LOVELY PROFESSIONAL UNIVERSITY DEPARTMENT OF COMMERCE

SUMMER TRAINIG PROJECT Trend Analysis of SHRI GURU NANAK FINANCE CO. LTD. Submitted to Lovely Professional University

In partial fulfillment of the Requirements for the award of Degree of Bachelor of Commerce Submitted by: ARJIT BRAR

DEPARTMENT OF COMMERCE LOVELY PROFESSIONAL UNIVERSITY JALANDHAR NEW DELHI GT ROAD PHAGWARA PUNJAB

PREFACE

As the part of my B.Com (Hons) curriculum. I am required to work on a summer trainig project. The project was assigned to us by our teacher and i had got the topic of comparative statement analysis of SHRI GURU NANAK FINACE CO. Ltd I was working under the guidance of MISS.POOJA KANSRA. who readily agreed to extend her cooperation. In this record I have put my best efforts to compile the information to the highest level of accuracy and give my views to the best of my judgment.

ACKNOWLEDGEMENT

No task is single mans effort. Any job in this world however trivial or tough cannot be accomplished without the assistance of others. A n assignment puts the knowledge and experience of an individual to litmus test. There is always a sense of gratitude that one likes it express towards the p e r s o n s w h o h e l p e d t o c h a n g e a n e f f o r t i n a success. The opportunity to helped me to accomplish this task. express my indebtedness to people who have

I deem it a proud privilege to extend my greatest sense of gratitude to m y f a c u l t y g u i d e MISS.POOJA KANSRA for the keen interest, inspiring guidance, continuous , valuable suggestions and constructive criticism throughout the pursuance of this report This Acknowledgement would be incomplete if I fail to express my deep gratitude towards all the facility of Lovely honors school of business who gave me a lot of support and guidance.

Last but not least I would be special gratitude to our all friends who heartening me to complete this project.

ARJIT BRAR B.COM (HONS)

EXECUTIVE SUMMARY This project is based on the Trend analysis of SHRI GURUNANAK FINANCE CO. LTD.This project is made in order to check out that whether this company is improving in terms of profits or not.

Further, in this Project Chapter 1 includes the introduction of the company wherein I told about the Objectives of the study. Chapter 2 includes the review of literatures. Chapter 3 Research Methodology wherein I have discussed the Research Design and Various sources of the Data Collection.

Chapter 4includes the Data collection and analysis wherein I have analyzed the data collected from the annual reports and web site records. Chapter 5 represents the conclusion and the suggestions based on the above analysis and annual reports.

CHAPTER 1 : INTRODUCTION Analysis of company provides an interesting outlook on a company and its success in comparison to its industry competitors. While these types of analysis provide a quantitative methodology of analyzing an organization, it is important to remember that qualitative factors also play a role in understanding the organizations well being. Assessing both the quantitative and qualitative factors will provide the tools necessary to conduct an unbiased financial analysis of an organization. Capital-budgeting decisions, corporate financial policies and informed selections of securities for investment are all products of financial analysis. Financial statement analysis includes the activity of providing inputs to the portfolio management process and it is used to know whether management is exercising its best Endeavour to maximize shareholders wealth. Analytical resources mobilized for these purpose include economic, capital market sector and specific security analysis. Economic analysis provides both near-term and longer-term projections for the total economy, in terms of the nations output of goods and service, inflation, profits, monetary and fiscal policy and productivity. It thus provides the foundation for capital market, industry, sector and company estimates of the future.

PROFILE OF SHRI GURU NANAK FINANCE CO.

The Company was setup in 1998 with its four members under the HIRE PURCHASE AGREEMENT ACT 1972.The company is a partnership firm as the company is separate entity from its members. The company mainly deals in providing loan on vehicles with interest rates. The company is a finance firm. SGFC mission is to be great working co. With long survival in the market. The objective is to build sound customer franchises across distinct businesses so as to be the preferred provider of loans services to its customer segments, and to achieve healthy growth in profitability, consistent with the companys risk appetite. The company is committed to maintain the highest level of ethical standards, professional integrity, corporate governance and regulatory compliance. SGFCS business philosophy is based on two core values Operational Excellence and Customer Focus. The authorized capital of SGFC is Rs 2500000.The co. Has its branches in raisinghnagar and sri ganganagar. The firm is having good and reputed name in its field and it also good working environment with flexible working policies.

CHAPTER 2: REVIEW OF LITERATURE LITERATURE REVIW OF COMPARATIVE STATEMENT ANALYSIS Though there are innumerable literatures available on the subject, the most appropriate studies have been reviewed.

Ahindra Chakrabati (1988-89)- published an articles Performance of public sector enterprises a Case study on fertilizers in The Indian journal of public enterprise. He made analysis of consumption and production of fertilizer by public sector; he also made analysis of profit and loss statement. He gave suggestion to improve the overall performance of public enterprise.

Dr. Promod Kumar (1991) published a book on Analysis of financial statement of Indian Industries The study covered the 17 private sector, 5 state owned public sector and 1 central public sector companies. He studied analysis of activities, assessment of profitability, return on capital investment, analysis of financial structure, analysis of fixed assets and working capital. In his research he revealed various problems of industries and suggested remedies for the problems. He also suggested for the improvement of profitability and techniques of cost control.

Dutts S.K (1992) has written an article on Indian tea industry an appraisal which was published in Management accountant. He analyzed the profitability, liquidity and financial efficiency by using various ratios.

S.J.parmar (1998) on Financial Efficiency-Modern methods, tools & Techniques for the period from 1998-89 to 1994-95.He had made an attempt to analyze financial strength, liquidity, profitability, cost and sales trend and social welfare trend by using various ratios analysis, common size analysis and value added analysis. He made several suggestions for the improvement of profitability of industry. In his analysis, he indicates various reasons for higher cost, low profitability, and inefficient use of internal resources.

Dr. Sugan C. Jain (2002) has written a book on Performance appraisal automobile industry In his study he has analyses the performance of the automobile industry and presented comparative study of some national and international units. The operational efficiency and profitability had been analyzed using the composite index approach. He made several suggestions from the strengthening the financial soundness improving profitability, working capital the performance of fixed assets.

Dr Sanjay Bhayani (2003) published Practical financial statement analysis The study covered 16 public limited cement companies in private sector. He made study of analysis of profitability, working capital, capital structure and activity of Indian cement industry. In his research he revealed various problems of cement industries and suggested remedies for the problems. He also suggested for the improvement of profitability and techniques of cost control.

Ram Kumar,Kakani Biswatosh saha and V.N.Reddy has written research paper on Determinants of Financial Performance of Indian Corporate Sector in the PostLiberalization Era: An Exploratory Study. This paper attempts to provide an empirical validation of the widely held existing theories on the determinants of firm performance in the Indian context. The study uses financial statement and capital market data of 566 large Indian firms over a time frame of eight years divided into two sub-periods (viz., 1992-96, and 19962000) to study Indian firms' financial performance across various dimensions viz., shareholder value, accounting profitability and its components, growth and risk of the sample firms. It reveals that even on the same data, the determinants of marketdiffer due to

based performance measures and accounting-based performance measures

influence of 'Capital Market Conditions'. We found that size, marketing expenditure, and international diversification had a positive relation with a firm's market valuation. Apart from these firm attributes that reflect either operating parameters of firms or 'strategic choice' of firm managers, we also found that a firm's ownership composition, particularly the level of equity ownership by Domestic Financial Institutions and Dispersed Public Shareholders, and the leverage of the firm were important factors affecting its financial performance. The different implications of the findings for various stakeholders of a firm are also discussed.

CHAPTER 3: RESEARCH METHODOLOGY Nature of study The design of the study will be descriptive in nature. The main purpose of the study is to find out the comparative statement analysis of SHRI GURU NANAK FINACE CO. LIMITED. And making there trends. Sources of Data This is an analytical study based mainly on Secondary data collected. The Secondary data was taken from the literature available on the subject, information available on internet, published articles and different books on financial sector. Research Designs and statistical tools applied The research designs methods of financial analysis. Through comparative balance sheet in comparative statement, I am studying balance sheet of SHRI GURU NANAK FINACE CO. LIMITED. So the comparative statement analysis and trend analysis is the core part of the project. The different tools used to present the data are: Bar- Diagrams Histograms Line charts

CHAPTER 4: DATA ANALYSIS Introduction 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 statement is not an end in itself as no managerial can be drawn from these statement alone. However, the information provided in the financial statement is of immense use in making decision 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 item of the balance sheet and the profit and loss account. There are various methods used in analyzing financial statements, such as comparative statements, trend analysis, common-size statement, schedule of change in working capital, funds flow and cash flow analysis, cost-volume-profit analysis and ratio analysis. The term financial analysis, also know as analysis and interpretation of financial statement, refers to the process of determining financial strengths and weaknesses of the firm of the firm by establishing strategic relationship between the item the balance sheet, profit and loss account and other operative data. Financial analysis is a process of evaluating the relationship between component parts of a financial statement to obtain a better understanding of a firms position and performances According to Matclf andTitard Financial statement analysis is largely a study of relationship among the various financial factors in a business as disclosed by single set-of statements and a study of the trend of these factors as shown in a series of statement. According to Myers The term financial statement analysis include both analysis and interpretation. The analysis and interpretation of financial analysis statements is essential to bring out the mystery behind the figure in financial statements. Financial statement is an attempt to determine the significance and meaning of the financial statement data so the forecast may be made of the future earning, ability to pay interest and maturities and profitability of a sound dividend policy.

Types of Financial Analysis I can classify various types of financial analysis into different categories depending upon (i) the material used, and (ii) the method of operation followed in the analysis or the modus operandi of analysis. (i)On the basis of material used: According to material used, financial analysis can be of two types (a) External analysis and (b) Internal analysis.

a. External Analysis: This analysis is done by outsiders who do not have access to the detailed internal accounting records of the business firm. These outsiders include investors, potential investors, creditors, potential creditors, government agencies, credit agencies and the general public. For financial analysis, this external party to firm depends almost entirely on the published financial statement. External analysi, thus serves only a limited purpose. However, the changes in the government regulations requiring business firm makes available more detailed information to the public through audited accounts have considerably improved the position of the external analysis.

b. Internal Analysis: The analysis conducted by persons who have access to the internal accounting records of a business firm is known as internal analysis. Such an

analysis can, therefore, be performed by executive and employees of the organization as well as government agencies which have statutory powers vested in them. Financial analysis for managerial purpose is the internal type of analysis that can be effected depending upon the purpose to be achieved. (ii) On the basis of modus operandi: According to the method of operation followed in the analysis financial can also be of two types: (a) horizontal analysis (b) vertical analysis.

a. Horizontal Analysis: Horizontal analysis refers to the comparison of financial data of a company for several years. Thus figure for this type of analysis are presented horizontally over a number of columns. The figures of the various years are compared with standard or base years. A base year chosen as beginning point. This type of analysis is also called Dynamic Analysis as it is based on the data from year to year rather than on data of any one year. The horizontal analysis makes it possible to focus attention on items that have changed

significantly during the period under review. Comparison of an item over several periods with a base year may show a trend developing. Comparative statement and trend percentages are two tools employed in horizontal analysis.

b. Vertical Analysis: Vertical analysis refers to the study of relationship of the various items in the financial statements of one accounting period. In this types of analysis the figure from financial statement of a year are compared with a base selected from the same years statement. It is also knows as Static Analysis. Common-size financial analysis statement and financial ratio are the tools employed in vertical analysis. Since vertical analysis considers data for one time period only, it is not conducive to a proper analysis of financial statements. However, it may be used along with horizontal analysis to make it more effective and meaningful.

Procedure of Financial Statements There are three steps involved in the analysis of financial statements. These are: (i) selection (ii) classification (iii) interpretation, the first step involves selection of information (data) relevant to the purpose of analysis of financial statements. The second step involved is the methodical classification of the data and the third step include drawing and conclusions.

The following procedure is adopted for the analysis and interpretation of financial statements: 1. The analysis should acquaint himself with the principal and postulates of accounting. He should know the plans and policies of the management so that he may be able to find out whether these plans properly executed or not. 2. The extent of analysis should be determined so that the sphere of work may be decided. If the aim is to find out the earning capacity of the enterprise than analysis of income statement will be undertaken. On the other hand. If financial position is to be studied then balance sheet analysis will be necessary. 3. The financial data given in the statement should be re-organized and re-arranged. It will involve the grouping of similar data under same heads, breaking done of individuals components of statements according to nature. The data is reduced to a standard form. 4. A relationship is established among financial among financial statements with the help tools and techniques of analysis such as ratio, trends, common size, funds flow etc.

5. The information is interpreted in a simple and understandable way. The significance and utility of financial data is explained for helping decision-talking. 6. The conclusions drawn from interpretation are presented to the management in the form if reports. Methods or Devices of Financial Analysis The analysis and interpretation of financial statements is used to determine the financial position and result of operation as well. A number of methods or devices are used to study the relationship between different statements. An effort is made to use those devices which clearly analysis position of the enterprise.

The following methods of analysis are generally used: Comparative Statement Trend analysis Common Size Statement Cash Flow Analysis Funds flows Ratio analysis Cost volume - Profit analysis.

Comparative Statement: .Comparative balance sheet analysis is the study of the trend of the same items, group of item and computed item in two or more balance sheets of the same business enterprise on different data. Trend analysis: This method determines the direction uwards and involves the computation of the percentage relationship that each statement item bears to the same item in base year. Common size Statement: The common size statements balance sheet statements are shown in analytical percentages. The figures are shown as percentages of total assets, total liabilities and total sales. Total assets are taken as 100 and different assets are expressed as a percentage of the total, similarly various liabilities are taken as a part of total liabilities. Cash flow Statement: Cash flow statement is a statement which describes the inflow(Sources) and outflow (uses) of cash and cash equivalent in an enterprise during a specified period of time. Ratio Analysis: Ratio is a simple arithmetical expression of the relationship of one number to another. It may be defined as the indicated quotient of two mathematical

expressions. Cost Volume Profit Analysis: Cost Volume Profit Analysis is a technique for studying the relationship between cost, volume and profit. Profits of an understanding depend upon a large number of factors. But the most important of these factors are the cost of manufacture, volume of sales and the selling prices of the product.

(BALANCE SHEET AS AT MARCH 31st, 2011) SOURCES OF FUNDS Shareholders fund Capital Reserves and Surpluses Loan Funds Unsecured loans Deferred tax liability- Net Total Applications of Funds Fixed assets Gross Block less: Depreciation Net Block Capital work- in- progress Decommissioned Assets Investments Current Assets and Loans & Advances Accrued Interest (Net) Inventories Sundry Debtors Cash & Bank balance Loans & Advances Less: Current Liabilities and provisions Liabilities Provisions Net current assets Intra/Inter Circle Remittance Total As at march,2011 (Rs in lakh) 2500000 7,397,566 153,370 12,384 10063320 As at march,2010 (Rs in lakh) 2500000 7,613,358 341,384 64,484 10519226 Increase/D ecrease 0 -215,792 -188,014 -52,100 -455,906 % change

0 -2.91706759 -122.588511 -420.704134 -4.33402609

16,046,962 8,658,930 1,388,032 596,523 7,897 7,992,452 20,000 85,521 505,833 474,457 3,034,340.0 0 1,397,028 5,497,179 4,277,642 557,602 4,835,244 661,935 138,933 8,813,320

13,224,291 7,792,203 5,432,088 492,864 4,644 5,929,596 20,000 87,239 457,258 472,054 3,813,430.00 944,880 5,774,861 2,072,702 493,878 2,566,580 3,208,281 111,349 9,269,226

2,822,671 866,727 -4,044,056 103,659 3,253 2,062,856 0 0 -1,718 48,575 2,403 -779,090 452,148 -277,682 2,204,940 63,724 2,268,664 -2,546,346 27,584 -455,906

17.59006471 10.00963168 -291.351784 17.37720088 41.19285805 25.81005178 0 -2.00886332 9.602971732 0.506473716 -25.6757647 32.36499197 -5.05135452 51.54568802 11.428223 46.91932817 -384.682182 19.85417431 -5.17292008

Interpretation:The comparative balance sheet of the company reveals that during 2011 there has been a increase in fixed assets of Rs. 2,062,856 lakhs, i.e.25.81% while long-term liabilities to outsiders have decreased by Rs. 455,906 lakhs, i.e.5.17%. There has also been decrease by Rs.215,792 lakh, i.e. 2.91% in reserve and surplus of the company. Thus, the company has used long term resources to finance additional working capital.

The current assets have decreased by Rs. 277,682 lakhs, i.e. 5.05% and cash has decreased by Rs. 779,090 lakhs. On the other hand, there has been increased in inventories amounting to Rs. 48,575 lakhs. Here in this year company has utilized its cash in purchasing more inventory and fixed assets as above also it shows increase in fixed assets. The current liabilities have decreased only by Rs 455,906 lakhs, i.e. 5.17%. The overall financial position of the company is satisfactory.

(BALANCE SHEET AS AT MARCH 31st, 2010) SOURCES OF FUNDS Shareholders fund Capital Reserves and Surpluses Loan Funds Unsecured loans Deferred tax liability- Net Total Applications of Funds Fixed assets Gross Block less: Depreciation Net Block Capital work- in- progress Decommissioned Assets Investments Current Assets and Loans & Advances Accrued Interest (Net) Inventories Sundry Debtors Cash & Bank balance Loans & Advances Less: Current Liabilities and provisions Liabilities Provisions Net current assets Intra/Inter Circle Remittance Total As at As at march,2010 (Rs march,2009 in lakh) (Rs in lakh) 2500000 7,613,358 341,384 64,484 10519226 2500000 7,562,825 338,887 131,053 10532765 Increase/D ecrease 0 50,533 2,497 -66,569 -13,539 % change

0 0.663741282 0.731434396 -103.233360 -0.12854174

13,224,291 7,792,203 5,432,088 492,864 4,644 5,929,596 20,000

12,457,823 6,987,974 5,469,849 266,562 389 5,736,800 20,000

87,239 137,687 457,258 322,006 472,054 546,551 3,813,430.00 4,055,158.00 944,880 744,441 5,774,861 5,805,843

766,468 804,229 -37,761 226,302 4,255 192,796 0 0 -50,448 135,252 -74,497 -241,728 200,439 -30,982

5.795909966 10.32094518 -0.69514706 45.915709 91.62360034 3.251418815 0 -57.8273479 29.57892481 -15.7814572 -6.33886029 21.21316993 -0.53649776

2,072,702 493,878 2,566,580 3,208,281 111,349 9,269,226

1,739,788 606,321 2,346,109 3,459,734 66,231 9,282,765

332,914 -112,443 220,471 -251,453 45,118 -13,539

16.06183619 -22.7673636 8.590069275 -7.83762395 40.51944786 -0.14606398

Interpretation:-

The comparative balance sheet of the company reveals that during year 2010 there has been increase in fixed assets of Rs 192,796 lakhs i.e. 3.25% while outside liabilities to outsiders have decreased by Rs 13,539 lakhs i.e. 0.14%. There has also been increase by Rs 50,533 lakhs i.e. 0.66% in reserves and surpluses of the company. This all shows that company is in good position and running in profits as company is purchasing fixed assets also and keeping some amount in reserves also. Current assets have decreased by Rs. 30,982 lakh and cash and bank balances also decreased Rs. 241,728 i.e. 6.33%, investments not increased on the other hand there has been an increase in inventories amount Rs. 135,252 lakh i.e. 29.57%,this reveals that company is using its cash in purchasing inventory in year 2010,thus its cash balance gets reduced in year 2009 as compared to year 2009.The current liabilities have decreased by Rs. 13,539 lakh i.e. 0.14%.This further confirms that the company has revised long term finances. The overall financial position of the company is satisfactory

(BALANCE SHEET AS AT MARCH 31st, 2009 SOURCES OF FUNDS Shareholders fund Capital Reserves and Surpluses Loan Funds Unsecured loans Deferred tax liability- Net Total Applications of Funds Fixed assets Gross Block less: Depreciation Net Block Capital work- in- progress Decommissioned Assets Investments Current Assets and Loans & Advances Accrued Interest (Net) Inventories Sundry Debtors Cash & Bank balance Loans & Advances Less: Current Liabilities and provisions Liabilities Provisions Net current assets Intra/Inter Circle Remittance Total As at march,2009 (Rs in lakh) 2500000 7,562,825 338,887 131,053 10532765 As at march,2008 (Rs in lakh) 2500000 7,444,802 554,366 124,605 10623773 Increase/Dec % change rease 0 118,023 0 -215,479 6,448 -91,008 0 1.560567645 -63.5843216 4.920146811 -0.856644809

12,457,823 6,987,974 5,469,849 266,562 389 5,736,800 20,000

11,864,901 6,071,511 5,793,390 256,860 6,444 6,056,694 20,000

592,922 916,463 -323,541 9,702 -6,055 -319,894 0

4.759435096 13.1148599 -5.91498961 3.639678574 -1556.55527 -5.57617487 0

137,687 114,148 322,006 242,847 546,551 558,066 4,055,158.00 3,745,296.00 744,441 714,431 5,805,843 5,374,788

23,539 79,159 -11,515 309,862 30,010 431,055

17.09602214 24.5830823 -2.10684822 7.641181922 4.031212682 7.424503212

1,739,788 606,321 2,346,109 3,459,734 66,231 9,282,765

1,667,919 514,858 2,182,777 3,192,011 105,068 9,373,773

71,869 91,463 163,332 267,723 -38,837 -91,008

4.130905605 15.08491377 6.961824877 7.738253866 -58.6387039 -0.98039754

Interpretation:The comparative balance sheet of the company reveals that during 2009 there has been on decrease in fixed assets of Rs. 319894 lakh i.e. -5.28% while long term liabilities to outsiders have relatively decrease by Rs. 91008 lakh i.e.-0.97. This fact depicts the policy of the company is to not purchase fixed assets from the long-term sources of finance there by not affect the working capital.

Current assets have increased by Rs. 163,332 lakh and cash and bank balances also increased Rs. 309,862 i.e. 8.27%, investments not increased on the other hand there has been an increase in inventories amount Rs. 79,159 lakhi.e.32.60%. The current liabilities have increased by Rs. 163,332 lakh i.e. 7.84 %.This further confirms that the company has revised long term finances. The overall financial position of the company is satisfactory

SOURCES OF FUNDS Shareholders fund Capital Reserves and Surpluses Loan Funds Unsecured loans Deferred tax liability- Net Total Applications of Funds Fixed assets Gross Block less: Depreciation Net Block Capital work- in- progress Decommissioned Assets

(BALANCE SHEET AS AT MARCH 31st, 2008 As at As at march,2008 march,2007 Increase/De (Rs in lakh) (Rs in lakh) crease 2500000 7,444,802 554,366 124,605 10623773 2500000 6,825,651 728,393 170,400 10224444 0 619,151 -174,027 -45,795 399,329

% change 0 8.316554288 -31.39207671 -36.75213675 3.905630467

Investments Current Assets and Loans & Advances Accrued Interest (Net) Inventories Sundry Debtors Cash & Bank balance Loans & Advances Less: Current Liabilities and provisions Liabilities Provisions Net current assets Intra/Inter Circle Remittance Total

11,864,901 6,071,511 5,793,390 256,860 6,444 6,056,694 20,000 114,148 242,847 558,066 3,745,296.0 0 714,431 5,374,788 1,667,919 514,858 2,182,777 3,192,011 105,068 9,373,773

11,169,203 5,150,354 6,018,849 382,048 7,346 6,408,243 20,000 63,627 278,922 630,205 3,057,948.00 923,207 4,953,905 1,612,324 888,223 2,500,547 2,453,362 92,839 8,974,444

695,698 921,157 -225,459 -125,188 -902 -351,549 0 50,521 -36,075 -72,139 687,348 -208,776 420,883 55,595 -373,365 -317,770 738,649 12,229 399,329

5.863496038 15.17179167 -3.891659288 -48.73783384 -13.99751707 -5.804305121 0 44.25920734 -14.85503218 -12.92660725 18.35230113 -29.2226961 7.830690252 3.333195437 -72.51805352 -14.55806067 23.14055309 11.63912895 4.260066891

Interpretation:The comparative balance sheet of the company reveals that during 2008 there has been a decrease in fixed assets of 351,549 i.e. -5.49% while long term liabilities to outsiders have increased by Rs. 399,329 i.e. 4.45%. There has also been increase of Rs. 619,151 lakhs, i.e. 9.07% in reserves and surplus of the company. The current assets have increased by Rs. 420,879 lakhs, i.e. 8.50% and cash and bank balance has increased by Rs. 687,348 lakhs, as company might have sold its fixed assets as above company is showing decrease in fixed assets this year, thus it results in increase in cash balance of the company. On the other hand, the current liabilities have increased only by Rs. 55,595 lakhs, i.e. 3.45%. These further confirm that the company has raised long term finance even for the current assets resulting into an improvement in the liquidity position of the company.Inventories have decreased from Rs. 278922 lakhs to Rs. 242,847 lakhs, i.e.12.93% which shows that there have increased in demand. It is better for business. The overall financial position of the company is satisfactory

(BALANCE SHEET AS AT MARCH 31st, 2007) As at march,2007 (Rs in lakh) 2500000 6,825,651 728,393 170,400 10224444 As at march,2006 (Rs in lakh) 2500000 6,027,911 750,089 304,402 9582402 Increase/De crease 0 797,740 -21,696 -134,002 570,042

SOURCES OF FUNDS Shareholders fund Capital Reserves and Surpluses Loan Funds Unsecured loans Deferred tax liability- Net Total Applications of Funds Fixed assets Gross Block less: Depreciation Net Block Capital work- in- progress Decommissioned Assets Investments Current Assets and Loans & Advances Accrued Interest (Net) Inventories Sundry Debtors Cash & Bank balance Loans & Advances Less: Current Liabilities and provisions Liabilities Provisions Net current assets Intra/Inter Circle Remittance Total

% change 0 11.68738 -2.97861 -78.6397 5.94884247

11,169,203 5,150,354 6,018,849 382,048 7,346 6,408,243 20,000 63,627 278,922 630,205 3,057,948.0 0 923,207 4,953,905 1,612,324 888,223 2,500,547 2,453,362 92,839 8,974,444

10,410,216 4,233,309 6,176,907 457,226 8,045 6,642,178 20,000 14,368 224,535 663,703 2,193,113 752,160 3,847,849 1,461,541 738,616 2,200,157 1,647,722 94,502 8,404,402

758,987 917,045 -158,058 -75,178 -699 -233,935 0 49,259 54,387 -33,498 864,835 171,047 1,106,056 150,783 149,607 300,390 805,640 -1,663 570,042

6.795355 17.80548 -2.62605 -19.6776 -9.51538 -3.65053 0 77.41839 19.499 -5.31541 28.28155 18.52748 22.32695 9.351904 16.84341 12.01297 32.8382 -1.79127 6.351836392

Interpretation:The comparative balance sheet of the company reveals that during 2007 there has been a decrease in fixed assets of Rs. 233,935 lakhs, i.e. 3.65% while long-term liabilities to outsiders have increased by Rs. 570,042 lakhs, i.e.6.35%. There has also been increase by Rs. 797,740 lakh, i.e. 11.68% in reserve and surplus of the company. Thus, it shows that the company has used long term resources to finance additional working capital. As the companys reserves and surpluses are also showing 11.68% increase it reflects that companys profits are increasing in year 2007 in comparison to year 2006

The current assets have increased by Rs. 1,106,056 lakhs, i.e. 22.3% and cash has increased by Rs. 864,835 lakhs. On the other hand, there has been increased in inventories amounting to Rs. 54,387 lakhs. The current liabilities have increased only by Rs. 150,783 lakhs, i.e. 10.32%. These further confirm that the company has raised long term finance even for the current assets resulting into an improvement in the liquidity position of the company. The overall financial position of the company is satisfactory.

INTERPRETATION OF TREND ANALYSIS OF BALANCE SHEET WITH THE HELP OF CHARTS

1. SHARE CAPITAL

Year 2006 2007 2008 2009 2010 2011

Share capital 100 100 100 100 100 100

Share capital
120 100 80 60 40 20 0 2006 2007 2008 2009 2010 2011 Share capital

Interpretation: The chart of share capital shows that it remain same in the all 6 years from 2006 to 2011 i.e. 2500000

2. RESERVES AND SURPLUSES

Year 2006 2007 2008 2009 2010 2011

Reserves and surpluses 100 113.23 123.5 125.46 126.3 122.72

Reserves and surpluses

140 120 100 80 60 40 20 0 2006 2007 2008 2009 2010 2011 Reserves and surpluses

INTERPRETATION: The above chart shows that reserves and surpluses of the company is constantly increasing from year 2006 up to year 2010 even though there is a slight increase, this shows that company is transferring more and more profits in reserves and surpluses year by year. This way company is investing more profits in the growth of the company. But in year 2011 there is a slight decrease in reserves and surplus as compared to the previous year which indicates company is investing its amount somewhere else in other projects.

3. UNSECURED LOAN

Year 2006 2007 2008 2009 2010 2011

Unsecured Loan 100 97.1 73.9 45.17 45.51 20.44

Unsecured Loan
120 100 80 60 40 20 0 2006 2007 2008 2009 2010 2011 Unsecured Loan

Interpretation: This chart shows that unsecured loans are decreasing year by year as comparative to the base year 2006 which is good for the business that company is reducing its risk as unsecured loans are not collateralized by a lien on specific assets of the borrower in case of liquidation of the company or failure to meet the terms of repayment.

4. DEFERREFD TAX LIABILITY

Year 2006 2007 2008 2009 2010 2011

deferred tax liability 100 55.97 40.93 43.05 21.18 4.06

deferred tax liability

120 100 80 60 40 20 0 2006 2007 2008 2009 2010 2011 deferred tax liability

Interpretation: This chart shows that deferred tax liabilities are continuously decreasing in all the five years as comparative to the base year 2006 which is a good sign for a business as this is a liability which may or may not be realized during any given year. Thus companys risk is reducing every year by year. But it has slightly increased in year 2009 as comparative t year 2007 but if we see it in comparison of base year it shows a huge decrease. Overall deferred tax liability chart shows a improving condition of the company.

5. TOTAL CAPITAL EMPLOYED

Year 2006 2007 2008 2009 2010 2011

Total Capital employed 100 106.78 111.53 110.45 110.29 104.86

Total Capital employed

114 112 110 108 106 104 102 100 98 96 94 2006 2007 2008 2009 2010 2011

Total Capital employed

INTERPRETATION: This chart shows that there is continues increase in the capital employed from year 2006 to year 2007 which refers that company is employing more and more capital year by year to run its business. But in year 2008 it decreased and remains almost constant in next year also and there is a further decrease in capital employed in year 2011. As Capital employed is the value of the assets that contribute to a company's ability to generate revenue i.e. its liquidity. Thus it shows that companys position is going bit down as comparative to the first three years.

6. TOTAL FIXED ASSETS

Year 2006 2007 2008 2009 2010 2011

Total Fixed Assets 100 96.47 91.18 86.36 89.27 120.32

Total Fixed Assets

140 120 100 80 60 40 20 0 2006 2007 2008 2009 2010 2011 Total Fixed Assets

Interpretation: This chart shows that fixed assets are continuously showing decrease up to year 2009 as comparative to base year 2006. There is decrease in fixed assets in year 2010 also as comparative to base year but when we see it in comparison of year 2009 its showing a slight increase, but in year 2011 there is a huge increase in fixed assets as comparative to base year. As the benefits that a business obtains from a fixed asset extend over several years. For example, a company may use the same piece of production machinery for many years, whereas a company-owned motor car used by a salesman probably has a shorter useful life. By accepting that the life of a fixed asset is limited, the accounts of a business need to recognize the benefits of the fixed asset as it is "consumed" over several years. Thus increase in the fixed assets is not bad but it is somewhere good for the business.

7. INVESTMENTS

Year 2006 2007 2008 2009 2010 2011

Investments 100 100 100 100 100 100

Investments
120 100 80 60 40 20 0 2006 2007 2008 2009 2010 2011 Investments

Interpretation: The above chart shows that the investments of the company remain same in all the six years. There is no change in the investments of the company.

8. TOTAL CURRENT ASSETS, LOANS AND ADVANCES Year 2006 2007 2008 2009 2010 2011 Total current assets, loans and advances 100 128.74 139.68 150.88 150.08 142.86

Total current assets, loans and advances

160 140 120 100 80 60 40 20 0 2006 2007 2008 2009 2010 2011 Total current assets, loans and advances

Interpretation: This chart shows that there is a continuous increase in the total current assets, loans and advances as comparative to the base year 2006. Current asset is an indication to an outside creditor, whether the company has got the ability to meet its immediate payment obligation or not. Thus increasing current asset indicates the corporate poor inventory management and inability to recover its dues.

9. TOTAL CURRENT LIABILITIES AND PROVISIONS Year 2006 2007 2008 2009 2010 2011 Total current liabilities and provisions 100 113.65 99.21 106.63 116.65 219.76

Total current liabilities and provisions

250 200 150 100 50 0 2006 2007 2008 2009 2010 2011 Total current liabilities and provisions

Interpretation: This chart shows an increase in current liabilities and provisions for all the years except year 2008 in 2008 there is a slight decrease i.e 99.21%as comparative to the base year 2005. As provisions are increasing that means company is facing losses which is not a good sign for a co.

10. NET CURRENT ASSETS Year 2006 2007 2008 2009 2010 2011 Net current assets 100 148.89 193.72 209.97 194.71 40.17

Net current assets

250 200 150 100 50 0 2006 2007 2008 2009 2010 2011 Net current assets

Interpretation: This chart shows that there is a continuous increase in the net current assets except year 2011 as in that year there is a huge decrease in net current assets of the company as comparative to the base year 2006. The assets of a business that can be applied to its operation is called net current assets. As the chart shows the increase in net current assets of the company it is good for the company as company is having the money to carry its operations. But year 2011 shows huge decrease thus the position of company is not satisfactory in year 2011 as it doesnt have the enough sources to run its operations.

Conclusion:After overhauling the five years balance sheet of SHRI GURU NANAK FINANCE CO.LTD. and all condition, I have to reach this conclusion that; There was not much good financial position of SHRI GURU NANAK FINANCE CO.LTD. in year 2011 as comparison to 2006 and previous years. There was no change in investment of the company in all the 6 years. If there are more investment than financial position of SHRI GURU NANAK FINANCE CO.LTD. may be improved and earn more profit at present time. Working process of SHRI GURU NANAK FINANCE CO.LTD. is take very long time because of which, SHRI GURU NANAK FINANCE CO.LTD. is not being able to progress. So improvement in the working process is required. SHRI GURU NANAK FINANCE CO.LTD. is facing the capital problem because of which financial position of CO. is affected. Co. is paying more taxes. Because of paying more taxes, financial position of co. are affected. Overall at present time, financial position of co. is good based on year 2006-2007. SHRI GURU NANAK FINANCE CO.LTD. earned more profit in year 2006 but year by year co. is on loss.

Suggestion: The study has provided with the useful data from the respondents. There has a lot to be recommended. Following are the recommendations: There should be increase in investment of co. So that could be earned more profit. Because, if investment will be high than profit will be earned high. There should be improved the working process of co. Because working process of co. is take more time. Departments of co. do not have good coordination. So there should be good coordination in departments of co. If coordination will have good in departments, than there will not has to face any problem in proper work. Time to time, there should be provided training of employee. So that they could take information about the new technology of them proper working process. There should be good communication between each departments of co.

Bibliography:Management Accounting Shashi K. Gupta & R.K. Sharma Financial Management I.M. Pandey. Research Paper: Financial Analysis Hampton John J. Financial Decision Making, Second Ed p.75 Web sites www.shrigurunanakfinance.co.in www.slideshare.net www.monecontrol.com

Annual Reports of SHRI GURU NANAK FINANCE CO.LTD. 2006-2011. Departmental Records