AMBEDKAR UNIVERSITY DELHI

SCHOOL OF BUSINESS, PUBLIC POLICY

& SOCIAL ENTREPRENEURSHIP

SUMMER INTERNSHIP REPORT

(4th April, 2016 – 31st May, 2016)

NAME : Pankaj Prasad

COMPANY : Primero Skill and Training Pvt. Ltd.
AREA : Finance
SUPERVISOR : Rohit Rawat(Assistant Manager)
 ACKNOWLEDGEMENT

It is my pleasure to acknowledge and express gratitude to all those who helped me throughout
the duration of my project as well as people who gave me an opportunity to be a part of such an
esteemed organization.

I thank my mentor Mr. Rohit Rawat , Senior Manager at Primero Skill and Training Pvt. Ltd. For
his continuous support throughout the project. Without his efforts and mentorship, the project
would not have been possible. His experience and methodology of providing training helped me
perform well and also provided me with a rich learning experience.

I also wish to thank my faculty member, Dr. Kanwal Anil, Assistant Professor, at Ambedkar
University Delhi for her valuable inputs In Financial management and continuous guidance to
accomplish this project work successfully.

Finally, my heartfelt thanks to all the people and staff at Primero Skill and Training Pvt. Ltd ,
faculty members at SBPPSE and my parents who have appreciated and supported my work and
helped me remain motivated throughout the duration of this project.

Pankaj Prasad (FY-26)

 CONTENTS:

Chapter Particular(s) Pg. no.

certificate

Acknowledgements
1.
4
Executive Summary
2.
6
Company Profile
3.
10
Introduction to financial
analysis
4.
Research study 11
5.
Project overview 12
6.
16
Balance sheet analysis
7.
17
Income statement

8.
18
Ratio Analysis
9 24
Conclusion
10.
24
References
 EXECUTIVE SUMMARY

Finance is defined as a provision of money when it is required. Every new enterprise needs to
finance to start and carry out its operations. Finance is the lifeblood of an organization. So
finance should be managed effectively. Financial statements are prepared primarily for the
decision making. Financial statement analysis is refers to determining the financial strength and
weakness of the firm by properly establishing strategic relationship between the items of balance
sheet and profit and loss account. There are various methods and techniques used din analyzing
financial statement such as comparative statement, common size statement, and the most
important ratio analysis.

Financial statement analysis helps in study of the company’s revenue growing, actually making a
profits, competitors and ability to repay its debt. Financial Statement Analysis is a method of
reviewing and analyzing a company’s accounting reports (financial statements) in order to gauge
its past, present or projected future performance.
OBJECTIVE OF THE STUDY

 To know the financial position of the Primero skills and traning pvt. Ltd.
 The company has the strength to fulfill its obligations or not.
 Growth rate of Primero skills and traning pvt. Ltd.
 To know the liquidity position of Primero skills and traning pvt. Ltd.
 To know the long term solvency of Primero skills and traning pvt. Ltd.
 To know the operation efficiency of Primero skills and traning pvt. Ltd.
 To know the overall profitability Primero skills and traning pvt. Ltd.

Place of Study

All the activities are carried out in the Primero skills and traning pvt. Ltd.
 COMPANY PROFILE:
(PRIMERO SKILLS AND TRAINING PVT. LTD.)

Mission:

To contribute to the growth of India by providing skills to individuals and organizations that
enable them to realize their potentials and thereby enabling Primero to be amongst the top 5
Valued Skill Organization in the country.

Vision:

Provide Skills that transforms lives with sustainable Livelihood and Dignity. Primero Skills and
Training Pvt. Ltd. was established in 2014. With operations starting from October 2015, Primero
has trained over 7000 candidates and established 14 self run functional centers in just two
quarters, ended march 2016.

Primero Skills & Training private Limited is a Private incorporated on 30 September 2014. It is
classified as Non-govt. Company and is registered at Registrar of Companies, Delhi. Its
authorized share capital is Rs. 2,500,000 and its paid up capital is Rs. 2,500,000.

Primero Skills & Training private Limited's Annual General Meeting (AGM) was last held on 26
September 2015 and as per records from Ministry of Corporate Affairs (MCA), its balance sheet
was on 31st March 2015 and 2016.

Directors of Primero Skills & Training private Limited are:

1. Jayanta Das

2. and Goutam Roy.

Company Category Company limited by shares
Company Sub category Non-Govt. Company
Class of Company Private
Date of Incorporation 30th September, 2014
Age of Company 1 year, 8 months, 21 days

Primero skills and training Pvt. Ltd. Was established in 2014. With operations starting from
October 2015, Primero has trained over 7000 candidates and established 2014 self run functional
centers in just two quarters, end march 2016.

Primero’s main focus is to provide placement opportunities to migrants with accommodations

and meal facility such that their migration to any new region and culture is seamless and hassle –
free.

SERVICES:

The centers created have classrooms and lab facility for candidates to get hands-on experience of
the job. Focus of skill training to ensure candidates are able to understand their jobs thoroughly
and provide them adequate practice. This helps them to perform satisfactorily at their workplace.

PROJECTS:

Primero is setting up 8 multi skills centers at Mizoram, Gurgaon, Salt lake, Birbhum, Silliguri,
Silchar, Murshidabad and Guwahati. It also has access to 269 centers till 31stMarch 2016 pan
India covering states of India and 207 districts.

CLIENTS:

Primero has proactively tied up with some well-known recruiters like Taj Hospitality, Speciality
Restaurants, and Café Coffee Day for providing employment opportunities for successful
candidates.
Primero Skills and Training Pvt. Ltd, a Delhi-based private skill development outfit, said it has
given training to 276 unskilled unemployed in tea plantation work in North Bengal and Assam
under Pradhan Mantri Kaushal Vikas Yojana(PMKVY).

It is also beginning training in tourism/ hospitality, banking and financial services and bamboo
plantation in West Bengal, Assam, Mizoram and Tripura. It has plans to set up training centres in
Bihar, Jharkhand and Odisha. In each skill set area, the organization is also trying to create job or
entrepreneurial opportunities for the trained.

Primero has a pool of training experts with rich experience in agriculture (Poultry, Tea, Piggery
& Bamboo) tourism and hospitality, banking and Insurance and technical courses. It has created
programme for life insurance industry and agriculture under modular employment scheme of
DGET.
We have enrolled and trained 7011 candidates for Skilling under Pradhan Mantri Kaushal Vikas
Yojana (PMKVY) in the period October 2015 to march M016. The training is of minimum 2
months duration. Training involves classroom training program that is activity based and
practical training is conducted in Labs that have been setup within the centre itself. On- field
training is provided to candidates enrolled for Bamboo Growers program.

Entrepreneurship Development Programme

Reliance Commercial and Primero Skills have launched a free entrepreneurship training
programme. At present we are doing this in Delhi and would be extended to other cities. Its a
three hour interactive programme absolutely free and where participants get to pick up
entrepreneurship tips and skills on various business areas. This is primarily focused for small and
medium businessmen but we want to also cover it for student entrepreneurs who are about to
start business. At the end there is a certificate of participation provided.
Our Goals:

1) To provide Training to students and assist in generating quality employment for each of
them. To also assist in self sustaining micro ownership models
2) To be amongst the best Skill development companies in India
3) To provide programs that encourage the students in learning further and encouraging the
youth in the country
4) To Impact positively on the Livelihood of students by way of skilling
5) To create Business leaders
6) Upgrading the weaker section of the society
Introduction to Financial Analysis

Financial Analysis involves examining the economic, financial and other qualitative and
quantitative factors related to a security in order to determine its intrinsic value.

It attempts to study everything that can affect the security's value, including macroeconomic
factors (like the overall economy and industry conditions) and individually specific factors (like
the financial condition and management of companies).

Financial analysis, which is also known as quantitative analysis, involves delving into a
company’s financial statements (such as profit and loss account and balance sheet) in order to
study various financial indicators (such as revenues, earnings, liabilities, expenses and assets).

Many analysts and investors focus on a single number--net income (or earnings)--to evaluate
performance. When investors attempt to forecast the market value of a firm, they frequently rely
on earnings. Many institutional investors, analysts and regulators believe earnings are not as
relevant as they once were. Due to nonrecurring events, disparities in measuring risk and
management's ability to disguise financial earnings problems, other measures beyond net income
can assist in predicting future firm earnings.

Comprises the company’s financial statement

Company audited the accompanying standalone financial statements of Primero Skills &
Training Private Limited which comprise the Balance Sheet as at March 2015 and 2016 and the
Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary
of the significant accounting policies and other explanatory information. Company conducted
audit in accordance with the Standards on Auditing specified under section 143(10) of the Act.

These 4 financial ratios allow a good financial analyst to quickly and efficiently address the
following questions or concerns:
 Research Study

Research

Research comprises defining and redefining problems, formulating hypothesis or suggested

solutions, collecting, organizing and evaluating data, making deductions and reaching
conclusions and at last carefully testing the conclusions to determine whether they fit the
formulating hypothesis.

Research Methodology

Research methodology is a way to systematically solve the problems. It is a way of studying how
research is done scientifically. It consists of various steps that are generally adopted by the
researcher in studying his research problems along with the logic behind them.

Research Design

Research design is a framework or the blue print for conducting the research project. Research
design is the arrangement of conditions for collection and analysis of data in a manner that aims
to combine relevance to the research purpose with economy in procedure. It includes an outline
of what the researcher will do from writing the hypothesis and its operational implications to the
final analysis of data.

Data Collection

The whole of my study is based on secondary data of Primero skills and traning pvt. Ltd. I have
not taken any primary data for my study because primary data would not be helpful to my study.
During the tenure of my study I have taken help of the following secondary data. In this project,
secondary data has been collected from following sources:-

 Annual Report of Primero skills and traning pvt. Ltd.

 Annual audit report of Primero skills and traning pvt. Ltd.
 Balance sheet of Primero skills and traning pvt. Ltd.
 Profit and loss statement of Primero skills and traning pvt. Ltd.
 Cash flow statement of Primero skills and traning pvt. Ltd.
 Books
 Internet
 Other material and report published by company.

Sampling Design:

Sampling unit: Financial Data

Sampling size: Last two years financial statement.

PROJECT OVERVIEW

 Introduction to financial statement.

 Meaning and concept of financial analysis.
 Objective of financial statement analysis.
 Overview of ratio analysis

Introduction to financial statement:

Finance is defined as a provision of money when it is required. Every new enterprise needs to
finance to start and carry out its operations. Finance is the lifeblood of an organization. So
finance should be managed effectively. Financial statements are prepared primarily for the
decision making. Financial statement analysis is refers to determining the financial strength and
weakness of the firm by properly establishing strategic relationship between the items of balance
sheet and profit and loss account. There are various methods and techniques used din analyzing
financial statement such as comparative statement, common size statement, cash flow analysis
and the most important ratio analysis. The main types of financial statements are the balance
sheet, the income statement and the statement of cash flows.
Meaning and concept of financial statement

The term financial analysis also known as analysis and interpretation of financial statement
refers to the process of determining financial strength and weakness of the firm by establishing
strategic relationship between the item of the balance sheet and income statement. In other words
it is the process of evaluating the relationship between component part of financial statement to
obtain a better understanding of a firm’s position and performance.
The purpose of financial statement analysis is to diagnose the information
contained in financial statements so as to judge the profitability and financial soundness of a
firm. The analysis and interpretation of financial statements is essential to bring out the mystery
behind the figure in financial statement. The term financial statement analysis includes both
‘analysis and interpretation’. While the term analysis is used to mean the simplification of
financial data by methodological classification of the data given in the financial statement,
interpretation means explaining the measuring and significance of the data to so simplified
however both analysis and interpretation are interlinked and complimentary to each other.

Financial ratios allow business manager and investors to establish logical relationship between
different variables that are listed in the financial statement.

Objective of financial statement analysis:

 To assess the operational efficiency and managerial effectiveness.

 To assess the short term as well as long term solvency of the firm.
 To make forecasts about future prospects of the firm.
 To guide or determine the dividend action.

Accounting Policies and standards followed by Primero skills Pvt. Ltd.

General:

Financial staternents have been prepared under historical cost convention, in accordance with the
generally accepted accbunting principles and applicable accounting standards in India and the
relevant provisions of the Companies Act, 2013 as adopted by the company.

Accounting Conventions:
The accounts have been prepared on accrual concept.

Investments:

Investments classified as long-term investment are stated at cost and current investments are
carried at the lower of cost and quoted / fair value.

Preliminary & Pre-operative expenses:

Preliminary and Pre-operative Expenses shall be amortized over the period of five years from the
year of commencement of business activity.

Relating to Tangible Fixed Assets, Depreciation and Impairment

Tangible Fixed Assets

Tangible Fixed Assets are stated at cost, less accumulated depreciation and impairment, if any.
The costs to the company of Tangible Fixed Assets include purchase prices less trade discounts
& rebates, borrowing costs if capitalization criteria are met and directly attributable costs
incurred for bringing the assets to their working conditions for the purpose of using the same for
the business of the company.
Depreciation

No depreciation on Tangible Fixed Assets is provided as the assets were not put to use during the
period under audit.

Provision for Current and Deferred Tax:

Tax on income for the current year is determined on the basis of taxable income and tax credits
computed in accordance with the provisions of the Income Tax, Act 1961 and based on the
expected outcome of assessments / appeals.

Deferred Tax is recognized on timing differences between the accounting income and taxable
income for the period and quantified using the tax rates and laws enacted on the balance sheet
date. The deferred tax assets is recognized and carried forward only to the extent that there is a
reasonable certainty that the asset will be realized in future.

As this being the first year's account of the Company hence Previous year's figures are not
available.

BALANCE SHEET:
I. The Balance Sheet

The balance sheet shows the current financial position of the firm, at a given single point in time.
It is also called the statement of financial position. It indicates the capital need of business
allocation of resources in the business, how much capital or seed money you put up. The
structure of the balance sheet is laid out such that on one side assets of the firm are listed, while
on the other side liabilities and shareholders’ equity is shown. The two sides of the balance sheet
must balance as follows:
Assets = Liabilities + Shareholders’ Equity

Balance Sheet Analysis

The balance sheet is analyzed to obtain some key ratios that help explain the health of the firm at
a given point in time.

All advances and loans which are accrued and payable within 12 months. Primero skills Pvt. Ltd
is using under the straight line depreciation method, it means the depreciation for every year
would be same or constant but no depreciation is charged due to Company’s all tangible assets
(furniture+fixtures+machinery+computers etc.) is new.

INCOME STATEMENT:

Analysis of Income Statement:

1. The increase or decrease in sales should be compared with the increase or decrease in
cost of goods sold. An increase in sales will not always mean an increase in profit. The
profitability will improve if increase in sales is more than increase in cost of goods sold.
2. The second step of analysis should be the operational profits. The operating expenses
such as office and administrative expenses, selling and distribution expenses should be
 deducted from gross profit to find out operating profit. An increase in operating profit
will result from the increase in sales position and control of operating expense.
3. The increase or decrease in net profit will give an idea about the overall profitability of
the concern.
4. An option should be formed about profitability of the concern and it should be given at
the end. It should be mentioned whether the overall profitability of the concern is good or
not.

In the year 2015, company suffers the losses because in starting it generates zero revenue and
administrative expenses are more than its income. But in the year 2016, company generates
profit than the previous year and it also generates the revenue in this year. As a result, in the
year 2016 company is more profitable than the previous year.

Ratio Analysis:
Ratio analysis involves the method of calculating and interpreting financial ratios in order to
assess the strength and weaknesses underlying the performance of an enterprise. In order to
calculate a ratio a relevant relationship between two numbers of a financial statement.

Financial ratios are tools for interpreting financial statements to provide a basis for valuing
securities and appraising financial and management performance.

A good financial analyst will build in financial ratio calculations extensively in a financial
modeling exercise to enable robust analysis. Financial ratios allow a financial analyst to:

 Standardize information from financial statements across multiple financial years to allow
comparison of a firm’s performance over time in a financial model.
 Standardize information from financial statements from different companies to allow apples
to apples comparison between firms of differing size in a financial model.
 Measure key relationships by relating inputs (costs) with outputs (benefits) and facilitates
comparison of these relationships over time and across firms in a financial model.

In general, there are 4 kinds of financial ratios that a financial analyst will use most frequently,
these are:
• Performance ratios

• Working capital ratios

• Liquidity ratios

• Solvency ratios

Performance ratios

• What return is the company making on its capital investment?

• What are its profit margins?

Working capital ratios

• How quickly are debts paid?

• How many times is inventory turned?

Solvency ratios (Longer term)

• What is the level of debt in relation to other assets and to equity?

• Is the level of interest payable out of profits?

Liquidity ratios

• Can the company continue to pay its liabilities and debts? It means whether company’s ability
to meet short term obligations as they become due. A liquid asset is one that can be easily
converted into cash. Thus, liquidity tests focus on the size of and relationship between current
assets and current liabilities.
Current ratio: current ratio is a relationship between current assets and current liabilities. It is
calculated by:

Current Ratio= Current Assets

Current Liabilities

Current assets (year-2015) = (Cash and Cash Equivalents+ TDS Receivables) = 4738636
Current liabilities (year 2015) = (Short Term Provisions (other payables+ advance from customer+ TDS
payable) = 7,040,999

Current assets (year-2015) = (Cash and Cash Equivalents+ TDS Receivables) = 6,169,222

Current liabilities (year 2015) = (Short Term Provisions (other payables+ advance from customer+TDS
payable) = 6,024,448

For the year 2015 For the year 2016

current ratio = 0.68 1.02

The ideal current ratio is 2:1. In 2016 company have higher current ratio which is more favorable
because it shows the company can more easily make current debt payments. It means that current
assets are sufficient to cover for twice the amount of a company’s short term liabilities.

Quick Ratio: it measures the firm ability to payoff short term without on the sale of inventory.
A quick ratio of 0.5 would suggest that a company is able to settle half of its current liabilities
instantaneously. It is calculated by:

Quick ratio= current assets-inventory-advance prepayments

Current liabilities

For the year 2015 For the year 2016

quick ratio 0.68 1.02
But according to the financial statement (balance sheet) quick ratio will be same as current ratio
because there is no inventory. Higher the quick ratio means company is investing too many
resources in working capital of the business which may be more profitable be used elsewhere but
if it is lower than, it means company is taking too much risk.

Working capital turnover: working capital is defined as the amount by which current assets
exceed current liabilities. A higher working capital turnover ratio is better. It means that
company is utilizing its working capital more efficiently i.e., generating more revenue using less
investment. The working capital ratio is important to creditors because it shows the liquidity of
the company. It is calculated by:

Working Capital turnover ratio = Net sales

Working capital

Working capital = current asset- current liabilities

For the year 2015 For the year 2016

working capital turnover 0.003 3.75

In the year 2016, company is higher than the previous year it means company is utilizing its working
capital more efficiently.

Debt to equity ratio: it is the ratio of total liabilities of a business to its shareholder’s equity. It
measures the degree to which the assets of the business are financed by the debts and the
shareholder’s equity of a business.

Debt- to-equity ratio = Debt

Shareholder’s equity
 For the year 2015 For the year 2016

Debt to equity ratio 0 17.64

Lower the values of the debt to equity ratio are favorable indicating less risk. Higher debt to
equity ratio is unfavorable because it on means that the business relies more on external lenders
thus it is at higher risk. In 2015, there is no long term debt that’s why it is more favorable
indicating less risk but in the year 2016, company is facing higher amount of risk because debts (
Loan= 2,246,011) are more than the shareholder’s equity.

Return on Assets (ROA) ratio: it measures the efficiency of a business in using its assets to
generate net income. It is a profitable ratio. Net income is calculated after tax income. It can be
found in the income statement.

ROA= Net Income

Total assets

For the year 2015 For the year 2016

ROA 20% 80%

The higher the value of return on assets shows that business is more profitable. This ratio should
be only used to compare the companies in the same industry. An increasing trend of ROA
indicates that the profitability of the company is improving. Conversely, a decreasing trend
means that profitability is deteriorating.

Return on Equity (ROE): it measures the profitability of stakeholder’s investment. It shows

the net income as percentage of shareholder equity. . Net income is calculated after tax income.

ROE = Net Income

Avg. Shareholder equity
 For the year 2015 For the year 2016
ROE 9% 15%

Return on equity is an important measure of the profitably. Higher values indicating that
company is efficiently in generating income on new investment.
Conclusion:

Financial statement analysis involves analyzing the firm’s financial statement to extract
information that can facilitate decision making. The use of accounting ratios as one of techniques
used in financial statements analysis can guide management in decision making by playing a
central role in measuring strength and weaknesses of the firm. Ratio analysis and financial
analysis helps and guide the firm to meet its future financial obligations or expectations. In the
year 2015, company’s growth is very slow because this is the first year in which company run
their business by investing money into it. In 2015 company’s profit shows in negative figures but
in 2016, it generates revenue from its operations and shows it profit in positive values after
paying all taxes and deducting all administrative expenses.

References:

http://accountingexplained.com/financial/ratios/dividend-payout

http://www.primeroskills.com

http://www.investopedia.com

http://accounting-simplified.com/financial/ratio-analysis

http://www.slideshare.net/raboz/financial-ratios-analysis-project-26508658

http://www.slideshare.net/hemanthcrpatna/a-project-report-on-financial-statement-analysis