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INDUSTRY PROFILE:
The field of Aviation has been investigated for millennium but modern Aviation began with the first powered flight on 16th December 1903 by the !"#$T %!&T$'!()* +rom thereon, Aviation has grown to be one of the most e-isting, diverse and fast growing field of today* +rom the hot air balloons of 1. th century to the first manned machine to the moon on Apollo 11 to the new and e-isting aircraft being developed by the companies li/e %oeing, Airbus and %ombardier, aero space has come a long way over a century* The Aerospace and Defence industry was struggling to maintain profitability even before (ep 0001, and fears of further terrorism, the conflicts in Afghanistan and "ra1, and a wea/ economy combined to devastate the commercial aerospace industry over then (uring years* &n the other hand the wars in Afghanistan and "ra1 bolstered the coffers of many defence companies2 belt tightening may be on the way* The mother of all defence deals occurred in 0001 hen 3oc/heed beat out %oeing for the
4000 %illion 5oint stri/e fighter contract, the largest defence contract ever* (pread out almost 30 years, it may be the last deal for drones 6as evidence in Afghanistan with the use of general atomics predator7 it e-pected to continue supplanting the need for the more e-pensive manned aircraft and ma/ing it unnecessary to ris/ pilots lives in combat* "n the interim, the soaring costs in "ra1 have also put a damper on some other ma5or pro5ects* "n 0008 the 9( army cancelled the planned 480 billion apache reconnaissance $elicopter program2 early in 000: there was tal/ of scaling bac/ the +;A<00 !aptor program and of reducing the number of c<130= aircraft on order* A desire to be smart, fast, and mobile has replaced the >more and bigger? doctrine of the cold war* To the end several companies including 3oc/heed @artin, Aorthrop #rumman and #eneral Dynamics have invested in hardware and software companies that focus on #overnment Bustomers* The top defence contractors are 3oc/heed @artin, %oeing Aorthrop #rumman, and %A' systems, !aytheon, #'A'!A3 Dynamics, and 'AD(* &n the commercial side, airlines< by far the biggest customers in the sector have lost %illions since 0001
"n 0001, %oeing and Airbus, the world)s only large commercial aircraft mar/et, saw mar/et plummet by 8:D and 0.D respectively "n 0001, %oeing and Airbus, the world)s only large commercial aircraft mar/et, saw mar/et plummet by 8:D and 0.D respectively* Airbus recently surpassed %oeing in orders, but the formers 0000 deliver droppedFD from 0001*%oeing meanwhile e-perienced a staggering 0.D decline in deliveries from0001* As a result of the drastic fall<off in business, %oeing cut about 30000 5obs or roughly30D of it commercial aircraft wor/force in 0000*Aircraft orders pic/ed up in 0003 and 0008 as %oeing and airbus continued to du/e it out for airline orders* %oeing is wor/ing on its long<range, fuel<efficient, mid<siGed, F'F Dream 3iner 6due in 000.7, ::0<passenger behemoth* Airbus then upped the ante by announcing that it would build the A:30 6due in 00107 to compete directly with %oeing F'F* The @aintenance repairs and overhauls 6@!&7, 5et engine, and business and regional aircraft mar/ets have suffered right along with airlines and large commercial aircraft ma/ers* The biggest regional aircraft ma/ers are %ombardier, #ulf (tream and Te-tron)s Bessna 9nit*, #' Aircraft 'ngines, !olls !oyse, and Hratt and manufacturing and launch services* hitney are the three largest 5et engine ma/ers* The space mar/et is made up of two primary segments2 satellite and roc/et
0* %oeing 69*(7, 3* Aorth !ope #rumman 69*(7, 0* %A' (ystems 69*J7 and 3* !aytheon 69*(7 is the top five dominated 9*( aero space and defence ma5ors* The aviation industry comprises companies producing air craft, guided missiles, aircraft engines, space vehicles, propulsion units and reduced parts* Aircraft overhaul, rebuilding and parts are also included* The aviation industry in "ndia includes (tate owned entities and also number of Hrivate players* The ministry of civil aviation governs the aviation industry* $industan Aeronautics, ran/ed 38th among the global league of top :0 aerospace companies moving up since last year)s ran/ of 8:* "n 0008 < 000:, the "ndia share of the global aviation industry was 9( 436 %illion* Aviation "ndustry in "ndia is one of the fastest growing aviation industries in the world, with the liberaliGation of the "ndia aviation sector2
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$industan Aeronautics 3imit 6$A37 came into e-istence on 1st &ctober 1968* The Bompany was formed by the merger of $industan Aircraft 3imited with Aeronautics "ndia 3imited and Aircraft @anufacturing Depot, Janpur* The Bompany traces its roots to the pioneering efforts of an industrialist with e-traordinary vision, the late (eth alchand $arahan, who set up $industan Aircraft 3imited at %angalore in association with S)r$ *aya&)aramara+endra ,odeyar the erstwhile princely (tate of @ysore in December 1980, with the ob5ect of establishing an aviation industry that can manufacture, assemble and &verhaul aircraft under license* The #overnment of "ndia became a shareholder in @arch 1981 and too/ over the @anagement in 1980*+or si- decades, $A3 has spread its wings to cover various activities in the areas of design and development, @anufacture and @aintenance of advanced fighters, piston and 5et engines trainer)s commercial aircraft, helicopters and associated Aero engines, aircraft systems, e1uipment and avionics* Today, $A3 has 19 Hroduction 9nits and 9 !esearch and Design Bentres in F locations in "ndia* The Bompany has an impressive product trac/ record <10types of aircraft
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Dhruv, which is Advanced 3ight $elicopter 6A3$7 Te5as < 3ight Bombat Aircraft 63BA7 "ntermediate =et Trainer 6"=T7 Karious military and civil upgrades* Dhruv was delivered to the "ndian Army, Aavy, Air +orce and the Boast #uard in @arch 0000, in the very first year of its production, a uni1ue achievement* $A3 has played a significant role for "ndiaLs space programs by participating in the manufacture of structures for (atellite 3aunch Kehicles li/e2 H(3K 6Holar (atellite 3aunch Kehicle7 #(3K 6#eo<synchronous (atellite 3aunch Kehicle7 "!( 6"ndian !emote (atellite7 "A(AT 6"ndian Aational (atellite7 HAL has formed the following Joint Ventures (JVs) %A'$A3 (oftware 3imited "ndo<!ussian Aviation 3imited 6"!A37 (necma $A3 Aerospace Hrivate 3td (A@T'3 $A3 Display (ystem 3imited $A3%"T Avionics Hrivate 3td $A3<'dgewood Technologies Hrivate 3td "A+&T'B$ $A3 3td
The %angalore comple- of $A3 is the oldest and the largest group of aircraft and engines factories of the company* The comple- has its own airfield and comprises the
'ngine division, Aircraft division, $elicopter division,
@!& divisions* +rom past 00 years, $A3)s $elicopter division produced 336 B$'TAJs AAD 086B$''TA$ helicopters and more than 000 $elicopters of both the types for the "ndian Air force, Aavy, Army and Boast #uards
produce military aircraft for the !oyal "ndian Air +orce* The initiative was conceptualiGe %y (ir*@* Kisweswarya actively encouraged by the Jingdom of @ysore, especially by the Diwan, (ir "smail and it also had financial help from the "ndian #overnment* The organiGation and e1uipment for the factory at %angalore was set up by illiam D* Hawley of the "ntercontinental Aircraft Borporation of Aew Cor/, who was an e-porter of American aircraft to the region* Hawley managed to obtain a large number of machine<tools and e1uipment from the 9nited (tates* As The %ritish #overnment bought a one<third sta/e in the company by April 1980, it believed this to be a strategic imperative* 3ater in April 1980, it bought out the sta/es of alchand $irachand himself and other promoters so that it can act freely* The decision by 9nited
#round support e1uipment* '-port of aero structure to leading world aircraft manufacturers for satellite and launch vehicle* (oftware development for aero space applications*
0$%$on To ma/e $A3 a dynamic, vibrant, value N based learning organiGation with human resource e-ceptionally s/illed, highly motivated to meet the current and future challenges, this will be driven by core values of the company fully embedded in the culture of the organiGation? ission Design, manufacture and maintenance of aerospace defence e1uipment and diversifying to related areas, managing the business >To become a globally competitive aerospace industry
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Values
!USTOMER SATISFA!TION
e are dedicated to building a relationship with our customers where we become partners in fulfilling their mission* e strive to understand our customers L needs and to deliver products and services that fulfil and e-ceed all their re1uirements*
!OMMITMENT TO TOTAL 2UALITY
e are committed to continuous improvement of all our activities* maintainability and fitness for use as desired by our customers*
!OST AND TIME !ONS!IOUSNESS
e believe that our success depends on our ability to continually reduce the cost and shorten the Delivery period of our products and services* e will achieve this by eliminating waste in all activities and continuously improving all processes in every area of our wor/*
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e believe in striving for improvement in every activity involved in our business by pursuing and encouraging ris/<ta/ing, e-perimentation and learning at all levels within the company with a view to Achieving e-cellence and competitiveness*
TRUST AND TEAM SPIRIT
e believe in achieving harmony in wor/ life through mutual trust, transparency, co< operation, and a sense of belonging* towards achieving &rganiGational goals* !REDIT RATIN The Bompany continued to maintain the highest credit rating of both, short<term as well as long<term debt programmers, for !s*8:0;<cores each from the "nvestment "nformation I Bredit !ating Agency 6"B!A7 and Bredit !ating "nformation (ervices of "ndia 3imited 6B!"("37* Although yours is a Oero<Debt) Bompany, it has been availing Bash Bredit facility from the %an/ers to meet its short<term re1uirements from time to time* This credit rating has enabled the Bompany to source fund at the best possible rates, thereby improving the profitability* The cash and ban/ balances, including short<term deposits at the end of the year under review stood at !s* 1.6:F*68 core against !s* 19F88*:6 cores of the previous years* The Bompany scaled new heights in the financial year 000.<0F with a turnover of !s*F, F.3*61 Bores e will strive for building empowered teams to wor/
Im5ortan&e o3 .RA6%
17 (et goals and ob5ectives* 07 HrioritiGe their activities, therefore improve their time and wor/ management* 37 @a/e value added decisions* 87 Blarify roles of department or individual*
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D. PRODU!TS OF OR ANISATION
E. AREA OF OPERATION:
$A3 operates both domestically and internationallyE DOMESTIC AREA: "ndian Air +orce "ndian Aavy "ndian coast guar Defence !esearch I Development organiGation "ndian (pace !esearch organiGation %harat 'lectronic 3imited
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F.O,NERS#IP PATTERN:
The #overnment of "ndia 6#&"7 became one of the shareholders of $industan Aircraft 3imited in @arch 1981 and too/ over the management in 1980* $A3 in its present form as a Hublic (ector 9nderta/ing 6H(%7 under the @inistry of Defence and fully owned by $A3 Aircraft division #&", came into e-istence on &ctober 1, 1968,
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. !OMPETITORS INFORMATION:
The Aerospace @ar/et is highly competitive with the (tate owned, $A3 being the largest "ndian Aircraft manufacture* Bompetition is li/ely to intensify with greater Hrivate (ector and +oreign participation* The #overnment too has set up its role in promoting the industry* The company does not have any competitors in Domestic @ar/et, for its Aircraft because it re1uires huge sum of money I vast area of land for establishing a company and it also involves huge ris/ which the private parties would not li/e to ta/e* And the engine division manufactures Aircraft purely for countries defence purpose* (o its main customer is "A+ 6"ndian Air force7* The company is having few competitors of its e-port pro5ects li/e2 %oeing IAirbus does from countries li/e Bhina and Ha/istan*
#. INFRASTRU!TURAL FA!ILITIES:
a$ %&'()I*+ ,&"A)* &-*:
(ecurity department provides the safety measures to employees* Aew rules and regulations are created to protect to protect the employees from meeting with an accident* Terms and conditions are to be followed by the employees while performing the 5ob* (afety of employees is ta/en care of by this department* #$ *)AI-I-. HALL%:
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A good library with over 10,000 boo/s mainly on @anagement topics, a 5ournals and an impressive collection of Audio<Kisual Aids supplement classroom learning and assignments* d$ A(,I*0)I( :
An air<conditioned auditorium designed with 1.0 seats is also available for viewing films;videos and conducting seminars* A well facilitated Dias is also available for cultural programs of participants* e$ A''0 0,A*I0-:
+ully furnished 80 twin occupancy rooms and : dormitories provide accommodation for a 100 participants* A neat and tidy cafeteria within the campus* A very pleasant and calm place to live and nearness to mother nature< par/s, an absolute healthy atmosphere to live in f$ 'A-*&&- 1A'ILI*I&%:
Banteen has been established at every division as a necessity and welfare measure and in /eeping the statutory re1uirements under the +actories Act for the convenience of employees* This canteen serves coffee, tea, snac/s, meals etc* g. *)A-%"0)* 1A'ILI*I&%: 'mployees residing outside the company township are provided with transport facilities 6company owned7 at subsidiGed rates, to the e-tent possible for commuting between the residence and place of wor/* Bompany has established schools atE %angalore, $yderabad,
+or the benefit of the employee)s children* The administrations of these schools are vested with the educational committees constituted for the purpose of the education in respective divisions*
+. A /(LA-'& )00 2 This department is one of the safety measures* This department is to help the employees* @edicines are provided and available 08hours*
I. A,ARDS / A!#IE0EMENTS:
o( &3cellence Award: The Hrime @inister, Dr* @anmohan (ingh presenting the @o9 '-cellence Award 0006<0F for >"ndustrial (ector? to the &fficiating B@D of $industan Aeronautics 3td*, (hri(an5eev (ahi on behalf of the $industan Aeronautics 3td*, at the presentation ceremony of the @o9 '-cellence Awards and (B&H' Awards for the year 0006<0F and 000F<0.for '-cellence and &utstanding Bontribution to Hublic (ector @anagement, in Aew Delhi on &ctober1:, 0009* HAL 4I-% /0&I-.5% 6778 %(""LI&) 01 *H& +&A) A4A),
%angalore<based $A3 has been awarded the newly<constituted The Alliance Award) in recognition of its >uni1ue capabilities and services that are instrumental to a new %oeing product?*
$A3 was awarded the >"AT'!AAT"&AA3 #&3D @'DA3 A A!D? for Borporate Achievement in Quality and 'fficiency at the "nternational (ummit 6#lobal !ating 3eaders 00037 < 3ondon, 9J by @;s #lobal !ating<9J in con5unction with the "nternational "nformation and @ar/eting Bentre 6""@B7
$A3 was presented the "nternational < >A!B$ &+ '9!&H'? Award in #old Bategory in recognition for its commitment to Quality, 3eadership, Technology and "nnovation*
At the Aational level, $A3 won the M#&3D T!&H$CM for e-cellence in Hublic (ector @anagement, instituted by the (tanding Bonference of Hublic 'nterprises 6(B&H'7*
$A3 has bagged the &!3D Q9A3"TC B&@@"T@'AT "AT'!AAT"&AA3 H3AT"A9@ (TA! A A!D) from business initiative directions6bid7 (pain, during the 01st orld 1uality commitment 6 QB7 convention held at Haris recently* The year 000: started with an e-cellent beginning and the centre has been awarded the >#&3D'A H'AB&BJ A A!D +&! "AA"KAT"K' H!&D9BT N 0008?by the institute of "&D Aew Delhi* $A3 is conferred with the >AAK!AT$AA >status on 00nd =une 000F* $A3 has received !a/sha @antra)s Awards for e-cellence for #argi $uttenes<Albertus #reen +oundry Award of the year 000.<0009 by the "nstitute of "ndian +oundry men to +oundry I +orge Division* The award was presented on :th+ebruary, 0010 at Ahmadabad* (upplier of the year 0009 by %oeing based on their evaluation criteria for suppliers
#or)orate 5r,anisation
#-airman
$*siness Directors
$an,alor e#om)le ; </D) /89 #om)le; </D) .elica)to r#om)le; </D)
Accessori es#om)l
e; </D) </D)
Aircraft (an)*r +n,ine Divn &* no0 /!5 Divn $%lre Aeros)ace Divn l* no0 8/9' Divn .y2ra6a2 Air)ort 7ervice Divn &* no0 'A!D# (an)* #entral /aterial3 :rocess &a6
Aircraft Divn ,Nasi A!D# Aircraft over-a*l Divn, Nasi +'$!D# Avionics Divn .y2ra6a2 +n,ine Divn (ora)*t
!"!D#, $% &ore
'AD,
.elica)tor /f, Divn $%lre /#7!D# $arra )*ra Divn (ol ata
A4!D# Nasi
Avionics Divn
7&!D#
A7+!D# /,
5ver-a*l Divn
0/J&'*IV&% 01 *H& 0).A-I9A*I0-: Adherence to design specification and laid down procedures in all activities* Bontinual improvement in all processes based on previous and customer feedbac/ *To empowers the employees through and encouraging in 1uality circle; small ground activities and suggestion scheme* To up /eep and improve the infra structure to meet the re1uirements of process, people and environment* To ensure optimum utiliGation of resource and reduction of waste* Today, $A3 has 19 Hroduction 9nits and 9 !esearch and Design Bentres in F locations in "ndia* The Bompany has an impressive product trac/ recordN10types of aircraft manufactured with in<house ! I D and18 types produced under license* $A3 has manufactured &ver 3::0 aircraft, 3600 engine sand overhauled over .1:0 aircraft And 0F300 engines* $A3 has been successful in numerous ! I D programs developed for both Defence and Bivil Aviation sectors* Today, $A3 has 19 Hroduction 9nits and 9 !esearch and Design Bentres in F locations in "ndia* The Bompany has an impressive product trac/ record<10types of aircraft manufactured with in<house ! I D and18types produced under license* $A3 has manufactured &ver 3::0 aircraft, 3600engines and overhauled over .1:0 aircraft and 0F300 engine* $A3 has been successful in numerous ! I D programs developed for both Defence and Bivil Aviation sectors
1(*()& .)04*H "LA- 01 HAL: 17 Hhysical tas/E $aw/ @/ 130* Hata<la/shya* Jiran spares to "A+ I Aavy* Dornier spares to "A+ I Aavy*37 '-port ordersE Airbus* %oeing* Bargo doors* #un bay doors* ire bundle* eapon bay door*
07 !@( ordersE
Adour @J .11
#arrett TH'
A- 0).A-I%A*I0-5% ;
The Fs model is better /nown as mc Jinsey)s F<s* This is because the two persons who developed their model* T&@ H'T'!( and !A%'!T @c Jinsey and co at that time* AT'!@AA have been consultants at
at the @cJinsey I Bompany consulting firm, the basic premise of the model is that there are seven internal aspects of an organiGation that need to be aligned if it is to be successful* They published their F<s @odel in their articulate >structure "s Aot &rganiGation?619.0 and in their boo/s* >The art of =apanese @anagement? 619.17 and >"n (earch of '-cellence? 619.07*The most notable e-ception, which might be the cause of its enormous popularity, has been the boo/ >"n search of e-cellence? by Tom Heters and !obert aterman 619.07, where they emphasiGe the lesson to be derived from America)s best run companies* Harado-ically, it is interesting to observe that the best compliment that can be made to an American firm is that it resembles a =apanese company* @B, Jinsey)s F( model reflects upon the frame wor/ used to evaluate the best managerial companies* The F)( model can be used in a wide variety of situations where an alignment perspective is useful forE "mprove the performance of a company* '-amine the li/ely effects of future changes within a company* Align departments and processes during a merger or ac1uisition* Determine how best to implement a proposed strategy
The four soft ()s however, are hardly feasible* They are difficult to describe since capabilities, values and elements of corporate culture are continuously developing and changing* They are highly determined by the people at wor/ in the organisation* They are highly determined by people at wor/ in the organisation* Therefore it is much more difficult to plan or influence characteristics of the soft element* Although the soft factors below the surface, they can have great impact of the hard and structure, strategies and system of the organisation*
STRATE Y: ; Actions a company plans in a response to or anticipation of changes in its e-ternal environment* (tructureE %asis for specialisation and co<organisation influenced primarily by strategy and by organisation siGe and diversity*
SYSTEM:; +ormal and informal procedure that support the strategy and structure*6system are the more powerful than they are credit*7
T#E SOFT S6%: STYLE<!ULTURE: ; The culture the organisation consists of two components*
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MANA EMENT STYLE: ; @ore a matter of what managers do than what they say2 how does a company)s manager spend their timeS hat are they focussing attentionS
STAFF:; The people;human resource management< process used to develop managers, socialiGation processes way of shaping basic values of management of cadre, ways of introducing young recruits the company, ways of heling to manage the careers of employees*
S.ILLE < The distinctive competence< what the company does best, ways of e-panding or shifting competences*
OALS :;
#uiding concepts, fundamental ideas around which a business is built must be simply usually stated at abstract level have great meaning inside the organisation even through outsiders not see or understand them* 'ffective organisation achieves a fit between these seven elements* This criterion is the origin of the other name of the modelE diagnostic model for organisational culture 6management styles7 and thus will affect structures, processes and finally characteristic competences of the organisation* "n change processes, many organisations focus their efforts on the hard ()s strategy, structure and system* They are less for the soft ()s s/ill, staff, and style and shared valued* Heters and aterman in >in search of e-cellence? commented however, that brea/ a successful changes
These problems often come up in the dissatisfying result of spectacular mega<merger* The lac/ of success and synergies in such mergers is often based in a clash of completely different cultures, values and styles, which ma/e it difficult to establish effective common systems and structure* The F<s model is a valuable tool to initiate changes processes and to give them direction* $elpful application is to determine the current state of each element ant to compare this with the ideal state* %ased in this it is possible to develop action plans to achieve the intended states*
=.S,OT ANALYSIS:
%*)&-.*H: $A3 is an avionics industry and it is which is under government sector* $A3)s customer is defence as well as non defence the strength area for $A3 is as under
A0AILA-ILITY OF #AL "t e-ists the /ey areas are manufacturing repair and overhaul of aircraft*
"t e-ists in $A3* Ces, assured business is available by its buyers which are basically "ndian air force, army, navy, %(+ and other customer of national and international origin*
ell conceived function area strategies* Access to economies of sale Bost advantage
4&A<-&%%&%: The wea/nesses area for $A3 is as under, POTENTIAL INTERNATIONAL ,EA.NESSES (trategic direction &bsolete facilities 3ac/ of managerial dept and talent @issing competencies +alling behind in !ID
AT #AL Aot true 3atest facilities Aot true Bompetencies e-ist Ces
0""0)*(-I*I&%:
customers as man power is cheaper in "ndia and world class infrastructure is available in $A3*
*H)&A*%: The threats area for $A3 is as under, POTENTIAL E>TERNAL ANALYSIS Bostly regulatory re1uirements Bompetition in international mar/et AT #AL Ces (trong competition e-ist $A3
1.F$@ed A%%et%: #ross bloc/ 3essE Depreciation Net A4o&: Bapital wor/ in progress ".Inve%tment% De3erred Ta@ A%%et Tota4 7. !urrent A%%et%1 Loan% and Advan&e%: "nventories
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:00.*6.
:.60*80
B.LEARNIN
E>PERIEN!E:
As student of Kisvesvaraya Technological 9niversity, " have gone through dissertation of 10 wee/s and in inventory management , from 1Fth December 0010 to 03rd +ebruary 0013 it was really an opportunity for me to /now the functioning of $A3, @!& Division* The ten wee/s pro5ect has created a sense of practical e-posure and enlightenment in my mind as to what actually as organisation is how theoretical concepts are practiced in with only theoretical /nowledge, several management concepts were slightly difficult to analyse* $owever, after pro5ect " have felt empowered with confidence to understand different management concepts in a pragmatic manner*
INTRODU!TION:
!atio analysis is a very powerful and most commonly used tool of analysis and interpretation of financial statements* "t concentrates on the inter<relationship among the figure appearing in the financial statements* !atio analysis helps to analyse the past performance of a company and to ma/e future pro5ections* "t allows various interested parties li/e management, shareholders, potential investors, creditors, government and other analysts to ma/e an evaluation of the various aspects of company)s performance from their own point of view and interest* +or e-ample, management and shareholders may be interested in the
Rat$o ana4y%$%:
Thus, ratio analysis is a techni1ue of analysis and interpretation of financial statements by establishing I interpreting various ratios for helping in ma/ing certain decisions !atio analysis is a powerful tool to understand the financial strength I wea/ness of the firm*
Inter5retat$on o3 Rat$o%:
"nterpretation is an activity concerned with giving brief I understandable e-planation of analyGed financial data 6ratio7 to re1uired people* "t is >e-plaining financial ratio in simple language which may be understood by a layman? "t is made in the following waysE (ingle absolute ratio #roup of ratios $istorical comparison Hro5ected ratios "nter<firm comparison !atio analysis I interpretation begins with selection of financial data, calculation of ratios, and comparison of calculated ratios on some standards to interpret ratios*
-a%$& o3 &om5ar$%on:
Trend rat$o%: "t involves a comparison of ratios of a firm over a time, that is, present ratios are compared with past ratios for the same firm* The comparison of the profitability of a firm, say, year 1 through : is an illustration of a trend ratio* Trend ratios indicate the direction of change in the performance improvement, deterioration, or constancy over the years*
T)e $nter 3$rm &om5ar$%on: "t involves comparison of the ratios of a firm with those of others in the same line of business or for the industry as a whole, reflects its performance in relation to its competitors*
Ot)er ty5e% o3 &om5ar$%on: They may relate to comparison of items within a single year)s financial statement of a firm and comparison with standards or plan*
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TYPES OF RATIO:
The Types of !atios which are used for the analysis and interpretation of financial viability of $A3 areE
LI2UIDITY RATIOS
Burrent ratio
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TURNO0ER RATIOS
"nventory turnover ratio Debtor turnover ratio +i-ed assets turnover ratio Bapital turnover ratio or/ing capital turnover ratio
PROFITA-ILITY RATIOS
&perating ratio '-pense ratio A* Bost of goods sold ratio %* Administrative ratio Hroprietary ratio
RESEAR!# DESI N:
"t involves finding out best tool, process I procedure for getting financial information re1uired for the pro5ect wor/ >!atio analysis I "nterpretation?
1* Pr$mary data: The data which are collected for first time 6originally7 are called
primary data* These data are collected directly through interviews I discussion with officials of the firm* $ere primary data was collected from interaction I en1uiring various firms*
0* Se&ondary data: The data, which have already been collected by someone else, are
called secondary data* 6Aot original in character and second hand information7 $ere, secondary data is collected from firm)s past year)s records li/e financial statements and annual reports* Data is also obtained from various boo/s and websites for theoretical purposes* The 3 years financial statements of $A3* This includes %alance sheet I profit I loss account*
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L$Gu$d$ty Rat$o%:
3i1uidity refers to the ability of a firm to meet its obligations in the short<run, usually one year* 3i1uidity ratios are generally based on the relationship between current assets 6the sources for meeting short term obligations7 and current liabilities* The important li1uidity ratios areE current ratio, acid<test ratio and cash ratio*
ANALYSIS. The above table shows that current ratio in $A3* "n the year 000F<0. it was 1*8.,in the year 000.<09 it was 1*88,in the year 0009<10 it was 1*3F, in the year 0010<11 it was 1*99 and in the year 0011<10 it was 1*90*
ra5) no: 1
Inter5retat$on: +rom the above table and graph we can observe the current ratios from 000F<0. to 0011<10* The ratios show the firm)s commitment to meet its short term liabilities* #enerally 0E1 is considered as ideal for a concern* "f the ratio is less than 0 the firm may face difficult in payment of current liabilities* (ince ratios of the company are close to 0, it is maintaining ideal ratio*
".2u$&: Rat$o:
EAST WEST INSTITUTION OF TECHNOLOGY BANGALORE Page 48
TaA4e no: " Amount $n4a:)% Part$&u4ar%<year% 2u$&: a%%et !urrent 4$aA$4$ty 2u$&: Rat$o "??8;?I 8960*90 :.6F*88 ?.I=C "??I;?D ..9:*F6 .936*3: ?.DDC "??D;1? 130F9*39 13199*F0 ?.DD? "?1?;11 0000F*F0 13F11*03 1.B" "?11;1" 33.3:*80 0093F*81 1.B"
ANALYSIS. the above table shows that the 1uic/ ratio in $A3* "n the year 000F<0. it was 0*.8:, in the year 000.<09 it was 0*99:, in the year 0009<10 it was 0*990, in year 0010<11 it was 1*60 and in the year 0011<10 it was 1*60*
2 1.5 1
QUICKRATIO
S E M I T F O N
Inter5retat$on: The above graph clearly specifies that $A3, the 1uic/ ratio of last five years is showing increasing trend, it was 0*.8: in the year 000F<0., but increased 1*60 in the year 0011<10* "t shows the substantial increase in current assets in these year, the li1uidity position of the company is favourable*
TaA4e no: 7 Amount $n La:)% Part$&u4ar%<year% !a%) !urrent L$aA$4$ty !a%) Rat$o "??8;?I 081*.0 :.6F*88 ?.?= "??I;?D F8:*F1 .936*3: ?.?I "??D;1? F88*:3 13199*F0 ?.?B "?1?;11 9096*10 13F11*03 ?.BB "?11;1" 1.3:3*90 0093F*81 ?.II
ANALYSIS The above table shows that the cash ratio* "n the year 000F<0. it was 0*08, in the year 000.< 09 it was 0*0., in the year 0009<10 it was 0*06, in the year 0010<11 it was 0*66 and in the year 0011<10 it was 0*..*
Inter5retat$on: +rom the above table it is clear that the company is very good* The cash maintenance of the company is increasing year by year from 081*.0 la/hs in 000F<0. to 1.3:3*90 la/hs in 00011<10* #ood cash position of the company helpful to meet the e-penses of the company*
TaA4e no: = Amount $n4a:)% Part$&u4ar%<year% DeAt EGu$ty DeAt EGu$ty rat$o "??8;?I 1000*00 .3F6*3: ?.1= "??I;?D F01*86 18338*:0 ?.?C "??D;1? 1098*F6 1.F:.*80 ?.?8 "?1?;11 :81*F0 0.8::*0F ?.?" "?11;1" <<<<<<< 36199*81 ?.??
ANALYSIS
EAST WEST INSTITUTION OF TECHNOLOGY BANGALORE Page 53
Inter5retat$on +rom the above table we can see that the ratio is year by year is decease by 000F<0. to 0011< 10 is ratio is 0*18 to 0*00 last year is long term debt is not there* (o the company avoide barrowed or loan funds and it proper used available owner capital funds in the company*
TaA4e no: C Amount $n 4a:)% Part$&u4ar%<year% DeAt A%%et DeAt to a%%et rat$o ANALYSIS. The above table shows debt to asset ratio in the year 000F<0. it was 0*0F, in the year 000.<09 it was 0*03, in the year 0009<10 it was 0*08, in the year 0010<11 it was 0*01 and in the year 0011<10 it was 0*00* "??8;?I 1000*00 16060*93 ?.?8 "??I;?D F01*86 08919*80 ?.?7 "??D;1? 1098*F6 38:90*.1 ?.?= "?1?;11 :81*F0 88F9:*88 ?.?1 "?11;1" <<<<<<< :9.08*33 ?.??
ra5) no: C
Inter5retat$on The higher the ratio, the greater ris/ will be associated with the firm operation* "n addition, high debt to asset ratio may be indicates low barrowing capacity of a firm, which in turn will lower the firm financial fle-ibility*
7.Pro5r$etary Rat$o:
Hroprietary ratio is the ratio which e-penses the relationship between net worth or e1uity and total assets* "t establishes relationship between the proprietary or shareholders funds and EGu$ty Pro5r$etary Rat$oH JJJJJJJJ. Tota4 a%%et T'1uity U (hare Bapital V !eserve I (urplus* TaA4e no: B Amount $n 4a:)% Part$&u4ar%<year% EGu$ty Tota4 A%%et Pro5r$etary Rat$o AAA3C("(* The above table shows proprietary ratio in the year 000F<0. it was 0*:9, in the year 000.<09 it was 0*60, in the year 0009<10 it was 0*:9, in the year 0010<11 it was 0*66 and in the year 0011<10 it was 0*61* "??8;?I 9860*6. 16060*93 ?.CD "??I;?D 1:0F1*80 08919*80 ?.B? "??D;1? 000:0*80 38:90*.1 ?.CD "?1?;11 09:3F*00 88F9:*88 ?.BB "?11;1" 36809*:0 :9.08*33 ?.B1 total tangible assets* The higher the ratio the better performance*
ra5) no: B
Inter5retat$on +rom the above table we can see that the ratio is fluctuated year by year in 000F<0. to 0009< 10 the ratio is 0*:9 to 0*:9, it increase in the year 0010<11and it decrease in 0011<10 so company Total assets is good*
F$@ed A%%et% 'Net -4o&:( FA to Net ,ort) Rat$oH JJJJJJJJJJJJ S)are )o4der% 3und TaA4e no: 8 Part$&u4ar%<year% F$@ed A%%et S)are)o4der% 3und F$@ed A%%et% to 9ort) Rat$o ANALYSIS. The above table shows fi-ed asset to net worth ratio in the year 000F<0. it was 0*:9,in the year 000.<09 it was 0*8F, in the year 0009<10 it was 0*88, in the year 0010<11 it was 0*83 and the year 0011<10 it was 0*:0* "??8;?I :0.F*F0 9860*6. Net ?.CD "??I;?D F1F:*0. 1:0F1*80 ?.=8 "??D;1? ..80*:0 000:0*80 ?.== Amount $n 4a:)% "?1?;11 10F96*3F 09:3F*00 ?.=7 "?11;1" 1.0.F*09 36809*:0 ?.C?
ra5) no: 8
Inter5retat$on +rom the above table we can see that the ratio is decreasing year which was 0*:9 in 000F<0. to 0*83 in up to 0010<11* And increasing is 0*83 in 0010<11 to *:0 in 0011<10* Therefore here the ratio is good*
TaA4e: I Amount $n 4a:)% Part$&u4ar%<year% !urrent A%%et% "??8;?I .F10*39 "??I;?D 10.89*0. 1:0F1*80 ?.IC "??D;1? 1F9.0*.0 000:0*80 ?.ID "?1?;11 0F0:6*80 09:3F*00 ?.D" "?11;1" 3969F*.0 36809*:0 1.?I
S)are )o4der% 3und 9860*6. !urrent A%%et% to net ?.D" 9ort) rat$o ANALYSIS.
The above table shows current asset net worth ratio in the year 000F<0. it was 0*90, in the year 000.<09 it was 0*.:, in the year 0009<10 it was 0*.9, in the year 0010<11 it was 0*90 and in the year 0011<10 it was 1*0.*
ra5) no: I
Inter5retat$on +rom the above table we can see that the ratio is decreasing year which was 0*90 in 000F<0. to 0*.: in 000.<09* And increasing is 0*.: in 000.<09 to 1*0. in up to 0011<10* The ratio was good in 0011<10*
ra5) no: D
Inter5retat$on: The high inventory turnover ratio will show in the good inventory management, and low inventory implies e-cessive level than warranted by production and sales activity in 0010<11 inventory turnover ratio of $A3 was good but it has been decreased in 0011<10* The company production is high so may be the cause of for the less turnover ratio, and it may be the causes of recession period so inventory turnover ratio increased in 0010<11 and it was decreased in 0011<10*
TaA4e no: 1? Amount $n4a:)% Part$&u4ar%<year% Ra9 mater$a4 &on%umed Average %to&: o3 "??8;?I 1:.0*0. ra9 1:36*06 1.?7 "??I;?D 16.8*9. 130:*00 1."8 "??D;1? 1.08*61 18..*:6 1."7 "?1?;11 1993*08 01.9*6. ?.D1 "?11;1" 0380*06 0.99*9: ?.I1
ANALYSIS. The above table shows raw material tuanover ratio in the year 000F<0. it was 1*03, in the year 000.<09 1*0F, in the year 0009<10 it was 1*03, in the year 0010<11 it was 0*91 and in the year 0011<10 it was 0*.1*
ra5) no: 1?
1.5 1 0.5 0
RAW MATERIALTURNOVERRATIO
S E M I T F O N
2007=08
2008=09
2009=10 YE ARS
2010=11
2011=12
Inter5retat$on: The raw matireal turnover ratio was highest dooring 000.<09 that is 1*0F and lowest in the year 0011<10 at 0*.1 this ratio, throughout the period of study showed fluctuating trend*
TaA4e no: 11 Amount $n4a:)% Part$&u4ar%<year% "??8;?I Sa4e% F$@ed a%%et% F$@ed 1.0:9*F. :0.F*F0 "??I;?D 00F1:*60 F1:0*0. ".D? "??D;1? 00168*18 ..80*:0 ".C1 "?1?;11 303:1*3: 10F96*3F ".78 "?11;1" 31600*F9 1.0.F*09 1.8C
a%%et 7.=1
turnover rat$o ANALYSIS. The above table shows fi-ed asset turnover ratio in the year 000F<0. it was 3*81, in the year 000.<09 it was 0*90, in the year 0009<10 it was 0*:1, in the year 0010<11 it was 0*3F and in the in the year 00011<10 it was 1*F:*
ra5) no: 11
Inter5retat$on: +rom the above table we can see that the ratio is decreasing year by year which were 3*81 in 000F<0. to 1*F: in 0011<10* "t indicates under utiliGation of fi-ed assets*
TaA4e no: 1" Amount $n 4a:)% Part$&u4ar%<year% Net %a4e% Net 9or:$ng &a5$ta4 ,or:$ng turnover rat$o ANALYSIS. The above table shows wor/ing capital turnover ratio in the year 000F<0. it was 6*3:, in the year 000.<09 it was :*09,in the year 0009<10 it was 8*63, in the year 0010<11 it was 0*08 and in the year 0011<10 it was 1*6.* "??8;?I 1.0:9*F. 0.80*9: "??I;?D 00F1:*60 3910*F3 C."D "??D;1? 00168*18 8F.3*0. =.B7 "?1?;11 303:1*3: 13:8:*3F "."= "?11;1" 31600*F9 1.F60*39 1.BI
&a5$ta4 B.7C
Inter5retat$on: The inventory to wor/ing capital turnover ratio show)s, how the company utilising the inventory with using the wor/ing capital* This ratio should be less than it shows the company, is utilising a good inventory with less utilising of wor/ing capital* "n $A3 it was high in the year 000F<0., but it was 1*6. in 0011<10, so it shows that the company using low wor/ing capital for the utilisation of inventory*
!A Turnover Rat$o
TaA4e no: 17 Amount $n4a:)% Part$&u4ar%<year% Net %a4e% !urrent a%%et% !urrent turnover rat$o ANALYSIS. The above table shows current turnover ratio in year 000F<0. it was 0*0F, in the year 000.<09 it was 1*61, in the year 0009<10 it was 1*03, in the year 0010<11 it was 1*11 and in the year 0011<10 it was 0*.0* "??8;?I 1.0:9*F. .F10*39 a%%et ".?8 "??I;?D 00F1:*60 10.89*0. 1.B1 "??D;1? 00168*18 1F9.0*.0 1."7 "?1?;11 303:1*3: 0F0:6*80 1.11 "?11;1" 31600*F9 3969F*.0 ?.I?
ra5) no: 17
Inter5retat$on: +rom the above table we can see that the ratio is decreasing year by year which were 0*0F in 000F<0. to 0*.0 in 0011<10* A decrease in the ratio is a good indication of the performance of the company* (ince the ratio is decreasing every year it shows ability of the company to realiGe from debtors and less amount of money is bloc/ed in inventories*
TaA4e no: 1= Amount in la/hs Part$&u4ar%<year% Net %a4e% Average TA TA turnover rat$o "??8;?I 1.0:9*F. 18186*96 1."I "??I;?D 00F1:*60 00:91*1. 1.?1 "??D;1? 00168*18 09F:6*10 ?.8= "?1?;11 303:1*3: 39:06*.0 ?.88 "?11;1" 31600*F9 :1...*00 ?.B1
ANALYSIS. The above table shows totsl asset turnover ratio in the year 000F<0. it was 1*0., in the year 000.<09 it was 1*61, in the year 0009<10 it was 0*F8, in the year 0010<11 it was 0*FF and in the year 001<10 it was 0*61*
EAST WEST INSTITUTION OF TECHNOLOGY BANGALORE Page 73
ra5) no: 1=
Inter5retat$on: The inventory to total asset ratio depicts decrease in the ratio which indicates that the amount of fund loc/ed up as inventory in total asset, in other words it indicates that there is efficient management of inventory in the company* +rom the above table we can see that the ratio is decreasing by 000F<0. to 0009<10 is 1*0. to 0*F8, 0010<11 is increasing by 0*F8 to 0*FF, and 0011<10 decrease by 0*FF to 0*61 Bompany total assets is high*
ESTIONS:
The study inventory management with respect to $elicopter @!& Division has been carried with ob5ectives of Different categories of inventories, activities processed by stores managers, inventory control techni1ues, inventory turnover ratios, etc* @y study reveals the following findingsE "n $'3"BAHT&! @!& D"K"("&A, for physical verification of goods they follow the >A%B analysis?* The method of valuation is done on the basis of > eighted Average Bost method?* The inventory turnover ratio has increased over the years up to 000F<0. after which there is a little decrease in the subse1uent years* The investment is high for the reason the production plan has varied for being a concurrent design and production of
Sugge%t$on: The days of inventory holding should be reduced to avoid unnecessary bloc/ through the analysis of future demand to the product of the company* To avoid unnecessary labour* To "mprove Bomputer Technology*
7.!ON!LUSION
"nventory management has so far been loo/ed at as the driving seat of the financial manager* %y studying the inventory management in $A3, @!& division, one can /now the growth aspects of the company* All /inds of act in the operating field of production, procurement, mar/eting and services get ultimately interrupted by the final implication of the management of wor/ing capital and its segment* The efficiency in the use of wor/ing capital happens to be the most important condition for the running of the business so as to earn ade1uate profit* "n $A3, @!& division, the use of "nventory is efficient, affordable and can be even improved in order to have more profit for further period*
71%t mar&) 71%t mar&) 71%t mar&) 71%t mar&) 71%t mar&) "??I SOUR!ES OF FUNDS: 1. S)are)o4der%6 Fund% (hare capital !eserves and surplus Tota4 096*00 9166*8. 9860*6. 096*00 18FF:*00 1:0F1*80 096*00 199:6*00 000:0*80 096*00 09081*00 09:3F*00 096*00 36133*30 36809*:0 "??D "?1? "?11 "?1"
'net( TOTAL APPLI!ATION OF FUNDS: 1.F$@ed A%%et% #ross bloc/ 3essE Depreciation Net A4o&: Bapital wor/ in progress ".Inve%tment% De3erred Ta@ A%%et Tota4 7. !urrent A%%et%1 Loan% and Advan&e% "nventories (undry Debtors Bash And %an/ %alances &ther Burrent Assets 3oans and Advances
Tota4 TOTAL ASSETS 16060*93 =. Le%%: !urrent L$aA$4$t$e% and 5rov$%$on% Breditors Hrovisions Tota4 Net !urrent A%%et% 1308*33 8:63*11 :.6F*88 0.80*9:
The
For Year
The
st
For Year
The
st
For Year
The
st
For Year
The
stores
and 2483.85
spares 2254.05 Hower and fuel 5041.79 '-penses relating to employees &ther e-penses of 1050.12 administration (elling and distribution e-penses
5.02
charges +inancial charges Hrovision for losses and write<off Donations Depreciation on fi-ed assets Deferred revenue e-penditure written<off @iscellaneous written<off Tota4 e-penditure
". Pro3$t Hrofit for the year before F3.3*.0 ta-ation Ta@ 5rov$%$on% '$n&ome ta@(: Burrent &n Bompleted Assessments +ringe benefits ealth TaDeferred Tota4 Hrofit for
.193*F8
.:0.*3.
18803*:9
1:39:*98
the
year
ta-ation Aet income pertaining to prior 9*:3 period, change in A;c estimates and e-traordinary items Net Pro3$t ===7.B8 AddE Hrofit brought forward 0680*F8 Amount available for F0.8*81 appropriation 7. A55ro5r$at$on Transferred to general reserve F3:*00 "nterim dividend on e1uity 88*83 shares Borporate taon interim :*.0
dividend Hroposed dividend on e1uity 88*83 shares Borporate ta- on proposed 6*03 dividend %alance carried to balance 608.*:0 sheet -I-LIO RAP#Y: $A3 websiteE www*hal<india*com