A

PROJECT REPORT
ON
“FIXED ASSETS MANAGEMENT”

UNDERTAKEN
AT
RAYMOND LIMITED.
VAPI.

1
2. OBJECTIVES:

MAIN OBJECTIVE:-
➢ To Study the Fixed Assets Management System using At
Raymond Limited.

SUBSIDIARY OBJECTIVE:- later

3. DESIGN/METHODOLOGY/APPROACH:
The project report includes the information regarding the company Fixed
Assets Data, of Raymond Ltd. (additional)

4. SAMPLING METHODS: later

5. STATISTICAL TOOLS:
For Analysis purpose, different charts and other observation data has
been studied, through which I came out with the interpretation for my
project.

6. THE FINDINGS OF THIS STUDY: later

2
 INDEX

SR PARTICULAR PAG
No. E
NO
1 Background of the company
2 Vision, Mission and Values
3 Company Profile
4 Group Companies
5 Joint Ventures
6 Brand Portfolio
7 Fabric Outlines
8 Plant Details

3
9 SWOT Analysis
1 Organization Structure
0
1 Milestones
1
1 Technological Breakthrough
2
1 Overview of other Departments
3
1 Production Department
4
1 General Store and Commercial Department
5
1 Supply Chain Management Department
6
1 Account Department
7
1 Project Report FIXED ASSETS
8
1 Introduction
9
2
0

2 Role of other functional Department

4
9
3 Analysis & Findings (Graphical Presentation)
0
3 Recommendation
1
3 Conclusion
2
3 Bibliography
3

5
 BACKGROUND OF THE COMPANY

The Raymond Group was incorporated in 1925; and within a span of a

few
years, transformed from being an Indian textile major to being a global
conglomerate.

RAYMOND deals in mainly three sectors:

1. Aviation:
Raymond ltd is one of the first co-operate house in India to launch Air
charter service in India in 1996 and since then it has been always a
way
ahead of Raymond Aviation.

2. Engineering:
J.K.Files & tools and Ring Plus Aqua are the group companies that are
engaged in the manufacture of precision engineering product such as
steel
products, cutting tools, hand tools, agri tools & auto components.

3. Textile:
With a capacity of 33 million meters in wool and wool blended fabrics,
Raymond commands over 60% of market share in worsted suitings in
India
& ranks amongst the first four fully integrated manufactures of worsted

6
suiting in the world.

The Raymond’s endeavor to keep nurturing quality and leadership,

they
always choose the path untraded - from being the first in 1959 to
introduce
a polywool blend in India to creating the world's finest suiting fabric,
the
Super 230s made from the superfine 11.8 micron- wool.

Today, the Raymond group is vertically and horizontally integrated to

provide the customers total textile solutions. Few companies across
the
globe have such a diverse product range of nearly 12,000 varieties of
worsted suiting to cater to customers across age groups, occasions
and
styles.
Raymond manufacture for the world, the finest fabrics- from wool to
wool
blended worsted suiting to specialty ring denims as well as high value
shirting.

After making a mark in textiles, Raymond step into garmenting

through
highly successful ventures like Silver Spark Apparel Ltd. And Regency
Textile is Portuguesa Ltd (for fine Tailored Suits, Trousers and Jackets),
Ever Blue Apparel Ltd. (Jeanswear) and Celebrations Apparel Ltd.
(Shirts).

7
 Raymond also has some of the most highly respected apparel brands
in
their portfolio: Raymond, Manzoni, Park Avenue, Color Plus, Parx, Be:
Zapp!
And Notting Hill.

The Raymond Group also has an expansive retail presence established

through the exclusive chain of 'The Raymond Shop' and stand-alone
brand
stores for Manzoni, Park Avenue, Color Plus, Parx, Be:, Zapp! And
Notting
Hill.

With a 500 million US$ turnover, Raymond is today one of the largest
players in fabrics, designer wear, denim, cosmetics & toiletries,
engineering
files & tools, prophylactics and air charter services in national and
international markets. All Raymond plants are ISO certified, leveraging
on
cutting-edge technology that adheres to the highest quality
parameters
while also being environment friendly.

VISION & MISSION

➢ HR Vision

8
 “Raymond the most desired workplace for top talent”

➢ HR Mission
We commit to the HR Vision of making “Raymond the most desired
workplace for top talent”, “We will strive to weave in the core
Raymond value
namely Quality, Trust, Leadership and Excellence in all our actions &
HR
processes so as to make every Raymondiate a complete man.

VALUES
➢ Trust

➢ Quality

➢ Leadership

➢ Excellence

9
 COMPANY PROFILE

Name of the company : Raymond Limited (Textile division)

Address of Registered Office : Plot 156/H No. 2, Zadgaon,

Ratnagiri,
415 612.

Factory Location and Address : N .H. No.8, Khadki Udwada, Tal-Pardi,

Tel No : 0260-3252243

Fax No : 0260-2340322

Year of Establishment At Vapi : 2005

Business Activities : Manufacturing Process of Fibre to

Fabric

Board of Directors : Dr. Vijaypat Singhania Gautam Hari

Singhania B.K. Kedia Nana Chudasama
B.V.Bhargava U.V.Rao I.D.Agarwal
Nabankur Gupta P.K.Bhandari

10
Bankers : (1) Bank of India
(2) Bank of Maharashtra
(3) Bank of America
(4)Central Bank of India
(5) City Bank N.A.
(6) HDFC Bank Limited
(7) The Hongkong and
Shanghai Banking
Co-operation Limited
(8) Standard Chartered
Bank

Stock Code : Bombay Stock Exchange Ltd -500330

National Stock Exchange of India-
Raymond EQ

Auditors : Dalal & shah

Website : Www.Raymondindia.Com

11
 GROUP COMPANIES
There are 10 Companies in Raymond Group.

➢ Raymond Ltd.

It is among the largest integrated manufacturers of worsted fabrics in

the world.

➢ Raymond Apparel Ltd.

Raymond Apparel Ltd. has in its folio, some of the most highly
regarded apparel brands in India - Manzoni, Park Avenue, Color Plus,
Parx, Be: and Zapp! And Notting Hill.

➢ Color Plus Fashions Ltd.

The company was acquired by Raymond to cater to the growing

demand for a high end, casual wear brand in the country for men and
women.

➢ Silver Spark Apparel Ltd.

A garmenting facility manufacturing formal suits, trousers and jackets.

➢ Regency Textile Portuguesa Ltd

A facility set-up in northern Portugal bordering Spain, in Caminha for

the manufacturing suits, jackets and trousers.

12
➢ Ever Blue Apparel Ltd.

A state-of-the-art denim garmenting facility.

➢ Celebrations Apparel Ltd.

A facility set-up for the manufacture of formal shirts

➢ J.K. Files & Tools

A leading player in the engineering files & Tools segment and the
largest producer of steel files in the world.

➢ Ring Plus Aqua Ltd.

A leading manufactures in the engineering automotive components.

➢ J.K. Helene Curtis Ltd.

A leading player in the grooming, accessories and toiletries category.

➢ J.K. Investo Trade (India) Ltd.

JKIT is an investment company registered with Reverse Bank of India

as Non-Banking Financial Company.

13
 JOINT VENTURES

➢ Raymond UCO Denim Pvt. Ltd.

The manufacturers and marketers of denim fabrics.

➢ Raymond Zambaiti Pvt. Ltd.

A Greenfield facility manufacturing high value cotton shirting.

➢ Raymond Woolen Outerwear Ltd.

A plant set up to manufacture carded Woolen fabrics and blankets.

➢ Gas Apparel Pvt. Ltd.

The Joint venture with Grotto S.P.A launched the highly successful
'GAS' brand in India.

➢ J.K. Ansell Ltd.

The manufacturers and marketers of Kama Sutra condoms and

surgical gloves.

➢ J.K. Talabot Ltd.

Raymond has Joint venture with MOB Outillage SA. Manufacturing

files and rasps for international markets.

BRAND PORTFOLIO

14
 ➢ Manzoni

Manzoni is a luxury lifestyle brand providing the best in contemporary

international style & luxury. The brand offers the discerning customer a
super premium range of suits, trousers, jackets, shirts, and accessories
such as ties, cufflinks, belts, socks, shoes and leather bags.

➢ Park Avenue

Park Avenue is a premium lifestyle brand and has been the single
largest formal wear brand in India for the past two decades.

➢ Color Plus

Color Plus is among the largest smart casual brands in the premium
category. The company, acquired by Raymond caters to the growing
demand for a high end, casual wear brand in the country.

➢ Parx

Parx is a premium casual lifestyle brand comprising a range of

semi formal and casual cottons; blends and denim wear, reflecting
the vibrancy and attitude of the energetic 22 to 30 year old.

➢ Be:

Be: offers fashion that captures the latest trends from across the
globe. Be: offers a wide range of apparel and accessories for both
men and women from well known Indian designers like Anshu Arora
Sen. Akbar Shahpurwalla, Krishna Mehta, Manish Arora, Preeti
Jhawar, Priyadarshini Rao, Rohit Bal, Savio Jon, Shantanu & Nikhil,
Varun Bhal, Vidhi Singhania and Wendell Rodricks across categories
namely - Women’s Western wear, Women’s Ethnic wear, Lounge
15
 FABRIC

Worsted suitings:

➢ Pure wool, Polywool blended fabric

➢ 33 million meters
➢ 4 integrated plants in India

Raymond, with an installed capacity of 33 million meters of wool & wool

blended fabrics, is the leading integrated producer of worsted suiting
fabric in
the world. It has four plants located in the states of Maharashtra, Gujarat
and
Madhya Pradesh. The company exports its suiting fabric to more than 55
countries including USA, Canada, Europe, Japan and the Middle East.

Raymond, an innovator in the Indian textile industry, has developed a

heritage of in-house skills for research & development. This has resulted
in
path-breaking developments of new products, which are today the
corner
stones of the worsted suiting industry in India. The Group has mastered
the
craft of producing suiting using, wool from 80s to 230s count, blends
with
superfine polyester and other specialty fibers, like Cashmere, Angora,
Alpaca,
Silk, Linen etc.

16
 Thane Plant

This is the mother plant and is the centre of competence for world class
manufacturing and design facilities. With decades and expertise and
finely honed skills, this plant is a treasure house of knowledge for
producing superfine worsted suiting fabrics.

Chhindwara Plant

The Raymond Chhindwara plant, set up in 1991, is a state-of-the-art

integrated manufacturing facility located 57 kms away from Nagpur in
Central India. Built on 100 acres of land, the plant produces premium pure
wool, wool blended and polyester viscose suiting.

This plant has achieved a record production capacity of 14.65 million

meters, giving it the distinction of being the single largest integrated
worsted suiting unit in the world.

Jalgaon Plant

17
 A new manufacturing facility was set up at Jalgaon, to meet the
increasing demand for worsted woolen fabrics in 1979. In 2006, world
class carded woolen unit, Raymond Fedora Ltd, also set up.

Vapi Plant

Raymond has increased its worsted suiting capacity by 3 million

meters, as part of the second developmental phase of the Vapi plant.
After this expansion, Raymond will have a total capacity for
manufacturing 31 million meters of worsted suiting per annum.

Modeled to meet international standards, the Vapi plant has been

set up on 112 acres of lush green land with Hi-tech machinery such as
warping equipment from Switzerland, weaving machines from Belgium,
finishing machines, automatic drawing-in and other machines from
Italy.

This plant of Raymond is the youngest member in the family. The

plant is set up on lush green land. This was the property of Rohit Pulp
& Paper Mills Ltd, and after its closure, was acquired by Raymond with
vision to develop a world class unit to meet international standards.

The location’s advantages are:

➢ Situated in Gujarat- known for its good governance
➢ Situated on NH no.8 and near to industrial Hub
➢ Well connected by Rail & Road
➢ Proximity to Mumbai/Thane
➢ Non-polluted
➢ Accessibility of skilled manpower
➢ Continuous availability of water
➢ Urbanized and literate people

18
➢ Multi- culture community with communal harmony

Currently the unit is engaged in manufacturing of premium worsted

suiting fabrics, and is equipped with state of the art technology with hi-
tech machineries viz. Warping equipment from Switzerland, Weaving
machine from Belgium, Finishing machines, automatic drawing-in and
other machines from Italy to produce 11 million mtr fabrics per annum
It is propose to manufacturing polyester wool, polyester viscose and
all suiting fabrics in near future.

Overall Organization Culture

Over all organizational culture of Raymond Vapi is governed by self
-discipline,and understanding. They work together and with
commonunderstanding try to achieve the objective of the organization.
Other activities undertaken for agood Organizational Climate are
shown below:

➢ Good relation with government agencies and contractors

➢ Good communication from top to bottom level and bottom to top
level;
➢ Good communication between Management & Staff & Employees;
➢ Discipline is maintain at all levels;
➢ Good relation between Management & staff, between Staff &
workers;
➢ Punctuality of Job - satisfaction, Loyalty.

19
 SWOT ANALYSIS

Strength: Weakness:

• Location Advantage • Current Scenario of market

• Water availability • Effect of government policies
• Raw material Availability • (Delay in Procedure)
• Skilled labour at low cost
• Modern world class
machineries
• Schematic Layout

Opportunities: Threats:

• Increase focus on product • Competition in Domestic

development Market
• 100%capcity utilization & International market
• Increase foreign market • Ecological & social awareness
business • Regional Alliances

20
ORGANISATIONAL STRUCTURE

21
22
 MILESTONES
 1925 - Setup of The Raymond Woolen mill in the area around Thane creek.

 1944 - Lala Juggilal, Lala Kailashpat Singhania took over The Raymond
Woolen Mill. The mill was primarily making cheap and coarse woolen
blankets, and modest quantities of low priced woolen fabrics.

 1950 - Setup of a new manufacturing activity for making indigenous

engineering files known as JK Files & Tools. This has now become the largest
facility of its kind in the world.

 1958 - The first exclusive Raymond Retail showroom, King's Corner, was
opened in 1958 at Ballard Estate in Bombay.

 1964 - Setup of a new Combing Division. This was followed by a phase of

vertical integration, facilitating in the processing of multi-fibres and
technology improvements to make blended fabrics.

 1968 - Raymond setup a readymade garments plant at Thane. The

readymade garments division of Raymond has since then grown rapidly.
Raymond has now become the leader among ready-mades, in India,
achieving a business turnover of over Rs. 2000 million.

 1979 - A new manufacturing facility was set up at Jalgaon, to meet the

increasing demand for worsted woolen fabrics.

 1980 - Vijay pat Singhania took over the reins of the company. He injected
fresh vigor into Raymond, transforming it into a modern, industrial
conglomerate.

 1986 - Launch of "Park Avenue", the premium lifestyle brand providing a

complete wardrobe solution to the men who like to dress well & be current
on styles & fashion.

 1990 - The first showroom abroad for Raymond in Oman.

23
 1991 - A new manufacturing facility was set up at Chhindwara, near Nagpur.

 1995 - Superfine pure wool collection under the Lineage Line (Super 100S to
Super 140S).

 1996 - The Renaissance Collection made of Merino wool blended with

polyester and specialty fibres (Super 100S to Super 140S).

 1996 - Raymond's denim; focusing on quality, innovation and the creation of

exclusive products that have always caught the eye of some of the world's
leading denim wear brands. Its designs have always kept pace with the
changing styles and cuts found in every Youngster’s closet. With a 40 million
meters capacity, Raymond today ranks amongst the top 2 producers of ring
denim in India

 1999 - The Chairman's Collection of Super 150S made from Merino Wool and
Cashmere followed by Super 160S to super 190S.

 1999 - Launch of "Parx", a premium casual wear brand bringing customers a

range of semi-formal and casual clothes.

 2000 - Launch of "Be:” exclusive prêt line of ready-to-wear designer clothing

for men and women.

 2003 - Setup of 'Silver Spark Apparel Ltd.' for manufacturing suits and
formal trousers catering largely to export markets.

 2003 - Acquisition of Color Plus

 2004 - Super 220S fabrics under the Chairman's Collection.

 2005 - Setup of state-of-the art Jeanswear facility 'Ever blue Apparel Ltd.'
near Bangalore.

 2005 - Setup of state-of-the art facility 'Celebrations Apparel Ltd.' for the
manufacturing of formal shirts.

24
 2005 - Raymond achieved a rare feat and a historical milestone with the
creation of the world's finest worsted-suiting fabrics from the finest wool
ever produced in the world- The Super 230s made up of 11.8 micron of wool.

 2005 - Launch of 'Expressions' an exquisite collection of all wool and

Polywool suiting specially crafted using exotic fibers like Cashmere, Angora,
Mohair, Bamboo, Casein.

 2006 - Set of Raymond's third worsted unit at Vapi in Gujarat. Raymond now
has 3 state of the art units with a combined capacity of 31 million meters of
worsted fabric.

 2006 - Launch of design studio in Italy for cutting edge design capabilities
for exports and domestic brands.

 2006 - Set up of world class carded woolen unit, Raymond Fedora Ltd, in
Jalgaon.

 2006 - Set up of Greenfield shirting unit at Kolhapur producing high value

cotton shirting. This facility is set up as part of the company's JV with Gruppo
Zambaiti.

 2006- Set up of J.K Talabot Ltd – JV with MOB, France for the manufacturing
of files and rasps.

 2006- Launch of Zapp! Our kids wear brand with first store in Ahmedabad

 2007- Entered into joint venture to retail premium brand ‘GAS’ in India.

 2007- Launch of new brands for women’s wear.

 2008- Launch of ‘ Raymond Finely Crafted Garments’- readymade apparel

under Raymond brand

 2008-launch of ‘Neckties & More’- new format store for accessories.

25
 TECHNOLOGICAL BREAKTHROUGHS
Raymond has been pioneering technological breakthroughs over the
years, and was the first to introduce Polyester-Wool and Polyester-
Wool-Viscose in the Indian market. During the last decade, many path
breakthroughs were made.

 1995: Superfine pure wool collection under the Lineage Line (Super 100s to
Super 140s).

 1996: The Renaissance Collection made of Merino wool blended with

polyester and specialty fibers (Super 100s to Super 140s).

 1999: The Chairman's Collection of Super 150s made from Merino Wool and
Cashmere followed by Super 160s to Super 190s.

 2002: Super 200s (13.5 microns) fabrics under the Chairman's Collection.

 2003: Applause Wool-Rich Home Washable Suiting.

26
 2003: Super 210s (13.2 microns) fabrics under the Chairman's Collection.

 2004: Super 220s (12.7 microns) fabrics under the Chairman's Collection.

 2005: Raymond achieved a rare feat and a historical milestone with the
creation of the world's finest worsted-suiting fabric from the finest wool ever
produced in the world- The Super 230s fabric made up of 11.8 micron of
wool.

 2005: Launch of 'Expressions' an exquisite collection of all wool and

polywool suiting fabric specially crafted using exotic fibers like Cashmere,
Angora, Mohair, Bamboo, Casein.

OVERVIEW OF OTHER DEPARTMENTS

HUMAN RESOURCE DEPARTMENT.
Human resource management serves these key functions:

➢ Recruitment & Selection

➢ Training and Development (People or Organization)
➢ Performance Evaluation and Management
➢ Promotions/Transfer
➢ Redundancy
➢ Industrial and Employee Relations
➢ Record keeping of all personal data.
➢ Compensation, pensions, bonuses etc in liaison with Payroll

27
➢ Confidential advice to internal 'customers' in relation to problems at
work
➢ Career development
➢ Competency Mapping

ENGINEERING DEPARTMENT

Engineering department includes four major sub departments:

➢ Mechanical
➢ Electrical
➢ Instrumentation
➢ Civil

The major activities of Mechanical and Electrical department are to

fulfil
the following requirement to the different textile departments:
➢ Steam
➢ Water

28
➢ Electricity
➢ Air

IT DEPARTMENT
Objectives
➢ To provide computer system facility to all department.
➢ To provide internet access facility to all department.
➢ To facilitate company login ID creation to officers.
➢ To facilitate printouts and Xerox in several department.
➢ To facilitate networking of all computer system in the company.
➢ To check and solve the problems related to computer system
accessing in the factory premises.

IT comprises in three parts:

29
➢ Hardware
➢ Software
➢ Administrator

There are three types of server inside the IT room.

➢ Database server
➢ Windows server
➢ Monitoring server

QUALITY CONTROL DEPARTMENT

Quality Control is concerned with evaluation of test data and its

application to the control of textile process raw material intermediate
product and final product. It is concerned not only with quality level
and the cost of maintaining this level, but also with the presentation of
tangible values to measure quality and changes in quality. The main
objectives are:-
➢ Assistance in establishing quality controls at various points in the
manufacturing process.

30
➢ Maintenance and calibration of process control equipment.
➢ Investigation of defects and assistance in solving quality problem
during production
➢ Implementation of quality control measures for incoming store.
➢ Operating a testing laboratory to carry out required test and
analysis

There are different type of instrument used in QC department for

different type of material testing. Tests are done on the fiber stage,
yarn stage, fabric stage.

GENERAL STORE DEPARTMENT

Functions

Raw material that are required in the production are store in stores.

Indent is made for the material required by the department.

Purchase Requisition is received from the department and the demand

is send to purchase department. The purchase department will give
the order for the material. The material will be received in the general

31
stores and the verification of quantity is done by general stores and
quality is verified by respective department.

If the material is not according to the demand or the requirement than

it is rejected and for that purpose rejection note is prepared and
material will be returned to the supplier.

GRN (Goods Received Note) is Received for the material purchased on

behalf of departments and the material is verified with the note. After
receiving the material it is shifted to BIN.

BIN Card system is applied for keeping the

record of materials.

COMMERCIAL DEPARTMENT
The raw Material that is demanded by the departments for production
is informed at Thane and is coordinated with Thane head office. The
material are procured here independently.

The material that are procured are Engineering item, spares,

packaging material, dyeing , Bearing for machines etc.

All the material are purchased from Vapi, Surat, Bombay.

32
 PRODUCTION DEPARTMENT

PRODUCTION CAPACITY PER DAY

NAME OF THE PHA PHA PHASE

DEPARTMENTS SE 1 SE2 3

33
 SCOURING 14000
Kg.
GRIEGE COMBING 130 7000
0 Kg.
Kg.
CONVERTER 700 7000
0 Kg.
Kg.
RECOMBING 320 14000
0 Kg.
Kg.
DYEING 320 14000
0 Kg.
Kg.
SPINNING 320 7500
0 Kg.
Kg.
WEAVING 700 140 28000
0 00 mtrs
mtrs mtrs
FINISHING 150 250 40000
00 00 mtrs
mtrs mtrs
FOLDING 150 300 40000
00 00 mtrs
mtrs mtrs
WAREOUSE 150 300 150000
00 00 mtrs
mtrs mtrs

34
PRODUCTION PROCESS:

SCOURING (Wool)

GREY COMBING CONVERTER (Polyester)

DYEING

RECOMBING

SPINNING

YARN ROOM

WARPING

WEAVING

MENDING

FINISHING

FOLDING

WARE HOUSE

35
 SCOURING

Scouring is the process of cleaning the raw-wool which contains

natural Greece and foreign particles like dirt, dust-burrs and twigs, hey
and other vegetable matters. Normally fiber length is 5 to 9 cm and
above and fiber diameter is 17 to 26 micron. Here the raw material is
coming in form of bales. One bale weight has 150 to 160 kg. Bale
opening is done by manually spreading of fibers from bale on the floor
with the help of workers. A special mixture of lubrication, oil and water
is sprayed on the spreaded fibers. Here lubrication of fibers is done so
that wool will be going in to carding and avoids any static generation
further processing of the wool. After completing the process of
scouring, clean wool pass on to the next department.

SCOURED
WOOL

BALE
OPENING

PROCESSING OF WOOL

CLEAN WOOL

36
 GREY COMBING

This department is the preparatory department before going for dyeing

or re-Combing. According to the raw material it has two sections (a)
Wool (b) Polyester. In this process the raw materials goes through
various sub processes like carding, gilling and combing with respect to
wool and sub processes like converter and gilling for polyester. The
basic aim of this department is to remove the impurities in the fibers
and create equal size fibers for further processing. From this
department the raw materials are converted into tops and sent to
Dyeing.

CARDING:
➢ Parallelized fiber and sliver formation
➢ To remove impurities such as vegetable matters, dust, dint etc.
➢ To open the tiny lumps and hooks
➢ To convert criss-cross and tough form of bulk and giving finally rope
like shape

GILLING
➢ To improve evenness
➢ To blend the fibre
➢ To remove shorter staple fibre
➢ To strengthen the fibre

COMBING:
➢ To remove the short fibers
➢ To remove the neps and impurities
37
➢ To impart luster

The process flow of Grey Combing is given below:

CARDING

GILL BOX 1

GILL BOX 2

GREY
COMBING GILL BOX 3

COMBER

GILL BOX 4

GILL BOX 5

38
 CONVERTER:

Converter machine is only for polyester materials. The flat web of

continuous filament called TOW which is fed to the converter and cut
into the desired staple length so that it can be used to spin the staple
yarn finally the filaments are converted to sliver and fed to cans Then
sliver fed to gilling machines so that fiber becomes more parallel and
even.

CONVERTER

GILL BOX 1
CONVETER

GILL BOX 2

GILL BOX 3

39
 DYEING

This is the one of most important department of all because here the
fibers are dyed to suitable shades as per the customer requirement.
Dyeing is the process of coloring textiles materials by immersing them
in an aqueous solution of dyeing called liquor consist of dye, water and
an auxiliary after dyeing the tops are dried through HTHP m/c and RF
m/c and further sent for the re-combing. Here before dyeing the
different shades are matched to customer requirement and passed
through quality inspection to avoid rework.

The Process flow of Dyeing is given below:

PREPARING OF DYE LIQUER

SAMPLE DYEING

SAMPLE MATCHING

DYEIN COMPRESSING OF WOOL/

PLOYESTER BUMOP TOPS
G

40
 TOP DYEING

HYDRO
EXTRACTOR

RE-COMBING
RADIO FREQUENCY DRYER

After dyeing, the dyed materials are going to Re-combing department.

Input in terms of wool tops, polyester tops etc go to the Re-combing
section. Then they blend these according to their required quality. The
main objects of Re-combing are:-
➢ To separate the fibers of dyed tops of wool.
➢ Blending of fibers viz. wool, polyester
➢ Ensuring homogenous blending
➢ Removal of short fiber
➢ Removal of entanglement at the time of dyeing
➢ Removal of undesired elements like slubs, neps & pin point.

The process flow of Re Combing is given below:

DEFELTER

BLENDER

GILL BOX 1

41
 GILL BOX 2
RE-COMBING

GILL BOX 3

COMBER

GILL BOX 4

GILL BOX 5

SPINNING:

Spinning is the process in which fibers are converted into yarn which is
actually used for the weaving and to make the fabric here, the Re-
combed tops are again passed through gilling machine to increase the
strength of the fiber and to prepare slivers that can be fad into rubbing
frame now the sliver is converted into roves by applying draft and
doubling operations and reduction of sliver’s cross sections. Now
roving spools are brought to ring frame and roving is converted into
yarn by roller drafting system. After the ring frame spinning is done,
yarn is subjected to steaming because highly twisted yarns are prone
to snarling during winding. After the spinning of the fibers on the ring
frames it is checked for the uniformity and breakages in the Auto-
Conner section and also remove the defects like slubs, neps, thick
place, thing place etc. and to obtain suitable packages for further
processing. The yarns in the corn and cheese form are received from

42
auto-winding machine here two yarns are just wound together without
any twist. Then twisting is done for improve the evenness, strength
and elongation. After the T.F.O the packages is again sent to steaming
to reduce snarling tendency and finally all yarn packages sent to the
yarn room department for storage.

The process flow of spinning is given below:

GILL BOX 1

GILL BOX 2

GILL BOX 3

GILL BOX 4

SPINNING VERTICAL GILL BOX Co

unt Below 30 Nm

RUBBING FRAME

RING FRAME

STEAMING

43
 STEAM
Siro

Lycra

AUTO CONER

Siro Lycra
PLY WINDING
and
Single Weft
TWO FOR ONE

STEAMING

YARN ROOM

YARN ROOM:

This is the storage room for the yarn that are produced in the spinning

section and the yarn that are outsourced. It acts as a bridge between

the Spinning and the Warping stage of the production. The main

function of yarn room is to arrange all yarn packages according to

correct shade number, lot wise etc. The yarn is weighted and entry is

done in computer. Yarn needed for warping and weaving is determined

by S.C.M department. If yarn is not sufficient then it is imported from

various exporters like ELEGNT SPINNERS, BHIWANI, WELSPUN, NOVA

PETROCHEMICALS, SAGAR TWISTERS, VIKRAM WOOLEN etc or other

plants of RAYMOND. It is the only section that does not add value to

44
the inventory but despite that is critical for the smooth functioning of

the processes. The capacity of the yarn room is nearly about 130 tones

of the yarn.

Yarn Room is an intermediary storage location for yarns and it comes

in between the spinning department and the weaving department, in

the process flow. The yarn room at Raymond, Vapi currently stores 250

T of yarn, on an average. To make the storage and retrieval of the

yarns simpler and systematic, Warehouse Management System (WMS)

is trying to be implemented in Vapi. However, implementation of WMS

requires determination and standardization of the practices to be

followed in the yarn room.

The project “Implementation of Warehouse Management System in

Vapi” aims at studying the requirements, constraints, etc of the yarn

room and coming up with ways to improvise the management of the

yarn room.

45
 SPINNING
CHEESE
WEAVING
OUTSIDE
PACKING
DSG / SPG
DYR RECEIPTS &
/ CD /STORES
YARN
PRODUCTION
DYEING
RETURN
ISSUE
YARN
ISSUES ISSUES
YARN /ISSUES YARN
RECEIPT

46
 Yarn room currently stores 250 T of yarn, on an average.
The breakup of this figure, on the basis of the type of yarn is shown
below.

Type of
Quantity
Yarn
Deco Yarn 6T
Viscose
6T
Yarn
Texturised
6T
Yarn
PW Yarn 174 T
PV Yarn 58 T
All wool 4T

For bar coding purposes, a yarn is distinguished from another on the

basis of a combination of the following parameters:
1. Batch no.
2. Count
3. Blend
4. Material
5. Source
6. Weight
7. Date of receipt
8. Date of delivery

47
Two yarns, though they may be of the same count, blend and material
cannot be used for the production of the warp of the same fabric,
unless they have the same batch no. Any violations to this are subject
to the discretion of the SCM department. Hence, batch no. is used as
the primary key for a bar code. Batch no. when fed in for a yarn, will
give other relevant details. A single sales order can have several batch
numbers, while a batch number will correspond to only one sales
order. Whenever a bar code is entered, it should return details of the
yarn, including the bin / trolley locations where it is stored. Similarly,
the WMS should be able to provide information of the yarns contained
in that bin/ trolley and how much capacity is remaining in it, when a
bin number is entered.
WARPING

The yarns which are coming from Spinning Section are going for
winding for preparing required amount of package. Then they are
creeled according to the warp pattern which is given by designing
department. The main object of the warping is to produce the warp
sheet according to the warp pattern and formation of warp beam.

Winding supply sufficient number of packages in form of cheese

to bencreel so that sectional warping would take place here number of
packages are determined according to length of fabric.

Creeling is a process of loading the packages on creel according to the

design given by designing department and drawing yarn from
respective packages to sectional warping machine through guiding
rollers and eyelets.
48
Sectional warping is a process of preparation of warp yarn for process
of creeling here length of warp yarn is determine by length of fabric
according to considering the factor like shrinkage, weight loss etc.

Waxing is done during warping and beaming process to make wrap

yarn smooth so that there will be minimum breakage on loom. Knotting
is a process of making knots of warp yarn on beam to achieve warp
length for particular length of fabric. Drawing in is the process of
passing of warp yarn through the eye of healds according to peg plan.

Denting, in this process this plan is describes the arrangement of the

warp ends in the reed. Denting plans are entirely dependent on the
end density and number of dents per centimeters
In the reed, though there are some fabrics that require precise
positioning of dent wires in relationship to weave.

The process flow of the warping is given below:

WINDING

CREELING

SECTIONAL WARPING

SIZING (CELLULOSIC YARN)

49
 WARPI BEAMING
NG

WAXING

KNOTTING

GATTING

AUTO DRAWING

WEAVING

Weaving is the department, where by means of simple interlacement

of warp, weft and selvedge’s two sets of threads are converted in to
fabric. The beam from the warping section is used here to prepare the
real fabric that we know.
Passage of warp yarn through looms the warp yarns are contains on
weaver’s beam at the back of loom, each ends are successfully passed
through each of drop pin eyes which is an essential part in stopping
the loom in event of a break in any of the warp yarn then it is pass
through the eye of heads, through gaps between the wire of reed,
which is the comb light structure, in front of the reed warp and weft
yarns are combined together to form fabric, which is drown forward to

50
be store on the cloth roller. After completing pre-decides length of the
fabric the cloth roller is given to grey perching table. Here visible
inspection of fabric is done. The fabric is pass over the frosted glass
with light behind it and it inspect visually if any defects are there then
the worker give some mark on fabric with some marking material
which is easily removable. Then material is handover to mending
department.

The process flow of weaving is given below:

LOADING OF WARPING BEAM ON LOOM

SHEDDING

PICKING

WEAVI
NG BEATING UP

LET OFF

51
TAKE UP

GREY CHECKING
 TAKE UP

GREY CHECKING

MENDING:

Mending is the process where the defects in the fabric from the
weaving section are visually inspect and manually removed and
maintain the quality of fabric. This department still follows the
conventional method of doing things manually. Fabrics are passing
through different table like mending tables, checking tables and extra
mending tables. After correcting all removable faults, fabrics are
arranged in lot size according to requirement of pieces like export,
domestic, exclusive etc.

52
 The process flow of Mending is shown below:

GREY PERCHING

MENDING

Mending

GERY CHECKING

FOLDING

FINISHING:

After taking fabrics from mending department, the batch wise

arrangement is done in finishing department. The term finishing means
completing the manufacture of cloth by surface treatment. Finishing is
an essential process for textile goods before they are put on the
market. There are three types of finishing phases
➢ Wet

53
➢ Dry
➢ Grey finish

The main objective of finishing are:-

➢ To improve the appearance of the fabric that is make it more
attraction or lustrous.
➢ To improve the feel of the fabric.
➢ To cover faults in original fabric.
➢ To increase the weight of the fabric.
➢ To improve the weaving qualities.
➢ To make sure fabric free from pills and soiling.
➢ To impart special properties to the fabric for specific end uses.
➢ To set the texture of certain fabrics and make others dimensionally
stable.
➢ To produce stronger and more durable fabrics.
➢ To produce novelty effects

The process flow of finishing is shown below,

54
 Batching

Prescouring

Resin

Heat Setting

Shearing

Singing

Rope Scouring /Resin

Rope Opening

2nd Drying Finishing

Shering

Semi Perch

Damping

Pressing

Super Finishing

TMT

Super Finishing

55
 FOLDING

After completion of finishing process the fabric transfer to folding

department here the full finished fabric comes from finishing
department is being folded. The first step of folding process is to make
grey sample made for future use then samples are being matched with
the standard fabric sample from chhindwada plant. After that the fabric
is check on perching machine for their quality of finishing and any
defects which are left out. Here mending or correcting of faults are
done after that fabrics is go for lab testing in that pilling and shrinkage
test are done normally for export quality of fabric now both back side
as well as front side of fabric are inspected particularly in center to
selvedge inspection and end to end inspection. On that basis flags are
put on the fabric according to the faults.. After that individual piece
wise weighting is done. After that paper pasting process is start in that
paper transfer is used for pasting on the folded or rolled fabric in
contains company’s name, manufacturing site, blend information,
width, package date and length. Then brand tags are attached to
respective fabric for their respective brand

56
 S to ra g e o f F a b ric

G re y S a m p le M a kin g

S a m p le M a tc h in g

F in ish C h e k in g

M e n d in g

L a b T e s tin
(Egx p o rt M a rke t F)a b ric

F a c e& B a c k s id e In s p e ctio n s
Folding

F la g g in g

L a p p in(Dg o m e s tic M a)rk e t R o llin(E

g x p o rt M a rk
) et

P a p e r T ra n s fe r P a s tin g

T a g A tta c h in g

P a c k in g

W e ig h in g

57
 WAREHOUSE AND DISPATCH

After folding department fabric is transfer to warehouse for final

storage then final packing. The material is first divided into quality
wise, shade wise etc. with respect to civil, export, domestic.etc and
finally according requirements and order fabric are dispatch. In
warehousing fabrics are issue through scanner from folding
department which read the barcode on the tag of packed fabric. A
particular length of fabric is cut from each quality number to make the
sample so that its rate and price could be declared. Normally sample
size-110, 120, 130 cm after that booklet making is done in that
collection of fabric pieces of 2.5*2.5 inches each fabric pieces called
card there are 24 cards in a booklet. Rolls and folded fabric are further
stapled in an opaque plastic cover by using stapling machine. Staple
fabrics are dispatched from stocks to party. Warehouse manages to
search a particular piece number, shade number, quality number and
other information of fabric from stock. Maximum stock capacity of
fabric is 8 lacs mtr.

58
 MATERIAL HANDLING
Material handling is defined as movement and storage of material at
the lowest possible cost through the use of proper methods and
equipments.

The main objectives of material handling are

➢ Lower unit material handling costs
➢ Contribute to better quality by avoiding damage to products by
inefficient handling.
➢ Improve the working conditions and greater safety in the movement
of materials.
➢ Reduction in manufacturing cycle time through faster movement of
materials which reduce work-in-progress inventory cost.

In RAYMOND, material handling equipments are used in various

Departments

SR.NO NAME OF THE DEPARTMENT MATERIAL HANDLING

EQUIPMENTS
1 Scouring  Duct (chute feed
system)

2 Grey-Combing and Converter ➢ Roller cans

➢ Tow trolleys
➢ Pallets
➢ Top box trolleys

59
3 Dyeing  Dyed top trolleys
 Cheese creel
trolleys
 Electrically operated
Cranes

4 Recombing
 Roller cans
 Finish top trolleys
 Tractor-trailer
train(MEL)
 Pallets

5 Spinning ➢ Roller cans

➢ Creel trolleys
➢ Bobbin trolleys

6 Yarn room ➢ Creel trolleys

➢ Fork lift trucks
➢ Band trucks
➢ Stacker

7 Warping ➢ Beam lifter trolleys

➢ Heald shaft trolleys
➢ Bobbin trolleys

8 Weaving  Gaiting trolleys

 Fabric beam trolleys

9 Mending  Folding fabric

trolleys
 Wooden pallets

10 Finishing ➢ Folding fabric

trolleys

11 Folding ➢ Trolleys

12 Warehouse ➢ Band trucks

60
Some of the miscellaneous handling equipments like pipe lines which are
closed tubes that transport water, air and steam.

SCM DEPARTMENT

Supply Chain Management

Definition:

In Raymond, SCM is the core Department which mainly deals with the
planning & control activities of each plan. It provides link between the
all other departments. Now a day, SCM works as owner of the
company. It is a value streams for business. In Raymond, SCM deals
with the following activities.

1. Strategy & Analysis.

➢ Management Reporting & Analysis

2. Planning Processes

61
➢ Supply Chain Planning

3. Core Processes
➢ Procurement & Inbound Logistics
– Sales Orders
– Raw Materials
– Spare Parts
– Outsourcing Capacities
➢ Factory Planning & Production
– Capacity Balancing
– Delivery Commitments
– Priority setting
– Internal Follow up
➢ Sales & Outbound Logistics
– Ware House Stock Maintenance
– Delivery Planning
– Good Dispatching

4. Support Processes
➢ Financial & Cost Management
➢ Maintenance & Engineering
➢ Quality Management
➢ Human Resources

SCM also focuses on the civil & export marketing. SCM is done these
activities on the basis of Make To Stock & Make To Order. Vapi SCM
has following Key Result Areas.
➢ Commitment to Sales

62
➢ Timely Delivery
➢ Raw Material Availability
➢ Maximum Production by using minimum Capacity
➢ Help Production Departments to improve quality

Vapi SCM receives yearly/monthly plans from the main THANE Central
SCM. After that, Vapi SCM analysis that plans and as per the
production capacity of each department they prepare Master
Production Schedule & Material Requirement Planning
They set the production target monthly/weekly/daily basis and those
targets are to be E- Mail to each department through SAP system. The
updates of various departmental Reports are E-Mail to the main THANE
unit. Further more, the requirement and transfer of raw materials from
one department to the other department i.e. from fibre to fabric, is also
managed by SCM.

ACCOUNT DEPARTMENT

INTRODUCTION:

This company has finance cum account department which is mainly

deal with all transactions like wages, salary, expenditure, making
Chelan and invoice, all receipt and payments etc. all this activity is
done in SAP system and through this system all accounting report
access at all locations of Raymond. All major financial decision is taken
by THANE head office.

63
 OBJECTIVES
➢ To reduce cash transactions
➢ To record and maintain all monetary transactions of unit in SAP
➢ To provide required schedule for fund
➢ To provide necessary information to all internal and external
customers.
➢ To provide MIS report monthly to management for accurate decision
making
➢ To prepare annual revenue budget for proper control
➢ To create cost control awareness by providing training

FUNCTIONS

1. Accounts payable management

➢ Invoice Verification
➢ Payment scheduling
➢ Disclosure
➢ Bank reconciliation
➢ Vendor reconciliation
➢ Budget

2. Cash Management

➢ Cash reconciliation
➢ IOU reconciliation
➢ Fund Management
➢ Statutory Payment

➢ Accounts Payable Management

64
 Invoice verification

Invoices are verified against the purchase orders made. The quantity
and quality of the materials received as per the purchase order or not
is seen. If materials are not according to the purchase order made then
amount is deducted and then payment is made. Invoices are also
verified for the duties charged or whether CENVAT credit is received or
not or whether that material is excise able or not. Payment is only
made after the detail verification of invoice. If the material sent is
rejected then quantity rejected is deducted from the actual quantity
and payment is made for the approved material.

Payment Scheduling & preparation of Cheque

Payment is made to the vendors as per the auto scheduling of

overdue invoices.

Vendor Reconciliation

If any payment is due even after the due date then the ledger balances
is reconciled if money is not received by the vendors.

Disclosure

Acknowledgement from the

vendors is received by the accounts Department. Accounts
department verify about the payment made whether it is received by
the vendors or not through this acknowledgement.

Bank Reconciliation

65
 Bank book and pass book is maintained is by the accounts
department. Difference in bank charges is reconciled by the accounts

Budget

The expenses which are incurred for production, the estimation of

these expenses is sent by various plants to the accounts department.
After getting estimation from the entire plants budget is prepared by
the accounts department and sent to the head office for approval.

2. Cash management

A certain level of cash is maintained for working capital requirement.

The amount of cash maintained in the company should be neither too
high nor too low. If it’s too low then day to day activities can be
hampered and if it’s too high there is a risk.

Cash reconciliation

Cash balance is matched daily against the amount disbursed.

Person to whom amount is disbursed submits a voucher as a proof of
the expenses made.

IOU reconciliation

Any employee takes IOU for the office use or personal use. That
employee submits a voucher for the amount spent and left money is
returned. This amount is also reconciled against the voucher received.

66
Fund Management

Every department estimates the expense to be incurred in the coming

month and gives this estimate to the accounts department. Some
statutory payments like electricity bills, water bills also included in
these. Accounts department intimate this to head office and ask for
funds for these expenses.

At the end of every month stock shown in SAP should be matched with
the physical stock. Audit for that is conducted on any day in a month.

Statutory Payments

Statutory payments like GEB bills, water bills, and ETP bills are also
made by the accounts department.

FINANCIAL HIGHLIGHTS:
Particulars BSE NSE
9112 10596
No. of Shares 494 293
303.
Highest Share Price(Rs.In Lacs) 95 302
Lowest Price Share(Rs.In Lacs) 68.1 67.95
76.4
Closing Share Price as on 31.3.09 5 76.15
Market Capitaliation as on 31.3.09 (Rs. In 4692
Lacs) 6 46742

67
➢ This graph shows the continuous increase in the total assets of the last five years.It
indicates the company has good investments in both fixed and current assets as well.

➢ In 2009,company facing loss as per the calculation of profit before tax. We can see that in
2007, the company has more than 200 Lacs Rs. Profit before tax.

➢ The reported net profit is good in last 4 year.But in current year 2009,the company facing
loss of more than 200lacs. This happens because of the heavy loss in export business and
due to recession.

68
BALANCESHEET

69
 M M M M M
ar ar ar ar ar
ch ch ch ch ch
20 20 20 20 20
Particular 10 09 08 07 06
SOURCES OF
FUNDS :
61. 61. 61. 61. 61.
Share Capital 38 38 38 38 38
1,1 1,0 1,3 1,2 1,1
11. 65. 36. 94. 28.
Reserves Total 53 60 90 78 56
1,1 1,1 1,3 1,3 1,1
Total Shareholders 72. 26. 98. 56. 89.
Funds 91 98 28 16 94
756 868 502 566 546
Secured Loans .96 .85 .04 .86 .68
495 476 374 220 221
Unsecured Loans .75 .22 .72 .75 .2
1,2 1,3
52. 45. 876 787 767
Total Debt 71 07 .76 .61 .88
2,4 2,4 2,2 2,1 1,9
25. 72. 75. 43. 57.
Total Liabilities 62 05 04 77 82

APPLICATION OF
FUNDS :
1,7 1,7 1,3 1,2 1,3
13. 00. 45. 30. 66.
Gross Block 40 64 41 03 73
Less :
Accumulated 772 701 625 553 677
Depreciation .98 .6 .88 .98 .66
Less: Impairment
of Assets 0 0 0 0 0
940 999 719 676 689
Net Block .42 .04 .53 .05 .07
Lease Adjustment 0 0 0 0 0
Capital Work in 41. 62. 13. 85. 156
Progress 64 11 58 69 .05
1,0
891 888 47. 984 736
Investments .79 .59 30 .47 .6
Current Assets,
Loans & Advances
284 340 329 283 319
Inventories .5 .4 .74 .66 .04
296 304 289 268 248
Sundry Debtors .95 .48 .89 .77 .47
26. 46. 21. 25. 25.
Cash and Bank 56 8 82 62 03
70
 Profit & loss Account

Particul Mar- Mar- Mar- Mar- Mar-

ars 10 09 08 07 06
INCOM
E:
Sales 1,3 1,4 1,3 1,3 1,3
Turnover 50.89 02.16 42.48 06.84 40.45

Excise Duty 4.39 14.06 14.79 15.59 20.32

1,3 1,3 1,3 1,2 1,3
Net Sales 46.50 88.10 27.69 91.25 20.13
Other 155.8 111.1 147.5 195.4 107.8
Income 1 6 1 3 7
Stock - 26.1 50.8 40.9
adjustment 47.62 7 9 6 18.22
1,454. 1,525. 1,526. 1,527. 1,446.
Total Income 69 43 09 64 22
EXPENDITUR
E:
Raw
Materi 381.1 440.0 481.7 391.4 407.4
als 7 2 9 1 3
power & fuel 89.6 89.8 82.1 85.3 93.8
cost 6 4 5 3 1
Employee 249.7 256.7 227.7 218.1 199.6
Cost 1 2 8 9 4
Other
Manufacturin 169.5 199.7 205.6 185.6 199.6
g Expenses 5 2 5 6 4
Selling and
Administratio 213.8 231.9 190.7 152.2
n Expenses 4 3 217.2 6 6
Miscellaneou
s 123.6 432.5 89.2 107.8 123.8
Expenses 9 8 7 9 9
Less: Pre- 0 0 0 0.51 0.71
operative
Expenses

71
Capitalised
Total 1,22 1,65 1,30 1,17 1,17
expenditure 7.62 0.81 3.84 8.73 5.96
-
Operating 227.0 125.3 222.2 348.9 270.2
Profit 7 8 5 1 6

Interest 98.03 85.01 60.1 47.12 35.28

-
129.0 210.3 162.1 301.7 234.9
Gross Profit 4 9 5 9 8

Depreciation 111.3 88.81 81.07 62.96 72.72

Profit Before 238.8 162.2
Tax 17.74 -299.2 81.08 3 6
Tax 0 0.5 -4.91 42.11 27.68
Fringe
Benefit tax 0 3.15 3.42 2.75 3.58

Deferred Tax -7.32 -31.3 10.15 -8.15 10

-
Reported Net 271.5 202.1
Profit 25.06 5 72.42 2 121
Extraordinar -22
y Items 15.21 2.04 32.12 93.58 23.29
Adjusted Net 108.5
Profit 9.85 -49.51 40.3 4 97.71
Adjst. below
Net Profit 0 0 0 0 0
P&L
Balance
brought 326.7 278.8 167.1 106.0
forward 55.19 4 9 7 1
Statutory
Appropria
tions 0 0 0 0 0
Appropriatio
ns 0 0 24.57 90.4 59.84
P&L
Balance
carried 80.2 55.1 326.7 278.8 167.1
down 5 9 4 9 7
Dividend 0 0 15.35 30.69 30.69

72
Preference
Dividend 0 0 0 0 0
Equity
Dividend % 0 0 25 50 50
Earnings Per
Share- 11.3 32.0 19.0
Unit Curr 4.08 0 7 8 1
Earnings Per
Share(Adj)-
Unit curr 4.08 0 11.37 32.08 19.01
Book Value- 191.0 183.6 227.8 220.9 220.9
Unit Curr 9 1 1 4 4

Cash Flow Statement

Particulars Mar 06 Mar 07 Mar 08 Mar 09 Mar 10
1
8 -
11 17 5
6. 58
Net Profit Before Tax 6.5 3.6 6.
1 .7
0 5 9
5 5
9
5 1
10 15 12
Net Cash From Operating 7. 5.
9.4 7.5 0.
Activities 1 5
5 6 54
8 2
-
- -
1
Net Cash (used in)/from 15 28
-194.22 3. -361.13
Investing Activities 4.8 7.3
1
6 5
1
1
-
14 3 26
Net Cash (used in)/from 31. 6.
1.5 7. 5.
Financing Activities 89 2
8 6 57
0
2

-
- 0. 24
Net (decrease)/increase In 11. 3.
13. 5 .9
Cash and Cash Equivalents 78 7
51 8 7
9
2 2
21
Opening Cash & Cash 26. 13. 5. 5.
.8
Equivalents 76 25 0 6
2
3 1

73
 2 2
46
Closing Cash & Cash 13. 25. 5. 1.
.8
Equivalents 25 03 6 8
0
1 2

FIXED ASSETS MANAGEMENT

Fixed Assets (Definition)
Fixed asset is an asset held with the intention of being used for the purpose
of producing or providing goods or services and is not held for sale in the
normal course of business.
Fixed assets often comprise a significant portion of the total assets of an
enterprise, and therefore are important in the presentation of financial
position. Furthermore, the determination of whether an expenditure
represents an asset or an expense can have a material effect on an
enterprise's reported results of operations.

RATIO ANALYSIS
Types of Ratios
Several ratios, calculated from the accounting data, can be grouped into
various classes according to financial activity or function to be evaluated.
The parties interested in financial analysis are short-term and long term
creditors, owners and management. Short term creditors’ main interest is in
the liquidity position or the short term solvency and profitability of a firm.
Similarly, owners concentrate on the firm’s profitability and financial
condition. Management is interested in evaluating every aspect of the firm’s

74
performance. They have to protect the interest of all parties and see that the
firm grows profitably. In view of the requirements of the various users of
ratios, we may classify them into the following four categories:

1. Liquidity ratios
2. Leverage ratios
3. Activity ratios
4. Profitability ratios.

1. Liquidity ratios
It is extremely essential for a firm to be able to meet its obligations as they
become due. Liquidity ratios measure the ability of the firm to meet its
current obligations. In fact, analysis of liquidity needs the presentation of
cash budgets and cash and fund flow statements; but liquidity ratios, but
establishing a relationship between cash and other current assets to current
liabilities, provide a quick measure of liquidity. A firm should ensure that it
does not suffer from lack of liquidity, and also that it does not have excess
liquidity. The failure of a company to meet its obligations due to lack of
sufficient liquidity, will result in a poor credit worthiness, loss of creditors’
confidence, or even in legal tangles resulting in the closure of the company.
A very high degree of liquidity is also bad; idle assets earn nothing. The
firm’s funds will be unnecessarily tied up in current assets. Therefore, it is
necessary to strike a proper balance between high liquidity and lack of
liquidity.

75
The most common ratios, which indicate the extent of liquidity or lack of it,
are
(i) Current ratio
(ii) Quick ratio

Current Ratio
Current ratio is calculated by dividing current assets by current liabilities;
Current ratio= Current assets
Current liability

Current assets include cash and those assets that can be converted in to cash
within a year, such as marketable securities, debtors and inventories. Prepaid
expenses are also included in current assets as they represent the payments
that will not be made by the firm in the future. All obligations maturing
within a year are included in current liabilities. Current liabilities include
creditors, bills payable, accrued expenses, short-term bank loan, income-tax
liability and long-term debt maturing in the current year.

The current ratio is a measure of the firm’s short-term solvency. It indicates

the availability of current assets in rupees for every one rupee of current
liability. A ratio of greater than one means that the firm has more current
assets than current claims against them.

76
Quick Ratio
Quick ratio, also called acid test ratio, establishes a relationship between
quick, or liquid, assets and current liabilities. An assets is liquid if it can be
converted into cash immediately or reasonably soon without a loss of value.
Cash is the most liquid asset. Other assets are considered to be relatively
liquid and included in quick assets are debtors and bills receivables and
marketable securities. Inventories are considered to be less liquid.
Inventories normally require some time for realizing into cash; their value
also has a tendency to fluctuate. The quick ratio is found out by dividing
quick assets by current liabilities.
Quick ratio= Current assets – Inventories
Current liabilities

Net Working Capital Ratio

The difference between current assets and current liabilities excluding short-
term bank borrowing is called net working capital (NWC) or net current
assets (NCA). NWC is sometimes used as a measure of a firm’s liquidity. It
is considered that, between two firms, the one having the larger NWC has
the greater ability to meet its current obligations. This is not necessarily so;
the measure of liquidity is a relationship, rather than the difference between
current assets and liabilities. NWC, however, measures the firm’s potential
reservoir of funds. It can be related to net assets:
NWC ratio = Net working capital (NWC)
Net assets (NA)

77
2. Leverage Ratios
The short-term creditors, like bankers and suppliers of raw material, are
more concerned with the firm’s current debt-paying ability. On the other
hand, long-term creditors, like debenture holders, financial institutions etc.
are more concerned with the firm’s long-term financial strength. In fact, a
firm should have a strong short-as well as long-term financial position. To
judge the long-term financial position of a firm, financial leverage, or capital
structure ratios are calculated. These ratios indicate mix of funds provided
by owners and lenders. As a general rule, there should be an appropriate mix
of debt and owners’ equity in financing the firm’s assets.

The manner in which assets are financed has a number of implications. First,
between debt and equity, debt is more risky from the firm’s point of view.
The firm has a legal obligation to pay interest to debt holders, irrespective of
the profit made or losses incurred by the firm. If the firm fails to pay to debt
holders in time, they can take legal action against it to get payments and in
extreme cases, can force the firm into liquidation. Second, use of debt is
advantageous for share holders in two ways:
(a) They can retain control of the firm with a limited stake and
(b) Their earning will be magnified, when the firm earns a rate of return on
the total capital employed higher than the interest rate on the borrowed
funds.
The process of magnifying the shareholders’ return through the use of debt
is called “financial leverage” or “financial gearing” or “trading on equity.”
However, leverage can work in opposite direction as well. If the cost of debt

78
is higher than the firm’s overall rate of return, the earning of shareholders
will be reduced. In addition, there is threat of insolvency. If the firm is
actually liquidated for non payment of debt-holders’ dues, the worst suffers
will be shareholders- the residual owners. Thus, use of debt magnifies the
shareholders’ earnings as well as increases their risk. Third, a highly debt-
burdened firm will find difficulty in raising funds from creditors and owners
in future. Creditors treat the owners’ equity as a margin of safety; if the
equity base is thin, the creditors risk will be high. Thus, leverage ratios are
calculated to measure the financial risk and the firm’s ability of using debt to
shareholders’ advantage.
Leverage ratios may be calculated from the balance sheet items to determine
the proportion of the debt in total financing. Many variations of these ratios
exist; but all these ratios indicate the same thing-the extent to which the firm
has relied on debt in financing assets. Leverage ratios are also computed
from the profit and loss items by determining the extent to which operating
profits are sufficient to cover the fixed charges.

3. Activity Ratios
Funds of creditors and owners are invested in various assets to generate sales
and profits. The better the management of assets, the larger the amount of
sales. Activity ratios are employed to evaluate the efficiency with which the
firm manages and utilizes its assets. These ratios are also called turnover
ratios because they indicate the speed with which assets are being converted
or turned over into sales. Activity ratios, thus, involve a relationship between
sales and assets. A proper balance between sales and assets generally reflects

79
that are managed well. Several activity ratios can be calculated to judge the
effectiveness of asset utilization. Here we will take different activity ratio:
(i) Net assets turnover,
(ii) Total assets turnover
(iii) Fixed and current assets turnover and
(iv) Working capital turnover.

Net assets turnover

The firm can compute net assets turnover simply by dividing sales by net
assets.
Net assets turnover= Sales
Net assets

It may be recalled that net assets include net fixed assets and net current
assets, that is, current assets minus current liabilities. Since net assets equal
capital employed, net assets turnover may also be called capital employed
turnover.

A firm’s ability to produce a large volume of sales for a given amount of net
assets is the most important aspect of its operating performance. Unutilized
or under-utilised assets increase the firm’s need for costly financing as well
as expenses for maintenance and upkeep. The net assets turnover should be
interpreted cautiously. The net assets in the denominator of the ratio include
fixed assets net of depreciation. Thus old assets with lower book values may
create a misleading impression of high turnover without any improvement in
sales.

80
Some analysts exclude intangible assets like goodwill, patents etc., While
computing the net assets turnover. Similarly, fictitious assets, accumulated
losses or deferred expenditures may also be excluded for calculating the net
assets turnover ratio.

Total assets turnover

Some analysts like to compute the total assets turnover in addition to or
instead of the net assets turnover. This ratio shows the firm’s ability in
generating sales from all financial resources committed to total assets.
Total assets turnover= Sales
Total assets

Total assets (TA) includes net fixed assets (NFA) and current assets (CA).
so (TA=NFA+CA)

Fixed and Current assets turnover

The firm may wish to know its efficiency of utilizing fixed assets and
current assets separately.
Fixed assets turnover= Sales
Net fixed assets
The current assets turnover is:
Current assets turnover= Sales
Current assets
The use of depreciated value of fixed assets in computing the fixed assets
turnover may render comparison of firm’s performance over period or with
other firms meaningless. Therefore, gross fixed assets may be used to
calculate the fixed assets turnover for a meaningful comparison.

81
Working capital turnover
A firm may also like to relate net current assets to sales. It may thus compute
net working capital turnover by dividing sales by net working capital.
Net current assets turnover= Sales
Net current assets

4. Profitability Ratios
A company should earn profits to survive and grow over a long period of
time. Profits are essential, but it would be wrong to assume that every action
initiated by management of a company should be aimed at maximizing
profits, irrespective of concerns for customers, employees, suppliers or
social consequences. It is unfortunate that the word ‘profit’ is looked upon
as a term of abuse since some firms always want to maximize profits at the
cost of employees, customers and society. Except such infrequent cases, it is
a fact that sufficient profits must be earned to sustain the operations of the
business to be able to obtain funds from investors for expansion and growth
and to contribute towards the social overheads for the welfare of the society.
Profit is the difference between revenue and expenses over a period of time
(usually one year). Profit is the ultimate ‘output’ of a company and it will
have no future if it fails to make sufficient profits. Therefore, the financial
manager should continuously evaluate the efficiency of the company in term
of profits. The profitability ratios are calculated to measure the operating

82
 efficiency of the company. Besides management of the company, creditors
and owners are also interested in the profitability of the firm. Creditors want
to get interest and repayment of principal regularly. Owners want to get a
required rate of return on their investment. This is possible only when the
company earns enough profits.

Generally, two major types of profitability ratios are calculated:

• Profitability in relation to sales
• Profitability in relation to investment.

Here we will consider two profitability ratio:

(i) Return on investment and
(ii) Return on equity

Return on Investment
The term investment may refer to total assets or net assets. The funds
employed in net assets are known as capital employed. Net assets equal net
fixed assets plus current assets minus current liabilities excluding bank
loans. Alternatively, capital employed is equal to net worth plus total debt.
The conventional approach of calculating return on investment (ROI) is to
divide PAT by investment. Investment represents pool of funds supplied by
shareholders and lenders, while PAT represent residue income of
shareholders; therefore, it is conceptually unsound to use PAT in the
calculation of ROI. Also, as discussed earlier, PAT is affected by capital
structure. It is, therefore more appropriate to use one of the following
measures of ROI for comparing the operating efficiency of firms:

83
Return on Investment= EBIT(1-T)
Total assets

Or

Return on Investment= EBIT(1-T)

Net assets
Where above formula is for return on total assets and second formula is for
return on net assets. Return on net assets is equivalent of return on capital
employed.

Return on Equity
Common or ordinary shareholders are entitled to the residual profits. The
rate of dividend is not fixed; the earnings may be distributed to shareholders
or retained in the business. Nevertheless, the net profits after taxes represent
their return. A return on shareholders’ equity is calculated to see the
profitability of owners’ investment. The shareholders’ equity or net worth
will include paid-up share capital, share premium and reserves and surplus
less accumulated losses. Net worth can also be found by subtracting total
liabilities from total assets.
The return on equity is net profit after taxes divided by shareholders’ equity
which is given by net worth. If a company has both preference and ordinary
share capital, ROE should be calculated after deducting preference dividend
from PAT, and using only the ordinary shareholders’ capital.

84
 Return on Equity= Profit after taxes
Net worth (Equity)
Return on Equity indicates how well the firm has used the resources of
owners. In fact, this ratio is one of the most important relationships in
financial analysis. The earning of a satisfactory return is the most desirable
objective of a business. The ratio of net profit to owners’ equity reflects the
extent to which this objective has been accomplished. This ratio is, thus, of
great interest to the present as well as the prospective shareholders and also
of great concern to management, which has the responsibility of maximizing
the owners’ welfare.

The returns on owners, equity of the company should compared with the
ratios for other similar companies and the industry average. This will reveal
the relative performance and strength of the company in attracting future
investments.

Here certain ratios are calculated according to the data of balance sheet of
last five years of RAYMOND TEXTILE, INDIA.

Raymond Textile
Balance sheet
As on 31st March

85
 (Rs. In lacs)
2009- 2008- 2007- 2006- 2005-
10 09 08 07 06
sources of fund
share holders' fund
6138.0 6138.0 6138.0 6138.0 6138.0
shar capital 8 8 8 8 8
2086.9 2086.9
share warrant 5 5
11115 10656 13369 12947 11285
reserve & surplus 3 0.3 0.4 7.9 6.5

Loan Funds
75695. 86884. 50204. 56686. 54667.
secured loans 61 81 16 05 56
43575. 47621. 37472. 22074. 22120.
unsecured loans 24 85 21 96 28
2105.0 5967.5 5587.7 6402.7
deffered tax liability 3 2837.2 8 3 3
24466 25212 23555 21996 20218
total = 7 9.2 9.4 4.7 5.1

Application
Fixed Assets
17133 17006 13454 12300 13667
gross block 9.4 4.1 0.3 3.5 2.8
77297. 70159. 62587. 55397. 67765.
Less: depreciation 5 58 76 84 8
94041. 94041. 71952. 67605.
net block 85 85 51 64 68907
4164.2 4164.2 1358.3 8568.5 15604.
capital work in progress 8 8 6 1 81
89178. 88859. 10473 98447. 73660.
Investment 56 46 0.2 5 28
current assets, loans &
advances
28450. 34040. 32974. 28366. 31904.
Inventories 38 36 18 36 16
29694. 30447. 28988. 26877. 24846.
Debtors 35 61 56 07 74
2656.1 4679.9 2182.4 2503.1
Cash 6 4 8 2561.4 7
5066.3 5775.4 3315.0
Others 4332.3 4 9 2969.9 6
Loans 27827. 23931. 23361. 21715. 14442.

86
 63 33 38 86 06
less: current liabilities
and provisions
30367. 35044. 28210. 29083. 26227.
current liabilities 14 23 03 9 34
5311.4 5966.6 7553.7 8063.6 6770.8
Provision 2 2 3 6 4
57282. 57154. 57518. 45343. 44013.
net assets 26 48 33 03 01
24466 25212 23555 21996 20218
total = 7 9.2 9.4 4.7 5.1

Ratio Analysis
Current ratio
Current ratio= Current assets
Current liability

For the year 2006,

= 77011.19
32998.18

= 2.33:1
For the year 2007, = 82490.59
37147.56

=2.22:1

For the year 2008, = 94342.30

35799.26

=2.63:1

87
For the year 2009, = 98165.33
41010.85

=2.39:1

For the year 2010, = 92960.82

35678.56

=2.61:1

Interpretation of Current Ratio

Figure showing Current ratio

As a conventional rule, a current ratio of 2 to 1 or more is consider

satisfactory. Company’s current asset for the year 2006 was Rs 77011.19
and a current liability was Rs 32998.18. So the current ratio of a company
for the year 2006 is 2.33:1.
In year 2007, company’s current assets increase up to Rs 82490.59 with
increase in current liabilities up to Rs 37147.56. So the current ratio for the
company reduced to 2.22:1 in that year.
In year 2008, company’s current assets increased up to Rs 94342.30 with
decrease in current liabilities up to Rs 35799.26. So the ratio for the year is
2.63:1.
In year 2009, there is an increase in current assets of a company up to Rs
98165.33 and also increase in current liabilities up to Rs 41010.85. So the
ratio for that year reduced to 2.39:1.
88
In year 2010, there is a reduction in current assets of a company in
comparison of last year and it reduced Rs to 92960.82. But current liabilities
of a company also reduced to Rs 35678.56. So the ratio for the year 2010 is
increased to 2.61:1.
This trend of current ratio interprets that there is no significant change in the
current ratio of a company during last five years. It shows that there is no
significant impact of current assets and liabilities of a company on the fixed
assets of a company.
The ideal current ratio for a company is 2:1. Company has a current ratio
more than 2:1 for all the years. It interprets that company have more
working capital than its actual requirements. So company should invest in
fixed assets rather than investing in such non performing working capital.
Company can earn interest by investing such working capital in any other
investments. Company should invest money in such way that it can get some
return on such investment.

Total Assets Turnover

Total Assets Turnover = sales
Total assets

For the year 2006,

Total assets turnover = 140637
128524.82
= 1.09 times

For the year 2007,

Total assets turnover = 137497.17
121517.18
= 1.13 times

89
 For the year 2008,
Total assets turnover = 146015.70
131853.91
= 1.11 times

For the year 2009,

Total assets turnover = 147779.78
163269.72

= 0.91 times

For the year 2010,

Total assets turnover = 142706.48
155488.39

= 0.92 times

Interpretation of net assets turnover

figure shows net assets turn over

The firm can compute net assets turnover simply by dividing sales by net assets.
Net assets turnover may also be called capital employed turnover.

90
For the year 2006, sales of a company was Rs 140637 and the total assets of a
company for a year was Rs 128524.82. So the ratio for the year was 1.09 times.
It interprets that company is producing Rs. 1.09 of sales for one rupee of capital
employed.
For the year 2007, sales of a company decreased to Rs 137497.17 but the total
assets of a company also decreased to Rs 121517.18. So the ratio for the year
increased to 1.13 times. It interprets that company is producing Rs. 1.13 of sales
for one rupee of capital employed in net assets.
For the year 2008, sales of a company shows increased to Rs 146015.70 and also
increased in its total assets. So the ratio shows decreased to 1.11 times because
increase in total assets is higher in proportion of increase in sales.
For the year 2009, sales of a company increased to Rs 147779.78 and also increase
in total assets of a company to Rs 163269.72. The growth of total assets was
higher in comparison of sales because of capital formation of assets. So there is
a reduction in ratio even there is an improvement in sales. So the ratio for the
year was 0.91.
For the year 2010, there is a decline in both sales and total assets of a company to
Rs 142706.48 and Rs 155488.39 respectively. But the reduction in sales was
lower in proportion of reduction of total assets. So there is a slight increase on
ratio up to 0.92 times in the year.

Net Assets Turnover

Net assets turnover = Sales
Net assets

91
For the year 2006,
Net assets turnover = 140637
202185

= 1.66 times

For the year 2007,

Net assets turnover = 137497.17
219964.68

=0.63 times

For the year 2008,

Net assets turnover = 146015.70
236584.11

= 0.62 times
For the year 2009,
Net assets turnover = 147779.78
252129.18

= 0.59 times

For the year 2010,

Net assets turnover = 142706.48
244666.95

92
 = 0.58 times

Interpretation for net assets turnover

Figure showing net assets turnover

This ratio shows the firm’s ability in generating sales from all financial
resources committed to net assets. The firm can compute net assets turnover
by dividing sales by net assets.
for the year 2006, sales of a company was Rs 140637 and net assets of a
company was Rs 202185. So the net assets turnover for the company for that
year was 1.66 times which interprets that company was generating a sales of
Rs. 1.66 for one rupee investment in fixed and current assets together.
For the year 2007, sales of a company decreased to Rs 137497.17 and net
assets of a company increased to Rs 219964.68. It creates a decrease in the
ratio of a company. Ratio of the company for that year was 0.63 times. This
was happen mainly because of decrease in sales and increase of a net assets.
For the year 2008, sales of a company increased up to Rs 146015.70 and net
assets of a company also increased. But the ratio of a company slightly

93
decline because the growth of net assets was little more in proportion of
growth of sales. The ratio for the year was 0.62 times.
For the year 2009, sales of a company increased to Rs 147779.78 and net
assets also increased up to Rs 252129.18. But same as previous year ratio
decline to 0.59 times.
For the year 2010, both sales and net assets has reduced up to Rs 142706.48
and Rs 244666.95 respectively. So the ratio decline for this year up to 0.58
times.

Fixed and Current assets turnover

Fixed assets turnover = Sales

Fixed assets
And

Current assets turnover = Sales

Current assets

For the year 2006,

Fixed assets turnover = 140637
84512

= 1.66

Current assets turnover = 140637

77011.19

94
 = 1.82

For the year 2007,

Fixed assets turnover = 137497.17
76174.15

= 1.81
Current assets turnover = 137497.17
82490.59
= 1.67

For the year 2008,

Fixed assets turnover = 146015.70
73310.87

= 1.99
Current assets turnover = 146015.70
94342.30
= 1.55

For the year 2009,

Fixed assets turnover = 147779.78
106115.24

=1.39
Current assets turnover = 147779.78
98165.33
= 1.51

95
 For the year 2010,
Fixed assets turnover = 142706.48
98206.13

= 1.45

Current assets turnover = 142706.48

92960.82
= 1.54

Interpretation of Fixed and Current asset turnover

The firm may wish to know its efficiency of utilizing fixed assets and current
assets separately. A firm can compute fixed assets turnover simply by dividing
sales by fixed assets and can compute current assets turnover by dividing sales
by current assets.
In year 2006, the reciprocal of a company’s fixed assets turnover ratio was 0.60
and reciprocal of current assets turnover was 0.55. So it implies that company’s
fixed assets is faster than current assets and for generating sale of one rupee, the
company needs respectively Rs. 0.60 investment in fixed assets and Rs 0.55 in
current assets.
In year 2007, current asset of a company exceeds the value of fixed assets. A
current asset of a company was Rs 82490.59 lacs while a fixed asset was Rs
76174.15 lacs. So the reciprocal of a fixed asset turnover ratio was 0.55 and
reciprocal of current assets turnover ratio was 0.60. It implies that company’s
current assets is faster than its fixed assets and for generating a sale of one

96
rupee, the company needs respectively Rs. 0.55 investment in fixed assets and
Rs. 0.60 in current assets.
In year 2008, trend was also same. Current assets of a company was increased
up to Rs 94342.30 lacs and a fixed asset was further reduced to Rs 73310.87
lacs. So the reciprocal of a fixed assets turnover was 0.50 while the reciprocal
of a current assets was 0.65. so it implies that company’s current assets is faster
than its fixed assets and for generating a sale of one rupee, the company needs
respectively Rs. 0.50 investment in fixed assets and Rs. 0.65 in current assets.
In year 2009, both fixed and current assets of a company were increased but
fixed assets increased more than current assets. So the reciprocal of the fixed
assets turnover was 0.72 and reciprocal of current assets turnover was 0.66. It
implies that fixed assets of a company is faster than the current assets of a
company and for generating a sale of one rupee, the company needs
respectively Rs. 0.72 investment in fixed assets and Rs. 0.66 investment in
current assets.
In year 2010, both fixed and current assets of a company reduced. But current
assets reduced more in proportion of fixed assets. So the reciprocal of a fixed
assets turnover was reduced to 0.69 and reciprocal of current assets turnover
was reduced to 0.65. So it implies that fixed assets of a company is faster than
current assets and for generating a sale of one rupee, the company needs
respectively Rs. 0.69 investment in fixed assets and Rs. 0.65 investment in
current assets.

97
Working Capital Turnover
Working capital turnover = Sales
Net current assets

For the year 2006,

Working capital turnover = 140637
44013.01
= 3.20 times

For the year 2007,

Working capital turnover = 137497.17
45343.03

= 3.03 times

For the year 2008,

Working capital turnover = 146015.70
58543.04

= 2.49 times

For the year 2009,

98
 Working capital turnover = 147779.78
57154.48
= 2.59 times

For the year 2010,

Working capital turnover = 142706.48
57282.26
= 2.49 times

Interpretation of working capital turnover

Figure shows working capital turnover

A firm may like to relate net current assets to sales. It may thus compute net
working capital turnover by dividing sales by net working capital.
For the year 2006, a sale of a company was Rs 140637 and a current asset was
Rs 44013.01. So the reciprocal of the ratio implies that for one rupee of sales,
the company needs Rs. 0.31 of working capital.
For the year 2007, a sale of a company was reduced to Rs 137497.17 and a
current asset was increased up to Rs 45343.03. So the reciprocal of the ratio
was 0.33. The ratio increased because of the increase in current assets of a
company.
For the year 2008, a sale of a company was Rs 146015.70 which is more than
previous year and current assets was also more than previous year that is Rs
58543.04. so the reciprocal of the ratio was 0.40 which implies that for one
rupee of sales, the company needs Rs. 0.40 of working capital.

99
 For the year 2009, a sale of a company increased to Rs 147779.78 but the
current assets of a company reduced to Rs 57154.48.So the reciprocal of the
ratio slightly decline to 0.39.
For the year 2010, a sale of a company reduced to Rs 142706.48 and there is a
slight increase in current assets of a company which leads to little increase in
ratio. Ratio for the year is 0.40.
The gaps for all these years are met from long term sources of funds of a
company.

Return on Investment
Return on Investment = EBIT (1-T)
Total assets

For the year 2006,

Return on Investment = 16370.48 (0.7)
202185
= 0.056 or (5.6%)

For the year 2007,

Return on Investment = 23823.28 (0.7)
219964.68
= 0.075 or (7.5%)

For the year 2008,

Return on Investment = 8169.66 (0.7)

100
 236584.11
= 0.024 or (2.4%)

For the year 2009,

Return on Investment = (-29755.06) (0.7)
252129.18
= -0.083 Loss or (-8.3%)

For the year 2010,

Return on Investment = 2004.34 (0.7)
244666.95
=0.006 or (0.6%)
Interpretation of return on investment
Figure shows return on investment

The conventional approach of calculating return on investment is to divide PAT by

investment. Firm can compute the return on investment which is yield by
investing in total assets simply by dividing PAT by total assets. Company pays
30% tax on profit every year.
In year 2006, company earns Rs 16370.48 lacs profit before tax. After the payment
of 30% tax. Company has PAT of Rs 11459.33 lacs. And the total asset of the
company was Rs 202185 lacs. So the return on investment for the company for
the year 2006 was 5.6%.
In year 2007, PAT of a company was Rs 16676.30 lacs. And the total asset of a
company was Rs 236584.11 lacs. So the company got 7.5% return on
investment for that year.
In year 2008, PAT of a company was Rs 5718.76 lacs. There was a huge reduction
in the profit of a company because of recession. The total asset of a company
was Rs 236584.11 lacs. Because of the reduction in profit, the return on
investment breakdown to 2.4% in that year.

101
In year 2009, effect of recession continues and because of that company faced loss
of Rs 20828.54 lacs. So the ratio became negative for that year. The ratio for
that year was -8.3%.
In year 2010, company overcomes from the effect of recession. Company has
made PAT of Rs 1403.04 lacs. And the total assets of a company are Rs
244666.95 lacs. Because of the low profit and high rate of investment. Return
on investment is very low but in positive nature. The return on investment for
the year is 0.6%.

Equity to Fixed Assets Ratio

Equity to fixed assets ratio = Total equity shares
Fixed assets

For the year 2006,

Equity to Fixed assets ratio = 6138.08
84511.81
= 0.076 or (7.6%)

For the year 2007,

Equity to fixed assets ratio = 6138.08
76174.15
= 0.081 or (8.1%)

For the year 2008,

Equity to fixed assets ratio = 6138.08
73310.87
= 0.084 or (8.4%)

102
 For the year 2009,
Equity to fixed assets ratio = 6138.08
106115.24
= 0.058 or (5.8%)
For the year 2010,
Equity to fixed assets ratio = 6138.08
98206.13
=0.063 or (6.3%)

Interpretation of Equity to Fixed assets ratio

Many times, firm compute the equity on fixed assets ratio to know its equity in
relation with fixed assets simply by dividing its equity shares by its fixed assets.
If equity shares are low and fixed assets is high than ratio is low and vice-e-
versa. Equity of a company is same or unchanged from last 5 years. Equity of a
company from last 5 years is Rs 6138.08 lacs.
For the year 2006, the fixed asset of a company was Rs 84511.81 lacs. So the
ratio for the year was 7.6 %.
In year 2007, the fixed asset of a company was decreased up to Rs 76174.15
lacs. Because of such reduction, ratio increase up to 8.1%.
In year 2008, the fixed asset of a company was further reduced to Rs 73310.87
lacs. This creates further improvement in ratio up to 8.4%.
In year 2009, the fixed asset of a company was increased to Rs 106115.24 lacs
because of capital formation. This leads to decline in ratio up to 5.8%.
In year 2010, the fixed asset of a company again reduced in comparison of
previous year up to Rs 98206.13 lacs. So ratio increase up to 6.3%.

103