SUMMER TRAINING PROJECT

REPORT

Submitted in partial fulfilment of Master of Business Administration

Session- 2022-2023

Financial Performance Analysis of RSPL Ltd

Submitted to- Submitted By-

MR.SHYAM DUBEY PRASHANT PASWAN

Asst.Pro- MBA Branch- MBA 2nd year

Company Guide Internal Guide

Mrs. Nidhi Gupta Mr.Shyam Dubey

Finanace Department Asst.Pro- MBA

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 DECLARATION

I hereby declare that this submission is my own work. It contains no material previously

published or written by another person, nor has this material to a substantial extent been

accepted for the award of any other degree or diploma of the university or other institute

of higher learning.

Roll.No.- 2100460700035 PRASHANT PASWAN

Branch-MBA-2nd year

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 ACKNOWLEDGMENT

Research Project Report is the one of the important part of MBA program, which has

helped me to gain a lot of experience, which will be beneficial in my succeeding career.

For this with an ineffable sense of gratitude I take this opportunity to express my deep

sense of indebtedness and gratitude to Dr. Mamta Shukla, HOD, MPEC and Mr.

Shyam Dubey Assistant Professor, department of business administration for their

encouragement,

support and guidance in carrying out the project.I am also thankful to my Parents and

my friends for their indelible Co-operation for achieving the Goal of this study.

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 EXECUTIVE SUMMARY

FINANCIAL PERFOMANCE ANALYSIS provide summarized view of the financial

position and operations of the company. Therefore, now a day, it is necessary for all the

companies to know as well as to show the financial soundness i.e. position and operations

of the company to its stakeholders.

In this report, I made an effort to know the financial position of RSPL Ltd, through Ratio

Analysis using the annual reports and financial statements of the firm. The financial

analysis in this report which shows the strength and weakness of the RSPL Ltd. This

report will help the firm in taking decisions.

Thus, we can say that, financial analysis is starting point for making plans before using

any sophisticated forecasting and planning.

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CONTENTS

CHAPTER – 1 6-23

CHAPTER – 2 24-41

CHAPTER – 3 42-65

CHAPTER – 4 66-99

CHAPTER – 5 100-105

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 PART-I

CHAPTER 1

INTRODUCTION TO FMCG

INDUSTRY

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ABSTRACT

FMCG product touches every aspects of human life. These products are frequently consumed by all

sections of the society and a considerable portion of their income is spent on these goods. Apart from this,

the sector is one of the important contributors of the Indian economy. This sector has shown an

extraordinary growth over past few years, in fact it has registered growth during recession period also.

The future for FMCG sector is very promising due to its inherent capacity and favourable changes in the

environment. This paper discusses on overview of the sector, its critical analysis and future prospectus.

INTRODUCTION

The Fast Moving Consumer Goods (FMCG) sector is the keycontributor of the Indian economy. This

fourth largest sectorof Indian economy provides employment to around 3 millionpeople which accounts

for approximately 5% of the totalfactory employment in the country. These products are dailyconsumed

by each and every strata of the society irrespectiveof social class, income group, age group etc. FMCG

sectoris more lucrative because of low penetration levels, well establisheddistribution network, low

operating cost, lower percapita consumption, large consumer base and simple manufacturingprocesses for

most of products resulting in fairly lowcapital investments.

The industry is highly competitive due to presence of multinationalcompanies, domestic companies and

unorganizedsector. A major portion of the market is captured by unorganizedplayers selling unbranded

and unpackaged products.More than 50 per cent of the total revenues of FMCG companiescome from

products worth Rs 10 or less1. This has madethe proliferation of localized brands which are offered in

looseform in small towns and rural part where brand awareness islow. In last 10 years’ domestic players

are giving tough competitionto multinationals; infect they have outstripped manyMNCs in growth and

market cap. Between 2005- 2014 theprofit of domestic companies increased by 24% against 14%increase

of multinational companies.

Urban India accounts for 66% of total FMCG consumption,while rural India accounts for the remaining

34%. However,rural India accounts for more than 40% of the consumptionin major FMCG categories such

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as personal care, fabric careand hot beverages. As per the analysis by ASSOCHAM, companieslike

Hindustan Unilever Ltd and Dabur India generatehalf of their sales from rural India while Colgate

Palmolive Indiaand Marico constitute nearly 37% respectively.

• FMCG is the 4th largest sector in the Indian economy

• Household and Personal Care is the leading segment, accounting for 50 per cent of the overall market.

Hair care (23 per cent) and Food and Beverages (19 per cent) comes next in terms of market share.

• Growing awareness, easier access and changing lifestyles have been the key growth drivers for the

sector.

• Retail market in India is estimated to reach Rs.110000 crores by 2020 from Rs.67200 crores in 2016,

with modern trade expected to grow at 20 per cent - 25 per cent per annum, which is likely to boost

revenues of FMCG companies.

OBJECTIVES

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• To understand the concept of FMCG

• To present an overview Indian FMCG sector

• To study the growth of Indian FMCG sector

• To critically analyze Indian FMCG sector

Overview of Indian FMCG Sector

History

The Indian Fast Moving Consumer Goods (FMCG) industry began to shape during the last fifty odd years.

The growth of FMCG industry was not significant between 1950’s to the 80’s. The FMCG industry

previously was not attractive from investor’s point of view due to low purchasing power and the

government’s favouring of the small-scale sector.

FMCG’s growth story further continued following the deregulation of Indian economy in early 1990s.

With relatively lesser capital and technological requirements, a number of new brands emerged

domestically as well, while the relaxed FDI conditions led to entry of many global players in this segment.

These factors made FMCG market in India highly competitive and one of the important contributor in the

Indian economy. In the mid - nineties, the growth of the sector was very fast whereas it declined rapidly

at the end of the decade. The initial growth was due to increase in product penetration and consumption

levels4. Riding on a rapidly growing economy, increasing per-capita incomes, and rising trend of

urbanization, the FMCG market in India is expected to further expand to Rs.10000 crores by 2025.

Analysis of FMCG Sector

PEST ANALYSIS

i) Political

• Tax Structure: Complicated tax structure, high in directtax and changing tax policies are challenges

for this sector.

• Infrastructure Issues: Performance of FMCG sector isvery much dependent on government spending

on Agricultural,Power, and Transportation Infrastructure.

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• Regulatory Constraints: Multiplicity permits and licensesfor various states, prevailing outdated labor

laws,cumbersome and lengthy export procedures are majorconstraints.

• Policy framework: FDI into Retail sector (single-brand & multi-brand retail), License rules in setting

up of Industry, Changes in Statutory Minimum Price of commodities are barriers for growth of this

sector.

ii) Economical

• GDP Growth: Growth of FMCG industry is consistentwith the Indian economy. It has grown by 15

% overpast 5 years. It shows good scope for this sector in nearfuture.

• Inflation: Inflationary pressures alter the purchasingpower of consumer which Indian economy is

facingin recent years. But it has not affected much to IndianFMCG sector.

• Consumer Income: Over the past few years, India hasseen increased economic growth. The GDP per

capita incomeof India increased from 797.26 US dollars in 2006 to 1262.4 Rupees in 2014. It resulted

in increase ofconsumer expenditure

• Private Consumption: The Indian economy, unlike othereconomies, has a very high rate of private

consumption(61%).

iii) Social

• Change in consumer Profile: Rapid urbanization, increasedliteracy, increase in nuclear families and

rising percapita income, have all caused rapid growth and changein demand patterns, leading to an

explosion of new opportunities.Around 45 per cent of the population in Indiais below 20 years of age

and the young population isset to rise further.

• Change in Lifestyle: In past decade changes are takingplace in consumption pattern of Indian

consumerwith more spending on discretionary (52%) than necessities (e.g. food, clothing). In last

decade the apparel,footwear and healthcare segments have registered highestgrowth whereas essentials

such as cereals, edible oil,fruits and vegetables shown decline.

• Rural focus: As market is getting saturated, companiesare focusing on rural area for penetration by

providingconsumers with small sized or single-use packs such assachets.

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iv) Technology

• Effective use of technology is seen only in leading companieslike HUL, ITC etc.

• E- Commerce will boost FMCG sales in future. More than150 million consumers would be influenced

by digitalby 2020 and they will spend more than Rs.4500 crores onFMCG categories –CII.

SWOT ANALYSIS

i) Strengths

• Low operational costs: One of the important strengthof this sector is low operational cost.

• Presence of established distribution networks in both urban and rural areas. A well established

andwide distribution network of both MNC and Indian FMCG companies increased an access for

consumers.

• Presence of well-known FMCG brands: The Presenceof strong brands in Indian FMCG sector not

only resultsin increased sales but also provides an opportunity in future.

ii) Weakness

• Low scope for investing in technologies and achievingeconomies of scale, especially in small sectors.

• “Me- too products, which illegally mimic the labels of established brands. These products narrow the

scope ofFMCG products in rural and semi- urban markets.

• Less innovative abilities and systems: Indian FMCG sector,especially small players are lagging behind

in adoptinginnovative approaches for fulfilling needs of the consumers.

iii) Opportunities

• Untapped rural market, changing life style: An untapped,huge and fragmented rural market is an

opportunityfor FMCG players. The Penetration level for manyFMCG product categories is very low

especially in ruralarea.

• Rising income levels, i.e. increase in purchasingpower of consumers: According Mckinesy Global

Institutereport, in next two decades’ income level of Indianconsumer will almost triple and India will

becomeworld’s fifth – largest consumer market by 202510.India’smiddle class size will increase to
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 583 million, or 41% ofthe population. Extreme rural poverty has declined from94% in 1985 to 61% in

2005 and is projected to dropto 26% by 2025. This will result into increased purchasingpower of Indian

consumer.

• Large domestic market with more population ofmedian age 25 years: India has large young

population,54 % of Indians are under 25 years of age. A risingproductive population fuels growth and

drives personalconsumption

• High consumer goods spending: The rising income isresulting into high spending into consumer

goods. Accordingto a Nielsen report, the spending on consumergoods set to triple to Rs 500 crores by

201511.

• Export potential to neighboring countries like Bangladesh,Pakistan, Srilanka.

iv) Threats

• Entry of MNCs with liberalization: In the post liberalizationera Indian market has become highly

competitive.Many multinational companies have entered in to the Indianmarket.

• The removal of import restrictions resulted in replacementof domestic brands.

• Rural demand is cyclical in nature and also depends uponmonsoon to large extent.

• Complicated, changing and uneven tax structure is oneof the major threats for FMCG sector.

• New packaging norms made mandatory for all companiesto sell products in standard size packs.

ADVANTAGE INDIA

Growing Demand:

• Rising incomes and growing youth population have been key growth drivers of the sector. Brand

consciousness has also aided demand.

• 1st Time Modern Trade Shoppers spend was estimated to be tripled to Rs100 crores by 2015.

• Tier II/III cities are witnessing faster growth in modern trade.

Higher Investments:

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• Many players are expanding into new geographies and categories.

• Modern retail share is expected to triple its growth from Rs.6000 crores in 2015 to Rs18000 crores in

2020.

• With an investment of Rs254.50 million, Wipro is diversifying and expanding its product range in

energy drinks, detergents and fabric conditioners.

• Patanjali will spend Rs743.72 million in various food parks in Maharashtra, M.P. Assam, Andhra

Pradesh and Uttar Pradesh.

Attractive Opportunities:

• Low penetration levels in rural market offers room for growth

• Disposable income in rural India has increased due to the direct cash transfer scheme

• Exports is another growing segment

• E-commerce companies like Amazon are strengthening their business in FMCG sector, by positioning

their platform pantry as front line offering to drive daily products sales.

Policy Support:

• Investment approval of up to 100 per cent foreign equity in single brand retail and 51 per cent in multi-

brand retail

• Initiatives like Food Security Bill and direct cash transfer subsidies reach about 40 per cent of

households in India

• The minimum capitalization for foreign FMCG companies to invest in India is Rs100 million

FOOD AND PERSONAL CARE ACCOUNT FOR 2/3rd SHARE IN

REVENUES

• Hair Care is the leading segment, accounting for 23 per cent of the overall market in terms of revenue.

• Food Products is the 2nd leading segment of the sector accounting for 19 per cent followed by health

supplements and oral care which has a market share of 16 per cent and 15 per cent, respectively.

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URBAN MARKET ACCOUNTS FOR MAJOR CHUNK OF REVENUES

• Accounting for a revenue share of around 60 per cent, urban segment is the largest contributor to the

overall revenue generated by the FMCG sector in India and recorded a market size of around Rs 2940

crores in 2016-17.

• Semi-urban and rural segments are growing at a rapid pace and accounted for a revenue share of 40

per cent in the overall revenues recorded by FMCG sector in India.

• In the last few years, the FMCG market has grown at a faster pace in rural India compared with urban

India.

• FMCG products account for 50 per cent of total rural spending.

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 Rs4900 CR

RURAL SEGMENT IS QUICKLY CATCHING UP

• In FY17, rural India accounted for 40 per cent of the total FMCG market.

• Total rural income, which is currently at around Rs 57200 crores, is projected to reach Rs.180000

crores by FY21. India’s rural per capita disposable income is estimated to increase at a CAGR of 4.4

per cent to Rs 631 by 2020.

• As income levels are rising, there is also a clear uptrend in the share of non-food expenditure in rural

India.

• The Fast Moving Consumer Goods (FMCG) sector in rural and semi-urban India is estimated to cross

Rs 22000 crores by 2025.

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• Amongst the leading retailers, Dabur generates over 40-45 per cent of its domestic revenue from rural

sales. HUL rural revenue accounts for 45 per cent of its overall sales while other companies earn 30-

35 per cent of their revenues from rural areas.

INCREASING SALES OF TOP FMCG COMPANIES

• Consumer products manufacturers ITC, Godrej Consumer Products Limited (GCPL) and HUL

reported healthy net sales in FY17.

• Aggregate financial performance of the leading 10 FMCG companies over the past 8 quarters displays

that the industry has grown at an average 16-21 per cent in the past 2 years.

• In December 2016, Godrej Consumer Products Ltd (GCPL) acquired remaining 49 per cent in Kenyan

Co Charm Industries

• Reckitt Benckiser, posted 14 per cent growth in sales in FY16, on the back of a forced distribution

push in rural market, in support from the Swach Bharat Campaign.

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• Biscuits and confectionery maker - Parle Products, is aiming to increase its market share in the

premium biscuits category from 15 per cent in 2016—17 to around 20 per cent by 2017-18.

• ITC (FMCG) has generated highest revenue till FY17.

• The current sales of RSPL Ltd in 20018 is 619.65 Million Rupees and net income of Rs57.38 million.

Revenue Rs 619.65

Net Income: Rs 57.38

GROWTH DRIVERS FOR INDIA’s FMCG SECTOR

Shift to organized market:

• Organized sector growth is expected to grow as the share of unorganized market in the FMCG sector

fall with increased level of brand consciousness

• Growth in modern retail will augment the growth of organized FMCG sector

Easy Access:

• Availability of products has become way easier as internet and different channels of sales has made

the accessibility of desired product to customers more convenient at required time and place

• Online grocery stores and online retail stores like Grofers, Flipkart, Amazon making the FMCG

product s more readily available

Increase in penetration:

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• Low penetration levels of branded products in categories like instant foods indicating a scope for

volume growth

• Investment in this sector attracts investors as the FMCG products have demand throughout the year.

Rural consumption:

• Rural consumption has increased, led by a combination of increasing incomes and higher aspiration

levels, there is an increased demand for branded products in rural India

• Huge untapped rural market

• Godrej is launching One Rural program to generate more revenues from rural areas

• Rural India accounts for 40 per cent of the total FMCG market, as of May 2017.

HIGHER INCOMES AID GROWTH IN URBAN AND RURAL

MARKETS

• Incomes have risen at a brisk pace in India and will continue rising given the country’s strong

economic growth prospects. According to IMF, nominal per capita income is estimated to grow at a

CAGR of 4.94 per cent during 2010-19F

• An important consequence of rising incomes is growing appetite for premium products, primarily in

the urban segment

• As the proportion of ‘working age population’ in total population increases, per capita income and

GDP are expected to surge

• Per capita income in India is expected to grow at a CAGR of 8.09 per cent during 2015-19F

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 (Rs)

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GROWTH DRIVERS FOR RETAIL IN INDIA

GROWTH OPPORTUNITIES IN THE INDIAN FMCG INDUSTRY

Rural Market:

• Leading players of consumer products have a strong distribution network in rural India; they also stand

to gain from the contribution of technological advances like internet and e-commerce to better

logistics. Godrej is focusing on rural market for household insecticides segment. At present, Godrej

accounts for 25 per cent of the household insecticides sales from rural areas

• Rural FMCG market size is expected to touch Rs. 22000 croresby 2025.

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Innovative products:

Indian consumers are highly adaptable to new and innovative products. For instance, there has been an

easy acceptance of men’s fairness creams, flavoured yoghurt, cuppa mania noodles, gel based facial

bleach, drinking yogurt, sugar free Chyawanprash.

Premium products:

• With the rise in disposable incomes, mid and high-income consumers in urban areas have shifted their

purchase trend from essential to premium products

• Premium brands are manufacturing smaller packs of premium products. For example, Dove soap is

available in 50g packaging

• Nestle is looking to expand its portfolio in premium durables cereals, pet care, coffee, and skin health

accessing the potential in India.

Sourcing base:

Indian and multinational FMCG players can leverage India as a strategic sourcing hub for cost-competitive

product development and manufacturing to cater to international markets

Penetration:

• Low penetration levels offer room for growth across consumption categories

• Major players are focusing on rural markets to increase their penetration in those areas

Align partnership:

ITC partnered with farmers of MP to improve the living conditions in villages. It aims at improving

watershed development programmes where ITC has factory or agri operations.

STRONG GROWTH IN INDIAN FMCG SECTOR

• The FMCG sector in India generated revenues worth Rs 4900 crores in 2016.

• Over 2007-16F, the sector is expected to post CAGR of 11.9 per cent in revenues

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• In 2016-17, revenues for FMCG sector have reached Rs 4900 crores and is expected to grow at 9-9.5

per cent in FY18.

• In the long run, with the system becoming more transparent and easily compliable, demonetization is

expected to benefit organized players in the FMCG industry.

Rs billion

SCOPE OF FMCG

• FMCG is the 4th largest sector in the Indian economy

• Household and Personal Care is the leading segment, accounting for 50 per cent of the overall market.

Hair care (23 per cent) and Food and Beverages (19 per cent) comes next in terms of market share

• Growing awareness, easier access and changing lifestyles have been the key growth drivers for the

sector
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• The number of online users in India is likely to cross 850 million by 2025.

• Retail market in India is estimated to reach Rs 110000 crore by 2020 from Rs 67200 crores in 2016,

with modern trade expected to grow at 20 per cent - 25 per cent per annum, which is likely to boost

revenues of FMCG companies

• People are gracefully embracing Ayurveda products, which has resulted in growth of FMCG major,

Patanjali Ayurveda, with a revenue of Rs 157 crores in FY17. The company aims to expand globally

in the next 5 to 10 years.

Government Measures – Ease of doing business in India

• 100 per cent FDI is allowed in food processing and single-brand retail and 51 per cent in multi-brand

retail

• Implementation of the Goods and Services Tax (GST), which aims to replace a multitude of indirect

taxes with a single GST rate, is expected to benefit the sector enormously by reducing the overall

incidence of taxation

• The Government announced setting up of special fund of Rs 300.47 Million in the financial year 2014-

15 in NABARD for extending affordable credit to designated food parks and the individual processing

units in the designated food parks at concessional rates. The fund has been continued in 2015-16

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 CHAPTER 2

COMPANY PROFILE

(RSPL PVT.LTD)

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OUR BUSINESS

Constitution:

We lived in the fast paced ever changing world. These changes affect our lives and lifestyle and therefore
it is crucial to learn to be resilient.

The driving force at RSPL Group is to understand profound changes in product technology and consumers
need to make our brands to way consumer desire them to be.

We believe that the only constant in the history of mankind is evolution and so it is our endeavour to give
superior brand experience and most superior value for consumers’ money.

Our undeterred pursuit for evolution hasled the company to progress on the path of value during our
growth.

Rohit Surfactants Private Limited, a flagship company of RSPL Limited Group, owner of Trademark

“Ghadi”, was incorporated on 22nd June 1988 with the name Shri Mahadoe Soap Industries Private

Limited and the name was changed to its present name with effect from 17th June 2005.

The group has under gone another major restructuring in the year 2008. The said restructuring has enabled

the group to consolidate the detergent and leather business, alongwith all related brands into one single

entity and separating the real estate business into another entity.

Historical Background:
Late Dayal Das with his sons Shri MurliDhar Ji and Shri Bimal Kumar Ji initiated the group as a small

family business. It is said that knowledge and expertise comes from experience. It was their efforts and

dedication that laid the foundation on which the empire of RSPL Limited group has been build up within

a span of three decades.

RSPL Limited originally started with the name of `Shri Mahadeo Soap Industries Private Limited' in the

year 1988. The Company's name was changed to `Rohit Surfactants Private Limited' on 17th June 2005.

In the year 2008 the Company was merged with `Ghari Industries Private Limited' and 'Calcutta Detergent

Private Limited' and real estate business of the Company was demerged to Nimmi Build Tech Private

25
Limited'. In 2011, the Company also demerged its leather business into “Leayan Global Private Limited'.

Effective from 26th August 2011 the name of the Company was changed to `RSPL Private Limited'.

Subsequently the Company was converted into a Public Limited Company w.e.f. 29th August 2011. The

Company is operating in the 'Fast Moving Customer Goods' (FMCG) business comprising Home and

Personal Care (HPC) products and it is also generating electricity through windmills.

Group comprises of companies mentioned under: -

1)Rohit Surfactants Private Limited -Company does the manufacturing and marketing of detergents, toilet

soaps, leather & footwear, wind energy and other FMCG products.

2)Nimmi Build Tech Private Limited (formerly known as Poonam Developers & Infrastructure India

Private Limited) - This company is involved in the business of construction and real estate.

3) Namaste India Foods Private Limited - This is the latest venture of the group into the dairy business.

The Company has set up number of milk collection centres at Shivrajpur, Kanpur for collection of milk

from villagers.

All the Companies are under the supervision and control of the single management thereby making its

recognition as the “RSPL Limited GROUP”.

RSPL Ltd, Regd. & Corporate Office, RSPL Limited 119 - 121, Block P&T Fazalgunj, Kalpi Road,

Kanpur 208 012, Tel. +91-512-2221201-05, E-mail [email protected].

Delhi Corporate Office

3rd Floor, C -1,2, and 3, Netaji Subhash Place, Wazirpur District Center, Pithampura, New Delhi - 110

034. Tel. + 91 -11- 27351856, 27351856, Fax. +91- 11- 27353193

Mumbai Corporate Office

Flat No.-203, Kesarinath Apt. S.V. Road, Goregaon West Near Filmistan Studio, Mumbai - 400104

Ahmedabad Corporate Office

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Safalprofitaire, C-2, 3rd floor, Corporate Road, Near auda garden, Prahladnagar, Satellite, Ahmedabad –

380015

The firm is dealing with the FMCG products, footwear, dairy products, hygiene care products and wind

energy also. RSPL Limited (“Company”) is in the business of manufacturing, producing, making, altering,

converting, processing, refining, rectifying, mixing, distilling, buying, selling, trading, importing,

exporting, supplying, distributing, stocking, acting, dealing and preparing for the market all kinds and

description of and/or the allied & by-products and intermediates of all types of toilet soaps, washing

soap, liquid soaps, glycerine soap, detergent cake, detergent powder, shampoo and its ingredients.

Company’s Products

• Dairy Product
Namaste India:Namaste India food Pvt. Ltd. Is an Indian Dairy Company, the concern of 3500cr.

RSPL Ltd, is committed to supply pure milk and fresh milk products.

It’s a fully automated unit, at par with international standards, is planning to collect, process and

pasteurize 4 lakh liter of milk per day.

We have Collection Center in one thousand villages and will be extended to 2000 villages in the

coming two years. In this way, we are planning to supply pure and fresh milk to every house, in every

village and very soon, in every city.

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• Household Products

Ghadi Detergent Powder and Cake: The brand was founded by the Murlidhar andBimal Kuma

Gyanchandani in 1987.

When Ghari was launched market was already dominated by the big brands like Surf and Nirma.

Over the years since the launch of Ghadi detergent powder, till date there have been introduction of

plethora of brands from biggies like HUL and P&G and many local players.

It came to limelight in late 2012 when it surpassed HULs’ Wheel detergent and grab top spot in terms

of market shares. It took almost 25 years for Ghadi to be the market leader in detergent market.

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UniWash Detergent Powder: Introducing Uniwash detergent with Colour Shine Protection* + Stain

Cleaner’, Uniwash is powered with new-age molecules that remove dirt and stains effectively from

coloured as well as white fabrics. It infuses the clothes with a long lasting meadow fragrance while

maintaining their colours and shine for longerProcessed from fine quality ingredients, the proffered

powder is free from harmful chemicals. It enhances the whiteness of white clothes and brightness the

colour of coloured ones. This batch leaves the cloths clean & fresh, while protecting clothing fabric

and colour.

Xpert Dish Wash Bar and Ultra Gel (Liquid): In the Rs.600cr Dish wash market, Xpert Dish wash

bar is a fast growing brand in the North India market.

As against the conventional lime variants it was launched in orange variant.

The company wants to increase the market share of the brand and become the category leader.

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Venus Toilet Soap: Venus soap is the another major product launched by the RSPL company.

It is he creamy bathing soap with many fragrances like rose, lemon, etc.

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• Hygiene Care Products

Pro-ease Sanitary Pad

• Footwear Products

Red Chief Men Shoes: Red Chief is one of the leading footwear brands in India since 1997,

manufacturing high quality genuine leather footwear at unbeatable price. The company has recorded

an impressive growth through its enthusiastic and highly motivated marketing team; company has

estimated sales figures of Rs. 900 million in benchmarking standards. In the domestic market it is one

of the most admired footwear brands and holds the valued market share for leather footwear.

Red Chief as a brand is constantly evolving to keep pace with the changing trends, styles, beliefs, and

aspirations of people while maintaining the sanctity of certain traditions like workmanship and good

value.

Perfection is a never ending pursuit for us. With quality as the hallmark, it is our sincere endeavor that

each product that comes through our state-of-art production line should truly act as the ambassador of

goodwill, with the consumers-reinforcing their conviction in Red Chief.

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• Renewable Energy

The company also creates clean energy to meet the increasing demand for clean electricity and to

address the pressing challenges of global warming and energy security. Our plan is to grow to 100MW

operational capacity in the next few years.

The Company has seven wind farms in Karnataka Rajasthan, Tamilnadu, Gujarat, and Madhya

Pradesh with a consolidated wind energy generation capacity of 50.1 megawatts. The 6 megawatts

wind power plant at Hiriyur, ChitradurgaDist(Karnataka) & 9.6 -megawatt at Gujarat wind farm spread

across the two sites namely DhunDohraji and Jamvali, 9 megawatts wind power plant at Jaisalmer,

Rajasthan, 10.5 megawatts wind power plant at Tamilnadu and 15 megawatts at Madya Pradesh wind

farm spread across the two sites namely Hathuniya and Gathiya Phase-1. All the projects Operation

and Maintenance (O&M) taking care by OEM’s (Original Equipment Manufacturer) have Long Term

PPAs of 20 to 25 years.

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• REAL ESTATE PROJECTS

NimmiBuildtech: The Group has interest in Real Estate industry. One of the group companies, Nimmi

Build Tech Private Limited (formerly known as Poonam Developers & Infrastructure India Private

Limited), is engaged in the business of construction and real estate.

The Company has set up an IT Software Technology Park in Noida. The company is developing

residential projects in Kanpur and one residential project in Lucknow through SPV.

OUR MISSION

To be a part of consumer’s daily life by giving them best value for money through well researched and

everevolving excellent products.

OUR CORE VALUES

• Consumer Centricity

• Continuous Improvement

• Integrity

• Thorough Planning and Execution

Corporate Social Responsibility

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CHARITABLE HOSPITAL

Inaugurated in April 2013, LAXMI DEVI DAYAL DAS CHARITABLE HOSPITAL is a significant

socialinitiative taken by RSPL Group to serve the humanity. Set up nearly 29 Km away from the city of

Kanpur,the hospital aims at providing medical assistance for ailments and surgeries to the poor and needy.

The hospital has set prescribed standards in both medical treatment & patient comfort aiding quick and

complete cure. It is equipped with latest medical equipment facilitating accurate treatment to its patients.

It offers medical treatments to patients at nominal rates so that people from all walks of life can afford to

avail the medical facilities of the hospital and also distributes medicines absolutely free of cost on a daily

basis to those people who cannot afford to pay.

The hospital through its specialized & committed doctors is dedicated to fulfil its objectives of complete

and comprehensive health care and is inclined to work for the betterment and upliftment of the society.

WHISTLE BLOWER POLICY

• INTRODUCTION

1. RSPL Limited (the “Company”) believes in the conduct of the affairs of its constituents in a fair and

transparent manner by adopting highest

standards of professionalism, honesty, integrity and ethical behaviour. In order to inculcate accountability

and transparency in its business

conduct, the Company has been constantly reviewing its existing systems and procedures.

2. The Company is committed to open communication regarding the Company’s business practices and

to protecting the employees from unlawful retaliation and discrimination for bringing to light unethical

behavior and unlawful practices.

• SCOPE AND OBJECTIVE

34
1. In keeping with its beliefs it has been decided by the Company to introduce a Whistle Blower Policy

(hereinafter referred to as “Policy”). The purpose of this Policy is to provide a framework to promote

responsibility and secure whistle blowing. This Policy will enable all employees, directors and other

stakeholders to raise their genuine concerns internally in a responsible and effective manner if and

when they discover information which they believe shows serious malpractice or irregularity within

the Company and/or to report to the management instances of unethical behaviour, actual or suspected,

fraud or violation of Company’s code of conduct or ethics policy.

2. This Policy also offers appropriate protection to the whistle blowers from victimization, harassment

or disciplinary proceedings. It is further clarified that the Policy neither releases employees from their

duty of confidentiality in the course of their work, nor is it a route for taking up a grievance about a

personal situation.

Our Management

Directors on Board

RSPL Group is promoted by Gyanchandani family. The promotor directors are combination of

experiencedand young persons.

MurliDhar

Executive Chairman

Joined the family business of his father late Dayal Das.

His vision and strong dedication laid the foundation of the RSPL Ltd Group. He has the responsibilities

of finalizing corporate strategy and planning for the growth of the business of the group. Under his

leadership the group has stablished it elf amongst the top manufacturers of detergent products in a short

period of nearly 3 decades. He provides guidance to the younger generation to venture into new categories.

Bimal Kumar

Managing Director

Joined the family business of his father with his elder brother Shri MurliDhar.

35
His responsibilities are supervising and control management of entire group. His contribution to the

human resource development in the group has been enormous and his media and advertisement strategies

have proved to be very efficient in terms of sales response. His ability to spot trends early has help to

identify new segments the company should foray into.

Manoj Kumar

Director

Joined the business in 1996 at a very young age

His contribution to the group was the first business diversification in the leather industry. After stablishing
leather and footwear venture and turning the business into Rs. 100 crores. He is on his way to create new
landmarks in dairy business.

Rahul Gyanchandani

Managing Director

He was appointed director of the company in the year 2004

His present responsibilities are operations of soap and detergent division of the company. He is also

actively involved in the planning of new projects. All the expansion plans of soap and detergent division

are moving smoothly under his able direction. He has a vision for backward integration. Under his able

guidance, the company has successfully entered into toilet soap segment by launching toilet soap under

the brand name “Venus” and foraying into home care segment.

Rohit Gyanchandani

Director

He was inducted to the board of the company in the year 2005.

He has the responsibility of planning and monitoring advertising and evolving new strategies for
marketing. He is also looking after real estate business of the group. One of the group company, Nimmi
Build Tech Pvt Ltd is developing residential projects in Kanpur and Lucknow through SPV.

Market share & position of the company in the industry

36
Ghadi Detergent brand is one of the fastest growing brands in the FMCG market. The RSPL Limited
Group, in spite of competition, is making great strides in the Indian Detergent Industry and is currently
ranked as largest brand in its category with more than 16% market share and is striving to better its position
by constant endeavour. A family business which started around 1970 for manufacturing and marketing of
oil soap with a turnover of a couple of Lacs turned into a corporate in the year 1988 by entering in
manufacture of Detergents.

RSPL Limited has achieved a turnover of more than Rupees 1940 Crores during 2009-10 from a mere

turnover of Rupees 1.39 Crores in the year 1988-89 with an average growth rate of 15 to 20%.

Organization structure of the company

RSPL Group follows the policy of penetrating its markets deep and then focusing on geographical

expansion. Having achieved strong distribution reach in its core markets, it has now embarked on

strengthening its geographical presence by establishing and expanding distribution in other states (most

notably in South India).

We are successfully running more than one manufacturing units at Alwar, Aurangabad, Chitradurg, Dhar,

Ghaziabad, Greater Noida, Haridwar, Jamnagar, Jamshedpur, Jhansi, Kanpur, New Delhi, Roorkee, Sagar

and adding more.

Position of Company in the Industry

When RSPL launched its new laundry brand UniWash a month ago, its strategy was in complete contrast to what it

adopted for its runaway success Ghari detergent a quarter of a century ago. For one, UniWash was launched in

Punjab, Haryana and New Delhi while Ghari stayed in Uttar Pradesh in the first two decades of its existence. Also,

at Rs 95 a kilo, the new product commands a 10% premium over competitors Rin and Tide’s basic variants and

costs double as much as Ghari. That’s quite a gamble in one of the most price sensitive segments — laundry—

currently worth Rs 14,000-crore in the country.

Clearly RSPL hopes its new laundry product will replicate the magic of Ghari, which emerged the country’s largest

brand in a segment where the world’s largest consumer product firms Unilever and Procter & Gamble are engaged

in a marketing war. And RSPL is once again betting on its quality rather than on pricing or advertising.Our brand

Namaste India has outperformed market leader Amul in the dairy space within two years of its launch in Kanpur,”

37
says Manoj Gyanchandani who is also in-charge of leather brand Red Chief, endorsed by cricketer ViratKohli.

RSPL, which entered more than a dozen new states in the last four years.An attempt to be a national FMCG company

reflects in its name too, which has changed from original Kanpur Trading Company to Rohit Surfactants Private

Limited to RSPL.

Financial Reports

How We Performed

Ghadi Detergent brand is one of the fastest growing brands in the FMCG market. The RSPL Limited

Group, in spite of competition, is making great strides in the Indian Detergent Industry and is currently

ranked as largest brand in its category with more than 16% market share and is striving to better its position

by constant endeavour. A family business which started around 1970 for manufacturing and marketing of

38
oil soap with a turnover of a couple of Lacs turned into a corporate in the year 1988 by entering in

manufacture of Detergents.

With the passage of time, by adopting latest technology and using premium quality raw materials, it

developed a product under the brand name ‘Ghadi’ to the liking of the masses. The Company then

diversified into the dish wash bar segment and launched “XPERT”. Further to the success, the company

entered into toilet soap segment and launched toilet soap under the brand name “VENUS”, which is

available in various variants.

RSPL Limited has achieved a turnover of more than Rupees 1940 Crores during 2009-10 from a mere

turnover of Rupees 1.39 Crores in the year 1988-89 with an average growth rate of 15 to 20%.

Our performance in the previous years:

39
DISCLAIMER

Limitation of Liability

The materials are provided "as is" without any warranty, representation, condition, undertaking or term of

any kind, express or implied, statutory or otherwise, including without limitation, the warranties of

merchantability, non-infringement of intellectual property, or fitness for a particular purpose. Because

some jurisdictions prohibit the exclusion of implied warranties, the above exclusions may not apply to the

User.
40
Further RSPL Limited does not warrant the accuracy or completeness of the information, text, graphics,

links or other items contained within the Materials. RSPL Limited may make changes to the Materials, or

the programs, policies or other information described in the Materials, at any time without notice. RSPL

Limited makes no commitment to update the Materials.

In no event RSPL Limited be liable for any special, indirect or consequential damages or any damages

whatsoever, including loss of profits or data, whether in an action in contract or tort, arising out of the use

or performance of the site or the materials, or the performance or non-performance by RSPL Limited or

any third party providers of products or services related to this site, this limitation of liability shall apply

regardless of whether the claim asserted is based on contract, negligence, or any other theory of recovery,

even if the RSPL Limited has been advised of the possibility of such damages. Because some jurisdictions

prohibit the exclusion or limitation of liability for consequential or incidental damages, the above

limitation may not apply to the User.

41
 PART-3

CHAPTER 3

INTRODUCTION TO

FINANCIAL ANALYSIS

42
MEANING OF FINANCE

Finance may be defined, as the provision of money at the time is wanted. However, as management

function it has a special meaning of funds and their effective utilization. Finance is concerned with

everything that takes place in the conduct business.

IMPORTANCE OF FINANCE

Finance is regarded as the life blood of a business enterprise. This is because in the modern money oriented

economy, finance is one of thebasis foundations of all kinds of economic activities. It has been rightly

being said that “Business needs money to make money”. It is also true that money be gets more, only

when it is properly managed. It has rightly been said that business needs money to make more money.

However, it is also true that money can earn more money only when it is property manages.

FINANCIAL PERFORMANCE ANALYSIS of RSPL Ltd.

Meaning and Definition

The word 'Performance is derived from the word 'parfourmen', which means `to do', `to carry out' or 'to

render'. It refers the act of performing; execution, accomplishment, fulfilment, etc. In border sense,

performance refers to the accomplishment of a given task measured against pre-set standards of accuracy,

completeness, cost, and speed. In other words, it refers to the degree to which an achievement is being or

has been accomplished in the words of FrichKohlar "The performance is a general term applied to a part

or to all the conducts of activities of an organization over a period of time often with reference to past or

projected cost efficiency, management responsibility or accountability or the like. Thus, not just the

presentation, but the quality of results achieved refers to the performance. Performance is used to indicate

firm's success, conditions, and compliance.

43
Financial performance refers to the act of performing financial activity. In broader sense, financial

performance refers to the degree to which financial objectives being or has been accomplished. It is the

process of measuring the results of a firm's policies and operations in monetary terms. It is used to measure

firm's overall financial health over a given period of time and can also be used to compare similar firms

across the same industry or to compare industries or sectors in aggregation.

Financial performance analysis is the process of identifying the financial strengths and weaknesses of the

firm by properly establishing the relationship between the items of the balance sheet and profit & loss

account. It also helps in short term and long term forecasting. Growth of the company can also be identified

with the help of financial performance analysis. The dictionary meaning of analysis is to resolve or

separate a thing into its element or components part for tracing their relation to the things as whole and to

each other. The analysis of financial statement is a process of evaluating the relationship between the

component parts of financial statement to obtain a better understanding of the firm's position and

performance. This analysis can be undertaken by management of the firm or by parties outside.

In short, the firm itself as well as various interested groups such as managers, shareholders, creditors, tax

authorities, and others seeks answers to the following important questions:

1. What is the financial position of the firm at a given point of time?

2. How is the Financial Performance of the firm over a given period of time?

These questions can be answered with the help of financial analysis of a firm.

Financial analysis involves the use of financial statements. A financial statement is an organized collection

of data according to logical and Conceptual Framework 50 consistent accounting procedures. Its purpose

is to convey an understanding of some financial aspects of a business firm. It may show a position at a

moment of time as in the case of a Balance Sheet, or may reveal a series of activities over a given period

of time, as in the case of an Income Statement. Thus, the term 'financial statements' generally refers to two

basic statements: The Balance Sheet and the Income Statement. The Balance Sheet shows the financial

position of the firm at a given point of time. It provides a snapshot and may be regarded as a static picture.

"Balance sheet is a summary of a firm's financial position on a given date that shows Total assets = Total

liabilities + Owner's equity." The income statement (referred to in India as the profit and loss statement)

44
reflects the performance of the firm over a period of time. "Income statement is a summary of a firm's

revenues and expenses over a specified period, ending with net income or loss for the period." However,

financial statements do not reveal all the information related to the financial operations of a firm, but they

furnish some extremely useful information, which highlights two important factors profitability and

financial soundness. Thus analysis of financial statements is an important aid to financial performance

analysis.

Financial performance analysis includes analysis and interpretation of financial statements in such a way

that it undertakes full diagnosis of the profitability and financial soundness of the business. The analysis

of financial statements is a process of evaluating the relationship between component parts of financial

statements to obtain a better understanding of the firm's position and performance.

The financial performance analysis identifies the financial strengths and weaknesses of the firm by

properly establishing relationships between the items of the balance sheet and profit and loss account. The

first task is to select the information relevant to the decision under consideration from the total information

contained in the financial statements. The second is to arrange the information in a way to highlight

significant relationships. The final is interpretation and drawing of inferences and conclusions. In short,

"financial performance analysis is the process of selection, relation, and evaluation."

SIGNIFICANCE OF FINANCIAL PERFORMANCE ANALYSIS of

RSPL Ltd.

Interest of various related groups is affected by the financial performance of a firm. Therefore, these

groups analyze the financial performance of the firm. The type of analysis varies according to the specific

interest of the party involved. The following are some of the parties interested in financial performance

analysis.

• Trade creditors: Trade creditors interested in the liquidity of the firm (appraisal of firm's liquidity)

• Bond holders: Bond holders interested in the cash-flow ability of the firm.

• Investors: Investors interested in present and expected future earnings as well as stability of these

earnings

45
• Management: Management interested in internal control, better financial condition and better

performance (appraisal of firm's present financial condition, evaluation of opportunities in relation to

this current position, return on investment provided by various assets of the company, etc.)

TYPES OF FINANCIAL PERFORMANCE ANALYSIS

Financial performance analysis can be classified into different categories on the basis of material used and

modes operandi as under:

1. Material used

On the basis of material used financial performance can be analyzed in following two ways:

a. External analysis: This analysis is undertaken by the outsiders of the business namely investors, credit

agencies, government agencies, and other creditors who have no access to the internal records of the

company. They mainly use published financial statements for the analysis and as it serves limited

purposes. b. Internal analysis: This analysis is undertaken by the persons namely executives and

employees of the organization or by the officers appointed by government or court who have access to the

books of account and other information related to the business.

2. Modus operandi

On the basis of modus operandi financial performance can be analyze in the following two ways:

a. Horizontal Analysis: In this type of analysis financial statements for a number of years are reviewed

and analyzed. The current year's figures are compared with the standard or base year and changes are

shown usually in the form of percentage. This analysis helps the management to have an insight into levels

and areas of strength and weakness. This analysis is also called Dynamic Analysis as it based on data from

various years.

b. Vertical Analysis: In this type of Analysis study is made of quantitative relationship of the various

items of financial statements on a particular date. This analysis is useful in comparing the performance of

several companies in the same group, or divisions or departments in the same company. This analysis is

not much helpful in proper analysis of firm's financial position because it depends on the data for one

46
period. This analysis is also called Static Analysis as it based on data from one date or for one accounting

period.

TECHNIQUES OR TOOLS OF FINANCIAL PERFORMANCE

ANALYSIS

An analysis of financial performance can be possible through the use of one or more tools / techniques of

financial analysis:

Ratio Analysis

Ratio analysis is a very strong tool in financial analysis. It can be defined as” a quantitative analysis of

information contained in a company’s financial statements”.

In financial analysis, a ratio can be used as a benchmark for the evaluation of the financial position and

performance of the company. The absolute accounting figures which are present in the financial statements

do not provide a meaningful understanding about the performance of the company but when it is related

to some other relevant information, it becomes meaningful. For example, a net profit of Rs.10 crores looks

like an impressive number but when it is compared with the investment made by the company then only

it can be said good or bad.

Ratios help to summarize a big quantity of financial data which helps in a qualitative judgement about

company’s financial performance.

STANDARDS FOR COMPARISON

The ratio analysis helps in a useful interpretation of the financial statements. A single ratio in itself is not

of much use and does not indicate anything, but after comparing it with certain standards it become

meaningful. It may consist of:

1. INDUSTRY RATIOS - ratios of the industry to which company belong

47
2. COMPETITORS ANALYSIS - this is done of some selected companies, especially the most

successful and progressive competitors at that point of time

3. PROTECTED RATIOS - this is developed using the protected or proforma, financial statements of

the same company

4. PAST RATIOS - ratios calculated from the past financial statements of the company

USE AND SIGNIFICANCE OF RATIO ANALYSIS

The ratio is one of the most influential tool of financial analysis. It is used as a device to interpret the

financial health of the company and finding relationship between various items and group of items as well,

thus, ratios have a wide range of applications and are of immense use today.

The following points will show the importance of ratio analysis

a) Managerial uses of Ratio Analysis

1. Helps in decision making-:

The main purpose of preparing financial statements is for decision making. Ratio analysis helps in the

decision-making process through the information provided in these financial statements.

2. Helps in financial forecasting and planning-:

Ratio analysis is of great help for financial forecasting and planning. Planning is always done for future

and ratios are calculated through the data for the number of years which acts as a guide for the future.

3. Helps in communicating-:

Ratio analysis helps in communicating the financial strengths and weaknesses of the company in more

easy and understandable manner.

4. Helps in controlling-:

Ratio analysis helps in gaining the effective control of the business by overcoming the weaknesses and

the loopholes that exist in the business.

48
b) Utility to shareholders/investors

An investor would definitely want to access the financial position of the company where he might be

thinking of investing. His biggest concern would be the security of the investment and then the return in

the form of dividends or interest. So, ratio analysis will play a great role here in helping the investor to

make up his mind whether to invest or not.

c) Utility to creditors

The ratio analysis of the financial statements lets the creditors understand the financial position of the

company which will tell whether the investors will get back the money on time or not.

d) Utility to employees

The employees of the company are also interested in the financial position of the company as their salary

increment and amount of fringe benefits would be dependent on the volume of profits earned.

e) Utility to government

Government is interested in knowing the financial position of the company’s as based on that it levies

various tax which indirectly strengthens the nation’s economy.

f) Tax Audit Requirements

Section 44A in the Income Tax Act requires that the following accounting ratios should be given-

1. Stock in trade/turnover

2. Gross Profit/turnover

3. Material consumed/Finished Goods produced

4. Net Profit/turnover

LIMITATIONS OF RATIO ANALYSIS

Despite having so many advantages like revealing of financial position and soundness of the business,

Ratio analysis has certain limitations as well which restricts its use. These limitations should be kept in
49
mind while using ratio analysis for interpreting the financial statements. Here are few of the limitations of

ratio analysis.

1. Limited Comparability

It is very important to adopt the uniform accounting policy while comparing the ratios of one firm with

the performance of others. It cannot be compared if there is a difference in the methods of calculation of

stock or various methods used to record depreciation on assets as it will not provide identical data.

2. Absence of universally accepted standard terminology

Different company’s use different terminology which gives a totally different meaning and changes

everything like some company’s might take bank overdraft as current liability while some might consider

it as non-current liability, some company’s might use profit before interest and tax while others may use

profit after interest and tax. So, ratios can be comparable only when all the companies adapt to a uniform

standard terminology.

3. Window Dressing

It is very easy to window dress the financial statements to give a good impression about the financial

stability and profitability to the outsiders including the investors. Therefore, one has to be careful in

making decisions by going only through ratios calculated from financial statements.

4. Changes in price level affect ratios

The ratios of the commodities become meaningful only if the prices of two different years are same.

Change in the price will affect the cost of production, its sale and even the value of assets.

5. Ignoring Qualitative Factors

50
Ratio analysis measures the quantitative aspects of the business. It ignores the qualitative measure of the

firm no matter how important it may be. Therefore, it shows that the ratio only gives one sided approach

to measure the efficiency of the business.

CLASSIFICATION OF RATIOS

There are many ratios that can be calculated from the accounting data according to the financial activity

or function to be evaluated. The performance of company is the prime importance to the management.

The ratios can be calculated in four main categories:

• Profitability Ratios long term earning power

• Leverage Ratios long term financial strength

• Liquidity Ratios short term financial strength

• Activity Ratios term of investment utilisation

Profitability Ratios are used to measure the overall performance and effectiveness of the company.

Leverage Ratios indicate the proportion of debt and equity in financing the overall assets of the company.

Liquidity Ratios help in measuring the company’s ability to meet current obligations.

Activity Ratios show how well a company is utilising its assets.

Comparative balance sheet

The comparative balance sheet is helpful in analysing and evaluating the financial position of the firm

over a period of years. The comparative balance sheet analysis is the study of the trend of the same items,

group of items, and computed items in two or more balance sheet of the same business enterprise on

different dates.

51
The changes in periodic balance sheet items reflect the conduct of a business. The changes can be observed

by comparison of the balance sheet at the beginning and at the end of the period and these changes can

help in forming an opinion about the progress of an enterprise.

Common size balance sheet:

Financial statements when read in absolute figure are not easily understandable. They are even misleading.

Each items of asset are converted in to percentage to total asset and each item of capital and liabilities is

expressed to total liability and capital fund. That the whole balance sheet is converted in to percentage

form i.e., every individual item stated as a percentage of total 100.such convened balance sheet is known

as common size balance sheet. The percentage so calculated can be easily compared with the

corresponding percentages in some other period.

CASHFLOW STATEMENT

In financial accounting, a cash flow statement, also known as statement of cash flows, is a financial

statement that shows how changes in balance sheet accounts and income affect cash and cash

equivalents, and breaks the analysis down to operating, investing and financing activities. Essentially, the

cash flow statement is concerned with the flow of cash in and out of the business. The statement

captures both the current operating results and the accompanying changes in the balance sheet. As an

analytical tool, the statement of cash flows is useful in determining the short-term viability of a company,

particularly its ability to pay bills. International

Accounting Standard 7 OAS 7), is the International Accounting Standard that deals with cash flow

statements.

The cash flow statement is partitioned into three segments, namely:

I. cash flow resulting from operating activities;

2. cash flow resulting from investing activities;

3. cash flow resulting from financing activities.

52
WORKING CAPITAL MANAGEMENT

DEFINITION:

A managerial accounting strategy focusing on maintaining efficient levels of both components of working

capital, current assets and current liabilities, in respect to each other. Working capital management ensures

a company has sufficient cash flow in order to meet its short-term debt obligations and operating expenses.

Working capital = current asset - current liabilities

There are three main components associated with working capital management: accounts receivable,

accounts payable and inventory.

The efficient management of working capital is essential for the profitability and overall financial health

of any company. Working capital is the cash that companies use to operate and conduct their businesses.

The components, or aspects, of working capital that investors and analysts assess to evaluate a company

are the key elements for a company's cash flow — money coming in, money going out and management

of inventory.

ACCOUNTS RECEIVABLE

Accounts receivable are revenues due — what is owed to a company by its customers for sales made.

Timely, efficient collection of accounts receivable is essential to a company's smooth financial operation.

Accounts receivable are listed as assets on a company's balance sheet, but they are not actually assets until

they are collected. A common metric analysts use to assess a company's handling of accounts receivable

is days’ sales outstanding, which reveals the average number of days a company takes to collect sales

revenues.

ACCOUNTS PAYABLE
53
Accounts payable, the money that a company is obligated to pay out over the short term, is also a key

component of working capital management. Companies seek to strike a balance between maintaining

maximum cash flow by delaying payments as long as is reasonably possible and the need to maintain

positive credit ratings and good relationships with suppliers and creditors. Ideally, a company's average

time to collect receivables is significantly shorter than its average time to settle payables.

INVENTORY

Inventory is a company's primary asset that it converts into sales revenues. The rate at which a company

sells and replenishes its inventory is an important measure of its success. Investors consider the inventory

turnover rate to be an indication of the strength of sales and as a measure of how efficient the company is

in its purchasing and manufacturing process. Inventory that is too low puts the company in danger of

losing out on sales, but excessively high inventory.

How does working capital management affect corporate earnings?

• A company that does not manage working capital effectively is less profitable and could potentially

face financial insolvency. Working capital is the money used by a business to fund its daily operations.

It can be looked at as essentially the financing for the transformation of basic materials into finished

good.

• Three key components of working capital are inventory, accounts payable and accounts receivable.

Each of these elements is examined by analysts for indications of a company's financial soundness and

operational efficiency. The longer it takes a company to turn raw materials into sales revenues, the

longer the company's working capital is tied up and cannot be utilized for growing its business and

increasing profits. If a company's working capital is tied up for an extended period of time, it may have

to take on additional financing to bridge the gap in cash flow. Efficient working capital management

thus helps keep a company's total debt level down.

• Companies do not all face the same situations in terms of operational cash flow. For example, hospitals

receive co-pays form patients at the time of delivery of services and then receive the remainder some

time later from insurance companies. Timely collection of accounts receivables is of paramount

54
 importance. Large retail companies do not face such accounts receivable issues since customers pay

for goods immediately. The issue for these kinds of businesses is more in the area of inventory

management.

• Evaluating the working capital management of a company is important for investors as it is indicative

of how efficiently a company is handling cash, how likely it is to be profitable and how much potential

it has for growth. Adequately managing working capital is critical for the basic financial survival of a

company.

CASH

Debtors Raw Materials, Wages

SALES and Overheads

Work in Progress

Finished Stock

(Working Capital Cycle)

Review of Literature on Financial Performance of Companies

Financial Performance Analysis of Adidas AG

AnupaJayawardhanain their study entitled the financial statement of Adidas has been selected and

analysed. The financial statement indicates the balance sheet, income statement and the cash flow

statement.Financial performance has been studied using horizontal analysis, vertical analysis, trend

analysis and mainly ratio analysis to suggest improvements to increase finance flow, improve dividend

55
and reduce liabilities. Main analysis is based on 2014 and 2013 financial years which are ending on 31st

of December in every year. The latest performance being compared with company’s statements over the

last five years starting 2010 for showing trends. Finally, recommendations and suggestions have been

made to ensure the revenue of the company and reduce the liabilities while improving the stability of the

company.

A Study on Financial Performance Using Ratio Analysis of Hindalco

AluminiumCompany Ltd

This paper provides a critical review of the theoretical and empirical basis of four central areas of financial

ratio analysis. The research areas reviewed are the functional form of the financial ratios, distributional

characteristics of financial ratios, classification of financial ratios, and the estimation of the internal rate

of return from financial statements. It is observed that it is typical of financial ratio analysis research that

there are several unexpectedly distinct lines with research traditions of their own. A common feature of

all the areas of financial ratio analysis research seems to be that while significant regularities can be

observed, they are not necessarily stable across the different ratios, industries, and 45 time periods. This

leaves much space for the development of a more robust theoretical basis and for further empirical

research.

A Study on Financial Performance Analysis of Bharti Airtel Limited

IndrajithMallick (2009) studied the allocation of liquidity in the inter-bank money market. This paper

focuses on an ex post trading problem in inter banks money market. “An over counter” inter-bank market

is modelled in this paper. Relationship banking leads to private proprietary information that causes

bargaining failure in such markets with positive probability. Both independent and interdependent

bargaining games are studied. It is shown under the allocation is not constrained efficient under bargaining

games without monetary intervention. Monetary intervention shown to dominate variety of informational

and bargaining assumptions. The literature on monetary policy design is thus extended in the present paper

by providing a micro- rationale for central bank intervention and by characterizing the solution of state

contingent market making in liquidity.

56
Selvakumar and kathiravan (2009) studied the profitability performance of public sector banks in India.

Banking system is an important constituent of the overall economic system. It plays an important role in

mobilizing the nation’s savings and in channelizing them into high investment priorities and better

utilization of available resources. Banking, if equated with money lending, is perhaps as old as the

civilization itself. However, modern banking is something really different from mere lending. It is far

more sophisticated and complicated. In a developing economy, the role of bank is more formative and

purposeful than in the developed one. In a developing country, where the banking habits of the people not

developed, the task of creating and spreading the banking habits and of mobilising the country’s resources

becomes a challenging one. Banks plays a crucial role because they act as a bridge between those who

require finance and those who have finance.

The Financial Performance Analysis of Nike Inc

WeerakoonRanjan in their study entitled Nike’s financial statement was analysed and studied thoroughly

to understand Nike`s financial performance. That financial statement includes balance sheet, income

statement and cash flow statement. The financial performance of Nike has evaluated using methods of

Horizontal analysis, vertical analysis tends analysis and selected key ratios for improvements to increase

cash flow and improve dividend and reduce labilities. Therefore, analysed company`s latest annual report

that is the 2015 annual report ending May 31st. That latest company annual report data was compared

with the data from last five years from 2010 to 2015 to gain an understanding of company`s performance,

which was shown in the trends analysis. According to the analysis data, recommendations have been given

to ensure the company`s revenue and reduce liabilities. All the recommendation and suggestions were

made according to key ratios which will directly influence company`s performance: mainly the net profit

margin, current ratios, quick ratio, and debt to equity ratio, earning per share ratio, working capital turn

over and cash return on capital investment.

Evaluation of Financial Performance

Performance evaluation of an economic entity requires approaching several criteria, such as industry and

economic entity type, managerial and entrepreneurial strategy, competitive environment, human and

material resources available, using a system of appropriate performance indicators for this purpose. The
57
exigencies of communication occurred on the growing number of phenomena that marked the global

economy in recentdecades’ internationalization and relocation of business crises and turmoil in financial

markets, demand performance measurement to be made in a comprehensive way by financial and non –

financial criteria indicators are measures of performance used by management to measure, report and

improve performance of the economic entity. The relationship between indicators and management is

ensured by the existence of performance measurement systems. Studies to date indicate that economic

entities using balanced performance measurement systems as a key management tool registered superior

performance compared to entities not using such systems. This study attempts to address the issue of

performance evolution by systems. We tried to do this literature review because sustainable development

and, therefore, globalization require new standards of performance that exceeds the economic field, both

for domestic companies as well as international ones. so, these standards should be integrated into

corporate strategy development to ensure sustainability of activities undertaken by harmonizing the

economic, social and environmental objectives.

M.Y.Khan and P.K.Jain.”Management Accounting” in (2007) “Financial performance is the process of

selection, relation and evaluation the focus of financial performance is on buy figures I the financial

statement and significant relationship that exists between them. The analysis of financial statement is a

process of evaluating the relationship between component parts of financial statement to obtained a better

understanding of the firm’s position and performance”.

Mr.Ashok Kumar Lahr’s(1981)study on “liquidity behavior of Indian business firms” presents some

independent evidence of the period 1971-74 in support of the existence of economics of scale and inter-

industry differences. He found that in majority of the industries the elasticity coefficient is substantially

less than unity. This indicates the existence of scale in money.

Financial Performance of Telecom Companies

MeghaGaste, Prof. Vanishri R. Hundekarin their study entitled Financial performance is a subjective

measure of how well a firm can use assets from its primary mode of business and generate revenues. This

item is also used as a general measure of a firm’s overall financial health over a given period of time, and

58
can be used to compare similar firms across the same industry or to compare industries or sectors in

aggregation.

Finance which is the lifeblood of the business. For every business finance is very important aspect for

surviving for longer period. Finance is the soul of economic activities. Performing economic activity, we

need resources that resources we will get through the source of money.so many is integral part in the firm.

In this paper analyze the financial performance of Indian telecom sector specially focused on BSNL, Airtel

and Vodafone. As the Indian telecom sector is one of the key contribution towards development our

country and also towards other Industries.

Developing the Financial health of the organization is the first step, and next step of financial performance

is to compare the financial result of the firm with same industry or firm which helps to improve the

financial position of the company.

A Study on Financial Performance of Ashok Leyland Limited at Chennai

Gary W.selnow(2003) examined various approaches to promote retirement investment .His study found

that automatic enrolment has a good chance of overcoming the natural impediments to wise decisions

about retirement investments.

Douglas A.Hersahey and Hendrik p. Van Dalen(2006)in the study explored the Psychological

mechanisms that underlie the retirement planning and saving tendencies of Dutch and American Workers

the research suggests that policy analysts should take into account both individual and cultural differences

in the psychological predispositions of workers when considering Pension reforms that stress individual

responsibility for planning and saving.

M.Kabir Hassan and Dr.ShariLawrance (2007) conducted a survey on “An Analysis of Financial

preparation for Retirement ''. In this study, the researcher analyses the financial preparation for retirement.

Regarding retirement plan contributions, the findings indicate significant positive effects regarding

income and womanhood. Education is significant and positive as a predictor for the decision to contribute

to a pension plan for women in their thirties, thus supporting the hypothesis of a significant positive

relationship between education and pension plan Contributions.

59
A Study of Financial Performance: A Comparative Analysis of SBI and ICICI Bank

DR. ANURAG. B. SINGH*; MS. PRIYANKA TANDON in their study entitled Banking Sector plays

an important role in economic development of a country. The banking system of India is featured by a

large network of bank branches, serving many kinds of financial services of the people. The State Bank

of India, popularly known as SBI is one of the leading bank of public sector in India. SBI has 14 Local

Head Offices and 57 Zonal Offices located at important cities throughout the country. ICICI Bank is

second largest and leading bank of private sector in India. The Bank has 2,533 branches and 6,800 ATMs

in India. The purpose of the study is to examine the financial performance of SBI and ICICI Bank, public

sector and private sector respectively. The research is descriptive and analytical in nature. The data used

for the study was entirely secondary in nature. The present study is conducted to compare the financial

performance of SBI and ICICI Bank on the basis of ratios such as credit deposit, net profit margin etc.

The period of study taken is from the year 2007-08 to 2011-12. The study found that SBI is performing

well and financially sound than ICICI Bank but in context of deposits and expenditure ICICI bank has

better managing efficiency than SBI.

A Study on Financial Performance Analysis at City Union Bank

It is necessary since it familiarizes the researches with concepts and conclusions already evolved by earlier

analysts. It also enables the present researcher to find out the scope for further study and to frame

appropriate objectives for the proposed evaluation. Since the proposal of the study is to measure the Study

On Financial Performance Analysis at City Union Bank. The previous studies in this area of researches

are briefly reviewed. It also includes the opinions expressed by various authors in leading articles, journals,

books etc.

A.S. Shiralashetti1 in their paper “Performance appraisal of the Godag co-operative Cotton Textile Mill

Ltd, Hulkoti- A Case Study” discusses about the trends in capital employed and net worth of the firm. It

also considered the trends in sales, cost of goods sold, gross profit/loss and net profit/loss during the period.

The result was found that the overall performance of the Godag Co-operative Cotton Textiles Mill Ltd has

been poor from 2002-2003 to 2008-09.

60
Chundawat and Bhanawat2 (2000) analyzed the working capital management practices in IDBI assisted

tube and type companies for the period 1994-1998 by using some relevant ratios and concluded that the

working capital management; of IDBI assisted companies was more effective than the industry as a whole.

Deloof3 2003 discussed that most of the firms had a large amount of each invested in working capital. It

can therefore be expected that the way in which working capital is managed will have a significant impact

on profitability of those firm. Using correlation and regression tests he found a significant negative

relationship between gross operating income and the number of days’ accounts receivable, inventories and

accounts payable of firms. On the basis of these results he suggested that managers could create value for

their shareholders by reducing the number of days’ accounts receivable and inventories to a reasonable

minimum.

Dheenadayalan V. and Mrs. R. Deviananbrasi4 (2007) he had suggested that the “Z” score of the

sample units remain below the grey area from 1997-07 but in the year 2001-02, the “Z” score is -0.29.

After 2001-02, the decreases in the score indicate that the sample unit is not financially sound and healthy.

The sample units need to put in efforts to increases the score. This will help the sample unit to avoid any

damage to its liquidity and solvency positions, thereby avoiding financial distress and bankruptcy.

Dr. Hamandou Boubacar5 (2011) in their paper “The financial performance of foreign Bank

subsidiaries” discuss about the relationship between the performance of bank foreign subsidiaries and the

degree of the implication of the present banks in the organization and the management of their activities

abroad. The result was found that ownership means share of the capital held by the parent bank.

Dr. K. Srinvas6(2010) in their paper “Pre and Post Merger financial performance of merged Banks in

India”- A selected study is conducted and analysis the financial performance of Bank of Baroda, Punjab

National Bank, Oriental Bank of Commerce, HDFC Bank, ICICI Bank and Centurions Bank of Punjab.

Then found that the private sector merged banks performed well as compared to the public sector merged

banks.

Dr. P.B. Bhatasna and J.R. Raiyani 7(2011) in their paper “A study on Financial Health of Textile

Industry in India: A “Z” – Score Approach” revealed that all the sample companies like SPML Ltd and

61
WIL Ltd were financially sound enough during the study period bearing SSML and SKNL which had

slightly lower “Z” score on the basis of average scores during the study period.

Dr. Prasanta Paul8 (2011) in their paper, “financial performance evaluation – A Comparative

study of some selected “NBFCS” found that selected companies differ significantly in terms of their

financial performance indicators from one to another may be different services they provide.

Financial Performance in Paper Industry

Srinivasa Rao and Indrasena Reddy (1995)7 in their study entitled “Financial Performance in Paper

Industry- A Case Study” stated that the financial position of the company had been improving from year

to year. The company’s performance in relation to generating internal funds in the form of reserves and

surplus was excellent and also was doing well in mobilizing outside funds. The liquidity position of the

company was sound as it was revealed by current and liquid ratios which were above the standard. The

solvency ratios showed that the company had been following the policy of low capital gearing from 1990-

91 as these ratios had been decreasing from this year. The performance of the company in relation to its

profitability was not up to the expected level. The company’s ability to utilize assets for generation of

sales had not been improved much during the study period as it was revealed by its turnover ratios.

A Study of the Financial Performance with Reference to Steel Industries Kerala

Limited

Anshan Lakshmi (2003)17 made “A Study of the Financial Performance with Reference to Steel

Industries Kerala Ltd”. This study covered from 1977-1998 to 2001-2002. The objectives of the study

were to analyse and evaluate the working capital management, to analyse the liquidity position of the

company, to evaluate the receivables, payables and cash management and to suggest ways and means to

improve the present date of working capital. The major tools used for the analysis said that the working

capital management suggested that the inventory management have to be corrected.

62
Financial Performance of Indian Pharmaceutical Industry – A case study”,

AsianJournal of Management Research, 2010

AmalenduBhunia (2010)33 has undertaken an analysis of financial performance of pharmaceutical

companies to understand how management of finance plays a crucial role in the growth. The study covers

to public sector drug & pharmaceutical enterprises listed on Bombay Stock Exchange (BSE). The study

has been undertaken for the period of twelve years from 1997-98 to 2008-09. In order to analysis financial

performance in terms of liquidity, solvency, profitability and financial efficiency, various accounting

ratios have been used. Statistical measures namely Liner Multiple Regression Analysis and Test of

Hypothesis – t test has been used.

A Study on Financial Status of Tata Motors Ltd”, Indian Journal of Applied Research

Moses Joshuva Daniel (2013)49 in his study “A Study on Financial Status of TATA Motors Ltd” stated

the main objectives to analyzing the overall financial status of the TATA Motors Ltd by using various

financial tools. In order to analyses financial status in terms of Profitability, Solvency, Activity and

Financial stability various accounting ratios have been used. It is cleared from the study that the company’s

financial performance is satisfactory. The company has stable growth and it shows a greater status in all

the areas it works. The company has been suggested to reduce the expenditure as it increases every year.

Decrease in expenses will increase the profitability.

A Comparison of Financial performance of major Gujarat pharma players

throughvalue added and economic value added

Dharmendra Mistry (2010)34 in his study “A Comparison of Financial Performance of Major Gujarat

Pharma” players through value added and economic value added”. The purpose of this study is to classify

major Gujarat pharmacy players in cohesive categories on the basis of their financial characteristic

revealed by the financial statements. The study also revealed that economic value added has also positive

correlation with firm size, funds of proprietors, and funds of money lenders and have significant impact

on economic value added.

63
“From the above review of literatures I analyse that no one have done the research on Financial

Performance of RSPL Ltd, so it is observed that it is typical of financial ratio analysis research that

there are several unexpectedly distinct lines with research traditions of their own. A common feature

of all the areas of financial ratio analysis research seems to be that while significant regularities can

be observed, they are not necessarily stable across the different ratios, industries. This leaves much

space for the development of a more robust theoretical basis and for further empirical research. I

also identify problem of the working capital management and liquidity position of the company. So

this is the reason that’s why I am doing research on Financial Performance of RSPL Ltd.”.

RESEARCH OBJECTIVES

• To study the financial performance analysis of “RSPL Ltd”.

• To analyse the financial statements of the company by using financial tools.

• To evaluate the financial position of the company in terms of solvency, profitability, activity and

earnings ratios.

RESEARCH QUESTIONS

Statement 1: Analyse the financial performance of “RSPL Ltd”.

Statement 2: Evaluate the financial position of the company in terms of earnings ratio.

Statement 3: Evaluate the financial position of the company in terms of solvency

Statement 4: To analyse the financial changes over a period of four years for measuring the firm’s

performance.

SCOPE OF THE STUDY

The scope of the study is limited to the collection of financial data which is published in the annual report

of the company each year. The analysis has been done to suggest the possible solutions which might be

useful for the company. The study, which is done at the RSPL Ltd, aims at forecasting profitability.

64
Profitability analysis is a process of understanding the financial strength and weakness between the various

items of balance sheet and profit and loss account, profitability analysis is therefore very important and

crucial aspect of every company has to undertake as it is starting for making plans and has to be done

using any sophisticated forecasting and procedures. The above study will help the organization to identify

the adverse condition and would help in taking necessary steps. The study has been carry for a period of

4 years (2013-2017).

RESEARCH METHODOLOGY

Research Methodology helps in a systematic solving of research problems. It is as important as research

method. Research Methodology is a technique used by the researchers for describing, analysing and

predicting the work done by them. Research method comprises of generation, collection and evaluation

of data. The success of any project depends a lot on the accuracy, timing and the efforts done on the

collection of data, which is an extremely important requirement for any project.

Research Design

The research design is descriptive. The research is designed in such a way to mainly concentrate on data

collected through secondary mode.

Descriptive Research Design

This study used descriptive research. Descriptive research involves gathering data that describe events and

then organizes, tabulates, depicts, and describes the data collection. It often uses visual aids such as graphs

and charts to aid the reader in understanding the data distribution.

Descriptive research is used in the study because it will ensure the minimization of bias and maximization

of reliability of dada collected. The researcher had to use fact and information already available through

financial statements of earlier years and analyse these to make critical evaluation of the available material.

Hence by making the type of the research conducted to both Descriptive and analytical in nature. From

the study, the types of data to be collected and the procedure to be use for this purpose were decided.

Sampling Tools and Techniques

65
Convenience and purposive sampling are used in the present study. In convenience sampling, participants

are included in the study because they happen to be in the right place at the right time. Purposive sampling

refers to judgmental sampling that involves the conscious selection by the researcher of certain participants

to include in the study that can give proper responses and are aware of the core of the study.

Sampling Units

1. Schedule changes in working capital

2. Common size balance Sheet

3. Ratio analysis

4. Comparative balance sheet analysis

5. Cash flow statement

Sampling Size

Financial Statements of four years (2014-2017)

Sources and Collection of Data

For the purpose of this study only secondary data have been used to a large extent.

Source of Data: The main source of data of the study was the annual reports of RSPL Ltd, intermit

sources, books and articles.The study is mostly based on secondary data. However, to fill the gap in the

information wherever they exist, primary data has also been utilised.

Secondary Data The secondary data are data are collected from information which is used by other. It is

not direct information. This information is already collected and analysis by other and that information is

used by others. The secondary data are collected from following:

• Company’s annual report

• Company’s website

• Manual

Limitations

• The study is mostly based on secondary data

66
• The period of study and data is limited to 5 years.

67
 CHAPTER 4

DATA ANALYSIS

&INTERPRETATION

(RSPL PVT.LTD)

68
 COMPARTIVE STATEMENT ANALYSIS OF RSPL Ltd FOR THE YEAR 2014-2015
Rs in Lacs
CY 2015 (Rs BY 2014 (Rs
PARTICULAR INC/DEC (Rs) INC/DEC (%)
in crore) in crore)
NON CURRENT ASSETS
FIXED ASSET
tangible assets 14113.7 10899.6 3214.1 29.5
intangible assets 5287 4724.6 562.4 11.9
cap wip 7878.8 7392.9 485.9 6.6
goodwill and consolidation 0 0
intangible assets under development 7033.9 4969.5 2064.4 41.5
NON CURRENT INVESTMENTS 1564.9 1503.3 61.6 4.1
LONG TERM LOANS AND ADVANCES 1900.8 2188.4 -287.6 -13.1
CASH AND BANK BALANCES 143.6 0.8 142.8 17850.0
OTHER NON CURENT ASSETS 201.7 95.1 106.6 112.1
DEFERRED TAX ASSETS (NET) 129 20.7 108.3 523.2
LONG TERM LOANS AND ADVANCES TOWARDS F.A 16605.9 10358.6 6247.3 60.3
CURRENT ASSETS
CURRENT INVESTMENTS 7224.6 7712.4 -487.8 -6.3
INVENTORIES 4229.9 3040.3 1189.6 39.1
TRADE RECIEVABLES 20405.4 14119.5 6285.9 44.5
CASH AND BANK BALANCES 3378.6 3644.6 -266 -7.3
SHORT TERM LOANS AND ADVANCES 5591.5 4184.3 1407.2 33.6
SHORT TERM LOANS AND ADVANCES TOWARD F.A 8167.3 7352.1 815.2 11.1
OTHER CURRENT ASSETS 15137.9 12527.6 2610.3 20.8
TOTAL 118994.5 94734.3 24260.2 25.6
EQUITY AND LIABILITIES
NON - CURRENT LIABILITIES
LONG TERM BORROWING 36155.6 24841.1 11314.5 45.5
DEFERRED TAX LIABILITIES (NET) 210.9 331.6 -120.7 -36.4
OTHER LONG TERM LIABILITIES 1059.6 252.1 807.5 320.3
DEFERRED PAYMENT LIAB FOR ACQUISITION OF F.A 3953.6 4417.8 -464.2 -10.5
LONG TERM PROVISIONS 312.2 274.3 37.9 13.8
CURRENT LIABILITIES
SHORT TERM BORROWINGS 5778.1 4036.8 1741.3 43.1
CURRENT MATURITIES OF LTB 5216.4 3920.4 1296 33.1
TRADE PAYABLES 16716.5 14687.7 2028.8 13.8
SHORT TERM PROVISIONS 2343.1 2246.8 96.3 4.3
CURRENT MATURITIES OF DEFERRED PAY LIAB FOR ACQ OF F.A 464.1 93.9 370.2 394.2
OTHER CURRENT LIABILITIES 15644.2 13555.2 2089 15.4
SHARE HOLDERS FUNDS
SHARE CAPITAL 122.5 121.8 0.7 0.6
RESERVE AND CAPITAL 29264.3 24928.8 4335.5 17.4
MINORITY INTEREST 1753.5 1026 727.5 70.9
TOTAL EQUITY AND LIABILITIES 118994.6 94734.3 24260.3 25.6

69
 COMPARTIVE STATEMENT ANALYSIS OF RSPL Ltd FOR THE YEAR 2015-2016
Rs in Lacs
CY 2016 (Rs BY 2015 (Rs
PARTICULAR INC/DEC (Rs) INC/DEC (%)
in crore) in crore)
NON CURRENT ASSETS
FIXED ASSET
tangible assets 20816.2 14113.7 6702.5 47.5
intangible assets 7453.3 5287 2166.3 41.0
cap wip 4061.1 7878.8 -3817.7 -48.5
goodwill and consolidation 2119.8 0 2119.8 0.0
intangible assets under development 7289.4 7033.9 255.5 3.6
NON CURRENT INVESTMENTS 1224.2 1564.9 -340.7 -21.8
LONG TERM LOANS AND ADVANCES 2258.6 1900.8 357.8 18.8
CASH AND BANK BALANCES 65.1 143.6 -78.5 -54.7
OTHER NON CURENT ASSETS 148.2 201.7 -53.5 -26.5
DEFERRED TAX ASSETS (NET) 194.2 129 65.2 50.5
LONG TERM LOANS AND ADVANCES TOWARDS F.A 21840.7 16605.9 5234.8 31.5
CURRENT ASSETS
CURRENT INVESTMENTS 7543.3 7224.6 318.7 4.4
INVENTORIES 5169.5 4229.9 939.6 22.2
TRADE RECIEVABLES 23011.3 20405.4 2605.9 12.8
CASH AND BANK BALANCES 3566.1 3378.6 187.5 5.5
SHORT TERM LOANS AND ADVANCES 6171.5 5591.5 580 10.4
SHORT TERM LOANS AND ADVANCES TOWARD F.A 10160.1 8167.3 1992.8 24.4
OTHER CURRENT ASSETS 20029.7 15137.9 4891.8 32.3
TOTAL 143122.3 118994.5 24127.8 20.3
EQUITY AND LIABILITIES
NON - CURRENT LIABILITIES
LONG TERM BORROWING 47392.1 36155.6 11236.5 31.1
DEFERRED TAX LIABILITIES (NET) 377.9 210.9 167 79.2
OTHER LONG TERM LIABILITIES 1160.9 1059.6 101.3 9.6
DEFERRED PAYMENT LIAB FOR ACQUISITION OF F.A 3481.5 3953.6 -472.1 -11.9
LONG TERM PROVISIONS 346.7 312.2 34.5 11.1
CURRENT LIABILITIES
SHORT TERM BORROWINGS 7965.8 5778.1 2187.7 37.9
CURRENT MATURITIES OF LTB 7313.7 5216.4 2097.3 40.2
TRADE PAYABLES 18053.7 16716.5 1337.2 8.0
SHORT TERM PROVISIONS 2539.4 2343.1 196.3 8.4
CURRENT MATURITIES OF DEFERRED PAY LIAB FOR ACQ OF F.A 472.5 464.1 8.4 1.8
OTHER CURRENT LIABILITIES 17505.6 15644.3 1861.3 11.9
SHARE HOLDERS FUNDS
SHARE CAPITAL 123.1 122.5 0.6 0.5
RESERVE AND CAPITAL 33736.6 29264.3 4472.3 15.3
MINORITY INTEREST 2652.9 1753.5 899.4 51.3
TOTAL EQUITY AND LIABILITIES 143122.4 118994.7 24127.7 20.3

70
 COMPARTIVE STATEMENT ANALYSIS OF RSPL Ltd FOR THE YEAR 2016-2017
Rs in Lacs
CY 2017 (Rs BY 2016 (Rs
PARTICULAR INC/DEC (Rs) INC/DEC (%)
in crore) in crore)
NON CURRENT ASSETS
FIXED ASSET
tangible assets 47151.8 43827.4 3324.4 7.6
intangible assets 9391.4 7453.3 1938.1 26.0
cap wip 4262.6 4061.1 201.5 5.0
goodwill and consolidation 2136.2 2119.8 16.4 0.8
intangible assets under development 10018.4 7289.4 2729 37.4
NON CURRENT INVESTMENTS 1432.8 1224.2 208.6 17.0
LONG TERM LOANS AND ADVANCES 2793.8 2258.6 535.2 23.7
CASH AND BANK BALANCES 38.7 65.1 -26.4 -40.6
OTHER NON CURENT ASSETS 184.9 148.2 36.7 24.8
DEFERRED TAX ASSETS (NET) 280.4 194.2 86.2 44.4
LONG TERM LOANS AND ADVANCES TOWARDS F.A 32598.9 21840.7 10758.2 49.3
CURRENT ASSETS
CURRENT INVESTMENTS 6676.2 7543.3 -867.1 -11.5
INVENTORIES 5527.5 5169.5 358 6.9
CASH AND BANK BALANCES 4096.6 3566.1 530.5 14.9
SHORT TERM LOANS AND ADVANCES 7327.2 6171.5 1155.7 18.7
SHORT TERM LOANS AND ADVANCES TOWARD F.A 10835.6 10160.1 675.5 6.6
OTHER CURRENT ASSETS 25269.7 20029.7 5240 26.2
TOTAL 170022.7 143122.2 26900.5 18.8
EQUITY AND LIABILITIES
NON - CURRENT LIABILITIES
LONG TERM BORROWING 55447.3 47392.1 8055.2 17.0
DEFERRED TAX LIABILITIES (NET) 617.9 377.9 240 63.5
OTHER LONG TERM LIABILITIES 980 1160.9 -180.9 -15.6
DEFERRED PAYMENT LIAB FOR ACQUISITION OF F.A 2966.8 3481.5 -514.7 -14.8
LONG TERM PROVISIONS 366.1 346.7 19.4 5.6
CURRENT LIABILITIES
SHORT TERM BORROWINGS 13678.7 7965.8 5712.9 71.7
CURRENT MATURITIES OF LTB 11027 7313.7 3713.3 50.8
TRADE PAYABLES 20870.6 18053.7 2816.9 15.6
SHORT TERM PROVISIONS 2930.8 2539.4 391.4 15.4
CURRENT MATURITIES OF DEFERRED PAY LIAB FOR ACQ OF F.A 515.1 472.5 42.6 9.0
OTHER CURRENT LIABILITIES 19731.8 17505.6 2226.2 12.7
SHARE HOLDERS FUNDS
SHARE CAPITAL 185.4 123.1 62.3 50.6
RESERVE AND CAPITAL 37526.2 33736.6 3789.6 11.2
MINORITY INTEREST 3179.2 2652.9 526.3 19.8
TOTAL EQUITY AND LIABILITIES 170022.9 143122.4 26900.5 18.8

71
 Analysis of changes in comparative balance sheet of RSPL Ltd from

2014-15 to 2016-17 (in %)

Interpretation

By analysing the comparative balance sheet from the FY 2014-15 to 2016-17, we can see the following

results: The shareholders fund is increasing in at a decreasing rate of 5.93% which is due to the issue of

bonus shares. The total non-current liabilities have been increasing at a decreasing rate of 23.99%. The

current liabilities increased by 7.9%. The non-current assets increased at a decreasing rate of 5.78%. The

total current asset increased at a decreasing rate of 8.14%. This shows there is a considerable increase in

the current assets with respect to current liabilities. In this situation the organization can easily manage

the requirement for working capital to meet its day to day expenses.

72
 COMMON SIZE BALANCE SHEET OF RSPL LTD

COMMON SIZED BALANCE SHEET OF RSPL Ltd 2013-14 to 2014-15)

Rs in Lacs

2014-15
2013-14 (in 2014-15 2013-14
PARTICULARS (in
crores) (in %) (in %)
crores)

Equity and liability

Total shareholder's fund 29386.78 25050.55 24.7 26.4
Minority interest 1753.46 1023 1.5 1.1
Total non-current liabilities 41691.81 30116.8 35.0 31.8
Total current liabilities 46162.28 38540.77 38.8 40.7
Total liabilities 118994.33 94731.12 100.0 100.0
Assets
Total non-current assets 54859.3 42153.39 46.1 44.5
Total current assets 64135.03 52580.73 53.9 55.5
Total 118994.33 94734.12 100.0 100.0

Interpretation

The above table reveals the common size balance sheet of RSPL Ltd for the year 2014-2015. The company

net current assets decreased from 55.50% to 53.90% followed by 2014-2015. The Company's Fixed Asset

shows a slight amount of deviation. The company capital, surplus and reserves also didn't show much of

deviation. Finally, it can be concluded that the company's financial position is satisfied.

73
 COMMON SIZED BALANCE SHEET OF RSPL Ltd 2014-15 to 2015-16)

Rs in Lacs

2015-16 2014-15 (in 2015-16 2014-15

PARTICULARS
(in crores) crores) (in %) (in %)

Equity and liability

Total shareholder's fund 33859.69 29386.8 23.7 24.7
Minority interest 2652.87 1753.46 1.9 1.5
Total non-current liabilities 52758.98 41691.81 36.9 35.0
Total current liabilities 53850.69 46162.28 37.6 38.8
Total liabilities 143122.23 118994.35 100.0 100.0
Assets
Total non-current assets 67470.74 54859.3 47.1 46.1
Total current assets 75651.49 64135.03 52.9 53.9
Total 143122.23 118994.33 100.0 100.0

Interpretation

The above table reveals the common size balance sheet of RSPL Ltd for the year 2015-2016. The company

net current assets decreased from 53.90% to 52.86% followed by 2015-2016. The Company's Fixed Asset

did not show much of deviation. The company capital, surplus and reserves also didn't show much of

deviation. Finally, it can be concluded that the company's financial position is satisfied.

74
 COMMON SIZED BALANCE SHEET OF RSPL Ltd 2015-16 to 2016-17)
Rs in Lacs

2016-17
2015-16 (in 2016-17 2015-16
PARTICULARS (in
crores) (in %) (in %)
crores)

Equity and liability

Total shareholder's fund 37711.61 33859.69 22.2 23.7
Minority interest 3179.18 2652.87 1.9 1.9
Total non-current liabilities 60377.97 52758.98 35.5 36.9
Total current liabilities 68753.97 53850.69 40.4 37.6
Total liabilities 170022.73 143122.23 100.0 100.0
Assets
Total non-current assets 83905.49 67470.74 49.3 47.1
Total current assets 86117.24 75651.49 50.7 52.9
Total 170022.73 143122.23 100.0 100.0

Interpretation

The above table reveals the common size balance sheet of RSPL Ltd for the year 2016-2017. The company

net current assets decreased from 52.86% to 50.65% followed by 2016-2017. The Company's Fixed Asset

shows a slight amount of deviation. The company capital, surplus and reserves also didn't show much of

deviation. Finally, it can be concluded that the company's financial position is satisfied.

75
Analysis of Equities and Liabilities in the Common Size Balance Sheet of

RSPL Ltd during the FY 2014-15 to 2016-17

Total share holder's fund

27 26.4
26

25 24.7

24 23.7

23
22.2
22

21

20
Year 2014 Year 2015 Year 2016 Year 2017

Minority interest
2 1.9 1.9
1.8
1.6 1.5
1.4
1.2 1.1
1
0.8
0.6
0.4
0.2
0
Year 2014 Year 2015 Year 2016 Year 2017

76
 Total non-current liabilities
38
36.9
37
36 35.5
35
35
34
33
31.8
32
31
30
29
Year 2014 Year 2015 Year 2016 Year 2017

Total current liabilities

38
36.9
37
36 35.5
35
35
34
33
31.8
32
31
30
29
Year 2014 Year 2015 Year 2016 Year 2017

Total non-current assets

50 49.3
49
48
47.1
47
46.1
46
45 44.5

44
43
42
Year 2014 Year 2015 Year 2016 Year 2017

77
 Total current assets
56 55.5

55
53.9
54
52.9
53
52
51 50.7

50
49
48
Year 2014 Year 2015 Year 2016 Year 2017

78
 STATEMENT OF WORKING CAPITAL 2014-15 (in crores)
Rs in Lacs

Particulars 2014-15 2013-14 Increase Decrease

Current assets
current investments 7224.6 7712.44 487.84
inventories 4229.87 3040.27 1189.6
trade recievables 20405.36 14119.45 6285.91
cash and bank balance 3378.58 3644.64 266.06
short term loans and advances 5591.45 4184.29 1407.16
short term loans and advances toward F.A. 8167.27 7352.06 815.21
other current assets 15137.9 12527.58 2610.32
Total current assets 64135.03 52580.73 11554.3
Current liabilities
short term borowings 5778.06 4036.83 1741.23
Current maturities of deferred payment liabilities for
464.09 93.91 370.18
acquisition of fixed assets
current maturities of long term borrowings 5216.38 3920.41 1295.97
trade payables 16716.53 14687.72 2028.81
other current liabilities 15644.15 13555.15 2089
short term provisins 2343.07 2246.75 96.32
Total current liabilities 46162.28 38540.77
Working capital (CA-CL) 17972.75 14039.96
Increase in WC 3932.79 3932.79
Net WC 17972.75 17972.75 23862.5 12308.2

79
 Change in working capital during FY 2013-14 to 2014-15
70000 64135.03
60000
52580.73
50000 46162.28
38540.77
40000

30000
17972.75
20000 14039.96
10000

0
Total current assets tTotal current liabilities Total working capital

Year 2015 Year 2014

Interpretation

The current asset and the current liability shows an increasing trend during the FY 2013-14 to 2014-15.

The total current asset increased by 21.97 %. The total current liabilities increased by 19.77 %. It shows

an increase in the working capital by 28.01% in this FY.

80
 STATEMENT OF WORKING CAPITAL 2015-16 (in crores)
Rs in Lacs

Particulars 2015-16 2014-15 Increase Decrease

Current assets
current investments 7543.31 7224.6 318.71
inventories 5169.46 4229.87 939.59
trade recievables 23011.32 20405.36 2605.96
cash and bank balance 3566.14 3378.58 187.56
short term loans and advances 6171.5 5591.45 580.05
short term loans and advances toward F.A. 10160.06 8167.27 1992.79
other current assets 20029.7 15137.9 4891.8
Total current assets 75651.49 64135.03
Current liabilities
short term borowings 7965.76 5778.06 2187.7
Current maturities of deferred payment liabilities
472.53 464.06 8.47
for acquisition of fixed assets
current maturities of long term borrowings 7313.73 5216.38 2097.35
trade payables 18053.65 16716.53 1337.12
other current liabilities 17505.6 15644.15 1861.45
short term provisins 2539.42 2343.07 196.35
Total current liabilities 53850.69 46162.25
Working capital (CA-CL) 21800.8 17972.78
Increase in WC 3828.02 3828.02
Net WC 21800.8 21800.8 11516.46 11516.46

81
 Change in working capital during FY 2014-15 to 2015-16
80000 75651.49

70000
64135.03

60000
53850.69

50000 46162.25

40000

30000
21800.8
20000 17972.78

10000

0
Total current assets tTotal current liabilities Total working capital

Year 2016 Year 2015

Interpretation

The current asset and the current liability shows an increasing trend during the FY 2014-15 to 2015-16.

The total current asset increased by 17.95 %. The total current liabilities increased by 16.65 %. It shows

an increase in the working capital by 21.29% in this FY.

82
 STATEMENT OF WORKING CAPITAL 2016-17 (in crores)
Rs in Lacs
Particulars 2016-17 2015-16 Increase Decrease
Current assets
current investments 6676.17 7543.31 867.14
inventories 5527.46 5169.46 358
trade recievables 26384.55 23011.32 3373.23
cash and bank balance 4096.57 3566.14 530.43
short term loans and advances 7327.16 6171.5 1155.66
short term loans and advances toward F.A. 10835.6 10160.06 675.54
other current assets 25269.73 20029.7 5240.03
Total current assets 86117.24 75651.49
Current liabilities
short term borowings 13678.67 7965.76 5712.91
Current maturities of deferred payment
515.13 472.53 42.6
liabilities for acquisition of fixed assets
current maturities of long term borrowings 11026.97 7313.73 3713.24
trade payables 20870.58 18053.65 2816.93
other current liabilities 19731.84 17505.6 2226.24
short term provisins 2930.78 2539.42 391.36
Total current liabilities 68753.97 53850.69
Working capital (CA-CL) 17363.27 21800.8
Increase in WC 4437.53 4437.53
Net WC 21800.8 21800.8 15770.42 15770.42

83
 Change in working capital during FY 2015-16 to 2016-17
100000

90000 86117.24

80000 75651.49
68753.97
70000

60000 53850.69
50000

40000

30000
21800.8
20000 17363.27

10000

0
Total current assets tTotal current liabilities Total working capital

Year 2017 Year 2016

Interpretation

The current asset and the current liability shows an increasing trend during the FY 2015-16 to 2016-17.

The total current asset increased by 13.83%. The total current liabilities increased by 27.67%. It shows a

decrease in the working capital by 20.35% in this FY.

84
RATIO ANALYSIS

Liquidity Ratio

1. Current Ratio

CURRENT RATIO

In Lacs
Current Current
Years Current Ratio
Assets Liabilities

Year 2014 52580.73 38540.77 1.364288518

Year 2015 64135.03 46162.28 1.389338438

Year 2016 75651.49 53580.69 1.411917054

Year 2017 86177.24 68753.97 1.253414748

CURRENT RATIO
1.45
1.411917054
1.4 1.389338438
1.364288518
1.35

1.3
1.253414748
1.25

1.2

1.15

Year 2014 Year 2015 Year 2016 Year 2017

Interpretation

From the above graph it can be observed that there is fluctuating trend during the study period. In the year

2014-2015 it increased from 1.36 to 1.38. It again increased to 1.41 in the year 2016. In the year 2017 it

decreased to 1.25. The management should take remedial measures to improve the present position.

85
2. Quick Ratio

QUICK RATIO

In Lacs
Quick Current
Years Quick Ratio
Assets Liabilities

Year 2014 49540.46 38540.77 1.285404002

Year 2015 59905.16 46162.28 1.297707999

Year 2016 70482.03 53580.69 1.315437147

Year 2017 80589.78 68753.97 1.172147296

QUICK RATIO
1.35
1.315437147
1.297707999
1.3 1.285404002

1.25

1.2
1.172147296

1.15

1.1

Year 2014 Year 2015 Year 2016 Year 2017

Interpretation

From the above graph it can be observed that there is fluctuating trend during the study period. In the

year 2014-2015 it increased from 1.28 to 1.30. It again increased to 1.31 in the year 2016. In the year

2017 it decreased to 1.17. The management should take remedial measures to improve the present

position.

86
3. Absolute Liquid Ratio

ABSOLUTE LIQUID RATIO

In Lacs
Current
Years Absolute Liquid Assets Absolute Liquid Ratio
Liabilities

Year 2014 10603.18 38540.77 0.275115936

Year 2015 11357.08 46162.28 0.24602511

Year 2016 11109.45 53580.69 0.207340555

Year 2017 10772.74 68753.97 0.156685352

ABSOLUTE LIQUID RATIO

0.3 0.275115936
0.24602511
0.25
0.207340555
0.2
0.156685352
0.15

0.1

0.05

Year 2014 Year 2015 Year 2016 Year 2017

Interpretation

From the above graph it can be observed that there is fluctuating trend during the study period. In the

year 2014-2015 it decreased from 0.27 to 0.24. It again decreased to 0.21 in the year 2016. In the year

2017 it further decreased to 0.15. The management should take remedial measures to improve the

present position

87
Leverage Ratio

4. Proprietary Ratio

PROPRIETARY RATIO
In Lacs
Years Shareholder’s Fund Total Tangible Assets Proprietary Ratio

Year 2014 25050.55 38183.38 0.656058997

Year 2015 29386.78 49301.98 0.596056791

Year 2016 33859.69 58899.01 0.574877065

Year 2017 37711.61 64571.28 0.584030702

PROPRIETARY RATIO
0.68
0.656058997
0.66

0.64

0.62
0.596056791
0.6
0.584030702
0.58 0.574877065

0.56

0.54

0.52

Year 2014 Year 2015 Year 2016 Year 2017

Interpretation

From the above graph it can be observed that there is fluctuating trend during the study period. In the year

2014-2015 it decreased from 0.65 to 0.59. It again decreased to 0.57 in the year 2016. In the year 2017 it

increased to 0.58. The management should take remedial measures to improve the present position.

88
ACTIVITY RATIO

5. Working Capital Turnover Ratio

WORKING CAPITAL TURNOVER RATIO

In Lacs

Working Capital
Years COGS Working Capital
Turnover Ratio

Year 2014 31220.89 14039.96 2.223716449

Year 2015 38785.64 17972.75 2.158024788

Year 2016 43462.44 22072.8 1.96904969

Year 2017 48730.46 17363.27 2.806525499

WORKING CAPITAL TURNOVER RATIO

3 2.806525499

2.5
2.223716449 2.158024788
1.96904969
2

1.5

0.5

Year 2014 Year 2015 Year 2016 Year 2017

Interpretation

From the above graph it can be observed that there is fluctuating trend during the study period. In the year

2014-2015 it decreased from 2.22 to 2.15. It again decreased to 1.96 in the year 2016. In the year 2017s it

increased to 2.8.The management should take remedial measures to improve the present position.

89
6. Fixed Assets Turnover Ratio

FIXED ASSETS TURNOVER RATIO

In Lacs
Net
Fixed Fixed Assets Turnover
Year COGS Assets Ratio
Year 2014 31220.89 27986.53 1.115568454
Year 2015 38785.64 34313.51 1.130331464
Year 2016 43462.44 41739.74 1.041272418
Year 2017 48730.46 46575.98 1.04625732

FIXED ASSETS TURNOVER RATIO

1.14 1.130331464

1.12 1.115568454

1.1

1.08

1.06
1.04625732
1.041272418
1.04

1.02

0.98

Year 2014 Year 2015 Year 2016 Year 2017

Interpretation

From the above graph it can be observed that there is fluctuating trend during the study period. In the year

2014-2015 it increased from 1.11 to 1.13. It again decreased to 1.04 in the year 2016. In the year 2017 it

increased to 1.05. The management should take remedial measures to improve the present position.

90
7. Capital Turnover Ratio

CAPITAL TURNOVER RATIO

In Lacs
Capital Capital Turnover
Year COGS Employed Ratio

Year 2014 31220.89 25050.55 1.24631555

Year 2015 38785.64 29386.78 1.319832932

Year 2016 43462.44 33859.69 1.283604191

Year 2017 48730.46 37711.61 1.292187207

CAPITAL TURNOVER RATIO

1.34
1.319832932
1.32

1.3 1.292187207
1.283604191
1.28

1.26
1.24631555
1.24

1.22

1.2

Year 2014 Year 2015 Year 2016 Year 2017

91
Interpretation

From the above graph it can be observed that there is fluctuating trend during the study period. In the year

2014-2015 it increased from 1.24 to 1.32. It again decreased to 1.28 in the year 2016. In the year 2017 it

increased to 1.29. The management should take remedial measures to improve the present position.

8. Current Assets to Fixed Assets Ratio

CURRENT ASSETS TO FIXED ASSETS RATIO

In Lacs

Current Assets and

Year Current Assets Fixed Assets
Fixed Assets Ratio

Year 2014 52580.73 27986.53 1.878787045

Year 2015 64135.03 34313.51 1.869089755
Year 2016 75651.49 41739.74 1.812457145
Year 2017 86117.24 46575.98 1.848962491

CURRENT ASSETS TO FIXED ASSETS RATIO

1.9
1.878787045
1.88
1.869089755

1.86
1.848962491

1.84

1.82 1.812457145

1.8

1.78

1.76
Year 2014 Year 2015 Year 2016 Year 2017

92
Interpretation

Current Assets are increased due to an increase in debtors and the next fixed assets of the company are

raised due to a rise in investment. It resulted in the rise in ratio compared to the previous year.

PROFITABILITY RATIO

GENERAL PROFITABILITY RARIO

9. Net Profit Ratio

NET PROFIT RATIO

In Lacs
Net Profit
Year After Tax Net Sales Net Profit Ratio

Year 2014 4455.15 52043.78 8.56

Year 2015 4690.96 64313.11 7.29

Year 2016 5252.38 74498 7.05

Year 2017 4875.4 85128.4 5.73

NET PROFIT RATIO

9.00 8.56

8.00
7.29
7.05
7.00

6.00 5.73

5.00

4.00

3.00

2.00

1.00

0.00

Year 2014 Year 2015 Year 2016 Year 2017

93
Interpretation

From the above graph it can be observed that there is decreasing trend during the study period. In the year

2014-2015 it decreased from 8.36 to 7.29. It again decreased to 7.05 in the year 2016. In the year 2017 it

further decreased to 5.73. The management should take immediate remedial measures to improve the

present position which is alarming.

10. Operating Profit Ratio

OPERATING PROFIT
In Lacs
Operating
Year Profit Net Sales Operating Profit Ratio

Year 2014 16967.01 52043.78 0.326014175

Year 2015 20636.88 64313.11 0.320881388

Year 2016 24145.65 74498 0.324111386

Year 2017 28998.33 85128.4 0.340642253

94
 OPERATING PROFIT
0.345
0.340642253
0.34

0.335

0.33
0.326014175
0.324111386
0.325
0.320881388
0.32

0.315

0.31

Year 2014 Year 2015 Year 2016 Year 2017

Interpretation

From the above graph it can be observed that there is constant trend during the study period. In the year

2014-2015 it decreased from 0.33 to 0.321. It again increased to 0.324 in the year 2016. In the year 2017

it increased to 0.34. The management should take remedial measures to improve the present position.

11. Return on Total Assets Ratio

RETURNS ON TOTAL ASSETS RATIO

In Lacs
Total Return on Total
Year Net Profit Assets Ratio
Year 2014 4455.15 94734.12 4.70
Year 2015 4690.96 118994.33 3.94
Year 2016 5252.38 143122.23 3.67
Year 2017 4875.4 170022.73 2.87

95
 RETURNS ON TOTAL ASSETS RATIO
5.00 4.70
4.50
3.94
4.00 3.67
3.50
2.87
3.00
2.50
2.00
1.50
1.00
0.50
0.00

Year 2014 Year 2015 Year 2016 Year 2017

Interpretation

From the above graph it can be observed that there is decreasing trend during the study period. In the year

2014-2015 it decreased from4.7 to 3.94. It again decreased to 3.67 in the year 2016. In the year 2017 it

further decreased to 2.87. The management should take remedial measures to improve the present position.

12. Reserve and Surplus to Capital Ratio

RESERVES AND SURPLUS TO CAPITAL RATIO

In Lacs

Year Reserves and Surplus Capital Reserves & Surplus to

Capital Ratio
Year 2014 37526.23 185.38 0.995

Year 2015 33736.61 123.08 0.996

Year 2016 29264.3 122.48 0.995

Year 2017 24928.78 121.77 0.995

96
 RESERVES AND SURPLUS TO CAPITAL RATIO
0.9962
0.996
0.996

0.9958

0.9956

0.9954

0.9952
0.995 0.995 0.995
0.995

0.9948

0.9946

0.9944
Year 2014 Year 2015 Year 2016 Year 2017

Interpretation

From the above graph it can be observed that there is constant trend during the study period. In the year

2014 it is 0995. It again increased to 0.996 in the year 2015. In the year 2016-2017 it remained constant

in 0.995 The present position is satisfying.

OVERALL PROFITABILITY RATIO

13. Earnings Per Share

EARNING PER SHARE

In Lacs
Earnings Per
Year Net Profit NO. of Equity Shares Share

Year 2014 4455.15 605799396 73.54

Year 2015 4690.96 611108916 76.76

Year 2016 5252.38 920889827 57.04

Year 2017 4875.4 925416187 52.68

97
 EARNING PER SHARE
90.00

80.00 76.76
73.54
70.00

60.00 57.04
52.68
50.00

40.00

30.00

20.00

10.00

0.00

Year 2014 Year 2015 Year 2016 Year 2017

Interpretation

From the above graph it can be observed that there is fluctuating trend during the study period. In the year

2014-2015 it increased from 73.54 to 76.76. It again decreased to 57.03 in the year 2016. In the year 2017

it further decreased to 52.59. The management should take remedial measures to improve the present

position.

14. Price Earnings (P/E) Ratio

PRICE EARNING (P/E) RATIO

In Lacs

Year Market Price Per Share Earnings Per Share Price-Earnings Ratio
Year 2014 41.35 73.54 0.562279032

Year 2015 48.09 76.76 0.626498176

Year 2016 36.77 57.03 0.644748378

Year 2017 40.75 52.59 0.774862141

98
 PRICE EARNING (P/E) RATIO
0.9
0.774862141
0.8
0.7 0.626498176 0.644748378
0.6 0.562279032

0.5
0.4
0.3
0.2
0.1
0

Year 2014 Year 2015 Year 2016 Year 2017

Interpretation

From the above graph it can be observed that there is increasing trend during the study period. In the year

2014-2015 it increased from 0.56 to 0.63. It again increased to 0.64 in the year 2016. In the year 2017 it

further increased to 0.77. This shows a greater amount of satisfaction in the market.

15. Return on Investment

RETURN ON INVESTMENT
In Lacs

Year Net Profit Shareholder's Fund Return on Investment

Year 2014 4455.15 25050.55 0.177846395

Year 2015 4690.96 29386.78 0.159628241

Year 2016 5252.38 33859.69 0.155121916

Year 2017 4875.4 37711.61 0.129281142

99
 RETURN ON INVESTMENT
0.2
0.177846395
0.18
0.159628241 0.155121916
0.16
0.14 0.129281142
0.12
0.1
0.08
0.06
0.04
0.02
0

Year 2014 Year 2015 Year 2016 Year 2017

Interpretation

From the above graph it can be observed that there is decreasing trend during the study period. In the year

2014-2015 it decreased from 17.78 to 15.96. It again decreased to 15.51 in the year 2016. In the year 2016

it further decreased to12.93. The management should take remedial measures to improve the present

position.

100
 CONSOLIDATED CASH FLOW DTATEMENT FY 2014-2017

Consolidated Cash Flow Statement FY 2014-2017

Rs
IninCrores
Lacs

Cash Flow Mar 17 Mar 16 Mar 15 Mar 14

Profit Before Tax 6679.41 5677.94 6255.33 5568.56
Net Cash Flow Operating Activity 1047.24 1472.24 1081.58 3833.3
Net Cash Flow Investing Activity -1214.32 656.73 -1922.28 -2416.79
Net Cash Flow Financial Activity 504.5 -3316.23 1015.61 -1124.84
Net Inc/Dec In Cash And Cash Equivalent 336.97 -409.66 174.91 298.48
Cash And Cash Equivalent At The Beginning Of The Year 1457.15 1906.02 1730.35 1431.87
Cash And Cash Equivalent At The End Of The Year 1794.12 1496.36 1905.26 1730.35

CONSOLIDATED CASH FLOW STATEMENT FY 2014 -2017 (IN CRORES )

6679.41

6255.33
5677.94

5568.56
3833.3
1906.02

1905.26
1794.12

1730.35

1730.35
1496.36
1472.24
1457.15

1431.87
1081.58
1047.24

1015.61
656.73
336.97

298.48
504.5

174.91

MAR 17 MAR 16 MAR 15 MAR 14

-409.66

-1124.84
-1214.32

-1922.28

-2416.79
-3316.23

Profit Before Tax Net Cash Flow Operating Activity

Net Cash Flow Investing Activity Net Cash Flow Financial Activity

Net Inc/Dec In Cash And Cash Equivalent Cash And Cash Equivalent At The Beginning Of The Year

Cash And Cash Equivalent At The End Of The Year

101
 CHAPTER 5

SUMMARY AND CONCLUSIONS

102
LEARNING FROM THE STUDY

• Exposure to various industry related jargons and terminology

Through constant interaction with my mentor and staff of the organization I came to know about various

industry jargons which are used in the FMCG industry like TRADE SCEHEMES, VALUE PURCHASE

SCHEMES (VPS), STRIKE SALES.

• Practicality of Financial Ratio Analysis

The study helped in putting my theoretical knowledge into a practical knowledge which helped me a lot

in understanding how financial analysis can help in better decision making for the company.

• Cost control tactics used in the company

The project helped me to understand the whole process of purchase and cost control, various measure of

cost controlling and how it helps in converting every activity into a cost-efficient activity.

• An insight into the FMCG sector

The project helped in getting a better understanding of FMCG industry and how things operate in the

sector, key players, various products offered and much more.

103
Conclusion

• The company's overall position is at a good position. Particularly the current year's position is well
due to a raise in the profit than the previous year.

• It's better for the organization to diversify the funds to different sectors in the present market scenario.

• RSPL Ltd is showing fluctuations in its profitability position in the past few years, which is concluded
with the financial statement analysis.

• The Assets were increased but the working capital is decreased which says that the firm is not able to
meet its current liabilities.

• The calculation of Current and Liquid Ratio will enable the creditors to access the current financial
position of the concern in relation to their debts.

• Preparation of financial statements enables the government to find out whether the organization is
following various rules and regulations or not. These statements provide a base for regulation of the

company.

• It is not only helpful to analyses the present financial position it also enables to study the future
prospects and the expansion plans of the concern.

104
RECOMMENDATIONS

• After the analysis of financial statements, it is clear that the company's status is not good, because the
net working capital of the company has decreased from last year's position.

• Company's Profits are huge in the current year, it's better to declare dividend to shareholders.

• The Company is utilizing its fixed assets, which majorly help in the growth of the organization. The
Company should maintain that perfectly.

• The company's Investments are raised from the inception, it gives the other income i.e., interest on
investments.

• Steps have to be taken to increase the current assets position of the firm so as to improve the liquidity
position of the company.

• Percentage of debt to equity can be reduced so as to reduce the financial risk.

• Percentage of debt in capital can be reduced no as to reduce the financial risk.

• Steps can be taken to reduce the current liability of the firm so as to have a stable financial position.

• Steps can be taken to increase the net profit no as to increase the overall financial performance.

105
LIMITATIONS OF FINANCIAL PERFORMANCE ANALYSIS

Financial statement analysis is a very important device but it has certain limitations which are to be kept

in mind. Following are the limitations of financial statement analysis.

Based on past data

The nature of financial statements is historical. Past cannot be the index of future estimation, forecasting,

budgeting and planning.

Reliability of figures

The accuracy and reliability of analysis depends on reliability of figures derived from financial statement.

Different interpretation

Result of the analysis may be interpreted differently by different user.

Change in accounting methods

Analysis will be effective if the figures taken from financial statements comparable. If there are frequent

change in accounting policies and method, figures of different periods will be different and comparable.

Price level change

The ever rising inflation erodes the value of money in the present day economic situation, which reduces

the validity of analysis.

106
BIBLIOGRAPHY

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TEXT BOOK

Financial Management,

I.M Pandey –VIKAS PUBLISHING HOUSE PVT LTD

9th EDITION (2004) - 2007

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