Build Limited Register Office

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Anand-Sojitra Road Vallabh Vidyanagar -388120

Form of the Organisation Private Limited Achievements 29 records have been achieved sine 2001-11-09. Board of Directors Shri P.B.PATEL Shri D.M.PATEL Shri P.C. Amin : : : Chairman Whole time Director Director Director

Smt. K.A.PATEL : Bankers State Bank of India

Chairman P.B.PATEL Finance Manager Shri Subodhbhai. S. Shah Company Secretary K. D. Patel

Statutory Auditor J. D. Zatakia & C0. Charter Accountant

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Mumbai

Personnel Manager Mr. Dipakbhai. P. Patel Main Product Gears Motors Truck Loader Loose Tools Hoist Material Handaling Equipments E-Mail Infopbl@elecon.com Fax +91-2692-236559

Size of the unit and firm of the organization:-

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Power Build Ltd. Is one of the sub companies of Elecon engineering Ltd It has so many selling branches in all over India wiz, Chennai, Mumbai, Pune, Baroda, Ahmadabad, New Delhi etc. Its registered office is established at Anand Sojitra road, Vallabh Vidhyanagar 388120, Gujarat India. There are mainly 3 types of The main three types are: Small Scale Industry Medium Scale Industry Large Scale Industry Small Scale Industry:All industry units whose capital investment plant and machinery is up to 3 corers of rupees are known as small scale industries. Medium Scale industry:All the industry units with the capital investment of more than 3 corer and up to above 100 corers are known as medium scale industries. Large scale industry:Where the capital requirement to start on industrial unit is enormous and where labour laws are applicable. It is known as large scale industries. PBL is medium scale industry and its form of organization is deemed public ltd. industry on the basis size wise classification.

ISO CERTIFICATE:-

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Standard Certificate Register no.

ISO 9001: 2008 01 100 058592 TUV Rhineland cert GmbH certifies

Certificate holder:

Power Build Limited Post Box No. 28, Anand Sojitra road, Vallabh Vidhyanagar 388120 Gujarat, India

Scope:

Design and manufacture of Power Transmission Products such as geared motors, gear reducers, gear components & electric wire rope Hoist An audit was performed, Report No. 058592. Proof has been finished that the requirements according to ISO 9001 2008 are fulfilled. The due date for all future audits is 18 20 (dd. mm).

Validity:

The certificate is valid from 20090317 until 20120416. First certification 2006 Bangalore: 2009 03 - 24

Produts of the Company

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(1)

Series M inline geared motors and reducers

Series M inline geared motors and reducers provide a very efficient and compact drive solution to meet most requirements upto 90KW with maximum output torque capacity 11,000 Nm.Units are available with ratios coverage of 1.4:1 to 70:1 in double reduction, upto 250:1 in triple reduction and upto 16200:1 in combined units.

(2)

Worm Geared Motors & Reducers

PBL manufactures worm Geared Motors & Reducers with hollow input shaftsand aluminum alloy casings. The units are supplied with factory filled lubricant avoiding frequent oil changes. The worm Geared Motors & Reducers are available in 63S, 80S & 100S models with ratios ranging from 5:1 to 70:1.

(3)

Helical Geared Motors, Motor Mount Reducers and Inline Gear Reducers

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PBL also manufactures state-of-the-art Helical Geared Motors, Motor Mount Reducers and Inline Gear Reducers with solid and hollow input shafts, under the license agreement with a renowned Japanese manufacturer Seiki Kogyosho Limited (SKK) (now taken over by Sumitomo Heavy Industries). Foot/flange mounted Geared Motors, solid input shaft inline Gear Reducers and Motor Mount Reducers with Hollow Input Shaft are available in the range of 0.4 kw to 11.0 kw and having ratio from 5:1 to 200:1. The units are suitable to accommodate IEC frame 3-phase, 4 pole AC induction motors.

(4)

Electric hoists

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PBL electric hoists are designed in accordance with international standards and also as per Rules for design of serial lifting equipment issued by Federation of European Hoist Manufactures (FEM). Present manufacturing range includes hoists up to 16 tons lifting capacity.

LOOSE GEARS

PBL manufactures helical and spur gears strictly to customers requirements. Accuracy class attainable generally is conforming to DIN-6 and even up to DIN 3 / 4, for precision gears up to diameter 400 mm. Helical Gear Wheels and Pinion Shafts with internal as well as external spline (both straight & involutes) can be offered. Hardened and ground Spur and Helical Gears manufactured by PBL are used in Printing Machines, Plastic Extrusion Machines, Textile Machines, Air Compressors, Packing Machines, Gear Pumps, Oil Engines and Mining Equipments.

(1) HELICAL & SPUR GEAR PINIONS

Hardened & ground spur and helical gears manufactured by PBL, used in plastic extrusion machines, textile machines & helical gear reducers.

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(2) HALICAL GEARS & PINIONS

Hardened & ground spur and Helical gears manufactured by PBL, used in Packing machines & Gear Pumps.

(3) Hardened and Ground spur gears manufactured by PBL, used in Oil Engines

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(4) Hardened & Ground Helical Gears manufactured by PBL, used in Air Compressors.
..............................................................................................................................................................................................

.............................................................

(5) Hardened & Ground Spur Gears with Internal Spline manufactured by PBL, used in Mining Equipments.

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..............................................................................................................................................................................................

............................................................. .............................................................................................................................................................................................. .............................................................

CLIENTS OF THE COMPANY

GSFC BHARAT HEAVY ELECTRICAL LIMITED IPCL HINDUSTAN LIVER LIMITED L&T THERMAL POWER STATION GNFC FOOD INDUSTRIES DAIRY INDUSTRIES

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COMPETITORS

Bonfiglioli SFW Shanti Gears Nords Ic-Bauer

Chapter - 2
RESEARCH METHODOLOGY

The information is collected through secondary sources during the project. That information was utilized for calculating performance evaluation and based on that, interpretations were made.

Sources of secondary data:

(1) (2)

Most of the calculations are made on the financial statements of the company provided statements. Referring standard texts and referred books collected some of

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the information regarding theoretical aspects.

(3)

Method- to assess the performance of he company method of observation of the work in finance department in followed.

Chapter 2.1
OBJECTIVE OF THE STUDY
The major objectives of the resent study are to know about financial strengths and weakness of POWER BUILD LIMITED through
FINANCIAL RATIO ANALYSIS.

The main objectives of resent study aimed as: To evaluate the performance of the company by using ratios as a yardstick to measure the efficiency of the company. To understand the liquidity, profitability and efficiency positions of the company during the study period. To evaluate and

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analyze various facts of the financial performance of the company. To make comparisons between the ratios during different periods. OBJECTIVES

(1). To study the present financial system at POWER BUILD LIMITED. (2). To determine the Profitability, Liquidity Ratios. (3). To analyze the capital structure of the company with the help of Leverage
Ratio.

(4). To offer appropriate suggestions for the better performance of the

Organization

Chapter 2.2

SOURSES OF DATA AND METHODOLOGY

The data being collected for this study is from the annual reports of the company. I have deeply study the annual report of last five years of the company to find out the various ratios. The annual reports of the company is so well prepared that it is very easier for me to understand the financial position of the company without any difficult. I have also taken the help of account to understand the accounting method of the company.

30 The another source of the data collection for my study of financial condition of the company is website of the Power build limited. The website provides me all the necessary information for my study. The methodology I have used for calculating the various ratios is according the reference book like I.M.Pandey and also taken help of internet where I have faced difficulties.

Chapter 2.3

LIMITATIONS

(1) The study provides an insight into the financial, personnel, marketing And
other aspects of POWER BUILD LIMITED. Every study will be bound With certain limitations.

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(2) The below mentioned are the constraints under which the study
is carried out.

(3)

One of the factors of the study was lack of availability of ample Information. Most of the information has been kept confidential and as such as not assed as art of policy of company.

Time is an important limitation. The whole study was conducted in a period of SIX WEEKS, which is not sufficient to carry out proper interpretation and analysis.

Chapter -3

FINANCIAL DEPARTMENT
Financial Management:- is the specific area of finance dealing with the financial decision
corporations make, and the tools and analysis used to make the decisions. The discipline as a whole may be divided between long-term and short-term decisions and techniques. Both share the same goal of enhancing firm value by ensuring that return on capital exceeds cost of capital, without taking excessive financial risks.

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Capital investment decisions:-

comprise the long-term choices about which projects receive investment, whether to finance that investment with equity or debt, and when or whether to pay dividends to shareholders. Short-term corporate finance decisions are called working capital management and deal with balance of current assets and current liabilities by managing cash, inventories, and short-term borrowings and lending (e.g., the credit terms extended to customers). Corporate finance is closely related to managerial finance, which is slightly broader in scope, describing the financial techniques available to all forms of business enterprise, corporate or not.

Role of Financial Managers:

The role of a financial manager can be discussed under the following heads: 1. Nature of work 2. Working conditions 3. Employment 4. Training, Other qualifications and Advancement 5. Job outlook 6. Earnings 7. Related occupations Finance department is like blood vain of the business without adequate finance the business cannot start nor it can be run properly. All the activities regarding finance handled by finance department. Finance department deals with, (1) (2) Controlling financial activity Treasury & taxation

Finance activity includes:

Working capital managmrnt Costing Account payable Account receivable

33 Invoicing Bill boking

Finance department is the most important department as it concerned with some important decision making process of the company. The vital importance of the finance decision to a firm makes it importance of the finance decision to a firm makes it imperative to set up a sound and efficient organization for the finance function. In PBL, the important decision for the firm is taken by the top management. They give the objectives or goals of the finance function for increasing effectiveness and efficiency.

Chapter 3.1
Ratio Analysis
Financial ratios are calculated from one or more pieces of information from a company's financial statements. For example, the "gross margin" is the gross profit from operations divided by the total sales or revenues of a company, expressed in percentage terms. In isolation, a financial ratio is a useless piece of information. In context, however, a financial ratio can give a financial analyst an excellent picture of a company's situation and the trends that are developing.

34 A ratio gains utility by comparison to other data and standards. Taking our example, a gross profit margin for a company of 25% is meaningless by itself. If we know that this company's competitors have profit margins of 10%, we know that it is more profitable than its industry peers which are quite favorable. If we also know that the historical trend is upwards, for example has been increasing steadily for the last few years, this would also be a favorable sign that management is implementing effective business policies and strategies. Financial ratio analysis groups the ratios into categories which tell us about different facets of a company's finances and operations.

Meaning
Ratio-analysis is a concept or technique which is as old as accounting concept. Financial analysis is a scientific tool. It has assumed important role as a tool for appraising the real worth of an enterprise, its performance during a period of time and its pit falls. Financial analysis is a vital apparatus for the interpretation of financial statements. It also helps to find out any cross-sectional and time series linkages between various ratios. Unlike in the past when security was considered to be sufficient consideration for banks and financial institutions to grant loans and advances, nowadays the entire lending is need-based and the emphasis is on the financial viability of a proposal and not only on security alone. Further all business decision contains an element of risk. The risk is more in the case of decisions relating to credits. Ratio analysis and other quantitative techniques facilitate assessment of this risk. Ratio-analysis means the process of computing, determining and presenting the relationship of related items and groups of items of the financial statements. They provide in a summarized and concise form of fairly good idea about the financial position of a unit. They are important tools for financial analysis.

IMPORTANCE OF RATIO ANALYSIS

Aid to measure general efficiency Aid to measure financial solvency Aid in forecasting and planning Facilitate decision making Aid in corrective action Aid in intra-firm comparison Act as a good communication Evaluation of efficiency Effective tool

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Advantages:The following points are revealing the merits of ratio analysis. (1) It simplifiers the understanding of financial statements. (2) Ratio being out the inter relationship among various financial figures and bring to light theirs financial significance. Ratio analysis is advice to analysis and interprets the financial health of the enterprise. (3) It gives information about to profitability and performance of the company. (4) It evaluates the financial position of the company. (5) Ratio serves as effective control tools. They also facilitate establishment of a standard costing system budgeting control. (6) It helps is decision making by the statement widely management investors financing institutions etc.

Limitations:The following limitations are as under

(1)
(2) (3) (4) (5)

False result: Limited comparability: Price level changes affect ratio Ignoring qualitative factors No single standard ratio

36 (6) Impressed by personal bias and ability of the analysis.

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

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It includes the following. Balance sheet (or) position statement ratio: They deal with the relationship between two balance sheet items, e.g. the ratio of current assets to current liabilities etc., both the items must, however, pertain to the same balance sheet. Profit & loss account (or) revenue statement ratios: These ratios deal with the relationship between two profit & loss account items, e.g. the ratio of gross profit to sales etc., Composite (or) inter statement ratios: These ratios exhibit the relation between a profit & loss account or income statement item and a balance sheet items, e.g. stock turnover ratio, or the ratio of total assets to sales. 2. Functional Classification These include liquidity ratios, long term solvency and leverage ratios, activity ratios and profitability ratios. 3. Significance ratios Some ratios are important than others and the firm may classify them as primary and secondary ratios. The primary ratio is one, which is of the prime importance to a concern. The other ratios that support the primary ratio are called secondary ratios.

IN THE VIEW OF FUNCTIONAL CLASSIFICATION THE RATIOS ARE (1) . Liquidity ratio (2). Leverage ratio (3). Activity ratio (4). Profitability ratio

1. LIQUIDITY RATIOS
Liquidity refers to the ability of a concern to meet its current obligations as & when there becomes due. The short term obligations of a firm can be met only when there are sufficient liquid assets. The short term obligations are met by

38

realizing amounts from current, floating (or) circulating assets The current assets should either be calculated liquid (or) near liquidity. They should be convertible into cash for paying obligations of short term nature. The sufficiency (or) insufficiency of current assets should be assessed by comparing them with short-term current liabilities. If current assets can pay off current liabilities, then liquidity position will be satisfactory. To measure the liquidity of a firm the following ratios can be Calculated 2. LEVERAGE RATIOS The leverage or solvency ratio refers to the ability of a concern to meet its long term obligations. Accordingly, long term solvency ratios indicate firms ability to meet the fixed interest and costs and repayment schedules associated with its long term borrowings. 3. ACTIVITY RATIOS Funds are invested in various assets in business to make sales and earn profits. The efficiency with which assets are managed directly effect the volume of sales. Activity ratios measure the efficiency (or) effectiveness with which a firm manages its resources (or) assets. These ratios are also called Turn over ratios because they indicate the speed with which assets are converted or turned over into sales. 4PROFITABILITY RATIOS The primary objectives of business undertaking are to earn profits. Because profit is the engine, that drives the business enterprise

Classification:Ratio Analysis

Liquidity Ratio

Activity Ratio

Leverage Ratio

Profitability Ratio

39

S (A) Current Ratio (B) Quick Ratio (C) Net working Capital Ratio

(A) Inventory turnover ratio (B) Debtors turnover ratio (C) Fixed assets turnover ratio (D) Current assets turnover ratio (E) Total assets turnover ratio

(A) Debt equity ratio (B) Debt assets ratio

(A) Gross profit ratio (B) Net profit ratio (C) Return on investment

Financial ratio can be classified according to the information they provide. The following types of ratio frequently are used: 1. 2. 3. 4. Liquidity Ratio Activity Ratio Leverage Ratio Profitability Ratio

STEPS IN RATIO ANALYSIS

The first task of the financial analysis is to select the information relevant to the decision under consideration from the statements and calculates appropriate ratios. To compare the calculated ratios with the ratios of the same firm relating to the pas6t or with the industry ratios. It facilitates in assessing success or failure of the firm. Third step is to interpretation, drawing of inferences and report writing conclusions are drawn after comparison in the shape of report or recommended courses of action.

40

BASIS OR STANDARDS OF COMPARISON

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

NATURE OF RATIO ANALYSIS

Ratio analysis is a technique of analysis and interpretation of financial statements. It is the process of establishing and interpreting various ratios for helping in making certain decisions. It is only a means of understanding of financial strengths and weaknesses of a firm. There are a number of ratios which can be calculated from the information given in the financial statements, but the analyst has to select the appropriate data and calculate only a few appropriate ratios. The following are the four steps involved in the ratio analysis. Selection of relevant data from the financial statements depending upon the objective of the analysis. Calculation of appropriate ratios from the above data.

41

Comparison of the calculated ratios with the ratios of the same firm in the past, or the ratios developed from projected financial statements or the ratios of some other firms or the comparison with ratios of the industry to which the firm belongs. INTERPRETATION OF THE RATIOS

The interpretation of ratios is an important factor. The inherent limitations of ratio analysis should be kept in mind while interpreting them.The impact of factors such as price level changes, change in accounting policies, window dressing etc., should also be kept in mind when attempting to interpret ratios. The interpretation of ratios can be made in the following ways. Single absolute ratio Group of ratios Historical comparison Projected ratios Inter-firm comparison

GUIDELINES OR PRECAUTIONS FOR USE OF RATIOS The calculation of ratios may not be a difficult task but their use is not easy. Following guidelines or factors may be kept in mind while interpreting various ratios are o Accuracy of financial statements o Objective or purpose of analysis o Selection of ratios o Use of standards

42

o Calibre of the analysis

Chapter 3.2
Calculation of Ratios
1. LIQUIDITY RATIO:
Some are the most common ratio which shows the accent of liquidity. (A) Current Ratio (B) Quick Ratio

43 (C) Net Working Ratio A ratio of greater than one means that has more than turn out assets than current claims against then. It is obtained by dividing current assets by current liabilities.

( A) CURRENT RATIO: Current ratio may be defined as the relationship between current assets and current liabilities. This ratio also known as Working capital ratio is a measure of general liquidity and is most widely used to make the analysis of a short-term financial position (or) liquidity of a firm.
Current ratio = Years 2005-06 2006-07 2007-08 2008-09 2009-10 = = = = = 40, 84, 67, 432 23, 00, 56, 910 63, 16, 79, 935 32, 58, 23, 091 80, 13, 51, 355 42, 13, 72, 397 60, 96, 40, 315 34, 65, 08, 298 470,287,319 307,472,978 = 1.78:1 = 1.94:1 = 1.90:1 = 1.75:1 = 1.53:1 Current assets Current Liabilities

Table 1 Current Assets Year

2005-06 40, 84, 67, 432 23, 00, 56, 910 1.78:1

Current liabilities

Current Ratio

2006-07

63, 16, 79, 935

32, 58, 23, 091

1.94:1

44 2007-08 80, 13, 51, 355 42, 13, 72, 397 1.90:1

2008-09

60, 96, 40, 315

34, 65, 08, 398

1.76:1

2009-10

470,287,319

307,472,978

1.53:1

Chart - 1
Current ratio

2.00 1.95 1.85 1.75 1.65 1.55 1.45 2005-06 2006-07 2007-08 Year 2008-09 2009-10 Current ratio

Interpretation: Current ratio measures short term solvency of the firm. It indicates availability at current assets in rupees for every one rupee of current liabilities.

As a rule, the current ratio with 2:1 (or) more is considered as satisfactory position of the firm.
. The PBL has current ratio of 2006-07 is 1.94:1 which is increase of 2005-06 I.e. 1.78:1 and 2007-08 C.R. is decrease from 1.94:1 to 1.90:1. The above ratio shows that PBL is nearest to standard which show that the good position of working capital of PBL.

45

(B) Quick Ratio: Quick Ratio is also known as Acid test ratio. The Quick ratio is an alternative measure of liquidity that does not include inventories in the current assets. The current assets used in the quick ratio are cash, accounts receivable, and notes receivable. These assets essentially are current assets less inventory. The quick assets comprise any cash balance and reading marketable securities only. Quick Assets Quick Ratio = Current liabilities Years

2005-06

26,82,47,295 23, 00, 56, 910 43,45,70,597 32, 58, 23, 091 60,60,90,951 42, 13, 72, 397 46,73,60,071 34, 65, 08, 298 36,28,90,055 . 30,74,72,978

1.16 :1

2006-07

1.33 :1

2007-08

1.43 :1

2008-09 2009-10 =

= =

1.34 :1 1.18 :1

Table - 2
Year 2005-06 2006-07 Quick Assets 26, 82, 47, 295 43, 45, 70, 597 Current Liabilities 23, 00, 56, 910 32, 58, 23, 091 Quick Ratio 1.16 1.33

46 2007-08 2008-09 60, 60, 90, 951 46, 73, 60, 071 42, 13, 72, 397 34, 65, 08, 298 1.43 1.34

2009-10

36, 28, 90, 055

30, 74, 72, 978

1.18

Chart 2
Quick ratio
1.55 1.50 1.45 1.40 1.35 1.30 1.25 1.20 1.15 1.10 0 2005-06 2006-07 2007-08 2008-09 2009-10

Year

ratio

Interpretation: This is very exacting standard of liability and it is satisfactory of the ratio is 0.50:1.it is indicate the position of business for payment of liquid liabilities as and when they natured. In PBL quick ratio in the year 2006-07 in 1.33:1 and in the year 2007-08 is 1.43:1.It is increase by 0.10. after that period it has shown the decline for the next two years for 2008-09 & 2009-10 to 1.34 & 1.18 respectively which is not being so good for the company if they have to make an immediate payment. Although this ratio is good for the company as they are not have to large amount of immediate payment so lesser the investment in quick asset better is the benefit.

47

(C) Net Working Capital Ratio: The difference between current assets and current liabilities excluding short term bank borrowing is called net working capital. NWC is sometimes used as measures of firms liquidity. It is concerned that between any two firms. The one having a larger NWC has the greater ability to meet its current obligation. Net working capital Years 2005-06 2006-07 2007-08 2008-09 2009-10 = = = = = 17, 84, 10, 522 31, 17, 98, 969 30, 58, 56, 844 48, 67, 18, 332 37, 99, 78, 958 61, 65, 25, 185 26, 31, 32, 017 59, 15, 08, 513 16,28,14,341 44,50,23,697 . = 0.36 :1 = 0.57:1 = 0.63:1 = 0.62:1 = 0.40:1 = Net working capital Net assets

Table - 3

48 Year 2005-06 2006-07 2007-08 2008-09 2009-10 Net working Capital 17, 84, 10, 522 30, 58, 56, 844 37, 99, 78, 958 26, 31, 32, 017 16, 28 ,14, 341 Net assets 31, 17, 98, 969 48, 67, 18, 332 61, 65, 25, 185 59, 15, 08, 513 44, 50, 23, 697 Net working capital ratio 0.57 0.63 0.62 0.40 0.36

Chart - 3
Net working capital ratio
0.7 0.6 0.5 0.4 0.3 0.2 0.1 0 2005-06 2006-07 2007-08 year 2008-09 2009-10

49

Interpretation: In 2006-07 the networking capital ratio is 0.63 and 2007-08 the NWC ratio is decreased by 0.01. After this two year for next two years it has being decline to 0.40 & 0.36 for 2008-09 & 2009-10 respectively. This shows that company has lesser its investment in working capital in the last two years. Power build limited is not an retail industry so lesser investment in net working capital will be consider a good idea.

2.

ACTIVITY RATIOS: -

Funds of creditors and owners are invested various assets to generate sales and profits. The management of assets, the larger amount of to evaluate the efficiency with which the firm manager and utilizes its assets. These ratios are called turnover ratios because they indicates the speed with which assets are being converted or turned over into sales activity ratios. Thus, involve a relationship between sales and assets. A proper balance between sales and assets generally reflects that assets are managed well several activity ratios can be calculated to judge the effectiveness of assets utilizations. Following are the activity ratio: 1) 2) 3) 4) 5) 6) Inventory turnover ratio Debtors turnover ratio Fixed assets turnover ratio Current assets turnover ratio Total assets turnover ratio Creditors turnover ratio

(A) Inventory turnover ratio:This ratio is also known as stock turnover ratio. It indicates the efficiency of the firm in selling its products. The higher ratio is more efficient the management of inventories. A high turnover ratio may be caused by a low level of inventory which may result in frequent out and loss of sales and customer goodwill. Inventory turnover ratio = Net sales Inventory Years

50

2005-06 2006-07 2007-08 2008-09

= = = =

504212645 140220137 812039240 107109338 1034232621 195260404 1148956523 142280244 842,469,422 107,397,264

= 3.60 times = 4.12 times = 5.30 times = 8.07 times

2009-10

= 7.84 times

Table 4
YEAR 2005-06 2006-07 2007-08 2008-09 20009-10 INVENTORY TURNOVER RATIO 3.60 4.12 5.30 8.07 7.84

51

Chart 4
Inventory turnover ratio 9 8 7 6 5 4 3 2 1 0 2005-06 2006-07 2007-08 year 2008-09 2009-10

Interpretation:The inventory turnover ratio is good. In 2005-06 is 3.6 then next year it is increase to 4.12 in the year 2006-07 and 2007-08 is 5.3 times and 2008-09 it is 8.07and in the last year it has being decrease 0.23 to 7.84. That means this inventory turnover ratio is increase year by year which shows the positive utilization of the inventory in the company for making beteer utilization of inventory for achieving desired result.

(B)

Debtors turnover ratio: -

A firm sells good for cash and credit is used as a marketing tool by a numbers of companies when the firm is extends credits to its customers, debtors are created in the firm accounts. Debtors are expected to be converted into cash over a stock short period of therefore, are included in current assets. Debtors turnover indicates the numbers of times debtors turnover each year. Generally the higher value of debtors turnover the more efficiency in the management of credit.

52

Debtors turnover ratio = Years 2005-06 2006-07 2007-08 2008-09 2009-10 = = = = =

Sales Debtors

504212645 223263531 812039240 342500324 1034232621 485745281 1148956523 319636536 842,469,422 200,099,457

2.26 times = 2.36 times = 2.13 times = 3.60 times = 4.21times

Table - 5
YEAR 2005-06 2006-07 2007-08 2008-09 2009-10 DEBTORS TURNOVER RATIO 2.26 2.36 2.13 3.60 4.21

53

Chart - 5
Debtors turnover ratio 4 3.5 3 2.5 2 1.5 1 0.5 0 2005-06 2006-07 2007-08 year 2008-09 2009-10

(B)-1 Average collection period/Debtors velocity.

= 365 Debtors t/o .

Avg collection period

Table 5.1
YEARS RATIO-DAYS

54

2005-06 2006-07 2007-08 2008-09 2009-10

Interpretation:-

161 154 171 101 86

The average collection period shows the time that you give to your debtors to make payment to you for the goods being purchased. The collection period will have to be more days where competition is higher to attract the customer. Power build limited has maintain its polisy of collection period over the years. In PBL Company the debtors turnover ratio is not so good. In the year 2005-06 it is being 161 days which is decrease to 154 days in the year 2006-07. But next year it has being increased to 171 days which is unfavorable for company. It is being on positive side for last to years it is being decreasing to 101 days & 86 days for 2008-09 &2009-10 respectively. Fixed assets turnover ratio measures sales for rupee of investment in That means company is improving the collection terms from customer to lesser the bed-debt possibility and lesser the collection period faster the rotation of cash will flow into the business.

(C)Fixed assets turnover ratio:It is also known as sales to fixed assets ratio. This ratio measures the efficiency and profit earning capacity of the firm. Higher the ratio, greater is the intensive utilization of fixed assets. Lower ratio means under-utilization of fixed assets.

55 Fixed assets, the numeration of this ratio is the net sales for the period and the denominator is the balance in the next fixed assets account at the end of the year. It measures the efficiency with which the firm is utilizing its investment in fixed assets. Such as land buildings etc. it is also indicates the adequate of sales in relation to the investment in fixed assets. Fixed assets turnover ratio = Years 2005-06 = 504212645 133388447 103423261 236546227 812039240 180861438 1148956523 328376496 842,469,422 282,209,356 = 3.78 times Net sales Net fixed assets

2006-07

= 4.37 times

2007-08

= 4.49 times

2008-09

= 3.5 times

2009-10

= 2.99 times

Table - 6
YEAR 2005-06 2006-07 2007-08 2008-09 2009-10 FIXED ASSETS TURNOVER RATIO 3.78 4.37 4.49 3.50 2.99

56

Chart - 6
fixed assets turnover ratio 5 4.5 4 3.5 3 2.5 2 1.5 1 0.5 0 2005-06 2006-07 2007-08 year 2008-09 2009-10

Interpretation:Fixed assets are used in the business for producing the goods to be sold. This ratio shows the firms ability in generating sales from all financial resources committed to total assets. The ratio indicates the account of one rupee investment in fixed assets. The income from services is greatly increased in the current year due to the increase in the Operations & Maintenance fee due to the increase in extra invoice and the net fixed assets are reduced because of the increased charge of depreciation. Finally, that effected a huge increase in the ratio compared with the previous years ratio. This ratio shows that the investment in fixed assets is very low. In PBL the fixed assets turnover ratio increase year by year. In 2005-06 it is 3.78 times after two year in 2007-08. It is 4.49 times after it is decline and in 2008-09 it is 3.50 times turnover and in last year it has decline to 2.99 times. That means for power build limited sales are higher than fixed assets which is a positive indication for the company

57

(D) Current assets turnover ratio:In current assets turnover ratio total C.A. Assets are compared to sales. The more sales in selection to amount invested in current assets. The more efficient is the use of the current assets, if indicates the higher efficiency current assets. Current assets turnover ratio = Years 2005-06 2006-07 2007-08 2008-09 2009-10 = = = = = 504212645 408467432 812039240 631679935 1034232621 8013513355 1148956823 609640315 842,469,422 470,287,319 = 1.23 times Sales Current assets

= 1.29 times = 1.29 times = 1.88 times = 1.79 times

Table 7
YEAR 2005-06 2006-07 2007-08 2008-09 2009-10 CURRENT ASSETS TURNOVER RATIO 1.23 1.29 1.29 1.88 1.79

58

Interpretation:The above ratio indicates that sales are higher than the current assets. In Table highest firm turnover is in 2008-09 and which is 1.88 times and lowest turnover is in 2005-06 which 1.23 times and in 2006-07 & 2007-08 it has remain constant which is 1.29 times

(E) Total assets turnover ratio:Assets are used to generate sales therefore a firm should manage its assets efficiency to maximize sales. The total assets turnover ratio shows the firms ability in generating sales from all financial resources committed to total assets. Total assets turnover ratio Years = Net sales Total assets

2005-06 2006-07 2007-08 2008-09

= = = =

504212645 347433895 812039240 522353256 1034232621 652160109 1148956823 591507513

1.45 times

= 1.55 times = 1.59 times = 1.94 times

59 2009-10 = 842,469,422 474958521 = 1.77 times

Table - 8
YEAR 2005-06 2006-07 2007-08 2008-09 2009-10 TOTAL ASSETS TURN OVER RATIO 1.45 1.55 1.59 1.94 1.77

Interpretation:In PBL assets turnover ratio increases year by year. We seen in above Tables or dates in 2005-06 is 1.45, in 2006-07 is 1.55,in 2007-08 it is 1.59, and in 2008-09 it is 1.94. So the total turnover ratio is constantly increased for the company over the year to year. This ratio shows how efficiently & effectively the asset established in the company is being utilized by the company.

60

(F) CREDITOR TURNOVER

It indicates the number of times sundry creditors have been paid during a year. It is calculated to judge the requirements of cash for paying sundry creditors. It is calculated by dividing the net credit purchases by average creditors. Creditors turnover ratio = Credit purchase Creditors .

Net credit purchases consist of gross credit purchases minus purchase return When the information about credit purchases, opening and closing balances of trade creditors is not available then the ratio is calculated by dividing total purchases by the closing balance of trade creditors. Years 2005-06 2006-07 2007-08 2008-09 2009-10 = = = = = 327232198 188236481 516041224 261987695 625866084 278585738 608710516 214627812 379888893 167241721 = 1.74 times

= 1.97 times = 2.25 times = 2.84 times = 2.27 times

Table - 9

Years
2005-06

Creditors turnover
1.74

61 2006-07 2007-08 2008-09 2009-10 1.97 2.25 2.84 2.27

(F) -1 Creditors ratio/Credit velocity/Average payment period

Creditors ratio

365 . Creditor turnover

Table 9.1

YEARS 2005-06 2006-07 2007-08 2008-09 2009-10

RATIO-DAYS 209 185 162 128 160

62

Interpretation
The above ratio indicates the time period of paying to the creditors of the company during the year. the ratio is good for company when average payment period is more than average collection period. The above calculation shows that average collection period for the year 2005-06 is 209 days which is being decreased in 2006-07 to 185 days and further decreased by 162 days in 2007-08 thereafter in the year it further decline to 128 in 2008-09. This is not a positive condition as the company has to make the arrangement in lesser time for creditors for making the payment in a shorter time spam. The positive result is that in the last year 2009-10 the average collection period has increased to 160 days which shows that management has make the improvise in policy for meting the negative situation and positive result has been achieved in the last year

(D) Leverage ratio: Leverage ratios look at the extent that a company has depended upon borrowing to finance its operations. As a result, these ratios are reviewed closely by bankers and investors. Most leverage ratios compare assets or net worth with liabilities. A high leverage ratio may increase a company's exposure to risk and business downturns, but along with this higher risk also comes the potential for higher returns. Some of the major measurements of leverage include: A. Debt Equity Ratio: B. Debt Assets Ratio: C. Interest Coverage Ratio:

(A) Debt - Equity Ratio: Debt equity ratio is to indicate the relative mix of the company's investor-supplied capital. A company is generally considered safer if it has a low debt to equity ratiothat is, a higher proportion of owner-supplied Debt Equity Ratio = Long Term Debt Equity shareholder fund .

63

Years 2005-06 2006-07 2007-08 2008-09 = = = = 151254098 102490465 254288527 162347032 348472033 243955786 298921369 280567293 = 1.55 times = 1.57 times = 1.43 times = 1.07 times

2009-10

153783781 97085526

0.52 times

Table - 10
YEAR 2005-06 2006-07 2007-08 2008-09 2009-10 DEBT EQUITY RATIO 1.55 1.57 1.43 1.07 0.52

Chart - 7

64

DEBT EQUITY RATIO 1.8 1.6 1.4 1.2 1 0.8 0.6 0.4 0.2 0 2005-06 2006-07 2007-08 year 2008-09 2009-10

Interpretation: Debt -assets ratio establishes the relationship total debts and total assets. Here total assets are higher than the total debts. In the year 2005-06 it is 43.54 % and in the year 2006-07 it is increase up to 48.68 % and in the year 2007-08 debt equity ratio is increase up to 53.43 %. In every year ratio is increase by increase.

(B) Debt Assets Ratio: Several debt ratios may be used to analyze the long term solvency of a firm. The firm may be interested in knowing the proportion of the interest because debt in the capital structure. The debt assets ratio measures the portion of a company's capital that is provided by borrowing. A debt ratio greater than 1.0 means the company has negative net worth. This ratio is similar, and can easily be converted to, the debt to equity ratio.

Total Assets Ratio

Total Debt Total Assets

* 100

65 Years 2005-06 2006-07 2007-08 2008-09 2009-10 = = = = = 151254098 * 100 347433893 254288527 522353256 348472033 652160109 298921369 621443337 153783781 474958521 * 100 * 100 * 100 * 100 = = = = = 43.53% 48.68% 53.43% 48.10% 32.38

Table - 11
YEAR 2005-06 2006-07 2007-08 2008-09 DEBT ASSETS RATIO 43.53% 48.68% 53.43% 48.10%

2009-10

32.38%

Chart - 8

66

DEBT ASSETS RATIO 60.00% 50.00% 40.00% 30.00% 20.00% 10.00% 0.00% 2005-06 2006-07 2007-08 year 2008-09 2009-10

Interpretation: It is clear from the above diagram whether debt equity ratio. PBL have more lenders funds, then owners because lenders contribution is 1.57 times of owners contribution in 2006-07. In 2007-08 it is decreased up to 1.43 times.

(C )

Interest coverage ratio

Interest coverage ratio shows how efficiently the company is covering the interest rate show that it can be able to fulfill their payment in time without facing any kind of difficulties in any kind of situation. Interest coverage ratio = E.B.I.T . Interest Years 2005-06 = 40815726 = 1.95 Times

67 20944252 2006-07 2007-08 2008-09 2009-10 = = = = 100578447 26675714 97926838 35807963 121796688 44178832 131924626 30329276 = 3.77 Times = 2.74 Times = 2.76 Times = 4.34 Times

Table - 12
Years 2005-06 2006-07 2007-08 2008-09 2009-10 INT Coverage Ratio 1.95 3.77 2.74 2.76 4.34

Interpretation
The interest coverage ratio of power build limited in the year 2005-06 is 1.95 and in the very next year it has increased to 3.77 there after in the following two years it has remain constant at 2.74 & 2.76 for the year 2007-08 & 2008-09 respectively. While in the last year 200910 it has increased to 4.34.

D) PROFITABILITY RATIO: Profitability ratios provide information about management's performance in using the resources of the small business. As Gill noted, most entrepreneurs decide to start their own businesses in order to earn a better return on their money than would be available through a bank or other low-risk investments. If profitability ratios demonstrate that this is not occurring particularly once a small business has moved beyond the start-up phasethen the entrepreneur should consider selling the business and reinvesting his or her money elsewhere.

68 However, it is important to note that many factors can influence profitability ratios, including changes in price, volume, or expenses, as well the purchase of assets or the borrowing of money. Some specific profitability ratios follow, along with the means of calculating them and their meaning to a small business owner or manager. Following are the Profitability Ratio: A. B. C. D. Gross Profit Ratio Net Profit Ratio Return on Capital Employed Earning Per Share

(A) Gross Profit Ratio: Gross profit ratio measures the margin on sales the company is achieving. It can be an indication of manufacturing efficiency or marketing effectiveness. Its express the relationship between gross profits earned to net sales. If the ratio is low, it indicates that the cost of sales is high that purchasing is inefficient. It measures the relationship between gross profit and sales. It is calculated by dividing gross profit by sales Gross profit is the difference between sales and cost of goods sold.

Gross Profit Ratio

Gross Profit Sales

* 100

Years 2005-06 2006-07 2007-08 2008-09 2009-10 = = = = = 137276259 504212695 222991387 812039240 258231359 1034232621 327882963 1148956523 299338541 * 100 * 100 * 100 * 100 *100 = = = = = 27.23% 27.46 % 24.97 % 28.54 % 35.53%

69 842469422

Table 13
YEAR 2005-06 2006-07 2007-08 2008-09 2009-10 GROSS PROFIT RATIO 27.23% 27.46% 24.97% 28.54% 35.53%

Chart - 9

70

GROSS PROFIT RATIO 40.00% 38.00% 36.00% 34.00% 32.00% 30.00% 28.00% 26.00% 24.00%

Interpretation: Power build limited company gross profit ratio has increased year-by-year. Except in the year 2007-08 it has shown the increasing trend of gross profit ratio. which shows the positive side of the power build limited. The gross profit ratio in the year 2005-06 is 27.23 % which has increased minor to 27.46 %. The next year it has decreased to24.97 %. But it has recovered next year and has increased to 28.54 % and the very next year it has increased tremendously to 35.53 % . The result of this ratio shows that company is focusing on its goal and keeping the continues watch on gross profit so that if any change can be applied to increase the gross profit

22. 00. 00

2005-06

2006-07

2007-08

2008-09

2009-10

(B) Net Profit Ratio: Net profit ratio measures the overall profitability of the company, or how much is being brought to the bottom line. Strong gross profitability combined with weak net profitability may indicate a problem with indirect operating expenses or non-operating items, such as interest expense. In general terms, net profitability shows the effectiveness of management. Though the optimal level depends on the type of business, the ratios can be compared for firms in the same industry. Net profit ratio establishes a relationship between net profit (after tax) and sales and indicates the efficiency of the management in manufacturing, selling administrative and other activities of the firm. It also indicates the firms capacity to face adverse economic conditions such as price competitors, low demand etc. Obviously higher the ratio, the better is the profitability

71

Net Profit Ratio Years 2005-06 2006-07 2007-08 2008-09 2009-10 = = = = =

Net Profit Net Sales

* 100

11820791 504212695 46356567 812039240 42722854 1034232621 51728276 1148956523 66783008 842469422

* 100 * 100 * 100 * 100 *100

= = = = =

2.34 % 5.71 % 4.13 % 4.50 % 7.52%

Table 14
YEAR 2005-06 2006-07 2007-08 2008-09 2009-10 NET PROFIT RATIO 2.34 % 5.71 % 4.13 % 4.50 % 7.52%

72

Chart - 10
NET PROFIT RATIO 14.00% 12.00% 10.00% 8.00% 6.00% 4.00% 2.00% .00% 2004-05 2005-06 2006-07 year 2007-08 2008-09

Interpretation: The ratio of Net Profit is shows the net margin on sales. The net profit ratio of the company will be able to dictate its profit making capacity. In the year 2005-06, Net Profit Ratio is 2.34 % and next year 2006-07 increased up to 5.71 % and the next year the ratio is decreased up to 4.13 % in the year 2007-08it being slightly change to 4.50 %. The last year shown the highest profit of last five years 7.52 %.that shows the company is improving their profit ratio by reaming active throughout whole year. The result we can conclude from the above ratio is that company is making a constant effort for increasing the profit ratio of the company.

(C) Return on Capital Employeed

73 It is calculated by dividing Earnings Before Interest & Tax (EBIT) by the net capital employed. The term net capital employed in the gross capital in the business minus current liabilities. Thus it represents the longterm funds supplied by creditors and owners of the firm. R.O.C.E = E.B.I.T Capital Employed Years 2005-06 = 40815726 543175743 2006-07 = 100578447 848176347 2007-08 = 97926838 1039217446 2008-09 = 121796688 967951635 2009-10 = 131924626 782431499 *100 = 16.86 % *100 = 12.58 % *100 = 9.42 % *100 = 11.86 % *100 = 7.51 % *100

Table - 15

Years
2005-06 2006-07 2007-08

R.O.C.E
7.51 % 11.86 % 9.42 %

74 2008-09 2009-10 12.58 % 16.86 %

Interpretation The ratio return on capital employed shows that how much return you gives to your creditors and suppliers who has given to you the long term finance on credit basis. Thus in this ratio the more percentage you give return to your creditors and suppliers the better the image will improvise in the market and more the finance the company will be able to gather on credit basis. this ratio simply applies credit worthiness of the company. Power build limited has given a better return to their creditors and suppliers in the year it has given 7.51% return. The very next year it has increased to 11.86% although it has decreased in the year 2007-08 but in the next year 2008-09 it has increased to12.58%. the last year the company has given the highest return of 16.86% in 2009-10. This result shows the power build limited is giving better return to their creditors and suppliers.

(D) EARNING PER SHARE Earnings per share is a small verification of return of equity and is calculated by dividing the net profits earned by the company and those profits after taxes and preference dividend by total no. of equity shares.
E.P.S = Net Profit after Tax No. of Equity Shares .

The Earnings per share is a good measure of profitability when compared with EPS of similar other components (or) companies, it gives a view of the comparative earnings of a firm.

75

Years

2005-06

11820791 165000

= 71.64

2006-07

46356567 300000

= 154.52

2007-08

42722854 300000

= 142.41

2008-09

46572635 399551

= 116.00

2009-10

66783008 3995510

= 16.70

Table 16

Years 2005-06 2006-07 2007-08 2008-09 2009-10

E.P.S 71.64 154.52 142.41 116.00 16.70

76

Interpretation
IT measure the profit available to the equity shareholders on a per share basis. The earning per share of the company is not same for all the years. In the year 2005-06 the earning per share of the company is 71.64 and in the very next year it doubles at 154.52 for the year200607.the big reason behind this is no of share increased to 300000 from 165000 in the year 2005-06. After that it has decrease minor for two years. But in the year2009-10 it has fallen to Rs 16.70 the reason is company has sub-divided the face value of equity share of Rs 100 each into Ten equity share of Rs 10 each .

Comparision with other big Company in the industry

The Power Build Limited is said to be one of the big company in the industry. In the vithhal udoygnagar association the other big Companies are as follows

1- ELECON ENGINEERING COMPANY LIMITED 2- EIMCO ELECON (INDIA) LIMITED 3- ANUPAM INDUSTRIES LIMETED

77 The three above mentioned companies are said to be as big profit making companies in the industries among these four big companies three are from same group i.e. Elecon. The comparison of some of the ratio among this companies is being as follows The Gujarat industrial development corporation(GIDC) is being one of the biggest industrial area in the Gujarat it is being providing many opportunities of growth of the Gujarat state. The industries is also being providing state-of-the art facilities in every region of the field.

Ratio of all the companies for the year 2009-10

78

Accounting policies
Elecon Eimco Elecon
120 days

Power Build Limited

86 days

Anupam Industries Limited

201 days

Ratios Debtors Turnover Ratio Creditor Turnover Ratio Gross Profit Ratio Net Profit Ratio Return on Capital Employed Return on Equity Shareholders fund

Engineering limited
180 days

185 days

117 days

160 days

129 days

25.48 %

34.75 %

35.53 %

34.61 %

6.32 %

7.90 %

7.52 %

15.28 %

10.93 %

11.28 %

16.86 %

25.02 %

43.30 %

15.50 %

44.40 %

59.30 %

a) BASIS OF ACCOUNTING:The accounts have been prepared under the historical costs convention in accordance with the generally accepted accounting principles and the provisions of the companies Act, 1956.

79 b) FIXED ASSETS:Fixed assets are started at the cost of acquisition or construction. They are stated as historical costs less accumulated depreciation. c) DEPRECIATION:Depreciation is provided on written down value method, at the rates specified in schedule xiv of the Companies Act, 1956. Depreciation is provided on pro-rata basis: 1. From the date of addition, in case of addition to fixed assets during the year and 2. Up to the date of disposal, in case of disposal of fixed assets during the year. d) INVENTORIES:Items of inventories are valued on the basis given below:1. Raw materials, stores and spare parts: - At weighted average cost or market value whichever is lower. 2. Work-in-process and finished goods. At cost or net realisable value whichever is lower. The value of finished goods is inclusive of excise duty. e) INVESTMENT:-

Investments are stated at cost of acquisition.

f) REVENUE RECOGNITION:1. Sales of goods are generally recognised on despatch to customers and are net of trade discount, VAT tax and excise duty. 2. All the items of expense and income are accounted on accrual basis, except income on account of refund of VAT tax, dividend income and insurance claims which are accounted on cash basis. g) RETIREMENT BENEFITS:1. The company has taken group gratuity polices with the Life Insurance Cooperation of India (LIC) for future payment of gratuities. The gratuity liabilities are determined based on an actuarial valuation conducted by an independent actuary.

80 2. The liability on account of encashment of unveiled accumulated leave of employees as at the balance sheet date is determined based on an actuarial valuation conducted by an independent actuary. 3. Liability towards superannuation is funded in accordance with the scheme with LIC. 4. Employers contribution to provision fund is charged to profit and loss a/c. h) FOREIGN CURRENCY TRANSACTIONS:i. INITIAL RECOGNISATION:Transactions determined in foreign currencies are recorded at the exchange rates prevailing on the date of the transaction. ii. CONVERSION:At the year end, monetary items determine in foreign currencies are converted into rupee equivalent at the year and exchange rates.

iii.

EXCHANGE RATE DIFFERENCES:All exchange rate differences arising on settlement and conversion on foreign currency transaction are recognised as income or an expense in the year in which they arise.

i) BORROWING COST:Cost in connection with borrowing of the funds to the extent related/attributed to the acquisition/construction of qualifying fixed assets are capitalised up to the date when such assets are ready for its intended use and other borrowing cost are charged to profit and loss a/c. j) IMPAIRMENT OF ASSETS:The carrying amount of assets is reviewed at each balance sheet date. If there is an indication of improvement based on internal/external factor and impairment losses recognised wherever the carrying amount of an asset exceeds it recoverable amount. The

81 recoverable amount is the greater of the assets net selling price and value in use. In assessing value the estimated future cash flows are discounted to their present values.

DIRECTORS REPORT
(1) FINANCIAL RESULTS:-

82

31-3-2010 RUPEES
Profit before interest and depreciation Less: Interest Depreciation Profit before taxation Less: Provision for taxation Provision for fringe benefit tax Deferred tax liability/assets Profit after taxation Add: Adjustment of previous years Balance brought forward from last year Amount available for appropriation Less: Dividend on 10% C.R.C preference share capital Tax on dividend Amt. transferred to 10% C.R.C preference share capital redemption reserve Amt. transferred to general reserve Balance of P&L a/c carried forward Total

31-3-2009 RUPEES

19,77,75,15 19,49,30,881 4 4,41,78,832 3,03,29,27 7,31,34,193 6 7,73,17,856 6,58,50,528 2,60,00,000 10,15,95,35 4,73,400 0 (6,83,550) 4,00,00,000 5,18,28,006 (48,55,585) 99,730 6,64,50,935 82,32,471 3,32,0 5,99,60,747 73 46,95,972 45,00,000 7,14,78,980 7,64,775 45,00,000 7,64,775 4,50,00,000 2,00,00,000 12,14,205 7,14,78,980 5,00,00,000 46,95,972 5,99,60,747

2. PERFORMANCE:During the year under review, the company has achieved turnover of Rs.8,424.69 lacs (previous year Rs.11489.57 lacs). The net profit stood at Rs.667.83 lacs (previous year 517.28 lacs).

83

3. DIVIDEND:Directors felt it prudent to retain the earnings for the year under review to be ploughed back in business, which shall result in further augmentation of the companys growth. During the year under review, the dividend @10% on 10% cumulative redeemable convertible preference shares has been paid for the year ended 31st March, 2010.

4. SHARE CAPITAL:During the year under review, the company has redeemed 4,50,000 10% cumulative redeemable convertible preference shares of Rs.100/- each aggregating to Rs.4,50,00,000/- at par out of the profits of the company which would otherwise be available for the dividend. The company has transferred equivalent amt. of Rs.4,50,00,000/- to 10% convertible redeemable cumulative preference share capital redemption reserve a/c. Further during the year under review, the company has sub-divided the face value of equity shares of Rs.100/- each into ten equity shares of Rs. 10/- each.

5. FIXED DEPOSITS:As on 31st March, 2010 outstanding balance of fixed deposits is Rs.183.27 lacs as against a sum of Rs.333.27 lacs at the end of previous year. There are no unclaimed deposits as on 31st March, 2010.

6. INSURANCE:All the assets of the company are adequately insured.

7. DIRECTORS:In accordance with the provision of the Companies Act, 1956 in the article of the association of the company, Smt. Kanisha A Patel, directors retire by rotation at the forth coming annual general meeting of the company an being eligible, offers herself re-appointment.

During the year under review Shri D.M.Patel has been re-appointed as a whole time director for a further period of 3 years with effect from 1st April, 2010.

8. AUDITORS:The companys auditors M/s J.D.Zatakia & Co. Chartered Accountants, Mumbai retires at the ensuing general meeting of the company and being eligible for themselves for reappointment.

84

9. DIRECTORS RESPONSIBILITY STATEMENT:Pursuant to section 217(2AA) of the companies (amendment) act, 2000 the directors confirm that: In the preparation of the annual a/cs, the applicable accounting standards have been followed. Appropriate accounting principles and applied consistently, and have made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company as at 31 st March,2010 end of the profit/loss of the company for the period ended on 31st march,2010. Proper and sufficient care has been taken for the maintenance of the adequate accounting records in the accordance with the provisions of the companies Act, 1956 for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities. The annual a/cs have been prepared on a Going concern basis.

10. PARTICULARS OF EMPLOYEES:As required by the provisions of section 217 (2A) of the companies Act, 1956 read with the companies (particulars of employees) Rules,1975 as, the statement covering names and other particulars of the employee is set out in the Annexure -1 to this Report.

11. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO:Information pursuant to the provision of section 217(1) (e) of the companies Act, 1956 read with companies (Disclosure of particulars in the report of Board of directors) Rules, 1988 is as under;

ENERGY CONSERVATION: Energy conservation measure taken: Monitoring closely high energy consuming equipments Optimum use of compressors and monitoring air losses. Use of step down transformer with stabilizers on entire factory lighting there by achieving overall reduction in energy consumption. Installation of APFC (Automatic power factor correction panels for achieving optimum power factor. Company has started to use variable frequency drives (VFD) in EOT, Goliath and travelling jib crane to reduce starting load of motor. Company has continued to replace number of high voltage consuming lighting system into low voltage consuming FL tubes in the companys factory sheds and workshop to conserve energy.

85 Installation of a sealed quench furnace powered by natural gas for heat treatment in place of electric power thereby saving the electricity sizably. The continuous and cautious efforts will save energy cost to the company.

TECHNOLOGY ABSORPTION, ADAPTION & INNOVATION:Efforts made towards technology absorption and innovation;

RESEARCH AND DEVELOPMENT:R&D efforts have helped to bring out improvements in process, product design and operating efficiencies

FOREIGN EXCHANGE EARNING AND OUTGO:During the year under review, the company has earned foreign exchange of rs.85.31 lacs (previous year rs.713.14 lacs) from the direct export. Foreign exchange spent by the company during the year amounted to Rs.169.35 lacs (previous year Rs.1196.52 lacs).

12. COMPLIANCE CERTIFICATE:In terms of proviso to section 383A(1) of the companies act 1956, read with the companies (compliance certificate) rules, 2001 the company has obtained compliance certificate from Shri Amrish N. Gandhi ,secretary in whole time practice at Ahmadabad, the copy of said certificate is attached with this report.

13. INDUSTRIAL RELATIONS:During the year under review, harmonious and cordial industrial relations were motioned in the company.

14. ACKNOWLEDGEMENT:Your director place on record their appreciation for the co-operation received from the company. The directors also acknowledge the support and co-operation extended by the bank and financial institutions, share holders, vendors, traders, customers and society at large.

86

AUDITORS REPORT
1)
They have audited the attached balance sheet of PBL As at 31 st march, 2010 and the p&l

a/c for the year ended on that date annexed thereto and also the cash flow statement on that date. These financial statements are the responsibilities of the companys management. Their responsibility is to express an opinion on this financial statement based on our audit. 2) They conducted their audit in accordance with the auditing standards generally accepted in

India. Those standards require that they plan and perform the audit to obtain reasonable assurance about the financial statement is free of material statements. An audit includes examining on a test basis, evidence supporting the amounts and disclosure in financial statements. An audit also includes assessing the accounting principles used a significant estimates made by management, as well as evaluating overall financial statement presentation. They believe that their audit provides a reasonable basis for their opinion. 3) As required by the companies (auditors report) order, 2003 issued by the central

government of India on terms of sub section(4a) of section 227 of the Companies Act,1956, they enclose in the annexure a statement on matters specified in paragraphs 4 and 5 of the said order to the extent applicable. 4) Further to their comments in the annexure referred to above they report that: a) They have obtain all the informations and explanations which to the best of their knowledge and belief were necessary for the purpose of our audit. b) In their opinion, proper books of account as required by law have been kept by the company as far as appears from their examination of those books. c) The balance sheet, P&L a/c and cash flow statement dealt with by this report are in agreement with the books of account. d) In our opinion, the balance sheet, P&L a/c and cash flow statement dealt with by this report compel with the accounting standards referred to in sub section (3c) of section 211 of the Companies Act, 1956, to the extent applicable. e) On the basis of written representation received from directors as on 31 st march 2010 and taken on record by the board of directors, they report that none of the directors is

87 disqualified as on 31st march, 2010 from being appointed as an director in terms of clause(G) of sub section(1) of section 274 of the Companies Act, 1956. f) In their opinion and to the best of their information and according to the explanations given to them, they said accounts together with notes their own give the information required by the Companies Act,1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India. i. ii. iii. In the case of the balance sheet, of the state of the affairs of the company as at 31 st march, 2010, In the case of the profit and loss account, of the profit of the company for the year ended on the date and, In the case of the cash flow statement, of the cash flow for the year ended on the date.

88

CASH FLOW STATEMENT

CASH FLOW STATEMENT:PARTICULARS INFLOW Add: 1. Acquisition of company 2. Increase in long term borrowing on amalgamation 3. Increase in long borrowing for working capital on amalgamation 4. Issue of share capital on amalgamation 5. Increase in borrowing OUTFLOW Less: 1. Demerger of MHE division 2. Transfer of MHE secured loans 3. Decrease in borrowing for working capital 4. Repayment of borrowing-secured loans 5. Repayment of borrowing-unsecured loans 6. Redemption of 10% NCRP shares 7. Interest paid 8. Dividend paid NET CASH FLOW FRON FINANCIAL ACTIVITIES(C) NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS(A+B+C) Cash & cash equivalents as at 1/04/2009 Cash & cash equivalents as at 31/03/2010 2,137,540 12,987,384 15,124,924 6,144,235 6,843,149 12,987,384 146,571,664 13,009,876 45,000,000 30,329,276 10,529,550 245,440,366 (244,006,290) 84,013,312 101,272,359 69,962,292 44,178,832 1,683,002 301,109,797 (202,947,527) 1,434,076 1,434,076 9,955,100 98,162,270 4,652,745 63,716,073 19,838,352 AMT. (RS.) AMT. (RS.) AMT. (RS.)

COMMON SIZE STATEMENT

89

PROFIT & LOSS A/C FOR THE YEAR ENDED 31ST MARCH, 2010

Particulars

Current Year Rupees

Previous Year Rupees

INCOME Gross Sales Less: Excise Duty Net Sales Other Income 909,531,242 67,061,820 842,469,422 111,075,759 853,545,181 EXPENDITURE Manufacturing and other expenses Consumption of Material, Subcontracts Interest Depreciation Administrative, Selling & General Expenses 427,004,603 30,329,276 65,850,528 224,031,654 748,031,654 (Increase) / Decrease in Stock 3,918,177 751,949,831 PROFIT BEFORE TAXATION Excess / Short Provision written Back Provision for taxation 101,595,350 (332,073) 10,000,000 1,087,873,498 77,617,856 99,730 26,000,000 674,132,035 44,178,832 73,134,193 273,464,368 1,064,909,428 1,282,927,541 133,971,018 1,148,956,523 16,534,831 1,165,491,354

90

Provision for Fringe Benefit Tax Provision for Deferred Tax Liability/ Assets PROFIT AFTER TAX Add: Balance of Profit / (Loss) brought forward PROFIT AVAILABLE FOR APPROPRIATION Dividend on 10%C.R.C. Preference Share Capital Tax on Dividend Transfer to 10% C.R.C preference share redemption reserve Transfer to General Reserve Balance Profit Carried forward

(4,855,585) 66,783,008 4,695,972 71,478,980 4,500,000 764,775 45,000,000 20,000,000 1,214,205

473,400 (683,550) 51,728,276 8,232,471 59,960,747 4,500,000 764,775 50,000,000 4,695,972

BALANCE SHEET AS AT 31ST MARCH, 2010

PARTICULARS

RUPEES

CURRENT YEAR RUPEES

PRVIOUS YEAR RUPEES

SOURCES OF FUNDS (1) Share Holders Fund Share Capital 39,955,100 84,955,100

91

Reserves and Surplus

257,130,426 297,085,526

195,612,193 280,567,293

(2) Loans Funds Secured Loans Unsecured Loans 153,783,781 21,031,727 174,815,508 (3) Deferred Tax Liability(Net) Total APPLICATION OF FUNDS (1) Fixed Assets Gross Block Less: Depreciation 658,888,528 376,679,172 282,209,356 (2) Investment (3) Current Assets, Loans and Advances Inventories Sundry Debtors 107,397,264 200,099,457 142,280,244 319,636,536 29,934,824 640,123,844 311,747,348 328,376,496 29,934,824 3,057,487 474,958,521 298,921,369 34,041,603 332,962,972 7,913,072 621,443,337

92

Cash and Bank Balance Loans and Advances

15,124,924 147,665,674 470,287,319

12,987,384 134,736,151 609,640,315 346,508,298 263,132,017 621,443,337

Less: Current Liabilities and Provision Net Current Assets Total

307,472,978 162,814,341 474,958,521

HUMAN RESOURCE DEPARTMENT

93

ORGANIZATION OF PERSONNEL DEPARTMENT: INTRODUCTION:

Human recourse management is concerned with people dimension in management since every organization is made up at people acquiring their service developing their skills maturing them to high levels of performance and ensuring that they continue maintain their commitment to the organization are essential to achieving organization objectives. Human resources management is the planning. Controlling organizing and directing of the procurement, Development maintenance and separation of human resources to the end what individual organizational and social objectives are accomplished. The human resource department of the Power Build Limited is different as the company is big in size. Personnel department, general administration security, civil and excise are the 5 different section of human resource department of Power Build Ltd.

94

Managing Directors General Manager Assistant manager

Personnel Department

General administration

Excise

Civil

Security

In Power Build Ltd. H.R. Department is under the managing directors follow by the G.M. (H.R.Department) assistant managers and the different section heads.

RECRUITMENT, SELECTION AND INDUCTION:-

95

RECRUITMENT:Recruitment has been regarded as the most important function of personnel administration. It is the process of searching for prospective candidates and stimulating & encouraging them to apply for job in organization. The procedure of recruitment in Power Build Limited in done by labour officers & managing directors. When this company requires any person for some were in any of the department or they wants to fill up the vacancy. They use mostly external sources. In very rear cases they are using internal sources. In external sources they are using majority following sources:-

1. Advertisement:For any supervisor as marginal, post company gives advertisement in local newspapers like Gujarat Samachar, Sandesh etc. and also advertiser in some English news papers like Times of India.

2. Trade unions:When company needs workers Unions Company informs trade unions about the requirements of the workers and trade unions provide the workers to the company. This sense of co-operation helps in developing the better labour relations.

3. Leasing contracts:Company some-times go to private an agency which provides the workers on leasing. Thus, companies also use these sources.

Some other sources requirement source used by this company:(A) (B) Waiting list Employment exchange

(C) Educational institutes

SELECTION:

96 The selections procedure in concerned with securing relevant information is secured in information is secured in a number of steps. At each stage facts may come to light which may lead to the rejection of the applicants. So this procedure is called negative. This selection uses following steps in its selections procedure:-

Reception of Applicants:Firstly application is to be collected and candidates information is known. Information includes educational qualification, age, sex, birth date etc. from that the decision is to be taken whether the application is proper or not.

For Workers:The workers are not required to pass from selection procedure. They are directly placed as they required because workers are Power Build Ltd. generally provided by the trade unions in Power Build Ltd.

Induction:Induction is concerned with the problem of introducing or organizing a new employee to the organization. The new employee may have some difficulty in setting down to his new job and developing a sense of belonging. It is a welcoming process. In Power Build Ltd. the process of induction is done Human Resources department. Power Build Ltd. is always ready to help new comers. They treated them very politely and friendly make him feel at home generate in him & feeling that His own job. They always give lots of encouragement to the new comer.

TRAINING AND MANAGEMENT DEVELOPMENT:

Training is short term process utilizing a systematic and organized by which non managerial personnel learn technical knowledge and skills for a definite purpose. It refers only to

97 instruction technical and mechanical operations. It is designed for short terms period for man manager. It is the training that prepares people to perform their present jobs better.

Training in Power Build Ltd.:In Power Build Ltd. Company have different training programmes for new comers. I.e. trainees like diploma mechanical Electrical, B.S.C., B.B.A, M.B.A and engineers. The company provide appropriate training to those who have come from outside reference or sources and it is up to the company to take as a permanent workers or not. The training can be of any period. The worker of the company is not given tanning. On the job training is popular in Power Build Ltd. Regular need based programmed are conducted in the company. Power Build Ltd. has its own pool or manpower in which fresh candidates are getting training continuously on different functional area, so in future right men can be selected at the right time for right job. Staffs are not given any type of training.

Types of training in Power Build Ltd.:Training methods can be used while the man is engaged in the process of productive work on the job. Different training methods for the different personnel are used. Shop floor training and case study methods mostly help trainee to learn how different situation can solve when they are facing different problems in future.

Apprenticeship: Here the trainee has to work in the firm or companies where they are given on the job knowledge how they should face different problems and how to use different machines and other technical knowledge is given to them. They are given stipend for it.

Graduate apprenticeship: They have 1 year training. They are given then on the job training. If the company has vacancy then they get job in the company. Generally they receive more stipends then the apprenticeship trainees.

98

Internal training programmed:Generally in this method mostly training is given on safety self development. Company also arranges video show. Hoardings, debates to provide knowledge to personnel and reduces the industrial accidents.

Chapter 5

SUMMARY & FINDINGS

(1)
The current ratio of Power Build Limited has being increased continuously for first two years at 1.78 to 1.94 after that it has shown a declining trend at 1.90 to 1.76 to 1.53 for 2007-08,2008-09,2009-10 respectively. The Quick Ratio has shown a Fluctuating trend at 1.16, 1.33, 1.43, 1.34 and 1.18 for the five years. The companys present liquidity position is satisfactory.

(2)

99

(3)

The Net Working Capital Ratio has shown a declining trend except in the year 2006-07. The ratio has decreased thereafter to 0.62, 0.40, 0.36 for the last three years.

(4)

Inventory turnover Ratio has almost shown a continuously increasing trend for the last five years at 3.60, 4.12, 5.30, 8.07, 7.48. this shown a good inventory management in the company.

(5)

Debtors turnover ratio has also shown almost increasingly trend for last five years at 2.26, 2.36, 2.13, 3.60, 4.21. this shows the company is managing good collection period from debtors. The collection period is 161, 154, 171, 101 and 86 days for last five years.

(6)

The total asset turnover ratio of the company for last five years is 1.45, 1.55, 1.59, 1.94, and 1.77. the company is 99tilizing their asset in an effective manner.

(7)

Creditors turnover ratio of PBL is shown a fluctuating trend in the last five years. The payment period to creditors is 209, 185, 162, 128, and 160 for last five years.

(8)

The Debt-Equity Ratio shows the mix of Debt & Equity in the companys capital. The ratio has shown a fluctuating trend at 1.55, 1.57, 1.43, 1.07, 0.52 for the last five years in the companys record.

100

After the analysis of Financial Statements, the company status is better and shows the positive features of growth in the future.

The company profits are huge in the current year at 19,77,75,154 which shows that how the company is being making impact of future performance .

7.52 %.

The company is also providing good return to the capital provider i.e.: Return on Capital Employed of the Companys Ratio for last year is

Power Build Limited is also maintains the accounting records in very good form. The company is being using SAP System for Preparing the accounts and keeping the accounting records of the company.

Chapter 6

CONCLUSION:Complexity & web a like cause effect relationship are internal elements of corporate business today. Making the practical study of management practice very interesting. The training was a good learning experience for me & private me with a better understanding of industrial processes & procedures in general. The objective of getting an overall grasp of the corporate environment was more than achieved with my training in ELECON.

101 Power Build Ltd. Is a highly respected industrial entity. If strategy of exploiting delivered quality as an appreciating asset is a prudently profitable practice & perhaps the highlight of its profile. Its pursuit of quality has been duly recorded with an ISO 9001 certificate to its gear division & of course, admirable customer equity. Systems & Structures which are very much in place commitment to quality, well deepened organization structure presence of requisite controls & a motivated manpower Power Ltd. Has all the elements of corporate entity of potential.

The company Power Build Ltd. Is higher profit making unit & always a step ahead Co. in Engineering & Manufacturing of conveyers & eliminators? I feel very happy getting enough information about modern policy & techniques. Actually I have many things deeply which I cant find on paper, but only can feel logically. The workers and executives are always sound in cheerful mood, because of the ambient in the company premises really worth due to the co-operation and communication among employees.

Chapter 7

BIBIOGRAPHY

Website: www.pbl.co.in Other Web-Sites

102

Last five years ANNUAL REPORT of the Company FINANACIAL MANAGEMENT BOOK I.M.Pandey and Jain khan and Pranshanchandra Website: www.net MBA. Com, www.Wikipedia.Com.