3

FINANCIA
L
ANALYSIS
OF
THE
COMPANY
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RESEARCH METHODOLOGY
hen we talk of research methodology, we not only talk of the
research methods but also the comparison of the logic behind the
methods, we used in this context of our research study and explain
why we are using a particular method or technique and why using the others.
Research methodology is a way to systematically solve the research problem. It
may be understood as a science of studying how research is done systematically. In
this, we study the various steps that are generally adopted by researcher in studying
his research problem along with the logic behind them. The present study is
based upon the case study method of research to investigate procedures at micro
level.
!
"s the study is analy#ing probing in nature, thus, entirely based on the secondary
data gathered through the annual reports of the industry. Therefore it provides a
historical perspective of decisions.
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RESEARCH
esearch refers to search for knowledge. Research is an original
contribution to the existing stock of knowledge making for its
advancement. It is the pursuit of truth with the help of study,
observation, comparison and experiment. In short, the search for knowledge
through ob$ective and systematic method of finding solution of the problem is
research. The advance learner%s dictionary of current &nglish gives the meaning of
research a careful investigation or inquiry especially through search for new facts
in any branch of knowledge.
R
RESEARCH METHODS:
Research methods may be understood as those methods'techniques that are used
for conduction of research. "ll those methods which are used by the researcher
during the course of studying his research problem, are termed as research
methods. (eeping in view, the research methods can be put into following three
groups)
In the first group we include those methods which are concerned
with the collection of data. These methods will be used where the
data already "vailable are sufficient to arrive at the required
solution.
The second group consists of those statistical techniques which are
used to establish relationships between the data and the unknown.
The third group consists of those methods which are used to
evaluate the accuracy of the obtained results.
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COLLECTION OF DATA:
There are several ways of collecting the appropriate data which differ considerably
in context of money, cost, time and other sources at the disposable of the
researcher.
There are two types of data)
*rimary data
+econdary data
Primary data:
*rimary data are those which are collected afresh and for the first time, and thus
,appen to be original in character. In case of descriptive research, researcher
performs survey whether sample survey or census survey, thus we obtain primary
data either through
-bservation
.irect communication with respondent
*ersonal interview
Secondary data:
+econdary data are those which have already been collected by someone else and
have already been passed through statistical process. In this pro$ect report, both
types of data have been used. /ainly, secondary data is used such as annual reports
of last two years of 0hinar +yntex 1td. industries.
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CHINAR SYNTEX LTD. INDSTRY
introd!ction
stablished in 2345, 0hinar +yntex 1td. ,as displayed remarkable
business "cumen to grow both vertically and hori#ontally. 0hinar +yntex
1td. has tapped opportunities as a result of its dynamic approach to
emerge as a leading industrial giant of our country. Today, it is more than an
industrial enterprise6 it is a symbol of India%s search for economic and industrial
liberali#ation.
&
The group of operates in the core sectors of iron, petroleum, fertili#ers, cement,
chemicals and textiles. !ith a turnover of approximately of Rs. 72528.49 crore, the
group en$oys a pioneer status in numerous industrial disciplines such as viscose
staple fiber, rayon grade pulp, and caustic soda, textiles, cement and sponge iron. It
tries to a faster a simple corporate philosophy that is to achieve perfection and
excellence in all spheres. Its tradition is that of innovation, dynamism and
experiments.
Research and .evelopment plays a vital role in its vertical and hori#ontal
integration programs. It perfectly complements its goals of leadership, quality and
growth : its aim to be best. 0hinar +yntex 1td. has a strong presence in fabrics,
synthetic yarns, worsted yarn and is well known for its branded suiting 0hinar
+yntex 1td. and ;raviera, made from different blends of polyester and viscose. Its
textile plants are located at <hiwani in ,aryana and /alanpur in /adhya *radesh.
=abric operations are centrali#ed at <hiwani with a processing capacity of 249
looms and >?989 spindles a year, while the /alanpur unit manufactures worsted
dyed yarn spun from 288 per cent merino wool along with polyester and other
blends.
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The 0hinar +yntex 1td. brand has differentiated itself as @The *ower of =ashion%
with several innovative fabrics such as, Ancrushables, Ice Touch, *urista and 0lean
=ab, "qua soft and &B+tretch. 0hinar +yntex 1td.Cs strong nationwide retail
network includes 228 exclusive showrooms as well as another 788 wholesalers and
27,888 multiBbrand outlets through which it reaches its customers.
0hinar +yntex 1td. Industries 1imited, a flagship company of the "ditya <irla
;roup, ranks among IndiaCs largest private sector companies, with a turnover of Rs.
72528.49 crore for =D 7883B28, with <hiwani 0hinar +yntex 1td. Textiles 1td.
having a turnover of Rs. 795.88 crore.
Its premium brands, the C0hinar +yntex 1td.C and C;ravieraC range of fabrics, have
distinctively positioned themselves as "t#e $o%er o& &a'#ion".
0hinar +yntex 1td. has a strong presence in fabrics, synthetic yarns, worsted yarn
and is well known for its branded suiting 0hinar +yntex 1td. and ;raviera, made
from different blends of polyester and viscose. =abric operations are centrali#ed at
<hiwani with a processing capacity of 25 million meters a year.
The 0hinar +yntex 1td. brand has differentiated itself as Cthe power of fashionC with
several
Innovative fabrics such as, Ancrushables, Ice Touch, =reedom, Eenetia, *urista,
0lean =ab, and "qua soft. 0hinar +yntex 1td.%s strong nationwide retail network
includes F8 exclusive showrooms as well as another 788 wholesalers and 27,888
multiBbrand outlets through which it reaches its customers.


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CHARACTERISTICS OF CHINAR SYNTEX LTD. INDSTRIES
0hinar +yntex 1td. was incorporated on 7? "ugust 2345, exactly 28 days
after India achieved independence.
-riginally a textile manufacturer, 0hinar +yntex 1td. has successfully
diversified into E+=, cement and chemicals.

"ditya <irla ;roup is the worldCs largest producer of E+=

The "ditya <irla ;roup is the ninthBlargest cement producer in the world

+econd largest producer of caustic soda in India

=ourthBlargest producer of insulators in the world

0hinar +yntex 1td. and ;raviera range of fabrics signify the Cpower of
fashionC
I+- 3887 and I+- 24882 0ertified

0aptive power generation in most of its units

/akes 25 million metres of textiles a year

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MISSION OF CHINAR SYNTEX LTD.
To deliver superior value to our customers, shareholders, employees and
society at large.
2G &ducation for all) to secure them a brighter future.
7G +ustainable 1ivelihood) through training and education for skill development.
>G ,ealth care and ,ygienic living conditions.
4G =amily !elfare
?G Restoring self esteem of the physically handicapped
FG &mpowerment of !omen
5G 0ommunity .evelopment) holistic development of the community including
infrastructure
9G &spousal of social causes

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he erstwhile *un$ab cotton /ills at <hiwani in ,aryana was taken over
by 0hinar +yntex 1td. Industries 23F4.+ubsiquently, its product mix was
changed from cotton to polyester' viscose suiting. Today with a capacity
of over >?,989 spindles of yarn and over 249 looms of fabric, <hiwani Textile
/ills H<T/G caters to a large market in India. Its brandB ;raviera +uitingB is wellB
received in /iddle &ast, +outh &ast "sia,0yprus, latin "merica and /auritius as
well. The first to introduce +ynthetic .enims and *olyester Iute +uiting, the Anit
intends to diversify into fancy yarn spinning and blended design suiting using
fibres like silk, cotton , flax and $ute. " leader in Darn and fabric B right from its
inceptionB <T/Cs brands include "donis, and +umo.
T
The organi#ation CHINAR SYNTEX LTD. (HI)ANI TEXTILE MILLS is a
unit of 0hinar +yntex 1td. Industrial 1td. It%s Head O&&ice at NA*DA +M.P., and
%or-in. o&&ice at (HI)ANI. This mill is under dynamic leadership of Mr.
/MAR MANA*LAM (IRLA. This mill was under the inspiring leadership of
0hief -perative -fficer /r. +. (rishnamurthy along with moderni#ation has
successfully diversified its production to synthetic blended fabric , which is
modern trend , en$oy a very good reputation in India as in modern trend . It got I+-
3887 and 24882 for its quality and at present undertaking !.0./. H!orld 0lass
/anufacturingG in the organi#ation.
<hiwani Textile /ill have been transferred to a subsidiary, 0hinar +yntex 1td.
<hiwani Textiles 1td. w.e.f. 2st -ctober, 7885. The move is aimed at enabling the
new entity to have a more focused approach to the development of textile business
and pursue emerging growth opportunities in the textile sector.
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In =inancial Dear 7883B28, 0hinar +yntex 1td. <hiwani Textile 1imited, the textile
subsidiary of 0hinar +yntex 1td. 0ompany posted a better than expected
performance. Jet revenue increased by 28K to Rs.795 0rores with higher sales in
both, -ver the 0ounter and Readymade ;arments segments. " new thermal power
plant commissioned last year has led to substantial cost savings and has
generated profits on power sale. In addition, captive power provides uninterrupted
power supply, enabling better capacity utili#ation. Jet profit increased to Rs.4.F
0rores as against a marginal profit of Rs.8.> 0rores in =D83.
C#inar Synte0 Ltd. (#i%ani Te0ti1e Ltd. i' e2!i$$ed %it#:
2. !orld 0lass spindles.
7. .ornier 1ooms H;ermanyG and +lu#er 1ooms H +wit#erland G.
>. 0omputerised matching systems and sophisticated $etB dyeing machines in its
*rocessing unit.
4. 0omputer "ided .esign packages in its =abric .evelopmnt +ection.
0,IJ"R +DJT&L 1T.. promotes the mega fashion event ;raviera Mr. IndiaMB
the winner of this
&vent participates in the spublicised event6 it has provided a boost to the image of
the companyCs products.
?. It has Italian machinery for making perching and dying the cloth.
CHINAR SYNTEX LTD. also promotes the mega fashion event CHINAR
SYNTEX LTD. MR. INDIA3B the winner of this event participates in the
publici#ed event, it has provided a boost to the image of the company%s products.

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STRATE*IES OF CHINAR SYNTEX LTD.
4. )ORLD CLASS MANFACTRIN*+)CM,
In order to delight customers, employees, stakeholders and to become a +uccessful
competitor in global market, "ditya <irla ;roup has evolved and promoted this top
rank methodology of !.0./. to sustain excellence in company wise performance.
This is multidimensional vi#. waste elimination, ?B+, IIT, T*/ +ystem N 0ash
=lows.
5. (MC +Mana.ement Centre,
*hilosophy behind its logo) The philosophy of </0 is beautifully captured in its
symbol. The logo has been designed to reflect concept of group dynamics and
group +ynergy, six symbolic person, one is dark blue and five is light blue denote
one group, all fusing their energies and knowledge to form a strong nucleus.
6. 7!a1ity Circ1e'
Ouality is match word of the unit. It is not imposed by checks and counters
0hecks. It is a part of total manufacturing system. Ouality is first parameter. "gain
in order to maintain a superior quality of the product various /anagement
practices and being carries out by top management. Ouality 0ircles meetings have
been formed by the top management with a view to Increase the involvement and
responsibility in their individual work areas. "fter completion of the *ro$ect, award
by way of recognition are given to all The quality circles team members.
8. 9:S +a #o!'e:-ee$in. mana.ement,
;ood quality management producers can prosper only in clean and serene
"tmosphere an so the top management at <T/ have implemented the ?B+
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Technique Hrelated to the wok environmentG)
+eiri +orting out unnecessary items.
+eiton +ystemati#ing necessary items.
+eison +weeping of work place and machines.
+eiketsu +aniti#ing.
+hitsuke +elf disciplining.
9. T7M +TOTAL 7ALITY MANA*EMENT,
Today%s executive view the task of improving product and service quality as their
top priority. /ost customers, whether they are internal or external will Jo longer
accept average quality performance. If company wants to stay in they have no
choice but to adopt TO/. (eca!'e of this strong quality consciousness of <T/, in
4;;8 *ra<iera was awarded the prestigious I+- 3887 so certification. &ach
process from buying the =ibre to the finished fabric monitored by the computeri#ed
machines, highly observant workers and technicians.
O(=ECTI>ES OF THE COMPANY
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-b$ectives establish the goals and the aims of the business and determine the shape
of future events. -b$ectives are the way of achieving motives for profit of social
service. /ain ob$ectives of C#inar Synte0 Ltd. (#i%ani Te0ti1e Mi11' as in its
Memorand!m o& A''ociation are)
Increasing productivity of work force
To introduce new products and create new markets
0ustomers service and customer satisfaction
Improving work culture among the employees
0apitali#ing on company strength and use of corporate assets
0ontinuous innovation
To provide a growth rate of about 28K p.a.
Improve the advertising effectiveness
To ensure that a large proportion of its sales is directed towards the sectors
and urban sectors

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S)OT ANALYSIS OF CHINAR SYNTEX LTD.
Stren.t#' o& CHINAR SYNTEX LTD.
2. 0,IJ"R +DJT&L 1T.. is a composite firm in ,aryana.
7. 0,IJ"R +DJT&L 1T.. is a financially sound firm.
>. !orking environment is peacefully HAnion is strength principle is followedG
4. =acilities given to employees N employers on time and up to date.
?. *roduct quality is given equally to all H!holesaler, RetailersG
)ea-ne''e' o& CHINAR SYNTEX LTD.
2. <asic salary structure is not up to date some manipulations are needed
7. Jot sufficient facilities are given employers N employees
O$$ort!nitie' &or CHINAR SYNTEX LTD.
2. ;iven chance to 0hinar +yntex 1td. to make N sale its product providing them manpower,
/achine, money, market, material
7. In near future they will start readymade garments
T#reat' to CHINAR SYNTEX LTD.
2. 0,IJ"R +DJT&L 1T.. faces threats from its competitors like Eimal, ocm , +iyaram ,
Raymond.
7. 0,IJ"R +DJT&L 1T.. face in overseas market like *hilippines, /alaysia, 0anada,
/exico,"merica.

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)HAT CAN )E DO
a, +ampling
?, +eeding
c, *erfecting a new product
d, Trade and ' or 0onsumer Research
e, 1aunch of new products
&, 0oB<randing
., Ioint *romotion
#, +haring .istribution
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)HAT CAN YO EXPACT
Ander this our partners can expect ' avail of the following support services from
<irla Eiscose.
". Darn 1ogistic support) " good quality viscose or viscose blended yarn can be
made available from a good spinning mill with in time.
<. Technical support) Eiscose based processing support through manuals is
available on a caseBtoBcase basis. *hysical demonstration at select process
houses is also carried out for the benefit of the knitters and processors.
0. .esign and .evelopment support) !e have an application development
center at TIT N +6 <hiwani, where we keep on developing new product and
concepts.
.. /arketing +upport) To tie up spinners' knitters'
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INTRODCTION TO PROFITA(ILITY ANALYSIS
The basic ob$ective of running any business is to earn profit. *rofits determine the financial
position, liquidity and solvency of any business enterprise. Thus, management of
profitability has played a significance role in the field of financial management. It is the
important and indispensable component of every business entity%s financial structure. The
quantum may differ, depending upon factors which have a direct bearing on the profit of
the unit, profit longer or shorter. The length of profit is determined by factors, availability
to and terms of procuring currentBassets, marketability of the product, accessibility to and
need for allowing credit.
In the present study an attempt has been made to highlight the problems of profitability
management based on the study of aggregate financial data of 0hinar +yntex 1td.
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O?@ecti<e'
The main ob$ective of present study is to analy#e the profitability of 0hinar
+yntex 1td.
This study has been undertaken with the following ob$ectives)
2. To analy#e the growth N development of 0hinar +yntex 1td. Industries with a
focus on various aspects vi#. The production, net block, sales, net worth,
profits etc.
7. To obtain a true insight into the appraisal of profitability analysis in 0hinar
+yntex 1td.
>. To evaluate the changes this has taken place during 788F to 7828 and to examine
its financial position.
4. To examine the scope for improvement in the profitability in 0hinar +yntex 1td.
Industries indicating the factors responsible for comparatively low profit margin.
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Pro&it A Pro&ita?i1ity:
4. Conce$t' o& Pro&it:
*rofit plays an important role in every business organi#ation and its
determination is really a tough one. *rofit is not only concern with the
proprietors but also incomeBtax authorities, managers, directors etc. because
all of them get a percentage of net profit. &ven the accountants are not
unanimous on this matter.
Jow question arises, !hat is *rofitP 1aw and even the accountants have
not defined the word *rofit. ;enerally speaking The *rofit of <usiness
during a given period is the excess of income over expenditure for the
period. It may arise from other sources.
/aximi#ation of profit has ever been one of the important goals of every
business enterprises. The existence, continuance and expansion of business
depends, to large extent, on its capacity to earn a good amount of profit every
year.
The efficiency of a business is measured by the amount of profit earned. "
company should earn profits to serving and grow over a long period of time.
The adequacy of profits says (orn and <oyd. Anderlies the entire financial
structure of a firm. -nly if a company to earn profit will it survive in the long
run.
*rofits are essential, but it would be wrong to assume that every action initiated by
the management of the company should be aimed at maximi#ation of profits,
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irrespective of social consequences. It is unfortunate that the word profit is looked
upon as a term of abuse since some firms always act to maximi#e profits at the cost
of employee%s customers and society.
PROFITA(ILITY
The word @profitability% is composed of two words @profit% and @ability%. -n this basis the
concept of profitability may be defined as the ability of a given investment to earn a return its
use. This ability is also referred to as earning power or operating performance of the
concerned investment. ,owever, profitability is not a condition that exists and it can be
measured for only a limited period of time. It is variable thing like the temperature of the human
body.
The concept of profit is related to absolute figures. It does not tell about the reason,
scatteredBness and how it takes place or the relationship of one figure with another one. These
question can be answered by a peep into the profitability of an entity.
"s observed by +am R. ;oodman, *rofit is a residual. It is a static historical term more
geared to a reporting function then to decision making. ,e further differentiates profit from
profitability saying, *rofit is an ownerBoriented concept and is tied into the ownership shares of
national income and the provision. -n the other hand, as a concept is taken to levels of profits,
which lead themselves to be least number of alternative accounting measures, the profit is
directly attributable to the existence of a product and identifies marginal contributions. It is
essentially an internal measure of new wealth creation. Thus, whereas the accounting concept of
profit measures what have been accumulated, the analytical concept of profitability is concerned
with future accumulation of wealth.
Robert <ayer and .onald I. Trawicki have observed that +egment profitability implies
segment revenues fewer segments cost6 this cost however may range from variable cost to what
is traditionally referred to as full cost.
They further state6 the appropriate measure of profitability and, therefore, the
appropriate costs will differ depending on the specific purpose for which the information is being
used.
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!hen considering from the accounting point of view profit reflects the excess or
earning over expenses or costs. If the costs are more than earnings, it will mean a positive loss.
Conce$t o& Pro&ita?i1ity
H"G Acco!ntin. Pro&ita?i1ity:
" measure of profitability is the overall measurement of efficiency. In general terms
efficiency in business is measured by the inputBoutput analysis. <y measuring the output as a
proportion of the input, and company result of similar other firms or period the relative change in
its profitability can be established.
The income HoutputG as compared to the capital employed HinputG indicates profitability of
a firm. This is known as Return on Investment HR-IG or Return on 0apital &mployed. -ne of the
ob$ectives of management is to maximi#e the profitability. The overall profitability ratio has two
components i.e. net profit ratio H-perating *rofit'+alesG multiplied by turnover ratio Hsales'capital
employedG.
Ret!rn on In<e'tment
Return on Investment is a @*rime /easure% of management%s capability in handling funds
entrusted to it as stewards. Increasing acceptance of this measure as an indicator of performance
rests on solid grounds, and, therefore, profit opportunities and performance are viewed in relation
to the scale of resources of funds required to produce them. That is, a given amount of profit
return should be evaluated in terms of the percentage profit return on the investment of funds.
/oreover, the return on capital used depicts the effectiveness of all the operating
decisions, from the routine to the critical, made by management at all levels of the organi#ation
from shop foreman to president. =or example6
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H<G Socia1 Pro&ita?i1ity:
<y and large, it appears that there is a general consequence that the primary goal of
business lies in maximi#ing the long term wealth or economic welfare of its members, consistent
with social and economic responsibility cost on the business firm by the community in which it
operates.
+ome social ob$ectives reBin force profitability by attracting customers, whilst others may
be directly counteractive, for example, the elimination of pollution may well and direct cost to
the company%s operations and reduce its profitability, but it creates certainly includes
profitability, /oreover, the wide community needs, market forces, customers% and suppliers%
needs, social pressures, employment of labour and location of factory environment
considerations, elimination of noise, conversation of resources and treatment of waste etc. are
include in it.
Therefore, it should be indispensable for every company to state its financial, personnel6
marketing and social ob$ectives in a simple and concise form well in advance and these
ob$ectives should be updated in the light of dayBtoBday changes. They should also be published
so that they may enable every employee to know as to what the ob$ectives are and $udge how
they influence his $ob.
H0G >a1!e Added Pro&ita?i1ity:
Ealue added is an important measure to $udge the efficiency of an enterprise. It indicates
the net value of wealth created by the manufacturing during a specified period. Jo enterprise can
survive or grow, if it fails to generate wealth. "n enterprise may exist without making profit but
cannot survive without adding value. The enterprise, not making profit, is bound to become sick
but not adding value may cause its death over a period of time.
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The investment made in an enterprise comprises investment in shares by shareholders,
borrowings from outsiders like debenture holders, creditors and speciali#ed financial institution
etc. If such as investment does not generate growth, i.e. value added, it means that it is a misuse
of public funds. Therefore, the concept of value added can be directly linked with the concept of
social profitability of an enterprise. The measure of value added must be applied in addition to
profitability to measure the performance of a business. Thus, the concept of value added
measures, the performance of the enterprises and workout the productivity ratio, which helps the
management of find out how productivity is increased when the same or better outputs are
produced with reduction is resourced consumed. /oreover, the concepts represent the wealth
distribution in the proper manner.
Si.ni&icance o& Pro&ita?i1ity
&verything in the world is result oriented, and a firm too is not an exception to it. +o the
goal of the firm is to maximi#e profits. *rofits and profitability play the same role in business a
@blood% and @pulse% in the human body. The survival of a human being is not possible in the
absence of adequate blood and ability to generate blood. The same may be applied to business. It
is very difficult for firm to survive without prospects and ability to earn adequate profits. *rofits
and profitability are therefore, the nerveBknot of a business and without it the existence of firm is
like a body without the backbone.
Thus, profitability is the most powerful motivational factor in any business. !hether or
not a company pursues profit maximi#ation as its ob$ective, the ma$ority of users of account will
be interested in its profitability, as to how the management will use the resources at their
disposal. " profitability ob$ective in this context according to *eter .rucker, measures not the
maximum profit the business can produce but the minimum is the rate of profit required for the
desired type of investment in an enterprise.
This means that there must be not only enough profit to yield the capital market rate
which is already sunk in business but also to provide additional capital needed in order to cover
the cost of staying in business.
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6. PROFIT MAR*IN A ASSETS TRNO>ER
4. Pro&it Mar.in':
*rofit margin is the margin of profit on sales. It is the
percent of sales revenue which remains after deducting expenses and other
provision from it. The profit margin depends upon the operating cost and selling
price of a company. ;enerally an increase in the sales volume is favorable to profit
but not necessary.
" high profit margin on sales is not always a blessing unless it is related to
reasonably large volume of sales. The fact is that a lowBprofit margin on sales is
better compared to a higherBmargin if the former is accompanied by a rapid
turnover. Altimately it is a return on profitability.
+i#e of profit margin depends upon ability to control operating costs and
suitable pricing policy of a company management. *rofit margin is a measure of
overall profitability. The more commonly used accounting forms of profit are gross
profit in origin and net profit margin. *rofit margin figures can be best evaluated
by expressing them as K of net sales Hsales minus sales return, discounts and return
etc.G " company should be able to earn adequate profit on each rupee of sales6
otherwise it would be difficult for it to cover its fixed costs and fixed charges on
debt and to give a reasonable return to shareholders.
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*ro'' Pro&it Mar.in:
It is the excess of selling price or sale proceeds over the cost of goods sold
and it provides the balance for operating expenses, income tax and return on
capital employed. It indicates the efficiency of operation and the price policy of the
management. ;ross profit ratio is an indication of the extent of average mark up on
cost of goods. It is primarily test of efficiency of purchase and sales management.
.educting cost of goods sold from value of net sales has arrived at the ;ross
profit margin of the company. JonBoperating incomes and nonBoperating expenses
have not been taken into consideration while arriving at these figures.
Ta?1e 6.4
*ro'' Pro&it ratio o& C#inar Synte0 Ltd. +IN CRORES,
Year'
*ro'' Pro&it
+R'. In Crore',
Sa1e'
+R'. In Crore',
Ratio
+In B,
5CC;:4C 4888.88 233>>.>F 78.8F
5CCD:C; >?93.88 2578F.F2 78.9?
5CCE:CD 7?93.88 2F35>.88 2?.7?
5CCF:CE 48F2.88 248F3.88 79.9F
5CC9:CF 7229.88 28774.88 78.52
Table >.2 shows gross profit in relative terms as percentage of sales in
0hinar +yntex 1td. Industries.
In 0hinar +yntex 1td. Industries the year 788?B8F, ;ross *rofit Ratio was
78.52K N it is increasing up to 7885B89 N became >8.F4K. !hile there is a
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decrease in 7889B83 N ;ross *rofit Ratio became 74.44K due to the year started
with a high inflation rate leading to tightening in credit which affected industry.
.uring the second half of =D83, the economy experienced sharp slowdown in
activity, liquidity squee#e and a dip in confidence levels, in line with the global
conditions. &xport declined, !eak demand conditions were also reflected in the
wholesaleBlevel inflation approaching closer to #ero by the end of the year also
there was effect of global slowdown on the profitability of 0hinar +yntex 1td., and
in the last financial year i.e., 7883B28 there was a good improvement in gross profit
margin which is >8.84K as compare to 74.44K in =D83. 0hinar +yntex 1td.
0ompany%s businesses benefited from strong demand recovery and decline in input
costs due to lower commodity prices globally during the year.
This also happened due to the company%s good strategic management of raw
material, decrease the rate of fuel N power in first half of =D28 and globally
decrease in commodity rates and also by high demand make it possible for the
company in =D28.
Trends are shown on *age ;raphB".
4.4. Net Pro&it Mar.in:
Jet profit margin establishes a relationship between Jet *rofit and sales.
Jet profit may be analy#ed on two accounts, first net profit before tax and second
net profit after tax. Jet profit margin indicates the efficiency of management in
administrating, manufacturing and selling products. It is overall measure of a
companyCs ability to turn each rupee of sales into Jet profit. Thus if the Jet profit
margin is inadequate then the company will fail to achieve a satisfactory return on
ownerCs equity. Jet profit margin differs from the operating profit to sales ratio as
3
it is computed after adding nonBoperating surplus. Jet profit margin can be
expressed as follows)
NET PROFIT MAR*IN G NET PROFITHNET SALES +4CC,
Ta?1e 6.5
Net Pro&it Mar.in +IN CRORES,
Year'
Net Pro&itHLo''
+R'. In Crore',
Net Sa1e'
+R'. In Crore',
Ratio
+In B,
5CC;:4C >83?.?> 233>>.>F 2?.?7
5CCD:C; 729F.FF 2973F.F2 22.3?
5CCE:CD 7932.88 2F35>.88 25.8>
5CCF:CE 23F5.88 248F3.88 2>.39
5CC9:CF 2842.88 28774.88 28.29
Table >.7 shows Jet profit margin in relative terms as percentage of sales in
0hinar +yntex 1td. Jet profit ratio also presents the same situation as presented by
;ross *rofit Ratio. It is increasing up to 7885B89 N became from 25.8>. <ut it is
also decreased to 22.3?K in 7889B83. This decrement is due to globally meltdown
of economy, low demand, low export but in next financial year there is again
improvement in net profit ratio which is 2?.?7. There is also increase in Jet *rofit
of 47K in =D7828 as compare to Jet *rofit of 7889B83.
Trends are shown on *age ;raphB".
3
8. RETRN ON CAPITAL EMPLOYED
4.Meanin. A Conce$t' o& Ca$ita1 Em$1oyed: There is no consequence on the
definition of M0apital &mployedM in simple words6 it means the different opinions are given to
different persons. "n analyst may include certain assets while the other may exclude them
altogether in the computation of the amount of capital invested in business. The following are the
most popular concepts of M0apital &mployedM.
+4,A<era.e Ca$ita1 em$1oyed:: R-0& uses the reported Hperiod endG capital numbers6 if
one uses the average of the opening and closing capital for the period, one obtains Ret!rn on
A<era.e Ca$ita1 Em$1oyed HROACEG. =or this we take ordinary Q'#are ca$ita1 I re'er<e' I
$re&erence '#are ca$ita1 I minority intere't I $ro<i'ion' I tota1 ?orro%in.' J intan.i?1e
a''et' o& ?e.innin. and endin. o& t#e yearH5K. This is very right way to calculate capital
employed because in this we give proper value to opening balance of capital employed and the
closing balance of the capital employed.
+5,*ro'' Ca$ita1 Em$1oyed::-n the ground that the current assets are also a form of
capital and all funds must be effectively employed, the M;ross 0apital &mployedM concept may
be favored by the analysis.
L*ro'' Ca$ita1 Em$1oyed G Fi0ed A''et' I C!rrent A''et'.K
It may be noticed that the total of fixed assets and current assets does not necessary
represent total assets or total liabilities of a company.
+6, Net Ca$ita1 Em$1oyed::-n the ground that either only shortBterm creditors or only
shortBterm debtors should be included in the capital employed, the MJet capital employedM
concept may be favored,
Net ca$ita1 em$1oyedG*ro'' ca$ita1 em$1oyed:C!rrent 1ia?i1itie'
3
-r
G Fi0ed A''et' I C!rrent A''et' : C!rrent Lia?i1itie'
-r
G Fi0ed A''et' I Net )or-in. Ca$ita1.
+i, S#are#o1der'M E2!ity or Net )ort#::
The shareholders of a company may comprise equity shareholders and preference
shareholders. *reference shareholders have priority in receiving dividend. The rate of preference
dividend is fixed. &quity shareholders are entitled to the residual profits. The rate of equity
dividend is not fixed6 the earning may be distributed to them or retained in the business.
LS#are#o1der' E2!ity G E2!ity S#are Ca$ita1 IPre&. S#are Ca$ita1 I
S#are Premi!m I Re'er<e A S!r$1!' : Acc!m!1ated Lo''e'.K
The total shareholderCs equity is sometimes called NNet )ort#N. Jet worth can also be
found by subtracting total liabilities from total assets. The use of the term MJet !orthM is
misleading as MJet !orthM refers to the market value of the ownerCs equity, while the ownersC
equity is recorded at book value in the business. Therefore, to avoid confusion, the term Mnet
worthM may be replaced by the term MownersM or shareholdersC equity.
+ii, Com$!tation o& Ca$ita1 Em$1oyed::In the computation of M0apital &mployedM
various items are treated as described below)
I. Fi0ed A''et':
"ll fixed assets are included in computation of capital employed. <ut there are certain
problems relating to the inclusion of fixed assets which are discussed below)B
3
+a, Pro?1em o& >a1!ation: 0onceivably there can be three methods of valuation
of fixed assets)B

HiG ;ross Ealue Hi.e. original costG
HiiG Jet Ealue Hi.e. written down valueG
HiiiG Replacement cost.
Though one may advance argument to support each of the above methods,
yet the Cnet value methodC is preferred to the gross value method. <ut because of
the problem of rising prices, more and more accountants have started showing
preference for MReplacement 0ost /ethodM. .espite its inherent limitations,
replacement cost method scores over the net value method. Replacement cost can
either be arrived at on the market rates or with the help of index number of market
prices.
+?, Treatment o& Id1e A''et'::Idle "ssets are nonBoperating assets and they
generally do not market any contribution to the earning of the company. Return on
0apitalB&mployed is a test of efficiency and Cidle assets should not be included for
the purpose of calculation of capital employed. <ut stand by plant if any, shall be
included as it is required to maintain the level of production.
+c, Intan.i?1e A''et': Intangible "ssets usually consist of goodwill, patents and
trademarks, franchise etc. these assets are required to be written off at the earliest.
Thus, such assets are not included, unless have some resaleBvalue.
+d, Fictitio!' A''et': =ictitious "ssets consist of items like preliminary expenses
and deferred revenue expenses and deferred revenue expenditure. +uch assets
should be excluded.
3
4. In<e'tment::
Invests outside the business should be excluded. <ut some can be included, if investment
has been made in the interest of the company, it should be included e.g. investment in the
share of the subsidiary company, which is the supplier of raw material.
5. De?tor':
The debtors should be included after making provision for bad N doubtful debts.
6. Stoc-:
+tock of raw material, work in progress, finished goods etc. These assets shall generally
be inclued in cash.

8. Ca'#:
0ash in excess of normal business requirement is an idle asset and thus it should be
excluded. <ut normal cash requirements are certainly part of the capital employed.
9. Si.ni&icance o& t#e Conce$t o& Ret!rn on Ca$ita1 Em$1oyed:
The concept of MReturn on 0apital &mployedM has become one of the important
indications of the health and efficiency of a company. The expectation of particular rate of return
on the resources mobili#ed becomes the basis of planning and budgeting in modern enterprises.
,ow significant is the computation of this ratio can be appreciated by the following benefits
accruing from it.
HiG +ound measure of overall profitability.
HiiG ;ood basis of interBcompany comparison.
HiiiG ,elps in measuring interBdepartment.
HivG It is a useful aid in .ecisions on capital expenditure.
HvG ,elps in ensuring fairBremunerations to factory of production.
HviG *rompts merger and consolidations.
HviiG "ids in formulation of borrowing policy.
3
9. COMMON SIOE ANALYSIS
2. /eaning N ob$ective of common si#e.
7. 0ommon +i#e *rofit N 1oss "'c.
3. Common Size Balance Sheet.
4. Meanin. A o?@ect:
Common SiPe Financia1 Statement':
Common size ratios are used to compare financial statements of differentBsi#e
companies or of the same company over different periods. <y expressing the items
in proportion to some si#eBrelated measure, standardi#ed financial statements can
be created, revealing trends and providing insight into how the different companies
compare.
The common si#e ratio for each line on the financial statement is calculated as
follows)
0ommon +i#e Ratio
R
Item of Interest
Reference Item
=or example, if the item of interest is inventory and it is referenced to total assets
Has it normally would beG, the common si#e ratio would be)
0ommon +i#e Ratio for Inventory
R
Inventory
3
Total "ssets
The ratios often are expressed as percentages of the reference amount. 0ommon
si#e statements usually are prepared for the income statement and balance sheet,
expressing information as follows)
Income statement items B expressed as a percentage of total revenue
<alance sheet items B expressed as a percentage of total assets
The process of preparing analytical material always in practice be sharply
separated from actual analysis and interpretation, but it is well to recogni#e the
distinction between methods and material and task of understanding and effective
use. "lbery rightly suggest, M" distinction between analysis and interpretation by
referring to analysis is the process of fact finding of significant relationship and
trends and learning to interpretation the area of understanding the data. ,e
includes, Mif figures could be analy#ed so that favorable trend could be visuali#ed
at a glance, interpretation would not be necessary whatever is plain and
unequivocal does not have to be sub$ected to interpretation.M
0ommon +i#e analysis can make a comparison between different si#e firms
much more meaningful since the numbers are brought to a common base percent.
In the words of Ray ,. ;arrison, M" common si#e statement is one that
shows the separate items appearing on it in percentage form rather than in dollar
3
form each item is stated as a percentage of sum totals of which that item is a part
percentage of common si#e statement is known as vertical analysis.M
0ommon si#e statement analysis is also known as vertical analysis. This
type of analysis first converts each rupee amount into the statement to percentage
of the total amount of the group of which it is a part. "s a result, the relative
importance of each individual amounts stands out clearly.

Thus, common si#e statements are miniatures of the originals. They are most
valuable to an analyst in studying the current financial position and operating
results of a business and especially in making comparisons between companies in
the same industry and with industry standards. To a lesser extent this method of
analysis may be used in making a historical study of a particular business because
ma$or changes in the distribution of individual items are revealed.
O?@ecti<e o& Common SiPe Statement:
The ob$ectives of preparing common si#e statement are mentioned below)
aG It is useful in comparing two or more periods or two or more
companies when the productive capacity is not the same.
bG 0omponents of cost of goods sold by companies can be analy#ed.
cG 0ommonBsi#e statement enables comparison of income of different
periods of a company and within the company.
dG It enables comparison between total cost and total sales of a company
in different periods and within the companies in cost in the case of
two or more than two companies.

3
5. Common SiPe Pro&it A Lo'' AHc:
*rofit and 1oss "ccount when read with absolute figures is not easily
understandable, sometimes it is even misBleading. It is, therefore, necessary that
figures reported in this statement should be converted into percentage to some
common base.
" comparison of common si#e * N 1 "'c ratio is significant in as much as it
shows that a large particular of smaller relative amount of net sales figure was used
in meeting cost or expenses.
The percentage, however, may be influenced by variations if sales price,
higher or lower cost of goods is acquired. The * N 1 "'c percentage is based on
sales equal to 288K. Then each element of the income statement is expressed as a
percentage of sales.
The common si#e *rofit N 1oss "'c translates raw amount values for gross
margins into percentage values that can be easily compared with the performance
of others.
3
Common SiPe Pro&it A Lo'' Acco!nt +in Crore',
Partic!1ar'
Year'
5CC;:4C 5CC;:CD 5CCD:CE 5CCE:CF 5CCF:C9
Amo!nt B Amo!nt B Amo!nt B Amo!nt B Amo!nt B
Re<en!e 7249?
4CC
23F33
4CC
29792
4CC
243F>
4CC
22882
4CC
Co't o&
*ood'
'o1d
2?435
E5
2?775
EE
2>892
E5
28387
E6
999>
D4
*ro''
Pro&it
?399
5D
4457
56
?788
5D
48F2
5E
7229
4;
Se11. Ad.
E0$.
485?
4;
>?45
4D
>237
4E
7578
4D
7779
5C
O$e. E0$. ?737
59
??7?
5D
44F?
58
>927
59
>8?4
5D
Int. E0$. >>?
5
>85
5
777
4
773
5
723
5
Ta0e' 2?58
E
332
9
24FF
D
2837
E
48>
8
Net Pro&it >83F
48
7295
44
7932
4F
23F5
46
2842
;
I above table I did common analysis of last five financial year i.e. =D8FB
=D28. In this table the reference item is Revenue of 0hinar +yntex 1td. company
and other interested items are 0ost of ;oods +old, ;ross *rofit, selling
.istribution and "dvertisement expenses, -perating'/anufacturing expenses,
Interest expenses, taxes and Jet *rofit. !ith the help of above statement we can
see how the different items have their share in Revenue of the 0hinar +yntex 1td.
0ompany. If we talk about 0ost of ;oods +old than we shall come to know that in
=D28 the cost of goods sold was 57K of total revenue a big part of our revenue so
if we want to increase the profit of the company then we have to control our cost of
goods sold because it is a important item which have largest share in our revenue.
If we talk about our Jet *rofit in =D28then we shall see that it has24K of our
0hinar +yntex 1td. 0ompany. If want to increase this then we should decrease the
3
share of other expenses items in the revenue by that task we will be in the position
of higher ;ross or Jet *rofit. In =D 8F the Jet profit share in total revenue was
only 3K, due to the higher Kage of 0ost of goods sold in total revenue. +o with the
help of Common SiPe Statement we easily took a helicopter view about the
0hinar +yntex 1td. 0ompany%s profitability and also came to know why the
profitability is fluctuating across the last five years i.e. H=D8FB=D28G.

Common SiPe Pro&it A Lo'' A$$. AHc:
The common si#e *rofit and 1oss "pp. "ccount shows the relation of retained
earnings and proposed dividend to total net profit after tax in a year. In this
statement, net profit after tax figure is assumed to be equal to 288 whereas other
figures are expressed as K of net profit after tax. " comparison of percentage in
common si#e profit N loss appropriate account is significant in as much as it show
variations form year to year in retained earnings and proposed dividend.
Common SiPe (a1ance S#eet +in Crore',
Partic!1ar'
ASSETS
Year'
5CC;:4C 5CC;:CD 5CCD:CE 5CCE:CF 5CCF:C9
Amo!nt B Amo!nt B Amo!nt B Amo!nt B Amo!nt B
3
Fi0ed A''et' 24??>
96
2472F
9;
27329
F4
94F9
96
F422
95.
In<e'tment' FF5F
58
>??8
49
2FF2
CD
7757
48
2>?7
44
*ood%i11 7885
CE
7882
D
233?
;
2944
45
2555
49
De&erred
Ta0 A''et'
B
CC
B
CC
B
CC
B
CC
4
.C6
C!rrent
A''et'
4?>9
4F
4435
4D
4F?3
55
>>77
54
7F23
54
Tota1 75554
4CC
747F4
4CC
727>>
4CC
2?38F
4CC
272F>
4CC
Assets are the right hand side part of the balance sheet. In above
Table I did common size analysis of assets of balance sheet of Chinar
Syntex Ltd. Company. In this reference item is total assets and rest of
the items are treated as interested items in above table in the ay of
ratio. By the !"ic# loo# e can observed that most of the part of or e
can say more than $%& is invested in the 'xed assets in all last 've
years i.e. ()*%%+ , ()*%-%. Second largest part of asset of the
company is C"rrent Assets except ()%. in hich second largest assets
of the part of total assets as investment. So company/s main
b"siness is depending on the c"rrent assets and (ixed Assets.
Therefore Chinar Syntex Ltd./s pro'tability to a large extent depending
on the c"rrent and 'xed assets so ret"rn on these assets are very
important. Company sho"ld properly manage its c"rrent and 'xed
assets.
Partic!1ar'
Lia?i1itie' +in crore',
Year'
5CC;:4C 5CC;:CD 5CCD:CE 5CCE:CF 5CCF:C9
Amo!nt B Amo!nt B Amo!nt B Amo!nt B Amo!nt B
3
S#are#o1der
'M E2!ity
27?7?
89
22??9 8E 3244
86
FF88
85
49>9 8C
Loan F!nd' ??33
5C
?937 58 ??55
5E
4973
64
>F9> 6C
De&erred
Ta0 1ia?i1ity
788F
CE
2?38 CE 2??9
CE
22?7
CE
22F7 4C
C!rrent
Lia?i1ity
>8>5
44
2F58 CD >8>?
48
77?F
48
2F>9 46
Pro<i'ion' 9?7
C6
7933 44 F4>
C6
785
C4
>79 6
Minority
Int.
>5??
48
F?? C6 275F
CF
9?3
C9
?24 8
Tota1 75554
4CC
747F4
4CC
727>>
4CC
2?395
4CC
272F>
4CC
1eft hand side of balance sheet comprises all liabilities of 0hinar +yntex 1td.
0ompany. <y above it is clear that most of the part of Jet !ealth comprises by
equity shareholders and loan funds and after that current liabilities or minority
interest across the whole study of 0hinar +yntex 1td. i.e. from =D8F to =D28.
3
SMMARY OF FINDIN*S AND CONCLSIONS
Introd!ction:
India is >rd biggest textile exporter in the world market. Textile industry
plays an important role in country. In /arch 2337, there were 2225 textile mills
H94F spinning mills and 752 mixed millsG. The industry provides employment to
22.? lacs of people which constitute 29K of the total labour force.
0hinar +yntex 1td. was incorporated on 7?th "ugust 2345, exactly 28 days
after India achieved independence. -riginally, a textile manufacturer, 0hinar
+yntex 1td. has successfully diversified into E+=, 0ement, +ponge iron and
chemicals. "ditya <irla ;roup is the 3
th
1argest 0ement producer in the world and
F
th
largest in "sia.
0hinar +yntex 1td. is 7nd largest producer of caustic soda in India. 0hinar
+yntex 1td. N ;raviera range of fabrics signify the Mpower of fashionM.
Prod!ct:
*roduct is nothing but a bundle of satisfaction. *roduct is anything that can
be offered to a market to satisfy want or need. *roducts that are marketed include
physical goods, services, experiences, events, persons, places, properties,
organi#ation information N ideas.
0hinar +yntex 1td. is producing Eiscose +taple =iber, 0ement, ;rey
0ement, !hite 0ement, +ponge Iron, 0hemicals, and Textiles.
3
FINDIN*S
The following are the findings of paramount importance concluded after a
close analysis of various facts of profitability analysis in 0hinar +yntex 1td.)B
2.G =or the =inancial Dear 7883B28, your 0ompany%s performance has been
robust. Jet Revenue at Rs.78,23? crores is up by 3K over that of the
precedingS year
7.G Jet *rofit at Rs.>,83F crores registered a growth of 47K.
>.G Dour 0ompany divested its +ponge Iron business at a sale consideration of
Rs. 2,8>8 0rores, resulting in a net gain of Rs.>>F 0rores. The transaction
was completed on 77nd /ay, 7883.
4.G 0,IJ"R +DJT&L 1T.., the textile subsidiary of your 0ompany posted a
better than expected performance. Jet revenue increased by 28K to Rs.795
0rores with higher sales in both, -ver The 0ounter and Readymade
;arments segments.
?.G Jet profit of 0,IJ"R +DJT&L 1T.. increased to Rs.4.F 0rores as against
a marginal profit of Rs.8.> 0rores in =D83.
F.G *<I.T rose by >7K with higher volumes, lower input and energy prices as
elaborated under the +egmental Review and "nalysis.
5.G Interest cost increased from Rs.>85 0rores to Rs.>>? 0rores Hnet of interest
capitalisedG. 1oans aggregating Rs.F?8 0rores were raised during the year to
fund capex. Interest capitalised reduced from Rs.38 0rores to Rs.>7 0rores
with the commissioning of pro$ects. Interest cover Hincluding interest
capitali#edG remains at a comfortable level of 29.8times.
9.G Jet addition to the ;ross <lock was Rs.2,99> 0rores due to the
commissioning of cement pro$ects and other capex. "s a result, Rs.33?
0rores was provided towards depreciation charge in =D28 as against Rs.9FF
0rores in =D83, an increase of 2?K.
3
3.G The total tax soared by ?9K at Rs.2,?52 0rores primarily due to higher
profits. The current tax was substantially higher at Rs.2,7>3 0rores in the
current year as against Rs.??2 0rores in the previous year.
28.G &xcess tax provision of Rs.7? 0rores related to earlier years was written
back. *rovision for deferred tax decreased to Rs.>?5 0rores in the current
year from Rs.442 0rores in the previous year.
22.G Jet profit before extraordinary gain was Rs.7,5?3 0rores in =D28, as against
Rs.7,295 0rores in =D83, an increase of 7FK.
27.G There was an extraordinary gain of Rs.>>F 0rores Hnet of taxG arising from
sale of +ponge Iron business.
2>.G Jet *rofit for =D28 stood at Rs.>,83F 0rores including extraordinary gain,
compared to Rs.7,295 0rores in =D83.
24.G -wing to the higher inflation in =D83 the profitability of 0hinar +yntex 1td.
0ompany fell down.
2?.G "fter +econd quarter of =D83 there were lack of satisfaction in the mind of
investor due to global economic meltdown by which the demand in the
market was low so that was also a reason of low earnings in =D7883
2F.G In last financial year conditioned changed demand increase of the product so
0hinar +yntex 1td. 0ompany registered 47K growth in profit as compare to
its 7883 year profit.
25.G In =D7828 prices of the 0ommodity globally decrease so by that company
expend less for input cost as compare to last financial year i.e. 7883.
29.G 0ompany also registered higher profitability due to extraordinary gain of Rs.
>>F crores.
23.G In the study of last five year data of company in the common si#e analysis of
profit and loss a'c we observed that the 58K B 98K revenue part is taken by
cost of goods sold.
78.G In the E+= business, a high level of backward integration in pulp and caustic
helps mitigate the risk of non availability of input material. In last year
3
company took step which is related to backward integration in pulp and
caustic these type of steps increased the profitability of company.
72.G 0ompany%s ;ross *rofit margin ratios in last five years of study have an
increasing trend except =D7883. In =D 788F it was 78.52K, in =D 85 it was
79.9F, in =D 7889 it was stood >8.F4K, in =D7883 a decreased in ratio so it
was 74.44K, and in =D28 it registered again growth and scored >8.84K.
77.G 0ompany%s Jet *rofit /argin ratios also have similar trend as like gross
profit ratios it also have increasing trend except 7883. In =D28 it was
2?.?7K and in overall five years study it was highest in =D89.
7>.G In -perating *rofit /argin Ratio 0ompany also have increasing trend
except =D83. It was approx. 79K in =D28.
74.G .epreciation to ;ross <lock Ratio remain around ?K during the whole
study period of five years i.e. =D8F : =D28.
7?.G .epreciation to Jet +ales also was around ?K except =D7889 in which due
to the high turnover it was stood approx. 4K.
7F.G /anufacturing expenses to Jet +ales were approx. 7?K, Raw material
expenses to Jet +ales were approx. 77K and *ower and =uel expenses to
Jet +ales were approx. 29K during the time period of =D8F : =D28.
75.G Interest 0overage ratio were stood across the study time period near about
2)2? which are more than standard of industry which is 2)F.
79.G "ssets Turnover Ratio were near about 8.9?)2 which is good indication of
company performance and utili#ation of assets.
73.G Return on 0apital &mployed showed a increasing trend except =D83.
>8.G Return on Jet !orth is also satisfactory in the study period except last two
financial year i.e. =D83, =D28. In last financial year i.e. =D28 it was
77.32K.
?888
.etermination of profit has great importance. The true profit of concern not
only affects its proprietors but also the income tax authorities. *rofit is a very
important aspect of business. The principal motivating force behind conducting
3
business is profit. The efficiency of a business is measured by the amount of profit
earned. The greater the profit, the more efficient is the business considered to be.
The profit of a business may be measured by studying the profitability in it.
In accounting the word profit is used almost invariably with some qualifying
words or phrases. "ccounting profit lies in the difference between the current value
of sales minus the historic cost of expenses plus retained earnings. To determine
economic profit competitive normal rate of payment for service of capital supplied
by the firm must be subtracted from the profit for the period as determined by
conventional accounting methods. Return on investment is a prime measure of
managementCs capability in handling fund entrusted to it as stewards.
&verything in the world is result oriented, and a firm too is not an exception
to it. *rofitability is the most powerful motivation factor in any business. The most
important precaution in connection with the measurement of profitability is that the
investment figure used should be related to its associated income figure. The
overall profitability ratio has two components, i.e. net profit multiplies by turnover
ratio.
!hile discussing the concept of profitability it has been argued that return
on investment is a basic measure of profitability of a firm of an industry.
*rofit margin is the return generated by a companyCs assets and represents
the difference between revenues and total expenditure.
Jet profit margin enables one to measure the relationship between sales N net
profit and it is an indication of the efficiency of the management in manufacturing
the efficiency of the management in manufacturing, selling N financing. If the net
3
profit is inadequate the company will not in a position to pay off its debts and give
a satisfactory return to its shareholders.
3
S**ESTIONS
2. 0ompany should take strategic decisions by which the cost of production
can be minimi#ed or profitability of the company can improve.
7. " ma$or portion of revenue goes in cost of goods sold so company
should give proper attention by which this cost can be minimi#ed
for example) the cost of raw material, here we can apply IIT
technique, &-O and =I=- 1I=- ,I=- method as per the market
conditions by which we can maximi#e our profitability.
>. 0ompany also should give proper attention to manufacturing costs
and with highest efforts and scientific methods company should
minimi#e these also.
4. To increase the profitability company should increase its sales by
which it can earn more revenue without increases the prices of the
products for this purpose company should start effective
advertisement for its potential customer segment.
?. .iversification is to be adopted by the co. to meet out the
globali#ation change N this change done by ensuing high level of
customers% satisfaction through fairness transparency and quick
response.
F. Research N development cell is to be improved because 0hinar
+yntex 1td. needs extensively research in this field and for this
purpose information technology should be used by 0hinar +yntex
1td.
3
5. 0hinar +yntex 1td. should make the efforts to increase the
productivity through potential and improve their competence in all
spheres of organi#ational development including through reB
deployment.
9. 0hinar +yntex 1td. should acquire primary sources of input by
which its dependability on the external supplier can be minimi#e
and by this way economy in input costs can be initiali#ed.
3. Indian companies are large extent to depend on the domestic
market so 0hinar +yntex 1td. should focused its business around
the need of the domestic customer by which it can face the globally
threats.
28. Jot only Indian market but global business also is very
important by which we can bring the economy of scale in the
business by this way we can increase the profitability of the 0hinar
+yntex 1td.
22. 0ompany should hire new management skills by which it can
keep itself with modern technology and new know how.
=inally, 0hinar +yntex 1td. +hould try to remove the above
problems N try to improve its profitability. It should continue to
receive full guidance, support N coBoperation from the planning
commission, ministry of finance N various other ministries.
7
DIAGRAM 3.1
3
DIAGRAM 3.2
DIAGRAM 3.3
3
DIAGRAM 3.4
DIAGRAM 3.5
3
DIAGRAM 3.6
DIAGRAM 3.7
3
DIAGRAM 3.8
DIAGRAM 3.9
3
DIAGRAM 3.10
DIAGRAM 3.11
3
DIAGRAM 3.12
DIAGRAM 3.13
3
DIAGRAM 3.14
DIAGRAM 3.15
3
DIAGRAM 3.16
3
(I(LIO*RAPHY
(OO/S:
(ATTQ =. :
Mana.ement Acco!ntancyQ
1ondon ) /acdonals and &vens 1td., 235?.
(AYER RE(ORT AND TR)IC/IQ DONALD =. :
Pro&ita?i1ity Acco!ntin. &or P1annin. and Contro1.
Jew Dork ) Iohan !iley and +ons, 2357.
(HATTACHARYAQ S./. AND DEARDONQ =OHN :
Acco!ntin. &or Mana.ement Te0t and Ca'e'.
Jew .elhi ) Eikas *ublishing ,ouse, 235F.
(ODNARQ *EOR*E H. AND HOP)OODQ )ILLIAM S.:
Acco!ntin. In&ormation Sy'tem'.
/assachusetts ) "llyn and <acon, Inc., 2395.
(ROC/Q HORACE R. ET. AL. :
Acco!ntin. (a'ic Princi$1e'.
Jew Dork ) /c;raw ,ill <ook 0ompany, 239F.
I.M. PANDEY :
Financia1 Mana.ement.
Eikas *ublishing ,ouse, Jew .elhi, 2333.
=.R. MON*A R *IRISH AH=A :
F!ndamenta1 o& Cor$orate Acco!ntin.
/alik N 0ompany, Jew .elhi, 7882.
3
=AINQ /HANDEL )ALQ PAREE/ :
Financia1 Acco!ntin.
"$mera <ook 0ompany, Iaipur, 7882.
/HANQ =AIN :
Financia1 Mana.ement
Tata /c;raw ,ill, 2333.
S.N. MAHESH)ARI :
Financia1 Mana.ement
+ultan 0hand N +ons, 7887.
RA>IM. /ISHORE :
Ad<ance Mana.ement Acco!ntin.
Taxmanm *ublishing ,ouse, Jew .elhi, 7887.
RO(ERT N. ANTHONYQ =AMES S. REECE :
Acco!ntin. Princi$1e :
"IT<+, Jew .elhi, 7887.
REPORTS :
ANNAL REPORTS OF CHINAR SYNTEX LTD.
=ORNALS AND PERIODICALS
THE INDIAN EXPRESS
THE TIMES OF INDIA.