Financial Analysis

Submitted to Jawaharlal Nehru Technological University, Hyderabad

In fulfillment of Main Project for the award of the degree of

MASTER OF BUSINESS ADMINISTRATION

(MBA)

Submitted by
xxxxxxxxx
H.T.No: 14xxxxxxx

Under the guidance of

Mrs.A.Padma
MBA(Ph.D),NET,SET,FET

DEPARTMENT OF BUSINESS MANAGEMENT

KSHATRIYA COLLEGE OF ENGINEERING
(Approved by AICTE, New Delhi and Affiliated to JNTU Hyderabad)
2016
(An ISO 9001:2008 CERTIFIED INSTITUTION)

(Approved by AICTE New Delhi and Affiliated to JNTUH, Hyderabad) NH-16,

Chepur-Armoor, Dist. Nizamabad 503224 (T.S.) India.Ph:08463 253155,253156,
253222.

www.kcea.ac.in email:kceamba@gmail.com

CERTIFICATE

Certified that the project report FINANCIAL ANALYSIS OF AMAR RAJA

BATTERIES LIMITED is the bonafide work ofERAVATHRI VANI, 14B41E0014
2nd Year MBA of Kshatriya College of Engineering,Chepur-Armoor, carried out under
supervision of Mrs. A. Padma, Head of Department of Business Management during
2014 to 2016

Signature of Head of the Department Mrs. A. PADMA

Department of Business Management

Admin Office: NH-16, Chepur Armoor, Nizamabad, (Telangana)-

503224www.kcea.ac.in
 DECLARATION

I hereby declare that the work described in this Project report

entitledFINANCIAL ANALYSIS, which is being submitted by me in fulfillment for
the award of degree of Master of Business Administration in the Dept. of Business
Management ,Kshatriya College of Engineering, Chepur-Armoor to the Jawaharlal Nehru
Technological University Hyderabad, Kukatpally, Hyderabad (A.P.) -500 085, is the
result of investigations carried out by me under the Guidance of Mrs. A. PADMA, Head
of Department of Business Management.

The work is original and has not been submitted in full /partial for any Degree/Diploma
of this or any other university or institution.

Place: Signature:

Date: Name of the Candidate: xxxxxxxx

Hall Ticket No.: 14XXXXXX

 ACKNOWLEDGEMENT

I wish to take this opportunity to express my deep sense of gratitude to all the people who
have extended their co-operation in various ways during my project work. It is my
pleasure to acknowledge the help of all those individuals.

I am very grateful to Mr. RAVI TEJA, a finance manager in FINANCIAL ANALYSIS

OF AMAR RAJA BATTERIES LIMITED, PANJAGUTTA for his timely
guidance, support and encouragement in completing my project work.

I express my profound gratitude to my internal guide Mrs. A. PADMA, Head of Dept.

of Business Management in Kshatriya College of Engineering, for her sagacious
guidance, scholarly advice and the inspirations offered in an amiable and pleasant manner
helping me in completing this project successfully.

I render my whole hearted thanks to Prof. M. Venkateshwarlu, Director, Kshatriya

College of Engineering for his support and assistance in completion of my project

I am deeply indebted to express my thanks to Dr. M. Lakshmi Narayana, Principal of

Kshatriya College of Engineering for his kind co-operation in completion of this
project.

I render my whole hearted thanks to Prof. B. Ram Prasad, Dean, Kshatriya College of
Engineering for his support in completion of my project.
I express my profound gratitude to Mrs. A. Padma, Head of the Department of
Business Management, Kshatriya College of Engineering, for her support and
encouragement in completing my project work.

I avail this opportunity to express my gratitude to Management, all faculty members of

Department of Business Management and librarian of Kshatriya College of
Engineering

I would like to express my sincere thanks to my parents my friends for there and moral
support in finishing my project and all those who helped me directly and indirectly in
completing my project work.

ERAVATHRI VANI
 ABSTRACT

This project report entitled to A Study On Financial Performance Of Amar Raja

Batteries Limited at Hyderabad. The main objective of the study is to analyze the
financial performance of a company. It is the process of identifying the financial strength
and weakness of the firm properly by establishing relationship between the items in
balance sheet and profit and loss account. The details regarding the history and finance
details of the company were collected through discussions with the company officers.
Secondary data was based on annual reports of 2011-2015.

The tool used for this study is Ratio Analysis. Charts and tables used
for better understanding. Through Ratio Analysis the company should understand the
Profitability, Liquidity, Leverage, Turnover positions of the firm.

The company is following Liquidity ratios effectively because it is

following that all the Current Ratios are greater than the standard 2:1 and Quick Ratios
are greater than the standard 1:1. The firm is maintaining a low cash balance so that
indicates all the cash payments are done. The Gross Profit Ratio, Net Profit Ratio is
showing the increasing trends. So, finally the Profitability of the firm is increasing. So we
can say that financial performance of the firm is very good and they will increase their
business year by year by expanding their branches.

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 TABLE OF CONTENTS

CONTENT PAGE NO

Abstract i

Index ii - vii

List of Tables viii

List of Charts ix

I Chapter Introduction 1-3

1.1 Importance of Finance 1

1.2 Objectives of Finance Analysis 2

1.3 Significance of Financial Analysis 2

1.4 Advantages of Financial Analysis 3

1.5 Limitations of Financial Analysis 3

1.6 Data Collection Methods

1.6.1 Primary Data 3

1.6.2 Secondary Data 3

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II Chapter Review of Literature 4 - 13

III Chapter Company & Industry Profile 14 - 21

3.1 History of Company 14

3.1.1 Culture and Environment 14

3.1.2 Quality Policy 15

3.1.3 Research and Development 15

3.2 Future plan of Action 16

3.3 Awards for the Company 17

3.4 Amar Raja Group of Companies 17

3.5 Industrial Battery Division (IBD) 18

3.6 Automatic Battery Division (ABD) 19

3.7 Major Users 20

3.8 Production Process 21

IV Chapter Theoretical Frame Work 23 - 37

4.1 Parties Interested in Financial Analysis 23

4.2 Methods of Analysis 23

4.2.1 Nature of Ratio Analysis 24

4.2.2 Standards of Comparison 24

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 4.2.3 Time Series Analysis 25

4.2.4 Cross Sectional Analysis 25

4.2.5 Industry Analysis 25

4.3 Types of Ratios 26

Liquidity Ratios 26

4.3.1 Current Ratio 27

4.3.2 Quick Ratio 27

4.3.3 Cash Ratio 28

4.4 Leverage Ratios 28

4.4.1 Debt Equity Ratio 29

4.4.2 Debt Ratio 30

4.4.3 Interest Coverage Ratio 30

4.4.4 Proprietary Ratio 31

4.4.5 Capital Gearing Ratio 31

4.5 Activity Ratios 31

4.5.1 Total Capital Turnover Ratio 32

4.5.2 Working Capital Turnover 33

4.5.3 Fixed Assets Turnover Ratio 33

iv
 4.5.4 Stock Turnover Ratio 33

4.6 Profitability Ratios 34

4.6.1 Gross Profit Ratio 35

4.6.2 Operating Profit Ratio 36

4.6.3 Net Profit Ratio 36

4.6.4 Return on Income 37

4.6.5 Earning Per Share 37

4.6.6 Operating Expenses Ratio 37

V Chapter Data Analysis and Interpretation 38 - 72

Vertical and Horizontal Analysis 38

5.1 Liquidity Ratios 39

5.1.1 Current Ratio 39

5.1.2 Quick Ratio 41

5.1.3 Cash Ratio 43

5.1.4 Net Working Capital 45

v
5.2 Leverage Ratios 47

5.2.1 Debt Ratio 47

5.2.2 Debt Equity Ratio 49

5.2.3 Interest Coverage Ratio 51

5.3 Activity Ratios 53

5.3.1 Inventory Turnover Ratio 53

5.3.2 Debtors Turnover Ratio 55

5.3.3 Fixed Assets Turnover Ratio 57

5.3.4 Current Assets Turnover Ratio 59

5.3.5 Total Assets Turnover Ratio 61

5.4 Profitability Ratios 63

5.4.1 Gross Profit Ratio 63

5.4.2 Net Profit Ratio 65

5.4.3 Return on Investment 67

5.4.4 Return on Equity Shareholders 69

Vi
VI Chapter Findings, Suggestions and Conclusion 71 - 74

Findings 71

Suggestions 73

Conclusions 74

Bibliography 75

vii
 LIST OF TABLES

S.NO Table Name Table No PageNo

1 Calculation of Current Ratio 1 39

2 Calculation of Quick Ratio 2 41

3 Calculation of Cash Ratio 3 43

4 Calculation of Net Working Capital 4 45

5 Calculation of Debt Ratio 5 47

6 Calculation of Debt Equity Ratio 6 49

7 Calculation of Interest Coverage Ratio 7 51

8 Calculation of Inventory Turnover Ratio 8 53

9 Calculation of Debtors Turnover Ratio 9 55

10 Calculation of Fixed Assets Turnover Ratio 10 57

11 Calculation of Current Assets Turnover Ratio 11 59

12 Calculation of Total Assets Turnover Ratio 12 61

13 Calculation of Gross Profit Ratio 13 63

14 Calculation of Net Profit Ratio 14 65

15 Calculation of Return On Investment 15 67

16 Calculation of Equity on Equity Shareholders 16 69

viii
 LIST OF CHARTS

S.NO Charts Names Chart No Page No

1 Current Ratio 1 40

2 Quick Ratio 2 42

3 Cash Ratio 3 44

4 Net Working Capital 4 46

5 Debt Ratio 5 48

6 Debt Equity Ratio 6 50

7 Interest Coverage Ratio 7 52

8 Inventory Turnover Ratio 8 54

9 Debtors Turnover Ratio 9 56

10 Fixed Assets Turnover Ratio 10 58

11 Current Assets Turnover Ratio 11 60

12 Total Assets Turnover Ratio 12 62

13 Gross Profit Ratio 13 64

14 Net Profit Ratio 14 66

15 Return On Investment 15 68

16 Return On Equity Shareholders 16 70

ix
 INTRODUCTION

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

1.1 IMPORTANCE OF FINANCE

Finance is important to an organization as the firm has to know how viable it is and
balance profit with costs.

The Role of the Finance Department can be summarized:

Prepare and create financial accounts such as Trading, Profit and Loss Account and
theBalance Sheet.

Keep and maintain financial records sales figures and records of expenditure would
be heldby the Finance department and used by other departments also.

Prepare and plan internal financial information this would mainly be performed in
the caseof a budget, which is a financial plan and can help managers take corrective
action.

Analyze current financial performance how the firm has done in trading or expenses
wouldbe analyzed primarily using ratio analysis tools.

Pay creditors Finance Department would ensure that bills are paid to people the firm
owesmoney to.

Pay employees wages and salaries running the payroll system is another important task
forFinance to undertake. Employees have to be paid!

1
1.2 Objectives of the financial analysis
Analysis of financial statements may be made for a particular purpose in view.
1. To find out the financial stability and soundness of the business enterprise.
2. To assess and evaluate the earning capacity of the business
3. To estimate and evaluate the fixed assets, stock etc., of the concern.
4. To estimate and determine the possibilities of future growth of business.
5. To assess and evaluate the firms capacity and ability to repay short and long term
loansParties interested in financial analysis

1.3Significance of financial analysis

Financial analysis serves the following purpose:
To know the operational efficiency of the business:
The financial analysis enables the management to find out the overall efficiency of the
firm. This will enable the management to locate the weak Spots of the business and take
necessary remedial action.

Helpful in measuring the solvency of the firm:

The financial analysis helps the decision makers in taking appropriate decisions for
strengthening the short-term as well as long-term solvency of the firm.

Comparison of past and present results:

Financial statements of the previous years can be compared and the trend regarding
various expenses, purchases, sales, gross profit and net profit can be ascertained.

Helps in measuring the profitability:

Financial statements show the gross profit, & net profit.
Interfirm comparison:
The financial analysis makes it easy to make inter-firm comparison. This comparison can
also be made for various time periods.

2
Bankruptcy and Failure:
Financial statement analysis is significant tool in predicting the bankruptcy and the
failure of the business enterprise. Financial statement analysis accomplishes this through
the evaluation of the solvency position.

1.4 Advantages of Financial Analysis:

Ratios help compare current performance with previous records.
Ratios help compare a firms performance with similar competitors.
Ratios help monitor and identify issues that can be highlighted and resolved.

1.5 Limitations of Financial Analysis:

Ratio analysis information is historic it is not current.
Ratio analysis does not take into account external factors such as a worldwide
recession.
Ratio analysis does not measure the human element of a firm.

1.6 Data Collection Methods

Primary Data

Information collected from internal guide and finance manager.

Primary data is first-hand information.

Secondary Data

Company balance sheet and profit and loss account.

Secondary data is second hand information

3
Gautam U.s (2005) revealed that financial statements is generally explained as financial
information which is the information relating to the financial position of any firm in a
capsule form and also captures and report on four key business activities planning,
financing, investing and operating activities. Analysis of financial statements provides the
essential concepts and tools needed by analysis who make decisions on the basis of
information found in the statements

Herbert Mayo (1978) disclosed that financial analysis can also use percentage analysis
which involves reducing a series of figures as a percentage of some base amount. For
example a group of items can be expresses as a percentage of net income. When
proportionate changes in the same figure over a given period expressed as a percentage is
known as horizontal analysis. Vertical or common size analysis reduces all items on a
statement a common size as a percentage of same base value which assets in
comparability with other companies of different sizes. As a result all income statement
items are divided by sales, all the balance sheet items are divided by total assets.

Victor.L.Bernard (1984) according to him there are mainly three steps for the financial
statement analysis one is identification of the users purpose, second is identification of
data source which part of the annual report on other information is required to be
analyzed to suit the purpose, third is selecting the tecniques to be used for such analysis.
As such analysis is purpose it may be restricted to any particular position of the available
financial statement taking care to ensure objectivity and unbiasedness. It covers the study
of relationships with a set of financial statements at a point of time and with trends in
them overtime. It covers a study of some comparable firms at particular time or of a
particular firm over a period of time or may cover both.

Ben Mc Clure (1973) explaines to understand the value of a company, investors have to
look a its financial position. Fortunately this is not difficult as its sounds. If you borrow

4
money from a bank you have to list the value of all your significant assets as well as all
your significant liabilities. Your bank uses this information to assess the strength of your
financial position it looks at the quality of the assets. Such as your car and house and
places a conservation valuation upon them. To make all this to know the financial
analysis to be done. Evaluating the financial position of a listed company is quite similar
except investors need to tale another step and consider financial position in relation to
market value.

Mike Periu (1986) discussed about the financial analysis by five key elements. Financial
health is one of the business indicators of the business potential for long term growth.
Elements are revenues, revenues are probably your business main source of cash. Profits,
if you cant produce quality profits consistently your business may not survive in the long
run. Operation efficiency, it measures how well you are using the companys resources a
lack of operational efficiency leads to smaller profits and weaker profits. Capital
efficiency and solvency, it is an interest to lenders and investors. Liquidity, it is the
analysis which will addresses your ability to generate sufficient cash to cover cash
expenses. No amount of revenue growth or profits can compensate for poor liquidity.

Jeremy Slaughter (1974) explains the evaluation the performance of a business can be
challenging and requires a systematic collection and review of financial information.
Financial statements provide this summary of collected data. Public companies also have
a statement of equity. Reviewing and analyzing financial statements provide the user with
trends and indicators to compare operations and management. Financial analysis is used
to evaluate trends set financial policy to build long terms plans for business activity and
identify projects or companies for investment. This is done through the synthesis of
financial numbers and data. One of the most common ways to analyze financial data is to
calculate ratios from the data to compare against those of other companies or against the
companies own historical performance.

5
Osmand vitez (1989) discussed about the financial analysis that financial statements are
usually the final output of a companys accounting operations. These statements contains
information relating to the revenues, expenses, assets, liabilities and retained earnings of
the business. Business owners often pay close attention to this information. Since the
statements provide detailed information about the companies operational performance.
Many business owners and managers use specific analysis tools to closely review their
company financial statements for decision making purpose. A traditional financial
statement analysis tppl is financial ratios. These ratios take information from the
company financial statements and calculate economic indicators for compares to another
company or the industry standard.

Renee Booker (1991) explained writing a companies detailed financial analysis can be
necessary to determine whether to invest in the company. There is no specific method for
doing so and presentation styles and vary but key components should be included in any
financial analysis. Only after reviewing all the components can conclusion be drawn
regarding the companys financial health. Financial health is one of the best indicators of
your business potential for long term growth.

Jean.L.Heck (1985) reveled financial analysis can be applied in a wide variety of

situations to give business managers the information they need to make critical decisions.
Finance is the language of business. Business goals and objective are set in financial
terms and their outcomes are measured in financial terms. Finally finance involves
analyzing the data contained in the financial statements in order to provide valuable
information for most decisions. Another part of financial analysis involves using the
numerical data contained in company statements to uncover patterns of activity that may
not be apparent on the surface.

6
Philip Cooley (1978) in his point of view, financial analysis is of five types horizontal
analysis, vertical analysis, short term analysis, multi company comparison, industry
comparison. Financial analysis is one of the key tools needed by the managers of a
business to examine how their organization is performing. For this reason they are
constantly querying the financial analyst about the profitability, cash flows and other
financial aspects of their business. The analysis of financial statement consists of a study
relationship and trends to determine whether or not the financial position of the concern
and its operating efficiency have been satisfactory.

Smita Mishra (1988) given the following points highlights the four important types of
financial analysis. First is on the basis of material used and it is subdivided into two types
external analysis and internal analysis. Second is on the basis of modus operandi and it is
subdivided into two types horizontal and vertical analysis. Third is on the basis of entities
involved and is subdivided into two types cross sectional or inter firm analysis and time
series or intra firm. Fourth is on the basis of time horizon or objective of analysis and is
also divided into two types short term analysis and long term analysis.

Matt.H.Evans (1977) explained financial analysis is the examination of financial

information to reach business decisions. This analysis typically results in the reallocation
of resources to or from a business or a specific internal operation. This type of analysis
applies particularly well to the following situations investment decisions by external
investors and internal investors. The outcome of financial analysis may be any of these
decisions. Whether to invest a business and at what price per share, whether to tend
money to a business and if so what terms to offer, whether to invest internally in an asset
or working capital and how to finance the acquisition.

Benjamin Graham, David Dood (1934) approved referred to as fundamental analysis of

the statements which are provided by the financial analysis and it includes economic

7
analysis, industry analysis, company analysis they mainly describes about the security
analysis. For that reason they used to use these financial analysis is mainly used to take
the decisions so it is very useful in any type of business. It helps to compare the data with
other companies for knowing their position in the market level that deals with the
competitors.

Pamela.P.Peterson (1982) determines the financial analysis a company health and

stability. The data gives you an initiative understanding of how the company conducts
business. Stock holders can find out how management employs resources and whether
they use them properly. Governments are regulatory authorities use financial statements
to determine the legality of a companys fiscal decisions and whether the firm is
following correct accounting procedure. Finally government agencies such as the internal
revenue service, use financial statement analysis to decide the correct taxation for the
company.

KD Garg (2000) according to him to meet their financial reporting obligations and to
assist in strategic decision making, firms prepare financial statements. However the
information provided in the financial statements is not an end in itself as no meaningful
conclusions can be drawn from these statements alone. Firms employ financial analysis
to read, compare and interpret the data as necessary for quant analysis and decision
making. In a technical sense, financial statement summarize the accounting process and
provide a tabulation of account titles and amounts of money.

Meigs and Meigs (2003) stated that the rate of return on investment is a test of
managements efficiency in using available resources. This review is useful to know the
exact position of the performance of an entity. Analysis can do this by dividing debt
which comes from balance sheet by net income which comes from income statement.

8
Likewise return on assets and return on equity compare company net income found on
the income statement with assets and stockholders equity as found on the balance sheet.

AKpan (2003) describes about the financial analysis that takes and helps in decision
making. Each financial statements provides multiple years of data used to get analysis
can track performance measures across financial statements. Using several different
methods for financial statement analysis including horizontal and vertical analysis. That
also includes calculation of ratios and this is done through the synthesis of financial
numbers and data.

Harvey.B.Lermack (1981) explained financial analysis an art said Philadelphia

university assistant professor of management. Experienced managers, investors and
analysis collect industry information overtime that allow them to perform financial
analysis of a companys more thoroughly. There are many steps to do financial analysis
as follows. Collect the companys financial statements from last three to five years.
Analyze these statements and scan them in order to look for large movements in specific
items from one year to the next. Make sure to review the financial statements notes.
Analyze the balance sheet to see if there are large changes in the companys assets,
liabilities and equity. Examine the income statement to identify trends over time. Next,
evaluate the business shareholders equity statement. Analyze the companys cash flow
statement. Calculate financial ratios. Then, gather the companys key competitors data.
Review the market data of the business stock price as well as the price to earnings ratio.
Review the dividend payout ratio. Now, you can evaluate all of the data you generated.
Congratulations, you did it you successfully performed a financial analysis on a business.

Anthony Robert N (1984) revealed financial statement analysis involves the

identification of the following items for a companys financial statements over a series of
reporting periods. Financial statement analysis is an exceptionally powerful tool for a

9
variety of users of financial statements each having different objectives in learning about
the financial circumstances of the entity. There are a number of users of a financial
statement analysis. They are creditors, investors, management, and regulatory authorities.
There are several general categories of ratios. Each designed to examine a different
aspects of a companys performance.

Diamond (2006) explains all watchful business owners have an innate sense of how well
their business is doing. This review is useful to know the exact position of the
performance of an entity. Finally, finance involves analyzing the data contained in the
financial statements in order to provide valuable information for most decisions. So
finance is called as an language of business.

Johan N Myer (1962) explains financial analysis refers to an assessment of the viability,
stability and profitability of a business, sub business or project. It is performed by
professionals who prepare reports using ratios that make use of information taken from
financial statements and other reports. These reports are usually presented to top
management as one of their bases in making financial decisions. These financial
statements helps the investors also. These statements consists of a study relationship and
trends to determine whether or not the financial position of the concern and its efficiency
have been satisfactory.

JA Ohison (1999) was defined as a written report that summarizes the financial status of
organization for a stated period of time. It includes income statements and balance sheet
or statement of financial position describing the flow of resources, profit and loss and the
distribution of retention of profit. To intelligently understand analyze and interpret
financial statement you must took for the right information to know where to locate it and
act on it.

10
Johnson.R.W (1971) revealed the financial analysis may determine if a business will
continue or discontinue its main operation or part of its business. Make or purchase
certain materials in the manufacture of its product. Acquire or rent/lease certain
machineries an equipment in the production of its goods. Issue stocks or negotiate for a
bank loan to increase its working capital. Make decisions regarding investing or lending
capital. Make other decisions that allow management make an informed selection on
various alternatives in the conduct of its business.

Guthmann H G (1953) explains analysis of the data on ratio. Ratio analysis of financial
statements is the study of relationship among various financial factors in a business as
disclosed by a single set of financial statements and a study of trend of these factors as
shown in a series of statements.

Meignsetal (2001) describes financial statements simply means a declaration of what is

believed to be true and which communicated in terms of monetary unit. It describes
certain attributes of a company that is considered to fairly represent its financial activites.
It is a process of reviewing and analyzing a companys financial statements to make
better economic decisions. These statements includes the income statements, balance
sheet, statement of cash flow and statement of changes in equity. Financial statement
analysis is a method or process involving specific technique.

Beckman, Theodore N (1992) revealed the review of the growing literature relating
corporate environmental performance to financial performance. Financial analysis is the
process of identifying the strengths and weakness of the firm with the help of accounting
information provided in the profit and loss and balance sheet. It is the process of the
evaluation of relationship between component parts of financial statements to obtain a
better understanding of the firms position and performance.

11
Dauton cart A (1991) explains ratio analysis is a commonly used analytical tool for
verifying the performance of a firm. While ratios are easy to compute which in part
explains their wide appeal, their interpretation is problematic especially when two or
more ratios provide conflicting signals. Indeed ratio analysis is often criticized on the
grounds of subjectivity that is the analyst must pick and choose ratios in order to assess
the overall performance of a firm.

Pandey, I.M (2005) describes profitability is the ability of an entity to earn income. It can
be assessed by computing various relevant measures including the ratio of net sales to
assets the rate earned on total assets etc. profit only comes when there is a accurate rate of
return that will be based on analysis. While ratios are easy to compute which in part
explains their wide appeal, their interpretation is problematic especially when two or
more ratios provide conflicting signals.

Gestenberg, Charles W (1962) describes an analysis of the data on ratios. Ratio analysis
is one of the techniques of financial analysis to evaluate the financial condition and
performance of a business concern. Ratio analysis is a form of financial statement
analysis that is used to obtain a quick indication of the firms financial performance in
several key areas. The computation of ratios facilitates the comparison of firms which
differs in size ratios can be used to a firms financial performance with industry averages.

Rosemary Peavler (1988) revealed that there are number of techniques you can use to
perform financial analysis for your business firm, depending on what you are trying to
find out. The financial statements you want to use in your analysis are balance sheet,
income statements and statement of cash flows. First you need to know how to prepare
financial statements after learning preparation, financial analysis comes next. Here are
some techniques used to analyze the financial statements.

12
1.Trend Analysis:Historical analysis is based on historical data form the firms financial
statements and forecasted data from the firms proforma or forward looking financial
statements.

2. Common Size financial statement analysis: Financial statement analysis is analyzing

the balance sheet and income statements using percentages. All income statement line
items are stated as percentage of sales. All balance sheet line items are stated as total
assets.

3. Percentage change financial statement analysis: When you use these form of analysis,
you calculate growth rate for all income statement items and balance sheet accounts
relative to a base year.

4. Bench marking analysis: It is also called as industry analysis. Bench marking involves
comparing one company to other companies in the same industry in order to see how one
company is performing financially better than the other company.

13
 COMPANY PROFILE

3.1 History of Company

Amara Raja Batteries (ARBL) incorporated under the companies Act, 1956 in 13th February
1985, and converted into public Limited Company on 6th September 1990. The chairman and
Managing Director of the company is Sri Gala Ramachandra Naidu, ARBL is a first
company in India, which manufactures Values regulated Lead Acid (VRLA) Batteries. The
main objectives of the company are a manufacturing of good quality of Sealed Maintenance
Free (SMF) acid batteries.

The company is setting up to Rs.1, 920 lakhs plant is in 185 acres in Karakambadi
village,Renigunta Mandal. The project site is notified under B category. The company
has the clear-cut policy of direct selling without any intermediate. So they have set up six
branches and are operated by corporate operations office located in Chennai. The
company has virtual monopoly in higher A.H. (Amp Hour) rating Market its product
VRLA. It is also having the facility for industrial and automotive batteries. Amara Raja is
5 S Company and its aim are to improve the work place environment by using 5S
techniques which is A systematic and rational approach to workplace organization and
methodical house keeping with a sense of purpose, consisting of the following five
elements

3.1.1 Culture and Environment

Amar Raja is putting a number of HRD initiatives to foster a spirit of togetherness and a
culture of meritocracy. Involving employees at all levels in building organizational
support plans and in evolving our vision for the organization.

ARBL encourages initiative and growth of young talent allows the organization to
develop innovation solution and ideas.

14
Benchmark pollution control measures, energy conversation measures, waste reduction
schemes, massive green belt development programs, employee health monitoring and
industrial safety programs have helped ARBL to take further environment management
program.

Amar Raja has now targeted to secure the ISO 14001 certification

3.1.2 Quality Policy

ARBLs main aim is to achieve customer satisfaction through the collective commitment
of employees in design; manufacture and marketing of reliable power systems, batteries,
allied products and services.

To accomplish above, ARBL focus on

Establishing superior specifications for our products and processes.

Employing state-of-the-art technologies and robust design principles.
Striving for continuous improvements in process and product quality.
Implementing methods and techniques to monitor quality levels.
Providing prompt after sales service.

3.1.3 Research and Development

Specific areas in which the company carries out R&D are;

New product development.
Process technology up gradation.
Application engineering for new market place.
Quality improvement.

Benefits derived as a result of above R&D,

Developed 4v/200 AH batteries.

15
 Design optimization of higher AH batteries for DOT application.
Design optimization of batteries 92v/1285 AH for TL/AC-Railway application.
Formation cycle optimization results in reduced duration and rejection.
Chemist curing cycle optimization.
Manufacture of automobile battery for four-wheeler vehicles

3.2 FUTURE PLAN OF ACTION

Commercialization of motorcycle batteries.

Development of new range high integrity VRLA cell design.

Establishment of product for new application segment.

Studies on paste additives to enhance the battery performance.

In-depth evaluation of metal surface treatment chemical to reduce the process cycle time.

Validating alternative grades of propylene to conserve energy and to improve

productivity.

MILE STONES YEAR Mile stone

1997 100 crores turnover
1997 ISO-9001 Accreditation
1999 S-9000 Accreditation
2002 SO-14001 Certification

16
3.3 AWARDS

The spirit of Excellence- Awarded by academy of fine arts, Tirupati.

Best Entrepreneur of the year 1998-awarded by Hyderabad Management Association.

Industrial Economist Business Excellence Award 1991- Awarded by the industrial

Economist, Chennai.

Excellence Award-by institution of economic studies (ES), New Delhi.

Udyog Rattan Award- by institution of economic studies, New Delhi.

QI CERTIFICATE 2002 - By FORD Company

3.4 AMARA RAJA GROUP OF COMPANIES

AMARA RAJA POWER SYSTEMS PRIVATE Ltd. (ARPSL), Karakambadi, Tirupati.

MANGAL PRECISION PRODUCTS PRIVATE Ltd1. (MPPL1), Karakambadi, Tirupati.
MANGAL PRECISION PRODUCTS PRIVATE Ltd2. (MPPL2), Petamitta, Chittoor.
AMARA RAJA ELECTRONICS PRIVATE LIMITED (AREPL), Dighavamgham,
Chittoor.
GALLA FOODS PRIVATE LIMITED (GFPL), Puthalapattu Mandal, Chittoor .

This ratio is calculated by dividing sales in to current assets. This ratio expressed the
number of times current assets are being turn over in stated period. This ratio shows how
well the current assets are being used in business. The higher ratio is showing that better
utilization of the current assets another a low ratio indicated that current assets are not
being efficiently utilized.

3.5 INDUSTRIAL BATTERY DIVISION (IBD)

17
Amara Raja has become the benchmark in the manufacturer of industrial batteries. India
is one of the largest and fastest growth markets for industrial batteries in the world.
Amara Raja is leading in the front, with an 80% market share is stand by VRAL batteries
point of view. It is also having the facility for production plastic components. ARBL id
the first company in India to manufacture VRLA (SMF) Batteries. The initial investment
of the company has Rs.1920 lakhs; the total land is around 18 acres in Karambadi village,
Renigunta Mandal. The project site is notified under B category.

Capacity
The capacity per the year 2005-2006 of IBD is 3, 70,000 cells per annum.

Products
Amara Raja being the first entrant in this industry and has the privilege of pioneering
VRLA technology in India. Amara Raja has established itself as a reliable supplier of
high quality products to major segments like Telecom, Railways and power.

Plate Preparation
Using lead oxide production in earlier stage positive and negative paste is prepared with
addition of sulphuric acid and water. These pastes are applied to respective grids using
industrial fasting machines.

Call Assembly
Here positive and negative grids are separated by a sheet of fiber glass mat bush bars are
welded and as assembled into a jar or container to form battery cells. Then these cells are
assembled according to the customers specification into battery sets or systems.

Formation

18
In this process cells are filled with the electrolyte (surphuric acid) and then the set is
charged and discharged repeatedly, after final charging the battery comes out ready to be
used.

Competitors
The Major competitors for Amara Raja Batteries are Exude industries Ltd, and GNB.

3.6 AUTOMOTIVE BATTERY DIVISION (ABD)

ARBL has inaugurated its new automotive plant at Karakambadi in Tirupati on
September 24th, 2001. This plan is a part of the most completely integrated battery
manufacturing facility in India with all critical components, including plastics sourced in-
house from existing facilities on site. In this project, Amara Rajas strategic alliance
partners JohnsonControl Inc., of USA have closely worked technology and plant
engineering. It is also having the facility for producing plastic components required for
automotive batteries.

Capacity
With an existing production capacity of 5 lakhs units of automotive batteries, the new
Greenfield plant will now be able to produce 1 million batteries per annum. This is the
first phase in the enhancement of Amara Rajas production capacity, for this the company
has invested Rs.45 crores and the next phase, at an additional cost of Rs.25 crores, for
this the production capacity will be increase to 2 million units and the company has
estimated to complete around 3 years, after that ARBL will become the single largest
battery of manufacturer in Asia. The fiscal year 2005-2006s capacity Of ABD is 2.2
million numbers of batteries per year.

Products
The products of ABD are

Amaron Hi-way

19
Amaron Harvest
Amaron shield
Amaron Highlife

The plastic products of ABD are jars and jar covers.

Customers
ARBL has prestigious OEM (Original Equipment Manufacture) clients like FORD,
GENERALMOTORS, DAEWOO MOTORS, MERCEDES BENZ, DAIMLER
CHRYSLER, MARUTI UDYOG LTD., premier Auto Ltd., and recent acquired a
preference supplier alliance with ASHOK LEYLAND, HINDUSTAN MOTORS,
TELCO, MAHINDRA & MAHINDRA and SWARAJ MAZDA. COMPETITORS

EXIDE
PRESTOLITE
AMCO.

3.7 MAJOR USERS

Railways

Train lighting air conditioning, diesel engine starting, signaling systems, control
systems, emergency breaking systems, and telecommunications.

Tele Communication

Central office power plants, microwave repeaters station, RAX in public building,
emergency lighting system at airports, fire alarm system etc.,

Power Systems
Switch gear control systems, powerhouse control systems, rural street lighting etc.

20
UPS System
Backup power to computers in progress control systems in industry etc.

Traction
Forklift trucks, earth moving machinery, mining locomotives and road vehicles etc.

Petro Chemicals
Off-share and no-shore oil exploration lighting systems, security systems etc.
Defence
Defence communication, aircraft and helicopter ground starting, stationary and mobile
diesel engine starting etc.

3.8 PRODUCTION PROCESS

The process for the production of lead acid batteries consists essentially of five
operations described below

Grid Casting
Different sizes of moulds are used to get the required size of grids.In the process grids
to hold the active materials are made. Battery grids are produced using microprocessor-
casting machines.

Plate Preparation
Using lead oxide production in earlier stage positive and negative paste is prepared with
addition of sulphuric acid and water. These pastes are applied to respective grids using
industrial fasting machines.

Call Assembly
Here positive and negative grids are separated by a sheet of fiber glass mat bush bars are
welded and as assembled into a jar or container to form battery cells. Then these cells
are assembled according to the customers specification into battery sets or systems.

21
Formation
In this process cells are filled with the electrolyte (surphuric acid) and then the set is
charged and discharged repeatedly, after final charging the battery comes out ready to be
used.

Testing and Inspection

Testing the battery is discharged to the customer it is tested for quality specifications.

22
4.1 PARTIES INTERESTED IN FINANCIAL ANALYSIS

The users of financial analysis can be divided into two broad groups.

Internal users
Financial executives
Top management

External users
Investors
Creditor.
Workers
Customers
Government
Public
Researchers

4.2 METHODS OF ANALYSIS:

A financial analyst can adopt the following tools for analysis of the financial statements.
These are also termed as methods of financial analysis.

Comparative statement analysis

Common-size statement analysis
Trend analysis
Funds flow analysis
Ratio analysis

23
4.2.1Nature of Ratio Analysis

Ratio Analysis is a powerful tool of financial analysis. A ratio is defined as "the indicated
quotient of mathematical expression" and as "the relationship between two or more
things". A ratio is used as benchmark for evaluating the financial position and
performance of the firm. The relationship between two accounting figures, expressed
mathematically, is known as a financial ratio. Ratio helps to summarizes large quantities
of financial data and to make qualitative judgment about the firm's financial performance.

The persons interested in the analysis of financial statements can be grouped under three
head owners (or) investors who are desired primarily a basis for estimating earning
capacity. Creditors who are concerned primarily with Liquidity and ability to pay interest
and redeem loan within a specified period. Management is interested in evolving
analytical tools that will measure costs, efficiency, liquidity and profitability with a view
to make intelligent decisions.

4.2.2Standards of Comparison

The ratio analysis involves comparison for an useful interpretation of the financial
statements. A single ratio in itself does not indicate favorable or unfavorable condition. It
should be compared with some standard. Standards of comparison are:

Past Ratios
Competitor's Ratios
Industry Ratios
Projected Ratios

Past Ratios: Ratios calculated from the past financial statements of the same firm.

Competitor's Ratios: Ratios of some selected firms, especially the most progressive
andsuccessful competitor at the same point in time.

24
Industry Ratios: Ratios of the industry to which the firm belongs.

Projected Ratios: Ratios developed using the projected financial statements of the same
firm.

4.2.3 Time Series Analysis

The easiest way to evaluate the performance of a firm is to compare its present ratios with
past ratios. When financial ratios over a period of time are compared, it is known as the
time series analysis or trend analysis. It gives an indication of the direction of change and
reflects whether the firm's financial performance has improved, deteriorated or remind
constant over time.

4.2.4 Cross Sectional Analysis

Another way to comparison is to compare ratios of one firm with some selected firms in
the industry at the same point in time. This kind of comparison is known as the cross-
sectional analysis. It is more useful to compare the firm's ratios with ratios of a few
carefully selected competitors, who have similar operations.

4.2.5 Industry Analysis

To determine the financial conditions and performance of a firm. Its ratio may be
compared with average ratios of the industry of which the firm is a member. This type of
analysis is known as industry analysis and also it helps to ascertain the financial standing
and capability of the firm & other firms in the industry. Industry ratios are important
standards in view of the fact that each industry has its characteristics which influence the
financial and operating relationships.

25
4.3 TYPES OF RATIOS

Management is interested in evaluating every aspect of firm's performance. In view of

the requirement of the various users of ratios, we may classify them into following
four important categories:

Liquidity Ratio
Leverage Ratio
Activity Ratio
Profitability Ratio

Liquidity Ratio

It is essential for a firm to be able to meet its obligations as they become due. Liquidity
Ratios help in establishing a relationship between cast and other current assets to current
obligations to provide a quick measure of liquidity. A firm should ensure that it does not
suffer from lack of liquidity and also that it does not have excess liquidity. A very high
degree of liquidity is also bad, idle assets earn nothing. The firm's funds will be
unnecessarily tied up in current assets. Therefore it is necessary to strike a proper balance
between high liquidity. Liquidity ratios can be divided into three types:

Current Ratio
Quick Ratio

Cash Ratio

4.3.1 Current Ratio

26
Current ratio is an acceptable measure of firms short-term solvency Current assets
includes cash within a year, such as marketable securities, debtors and inventors. Prepaid
expenses are also included in current assets as they represent the payments that will not
made by the firm in future. All obligations maturing within a year are included in current
liabilities. These include creditors, bills payable, accrued expenses, short-term bank loan,
income-tax liability in the current year. The current ratio is a measure of the firm's short
term solvency. It indicated the availability of current assets in rupees for every one rupee
of current liability. A current ratio of 2:1 is considered satisfactory. The higher the current
ratio, the greater the margin of safety; the larger the amount of current assets in relation to
current liabilities, the more the firm's ability to meet its obligations. It is a cured -and
-quick measure of the firm's liquidity. Current ratio is calculated by dividing current
assets and current liabilities.

Current Assets
Current Ratio = ----------------------------
Current Liabilities

4.3.2 Quick Ratio

Quick Ratio establishes a relationship between quick or liquid assets and current
liabilities. An asset is liquid if it can be converted into cash immediately or reasonably
soon without a loss of value. Cash is the most liquid asset, other assets that are considered
to be relatively liquid asset and included in quick assets are debtors and bills receivables
and marketable securities (temporary quoted investments).

Generally, a quick ratio of 1:1 is considered to represent a satisfactory current financial

condition. Quick ratio is a more penetrating test of liquidity than the current ratio, yet
it should be used cautiously. A company with a high value of quick ratio can suffer
from the shortage of funds if it has slow- paying, doubtful and long duration
outstanding debtors. A low quick ratio may really be prospering and paying its current
obligation in time.

Current Assets Inventories

Quick Ratio = --------------------------------------------

27
 Current Liabilities

4.3.3 Cash Ratio

Cash is the most liquid asset; a financial analyst may examine Cash Ratio and its
equivalent current liabilities. Cash and Bank balances and short-term marketable
securities are the most liquid assets of a firm, financial analyst stays look at cash ratio.
Trade investment is marketable securities of equivalent of cash. If the company carries a
small amount of cash, there is nothing to be worried about the lack of cash if the
company has reserves borrowing power. Cash Ratio is perhaps the most stringent
Measure of liquidity. Indeed, one can argue that it is overly stringent. Lack of immediate
cash may not matter if the firm stretch its payments or borrow money at short notice.

Cash and Bank balances

Cash Ratio = -------------------------------------
Current Liabilities

4.4 LEVERAGE RATIOS

Financial leverage refers to the use of debt finance while debt capital is a cheaper source
of finance: it is also a riskier source of finance. It helps in assessing the risk arising from
the use of debt capital. Two types of ratios are commonly used to analyze financial
leverage.

Structural Ratios &

Coverage Ratios

Structural Ratios are based on the proportions of debt and equity in the financial structure
of firm. Coverage Ratios shows the relationship between Debt Servicing, Commitments

28
and the sources for meeting these burdens. The short-term creditors like bankers and
suppliers of raw material are more concerned with the firm's current debt-paying ability.
On the other hand, long-term creditors like debenture holders, financial institutions are
more concerned with the firm's long-term financial strength. To judge the long-term
financial position of firm, financial leverage ratios are calculated. These ratios indicated
mix of funds provided by owners and lenders. There should be an appropriate mix of
Debt and owner's equity in financing the firm's assets. The process of magnifying the
shareholder's return through the use of Debt is called "financial leverage" or "financial
gearing" or "trading on equity". Leverage Ratios are calculated to measure the financial
risk and the firm's ability of using Debt to shareholders advantage.

Leverage Ratios can be divided into five types.

Debt Equity Ratio

Debt Ratio

Interest Coverage Ratio

Proprietary Ratio

Capital Gearing Ratio

4.4.1 Debt equity ratio

It indicates the relationship describing the lenders contribution for each rupee of the owner's
contribution is called debt-equity ratio. Debt equity ratio is directly computed by dividing
total debt by net worth. Lower the debt-equity ratio, higher the degree of protection. A debt-
equity ratio of 2:1 is considered ideal. The debt consists of all short term as well as long-term
and equity consists of net worth plus preference capital plus Deferred Tax Liability.

Long Term Liabilities

29
 Debt Equity Ratio = ------------------------------------
Equity

4.4.2 Debt ratio

Several debt ratios may use to analyze the long-term solvency of a firm. The firm may be
interested in knowing the proportion of the interest-bearing debt in the capital structure. It
may, therefore, compute debt ratio by dividing total debt by capital employed on net
assets. Total debt will include short and long-term borrowings from financial institutions,
debentures/bonds, deferred payment arrangements for buying equipments, bank
borrowings, public deposits and any other interest-bearing loan. Capital employed will
include total debt net worth.

Total Debt
Debt Ratio = -------------------------------
Total Debt + Net Worth

4.4.3 Interest Coverage Ratio

The interest coverage ratio or the time interest earned is used to test the firms debt
servicing capacity. The interest coverage ratio is computed by dividing earnings before
interest and taxes by interest charges. The interest coverage ratio shows the number of
times the interest charges are covered by funds that are ordinarily available for their
payment. We can calculate the interest average ratio as earnings before depreciation,
interest and taxes divided by interest.

EBIT
Interest Coverage Ratio = ---------------------
Interest

30
4.4.4 Proprietary Ratio

The total shareholder's fund is compared with the total tangible assets of the company.
This ratio indicates the general financial strength of concern. It is a test of the soundness
of financial structure of the concern. The ratio is of great significance to creditors since it
enables them to find out the proportion of shareholders funds in the total investment of
business.

Proprietors Fund
Proprietary Ratio = -----------------------------
Total Assets

4.4.5 Capital Gearing Ratio

This ratio makes an analysis of capital structure of firm. The ratio shows relationship
between equity share capital and the fixed cost bearing i.e., preference share capital
and debentures.

Common Stockholders Equity

Capital Gearing Ratio = -----------------------------------------
Fixed Interest Bearing Funds

4.5 ACTIVITY RATIOS

Turnover ratios also referred to as activity ratios or asset management ratios,

measure how efficiently the assets are employed by a firm. These ratios are based on
the relationship between the level of activity, represented by sales or cost of goods
sold and levels of various assets. The improvement turnover ratios are inventory
turnover, average collection period, receivable turn over, fixed assets turnover and
total assets turnover.

31
Activity ratios are employed to evaluate the efficiency with which the firm manages
and utilize its assets. These ratios are also called turnover ratios because they
indicate the speed with which assets are being converted or turned over into sales.
Activity ratios thus involve a relationship between sales and assets. A proper balance
between sales and assets generally reflects that asset utilization.

Activity ratios are divided into four types:

Total capital turnover ratio

Working capital turnover ratio

Fixed assets turnover ratio

Stock turnover ratio

4.5.1 Total Capital Turnover Ratio

This ratio expresses relationship between the amountsinvested in this assets and
the resulting in terms of sales. This is calculated by dividing the net sales by total
sales. The higher ratio means better utilization and vice-versa. Some analysts like
to compute the total assets turnover in addition to or instead of net assets turnover.
This ratio shows the firm's ability in generating sales from all financial resources
committed to total assets.
Sales
Total Capital Turnover Ratio = ---------------------------
Capital Employed

4.5.2 Working Capital Turnover Ratio

32
This ratio measures the relationship between workingcapital and sales. The ratio
shows the number of times the working capital results in sales. Working capital as
usual is the excess of current assets over current liabilities.

Net Sales
Working Capital Turnover Ratio = ---------------------------------
Average Working Capital

4.5.3 Fixed Asset Turnover Ratio

The firm may which to know its efficiency of utilizing fixedassets and current assets
separately. The use of depreciated value of fixed assets in computing the fixed assets
turnover may render comparison of firm's performance over period or with other firms.
The ratio is supposed to measure the efficiency with which fixed assets employed a
high ratio indicates a high degree of efficiency in asset utilization and low ratio
reflects inefficient use of assets. However, in interpreting this ratio, one caution
should be borne in mind, when the fixed assets of firm are old and substantially
depreciated, the fixed assets turnover ratio tends to be high because the
denominator of ratio is very low.

Net Sales
Fixed Assets Turnover Ratio = ------------------------------
Net Fixed Assets

4.5.4 Stock Turnover Ratio

StockTurnover Ratio indicates the efficiency of firm in producingand selling its

product. It is calculated by dividing the cost of goods sold by the average stock. It
measures how fast the inventory is moving through the firm and generating sales.
The stock turnover ratio reflects the efficiency of inventory management. The

33
higher the ratio, the more efficient the management of inventories and vice
versa .However, this may not always be true. A high inventory turnover may be
caused by a low level of inventory which may result if frequent stock outs and loss
of sales and customer goodwill.

Cost of Goods Sold

Stock Turnover Ratio = -------------------------------
Average Inventory

4.6 PROFITABILITY RATIOS

A company should earn profits to survive and grow over a long period of time. Profits are
essential but it would be wrong to assume that every action initiated by management of a
company should be aimed at maximizing profits. Profit is the difference between
revenues and expenses over a period of time.

Profit is the ultimate 'output' of a company and it will have no future if it fails to make
sufficient profits. The financial manager should continuously evaluate the efficiency of
company in terms of profits. The profitability ratios are calculated to measure the
operating efficiency of company. Creditors want to get interest and repayment of
principal regularly. Owners want to get a required rate of return on their investment.

Generally, two major types of profitability ratios are calculated

Profitability in relation to sales
Profitability in relation to investment

Profitability Ratios can be divided into six types:

Gross Profit Ratio

Operating Profit Ratio

34
Net Profit Ratio

Return On Investment

Earns Per Share

Operating Expenses Ratio.

4.6.1 Gross Profit Ratio

First profitability ratio in relation to sales is the gross profit margin the gross profit
margin reflects. The efficiency with which management produces each unit of product.
This ratio indicates the average spread between the cost of goods sold and the sales
revenue. A high gross profit margin is a sign of good management. A gross margin ratio
may increase due to any of following factors: higher sales prices cost of goods sold
remaining constant, lower cost of goods sold, sales prices remaining constant. A low
gross profit margin may reflect higher cost of goods sold due to firm's inability to
purchase raw materials at favorable terms, inefficient utilization of plant and machinery
resulting in higher cost of production or due to fall in prices in market.

This ratio shows the margin left after meeting manufacturing costs. It measures the
efficiency of production as well as pricing. To analyze the factors underlying the variation
in gross profit margin, the proportion of various elements of cost (Labor, materials and
manufacturing overheads) to sale may studied in detail.

Gross Profit
Gross Profit Ratio = --------------------
Net Sales

4.6.2 Operating Profit Ratio

35
This ratio expresses the relationship between operating profit and sales. It is worked
out by dividing operating profit by net sales. With the help of this ratio, one can judge
the managerial efficiency which may not be reflected in the net profit ratio.

Operating Profit
Operating Profit Ratio = ---------------------------
Net Sales

4.6.3 Net Profit Ratio

Net profit is obtained when operating expenses, interest and taxes are subtracted from the
gross profit. Net profit margin ratio established a relationship between net profit and sales
and indicates management's efficiency in manufacturing, administering and selling products.
This ratio also indicates the firm's capacity to withstand adverse economic conditions. A firm
with a high net margin ratio would be in an advantageous position to survive in the face of
falling selling prices, rising costs of production or declining demand for product This ratio
shows the earning left for shareholders as a percentage of net sales. It measures overall
efficiency of production, administration, selling, financing. Pricing and tax management.
Jointly considered, the gross and net profit margin ratios provide a valuable understanding of
the cost and profit structure of the firm and enable the analyst to identify the sources of
business efficiency / inefficiency.

Net Profit
Net Profit Ratio = -------------------
Net Sales

4.6.4 Return On Investment

36
This is one of the most important profitability ratios. It indicates the relation of net profit with
capital employed in business. Net profit for calculating return of investment will mean the net
profit before interest, tax, and dividend. Capital employed means long term funds.

EBIT
Return On Investment = ------------------------
Capital Employed

4.6.5 Earnings Per Share

This ratio is computed by earning available to equity shareholders by the total amount of
equity share outstanding. It reveals the amount of period earnings after taxes which occur
to each equity share. This ratio is an important index because it indicates whether the
wealth of each shareholder on a per share basis as changed over the period.

Net Income Preferred Dividends

Earnings Per Share = --------------------------------------------------------------
Weighted Average Common Shares Outstanding

4.6.6 Operating Expenses Ratio

It explains the changes in the profit margin ratio. A higher operating expenses ratio is
unfavorable since it will leave a small amount of operating income to meet interest,
dividends. Operating expenses ratio is a yardstick of operating efficiency, but it should be
used cautiously. It is affected by a number of factors such as external uncontrollable
factors, internal factors. This ratio is computed by dividing operating expenses by sales.
Operating expenses equal cost of goods sold plus selling expenses and general
administrative expenses by sales.

Operating Expenses
Operating Expenses Ratio = ---------------------------------
Sales
HORIZONTAL ANALYSIS

37
Horizontal analysis is the comparison of historical financial information over a series of
reporting periods, or of the ratios derived from this financial information. The intent is to
see if any numbers are unusually high or low in comparison to the information for
bracketing periods, which may then trigger a detailed investigation of the reason for the
difference. The analysis is most commonly a simple grouping of information that is
sorted by period, but the numbers in each succeeding period can also be expressed as a
percentage of the amount in the baseline year, with the baseline amount being listed as
100%.

VERTICAL ANALYSIS

Vertical analysis is the proportional analysis of a financial statement, where each line
item on a financial statement is listed as a percentage of another item. Typically, this
means that every line item on an income statement is stated as a percentage of gross
sales, while every line item on a balance sheet is stated as a percentage of total assets

38
5.1 LIQUIDITY RATIOS

5.1.1CurrentRatio
The ratio between all current assets and all current liabilities; another way of expressing
liquidity. It is a measure of the firms short-term solvency. It indicates the availability of
current assets in rupees for every one rupee of current liability. A ratio of greater than one
means that the firm has more current assets than current claims against them.

Current assets
Current Ratio = ----------------------------
Current Liabilities

Table 5.1.1

S.NO Year Current Current Current

Assets Liabilities Ratio

1. 201514 727.04 450.50 1.79

2. 201413 663.10 373.58 1.77

3. 201312 669.07 336.52 1.98

4. 201211 505.57 223.27 2.26

5. 201110 367.33 222.67 1.64

39
 Graph 5.1.1 Current Ratio

1.7
9 1.77

2011 2012 2013 2014 2015

Interpretation: The standard norm for current ratio is 2:1.During the year 2011 the ratio
is 1.64 and ithas increased to 2.26 and decreased to 1.98 in the year 2013 and decreased
to 1.77 in the year 2014 and increased to 1.79 in the year 2015. The ratio above was
standard only in the year 2012. So the ratio was satisfactory.

40
5.1.2 Quick ratio

Quick ratio establishes a relationship between quick, or liquid, assets and current
liabilities. An asset is liquid if it can be converted into cash immediately or reasonably
soon without a loss of value.

Current Assets Inventories

Quick Ratio = --------------------------------------
Current Liabilities

Table 5.1.2

S.NO Year Quick assets Current Liabilities Quick Ratio

1. 2015 308.91 450.50 0.76

2. 2014 328.09 373.58 0.87

3. 2013 376.21 336.52 0.10

4. 2012 278.75 223.27 1.24

5. 2011 82.63 222.67 0.37

41
 5.1.2 Quick Ratio

0.

2011 2012 2013 2014 2015

Interpretation: The standard form of quick ratio is 1:1. The quick ratio in the year 2011
was 0.37and it was increased to 1.24 in the year 2012 and decreased to 0.10 in the year
2013 and increased to 0.87 in the year 2014 and decreased to 0.76 in the year 2015. The
ratio above was standard onlyin the year 2012. So the ratio was satisfactory.

42
5.1.3 Cash Ratio

The ratio between cash plus marketable securities and current liabilities.

Cash &Bank Balances

Cash Ratio = ---------------------------------
Current Liabilities

Table 5.1.3 Cash Ratio

Cash& Bank Current Cash

S.NO Year Balances Liabilities Ratio

1. 2011 45.12 450.50 0.10

2. 2012 229.22 373.58 0.60

3. 2013 410.79 336.52 1.22

4. 2014 294.52 223.27 1.31

5. 2015 222.17 222.67 0.99

43
 5.1.3 Cash Ratio

2011 2012 2013 2014 2015

Interpretation: The Standard norm for absolute quick ratio is 1:1. Except in the year
2013 and2014. The absolute quick ratio is very low. The company failed in keeping cash
& Bank balances and Marketable surplus.

44
5.1.4 NET WORKING CAPITAL

The difference between Current assets and Current liabilities excluding shortterm bank
borrowing is called net working capital or net current assets.

Net Working Capital

Net Working Capital Ratio =--------------------------------
Net Assets

Table 5.1.4 Net Working Capital

Net Working Net Assets Net Working

S.NO Year Capital Capital Ratio

1. 2011 45.12 450.50 0.87

2. 2012 229.22 373.58 0.92

3. 2013 410.79 336.52 0.92

4. 2014 294.52 223.27 0.94

5. 2015 222.17 222.67 0.95

5.1.4 Net Working Capital

45
 0.92

2011 2012 2013 2014 2015

Interpretation: Net working capital in the year 2011 was o.87 and it was increased to
0.92 and the year 2013 was same and increased to 0.94 in the year 2014 and increased to
0.95 in the year 2015.But condition of business working capital is not shortage.

5.2 LEVERAGE RATIO

46
5.2.1 Debt Ratio

If the firm may be Interested in knowing the proportion of the interest bearing debt in
the capital structure.

Total Debt
Debt Ratio= ----------------------------------
Total Debt +Net Worth

Table 5.2.1 Debt Ratio

Total Debt Total Debt+ Debt

S.NO Year Net Worth Ratio

1. 2011 90.11 736.04 0.12

2. 2012 84.07 907.54 0.09

3. 2013 87.17 1146.98 0.07

4. 2014 84.33 1447.03 0.05

5. 2015 74.14 1773.71 0.04

47
Graph 5.2.1 Debt Ratio

0.090.07

2011 2012 2013 2014 2015

0.0

Interpretation: This ratio gives results relating to capital structure of a firm. Debt ratio is
0.12 inthe year 2011 and it was decreased to 0.09 in the year 2012 and decreased to 0.07
in the year 2013 and decreased to 0.05 in the year 2014 and decreased to 0.04 in
2015.From the above in fluctuating trend we can conclude that the companys
dependence on debt is decreasing it is not better position in collection of debt.

5.2.2 Debt equity ratio

48
Debt equity ratio indicates the relationship describing the lenders contribution for
each rupee of the owners contribution is called debt- equity ratio. Debt equity ratio is
computed by dividing Long term Liabilities divided by Equity. Lower debt equity
ratio higher the degree of protection. A debt-equity ratio of 2:1 is considered ideal.

Total Debt
Debt Equity Ratio = ------------------
Net Worth

Table 5.2.2 Debt equity Ratio

Total Debt Net worth Debt Equity

S.NO Year Ratio

1. 2011 90.11 645.93 0.13

2. 2012 84.07 823.47 0.10

3. 2013 87.17 1059.81 0.08

4. 2014 84.33 1362.70 0.06

5. 2015 74.14 1699.57 0.04

Graph 5.2.2 Debt Equity Ratio

49
 0.0

2011 2012 2013 2014 2015

Interpretation: This ratio gives results relating to capital structure of a firm. Debt equity
ratio is0.13 in the year 2011 and it was decreased to 0.10 in the year 2012 and decreased
to 0.08 in the year 2013 and decreased to 0.06 in the year 2014 and decreased to 0.04 in
2015.we can conclude that the company depend on debt fund is decreasing.

50
5.2.3 INTEREST COVERAGE RATIO:

The ratio shows the number of time the interest charges are covered by funds
that are ordinarily available for their payment.

EBIT
Interest Coverage Ratio = -------------------
Interest

Table 5.2.3 Interest Coverage Ratio

EBIT Interest Interest

S.NO Year Coverage Ratio

1. 2011 257.37 3.06 84.10

2. 2012 354.01 4.06 87.19

3. 2013 451.52 1.00 451.52

4. 2014 560.30 0.72 778.19

5. 2015 709.07 0.24 2954.4

51
 Graph 5.2.3 Interest Coverage Ratio

84.1 87.19

20 20
2011 2012 13 14 2015

Interpretation: Interest coverage ratio is 84.10 in the year 2011 and increased to 87.19 in
the year2012 and increased to 451.52 in the year 2013 and increased to 778.19 in the year
2014 and increased to 2954.4 in the year 2015. In this position outside investors is
interested to invest money in the company.

52
5.3 ACTIVITY RATIO
5.3.1 INVENTORY TURNOVER RATIO:
It indicates the firm efficiency of the firm in producing and selling its product. It is
calculated by dividing the cost of goods sold by the average inventory.

Cost of Goods Sold

Inventory Turnover Ratio= -------------------------------
Average Inventory

Table 5.3.1 Inventory Turnover Ratio

Cost Of Goods Average Inventory

S.NO Year Sold Inventory Turnover
Ratio

1. 2011 1,531.99 142.35 10.76

2. 2012 2,001.18 133.31 15.01

3. 2013 2,541.97 146.43 17.35

4. 2014 2,905.56 167.50 17.34

5. 2015 3,550.26 209.06 16.98

53
 Graph 5.3.1 Inventory Turnover Ratio

2011 2012 2013 2014

201510.76

Interpretation: Inventory Turnover ratio was 10.76 times in the year 2011 and was
increased to15.01 times in the year 2012 and increased to 17.34 times in the year 2014
and remains constant in the year 2014 and decreased to 16.98 times in the year 2015.
Inventory turnover ratio is increased year by year and the sale are also started increasing
and in 2014 onwards started diminishing.

54
5.3.2 DEBTORS TURNOVER RATIO:

It is found out by dividing the credit sales by average debtors.

Debtors turnover indicates the number of times debtors turnover each year.

Sales
Debtors Turnover Ratio =--------------------------
Average Debtors

Table 5.3.2 Debtors Turnover Ratio

Sales Average Debtors Turnover

S.NO Year Debtors Ratio

1. 2011 1761.05 152.83 11.52

2. 2012 2367.36 159.84 14.81

3. 2013 2961.40 190.34 15.55

4. 2014 3436.65 226.36 15.18

5. 2015 4211.33 277.05 15.20

55
 Graph 5.3.2 Debtors Turnover Ratio

11.

2011 2012 2013 2014 2015

Interpretation: Debtors Turnover ratio is 11.52 times in the year 2011 and increased
to14.81times in the year 2012 and increased to 15.55 times in the year in the year 2013
and remains constant as 15.20 times in the year 2014&2015.

5.3.3 Fixed Asset Turnover Ratio

56
The ratio is supposed to measure the efficiency with which fixed assets are employed a
high ratio indicates a high degree of efficiency in asset utilization and a low ratio
reflects inefficient use of assets. However, in interpreting this ratio, one caution should
be borne in mind. When the fixed assets of the firm are old and substantially
depreciated, the fixed assets turnover ratio tends to be high because the denominator of
the ratio is very low.

Net Sales
Fixed Asset Turnover Ratio = ---------------------------
Net Fixed Asset

Table 5.3.3 Fixed Asset Turnover Ratio

Net Sales Net Fixed Assets Fixed Asset

S.NO Year Turnover
Ratio

1. 2011 1761.05 368.71 4.77

2. 2012 2367.36 402.17 5.8

3. 2013 2961.40 477.92 6.19

4. 2014 3436.65 783.94 4.38

5. 2015 4211.33 1046.66 4.02

Graph 5.3.3 Fixed Asset Turnover Ratio

57
 4.77

2011 2012 2013 2014 2015

Interpretation: Fixed assets turnover ratio is 4.77 times in the year 2011 and increased to
5.88times in the year 2012 and increased to 6.19 in the year 2013 and decreased to 4.38
times in the year 2014 and decreased to 4.02 in the year 2015.

5.3.4 Current Asset Turnover Ratio

58
Current Assets Turnover Ratio indicates how efficiently a firm is using its current assets
to generate revenue.

Net Sales
Current Asset Turnover Ratio = -----------------------
Current Assets

Table 5.3.4 Current Asset Turnover Ratio

Net Sales Current Asset

S.NO Year Current Assets Turnover
Ratio

1. 2011 1761.05 727.04 2.42

2. 2012 2367.36 663.10 3.57

3. 2013 2961.40 669.07 4.42

4. 2014 3436.65 505.57 6.79

5. 2015 4211.33 367.33 11.46

Graph 5.3.4 Current Asset Turnover Ratio

59
 3.57

2011 2012 2013 2014 2015

Interpretation: current assets turnover ratio is 2.42 in the year 2011 and increased to
3.57 in theyear 2012 and increased to 4.42 in the year 2013 and increased to 6.79 in the
year 2014 and increased to 11.46 in the year 2015. From the above we can conclude that
current assets turnover ratio is increasing.

5.3.5 Total Assets Turnover Ratio:

60
The ratio ensures whether the capital employed has been effectively used or not. This is
also test of managerial efficiency and business performance. Higher total capital
turnover ratio is always required in the Interest of a company.

Sales
Total Assets Turnover Ratio= ----------------------
Total assets

Table 5.3.5 Total Assets Turnover Ratio

Net Sales Total Assets Capital

S.NO Year Turnover
Ratio

1. 2011 1761.05 736.04 2.39

2. 2012 2367.36 907.54 2.60

3. 2013 2961.40 1146.99 2.58

4. 2014 3436.65 1447.04 2.37

5. 2015 4211.33 1773.70 2.37

Graph 5.3.5 Total Assets Turnover Ratio

61
 2011 2012 2013 2014 2015

Interpretation: Total assets turnover ratio is 2.39 in the year 2011 and increased to 2.60
in theyear 2012 from 2013 onwards decreased to 2.58 and decreased t0 2.37 in the year
2014&2015. It means total assets are increased till 2013 and decreased and remains
constant in 2014&2015.

5.4 PROFITABILITY RATIOS

62
5.4.1 Gross Profit Ratio

This ratio shows that the margin left after meeting manufacturing costs. It
measures the efficiency of production as well as pricing.

Gross Profit
Gross Profit Ratio = --------------------x 100
Net Sales

Table 5.4.1 Gross Profit Ratio

Net Sales Gross Profit

S.NO Year Gross Profit Margin
Ratio

1. 2011 257.37 1761.05 14.61

2. 2012 354.01 2367.36 14.95

3. 2013 451.52 2961.40 15.24

4. 2014 560.30 3436.65 16.30

5. 2015 709.07 4211.33 16.83

Graph 5.4.1 Gross Profit Ratio

63
 2011 2012 2013 2014 2015

Interpretation: The gross profit ratio is 14.61 % in the year 2011 and increased to 14.95

% in theyear in the year 2012 and increased to 15.24% in the year in the year 2013 and
increased to 16.30 %in the year 2014 and increased to 16.83% in the year 2015. The
company is maintaining proper control on trade activities.

5.4.2 Net Profit Ratio:

64
This ratio also indicates the firms capacity to withstand adverse economic conditions. A
firm with a high net margin would be in an advantageous position to survive in the face
falling selling prices rising cost of production or declining demand for the product.

Net Profit
Net Profit Ratio = ---------------x100
Net Sales

Table 5.4.2 Net Profit

Net Sales Net Profit

S.NO Year Net Profit Margin
Ratio

1. 2011 148.10 1761.05 8.40

2. 2012 215.06 2367.36 9.08

3. 2013 286.71 2961.40 9.68

4. 2014 367.44 3436.65 10.69

5. 2015 410.86 4211.33 9.7

Graph 5.4.2 Net Profit

65
99.7

2011 2012 2013 2014 2015

Interpretation: During the year 2011 net profit is 8.40% in the year 2011 and increased to
9.08%in the year 2012 and increased to 9.68% in the year 2013 and increased to 10.69% in
the year 2014 and decreased to 9.7% in the year 2015.because of decrease in administration
& selling expenses.

5.4.3 Return on Investment:

66
The conventional approach of calculated ROI is to divide PAT by investment.
EBIT
Return On Investment = ----------------------
Total Assets

Table 5.4.3 Return on Investment

EBIT Total Assets Return on

S.NO Year Investment

1. 2011 257.37 736.04 0.34

2. 2012 354.01 907.54 0.39

3. 2013 451.52 1146.99 0.39

4. 2014 560.30 1447.04 0.38

5. 2015 709.07 1773.70 0.39

Graph 5.4.3 Return on Investment

67
 2011 2012 2013 2014 2015

Interpretation: Return on investment is very low in all years due to less earnings.

5.4.4 Return on equity share holders fund

The return on equity shareholders fund explains about the return of shareholders with
they get on their investment.

68
 Net Profit
Return on Equity Shareholder Fund= -------------------
Net Worth

Table 5.4.4 Return on Equity Shareholder Fund

Return on equity
Shareholders
S.NO Year Net Profit Net Worth Fund

1. 2011 148.10 645.93 0.22

2. 2012 215.06 823.47 0.26

3. 2013 286.71 1059.81 0.27

4. 2014 367.44 1362.70 0.26

5. 2015 410.86 1699.57 0.24

Graph 5.4.4 Return on Equity Shareholder Fund

69
 2011 2012 2013 2014 2015

Interpretation: Return on equity shareholder fund is 0.22 in the year 2011 and increased
to 0.26in the year 2012 and increased to 0.27 in the year 2013 and decreased to 0.26 in
the year 2014 and decreased to 0.24 in the year 2015.

70
 FINDINGS

Except in the year 2012, the company is maintaining current ratio as 2 and more,
standard which indicates the ability of the firm to meet its current obligations is
more. It shows that the company is strong in working funds management.

The company is maintaining of quick assets more than quick ratio. As the
company having high value of quick ratio. Quick assets would meet all its quick
liabilities without any difficulty.

The company is failed in keeping sufficient cash & bank balances and
marketable securities.

Net working capital ratio is 0.45 in 2013 but also 0.50 in 2014. It is increased
very high but condition of business working capital is not shortage.

Debt Equity ratio is increasing every year. It indicates the company depends on
the debt fund increasing.

Total liabilities ratio is also increasing year by year.

In the year 2012, the interest coverage ratio 7.56 which increased to 94.76 in the
year 2015 and high fluctuations in the followed years. In this position, outside
investors are interested to invest their money in this company.

The company is declining of its coverage ratio to serve long term debts.

Inventory turnover also increased for year by year that is company

production is also increased. Subsequently sales are also increased.

The net profit ratio of the company increasing over the study period. Hence
the organization having the good control over the operating expenses.

71
o

72
 SUGGESTIONS

The company has to increase the profit maximization and has to decrease the
operating expenses.

By considering the profit maximization in the company the earning per share,
investment and working capital also increases. Hence, the outsiders are also
interested to invest.

The company should maintain sufficient cash and bank balances; they should
invest the idle cash in marketable securities or short term investments in shares,
debentures, bonds and other securities.

The company must reduce its debtors collection period from 83 & 84 days to 40
days be adopting credit policy by providing discounts to the debtors.

Return on investment is fluctuates every year. The company has to make

efforts in increasing return on investments by reducing its administration,
selling and other expenses.

The net profit of the company is increasing over the study period.
Hence the organization maintaining good control on all trees of
expenses.

The dividend per share has observed as raising trend over the study period,
hence it may be suggested Amara Raja Batteries Limited should take key
interest to maximize the shareholder wealth by increasing dividend payout.

CONCLUSION

73
Liquidity ratios, both current ratio and quick ratio are showing effectiveness in liquidity
as in all the years current ratio is greater than the standard 2:1 and quick ratio is greater
than the standard 1:1 ratio. The firm is maintaining a low cash balance and marketable
securities which means they done cash payments. Debt equity ratio, solvency ratio and
interest coverage ratio are showing an average increase in the long term solvency of the
firm. The proprietary ratio is showing an average increase which means, the shareholders
have contribute more funds to the total assets.

Average payment period of the firm is showing the credit

worthiness of the firm to its suppliers. Fixed assets turnover ratio is showing that the firm
needs lesser investment in fixed assets to generate sales. The increasing trend of current
assets turnover ratio indicates that the firm needs more investment in current assets for
generating sales. The gross profit ratio, net profit ratio is showing the increasing trends.
The profitability of the firm the increasing.

Operating ratio of the company has observed decreasing trend,

hence it may be good control over the operating expenses. The interest that has to be paid
is very less when compared to the sales. The firm is not utilizing the debt conservatively.
The firm is retaining much of the earnings (based on dividend payout ratio). The
company financial performance is very good and also they will increase their business
year by year by expanding their branches.

74
BIBLOGRAPHY

1. I.M.Pandey : Financial Management

2. M.Y.Khan & P.K.Jai : Financial Management

3. S.P. Jain & K.L. Narang : Cost & Management accounting

4. K.Rajeswara rao & G. Prasad: Accounting & Finance

5. P.Kulakarni : Financial Management

6. www.google.com

7. www.amaron.co.in

8. www.valueresearchonline.com

9. www.economywatch.com

10. www.moneycontrol.com

11. www.investopedia.com

12. www.faculty.philau.edu

13. www.accountingtools.com

75
Balance Sheet of Amara Raja Batteries ------------------- in Rs. Cr. -------------------

Mar '15 Mar '14 Mar '13 Mar '12 Mar '11

12 mths 12 mths 12 mths 12 mths 12 mths

Sources Of Funds

Total Share Capital 17.08 17.08 17.08 17.08 17.08

Equity Share Capital 17.08 17.08 17.08 17.08 17.08

Share Application Money 0.00 0.00 0.00 0.00 0.00

Preference Share Capital 0.00 0.00 0.00 0.00 0.00

Reserves 1,682.49 1,345.62 1,042.73 806.39 628.85

Net worth 1,699.57 1,362.70 1,059.81 823.47 645.93

Secured Loans 0.00 8.38 9.86 5.60 20.01

Unsecured Loans 74.14 75.95 77.31 78.47 70.10

Total Debt 74.14 84.33 87.17 84.07 90.11

Total Liabilities 1,773.71 1,447.03 1,146.98 907.54 736.04

Mar '15 Mar '14 Mar '13 Mar '12 Mar '11

12 mths 12 mths 12 mths 12 mths 12 mths

Application Of Funds

Gross Block 1,437.20 992.57 678.41 620.22 538.21

76
Less: Revaluation Reserves 0.00 0.00 0.00 0.00 0.00

Less: Accum. Depreciation 492.94 369.38 319.55 265.65 223.12

Net Block 944.26 623.19 358.86 354.57 315.09

Capital Work in Progress 86.32 144.67 102.98 31.52 37.54

Investments 16.08 16.08 16.08 16.08 16.08

Inventories 418.13 335.01 292.86 266.62 284.70

Sundry Debtors 554.10 452.79 380.68 319.68 305.66

Cash and Bank Balance 222.17 294.57 410.79 229.22 45.12

Total Current Assets 1,194.40 1,082.37 1,084.33 815.52 635.48

Loans and Advances 147.02 273.14 208.22 133.83 111.74

Fixed Deposits 0.00 0.00 0.00 0.00 0.00

Total CA, Loans & Advances 1,341.42 1,355.51 1,292.55 949.35 747.22

Deferred Credit 0.00 0.00 0.00 0.00 0.00

Current Liabilities 450.50 373.58 336.52 223.27 222.67

Provisions 163.88 318.83 286.96 220.71 157.22

Total CL & Provisions 614.38 692.41 623.48 443.98 379.89

Net Current Assets 727.04 663.10 669.07 505.37 367.33

Miscellaneous Expenses 0.00 0.00 0.00 0.00 0.00

Total Assets 1,773.70 1,447.04 1,146.99 907.54 736.04

Contingent Liabilities 364.39 160.28 152.04 48.63 61.91

Book Value (Rs) 99.50 79.78 62.05 96.42 75.63

77
Profit & Loss account of Amara Raja
------------------- in Rs. Cr. -------------------
Batteries

Mar '15 Mar '14 Mar '13 Mar '12 Mar '11

12 mths 12 mths 12 mths 12 mths 12 mths

Income

Sales Turnover 4,637.17 3,837.17 3,310.97 2,605.75 1,944.31

Excise Duty 425.84 400.52 349.57 238.39 183.26

Net Sales 4,211.33 3,436.65 2,961.40 2,367.36 1,761.05

Other Income 35.02 41.63 37.39 15.19 7.78

Stock Adjustments 48.00 29.21 32.09 -12.17 28.31

Total Income 4,294.35 3,507.49 3,030.88 2,370.38 1,797.14

Expenditure

Raw Materials 2,882.60 2,357.51 2,064.99 1,614.59 1,217.77

Power & Fuel Cost 115.08 92.26 98.69 53.98 48.34

Employee Cost 195.09 158.32 126.62 100.26 88.46

Other Manufacturing Expenses 11.40 7.17 7.74 7.51 6.45

Selling and Admin Expenses 0.00 0.00 0.00 0.00 0.00

Miscellaneous Expenses 346.09 290.30 243.93 224.84 170.97

Preoperative Exp Capitalized 0.00 0.00 0.00 0.00 0.00

78
Total Expenses 3,550.26 2,905.56 2,541.97 2,001.18 1,531.99

Mar '15 Mar '14 Mar '13 Mar '12 Mar '11

12 mths 12 mths 12 mths 12 mths 12 mths

Operating Profit 709.07 560.30 451.52 354.01 257.37

PBDIT 744.09 601.93 488.91 369.20 265.15

Interest 0.24 0.72 1.00 4.06 3.06

PBDT 743.85 601.21 487.91 365.14 262.09

Depreciation 133.99 64.57 66.09 46.47 41.71

Other Written Off 0.00 0.00 0.00 0.00 0.00

Profit Before Tax 609.86 536.64 421.82 318.67 220.38

Extra-ordinary items 0.00 0.00 0.00 0.00 0.00

PBT (Post Extra-ord Items) 609.86 536.64 421.82 318.67 220.38

Tax 199.00 169.23 135.11 103.58 72.29

Reported Net Profit 410.86 367.44 286.71 215.06 148.10

Total Value Addition 667.65 548.04 476.98 386.60 314.22

Preference Dividend 0.00 0.00 0.00 0.00 0.00

Equity Dividend 61.66 55.17 43.05 32.28 39.29

Corporate Dividend Tax 12.33 9.38 7.32 5.24 6.53

Per share data (annualized)

Shares in issue (lakhs) 1,708.13 1,708.13 1,708.13 854.06 854.06

Earnings Per Share (Rs) 24.05 21.51 16.78 25.18 17.34

Equity Dividend (%) 361.00 323.00 252.00 189.00 230.00

Book Value (Rs) 99.50 79.78 62.05 96.42 75.6

79