Vishal Containers Pvt. Ltd.

VISHAL CONTAINERS PVT.LTD.
1.
GENERAL
INFORMATION
V.M.PATEL COLLEGE OF MANAGEMENT STUDIES,

GANPAT UNIVERSITY,KHERVA Page 1
1.1. INTRODUCTION OF COMPANY
NAME OF THE COMPANY :-
VISHAL CONTAINERS PVT. LTD.
ADDRESS :-
CORRUGATED BOX UNIT:-

OFFSET UNIT:-
919, GIDC,
Chhatral-382729,
Ta : Kalol,
Dist :- Gandhinagar.
KRAFT PAPER UNIT:-

Block No:2023,
6th KM Stone,
Kalol-Vamaj Road,
Ta: Kadi.
REGISTERD OFFICE:-
313, GIDC,
Chhatral-392729,
Ta:Kalol,
Dist:- Gandhinagar.
PRODUCTS:-
• Flexible packaging Material,

• Rolls & pouches,
• Offset Cartons
• Corrugated Boxes.
MISSION OF THE COMPANY :-

“To provide good quality at lower price.”
DATE OF ESTABLISHMENT :-
12th December, 1985
SIZE OF THE COMPANY :-

Middle scale.
1.2 EXISTING MANAGEMENT BODY
BOARD OF DIRECTORS :-
Mr. Vinodkumar M. Patel Chairman & Managing Director

Mr. Arvindkumar M. Patel Joint M.D.
Mr. Rajendrakumar M. Patel Executive Director
Mr. Krunalkumar Patel Director
Mr. Vijay B. Vakharia Director
Mr. Nilkamal C. Nayak Director
Mr. Ramanlal C. Patel Director
AUDITORS :-
Babubhai P. Patel & Co.

Chartered Accountants,
2nd Floor A-11,
Ajanta Commercial Center,
Nr. Income Tax Office,
Ashram Road,
Ahmedabad-380014.
ACCOUNTANT:-
Natubhai Patel
COMPETITORS:-
• Goods Care Product Co.

• Kamdhenu Paper Mill
• Shelavi Paper Mill
• Kalptaru Paper Mill

1.3 LOCATIONAL ADVANTAGES
 The place Chhatral as an industrial area is good for doing any kind of business.
 The reason for selecting this place is availability of vendors and other business
stock holders.
 The raw material required by the company is easily available.
Location is also suitable for marketing of goods because it is industrial area and
All companies need Flexible packaging Material,Rolls & pouches,Offset
Cartons,Corrugated Boxes. 57% of their product sold out in local nearer area so
the overall cost of transporation become low.
 Infrastructure facility & power supply are also easily available of industrial area.
 The weather is good for producing company’s product. Government provides
subsidiary and some other benefits.
 The company is located in G.I.D.C. area so, there are easily available cheap,
unskilled, semiskilled & skilled labours.
 The company is situated near National Highway No.8, so that there is no
transportation problem.

1.4 COMPANY PROFILE

Vishal Containers Pvt. Ltd. is a part of Well Pack Papers & Containers
Limited, is leading manufacturer and supplier of Kraft papers & corrugated cartons
having its office and corrugated cartons manufacturing facility located in Chhatral GIDC,
Kalol. The plant location was opted at Vamaj 8 Kms. Away from the Chhatral office
having installed capacity of 15000 Mt recycled paper.
The company was established in the year 1991 with a view to cater the Kraft paper
& corrugated packaging needs of various industries with an aim of total customer
satisfaction for total solution of printing & packaging under one roof.
The company manufactures customized corrugated boxes as per customer quality

requirement and need with its unique established manufacturing process as they say “they
are not interested in selling us just another corrugated box. They are always looking for
new ways to go above and beyond our customers expectations to their products.”
At Vishal they have competent work force at levels of the organization and strict
quality control at all defined process stages provides consistency of quality and adds
value in to customer products, which truly reflect the need and expectations of customers.
A part from their own strict quality control mechanisms, they also adhere to
requirements of ISO 9001: 2000 Quality Management System and achieved certificate of
compliance from DNV, a Dutch certificate body working under RAV accreditation
scheme for Vishal Containers Pvt. Ltd.

1.5 HISTORY AND DEVELOPMENT

The history of the company is most important because it shows how the idea
regarding formation of the company is coming in the mind of promoters. At the time of
establishment many things are required to be considered, many problems are required to
get solved. The company which is going to be established as a small scale unit may face
some problems. We would be able to know such a problems which are most complex into
the history of the company. History of the units provides guides about past situation. The
history of Vishal Containers Pvt. Ltd. is as follow:
HISTORY OF THE COMPANY :-
In the present scenario, a good packaging policy is must for every producer to
increase its sales figures and its product image. In India there are about 20000
corrugated packaging units in organized and unorganized sectors. Vishal Containers
Pvt. Ltd. is one of them. In modern times packaging is considered an important tool
for marketing.
Vishal Containers Pvt. Ltd. is a part of Well Pack Papers & Containers
Limited, considering the customer requirement and to win total customers satisfaction
where innovation, creativity, dynamism and loyalty is a core with message of honesty
and performance going as loud and clear to all becoming part of Vishal Containers Pvt.
Ltd. Vishal Containers Pvt. Ltd. is one of the private companies and it is middle scale
having three units. It is situated at Chhatral GIDC, Ta: Kalol.
The Well Pack Group is established their first unit in the year 1985. at that time
the company has only one unit of corrugated boxes. After getting success they start the
production of Kraft paper at Vamaj and then after they establish Vishal Containers Pvt.
Ltd. of their own for offset machine.
The capital investment of this company during the time of establishment is around
Rs. 5 lacks. But one by one getting success in their new projects, the company has now
three units with the capital investment of Rs. 15 cr. They want to increase its capital
investment by 15-20% in the next year.
The area covered by the Kraft paper unit is 5090 square foot and the corrugated
box unit is 2080 square foot. The total turn over of all the three units is about Rs.20 cr.
And want to reach Rs. 25 cr. in the next year. The production capacity of the company is
about 20 tons.
Vishal Containers Pvt. Ltd., employees, partners, in their success, vigorously

uphold our mission statement for every assignment. With the entire staff of Vishal,
sharing their vision of distinctive quality and unparalleled customer product with a smile,
they are headed for greater success.
Vishal was a middle scale unit with limited capital structure, limited products &
limited profit when it was started. But well management of a company comes up as a
development factor. Today, the company is producing wide range of products.
Thus, Vishal Containers Pvt. Ltd. is on the path of growth and development from
the date of establishment.
DEVELOPMENT OF THE COMPANY :-
The development of Vishal Containers Pvt.Ltd. is slowly but surely. Now a days
company is one of the developing unit in the field of food product. This company is
developed in all aspects i.e. forms like view point of products; financial strength etc. this
company has earned name and fame in the export market also.
At the time of establishment company was producing only limited number of

products like flexible packaging material, rolls & pouches, offset cartons & corrugated
boxes.
It is worth to note that :-
“VISHAL LTD. TAKES A CONSUMER’S SATISFACTION FROM THE DATE

OF ESTABLISHMENT.”

1.6.VISION & POLICY STATEMENT
Vision :-
To be the preferred supplier of corrugated packaging solutions by meeting

customer’s needs of quality, service and fast turnaround in the Indian market, which will
provide mutual benefits of profitability and growth.
Policy Statement :-
Committed to produce and supply corrugated boxes to satisfy customers

by responding promptly and efficiently to cater their needs & expectations and strive hard
to continually improve business processes and resources to accomplish quality objectives.
INFRASTRUCTURE & RESOURCES :-
Technically innovative, advanced & modern machinery and committed to

be the best, Well Pack Papers & Containers Limited having manufacturing facility that is
unmatched in the corrugated box industry. Vishal’s manufacturing consists of fully
integrated production floor engineered to be fast, easy and accurate with modern
converting equipment and advanced manufacturing techniques.

1.7 GOALS, VALUES & BELIEFS
Their goal at Vishal is simple- building extra ordinary customer product as they
provide their customer’s needs in the personal service industry. They accomplish by
taking over the task, which interfere with an enjoyable, leisurely lifestyle; and by
partnering with organizations, which have the finest reputations for quality.
Their goals are accomplished by a commitment from every employee.
Their values and beliefs require that they:
• Treat each employee with respect and give them an opportunity for input on how
to continually improve their service goals.
• Treat each employee fairly and with mutual respect. The company does not
tolerate discrimination of any kind encourage all managers and supervisors to
involve employees in problem solving and the creativity process. When problems
arise, the facts should be analyzed to determine ways to avoid similar problems in
the future.
• Provide the most effective and efficient corrective action, to resolve consumer
issues, to ensure their consumers satisfaction and that the problem not be
respected in the future. In this way, they will maintain their leadership position in
the industry.
• Foster an open door policy, which encourages interaction, discussion and ideas to
improve the work environment, thus increase our productivity.
• Deliver competitive, impeccable product to their consumer and, where required.
• Make “Do It Right The First Time” our commitment as a term and our only way
of doing business. This commitment will assure continued growth and prosperity.
Vishal Containers Pvt. Ltd. is an Equal Opportunity Employer. This means

that we will extent equal opportunity to all individuals without regard for race, religion,
color, sex, national origin, and age handicaps or veterans status. This policy affirms
Vishal commitment to the principles of fair employment and the elimination of all
vestiges of discriminatory practices that might exist. They encourage all employees to
take advantage of opportunities for promotion as they occur.
It is important that the personnel records of Vishal be accurate at all times. In

order to avoid issues or compromising your benefit eligibility, Vishal expects that
employees will promptly notify appropriate number, marital status, number of
dependents, or any other pertinent information, which may change.

2.
FINACIAL
MANAGEMENT

2.1 INTRODUCTION
“Finance management is raising and allocation of financial resources

to achieve predetermined goal of the organisation.” The task of financial manager is
to see how large the firm can grow in terms of financial affairs. Financial
management is not the separate one from overall management. In other words
financial management is an integrated part of overall management, financial
resources for obtaining optimum efficiency of operation. Financial management is
concerned not only with the procurement of funds but effective use of funds is also
required.
In modern business world, finance is the life’s blood of the

business economy. One cannot image the business without finance because it is the
central point of all business activities. No matter, the business is big or small,
government or semi government or non-government. There is always a problem with
every organization for managing its expanding and ambitious plants with its limited
resources. The financial management has therefore been assigned the task of planning
and controlling the short term and long term financial needs of the firms.
In VISHAL CONTAINERS PVT.LTD. there is a separate finance

department for doing the financial functions effectively. This company can raise
finance by issuing shares and also by the bank loans. This company is not facing any
financial difficulty in present time.

2.2 FINANCIAL PLANNING :-
To plan means to deside the advance future. Financial planning also means the
planning of financial activities to be carried out in future. “financial planning is primarily
a statement estimating the amount of capital and determining composition.”
Financial planning is necessary for the control of inflow and outflow of cash. So
that the necessary funds may be made available as and when they are required. It
provides a clear cut picture of inflow and outflow of finance i.e. sources of funds and
uses of funds.
Thus financial planning means to plan that how much capital is required or how
much finance is required for future business functions.
In short financial planning means deciding in advance the financial activities to be

carried on to achieve the basic objectives of the firm. The basic purpose of financial
planning is to make sure that adequate funds are raised at the minimum cost and that they
are used wisely. Thus basically it covers with main cash flow. It include mainly two
aspects.
(1) Capitalization
(2) Capital structure

2.3 WORKING CAPITAL MANAGEMENT:-
Business capital is broadly divided in to two groups

 Fixed capital
 Working capital
“Working capital refers to the funds locked up in materials, work-in-progress,

finished goods, receivables and cash etc.” The management of such current assets,
described as working capital management or Current Asset management.
It is one of the most important aspects of the overall financial management.

Technically, working capital management is an integral part of the overall financial
management. To that extent, it is similar to the long term decision making process
because both entail an analysis of the effect of risk and profitability.
The goal of working capital management is to manage the firm’s current asset and
liabilities in such a way that a satisfactory level of working capital is maintained.
SOURCES OF WORKING CAPITAL
 Fund from business operation

 Other incomes
 Sales of non-current asset
 Long term borrowing
 Issue of additional equity capital or preference capital
USES OF WORKING CAPITAL
As a human body having all the components can not run without blood and
vehicles can not be considered to be brought without fuel. The management of any
industrial undertaking can not be considered without management of working capital.
In simple words working capital means the funds that are used for dealing with
day to day activities. In other words working capital means a fund, which is raised to use
during and accounting year to generate current income.
 Loss from business operation

 Purchase of non-current asset
 Redemption of debenture and / or preference share
 Dividend to shareholder
 Interest to lenders

ESTIMATING WORKING CAPITAL REQUIREMENT
In order to determine the amount of working capital needed by a firm, a number

of factors viz. production policy, nature of the business, length of manufacturing process,
credit policy, rapidity of turn over, seasonal fluctuations etc are to be considered by the
finance manager. Finance manager can apply any of the following techniques for
assessing the working capital requirements of a firm.
TECHNIQUES FOR ASSESSMENT OF WORKING CAPITAL REQUIREMENT
 Estimation of components of working capital

 Percent of sales method
 Operating cycle approach
O=R+W+F+D–C
Vishal Containers Pvt. Ltd. can maintain an adequate proportion of total

investments. The firm can meet their day to day expenditures easily. The operating cycle
of company is neither very lengthy nor very short. The working capital management of
Vishal Ltd. comprises of
(1) Management of Cash

(2) Management of Inventories
(3) Management of Receivables

2.3.1 MANAGEMENT OF CASH
Cash is the most important current asset for the operation of the business. Cash is
the basic input needed to keep the business running on a continuous basis. The firm
should require keeping sufficient cash neither more nor less. Cash shortage will disturb
the firm’s manufacturing operations. Thus a major function of financial management is to
maintain a sound cash position.
It is the duty of the finance manager to provide adequate cash to all segments of
the organization. He has also to ensure that no funds are blocked in idle cash since this
will involve cost in terms of interest to the business. A sound cash management scheme,
therefore, maintains the balance between the twin objective of liquidity and cost.
MOTIVES FOR HOLDING CASH
 Transaction motive
A firm enters into a variety of business transactions resulting in both inflows and
outflows. In order to meet the business obligations in such a situation, it is necessary to
maintain adequate cash balance. Thus, cash balance is kept by the firms with the motive
of meeting routine business payments.
 Precautionary motive
A firm keeps cash balance to meet unexpected cash needs arising out of
unexpected contingencies such as floods, strikes, presentment of bills for payment earlier
than the expected date, sharp increase in prices of raw materials, etc.
 Speculative motive
A firm also keeps cash balance to take advantages of unexpected opportunities,

typically outside the normal course of the business. For example, a firm may like to take
advantage of an opportunity of purchase raw materials at the reduced prise on payment of
immediate cash or delay purchase of materials in anticipation of decline in price.
 Compensation motive
Banks provide certain services to their clients free of charge. They, therefore,
usually require clients to keep minimum cash balance with them, which help them to earn
interest and thus compensate them for the free services so provided.

REPORT FOR CONTROL
In any business the most important part is cash and all cash are managed by
report. All firms promoting and providing some information by control cash by report
and budgeting. The Vishal Containers Pvt. Ltd follows the following ways to manage and
control and operate financial report.
- Daily report
- Weekly report
- Monthly report
- Preparing cash budget
Cash budget or cash forecast is the most important device for planning and
controlling the use of cash. It involves a projection of future cash receipts and cash
payments over various intervals of time. It reveals to the finance manager the timings and
amount of expected cash inflow and outflows over a period studied. With this
information, he is better able to determine the future cash needs of the firm, plan for the
financing of these needs and exercise control over the cash and liquidity of the firm.
Cash budgeting or short term cash forecasting is the principle tool of cash
management. Cash budget routinely prepared by firm are helpful in following four ways
 Estimating cash requirements

 Planning short term financing
 Planning purchase of raw material
 Developing credit policies

So far as Vishal Ltd. is concerned to maintain a sound cash option. Cash position
of Vishal Ltd. is as under.
YEARS CASH
2004-05 1840149
2005-06 1434932
2006-07 306310

2.3.2 MANAGEMENT OF INVENTORY
Inventory is the stock of a company. The various inventories exists in a

manufacturing company are
 Raw material
 Work in process goods
 Finished goods
The level of three kinds of inventories of a company depends upon the nature of
its business. The main aspects of inventory management is to avoid investment and under
investment in inventories.
Inventory management covers a large number of issues including fixation of

minimum and maximum levels; determining the size of the inventory to be carried;
deciding about the issue price policy; setting up receipts and inspections procedure;
determine economic order quantity; providing proper storage facilities, etc.
TECHNIQUES OF INVENTORY MANAGEMENT
Effective inventory management requires an effective control over inventories.

Inventory control refers to a system which ensures supply of required quantity and
quality of inventories at the required time and at the same time prevents unnecessary
investment in inventories. The techniques of inventory control are as follows:
 Determination of Economic Order Quantity (EOQ)

 Determination of Optimum Production Quantity
 Determination of Re-order Level
 ABC Analysis
 Inventory Turnover Ratio
 Aging Schedule of Inventory
 Just in Time Inventory System
 Flexible Manufacturing System
Above all are the techniques which help the management to control all types of
inventories. Vishal Containers Pvt. Ltd is using the first technique for managing its raw-
material inventory. Company places that type of order for purchasing raw material which
is economically advantageous to the management. For that company determine the
Ordering cost, Inventory Carrying cost, and Total Required Quantity.

The inventories of Vishal Ltd. for last three years are as under
YEARS INVENTORY OF R.M & INVENTORY OF

SEMI FINISHED FINISHED GOODS
GOODS
2004-05 5338944 77444
2005-06 7331542 400099
2006-07 9842804 2227194
TOTAL INVENTORIES 22513290 2704737

2.3.3 MANAGEMENT OF RECEIVABLE
Selling goods on credit is the most prominent force of the modern business. Every
company adopts this method for selling goods to protect it from the competitors and to
attract the potential customers to buy the product at favorable terms. When the company
sells goods and services and does not receive payments then it is said to have guaranteed
trade credit to customer. Trade credit is known as receivable or book debt.
Receivables are asset accounts representing amounts owed to the firm as a result
of sale of goods/services in the ordinary course of business. Credit sale is resorted by a
firm to push up its sales which ultimately result in pushing up the profits earned by the
firm. At the same time, selling goods on credit results in blocking of funds in accounts
receivables.
Additional funds are, therefore, required for the operational needs of the business
which involve extra costs in terms of interest. Moreover, increase in receivables also
increases chances of bad debts. Thus, creation of accounts receivable is beneficial as well
as dangerous.
The company gives credit to its responsible and regular customer to push up the
business. The company gives the credit facilities on the basic of past record, financial
position, quantity of goods ordered by the customers.
CREDIT POLICY
Credit policy adopted by a firm should be optimum- neither too liberal nor too
stringent. In order to determine the nature of credit policy followed by a firm, the
following techniques may be adopted:
 Computation of average age of receivables
 Aging schedule of Receivables

POLICIES FOR MANAGING RECEIVABLES
A firm should establish receivables policies after carefully considering both

benefits and costs of different policies. The important decision of Vishal Containers Pvt.
Ltd. for credit policy is as under.
 Credit Standard
The term credit standards represent the basic criteria for extension of credit to
customers. The Vishal’s credit standards are generally determined by the five
“Cs”:
-Character
-Capacity
-Capital
-Collateral
-Conditions
It has decided to grant credit to all customers according to the firm’s previous
experience with the customer supplemented by its own well developed
information system. If the customers are new the company uses customer’s
references, trade associations and credit rating organizations.
 Credit Period
The credit period refers to the length of time customers are allowed to pay
the receivables. Vishal Ltd. has different type of credit period according to the
customers. Extending the credit period stimulate sales but increases the cost of
receivables. Similarly, shortening the credit period reduces the profit on account
of reduced sales, but also reduces the cost of tying up of funds in receivables.
 Cash Discount
Attractive cash discount terms reduce the average collection period
resulting in reduced investment in account receivable. Thus there is a saving in
capital costs. The company is providing 2% of cash discount to its customers for
prompt payment.

 Collection procedure
A stringent collection procedure is expensive for the firm because of high
out-of-pocket costs and loss of goodwill of the firm among its customers.
However, it minimizes the loss on account of bed debts as well as increases
savings in terms of lower capital costs on account of reduction in the size of
receivables.
The collection program of Vishal Containers Pvt. Ltd is consists the
following procedure:
- Monitory they state of receivables
- Dispatch of letter to customer whose due is approaching
- Telegraphic and Telephonic advice to customers around the due date
- Threat of legal action to over due accounts
- Legal action against over due accounts.

CREDIT GRANTING DECISION
Proper assessment of credit risks is an important element of credit management. it

helps in establishing credit limit. Vishal Ltd. is following the traditional approach to
credit analysis it call for assessing prospective customers in terms of the five “Cs”of
credit.
Once the credit worthiness of a customer has been assessed the next question is
should the credit be offered. Vishal Ltd. follows the following pattern of granting credit
to the customers.

3.
FINANCIAL
ANALYSIS

3.1 INTRODUCTION OF FINANCIAL ANALYSIS
The primary objective of financial reporting is to provide information to

present and potential investors and creditors and other in making rational investment,
credit and other decisions. Effective decision making requires evaluation of the past
performance of companies and used by investors, creditors, and professional analysis for
analyzing and interpreting the information contained in financial statements.
Any successful business owner is constantly evaluating the performance

of his or her company, comparing it with the company's historical figures, with its
industry competitors, and even with successful businesses from other industries. To
complete a thorough examination of your company's effectiveness, however, you need to
look at more than just easily attainable numbers like sales, profits, and total assets. You
must be able to read between the lines of your financial statements and make the
seemingly inconsequential numbers accessible and comprehensible.

3.2 TECHNIQUES OF FINANCIAL STATEMENT

ANALYSIS
Very few numbers in financial statements are significant in themselves,

but meaning inferences can be drawn from their relationship to other amounts or their
change from one period to another. The tools of financial statement analysis help in
establishing significant relationships and changes. The most commonly used analytical
techniques are:
1) HORIZONTAL ANALYSIS (Comparative Analysis)

2) VERTICAL ANALYSIS (Common size Analysis)
3) TREND ANALYSIS (Index Analysis)
4) RATIO ANALYSIS
5) DU PONT ANALYSIS

4.
HORIZONTAL
ANALYSIS

4.1 INTRODUCTION OF HORIZONTAL ANALYSIS
Financial statements present comparative information for the current year

and the previous year. A simple approach to financial statement analysis, known as
Horizontal analysis, is to calculate amount changes and percentage changes from the
previous year to the current year.
While an amount change in itself may mean something, converting

amount changes to percentages is more useful in appreciating the order of magnitude of
the change.
USE OF THE HORIZONTAL ANALYSIS:
1) To obtain the changes among various accounting information in respect to a base year.
2) This information provides insights related to variances in two results.
3) This variance facilitates decision-making.
4) These changes can be obtained for a series of years.
5) It helps in formation of financial strategies.

4.2 HORIZONTAL ANALYSIS OF BALANCE SHEET

Increase/decrease
PARTICULARS 2006-07 2005-06 RS. In %

S0URCES OF FUND
Share Capital 10000000 10000000 0
Share Application Money 5305000 - 5305000
Reserve & Surplus 5101370 4204337 897033 21.34
20406370 14204337 6202033 43.66
LOAN FUNDS
Secured Loan 30118396 11263191 18855205 16.74
Unsecured Loans 6758465 3925785 2832680 72.16
Deferred Tax 2809510 2826741 -17231 -0.61
Total 60092741 32220054 27872687 86.51
APPLICATION OF FUNDS
Gross block 21738699 19398907 2339792 12.06
Less: Depreciation Fund 4142632 2693612 1449020 53.79
Net block 17596067 16705295 890772 5.33
Capital Work in Progress 17458929 0 17458929 0
CURRRENT ASSETS- LOANS &
ADVANCES
Investments 214500 25000 189500 758
Inventories 12103828 7785273 4318555 55.47
Sungry Debtors 22501264 21715950 785314 3.62
Cash & Bank balances 304310 1434932 -1130622 -78.79
Loans & Advances 8234175 4746738 3487437 73.47
43360077 35707938 7652139 21.43
Less: CURRENT LIABILITIES &
PROVISONS
Current Liabilities 14773332 17257079 -2483747 -14.39
Provison for Taxation 3673600 3078500 595100 19.33
18446932 20335579 -1888647 -9.29
Net Current Assets 24913145 15372359 9540786 62.06
Miscellaneour Expenditure 124600 142400 -17800 -12.5

TOTAL 60092741 32220054 27872687 86.51
HORIZONTAL ANALYSIS:
For carrying out the horizontal analysis, I have selected the two financial years of 2005-
06 and 2006-07. This analysis is carried out in two phases as the balance sheet analysis
and profit and loss account analysis.
BALANCE SHEET ANALYSIS:
 SHAREHOLDERS FUNDS:
There is no change in the issued and subscribed share capital over the last two
financial years. Authorized share capital is also without any change.
 RESERVES AND SURPLUS:
YEAR VALUE CHANGE (%)

2005-06 4204337 21.34%
2006-07 5101370
From the above table we can observe that there is 21.34% percent increase in the
reserves and surplus as compared to previous year. This is due to rise in the net
profits as compared to past year.
 Due to no changes in the shareholders funds, the total change occurring in the
equity funds is similar to the changes occurring as a result of the changes in the
reserves and surplus of the company.

 SECURED LOAN FUNDS:
Secured loans include the loans taken by the company from the following scheduled
banks:
1) STATE BANK OF INDIA
2) KOTAK MAHINDRA PRIMUS LTD.

2005-06 11263191 16.74%
2006-07 30118396
From the above table we can observe that there is increase in percent in the secured
loans taken by the company. The reason for this increment is the taking more loans
for manufacturing goods and expanding their business by the company.
 UNSECURED LOAN FUNDS:
Unsecured loan funds will include the loans taken on the deposits and
advances taken from suppliers and customers.

2005-06 3925785 72.16%
2006-07 6758465
From the table we can observe that there is a reduction of almost 72% percent
in the unsecured loan funds as compared to last year.
 TOTAL SOURCES OF FUNDS:

2005-06 32220054 86.51%
2006-07 60092741

From the above table we can observe that the increase in the total sources of funds
is not very much significant for the company.
From the graph given above we can observe a significant increment in the debt
funds being used by the company. There is a inconsiderable increase in the debt
funds which is due to the increase in the secured & unsecured loans of the
company.

 APPLICATION OF FUNDS:
 FIXED ASSETS:

2005-06 16705295 5.33%
2006-07 17596067
Due to purchasing new Machinery the value of the fixed assets is increase,
there is a increment of 5.33% percent in the value of fixed assets as compared
to last financial year.
 INVESTMENTS:

2005-06 25000 758%
2006-07 214500
There is a unbelievable change observed in the investments made by the

company. Investments of the company include the shares of the company
in the cooperative banks, WPPCL Shares and Gujarat State Financial
Corporation Ltd.
 CURRENT ASSETS:
For the analysis of the current assets we have to start with the various
contents of current assets.
1) INVENTORIES:

2005-06 7785273 55.47%
2006-07 12103828
From the table we can observe that the increase in the inventories is very
high compared to the previous financial year. This shows that the company

seems to plan its production well in relation to the demand and supply
scenario.
Inventories would include raw material, work in process goods,

finished goods, packing material, stock transferred.
2) DEBTORS:

2005-06 21715950 3.62%
2006-07 22501264
From the above table we can observe that there is an increase of almost
3.62 percent in the debtors of the company. This is a cause of concern for
the company.
3) CASH AND BANK BALANCE:

2005-06 1434932 -78.79%
2006-07 304310
From the above table we can observe that there is a reduction of almost
78% in the cash and bank balances of the company. This shows company’s
well working capital management.
5) LOANS AND ADVANCES PAID:

2005-06 4746738 73.47%
2006-07 8234175
From the above table we can analyze that the increase in the loans and advances paid by
the company has increased to a great extent. This is a major cause of concern for the
company.

 TOTAL CURRENT ASSETS:

2005-06 53707938 21.43%
2006-07 43360077
From the above table we can observe that the increase in the current assets
as compared to the previous financial year is about 21%. However here the
analysis of the quality of the current assets for the company is major
concern.
From the above graph we can clearly analyze that the increase in the
current assets of the company is mostly due to the increase in the
investment done by the company. The increase in the cash & Bank
Balances is quite negligible which indicates that the company is planning
its working Capital pretty well. The increase in the inventories should be
expected to rise in the next financial year. The key areas of concern for me
appear to be the increase in the loans and advances paid by the company.
The next key issue for concern for the company is the rise in the quantity of

the debtors. While carrying out the ratio analysis the collection period of
the company will matter the most.
 CURRENT LIABILITIES:

2005-06 17257079 -14.39%
2006-07 14773332
From the above table we can observe that the decrease in the current
liabilities of the company is -14.39% percent as compared to the previous
financial year. Due to company’s good financial position there is a
considerable change happened.

4.3 HORIZONTAL ANALYSIS OF PROFIT & LOSS A/C
Particulars 2006-07 2005-06 In Rs. In %

INCOME
Sales 77086934 69877831 7209103 10.32%
Other Income 3318880 3230865 88015 2.72%
Increase/ Decrease in Stock 4571809 -64620 4636429 0%
Total 84977623 73044076 11933547 16.34%
EXPENDITURE
Manufacturing Expenses 69711928 59253517 10458411 17.65%
Employees Remuneration & 4308413 2230137 2078276 93.19%
Benefits
Administrative Expenses 3478070 3707810 -229740 -6.20%
Selling & Disribution Expenses 1646015 1549079 96936 6.26%
Interest & Financial Expenses 2274529 1620473 654056 40.36%
Depreciation 1449020 1306192 142828 10.93%
Amortisation 17800 17800 0 0
Net Profit 2091848 3359068 -1267220 -37.73%
Total 84977623 73044076 11933547 16.34%

PROFIT AND LOSS ACCOUNT ANALYSIS:
 SALES:

2005-06 69877831 10.32%
2006-07 77086934
From the above table we can observe that the increase in the sales of the
company as compared to the previous financial year is 10.32 percent. Since
there is no change in the other sources of income like interest received or
dividend received the change in the total income is equal to the change in
the sales of the company. It is shown below.

2005-06 3230865 2.72%
2006-07 3318880
 OPERATING EXPENSES:
The analysis of the operating expenses would include the analysis of the following:
1) MFG. EXPENSES:

2005-06 59253517 17.65%
2006-07 69711928
Mfg. expenses would include excise duty, job charges, stores and spares expenses,
electricity and fuel charges and transportation inwards. From the above table we can
observe that there is an increase of about 17.65 percent in the manufacturing expenses as
compared to the previous financial year.

2) EMPLOYEE EXPENSES:

2005-06 2230137 93.19%
2006-07 4308413
There is about 93% increase in the employee expenses as compared to the previous
financial year.
3) OTHER EXPENSES:

2005-06 6877362 7.58%
2006-07 7398614
Other expenses would include the administrative expenses, selling & distribution
Expenses and financial expenses. There is about percent rise in the other expenses as
compared to the previous financial year.
 DEPRECIATION EXPENSES:

2005-06 1306192 10.93%
2006-07 1449020
From the above table we can observe that the increase in the value of
depreciation charges is about 10/93 percent as compared to the previous
financial year. This will bring about reduction in the value of the fixed
assets.

5.
TREND
ANALYSIS

5.1 INTRODUCTION OF TREND ANALYSIS
Trend analysis involves calculation of percentage changes in

financial statement items for a number of successive years. It is an extension of
horizontal analysis to several years. Trend analysis is carried out by first assigning a
value of 100 to the financial statement items in the following years as a percentage of the
base-year value.
Trend analysis over longer periods helps in identifying certain

basic changes in the nature of the business. Since many large corporations publish a
summary of operating results and selected financial indicators for five years or more, it is
possible to perform trend analysis using published reports.
USE OF THE TREND ANALYSIS:
• Provide information related to well-observed behavior of accounting

an entity.
• Easier to understand.
• Most preferred method, reliable for well established firm.

5.2 TREND ANALYSIS OF BALANCE SHEET
PARTICULARS 2006-07 2005-06 2004-05 2004-05 2005-06 2006-07

S0URCES OF FUND
Share Capital 10000000 10000000 10000000 100% 100% 100%
Share Application Money 5305000 - - 100% 0
Reserve & Surplus 5101370 4204337 1542676 100% 272.54% 330.68%
20406370 14204337 11542676 100% 123.06% 176.79%
LOAN FUNDS
Secured Loan 30118396 11263191 10104012 100% 111.47% 298.08%
Unsecured Loans 6758465 3925785 5181670 100% 75.76% 130.43%
Deferred Tax 2809510 2826741 3618027 100% 78.13% 77.65%
Total 60092741 32220054 30446385 100% 105.83% 197.37%
APPLICATION OF
FUNDS
Gross block 21738699 19398907 21117533 100% 91.86% 102.94%
Less: Depreciation Fund 4142632 2693612 1628075 100% 165.45% 254.44%
Net block 17596067 16705295 19489458 100% 85.71% 90.29%
Capital Work in Progress 17458929 0 25540 100% 0 0
CURRRENT ASSETS-
LOANS & ADVANCES
Investments 214500 25000 25000 100% 100% 858%
Inventories 12103828 7785273 5487443 100% 141.87% 220.57
Sungry Debtors 22501264 21715950 18040555 100% 120.37% 124.73%
Cash & Bank balances 304310 1434932 1840149 100% 77.97% 16.54%
Loans & Advances 8234175 4746738 2514073 100% 188.81% 327.52%
43360077 35707938 27907220 100% 127.95% 155.37%
Less: CURRENT
LIABILITIES &
PROVISONS
Current Liabilities 14773332 17257079 15458233 100% 111.64% 95.57%
Provison for Taxation 3673600 3078500 1677800 100% 183.48% 218.95%
18446932 20335579 17136033 100% 118.67% 107.65%
Net Current Assets 24913145 15372359 10771187 100% 142.72% 231.29%
Miscellaneour Expenditure 124600 142400 160200 100% 88.89% 77.77%

TOTAL 60092741 32220054 30446385 100% 105.83% 197.37%
5.3 TREND ANALYSIS OF PROFIT & LOSS A/C
Particulars 2006-07 2005-06 2004-05 2004-05 2005-06 2006-07

INCOME
Sales 77086934 69877831 57930430 100.00% 120.62% 133.07%
Other Income 3318880 3230865 1466909 100.00% 220.25% 226.25%
Increase/ Decrease in Stock 4571809 -64620 91887 100% -70% 4975%
Total 84977623 73044076 59489226 100.00% 122.79% 142.84%
EXPENDITURE
Manufacturing Expenses 69711928 59253517 47703853 100.00% 124.21% 146.13%
Employees Remuneration & 4308413 2230137 1780560 100.00% 125.25% 241.97%
Benefits
Administrative Expenses 3478070 3707810 2051257 100.00% 180.76% 169.56%
Selling & Disribution 1646015 1549079 1579996 100.00% 98.04% 104.18%
Expenses
Interest & Financial 2274529 1620473 1608268 100.00% 100.76% 141.43%
Expenses
Depreciation 1449020 1306192 1628075 100.00% 80.22% 89.00%
Amortisation 17800 17800 17800 100% 100% 100%
Net Profit 2091848 3359068 3119417 100.00% 107.68% 67.06%
Total 84977623 73044076 59489226 100.00% 122.79% 142.85%

6.
RATIO
ANALYSIS

6.1 INTRODUCTION OF RATIO ANALYSIS:
The financial statement as prepared presented annually is of little use for guidance
of prospective investors, creditors and even management. If relation ships between
various related items in these financial statements are established, they can provide useful
clues to guage accurately the financial health and ability of business to make profit. This
relation between two related items of financial statements is known as ratio.
A ratio, thus is one number expressed in terms of another, e.g. in order to obtain
the rate of return on paid up capital, then net profit of the business is divided by the paid
up share capital. The figure so obtained is the ratio. If the same is multiplied by 100 a
percentage rate of return on paid up capital is obtained.
In short Ratios are relationship expressed in mathematical terms between figures

which are connected with each other in some manner. Obviously, no purpose will be
served by comparing two sets of figures which are not at all connected with each other.
Moreover, absolute figures are also unfit for comparison.
Ratios can be expressed in two ways.
TIMES:
When one value is divided by another, the unit used to express the quotient is
termed as “TIMES”. For example if out of 100 students in a class,80 are present, the
attendance ratio can be expressed as follows:
= 80/100 = 0.8 times
PERCENTAGE:
If the quotient obtained is multiplied by 100, the unit of expression is termed as
“PERCENTAGE”. For example in the above example, the attendance ratio as a
percentage of the total number of students is as follows:
= 0.8*100 = 80%

6.2 CLASSIFICATION OF RATIOS
In order to easily understand the ratios, the traditional classification is more useful.
Hence, the ratios have been discussed according to classification.
[ A ] REVENUE STATEMENT RATIOS
• GROSS PROFIT RATIO
• OPERATING RATIO
• EXPENSE RATIO
• NET PROFIT RATIO
• STOCK TURNOVER
[ B ] BALANCE SHEET RATIOS

• CURRENT RATIO
• LIQUID RATIO
• QUICK RATIO
• PROPRITERY RATIO
• DEBT-EQUITY RATIO
• GEARING RATIO
• LONG TERM DEBTS TO FIXED ASSETS
[ C ] COMPOSITE RATIOS
1) RETURN ON INVESTMENT
a) Return on capital employed
b) Return on share holder’s fund
c) Return on equity share holders’ fund
2) DEBTORS TURNOVER ( DEBTORS’ RATIO)
3) CREDITORS TURNOVER (CREDITORS’ RATIO)
4) FIXED ASSETS TURNOVER RATIO
5) TOTAL ASSETS TURNOVER

6.2.1 REVENUE STATEMENT RATIOS:-
6.2.1.1 GROSS PROFIT RATIO:-
It is a ratio expressing relationship between gross profit earned to Net

Sales. It is an useful indication of the profitability of any business. This ratio is usually
expressed as a percentage. This ratio shows whether the mark-up obtained on cost of
production is sufficient. There is no standard showing reasonableness of gross profit
ratio. However, it must be enough to cover its operating expenses. If this ratio is low, it
indicates that the cost of sales is high or that the purchasing is inefficient. Alternatively,
it may also mean that due to depression, the selling price is reduced but there may be no
corresponding reduction in cost of sales. In such case the management must investigate
the causes and try to bring up this ratio.
Gross profit Ratio = Gross profit *100

Net sales
(2006-07) = 2091848 *100

77086934
=2.714%
(2005-06) = 3359068 *100

69877831
=4.807%
(2004-05) = 3119417 *100

57930430
= 5.3847%

INTERPRETATION :-
A high gross profit margin related to the industry shows that firm is able to
produce at relatively lower cost or the cost of sales is lower. A high profit margin
is good for the company.
In VISHAL CONTAINERS PRIVATE LID., gross profit ratio in 2004

was 5.38% which was an average while it was increasing up to 4.81% in 2005
which was considered as better one, and 2.71% in 2006-07. This ratio shows that
for a sale of every Rs. 100, a margin of 2.71 Rupee is available from which
operating expenses of business are to be recovered.
Thus, this company has enough margin ratio so that we can conclude
that company has the lower cost of sales and it can easily cover its operating
expenses by its revenue margin.

6.2.1.2 NET PROFIT RATIO:-
The ratio is valuable for the purpose of ascertaining the overall profitability of
business and shows the efficiency or otherwise of operating the business. It is the
reverse of the operating ratio. Generally the ratio is computed on the basis of net profit
earned from operation of business and non-operating expenses and incomes are
excluded. Loss on sale of asset is non-trading loss and it is not taken into account.
Generally, tax is deducted from profit while calculating this ratio.
Net Profit Ratio = Net Profit *100

Net sales
(2006-07) = 897033 *100

77086934
= 1.164%
(2005-06) = 2661661 *100

69877831
= 3.8090%
(2004-05) = 1542676 *100

57930430
= 2.6629%

INTERPRETATION
Net profit ratio establishes relationship between net profit and sales. It
indicates management efficiency in manufacturing, administrating, and selling of the
product. A firm with high profit ratio can make better use of favorable conditions. The
higher this ratio the better will be the profitability.
In Vishal Containers Pvt Ltd., net profit ratio in 2004 was 2.66% which
was considered as good while it was increasing up to 3.81% in 2005 and 1.163% in
2006-07, which was considered as very good.
Thus, from this ratio we can conclude that in this company the
proportion of sales revenue is left to the proprietors after all operating expenses
are met. Profitability of Vishal containers Pvt. Ltd. can be said as the very good.
Another meaning of rising net profit ratio is that the administrative expenses are
rising fastly

6.2.1.3 OPERATING RATIO:-
It is a ratio showing relationship between Cost of goods sold plus Operating

expenses and Net sales. It shows the efficiency of the management. The higher the ratio,
the less will be the margin available to proprietors. This ratio is also usually expressed as
a percentage. The higher the ratio, the less profitable it is, because it would prove
insufficient to pay dividend and create necessary reserves.
Operating Ratio = Cost Of Goods Sold + Operating Exp. *100

Net Sales
(2006-07) =74995086+69711928 *100

77086934
= 187.719%
(2005-06) = 66518763 + 59253517 *100

69877831
= 179.988%
(2004-05) = 54811013 + 47703853 *100

57930430
= 176.962%

INTERPRETATION:-
Here, in Vishal Containers Pvt. Ltd., operating ratio of the firm in

2004 was 176.96% while it was increasing in 2005 up to 179.98% and 187.71%.
Generally, lower operating ratio is good for the company.
Thus, from this ratio we can conclude that company’s expenses

is to much high in 2006 as compared with the ratio of 2005. as production as well as
sales increase, the cost of good sold and cost of other expenses will be goes on
increase and so operating ratio is increased. It indicates the condition of the firm is
not good because of high expenses.
Operating Ratio indicate the changes in the profit margin ratio. A

higher operating ratio is unfavorable or the firm. In this company the operating ratio is
176.962% in 2004-05 which increase to 179.988% in 2005-06. And 187.719% in 2006-
07. Company must has to try to decrease this ratio.

6.2.1.4 EXPENSE RATIOS:-
For the purpose of ascertaining relationship between operating expenses and net sales,
expenses ratios are computed. For example, proportion of selling expenses or
administrative expenses or financial expenses in relation to net sales is an expense ratio.
These ratios over a number of years will reveal the extent to which expense vary in
relation to sales. Fixed expense ratio will change according to change in sales, but
variable expenses ratios will remain constant. Some accountants calculate expenses ratio
in respect of raw-materials consumed, direct wages and factory expenses.
A). ADMINISTRATIVE EXPENSE RATIO:-
Administrative Expense Ratio = Administrative Expenses *100

Net Sales
(2006-07) = 3478070 *100

77086934
= 4.512%
(2005-06) = 3707810 *100

69877831
= 5.306%
(2004-05) =2051257 *100

57930430
= 3.541%

B).FINANCIAL EXPENSE RATIO:-
Financial Expense Ratio = Financial Expenses *100

Net Sales
(2006-07) = 2274529 *100

77086934
= 2.95%
(2005-06) = 1620473 *100

69877831
= 2.319%
(2004-05) =1408268 *100

57930430
= 2.776%

C).SELLING & DISTRIBUTION EXPENSE RATIO:-
Selling & Distribution Expense Ratio = Selling &Distribution Exp. *100

Net Sales
(2006-07) = 1646015 *100

77086934
= 2.135%
(2005-06) = 1549079 *100

69877831
= 2.216%
(2004-05) =1579996 *100

57930430
= 2.73%

INTERPRETATION:-
For the purpose of ascertaining relationship between operating expenses
and net sales, expenses ratio are computed. This ratio over a number of years will reveal the
extent to which expenses vary in relation to sales. Expenses ratio is low is good for the
management.
Thus, from this ratio we can conclude that the expenses of this dairy go on
decreasing. Fixed expenses will remain constant but variable expenses will change
according to change in sales. But increment in variable will not lead to increment in average
expenses. Which shows satisfactory condition.
The Expense Ratio includes above three Administrative expense, financial expense
and Selling & Distribution expense ratios. Which show low the ratio is good for the
company. All three ratios are decreasing year by year which shows the good management
policy of the company and must try to maintain it.

6.2.2 BALANCE SHEET RATIOS:-
6.2.2.1 CURRENT RATIO:-
This the most widely used ratio shows the proportion of current assets to
current liabilities. It is also known as “working capital ratio” as it is a measure of
working capital available at a particular time for meeting the daily function of the
company. It is a measure of short term financial strength of the business and shows
whether the business will be able to meet its current liabilities, as and when they
mature. Current assets include bank balance, cash, stock, debtors,bills receivables etc.
while current liabilities include creditors, bills payable, bank overdraft out standing
expenses etc.
Current Ratio = Current Assets

Current Liabilities
(2006-07) = 43145577
18446932
= 2.34:1
(2005-06) = 35682938
20335579
= 1.75:1
(2004-05) = 27882220
17136033
= 1.63:1

INTERPRETATION :-
The current ratio indicates availability of current assets to current

liability when it becomes due.The ideal ratio is 2:1. High ratio is good for management.
Here, in Vishal Containers Pvt. Ltd., current ratio in 2004 was

1.63:1, while in 2005 it was increasing up to 1.75:1 and in 2006-07 it is 2.34:1. It
indicates satisfactory condition of the company.
Thus, from this ratio we can conclude that company’s liquid

position in 2004 was good and rather it is very good in 2005 and in 2006 it is ideal
what required. It indicates that for every Rs. 1 of current liability, there is available
Rs. 2 in current assets to meet the current liabilities. We can also say from this ratio
that company has enough working capital i.e. short term solvency in meeting its
daily operations.
Current Ratio shows firm’s short term solvency. It indicates

availabilities of cash when liabilities become due.

6.2.2.2 LIQUID RATIO/ QUICK RATIO:-
Liquid Ratio = Liquid assets

Liquid liabilities
(2006-07) = 31041749
18446932
= 1.68:1
(2005-06) = 27897665
20335579
= 1.37:1
(2004-05) = 22394777
17136033
= 1.31:1

INTERPRETATION:-
Liquid Ratio is a better indicator of liquid position of the company and

shows whether the company will be able to meet its current obligation or not. No
standard norm is available for this ratio. However it is believed that liquid assets should
at least cover the liquid liabilities. I.e. the ratio should be 1:1.
Here the ratio for this company is 1.31 and 1.37 and 1.68 respectively
2004-05, 2005-06 and 2006-07 which is higher than the standard. It shows that the
company’s liquidity position is very good.

6.2.2.3 DEBT-EQUITY RATIO:-
Debt – Equity Ratio = Long Term Liabilities

Owner’s Fund
(2006-07) = 18446932
15101370
= 1.2215
(2005-06) = 20335579
14204337
=1.4316
(2004-05) = 17136033
11542676
= 1.485

INTERPRETATION
It shows the proportion of long term liabilities in relation to owners’ funds. A

higher ratio means that outsider creditors have a larger claim than the owners of the
business. The pressure from creditors would increase & their interference will also
increase.
Here, in Vishal Containers Pvt. Ltd.’s Debt-Equity ratio in 2004-05 was

1.48 % which was not considered as good. While it was decreasing in 2005-06 up to 1.43
% and in 2006-07 it is 1.22%. It shows good financial management of company between
debt and equity,because day by day the ratio is decreasing.

6.2.2.4 PROPRIETORY RATIO:-
This ratio shows the proportion of proprietors’ funds to the total assets
employed in the business. The proprietors’ funds or shareholders’ equity consist of share
capital and reserves and surplus. Generally, this ratio is obtained in percentage. The
higher the ratio, the stronger the financial position of the enterprise, as it signifies that the
proprietors have provided larger funds to purchase the assets. This ratio can not exceed
100 percent. It means that the business does not use the outside funds. There are no
outside liabilities.
Proprietory ratio = proprietory funds *100

Total assets
(2006-07) = 18446932 *100

43360077
= 42.54%
(2005-06) = 20335579 *100

35707938
= 56.95%
(2004-05) = 17136033 *100

27907220
= 61.40%

INTERPRETATION
The ratio indicates the amount of capital contributed by the proprietors.

The higher the ratio the stronger is the financial position of the company.
Here, in Vishal Containers Pvt. Ltd.’s Proprietary ratio in 2004-05 was

61.40 % which was not considered as good. While it was highly increasing in 2005-06 up
to 56.94 %. It shows that company’s proprietary fund was gone down in 2006-07 it is
42.54%. It indicates satisfactory condition.
Thus, from this ratio we can conclude that in this company

proprietors’ contribution was not well in its assets in 2004. means at that time
business used the outside funds for the operation of its assets while in 2006-07
proprietors of this company had increased their contribution level in the company’s
assets.

6.2.3 COMPOSITE RATIO:-
6.2.3.1 RETURN ON CAPITAL EMPLOYED:-
Return on capital employed or return on investment can be computed for

computing the return for different purposes.
This ratio can be calculated as follows:
Return on Total Capital Employed = Net Operating Profit before Interest & tax * 100
Total Capital Employed
Net operating profit = Net Profit + Provision for Tax – Income from Investment +
Interest on Debentures.
(2006-07) = 2091848+1220322-3318880+2274529
= 2267819
(2005-06) = 3359068+2279979-3230865+1620473
= 4028655
(2004-05) =3119417+157641-1466909+1608268
=4837517
Capital Employed = Fixed Assets + Current Assets – Provision for Tax
(2007-05) = 17596067+30961155-1220322
=47436900
(2005-06) = 16705295+25393147-2279979
= 39818463
(2004-05) =16272339+30961155-1576741
=45656753

Return on Total Capital Employed:-
(2006-07) = 2267819 *100

47436900
= 4.7807%
(2005.6) = 4028655 * 100

39818463
= 10.1175%
(2004-05) = 4837517 *100

45656753
=10.595%
INTERPRETATION:-
Here, in 2004-05 the Return on Capital Employed was 10.595% which decrease
to 10.1175% in 2005-06 and 4.7807% in 2006-07. These ratios shows that company is
not getting much from the capital. for the company,company has to improve its structure
for tax provision and interest on debentures,because company gives more return on
debentures than other private companies.

6.2.3.2 CURRENT ASSETS TURNOVER RATIO:-
Current assets turn over ratio means the relationship of firm’s current assets with
the sales.
Current Assets Turn Over = Net Sales

Current Assets
(2006-07) = 77086934
30961155
= 2.49:1
(2005-06) = 69877831
25393147
= 2.753:1
(2004-05) =57930430
30961155
= 1.87:1

INTERPRETATION:-
Here by looking the graph of Current Asset Turnover Ratio of the firm, we can
find the relationship between the company’s sales and current assets. Here, by looking
the figures of current assets turnover ratio we find that there is a continuity of ratio which
may the positive impact of company’s sales or the maintenance of the company’s current
assets as the company is requiring.

6.2.3.3 FIXED ASSETS TURNOVER RATIO:-
Fixed assets turn over ratio established the relationship between companies’s
Fixed Assets with its Sales.
Fixed Assets Turn Over = Net Sales

Fixed Assets
(2006-07) = 77086934
17596067
=4.38:1
(2005-06) = 69877831
16705295
=4.183:1
(2004-05) =57930430
16272339
= 3.56:1

INTERPRETATION:-
The Fixed Assets Turnover Ratio shows the sales of a company for a given level
of fixed assets. Means how much a sale generated by a company has a good performance.
The Ratio for the year 2004-05 is 3.56:1 means the company has Rs.3.56 sales by 1 rupee
of fixed assets. This ratio is increased to 4.18:1 in the next year 2005-06 and 4.38 sales by
every 1 Rs. of sales. We can say that the company’s ratio is increase. So, the company’s
performance increases year by year.

6.2.3.4 TOTAL ASSETS TURNOVER RATIO:-
Total Assets Turnover Ratio is computed on the total assets turn over in addition
to or instead of net assets turn over. This ratio shows the firm’s ability in generating sales
from all financial resources committed total assets.
Total Assets Turn Over = Net Sales

Total Assets
(2006-07) = 77086934
43360077
=1.78:1
(2005-06) = 69877831
35707938
=1.956:1
(2004-05) = 57930430
27907220
= 2.074:1

INTERPRETATION:-
This ratio indicates the relationship between sales & total assets. This ratio shows
that how much sales is generated by a company with given level of total assets. In 2004-
05, the ratio is 2.074:1 and in 2005-06 it decreases to 1.956:1 and 1.78:1 in 2006-07
which show company has a good performance in selling.

6.2.3.5 STOCK TURN OVER RATIO:-
This ratio indicates whether an investment in inventory is efficiently used or not.

It therefore, explains whether investment in inventories is within proper limits or not. The
ratio is calculated as follows.
Stock Turn Over = Cost of Goods Sold

Average Stock
Average inventory is calculated by taking stock levels of raw materials, work-in-

process, finished goods at the end of each month, adding them up and dividing by twelve.
(2006-07) = 74995086
6051914
= 12.39 times
(2005-06) = 66518763
3892636
= 17.09 times
(2004-05) = 54811013
2743722
= 19.97 times

INTERPRETATION:-
The inventory turn over ratio signifies the liquidity of the inventory. A high
inventory turnover ratio indicates brisk sales. The ratio is therefore, a measure to discover
the possible trouble in the form of over stocking or overvaluation. Here, the ratio is 19.97
times in the year 2004-05 which increase to 17.09 times in the next year 2005-06 and
12.39 times in 2006-07, which shoes increased liquidity of the inventory.

6.2.3.6 DEBTOR`S RATIO:-
This ratio shows the number of days taken to collect the dues of credit sales. It
shows the efficiency or otherwise of the collection policy of the enterprise. The ratio is
computed by dividing the amount of debtors and bills receivable by the average daily
sales. The average daily sales is obtained by dividing the total annual sales by 365. The
higher the ratio, the more unsatisfactory position it shows. In this ratio firstly, average
daily sales is found out and then collection period is determined.
Debtor’s Ratio = Debtors + Bills Receivable *365

Credit Sales
(2006-07) = 22501264 *365

63851110
= 128.63
= 129 days
(2005-06) = 21715950 *365

54285365
=146.012
=146 days
(2004-05) = 18040555 *365

43236360
= 152.29
= 152 days
DEBTOR'SRATIO
146 152
160
128 2006-07
140
2005-06
120
2005-04
100
2006-07 2005-06 2005-04

INTERPRETATION
This ratio indicates within how much period cash is collected

from debtors for credit sales. The ideal ratio is 45 days. Low ratio is good for
management.
Here, in Vishal Ltd. Debtors ratio in 2004 was 152 days,

while it was decreasing in 2005 up to 146 days and in 2007 it was 128 days. It shows that
company’s credit period is decreasing which shows satisfactory condition.
Thus, from this ratio, we can conclude that company can

receive the return of its credit sales in average 128 days from its debtors. Company’s
credit collection period is decreasing which is good because if company gets its cash back
as early as possible it can use that cash liquidity in its basic operations.

6.2.3.7 CREDITOR`S RATIO:-

As the debtors ratio gives us number of days within which amount due for
credit sales is collected. Similarly, the number of days with which we make
payment to our creditors for credit purchases is obtained from creditors velocity.
Suppose the credit period is 45 days and if creditors velocity is 30 days i.e. we are
making payment within 30 days, it means that we do not take the advantage of
credit period allowed to us.
Creditor’s Ratio = Creditors + Bills Payable *365

Credit Purchase
(2006-07) = 14773332 *365

45720593
= 118 days
(2005-06) = 17257079 *365

41421681
=152 days
(2004-05) = 15458233 *365

27984653
= 202 days
CREDITOR'SRATIO
250 201
152
200
117 2006-07
150
2005-06
100
2004-05
50
0
2006-07 2005-06 2004-05

ITERPRETATION:-
Creditor’s ratio shows the credit period allowed by the suppliers of raw
material. The standard period for payment to the creditors is 50 days. If company can get
more days it is beneficial for the company.
Here the credit period allowed by the suppliers in 2004-05 is 202 days and
in 2005-06 is 152 days and 118 days in 2006-07. In all three years the company has
benefit to pay later. But if liquid position is comfortable, then benefit of cash discount
should be taken by making early payments.

7.
DU-PONT
CHART

DU PONT CHART
The Du Pont company of the US pioneered a system of financial

analysis which has received widespread recognition and acceptance. A useful system of analysis,
which considers important interrelationships based on information found in financial statements, it
has been adopted by many firms in some form or the other. The main object of Du Pont chart is to
find out total return on assets.
Net sales
77086934
Net profit
3897033
Net -
profit /
Total cost
margin 73189901
0.05% Net sales
77086934
Return
on *
Total
assets Fixed assets
17596067
0.063 Net sales
% 77086934 +
Total
assets /
turnover Investments
Total assets 214500
1.26% +
60956144
Current assets
43145577

INTERPRETATION
At the left of the Du Pont Chart is the return on total assets (ROTA),
defined as the product of the net profit margin (NPM) and the total assets turnover ratio (TATR):
Net profit = Net profit Net sales

Total assets Net sales * Total assets
ROTA NPM TATR
The upper side of the Du Pont Chart shows the details underlying the net
profit margin ratio. An examination of this side may indicate areas where cost reductions
may be effected to improve the net profit margin. If this is supplemented by comparative
common size analysis, it becomes relatively easier to understand where cost control
efforts should be directed.
The lower side of the Du Pont Chart throws light on the determinants of
the total assets turnover ratio. If this is supplemented by a study of component turnover
ratio, a deeper insight can be gained into efficiencies/inefficiencies of asset utilization.
Here in VISHAL CONTAINERS PVT.LTD. there is high total assets

turnover but due to less profit net profit margin will be lower up to 0.05% and thus
RETURN ON TOTAL ASSETS will be 0.063% which is said to be an average.

8.
FINANCIAL
STATEMENT
ANALYSIS

8.1 BALANCE SHEET
PARTICULARS 2004-05 2005-06 2006-07

S0URCES OF FUND
Share Capital 10000000 10000000 10000000
Share Application Money - - 5305000
Reserve & Surplus 1542676 4204337 5101370
11542676 14204337 20406370
LOAN FUNDS
Secured Loan 10104012 11263191 30118396
Unsecured Loans 5181670 3925785 6758465
Deferred Tax 3618027 2826741 2809510
Total 30446385 32220054 60092741
APPLICATION OF FUNDS
Gross block 21117533 19398907 21738699
Less: Depreciation Fund 1628075 2693612 4142632
Net block 19489458 16705295 17596067
Capital Work in Progress 25540 0 17458929
CURRRENT ASSETS-
LOANS & ADVANCES
Investments 25000 25000 214500
Inventories 5487443 7785273 12103828
Sungry Debtors 18040555 21715950 22501264
Cash & Bank balances 1840149 1434932 304310
Loans & Advances 2514073 4746738 8234175
27907220 35707938 43360077
Less: CURRENT
LIABILITIES & PROVISONS
Current Liabilities 15458233 17257079 14773332
Provison for Taxation 1677800 3078500 3673600
17136033 20335579 18446932
Net Current Assets 10771187 15372359 24913145
Miscellaneour Expenditure 160200 142400 124600
TOTAL 30446385 32220054 60092741

8.2 PROFIT & LOSS ACCOUNT
Particulars 2004-05 2005-06 2006-07

INCOME
Sales 57930430 69877831 77086934
Other Income 1466909 3230865 3318880
Increase/ Decrease in Stock 91887 (64620) 4571809
Total 59489226 73044076 84977623
EXPENDITURE
Manufacturing Expenses 47703853 59253517 69711928
Employees Remuneration & Benefits 1780560 2230137 4308413
Administrative Expenses 2051257 3707810 3478070
Selling & Disribution Expenses 1579996 1549079 1646015
Interest & Financial Expenses 1608268 1620473 2274529
Depreciation 1628075 1306192 1449020
Amortisation 17800 17800 17800
Net Profit 3119417 3359068 2091848
Total 59489226 73044076 84977623

8.3 ANALYSIS OF FINANCIAL STATEMENTS
After examining the above statements- P & L A/c and Balance

sheet the following items are made clear.
1. Examination of sales and cost of sales makes it clear that as compared to cost of
sales, increase in sales is more and as a result the rate of gross profit has
increased.
2. The liquid position if the company is constantly improving in last two years.
There is an increase in both current assets and current liabilities, the increase in
current assets is comparatively more and in the year 2006 current assets are twice
the current liabilities and the ratio was 2 : 1
3. The increase in fixed assets is financed by issue of new share capital. The
increase. Thus the advantage of “Trading on Equity” has been taken.
4. Balance of profit and loss account is increasing and so the proportion of

reserves and surplus was also increasing which is considered as a better feature of
any company. But such a high increase may lead to overcapitalization in
future and at that time company may have to face the disadvantages of
overcapitalization.
5. On one hand sales are increasing while on the other hand debtors are also
increasing. Increase in sales is more than increase indebtors. This suggests
effectiveness of sales promotion policy and the collection policy is satisfactory. It
seems that more emphasis has been put on cash sales. Morever bills receivables
are constantly increasing which is a sign of new credit sales policy of
management.

6. Looking at other expenses, increase in them is less than increase in sales

which shows effectiveness of management in production as well as in sales
also.

9. FINDINGS:
At the end of the financial analysis of the company the following are the various findings:
 The current ratio of the company is quite satisfactory. Although there is a decline
but still the company is maintaining a ratio far greater than the ideal ratio.
However in such case the quality of the current assets is necessary to be analyzed.
 Considering the liquidity position the major contributors to the company current
assets are the debtors and the inventories. So a high current ratio or quick ratio
does not mean that the company has sufficient liquidity. The company needs to
focus more on the cash and other current assets.
 Considering the liquidity position there is a decline in the interval measure by

almost 68 percent which indicates the tight liquidity position of the company.
Since the last financial year there appears to be a reduction in the use of
the debt funds in the working capital financing of the company
.
 Considering the capital structure of the company almost 60-70 percent financing
of the company is carried out through the debt funds while the equity financing
contributes to only 25-30 percent of the financing.
 The total liabilities of the company constitutes about 60-70 percent of the
company total assets. However in the present financial year this ratio has
increased due to increase in the use of taking loans by the company.
 The company has the ability to match the expenses of interest as well as the fixed
charges well with their earnings. This ratio is quite consistently high for the
company.
 In the last two financial years the inventory holding periods and the debtors
collection period for the company has increased which has a direct impact on the
current ratio of the company.
 There is a constant rise in the company sales. The company seems to utilize the
fixed assets well in its conversion in sales. However the company needs to plan
well for using the current assets well.
 There is a constant rise in the gross profit margins of the company but there are
constant fluctuations observed in the net profit margins of the company.

 The operating expenses of the company are on a constant rise. This indicates that
the net profit margins are affected a lot by the operating expenses of the company.
 There is a constant rise in the ROI, ROE and EPS for the company. This is a
good sign for the company shareholders.
 The earning power of the company has almost doubled in the last three financial
years.

10. RECOMMENDATIONS AND SUGGESTIONS:

1) The company needs to plan its strategy regarding the current assets utilization.
Over the last five financial years this ratio is constantly reducing. Moreover the
main components of this current ratio appear to be the inventories and the debtors.
The company needs to focus more on the cash and more liquid assets.
2) The company needs to manage the inventories well because over the last two
financial years there is a constant rise in the inventory holding periods. This could
lead to reduced profit margins and reduction in the liquidity position.
3) There is also a loophole observed in the debtors’ collection policy which indicates
that the company needs to collect its debt well. Moreover there is a constant rise
in the debtors’ quantity which is a matter of concern for the company.
4) The company seems to make no changes in the investment pattern over the last
three financial years. So the company seems to be using a very aggressive mode
of financing. However the company needs to be cautious.
5) The company prefers debt financing over equity financing. However the company
needs to be careful in selecting an optimum mixture of the debt and equity. This
can have an effect on the solvency of the firm.
6) There is a constant rise in the operating expenses of the firm. So the company
needs to plan an effective cost reduction strategy to reduce the operating expenses
and thereby improve the net profit margins.
7) The company needs to have a closer watch particularly on the additional expenses
and the manufacturing expenses. In additional expenses also the administrative
expenses seems to be worrisome.

11. LIMITATIONS OF THE ANALYSIS:

1) This financial analysis carried out does not consider the effect of the opportunity
cost of money. It ignores the present value and the future value of money.
2) The standards for comparison data of the other companies are not available easily.
So an overall view of the analysis cannot be brought about through this analysis.
3) No information related to the effects of the external factors on the business

conditions and the company policy can be obtained through this analysis.
4) The analysis carried out is based only on the past information. No one can
successfully predict the future conditions and strategies based on this data.
5) Moreover at times there exists a confusion to record some of the expenses or

financial terms into both different categories. So one cannot be 100 percent
accurate in such analysis.

12. CONCLUSION
According to my analysis VISHAL CONTAINERS PVT.LTD. is having very

good efficiency and sound management system. The manufacturing technology brought
from abroad and also from here(INDIA).
I would like to say that the company’s financial position and financial management
is very sound. The company’s assets increasing day by day.
According to my opinion company had wide scope to develop in coming year. A

company also can sell it’s products to out of India. Because all the products are durable
and it is also wide scope for company to expand their business. The future of this
company will be definitely bright. And company will get more reputation in all over
India.

13. BIBLIOGRAPHY
I have referred following books for the preparation of this project report on
financial analysis of VISHAL CONTAINERS PVT.LTD.
1) www.vishal containers.com
2) Prasanna Chandra, “Financial Management- Theory and Practice”, Fourth
Edition, Tata-McGraw Hill Publications.
3) R.Narayanswamy, “ Financial Accounting- A Managerial Perspective”,
Second Edition, Prentice-Hall Publications.
4) I.M.Pandey, “Financial Management”, Ninth Edition, Vikas Publishing
House.
5) Annual Reports Of Vishal Containers Pvt. Ltd.

14.ANNEXURES
 Balance Sheet of the Year 2004-05

 Balance Sheet of the year 2005-06
 Balance Sheet of the year 2006-07
 Profit & Loss A/C statement of the year 2004-05



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V.M.PATEL COLLEGE OF MANAGEMENT STUDIES,

1.1. INTRODUCTION OF COMPANY

NAME OF THE COMPANY :-