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TABLE OF CONTENT

INTRODUCTION

COMPANY PROFILE

OBJECTIVES OF THE STUDY

RESEARCH METHODOLOGY

ANALYSIS OF BALANCE SHEET

FINDINGS:

CONCLUSIONS

LIMITATIONS

RECOMMENDATIONS AND SUGGESTIONS

BIBLIOGRAPHY
INTRODUCTION

Financial management focuses on ratios, equities and debts. It is useful for portfolio management,
distribution of dividend, capital raising, hedging and looking after fluctuations in foreign currency
and product cycles. Financial managers are the people who will do research and based on the
research, decide what sort of capital to obtain in order to fund the company's assets as well as
maximizing the value of the firm for all the stakeholders. It also refers to the efficient and effective
management of money (funds) in such a manner as to accomplish the objectives of the
organization. It is the specialized function directly associated with the top management. The
significance of this function is not seen in the 'Line' but also in the capacity of the 'Staff' in overall
of a company. It has been defined differently by different experts in the field.

The term typically applies to an organization or company's financial strategy, while personal
finance or financial life management refers to an individual's management strategy. It includes how
to raise the capital and how to allocate capital, i.e. capital budgeting. Not only for long term
budgeting, but also how to allocate the short term resources like current liabilities. It also deals
with the dividend policies of the share holders.

Personal finance is the financial management which an individual or a family unit performs
to budget, save, and spend monetary resources over time, taking into account various financial
risks and future life events.[1] When planning personal finances, the individual would consider the
suitability to his or her needs of a range of banking products (checking, savings accounts, credit
cards and consumer loans) or investment private equity, (stock market, bonds, mutual funds) and
insurance (life insurance, health insurance, disability insurance) products or participation and
monitoring of and- or employer-sponsored retirement plans, social security benefits, and income
tax management.

What is Financial Management?

Financial Management is a vital activity in any organization. It is the process of planning,


organizing, controlling and monitoring financial resources with a view to achieve organizational
goals and objectives. It is an ideal practice for controlling the financial activities of an organization
such as procurement of funds, utilization of funds, accounting, payments, risk assessment and
every other thing related to money.
In other terms, Financial Management is the application of general principles of management to the
financial possessions of an enterprise. Proper management of an organization’s finance provides
quality fuel and regular service to ensure efficient functioning. If finances are not properly dealt
with an organization will face barriers that may have severe repercussions on its growth and
development.

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There are several options that one can use for managing their finances, this could be either
managing them on your own, hire a full time employee, hire a part time accountant or a third party
who manages all finance related activities for you, for example a Chartered Accountant.

Most often organizations have a dedicated department that looks after the financial matters of the
company. A finance manager is designated for handling finance and managing its resources within
an enterprise. All finance-related decisions are taken at this position. Depending on the company
profile the finance department can have several designations to cater to the various needs of the
company.

As a NGO you might be thinking your primary task is to work towards social service and not
financial management. But unless your finances and funds are sorted, you cannot achieve your
objectives. The primary significance of financial planning and management in NGOs lies in
achieving its overall goals and objectives. Here are some points indicating the importance of
financial management for an NGO.
 Being accountable to the donors: Most NGOs rely completely on funding and therefore
having proper accounting systems in place becomes all the more important. As a NGO you
need to be accountable to the donor agencies and individuals who support your cause. With
proper systems in place you can keep track of your expenditures and submit timely reports
to them. This would lead to enhanced trust between you and the donor, thereby increasing
the chances of your NGO getting a continuous support from them. With limited funding it
is important for an NGO to manage all the funds in a careful manner. Furthermore, proper
finance systems will also help the NGO maintain financial reports and showcase their entire
spending to the regulatory bodies as per the agreed terms.

 Securing future: The present financial condition of any organization determines its future.
In a similar manner, NGOs should also opt for sustainable use of finance. This simply
means that NGOs should spend in their present ventures, keeping in mind the future. After
all, it is quite important to have future plans and become well secured as well as future-
ready.

 Eliminating fraud and theft: Malpractices and illegal deeds such as overuse of resources,
fraud and theft have become prevalent among NGOs. Firm checks are mandatory, for
minimizing such illicitness and preventing abuse of resources. With complete financial
planning, coordination and control, these issues can be easily addressed.

 Making productive decisions: With sound financial management, NGOs can make more
productive decisions concerning resource allocation, fund raising, fund mobilizing and
other undertakings. Good decision making skill enables right amount of funds to be
invested at the right place. Funds are therefore efficiently and optimally utilized.

 Achieving objectives: Every NGO is guided by certain policies and procedures, which are
related to its overall objectives. Each decision that is undertaken by the authority is driven
towards successful achievement of its set goals and objectives. Without organizing finance,
it will be difficult for the organization and its employees to reach its aim and fulfill purpose
of its existence.

 Enhancing credibility: Managing finance is a matter of skills and tactics that ideally
changes from time to time. With excellent finance management, NGOs enhance their image
that enhances its value and making them more credible. By framing well defined financial
plans and policies NGOs also earn good reputation within its community. They can also
improve their current position and look forward to gain trust, faith and reliability.

 Strengthening fundraising efforts: Most of the NGOs solely survive on its funds. Well
organized financial resources help in strengthening fundraising efforts by giving an overall
idea about available finance and the amount of finance that needs to be accumulated. Thus,
employees get a fair idea regarding the expected amount and plan their fundraising ventures
accordingly.

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Process for developing Financial Policy of an NGO

Developing a financial policy is a matter of time, effort and resources. Depending on the size of
your NGO, the time required for developing a policy may vary and may take anything between ten
days to few months. Once the first draft of the policy document is ready, it is it is reviewed and re-
assessed to make it relevant to NGOs overall mission and vision statement.

The policy is generally developed though a series of brainstorming sessions where board members,
senior team members discuss and formulate the policy.
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Ideally, financial policies are developed in the following stages:

 Assessing the need: The very first step in making a policy is to understand its purpose.
NGOs need to address specific needs or objectives while making financial policies.
Identifying the purpose will give a strong foundation and base to overall policy
development. Therefore, it is the most significant stage in the policy making procedure.

 Identifying key roles & responsibilities: Once you the purpose of the policy, it is time to
define important roles and responsibilities according to expertise. At this stage, key
members are designated in their respective positions. Responsibilities are delegated to
individuals, groups, sub-committees or working group, depending on organizational
structure and functioning. Disseminating key roles also help in identifying important
individuals/group, which shall be responsible for various aspects of financial management.
It also helps in categorizing scope of financial tasks and activities and the lead person
behind it.

 Gathering Information: While developing the policy you will need information related to
financial resources, assets and other available sources of financial data. All such data
should be accumulated, analyzed and then be used for framing initial policy content. It is
best to gather whatever information is available from the market and then classify. By
doing so, it will give a reflection of environment, factors and other features which might
affect or help in making financial policy for a Non-Governmental Organization.

 Drafting policy: While many NGOs do the initial draft in pen and papers, others prefer
doing in word doc. No matter which mode you opt, you need to be careful while choosing
the words, language, length, complexity, style and tone. Words must be simple, without any
jargons. Do not complicate the document that it is difficult to understand and implement its
clauses. For a policy to be fair, realistic and acceptable, it is important to have a structured
approach.
 Consulting with appropriate stakeholders: Stakeholders play a major role in formulating
financial policies of NGOs. After the first draft has been prepared, it is best to involve the
stakeholders since they are the ones, mostly moved by policies. Stakeholders can be anyone
including individuals and organizations that might positively or negatively, directly or
indirectly affect or be affected by the activities stated in the policy package. In ideal
circumstances, stakeholders and policy-makers sit together and discuss about the potential
implications of the financial policy. Based on whether the NGO decides to develop its
internal governance or external policy positions, the appropriate stakeholders are consulted.

 Finalizing/Approving policy: After the stakeholder consultation, there may be certain


changes in the policy document. After incorporating the changes in the policy, the
Management Committee approves the policy. While approving the policy, the management
committee discusses all the aspects of the policy with financial heads to ensure that the
policy will be fruitful and productive in the view of achieving its objectives and meeting its
purpose.

 Considering other procedures/measures: Whether for internal or external policies,


essential procedures need to be developed for providing necessary support. These
procedures are established after considering the need for clear guidance towards
implementing the policy and the responsible people behind the execution. All the
procedure-related decisions, which will further affect the implementation of the policies,
are taken at this stage.

 Implementing: Once steps have been taken the clauses of the policy are communicated
with the target audience. Proper training and guidance is provided to the staff and
volunteers to support and enhance the quality of policy execution. Multi-national NGOs
often conduct conference to spread awareness about their financial policy.

 Monitoring & Reviewing: In order to ensure that policy gets implemented in the best
possible way, constant monitoring, reviewing and revision are done. It is seen that
monitoring systems and reporting modules are accessible and responsive. By establishing
suitable reviewing systems, policy heads can keep a firm check on overall execution of
policy and be sure about its proper functionality. In case it is seen that the policy has
loopholes in certain sections, the same is amended and fine-tuned for best results.
Monitoring and reviewing gives an overall assessment about the ultimate benefits of
framing the policy

Financial Management - Meaning, Objectives and Functions

Meaning of Financial Management

Financial Management means planning, organizing, directing and controlling the financial activities
such as procurement and utilization of funds of the enterprise. It means applying general
management principles to financial resources of the enterprise.

Scope/Elements

Investment decisions includes investment in fixed assets (called as capital budgeting). Investment in
current assets are also a part of investment decisions called as working capital decisions.

Financial decisions - They relate to the raising of finance from various resources which will depend
upon decision on type of source, period of financing, cost of financing and the returns thereby.

Dividend decision - The finance manager has to take decision with regards to the net profit
distribution. Net profits are generally divided into two:

Dividend for shareholders- Dividend and the rate of it has to be decided.

Retained profits- Amount of retained profits has to be finalized which will depend upon expansion
and diversification plans of the enterprise.

Objectives of Financial Management

The financial management is generally concerned with procurement, allocation and control of
financial resources of a concern. The objectives can be-

 To ensure regular and adequate supply of funds to the concern.


 To ensure adequate returns to the shareholders which will depend upon the earning capacity,
market price of the share, expectations of the shareholders.
 To ensure optimum funds utilization. Once the funds are procured, they should be utilized in
maximum possible way at least cost.
 To ensure safety on investment, i.e, funds should be invested in safe ventures so that
adequate rate of return can be achieved.
 To plan a sound capital structure-There should be sound and fair composition of capital so
that a balance is maintained between debt and equity capital.

Functions of Financial Management


Estimation of capital requirements: A finance manager has to make estimation with regards to
capital requirements of the company. This will depend upon expected costs and profits and future
programmes and policies of a concern. Estimations have to be made in an adequate manner which
increases earning capacity of enterprise.

Determination of capital composition: Once the estimation have been made, the capital structure
have to be decided. This involves short- term and long- term debt equity analysis. This will depend
upon the proportion of equity capital a company is possessing and additional funds which have to
be raised from outside parties.

Choice of sources of funds: For additional funds to be procured, a company has many choices like-

 Issue of shares and debentures


 Loans to be taken from banks and financial institutions
 Public deposits to be drawn like in form of bonds.
 Choice of factor will depend on relative merits and demerits of each source and period of
financing.
 Investment of funds: The finance manager has to decide to allocate funds into profitable
ventures so that there is safety on investment and regular returns is possible.
 Disposal of surplus: The net profits decision have to be made by the finance manager. This
can be done in two ways:
 Dividend declaration - It includes identifying the rate of dividends and other benefits like
bonus.

Retained profits - The volume has to be decided which will depend upon expansional, innovational,
diversification plans of the company.

Management of cash: Finance manager has to make decisions with regards to cash management.
Cash is required for many purposes like payment of wages and salaries, payment of electricity and
water bills, payment to creditors, meeting current liabilities, maintainance of enough stock,
purchase of raw materials, etc.

Financial controls: The finance manager has not only to plan, procure and utilize the funds but he
also has to exercise control over finances. This can be done through many techniques like ratio
analysis, financial forecasting, cost and profit control, etc.
INVENTORY

What is Inventory Management?

A Definition of Inventory Management

Inventory management is a component of supply chain management that involves supervising non-
capitalized assets, or inventory, and stock items. Specifically, “inventory management supervises
the flow of goods from manufacturers to warehouses and from these facilities to point of sale.”
Thus, inventory management hinges on detailed records of products or parts as they enter and leave
warehouses and points of sale.

Inventory management is critical to the bottom line because inventory is a major asset that remains
an investment until the products sell. Several costs are tied to inventory management because
businesses must store, track, and insure inventory. Overall, best practices in inventory management
involve sound purchasing plans to guarantee items are available when they are needed without
having too few or too many on hand and the necessary tools for tracking existing inventory.
Methods of Inventory Management

There are two common inventory management strategies: the just in time method and the materials
requirement planning method.

Just In Time Method

The just in time method (JIT) of inventory management involves companies planning to receive
items as they are needed instead of maintaining high levels of inventory. One benefit of this
inventory management method is that companies do not have a great deal of money tied up in
inventory levels; they reduce storage and insurance costs and the cost of liquidating unused
inventory. Another benefit of the just in time method is that companies reduce waste.
Challenges of the just in time method of inventory management come into play when
manufacturers and retailers have to work together to monitor the availability of manufacturing
resources and consumer demand. Just in time inventory management also is considered risky
because companies take a gamble with being unable to fill orders; being out of stock reduces
revenue and may harm customer relations.

Materials Requirement Planning Method

The materials requirement planning method (MRP) of inventory management involves companies
scheduling material deliveries based on sales forecasts. Typically a computer-based inventory
management system, MRP breaks down inventory requirements into planning periods so that
production can be completed efficiently while keeping inventory levels and storage costs at a
minimum. Another benefit of MRP inventory management is that it aids production managers in
planning for capacity needs and allocating production time. One of the most significant
disadvantages of the MRP inventory management method is that the systems often are expensive
and involve a time-consuming implementation period. It also may be challenging for companies to
put quality information into the MRP system to gain accurate forecasts; to reap the full benefits of
MRP inventory management, organizations must be prepared to maintain current and accurate bills
of materials, part numbers, and inventory records.

Inventory Management Best Practices

Companies that continue to rely on manual inventory tracking with spreadsheets run the risk of
data entry errors, shipping mistakes, and lack of inventory knowledge. Thus,
implementing inventory management best practices is important for business success and the
bottom line:

 Determine whether a continuous review system or periodic review system is the best type
of inventory management system for your business

 Implement a cycle counting program after considering counting frequency, counting


strategy, and cycle count management

 Manage your inventory by knowing the inventory levels that are most beneficial to the flow
of your business; track data to make better inventory management decisions

 Implement quality control procedures so that all employees can work toward the same
goals

 Optimize inventory levels to boost efficiency and meet customer demands

 Prepare for growth and implement inventory management best practices that will support
your business goals
Inventory management is critical to a company’s success and bottom line. Determining which
inventory management method is better suited to your business and following through with
inventory management best practices is key to successful inventory management for the long term.

Inventory management is the supervision of non-capitalized assets (inventory) and stock items.

A component of supply chain management, inventory management supervises the flow of goods
from manufacturers to warehouses and from these facilities to point of sale. A key function of
inventory management is to keep a detailed record of each new or returned product as it enters or
leaves a warehouse or point of sale.

The inventory management process

Inventory management is a complex process, particularly for larger organizations, but the basics
are essentially the same regardless of the organization's size or type. In inventory management,
goods are delivered into the receiving area of a warehouse in the form of raw materials or
components and are put into stock areas or shelves.

Compared to larger organizations with more physical space, in smaller companies, the goods may
go directly to the stock area instead of a receiving location, and if the business is a wholesale
distributor, the goods may be finished products rather than raw materials or components. The
goods are then pulled from the stock areas and moved to production facilities where they are made
into finished goods. The finished goods may be returned to stock areas where they are held prior to
shipment, or they may be shipped directly to customers.

Inventory management uses a variety of data to keep track of the goods as they move through the
process, including lot numbers, serial numbers, cost of goods, quantity of goods and the dates
when they move through the process.Inventory management software systems

Inventory management software systems generally began as simple spreadsheets that tracked the
quantities of goods in a warehouse, but have become more complex. Inventory management
software can now go several layers deep and integrate with accounting and ERP systems. The
systems keep track of goods in inventory, sometimes across several warehouse locations. The
software also calculates the costs -- often in multiple currencies -- so that accounting systems
always have an accurate assessment of the value of the goods.

Inventory management

Some inventory management software systems are designed for large enterprises, and they may be
heavily customized for the particular requirements of those organizations. Large systems were
traditionally run on premises, but are now also deployed in public cloud, private cloud and hybrid
cloud environments. Small and midsize companies typically don't need such complex and costly
systems, and they often rely on stand-alone inventory management products, generally
through SaaS applications.

Inventory management techniques

Inventory management uses several methodologies to keep the right amount of goods on hand to
fulfill customer demand and operate profitably. This task is particularly complex when
organizations need to deal with thousands of stockkeeping units (SKUs) that can span multiple
warehouses. The methodologies include:
What software systems does your company use for inventory management?

 Stock review, which is the simplest inventory management methodology and is generally
more appealing to smaller businesses. Stock review involves a regular analysis of stock on
hand versus projected future needs. It primarily uses manual effort, although there can be
automated stock review to define a minimum stock level that then enables regular inventory
inspections and reordering of supplies to meet the minimum levels. Stock review can
provide a measure of control over the inventory management process, but it can be labor-
intensive and prone to errors.

 Just-in-time (JIT) methodology, in which products arrive as they are ordered by


customers, and which is based on analyzing customer behavior. This approach involves
researching buying patterns, seasonal demand and location-based factors that present an
accurate picture of what goods are needed at certain times and places. The advantage of JIT
is that customer demand can be met without needing to keep quantities of products on hand,
but the risks include misreading the market demand or having distribution problems with
suppliers, which can lead to out-of-stock issues.

 ABC analysis methodology, which classifies inventory into three categories that represent
the inventory values and cost significance of the goods. Category A represents high-value
and low-quantity goods, category B represents moderate-value and moderate-quantity
goods, and category C represents low-value and high-quantity goods. Each category can be
managed separately by an inventory management system, and it's important to know which
items are the best sellers in order to keep quantities of buffer stock on hand. For example,
more expensive category A items may take longer to sell, but they may not need to be kept
in large quantities. One of the advantages of ABC analysis is that it provides better control
over high-value goods, but a disadvantage is that it can require a considerable amount of
resources to continually analyze the inventory levels of all the categories.

Inventory control is the area of inventory management that is concerned with minimizing the total
cost of inventory, while maximizing the ability to provide customers with products in a timely
manner. In some countries, the two terms are used as synonyms.
COMPANY PROFILE
ITC Ltd (ITC) was incorporated on August 24, 1910, under the name Imperial Tobacco
Company of India Ltd. to make cigarettes and tobacco. In 1975, the company entered
the hospitality business with the acquisition of ITC-Welcome group Hotel Chula. the
name of the Company was changed to I.T.C. Limited in 1974. In recognition of the
Company's multi-business portfolio encompassing a wide range of businesses -
Cigarettes & Tobacco, Hotels, Information Technology, Packaging, Paperboards &
Specialty Papers, Agri-Exports, Foods, Lifestyle Retailing and Greeting Gifting &
Stationery - the full stops in the Company's name were removed effective September
18, 2001. The Company now stands rechristened 'ITC Limited'.

ITC is one of India's foremost private sector companies with a market capitalization of
nearly US $ 14 billion and a turnover of over $ 5 billion. ITC is rated among the
World's Best Big Companies, Asia's 'Fab 50' and the World's Most Reputable
Companies by Forbes magazine, among India's Most Respected Companies by
BusinessWorld and among India's Most Valuable Companies by Business Today. ITC
ranks among India's `10 Most Valuable (Company) Brands', in a study conducted by
Brand Finance and published by the Economic Times. ITC also ranks among Asia's 50
best performing companies compiled by Business Week.

ITC has a diversified presence in Cigarettes, Hotels, Paperboards & Specialty Papers,
Packaging, Agri-Business, Packaged Foods & Confectionery, Information Technology,
Branded Apparel, Personal Care, Stationery, Safety Matches and other FMCG
products. While ITC is an outstanding market leader in its traditional businesses of
Cigarettes, Hotels, Paperboards, Packaging and Agri-Exports, it is rapidly gaining
market share even in its nascent businesses of Packaged Foods & Confectionery,
Branded Apparel, Personal Care and Stationery. As one of India's most valuable and
respected corporations, ITC is widely perceived to be dedicatedly nation-oriented.

ITC's Agri-Business is one of India's largest exporters of agricultural products. ITC is


one of the country's biggest foreign exchange earners ( $ 3.2 billion in the last decade).
The Company's 'e-Choupal' initiative is enabling Indian agriculture significantly
enhance its competitiveness by empowering Indian farmers through the power of the
Internet. This transformational strategy, which has already become the subject matter of
a case study at Harvard Business School, is expected to progressively create for ITC a
huge rural distribution infrastructure, significantly enhancing the Company's marketing
reach.

ITC's wholly owned Information Technology subsidiary, ITC Infotech India Ltd,
provides IT services and solutions to leading global customers. ITC Infotech has carved
a niche for itself by addressing customer challenges through innovative IT solutions.

Its beginnings were humble. A leased office on Radha Bazar Lane, Kolkata, was the
centre of the Company's existence. The Company celebrated its 16th birthday on
August 24, 1926, by purchasing the plot of land situated at 37, Chowringhee, (now
renamed J.L. Nehru Road) Kolkata, for the sum of Rs 310,000. This decision of the
Company was historic in more ways than one. It was to mark the beginning of a long
and eventful journey into India's future. The Company's headquarter building, 'Virginia
House', which came up on that plot of land two years later, would go on to become one
of Kolkata's most venerated landmarks. The Company's ownership progressively
Indianised, and the name of the Company was changed to I.T.C. Limited in 1974. In
recognition of the Company's multi-business portfolio encompassing a wide range of
businesses - Cigarettes & Tobacco, Hotels, Information Technology, Packaging,
Paperboards & Specialty Papers, Agri-Exports, Foods, Lifestyle Retailing and Greeting
Gifting & Stationery - the full stops in the Company's name were removed effective
September 18, 2001. The Company now stands rechristened 'ITC Limited'.

Though the first six decades of the Company's existence were primarily devoted to the
growth and consolidation of the Cigarettes and Leaf Tobacco businesses, the Seventies
witnessed the beginnings of a corporate transformation that would usher in momentous
changes in the life of the Company.

ITC's Packaging & Printing Business was set up in 1925 as a strategic backward
integration for ITC's Cigarettes business. It is today India's most sophisticated
packaging house.

In 1975 the Company launched its Hotels business with the acquisition of a hotel in
Chennai which was rechristened 'ITC-Welcomgroup Hotel Chula'. The objective of
ITC's entry into the hotels business was rooted in the concept of creating value for the
nation. ITC chose the hotels business for its potential to earn high levels of foreign
exchange, create tourism infrastructure and generate large scale direct and indirect
employment. Since then ITC's Hotels business has grown to occupy a position of
leadership, with over 100 owned and managed properties spread across India.

ITC's foray into the marketing of Agarbattis (incense sticks) in 2003 marked the
manifestation of its partnership with the cottage sector. ITC's popular agarbattis brands
include Spriha and Mangaldeep across a range of fragrances like Rose, Jasmine,
Bouquet, Sandalwood, Madhur, Sambrani and Nagchampa.

ITC introduced Essenza Di Wills, an exclusive range of fine fragrances and bath &
body care products for men and women in July 2005. Inizio, the signature range under
Essenza Di Wills provides a comprehensive grooming regimen with distinct lines for
men (Inizio Homme) and women (Inizio Femme). Continuing with its tradition of
bringing world class products to Indian consumers the Company launched 'Fiama Di
Wills', a premium range of Shampoos, Shower Gels and Soaps in September, October
and December 2007 respectively. The Company also launched the 'Superia' range of
Soaps and Shampoos in the mass-market segment at select markets in October 2007
and Vivel De Wills & Vivel range of soaps in February and Vivel range of shampoos in
June 2008.

Mile Stone
 ITC was incorporated on August 24, 1910 under the name of 'Imperial
Tobacco Company of India Limited'

 In 1975 through its acquisition of a hotel in Chennai , the company launched


its hotel business by the name 'ITC-Welcomgroup Hotel Chula'.

 In 1979 it entered into manufacturing paperboards, packaging & printing


business.

 In 1985 it set up Surya Tobacco Co. in Nepal, now a subsidiary of ITC.

 In 1990 ITC set up the Agri Business Division for export of agri-commodities
based on partnership with farmers, for revolutionizing the rural agricultural
sector.

 In 2000, ITC launched a line of greeting cards under the brand name
‘Expressions’. There has been further extension in productline with
introduction of gift wrappers, autograph books slam books and stationery.
 In 2000, it entered in lifestyle retailing business with the Wills Sport, a range
of international quality wear for men and women.

 ITC InfoTech India was set up in 2000 to provide outsourcing solutions to


manufacturing, BFSI (Banking, Financial Services & Insurance), CPG&R
(Consumer Packaged Goods & Retail), THT (Travel, Hospitality and
Transportation) and media & entertainment.

 ITC entered food business in 2001, its product line in this segment consist of
brands 'Kitchens of India', ‘Aashirvaad atta’, ‘Candyman’, ‘Sunfeast’ &
‘Bingo!’.

 In 2002 it entered in marketing of matches, ITC now markets popular safety


matches brands like iKno, Mangaldeep, Aim, Aim Mega and Aim Metro.

 In 2003 ITC's forayed into the marketing of Agarbattis (incense sticks),


creating brands like Mangaldeep, Spriha, Aim Metro and so on.

 ITC introduced Essenza Di Wills, an exclusive range of fine fragrances and


bath & body care products for men and women in July 2005.

 The Company also launched the 'Superia' range of Soaps and Shampoos in the
mass-market segment at select markets in October 2007 and Vivel De Wills &
Vivel range of soaps in February and Vivel range of shampoos in June 2008.

 In 2013- ITC Hotels tied up with RP Group Hotels & Resorts to manage 5
hotels in India and Dubai, under ITC Hotels’ 5-star ‘WelcomHotel’ brand and
the group’s mid-market to upscale ‘Fortune’ brand.

 Chairman Mr. Y C Deveshwar was presented the Lakshmipat Singhania-IIM


Lucknow National Leadership Award by Shri M
Hamid Ansari, Hon'ble Vice President of India.
 ITC’s Chief Financial Officer, Mr Rajiv Tandon, was ranked the ‘Best
Overall CFO’ at the ‘Business Today-Yes Bank Best CFO Awards 2013’. He
was also declared the winner in the category of ‘Sustained Wealth Creation
(large companies)’.

 ITC was ranked 3rd in Corporate Reputation among 40 leading companies in


the Nielsen Corporate Image Monitor 2013-14. ITC was also perceived to be
the ‘Company most active in CSR' for the third year in a row.

Future Prospects
As a Company deeply rooted in India's soil, ITC is inspired by the opportunity to
serve a larger national purpose and create enduring value for its stakeholders. This
abiding vision has spurred innovation, creativity and vitality to ensure a substantial
and growing contribution to the Indian Economy, whilst simultaneously contributing
significantly to enhancing environmental capital and sustainable livelihoods.

ITC’s unique and multi-faceted enterprise strengths including deep consumer


insights, brand building capability, cutting-edge Research & Development, globally
benchmarked manufacturing infrastructure, agri-sourcing advantages and extensive
rural linkages, trade marketing & distribution network, committed

and competent human resources, constitute a robust and formidable foundation that
has enabled the Company to create multiple drivers of growth in its

chosen portfolio of businesses that spans FMCG, Hotels, Paperboards and


Packaging, Agri-Business and Information Technology. These enterprise strengths
coupled with the opportunities arising out of rising disposable incomes, urbanization,
a favorable demographic dividend and growth in rural areas provide competitiveness
to ITC’s strategy of creating enduring value for its stakeholders and the nation. ITC
continues to blend its diverse competencies

residing in various businesses to enhance the competitive power of the portfolio and
position each business to attain leadership on the strength of

world-class standards in quality and costs. The Company has also crafted an
effective strategy of organization and governance processes to not only

enable focus on each business but also harness the diversity of its portfolio to create
unique sources of competitive advantage. ITC’s Foods business, for example, gains
competitive advantage from enterprise synergies existing in ITC

e-Chou pal’s agri-sourcing capabilities, cuisine expertise of its Hotels business,


brand building capabilities, in-house packaging competencies as well

as an unmatched distribution network

Nature Of Business
As a Company deeply rooted in India's soil, ITC is inspired by the opportunity to
serve a larger nationalpurpose and create enduring value for its stakeholders. This
abiding vision has spurred innovation,creativity and vitality to ensure a substantial
and growing contribution to the Indian Economy, whilstsimultaneously contributing
significantly to enhancing environmental capital and sustainable livelihoods.

The Company’s strategic intent to create enduring value by investing in new engines
of growth is powered by its
strong and competitive capabilities in R&D, innovation and technology and an array
of institutional strengths including

deep consumer insights, brand building capability, trade marketing and distribution
infrastructure, focus on quality

and world-class manufacturing practices, strong rural linkages and outstanding


human resources.

ITC endeavours to embed the principles of sustainability, as far as practicable, into


the various stages of product or service life-cycle, including procurement of raw
material/service, manufacturing of product or delivery of service, transportation of
raw materials and finished goods, and disposal by consumers. The Board approved
policy on “Life-cycle Sustainability” details the Company’s approach in this respect.
Further details on this Policy can be accessed from the ITC portal –
www.itcportal.com and will be available in the ITC Sustainability Report 2014.
Delivering best-in-class quality of goods and services forms the bedrock of ITC’s
pursuit of sustainable value creation. This commitment to excellence in quality is
manifest in its portfolio of world-class brands, and is driven by unwavering attention
to efficiency of design, processes, sourcing and distribution in order to provide
superior and differentiated offerings to customers.

Product Profile
Businesses Products / Services
FMCG: Branded Packaged Foods Businesses (Bakery and
Confectionery Foods; Snack Foods; Staples, Spices
and
Ready to Eat Foods); Apparel; Education and
Stationery
Products; Personal Care Products; Safety Matches and
Agarbattis; Cigarettes, Cigars, Smoking Mixtures etc.

Hotels: Hoteliering.

Paperboards, Paper & Packaging: Paperboards, Paper including Specialty Papers &
Packaging including Flexibles.

Agri Business: Agri-commodities such as soya, spices, coffee and


leaf tobacco.

Locations where business activities The Company’s businesses and operations are spread
are undertaken by the Company: across the country. Details of plant locations, hotels
owned / operated by the Company, stores etc. are
provided in the section, ‘Report on Corporate
Governance’, in the Report and Accounts.

Markets served by the Company: ITC’s products and services have a national presence
and many products are exported to a numb countries.

Background

LISTING DETAILS

Corporate Identity Number (CIN) L16005WB1910PLC001985


of the Company:
Name of the Company: ITC Limited
Address of the Registered Office: Virginia House, 37 J L Nehru
Road, Kolkata 700 071
Website: www.itcportal.com
E-mail id: ccd@itc.
BSE Code 500875
NSE Symbol ITC
ISIN NO INE154A01025
Face Value 1
Listing BSE,NSE,Kolkata
BSE Group A
Indices SENSEX, BSE100, BSE200,
BSE500,
BSEFMC, GREENEX,
CARBONEX ,
NIFTY, CNX500,
CNX100,CNXFMCG,
CNXCONSUMP,
CNXDIVOPPT,
CNXLOWVOL, NI15
Contact details
Address Virginia House,37 Jawaharlal
Nehru
Road, Kolkata,West Bengal-
700071 .
Phone No 91-033-22889371/22886426
/22880034 (Phone)
Fax 91-033-22882358 (Fax)
Email ID isc@itc.in
Website www.itcportal.com
Register’s Details

Registrar ITC Ltd.


Registrar's Office Virginia House,37 Jawaharlal
Nehru
Road, ,Kolkata 700071
Registrar Phone 033-2288 9371 / 2288 6426 /
2288
0034 (Phone)
Registrar Fax 033-2288 2358 (Fax)
Registrar Email Id isc@itc.in
Registrar Website www.itcportal.com

Board of Directors

Chairman:
Yogesh Chander Deveshwar
Nakul Anand
Pradeep Vasant Dhobale
Kurush Noshir Grant

Executive Directors:
Anil Baijal
Angara Venkata Girija Kumar
Serajul Haq Khan
Robert Earl Lerwill
Suryakant Balkrishna Mainak
Sunil Behari Mathur
Pillappakkam Bahukutumbi Ramanujam
Sahibzada Syed Habib-ur-Rehman
Anthony Ruys
Meera Shankar
Krishnamoorthy Vaidyanath

Non-Executive Directors:
Corporate Management
Committee

Executive Directors:
Y C Deveshwar Chairman
N Anand Member
P V Dhobale Member
K N Grant Member
Executives
A Nayak Member
T V Ramaswamy Member
S Sivakumar Member
K S Suresh Member
R Tandon Member
B B Chatterjee Member & Secretary
Chief Financial Officer:
Rajiv Tandon

Executive Vice President & Company Secretary:

Biswa Behari Chatterjee

General Counsel:
Kannadiputhur Sundararaman Suresh

Auditors
M/s. Deloittee Haskins & Sells, Chartered Accountant, the Statutory Auditors of the
company retire at the ensuring Annual General Meeting and ate eligible for re-
appointment. They have furnished a certificate regarding their eligibility for re-
appointment as Statutory Auditors of the Company, pursuant to Section 224(1B) of
the company Act,1956. Observations Made in the Auditors Report are self-
explanatory and therefore, do not call for any further comment.

Share Pattern
Tabal1.8No. of %
(A)Institutional No. of Shares held %
Shareholding

Financial Institutions, 2,75,77,23,494 34.68


Insurance Companies, Mutual
Funds and Banks

Foreign Institutional Investors 1,53,21,06,319 19.26

Sub-Total (A) 4,28,98,29,813 53.94

(B)Non-Institutional
Shareholding

Foreign Companies 2,41,35,09,216 30.35

NRIs, Foreign Nationals and 4,24,31,363 0.53


Qualified Foreign Investment

Bodies Corporate 35,40,95,975 4.45

Public and Others 83,25,34,963 10.47

Sub-Total (B) 3,64,25,71,517 45.80

Public Shareholding (A+ B) 7,93,24,01,330 99.74

Shares underlying Global 2,07,81,620 0.26


Depository Receipts

Total 7,95,31,82,950 100.00


OBJECTIVES OF THE STUDY

1. To know the causes of the financial analysis of ITC Ltd.

2. To know the solvency ratio in ITC Ltd.in last 5 year

3. To know about the value added per employee in ITC Ltd.

4. To know about the Performance Highlights of ITC Ltd..


RESEARCH METHODOLOGY

The report is the result of a survey which was undertaken in working capital of ITC Ltd.. The
objectives of the project has been fulfilled by getting response from the Employee's associated to
these segments through a personal interview in finance department. The responses available
through the balance sheet and personal interview are used to evaluate the working capital
management of the company.

THE RESEARCH PROBLEM

The problem formulation is the first step to a successful research process. The summer training
undertaken the problem of analyzing the trend analysis of working capital management of ITC
Ltd.and to find out the ratio analysis of company.

THE RESEARCH DESIGN

The research design used in the project is Descriptive Research. The investigation
is carried upon the financial analysis of ITC Ltd.in Lucknow. The reason for choosing this design
is to get responses from the company’s Balance sheet.

COLLECTION OF DATA

The data has been taken from secondary source

 Secondary data source

Secondary data was collected from following sources

Balance sheet

Websites
Books

Personal consultation

THE AREA OF WORK

The field work is conducted in the ITC Ltd. in financial department Lucknow .

THE ANALYTICAL TOOLS USED

The analytical tools used are mostly graphical in nature which include

 Bar Charts

 Tables showing percentage


ANALYSIS OF BALANCE SHEET

Balance Sheet of Torrent Power Limited From March-2010 toMarch-2014.

Table 2.1

Year End 2009-2010 2010-2011 2011-2012 2012-2013 2013-2014

SOURCE OF FUND
Shareholder’s Funds

Share capital 381.82 773.81 781.84 790.18 795.32

Total Reserve 13682.56 15179.46 18010.05 21497.67 25466.70

14064.38 15953.27 18791.89 22287.85 26262.02

Loan Fund

Secured Loan - 1.94 77.32 66.40 51.00

Unsecured Loan 107.71 97.26 1.77 - 0.14

Deferred Tax-Net 785.01 801.85 872.72 1203.72 1296.96

14957.10 16854.32 19743.07 23557.97 27610.12

APPLICATION OF FUNDS

Fixed Assets

Gross Block 11967.86 12765.82 16072.58 18061.18 20448.54

Less Depreciation 3825.46 4420.75 4819.66 5469.83 6226.91

Net Block 8142.40 8345.07 11252.92 9529.83 14221.63

Capital Work in Process 1008.99 1333.40 2269.26 1472.80 2272.94

9151.39 9678.47 13522.18 11002.63 16494.57


Investment 5726.87 5554.66 6316.59 7060.29 8823.43

Current Assets, Loan and Advances

Inventories 4549.07 5267.53 5637.83 6600.20 7359.54

Sundry Debtors(Debtors) 858.80 907.62 986.02 1163.34 2165.36

Cash and Bank 1126.28 2243.24 2818.93 3615.00 3289.37

Other Current Assets 288.39 347.49 136.89 641.36 1019.69

Loans and Advances 1304.54 1418.09 1694.02 2240.11 2263.53

8127.08 10183.97 11273.69 14260.01 16097.49

Less: Current Liabilities and


Provisions

Current Liabilities 3498.30 4457.94 3386.79 3531.73 3636.97

Provisions 4549.94 4104.84 4411.07 5258.75 5994.71

8048.24 8562.78 7797.86 8790.48 9631.68

Net Current Assets 78.84 1621.19 3475.83 5469.53 6465.81

14957.10 16854.32 19743.07 23557.97 27610.12


TREND ANALYSIS OF BALANCE SHEET

Table 2.2

Year End 2009-2010 2010-2011 2011-2012 2012-2013 2013-2014

SOURCE OF FUND
Shareholder’s Funds

Share capital 100.00 202.66 101.04 101.07 100.65

Total Reserve 100.00 110.94 118.65 119.36 118.46

113.43 117.79 118.60 117.83

Loan Fund

Secured Loan 100.00 - 3985.57 85.88 76.81

Unsecured Loan 100.00 90.30 1.82 - 0.13

Deferred Tax-Net 100.00 102.15 108.84 137.92 107.74

112.68 117.14 119.32 177.20

APPLICATION OF FUNDS

Fixed Assets

Gross Block 100.00 106.67 125.90 112.37 113.22

Less Depreciation 100.00 115.56 109.02 113.49 113.84

Net Block 100.00 102.50 134.85 84.69 149.23

Capital Work in Process 100.00 132.15 170.19 64.90 154.33

105.76 139.71 81.37 149.91

Investment 100.00 96.99 113.72 111.77 124.97


Current Assets, Loan and Advances

Inventories 100.00 115.79 107.03 117.07 111.51

Sundry Debtors(Debtors) 100.00 105.68 108.63 117.98 186.13

Cash and Bank 100.00 199.17 125.66 128.24 90.99

Other Current Assets 100.00 120.49 39.40 456.52 158.99

Loans and Advances 100.00 108.70 119.46 132.23 101.05

125.30 110.70 126.49 112.86

Less: Current Liabilities and


Provisions

Current Liabilities 100.00 127.43 75.97 104.28 102.98

Provisions 100.00 90.22 107.46 119.22 113.99

106.39 91.07 112.73 109.57

Net Current Assets 100.00 2056.30 214.40 157.36 118.22

Tootle
Interpretation:

share capital contribution to the total fund has constant same from last three year. In only 2011 not
same.

company not issuing any more shares to increase share capital from last three year.

So we can say that company should maintain it in a good position to meet its future requirements.

Total Reserve
Interpretation:

Total Reserve contribution to the total fund has to be constant increasing from 2009-10 To 2012-13
but 2013-14 decreasing.

company is good in position to expand their business and

Come out company’s debts.

WE can see, company has good reserve for surviving in future situation .

Secured Loan

Interpretation:

Secured loan have been increasing in year 2011-12 and then after it is more decreasing.

It shown to be company used it more in the recession time to recovers its profit and position.
Unsecured Loan

Interpretation:

Hear we can see that from 2009-10 company was decreasing their Unsecured Loan. And it shown
decreasing more in two year. It shown to be good that the company has decreasing their debts.

But in the current year company decreasing. It is sing not good credit and financial position but for
long run it will good for company.
Capital Work in Process

Interpretation:

Capital work in Process is increasing or after decreasing and remain in current year at good level

Capital in process is more it good for company decrease their capital in compare last four years
Investment

Interpretation:

By seeing in the above graph it is Proved to be that the company invests high in years 2013-14
compared to the all previous years because of recession time the company need to recover its profit
by outside income .interest achieving it by investing more in the profitability areas.
Vertical Anal Isis Of Balance-Sheet

Table 2.3

Year End 2009-2010 2010-2011 2011-2012 2012-2013 2013-2014


SOURCE OF FUND
Shareholder’s Funds
Share capital 2.5527675 4.5911671 3.9600730 3.3541939 2.8805380
Total Reserve 91.478695 90.062725 91.222135 91.254339 92.236832
82 31 79 31 06
94.031463 94.653892 95.182208 94.608533 95.117370
74 76 16 83
Loan Fund
32 89 24 76 01
Secured Loan 0 0.0115104 0.3916310 0.2818579 0.1847148
Unsecured Loan 0.7201262 0.5770627 0.0089651 0 0.0005070
02 89 02 8
Deferred Tax-Net 5.2484104 4.7575339 4.4203864 5.1096083 4.6974080
28 35 71 6
100 100 100 100 100
54 73 95 41 52
APPLICATION OF FUNDS
Fixed Assets 80.014575 75.742124 81.408717 76.666962 74.061757
Gross Block 25.576214 26.229180 24.411907 23.218596 22.552998
02 27 08 39 07
Less Depreciation 54.438360 49.512943 56.996809 40.452679 51.508758
64 41 57 51 68
Net Block 6.7458932 7.9113248 11.493957 6.2518120 8.2322713
38 86 51 07 38
Capital Work in Process 61.184253 57.424268 68.490766 46.704491 59.741029
55 12 12 19 56
38.288638 32.956891 31.993960 29.969857 31.957231
63 67 63 09 74
Investment
84 76 41 33 62
Current Assets, Loan and Advances 30.414117 31.253292 28.555994 28.016845 26.655226
Inventories 5.7417547 5.3850882 4.9942587 4.9382013 7.8426316
71 92 58 25 42
Sundry Debtors(Debtors) 7.5300693 13.309584 14.278073 15.345125 11.913638
52 15 45 82 15
Cash and Bank 1.9281144 2.0617266 0.6933572 2.7224756 3.6931748
32 72 27 24 91
Other Current Assets 8.7218779 8.4138072 8.5803271 9.5089262 8.1981896
07 08 13 63 21
Loans and Advances 54.335934 60.423499 57.102010 60.531573 58.302861
04 61 73 78 49
1 73 98 82 41
Less: Current Liabilities and 23.388892 26.449836 17.154323 14.991656 13.172597
Current Liabilities 30.419934 24.354824 22.342371 22.322594 21.712002
Provisions 23 01 01 75 58
Provisions 53.808826 50.804660 39.496694 37.314250 34.884600
35 16 27 01 7
0.5271075 9.6188395 17.605316 23.217323 23.418261
58 17 28 76 28
Net Current Assets 100 100 100 100 100
28 62 7 05 13
Share Capital

Interpretation:

share capital contribution to the total fund has to be increased in year 2011 to compare 2010.But
after year 2011 Share capital decreased to year 2014.

The company should maintain it in a good poison to meet its future requirements and also to
recover its loser in the current depression situation.
Total Reserve

Interpretation:

As per the above details we can see here that the reserves are decreased in year 2011 to compare
2010. Constantly increased in 2012 to 2014.

The Company should maintain it because it will helps to the company to carry on its business in
recession time also.
Secured Loan

Interpretation:

Secured loan is increased very more in year 2012 to compare last 2 year. And 2013-14 decreased
to compare 2012.

It shows that the company not uses it on the basis of changes occurred in the market like current
position of the market is being a recession period so, they have to increased its loan by securing or
mortgaging the items.
Unsecured Loan

Interpretation:

As shown above chart unsecured loan who high in the year 2010 and after decreging year by year
constantly it shows company better position company should reduce their debts or short turn loans
and create more cash show company in good position to decrease the unsecured loan
Investment

Interpretation:

As seen above Graph an investment who high in 2011 and after decreasing constantly to 2014 it’s
create bed reputation in market and company have not more investment so in emergency company
loss his business and it not good sign for the company.
Horizontal Analysis Of Balance Sheet.

Year End 2009-2010 2010-2011 2011-2012 2012-2013 2013-2014

SOURCE OF FUND

Shareholder’s Funds

Share capital 100 102.66 1.03 1.06 0.65

Total Reserve 100 10.94 18.64 19.36 18.46

100 13.43 17.79 18.6 17.83

Loan Fund

Secured Loan 100 0 38.85 -14.12 -23.19

Unsecured Loan 100 -9.7 -98.18 0 0

Deferred Tax-Net 100 2.14 8.83 37.92 7.74

100 12.68 17.13 19.32 17.2

Interpretation:

Total reserve contribution to the total fund has to be decreasing in 2013-14 but not decreasing more
as compare to last year

We can see, company has good reserve for surviving in future situation.

Secured loan have been decreased for successive years it shown to be that company used its capital
to recover its profit and potion.
Horizontal Analysis Of Balance sheet

Table 2.4.2

Year End 2009-2010 2010-2011 2011-2012 2012-2013 2013-2014

APPLICATION OF FUNDS

Fixed Assets

Gross Block 100 6.66 25.9 12.37 13.21

Less Depreciation 100 15.56 9.02 13.48 13.84

Net Block 100 2.48 34.84 -15.31 49.23

Capital Work in Process 100 32.15 70.18 -35.09 54.32

100 5.75 39.71 -18.63 49.91

Investment 100 -3 13.71 11.77 24.97

Current Assets, Loan and


Advances

Inventories 100 15.79 7.02 17.06 11.5

Sundry Debtors(Debtors) 100 5.68 8.63 17.98 86.13

Cash and Bank 100 99.17 25.66 28.24 -0.9

Other Current Assets 100 20.49 -60.6 36.85 58.98

Loans and Advances 100 8.7 19.45 32.23 1.04

100 25.3 10.7 26.48 12.88

Less: Current Liabilities and


Provisions
Current Liabilities 100 27.43 -24.02 4.27 2.97

Provisions 100 -9.78 7.46 19.21 13.99

100 6.39 -8.93 12.72 9.56

Net Current Assets 100 19.56 114.39 57.35 18.21

100 12.68 17.13 19.32 17.2

Interpretation:

Here we can see that in compare of year 2010-11 company’s assets increasing more as compare to
last five year. Its means company is performing well to increasing their assets in currents year

Company investment decreasing in current year as compare to last year

Technical Analysis and Charts of ITC Ltd

Sector Share Price Previous Beta Average NSE BSE BSE NSE Futures
Price Change Close Volume Code Code Index Index and
options

Itc limited 364.10 -7.60 / 371.70 0.46 5919.60 ITC 500875 BSE Nifty Yes F&O
-2.04% K 30 50 list
Pivot Point - Intra-Day Support & Resistance

Pivot Support1 Support2 Support3 Resistance1 Resistance2 Resistance3 What Pivot


Point is Point
Pivot of
Point other
Stocks

366.28 360.37 356.63 350.72 370.02 375.93 379.67 Learn Pivot


Pivot Point
Point List
Oscillators & Volume Indicators

Name Value

Stochastic D Fast 78.17

Stochastic K Fast 65.71

Stochastic D Slow 79.95

Relative Strength Index (RSI) (14 63.31


day)

Williams %R -34.29

Rate of Change 3.31

Price Volume Trend 12431200.00

Money Flow Index 61.85

Aroon Up 0.00

Aroon Down 44.00

Ultimate Oscillator 57.32

Average True Range 7.29

On Balance Volume 1089330000.00

Accumulation Distribution 200774000.00


Indicators For I T C Ltd.

Name Value

MACD (26d ,12d) 1.09

Signal Line -0.42

Macd Above Signal Line True

Macd/Signal Line trend days 4

Macd Above Zero Line True

Macd/Zero Line trend days 2

Bollinger Band Upper 368.56

Bollinger Band Middle 355.54

Bollinger Band Low 342.52

Average Directional Index 19.29

ADX +DI 26.14

ADX –DI 13.52

Chaikin Money Flow 0.07

Interpretation:

In technical analysis we should look price and volume of the company at which level we should
hold the shares and which level we should sell the share. In chart ware the price line shown and a
volume line shown in which the current market price which helps us to decide future movement of
share or company price as ware a price and volume line intersect in increase level we got profit
when sell our shares. And when line intersects decrease level we should purchase share and hold
the share.
PROFIT & LOSS STATEMENT

P & L Statement of ITC Limited from March-2010 to March-2014.

Table 3.1

2010 2011 2012 2013 2014

Gross Income 26862.98 31423.23 36072.59 43044.21 48175.8

Net Income

Gross Sales 26259.6 30604.39 34871.86 41809.82 46712.62

Lees:excise Duties and Taxes 8106.41 9436.81 10073.43 12204.24 13830.06


on Sales of Services

Net Sales 18153.19 21167.58 24798.43 29605.58 32882.56

Other Income 603.38 818.84 1174.37 1234.39 1463.18

18756.57 21986.42 25972.8 30839.97 34345.74

Expenditure

Raw Materials etc. 6971.4 8126.5 7660.91 8936.21 10263.28

change in inventories of 270.55 65.59 246.35 128.41


finished goods,Work-in-capital

Employ benefits Expense 1140.02 1265.41 1387.01 1608.37

Finance costs 68.38 77.92 86.47 2.95

Depreciation 608.71 655.99 655.99 795.56 899.92

Other Expenses 4745.52 5427.26 5820.97 6019.05


Manufacturing,Selling 5161.15 5935.77 2037.21 3375.92 3021.47
etc.Expenses

12741.26 14718.26 17101.63 20155.79 21686.63

Profit

Profit Before Taxation 6015.31 7268.16 8897.53 10684.18 12659.11

Provision for Taxation 1954.31 2280.55 2679.66 2989.06 3873.9

Profit after Taxation 4061 4987.61 6217.87 7695.12 8785.21

Profit Brought Forward 858.14 61.31 70.87 331 82.77

Available for appropriation 4919.14 5048.92 6288.74 8026.12 8867.98

Appropriations

General Reserve 406.1 498.76 1651.62 2143.24 3340.76

Proposed Dividend

Ordinary Dividend 1718.18 2166.68 3518.29 4148.46 4771.91

Income Tax on Proposed


Dividend

Current Year 634.15 558.62 570.75 705.03 810.99

Earlier Year's proposed -0.6 -0.6 (0.59 (0.61 28.68


Dividend

Profit Carried Forward 61.31 548.67 548.67 430.07

4919.14 5048.92 6288.74 8026.12 8867.98


Earnings Per Share (Face
Value Re.1.00 each)

Basic Rs.10.73 Rs.6.49 Rs7.93 Rs9.45 Rs11.09

Diluted Rs.10.62 Rs.6.41 Rs7.84 Rs9.33 Rs11.96

Trend Analysis of P & L Statement

Table 3.2

Particulars 2010 2011 2012 2013 2014

Total revenue 100 117.2198328 118.1311009 118.739489 15.62209764

Total expenses 100 115.9276241 115.6027769 136.4584744 146.822548

Profit before tax 100 120.827688 122.417916 146.9997909 174.1721426

Profit after tax 100 122.8172864 123.5535657 148.7363687 175.5993352

Profit available 100 102.638266 124.5561427 158.9670662 175.6411272


for
appropriation
Total revenue

Interpretation:

Total revenue was increased in year 2011 to year 2014 to compare base year. But in present year
2014 Total Revue is decreased very. So, we can see company is performing not well.
Total Expenses

Interpretation:

Hear we can see that Total expenses is increasing constantly from the 2009-2010 to the 2013-2014.

Company is performing successively decreasing their expenses and earning not good profit
constantly. It is not good for the company.
Profit Before Tax

Profit before tax

180

160

140

120

100
Profit before tax
80

60

40

20

0
1 2 3 4 5

Interpretation:

Profit before Tax has increased in the current year that in compare to base year, because optimum
utilization of assets in generating sales revenue reduction in total cost, increase in market size of
the company, etc. so it is good condition of the company.
Profit after tax

Interpretation:

Profit After Tax has intended to increase throughout analyzes. In the presently financial year
increase in compare of the base year.

We can see that company is performing well and its Profit After Tax become a more than in
compare of base years.
Vertical Analysis of P & L Statement

Table 3.3

Particulars 2014 2013 2012 2011 2010


Total revenue 15.62 118.73 118.13 117.21 100
Total expenses 146.82 136.45 115.60 115.92 100
Profit before tax 174.17 146.99 122.41 120.82 100
Profit after tax 175.59 148.73 123.55 122.81 100
Profit available for appropriation 175.64 158.96 124.55 10ase 100
2.63

Total Revenue

Interpretation:

Hear we can see that Total Revenue is increased after year 2010 but in year 2014 Total Revenue is
decrease.

Company is performing is good but not very well.


Total Expenses

Interpretation:-

Hear we can see that Total expenses is decreasing constantly from the 2009-2010 to the 2013-
2014.Company is performing successively decreasing their expenses and earning good profit
constantly. It is good for the company.
Profit before tax

Interpretation:

Here during the analyzing the data we can see, in compare to total income, profit before tax is
decreasing constantly in compare of base year.

In the year 2013-2014 Profit Before Tax is decreased, its not


Profit available for appropriation

Interpretation:

Hear during the analyzing the data we can see, in compare to total income, Available profit for
appropriation in decreasing in year 2013 and year 2014 to compare last Three year.

It is not good for the company and their investors.


Horizontal Analysis

Particular's 2010 2011 2012 2013 2014


Gross Income 100 16.97 14.79 19.32 11.92
Total Expenses 100 15.51 16.19 17.85 7.59
Profit Before Taxation 100 20.82 22.41 20.08 18.48
Profit after Taxation 100 22.81 24.66 23.75 14.16
Available for appropriation 100 2.63 24.55 27.62 10.48
Proposed Dividend 100 26.1 62.38 17.91 15.03

Interpretation:

Here we can see that total expenditure is decreasing on base of total income.

Expenses are decreasing more from last 4 year.

So, Company have good potion in financial year.

Here during the analyzing the data we can see , in compare to total income available profit for
appropriation in decreasing in 2009-10 in compare of base year and also in current year.
FINANCE STRUCTURE RATIOS

Finance structure ratio indicates the relative mix or blending of owner’s fund and outsider’s
debt funds in the total capital employed in the business. It should be noted that equity funds are the
prime fund, which increases progressively through reinvestment of profits, while outside debt
funds are supplementary funds and are added at the discretion of the management. Management
prefers to choose debt only when it helps in enhancing the earning of equity. The debt funds are
used to generate ROI greater than interest costs on debts, the equity earning is enhanced, but if the
interest costs are higher than ROI, it adversely affects the earning of owner. This ratio is popularly
described as debt equity ratio. Higher debt ratio is (I) good if ROI is greater than interest on debts
and it is (II) bad if ROI is less than interest on debts. Thus, use of debts is considered as a “Double-
Edge” weapon. Some popular finance structure ratios are as under:

5.4.1 Equity Ratios

5.4.2 Debt Ratios

5.4.3 Debt-Equity Ratios

5.4.4 Interest Coverage Ratios

Equity Ratios

Where,

Net Worth = Equity Capital + Reserves – Misc. Expenses.


Total Capital Employed = Net Worth + Long Term Debts.

Particulars Year

2009-10 2010-11 2011-12 2012-13 2013-14

Net Worth 18938.52 21002.19 25080.63 30313.97 35130

Total Capital Employed 19797.32 21909.81 26066.65 31477.31 37295.36

Equity Ratio 0.95 0.95 0.96 0.96 0.94

Interpretation:

 This ratio suggests the proportion of the Net Worth to total capital employed. Net Worth is
share plus reserves and surplus. The higher the ratio the higher the net worth in total capital
employed and vice versa.

 The ratio decreases year by year because of the capital the total capital employed increased.

 It was the highest value is 0.85 in the year 2008-07.

 It is decreased by 0.74 in the year 2010-09.This is not good for company.


Debt Ratios:

Particulars Year

2009-10 2010-11 2011-12 2012-13 2013-14

Long Term Debt 858.80 907.62 986.02 1163.34 1165.36

Total capital Employed 19797.32 21909.81 26066.65 31477.31 37295.30

Debt Ratio 0.043 0.041 0.037 0.037 0.058

Debt Ratios = Long Term Debt

Total Capital Employed

Analysis:

 This ratio suggests the proportion of long-term debt to Total Capital Employed. Long-
term debt is a debt, which is of more than five years and includes interest thereon. The
higher the long-term the higher the total capital employed and vice-versa.

 The ratio has increased and then decreased. This is good for the company.
Debt Equity Ratio:

When debt funds are used to generate ROI greater than interest cost on debt, the equity
earning is enhanced, but if the interest cost is higher than the ROI, adversely affect the earning
owners. This ratio is popularly described as Debt-Equity Ratio. Higher debt – equity ratio is (1)
good if ROI is greater than interest on debt. Thus, use of debt (or leverage) is considered as a
“Double Aged” weapon.

Particulars Year

2009-10 2010-11 2011-12 2012-13 2013-14

Total Long Term Debt 858.80 907.62 986.02 1163.34 1165.36

Net Worth 18938.52 21002.19 25080.63 30313.97 35130

Debt-Equity Ratio 0.045 0.043 0.039 0.038 0.062

Interpretation:

 Debt Equity Ratio is debt to Equity. Debt means long term fund having maturity of five
years or more including interest thereon.

 Equity is paid up share capital plus free reserves. The higher the debt fund used in capital
structure, the greater is the financial risk. This is also known as leverage ratio.

 We can see that the value is increasing and decreasing.

 It should be 2:1 but industry ratio is 0.8:1. Still it is higher than company’s ratio. So,
company should raise the debt.
Interest Coverage Ratios:

This Ratio indicates the use of interest becoming debt funds in generating higher operating profits
or EBIT. Higher is the Ratio better is the utilization of the debt funds. Higher interest coverage
ratio enhances the equity earning (i.e. EBIT – interest) is passed over to the equity finance of the
capitalization. It can be concluded as follow:

Particulars Year

2009-10 2010-11 2011-12 2012-13 2013-14

EBIT 126569 10684.18 8897.53 7268.16 6015.31

Interest 412.17 355.48 309.41 58.67 54.54

Interest Coverage Ratio 110.29 123.88 28.75 30.05 30.71

Interpretation:

 A high ratio implies adequate safety for payment of interest.

 It decreased but in the year 2010-09 the ratio increased.

 It is clearly indicates by the above calculation that interest expenses decreases and also
PBIT increase and so it implies that the debt of the company decreases.

 Thus in general we can conclude that the growth of the company is very good
Valuation Ratios:

Valuation ratios are the result of the management of the above four categories of the functional
ratios. Valuation ratios are generally presented on a per share basis and thus are more useful to the
equity investor. The per share valuation are popularly presented as:

Earning Per Share:

If the company has issued preference share capital then net profit for equity share = Net Profit -
Preference Dividend. In absence of the preference share capital net profit is taken in the numerator
of the below formula.

Particulars Year

2009-10 2010-11 2011-12 2012-13 2013-14

Net Profit 4061 4987.61 6217.87 7695.12 8785.21

No. of Equity Share 381.82 773.81 781.84 790.18 795.32

EPS 10.64 6.45 7.95 9.74 11.05

Interpretation:

 It decreased in the year 200-11 to 6.45 this is because of the no.of equity share
increased.

 This provides company’s future prices. It is increases gradually and peaks in year
2013-14 at value 11.05 this is good for the company.
Dividend Pay Out Ratio:

This Ratio indicates the split of EPS between cash dividend and re-investment of profit. If the
company has profitable projects, then it will prefer to keep D/P Ratio lower, it will re- invest
higher proportion of the profit in the business.

Particulars Year

2009-10 2010-11 2011-12 2012-13 2013-14

Dividend per Share 3.67 4.93 4.40 4.45 5.22

Earnings Per Share 10.62 6.41 7.84 9.33 11.96

Dividend payout Ratio. 0.35 0.77 0.56 0.48 0.44

Interpretation:

 This ratio indicates the splits of EPS between cash dividend and reinvest at profit.

 If the company has profitable project then it will keep D/P ratio lower it will reinvest higher
proportion of project in business.

 Here the company’s ratio is first increased but decreased in 2011-12 to 2013-14
continuously. That means company is reinvesting their money.

 So it is good for the long term investor but not good for the short term investor. Company
may provide higher profits after long-term. It is good to invest for long term.
Dividend Yield Ratio:

The dividend yield represents the current cash return to shareholders. It is computed by
dividing the Dividend per Share by the current market price per share. The investors also earn a
return from a capital gain in shares.

Particulars Year

2009-10 2010-11 2011-12 2012-13 2013-14

Dividend per Share 3.67 4.93 4.40 4.45 5.22

Average market price 222 168 133 159 245

Dividend yield Ratio. 2% 2.67% 3.07% 2.79% 2.13%

Interpretation:

 The lowest ratio is 2% in the year 2009-10 and it is high in the year in the 2009-08 and the
value is 2.67%.

 Higher ratio is good for the short term investor and lower ratio is good for the long term
investor. It is good in 2010-09 for long term investor.
P/E Ratios:

This ratio is a popular measure extensively used in investment analysis. It is computed


by dividing a Current Market Price of a share by the annual Earning per Share. Many view the P/E
Ratio as an indicator of a firm’s growth prospects. It is used as a device to detect mix-priced
stocks. A high Price Earnings Ratio indicates the stock market’s confidence in the company’s
future earning growth.

Particulars Year

2009-10 2010-11 2011-12 2012-13 2013-14

Current Market Price of Share 290.22 289.55 308.12 324.84 376.65

Earnings Per Share 10.64 6.45 7.95 9.74 11.05

P/E Ratio 27.27 41.17 38.75 33.35 34.08

Interpretation:

 This provides company’s future price earning.


FINDINGS:
1. It is important to study the size of Inventory Management of any enterprise. It decides the
need for best owing attention in the management of this component. In the enterprise under
the study Inventory formed a major percentage of total assets. It varied between the lowest
of 55 percent and the highest of 60 percent to total assets.

2. The composition of current assets is dominated by inventory and receivable in 2001-02 the
composition of current assets are dominated by inventory and other current assets.

3. The inventory index and growth rate of ITC is so even for instance the annual growth of
ITC is negative.

4. The receivable index in ITC is highly uneven. In some year it is highly positive and in some
year it is negative. The unevenness is not good.

5. Some of the inventories are ordered on the basis of minimum stock or reorder level.

6. There is no particular method has been followed for valuing the particular type of
inventories.

Fast Moving stocks.

Slow Moving stocks.

Seasonal stocks.

Vital Items.
CONCLUSIONS

In spite of various obstacle hurdles, limitations and bottlenecks, financial analysis in


ITC Ltd. has a bright future for growth and expansion. The organization is a profit
making and contributing lot in the path of the progress of the nation by providing
easy working capital management of ITC Ltd. to various states including some
strategic remote areas. financial analysis of ITC Ltd. is the only pioneer
organization in the field of financial analysis in ITC Ltd. sector at present . As
mentioned in this chapter the organization is already working on its planning for
rapid growth by commissioning more projects, entering. Our nation is facing acute
shortage of technology . Thus to achieve rapid industrialization & growth of other
sector including software. financial analysis of ITC Ltd. has to play a greater role
by increasing its capacity manifold in future / coming days and the organization has
great importance from the nations point of view.

Trend analysis in a business enterprise is synonymous with the blood of the human
body. The importance of Trend analysis from liquidity and profitability point of view
can not be over emphasized. Both these significant aspects largely depends upon
efficient management of Trend analysis, (i.e.) management of inventory, receivable,
cash & bank balances and short term creditors & other short-term liabilities, liquidity
which refers to the ability of a firm to meet its current obligations encompasses
current assets and their structure. In recent times high importance is being given
corporate liquidity as it has direct impact on profitability as well as long term
survival of the firms. Maintaining sound liquidity and profitability position
ultimately depends upon efficient and smooth management of working .

The present study is divided into five parts. In this part importance of
the study, importance of financial analysis and potential, status and development of
financial analysis of ITC Ltd. , data and methodology of the study has been
discussed. In the second part the objectives of the study has clearly defined. In third
chapter deals with various concepts, aspects & dimensions of working capital. In
forth part an attempt is made to know the trend, status and management of Trend
analysis through analysis by using various financial and statistical techniques. In
fifth chapter summery of result, findings, scope of futures research limitations of
study etc. has been described briefly.
LIMITATIONS

It is not possible to remove the limitation of any investigators. So this project also has certain
limitation that is:

1) Information was gathered through the rating of the subject, thus biasness is possible.

2) As the sample size was small it is possible that it may not represent the precise picture.

3) Employees of the organization may hide the fact.

4) The management did not agree to disclose all the confidential data.

Number of respondent are very less, so clear conclusion can’t be dra


RECOMMENDATIONS AND SUGGESTIONS

By analyzing the annual report of the company we can conclude that,

 From the Liquidity Ratio we can recommend that the Liquidity of the company is Very
Good.

 The Current ratio increases every year. The Current Assets should be at least twice the
Current Liabilities for a comfortable liquid position. But here it more than 2 to 3 times,
which very good.

 By the profitability ratio we can conclude that the profit of the company decreased and then
increased but it is slightly increment.

 But the Operating profit of the company is decreasing, so company should try to reduce its
Operating Cost by controlling the expenses of Raw material consumption as well as the
selling, Distribution, and Administration and other expenses.

 Here we can see that interest to be paid has been cut very well, which is good for the
company in the future.

 Here from the analysis we can say that the company is not going to spread its business
because not considerable increase in the investment has been found
BIBLIOGRAPHY

Annual Reports of ITC LTD

1. 2009-10

2. 2010-11

3. 2011-12

4. 2012-13

5. 2013-14

Books

Managerial accounting and financial book by R. Narayanswamy

Web Sites

WWW.ITCPORTAL.IN

WWW.BSEINDIA.COM

WWW.GOOGLE.COM

Software

ACEANALYSER SOFTWARE