Assignment Of Accounting for Managers On Financial Statements Of

ADITYA BIRLA GROUP

Submitted to: Ms. Vandana verma Dept. Of Management LPU

Submitted by: smriti narula R323A09

About Aditya Birla Group

A US $28 billion corporation, the Aditya Birla Group is in the league of Fortune 500. It is anchored by an extraordinary force of 100,000 employees, belonging to 25 different nationalities. In India, the Group has been adjudged "The Best Employer in India and among the top 20 in Asia" by the Hewitt-Economic Times and Wall Street Journal Study 2007. Over 50 per cent of its revenues flow from its overseas operations. The Group operates in 25 countries India, UK, Germany, Hungary, Brazil, Italy, France, Luxembourg, Switzerland, Australia, USA, Canada, Egypt, China, Thailand, Laos, Indonesia, Philippines, Dubai, Singapore, Myanmar, Bangladesh, Vietnam, Malaysia and Korea. Globally the Aditya Birla Group is: :: A metals powerhouse, among the world's most cost-efficient aluminium and copper producers. Hindalco-Novelis is the largest aluminium rolling company. It is one of the three biggest producers of primary aluminium in Asia, with the largest single location copper smelter No.1 in viscose staple fibre The fourth largest producer of insulators The fourth largest producer of carbon black The 11th largest cement producer globally, the seventh largest in Asia and the second largest in India Among the world's top 15 BPO companies and among India's top four Among the best energy efficient fertiliser plants

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In India: :: :: :: :: :: :: A premier branded garments player The second largest player in viscose filament yarn The second largest in the chlor-alkali sector Among the top five mobile telephony companies A leading player in life insurance and asset management Among the top three supermarket chains in the retail business

Rock solid in fundamentals, the Aditya Birla Group nurtures a culture where success does not come in the way of the need to keep learning afresh, to keep experimenting.

Beyond business the Aditya Birla Group is: :: :: Working in 3,700 villages Reaching out to seven million people annually through the Aditya Birla Centre for Community Initiatives and Rural Development, spearheaded by Mrs. Rajashree Birla Focusing on: health care, education, sustainable livelihood, infrastructure and espousing social causes Running 41 schools and 18 hospitals

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Transcending the conventional barriers of business to send out a message that "We care". Vision To be a premium global conglomerate with a clear focus on each business. Mission To deliver superior value to our customers, shareholders, employees and society at large. Management Team The Aditya Birla Management Corporation Private Limited, is the Group's apex decision making body and provides strategic direction to Group companies. Its Board of Directors comprises: :: Mr. Kumar Mangalam Birla, Chairman :: Mr. S. Aga :: Mr. D. Bhattacharya :: Mr. S. K. Jain :: Dr. S. Misra :: Mr. S. Misra :: Dr. B. K. Singh :: Mr. K. K. Maheshwari :: Mr. Vikram Rao :: Mr. Ajay Srinivasan FINANCIAL STATEMENTS:Financial statements are the medium through which financial reporting is done.financial reporting may be described as the communication of financial information relating to an entity

through financial statements.financial statements used in accounting refers to atleast two statements i.e. profit and loss account and balance sheets.these two statements are prepared at the end of the given period of the time for a business concern. Profit and loss account shows the result of operations i.e.profit or loss during a certain period.this is also called income statement.

OBJECTIVES OF FINANCIAL STATEMENTS:Financial statements are the means of communicating information to various users group of such information. Shareholders,potential shareholders,management,researchers etc.are the wide spectrum of users of financial information. Income statement is the scoreboard of the entitys performance during a particular period of time.it is a flow statement and consists of several stages: Gross profit is calculated in the first stage by deducting cost of goods or services sold from the sales value of such goods and services. Net profit is the residue left after deducting selling ,general and administrative expenses from gross profit. it should be approximately be termed as operating profit. The total net profit before tax is arrived at after adding non-operating incomes and gains and deducting non-operating expenses and losses. Net profit after tax is carried forward to an account named as profit and loss appropriation account in this account appropriations to various funds and reserves are shown from the total net profit .it shows the uses to which the available net profits have been put or will be put the balance is treated as retained earnings.

FINANCIAL ANALYSIS:Financial analysis is the process of identifying the financial strengths and weaknesses of the entity by properly establishing relationships between the variable (items) of balance sheet and profit and loss account.the purpose of financial analysis is to diagnose the information given in the financial statements in such a manner so as to judge the liquidity,profitabilityand financial soundness of the entity.the term analysis includes interpretation also.Analysis involves regrouping and re-arranging the data in a useful manner whereas interpretation means explaining the meaning and significance of the data so processed.

TECHNIQUES OF FINANCIAL STATEMENT ANALYSIS :The commonly used methods are:-

Comparative statements Flow statements Trend analysis Common size statements Ratio analysis

Comparative Balance Sheet for the year ending 2007-08 (Rs Crores)
Particulars 2006-07 2007-08 Increase/Decrease %

Increase/Decrease Assets Net Fixed Assets Long term Strategic Investments Other Investments Total Investments Net Current Assets Capital Employed Liabilities Equity Share Capital Share Warrants Reserve & Surplus Net Worth Long Term Loans Short Term Loans Total Loan Funds Deffered Tax Capital Employed 93.3 ---3031.2 3124.5 1869.2 962.7 2831.8 174.1 6130.5 95.0 377.4 3551.3 4023.7 1841.2 902.2 2743.4 200.3 6967.5 1.7 377.4 520.1 899.2 (28) (60.5) (88.4) 26.2 837 1.82 ---17.15 28.77 (1.49) (6.28) (3.12) 15.04 13.65 1308.1 3473.9 1501.6 3909.3 193.5 435.4 14.79 12.53

375.5 3849.4 972.9 6130.5

144.9 4054.2 1411.7 6967.5

(230.6) 204.8 438.8 837

(61.41) 5.32 45.10 13.65

Interpretation The company has issued share warrants worth Rs. 377.40 Crores & disposed 61.41% of other investments & the funds generated from above are used for financing its fixed assets & making long term strategic investments. The companys reserves & surplus have increased by 520 crores which the company has used to make investments in current assets & pay off some of its long term and short term loans.

 The companys equity share capital has increased by only 1.82%. This shows that the company is reluctant to issue more equity & prefers to issue share warrants. The companys reserves & surplus have increased by almost 17% which shows company is earning sufficient profits which makes such a transfer possible. Common Size Balance Sheet for the year ending 2007-08
Particulars Assets Net Fixed Assets Long term Strategic Investments Other Investments Total Investments Net Current Assets Capital Employed Liabilities Equity Share Capital Share Warrants Reserve & Surplus Net Worth Long Term Loans Short Term Loans Total Loan Funds Deffered Tax Capital Employed 93.3 ---3031.2 3124.5 1869.2 962.7 2831.8 174.1 6130.5 95.0 377.4 3551.3 4023.7 1841.2 902.2 2743.4 200.3 6967.5 1.52 ---49.44 50.96 30.49 15.70 46.19 2.83 100 1.36 5.41 50.96 57.74 26.42 12.94 39.37 2.87 100 1308.1 3473.9 1501.6 3909.3 21.33 56.56 21.55 56.10 2006-07 2007-08 % in 2006-07 % in 2007-08

375.5 3849.4 972.9 6130.5

144.9 4054.2 1411.7 6967.5

6.12 62.79 15.86 100

2.07 58.18 20.26 100

Interpretation

 The companys ownership funds have increased from 50% of total assets to 57% ( mainly due to issue of share warrants) which is good as it would strengthen creditors/ lenders faith in company. The companys investment in other investments as a part of total assets has reduced by 4%. The company has repaid some of its long term and short term loan funds which has helped in improving its debt equity ratio & reduced interest burden of company. Companys reserve and surplus form 50% of total liabilities which shows company is following conservative dividend policy.

Trend Analysis
Particulars Net Profit Assets Liabilities Shareholder s Fund 1998-99 106.0 2064.3 651.1 1413.3 2003-04 131.3 1798 405.8 1264.7 2005-06 186.9 3938.9 1563.6 2207.6 2006-07 225.0 6130.5 2831.8 3124.5 2007-08 243.1 6967.5 2743.4 4023.7

Particulars Net Profit Assets Liabilities Shareholder s Fund

1998-99 as base year 100 100 100 100

% in 2003-04 123.86 87.09 62.32 89.48

% in 2005-06 176.32 190.81 240.14 156.20

% in 200607 212.26 296.97 434.92 221.07

% in 2007-08 229.33 337.52 421.34 284.70

Interpretation There is continous trend of increasing net profit which are increasing around 20% but major increase was reported in 2005-06 where it increased by around 50%. Total assets initially declined by 13% but after then it has been increasing continuously. Shareholders funds are also increasing as compared to figures in 1998-99 but major increase has been reported in year 2006-07 & 2007-08 which is more than 60% of 1998-99 value. Total liabilities after falling initially in 2003-04 are increasing but it has been rising more rapidly than total assets.

BIBLIOGRAPHY
Websites:
http://adityabirla.com/the_group/index.htm http://adityabirla.com/the_group/our_values.htm http://adityabirla.com/the_group/management.htm http://www.adityabirlanuvo.com/investors/downloads/Nuvo_annual_report_fy08.pdf

Book:
Accounting for Managers by Juneja Chawla