rasj verma

8/14/2019 Rasj Verma

http://slidepdf.com/reader/full/rasj-verma 1/71

Chapter No. 1

Executive Summary

In this project, work selected. Kirloskar oil Engines limited Khadki, Pune because it

is one of the most different oil Engines Company. In this project the study of

Company’s annual report through an analysis & interpretation of Treasury

Management has been undertaken.

The management is not satisfied with only total figures recorded in the financial

statements. I want to know the financial strength of the Company such the liquidity,

profitability and solvency position of the co. Treasury Management is the process of

identifying the financial strength any weaknesses of the company by properly

establishing relationships between the items of the balance sheet and the profit and

loss account. The figures recorded in the financial statement are analysed, interrelated

and then they are interpreted i.e. the conclusions are drawn.

1



Chapter No. 2

PROFILE OF COMPANY

Kirloskar Oil Engines limited

KIRLOSKAR OIL ENGINES LIMITED

The Kirloskar Story

It has now been more than a century since the Kirloskar story started. We started with an aim

of becoming the pioneers in fields in which our country needed innovation. In the 100 years

and more that we have been in existence as a family and as an organisation, we've been

seminal to Indian agricultural and industrial development. We gave India its first iron plough,

pump and engine; inventions that were deviced from the need of the hour and went on to

become signs of the time. Which is why our group history can in many ways can be

considered a history of the economic and industrial revolution in India

2



The first Kirloskar Group Company

Kirloskar Brothers Limited (KBL) - the first Kirloskar venture at Kirloskarvadi was to

become the base for all of the Kirloskar Group’s subsequent enterprises. It began as the only

Indian company with its own standard products - the fodder cutter and the iron plough, which

competed with the British products.

KBL also manufactured groundnut shellers, sugarcane crushers and pumps, which were to

usher in a new economic order in the Indian industry. To power these machines, diesel

engines, coal gas generators and electric motors were developed at Kirloskarvadi.

In a display of great versatility, KBL then shifted its focus to fluid handling and control. As

India's largest manufacturer of pumps and valves, and also the group's flagship company,

KBL lends its strength and expertise to every new venture of the Kirloskar Group.

Playing a part in the War

The intensified boycott of the British goods and the approaching World War threatened to

stop imports of machine tools into India. The Kirloskar, with characteristic foresight

began making machine tools. This paradigm shift of sorts, from farm implements to

machine tools, created a new company - The Mysore Kirloskar Limited. This company,

situated in Harihar, benefited greatly from the patronage of yet another Raja - the

3



Maharaja of Mysore. In the first month of production, Mysore Kirloskar sold all of

manufactured seven lathes.

The new generation -Innovation, creation, tradition

From colonialism to independence

An important change, for the country, and for one of its premier industrial houses, the

Kirloskar Group. The altered political climate of the 1940s heralded the end of the princely

patronage for enterprise. The policy shifts and changes in authority were the order of the day.

This marked a turning point for the group.

Shantanurao Kirloskar, the eldest son of the founder travelled to Pune to

initiate a new aspect of the group's activities - diesel engines. His experience of

trying to secure the land for his factory in Pune was quite different from his

father's in Kirloskarvadi. There was no benevolent ruler here to bestow acres

gratis. Shantanurao had to face the tangle of red tape and public resistance to acquisition of

land for industrial purposes.

Finally, after arguing that factories have a longer life than human beings Shantanurao

Kirloskar won a place for Kirloskar Oil Engines Ltd. (KOEL), twelve months after signing an

agreement of collaboration with Associated British Oil Engines Export Ltd. of UK.

This collaboration, incidentally, was the first of its kind between an Indian and a

foreign company, and signified a bridging of the technological gap between east and west.

4



The KOEL factory was incorporated in 1946, and soon after that gave India her first

vertical high-speed engine. Brijlal Sarda, who reported its satisfactory running for over 4

decades, bought this first engine!

To electric motors and pneumatics

The making of the electrical motor. This was the second of Laxmanrao Kirloskar's long

cherished dreams, the first being the making of an engine. Ravi Kirloskar brought his

youngest son, this task to completion, in 1946. Way back then, the authorities whom Ravi

Kirloskar had approached for land was astonished by the request for 25 acres. Today,

Kirloskar Electric Company Limited (KECL) has four plants occupying several times that

acreage.

The dawn of a new millennium

To meet the changing demands of a global business environment and emerging economic

trends, the Kirloskar Group has refocused and restructured its direction by concentrating on

its core segment of agriculture, water supply, power, and air conditioning. By consciously

opting out of hospitality, advertising and unreal services, the Group has channeled its

potential in these core sectors.

The Group aims at unlocking the strength and value in the Kirloskar brand and distribution to

enhance returns for its stakeholders. It has identified and is implementing processes that

would bring greater customer focus and competitiveness.

Today, the Kirloskar Group is a conglomerate with interests across a diverse range of

industries. It is still spurred by the simple yet profound ethic born with Laxmanrao Kirloskar

5



that where there is will there are many ways.

The setting up of KECL and other Kirloskar companies saw a major role being played

by Nanasaheb Gurjar, a lawyer who made industry his sole area of operation. Though the

development of air compressors was an established activity at Kirloskarvadi, a full-fledged

plant to manufacture the same was set up at Pune in 1958, under the eventual management of

Shreekant Kirloskar, Shantanurao's youngest son. In collaboration with Broom and Wade of

England, Kirloskar Pneumatic Company Limited began the manufacture of air compressors

and pneumatic tools.

Today, its turnkey expertise is sought in almost every major industrial project in India.

Collaboration with Twin Disc Inc. of the USA has taken the company into torque invertors,

marine gearboxes and rail traction transmissions.

A new direction - services

The phenomenal success of the Kirloskar name prompted entrepreneurs and businessmen of

the time to approach the group for guidance and expertise. This gave birth to the concept of

formalised engineering consultancy and a new company - Kirloskar Consultants Limited

(KCL) in 1963. Marking an extension of the group's repertoire from manufacturing to

services, KCL, in its 25 years of operation, has contributed to critical areas such as defence,

irrigation, roads and environment. This paradigm shift saw the setting up of yet another

service company - Pune Industrial Hotels Limited in 1964, the Kirloskar Group's first foray

into hospitality. This company set up Hotel Blue Diamond in Pune and began to manage

Hotel Pearl in Kolhapur. The Baker's Basket confectionery chain and the Hotel and Catering

Consultancy Services (HOCON) were also set up.

6



1. The dawn of a new millennium

To meet the changing demands of a global business environment and emerging economic

trends, the Kirloskar Group has refocused and restructured its direction by concentrating

on its core segment of agriculture, water supply, power, and air conditioning. By

consciously opting out of hospitality, advertising and unreal services, the Group has

channeled its potential in these core sectors.

The Group aims at unlocking the strength and value in the Kirloskar brand and

distribution to enhance returns for its stakeholders. It has identified and is implementing

processes that would bring greater customer focus and competitiveness. Today, the

Kirloskar Group is a conglomerate with interests across a diverse range of industries. It is

still spurred by the simple yet profound ethic born with Laxmanrao Kirloskar that where

there is will there are many ways.

HISTORY

Kirloskar oil Engines limited was formed in 1946, by late Mr. Shantanurao Kirloskar

was founded Kirloskar oil Engines limited with the object of carrying on business of

manufacturing and selling of all type of internal combination engines. The factory is situated

on 55 acres of land in Khadki, Pune and was inaugurated on 25 th April 1949.The production

commenced immediately thereafter. The company secured the technical collaboration of

British oil Engine (Export), now known as Hawker siddeley Brush International limited, for

the period of 15 years up to 26th June 1961.

7



Initially production was restrieted to small diesel engines having agriculture and

industrial applications. Over the period of time, the company developed medium and large

engines; The year 1954-55 was the beginning of the decade of rapid growth. The company

began exporting engines to Germany, The Middle East and The Far Eastern countries.

In 1954 the company started manufacturing bearing primarily for the captive use

stationary engines. In 1957,The Company entered into a technical collaboration agreement

with Glacier Metal Co. Ltd. To cope-up with the increased demand, The Company launched

the first phase of its expansion in 1958. In 1959-60, the company acquired Shivaji Works

Ltd.as a subsidiary.

The Company entered into technical collaboration agreement with French Company,

e-Agro French, 1961-62, for the manufacturing of light air cooled engines of modern design

in the range of 20 to60 hp: In 1970-71, The company promoted Kirloskar Kisaan Ltd., as

fully owned subsidiary. In 1979, the company got the approval for collaboration agreement

with Societe D’Etidues De Machines Thermiques (SEMT), France for manufacturing of

pielstick engines. The agreement is valid for 13 years from 1981.In 1983-84; the Company

manufactured the high power diesel engines in collaboration with SEMT Pielstick of France.

In 1989-90, the Company undertook a scheme for modernisation of the Company’s

plant at pune and Ahmednagar. During 1990-91 Company undertook packaging of gas

turbines for industrial power generation market in 1MW to 10MW range in association with

Solar Turbines Inc U.S.A. a subsidiary of Caterpillar U.S.A.

8



In early 1993 KOEL purchased the product know how and selected manufacturing line

from IFA an East German Company.

In late 1993 Company. Secured the ISO 9001 certificate in first go.

In 1995 - Approval from Government was received for setting up a project at Ambad,

District Nasik in Maharashtra for the manufacture of 300 units per annum of heavy duty large

diesel generating sets. In this connection, a technical collaboration agreement was entered

into with M.A.N.B & W Diesel GmbH, West Germany.

In 2000, KOEL has been named the country's best automotive components

manufacturer by the Automotive Components Manufacturers Association (ACMA) for 1999-

2000. The Company has launched its `Gen Power 2000 Project' in Guwahati in collaboration

with Assam Allied Industries.

In 2001, Kirloskar Oil Engines has launched a new range of ready-to-use gensets.

In 2003, KOEL becomes the first company in the country to achieve compliance with

the Central Pollution control Board's mass emission and smoke norms.

9



Business Location and Services

10



Organization Structure

11



Corporate Social Responsibility:

KOEL, as has been its tradition, willingly wears its social responsibility by sustaining

initiatives that support the community. Throughout the year, it organized programs to

improve the status of education and health of people living in the vicinity of its premises.

KOEL continues with following initiatives

:

1. HEALTH 2. EDUCATION

Individual Sponsorship

• Health check up camp • Donation to SOFOSH and labs

• Spectacles distribution • Financial support to orphans

Women • Performance awards for school children

• Women health programme • School bag and raincoat distribution

• Yoga camp for women

Community• Tree plantation Awareness

• Spraying & fogging • Computer literacy for school children

• De-addiction in workshop • Livelihood programme for youth

• Pollution check ups • Study visits by school and college students

• HIV/AIDS Awareness program

Employability

• Various occupational training programme for

making candles, washing powder, Agarbatti,Rakhi & Papad.

3. GENERAL

• Sport Tournament

• Community Gymnasium

• Well Reconstruction

• Environment program by Green peace

• Energy Conservation Competition

12



KOEL Objectives

Kagal Project should be financially viable without considering the incentive benefits.

To recover 100% Fixed Capital Investment at Kagal within shortest possible period in

terms of VAT refund (recovered on Sales and paid to GOM) from GOM. This is

critical in view of KOEL’s > 90% sales being out of Maharashtra and also because of

proposed CST phase out plan of the Government.

Any restructuring by KOEL should not be perceived as a device for solely availing

incentive benefits from GOM.

While achieving above, follow Corporate Governance guidelines and keep intact the

image and reputation of KOEL.

Restructuring, if any, should be long term. Restructured Company should be a going

concern. Its existence shouldn’t end after availing of incentive from GOM.

Restructuring should be logical, justifiable and should achieve long-term business

objectives. E.g. creation of customer centric organization focusing on sales and

servicing of products. Price to the ultimate customer should remain the same. Creation

of separate manufacturing/sales & services Company entails additional overheads,

which should be offset by increased

13



Vision 2012

Will become a globally major player in off - highway engines & power

generation businesses by offering winning combination of quality, cost & delivery through

innovation & unmatched services. Thus, we will strive to attain amongst top ten positions

world wide in selected engine businesses.

While pursuing the above, we will continue to enhance the value of engine

bearing & values business. Business for us is the best service, customer care and a lifelong

relationship.

Mission 2012

Over 11% profits on sales of Rs.8525 Cr.

Achieve CII Exim Business Excellence Score of 600+ points by

Assessment Year 2012.

Sales turnover of Rs. 20,000 million

Profit of Rs. 2000 million

Exports at 25% of total sales

14



Increasing market share by 5% in the domestic market

1,00,000 engines per annum by 2008-2009

Process centric customer driver organization.

Kirloskar has –got market presence in all the sectors generic to the engines. i.e. Agriculture,

industry and services.

15



Product Profile

1982First pielstick engine manufactured.

1984

Thyristor convertor made; Kirloskar Ebara JVestablished for specialisation in Pumps.

1988

Kirloskar Group completes a 100 years in operation;

the Centenary year.

1991Kirsons Trading Pvt. Ltd. Singapore established.

1992Kirloskar Ferrous Industries Ltd. established.

1993

All major companies in the group receive ISO 9001Certification.

1996

India's first Concrete Volute Pump installed inDahanu;KOEL and KEC celebrate Golden Jubilee

Merger of Kirloskar Oil Engines Limited, withPrashant Khosla Pneumatic Limited on March 1,1996.

1998

1. With t Baramati, undertakings of Poona Industrial Hotel Ltd.were sold to Taj Group of Hotels.

2. Shivaji Works Ltd., merged with Kirloskar Oil EnginesLimited.

3. Kirloskar Oil Engines Limited gets ISO 14001certification for Environment Management Systems fromTUV.

he stepping down of Mr. Vijay Kirloskar as Chairman andDirector as on 23rd July 1998, the following took over asChairman and Managing Directors of the respectivecompanies:

Mr. Atul C. Kirloskar, Kirloskar Oil Engines Limited.Mr. Sanjay C. Kirloskar, Kirloskar Brothers Limited.

16



Mr. Rahul C. Kirloskar, Kirloskar Pneumatic Companylimited.

2. Mr. Gautam Kulkarni co-opted as an additional director onthe Board of Kirloskar Oil Engines Limited, and the directorsappointed him as the Joint Managing Director with effectfrom 20th August 1998, for a period of five years.

3. Joint Venture between Kirloskar Oil Engines Limited andDenso Corporation, Japan, for the manufacture of car air conditioners and aluminium radiators for Automotiveapplications.

1999

1. Hotel Blue Diamond, Pune and Hotel City Inn, 4.Collaboration Agreement of Kirloskar Brothers Limited withEbara Corporation-Japan for Hydro Turbines.5. ISO 14001 Certifications for major plants of Kirloskar Brothers Limited and Kirloskar Oil Engines Limited.

6. All India trophy of largest exporter of pumps for 11thsuccessive year from EEPC.

2000

Mr. Vijay Kirloskar and six companies under him separate from theKirloskar group of Companies.

Launch of Kirloskar Green Power Ideas by KOEL at New Delhi on26th Feb 2000.

2001

KBL gets order to supply concrete volute pumps worth 78 MillionUS Dollors to world's largest hydro-electric project : Sardar Sarovar

Narmada Valley Project·

Toyota Corp. Japan forms a joint venture with Kirloskars tomanufacture multi-utility vehicle QUALIS.

2002

Agreement to dissolve the partnership between Kirloskar OilEngines Limited and Briggs & Stratton Corporation, USA.

Agreement to dissolve the partnership between Kirloskar OilEngines Limited and KNECHT Filterwerke GmbH, Germany.

Toyota-Kirloskar introduces its latest offering in India the luxurysedan CAMRY.

17



Kirloskar Oil Engines - Industrial Engines, Epacks and Gensets for the Agriculture, Power

Generation, Construction, Material Handling, Rental and Telecommunication Industries

Founded in 1888, Kirloskar Group today is a multi-product, multi-location Engineering

Conglomerate with annual sales exceeding $1.0 billion. We are the leader of the Indian power

generation, construction, material handling & agriculture sectors.

With annual sales exceeding $320 million, engine quantity exceeding 200,000 engines and

rapidly growing exports to European Union, North America & China, we are India's largest

manufacturer of diesel engines, both air-cooled and liquid cooled, covering a power range of

3hp to 11,000hp. Kirloskar engines conform to US as well as European Tier II emission

norms. Tier-III designs are in progress. These power 80 different applications in nine distinct

segments such as: agriculture, power generation, construction, material handling, earth

moving, mining, offshore, fluid handling, agro industrial and defence automotive retrofits.

We also manufacture over 35,000 AC generators in 5kVA to 300 kVA range.

18



QUALITY AND PROCESS GEAR

• ISO 9001, QS 9000, ISO 14001 and TS 16949 certified plants

• Self-certification status for quality systems from the Indian Army

• Modern Emission, Research Center and NVH Lab

• eBusiness Suite covering the entire demand-supply chain, including CRM module

ePacks FOR STAND-BY AND PRIME POWER FOR GENERATING SET OEMS

ePack is a sub assembly of engine complete with cooling package and alternator close

coupled and resting on a common base-frame through anti-vibration mountings. With over

45% share of the Indian power generation segment we lead the world majors such as Perkins,

Cummins, Iveco, and Caterpillar by a substantial margin. With annual volumes exceeding

55,000 gensets in the 15kVA to 300kVA range, we represent the world's largest Genset

business.

GENSETS FOR RENTAL, TELECOM AND CELLULAR POWER

We are the first choice of global telecom OEMs and cellular service providers. A national

fleet of over 45,000 Kirloskar Green Gensets ensures India's cellular network is kept ticking

19

http://www.power-technology.com/contractors/gensets/kirloskar/kirloskar2.html



round the clock. To just name a few cellular majors, AT&T, Airtel, Hutch, Alcatel, Idea

Cellular, BPL, RPG, Essar and ESCOTEL all count on Kirloskar reliability.

An active population of over 2 million engines amply demonstrates product reliability and

customer acceptance in these fiercely competitive markets.

GENSET AND ePacks - 15KVA / 50HZ PRIME TO 300KVA / 60HZ STAND-BY

We offer a comprehensive range of Gensets as well as ePacks to suit a wide-spectrum of end

uses. These are available from 50Hz to 60Hz, with multiple voltage options, 1-Ø and 3-Ø,

stationary or towable, open-skid to silent to super silent and manually operated to auto mains

failure to web-enabled.

LIQUID-COOLED R1040 SERIES ENGINES 28HP TO 189HP

• Sectors: agriculture, construction and earthmoving, power, oil and gas and transport

20





• Applications: gensets, agri tractors, backhoes, loaders, excavators, forklifts, pavers,

compressors, cranes, aerial platforms, harvesters and assorted pump sets

LIQUID-COOLED SL90 SERIES ENGINES 154HP TO 355HP

Sectors: agriculture, construction and earthmoving, fluid

handling (fire pumps), power, oil and gas and transport

• Applications: gensets, fire pumps and compressors

AIR-COOLED HA SERIES ENGINES, THE POWER DIFFERENTIATORS, 19HP

TO 120HP

• Sectors: agriculture, construction and earthmoving, oil and gas, power, utilities and

transport

• Applications: gensets, compactors, pavers, loaders, cranes, transit mixers, agri

tractors, and assorted pump sets

21




In order to familiarize yourself with our product offerings and explore a sustainable business

partnering in mutual interest, visit the website below or call Rajiv Bandivadekar, General

Manager Strategic Businesses.

22



Chapter No.3

Objectives of Study

To study financial position of Kirloskar oil Engines

Limited Khadki, Pune

To analyse and interpret financial statement of the Company.

To examine and verify liquidity, solvency and profitability position of

Company.

To make suggestion, if any.

23



Chapter No.4

Methodology of Research

Data collection is an essential part of a research proposal the task of

data collection starts after the objective of the study and the Research Design has been

decided. The Research data is generally of two types.

(I) Primary Data: -

Oral interview of Company Finance Manager was taken to get relevant

information or data from the Company.

(II) Secondary Data: -

The study is mainly based on secondary data for the purpose of this study, secondary

data has been collected from annual reports and relevant records of the Kirloskar oil

Engines limited Khadki, Pune

24



Chapter No. 5

Conceptual Study

Treasury Management

Treasury means cash/Funds hence treasury management means managing the

funds of an organization. Typically the role of a treasury manager involves forecasting

& planning the future cash flows (of course supported with solid basis...) It involves

ensuring that proper funds are available with the company at the time of outflow

required & also that funds are not kept unutilized for a good long time...this requires

investing/disinvesting funds in opened ended mutual fund schemes (if we are not

using funds let the

Treasury management means "To plan, organize and control cash and

borrowings so as to optimize interest and currency flows, and minimize the cost of

funds, Also to plan and execute communications programmes to enhance investors

confidence in the firm" or in other words "the corporate handling of all financial

matters, the generation of external and internal funds for business, the management of

currencies and cash flows, and the complex strategies, policies, and procedures of

corporate finance" The Treasury Management Policy applies to the treasury functions

of all public sector agencies, incorporating both General Government agencies and

Government businesses. However, the policy is of greater relevance to Government

businesses, given the extent of their treasury functions. The objective of the policy is

to provide an overarching framework for managing the risks associated with treasury

25



functions. the scope of Treasury management includes the management of cash flows,

banking, money-market and capital-market transactions; the effective control of the

risks associated with those activities;and the pursuit of optimum performance

consistent with those risks.

This definition is intended to embrace an organisation’s use of capital and project

financings, borrowing, investment, and hedging instruments and techniques.

Part of Treasury Management

• Working Capital

• Cash flow Management

• Import Procedure

• Export Procedure

• Risk Management

• Fund Flow Management

• Financial statement

• Capital Markets

Working Capital Management

One of the most important area in the day to day management of the firm is the

management of working capital. Working capital management is the functional area

of finance that covers all the current accounts of firm. Working capital management

is concerned with current assets and current liabilities and their relationship to the rest

of the firm.

26



Working capital is calculated as:

Working capital is defined as the difference between current assets (such as

cash, receivables and inventory) and current liabilities (payables, credit lines, notes).

It measures how many liquid assets are available for a business to use for growth

opportunities. A lack of working capital can really hold a business back from reaching

their full potential. There are many different ways can help to obtain working capital

for your business.

Cash Flow

Cash flow is a term that refers to the amount of cash being received and spent

by a business during a defined period of time, sometimes tied to a specific project.

Measurement of cash flow can be used:

1. To evaluate the state or performance of a business or project

2 to determine problems with liquidity . Being profitable does not necessarily mean

being liquid. A company can fail because of a shortage of cash, even while Profitable

3 to generate project rate of returns. The time of cash flows into and out of projects

are used as inputs to financial models such as internal rate of return, and

4 to examine income or growth of a business when it is believed that accrual

accounting concepts do not represent economic realities. Alternately, cash flow can be

27

http://en.wikipedia.org/wiki/Cash

http://en.wikipedia.org/wiki/Accounting_liquidity

http://en.wikipedia.org/wiki/Rate_of_return

http://en.wikipedia.org/wiki/Internal_rate_of_return

http://en.wikipedia.org/wiki/Cash

http://en.wikipedia.org/wiki/Accounting_liquidity

http://en.wikipedia.org/wiki/Rate_of_return

http://en.wikipedia.org/wiki/Internal_rate_of_return



used to 'validate' the net income generated by accrual accounting. Cash flow as a

generic term may be used differently depending on context, and certain cash flow

definitions may be adapted by analysts and users for their own uses. Common terms

include operating cash flow .

In financial accounting, a cash flow statement or statement of cash flows is a

financial statement that shows a company's incoming and outgoing money (sources

and uses of cash) during a time period. The statement shows how changes in balance

sheet and income accounts affected cash and cash equivalents, and breaks the analysis

down according to operating, investing, and financing activities. As an analytical tool

the statement of cash flows is useful in determining the short-term viability of a

company, particularly its ability to pay bills.

Financial Analysis

Analysis: -

Analysis is placing the collected data in some order or format so that the

data acquire meaning row data become information only when they are

placed in meaning form.

Financial Analysis: -

The term ‘Analysis’ means methodical classification of the data given

in a financial statement will not help one unless they are put in a simplified

form.

28

http://en.wikipedia.org/wiki/Operating_cash_flow

http://en.wikipedia.org/wiki/Financial_accounting

http://en.wikipedia.org/wiki/Financial_statements

http://en.wikipedia.org/wiki/Money

http://en.wikipedia.org/wiki/Balance_sheet


http://en.wikipedia.org/wiki/Income_account

http://en.wikipedia.org/wiki/Cash_and_cash_equivalents

http://en.wikipedia.org/wiki/Operating_cash_flow

http://en.wikipedia.org/wiki/Financial_accounting

http://en.wikipedia.org/wiki/Financial_statements

http://en.wikipedia.org/wiki/Money



http://en.wikipedia.org/wiki/Income_account

http://en.wikipedia.org/wiki/Cash_and_cash_equivalents



According to Myers “Financial Statement” analysis is largely a study of

the relationship among the various financial factors in a business as

disclosed by a single set of statement and a study of the trend of these

factors as shown in a series of statement.

Interpretation

Meaning: -

Analysis and Interpretation are complementary to each other.

Interpretation requires analysis while analysis is useless without

interpretation.

Interpretation means drawing inferences from the collected facts after the

analysis study.

Techniques of Financial Analysis

1) Comparative Financial Analysis

2) Common-size Financial Analysis

3) Trend Percentage

4) Fund Flow Analysis

5) CVP Analysis

6) Ratio Analysis

1) Comparative Financial Analysis: -

29



Comparative Financial Statements are those statements, which have

been designed in a way so as to provide time perspective to the consideration

of various elements of financial position.

the income statements and Balance Sheet can be prepared in the form

of comparative Financial Statement.

2) Common-size Financial Statements: -

Common-size Financial Statements are those figures reported are

Converted into percentages to some common base in the income statement.

The sale figure is assumed to be 100 and all figure are expressed as

percentages of this total.

3) Trend Percentage: -

Trend Percentage is helpful in making a comparative study of the

financial statements for several years.

The method of calculating trend percentage involves the calculation of

percentage relationship that each item bears to the same item in the year.

4) Fund Flow analysis: -

Fund Flow analysis has become an important tool in the analysis kit of

financial analysis. Credit.

Granting institutions and financial managers this is because the

Balance Sheet of a business reveals its financial transactions, which

30



have been behind the balance sheet changes it will help him in making

a better estimate about the companies financial position and policies.

5) Cost – Volume – Profit Analysis: -

It is an important tool of profit planning it studies the relationship

between costs. Volume of production sales it is not strictly a technique

used for analysis of financial statement.

6) Ratio Analysis: -

Ratio means simply one number expressed in the term of another

number ratio analysis is useful in simplifying financial statement.

Ratio analysis is widely used tool of financial analysis. It is defined as a systematic

use of ratio to interpret the financial statement.

Types of Financial Analysis

1) On the basis of material used

a) External Analysis

b) Internal Analysis

2) On the basis of modus operand

a) Horizontal Analysis

b) Vertical Analysis

1) On the basis of material used: -

31



According to this basis financial analysis can be of two types

a) External Analysis: -

This analysis in done by those who are outside for the business means

investors, credit agencies, Govt. agencies and other creditors, these

persons mainly depend upon the published financial statement.

b) Internal Analysis:-

Persons who have access to the books of account do this

analysis and other information related to the business it is done

by executives and employees of organizations or by officers

appointed for the purpose by the Government.

3) On the basis of modus operandi: -

According to this basis financial analysis can be two types.

a) Horizontal Analysis: -

In case of this type of analysis financial statements for a

number of year received and analyzed the current year’s figures

are compared with the standard or base year it is also called.

Dynamic analysis the analysis statement usually contains

figures for two or more year and the changes are shown.

b) Vertical Analysis: -

In case of this type of analysis a study is made of the

quantitative relationship of the various items in the financial

statements one a particular data for example the ratios of

different items of costs for a particular period such as analysis

32



is useful in comparing in the same group or divisions or depts.

In the same company.

Import Procedure :

The procedure of import is routed through following four departments:

Purchase Department : For generating P.O.s and all other formalities

involved in the process of import.

Stores Department: For preparation of GRRs., inspection of material

received and applying the duty on the purchases made.

Central Receipt Department: For receiving material.

Finance Department: For settling the liability.

The above departments are involved in the following manner

1. Analyzing materials to be imported:

Purchase department analyses the production plan for next six

months according to Annual Operating Plan based on which import purchases are

planed for the period.

33



2. Selection and Registration of the supplier:

Co. has list of suppliers registered in the system. If the co is

planning to procure material from the supplier not registered in the system then it

is required to register the supplier.

Purchase order will not be created unless the vendor is registered in the

system.

Purchase department is responsible for giving timely advice to finance

department regarding the registration of new vendor.

Vendor no is defined by the finance department which is informed to

the purchase department as per the advice given by the purchase

department.

3. Preparation of purchase order:

The procedure for generating P.O. is same as for the indigenous purchases.

• For the import purchases planned purchase orders are prepared. In planned

purchase orders lead-time for material is planned. If material is not received in

that lead time then approval for the extended period is required to be taken

otherwise GRR will not be passed

34



• The rates of customs duty including the concessional if any available against

license are punched manually.

Figures in the red box are punched manually in case there is any concession is

available.

4. Receipt of Order Confirmation:

As per RBI rules it is necessary to get Order acceptance from the vendor for

further import formalities

5. Arrangements for financing Exports:

After P.O is generated and order confirmation is received purchase department

informs finance department and issues the internal memo as regards arrangements

for payments

There are two modes of financing imports

1 Remittance by way of advance – Advances are given in case of imports are for

the value in foreign currency up to 10000. There is no hard & fast rule for

payment of advances. It mostly depends on the discretion of the purchase

department.

35



2. Opening of L/Cs – For high value items & capital good L/Cs are opened.

One month prior to shipment date, Purchase

Department gives intimation to finance department

Regarding opening of L/Cs through memo.

The finance department at the earliest stage i.e. at the time of payment of advance, or

acceptance of documents against L/Cs or payment of duty whichever is earlier, gives

consignments number. Then this consignment number is informed to the Central

receipt department. It is used to identify the consignment actually received. These

consignment numbers are not system generated. Payments made for imports and

goods actually received are not linked in the system.

6. Receipt of Airway/Shipment Bill:

Follow up for delivery is made with the supplier by the purchase department.

Airway bill or bill of lading is received from the supplier after dispatching the

consignment. These bills are sent to ATC for preparation of Bill of Entry.

7. Payment of Customs Duty:

ATC sends Performa Bill of Entry wherein customs duty liability is

mentioned. Purchase department enters these details in the system and after

saving those details, Bill of Entry no is generated by the system. Then

intimation regarding payment of customs duty is given by purchase

department to finance department through internal memo.

36



When payment of customs duty is made customs department issue Bill of

entry in triplicate

• Original copy is retained by the customs department

• Duplicate copy is transporters’ copy which comes along with the

goods

• Triplicate copy is Exchange control copy (ECC), which is

deposited with the bank.

For the purpose of calculating customs duty, exchange rate declared by

the Customs for the month is considered. Actual rate of exchange may

be different but the customs liability is finalized on the basis of rate

declared by customs.

When the customs duty is paid it is debited to prepayment of bill of

entry (GL code 350618). When actually goods are received the person

in charge in the Central receipt department loads customs duty on the

purchases.

The process of loading duties is built in the system except for the

ACBG where the duty is loaded manually.

37



8. Receipt of material:

There is central receipt department in the company. The major task of

Central Receipt Department is to make documentation relating to materials

purchased.

When the goods are actually received a gate entry is made. ATC Bill comes

along with the material. At the time when material comes in a pre-numbered

sticker is stuck on the ATC Bill. This no is used for reference to give

acknowledgement to the transporters against material received. The ATC bill has

an ATC job No. Which is used as control No. i.e. this no. is informed by the

purchase department and finance department to central receipt department to

identify the specific shipment.

On receipt of material Octroi is checked at Central Receipt Department and

if there is any shortfall it is paid and excess if any is claimed.

In case of imports Delivery Challan doesn’t come along with the material. It

is prepared at purchase department on the basis of P.O. and invoice of the supplier

and forwarded to Central Receipt Department. In delivery challan actual quantity

received is entered and a bin number is given.

Purchase order is released by entering the original PO number and actual

quantity received is punched into the system. P.O. release No. Is mentioned in the

Delivery Challan.

A PO release number is given which is a reference for the order received

towards the original purchase order. There can be various PO release numbers

38



against single PO. P.O. release shows the actual quantity received against

specific P.O.

9. Dispatch & inspection at the respective location:

After creating GRR all the documents except customs document i.e. B.O.E.

are sent to stores where the shipment is unloaded. At respective stores

inspection of goods is conducted. Here the actual quantity received is checked

according to delivery challan. If there is any discrepancy as regards material

received then person inspecting it, declares the discrepancy. A discrepancy

report is generated.

10. Creation of GRR :

Person receiving the material sends PO, Bill of entry, ATC Bill, and Delivery

Challan along with GRR issuance request to central receipt department. On the

basis of above documents Central receipt department creates GRR

At the time of preparing GRR, first PO is called and following other details

are filled in

39



Invoice No.

Date of invoice

ATC Job No.

Sticker No.

Bill of Lading No.

Container No. (write what is container no.)

Supplier’s name

Receiver’s name

BOE No.

Consignment No., given by corporate finance

Octroi No.

Gate entry No.

Value of CVD

P.O. release No.

Comment i.e. other details as many as possible.

Once all the above information is filled and the GRR is saved

system generates GRR No.

GRR is reopened in case of there is any mistake in the original GRR. If the

quantity recorded in GRR is in excess of actual receipt then the GRR is

reopened and the excess is shown as rejection. At this time system

40



automatically generates debit note. Due care is taken so that system do not

generate debit note i.e. it is ensured that default flag for generating debit note

is deactivated. When the quantity recorded is shorter than actual receipt or the

entire GRR is wrong then the original GRR is cancelled and new GRR is

created.

When the value of CVD is entered in the GRR it automatically goes to Auto

Claim Cenvat Report. For accounting and controls for CVD refer system audit

report on purchases. After creation of GRR system gives the outstanding

balance against the specific P.O.

11. Loading the duties:

Duties are manually entered in the system at Central Receipt Department,

as per Bill of Entry. Duty as per system generated BOE and customs BOE should

match unless the GRR will not be created

If there is minor difference between duties as per system generated BOE

and customs BOE it will be manually corrected as per customs BOE at Central

Receipt Department.

Duties are loaded through apply function at the time of creating GRR. Once

the BOE is applied it is not possible to go back and make changes in the BOE.

41



12. ATC bills are received consignment wise. But entry for it is passed once

in a month for all bills received during the month.

13. Generating ERS:

Every evening GRRs generated during the day are converted in the Evaluated

Receipt Settlement (ERS) by the system and shown in the payables module. ERS is

the system-generated invoice for imports. All the accounting entries are processed in

the system on the basis of ERS.

14. Import Rejection;

Procedure for import rejection is same as that for indigenous purchases

except,

In case of import if the whole lot is to be rejected, a customs rejection

certificate is required which is to be arranged by the purchase

department. Amount of customs duties paid for imports is reversed by

the customs department in this case.

If some items from the lot are to be rejected then these are scrapped

and accounted for in the same way as indigenous material is scrapped.

It was told that there is no such a case till date.

42



Import Procedure

Yes

No

Analysing the material tobe procured

Selection of the supplier

Is supplier registered in the

system?

Intimation is given to the financedepartment regarding registration

of supplier by purchase dept.

Supplier is registered in thesystem by the finance department

Prepare the purchase order

43



Get the order confirmation

Intimation to finance departmentregarding opening of LCs. Or advance payment as the case may be

Advance is remitted by TT or LC is dispatched to supplier.

Following up for delivery

Submitting these bills toclearing agent – ATC for

customs clearance

Intimation is given to financedepartment regarding payment of

customs duty through e - mailReceipt of material at KOEL

Preparation of delivery challan by purchase department

Releasing of purchase order with actually quantity receivedGenerating the PO

release number

Generating bill of entry no. in thesystem

Receipt of airway bill or bill of lading

Receiving the bill of entryfrom the clearing agent

44



Dispatch of material to respectivelocation where inspection of will

be conducted

PO, Bill of Entry, ATC’s Bill,Delivery Challan is sent along with

GRR issuance request sent to Centralreceipt department

Preparation of GRR.

Loading of duties

End

Unloading the container andinspecting the material

Discrepancy isdeclared if any.

45



Exports

The Company traditionally exports engines; pump sets and generating sets mainly to

Africa, Middle East and Asian region. At present, the Company exports to 65

countries and predominantly to Middle East Asia, South and East Africa and the

Indian Sub-continent. The company’s major focus in future (in addition to existing

export markets) will be the countries in South East Asia, West Africa and Europe. The

Company’s export strategy is to focus on OEM suppliers as against our traditional

retail customers. This has increased the demand on quality levels, on time delivery

and cost competitiveness. At present, the Company exports to 65 countries and

predominantly to Middle East Asia, South and East Africa and the Indian sub-

continent. The company’s major focus in future (in addition to existing export

markets) will be the countries in South East Asia, West Africa and Europe. The

Company’s export strategy is to focus on OEM suppliers as against our traditional

46



retail customers. This has increased the demand on quality levels, on time delivery

and cost competitiveness. In this financial year, the exports of the

Company grew by 8% to1390 million (previous year Rs.1286 million).

KOEL has targeted exports to contribute 50% to the Company’s total sales, in the long

term.

Export Procedure

We can split the export procedure in following steps: -

1) Order acceptance

2) Declaration

3) Custom clearance

4) Loading

5) Realisation of invoice

6) Cost related to export

7) Benefits that arise from export

1). Order Acceptance: -

The company has two offices out side India, one is in

Johannesburg and the other one is in U.A.E. from where the orders are secured for the

company and the Company can also receive orders through mail. The customer gives

his requirement in a format given by the company.

47



After getting the order, the Production Card and Order acceptance

is generated by the system, both of which contain separate serial number. The

production card is sent to production department, according to which the production is

done within the lead-time, which may differ item wise. On Order Acceptance, all the

terms and conditions of export are mentioned on the basis of which the commercial

invoice is prepared.

2) Declaration: -

The company prepares the pre shipment invoice, which is sent to

clearing agent of the company. The clearing agent sends the Shipping bill on the basis

of pre shipment invoice along with SDF declaration (Now a days, the shipping bill

and SDF are prepared in same form) to the custom authority for clearance. There are

different types of shipping bills depending upon the type of order and the type of

benefit, which is going to be availed .The pre shipment invoice is prepared just for

custom clearance. If the quantity of goods to be exported can be packed completely in

containers, then the container is packed in Pune only, otherwise the goods are sent to

Mumbai for packing in containers.

The Custom authorities delegate their authority for clearance to the excise

department. When the goods are packed in container in Pune, then only the Excise

department checks the goods and seals the container and gives the Declaration to

Custom department that they have checked the goods. (They put the remark on

shipping bill itself). No separate custom clearance is required in that case.

3) Custom Clearance: -

48



When the goods go to Mumbai with shipping bill for custom

clearance and for packing the goods in container, then the Mumbai Custom

department verifies the certificate of origin, whether the goods are liable for Duty,

provision for duty, etc and check the goods on sample basis and after satisfaction, they

put a stamp on shipping bill. This is called Lets Export Certificate. Now, after this,

the goods are ready for shipping.

4) Loading on ship: -

After custom clearance for shipping the goods on vessel, the goods

are required to be present within the prescribed area (known as quay) before the cut

off time prescribed as per the port authority for that vessel, if the goods are not

present at Quay before prescribed time then the goods would not be allowed to go by

the same vessel for which permission has been obtained. The export certificate would

have to be amended by the port authority. On the dock the shipping line agent will

verify the goods and after that it is loaded into the container that may contain goods

from different exporters and issue a “Bill Of Lading” this is the time when the

property of goods is transferred actually.

There are three terms of export –

1. FOB

2. CIF

3. CFR / C&F

49



In case of FOB and C&F, insurance is the responsibility of importer, that is risk is

transferred as and when the goods are loaded on ship. But in case of CIF, the

insurance is our responsibility i.e. the insurance is from warehouse of exporter to the

warehouse of importer.

5) Realisation of invoice: -

After the goods are loaded on ship, the clearing agent sends the

shipping bill along with SDF declaration, bill of lading, insurance and freight

certificate, his bill for expenses, after that the company prepares a commercial

invoice, which is sent along with other documents to the companies’ banker.

Companies banker sends the invoice to the bank on which the L/C is opened. That

bank intimates the foreign bank. The foreign bank then intimates the importer to pay

money due within the credit period given by exporter and collects the Bill of lading.

After collecting the Bill of lading, the importer goes to the shipping agent and on

delivery of Bill of lading, collects the goods and pays the freight according to the

terms (e.g. for FOB the importer pays freight to the agent and collects the goods and

in other cases, the importer just produces the Bill of lading and collects the goods).

There are three terms of payment-

1. On advance payment-

50



In this case, the entire payment is collected in advance.

2. On L/C-

L/C can be discounted before the due date from

Bank, for that company has to pay discounting

Charges to the bank.

3. Non L/C –

In non-L/C, there is open credit available to the importer. If

sight term is available then the Hundi can be discounted before

the due date otherwise the importer will pay on the due date. On this

term, the goods are exported mostly to group companies only.

6) Cost related to export: -

The major costs that are involved in exports are freight,

insurance, clearing agent commission and bank commission. For clearing and

forwarding expenses, there is an agreement with the clearing agents. For export of

engines and their spare parts, the agreement is with ATC clearing and for bearing and

Valve, some other agents are there. According to the agreement, agents charge to the

company and send their bill along with Bill of lading. All clearing and forwarding

expenses are booked at individual A/C of agents. For bank commission, postage &

handling charges and for other charges, the bank gives direct debit to companies

51



account and sends a debit advice. For realisation of Invoice, Company sent two sets of

commercial invoice. The Bank charges first time to the company for postage and

handling charged at very beginning i.e. when bank receives the invoice, and at the

time of realisation of invoice bank again charges the company for postage & handling.

In case of L/C, bank charges realisation claim in addition to the expenses at the

second time.

7) Benefits that arise from export: -

There are various schemes under which the company

can avail benefits. Some of the schemes are DEPB, DUTY DRAWBACK, and

EXPORT LICENCE etc. The company has to satisfy the conditions under these

schemes in order to avail the benefits of the same. In case of DEPB benefit, at the

time of realisation, bank gives BRC i.e. Bank Realisation Certificate that is to be

produced to DGFT, against which company gets the Import license which can be sold

or can be utilized for further import. The amount for which the company is going to

get DEPB benefit is transferred in the Accrued income A/C at the every month end. In

the case of Duty Drawback, custom department automatically credits the exporter’s

account. Hence the export procedure is complete after the benefits have been claimed.

52



Net Profit

Sales

Chapter No. 6

Data Analysis

1. Net Profit Ratio: -

This ratio indicates net margin earned on turnover of receipts of

Rs. 100/-. It is calculated as -

Net Profit Ratio = X 100

Signification: -

53



Sales

Net Fixed Assets

Current Assets

Current Liabilities

This ratio helps in determining the efficiency with which affairs of the

business are being managed An increase in the ratio over the pervious period

indicates improvement in the operational efficiency of the business provided

the profit ratio is constant This ratio is an effective tool to check the

profitability of business.

2) Fixed Assets Turnover Ratio: -

The ratio is arrived as under-

Fixed Assets Turnover Ratio =

= No. Of times

Significance: -

The ratio measures the efficiency in the utilization of fixed assets. This

ratio indicates whether the fixed assets are being fully utilized. Normally a

standard ratio is taken as five times.

4) Current Ratio: -

It is a ratio of current assets to current liabilities. The ratio is calculated by dividing

the current assets by the current liabilities.

54



Current Ratio =

Certain authorities have suggested that in order to ensure solvency of a concern

current assets should be at least twice the current liabilities and therefore, this ratio is

known as 2:1 ratio.

Significance: -

This ratio indicates the solvency of the business i.e. ability to meet the liabilities of

the bank as and when they fall due. The current assets are the sources from which the

current liabilities have to be met.

Analysis & Interpretation of Ratio

1) Net Profit Ratio: -

Net Profit Ratio = X 100

Particulars 2006 - 2007 2007-2008

Net Profit1,784,090 1,189,516

Sales 20,694,761 23,723,049

Net Profit

Sales

55



2006 – 2007 2007-2008

1,784,090X 100

20,694,761

1,189,516

X 100

23,723,049

8.6 7.89

Interpretation: -

This ratio indicate the percentage of profit earning in this

Company percentage of profit in 2006– 2007 is 7.52%, 2007– 2008 is 9.05% and

generally standard of this ratio is 15 to 20% but, this Company’s profit level are

changing year after year the net profit for these years are sufficient to pay dividend at

reasonable & satisfactory rates on share capital. In 2007 – 2008 the net profit as well

as 2006– 2007 are mostly increase because the company’s profit on sale are increase

& other Income are mostly increase other year.

2) Current Ratio: -

Current Ratio =

Particulars 2006 - 2007 2007-2008

Current Assets6615365 7455319

Current Liabilities 4,738,704 5,574,962

2006 – 2007 2007-2008

Current Assets

Current Liabilities

56



6615365 4,738,704

7455319

5,574,962

1.391.33

Interpretation: -

Current ratio measures the inter-relation between the current assets & current

liabilities.

This ratio indicates the solvency of the business current ratio in 2006–

2007is1.39 in the year 2007 – 2008 ratio 1.33 The proportion of above current ratios

indicates that the liquidity position of the company is not satisfactory. Because of

these current ratios are lower than standard these current ratios are lower due to

current assets are less than current liabilities.

3) Return on Share Holder Investment: -

Return on Share Holder Investment = X 100

Particulars 2006 - 2007 2007-2008

Net Profit1,784,090 1,189,516

Share holder fund 8,513,490 9,149,913

Net Profit

Share Holder Fund

57



2006 – 2007 2007-2008

1,784,090X 100

8,513,490

1,189,516

X1009,149,913

20.9 %13 %

Interpretation: -

This ratio important because indicates the percentage of

return on investment the ratios of Kirloskar oil Engines limited year.

In the year 2006 – 2007 are return on shareholder Investment for mostly

increase than 2007-2008 because in the year net profit high.

4) Debt to Equity Ratio: -

Debt to Equity Ratio =

Particulars 2006 - 2007 2007-2008

Outside Debts 176,392 37,968

Share holder fund 8,513,490 9,149,913

Outside Debts

Shareholder Fund

58



2006 – 2007 2007-2008

176,392 8,513,490

37,968

9,149,913

0.0200.004

Interpretation: -

High debts equity ratio is considered as in favorable this

is because in such case the margin of safety available to creditors is less and on the

other hand low debt equity ratio will show high margin of safety.

Debt to equity ratio of 2006 – 2007 is 0.20:1; year 2007 - 2008 is 0.004:1 standard of

debt to equity ratio is 1:1.

This ratio measures financial strength of the company in these company

debts are lower & equity is large.

Advantages of Ratio Analysis

Following are some advantages of ratio Analysis: -

1) Ratios simplify the comprehension of financial statements. They tell the

whole story as a help of financial data is condensed in them. They indicate

the changes in the financial condition of the company.

2) The Ratio Analysis can be of invaluable aid to management in the

discharge of its basic functions of forecasting, planning. Co- ordination,

communication and control.

59



3) Investment decisions can at times be based on the conditions revealed by

certain ratios.

4) They make it possible to estimate the other figure when one figure is

known.

5) Ratio analysis provides data for inter-firm or intra firm comparison cannot

be made with absolute figures. Net profit of one company cannot be

compared with the net profit of the other company.

6) They act as an index of the efficiency of enterprise. As such they serve as

an instrument of management control.

Thus, the ratio analysis points out the financial condition of business

whether it enables the management to take necessary steps.

Limitations of Ratio Analysis

1) The benefits of a ratio analysis depend to a great extent upon the correct

interpretation. The interpretation may be based on a single ratio. But a

single ratio in itself is meaning less as it does not provide a complete

picture of a Company’s financial position. A single ratio may direct

attention to only one aspect of its financial status or operating results.

2) Reliability of Ratios depends upon the reliability of data.

60



3) While comparing ratios of the two company’s, it must see both of them

follow the same accounting plans or base, otherwise the comparison has no

meaning.

4) Changes in prices distort the comparison over a period of years.

5) Ratios sometimes give misleading picture. It would, therefore be proper to

study absolute figures along with ratios. Ratio analysis gives just a fraction

of information needed for decision making.

If there is window dressing the ratio calculated will fail to give the

correct picture and will prove to be misleading.

Financial Statement

Introduction: -

Financial Statements are prepared because of statutory obligations from this

statement outsiders can bet an idea about the performance of business unit.

Meaning: -

61



Financial statement is an organized collection of data according to

logical and consistent accounting procedures. Its purpose is to convey an

understanding of some financial aspects of a business company financial

statement generally refers to two basic statements.

1) Balance - Sheet.

2) Profit & Loss Account

62



BALANCE SHEET AS AT 31 MARCH 2008

Particular

Schedule As at

31st March

2008

As at

31st March

2007

1. SOURCES OF FUNDS

1. Shareholder’s funds

(a) Share capital(b) Reserve and Surplus

2. Loan funds

(a) Secured loans(b) )Unsecured loans

3. Deferred Tax Adjustment

(a) Deferred tax Liability(b) Deferred tax Asset

2. APPLICATION OF FUNDS

1. Fixed assets

(a) Gross block (b) Less: depreciation(c) Net block (d) Capital work-in-progress including

Capital Advances

2. Investment

0102

0304

05

06

388,3468,761,567

9,149,913

3,427,7361,179

3,428,915

523,119

226,919

296,200

12,875,028

194,1738,513,490

8,513,490

994,24868,900

1,063,148

291,207

126,785

164,422

9,741,060

9,213,1892,753,5206,459,669

649,294

7,108,963

4,763,347

5,305,1282,555,9002,749,228

572,762

3,321,990

5,173,868

63



3. Current assets, loans and advances

(a) Inventories(b) Sundry debtors(c) Cash and bank balances(d) Other current assets(e) Loans and advances

Less: Current liabilities and provisions(a) Liabilities(b) Provision

Net Current assets

Total

708091011

1213

1,940,4503,564,577

615,99361,765

1,272,534

7,455,319

5,574,962877,639

6,452,601

1,002,718

1,483,5833,892,511

413,02454,763

771,484

6,615,365

4,738,704631,459

5,370,163

1,245,202

12,875,028 9,741,060

64



PROFIT&LOSS A/C FOR THE YEAR ENDED 31 MARCH 08

Particular Schedule

As on31st Mar 08

As on31st Mar 07

65



Income

SalesLess: Excise duty

Operating incomeFinancial income

Expenditure

Material ConsumedManufacturing ExpenseEmployee CostSelling &Administration Expenses

Depreciation & amortisationInterest & Finance Charges

Less: expenses capitalised

Profit Before exceptional items & Taxation

Exceptional income

Profit Before Taxation

Provision for taxationCurrent tax (including wealth TaxRs.2, 9000,000/-, previous year Rs.2,200,000/-)Deferred Tax (see note no.19)Fringe Benefit

Profit for the year after Taxation

Prior period adjustment:Expenses

Taxation, net

As per last account

1415

16171819

2021

22

23,723,0492,158,648

20,694,7611,864,956

21,564,401

552,341162,827

18,829,805

554,080440,394

22,279,569

15,739,044529,112

1,392,9912,231,967

438,560197,054

19,824,279

13,792,882506,787

1,053,0551,871,835

318,114144,024

20,528,728123,235

17,686,69733,247

020,405,4931,874,076

-

17,653.4502,170,829

224,191

1,874,076

482,900

182,626

19,034

684,560

1,189,516

-

-

1,494,370

2,395,020

525,000

66,930

19,000

610,930

1,184,090

66

5,700

1,164,625

66



Less:Transferred to general reserve

Interim dividendTax on interim DividendProposed Dividend

Tax on Proposed Dividend

Balance carried to Balance sheet

2,683,886

750,000194,173

33,000194,173

33,000

1,204,346

1,204,346

2,942,949

1,000,000194,173

27,233194,173

33,000

1,448,579

1,494,370

Chapter No. 7

Limitation of Study

1) Treasury Management which is used by company has not been made available

for study and so that I used annual reports for the study of financial position

by accounting ratios. Balance Sheet and Profit and Loss account shown in the

annual report are used for study.

67



2) The time period is limited to know the entire process .we cannot draw

effective conclusion as it is continuous process.

Chapter No 8

Finding

The company is performing well in regard to long term liquidity, profitabilityand solvency position.

The system does not indicate any standard of performance efficiency

A System of budgetary control has not been used effectively

Financial position of the company is not satisfactory.

Recommendation

68



The following are some recommendation, which will be useful for further

improvement and efficient working of the company in future.

It is necessary to decrease the total expenses and to increase the net profit.

It is necessary to decrease the current liabilities and to increase the current

assets for improving liquidity position.

To be self sufficient, the company should try to increase own fund & also try

to decrease borrowed funds.

Chapter No 9

Conclusions

After the study of this project, I conclude as follows:

1) The Company’s profitability position is not much good because the company

2007-08 profit less than the year 2006-07.

2) The company treasury management position is good.

3) The study of financial statement of company by analysis & interpretation of

ratios & trend percentage show good position.

4) The turnover of company is good.

5) I conclude that financial position of this company is not good satisfactory

because profitability, current, activity positions are not good for previous year.

69



Chapter No 10

Bibliography

No. Books Author Publications/Edition

1Patkar M.G. “Management

Accounting”(Oct-2002) PhadkePrakashan, Kolhapur

2Pardeshi P.C. “Management

Accounting”

(Aug.2002)Nirali

Prakashan, Pune

3

Pillai R.S.N.

Bagavathi V.

“ManagementAccounting”

S.Chand and co. ramnager New Delhi.

4

Annual Reports of Kirloskar Oil Engines Limited

2006 – 2007 to 2007 - 2008

5 Www. Kirloskar Oil Engines.com

70



Chapter No 11

Annexure

Questioners

What is treasury management?

What is fund flow statement?

Which is the part of treasury management?

What is working capital?

Which is different type of ratio?

Explain export & import process?

rasj verma

Documents