A

PROJECT REPORT ON
FINANCIAL ANALYSIS OF
ARVIND MILLS LIMITED

Submitted by:
Parth Shah- P1645;
&
Ravi Shah- P1646

PGDM
Term-1
Under the Guidance of:
Prof. Hiteksha Joshi

N.R. Institute of Business Management

Acknowledgement:
We take this opportunity to express our profound gratitude and deep regards to
our mentor- Prof. Hiteksha Joshi for her exemplary guidance, monitoring and
constant encouragement throughout the course of this project. The blessings,
help and guidance given by her time to time shall carry us a long way in the
journey of life on which we are about to embark.
We also take this opportunity to express a deep sense of gratitude to N.R.
Institute of Business Management for giving us this opportunity to do this
project and providing us with the information and guidance, which helped us in
completing this task through various stages.
Lastly, we thank our group members and friends for their constant
encouragement and help without which this project would not be possible.

Executive Summary:
Our project is basically on financial analysis and a brief study on
Arvind mills Ltd. So firstly, we need to understand what Financial Analysis
is?
Financial analysis is an aspect of the overall business finance function
that involves examining historical data to gain information about the current and
future financial health of a company. The financial function in business
organizations involves evaluating economic trends, setting financial policy and
creating long range plans for business activities. There is ratio analysis,
common Size Statement, trend analysis which gives detailed analytical
information of the financial position of the company. It also helps to forecast the
future trend.
Ratio analysis is a widely used tool of financial analysis it is defined
as a systematic use of ratio to interpret the financial statement so that the strength
and the weakness of the firm as well as its historical performance and its current
financial condition can be determined. The term ratio refers to the numerical or
quantitative relationship between to variables or items. The ratio analysis helps
managers in making critical decisions. We studied the balance sheet and have
given recommendation as well. With the help of Ratios, we have tried to analyze
companies performance compared to previous year.

Introduction of Indian Textile Industry:

The Indian textile industry has a significant presence in the economy as well as
in the international textile economy. Its contribution to the Indian economy is
manifested in terms of its contribution to the industrial production, employment
generation and foreign exchange earnings. It contributes 28% of industrial
production, 13% of excise collections, and 25% of employment in the industrial
sector, nearly 28% to the countrys total export earnings and 6% to the GDP.

Industrial Production

28%

Excise Collections

13%

Employment in the industrial sector

25%

Countrys total export sharing

28%

GDP

6%

Contribution of Textile Industry

6%

Industrial Production

28%

Excise Collections

28%

Employment in the Industrial Sector

Countrys total Export Earning

13%

GDP

25%

The Indian textile industry is set for strong growth, buoyed by both strong
domestic consumption as well as export demand. Abundant availability of raw
materials such as cotton, wool, silk and jute and skilled workforce has made
India a sourcing hub. According to Ministry of Textiles, the current size of
Indias textile and apparel industry is estimated at Rs. 4,41,800 crores in 2012.
By 2020, Indian textile and apparel industry is expected to reach Rs. 1,034,000
crores with CAGR of 11%.

Major Players in the Indian Textile Industry:

1. ARVIND MILLS:

Arvind Mills, now Arvind Limited, is one of the largest manufacturer of textile
products. Headquartered in Naroda, Ahmedabad, Gujrat, Arvind Limited was
founded in 1931.Arvind Mills is one of the largest manufacturer and exporter
of denim in India and fourth in the world. The companys product portfolio
includes:

Denim
Knits
Woven
Engineering
Retail
Telecom
Agri Business
2. BOMBAY DYEING:

Bombay Dyeing is the second largest producer of textile in India.

Headquartered in Mumbai, Bombay Dyeing was established in 1879.The key
products of the company include: Towels, Bed linen and Furnishings. Apart
from textile manufacturing, the company is also involved in the manufacturing
of chemicals.
3. GRASIM INDUSTRIES:

Grasim Industries Limited is another big name in the textile industry of India,
established in the year 1947. Grasim Industries Limited is the flagship company
6

of the Aditya Birla Group and involved in the production of Textile, Fibre and
pulp, chemicals and cement.
4. RAYMOND:

Raymond is the 90 years old (as in 2015) Indian textile manufacturing company
established in 1925. Headquartered in Thane, Mumbai, Maharashtra, Raymond
Industries is the largest producer of worsted fabric in India. It is the largest
woolen fabric and one of the largest textile exporter of India, with exports to
countries like Japan, USA, Canada and many other countries. Apart from
manufacturing, the company also makes readymade suiting & shirting and sells
it them under its various brands. Some of the popular brands that the group
owns are:

Raymond
Park Avenue
ColorPlus
Parx

5. RELIANCE TEXTILES:

Reliance Textiles is a subsidiary of an Indian conglomerate holding company:

Reliance Industries Ltd. Established in the year 1966, Reliance Textiles
Industries Pvt Ltd started manufacturing synthetic fabrics, polyester, autotextiles, Silk-Amino suiting fabrics and water-repellent fabrics for
defense/police services, with Vimal becoming the flagship retail brand of the
company in the later years.
Today, Reliance Industries Ltd. operates majorly in 5 segments:

Exploration and production

Refining and marketing
Petrochemicals
Retail
Telecommunications
7

Introduction of Arvind Limited:

Arvind Limited (formerly Arvind Mills) is a textile manufacturer and
the flagship company of the Arvind Group. Its headquarters is
in Naroda, Ahmedabad, Gujarat, India. It has units at Santej (near Kalol). It
manufactures cotton shirting, denim, knits and bottom weights (Khakis) fabrics.
It has also recently ventured into technical textiles when it started Advanced
Materials Division in 2011. It is India's largest denim manufacturer apart from
being the worlds fourth-largest producer and exporter of denim.
Sanjaybhai Lalbhai is the Chairman & Managing Director of Arvind & Lalbhai
Group. In the early 1980s, Sanjay Lalbhai led the 'Reno-vision' whereby the
company brought denim into the domestic market, thus starting the jeans
revolution in India. Today it retails its own brands like Flying Machine,
Newport and Excalibur and licensed international brands like Arrow, Lee,
Wrangler and Tommy Hilfiger, through its nationwide retail network. Arvind
also runs a value retail chain, Megamart, which stocks company brands.

History of Arvind Limited:

The year 1930 was when the world suffered the great depression. At about this
time, Mahatma Gandhi championed the Swadeshi Movement and at his call,
people from all across India began boycotting fine and superfine fabrics, which
had so far been imported from England. In the midst of this depression one
family saw opportunity. The Lalbhais reasoned that the demand for fine and
superfine fabrics still existed. And any Indian company that met this demand
would surely prosper. The three brothers, Kasturbhai, Narottambhai and
Chimanbhai, decided to set up a mill to produce superfine fabric.

Next they looked around for state-of-the-art machinery that could produce such
high quality fabric. The best technology of that time was acquired at a most
attractive price. And a company called Arvind Limited was born. Arvind
Limited started with a share capital of Rs 2,525,000 ($55,000) in the year 1931.
With the aim of manufacturing the high-end superfine fabrics Arvind invested
in very sophisticated technology. With 52,560 ring spindles, 2552 doubling
spindles and 1122 looms it was one of the few companies in those days to start
along with spinning and weaving facilities in addition to full-fledged facilities
for dyeing, bleaching, finishing and mercerizing. Steadily producing high
quality fabrics, year after year, Arvind took its place amongst the foremost
textile units in the country.

Divisions of Arvind Limited:

Denim: The late 1980s saw Arvind pioneer the manufacture of denim in
India. Today with an installed capacity of over 110 million meters per
annum, Arvind is a leading producer of denim worldwide. The denim
facility at Arvind is accredited with ISO 9001, ISO 14001, OEKOTEX
100, GOTS, and Organic exchange standard. Our labs are certified by
NABL (ISO 17025 certification) and customers like Levis etc.

Woven Fabrics: Arvind expertise in new age shirting fabric and bottom
weights is unparalleled. Our shirting fabrics have consistently fetched a
premium in the local and international markets. Our state of the art
facility is capable of producing a total of 65 million meters per annum of
Shirting and bottom weight fabrics. This capacity is set to increase
reaching a total of 84 million meters by the next financial year.

 Knit Fabrics: Arvinds knits department has an annual knitting capacity

of 5,000 tons. The knits vertical has a fabric dyeing capacity of 5000 tons
per annum and yarn dyeing capacity of 1800 tons per annum. It has the
ability to process both tubular and open-width fabrics and offers specialty
finishes like mercerization, singeing and various forms of brushing and
peaching.
Garment Exports: At Arvind, our range of fabrics is universal in appeal.
We aim to inspire a diverse mix of customers enriching lifestyles
globally. We have successfully established ourselves as a one-stop shop
for apparel solutions catering to an array of national and international
clients.
Gap Inc Patagonia Tommy Hilfiger Quicksilver Brooks
Brothers Silver Jeans Calvin Klein FCUK Pull & Bear Jack
& Jones Energie Esprit S. Oliver Mexx Sisley Benetton
Coin
Advanced Materials: Arvind's Advanced Materials is a certified ISO
9001: 2008 manufacturing facility producing high performance industrial
fabrics with world class technology and knowhow based on a strong
foundation of knowledge, research and market needs. We are committed
to offer textile solutions for rapidly growing sectors like General
Industrial manufacturing and processing, infrastructure, transport, energy
and personal protection.
Arvind Composites: Arvind Composites, is an advanced & integrated
composite design, development and manufacturing facility, is the one
stop destination for FRP/ GRP Composite Solutions. From the simplest to
the most complex application, Arvind is equipped to deliver excellence.
Arvind Brands: Arvind is amongst a few organizations worldwide with a
portfolio of brands that are as distinctive and relevant across diverse
consumers. At Arvind, brands work across multiple channels, price points
and consumer segments. The expanse of the Arvind brandscape is spread
across the Indian market with around 273 standalone brand stores in
addition to 975 counters selling through key accounts and multibrand
outlets across India.

10

Own Brands:
Mainstream
Excalibur Gant
Flying Machine
Popular:
Ruf & Tuf
New Port University

Licensened Brands:
Bridge to Luxury
U.S.A. 1949
Energie
Premium:
USPA
Arrow
Izod
Popular:
Cherokee

Joint Venture Brands:

Bridge to Luxury
Tommy Hilfiger

Mega Mart Retail: Arvind runs India's largest Value Retail Chain Megamart. The Megamart format offers a unique and differentiated
proposition to the consumers. It offers mega brands at amazingly low
prices and provides a retail experience of a high-end department store.
The Megamart stores range in size from 2000 sq ft. to 65000 sq ft. The
larger stores are called Big Megamart and there are 6 such stores across
Bangalore, Chennai, Pune and Mumbai. The smaller formats spread
across the country are 205 in number. Megamart is expanding rapidly and
is expected to be a Rs. 1000 cr chain within the next two years.
The brands sold exclusively in Megamart include:
RUGGERS - SKINN - ELITUS - DONUTS - KARIGARI - MEA CASA
- AUBURN HILL - BAY ISLAND - COLT - LEISHA- EDGE

The Arvind Store: The Arvind Store bring together, under one roof, the
best that Arvind has to offer. It is a convergence of three of Arvinds
strongest capabilities, the best of fabrics from Arvinds textiles division,
leading apparel brands from Arvind Brands and bespoke styling solutions
11

based on the latest garment styles from Arvind Studios. In a world where
bespoke tailoring meets cutting edge fashion, The Arvind Store will
create a shopping experience to rival the best in the Indian Marketplace.

Over a 1000 different fabric styles across shirting, suiting and denim
Leading apparel brands such as Arrow, US Polo & Flying Machine
Arvind Denim Labs (ADL), a bespoke denim concept offering customized
washed denim - a first of its kind in India and perhaps the world
Arvind Studio A styling and tailoring solution to rival the best brands in the
world

Engineering:
1. ANUP EngineeringThe Anup Engineering Limited (established in 1963), is the flagship
Engineering Company of the Lalbhai Group, and is a subsidiary of
Arvind Limited. It is an accredited ASME U & NB stamp and ISO9001: 2008 certified company, conforming to specified standards. Anup
has extensive experience in working with critical metallurgies like low
temperature CS, NACE/HIC, low alloy, stainless steel, duplex, super
duplex, monel, cupro nickel, etc. Anup is approved by IBR, CCOE &
TDC certifications, and works closely with and under the surveillance of
renowned national and international inspection agencies like Lloyds,
BVI, DNV, EIL, Toyo Engineering, UHDE, and TUV etc.

12

2.Arvind AccelArvind Accel Limited is a multi-specialty Engineering Procurement and

Construction Company. We provide customized engineering solutions
starting from consultancy and design to the final implementation and
commissioning of projects on a turnkey basis. Their certified support
teams can also undertake complete operations and maintenance of a plant
site or facility. Their employ state of the art technology and equipment to
provide unparalleled services for water, wastewater treatment and
recycling projects.
Telecom:
1.Arya OmnitalkArya Omnitalk is a 50:50 Joint Venture between India's highly reputed
business houses, the J M Baxi Group & Arvind. The joint venture offers the
following services:

GPS based Fleet Automation & Management for

City-wide Walky Talky services
Highway Traffic Management Solutions with CSSI
2.SyntelSyntel is a division of Arvind. With more than a million users as on date,
Syntel has a dominant position in the Business Communication Solutions
landscape offering a range of Analog and Digital EPABX based enterprise
communication solutions for SMEs and leading Corporates.
Some of our esteemed clientele includes:
Wipro, Whirlpool, Ashok Leyland, Blue Dart, Sahara Airlines, The Indian
Armed Forces, State Bank of India, The World Bank, ICICI Lombard, etc.
Infrastructure: Arvind Infrastructure is steadily rising name in developing
lifestyle spaces of quality. They are already on an ambitious drive to
change the landscape of realty - with approx. 9 million square feet of real
estate emerging across the country. Arvind Infrastructure - Building
Pride. Building Joy.
Agri-Business: Arvind Agribusiness was established in 2007 with the aim
of creating a more balanced and healthy ecosystem. Being a leading
textile manufacturer and a major consumer of cotton, we focus to make
13

our key resources more eco-friendly and sustainable. Arvind

Agribusiness aim to educate farmers and extend support so that they
switch over to more sustainable farming practices. Since our foray into
sustainable agriculture, our organic agriculture practices and Better
Cotton Initiative have not only preserved our environment but have also
empowered farmers with over 18% better yield and fair pay. Arvind
procures organic cotton which is majority (approx. 50%) of the farmers'
produce.
E-Commerce: An initiative that houses all of Arvinds ecommerce
initiatives, Arvind Internet Ltd (AIL) is an entity that epitomizes smart
shopping in a world that is defined by the internet and technology. A
melting pot of talent, AILs play boasts of a number of ecommerce
professionals who have been a part of the industry since its nascent stage.
With its first initiative, Creyate, revolutionizing fashion globally, AIL
also has a major launch lined up next year.

14

Introduction of Financial Analysis Theory:

In the financial world, every company must know its financial position. It is
necessary for the company to know its profitability and for that purpose it is
require analyzing company's financial statements. Financial statement shows the
real picture of the company in terms of money. Management of the company is
keenly interested in knowing the real performance of the company. So it is
required to analysis the financial statement for knowing the actual financial
position and forecasting the future trend.
Financial Statements:
Financial statements as used in corporate business, refers to a set of report
and schedule which an accountant prepare at the end of the period for a
business enterprise. The financial statements are the means with the help
of which the accounting system perform its main function of providing
summarized information about the financial affair of the business. This
statement comprises of balance sheet position statement and profit & loss
account or income statement.
Analysis of Financial Statements:
Financial analysis determines the significant operation and financial
characteristics of a firm from accounting data. It is a technique typical
devoted to evaluate the past, current and projected information of a
business firm. Financial Analysis is an attempt to determine the
significance and meaning of financial statement data so that forecast can
be made of the future prospects for earnings, ability to pay interest and
debit maturities and profitability.
Types of Financial Statements:
Financial statements are analyzed by different parties for different
purposed. The analysis is done from different angles. Accordingly, we can
classify financial statement analysis into different categories as follows:

15

1. On the basis of concerned parties:

According to different parties concerned with the operation of the
company, the financial statement analysis can be of two types:
External Analysis
Internal Analysis
External Analysis:
When the analysis is undertaken by outside parties namely existing and
prospective investors, suppliers, lenders, government agencies, customers
etc., it is external financial statement analysis.
Internal Analysis:
This analysis is undertaken by the management of the company to
monitor its financial and operating performance.

2. On the basis of time period of the study:

Based on the time period covered for the study, the financial statement
analysis can be grouped into:
Horizontal Analysis
Vertical Analysis
Horizontal Analysis:
This analysis refers to the study of past consecutive balance sheets, income
statements or statements of cash flow at a time. The analysis can be made
between two periods or over a series of periods. This analysis is very much
effective for understanding the direction and trend of the organization
particularly when it is undertaken for several years. Comparative
statements and trend analysis are two important tools that can be employed
for horizontal analysis.
Vertical Analysis:
When the analysis is restricted to the financial statements of one particular
period only, it is known as vertical analysis of financial statements. In this
analysis each item of a particular financial statement is expressed as
16

percentage of a base figure selected from the same statement. Commonsize statements and accounting ratios are two important tools used for
vertical analysis. This analysis is very much useful for understanding the
structural relationship of various items in a financial statement.

3. On the basis of objective of analysis:

Long term analysis:
This analysis is made in order to study the long term financial stability
and liquidity as well as profitability and earning capacity of the business.
Short term analysis:
This analysis is done in order to determine the short term solvency,
stability, liquidity and earning capacity of the business.

Tools of Financial Analysis:

The analysis of financial statements consists of relationship and trends, to
determine whether the financial position of the company is satisfactory or
not. The analytical methods listed below are used to ascertain the
relationships among the financial statements items.
Analytical methods used in analyzing financial statements are as follows:
1) Ratio analysis
2) Common size financial statement
3) Trend Analysis

Financial Ratio:
Ratio analysis means the proportionate comparisons of any two variables of
Trading Account, Profit and loss account, Balance sheet. Ratio analysis is a
widely used tool of financial analysis it is defined as a systematic use of ratio
to interpret the financial statement so that the strength and the weakness of the
firm as well as its historical performance and its current financial condition can
be determined.
17

Accounting Analysis:
Comparative and Common Size Financial Statement:
Financial statements reveal the financial credibility of a company. A financial
statement, which expresses the different values in form of percentage, is called a
Common size financial statement. A common size financial statement helps in
comparing two companies, which differ in size. Two components of the common
size financial statement are:
Balance sheet
Income statement
When both these components are clubbed together, a comparative and common
size financial statement is obtained.

Features of a common size financial statement:

A common size financial statement consists of various amounts expressed as
percentage. For example, if cash of a particular company is calculated to be
847678395. In the common size financial statement, it will be represented as 15%
of the total assets. If the total assets of a company are found to be 5567069464, it
will appear as 100% in the common size financial statement as it is the base for
calculation. Similarly, if the current liabilities of a company are found to be
295273778, it will appear as 5%. The numbers obtained in the income statement
will appear in form of percentage.

18

Comparative Balance Sheet of 5 Years:

Particulars
Sources of Funds:
Equity Share Capital
Reserve & Surplus
Net Worth
Secured Loan
Unsecured Loan
Total Debt
C.L. & Provisions
Total Liabilities
Application of Funds:
Gross Block
(-) Depreciation
Net Block
Capital Work in Progress
Investments
Inventories
Sundry Debtors
Cash & Bank Balance
Total Current Assets
Loans & Advances
Fixed Deposits
Total CA, Loans &
Advances
Total Assets

Values in Rs.
2006-07 2007-08 2008-09

2009-10

2010-11

209.38
1106.9
1316.3
1772.7
161.57
1934.3
466.15
3716.8

218.98
1172.5
1391.5
1774.9
97.52
1872.5
395.17
3659.1

218.98
919.82
1138.8
1920.9
103.04
2023.9
608.77
3771.5

231.98
1107.3
1339.3
1728.7
141.85
1870.6
453.62
3663.5

254.4
1236
1490.4
1763.2
48.89
1812.1
651.33
3953.9

2817.2
-772.3
2044.9
71.45
46.05
645.01
204.85
20.86
870.72
752.93
1.45

2943
-906.78
2036.2
116.14
104.99
575.34
261.77
14.79
851.9
617.71
1.53

3056.8
-1015
2042.3
81.58
100.06
581.47
350.84
20.15
952.46
633.37
6.68

3002.5
-1084
1918.1
46.86
300.29
432
424.16
33.35
889.51
579.64
9.79

3172.2
-1170
2002
142.28
309.4
699.16
563.63
14.2
1277
514.19
14.89

1742.6
3787.5

1692.3
3728.5

1774.2
3816.4

1826.1
3744.2

2257.8
4259.7

19

Common Size Balance Sheet of 5 Years:

Particulars
Sources of Funds:
Equity Share Capital
Reserve & Surplus
Net Worth
Secured Loan
Unsecured Loan
Total Debt
C.L. & Provisions
Total Liabilities
Application of Funds:
Gross Block
(-) Depreciation
Net Block
Capital Work in Progress
Investments
Inventories
Sundry Debtors
Cash & Bank Balance
Total Current Assets
Loans & Advances
Fixed Deposits
Total CA, Loans &
Advances
Total Assets

Common Size%
2006-07
2007-08

2008-09

2009-10

2010-11

5.63
29.78
35.41
47.7
4.35
52.05
12.54
100

5.98
32.04
38.02
48.51
2.67
51.18
10.8
100

5.81
24.39
30.2
50.93
2.73
53.66
16.14
100

6.33
30.23
36.56
47.19
3.87
51.06
12.38
100

6.43
31.26
37.69
44.6
1.24
45.84
16.47
100

74.38
-20.39
53.99
1.89
1.22
17.03
5.41
0.55
22.99
19.88
0.04

78.93
-24.32
54.61
3.11
2.82
15.43
7.02
0.4
22.85
15.58
0.04

80.1
-26.58
53.51
2.14
2.62
15.24
9.19
0.53
24.96
16.6
0.18

80.19
-28.96
51.23
1.25
8.02
11.54
11.34
0.89
23.76
15.48
0.26

74.47
-27.47
47
3.34
7.26
16.41
13.23
0.33
29.98
12.07
0.35

46.01

45.39

46.49

48.77

53

100

100

100

100

100

20

 Interpretation:
For the analysis of Balance sheet, we have taken the total of the
liabilities side as base.
The total capital of the company has increased compared to last year because
of increase in reserves & surplus by 6.87 % compared to 2008-09 year.
The secured loan amount has decreased by 2.59 % this means that company
has paid off some its loan amount and so its liability is less.
The fixed assets of the company have increased by 2.09 % which is good
for company.
Total Current assets of the company has increased by 6.22 % as there is a
decrease in the cash balance which is not good for the company because
now it cannot pay off its liability easily.
The current liability of the company has increased by 4.09 % which is not
good because now it has to pay more amounts.

21

The Trend Analysis of the Balance Sheet:

NOTE: Base year taken is 2007.

Particulars
Sources of Funds:
Equity Share Capital
Reserve & Surplus
Net Worth
Secured Loan
Unsecured Loan
Total Debt
C.L. & Provisions
Total Liabilities
Application of Funds:
Gross Block
(-) Depreciation
Net Block
Capital Work in Progress
Investments
Inventories
Sundry Debtors
Cash & Bank Balance
Total Current Assets
Loans & Advances
Fixed Deposits
Total CA, Loans &
Advances
Total Assets

200607

200708

200809

200910

201011

1
1
1
1
1
1
1
1

1.05
1.05
1.05
1
0.6
0.97
0.85
0.98

1.05
0.83
0.86
1.08
0.64
1.05
1.3
1.01

1.11
1
1.01
0.97
0.88
0.97
0.97
0.99

1.22
1.11
1.13
0.99
0.3
0.94
1.4
1.06

1
1
1
1
1
1
1
1
1
1
1

1.04
1.17
1
1.62
2.28
0.89
1.28
0.7
0.98
0.82
1.05

1.08
1.31
1
1.14
2.17
0.9
1.71
0.97
1.09
0.84
4.6

1.06
1.4
0.94
0.66
6.52
0.67
2.07
1.6
1.02
0.77
6.75

1.12
1.51
0.98
1.08
6.72
1.08
2.75
0.68
1.46
0.68
10.26

1
1

0.97
0.98

1.02
1

1.05
0.99

1.3
1.12

22

 Explanation:
Trend analysis is an extension of horizontal analysis. Their methodology
is very simple. The utility of this tool of analysis lies in the fact that while
two years comparisons may provide indication of growth.
Overall assessment:

The equity share capital is increasing year by year and the higher amount
of the base year value.

The net worth is increasing year by year but the total debt is decreasing
year by year.

The total of the balance sheet is higher than base year means increasing
year by year.

Gross block amount is increasing stage but in the net block is not much in
increasing stage. Because the reason behind that depreciation and the
working progress amount is calculated.

The bad thing is that the cash and bank balance is highly decreasing in 2011
year as compared to the Value of base year.

It is not good for the company, if they want to some fund which is required
that fulfilled the new technology.

23

Comparative and Common Size Income statement:

An income statement in which each account is expressed as a percentage
of the value of sales. This type of financial statement can be used to allow for
easy analysis between companies or between time periods of a company. While
most firms dont report their statements in common size it is beneficial to
compute if you want to analyze two or more companies of differing size against
each other. It also allows for the analysis of a company over various time periods,
revealing for example what percentage of sales is cost of goods sold and how that
value has changed over time.

Comparative Income Statement:

Values in Rs.
20062007200807
08
09

Particulars

200910

201011

Income:
Sales Turnover
1845.01 2215.65 2347.5 2318.49 2665.81
(-) Excise Duty
-15.78
-2.33
-2.68
-1.74
-2.23
Net Sales
1829.23 2213.32 2344.82 2316.75 2663.58
Other Income
143.09
97.11
-54.05
69.5
80.71
Stock Adjustments
97.95
9.49
34.85
-18.78
93.63
Total Income
2070.27 2319.92 2325.62 2367.47 2837.92

Common Size Income Statement:

Particulars
Income:
Sales Turnover
(-) Excise Duty
Net Sales
Other Income
Stock Adjustments
Total Income

Common Size % age

20062007200807
08
09
89.12
-0.76
88.36
6.91
4.73
100

95.51
-0.1
95.41
4.19
0.41
100

24

100.94
-0.12
100.83
-2.32
1.5
100

200910
97.93
-0.07
97.86
2.94
-0.79
100

201011
93.94
-0.08
93.86
2.84
3.3
100

 Interpretation:
The income statement or profit and loss account is considered as a very
useful statement of all financials statement. It depicts the expenses incurred
on production, sales and distribution and sales revenue and the net profit
or loss for a particular period. It shows whether the operations of the firm
resulted in profit or loss at the end of a particular period. In comparative
analysis for the income is that the income of the company is gradually
increase in every year.

25

Trend Analysis of Income Statement:

Note: Base year taken is 2007.

Particulars

200607

200708

200809

200910

201011

Income:
Sales Turnover
(-) Excise Duty
Net Sales
Other Income
Stock
Adjustments
Total Income

1
-1
1
1

1.2
-0.15
1.21
0.68

1.27
-0.17
1.28
-0.38

1.25
-0.11
1.27
0.49

1.44
-0.14
1.45
0.56

0.1

0.36

-0.2

0.96

1.12

1.12

1.14

1.37

Interpretation:
Trend analysis is an extension of horizontal analysis. Their methodology
is very simple. The utility of this tool of analysis lies in the fact that while
two years comparisons may provide indication of growth.

The amount of sale is very variable. The amount of net sale is also very
variable. But it is good position.

Total income is increasing means the base year value is lower than other
years.The reason behind that, the stock adjustments are increasing good
stage.

26

Changes in Assets:
In Rs. Cr.
Particulars

2006-07

2007-08

2008-09

2009-10

2010-11

Assets

2044.89

2036.21

2042.29

1918.11

2001.96

Interpretation:
In comparative analysis for assets, it is showing that in 2010 the assets have
gradually decrease and in 2012 it is stable. No major assets increase in last
three years. It means there are not purchasing the assets in major quantity.

27

Change in Liabilities:
In Rs. Cr.
Particulars
Liabilities

2006-07
3716.77

2007-08
3659.14

2008-09
3771.51

2009-10
3663.49

2010-11
3953.85

Interpretation:
In comparative analysis for 2011 years is that liabilities of the company
are increasing highly which is not good for the company. The debtors
have not given money regularly.

28

Change in Profit:
In Rs. Cr.
Particulars
Profit

2006-07
11.34

2007-08
-21.55

2008-09
12.36

2009-10
20.27

2010-11
24.2

Interpretation:
In comparative analysis of profit, in 2010-11 profit of the company has
increase substantially but in 2008 it has decrease substantially.

29

Common Size Statements of Arvind Limited &

Raymond Limited:
Income statement of Arvind Limited & Raymond Limited of Mar16:
Arvind
Consolidated Profit &
Loss account

Income:
Sales Turnover
Excise Duty
Net Sales
Other Income
Stock Adjustments
(A)Total Income
Expenditure:
Raw Materials
Power & Fuel Cost
Employee Cost
Other Manufacturing
Expenses

Raymond
------------------ in
Rs. Cr. -------------- Common
Size%
---Mar '16

8,581.26
-130.85
8,450.41
88.46
27.68
8,566.55

101.55
-1.55
100
1.05
0.33
101.37

4,170.96
494.89
927.75

49.36
5.86
10.98

28.98

Miscellaneous Expenses

1,790.37

(B)Total Expenses

7,412.95

PBDIT(A-B)
Interest
PBDT
Depreciation
Profit Before Tax
Tax
Reported Net Profit

1,153.60
-381.14
772.46
-255.94
516.52
-151.69
364.83

0.34

Consolidated Profit &

Loss account

Income:
Sales Turnover
Excise Duty
Net Sales
Other Income
Stock Adjustments
(A)Total Income
Expenditure:
Raw Materials
Power & Fuel Cost
Employee Cost
Other Manufacturing
Expenses

21.19 Miscellaneous Expenses

87.72 (B)Total Expenses
13.65
-4.51
9.14
-3.03
6.11
-1.8
4.32

PBDIT(A-B)
Interest
PBDT
Depreciation
Profit Before Tax
Tax
Reported Net Profit

30

------------------ in Rs.
Cr. --------Common
---------Size%
Mar '16

5,169.15
-37.79
5,131.36
535.3
102.3
5,768.96

100.74
-0.74
100
10.43
1.99
112.43

2,738.69
193.61
725.08

53.37
3.77
14.13

403.24
1,198.74
5,259.36
509.6
-183.45
326.15
-164.25
161.9
-72.13
89.78

7.86
23.36
102.1
9.93
-3.58
6.36
-3.2
3.16
-1.4
1.75

Balance sheet statement of Arvind Limited & Raymond Limited of Mar16:

Arvind
Consolidated Balance
Sheet

Raymond
------------------ in Rs. Cr.
------------------

Common
Size%

Consolidated Balance Sheet

Mar '16

------------------ in Rs. Cr. ------------------

Common
Size%

Mar '16

Sources of Funds:

Sources of Funds:

Total Share Capital

258.24

4.37 Total Share Capital

61.38

1.79

Equity Share Capital

258.24

4.37 Equity Share Capital

61.38

1.79

Reserves

1,569.98

Net worth

1,631.36

Secured Loans

1,050.16

3,437.02

45.68
47.46
30.55
20.15
50.7
1.83
100

3,204.43

93.23

-1,897.95

-55.22

1,306.48

38.01

249.98

7.07

502.37

1,047.48

14.62
36.86
30.48

92.45

2.69

2,405.96
603.96

70
17.57

82.82 Advances
38.63 Current Liabilities
1.96 Provisions

3,009.92

87.57

1,575.37
56.37

45.84
1.64

Reserves

2,387.38

Net worth

2,645.62

Secured Loans

2,789.63

Unsecured Loans
Total Debt
Minority Interest
Total Liabilities

419.41
3,209.04
52.89
5,907.55

Application of Funds:
Gross Block
Less: Revaluation
Reserves
Less: Accum.
Depreciation
Net Block

5,584.70
-266.09
-2,125.17
3,193.44
146.9

Investments

72.64

Inventories

1,831.88

Sundry Debtors

1,417.25
65.08

Total Current Assets

3,314.21

Loans and Advances

1,578.57

(A)Total CA, Loans &

Advances

4,892.78

Current Liabilities

2,282.20

Provisions

Unsecured Loans
Total Debt
Minority Interest
Total Liabilities

692.55
1,742.71
62.95

Application of Funds:

Capital Work in
Progress

Cash and Bank Balance

40.41
44.78
47.22
7.1
54.32
0.9
100

116.01

94.53 Gross Block

-4.5 Less: Revaluation Reserves
-35.97 Less: Accum. Depreciation
54.06 Net Block
2.49 Capital Work in Progress
1.23 Investments
31.01 Inventories
23.99 Sundry Debtors
1.1 Cash and Bank Balance
56.1 Total Current Assets
26.72 Loans and Advances
(A)Total CA, Loans &

1,266.03

(B)Total CL &
Provisions

2,398.21

40.59 (B)Total CL & Provisions

1,631.74

47.48

(A-B) Net Current

Assets

2,494.57

42.23 (A-B) Net Current Assets

1,378.18

40.1

Total Assets

5,907.55

3,437.02

100

100 Total Assets

31

 Interpretation:
From the income point of view Arvind Ltd. is better than Raymond Ltd,
because if we compare total income of both companies with their profit
then Arvind Ltd.s ratio comes to approx. 4.26 as compared to Raymond
Ltd.s i.e. 1.56.
From the investment point of view Raymond Ltd. is better because of
following reasons:
1. Raymond Ltd. has 25times Reserves as compared to its Equity
Share Capital, while Arvind Ltd. has only 9 times Reserves as
compared to its Equity Share Capital. Raymond Ltd. Raymond Ltd.
can use these Reserves to give bonus shares, to declare share
premium, to declare dividends & to pay its debts in case of
bankruptcy.
2. Raymond Ltd. also has lesser amount to take from its debtors as
compared to Arvind Limited.
3. Raymond Ltd. also has lesser amount to give to its creditors as
compared to Arvind Limited.
4. Raymond Ltd. has taken lesser amount of loans & advances from
third parties. So we can say that Raymond Ltd. is able to manage
its funds very nicely.
5. Raymond Ltd. also has higher amount of liquidity compared to
Arvind Ltd. Raymond Ltd. also has higher investments in
comparison of cash balance. So, we can say that Raymond Ltd. has
not put all its cash balance in its business.
6. If Raymond Ltd. gets bankrupt then after utilization of Reserves, it
has to only bring Rs. 172.73 cr. to pay its debts, while Arvind Ltd.
has to bring Rs. 821.66 cr. in case of bankruptcy after utilization of
Reserves.

32

Ratio Analysis:
RETURN ON INVESTMENT (ROI) RATIOS:
Return on Capital Employed:
Ratio%:
ROCE
Years
2006-07
2007-08
2008-09
2009-10
2010-11

Formula:( EBIT/CE
*100)
Rs. Crores
(197.12/3787.49) *100
=5.20
(206.81/3737.98) *100
=5.53
(168.15/3826.51) *100
=4.39
(265.32/3290.58) *100
=8.06
(350.24/4259.71) *100
=8.22

Note: Capital Employed = Equity Capital + Preference Capital + Reserves and Surplus
+ Long Term Debt- Fictitious Assets

33

 Interpretation:
A measure of the return that a company is realizing from its capital
employed. The ratio can also be seen as representing the efficiency with
which capital is being utilized to generate revenue. It is commonly used as
a measure for comparing the performance between businesses and for
assessing whether a business generates enough returns to pay for its cost
of capital. Of course the higher the ratio, the better will be the profitability
of the company.
Return on Net Worth:
Ratio%:
RONW
Years
2006-07
2007-08
2008-09
2009-10
2010-11

Formula:( PAT/ NW *100)

Rs. Crores
(25.27/1316.31) *100 =1.92
(27.36/1391.51) *100 =1.96
(-47.87/1138.80) *100 = 4.20
(52.00/1339.29) *100 =3.88
(134.8/1490.40) *100 =9.06

34

 Interpretation:
The amount of net income returned as a percentage of
shareholders equity. Return on net worth measures a
corporation's profitability by revealing how much profit a
company. This ratio indicates the productivity of the owned
funds employed in the firm. However, in judging the
profitability of a firm, it should not be overlooked that during
inflationary periods, the ratio may show an upward trend
because the numerator of the ratio represents current values
whereas denominator represents historical values. it concludes
the resources of the firm are being used, higher the ratio, better
are the results.

SOLVENCY RATIOS:
Net Asset Value:

Ratio: NAV
(Rs.)
Years
2006-07
2007-08
2008-09
2009-10
2010-11

Formula:( NW/ Avg.

outstanding
Eq. shares *100)
Rs. Crores
(1316.31/20. 938)*100
=62.87
(1391.51/21.898) *100
=63.55
(1138.80/21.898) *100
=52.00
(1339.29/23.198) *100
=57.73
(1490.40/25.440) *100
=58.58

35

 Interpretation:
This ratio measures the net worth or net asset value per equity share.
Its thus seeks to assess as to what extent the value of equity share
of a company contributed at par or at a premium has grown or the
value/wealth has been created for the shareholders. The higher the
ratio is, the better the financial position of the company. If, we
assume the no. of equity shares issued is no change in net worth of
the company. The book value per share decreased from 2008-09
and increased in 2011 indicating that the net worth of the company
decreased and then increased in 2011.

Debt Equity:
Ratio: Debt Equity
((Times)
Years
2006-07
2007-08
2008-09
2009-10
2010-11

Formula:( Long Term

Debt/ NW*100)
Rs. Crores
(1934.31/1316.31) *100 =
1.47
(1872.46/1391.51) *100 =
1.35
(2023.94/1138.80) *100 =
1.77
(1870.58/1339.29) *100 =
1.40
(1812.12/1490.40) *100 =
1.22

36

 Interpretation:
This ratio indicates the ability to pay back the long term borrowings
so the lower the ratio, the better it is. As we see that the debt equity
ratio is increasing from 2008-09, this indicates that the company does
not have sufficient funds to pay back its debts. The ratio should be
ideally less than 1, but then as the ratio has slightly decreased from
2010-11, this indicates the companys position has improved to some
extent. But still company is facing crisis in terms of paying back the
long term borrowings.

DU PONT ANALYSIS:
Ratio
RONW (%)
Formula (PAT/ NW) *100
(25.27/1316.31) *100=
2006-07 1.92
(27.36/1391.51) *100=
2007-08 1.96
(-47.87/1138.80.31) *100=
2008-09 -4.20
(52.00/1339.29) *100=
2009-10 3.88
(134.80/1490.40) *100=
2010-11 9.06

:
:
:
:
:
:
:

Net Profit Margin (%)

(PAT / NS) *100
(25.27/1829.23)
*100=1.38
(27.36/2213.32)
*100=1.23
(-47.87/2344.82) *100=2.04
(52.00/2316.75)
*100=2.24
(134.8/2663.58)
*100=5.06

37

*
*

Net Worth Turnover

Net Sales/ Net Worth

(1829.23/1316.31) =1.39

(2213.32/1391.51) =1.59

(2344.82/1138.80.31) =2.06

(2316.75/1339.29) =1.73

(2663.58/1490.40) =1.79

 Interpretation:
This ratio analysis shows increase in RONW through which we can see
improvement in both net profit margin as well as net worth turnover. In
other word the overall ROI has improved due to higher resource efficiency
as well as higher operating margins. In year 2009 thus there is fall in both
net profit margin as well as net worth turnover. When it gradually increases
in year 2010 and 2011 thus we can see improvement in both ratios which
is good for company.

38

Suggestions:

In 2010-11 as compared to 2009-10, the sales have comparatively

decreased and Assets have increased, Company should take efforts in
boosting up its sales and make optimum utilization of Assets which it
possesses.

It is observed that Companys Net profit margin ratio has increase by 5.06%
in 2010-11 as compared to 2009-10; here company is doing excellence
work so no need to change it.

It has been seen that RONW in 2008-09 was -4.20% 2009-10 was 3.88 %
and finally in 2010-11 was only 9.06 %. Thus RONW is increase gradually.
So the Company should has made effort in optimizing the usage of the
funds invested by Equity share holder.

It is observed that Debt Equity has increased in 2008-09 was 1.77 times &
2010-11 it has decreased to 1.22 times. This indicates company has to do
more work to improve their condition.

39

Conclusion:
The project report on the topic Financial statement analysis is a best
method to analyze the financial position of the company and helps in forecasting
the future trend.
It is observed that company has improved its standing by lowering the debts, but
it is not achieved satisfactory profit margin, it has gone low in 2008-09. Company
has to adopt various methods that improve sales i.e. paying incentives to staff,
advertisement in market, etc. if the sale will increase the Service provided will
increase which will indeed decrease the production cost (operating cost) which
will lead to maximization of profit and optimum utilization of resources available
to the company. Another thing, company has to maintain a cash flow to decide
cash required to be kept for speculation, operation and emergency purpose, as
excess cash is loss of interest. It is also seen that Return on investment is very
low. Company should properly analyze different option available for investment
and after considering the cost of investment, selection of a proper investment plan
should be done, so that more returns are possible.

40