CHAPTERi1

INTRODUCTION
AiFINANCIALiSTAMENTiANALYSISi&iINTERPRETATION:

iFinancialistatementsiareirecordsithatiprovideianiindicationiofitheiorganization’sifina
ncialistatus.iItiquantitativelyidescribesitheifinancialihealthiofitheicompany.iItihelpsiin
itheievaluationioficompany’siprospectsiandirisksiforitheipurposeiofimakingibusinessi
decisions.iTheiobjectiveiofifinancialistatementsiisitoiprovideiinformationiaboutitheifi
nancialiposition,iperformanceiandichangesiinifinancialipositioniofianienterpriseithatii
siusefulitoiaiwideirangeiofiusersiinimakingieconomicidecisions.iFinancialistatementsi
shouldibeiunderstandable,irelevant,ireliableiandicomparable.iTheyigiveianiaccurateip
ictureiofiaicompany’siconditioniandioperatingiresultsiiniaicondensediform.iReportedi
assets,iliabilitiesiandiequityiareidirectlyirelateditoianiorganization'sifinancialipositioni
whereasireportediincomeiandiexpensesiareidirectlyirelateditoianiorganization'sifinanc
ialiperformance.iAnalysisiandiinterpretationiofifinancialistatementsihelpsiinidetermin
ingitheiliquidityiposition,ilongitermisolvency,ifinancialiviability,iprofitabilityiandisou
ndnessiofiaifirm.iThereiareifouribasicitypesiofifinancialistatements:ibalanceisheet,iin
comeistatements,icashiflowistatements,iandistatementsiofiretainediearnings.

Theianalysisiofifinancialistatementsiisiaiprocessiofievaluatingitheirelationshipibetwee
nicomponentipartsiofifinancialistatementsitoiobtainiaibetteriunderstandingiofifirmifin
ancialiposition.iAnalysisiisiaiprocessioficriticallyiexaminingitheiaccountingiinformati
onigiveniinifinancialistatements.iForitheipurposeiofianalysis,iindividualiitemsiareistu
died;itheiriinterrelationshipiwithiotherirelatedifiguresiisiestablished.

Thusianalysisiofifinancialistatementsireferitoitreatmentiofiinformationicontainediinifi
nancialistatementsiiniaiwayisoiasitoiaffordiaifullidiagnosisiofitheiprofitablyiandifinan
cialipositioniofitheifirmiconcern.

Aniattemptihasibeenicarriedioutiinithisiprojectitoianalyseiandiinterpretitheifinancialis
tatementsiofiEKTAiENGINEERS.

1
NEEDiFORiTHEiSTUDY:

Theineediforistudyingiandievaluatingitheifinancialistatementsiofitheicompany,iEktaiE
ngineersiisitoijudgeiandievaluateitheiprofitabilityiandifinancialipositioniofitheicompa
ny,iwithitheihelpiofivariousitoolsiofianalysisibeforeicommentingiuponitheifinancialih
ealthiofitheicompany.

OBJECTIVESiOFiTHEiSTUDY:

 Toiunderstand,ianalyseiandiinterpretitheibasiciconceptsiofifinancialistatement
siofitheicompany.i.

 Toiidentifyitheicompany’siprofitabilityiposition

 Toievaluateitheifinancialiandieconomicistabilityiofitheibusiness.

 Toievaluateitheifinancialiperformanceiofitheicompany.

 Toimeasureitheiliquidityipositioniofitheicompany.

 Toiidentifyitheisolvencyipositioniofitheicompany.

 Toianalyseitheiefficiencyiofitheicompany.

SOURCESiOFiIMFORMATION:i

 PrimaryiSources:iCompany’sifinancialistatementsiandirecords.

2
 PrimaryiInformationiisitheidataicollectedifirstihandifromitheicompanyiandiSe
condaryiInformationiisitheidataicollectedifromivariousiotherisourcesithanithei
company,ilikeimagazinesietc.

Theiinformationiwasiprovidedibyitheicompany.

SCOPEiOFiTHEiSTUDY:

TheistudyicoversicollectingitheifinancialidataiofiEKTAiENGINEERSiforifiveiy
ears,icalculatingivariousifinancialiratiosiandianalyzingithem.iItiisidoneiaccordingi
toitheiformulaeiofiRatioiAnalysis.

LIMITATIONS:

Everyistudyiisiconductediundericertainilimitations.

 Allitheifinancialidetailsiareinotirevealediasisomeimattersiareiconfident
ial.

 Theistudyirelatesionlyitoifinancialidataiandiotheriareasiareinotitakeniintoi
consideration.

 Thisistudyicoversionlyiforiaiperiodiofifiveiyears.iSoitheianalysisiisidoneio
nithisibasis.

 Theiinformationiprovidediisimostlyiofisecondaryidata.

 Theistudyiisilimitedibyitimeiandicostifactors.

3
4
 CHAPTERi-2

THEORETICALiFRAMEWO
RK
1. AiFinancialiStatementiisianiorganizedicollectioniofidataiaccordingitoilogical
iandiconsistentiaccountingiprocedures.iItsipurposeiisitoiconveyianiunderstand
ingiofisomeifinancialiaspectsiofiaibusinessifirm.iItimayishowiassetsipositionia
tiaimomentiofitimeiasiinitheicaseiofibalanceisheet,iorimayirevealiaiseriesiofia
ctivitiesioveriaigiveniperiodiofitimes,iasiinitheicaseiofianiincomeistatement.
2. Financialianalysisiisitheiexaminationiofiaibusinessifromiaivarietyiofiperspec
tivesiiniorderitoifullyiunderstanditheigreaterifinancialisituationiandidetermine
ihowibestitoistrengthenitheibusiness.iAifinancialianalysisilooksiatimanyiaspe
ctsiofiaibusinessifromiitsiprofitabilityiandistabilityitoiitsisolvencyiandiliquidit
y.iFinancialianalysisifocusesionitheifinancialistatements,iasitheyiareiaidisclos
ureiofiaifinancialiperformanceiofiaibusinessientity.
3. RatioiAnalysis:iTheimostipopulariwayitoianalyzeitheifinancialistatementsiisi
computingiratios.iItiisianiimportantiandiwidelyiuseditooliofianalysisiofifinanc
ialistatements.iWhileidevelopingiaimeaningfulirelationshipibetweenitheiindivi
dualiitemsiorigroupiofiitemsiofibalanceisheetsiandiincomeistatements,iitihighl
ightsitheikeyiperformanceiindicators,isuchias,iliquidity,isolvencyiandiprofitabi
lityiofiaibusinessientity.iTheitooliofiratioianalysisiperformsiiniaiwayithatiitim
akesitheiprocessioficomprehensioniofifinancialistatementsisimpler,iatitheisam
eitime,iitirevealsiailotiaboutitheichangesiinitheifinancialiconditioniofiaibusine
ssientity.
4. Fundiflowianalysisiisitheianalysisiofiflowiofifundifromicurrentiassetitoifixed
iassetioricurrentiassetitoilongitermiliabilitiesiorivice-
versa.iFundirefersitoiworkingicapital.
5. FundsiFlowiStatementiisiaistatementiprepareditoianalyseitheireasonsiforicha
ngesiinitheiFinancialiPositioniofiaiCompanyibetweeni2iBalanceiSheets.iItisho

5
wsitheiinflowiandioutflowiofifundsii.e.iSourcesiandiApplicationsiofifundsifor
iaiparticulariperiod.

6
 FINANCIALiSTATEMENTS

Financialistatementsi(orifinancialireports)iareiformalirecordsiofitheifinancialiactivitie
siofiaibusiness,iperson,ioriotherientity.iFinancialistatementsiprovideianioverviewiofia
ibusinessioriperson'sifinancialiconditioniinibothishortiandilongiterm.iAllitheirelevanti
financialiinformationiofiaibusinessienterprise,ipresentediiniaistructuredimanneriandii
niaiformieasyitoiunderstandiisicalleditheifinancialistatements.

Theianalysisiofifinancialistatementiisiaiprocessiofievaluatingitheirelationshipibetwee
nicomponentipartsiofifinancialistatementitoiobtainiaibetteriunderstandingiofifirmifina
ncialiposition.

Aicompleteisetiofifinancialistatementicomprises:i

1)iAistatementiofifinancialipositioniasiatitheiendiofitheiperiod:i

2)iAistatementioficomprehensiveiincomeiforitheiperiod;i

3)iAistatementiofichangesiiniequityiforitheiperiod:i

4)iAistatementioficashiflowiforitheiperiod.

5)iNotesiofiAccounticomprisingiaisummaryiofisignificantiaccountingipoliciesiandiot
heriexplanatoryiinformation.

Thereiareifouribasicifinancialistatements:

1. Balanceisheet:iItiisialsoireferreditoiasistatementiofifinancialipositionioricond
ition,ireportsioniaicompany'siassets,iliabilities,iandiownershipiequityiasiofiaig
ivenipointiinitime.iTheiBalanceiSheetishowsitheihealthiofiaibusinessifromida
yioneitoitheidateionitheibalanceisheet.

2. Incomeistatement:iItiisialsoireferreditoiasiProfitiandiLossistatementi(ori"P&
L"),ireportsioniaicompany'siincome,iexpenses,iandiprofitsioveriaiperiodiofiti
me.iProfiti&iLossiaccountiprovideiinformationionitheioperationiofitheienterpr

7
 ise.iTheseiincludeisaleianditheivariousiexpensesiincurrediduringitheiprocessin
gistate.

Theiincomeistatementishowsiaipresentationiofitheisales,itheimainiexpensesian
ditheiresultinginetiincomeioveritheiperiod.iNetiincomeiisibasedioniaccounting
iprinciplesiwhichigivesiguidance/rulesioniwhenitoirecognizeirevenuesiandiex
penses,iwhereasicashifromioperatingiactivities,iobviouslyiisicashibased.

3. StatementiofiRetainediEarnings:iItiexplainsitheichangesiiniaicompany'siret
ainediearningsioveritheireportingiperiod.iTheistatementiofiretainediearningsis
howsitheibreakdowniofiretainediearnings.iNetiincomeiforitheiyeariisiaddedito
itheibeginningiofiyearibalance,iandidividendsiareisubtracted.iThisiresultsiinith
eiendiofiyearibalanceiforiretainediearnings.

4. CashiFlowiStatement:iItireportsioniaicompany'sicashiflowiactivities,iparticu

larlyiitsioperating,iinvestingiandifinancingiactivities.iTheistatementioficashifl

owsitheiinsiandioutsioficashiduringitheireportingiperiod.iTheistatementioficas
hiflowsitakesiaspectsiofitheiincomeistatementiandibalanceisheetiandikindiofic
ramsithemitogetheritoishowicashisourcesiandiusesiforitheiperiod.

iBALANCEiSHEET

Inifinancialiaccounting,iaibalanceisheetioristatementiofifinancialipositioniisiaisumma
ryiofiaiperson'sioriorganization'sibalances.iAibalanceisheetiisioftenidescribediasiaisna
pshotiofiaicompany'sifinancialicondition.iItisummarizesiaicompany'siassets,iliabilitie
siandishareholders'iequityiatiaispecificipointiinitime.iTheseithreeibalanceisheetisegm
entsigiveiinvestorsianiideaiasitoiwhatitheicompanyiownsiandiowes,iasiwelliasitheiam
ountiinvestedibyitheishareholders.iOfitheifouribasicifinancialistatements,itheibalancei
sheetiisitheionlyistatementiwhichiappliesitoiaisingleipointiinitime.i

Aicompanyibalanceisheetihasithreeiparts:iassets,iliabilitiesiandiownershipiequity.iThe
imainicategoriesiofiassetsiareiusuallyilistedifirstiandiareifollowedibyitheiliabilities.iT
heidifferenceibetweenitheiassetsianditheiliabilitiesiisiknowniasiequityioritheinetiasset
sioritheinetiworthioricapitaliofitheicompany.iIt'sicallediaibalanceisheetibecauseitheit
woisidesibalanceiout.iItiworksionitheifollowingiformula:
8
 Assetsi=iLiabilitiesi+iShareholders'iEquity

PROFITi&iLOSSiSTATEMENT

Incomeistatement,ialsoicallediprofitiandilossistatementi(P&L)iandiStatementiofiOper
ationsiisifinancialistatementithatisummarizesitheirevenues,icostsiandiexpensesiincurr
ediduringiaispecificiperiodiofitimei-
iusuallyiaifiscaliquarterioriyear.iTheseirecordsiprovideiinformationithatishowsitheiabi
lityiofiaicompanyitoigenerateiprofitibyiincreasingirevenueiandireducingicosts.iTheipu
rposeiofitheiincomeistatementiisitoishowimanagersiandiinvestorsiwhetheritheicompa
nyimadeiorilostimoneyiduringitheiperiodibeingireported.iTheiimportantithingitoireme
mberiaboutianiincomeistatementiisithatiitirepresentsiaiperiodiofitime.iThisicontrastsi
withitheibalanceisheet,iwhichirepresentsiaisingleimomentiinitime.

9
FINANCIALiRATIOSiANDiTHEIRiINTERPRETATION

Table:iDifferentiFinancialiRatios

S CATE TYPEiOFiRATIO ITNERPRETATION

l. GOR
i Y
N
o
.
NetiWorkingiCapitali=i  Itimeasuresitheiliquidityiofiaifirm.

Currentiassets-icurrentiliabilities
1. Liquidit  Itimeasuresitheishortitermiliquidityiofiai
yiRatio Currentiratioi= firm.iAifirmiwithiaihigheriratioihasibett
CurrentiAssets eriliquidity.i
CurrentiLiabilities
 Airatioiofi2:1iisiconsideredisafe.

 Itimeasuresitheiliquidityipositioniofiaifir
AciditestioriQuickiratioi= m.
Quickiassets  Airatioiofi1:1iisiconsideredisafe.
CurrentiLiabilities
 Thisiratioiindicatesihowifastiinventoryii
InventoryiTurnoveriratioi= sisold.
Costsiofigoodsisold  Aifirmiwithiaihigheriratioihasibetteriliq
2. Turnove
Averageiinventory uidity.
riRatio
 Thisiratioimeasuresihowifastidebtsiareic
DebtoriTurnoveriratioi= ollected.
Neticreditisales  Aihighiratioiindicatesishorteritimeilagib

Averageidebtors etweenicreditisalesiandicashicollection.

10
 Creditor’siTurnoveriratioi=  Aihighiratioishowsithatiaccountsiareito
Neticreditipurchases ibeisettledirapidly
AverageiCreditors
i

 Thisiratioiindicatesitheirelativeiproporti
Capitali Debt-Equityiratioi=
onsiofidebtiandiequityiinifinancingithei
Structur Longitermidebt
assetsiofiaifirm.
3. eiRatios CapitaliAccounti+iNetiProfit  Airatioiofi1:1iisiconsideredisafe.
i  Itiindicatesiwhatiproportioniofitheiperm
DebtitoiTotalicapitaliratioi anenticapitaliofiaifirmiconsistsiofilong-
=i termidebt.
Longitermidebt  Airatioi1:2iisiconsideredisafe.

PermanentiCapitali
Or  Itimeasuresitheishareiofitheitotaliassetsi

Totalidebt financedibyioutsideifunds.
 Ailowiratioiisidesirableiforicreditors.
Permanenticapitali+iCurrentili  Itishowsiwhatiportioniofitheitotaliassetsi
abilities isifinancedibyitheiowners’icapital.
Or  Aifirmishouldineitherihaveiaihighiratioi
TotaliShareholder’siEquity noriailowiratio.
TotaliAssets

Profitab GrossiProfitimargini=  Itimeasuresitheiprofitiinirelationitoisales

ilityirati Grossiprofiti*i100 .
4.
os iSales  Aifirmishouldineitherihaveiaihighiratioi
noriailowiratio.
 Itimeasuresitheinetiprofitiofiaifirmiwithi
NetiProfitimargini= respectitoisale.
NetiProfitiafteritaxibeforeiinte  Aifirmishouldineitherihaveiaihighiratioi

rest noriailowiratio.

Sales
Or
NetiProfitiafteriTaxiandiIntere
st
Sales
Or

11
 NetiprofitiafteriTaxiandiIntere
st
Sales

i
Returni ReturnioniAssetsi(ROA)i=  Itimeasuresitheiprofitabilityiofitheitotali
oniInve NetiProfitiafteriTaxesi*i100i fundsiperiinvestmentiofiaifirm.
5.
stments TotaliAssets
Or
(NetiProfitiafteriTaxesi+intere
st)i*100
TotaliAssets

Or

(NetiprofitiafteriTaxesi+iInter
est)i*i100
TangibleiAssets

Or
(NetiProfitiafteriTaxesi+iInter
est)i*i100
TotaliAssets

Or
(NetiProfitiafteriTaxesi+iInter
est)i*i100

FixediAsset

12
  Itimeasuresiprofitabilityiofitheifirmiwith
ReturnioniCapitaliEmploye irespectitoitheitotalicapitaliemployed.
di(ROCE)i=  Theihigheritheiratio,itheimoreiefficienti
useioficapitaliemployed.

(NetiProfitiafteriTaxes)i*i100
totalicapitaliemployed
Or
(NetiProfitiafteriTaxesi+iInter
est)i*100
iTotaliCapitaliEmployed
Or
(NetiProfitiafteriTaxesi+iInter
est)i*i100
TotaliCapitaliEmployedi-
intangibleiassets

i
ReturnioniTotaliShareholde  Itirevealsihowiprofitablyitheiowner’sifu
rs’iEquityi= ndihasibeeniutilizedibyitheifirm
NetiProfitiafteriTaxesi*i100
Totalishareholders’iequity
.

ReturnioniOrdinaryishareh  Itideterminesiwhetheritheifirmihasiearne
oldersiequityi= disatisfactoryireturniforiitsiequityiholder
NetiprofitiafteritaxesiandiPref siorinot.
.idividendi*100

OrdinaryiShareholders’iEquit
y
 Itimeasuresitheiprofitiavailableitoitheieq
Shareho EarningsiperiSharei(EPS)i uityiholdersioniaiperishareibasis.
lder’sira =
6.
tios NetiProfitiofiEquityihold

13
ers

NumberiofiOrdinaryiSha
res

 Itiisitheinetidistributediprofitibelongingi
DividendiperiSharei(DPS)i
= toitheishareholdersidividedibyitheinumb

Netiprofitsiafteriinterestiandip eriofiordinaryishares

referenceidividendipaiditoiord
inaryishareholdersi
Numberiofiordinaryisharesiou
tstanding

 Itishowsiwhatipercentageishareiofithein
DividendiPayoutiratioi(D/P) etiprofitiafteritaxesiandipreferenceidivid
i= endiisipaiditoitheiequityiholders.
TotaliDividendiToiEquityihol  AihighiD/Piratioiisipreferredifromiinves

ders tor’sipointiofiview.

Totalinetiprofitiofiequityihold
ers
Or
DividendiperiOrdinary
iShareiEarningsiperiShare
i  Itishowsitheipercentageiofieachirupeeiin
EarningsiperiYieldi= vestediinitheistockithatiwasiearnedibyit
EarningsiperiShare heicompany.
MarketiValueiperiShare
i  Itishowsihowimuchiaicompanyipaysiout
DividendiYieldi= iinidividendsieachiyearirelativeitoiitsish
Dividendiperishare areiprice.
MarketiValueiperishare

14
 i  Itireflectsitheipriceicurrentlyipaidibyithe
Price- imarketiforieachirupeeiofiEPS.
iEarningsiratioi(P/E)i=  Higheritheiratioibetteriitiisiforiowners

MarketivalueiperiShare
EarningsiperiShare
EarningiPoweri=
iNetiProfitiafteritaxes
iTotaliAssets
i
Activity Inventoryiturnoveri=
iRatios Sales
7.
ClosingiInventory
Debtorsiturnoveri=
CostiofiGoodsimanufactured
AverageiWorkiiniProcessiInve
 Itimeasuresitheioveralliprofitabilityiandi
operationaliefficiencyiofiaifirm
 Itimeasuresihowiquicklyiinventoryiisiso
ld.
 Aifirmishouldineitherihaveiaihighiratioi
noriailowiratio.
 Itishowsihowiquicklyicurrentiassetsithat
iareireceivablesioridebtorsiareiconverted
itoicash.
 Aifirmishouldineitherihaveiaihighiratioi

ntory noriailowiratio.

 Itimeasuresitheiefficiencyiofiaifirmiinim
Assetsi TotaliAssetsiturnoveri= anagingiandiutilizingiitsiassets.
8.
Turnov CostiofiGoodsiSold  Higheritheiratio,imoreiefficientiisitheifir

er TotaliAssets miiniutilizingiitsiassets.

Ratios

FixediAssetsiturnoveri=
CostiofiGoodsiSold
FixediAssets

Capitaliturnoveri=
CostiofiGoodsiSold
CapitaliEmployed

CurrentiAssetsiturnoveri=
CostiofiGoodsiSold

15
CurrentiAssets

16
 CHAPTER-3i

INDUSTRYiPROFILE
&
COMPANYiPROFILE

17
 IndustryiProfile
MachineryiManufacturing
IndustriesiinitheiMachineryiManufacturingisubsectoricreateiendiproductsithatiapplyi
mechanicaliforce,iforiexample,itheiapplicationiofigearsiandilevers,itoiperformiwork.i
Someiimportantiprocessesiforitheimanufactureiofimachineryiareiforging,istamping,ib
ending,iforming,iandimachiningithatiisiuseditoishapeiindividualipiecesiofimetal.iProc
esses,isuchiasiweldingiandiassemblingiareiuseditoijoiniseparateipartsitogether.iAltho
ughitheseiprocessesiareisimilaritoithoseiusediinimetalifabricatingiestablishments,imac
hineryimanufacturingiisidifferentibecauseiititypicallyiemploysimultipleimetaliformin
giprocessesiinimanufacturingitheivariousipartsiofitheimachine.iMoreover,icomplexias
semblyioperationsiareianiinherentipartiofitheiproductioniprocess.iTherefore,itheiCom
paniesiinithisiindustryimanufactureivariousikindsiofimachineryiusediiniagriculture,im
ining,iconstruction,iorimanufacturing.

CompetitiveiLandscape
Demandiforimachineryidependsionioveralliindustrialiactivityiandionitheihealthiofisec
torsisuchiasiagriculture,iconstruction,imanufacturing,ioiliandigasiexplorationiandipro
duction,iandipowerigeneration.iTheiprofitabilityiofiindividualicompaniesidependsioni
engineeringiexpertiseiandiefficientiproduction.iLargeicompaniesihaveieconomiesiofis
caleiinipurchasing.iSmallicompaniesicanicompeteieffectivelyibyispecializing.

Products,iOperationsi&iTechnology
Majoriproductsiareifarmiandiconstructionimachinery,imetalworkingiandiotherimanuf
acturingimachinery,icommercialirefrigerationiequipment,iandigeneral-
useimachineryisuchiasienginesiandipumps.iWhileisomeiproducts,isuchiasitractorsiori
heaters,iareifinishediproducts,iothers,ilikeimotors,iareicomponentsiusediinifurtheripro
duction,iandisome,ilikeitextileiloomsiandiconfectioneryiequipmentsiareicustom-
designediforiaiparticularimanufacturingiprocess.

18
 COMPANYiPROFILE

EKTAiENGINEERS
EktaiEngineersiwasipromotediduringiyeari2006ibyiMr.iN.iR.iChandnaniiwhoiisiexp
eriencediinitheifieldioficonfectioneryisincei30iyearsi&istartedihisicareeriiniyeari1986
iwithioneiofiIndia’sileadingiconfectioneryimanufacturersiGURBANIiGROUPibased
iiniHyderabad.
Theicompanyispecializesiinidesigni&imanufactureiequipmentiforiconfectioneryi&ifo
odiprocessiindustryiwithihighioutputi&ilatestitechnology,ipresentlyicateringitheineed
siofiitsiclientsibasediiniIndiai&ineighbouringicountries.

Theicompanyimanufacturesihighiqualityiequipmentsiwhichiareimainlyiusediforiprod
uctionioficonfectioneryiproductsilikeiHardiBoilediCandies,iLollipops,iToffees,iÉclair
s,iThroatiLozenges,iCoughiDropsi&iotherisimilariproducts.

TheicompanyimanufacturesiequipmentilikeiContinuousiBatchiCookers,iCarameliBatc
hiCookersi(Toffeesi&iÉclairs),iStainlessiSteeliSugariSyrupiManufacturingi&iStorage
iTanks,iJacketediTanks,iSyrupiFilters,iMilkiEmulsioniTanks,iMilkiHomogenizers,iCr
eamiCenteriFillingiPumps,iPowderiCenteriFillingiPumps,iFatimeltingiChambers,iCh
ocolateiStorageiTanks,iandiChocolateiMeltingiTanksiEtc.

Theiequipmentsiareidesignediinilineiwithilatestiinternationalistandardsianditechnicali
expertise.iItihasiservedimanyiprestigiousiandilargeiordersifromileadinginationaliandi
multinationalicompanies.

EktaiEngineersiassuresihighiqualityiofiequipmenti&iprofessionaliconsultancyiservic
esiinitheifieldioficonfectioneryiproductsimanufacturing.
Theicompanyiisisensitiveitoimeetiitsiclient’sirequirementsi&istrivesirelentlesslyitoide
liveritheisameiwithimutualibenefitiandiexceptionalivalueiwithihighiquality.

Theicompanyiisiproudiofiitsiuniqueiabilityitoimanufactureicustomidesignediequipme
ntiaccordingitoiclient’sidemand.

19
 Theicompanyiisiengagediinimultipleiactivitiesicomprisingiequipmentidesigning,ideve
lopment,iinstallationiprocessiandiimplementationiofiprocessitechnology.

Constantiemphasisihasibeenioni
 Developingiconfectioneryi&ifoodiprocessiequipmentiwithilatestitechnologyi
&ihighistandards.
 Toicreateitechnicaliinnovationsiandiproductiefficiencyithatiindustryidemands.

Goals
 Easeiofioperation
 Maximizingiprofitabilityiforicustomers.

Equipments
ContinuousiBatchiCooker

 OutputiCapacityi:i500itoi1000iKgsiperihour
 Forimanufactureiofihighiqualityifruitiflavourediandimilkibasedicandies.

20
 MilkiEmulsioniTank
 OutputiCapacityi150itoi300iKgsiperihour
 ForiHomogeneousimixingiofimilkibasediIngredientsitoiproduceimilkiproducts

SyrupiManufacturingiTank
 OutputiCapacity:i500itoi5000iKgsiperilot.
 Forimfgiofisugari&iliquidiglucoseisyrupitoiproduceiconsistentiqualityicandies
,itoffeesi&ieclairs.

21
 SyrupiFilters
 OutputiCapacity:i500itoi5000iKgsiperishift.
 Foricompleteifiltrationiofisugaribasedisyrupiaroundi80itoi90idegiC.

CarameliBatchiCooker
 OutputiCapacityi:i300itoi600iKgsiperihour
 Forimfgiofihighiqualityitoffeesi&ieclairsiwithimilkibasediingredients.

22
 CreamiCenteriPump

 OutputiCapacityi:i200itoi1000iKgsiperihour
 Foriuniformicenterifillingichocolateicreamiinieclairsi&ifruitiflavouredisugaris
yrupiinicandies.

PowderiCenteriPump
 OutputiCapacity:i200itoi1000iKgsiperihour.
 Foriuniformicenterifillingidryispicesietcipowderiespeciallyiinifruitiflavouredic
andies.

23
 FatiMeltingiChamber
 OutputiCapacityi:i200itoi400iKgsiperihour
 Forifasterimeltingiofifatifromi15iKgsitinsi&islabs.

ChocolateiMeltingi&iStorageiTank
 OutputiCapacityi:i500itoi5000iKgsiperilot
 Forimeltingi&istorageiofichocolateiforieclairsicenterifillingi&imouldingiline.
i

24
 BatchingiTank
 OutputiCapacityi:200iKgsiperilot
 Forisyrup,iemulsionimilki&ireworkisolutioniforipreiweighingi(mountedionilo
adicell)i&iheatingiforifeedingitoiToffeei&iÉclairsibatchicooker.

25
 Clients
AnandiFoodsi(Hyderabad) BlossomiHealthiCarei(Mehsana)

NaturalleiHealthiProductsiPvt.iLtd.i(Hyderabad) K.PiPathroseiVaidhyansi(Kerala)

SampreiNutritionsiLtd.i(Hyderabad) InbiscoiIndiaiPrivateiLimitedi(Hyderabad)

RoyesiIndustriesiLtd.i(Hyderabad) K.SiIndustriesi(Indore)

RemedyiHealthiProductsiPvt.iLtd.i(Hyderabad) MayaiConfectioneryi(Khandwa)

26
RaviiFoodsiPvt.iLtd.i(Hyderabad) KeviniFoodsi(Hyderabad)

VallabhdasiD.iPateli(Kenya,iNairobi) SuncrestiFoodiMakersi(Ambernath)

M.iM.iPoonjiajiiSpicesiLtd.i(Nasik) KimiKimiEnterprisei(Ahmedabad)

BritaniaiAlliediIndustriesiLtd.i(Kampala,iUganda) TimsiFoodsi(Ambernath)

PrayaghiNutriiProductsiPvt.iLtd.i(Hyderabad) DurgaiConfectioneryi(Bareilly)

FrazeriFoodsiIndiaiPvt.iLtd.i(Baddi,iHimachaliPrade
sh) LeamakiHealthiCarei(Ahmedabad)

NewiDiamondiFoodiProductsi(Kolkata) ShiviProductsi(Indore)

SuryaiProcessediFoodsiPvt.iLtd.i(Haridwar) JyotiiIndustriesi(Nanded)

Metaplusi(U)iLtd.i(Kampala,iUganda) RichesteriFoodsi(JohannesburgiSouthiAfrica)

CandicoiIndiaiLtd.i(Nagpur) PearliFoodsi(Ahmedabad)

CadburyiIndiaiLtd.i(Bangalore) LuxmiiFoodsi(Ahmadabad)

27
i

CHAPTER-4

DATAiANALYSIS
AND
iINTERPRETATION

28
 RATIOiANALYSIS
WorkingiCapital
YEARS WorkingiCapital
2012-13 2092602.6
2013-14 -1410327.62
2014-15 -477692.53
2015-16 9248514.69
2016-17 5510081.82

Workiig Capital
10000000

8000000

6000000
Working Capital
4000000

2000000

0
2012-13 2013-14 2014-15 2015-16 2016-17
-2000000

INTERPRETATION:iTheiWorkingiCapitalidecreasediinitheiyearsi2012-
14.iItiincreasediinitheinextiyearsii.e.i2014-16.

29
 CurrentiRatio

YEARS CurrentiRatio
2012-13 3.72:1
2013-14 7.61:1
2014-15 0.75:1
2015-16 4.41:1
2016-17 1.85:1

Curreit Ratio
8

5
Current Ratio
4

0
2011-12 2012-13 2013-14 2014-15 2015-16

StandardiRatioi=i2:1

INTERPRETATION:iTheiCurrentiratioiwasilowiinitheiyeari2013-
14.iButiitiincreaseditheinextiyear.iItihasishowniaizigzagipattern.

30
 AcidiTest
YEARS AcidiTest
2012-13 -0.21:1
2013-14 0.24:1
2014-15 0.67:1
2015-16 -0.46:1
2016-17 -0.4:1

Acid iest
0.8

0.6

0.4

Acid Test
0.2

0
2011-12 2012-13 2013-14 2014-15 2015-16
-0.2

-0.4

-0.6

INTERPRETATION:iTheiAcidiTestiValuesihaveidecreasediduringitheiyearsi2014-
16.

31
 DebtiEquityiRatio

YEARS Debt-EquityiRatio
2012-13 0.7:1
2013-14 -0.17:1
2014-15 -4.29:1
2015-16 -2.6:1
2016-17 0.12:1

Debt-iquity Ratio
1

0
2011-12 2012-13 2013-14 2014-15 2015-16

-1
Debt-Equity Ratio
-2

-3

-4

-5

StandardiRatioi=i2:1

INTERPRETATION:iTheiDebt-EquityiRatiosiwereinotifavourableitilli2014-
15.iButiitihasiincreasediinitheiyeari2015-16.

32
 GrossiProfitiRatioi

YEARS GrossiProfitiRatio
2012-13 4.17%
2013-14 -71%
2014-15 -76%
2015-16 -41%
2016-17 -22%

GrossiProfit Ratio
10.00%
0.00%
2011-12 2012-13 2013-14 2014-15 2015-16
-10.00%
-20.00%
-30.00% Gross Profit Ratio
-40.00%
-50.00%
-60.00%
-70.00%
-80.00%
-90.00%

INTERPRETATION:iTheiGrossiProfitiRatioihasilowivaluesiasitheicompanyiwasim
akingilosses.iButitheivalueiwasibetteriini2015-
16icompareditoitheiotheriyearsii.e.i2012-15.iThisimeansitheicompanyiisirecovering.

33
 FixediAssetsiTurnoveriRatio

YEARS FixediAssetsiTurnoveriRatio
2012-13 3.23
2013-14 18.97
2014-15 2.51
2015-16 7.71
2016-17 11.2

FixediAssets Turnover Ratio

20
18
16
14
12
Fixed Assets Turnover Ratio
10
8
6
4
2
0
2011-12 2012-13 2013-14 2014-15 2015-16

INTERPRETATION:iTheiFixediAssetsiTurnoveriRatioivalueiincreaseditheihighesti
ini2012-13.iTheivaluesiareigraduallyiincreasingieveryiyear,iwhichiisigood.

34
 WorkingiCapitaliTurnoveriRatio

YEARS WorkingiCapitaliTurnover
2012-13 2.78
2013-14 4.69
2014-15 13.15
2015-16 2.08
2016-17 6.32

Workiig Capital Turnover

14

12

10

8 Working Capital Turnover

0
2011-12 2012-13 2013-14 2014-15 2015-16

INTERPRETATION:iTheiWorkingiCapitaliTurnoveriRatioiincreasediduringi2013-
14itoiaihighivalue.iIticameidownitoiaimuchilowerivalueitheinextiyear,ibutihadianiinc
reaseiini2015-16iagain.iTheicompanyistarteditoimanageitheirifundsiproperly.

35
WORKINGiNOTES
Ratioianalysisifori2012-13

Table:iAnalysisiofiFinancialiRatiosifori2012-13

Sl.iNo RATIOS PARTICULARS VALUE

.
1. CurrentiAssetsi=i2861348.60 2092602.6
WorkingiCapitali= CurrentiLiabilitiesi=i768746.0
Currentiassets- 0
Currentiliabilities

2. CurrentiAssetsi=i2861348.60 3.72:1
CurrentiRatioi= iCurrentiLiabilitiesi=i768746.0
CurrentiAssets 0
CurrentiLiabilities

3. liquidiAssetsi=i-165218.4 -0.21:1
AciditestioriQuickiratioi= CurrentiLiabilitiesi=i768746.0
LiquidiAssets 0
LiquidiLiabilities

4. Longitermidebt 0.70:1
Debt-EquityiRatioi= =900000
Longitermidebt CapitaliA/Ci=
CapitaliA/C+iNetiProfit 1041775.00
NetiProfit=i243053.60

5. GrossiProfit= 4.16%
GrossiProfitiRatioi= 243053.60
GrossiProfiti*i100 Sales=
Sales 5834664.00

36
6. NetiProfit 4.16%
NetiProfitiRatioi= =i243053.60
NetiProfiti*i100 Sales=
Sales 5834664.00

7. Salesia/c=
FixediAssetsiturnoveri= 5104025.95 3.23
Salesia/c FixediAssets=
FixediAssets 1579196.65
8. Sales=
WorkingiCapitaliTurnover= 5834664.00 2.78
Salesia/c WorkingiCapital=i2092602.6
workingiCapital

37
 Ratioianalysisifori2013-14

Table:iAnalysisiofiFinancialiRatiosifori2013-14

Sl.iNo. RATIOS PARTICULARS VALUE

1. WorkingiCapitali= CurrentiAssetsi=i213043.38 -1410327.62
Currentiassets-Currentiliabilities CurrentiLiabilitiesi=i1623371.00

2. CurrentiAssetsi=213043.38 7.61:1
CurrentiRatioi= CurrentiLiabilitiesi=1623371.00
CurrentiAssets
CurrentiLiabilities

3. AciditestioriQuickiratioi= liquidiAssetsi=396035.38 0.24:1

LiquidiAssets CurrentiLiabilitiesi=1623371.00
CurrentiLiabilities

4. Debt-EquityiRatio= Longitermidebt -0.17:1

Longitermidebt =300000.00
CapitaliA/C+iNetiProfit CapitaliA/Ci=2967276.62
NetiLoss=i4755014

5. GrossiProfitiRatioi= GrossiProfit=i-4755014.00 -71i%

GrossiProfiti*i100 Sales=i6615037.00
Sales

6. NetiProfitiRatioi= NetiProfit -71%

NetiProfiti*i100 =i-4755014.00
Sales Sales=6615037.00

7 FixediAssetsiturnoveri= Salesia/c=6615037.00 18.971

Salesia/c
FixediAssets FixediAssets=348677.00

8 WorkingiCapitaliTurnover= Sales=6615037.00 4.69

Salesia/c WorkingiCapital=
workingiCapital -1410327.62

38
Ratioianalysisifori2014-15
Table:iAnalysisiofiFinancialiRatiosifori2014-15

Sl.iNo RATIOS PARTICULARS VALUE

.
1. CurrentiAssetsi=1489203.47i -
WorkingiCapitali= CurrentiLiabilitiesi=1966896.00 477692.5
Currentiassets- i 3
Currentiliabilities

2. CurrentiAssetsi=1489203.47i 0.757:1
CurrentiRatioi= iCurrentiLiabilitiesi=1966896.0
CurrentiAssets 0i
CurrentiLiabilities

3. liquidiAssetsi=1317840.47i 0.67:1
AciditestioriQuickiratio CurrentiLiabilitiesi=1966896.00
i= i
LiquidiAssets
CurrentiLiabilities

4. Longitermidebt -4.29:1
Debt-EquityiRatioi= =2932311.00
Longitermidebt CapitaliA/Ci=4149706.00
CapitaliA/C+iNetiProfit NetiLoss=i4833079.53

5. GrossiProfit=i -76.8%
GrossiProfitiRatioi= -4833079.53
GrossiProfiti*i100 Sales=6285751.00
Sales

6. NetiProfit -76.8%
NetiProfitiRatioi= =i-4833079.53
NetiProfiti*i100 Sales=6285751.00

39
Sales

40
7. Salesia/c=i6285751.00 2.51
FixediAssetsiturnoveri= FixediAssets=i2502144.0
Salesia/c 0
FixediAssets
8. Sales=6285751.00 -13.15
WorkingiCapitaliTurnover= WorkingiCapital=i
Salesia/c -477692.53
workingiCapital

41
Ratioianalysisifori2015-16

Table:iAnalysisiofiFinancialiRatiosifori2015-16

Sl.i RATIOS PARTICULARS VALU

No. E
1. CurrentiAssetsi=11956345.44i 924851
WorkingiCapitali CurrentiLiabilitiesi=2707830.75i 4.69
=
Currentiassets-
Currentiliabilities

2. CurrentiAssetsi=11956345.44iCurrentiLia 4.41:1
CurrentiRatioi= bilitiesi=2707830.75i
CurrentiAssets
CurrentiLiabilities

3. liquidiAssetsi=i-1256251.56i -0.46:1
AciditestioriQuick CurrentiLiabilitiesi=2707830.75i
iratioi=
LiquidiAssets
CurrentiLiabilities

4. Longitermidebt -2.6:1
Debt- =3618303.00
EquityiRatioi= CapitaliA/Ci=6665540.00
Longitermid Loss=i8034332.51
ebt
CapitaliA/C+iNetiP
rofiti
5. GrossiProfit=i -41%
GrossiProfitiRatio -8034332.51
i=
GrossiProfiti*i100 Sales=i19295751.00
Sales

42
6. NetiProfit -41%
NetiProfitiRatioi= =i-8034332.51
NetiProfiti*i100 Sales=19295751.00
Sales

7. Salesia/c=19295751.00 7.71
FixediAssetsiturno FixediAssets=2502144.00
veri=
Salesia/c
FixediAssets
8. Sales=i19295751.00 2.08
WorkingiCapitali WorkingiCapital=i9248514.69
Turnover=
Salesia/c
workingiCapital

43
Ratioianalysisifori2016-17

Table:iAnalysisiofiFinancialiRatiosifori2016-17

Sl.iN RATIOS PARTICULARS VALUE

o.
1. CurrentiAssetsi=11982396.52i 5510081.8
WorkingiCapitali= CurrentiLiabilitiesi=6472314. 2
Currentiassets- 70i
Currentiliabilities

2. CurrentiAssetsi=i11982396.52 1.85:1
CurrentiRatioi= i
CurrentiAssets iCurrentiLiabilitiesi=6472314.
CurrentiLiabilities 70i

3. liquidiAssetsi= -0.4:1
AciditestioriQuickiratioi -2585231.48i
= CurrentiLiabilitiesi=6472314.
LiquidiAssets 70i
CurrentiLiabilities

4. Longitermidebt 0.12:1
Debt-EquityiRatioi= =929559.36
Longitermidebt CapitaliA/Ci=6265820.00
CapitaliA/C+iNetiProfit NetiProfit=i1423225.21

6. GrossiProfit= -22%
GrossiProfitiRatioi= i-8003489.87
GrossiProfiti*i100 Sales=34828029.00
Sales

7. NetiProfit 4.08%
NetiProfitiRatioi= =i1423225.21
NetiProfiti*i100
Sales=34828029.00

44
 Sales

8. Salesia/c=34828029.00
FixediAssetsiturnoveri= FixediAssets=3108522.75 11.20
Salesia/c
FixediAssets
9. Sales=34828029.00
WorkingiCapitaliTurnove WorkingiCapital=i5510081.82 6.32
r=
Salesia/c
workingiCapital

45
 FINDINGSi
Thisireportiworkihasiidentifiedihowicompaniesiuseifinancialistatementianalysisiandii
nterpretationiinimakingieffectiveimanagementidecisions.iOveralliorganizationaliprofit
abilityiandiachievementiofiorganizationaliobjectivesiwereidiscussed.

 TheiWorkingiCapitalidecreasediinitheiyearsi2013-14iandi2014-
15ibutihasilateriincreasediini2015-
16.iTheicompanyihasistarteditoimanageiitsiWokingiCapitaliproperly.
 TheiCurrentiRatioidecreasedionlyiinitheiyearsi2014-15iandi2016-
17.iItihasibeenifollowingiaizigzagitrendionitheigraph.
 TheiquickiRatiosioriAcidiTestiRatiosihaveibeenibelowitheistandardilevel.iThe
reforeiindicatingithatitheiliquidityipositioniofitheicompanyiisinotigood.
 Theidebt-
equityiRatioihasibeenibelowitheistandardilevelibutiitihasiincreasediinitheiyear
i2016-2017.
 TheiGrossiProfitiRatioianditheiNetiProfitiRatioidecreasedirapidlyiinitheiyeari
2013-
14ibutiitihasibeenicomingiupigraduallyiwithitheiyears.iItiisimakingirecovery.
 TheiFixediAssetsiRatioidecreasediinitheiyeari2014-
15.iItiincreaseditheinextiyeariandihasibeenigraduallyiincreasing.
 TheiWorkingiCapitaliTurnoveriRatioiwasidecreasediinitheiyeari2015-
16ibutiincreasediini2016-17iagain.

46
 Suggestions
TheiprofitiofitheiCompanyiisinotiiniaigoodiPosition.iProfitsidecreasediini201
2-
14.iSoitoiearnimoreiprofiticompanyihasitoitakeialternativeiactionsiforimoreipr
ofitisuchias:
 Theifirmsihaveilowicurrentiratioiini2014-15icomparisonitoi2013-
14isoiitishouldiincreaseiitsicurrentiratioiwhereiiticanimeetiitsishortitermioblig
ationsismoothly.
 TheiLiquidityipositioniofitheicompanyihasinotibeenistableioveritheipastifivei
yearsiasicalculatediinitheiratiosiandidepictediinitheiGraphs.iTheicompanyinee
dsitoimanageiitsiCurrentsiAssetsiandiCurrentiLiabilitiesibetter.iCurrentiAssets
ishouldibeimoreithanitheiCurrentiLiabilitiesias,itheiStandardiRatioiforithisiisi
2:1.iItiisisuggestedithatitheicompanyimaintainsiproperiliquidifundsilikeicashia
ndibankibalance.
 TheiSolvencyiPositioniasiwelliasitheiProfitabilityiPositioniofitheicompanyiisi
notistrong.iTheicompanyihasialreadyistarteditheirecoveryibutiitistillineedsitoi
concentrateioniincreasingitheiriprofitabilityiandiinvestingiinibetterimanageme
ntiofitheicapitaliandiinventoryiinvolved.
 TheiActivityiRatiosiofitheicompanyisuggestsiaigradualiincreaseiinitheiperfor
manceiofitheicompany.iTheicompanyineedsitoifocusioniusingitheiriresourcesi
effectivelyiandiefficientlyitoigenerateihigherirevenues.

 Theicompanyishouldienhanceiitsiemployee’siefficiency,itrainingimethodsisho
uldibeiimprovisediforitheiemployeesiiniorderitoiincreaseiitsiproductionicapaci
tyiandiminimizeimistakesiwhileiperformingitheitasks.iAlso,imoreisafetyipreca
utionsineeditoibeitakenibyiemployeesiwhoiareidirectlyiworkingiiniproductioni
process.

47
 CONCLUSION

Analysisiandiinterpretationiofifinancialistatementsiisianiimportantitooliiniassessingic
ompany’siperformance.iItirevealsitheistrengthsiandiweaknessesiofiaifirm.iItihelpsithe
iclientsitoidecideiiniwhichifirmitheiriskiisilessioriiniwhichioneitheyishouldiinvestisoit
hatimaximumibenefiticanibeiearned.iItiisiknownithatiinvestingiinianyicompanyiinvol
vesiailotiofirisk.iSoibeforeiputtingiupimoneyiinianyicompanyioneimustihaveithoroug
hiknowledgeiaboutiitsipastirecordsiandiperformances.iBasedionitheidataiavailableithe
itrendiofitheicompanyicanibeipredictediininearifuture.

Thisiprojectiofifinancialianalysisi&iinterpretationiinitheiproductioniconcerniisinotime
relyiaiworkiofitheiprojectibutiaibriefiknowledgeiandiexperienceiofihowitoianalyzeith
eifinancialiperformanceiofitheifirm.iTheistudyiundertakenihasibroughtiinitoitheilight,
itheifollowingiconclusions.

Duringithisiproject,i“TheiFinancialiAnalysisiofiEktaiEngineers”iIicameitoiknowithati
theicompanyihasibeeniincurringinormaliprofitsiduringitheiperiodiofistudy.iSoitheico
mpanyishouldifocusionigettingiofimoreiprofitsiinitheicomingiyearsibyitakingicareiofi
theiinternaliasiwelliasitheiexternalifactors.iWithiregarditoiresources,itheicompanyiisi
utilisingitheiassetsiproperly.

Thisiprojectimainlyifocusesionitheibasicsiofidifferentitypesiofifinancialistatements.
BalanceiSheetiandiProfiti&iLossistatementsiofiEKTAiENGINEERSihaveibeenistudie
d.

FromiRatioianalysisiofitheiFinancialiStatementsiprovided,ii.e.iBalanceiSheetiandiPro
fiti&iLossiStatementsiofiEKTAiENGINEERSiforitheiperiodi2011-
16,iitiisiconcludedithatitheicompanyiisimakingiprogressiiniaisteadyimanneriandiitine
edsitoitakeieffectiveimeasuresitoiincreaseiitsiprofitabilityiandimaintainigoodwilliinith
eiindustry.

48
 BIBLIOGRAPHY
Books:
 FinancialiManagementi–iI.M.Pandey
 FinancialiManagementi–iKhani&iJain
 ManagementiAccountingi–iR.P.Trivedi
 ManagementiAccountingi–iSakshi.K.Gupta
 FinancialiAccountingi–iR.G.Saha

Websites:
 www.google.com
 www.myaccountingcourse.com

AnnualiReportsiofitheicompany,iEktaiEngineers.

49