A Project Report

On

Financial Management of MIDAS

By

------- Your name -------------

(Registration No. …………..)

A project report submitted in partial fulfillment of the requirements

For the degree of Master of Business Administration of

University,

INDIA

University, India

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ACKNOLEDGEMENT

On the very outset of this report, I would like to extend my sincere & heartfelt
obligation towards all the personages who have helped me in this endeavor.
Without their active guidance, help, cooperation & encouragement, I would not
have made headway in the project. I am ineffably indebted to Purva Shah for
conscientious guidance and encouragement to accomplish this assignment. I am
extremely thankful and pay my gratitude to my faculty guide Guidance Name,
College Name for valuable guidance and support on completion of this project
in its presently. I extend my gratitude to University for giving me this
opportunity. I also acknowledge with a deep sense of reverence, my gratitude
towards my parents and member s of my family, who have always supported me
morally as well as economically.

At last but not least gratitude goes to all of my friends who directly or indirectly
helped me to complete this project report.

Any omission in this brief acknowledgement does not mean lack of gratitude.

Thanking You

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 Table of content
INTRODUCTION.....................................................................................................................................4

1.1 ABOUT THE STUDY.......................................................................................................................4

1.2 ABOUT THE INDUSTRY..............................................................................................................11

1.3 ABOUT THE COMPANY..............................................................................................................18

CHAPTER- 2..........................................................................................................................................26

2.1 OBJECTIVES OF THE STUDY........................................................................................................26

2.2 SCOPE OF THE STUDY................................................................................................................27

2.3 LIMITATIONS OF THE STUDY......................................................................................................28

2.4 RESEARCH METHODOLOGY.......................................................................................................29

2.5 REVIEW OF LITERATURE............................................................................................................31

CHAPTER- 3..........................................................................................................................................34

DATA ANALYSIS AND INTERPRETATION...............................................................................................34

3.1 COMPARATIVE STATEMENT......................................................................................................35

3.2 TREND ANALYSIS........................................................................................................................47

4 FINDING, SUGGESTIONS AND CONCLUSION.....................................................................................79

4.1 FINDINGS...................................................................................................................................79

4.2 SUGGESTIONS............................................................................................................................80

4.3 CONCLUSION.............................................................................................................................81

5. Reference:.......................................................................................................................................82

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 INTRODUCTION

1.1 ABOUT THE STUDY

The term ‘Financial performance is used to describe the performance of the
company during particular years. For analyzing the financial performance ‘Financial
Statements’ are used in modern business refers to statements which the accountant prepares
at the end of a period of time. They are balance sheet and Income statement. There are some
other statements which are not only important but are essential for the business enterprise to
draw useful conclusions regarding the financial position of the concern. Financial statements
are prepared primarily for decision making. They play a dominant role in setting the
framework of managerial decisions. But the information provided in the financial statements
is not an end in itself as no meaningful conclusions can be drawn from these statements
alone. However, the information provided in the financial statements is the immense use in
making decisions through analysis and interpretation of financial statements. Financial
analysis is “the process of identifying the financial strengths and weaknesses of the firm by
properly establishing relationship between the items of the balance sheet and the profit and
loss account.”

There are various methods or techniques used in analyzing financial position

such as comparative statements, schedule of changes in working capital, common-size
percentages, funds analysis, trend analysis and ratio analysis. The ratio analysis is the most
powerful tool of financial analysis. Concepts Of Financial Statements One of the most
important functions of the accounting process is to accumulate and report historical
accounting information. The most prominent examples of such reports are general purpose
financial statements showing an organizational financial position and results of its operations.
These financial statements are the end result of the process of financial accounting.

In the words of Hampton, “A financial statement is an organized collection of

data organized according to logical and consistent accounting procedures.” Therefore, all the
statements and accounting reports which the accountants prepare at the end of a period for a
business enterprise may be taken as financial statements. But the principal financial
statements are the ‘Balance sheet’ and the ‘Profit and Loss account’. In the word of Howard
and Upton, “Although any formal financial statements expressed in money values might be

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thought of as financial statements, the term has come to be limited by most accounting and
business writers to mean the ‘balance sheet’ and the ‘profit and loss statements”.

The financial statements may be of various types, but according to Miller all
the financial statements may be broadly classified in the following manner: 1. The audited
statement 2. The interim statement 3. The unaudited year-end statement 4. The ‘estimated’
statement According, which is the process of evolution, has three phases: (1) the recording of
transaction in the books of original entry, (2) the classification of these transaction in ledger,
and (3) the summarization of the records. The construction of the financial statement is a part
of the third phase of accounting techniques. Thus, financial statements summarized periodical
reports of financial and operating data accumulated by an enterprise in its books of accounts.
The accounting figures which are collected, tabulated and summarized by accounting
methods are presented in financial statements.

Financial performance of any organization is usually judged in terms of its liquidity,

long-term solvency, activity and profitability. Liquidity refers to the ability of a concern to
meet its current obligations as and when they become due. A firm should ensure that it does
not suffer from lack of liquidity, and also that it should - not possess too much liquidity as it
hampers the profitability. The short-term obligations are met by realizing funds from current,
floating or circulating assets. The current assets should either be liquid or near liquidity.
If current assets can pay off current liabilities, then liquidity position is satisfactory.
On the other hand, if current liabilities cannot be easily met out of current assets, then
the business is trading beyond its resources. The bankers, suppliers of goods and other short-
term creditors are interested in knowing the liquidity position of the company. They will
extend credit only if they are sure that current assets are enough to pay off their current
obligations. If a firm has a strong liquidity, it is able to meet the claims of the short-term
creditors when they are due, to maintain sufficient working capital for regular operations, to
meet current interest and dividend requirements and also to maintain a favorable credit rating.
Various financial and statistical analyses such as ratio analysis, student t test, coefficient of
variation, growth rates, and inter-correlation analysis have been employed to assess the
ability of the paper mills in meeting their short-term obligations.

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1.1.1 Objectives of Analyzing The Financial Performance

The Accounting Principles Board of America mentions the objectives of financial statements
as follows:

1. To provide reliable financial information about economic resources and obligations of a

business enterprise.

2. To provide reliable information about in net resources (resources less obligations) of an

enterprise that results from its activities.

3. To provide financial information that assist in estimating the earning potentials of a

business.

4. To provide other needed information about changes in economic resources of obligation.

5. To disclose, to the extent possible, other information related to the financial statements that
is relevant to the needs of the users of these statements.

In order to meet the above objectives and to suit the needs of the varied users, the accountant
entrusted with the task of compiling and presenting financial statements must follow a set of
guidelines to ensure consistency, completeness, and fairness of the statements. These
guidelines are called “generally accepted accounting principles”.

1.1.2 Types of Financial Statements

There are two major financial statements which are vital to financial analysis and financial
management i.e., profit and loss account and balance sheet. These statements contain various
information’s often needed by various persons interested in the enterprise such as
shareholder, government, debenture holder, management etc. They convey the financial
condition and results of an enterprise for a given period and at a given date. In annual report,
together with these two statements, there may be statement or schedules of retained earnings,
stockholders, equity statement, capital surplus fund, cash flow statement etc. Accounting is a
language of ‘Finance’ or ‘Monetary’. General search continues to be made for ways to
improve readability of financial statements. A lay man who read these statements is not able
to understand the terminology used in these statements.

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Balance Sheet

The balance sheet is a statement of assets and liabilities of a firm or what it owns and what it
owes, as on a given date. In a balance sheet, the assets and liabilities are equal to each other.
In the word of Pyle, White and Larson, “A balance sheet is so called because its two sides
must always balance, the sum of the assets shown on the balance sheet must equal liabilities
plus owner equity. According to Block and Hirt, “The balance sheet indicates what the firm
owns and how these assets are financed in the form of liabilities or ownership interest”. It is a
statement of affairs of an organization at a point of time and may be defined as a statement
prepared with a view to measuring the financial position of a business enterprise at a certain
fixed date. In reveals the financial position of a business as reflected by the accounting
records and contains a list of assets, liability and capital items as on a given date. The balance
sheet is designed to show the condition of the business in a form easily readable and more
quickly comprehended that would be possible form a survey of the facts shown in the
detailed records. The intention is to afford the shareholders who have placed their capital in
an enterprise and the creditor who does business with it, an opportunity of estimating from
time to time the financial stability. The balance sheet is also known as ‘Statement of
Financial Condition’, ‘Statement of Financial Position’, ‘Statement of Assets and Liabilities’,
‘Statements of Resources and Liabilities’, Statement of Assets, Liabilities and Capital’,
‘Statement of Worth’, and ‘Financial Statement’. It is an instantaneous photograph of Assets.
Liabilities and Net worth. According to 5 Hastings, “It reveals the property owned by the
business, the assets and the debts owned by the company, the liabilities.”

Income Statement

The income statement, usually designated as profit and loss account for the relevant financial
year, shows the net profit or net loss resulting from the operations of business during a
special field period of time. The items appearing in it are in the nature of ‘revenue’. In the
words of Walgenbech, Dietrich and Hanson, “To show the results of operations for a period,
an income statement is prepared, which lists the revenues and expenses and resents the
resulting net income amount. Foulke defines income statement as “the mathematical
interpretation of the policies, experience, knowledge, foresight, and aggressiveness of the
management of a business enterprise from the point of view of income, expenses, gross
margin, operating profit, and net profit or loss.” It provides a review of the factors directly
concerned with the determination of the net income- the revenue realized from the sale of

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goods or services and the costs incurred in the process of producing the revenue. The income
statement summarizes the changes that have taken place since the date of preceding balance
sheet and that have affected the owner’s share in the business either by gain or loss. It is a
performance report recording the changes in income, expenses, profit and loss as a result of
business operations during the year between two balance sheet dates.

Statement of retained Earnings

The statement of retained earnings indicates the magnitude and causes of changes in retained
earnings of the enterprise due to year’s activities. Retained earnings represent the sum of the
earnings which have been kept by the enterprise over the years, that is, earnings out paid out
in dividends. As defined by Walgenbech and Dittrich, “a retained earnings statement is an
analysis of the retained earnings accounts for the accounting period and is usually presented
with the other corporate financial statements.” The statement of retained earnings serves as
the link between the income statement and the balance sheet. Thus, changes in equity
accounts between balance sheet dates are report in the statement of retained earnings. The
retained earnings shown in the statement of retained earnings are retained by the enterprise
primarily to expand business.

Statement Of Changes In Financial Position

The statement of changes in financial position indicates both the sources and application of
working capital. Thus, it reveals the sources from which funds have been received during the
year and these funds were used within the enterprise. According to Hampton, “This statement
shows the movement of funds into the firm’s current-assets accounts from external sources
such as stockholders, creditors, and customers. It also shows the movement of funds to meet
the firm’s obligations, retires stock, or pay dividends.

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1.1.3 Importance and usefulness of Analyzing the Financial
Performance

For management

Financial statements are of very great help to management in understanding the progress,
position and prospects of business. Using analogy, it can be said that financial statements
serve the business management as gauges and charts serve the engineer. In the absence of
information’s which are included in the financial statements, management can neither plan
nor fulfill easily the functions of operation and control.

For Investors

Financial statements are also significant for investor both present and prospective. However,
the investors look to the financial position of business concern from a different angle.
Investors are interested in two things-firstly, they want to invest in such a situation where
they feel the financial structure of a company is sound. Secondly, they want to invest only in
such concern whose future is bright. Investor gives first attention to the profits after taxes in
the profit and loss account. Incase of prospective potential investment opportunity.

For Bankers

A banker is primarily concerned with the ability of paying current debts and the current
operation results. He wants not only the payment of advances but he also wants that such
advance should be repaid at proper time also.

For Government

Central and State Governments and Local Authorities are also interested in published
financial statements in order to assess their revenues through various taxes to regulate capital
issue and public utility regulation.

For Research Scholars

The financial analysis and research workers are interested in published financial statements
for guiding management or for establishing certain principles. A financial analyst can peep

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through these statements into the financial policies pursued by the management and offer
constructive suggestions to over come the financial malady, if diagnosed.

For Trade creditors

From the creditor’s point of view the financial statements act as magic eye highlighting the
credit worthiness, i.e., assurance whether the company will honor obligations as and when
they mature.

For Labour Unions

From social justice point of view in the present time, the labour unions may know now if the
labour is getting its fair share of business earnings.

For Public

Financial Statements are also valuable to the public who are interested in prospects of a
concern, in one way or the other. It is the securities of the enterprise alone that are bought and
sold on stock exchanges and the public is interested, mostly in their financial standing and
also to avoid hostile feelings of the pubic.

1.1.4 Limitations Of Financial Statements

1. Balance sheet reveals the financial position of a firm on a particular day usually at the end
of accounting year.

2. Financial statements reflect the recorded facts and figures. Hence these are not useful for
control purpose.

3. These contain some estimated amounts such as provision for doubtful debts etc.

4. The financial statements do not keep pace with changing price levels.

5. Balance sheet shows the deferred expenses such as preliminary expenses. These are not
really assets.

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1.2 ABOUT THE INDUSTRY
Tyre is the most important and widely used engineering product made
out of polymers. Tyre manufacturing comes in to existence as described by Good Year and
Haycock as solid tyre for animal driven vehicles in the 18 th century. Robert Thompson inverted
the automobile tyre in 1846.

All the faces of this industry reflect man’s inventing capacity. In 19 th century they were
invented from solid rubber after that the manufactures started making cotton ply pneumatic
tyre then it got updated to nylon tyres and then to radicalized tyres.

The automobile industry is one of the dominating sectors because many economic activities
rely on and are linked to automobile production. If you include suppliers, car services,
garages or retailers, a total of about 5 million employees depend on the success of the
automobile industry. With changing technologies, production concepts, strategies and
products, the automobile industry is often an initiator of innovations in other related
industries as well.

Advertisement is an unavoidable part in marketing. Though it spends only portion of an

amount for advertising, company’s per month sales come around 1500 tons. It keeps
positions in branding. It includes 12 lakhs in India.

World Scenario

As the world tries to come out of economic recession, the first sector to
witness positive movement has been the Automobile sector and since its linked to related
sectors like tire industry, plastics industry and metal processing, all the sub sectors are slowly
witnessing a silent revival. As more and more people look at buying automobiles slowly, the
tire industry is also set to attain a positive movement from the pits, where it has been for most
of last year. The recession had people reducing spending across the board, which mean that
they had been putting of those new tire on hold until things start to look a little better on the
economic front. Now as the economy is moving slowly, tire sales are witnessing a welcome
revival even better than the Automobiles companies and a lot of second hand cars owners
have also been investing in the new set of tires instead of buying a new automobile
altogether.

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 Tyre shipments in 2010 are projected to increace by approximately 3%
or approximately 7 million units to 267 million units, according to the Rubber Manufacturing
Association. Total shipments experienced an 8% drop in 2009 to 259.7 million units. The
increase in tire shipments reflects the onset of the economic rebound, an increase in vehicle
miles traveled and a slight uptick in auto sales. As a result, this rebound is projected to extend
into 2011, reaching approximately 275 million units as the economic recovery gathers
momentum.

 Tyre companies were first in the early on 20 th century, and grown in

partnership together with the automobile business. In the present day, above 1
billion tyres are created annually, in over 400 tire factories, with the three top
tire makers commanding a 60% total marketplace share.
 The US tire manufacturing industry alone consists of about 100 companies
with combined annual revenue of about $15 billion. The industry is highly
concentrated and the top four companies generate more than 75% of revenue.
Major companies include Goodyear, Bridgestone, Michelin, and Cooper..
 The manufacturing has become extremely technical and forward-thinking as
manufacturers look to push the boundaries of what can be achieved through
new technologies. Whether it’s improvements in fuel economy , handling
performance or safety, technological developments in the tire world are
making a big difference.
 As the world fights strong economic recession, people are more prone to buy
and use older cars rather than buying new ones. No matter if the vehicle is old
or new, the need for tire remains a constant and with number of second hand
vehicle sales increasing and as compared to new vehicles, the worldwide
consumption of tires is estimated to be more than automobiles.
 With developing nations churning the growth engines of the world,
commercial vehicles(vans, utility and light trucks) are much in demand in both
developed and developing nations; such vehicles require both more and larger
tires than passenger cars.

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Tyre Production Process:

The basic tyre-making process consists of mixing rubber and various additives in a large
mixer called a Banbury machine, then cooling the mixture, rolling it flat, and cutting it into
strips. Tires are assembled as layers of rubber strips along with reinforcing materials and
adhesives on a tire-building machine to produce a green (uncured) tire. The tire is then heated
in a curing press at a high temperature, which vulcanizes the rubber and produces the final
shape. The process is capital-intensive, uses a fair amount of energy, and produces polluting
vapors. The primary raw-materials used are synthetic rubber, carbon black, natural rubber,
various chemicals and reinforcing components such as steel wire, steel cord, and polyester.
Both synthetic rubber and carbon black are derived from petroleum or natural gas.

Many as 200 separate raw materials are used in the construction of

one tire. The grooves and tread sipes on the shoulder of the tire are specially designed to
channel water away from the surface of the tire, maintaining maximum wet grip. Different
rubber compounds are used for tires to make them suitable for different vehicles and driving
conditions. For example, racing cars have tires that can work at very high temperature ranges
with optimum grip, enabling prolonged usage at high speeds on the track. These tires wear
more rapidly than typical road tires that are balanced to provide optimum steering, braking,
road holding and wear capabilities

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INDIAN TYRE INDUSTRY

The origin of Indian tyre industry dates back to 1926 when Dunlop Rubber Limited set up the
1st tyre company in West Bengal. M.R.F followed suit in 1946. Since then the Indian tyre
Industry has grown rapidly.

MARKET PROFILE OF INDIAN TYRE INDUSTRY

The major players in the organized tyre segment consist of M.R.F, Apollo tyres, CEAT, and
J.K industries which account for 63% of the organized tyre market. The other key players
include Mode rubber, Kilogram Industries and Good Year India with 11%, 7% & 6% share
respectively. M.R.F, the largest tyre manufacturer in the country has strong band equity.
While rules supreme industry, players have created niche markets on their own.

INDIAN SCENARIO

Technology generation in the Indian tyre industry has witnessed a fair amount of expertise
and versatility to absorb, adapt and modify international technology to suit Indian Conditions.
This is reflected in the swift technology progression from cotton (reinforcement) carcass to
high-performance radial tyre in a span of four decades. Globalization has led to the linking of
the economies of all the nations and therefore major Indian Players in the tire industry are
pursuing global strategies to enhance their competitiveness in the world market. The present
section broadly undertakes an overview of the Indian tyre industry through an examination of
its growth treads with respect to production, export and acquisition of technological
capabilities....

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KEY FEATURES

 At present there are 40 listed companies in the tyre sector in India.

 Major players are MRF, JK tyre and Apollo Tyres & CEAT which account for 63 per
cent of the organized tire market. The other key players include ModiRubber,
Kesoram Industries and Goodyear India, with 11 per cent, 7 per cent and 6 per cent
share respectively. Dunlop, Falcon , Tyre Corporation of India Limited (TCIL), TVS
– Srichakra, Metro Tyre and Balkrishna Tyres are some of the other significant
players in the industry.
 While the tyre industry is largely dominated by the organized sector, the unorganized
sector is predominant with respect to bicycle tyres.
 That is a mojor consumer of the domestic rubber market. Natural rubber constitutes
80% while synthetic rubber constitutes only 20% of the material content in Indian
tyres. Interestingly , world – wide, the proportion of natural to synthetic rubber in
tyres is 30:70
 The sector is raw-material intensive, with raw material accounting for 70% of the total
cost of production.

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 EVOLUTIONARY PHASES OF TYRE MANUFACTURING IN INDIA

Table 1: Evolutionary Phases Of Tyre Manufacturing in India

Phase Period Characteristics Policy Regime

Phase 1 1920-35 No domestic production: Demand met through Liberal imports

imports. Key players included Dunlop(U.K),
Firestone & Goodyear(USA)
Phase 2 1936-60 Domestic production begins by erstwhile Imposition of tariff &
treading companies: Dunlop, Firestone, non-tariff berriers on
Goodyear and India Tyre & Rubber Company imports
Phase 3 1961-74 Indian companies – MRF, Premier & Incheck – Regulation on capacity
enter manufacturing sector with foreign expansion and
technology; licensing of additional production repatriation of profit of
capacity foreign companies;
enforcement of export
obligation on MNC;
protection from
external competition
Phase 4 1975-91 Entry of large Indian business houses like Delicensing of
Singhania & Modi & technical collaborations production, placing of
with MNC’s, introduction of radial tyres, vertical imports under OGL
integration and exponential growth in tyre with tariff and non-
production and exports. teriff berriers
Phase 5 1992 External trade liberalization and reduction in Progressive reduction
onwards import duty; re-entry of MNCs either in import duty;
independently or in collaboration with Indian liberalized imports
capital

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FUTURE PROSPECTS OF THE INDIAN TYRE INDUSTRY

The Industry Tyre industry is expected to show a healthy growth rate of 9-10% over the next
five years, according to a study by Credit Analysis and Research Limited (CARE). While the
truck and bus tyres are set to register a compounded annual growth rate(CAGR) OF 8% the
light commercial vehicles(LCV) segment is expected to show a CAGR of about 14%.
However , we have to also take account of the effected of the global recession on the sector in
making these assessments. The growth of the sector is closely linked to the expansin plans of
the automobile; the government’s thrust on development of road infrastructure and the
sourcing of auto parts by the global Original Equipment Manufacturers(OEMs). Some
significant hurdles towards attaining these projected growth rates could be raw material
related price volatility, rupee appreciation and the looming threat of cheap Chinese imports.
The Indian tyre companies need to make active efforts to explore newer markets as the
existing markets for bus- truck tyres, which account for about 45% of the total export valume,
is nearing saturation. There is also an urgent need to increase the degree of radialization in
order to safeguard their share in the export market. Global tyre manufacturers have been
making constant efforts to innovate and offer a diverse range of products such as tyres with
pressure warning system, run flat tyres , eco-friendly tyres and energy efficient tyres. In this
context, the Indian domestic companies have to persue a growth strategy of continuous
innovation and increasing emphasis on product differentiation.

MARKET PROFILE OF INDIAN TYRE INDUSTRY

The major players in the organized tyre segment consist of M.R.F, Apollo tyres, CEAT, and
J.K industries which account for 63% of the organized tyre market. The other key players
include Mode rubber, Kilogram Industries and Good Year India with 11%, 7% & 6% share
respectively. M.R.F, the largest tyre manufacturer in the country has strong band equity.
While rules supreme industry, players have created niche markets on their own.

17
1.3 ABOUT THE COMPANY
Mr. George Varghese, a creative thinker started a small headed rubber unit in Ettumanoor
near Kottayam in Kerala in the General Rubbers in 1969. With his dynamic leadership and
innovative ideas, he turned unit into a leader in the field.He started thecompany with an
investment of Rs 16000/- . This unit was a small unit in which the rubber compound used for
making the tyre tread is mixed using a lost open mill.

In the initial period, the pace of the growth of the company and its sales were very low. But
the introduction was processed tread in India placed MIDAS in the forefront with the
availability of best raw material i.e., the natural rubber claw. Now MIDAS has 36
manufacturing units out of which 26 in Kerala, 1 in Tamil Nadu and 8 in Pondicherry. Their
main units are around Kottayam district in Kerala, which is known as the natural rubber
capital of Kerala. The first unit that was started in 1969 has now become an ISO 9001 unit
under the name “General Rubbers”. In addition to this the other main units are:-

I. MIDAS Rubber Private limited , Ettumanoor

II. Southern Agro , Ettumanoor

III. MIDAS Polymer , Manimala(Kottayam)

IV. MIDAS Apw , Karaikal(Pondicherry)

V. MIDAS Rubber , Chennai

The company has total capacity of producing 200tons per day. The company has the
capacity of producing 2000 to 2300tons of processed tread rubber per month.

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19
THE MIDAS DEALERS NETWORK

The products are marketed and sold directly through dealer’s channel on all India basis and
Road Transport Corporation in Kerala. The company has the dealer named M.M Chandy and
company. The company will sell the product only to this dealers. The dealer has 4 depots at
Thiruvalla, Kottayam, Kollam and Calicut. The company has 30 dealers all over India. The
company has 5 in India which is located at the Coimbatore, Vijayawada, Mumbai, Baroda,
Bhopal.. The dealers collect the products from the depots.

All the marketing and the management services are operated from the corporate office
in Kottayam. The exporting procedures are also monitored by the corporate office.

Besides India, MIDAS has currently satisfied customers all over the world from South
America to Africa and from Europe to Australia. India’s largest rubber compounding unit is
of the MIDAS Rubber Private Limited. It is the major supplier of the rubber components to
many of the India’s major tyre companies like Apollo tyres, CEAT, J.K tyres and M.R.F..

PHILOSOPHY OF THE COMPANY

The company believes that the only way to give customer ever improving quality and
economy is the encouragement to experiment to every aspect of the production from input
prcess and finally to output.

Uncompromisingly, quality is the main feature of the MIDAS. It is with which the
company maintains its reputation. MIDAS uses latest technology in quality control system
which ensures quality at every stage of production.

OBJECTIVES OF THE COMPANY

 Quality

 Profit maximization

 Cost minimization

 More employment

 Timely delivery

 Consistency of sales and services

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MISSION OF THE COMPANY

 To remain as the leading producer of re-treading materials.

 To continue growth in business and become a significant player in the

world market.

 To maximize return on investment.

 To achieve international levels of excellence in technology and quality.

MANAGEMENT

Mr. George Varghese heads the group and his wife Mrs. Mariamma Varghese handle the
management of the unit in Tamil Nadu. Professional manager group look after the company’s
day to day operations. Mr. George Varghese takes decisions only on policy matters. The
directors of the company are Mr. John K Abraham and Mr. Koshy Varghese..

PRODUCTS OF THE COMPANY

 Procured Tread Rubber

 Tread Rubber / Camel back Tread

 Bonding gum

 Vulcanizing solution

 Rubber Compounds

 Tyre flaps

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 TYPE OF TREADS

1 Procured Tread Rubber

They are used for re-traeding tyre using cold process. The company produces these
using the latest technology. The tread will be cured by the company itself. The designs are
also done by the company itself. These cured treads are given to re-treads, they will adhere
the tread to the already buffered tyre casing by means of a vulcanizable cushion gum. The R
and D wing of the company develop all these patterns. The mileage and comfort to an extend
depends on the tread patterns. So the company always keeps on monitoring in these fields.
Their main tread pattern are Ajax, Maxinums, Eagle, R2, Apollo and Transport.

2 Conventional Tread Rubber

The conventional re-treading process is the process in the oldest re-treading process.
Until now it does not lost its charm. Most of the re-treads uses both procured and
conventional treads. Conventional treads are lower cost compared to procured treads. These
are plain treads can be further processed. It is the re-treading who converts these plain treads
into different design according to the type of moulds. In Kerala this type of re-treading is
more popular. Heavy vehicles generally prefer this type of re-treading.

3 Retreading:

As the tyre moves on the road, the road positions wear off gradually. The process of
removing the old worn out tread and replcing it with a tread surface is called re-treading.
Treads rubber is the material used to replacing the wearing surface on tyres. The useless tyres
can be made to run for almost equal mileage as a new tyre by treading within the cost not
exceeding one-third of the new tyre. Tyre can be re-tread as many as 4-5 times depending on
the casing strength in a re-treading industry. Commonly, 2 methods are adopted. They are-

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  Hot process

 Cold process

4 Hot process of re-treading:

Conventional tread is also known as Hot Process. It is a kind of re-treading

processing in which the company makes rubber sheet in a plain form and all sold to the re-
treaders. It is the re-treaders who convert the sheet into different shapes and designs with the
customer satisfaction with the help of moulds. Heavy vehicles generally use this process of
re-treading. This process gives more mileage compared to precured treads.

5 Cold process re-treading:

Cold process of re-treading is called the precured re- treading. Pre-treading is the
method of re-treading in which already cured tread rubber having tread pattern is adhered to
the type of casing using cushion gum and vulcanizing solution between them. The
temperature of this process is below 1000 degree celsius. A tyre with worn out tread may still
contain a healthy caring.

6 Bonding gum

Bonding gum is used in both conventional and the procured processing. It is used as
an adhesive to the fire the tread to the tyre, it is available for 99 degree celsius, 125 degree
and 150 degree celsius operations. The gum is made from 100% natural rubber to increase
tack. It can be used to fill nail holes and repair injured parts of caring.

7 Black Vulcanization solution

This is an associated product used for re-treading. MIDAS has both high quality and
low quality solutions are available for 99 degree celsius, 125 degree celsius and 150 degree
celsius operations. It is compactable for both conventional and precured process.

8 Tyre Flaps

MIDAS produces highly heat resistant and extra durable tyre flaps for re-treading
process

23
 .

9 Curing bags and Curing envelops

Company produces high quality butyl curing bags specially desing to maximize cures.
The company is also producing heat resistant envelops for ease use and long life.

10 Rope Rubber

It is used in extruder guns to repair rasping areas. It helps to provide

excellent process safety and tack. The company also produces custom designed procured
tread rubber exclusively for potential customers

11 Camel back $ Orbitreads

Increased scorch safety to maximize shelf life. Different compounds. Available for
different uses includes ( truck, tractor and OTR). Available in customer specified size.

24
 ORGANIZATIONAL STRUCTURE OF MIDAS

MANAGEMENT DIRECTOR

DIRECTOR DIRECTOR DIRECTORS DIRECTOR DIRECTOR DIRECTOR

FINANCE PURCHASE ALES MARKETING HR PRODUCTION
NN

MANAGER MANAGER MANAGER MANAGER MANAGER MANAGER

FINANCE PURCHASE SALES MARKETING HR PRODUCTIO
N

ACCOUNTA OFFICE ASSI: FACTORY

NT MANAGER

CASHIER

MANAGER ACCOUNTS&
ADMINISTRACCOUNTANT

STOCK ACCOUNTAN COMPUTER GENERAL OFFICE ASSI:

T ASSISTANT
MANAGER FINANCE

MANAGER PURCHASE
DESPATCH SERVICE
MANAGER MANAGER

DEPO SALES
MANAGER EXECUTIVE

DEPO SALES
EXECUTIVES
SHIFT LOADING
SUPERVISOR SUPERVISOR

25
 CHAPTER- 2

2.1 OBJECTIVES OF THE STUDY

• To study the liquidity position of the company

• To study the efficiency of the company in management its assets

• To study the profitability of the firm

• Determine the financial capacity of the firm

• To offer suggestions for the better treatment of the company

26
2.2 SCOPE OF THE STUDY
 To improve my knowledge in the particular field.
 To get more knowledge about various statements.
 To get an experience in the particular field
 Practical knowledge
 To improve my communication skill.
 To know the financial performance of the company.

27
2.3 LIMITATIONS OF THE STUDY

1. The study is restricted to a period of five years

2. The analysis is based on annual report of the company.
3. Ratio analysis has its own limitations is mainly a historical analysis.
4. Authorities were reluctant to revel full information about the working of the company.
5. The time and resource available for the study is limited which prevented from making
an in-depth analysis covering all aspects.

28
2.4 RESEARCH METHODOLOGY
Research refers to the search for knowledge. Research is an art of scientific
investigation. It attempt to discover answer to intellectual and practical problems through the
application of scientific method. Research methodology is a way to systematically solve the
research problem. It may understand as a science of studying how research is done
scientifically.

Methodology implies what concept is used to carry out the study. It is the
science of the method of the study. Research methodology is a systematic way to find out the
problems of the company. It may be understood as a science of studying how the research is
done systematically.

According to Clifford Woody, “research comprises defining and redefining problems,

formulating hypothesis or suggested solutions; collecting, organising and evaluating data;
making deductions and researching conclusion; and at last carefully testing the conclusion to
determine whether they fit the formulating hypothesis.

PROBLEM STATEMENT

Analysing the financial performance of a company is said to be a problem

without analysing the financial performance we cannot correctly identify the strength and
capacity of the firm for future prospects of the company. And also financial analysis help the
company to plan their strategies and competencies well in advance. Financial management is
considered as a vital part of overall management, as it involves acquisition of funds and its
profitable use with the business.

TYPES OF RESEARCH

Descriptive research: - it is very common in business and other aspects of life.

In fact, most of the financial researchers are using descriptive research. Though this we are
usually trying to describe some group of people or other entities.

PERIOD OF STUDY

29
 Period of study is limited to 5 years, i.e., 2009-2014

DATA COLLECTION METHOD

Secondary Data: - Secondary data mainly consists of data and information collected from
company records, company profile, company’s annual report, website of Midas and various
other websites and also from the text book.

TOOLS FOR ANALYSIS

 Ratio Analysis
 Comparative statement analysis
 Trend analysis

RATIO ANALYSIS

Ratio analysis is one of technique of financial analysis to evaluate the financial

condition and performance of business concern. Simply ratio means the comparison of one
figure to the other relevant figures. According to Myers, “ratio analysis of financial
statements is a study of relationship among various financial factors in a business as disclosed
by a single set of statements and study of trend of this factors as show in a series of
statements’’.

COMPARATIVE STATEMENT ANALYSIS

The change in the financial data over a period can be understood if the statement of
two or more year is placed side by side to facilitate comparison. Such statements are called
comparative financial statement. It includes comparative balance sheet and comparative
income statement.

TREND ANALYSIS

Comparison of past data over a period of time with the base year is called as trend
analysis. Information for a number of years is taken up and one year is taken as the base year.

30
Each item of the base year is taken 100 and on that basis the percentages for other years are
calculated it shows the direction of change whether here it is upward or down word.

2.5 REVIEW OF LITERATURE

1 Nirmala.(2002) Pointed out, the financial position of India cement ltd, would able
to understand the financial position and performance of the concern with the help of financial
statement analysis. She has noted that the liquidity and profitability position of India cement
ltd has normal and they have maintained the significant level of Ratio.

2 Maheshwari S.(2012) pointed that, comparative balance sheet as on two or more

different dates can be used for comparing assets and liabilities and findings out any increase
or decrease in those items. Thus, while in a single balance sheet the emphasis is on present
position. It is on change in the comparative balance sheet. Such a balance sheet is very useful
in studying the trends in an enterprise.

3 Aryan estimated the cost function in 12 cement companies for the period 1951-
1970, on the basis of secondary data collected from profit and loss accounts and balance
sheets of these companies. He found that there was no significant relationship between
capacity and average total cost. The rate of increase of inputs prices during the seventies was
much more than the rate of increase of inputs prices during the seventies was much more than
the rate of increase of output prices. According to him, under Utilization of capacity and
technological obsolescence also existed in the industry.

4 Nirmala Devi attempted to study the trend in productivity of cement industry in

India during 1973-74 to 1987-88. There had been near stagnation in cement production in the
1970s../in the 80's however there had been a remarkable upward trend in production aided by
the introduction of the dual pricing system in early 1982

5 Nair(2004) made an attempt to study productivity in Indian cement industry.

Particularly his study was based on identifying major problems and the prospects to solve
them. He found that cement plants in India were,one of the major contributors to air
pollution. He pointed out that the pollution control was a social necessity and effective device
should be installed to control air pollution as air pollution was injurious to health.

31
 6 Pradihan (1982) examined the concentration in cement industry under new policy
regime. He found that the concentration of the cement industry was changing in India,
keeping in view of the recent changes in policy, which allowed it to operate in a less
controlled environment. To show a better performance its concentration must decline, so that
the competition was initiated among a larger number of producers since the post-decontrol
period precluded the possibility of collusive behavior. He concluded that the concentration of
the industry had been following a declining trend since the 50s. With the partial decontrol of
the price and the distribution of cement in 1982, the rate of decline had come down and the
producers concentration might be increasing under the new policy.

7 Nagesh Kumari(2000) made a comparative analysis of compound growth of

installed capacity production and capacity utilization made among Indian industry as a whole
and nine cement industry units in Tamil Nadu for eight year from 1988-89 to 1995-96. The
compound growth rate of india's installed capacity was composed to all the units in Tamil
Nadu, Dalmia, sankari Drug, Alangulam, Ariyalur and Tamil Nadu cements are having zero
compound growth rate of installed capacity. Regarding growth rate of production except
ACC cement, unit all other units were having low rate of production. Grasim Industries
chairman Birla9believes that cement and viscose staple fiber will be the key growth drivers
for the company in future. In Financial Year 02, these two businesses together accounted for
81 percent of net revenues and 91 percent of operating profit. He is confident that both will
continue to score well even in the future.

8 Arya(1999) made an attempt to estimate the production function for Madras

cement, based on the data collected from the annual reports of the company during the
period, 1961 to 1974. He used cobb-Douglas production function and the labour alone
explained for more than 63 percent change whereas capital alone account for very little
changes in physical output. Taken together, both become significant variables and more than
94 percent change in output was explained by these two variables R was the significant
variable, as it explained more than 95 percent change in output. The sum of elasticity 30 Co-
efficient was significantly different from unity which indicated that the unit was enjoying
increasing returns to scale.

9 Suganaya devi(20004) " noted that A study on financial performance of the India
cements ltd., during June 2000. She found that, overall performance of the company during
the study period is satisfactory. But considering the liquidity position of the company, it is

32
not satisfactory. So, the company has to make some changes in its investment policies to
improve the liquidity position of the company.

10 R.Jefferson, waymond and scott.HIEstimating (2006) financial statement

information An Entropy Approach reveals that, Accountant forecasts are crucial to
management decisions regarding resource allocation. The accountant assists in these
decisions by providing appropriate financial forecasts for decisions based on the best
accounting information available. The accountant forecasts combine the disparate financial
figures into a set of accounts for each course of action which allows comparison. Then 31
management may compare each proposal and come to a decision based on the financial
benefit of each.

11 CM.APTER (2011) A review of previous studies of "Financial Statement

Analysis", is essential to understand the implications of the different concepts and also to
identify the areas to unexplored may be studied in depth.

12 G. Foster(2010) in his study on financial analysis stated that "it is the process of
identifying financial strengths and weaknesses of the firm by properly establishing
relationships between the items of the balance sheet and the profit and loss account. Financial
analysis can be undertaken by management of the firm, on by parties outside the firm, viz.,
owners, creditors, invertors and others.

13 Horrigan (1968) in his study on financial ratio analysis stated that "From a
negative view point, the most striking aspect of 'ratio analysis is the absence of an explicit
theoretical structure under the dominant approach of pragmatically empiricism", the user
ratio is required to rely upon the authority of an author's experience. As a result the subject of
ratio analysis is replete with untested assertion my about which ratios should be used and
what their proper levels should be"4.3 .7.---

14 L.C.Gupta, (1979) in an extensive study done with Indian data, attempt to

distinguish sick and non-sick companies on the basis of 2 W.H.Beaver, "Financial Ratios as
Predictor of Failures" Emprical Research in Accounting: selected studies, 1966, supplement
to Vol.4, Journal of Accounting Researcher, Pp. 71-177.

15 J.O.Horrigaan(1968), "A Short History of Financial Ratio Analysis", The

Accounting review, Vol.43 (April 1968), 284-294. 13 financial ratios. He employed the
criterion of 'percentage classification error' to judge the predictive power of financial ratios.

33
 CHAPTER- 3

DATA ANALYSIS AND INTERPRETATION

Analysis and interpretation are central steps in the research process. Analysis refers to
the methodical classification of the data given in the financial statements. Analysis is not
fulfilled without interpretation; and interpretation cannot proceed without analysis. So, both
are inter-dependent.
The term interpretation means explaining the meaning and significance of the
data so arranged. It is the study of the relationship between various financial factors of the
various companies over a period of study. The most important objectives of the analysis and
interpretation of financial statements is to understand the significance and meaning of
financial statements data to know the strength and weakness of a business undertaking so that
a forecast may be of the future prospects of that companies.
In this chapter, a detailed analysis of the collected data has been attempted as per the
objectives stated earlier.
TOOLS FOR ANALYSIS

 Comparative statement analysis

 Trend analysis
 Ratio Analysis

34
3.1 COMPARATIVE STATEMENT
The preparation of comparative financial statement is an important device of
horizontal financial analysis. Financial data become more important and meaningful when
compared with similar data for a period or a number of prior periods. Statements prepared in
a form that reflect financial data of two or more periods are known as comparative statement.
Annual data can be compared with similar data for prior years. Such statements are very
helpful in measuring the effects of the conduct of a business during the period under
consideration. Comparative statements may show:

1 Absolute figure

2 Change in the absolute figure

3 Absolute data in terms of percentage

4 Increase or d1111111ecrease in terms of percentage

Comparative statement can be of two types:

a) Comparative balance sheet

b) Comparative income statement

COMPARATIVE BALANCE SHEET

The comparative balance sheet analysis is the study of the trend of the same items of
two or more balance sheet of the same business enterprise on different dates. The changes in
periodic balance sheet items reflect the conduct of the 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. The comparative
balance sheet has two columns for the data for original balance sheet. A third column is used
to show increase in figure, the fourth column may be added for giving percentage of
increase or decrease.

35
 Table No: 3.1.1

COMPARATIVE BALANCE SHEET

As on 31st march 2014

INCREASE/ % INCREASE/
PARTICULERS 2013 2014 DECREASE DECREASE

Fixed asset 53120681 47807332 -5313349 -10.00%

Investment 2200000 2200000

Current asset 213589691 190295189 -23294502 -10.90%

TOTAL 266732372 240302521 -28607851 -10.72530146

Capital 40000000 40000000

Reserve &
surplus 155861103 175075669 19214566 12.32%

Loans and debts 3226467 -3226467 -100%

Other liabilities 67644802 23026852 -44617950 -65.95%

TOTAL 266732372 238102521 -28629851 -10.73%

Source: secondary data

INTERPRETATION:

During 2013-2014 current asset is decreased by only 10.90% but the other liabilities
is decreased by 65.96%. it shows the performance of the company is good in this particular
year.

36
 Table No: 3.1.2

PARTICULE INCREASE/ %INCREASE/

RS 2012 2013 DECREASE DECREASE

Fixed asset 61067209 53120681 -7946528 -3.58%

Investment 22000 22000

Current asset 160847980 213589691 52741711 23.76%

TOTAL 221937189 266732372 44795183 20.18%

Capital 40000000 40000000

Reserve &
surplus 152998185 155861103 2862918 1.28%

Loans and
debts 2626813 3226467 599654 0.27%

Other
liabilities 26312191 67644802 41332611 18.62%

TOTAL 221937189 266732372 44795183 20.18%

Source: secondary data

INTERPRETATION:

During 2013-2012 current asset is increased by 23.76 % but the other liabilities is
increased by 18.62 %

Table No: 3.1.3

37
 COMPARATIVE BALANCESHEET

As on 31st March 2012

Source: secondary data

INTERPRETATION:

During 2011-2012 the current asset is increased by 1.81 and the other liabilities also
increased by 1.47

Table No: 3.1.4

38
 COMPARATIVE BALANCESHEET

As on 31st March 2011

%
INCREASE/ INCREASE
PARTICULERS 2010 2011 DECREASE /DECREASE

Fixed asset 59647659 49862441 -9785218 -4.40%

Investment 22000 5022000 5000000

Current asset 162267530 164832116 2564586 1.15%

TOTAL 221937189 219716557 -2220632 -1.00%

Capital 40000000 40000000 0

Reserve &
surplus 152998185 150097740 -2900445 -1.30%

Loans and debts 17574035 58302 -17515733 -7.89%

Other liabilities 11364969 29560515 18195546 8.19%

TOTAL 221937189 219716557 -2220632 -1.00%

Source: secondary data

INTERPRETATION:

During 2010-2011 current asset is increased by 1.15 % but the other liabilities is
increased by 8.19.

Table No:.3.1. 5

39
 COMPARATIVE BALANCESHEET

As on 31st March 2010

INCREASE/ % INCREAS/
PARTICULERS 2009 2010 DECREASE DECREASE

Fixed asset 25836440 59647659 33811219 15.23%

Investment 5022000 22000 -5000000

Current asset 163211627 162267530 -944097 -0.42%

TOTAL 194070067 221937189 27867122 12.55%

Capital 40000000 40000000 0 0

Reserve &
surplus 131083734 152998185 21914451 9.87%

Loans and debts 17574035 17574035 7.91%

Other liabilities 22986333 11364969 -11621364 -5.23%

TOTAL 194070067 221937189 27867122 12.55%

Source: secondary data

INTERPRETATION:

During 2009-2010 the current asset is decreased by 0.43 but the other liabilities also
decreased by 5.24.

Table No: 3.1.6

40
 COMPARATIVE INCOME STATEMENT

As on 31st march 2014

INCEASE/ % INCREASE/
PARTICULERS 2013 2014 DECREASE DECREASE

Income 270133603 328319727 58186124 21.53%

Less: expence 265780697 299502694 33721997 12.68%

Profit before tax 4252906 28817033 24564127 577.58%

Provision for tax 1389988 9602467 8212479 590.83%

Profit after tax 2862918 19214566 16351648 571.15%

Source: secondary data

INTERPRETATION:

During the period 2013-2014 profit/ loss before tax is increased with 577.15 % and
profit/loss after tax is 571.15% decreased

Table No: 3.1.7

41
 COMPARATIVE INCOME STATEMENT

As on 31st March 2013

%
INCEASE/ INCEASE/
PARTICULERS 2012 2013 DECREASE DECREASE

Income 25624887 270133603 244508716 954.18%

Less: expense 252510167 265780697 13270530 5.25%

Profit before tax 4014720 4252906 238186 5.93%

Provision for tax 1114276 1389988 275712 24.74%

Profit after tax 2900444 2862918 -37526 -1.29%

Source: secondary data

INTERPRETATION:

During the period 2013-2014 profit/ loss before tax is increased with 5.93 % and
profit/loss after tax is 1.29% decreased

Table No: 3.1.8

COMPARATIVE INCOME STATEMENT

42
 As on 31st March 2012

%
INCEASE/ INCEASE/
PARTICULERS 2011 2012 DECREASE DECREASE

Income 273130855 255461771 -17669084 -6.46%

Less: expense 244174614 251447049 7272435 2.97%

Profit before tax 28956240 4014720 -24941520 -86.13%

Provision for tax 9942234 1114276 -8827958 -88.79%

Profit after tax 19014006 2900444 -16113562 -84.745%

Source: secondary data

INTERPRETATION:

During the period 2013-2014 profit/ loss before tax is decreased with 86.14 % and
profit/loss after tax is 84.75% decreased

Table No: 3.1.9

COMPARATIVE INCOME STATEMENT

43
 As on 31st March 2011

%
INCEASE/ INCEASE/
PARTICULERS 2010 2011 DECREASE DECREASE

Income 288590172 273130855 -15459317 -5.35%

Less: expense 255644641 244174614 -11470027 -4.48%

Profit before tax 32945531 28956240 -3989291 -12.10%

Provision for tax 8936586 9942234 1005648 11.25%

Profit after tax 24008945 19014006 -4994939 -20.80%

Source: secondary data

INTERPRETATION:

During the period 2013-2014 profit/ loss before tax is decreased with 12.11 % and
profit/loss after tax is 20.80% decrease.

Table No:3.1. 10

COMPARATIVE INCOME STATEMENT

44
 As on 31st March 2010

INCEASE/ %
PARTICULERS 2009 2010 DECREASE INCEASE/ DECREASE

Income 286261448 288590172 2328724 0.81%

Less: expence 260097155 255644641 -4452514 -1.71%

Profit before tax 26164293 32945531 6781238 25.91%

Provision for tax 7137012 8936586 1799574 25.21%

Profit after tax 19027282 24008945 4981663 26.18%

Source: secondary data

INTERPRETATION:

During the period 2013-2014 profit/ loss before tax is increased with 25.92% and
profit/loss after tax is 26.18% increased.

45
3.2 TREND ANALYSIS

Trend analysis is used to evaluate the trends and tendencies of events. It is a

guide to follow the changes that occur in a business from period to period. Trend analysis
reveals the direction of changes or is a guide to the movement of facts and figures revealed
while comparing the financial statements of different period. A series of financial statements
may be analyzed by determining and studying the trend of the data shown in the statement.
This method of analysis is one of the direct up words or down words and involves the %
relationship that each statement items bears to the same items in the base year. Trend %
relative to the base year emphasis changes in the financial operating data from year to year
and makes possible a horizontal study of data.
Business is a dynamic process. It is very difficult to find complete information
about the business by way of analyzing the financial statement of tendency of business. To
determine the direction of business, the past data relating to the problems are studied and the
trend is determined. The analysis of the trends helps to judge the future tendency of a
business.

46
 Table No: 3.2.1

TREND ANALYSIS OF NET ASSET

( Rs in lakhs)

YEAR Y X XY X2 TREND %

2009-2010 738.93 0 0 0 253.20

2010-2011 113.22 1 113.22 1 297.37

2011-2012 153.13 2 306.26 4 341.54

2012-2013 137.52 3 412.56 9 385.70

2013-2014 123.24 4 492.96 16 429.87

TOTAL 1266.04 10 1325 30

A 253.208

B 44.16
Source: secondary data

INTERPRETATION:

The graph shows the comparison between actual net asset and trend value. In 2014
trend percentage touches 450. Where as the net sales in 2014 does not even touches 100. It
shows the company is not in a good condition. The net sales is not satisfactory.

47
 CHART: 3.2.1

TREND ANALYSIS OF NET ASSET

48
 Table No:3.2.2

TREND ANALYSIS OF NET PROFIT

(Rs in lakhs)

Year Y X Xy X2 trend %

2009-2010 696.11 0 0 0 481.896

2010-2011 284.38 1 284.38 1 628.728

2011-2012 325.48 2 650.96 4 775.56

2012-2013 944.42 3 2833.26 9 922.392

2013-2014 159.09 4 636.36 16 1069.224

2409.48 10 4404.96 30

A 481.896

B 146.832
Source: secondary data

INTERPRETATION:

The trend percentage of net profit is decreasing from 2009-2014. In the year 2012-
2013 it shows a satisfactory level compared to previous and current year. In First year also it
cross the trend percentage. But in overall actual performance is not satisfactory when
compared to trend.

CHART: 3.2.2

49
TREND ANALYSIS OF NET PROFIT

Table No: 3.2.3

50
 TREND ANALYSIS OF CURRENT ASSET
( Rs in lakhs)

X2
YEAR Y X XY Trend %

2009-2010 222.2 0 0 0 358.554

2010-2011 366.05 1 366.05 1 489.2843

2011-2012 453.14 2 906.28 4 620.0147

2012-2013 355.94 3 1067.82 9 750.745

2013-2014 395.44 4 1581.76 16 881.4753

Y 1792.77 10 3921.91 30

A 358.554

B 130.7303
Source: secondary data

INTERPRETATION:

The trend analysis of current assets is not even touches or cross the trend percentage.

CHART:3.2.3

51
TREND ANALYSIS OF CURRENT ASSET

3.3 RATIO ANALYSIS

52
 A ratio is an arithmetical relationship between two figures. Financial ratio analysis is
a study of ratios between various items or groups of items in financial statement. An
accounting ratio shows the relationship between the either related accounting figures as gross
profit to sales, current assets to liabilities , loaned capital to owned capital etc.

APPLICATION OF ACCOUNTING RATIOS

To analyse the financial performance through the application of accounting
ratio the following ratios are grouped under the following heading.

 Liquidity ratio
 Leverage ratio
 Activity ratio
 Profitability ratio

1 LIQUIDITY RATIO

Current ratio = current asset

Current liability

Quick ratio = liquid asset

Current liability

Absolute liquidity ratio= absolute liquid asset

Current liability

LIQUIDITY RATIO
Liquidity refers to the ability of a firm to meet its current obligation as and when they
become its due. The short term obligations are met by realising accounts from current
floating or circulating assets. The current assets should either be liquid or near liquidity. The
bankers, suppliers of goods and either shorter creditors are interested in the liquidity of the
concern. Ration can be are calculated current ratio, liquid ration and absolute ratio

CURRENT RATIO
It is the most common ratio for measuring liquidity. Current ratio expresses
relationship between the current asset and current liability. It is calculated by dividing current
assets by current liabilities. Current assets include cash of these asset which can be converted
into cash within a year. Current ratio is also known as working capital ratio..

Current ratio = current asset

53
 Current liability

Table No: 3.3.1

CURRENT RATIO

YEAR CURRENT ASSET CURRENT LIABILITY CURRENT RATIO

2009-2010 222200955.5 44057186.28 5.04

2010-2011 366050722.8 65135305.59 5.61

2011-2012 453147742.9 418395722.3 1.08

2012-2013 355948617 248262202.9 1.43

2013-2014 395444477.2 178698761.1 2.21

Source: secondary data

INTERPRETATION:

In the year 2013-2014 it shows an increase in current ratio and it reaches to 2.21. the
standard norms of current ratio is 2:1. The average ratio is 3.07:1 which higher than the
standard ratio. It shows sound solvency position of the company.

CHART: 3.3.1

CURRENT RATIO

54
QUICK RATIO

It establishes a relationship between quick or liquid asset and current liabilities. An

as set is liquid if it can be converted into cash immediately or reasonably soon with out a lose
of value. A high quick ratio is an indication that the firm is liquid and has the ability to meet

55
its current or liquid liabilities in time and on the other hand a low liquid ratio represent that
the firms liquidity position is good.

Quick ratio = liquid asset

Current liabili

Table No: 3.3

.QUICK RATIO

YEAR QUICK ASSET CURRENT LIABILITY QUICK RATIO

2009-2010 140796668 44057186.28 3.195

2010-2011 119059082 65135305.59 1.82

2011-2012 213288383 418395722.3 0.50

2012-2013 212100578 248262202.9 0.85

2013-2014 213313138 178698761.1 1.19

Source: secondary data

INTERPRETATION:The average quick ratio is 1.5 it is more than the standard ratio 1:1. It
shows the efficiency of the firm’s capacity to pay off current obligation immediately.

CHART: 3.3.2
56
 QUICK RATIO

ABSOLUTE LIQUIDITY RATIO

57
Generally receivables are more liquid than inventories. But there may be doubts regarding
there liability is time. Hence only absolute liquid asset such as cash in hand, cash at bank.
Marketable securities are taken into consideration 1:2 is an ideal ratio is also known as cash
position ratio.

Absolute liquidity ratio= absolute liquid asset

Current liability

CHART: 3.3.3

ABSOLUTE LIQUIDITY RATIO

ABSOLUTE LIQUIDITY CURRENT ABSOLUTE LIQUIDITY

YEAR ASSET LIABILITY RATIO

2009-
2010 263.57 2236.551 0.11

2010-
2011 730.36 440.571 1.65

2011-
2012 918.81 651.353 1.41

2012-
2013 1128.81 4183.957 0.26

2013-
2014 1171.32 2482.622 0.47
Source: secondary data

INTERPRETATION:

The acceptable ratio is 2:1. The average absolute liquid ratio is 0.83:1. This shows
that company’s financial position is not satisfactory

CHART: 3.3.3

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 ABSOLUTE LIQUIDITY RATIO

2 LEVARAGE RATIO

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 The short term creditors like bank or suppliers of raw material are more than
concerned with current debt paying ability, on the other hand long-term creditors like
debenture holders, financial institutions, etc are more concerned with firms long-term
financial as well as long-term financial position. To judge the long-term financial position of
the firm, financial leverage or capital structure , ratios are calculated, these ratios indicate size
or fund provided by owner and tenders.

Debt equity ratio = outsider’s fund

Shareholder’s fund

Proprietary ratio = shareholder’s fund x 100

Total asset

Fixed asset to net worth ratio = fixed asset ( after depreciation)

Share holder’s fund

Current asset to proprietary fund ratio = total asset

Share holder’s fund

DEBT EQUITY RATIO

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The debt equity ratio is also known as external or internal ratio. It is calculated to measure the
relative claims of outsiders. Shareholders fund consist of equity share capital , revenue and
reserve representing accumulated profits and the standard debt equity ratio is

Debt equity ratio = outsider’s fund

Shareholder’s fund

Table No: 3.3.4

DEBT EQUITY RATIO

TOTAL
YEAR DEBT SHAREHOLDERS FUND DEBT EQUITY RATIO

2009-2010 2236.551 263.57 8.48

2010-2011 440.571 730.36 0.603

2011-2012 651.353 918.81 0.70

2012-2013 4183.957 1128.81 3.70

2013-2014 2482.622 1771.32 1.40

Source: secondary data

INTERPRETATION:

The average debt equity ratio is 2.98:1. It is more than the standard ratio 2:1. It shows that the
financial position of the firm is not solvent.

CHART: 3.3.4

61
 DEBT EQUITY RATIO

PROPRIETARY RATIO

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A variable to the debt equity is the proprietary ratio which is also known as equity ratio or
shareholders to total equities ratio or net worth ratio to total asset ratio. This ratio establishes
the relationship between shareholders fund to total assets of the firm. It is important ratio for
determining the long-term solvency of the firm. The standard ratio is 1:3.

Proprietary ratio = shareholder’s fund x 100

Total asset

Table No: 3.3.5

PROPRIETARY RATIO

TOTAL PROPRITARY
YEAR SHAREHOLDERS FUND ASSET RATIO

2009-2010 263.57 350.41 75.21

2010-2011 730.36 2737.55 26.67

2011-2012 918.81 3928.8 23.38

2012-2013 1128.81 5321.32 21.21

2013-2014 1771.32 4266.62 41.51

Source: secondary data

INTERPRETATION:

The above diagram shows the proprietary ratio during the period of study. The proprietary
ratio in the year 2009-2010 was 75.21%. Then it moved downward and reached to 41.51%.
The standard norms of proprietary ratio was 1:3.It is satisfying in all the years.

CHART : 3.3.5

63
 PROPRIETARY RATIO

FIXED ASSET TO NETWORTH RATIO

64
The ratio establishes the relationship between fixed asset and shareholder’s funds. i.e, share
capital plus reserves, surplus and retained earnings. The ratio can be calculated as follows

Fixed asset to net worth ratio = fixed asset ( after depreciation)

Share holder’s fund

Table No: 3.3.6

FIXED ASSET TO NETWORTH RATIO

FIXED SHAREHOLDERS FIXED ASSET TO

YEAR ASSET FUND NETWORTH RATIO

2009-
2010 754.19 263.57 2.86

2010-
2011 834.31 730.36 1.14

2011-
2012 782.28 918.81 0.85

2012-
2013 731.46 1128.81 0.64

2013-
2014 640.65 1771.32 0.36
Source: secondary data

INTERPRETATION:

The above diagram shows the fixed asset net worth ratio during the year 2009-2010, the ratio
was 2.86. Then it shows a significant decline in all the other years under study. Finally it
reached to 0.36 in 2013-2014 year

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 CHART: 3.3.6

FIXED ASSET TO NETWORTH RATIO

CURRENT ASSET TO PROPRIETORS FUND

66
The ratio is calculated by dividing the total of current assets by the amount of share holders
fund.

Current asset to proprietary fund ratio = total asset

Share holder’s fund

Table No: 3.3.7

CURRENT ASSET TO PROPRIETORS FUND

CURRENT SHAREHOLDERS CURRENT ASSET TO

YEAR ASSET FUND PROPRIETORS FUND

2009-
2010 1600.097 263.57 6.07

2010-
2011 2222.009 730.36 3.04

2011-
2012 3660.507 918.81 3.98

2012-
2013 4531.477 1128.81 4.01

2013-
2014 3559.486 1771.32 2.00
Source: secondary data

INTERPRETATION:

The ratio indicates the extent to which proprietors fund are invested in current assets. The
above diagram shows current assets to proprietors fund ratio. The ratios are fluctuating from
year to year. The ratio was 6.07% in the year 2009-2010. Then it moved downward and
reached to 3.04%. During the next year it again shows minute increase and reached 3.98%.
Then it moved to 4.01% in the year 2012-13. But in the next year, 2013-14, it moved
downward and reached to 2.00%.

CAPTER: 3.3.7

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 CURRENT ASSET TO PROPRIETORS FUND

3. ACTIVITY RATIO
68
It measures the efficiency or effectiveness with which a firm manages its resources and
assets. These ratios are also called turn over ratios or efficiency ratio, because they indicate
the speed with which assets are converted or turn over into sales.

Debtor’s turnover ratio = net sales

Debtors

Inventory turnover ratio = net sales

Inventory

Working capital turnover ratio = net sales

Working capital

Fixed Asset turnover ratio = sales

Fixed asset

Current asset turnover ratio = sales

Current asset

Total asset turnover ratio = sales

Total assets

DEBTORS TURNOVER RATIO

69
It indicates the velocity of debt collection of firm. In simple words, it indicates the number of
times average debtors (receivables) are turned over during a year. The higher the value of
debtor’s turnover the more efficient is the management of debtor’s or sales ormore liquid are
the debtors. Similarly, low debtors turnover implies insufficient management of debtors or
sale and less liquid debtors. Debtors should always be taken at gross value.

Debtor’s turnover ratio = net sales

Debtors

Table No: 3.3.8

DEBTORS TURNOVER RATIO

DEBTORS
YEAR SALES DEBTORS TURNOVER RATIO

2009-2010 6497.97 728 8.92

2010-2011 7389.32 787.21 9.38

2011-2012 11322.09 457.7 24.73

2012-2013 15313.87 1013.17 15.11

2013-2014 13752.88 889.71 15.45

Source: secondary data

INTERPRETATION:

The debtors turnover ratio of the company is decreased in the year 2013-2014. The average
ratio is 4.72. The highest ratio in the year 2011-2012 (24.73) and lowest in the year 2009-
2010 (8.92)

CHAPTER: 3.3.8
70
 DEBTORS TURNOVER RATIO

71
INVENTORY TURNOVER RATIO
It indicates the number of times the stock has been turned over during the period and
evaluates the efficiency with which a firm is able to manage its inventory.

Table No: 3.3.9

INVENTORY TURNOVER RATIO

INVENTORY
YEAR SALES INVENTORY TURNOVER RATIO

2009-2010 6497.97 339.01 19.167

2010-2011 7389.32 814.04 9.07

2011-2012 11322.09 2469.91 4.58

2012-2013 15313.87 2398.59 6.38

2013-2014 13752.88 1438.48 9.56

Source: secondary data

INTERPRETATION:

A higher inventory turnover ratio indicates efficient management of inventory because more
frequently the stock sold in the year 2010-2014, the average inventory turnover ratio is 9.75

CHART: 3.3.9

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 INVENTORY TURNOVER RATIO

WORKING CAPITAL TURNOVER RATIO

73
It used to measure the efficiency of the firm . This also indicates whether or not working
capital has been effectively utilised in marketing sales. In case the company can achieve
higher volume of sales with relatively small amount of working capital. It is an indication of
the operating efficiency of the company.

Working capital turnover ratio = net sales

Working capital

Table No: 3.3.10

WORKING CAPITAL TURNOVER RATIO

WORKING WORKING CAPITAL

YEAR SALES CAPITAL TURNOVER RATIO

2009-
2010 6497.97 636.45 10.20

2010-
2011 7389.32 1781.43 4.14

2011-
2012 11322.09 3009.15 3.76

2012-
2013 15313.87 347.52 44.06

2013-
2014 13752.88 1076.864 12.77
Source: secondary data

INTERPRETATION:

From the table, we can see that the working capital turnover ratio decreased and increased in
trend. The average ratio is 14.99. It producing a good amount of interest. Net working capital
is increasing due to increase in the bank balance and decrease in current liability shows a
good sign of health.

CHART: 3.3.10

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 WORKING CAPITAL TURNOVER RATIO

ASSET TURNOVER RATIO

75
Assets are used to generate sales. Therefore a firm should manage its asset efficiency to
maximize sales. The relationship between sales and asset is called asset turnover ratio can be
calculated.

FIXED ASSET TURNOVER RATIO

The firm wishes to know its efficiency of utilization of fixed asset.

Total asset turnover ratio = sales

Total assets

Table No: 3.3.11

FIXED ASSET TURNOVER RATIO

FIXED ASSET
YEAR SALES FIXED ASSET TURNOVER RATIO

2009-2010 6497.97 805.4 8.06

2010-2011 7389.32 915.54 8.07

2011-2012 11322.09 876.08 12.92

2012-2013 15313.87 745.35 20.54

2013-2014 13752.88 652.11 21.08

Source: secondary data

INTERPRETATION:

The table shows fluctuation in fixed asset. In 2014 the ratio indicate the greater
intensive utilization of assets and it help to increase in production and sales.

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 CHART: 3.3.11

FIXED ASSET TURNOVER RATIO

4 FINDING, SUGGESTIONS AND CONCLUSION

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4.1 FINDINGS
The study is based on the evaluation of financial performance of Midas threads
pvt.ltd. The findings of the analysis are as follows.

 The current ratio, quick ratio and absolute ratio are used to check the short term
liquidity position of the company. The current ratio and quick ratio has been increased
in the current year which shows a increase in company’s liquidity position.
 The proprietary ratio in the year 2009-2010 was 75.21%. Then it moved downward
and reached to 41.51%. The standard norms of proprietary ratio was 1:3.It is
satisfying in all the years.
 A higher inventory turnover ratio indicates efficient management of inventory
because more frequently the stock sold in the year 2010-2014, the average inventory
turnover ratio is 9.75
 The working capital turnover ratio decreased and increased in trend. The average ratio
is 14.99. It producing a good amount of interest. Net working capital is increasing due
to increase in the bank balance and decrease in current liability shows a good sign of
health.
 The fixed asset ratio shows fluctuation in fixed asset. In 2014 the ratio indicate the
greater intensive utilization of assets and it help to increase in production and sales.
 Profitability ratio measures the overall performance and effectiveness of the firm.
Midas has shown a low profitability when compared to the industry average. This
shows that the company has low productivity.
 Debtor’s turn over ratio represent the relationship of owner’s fund to total debt. In
case of Midas it has a poor ratio where the ratio has decreased a lot when compared to
its previous year.
 In trend analysis the decreasing trend shows that the performance of the company is
not good.
 From the comparative balance sheet During 2013-2014 current asset is decreased by
only 10.90% but the other liabilities is decreased by 65.96%. it shows the
performance of the company is good in this particular year.

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4.2 SUGGESTIONS

From the above study it is clear that the MIDAS THREADS PVT. LTD has
take more improvements in performance. Following are the suggestions for
improvements.
 Management should take necessary steps in monitor the constant increase in
the current liabilities.
 Inventory turnover ratio of the company is low. Efforts must be made to
increase sales.
 Steps should be taken to bring down the expenditure so as to enable the
company to show favorable net profit position than at present.
 The existing credit policy should be revised without affecting the present
relationship between company and suppliers.
 The company should take necessary steps for the proper estimation and
control of the different cost incurred in the operation of the company.
 The company should take necessary steps for the proper estimation and
control of the different costs incurred in the operations of the company.
 The company should invest and concentrate evenly on all departments.

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4.3 CONCLUSION
Finance is an inevitable resource of every organization. Without which an
organization cannot exit. It is the lifeblood of the business using which an organization
operates. The organization’s survival in the competitive market is depends upon how the
manages the available financial resources. As the other main resources of an organization
capital is also being given due importance.

Midas is India’s most popular brand of tyres retreading material with more than
3crores of sales. Besides India, Midas currently has satisfied customers all over the world the
South American to Africa and Europe to Australia. Midas constantly expanding its networks
to enable their used to have easier and better service.

In this study attempt is made to provide an idea about the way on which a decision
can be taken to plan the field of finance for better progress. Analysis and interpretation of
financial statements shows that the financial position of MIDAS THREADS PVT.LTD is
quiet satisfactory.

From the financial performance analysis of MIDAS THREADS PVT.LTD reveals

that the liquidity and solvency position of the company is good. The profitability of the
company is not satisfactory as it shows an decreasing trend. The study has found that the
business is expanding. But Midas cannot able to control the cost of goods sold which affect
the profit level. The steady and reap rise in the cost of raw materials effects on transportation
and overhead hinted the company hardly. The only solution is to review the price structure
and pass on increase to customers. The company can increase its solvency by controlling the
cost or by increasing its selling price. The performance of the company is satisfactory and
Midas is very employee friendly.

Four month training help me to gain more knowledge about the functioning of the
finance department in the organisation and also help me to gain more knowledge about other
departments in the company. finance department functioning well in the organisation. The
company maintain a good communication system. The experience that I get from the
company help me in future.

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 5. Reference:

1. http://www.ongcreports.com/
2. http://www.moneycontrol.com/
3. http://investing.businessweek.com/
4. http://www.globalinsight.com/
5. http://petroleum.nic.in/
6. http://www.investopedia.com/
7. http://www.bizminer.com/
8. http://www.gasandoil.com/
9. http://www.usitc.gov/

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