CONTENT

SR. NO. 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17
PARTICULAR

PAG E NO. 1 3 6 9 13 14 16 17 18 21 24 27 30 33 34 34 36 37 40 41 46 53 60 63 64

18

19 20 21

SECTION - I Introduction of finance History Executive summary Track record of company General information about company Companies product Social activities Awards and achievement Overview SECTION - II Corporate Governance Report Shareholder Information Directors Report SECTION - III Introduction of financial statement Analysis of financial statement Ratio analysis 1) Meaning of ratio analysis 2) Importance of ratio analysis 3) Limitation of ratio analysis SECTION - IV Types of ratio analysis Profit & loss a/c ratio Balance sheet ratio Composite ratio Common size balance sheet Conclusion Bibliography

INTRODUCTION OF FINANCE
Finance is a common dynameters for a vast range of corporate objectives and major part of any corporate plans must be expressed in financial terms. -Mr. A.L. kingsport Task of providing funds require by an enterpise on terms must favourable to it in the light of objectives of the business. -Hunt Williams & Donaldson Business finnce is that business activity with axaquisition and conservation of capital fund in meeting the financial needs of over all objectives of enterprise. -Wheeler We all aware that in Economics, the for factor of production considered are land, labour, capital and organization. The term Capital can also be referred to as finance. It represents the money that is required to be brought in to finance or fund and activity. In financial management, is most useful course of B.B.A.

B.B.A. is regarded as the lifeblood of a business organization. The financial management study of about the process of procuring of financial resources and its judicious utilization with a view to maximizing the shareholders wealth. Efficient management of every business enterprise is largely dependent on the efficient management of its finance. According to solo man Financial Management is concerned with the efficient use of an important economic resource, namely capital funds. Phillipatus has given a more detailed definition. According to him Financial Management is concerned with the managerial decisions that result in the acquisition and financing of long term and short term credits for the firm. As such it deals with the situations that require selection of specific assets or combination of assets, the selection of specific liability or combination of liability as well as the problem of size and growth of an enterprise. The analysis of this decisions is based on the expected inflow and outflow of funds and their effects upon managerial objectives.

H ISTORY OF COMPANY
1956 Indian Rayon Corporation limited is incorporated in the year of 1956. 1963 Indian Rayons viscose filament yarn (VFY) plant at veraval goes on stream. 1966 The Birla aquire Indian Rayon Corporation limited. 1976 Jaya shree textile and industries limited active in textile and insulator is merged with Indian Rayon Corporation limited. 1981 Jaya shree insulators second unit at halol goes on stream. 1984 Indian Rayon Corporation limited enters in cement business. 1987 Indian Rayon Corporation renamed as Indian Rayon and Industries limited to reflect the diversified activity of the company. 1988 Indian rayon forays into carbon black,hi-teck carbon goes on stream.
4

1998 Indian Rayons cement business transferred to group company grasim as part of cement business consolidation. Production commences at Hi-tech carbons second carbon black plant at Gummidipoondi, Chennai. 1999 Indian Rayon return surplus cash to shareholders through a buyback. 2000 Indian Rayon aquires Mudra garment taking the Aditya Birla group to the top apparels sector. 2001 life insurance subsidiary Birla Sun Life Insurance commencing operation in march. Indian Rayon auires PSI data system. 2002 Insulator 2003 Greentech Environment Award 2002-03 in chlor sector for outstanding achivement in environment. Joint venture with NGK of Japan Birla NGK Insulators pvt ltd launched on 6 february 2003. alkali business hived into a separate subsidiary effective from 1 august 2002. of the league in the branded

2004 Brownfield expansion of 40,000 TPA completed at Hi-tech carbon Gummidipoondi taking total capacity to 1,60,000 TPA. 2006 Indian Rayon and Industries limited renamed as Aditya Birla Nuvo.

EXECUTIVE SUMMARY
Name of Company Aditya Birla Nuvo Year of Incorporation In 1956 Aditya Birla Nuvo is incorporated as a name Indian Rayon corporation limited. Registered Office of Company Junagadh-veraval road Veraval-362266 gujarat(India) Tel :- (02876)245711 E-mail :- [email protected] . Board of Director Kumar Mangalam Birla (chairman) Rajashree Birla H.J.Vaidya B.L.Shah P.Murari B.R.Gupta Tarjani Vakil Vikram Rao S.C.Bhargava G.P.Gupta

Managing Director Sanjeev Aga Company Secretary Devendra Bhandari Product of Company Carbon Black Garment Textile Viscose Filament Yarn Fertilizer Product BPO Plant Location Rayon & Caustic soda Plant Rayon division Veraval 362266 Gujarat Tel :- (02876)245711 Garment Division Plant Mudra garment 110, 4 th cross, 5 th block koramangala Industrial layout koramangala Banglore 560095 tel :- 080-56915000

Carbon Black Plant Hi-tech carbon Murdhwa industrial area P.O. Renukoot 231217 Dist. Sonbhadra Utter pradesh. Tel :- 05446-252387

Textile Plant Jaya shree textile P.O. prabhasnagar 712249 Dist. Hooghly, west bengale Tel :- 91-033-26721146 Other Division Plant Insulator division (Domestic Mktg) P.O. Meghasas Tal. Halol Dist. Panchmahal Gujarat 389330 Tel :- 02676-221002

TRACK RECORED OF COMPANY

Sales record of company RAYON DIVISION Year Sales (MT) Chart :
18000 17500 17000 16500 16000 15500 15000 14500 17380 16445 15694

2003-04 15694

2004-05 16445

2005-06 17380

sales

2003-04

2004-05 year

2005-06

FERTILISER(UREA) Year Sales(MT) FABRIC 2003-04 2004-05 2005-06 563914

10

Year Sales (000Mtr) Chart :

2003-04 2798

2004-05 3593

2005-06 4418

5000 sales(000Mtr) 4000 3000 2000 1000 0 2003-04 2004-05 Year 2798 3593

4418

2005-06

CARBON BLACK Year Sales(MT) 2003-04 118182 2004-05 165095 2005-06 175944

Chart :

11

200000 Sales(MT) 150000 100000 50000 0 2003-04

165095 118182

175944

2004-05 Year

2005-06

GARMENT Year Sales(Rs.crore ) Chart :

700 600 500 400 300 200 100 0 Sales(Rs.crore) 620.55 413.09 475.87

2003-04 413.09

2004-05 475.87

2005-06 620.55

2003-04

2004-05 Year

2005-06

Data about profit of Company

12

Year ) Chart :
profit(Rs.crore) 200 150 100 50 0

2003-04

2004-05 113.72

2005-06 186.93

Profit(Rs.crore 131.28

186.93 131.28 113.72

2003-04

2004-05 year

2005-06

Information about payment of Dividend The board of director has recommended a dvidend of 50% for the current year as against 40% last year. The Company will also pay the dividend tax of 14.025%. The dividend outgo will therefore be Rs. 42.71 crore.

13

GENERAL INFORMATION ABOUT COMPANY

Name of Company Aditya Birla Nuvo Executives of Different Division 1) Rayon Division K.K.Maheshwari 2) Hi-Tech Carbon Rakesh Jain 3) Textile Division S.K.Saboo 4) Mudra Garment Vikram Rao 5) Insulator Division D.R.Dhariwal Name of Chief Finance Officer Adesh Gupta (Sr.president) Name of Auditors Khimji Kunverji & Co. Mumbai S.R.Batliboi & Co. Mumbai Name of Company Secretary Devendra Bhandari Name of Share-Transfer Agent In house Share Transfer Registered With SEBI as category-2 Regi.no. INR 000001815

14

COMPANYS PRODUCTS UNDER DIFFERENT DIVISION

Mudra Garment Several new stores augmented Mudra Garments salient retail presence currently at 3.1 lacs Sq.ft. The esprit brand, which it launched recently in India, has met with an encouraging response. Strong growth across its product range particularly in shirts trousers and suits boosted revenue growth. Rayon division The Rayon division recorded its highest ever volumes at 17380 tonnes higher by 5.7 per cent over the previous year. In the chlor alkali segment the expanded caustic soda capacity revenues. Carbon black division The carbon black division has shown a robust performance. Total volume grew by 6.6 per cent at 1,75,944 tonnes the highest ever recorded in a year on the back of a vibrant auto sector. Textile division The textile divisions revenues have gone up 15.1 per cent to Rs.524.8 crore as against
15

has

been

fully

utilized

leading

to

enhanced

Rs.

456.12

crore

in

the

preceding year. Operating profit jumped by 69.9 per cent buoyed by a strong performance across segments. Fertilizer division Increased operational efficiencies coupled with rising demand for urea fertilizer divisions production and sales reaching higher levels at 5.76 lacs.

16

SOCIAL RESPONSIBILITY ACTIVITIES

There rural development activities span five key areas and their single minded goal here is to help build model villages that can stand on their own feet. From the Aditya Birla Nuvo group education field is developed in village. For this they built the balwadies and declare the scholarship for girls and also give the technical education to the village boy. They doing a health and family welfare plan also. They have a mobile clinic and once in a week doctors are visits in a village. Especially for mother and her child health they make a medical camps. For the awareness and give the knowledge about mass marriages they take a vishal nashbandhi shibir also.

17

AWARDS & ACHIEVEMENT

Rayon division Gold trophy from synthetic & Rayon textile export promotion council for highest export. First price in textile sector from ministry of power. New Delhi for the year 2004 in a matter of energy conservation. Textile Division First prize by the government of India for the best energy conservation measures. Company certified by 18001 OHSAS. Garment Division The division is achieving the Indian express marketing awards for brand excellence and brand building. Best trouser brand of the year by Images. Best brand launch of the year by Images for the SF Jeans. Hi-Tech carbon Winners of silver awards in the chemical sector at greentech environment excellence awards 2004. Commendation certificate at the IMC Ramkrisna bajaj national quality awards 2004. Deming awards 2002 and golden peacock awards 2002 for the quality of product and corporate governance.

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OVER VIEW
Aitya Birla Nuvo ltd is the Aditya Birla groups most

diversified conglomarate with the turn over of Rs 2642.05 crore for FY2006. It is a leading player in its key business sagment including VFY, carbon black, Garment, Textile and Insulator. Over the past three year Aditya Birla Nuvo through its subsidiaries has made successful forays into insurance, BPO striking a balance between manufacturing brand and services. A leading player The second largest producer of viscose filament yarn in India. The largest branded Apparel Company in India. The second largest producer of carbon black in India. Life insurance joint venture birla sunlife insurance company limited is Indias second largest private sector insurance company. Emerging player in high growth IT services and BPO sector. Capacities Business Viscose filament yarn Caustic soda Carbon black Fabrics Insulators Capacity 17000 tpa 41975 tpa 170000 tpo 53 looms 36000 tpa
19

Flax yarn Worsted yarn Synthetic yarn Future plan of company Rayon division Eco and energy auditing.

6036 spindles 21136 spindles 50208 spindles

Development of speciality yarn. Improvement in quality of yarn. Recycling of wastewater. Carbon black Development of modified designs for cyclone separators, APH Inlet box and ventures in hard black reactor, based on computation Fluid dynamics software. Development of new application of carbon black in ink, plastics and paint. Textile division Developments of metal splash resist fabric for metal and foundry Industry.

20

21

CORPORATE GOVERNANCE REPORT

Companys on Corporate Governance The Aditya Birla group is committed to the adoption of best governance practices and adherence in the true spirit at all time. In line with this philosophy Aditya Birla Nuvo, a flagship of Aditya Birla group, is striving for excellence through adoption of best governance and disclosure practices. During the ear company has further strengthened the quality of disclosure of board composition and its functioning remuneration paid and level of compliance with various corporate governance codes. Compliance with corporate governance code The company is fully compliant with requirement of the prevailing and applicable corporate governance code and is committed to ensuring compliance with any proposals for modification well ahead of their implementation timeline. Philosophy

22

Board Of Directors Name of Directors Category Other Board Directorship Meetings Privat Public Held Attend e 12 6 1 4 11 5 4 2 9 7 10 10 1 1 1 2 4 4 4 4 4 4 4 4 1 1 1 4 2 4 4 4 4 4 4 1 1 1

NonMr. Mangalam Birla executive NonMrs. Rajashree Birla executive Mr.H.J.Vaidya Independent NonMr. B.L.Shah executive Mr. P.Murari Independent Mr. B.R.Gupta Independent Ms. Tarjani Vakil Independent NonMr. Vikram Rao executive Mr. S.C.Bhargava Independent Mr. G.P.Gupta Independent Mr. Sanjeev Aga M.D

Audit Committee During the year under review, the Audit Committee met 4 times to deliberate on various matters and the details of attendance by the Committee Members are as follows:. Name of Directors Ms. Tarjani Vakil Mr. P.Murari Mr. B.R.Gupta No.of meetings Held Attended 4 4 4 4 4 4

23

The Statutory and International Auditors of the Company are invited to the Audit Committee meetings. Company Secretary of the Company acts as the Secretary of the Committee.

24

Shareholder Committee During the year under review, the Audit Committee met 2 times and the detail of attendance by the Committee members are as follow: Name of Directors Mr. P.Murari Mr. H.J.Vaidya Mr. B.L.Shah Mr. Devendra No.of meetings Held Attended 2 1 2 2 2 2 bhandari, company secretary, acts as

secretary to the committee and also is the compliance officer for the company.

25

SHAREHODER INFORMATION
Annual General Meeting Date and time : Place : 24 t h june, 2006 at 11.30 a.m. Registered office Junagadh Veraval Road Veraval 362 266 Gujarat, India. Financial Calendar First quarter Half yearly Third quarter Year ending : end July, 2006 : ending October, 2006 : ending January, 2007 : April/May 2007

Date Of Book Closure 11 t h june,2006 to 24 t h June, 2006 Dividend Payment Date 4 t h week of June/1 s t week of July, 2006 Stock Code Bloomber Reuters g IRYN.BO IRYN IN IRYN.NS NINRY IN IRYNq.L Sirds

Stock Exchange, Mumbai National Stock Exchange Global Depository Receipts (GDRs)

26

Listing On Stock Exchange At

Global Depository Receipts(GDRs) Societe de la Bourse The Stock Exchange, Mumbai de Phiroze Jeejeebhoy Towers Luxembourg Dalal Street Societe Anonyme Mumbai - 400 051 R.C.B 6222, B P 165 L-2011, Luxembourg NSE of India Ltd. Exchange PlazaBandrakurla Complex Bandra(East) Mumbai - 400 051 Equity Shares Non-Convertible Debenture National Stock Exchange of India Ltd. Exchange Plaza Bandra-kurla Complex Bandra(East) Mumbai - 400 051

Registrar And Transfer Agents In-house Share Transfer Registered with SEBI as category II Share Transfer Agent (Registration No. INR 000001815) Complaints received during the year Name of Complaints Relating to Transfer,transmission Dividend, interest,Redemption etc. Annual Report Demat - remat Others Total 2004-05 Rec Clr 3 3 26 3 7 18 57 26 3 7 18 57 2005-06 Rec Clr 7 7 7 2 9 25 6 2 8 23

27

Stock price data

BSE High Low Close Av.volu (In Rs.) (In Nos) Luxembourg Stock Exchange High Low Close Av.volu High Low Clo. (In Rs) (In Nos) (In US$) NSE 5.2 5.2 4.7 4.7 4.6 4.9 4.5

Apr-04 May-04 Jun-04 Jul-04 Aug-04 Sep-04 Oct-04 Nov-04 Dec-04 Jan-05 Feb-05 Mar-05

236. 189.9 214.0 9 200. 248.5 180.0 5 221. 191. 203. 0 0 7 267. 240. 201.1 0 4 301. 221. 291. 0 0 4 297. 267. 262.0 5 2 279. 241. 247. 0 5 8 306. 244. 294. 7 0 9 395. 290. 388. 0 5 3 420. 348. 488. 9 3 7 460. 409. 450. 0 5 1 469. 350. 399.3 0 0

44,199 236.8 190.9 213.4 52,328 68,861 249.0 181.0 200.3 102,975 22,148 220.9 190.5
114,978

269.0 197.0 300.5 237.1 298.2 262.0 278.5 243.1

53,375 42,527 19,003

85,508 306.2 244.2 72,198 399.2 290.1 33,899 421.0 345.3 70,047 462.8 406.0 30,195 460.1 370.0

203. 35,962 9 240. 146,447 5 291. 73,959 1 267. 53,500 6 247. 36,334 3 295. 129,414 2 389. 144,859 9 411. 77,188 1 450. 95,407 2 402. 33,160 3

4.5 4.5 5.4 5.5 6.1 6.0 6.0 6.0 6.0

4.5 5.4 5.5 5.5 5.4 6.0 6.0 6.0 6.0 6.0 6.0 6.0 6.0 6.0 9.8

9.8 9.8 9.7

9.7 9.7

28

DIRECTORS REPORT
F I N A N C I A L H I G H L IG H T The companys stand-alone turnover at Rs.2610.40crore grew by 40.3 percent vis--vis Rs.1860.84crore attained in the previous year. This is inclusive of Rs.368.98crore reached by its fertilizer business, incorporating the period from September to March. The company is taking necessary steps to complete the corporate restructuring to merge Birla Global Finance with Aditya Birla Nuvo. FINANCIAL RESULT Particular Profit before Dep & Tax Less: Depreciation Profit before Tax & exce.item Less: Exceptional item Profit before Tax Less: Provision for Tax Net Profit 2005-06 2004-05 2003-04 387.60 245.42 111.81 80.69 275.79 164.73 243.00 81.52 161.48

(4.04) (7.65) 19.95 271.75 157.08 181.43 84.82 43.36 50.15 186.93 113.72 131.28

The operational performance of each of the companys division has been spelt out in depth in the management discussion and analysis Report which forms part of this annual report.

29

Business performance of company Aditya Birla Nuvo has posted excellent results for the year ended 31 march 2006. Its consolidated turnover of Rs.4759.36crore is up by 49.2 percent over Rs.3189.11crore achieved in the previous year. Also Net placing profit the has company in the to billion dollar league. leapfrogged Rs.190.67crore

against Rs.58.72crore in the previous year. Merger and Acquisition The company has merged Indo gulf Fertilizers with Aditya Birla Nuvo effective from 1 September 2005. its accounts include the seven months financials of Indo gulf Fertilizers. Payment of Dividend The directors recommend for consideration a dividend of Rs.4/- per equity share of Rs.10/- each for the year ended 31 s t march, 2005. current year 31-3-05 31-3-04 On 8,98,84,782 fully paid equity share of Rs.10/each,@Rs.4/- per share. Corporate Dividend Tax 42.71 23.95 23.95

5.99

3.42

3.07

30

31

INTRODUCTION OF FINANCIAL STATEMENT

The capital structure or the capitalization of an undertaking refers to the way in which its long-term obligations are distributed creditors. The finance function is most vital and crusial to an between different classes of owners and

organization. Hence, there is a need for sound and efficient organization for the finance function. A firm should give proper and due attention to the structure and organization of its finance department. Organization of finance function differs from firm to firm. It will depend on various factors such as the size and nature of the firms business capability of the persons handling the finance and the financial philosophy of the organization. Financial statement is a process of selecting and evaluating the financial factors in a business. (i). Profit & Loss Account (ii). Balance Sheet

32

(i). Profit & Loss Account :Financial statement like the balance sheet and profit & loss account are of limited value as source simply summaries what has happened by using certain accounting conventions. Comparisons are made to evaluate past performance and to provide a basis for making decisions management seeks indicators of why goals were or were not achieved, and it seeks to identify trends that may useful in the planning process. Thus financial analysis requires that comparisons be made over a period of years. Actual happenings must be compared with some benchmark comparisons are at the heart of the financial analysis. Benchmark could be the financial statements of a competitor or the firms particular budget or plan in followed. However arriving at these trends and amount simply does not make the analysis complete.

33

(ii). Balance sheet :Comparative financial statement may refers to :(1). Financial statement of our enterprise two or more successive accounting year. (2). Financial enterprise of enterprise for the same

accounting year. (3). Financial statement based on the relationship among the components of financial statement for two or more successive accounting year. A comparative balance sheet is prepared to study the magnitude and direction of changes in the enterprises financial position and performance. It is useful in as certaining the strengths in terms of liquidity, profitability, solvency etc. Here, I have compared the balance sheet of Aditya Birla Nuvo for the last three accounting year by comparing the absolute amount of industrial items in the balance sheet and also by using trend percentage analysis.

34

ANALYSIS OF FINANCIAL STATEMENT

In the words of Myers, financial statement analysis is largely a study of relationship among the various financial factors in a single set of statement and study of the trend of these factor as shown in a series of statement. Financing analysis is a process of selecting, relating and evaluating the financial factors in a business. According to Mr. Harry Guthmann, the first and most important function of financial statement is of course to serve those who control and direct the business to the end of securing the profit and maintaining a sound financial condition, questions as to how efficiently the capital of the business is being utilized, how will credit standards are being observed and whether the financial conditions are being improved may be answered from the financial statement. According a person. These devices of financial analysis helps the interested reader to analyze the dumb helps of figures given in various to F.Wood, interpreting means putting the

meaning of a statement in to simple terms for the benefit of

35

financial statement which in turn help in achieving the ultimate aim of interpreting the financial statements.

RATIO ANALYSIS
Financial analysis is the process of identifying the financial strengths and weaknesses of the firm by properly establishing relationship by means of ratios between the items of the balance sheet and profit & loss account. Ratio analysis is the most widely used tool of analysis. A ratio is a quotient of two numbers and is an expression of relationship between the figures or two amounts. It indicates a quantitative relationship, which is used for a qualified judgment and decision-making. The relationship between two accounting figures is known as accounting ratio. Meaning : According to J.Batty, the term accounting ratio is used to describe significant relationship which exist between figures shown in a balance sheet, in a budgetary control system or in any other part of the accounting organization. Business performance can be measured by use of ratios. Infact an analysis of financial statements is possible only

36

when figures are expressed as percentage or ratio. Ratio is of major importance for financial analysis.

37

There are two main ways to analyze a ratio : (1) In a trend analysis, the behavior of the ratio across

the time studies. (2) In a comparative analysis the performance of a firm

at a single point at time relative either to other firms in the industry of five same other generally accepted industry standard is studies. Ratio are usually expressed in the following forms :(I) Simple Ratio :One number by another e.g. current assets to current liabilities ratio is 2:1 (II) Rate :The ratio between two numeric facts Usually over a period of time e.g. stock times in year. Turnover is 3

(III) Percentage

:Special expresses hundred

types the e.g.

of Gross

rate

which in is

Relation profits

25% on sale.

38

Importance of Ratio Analysis :(1). Lee observed that the process of producing financial ratio is essentially concerned with the identification of the significant accounting data relationship which give the decision maker insights in to the company that is assessed. (2). Ratio indicates trends, which will help in decision making and forecasting. (3). Ratio analysis helps in assessment of liquidity,

profitability and solvency of the firm. (4). It indicates the overall operating efficiency and

performance of the firm. (5). It helps in understanding the financial statements. (6). It provides basis not only for intra-firm comparison but also inter-firm comparison. (7). Comparison of actual ratio with base year ratios or standard ratio will help the management in controlling the affairs of the firm. (8). It is powerful tools of financial analysis.

39

Limitation of ratio analysis :(1). A ratio in isolation is of little value. It should be compared with base year ratio of standard ratio, the computation of which is very difficult because of difficulties involves in selecting base year and fixation of standards. (2). Inter firm comparison may not serve useful purpose as two firms may vary is size, age, production method and accounting practices. (3). Even within the same company, comparison will distort due to price level changes. (4). Changes in the accounting practices between the twoyear may render the comparison difficult. (5). R.H.Parker is of the opinion that the limitation of conventional accounting should always be kept in mind that accounting figures should not be treated as more precise that really are. (6). Ratio indicates quantitative information for decision making but quantitative information may be more important. It is not possible to suggest absolute ratio for a firm.

40

(7). Westwick observes that ratios need the upper & lower warning lines because most causes they have an optimum level. (8). Ratios are calculated from past financial statements & they do not indicate future trend. The current economic condition same also ignored.

(9). V.V.Desai points out that the advancing artistry of technique of ratio analysis has miserably failed to accomplishing or immaculacy moreover it has made the technique more complicated and complex for beyond the understanding of ordinary business. (10). The window dressing in finalization of annual account. (11). It is guide rather that a solution to present problems and future plan. (12). Ratio is simply means and not ends. (13). Pavidson, schindles, stickiness and will have pointed out that ratios desired from financial statement.

41

42

Types of Ratio :1. Profit and loss account ratio 2. Balance sheet ratio 3. Composite ratio

43

(I) Profit & Loss Account Ratio :Gross Profit Ratio :Meaning :- It is a ratio expressing relationship between gross profit earned to net sales. It is an useful indication of the profitability of business. Formula :- Gross Profit Ratio = Gross Profit / Sales x 100 PARTICULAR Gross Profit Sales Gross Profit Ratio Chart :16 15.5 GP ratio(in%) 15 14.5 14 13.5 13 12.5 12 13.19 15.41 14.67

2005-06 387.60 2642.05 14.67

Rs.in Crore 2004-05 2003-04 245.42 243.00 1860.84 1577.39 13.10 15.41

2003-04

2004-05
year

2005-06

Comments :In the year 2003-04 gross profit ratio was 15.41%, which decreases in the year 2004-05 (13.19) and once again it will increase in the year 2005-06 (14.67). In the year 2003-04

44

sales is high but gross profit is low thats why gross profit ratio is less. Net Profit Ratio :Meaning :This ratio is valuable for the purpose of ascertaining the overall profitability of the business and shows the efficiency of the business. It is the reserve of the operating ratio. Formula :- Net Profit Ratio = Net Profit /Sales x 100 PARTICULAR Net Profit Sales Net Profit Ratio(%) Chart :10 NP ratio(in%) 8 6 4 2 0 2003-04 2004-05 year 2005-06 8.32 6.11 7.08

2005-06 186.93 2642.05 7.08

Rs.in Crore 2004-05 2003-04 113.72 131.28 1860.84 1577.39 6.11 8.32

Comments :From the above net profit ratio, it is clear that company is making satisfactory profit. Net profit ratio is 8.33% in the year 2004 and in 2005 it decreases to 6.11% and in the year
45

of 2006 it is increase to 7.08%. This ratio shows a better profitability of the firm as compared to the whole industry. This suggests as satisfactory position of the firm. (1) operating computed. Formula :- expenses ratio = Expenses / sales x 100 PARTICULAR Expenses Sales Expenses Ratio Chart :87.5 Exp.ratio(%) 87 86.5 86 85.5 85 84.5 2003-04 2004-05 year 2005-06 85.5 86.21 87.33

Expenses Ratio :expenses and net sales expenses ratio are

Meaning :- For the purpose of ascertaining relationship

Rs.in Crore 2005-06 2004-05 2003-04 2277.83 1625.14 1348.62 2642.05 1860.84 1577.39 86.21 87.33 85.50

Comments :The ratio of expenses is increases from 85.5% in the year 2004 to 87.33% in the year of 2005, but in the year 2006 it is
46

decrease to 86.21% which indicates that the companys expenses decreases comparing by sales. At the time of increasing companys expenses, company has to try for increase its sale. (2) Operating Ratio :Meaning :- It is a Ratio showing relationship between cost of good sold with operating expenses and net sales. It shows the efficiency of the management. The higher the ratio, the less will be margin available to proprietors. This ratio is also usually expressed as a percentage. Formula :- Operating ratio = cost of good sold / sales x 100 PARTICULAR Cost of good sold Sales Operating Ratio Chart :87 86.5 86 85.5 85 84.5 84 83.5 83 86.81 85.33 84.59

2005-06 2254.45 2642.05 85.33

Rs.in Crore 2004-05 2003-04 1615.42 1334.39 1860.84 1577.39 86.81 84.59

ope ratio(%)

2003-04

2004-05 year

2005-06

Comments: - In the year 2004 the operating ratio of company is 84.59% and it is increase in the year 2005 from 84.59% to
47

86.81%. But in the year 2006 it is declining by 1.48%. From the total income of sales, total expenses of goods sold will be deducted showing that mgt is not more efficiently worked in the year of 2006.

(5)

Stock turnover ratio :-

Meaning :- The number of times the average stock is turned over during the year is known as stock turn over. It shows how much time the stock turnover is made in the year. Formula :- Stock turnover ratio = COGS / Average stock PARTICULAR Cost of good sold Average stock Operating Ratio Chart :Turnover ratio(%) 3.7 3.65 3.6 3.55 3.5 3.45 3.4 3.35 3.65 3.55 3.48

2005-06 2254.45 618.17 3.65

Rs.in Crore 2004-05 2003-04 1615.42 1334.39 454.41 383.88 3.55 3.48

2003-04

2004-05 year

2005-06

Comments :- The ratio signifies that the average stock is turned over almost around 3 times in all the three years. In the year 2004 the stock turn over ratio is 3.48 times, in the

48

year 2005 it was 3.55 times. And in the year of 2006 it was increase and it is the high in comparing the last three year 3.65times.

49

(II). Balance Sheet Ratio :(1) Current Ratio :-

Meaning:- This ratio compares the current assets of the company to its liability the measuring the ability of the firms to meet it current obligations. This ratio indicates the position of liability. They are computed to a certain whether the company is capable of meeting its short-term obligations from its short-term recourses. Formula :- Current ratio = Current Assets/Current Liabilities PARTICULAR Current Assets Current liabilities Current Ratio Chart :3 ope ratio(%) 2.5 2 1.5 1 0.5 0 2003-04 2004-05 year 2005-06 2.27 2.75 2.19

2005-06 928.70 424.78 2.19:1

Rs.in Crore 2004-05 2003-04 628.60 482.92 228.58 212.74 2.75:1 2.27:1

Comment :- The ideal current ratio is supposed to be the higher the ratio the more protected are the short term creditor. In the year 2004 it was 2.27:1 which means that In 2005 it was 2.75:1

50

and in the year 2006 it is 2.19:1 which means that the company is very position to pay its creditors. (2) Liquid Ratio :Meaning :- The variant of current ratio is Liquid ratio which shows the amount of cash available to meet immediate payments. This ratio indicates the position of liquidity. They are computed to a certain whether the company is capable of meeting recourses. its short-term obligations from its short-term

Formula :- Liquid Ratio = liquid assets / liquid liabilities PARTICULAR Liquid Assets Liquid liabilities Liquid Ratio Chart :1.4 1.2 liquid ratio 1 0.8 0.6 0.4 0.2 0 2003-04 2004-05 year COMMENTS:- The liquid ratio in the year 2003-04 is 0.97:1 2005-06 0.97 1.2 0.95

2005-06 402.37 424.78 0.95:1

Rs.in Crore 2004-05 2003-04 273.60 206.01 228.58 212.74 1.20:1 0.97:1

and in the year 2004-05 is increase at 1.20:1 after this year

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it decrease. It means the ratio of the year 2005-06 is less then 0.95:1.

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(3)

Quick Ratio :-

Meaning :- The measure of absolute liquidity may be obtained by only cash and bank balance as well as ready marketable securities with Liquid liabilities. Formula :- quick ratio = Quick Assets / Liquid Liability Rs.in Crore 2004-05 2003-04 628.60 482.92 228.58 212.74 2.75 2.27

PARTICULAR Quick Assets Liquid liabilities Quick Ratio Chart :3 quick ratio 2.5 2 1.5 1 0.5 0 2003-04 2.27

2005-06 928.70 424.78 2.17

2.75 2.17

2004-05 year

2005-06

Comments :- The liquid ratio in the year 2003-04 is 2.27:1 and in the year 2004-05 is increase at 2.75:1 after this year it decrease. It means the ratio of the year 2005-06 is more then 2.17:1.

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(4)

Proprietary Ratio :-

Meaning: - This ratio indicates the general capability of the concerns creditors consider. This ratio is significant because it tells the preparation of shareholders funds in the total investment in business.
Formula:- Proprietary Ratio=Proprietary fund/Total assets x 100

PARTICULAR Proprietary fund Total assets Proprietary Ratio(%) Chart :80 70 60 50 40 30 20 10 0 70.39

2005-06 2207.61 3938.86 56.05

Rs.in Crore 2004-05 2003-04 1354.06 1267.68 1972.61 1801.00 68.64 70.39

68.64 56.05

Prop. Ratio

2003-04

2004-05 year

2005-06

Comments :A proprietary Ratio of more than 50% is considered to be satisfactory. For the creditors Proprietary Ratio is more than 50% in the year 2004 is 70.39% and in the year 2005

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Proprietary Ratio is 68.64%. Proprietary Ratio is satisfactory in the all years and it is very good for creditors. (5) Debtors Equity Ratio :Meaning :- This ratio express the relationship of long term liabilities and net worth. This ratio is a measure of the owners stock in the business. Formula :- Debt.Equi Ratio=long term liabilities/share holders fund x 100 Rs.in Crore PARTICULAR 2005-06 2004-05 2003-04 long term liabilities 1242.6 448.6 374.3 share holders fund 2110.8 1354.1 1267.7 Debt. Equi Ratio 58.87 33.13 29.53 Chart :debt equi ratio(%) 70 60 50 40 30 20 10 0 58.87

29.53

33.13

2003-04

2004-05 year

2005-06

Comments :In the year 2006 co. reserves current in to secured loans due to reserves are exceeded, companys long term liability are increased and this is the reason behind increment of DebtEquity Ratio in the year of 2006. In the year of 2004 it is

55

29.53% and it increase in the year of 2005 to 33.13% and in 2006 also it is increase but higher increment is arises it will be 58.87%.

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(6) Capital Gearing Ratio :-

Meaning :- This ratio express the proportion of preference capital and ordinary capital to known the proportion of fixed interest is very important. Formula :- Gearing Ratio = fixed interest gearing capital / Eq. sh. Capital PARTICULAR fixed int. gearing capital Eq. sh. Capital Gearing Ratio Chart :0.7 gearing ratio 0.65 0.6 0.55 0.5 2003-04 2004-05 year 2005-06 0.58 0.67 0.67

Rs.in Crore 2005-06 2004-05 2003-04 40.00 40.00 35.00 74.92 59.88 59.88 0.53 0.67 0.58:1

Comment :-In the year 2006 co. reserves current in to secured loans due to reserves are exceeded, companys long term liability are increased and this is the reason behind increment of Debt- Equity Ratio in the year of 2006. In the year of 2004 it is 0.58:1 and it increase in the year of 2005 to 0.67:1 and in 2006 also it is same as the year 2005, 0.67:1.

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(7)

Long Term Fund To Fixed Assets Ratio :-

Meaning :- Normally the fixed assets of business must be purchased out of fixed capital only which includes share capital reserve and any term liabilities. This ratio must be 1:1 or more i.e. the fixed capital must be more than fixed assets. Formula :- Long Term Fund To Fixed Assets Ratio = Long Term Fund / Fixed Assets PARTICULAR Long Term Fund Fixed Assets Long Term Ratio Chart :1.9 1.85 1.8 1.75 1.7 1.65 1.6 1.55 1.86

2005-06 2110.8 1135.52 1.86:1

Rs.in Crore 2004-05 2003-04 1354.1 1267.7 810.28 737.47 1.67:1 1.72:1

ratio

1.72 1.67

2003-04

2004-05 year

2005-06

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Comment :- The ratio is more than 1:1 and the fixed capital is also more than fixed assets. This ratio in the year of 2004 long term funds to fixed assets ratio is 1.72:1 and decrease in the year of 2005 to 1.67:1 and in last year 2006 it will be increase to 1.86:1. that means this ratio shows the better condition.

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(III). Composite Ratio :(1)

Meaning

Return On Capital Employed ::Return On Capital Employed is an index of

profitability of business and is obtained by comparing net profit with capital employed. The ratio is normally expressed in the percentage. The term capital employed includes share capital, reserve and long term loan such as debentures. Formula :- R. O. Cap. Empl. = EBIT / Capital Employed x 100

PARTICULAR EBIT Capital Employed R. O. Capital Employed Chart :20 15 ratio 10 5 0 2003-04 14.31

2005-06 271.75 2110.8 12.87

Rs.in Crore 2004-05 2003-04 157.08 181.43 1354.1 1267.7 11.60 14.31

11.6

12.87

2004-05 year

2005-06

Comment :- The success of otherwise of the enterprise is made with help of return on capital employed ratio. In the comparison of last three years the ratio of 2004 is high i.e.14.31%. After that in the year 2005 it is decrease to 11.6%. And finally 2006 it is high as comparing 2005 it is 12.87%.
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(2)

Return On Share Holders Funds :-

Meaning :- In order to judge the efficiency with which the proprietor funds are employed in the business. The ratio is ascertained proprietors fund includes hare capital and reserve. It is of great practical importances to the perspectives inventors as it enable the profitability of the company to be compared with that of other companies. Formula :- R.O.sh. Holder funds = EBAT/share holder funds x 100 PARTICULAR NPAIT share holder funds Return on sh. Holder funds Chart :12 10 Ratio(%) 8 6 4 2 0 2003-04 2004-05 year 2005-06 10.36 8.4 8.86

2005-06 186.93 2110.8 8.86

Rs.in Crore 2004-05 2003-04 113.72 131.28 1354.1 1267.7 8.40 10.36

comment :- From the above it can be said that the return on share holder fund is enough relative to the risk that the company undertakes. The ratio was 10.36 in the year 2004 and is decreasing to 8.4% in the year 2005 and in the year 2006 it

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increase as compare to 2005, which is 8.86%, but it is less than the 2004.

(3)

Return On Equity Share Capital :-

Meaning :- It is shows what percentage of profit is earned on the capital invested by ordinary share holder. The ratio is obtained by dividing net profit after deduction of preference dividend by the amount of ordinary share capital plus free reserves. Formula :R.O.equi.sh.holder funds=N.P pref. Divi./equi.share capital x 100

PARTICULAR NPAIT pref. Dividend Equity share capital R o equi sh. Holder funds Chart :1.35 1.3 ratio 1.25 1.2 1.15 1.1 1.05 2003-04 1.32

2005-06 93.47 74.92 1.24

Rs.in Crore 2004-05 2003-04 68.23 78.77 59.88 59.88 1.14 1.32

1.24 1.14

2004-05 year

2005-06

Comment :-Return on Equity Share capital is higher then 2005-06 which is 1.24 % and 2004-05, which is 1.14 %

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and also decreasing in the year 2003-04 it is 1.32%. In the year 2005-06 is highly then 2003-04 and 2004-05.
(4) Debtors Ratio :-

Meaning :- The ratio shows that the number of days taken to collect the dues of credit sales. It shows the efficiency or otherwise of the collection policy of the enterprise. Formula :- Debtors Ratio = Debtors B.R / credit sales x 365 days Rs.in Crore PARTICULAR 2005-06 2004-05 2003-04 Debtors B.R 415.44 260.90 186.41 credit sales 2642.05 1860.84 1577.39 Debtors Ratio 57 days 51 days 43days Chart :70 60 debt ratio 50 40 30 20 10 0 2003-04 2004-05 year 2005-06 43.13 51.18 57.39

Comment :- The debtors ratio is indicates the in how many days it takes to calls the dues amount. Higher the ratio; the more unsatisfactory and risky position it shows. In the year of 2004 this ratio is 43.13days, which is good position as compare to all the passed year of company. In the year 2005 it increase to 51days,
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which not satisfy the companys wants. In 2006 also companys position is day by day loose.

(5)

Debtors Turn Over Ratio: -

Meaning: - The Debtors Turn Over Ratio shows whether the amount of resources tied up in debtors is reasonable and whether the company has been efficient in converting debtors in to cash.
Formula:- Debtors Turn Over Ratio = Credit sales/ Average debtors

PARTICULAR credit sales Debtors Debtors Turn Over Ratio Chart: 10 8 ratio 6 4 2 0 2003-04 8.46

2005-06 2642.05 415.44 6.36

Rs.in Crore 2004-05 2003-04 1860.84 1577.39 260.90 186.41 7.13 8.46

7.13

6.36

2004-05 year

2005-06

Comment: The company has high debtor turn over ratio which indicates that the finance management is collecting companys dues from the debtors immediately 8.46 times in the year of year
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of 2004, this ratio decreasing to 7.13 times in the year of 2005 and decreases to 6.36 times in the year of 2006.

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(6)

Fixed Assets Turn Over Ratio: -

Meaning: - To ascertain the efficiency and profitability of business, the total fixed assets are compared to sales. The more the sales in relation to the amount invested in fixed assets, the more efficient is the use of fixed assets. Formula: - Sales / Fixed Assets PARTICULAR Sales Fixed Assets Ratio Chart: 9 8 7 6 5 4 3 2 1 0 8.46 7.13 6.36

2005-06 2642.05 1135.52 6.36:1

Rs.in Crore 2004-05 2003-04 1860.84 1577.39 810.28 737.47 7.13:1 8.46:1

ratio

2003-04

2004-05 year

2005-06

Comment: - The higher this ratio it shows that with less amount of investment in fixed assets the business has a capacity to sell more and such its profitability is also more. In the year 2004 the fixed assets ratio is 8.46:1 and in year 2005 it is 7.13:1 the year of 2006 it is also reduce to 6.36:1. (7) Total Assets Turn Over Ratio: 66

Meaning: - The amount invested in business is invested in all assets jointly and sales are affected through them to earn profit. So in order to find out relation between total assets to sales.

Formula: - Total Assets Turn Over Ratio = Sales / Total Assets PARTICULAR Sales Total Assets Ratio Chart: 9 8 7 6 5 4 3 2 1 0 8.46 7.13 6.36

2005-06 2642.05 3938.88 6.36:1

Rs.in Crore 2004-05 2003-04 1860.84 1577.39 1972.61 1801.00 7.13:1 8.46:1

total ass ratio

2003-04

2004-05 year

2005-06

Comment: - Total assets turn over ratio is 8.46 times in the year of 2004 and this ratio decreasing to 7.13 times in the year of 2005 and this ratio again decrease to 6.36 times in the year of 2006. because total assets is high and again sale will more. The higher this ratio, it shows that with less amount of

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investment in total assets the business has a capacity to sell more.

COMMON SIZE BALANCE SHEET

2003-04 2004-05 % Rs.in crs Rs.in crs SOURCES OF FUNDS 2005-06 Rs.in crs

PARTICULAR Shareholder funds Share capital Reserve and surplus Loan funds Secured loans Unsecured loan Deferred tax liabi Total funds empl

59.88 3.33 59.88 3.04 83.50 2.12 1207.80 67.06 1294.18 65.61 2124.11 53.93 405.81 22.53 493.03 24.99 1084.21 27.53 479.36 12.17 127.51 7.08 125.52 6.36 167.70 4.26 1801.00 100% 1972.61 100% 3938.88 100% APPLICATION OF FUNDS

Fixed assets Gross block 1301.31 72.26 1418.74 71.93 2461.81 62.50 less: depreciation 588.53 32.68 663.49 33.64 1448.74 36.78 Net block 712.78 39.58 755.25 38.29 1013.07 25.72 Cap. work-in-prog 24.69 1.37 55.03 2.79 122.45 3.11 TOTAL FIXE ASST 737.47 40.95 810.28 41.08 1135.52 28.83 INVESTMENT 741.63 41.18 699.66 35.47 1675.79 42.54 Current assets,loans and advances Inventories 276.91 15.38 355.00 17.99 526.33 13.36 Sundry debtors 186.41 10.35 260.90 13.22 415.44 10.55 Cash & bank 13.27 0.74 9.41 0.48 20.32 0.52 Loans and adv. 93.50 5.19 103.88 5.27 664.18 16.86 less: current liabilities & provision Current liabilities 212.74 11.81 228.58 11.59 424.78 10.79 Provisions 38.40 2.13 37.94 1.92 73.92 1.88 NET CRRT ASSETS 318.95 17.71 462.67 23.45 1127.57 28.63 Total funds utilize 1801.00 100% 1972.61 100% 3938.88 100%

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Comments: Sources of Funds: In the year 2003-04 share capital of the company was 3.33% it is decrease in the year 2004-05 and 2005-06 it was 3.04% and 2.12%. Reserve and surplus of the company was 67.06% in the year of 2003-04 it was decrease 35.31% in the year of 2004-05 and it was decrease also in the year of 2005-06 to 53.93%. Secured loan of the company was 22.53% in the year of 2003-04, it was increase in both last year 2004-05 & 2005-06 24.99% & 27.53%. Unsecured loan of the company was 12.17% in the year of 2005-06. Application of Funds: Fixed assets of the company was decrease It decrease in the year 2004-05 & 2005-06 compare to 2003-04. Fixed assets decrease due to change in investment of the company. Deprecation in the year 2003-04 is 32.68 % and previous two years both are slidely equal such as 33.64 % and 36.78 % in the year 2004-05 and 2005-06.

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Capital work in progressing the year 2003-04 is 1.37 % and next two years, it is increase to 2.79 % and also increase to 3.11 % in the year 2005-06 respectively. Investment of the company in 2003-04 was 41.18%. It is decrease in 2004-05 is 35.47% and it is increase in the year 2005-06 to 42.54%. Investment of company increases because company spent its more amount in investment. Sundry debtors are low 10.35 % in the year 2003-2004 and next year 2004-2005 is increasing 13.22 % and they are decreasing 10.55 % in the year 2005-2006. In 2003-04 inventories of the company was 15.38% It was increase is 17.99%in the year of 2004-05 and it was decreasing 13.36% in the year of 2005-06.Inventories of the company shows fluctuation position. This fluctuation due to changes in licenses goods, because an inventory is increase in the year of 2004-05. Cash and bank balance of the company was 0.74% in the year of 2003-04, it was decreasing 0.48% & 0.52% in the year 2004-05 and 2005-06. Loan and advances of company in 2003-04 it was 5.19 and it will increase in 2004-05 and 2005-06 is 5.27% and 16.86%.

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CONCLUSION
I have prepared this report on the bases of the information available in the balance sheet of ADITYA BIRLA NUVO LIMITED. From the above discussion conclude that ADITYA BIRLA NUVO LIMITED has a good improvement in future. The company has good technology for its product. Total profit of company is increasing in last year and also a total sale of the company is increasing continuously from last three years. This is the best feature for the company that it is closely selected with all products. This company begins them a study stream of out standing and new product innovation. Which is helping them keep ahead in a competitive and challenging industry. According to me, the ADITYA BIRLA NUVO LIMITED is doing a business and also profitable company and very popular company.

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BIBLIOGRAPHY

1. www.adityabirla.com 2. www.indianrayon.com 3. Last three years annual report of company 4. khan & jain 5. Account B.S. Shah 6. P.V. Rathnam

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