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PROJECT FOR MBA FINANCE DEPARTMENT REPORT ON RATIO ANALYSIS IN EXIDE INDUSTRIES
Typology: Thesis
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Submitted By HARISH KUMAR.N REG NO. In partial fulfillment for the award of degree Of MASTER OF BUSINESS ADMINISTRATION Under the Guidance of MR.RAJESH.R, MBA,M.Phill., ASSISTANCE PROFESSOR
Department Of Management Studies JUNE- 2014 This is to certify that the report entitled “A STUDY ON RATIO ANALYSIS TOWARDS EXIDE INDYSTRIES LIMITED, HOSUR” is the Bonafied record work done.
By HARISH KUMAR.N REG NO: 610812631016 Of MBA during the year 2012-
Guide Head of the Department Mr.R.RAJESH, MBA.,M.Phil Dr. A.RAVI, MBA, M. Phil, PhD
Submitted for the Viva-Voce examination held on___________________
Internal Examiner External Examiner
I am thankful to the trustee and the secretary of our college and Dr. S.CHITRA ME, M. Phil the principal of our college for permitting and encouraging me for successfully completing the Project work.
My special words of thanks to Dr. A.RAVI, MBA, M. Phil, Ph.D. Prof & Head, Department of Management Studies, PMC-TECH for their support and helping me lot and clearing my doubts in project that completed my project successfully.
I sincerely express my deep sense of gratitude to Mr.S.K KHAN – PERSONEL MANAGER of EXIDE INDUSTRIES LIMITED, HOSUR, for providing me all facilities and valuable guidance throughout my project work and I would like all the employees in the company who had helped me to complete the project success full.
I proudly privilege to express my hearty thanks to our college management and my faculty guide Mr.R.RAJESH,MBA,M.Phil Department of Management Studies, Er. Perumal Manimekalai College of Engineering, Hosur. Who have helped me a lot in completing my project through their constant encouragement and suggestions for her continuous support for me in carrying out all my project activities.
I thank all my Faculties of Department of Management Studies for their continuous support for me in carrying out all my project activities.
Chapter Content Page No
List of Tables List of Charts
A. Introduction A.1. Introduction to Project 1 A.2. Industry Profile 2 A.3. Company Profile 3 B. Design of the study B.1. Statement of the Problem 13 B.2. Objectives 14 B.3. Research Methodology 15 B.4. Limitation 16 B.5. Scope of the Study 17 2
A. Literature Review 18 B. Theoretical Overview 20 3 A. Analysis & Interpretation 26 B. Finding 56 Suggestion 57 Conclusion 58
Table No Name of Charts Page No.
1 .1 Current Ratio
1 .2 Liquidity^ Ratio
2.1 Inventory Turnover Ratio
2.2 Fixed Assets Turnover Ratio
2.3 Working capital Ratio
3.1 Return on^ Equity Ratio
3.2 Return on investment Ratio
3.3 Return on asset Ratio
3.4 Return on Total Assets Ratio
4.1 Net Profit Ratio
4.2 Gross Profit Ratio
4.3 Operating Ratio
5.1 Earning per Share
6.1 Proprietary Ratio
6.2 Current Assets and^ Fixed Assets Ratio
Ratio Analysis is the process of determining the significance of operating and financial characteristic of the firm’s financial data. The goal of financial management is to determine the effectiveness and efficiency of the company as reflected in the financial records and reports. Ratio Analysis disclosing status of investments is known as balance sheet and the statement showing the results is known as profit and loss account.
This title of the project is “A comparative study on suppliers and that client companies with respective to the Ratio Analysis”.
The entire study is based on secondary data. The secondary data were collected from books, journals, and published annual reports.
The study covers a period of five years starting from 2009-2013. The tools used for this study were ratio analysis and trend analysis.
Hence an attempt had been made in this study to analysis the financial position of the company especially regarding its liquidity and efficiency profitability position and provides valuable suggestions or improvement.
A Ratio is a mathematical relationship between two items expressed in a quantitative form. It is defined as the systematic use of ratio to interpret the financial statements so that the strengths and weaknesses of a firm as well as its historical performance and current financial condition can be determined.
Ratios can be defined as “Relationships expressed in quantitative terms, between figures which have cause and effect relationships or which are connected with each other in some manner or the other”.
Ratio analysis is an age-old technique of financial analysis. It is “the process of determining and presenting the relationship of items and groups of items in the financial statements”.
Ratio analysis is one of the techniques where ratios are used as a yardstick for evaluating the relationship between component parts of financial statements to obtain a better understanding of the firm’s position and performance.The importance of ratio analysis lies in the fact that it presents facts on a comparative basis Conclusions can be drawn regarding the liquidity position of a firm. It is useful for assessing the long-term financial viability of a firm.
ADVANTAGE OF RATIO ANALYSIS:
a) The advantages of ratio analysis are as follows.
b) Forecasting.
c) Managerial control.
d) Facilitates communications.
e) Measuring efficiency.
STEPS IN RATIO ANALYSIS
Selection of relevant information. Comparison of calculated ratios. Interpretation and reporting.
A.2. Industry Profile
The Indian storage batteries market is approximately estimated at US 500 million with the automotive batteries segment 60 to 70 percent of the overall market value. In terms of volumes, OE segment comprising around 1.2 to 1.3 million units per annum, various batteries(clock wise from bottom left)two 9-volt, two AA, one D, a handheld ham radio battery, a cordless phone battery, a camcorder battery, one C, and two AAA.
A battery is one or more electrochemical cells, which store chemical energy and make it available as electric current. There are many types of electrochemical cells, including galvanic cells, electrolytic cells, fuel cells, and voltaic cells, an electrical “battery” is two or more cells connected together, but often a single cell is called a battery. Battery characteristics may vary due to many factors including internal chemistry, current drain, and temperature.
There are two types of batteries, primary (disposable) and secondary (rechargeable), both of which convert chemical energy to electrical energy. Primary batteries can only be used once because they use up their chemicals in an irreversible reaction. Secondary batteries can be recharged because the chemical reactions they use are reversible; they are recharged by running a charging current through the battery, but in the opposite direction of the discharged current. Secondary, also called rechargeable batteries can be charged and discharged many times before wearing out, after wearing out some batteries can be recycled.
ABOUT BATTERY:
A battery is perhaps the only gift of science where electric is stored by means of electro chemical potentials guided by electro chemical reaction. Chemical reaction initiated by electricity. Which take place with the means of electron exchange between the reactions, as and when required the stored energy can be counted back to electro chemical reaction. In certain cases the electrical chemical reactions guiding the energy transformation is not reversible. Such batteries are called ordinary cells.
A.3. Company Profile
HISTORY OF EXIDE
The company was incorporated in January 1947 as Associated Battery Makers to purchase all or any of the assets of the business of manufacturers, buyers and sellers of and dealers in and repairers of electrical and chemical appliances and goods carried on by the Chloride Electric Storage Company.The name of the company was changed to Chloride India in 1972 which later got changed to Chloride Industries in 1988. Finally in 1995 the name was changed to Exide Industries.
In the year 1947, the company incorporated Chloride International Ltd. In the year 1969, the company set up their second factory at Chinchwad, Pune. In August 2, 1972, the name of the company was changed to Chloride India Ltd. In the year 1976, they established R&D centre at Kolkata. In the year 1981, the company set up third factory at Haldia, West Bengal. In October 12, 1988, the name of the company was again changed to Chloride Industries Ltd. In the year 1994, the company made a technical collaboration with Shin Kobe Electric Machinery Co. Ltd. of Japan, a subsidiary of the Hitachi Group. In August 25, 1995, the company changed their name to Exide Industries Ltd. In the year 1997, the company set up their fourth factory at Hosur, Tamil Nadu.
In the year 1998, the company acquired the industrial/ manufacturing units of Standard Batteries Ltd located at Taloja&Kanjurmarg (Maharashtra), Guindy (Tamilnadu) and plant at Ahmednagar (Maharashtra) from Cosepa Fiscal Industries Ltd as a going concern. In the year 1999, they acquired 51% shareholding in Caldyne Automatics Ltd. In the year 2000, the company acquired 100% stake in Chloride Batteries S E Asia Pte Ltd, Singapore and 49% stake in Associated Battery Manufacturers (Ceylon) Ltd, Sri Lanka.
In the year 2003, the company commissioned a plant at Bawal, Haryana. Also, they formed a new joint venture in UK, ESPEX Batteries Ltd, with 51% holding. In the year 2004, Associated Battery Manufacturers (Ceylon) Ltd, Sri Lanka became a subsidiary consequent to acquiring further 12.50% equity holding.
In the year 2005, the company made investment in 50% shareholding of ING Vysya Life Insurance Company Ltd. In the year 2007, Caldyne Automatics Ltd became 100% subsidiary consequent to acquiring the balance 49% shareholding.
In the year 2008, the company acquired 51% stake in Lead Age Alloys India Ltd. During the year 2008-09, the company received an order for 5000 batteries for the Singapore Taxi market amidst tough competition. Honda Japan selected the company as an exclusive supplier initially for 2 years for VRLA MC battery. The company entered into a technical collaboration with Changxing Noble Power Sourcing Co. Ltd., China for manufacture of Deep Cycling E-bike batteries for electric bicycles and scooters. During the year 2009-10, the company divested their 26% shareholding in Ceil Motive Power Pty Ltd, Australia (as associate company).
In August 12, 2010, the company entered into an agreement for acquisition of 22,93, equity shares of Leadage Alloys India Ltd representing 49% of the shares in the said company. The Company held 51% of the shares in Leadage Alloys India Ltd and with this acquisition Leadage Alloys India Ltd will become a wholly owned subsidiary of Exide Industries Ltd. In January 2012, the company entered into technical collaboration and assistance agreements with East Penn Manufacturing Co. Inc. USA.
Under these agreements, East Penn will provide technical assistance and support for the manufacture of automotive, motive power, standby, telecom, UPS, solar and traction batteries for Exide's various plants in India. This technical assistance will include a wide range of activities including the enhancement of processes for manufacturing, designs, quality control, and procurement.
The company has already launched Deep Cycling Electric Bike batteries for electric bicycles and scooters and is also in the process of developing batteries for Stop-Start Micro Hybrid Vehicles in collaboration with The Furukawa Battery Company Ltd, Japan. The company is also exploring the possibility of developing and marketing Lithium-ion batteries for the Electric Vehicle Segment.
The products manufactured by the company include
Automotive Batteries:
Automotive Batteries In India the company markets the products under Exide, SF, Sonic and Standard Furukawa brands and supplies to all car and two-wheeler manufacturers. In international market it sells products under Dynex, Index & Sonic brands. It has a distribution network of 4000 outlets, supported by 4 regional offices and 28 branch offices. It also exports batteries to the Middle East, Japan and CIS countries.
Industrial Batteries:
Industrial Batteries It manufactures industrial batteries in a wide range from 2.5 Ah to 20,600 Ah. In India it sells products under Exide, Index, SF, CEIL and Power Safe brands and in international market under CEIL, Chloride and Index brands. Industrial batteries cater mostly to the infrastructure sector such as railways, telecom, power plants, solar cells and other industrial segments including uninterrupted power supply, inverters and traction batteries.
Submarine Batteries:
Submarine Batteries the Company is also engaged in manufacturing of high-end submarine batteries (Type 1, 2 & 3). It is one of the five companies in the world which has capacity to manufacture submarine batteries for Russian and German types. It manufactures two to three submarine batteries a year for India’s defence requirement.
Simultaneous to providing credible value addition to customers, employees and shareholders: being recognized by society as a responsible corporate citizen. In addition, achieving operational excellence along with earning for environmental protection.
To carefully balance the interests of all stakeholders: strive to fulfil aspirations of the employees and pursue excellence with passion without deviating from our core values.
To modernize, upgrade and improve facilities or higher production and productivity. To achieve better quality in products. To strengthen the marketing organization to effectively compete in national and international markets. To get ISO certifications. To maintain and developed highly motivated Human Resources to achieve professional competence and ensure career development of its work force. To maintain market shares in industry.
FMAO-DIN60 Exide matrix, a state of the art automobile battery that is truly maintenance free. Its international technology ensures is required no topping up and is capable of looking after itself. This is why, Exide matrix comes to you absolutely sealed for life. You can now forget the hassles of battery maintenance and enjoy the pleasures of driving, uninterrupted.
FMAO-MA354R Exide matrix, a state of the art automobile battery that is truly maintenance free. Its international technology ensures is required no topping up and is capable of looking after itself. This is why, Exide matrix comes to you absolutely sealed for life. You can now forget the hassles of battery maintenance and enjoy the pleasures of driving, uninterrupted.
FEFO-ATB-38B20R Exide freedom. India’s only all-terrain battery. Guaranteed to perform consistently on any terrain, in extreme temperatures. Especially in India. Maintenance free, factory charged ready for fitment, magic eye.
B .Design of the study
B.1.Statement of the problem The study is based on the data obtained from the annual reports of the concern i.e. balance sheet and profit and loss account.
The period under study has been only for 5 financial year’s i.e. 2008 to 2013.
The study doesn’t take into account the other areas such as dividend policy, capital budgeting etc
Financial statements do not disclose the correct financial position of the company.
Information shown in financial statements is not precise.
Statements cannot be comparable with one concern to other concern.
Accounting practices and methods should differ from one company to other company.
