A

Project Report
On

Voltas Co. LIMITED.

In the subject
Of
Financial Management
Submitted By
Name: Saaim.I.SHAIKH
Roll No: 71
SYBBA
Guided By:
Rashmi Madam
Submitted To:-
Faculty of Business
Administration Dharmsinh
Desai University
 PREFACE
Finance is regarded as a blood of
business organization. Financial Management
is concerned with the efficient use of an
important economic resource.
Financial Management is an important
organ of the Management. Without Financial
Management the body of Management is
workless.
As a student of Business Administration I
get an opportunity to make a report on
‘Navin Fluorine International Limited’ in the
area of finance. I get practical knowledge
about finance which is different form
theories.
 ACKNOWLEDGEMENT
It is great pleasure to me to get an
opportunity to prepare a project report in the
finance area.
I am really thankful to faculty and
Dharmsinh Desai University which provides
theoretical as well as practical knowledge to
us.
I am thankful to our Director Mr. G. S.
Shah and also hardly thankful to our
Mrs.Pallavi Dave under her kind guidance I
make myself to prepare this report.
I am extremely thankful to my parents
who provide me all possible help.
Last but not least, I would like to thank all
those persons who directly or indirectly
helped me to prepare this report.

Shaikh FAZAL M.
76
SY BBA
 INDEX

1) Company Profile
2) Result of operation
3) Ratio Analysis and
Interpretation
4) Director’s Report
5) Auditor’s Report
6) Cash flow statement
7) Common size statement
8) Accounting Policies
9) Conclusion
 Company Profile
Name of Company:

Navin Flourine International

Limited
Address:

Navin Flourine ,Surat 395023.

(Gujarat)
Navin Flourine ,Dewas 455022.(M.P.)
Registered Office:

1st floor Kalptaru Point,

Kamani Marg,
Sion. (East),
Mumbai 400022.
Tel: 91 22 2404 0404 / 2404 3300
Fax: 91 22 2401 4077
E-mail: info@nfil.in
Website: www.nfil.in

Register & Share Transfer Agents:

Sharepro services (India) Private

Limited.
Board Of director:

Chairman :
Shri H.A.Mafatlal
Director
: Shri A.k.Puri
 Director
: Shri T.M.M. Nambiar
Director
: Shri P.N.Kapadia
Director
: Shri S.S.Lalbhai
Director
: Shri S.M.Kulkarni
Director
: Shri R.Sankaran
Director
: Shri V.P.Mafatlal
M.D.
: Shri V.P.Sadekar
Company Secretary :

Shri N.B.Mankad

Product of the Company:

Company is producing basically

textiles, petrochemicals, apparel,
garments, knitwear and dress for the
safety soldiers of Indian army.

Bankers:
State Bank Of Hyderabad.
UTI Bank Limited.
HDFC Bank Limited.
Export Import Bank Of India.
Dena Bank.
Auditors:
M/sC.C.Chokshi & Co.
(Chartered Accountant)
Subsidiary Companies:
Sulakshana Securities Limited.

Profitability Chart:-

Gross Profit

2850
2800
2750
2700
2650 Gross Profit
2600
2550
2500
2005-06 2006-07

Net Profit After Tax

 1400
1200
1000
800
600 Net Profit
400
200
0
2005-06 2006-07

Earning Per Share

14
12
10
8
6 Rs.
4
2
0
2005-06 2006-07

Dividend Per Share

4
3.5
3
2.5
2
Rs.
1.5
1
0.5
0
2005-06 2006-07
 Result of
Operations:
2005-06 2006-07
A. Operation Result:
Sales 23276.09 25639.50
Other Income 359 1343.4
Net Profit After Tax .13 2
B. 855 1259.8
Financial Position: .22 4
Fixed Asset (Net)
Current Asset (Net)
Others (Net) 14165.54 17252.11
Total assets 15946.40 15109.61
Share capital 8110.5 10210.96
Reserves and surplus 0 39717.88
Shareholder’s funds 36584.99 1009.5
Loan Funds 1008.8 0
C. Total Capital Employed 3 36125.06
33843.85 37134.56
Equity Share Data: 34852.68 28775.20
Earning Per Share (Rs) 26390.94 27814.73
Dividing Per Share (Rs) 26232.94
Number of Share (in lacs)
12.47
8.47 4.00
2.65 100.99
100.99

Ratio Analysis
Meaning of Ratio:
“The Comparison between two or more
variables. It can be represented as
percentage (%), Oblique (/), times,
isto (:).

A ratio is customarily expressed in

three different ways. It may be
expressed as a proportion between two
variable. E.g If the current asset are
twice then current ratio is 2:1.
Second way is to percentage. E.g The
rate on return on capital employed is
to express the ratio as rate for
example stock turnover is six times a
year.

Importance of Ratio:

The use of ratios was started by

banks for ascertaining the liquidity
and profitability of companies
business for the purpose of advancing
loans to them.

1.Profitability:

The trend of profitability is

available from profitability ratios.
The gross profit ratio, net profit
ratio and ratio of return on
investment give a good idea of the
profitability of business, The
management gets an idea about the
overall efficiency of managers and
bank as well as other creditors draw
useful conclusions about repaying
capacity of the borrowers.

2.Liquidity:

The current ratio, liquid ratio and

acid-test ratio will tell whether the
business will be able to meet its
current liability as and when they
mature. Banks and other lenders will
be able to conclude from these ratios
whether the firm will be able to pay
regularly the interest and along with
installments.

3.Efficiency:

The turn over ratio are excellent

guides to measures the efficiency of
managers, E.g the stock turnover will
indicate how efficiently the sale is
being made, the debtors turnover of
collection department and assets
turnover shows the efficiency with
which the assets are used in business.

4.Inter-firm Comparison:

The absolute ratio of firm are not

of much use, unless they are compared
with similar ratios of other firms
belonging to the same industry. This
is inter-firm Comparison , which shows
the strength and weakness of the firm
as compared to other firms and will
indicate corrective measures.

5.Indicate Trend:

The current ratio of a firm is

lower than the industry average, but
if the ratio of last five years shows
an improving trend, it is an
encouraging trend. Only ratio analysis
will provide this information.

6.Useful for Budgetary Control:

Regular Budgetary report are

prepared in a business where the
system of budgetary control is in use.
If various ratios are presented in
these reports, it will give fairly
good idea about position.

7.Useful for Decision-making:

Ratios guide the management in

making some of the important
decisions. Suppose, the liquidity
ratios shows an unsatisfactory
position, the expenditure decision the
ratio of return on investment will
guide the management.
Ratios of Navin Flourine
International Limited

A. Profitability Ratio:-

1.Gross Profit Ratio:

Meaning:

The gross profit ratio measures the

gross earning of the company to its
net sales. If the ratio is less its
shows the inefficiency of company. The
gross profit ratio is expressed in
percentage(%).
Formula:

Gross profit
Ratio =Gross profit *100

Net sales

2
005-06= 2824.57 * 100

23276.09
 =12.14%

2
006-07 2636.49 * 100

25639.50

=10.28%

Graph and Table:

Year Percentage
2005- 12.14
06
2006- 10.28
07

12.5
12
11.5
11
10.5 Percentage
10
9.5
9
2005-06 2006-07

Interpretation:
 The gross profit ratio of the year
2005-06 is 12.14% and in current
year10.28%, it means at Rs.100 sale of
company a margin of Rs. 12.14 in year
2005-06 and Rs. 10.28 in year 2006-07
is available from which the operating
expenses of the business are
recovered. But in the year 2006-07 the
gross profit ratio is decreased at
12.14% to 10.28% i.e. 1.86%. It
indicates that the cost of sale is
high during the current year. The
management must investigate and try to
bring up this ratio.

2.Net Profit Ratio:

Meaning:

Net profit ratio is useful to

measure the overall performance of the
business and efficiency of the company
to earn amount on net profit on net
sales.

Formula:
 Net
profit ratio=Net profit*100

Net sales

2
005-06= 855.22 * 100

23276.09

=3.67%

2
006-07=1259.84 * 100

25639.50

=4.91%

Graph and Table:

Year Percentage
2005- 3.67
06
2006- 4.91
07
 5

3
Percentage
2

0
2005-06 2006-07

Interpretation:

The net profit ratio of the company

in the year 2005-06 is 3.67% and in
year 2006-07 4.91%. It means that the
company is making the net profit of
Rs.3.67for sales of every Rs.100 in
2005-06. And the net profit of Rs.4.91
for net sales of every Rs.100in 2006-
07. It shows that the current year’s
net profit increased by Rs. 1.24 which
shows better profitability of the
company as compared to last year.
 3. Operating Expense Ratio :
Meaning :
The operating ratio shows the
relationship between the cost of goods
sold plus operating expense and net
sales. It shows the efficiency of the
management. The higher the ratio, the
less will be the profit margin
available to proprietors and
inefficiency of the management. This
ratio is expressed in percentage.
Formula :
Operating expense ratio
= Cost of goods sold + operating
expense*100
Net Sales
2005-06 = 26791.92 x 100
23276.09
= 115.1 %
2006-07 = 30514.24 x 100
25639.5
= 119.01 %

Graph and Table:

Year Percentage
2005- 115.10
06
2006- 119.01
07
 120
119
118
117
116 Percentage

115
114
113
2005-06 2006-07

Interpretation:
The operating ratio of the company
in year 2005-06 and 2006-07 are 115.1
and 119.01 respectively. These ratios
shows that in year 2005-06 the ratio
is 115.1 and increase in year 2006-07
at 119.01. It means operating expenses
increase in current year. So, net
profit decreased in current year which
is not good for the company.
 4.Return on Capital Employed:
Meaning:

It is an index of profitability of
business and is obtained by comparing
net profit with total capital employed
by the Company. The ratio is expressed
in (%) percentage. The Capital
employed includes share capital,
reserves and long term Loans and
Bonds.

Formula:
Return on Capital Employed=
EBIT *100

Capital Employed

200
5-06= 1096.83 * 100

26232.94

=4.18 %

200
6-07=2131.27 * 100

27814.73
 =7.66%

Graph and Table:

Year Percentage
2005- 4.18
06
2006- 7.66
07

8
7
6
5
4
Percentage
3
2
1
0
2005-06 2006-07

Interpretation:

This ratio shows that by investing

Rs.100 how much proprietor gets. The
ratio of year 2005-06 and 2006-07 are
4.18% and 7.66% respectively. Inthe
year2005-06 company invested Rs.100
and they will get the return of Rs.
4.18 and in current year company
invested 100 Rs. and they will get
return of Rs.7.66. The current year’s
return increase as compared to last
year which is good for the company.

5.Return on Shareholder Fund:

Meaning:

It is a profitability of business
from the viewpoint of shareholders as
compare to their investment. Return on
share holder’s ratio expressed in
percentage(%).

Formula:
Return on shareholder’s fund
=Net profit after
tax *100
Shareholder’s fund

2005-06=
855.22 *100

17426.34
=4.91 %

2006-
07=1259.84 *100
18567.28

=6.79
%

Graph and Table:

Year Percentage
2005- 4.91 %
06
2006- 6.79 %
07

7
6
5
4
3 Percentage

2
1
0
2005-06 2006-07

Interpretation:
The ratio of year 2005-06 & 2006-07
are 4.91% & 6.79% respectively. It
shows that the shareholders earn 4.91%
Rs. for their investment in year 2005-
06 which increase in year 2006-07 is
Rs. 6.79. This is good for company’s
shareholders and also for the
company’s reputation in the market.

6. Return On equity
shareholder’s fund:
Meaning:
It shows what percentage of profit
is earned on the capital invested by
ordinary shareholders. The ratio is
obtained by dividing net profit after
deduction of preference dividend by
the amount of ordinary share capital
plus free reserves.
 Return on equity shareholder’s fund
ratio is expressed in percentage (%).

Formula:
Return on equity shareholder’s
fund
= Net Profit-Preference
Dividend
Equity share
capital + free reserves

2005-06= 855.22 *100

17426.34

=4.91 %

2006-
07=1259.84 *100

18567.28

=6.79
%

Graph and Table:

Year Percentage
2005- 4.91 %
06
2006- 6.79 %
07
 7
6
5
4
3 Percentage

2
1
0
2005-06 2006-07

Interpretation:
The ratio of year 2005-06 and 2006-
07 are 4.91% and 6.79% respectively.
It shows that the equity shareholder’s
earn 4.91 Rs. for their investment in
year 2005-06 which increase in year
2006-07 is Rs. 6.79. This is good for
company’s shareholders and also for
the company.
It increases the company’s
reputation in the current market.
 7.Earning Per Share:
Meaning:
Earning per share measures the
earnings available to the equity
Shareholders as compare to their
investment made per share.

Formula:
Earning per Share
=Profit after Tax –
Preference Dividend
Number of
equity shares

2005-06=855.22
100.99
=8.47 Rs
2006-07=1259.84

100.99
= 12.47 Rs
Graph and Table:
Year Amount(Rs)
2005- 8.47
06
2006- 12.47
07
 14

12

10

6 Rs

0
2005-06 2006-07

Interpretation:
Earning per share ratio measures
the earning of the equity shareholders
as compared to investment made on each
share. Here the ratio of 2005-06is
8.47 Rs. and ratio of 2006-07is 12.47
Rs. It shows that if the face value of
one share is Rs.10 then shareholder’s
gets Rs.8.47 in year 2005-06 and
Rs.12.47 in year 2006-07.
 8.Devidend Per Share:
Meaning:
Dividend per share ratio measures
the dividend a valuable to the share
holders as compare to there investment
done per share.

Formula:-
Dividend per share=Total dividend
declared
Numbe
r of equity share

2005-06=268
100.99
=2.65 Rs

2006-07=404
100.99
=4 Rs

Graph & Table:-

Years Amount(Rs)
2005-06 2.65
2006-07 4

4
3.5
3
2.5
2 amount
1.5
1
0.5
0
2005-06 2006-07

Interpretation:

The ratio measures dividend

available to the shareholders as
compared to their investment made per
share. Here the current year ratio
shows 4 Rs. it means it shows almost
average dividend to shareholders
wherein, last year’s ratio shows 2.65
Rs. means less than current year. So
that it shows the efficiency of the
company. Dividend per share is
increased by 1.35 Rs. in current year.
 9.Stock Turnover Ratio:
Meaning:

Stock turnover ratio represents the

turnover of stock done during a year.
Higher the ratio found better for the
company. Stock turnover ratio is
expressed in times.
Formula:

Stock Turnover
Ratio=Cost of Goods*100

Average Sales

2
005-06=20451.52 * 100

2333.05

=8.77 times

2
006-07=23003.01 * 100
 2782.82

=8.27 times
Graph and Table:
Year Times
2005- 8.77
06
2006- 8.27
07

8.8
8.7
8.6
8.5
8.4
Times
8.3
8.2
8.1
8
2005-06 2006-07

Interpretation:

In the company there is a stock

turnover ratio of year 2005-06 is 8.77
times and ratio of year 2006-07 is
8.27 times. It means ratio is decrease
by 0.5 times during the current year
which is not good for the company.
 10.Debtor’s Turnover Ratio:
Meaning:

Debtors ratio shows the number of

times the rotation of debtor cycle is
done during a year. The ratio shows
the number of days taken to collect
the dues of credit sale. The lower the
ratio good for the Company.

This ratio is also known as average

collection period or debtors days or
debt collection period.

Formula:
Debtor’s Turnover Ratio
=Debtors + Bills
eceivable *365

Credit Sales
 2005-
06=5627.94 *365

23276.09

=88 days

2006-
07=7127.88

25639.5

=102 days

Graph and Table:

Year Days
2005- 88
06
2006- 102
07

105

100

95
Days
90

85

80
2005-06 2006-07
Interpretation:

Debtors velocity ratio of the year

2005-06 and 2006-07 are 88 and 102
days respectively. It shows that the
debtor cycle or average collection is
made in 88 days in year2005-06 while
in year 2006-07 the average collection
period is 102 days. This means that
the average collection period has
increased from 2005-06 to 2006-07 by
14 days. So, this ratio does not show
the satisfactory position of the
company.

11.Creditor’s Turnover Ratio:

Meaning:
Creditors velocity ratio shows the
number of days within which company
make payment to the creditor. It
measures the number of times the
rotations of creditors cycle is done
during a year.
This ratio is also known as average
payment period or creditors days or
credit payment period.

Formula:

Creditors Velocity Ratio=

Credit Purchase

Creditors + Bills Payable

2005-
06=662.38

9179.49

=0.07times

2006-
07=392.44

9530.11

=0.04times

Graph and Table:

Year Times
 2005- 0.07
06
2006- 0.04
07

0.07
0.06
0.05
0.04
0.03 Times

0.02
0.01
0
2005-06 2006-07

Interpretation:

The creditors ratio of the year

2005-06 and 2006-07 are 0.07 and 0.04
respectively. It shows that the 0.07
times amount of credit purchase is
paid in 2005-06 and 0.04 times in year
2006-07. In the year 2006-07 amount of
credit purchase is paid earlier as
compared to year 2005-06. It is not
satisfactory for the firm.
 12.Fixed Asset Turnover Ratio :
Meaning :
The fixed asset turnover shows the
sales of the business as compared to
its assets used. It is useful to
ascertain the efficiency and
profitability of business. Here the
total fixed assets are compared to
sales. The more the sales in relation
to the amount invested in fixed
assets, the more efficient is the use
of fixed assets. It indicates higher
efficiency.
Formula :
Fixed Asset Turnover Ratio=
Sales
Fixed
Assets
2005-06 = 23276.09
14165.54
= 1.64 times
2006-07 = 25639.50
17252.11
= 1.49 times
 Graph and Table:
Year Times
2005- 1.64
06
2006- 1.49
07

1.65

1.6

1.55
Times
1.5

1.45

1.4
2005-06 2006-07

Interpretation:

The fixed assets turnover ratio of

the year 2005-06 and 2006-07 are 1.64
times and 1.49 times respectively. The
ratio of the current year is less than
previous year. It means that fixed
assets were being not used effectively
in year 2006-07. This is not good for
the company.
 13.Current Ratio:
Meaning:

Current ratio measures the

capability of the company to pay its
liability within next 12 months as
compare to its current assets. Ideal
current ratio 2:1 and chore commission
ratio is 1.33:1, It is also known as
“Working Capital Ratio”.

The assets which can be converted

in cash within a time period is called
current assets.

The liability which will be paid by

the Company within a time period is
called Current Liability.

Formula:
 Current
Ratio=Current Assets

Current Liability

2
005-06=15946.4
9876.85
= 1.61 : 1

2
006-07=15109.61
11044.76
=1.37 : 1

Graph and Table:

Year Times
2005- 1.61:1
06
2006- 1.37:1
07
 1.65
1.6
1.55
1.5
1.45
Times
1.4
1.35
1.3
1.25
2005-06 2006-07

Interpretation:
The company’s current ratio of
year2005-06 is 1.61 and in year 2006-
07 is 1.37 times. This ratio shows
when at Rs. 1 liability of the company
then excess of assets is 1.61 in year
2005-06 and 1.37 in year 2006-07. The
ratio is decreased in year 2006-07 as
compared to 2005-06. It means that
there is decline in current assets and
increase in liability which is not
good for the company.
 14.Liquid Ratio:
Meaning:

Liquid ratio measures the liquid

position of the Company to pay off its
debt within very short period as
compared to it liquid assets. Ideal
liquid ratio is 1:1 .
Liquid assets can be obtained by
deducting stock and prepaid expenses
from current assets.
Liquid liability can be obtained by
deducting bank overdraft from current
liability.
Formula:

Liquid Ratio=Liquid assets

Liquid Liabilities

2005-
06=13463.84
9876.85

=1.36 : 1

2006-
07=12026.53
11044.76
=1.09 : 1

Graph and Table:

Year Times
2005- 1.36:1
06
2006- 1.09:1
07

1.4
1.2
1
0.8
0.6 Times

0.4
0.2
0
2005-06 2006-07

Interpretation:
This ratio shows the liquid
position of the company. The liquid
ratio of the year 2005-06 is 1.36 and
in year 2006-07 is 1.09. The ideal
ratio is 1:1. According to, liquid
ratio it is higher than the ideal
ratio. It means company having a good
and satisfactory level.

15.Quick Ratio:
Meaning:

Quick ratio measures the immediate

cash capabilities of company to meet
its very quick liabilities. Ideal
quick ratio is 0.5 : 1 .
Quick ratio is obtained by dividing
quick assets by quick liabilities.
Quick assets=liquid assets-debtors-
Bills Receivables
Quick liabilities=liquid
liabilities.

Formula:
 Quick Ratio=Quick
assets
Quick Liabilities

2005-
06=7835.9
9876.85

=0.79: 1

2006-
07=4898.65
11044.76

=0.44: 1

Graph and Table:

Year Times
2005- 0.79:1
06
2006- 0.44:1
07
 0.8
0.7
0.6
0.5
0.4
Times
0.3
0.2
0.1
0
2005-06 2006-07

Interpretation:

The quick ratio of the company of

the year 2005-06 is 0.79 and of year
2006-07 is 0.44. It shows that how
much quick funds are available to pay
off quick liabilities. The standard
quick ratio is 0.5:1. Here, the quick
ratio of current year is less than
standard ratio, it means company has
insufficient quick assets to pay out
its quick liabilities.
 16.Proprietary Ratio:
Meaning:

The proprietary ratio is measure

the proportion of contribution made by
the propriety as compare to the total
assets of the business. This propriety
or Shareholder’s Fund consist of Share
capital and reserve and surplus. This
ratio can be measured in percentage.

Formula:

Proprietary Ratio=Proprietary Fund

*100
Total Assets

2005-06=17426.34
*100

36584.99

=4
7.63 %

2006-
07=18567.28*100

39717.88
 =4
6.75 %

Graph and Table:

Year Percentages
2005- 47.63%
06
2006- 46.75%
07

47.8
47.6
47.4
47.2
47
Percentage
46.8
46.6
46.4
46.2
2005-06 2006-07

Interpretation:

The higher the ratio, the stronger

the financial position of the company
as it signifies that the proprietors
have provided larger funds to purchase
the assets. The current year’s ratio
is 46.75% it means the company uses
outside funds. This ratio cannot
exceed 100%. If it is 100% then it
means that the business uses only
proprietors’ funds and not outsiders
funds.

17.Debt Equity Ratio:

Meaning:
Debt equity ratio measures
outsiders’ funds as compared to
owner’s funds. It means debt is
measures with equity its ideal ratio
is 1:1.

Debt include outsiders fund

(Debenture + Long Term Borrowing +
secured and unsecured loans.)

Equity includes share capital,

equity share capital + Owners fund
(All reserve and surplus fictitious
assets.
 Formula:

Debt equity ratio= Debt

Equity

2005-06=13017.34

17426.34

=0.75:1

2006-07=14860.37

18567.28

=0.80:1

Graph And Table

Year Times
2005-06 0.75:1
2006-07 0.80:1
 0.8
0.7
0.6
0.5
0.4
times
0.3
0.2
0.1
0
2005-06 2006-07

Interpretation:

The ratio of the year 2005-06 and

2006-07 are 0.75 and 0.80 times
respectively. It means the debt is Rs.
0.75 for every 1Re. in year2005-06 and
0.80 Rs. for every 1Re. in year 2006-
07. It is a good for the company when
this ratio is high means outside
creditors have a large claim than the
owners. It shows the company has good
equity funds.

18. Capital Gearing Ratio:

Meaning:
This ratio expresses the proportion
of preference capital and ordinary
capital. This ratio should be lower.
It includes funds bearing fixed
interest and charges.

Formula:

Capital Gearing Ratio

=Fixed interest bearing
capital
Ordinary Capital

2005-06=8806.6

17426.34

=0.5:1

2006-07=9247.45
18567.28

=0.5:1

Graph And Table

Year Times
2005-06 0.5:1
2006-07 0.5:1
 0.5

0.4

0.3
times
0.2

0.1

0
2005-06 2006-07

Interpretation:

The capital gearing ratio of the

company in year 2005-06 is 0.5 and
also in year 2006-07 is 0.5. This
ratio shows the proportion of capital
which bearing fixed interest and
ordinary capital. Here company uses
50% ordinary capital and 50% capital
bearing fixed interest.
 Director’s Report
Directors have pleasure in
presenting their report and audited
accounts of the company for the year
ended march 31, 2007

Business Performance:

The business performance during the

year has been commendable. The net
profit Rs 1259.84 lacs is the highest
ever achieved by the company. The
company’s strong results demonstrate
the merits of your company growth
strategies.
Sale for the year have increased by
10 percent at Rs 25639.50 lacs as
against Rs 23276.09 lacs during 2005-
06. After absorbing the amount on
impairment of asserts, accelerated
detentions and diminution in the value
of company’s investment in its wholly-
owned subsidiary called Sulakshana
Securities Limited. Company’s overall
performance can be said well in the
year 2006-07.

Dividend:-
 The Board of Directors are pleased
to recommend a dividend of Rs.4 per
equity share on 10099889 equity shares
of a nominal value of Rs.10 each
aggregating Rs.4 lacs. In the year
2006-07 The dividend of the company
has rose up to 50% as compared to
year 2005-06.

Responsibility Statement:-
The companies act 1956, the
directors based on the representation
received from the operating
management.

(a) In the preparation of the annual

accounts, the applicable accounting
standards have been followed and that
no material departures have been made
from the same.

(b) Consulted the statutory auditors

and have applied them consentient and
made judgment and estimates that are
reasonable and prudent.

(c) Companies act, 1956 for

safeguarding the asset of the company
and for preventing and detecting found
and other irregularities.
(d) The Board of Directors have
prepared the annual account on a going
concern basis.

Foreign Exchange:-

Companies act,1956 read with the

company the rule,1988 with respect to
conservation of energy, technology
absorption and foreign exchange
earning and outgo as required to be
disclosed in terms of Section 217 (1)
(e) of the companies act 1956 read
with the companies rules,1988 is
annexed hereto and forms part of this
report.

Research & Development:-

The company’s research and
development team created new value
added molecules based on customer
requirements. These molecules
currently at different stages of
commercialization are expected to
report strong commercial success over
the coming years.

Social Responsibility:-
 During the year under review, the
company has made donation of Rs.10
lacs for charitable and other
purposes.

Insurance:-
The properties and insurable
interests of company like building,
plant, machinery and stock etc. are
properly insured.

AUDITORS REPORT:-

(1) They have audited the attached

balance sheet of Navin Flourine
International Limited as at March
31st 2007, the profit and loss
account and also the cash flow
statement for the year ended of
 that date, annexed there to.
These financial statements are
the responsibility of company’s
management. Their responsibility
is to express an opinion on these
financial statements based on
their audit.

(2) They conducted their audit in

accordance with the auditing
standards generally accepted in
India. Those standards require
that they plan and perform the
audit to obtain reasonable
assurance about whether the
financial statement are free of
material misstatement. An audit
includes examining on a test
basis, evidence supporting the
amounts and disclosure in the
financial statements. An audit
also includes assessing the
accounting principles used and
significant estimates made by the
management, as well as evaluating
the overall financial statement
presentation. They believe that
their audit provides a reasonable
basis for their opinion.
(3) As required by the companies
order, 2003, issued by the
Central Government in terms of
section 227 (4A) of the companies
Act, 1956, they enclose in the
annexture a statement on the
matters specified in paragraphs 4
& 5 of the said order.

(4) Further to their comments, in the

annexture referred to above, they
report that;

(a) They have obtained all the

information and explanation which to
the best of our knowledge and belief
were necessary for the purpose of
their audit.

(b) In their opinion, proper books

of accounts as required by law have
been kept by the company so for as
appears from their examination of
those books.

(c) The balance sheet, profit and

loss account and cash flow statement
dealt with by this report are in
agreement with the books of account.
(d) In our opinion, subject to note
16.a. of schedule 17, regarding non-
disclosure of information required
under Accounting Standard 27 in
respect of a joint venture of the
company, the Balance sheet, Profit &
Loss account and cash flow statement
dealt with by this report comply
with the accounting standards
referred to in sub-section (3C) of
section 211 of the Companies Act
1956.

(e) On the basis of written

representations received from the
directors, as on 31st March 2007 and
taken on record by the Board of
Directors, we report that none of
the directors is disqualified as on
31st March 2007 from being appointed
as a director in terms of clause(g)
of sub-section (1) of section 274 of
the Companies Act, 1956.

(f) In our opinion, and to the best

of our information, and according to
the explanations given to us, the
said accounts, read with the
significant accounting policies,
note 16.a., and other notes thereon,
give the information required by the
Companies Act, 1956, in the manner
so required, and give a true and
fair view in conformity with the
 accounting principles generally
accepted in India:

i. In the case of the Balance

sheet, of the state of affairs
of the company as at March 31st
2007

ii. In the case of the profit and

Loss account, of the profit
for the year ended on that
date; and

iii. In the case of the Cash flow

statement, of the cash flows
for the year ended on that
date.

CASHFLOW STATEMENT
Meaning:-

Cash is the most liquid asset of a

business. All business transactions
are ultimately results into cash
inflow or cash outflow. Hence, a
statement that shows a cash flow is
considered to be an important one. It
can be said that cash is both the
beginning and the end of the business
operations. The business should have
sufficient cash on hand so that the
liabilities can be paid as & when they
fall due. The cash on hand should not
be excessive; otherwise the cash would
remain idle, reducing the overall
profitability. The fund flow statement
shows the changes in the net working
capital, while the cash floe statement
shows the inflow and outflow of cash
only. The statement shows the amount
of cash received due to each
transaction of the business and cash
paid. The total cash inflow is added
to the opening balance of cash and the
total cash outflow is deducted there
from. This gives the final cash
balance.

Importance:-
(1)Efficient Cash Management:-
If the finance manager has clear
idea of cash receipts and payments
then cash resources can be efficiently
managed. Excess cash found at any
times may be profitable invested for
the time being and profitability is
increased.

(2)Useful For Internal Financial

Management:-
The management can plan out payment
of dividend, repayment of long term
loans, purchase of machines or
equipment etc. If it has good idea
about the timing when enough cash will
be on hand. This will avoid the
possibility of borrowing funds at
higher rate of interest.

(3)Information About Cash Receipt And

Payments:-
Such a statement will give
information about the trend of cash
receipt and payment. Such information
is useful to the management in meeting
any future contingencies and also
seizing any profitable opportunity.

(4)Useful For Control:-

The historical cash flow statement
prepared for last year is useful for
comparing the figures of cash budgets
and points of difference may be
located this facilitates managerial
control on the use of cash.

(5)Ease In Obtaining Funds:-

 By comparing the figures of cash
flow statement and cash budgets, the
cash planning and control becomes more
effective. In turn this facilitates
raising of additional fund easily when
needed.

CASH FLOW STATEMENT FOR

THE YEAR ENDED 31ST
MARCH,2007
Schedule Rs in Rs. in
Lacs 2007 Lacs 2006
A. Cash flow from
operating
activities
Profit before tax 2654.55 1794.04
Adjustment for:
Depreciation 883.00 750.33
Profit on sale of _ (52.22)
fixed assets
Loss on sale of 36.41 _
fixed assets
Provision for (509.64) (15.72)
doubtful advances
Interest expenses 783.08 817.78
Interest income (187.90) (161.62)
Share of loss in 0.03 0.06
the partnership
firm where the
company is a
partner
Dividend on long (134.85) (39.20)
term investments
Surplus on buyback (378.20) _
of sales by invest
company’s held as
long term
investment
Bad Debts W/off 466.95 _

Sundry credit _ (22.36)

balances written
back
Excess provision (1.03) (13.02)
of earlier year’s
written back
Provision for 302.26 228.51
doubtful debts
Operating Profit 3914.66 3286.58
before working
capital changes
Increase/ Decrease (425.99) 145.41
in trade
receivables
Increase in (221.38) (1685.63)
inventories
Increase in loans (2723.16) (1222.70)
and advances
Increase in trade 499.27 789.58
and other payables
(2871.26) (1973.34)
Cash generated 1043.40 1313.24
from operation
Direct Taxes and (566.10) (594.06)
fringe benefits
tax paid
Net cash generated 477.30 719.18
from operating
activities
B. Cash flow from
investing
activities
Purchase of fixed (3977.17) (3113.56)
assets
Capital (0.03) (0.06)
contribution in
the partnership
firm where the
company is partner
Share of loss in (0.03) (0.06)
the partnership
firm where the
company is partner
Withdrawal form 1494.51 _
capital
contribution in
the partnership
firm where the
company is partner
Buyback of 897.24 _
investment
Sale of fixed 9.84 72.57
assets
Dividend income 134.85 39.20
Interest income 162.11 38.95
Net cash investing (1278.68) (2962.96)
activities
C. Cash flow from
financing
activities
Proceeds from _ 1506.13
issue of equity
share capital
including share
premium
Calls in arrears 3.98 _
received during
the year
Expenses on issue _ (2.68)
of share W/off
against share
premium
Proceeds from long 1285.42 2563.00
term borrowings
Repayment of long (480.32) (1163.91)
term borrowings
Proceeds from 1212.69 398.59
other borrowings
Compensation 455.12 436.34
received pursuant
to Montreal
Protocol for
phasing out
production of
ozone depleting
substances
Dividend paid (339.89) (136.52)
Interest Expenses (848.85) (841.73)
Net cash (711.79) 2759.19
Increase in cash (1513.17) 515.41
and cash
equivalent
Cash and cash 5921.85 5406.44
equivalents at the
beginning of the
year
Cash and cash 4408.68 5921.85
equivalent at the
end of the year
4588.52 6075.90
179.84 154.05
4408.68 5921.85
 Table Of Ratios:
Particulars 2005-06 2006-07
1 Gross Profit ratio 12.14% 10.28%
2 Net profit ratio 3.67% 4.91%
3 Operating ratio 115.1% 119.01%
4 Return on capital 4.18% 7.66%
employed ratio
5 Return on 4.91% 6.79%
shareholder’s fund
ratio
6 Return on equity 4.91% 6.79%
shareholder’s fund
ratio
7 Earning per share 8.47Rs. 12.47Rs.
8 Dividend per share 2.65Rs. 4Rs.
9 Stock turnover 8.77times 8.27times
ratio
10 Debtors turnover 88days 102days
ratio
11 Creditors turnover 0.07times 0.04times
ratio
12 Fixed assets 1.64times 1.49times
turnover ratio
13 Current ratio 1.61:1 1.37:1
14 Liquid ratio 1.36:1 1.09:1
15 Quick ratio 0.79:1 0.44:1
16 Proprietary ratio 47.63% 46.75%
17 Debt Equity ratio 0.75:1 0.80:1
18 Capital gearing 0.50:1 0.50:1
ratio
 COMMON SIZE STATEMENT OF
BALANCE SHEET
Particular Sch. 2006-07 (%) 2005-06 (%)
No.
Sources of
Funds
Shareholder’ 1 1009.5 3.51 1008.83 3.82
s Fund
Capital 2 17557.78 61.02 16417.51 62.21
Reserve &
Surplus
Total 18567.28 64.53 17426.34 66.03
Loan Funds
Secured Loans 3 9247.45 32.14 8806.60 33.37
Deferred tax 960.47 3.34 158.00 0.59
liability
Total 28775.20 100 26390.94 100
Application
of Fund
Fixed Assets 4
Gross block 17830.32 61.96 16390.85 62.11
--Less Dep. 6282.54 21.83 5425.97 20.56
Net block 11547.78 40.13 10964.88 41.55
Capital work 5704.33 19.82 3200.56 12.13
in progress
Total 17252.11 59.95 14165.54 53.68
Investment 5 1743.24 6.06 2262.31 8.57
Current
assets,
loans and
advances
Inventories 6 5942.06 20.65 5720.68 21.68
Sundry 7 4579.03 15.91 4149.82 15.72
debtors
Cash and 8 4588.52 15.95 6075.90 23.02
bank bal.
Loans and 9 5612.92 19.51 4210.74 15.96
advances
Total 20722.53 72.02 20157.14 76.38
Less
Current
liability
and
provisions.
Current 10 10084.29 35.05 9718.85 36.83
liability
Provisions 11 858.39 2.98 475.20 1.80
Total 10942.68 38.03 10194.05 38.63
Net current 9779.85 33.99 9963.09 37.75
assets
Total 28775.20 100 26390.94 100
 COMMON SIZE STATEMENT FOR
PROFIT & LOSS A/C
Particular Sch. 2006-07 % 2005-06 %
No.
Income
Turnover 28084.32 109. 25331.2 108.
(gross) 54 4 83
Less : 2444.82 9.54 2055.15 8.83
Excise
Duty
Turnover 25639.5 100 23276.0 100
(net) 9
Processing 409.67 1.59 193.32 0.83
charge
26049.17 101. 23469.4 100.
59 1 83
Other 12 1343.42 5.24 359.13 1.54
income
Inc. in 13 600.52 2.34 299.02 1.28
stock
Total 27993.4 109. 24127.5 103.
18 6 66
Less
:Expenditu
re
Purchase 392.44 1.53 662.38 2.85
of goods
Manu. & 14 22966.32 89.5 19816.3 85.1
other exp. 7 9 4
Excise 53.92 0.21 166.07 0.71
duty
Depreciati 882.97 3.44 750.30 3.22
on
Dep. On 0.03 0.00 0.03 0.00
immovable 01 01
properties
Interest 15 738.08 3.05 817.78 3.51
Total 25078.76 97.8 22212.9 95.4
1 5 3
Profit 2914.35 11.3 1914.61 8.23
before 7
exceptiona
l items
and tax
Provision (259.80) (1.0 (120.57 (0.5
for 1) ) 2)
doubtful
advances
Profit 2654.55 10.3 1794.04 7.71
before tax 5
Provision
for tax
Current (555.27) (2.1 (473.82 (2.0
tax 7) ) 4)
Deferred (809.94) (3.1 (422.00 (1.8
tax 6) ) 1)
Fringe (29.50) (0.1 (43.00) (0.1
benefit 2) 8)
tax
(1394.71 (5.4 (938.82 (4.0
) 40 ) 3)
Profit 1259.84 4.91 855.22 3.67
after tax
Surplus 920.36 3.59 706.74 3.04
brought
forward
Amount 2180.20 8.50 1561.96 6.71
available
for
appropriat
ion
APPROPRIAT
ION
Transferre 125.98 0.49 85.52 0.37
d to
general
reserve
Transferre 250.00 0.98 250.00 1.07
d to
contingenc
y reserve
Proposed 404.00 1.58 268.42 1.15
dividend
Corporate 68.68 0.27 37.66 0.16
dividend
tax
Short 39.02 0.15 ------- ----
provision ---
of
dividend
Total 887.68 3.46 641.80 2.76
Surplus 1292.52 5.04 920.36 3.95
carried to
Balance
sheet

Accounting Policies
(1)Fixed assets:-
Fixed assets are recorded at cost
of acquisition or construction. They
are stated at historical cost less
accumulated depreciation and
impairment loss, if any.

(2)Depreciation:-
Depreciation on fixed assets is
provided on the straight-line basis in
accordance with the Companies Act,
1956. (refer note 4 of schedule 17).

(3)Impairment loss:-
Impairment loss is provided to the
extent the carrying amount(s) of
assets exceed their recoverable
amount(s). Recoverable amount is the
higher of an asset’s net selling price
and its value in use. Value in use is
the present value of estimated future
cash-flows expected to arise from the
continuing use of the asset and from
its disposal at the end of its useful
life. Net selling price is the amount
obtainable from sale of the asset in
an arm’s length transaction between
knowledgeable, willing parties, lays
the costs of disposal.

(4)Investment:-
Long terms investment are carried
at cost. Provision is made to
recognize a decline, other than
temporary, in the carrying amount of
long-term investments.

(5)Inventories:-
Items of inventory are valued at
cost or net realizable value, which
ever is lower. Cost is determined on
the following basis:
A. Raw materials, stores and spares
Weighted average
B.Process stocks and finished goods
At material cost plus
appropriate value of overheads
C.Trading goods
FIFO

(6)Retirement and other employee

benefits:-
A. Contributions are made towards
Provident fund, family pension
fund and superannuation fund, which
are defined contribution schemes.
Liability in respect thereof is
determined on the basis of
contribution as required under the
statute/rules.
B. Gratuity liability, a defined
benefit scheme, and provision for
leave encashment is accrued and
provided for on the basis of
actuarial valuations made at the
year end.

(7)Foreign currency transactions:-

Transactions in foreign currency
(including those related to
acquisition of fixed assets from
outside India) are recorded at the
original rates of exchange in force at
the time the transactions are
effected. At the year-end, monetary
items denominated in foreign currency
and forward exchange contracts are
reported using closing rates of
exchange. Exchange differences arising
thereon and on realization/ payment of
foreign exchange are accounted, in the
relevant year, as income or expense,
except in respect of liabilities
incurred in foreign currency for
acquiring fixed assets from outside
India, in which case, these are
adjusted in the carrying amounts of
respective fixed assets.
In case of forward exchange
contract, or other financial
instruments that are in substance
forward exchange contracts, the
premium or discount arising at the
inception of the contracts is
amortized as expense or income over
the life of the contracts. Gains/
losses on settlement of transaction
arising on cancellation/ renewal of
forward exchange contracts are
recognized as income or expense.

(8)Borrowing costs:-
Borrowing costs that are
attributable to the acquisition,
construction or production of
qualifying assets are capitalized as
part of the cost of such assets. A
qualifying asset is one that
necessarily takes a substantial period
of time to get ready for its intended
use. All other borrowing costs are
charged to revenue.

(9)Revenue recognition:-
Revenue (income) is recognized
when no significant uncertainty as to
its determination or realization
exists.

(10)Taxes on income:-
Tax expense comprises both current
and deferred tax at the applicable
enacted/ substantively enacted rates.
Current tax represents the amount of
income tax payable/ recoverable in
respect of the taxable income/ loss
for the reporting period. Deferred tax
represents the effect of timing
differences between taxable income and
accounting income for the reporting
period that originate in one period
and are capable of reversal in one or
more subsequent periods.

(11)Provisions and contingencies:-

A provision is recognized when the
company has a legal and constructive
obligation as a result of a past
event, for which it is probable that
cash outflow will be required and a
reliable estimate can be made of the
amount of the obligation. A contingent
liability is disclosed when the
company has a possible or present
obligation where it is not probable
that an outflow of resources will be
required to settle it. Contingent
assets are neither recognized nor
disclosed.
 Conclusion:-

“NAVIN FLOURINE INTERNATIONAL

LIMITED” is a well know company among
their entire consumer’s goods. It is
widely famous and reputed and not only
in home countries but also foreign
contries. The company is famous for
its entire product’s quality and its
reasonable price and the services
provided by the company among the
consumer.

The various ratios which we have

studied are very important ratios.
The company seems to maintain better
ratios at a satisfactory level.

This company’s liquidity position

and profitability is good. The company
is able to maintain its ratios at
satisfactory level.