Financial Performance of HSL

INTRODUCTION TO THE STUDY
The area of financial management in our present day economy, finance is defined as the provision of money at the time when it is required. Finance may be defined as the art and sciences of managing money. Finance holds key to all human activity. No business activity can ever be pursued without financial support. Finance is the only common decision denominator for a vast range of corporate plan must be expressed in financial terms. The major areas of finance are: 1. Finance services. 2. Managerial Finance (or) corporate Finance (or) financial management. Financial management is the managerial activity, which is concerned with the planning and controlling of the firms financial resources through it was a branch of economics till 1890 as a separate discipline it is of recent origin. Still it has no unique body of knowledge of its theoretical concepts even today. Of great interest to academicians because the subject is still developing and there are still certain areas where controversies exit for which no unanimous solutions have been reached as yet. Practicing managers are interested in this subject because among the crucial decisions of the firm are those which relate to finance and on undertaking of theory of financial management provides them with conceptual and analytical incites to make those decisions skillfully. The areas of financial management have undergone Far- reaching changes over a time. The finance function assumes a lot of significance in the modern days in the view of increased size of business operations and growing
complexilities associate there to. A firm performs finance functions simultaneously and continuously in the normal course in the business. They do not necessarily occur in a sequence. Finance function call for skillful planning, control and execution of business activities. The financial statements provide a summarize view of the financial position and operation of the organization. Therefore much can be learnt about the organization by a careful examination of its financial statements or they are the invaluable documents regarding the financial performance of an organization. This analysis of financial statements is an important id to financial analysis. The focus on key figures in the analysis of financial statements is a process of evaluating relationship between components parts of financial statements to obtain a better understanding of the financial position and performance. Managements of the organization are confronted with taking decision about source of finance its capital structure and credit policy its application of funds. In order to take strategic decision the management needs to asses the progress and performance of the organization. Working capital, cash flow analysis, funds flow analysis and ratio analysis are the some of the measurements to the financial performance. A study of financial management with particular reference to the financial performance in the large public sector undertaking is a challenging task and Endeavor in this direction is to analyze the funds flow statements, cash flow statements, ratio analysis and working capital is the amount required to meet day to day operation at the organization. An absence of this makes the functioning of the organization blind. A proper study on financial performance results in prevention of Mis-management and Mis-utilisation of funds.
SCOPE OF THE STUDY:

Firms create manufacturing capacities for production of foods some services to consumers. They sell their goods or services to earn profit. They raise funds to acquire manufacturing and other facilities. Thus, the 3 most important activities of the business firms are: Finance Production Marketing The firm secures whatever capital it needs and employs if (finance activity) in activities which generate returns on invested capital (production and marketing activities).
1. The scope of this project report is limited to only possible calculated ratio for analyzing the financial position. The calculations of ratios are based on the financial statements of the last five years only [2003 to 2008]. 2. there are 4 important tools for commenting on the results of the analysis of financial performance namely working capital, funds flow statement, cash flow statement and ratio analysis, comparison with standards of shipping industry were not available, comparison is made with the general standard. 3. Financial statements of the other shipping companies were also no available so the least two basis of comparison were not used in this report. Only trend analysis method is used in this report for comparison. This is useful to know the financial position of the company.
OBJECTIVES OF THE STUDY:

The present study in Hindustan shipyard limited has been undertaken to evaluate the overall performance by applying theoretical concepts to a particular situation in Hindustan Shipyard Limited and to compare and correlate the actual achievements with the theoretical conclusion. The efficiency of the financial performance is determined by the efficiency administration on its components.
T he major objectives of the study:
To know the process of working capital management of Hindustan Shipyard Limited. To study the cash inflow and outflow of Hindustan Shipyard Limited. To study the funds inflow and outflow of Hindustan Shipyard Limited. To examine the various ratios of Hindustan Shipyard Limited. To measure the financial performance and financial position of Hindustan Shipyard Limited. This study is to determine the efficiency and effectiveness of the management in each segment of the finance
activities.
METHODOLOGY:
Methodology is a systematic procedure of collecting information in order to analyze and verify a phenomenon. The present study is based o data collected from primary and secondary sources.
Primar y Data:
It is the information collected directly without any references. Primary data consists of information obtained from interaction and discussion with concerned official of the organization to elicit their opinions on various relevant matters. In the process of interaction with officials it is planned to confirm through secondary sources. T he Data Collection Includes: Conducting personnel interviews with the concerned officer of finance department of Hindustan Shipyard Limited accounts department.
Secondar y Data:
Secondary source of data includes collection of data through study of official records, journals, annual reports, administration reports and various magazines related to Hindustan Shipyard Limited. T he Data Collection Includes: Collection of required data from annual reports of Hindustan Shipyard Limited.
References from textbooks and journals relating to financial management. Statistical tools have been applied for the information so collected. Application of statistical techniques helps
to draw useful conclusions and to enable to give appropriate suggestion to improve the efficiencies of the organization.
Diag r ammatic Repr esentation:
Primary Sources
Management Respondent s
Personal observation
DATA SOURCE
Inside the Company
Annual Reports
Secondary Sources Outside the Company Textbook and websites
PERIOD OF STUDY
The period of study was 2 months and it is from 15th may to july 15th 2010.
LIMITATIONS OF THE STUDY:

Though the project is completed successfully a few limitations can be observed in the study.
The time allotted for the project study is too short, to depict a clear and real picture of the company and its operations. Reliability on usage of secondary data. The study was conducted with the data available and the performance was made accordingly. Some aspects of financial information were not available because of the confidentiality of the Hindustan Shipyard Limited. Interpretations are based on the valid its of the data collected. During the period of analysis the companys current financial information is not available.
This work is confined to published data available. Due to the busy schedule of the executives. It was very difficult to get valuable information about the organization. The calculated ratios were not compared with the standard of shipping industry due to non-availability of the same. The calculated data can be compared with the other shipping companies was not available they are not compared with other shipping companies. The financial results of the company are having the effect of general economic conditions and government policies. The performance therefore must consider the same but it is hard and difficult to find the effect of such factors affecting the financial position of the company.
INDUSTRY PROFILE
SHIPBUILDING INDUSTRY :
According to the 8th planning commission at present there are about 40 shipyards in India. Out of these, seven are in the public sector, two in the state sector and the remaining in the private sector. The private sector shipyards are allowed to construct vessels of any size. However, at present the private sector shipyards are not capable of building
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more than 10,000 DWT size crafts, in spite of so many shipyards in the country, shipbuilding industry is in doldrums partly because of very high cost of indigenous ships, unduly long delivery periods and poor viability of the shipyards and because of the ability of foreign shipyards. The foreign shipyards to construct ships at marginal cost and shorter delivery period consequent on worldwide recession in shipbuilding industry, hence, it is not proposed to set up any new shipbuilding yards in the 8 th plan. Efforts would, however be made to improve productivity and viability of the existing yards. Certain other measures pricing formula as recommended by BICP, treating the shipbuilding industry as 100% export oriented industry with all related benefits, allowing duty free imports up to a limit of 60% of the realizable price of the vessel, providing working capital loans to shipyards on short terms etc. So, the government of India used to change intension towards their activity from shipbuilding to ship repair because ship repair activity is far more profitable than shipbuilding. At the same time, to reduce outgo of foreign exchange (to the tune of Rs.50 cores every year) on account of Indian vessels repairs at foreign shipyards can be avoided if domestic capabilities are strengthened. Keeping this in view, most of the units in this sector re drawing up plans to increase their capacities. The government has recognized the strength of this industry and given it the states of deemed export industry. A number of concessions, as available to 100% export oriented units, have been provided.
INDIAN SHIPBUILDING INDUSTRY:

There are 28 shipyards in India, which include 7 large shipyards, which fall under public sector control, which offers a wide range of products and services. Indian shipyards are eligible for government subsidy for construction of
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ocean going vessels to maintain competitive edge in international competition. The public sector shipyards under the administrative control of the ministry of defiance (MOD) are:
Garden Reach Shipbuilders and Engineers (GRSE) Megaton Dock Limited (MDL) Goal shipyard Limited (GSL).
The public sector shipyards under the administrative control of Hindustan shipyard Limited (HSL). Cochin Shipyard Limited (CSL) Hough Dock and Port Engineers Limited (HDPE) Central Inland Water Transportation Limited (CIWTC) the Ministry of shipping are:
Investment Oppor tunities in Shipbuilding Facilities at par with 100% Export oriented units for Ship Repairs Industry. Duty free import of raw materials components, consumables and spares for shipyards constructing vessels under
bond for exports.
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Indian shipping companies placing orders on Indian shipyards are permitted to raise funds through External
Commercial Borrowings.
30% subsidy for Indian shipyards from Government for both domestic and exports orders on ocean going vessels. SHIPBUILDING AND SHIP REPAIR:
There are 32 shipyards including 7 Government owned companies engageed in shipbuilding and ship repairs. They offer a wide range of products and services. Indian shipyards are eligible For government subsidy for construction of ocean going vessels to maintain competitive edge in international competition.
Ship Building and Ship Repairs W ing (SBR W ing):

SBR wing, the apex technical organization with in the Ministry is the nodal authority for development of shipbuilding and ship repairs industry. It offers expert advice on a range of subject concerning the industry. Investment opportunities in shipbuilding ship repairs in India: Facilities at par with 100% Export oriented units for Ship Repairs Industry. Duty free import of raw materials components, consumables and spares for shipyards constructing vessels under bond for exports. Indian shipping companies placing orders on Indian shipyards are permitted to raise funds through External Commercial Borrowings. 30% subsidy for Indian shipyards from Government for both domestic and exports orders on ocean going vessels.
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AREAS IDENTIFIED FOR PRIVATE SECTOR PARTICIPATION IN INDIA:
Selling up of going ventures in shipbuilding and ship repair. Setting up of ship repair facilities at its available land and water front areas of ports. Building and repairs of Hi-tech vessels such as oil Tankers and container-cum-cargo vessels.
RESEARCH CENTERS FOR SHIP DESIGN:

Government offers grant in-aid to educational and Research institutions for carrying out R & D schemes on a project-to-project basis. At present seven R & D projects are in progress involving a grant in aid of Rs.103.62 lakhs.
National Ship Design And Research Center (Nsdrc):

Visakhapatnam based NSDRC administered by the ministry offers support to Indian shipbuilding and ship repair industry in the fields of ship design, research in Hydrodynamic structures, vibrations, ocean/water transport Economy, shipyard management.
THE MAJOR NINE SHIPYARDS:
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COCHIN SHIPYARD: REAR ADMIRAL R. WIR, chairman and managing director. Cochin is one of the largest shipyards, in India and is the only yard capable of building ships up to about 1, 25,000DWT. It was established in 1972 under technical collaboration with Mitsubishi heavy industries of Japan. The yard has the distinction of having the international standards organization (ISO) 9001 certification for shipbuilding, ship repair, and marine engineering training. The company has consistently shown a profit. In the latest reporting year (2000), there was a net income (including subsidy) of US$9.5 millions. HINDISTAN SHIPYARD: D. K. VARMA, chairman and managing director. The Hindustan Shipyard was established in 1941. The Government took over operation of the facility in 1952 and acquired ownership in 1962. The facility was the 1st yard in India to be awarded ISO 9001 certification for quality assurance. The shipyard has a work force of about 5000 that are capable of processing about 1600-1700 tons of steel/month. T he main features of the yar d are:
Three slipways of 30,000DWT capacity, each
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Building dock of 80,000DWt capacity Outfit jetty and ship quay of 457 meter length. A Two berth wet basin. HOOGHLY DOCK AND PORT ENGINEERS: M.M. KUILA, chairman and managing director. It is the one of the oldest shipyard in India and has two product units: the salka works and the nazirgunga for ship repairs and for new construction. The installed capacities in shipbuilding are 1100 tons/annum, and in ship repair about 125ships/annum. In 2001 the yards management decided to increase emphasis on ship repairs, and revamped a repair unit at kid deport, near the Calcutta Dock system.
CENTERAL ISLAND (RAJABAGAM) DOCK YARD: S.C.DUA, Chairman and managing director. It is the Calcutta dock system 3 miles down stream (on the Hooghly River) of the Calcutta dock system. The facility has 3 dry docks for construction and repair of small and medium size vessels. The operation has integrated facilities for hull fabrication, casting operations, machining, repair and outfitting of machinery and equipment, there are about 1700 employees. The yard was established in 1972 and consistently turns a small profit from its operation. In 2000, the net income which was largely from ship repair was Rs.39 cores (US$ 8.3 million). It has been recommended
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that the operation be privatized as quickly as possible, there being no strategic or commercial rationale for public ownership. GARDEN REACH SHIPBUILDING AND ENGINEERS: REAR ADMIRAL VOHRA, Chairman and managing director. The company was originally organized in 1884 as a small factory on the Hooghly River, near Calcutta. It was taken over by the government in 1960. The enterprise was gradually expended and modernized to meet growing maritime needs especially those of the Indian Navy and Coast guard.The company has 6 facilities in and around Calcutta, and one operation in Bihar. Most of the facilities are ISO 9000 qualified. There is a 160-meter dry dock for new construction and repair. The dock can handle ship up to 20,000DET. In additional to the dry dock garden reach has another building berth (162 m 825 m) and two slipways (90m*77m*44m) with supporting cranes. There is a repair and over haul shop for over hauling medium and slow speed diesel engines. MAZAGON DOCK LIMITED: REAR ADMIRAL D.V.TANEJA, director and shipbuilding. MOZAGON DOCK (MDL) is the Largest shipyard in India, employing over 10,000 workers. The yard has designed and constructed surface combatants (6700 ton destroyers), submarines, cargo vessels, tankers, tugs, dredges and offshore structure. The yard has ISO 9001 accreditation. An indication of the capabilities of the yard is evidenced by the fact that the Indian Navy has designed it as the facility to build two attack submarines that would be delivered by 2005. ABG SHIPYARD GROUP:
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Mr.R.NAKRA, managing director. ABG is the largest privately owned shipyard in India, and is considered the most efficient. Its annual sales/employee monetary statistic is about Rs. 7, 50,000 (apex US$ 16.150), a number much better than that at any other yard in the country. [As a comparison, the average revenue per employee in the U.S. shipbuilding industry is about $1, 15,000]. BHARATHI SHIPYARD LIMITED: Mr.V.KUMAR, director and Mr.P.C.KAPOOR, director. Bharathi shipyard is one of the two leading shipyards in the private sector. It is engaged in the design and construction of sea and coastal craft up to a maximum of approximately 25 meters in length. The wet basic is reported to have a capability of accommodating up to 8 vessels simultaneously.
PRIVATE SHIPYARDS IN INDIA:

While the big public sector shipyards in the country are smarting under a frail under book position, their smaller counterparts in the private sector that are engaged in building smaller vessels are being bolstered by a surge in demand interestingly, the private shipyards are getting an increasing flow of orders from foreign companies for smaller vessels, as world wide the big shipyards are full with new building orders. while the PSU shipyards engaged in building large vessels are non-competitive in the global market due to their cost over-runs and Government restrictions, it makes
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sense for foreign ship owners to place orders for smaller vessels on Indian yards due to the cheap labor costs and efficient working an industry analyst pointed out. There are about 30 to 35 shipyards in the private sector in the country of which are the leading players. Bharathi Shipyard ABG Heavy Industry Western India Chowgule and stebma Most of them especially Bharathi shipyard and ABG Industries are sitting on rich order books. While the ABG shipyard has an order book of RS.1, 300 cores involving some 25 ships. Bharathi shipyard doubled its sales of ships from Rs.610 cores in 2003-2004 to Rs.1, 213 cores last fiscal. Only recently we bagged two contracts from the Bourbon Group of France for supply of two multi-purpose long-platform supply vessels, the contract value for each vessel being $7.9 million. The vessels are scheduled for delivery in June 20065 and September 2006, an official of Bharathi shipyard said. The healthy trend is prompting many private shipyards to think in terms of expansion or acquiring other shipyards. ABG for example is investing RS.375 cores for setting up a new shipyard in Gujarat. Work has already started and it is expected to be operational by 2006. We see interesting possibilities in the shipbuilding and ship repair market in the coming months. Mr. Rishi Agarwal, Managing Director of the company told Business Line.
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Along with the shipbuilding industry, the ship repair industry is also riding on an upbeat market. This is so especially in the wake of the growing fear of pollution and stricter norms and regulations on ocean going vessels. We expect a further spurt in ship repair orders in the coming years, says Mr.S.K. Shahi, chairman of SKS (ship) Limited. The company is planning to set up a new ship repair unit with Danish collaboration. While it is the boom in the freight market that is the primary driver of growth in the ship building market, the cheap labor costs in India are also prompting foreign companies to have their ships built here. The labor cost per worker in India is at present estimated at $1,192 per year, while it is $ 10,743 and $21,317 per day in Korea and Singapore (both leading shipbuilding nations) respectively.
COMPANY PROFILE
Company name
Hindusthan shipyard limited
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Type Establishing Head quarters Quality Tag line Products Services Web site :
: : : : : : :
public sector undertaking 1940 Vishakapatnam ISO 9000:2001
A pioneer. . . . .in time with the changing time offshore platform, patrol boat ship design, ship building, ship repair. www.hsl.nic.in
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The ascidia steam company limited was sequestered in Bombay (presently Mumbai) in March 1919. Sri NAROTHAM MARARJEE was the chairman of the founders of the country. Sri NAROTHAM MARARJEE and Sri WATCHAND HIRACHAND invited MR. KNUSEN a well known ship building except from united kingdom is 1920, to visit India. He was to formulate a plan for establishing a shipyard project, but he died suddenly. Scandias were unable to make concrete progress till 1990. In 1940 m/s ALEXANDER GINN, partners and LONDON recommendation on the shipyard project. After examining various sites at Visakhapatnam for establishing the shipyard and submitted their reports in march 1941, to draw inference keeping in view the above objective a period of five years that is from 1993-94 to 1997-98 is consider. The annual performance reports and other printed reported, dated of M/s Hindustan shipyard Limited, Visakhapatnam is considered as secondary data. The foundation stone was laid on 21st June 1941 by Sir BABU RAJENDRA PRASAD, the president of India Nation congress with blessing of Mahatma Gandhi. The landed area is about 55 acres; the site is provided accommodation for 8 launching berths (slip ways) and for associated workshop. Construction works were stopped due to the st6acks of warplanes in April 1942. it was resumed in 1943 but progress could be achieved only after cessation of hostilities in 1945. The Government provided impetus for the shipping industry by resolving on July 12, 1947. India like other important maritime countries must adopt a dynamic policy with regard to here shipping. The reconstruction policy subcommittees report in 1947 recommended that India must builder own Nation shipping line to carry her own cargo
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overseas, the sub-committee also recommended that entire coastal trade ought to be forth with reserved for national shipping and nation bottoms should at least carry 50% of her maritime trades.
TRANSFER FROM PRIVATE TO PUBLIC SECTOR:

After building eight ships of JALA series, Scandias found it difficult to turn the shipyard without the financial assistance form the Government and appeal to Government in 1948 for payment of construction different subsidy. In 1950, the financial position of the yard was so critical that large scale retrenchment and even closure of the yard were apprehended on 16th March Sri SHYAMA PRASAD MUKHERJEE, Ministry in Parliament. The Visakhapatnam shipbuilding yard is a nation concern it is the duty of any national Government, to see that it is not compelled to down, not in a single civilized country had the ship building industry proposed without such subsidy or assistance from the state. Other counter had spent millions of pound for year on encouraging shipbuilding. . Finally, it was decided by the Government, that it would go ahead with the take over proposal. A new company under corporate of THE HINDUSTAN SHIPYARD LIMITED was registered on 21st Jan 1952 with the Government, holding two-third. Scandias signed on an agreement for the above sale on 23rd Feb 1952. The HSL took
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possession of Visakhapatnam yard on 1st march 1952. In July 1961 the shares held by the Scandias were also acquired by the Government of India because the company realized that it could not keep the industry going. Since then the HSL continues to be fully owned and controlled as a Government company.
FEATURES :
Steel processing capacity 1600 tons per month. Three slipway of 30,000 DWT. Outfit jetty and ship, 457 m. Wet basin has 2 berths.
DEPARTMENTS IN HSL:
The departments can be mainly categorized as follows: 1. PRODUCTION DEPARTMENT 2. ADMINISTRATION DEPARTMENT 3. SERVICE DEPARTMENT
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1. PRODUCTION DEPARTMENT:
The production department mainly consists of the following sections. I) HULL SHOP: It deals with material preparation like plates used for the construction of ship. II) PREFABEICATION SHOP: It deals with ship parts like the funnel, wheel house, and engine roots. III) ERECTION DEPARTMENT: Assembling is the ship parts to bring the complete shape IV) WELDING DEPARTMENT: It deals with attaching the parts to make complete ship work. V) BLACKSMITH DEPARTMENT: It deals with rallying work, leader work and flooring work. VI) SHEET MENTAL DEPARTMENT: It deals with air conditional works. VII) RIGGING DEPARTMENT: It is holding the ships with repairs. VIII) PAINTING DEPARTMENT: Painting is the ship with required colors. IX) ELECTRICAL DEPARTMENT:
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It is a department to fix all the electrical equipments. IV) PLUMBING DEPARTMENT: Plumbing works to trappers. V) ENGINEERING DEPARTMENT: Facilitating and assembling the main engine.
QULITY ASSURANCE ISO- 9001 CERTIFECATE: Hindustan Shipyard Limited is the first shipyard in the country the
ISO-9001 quality accreditation certificate awarded by LRGA London with accent placed on quality improvement in the construction, Hindustan Shipyard Limited was awarded ISO-9001 certificate by Lloyds register of quality assurance, London for construction.
ISO-9001 QUALITY POLICY: To produce consistency Quality Product to national and international standards in time for customer satisfaction at optimum cost.
2. ADMINISTRATION DEPARTMENT:
The administration department consists of the following sections.
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I) II) III) IV)
Accounts department. Personal department. Internal Audit department. General department.
I) ACCOUNTS DEPARTMENT: The following are the sections in accounts departments. a) Cost Accounts. b) Bills and Insurance. c) Provident fund. d) Salaries section. a) COST ACCOUNTS: Cost Accounts deal with compilation of Final Accounts, Budgets, and Cost reports to ministry, Direct and indirect taxation that is central excise, income tax and sales tax. b) BILLS AND INSURANCE: Bills and Insurance deals with payment of bills, that is passing of bills and insurance of materials etc. c) PAY ACCOUNT SECTION:
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Pay Account section deals with the payment of wages, salaries, provident fund gratuity, VR and up to 5000 only. The provident fund is allowed and remaining goes to the Hindustan Shipyard Limited provident fund trust. II) PERSONAL DEPARTMENT:
a) Staff cell. b) Work man cell. c) Executive cell. Staff cell deals with the staff of 958 members and work man 2694 and officers on executive of 386 totally strength of Hindustan Shipyard Limited comes to 3589. Acts which are present in the HSL are: Promotions, leave management, medical reimbursements, canteen management, facilities, general administration, shifts, time keeping etc. III) INTERNAL AUDIT DEPARTMENT: This department checks the values of inventories and bills different braches of accounts are awaited annually. IV) GENERAL DEPARTMENT:
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This is responsible for procurement of the stationery and functional goods other incidental items.
3. SERVICE DEPARTMENT:
The service department consists of the following sections. I) DESIGN OFFICE: It deals with ship design and off-fit design etc, design office is also called drawing office. II) PRODUCTION PLANNING DEPARTMENT: It deals with the way how to execute the work and they design the flow charts of the works. III) QUALITY CONTROL DEPARTMENT: It deals with the certificate of IRS, LRS works relating to the ISD certificate and inspection of material and stores is also done by this section. IV) PURCHASE DEPARTMENT: It deals with purchase of all types of materials V) GENERAL STORES: General stores are those stores which will be coming to this store after the inspection of material and this generally maintain like material receipts reports, material requisition and bin cards etc. VI) CLEARANCE DEPARTMENT: It deals with receipts to imported goods for clearance.
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VII) MAINTENANCE DEPARTMENT: It deals with maintenance of machinery. VIII) CIVIL ENGINEERING DEPARTMENT: It deals with the construction of civil works and maintenance of colony housing estate. IX) MEDICAL AND HEALTH DEPARTMENT: It deals with medical aspects like giving medicines to the sick employees and family etc. X) SECURITY DEPARTMENT: It deals with only the HSL security with supervisory to safeguard the organization.
BOARD OF DIRECTORS:
1. CMDE NARESH KUMAR, VSM --- Chairman and Managing Director. 2. SRI RAJNEESH GUPTA, IAS --- part time official Director. 3. SRI K.V.DRAHMANANDA REDDY, IRAS --- part time official Director. 4. CAPT.P.V.K. MOHAN --- part time Non-official Director. The Board is constituted by the Government of India with senior officials, civil servants drawers from the ministry of shipping and transport ministry of finance and other department/agencies of the Government senior executives of the port trust are also appointed as directors.
ACTIVITIESS OF HINDUSTAN SHIPYARD LIMITED:
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According to the 51st annual general meeting of the company held for the year 2002-03, the division wise performance of the Hindustan Shipyard Limited is as follows. 1. SHIP BUILDING: Ever since the shipyards first ship S.S.JALA USHA An 8000 DWT stream ship was launched on 14th march, 1948 by the prime minister of India PANDIT JAWAHARLAL NEHRU. Hindustan shipyard Limited has come a long way in building a range zero ships numbering more than 144 aggregating to over 1 million dead weighted tonnage. the range varied from conventional bank carries to general cargo and supply vessels, petrol vessels to highly sophisticated drill ship Iceland defense sectors. a part from conventional merchant shipping SAGAR BHUSHAN a highly sophisticated and complex drill ship was constricted first time in India. for ONGC is just an example of shipyards capability for hi-tech products. Each assignment is taken up as a new challenge to meet the requisite standard quality, time and cost constraints; technology of gradation, methods improvement, well coordinated input services and dedicated efforts made the proof achievements of Hindustan Shipyard Limited possible. 2. INFRASTRUCTURE FOR SHIP BUILDING : The Hindustan Shipyard Limited is spread over an area of about 300000 square meters work shop and facilities are systematically planned and functionally laid out to ensure unidirectional flow of material. The steel processing material consists of a stock yard to hold 30000 tones of steel. A modern plate and certain pressure, self evaluating trucks capable to handle flock up to 250 tones and large prefabrication cranes of adequate capability.
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The hull construction facilities include a modern covered building dock with intermediated gate facility and three shipways. Cutting, welding and assembling of steel to any specification are handling with care and accuracy by skilled operations, which are continuously trained to upgrade their skills. 3. SHIP REPAIR DIVISIONS: Hindustan Shipyard Limited established full-fledged ship repair division with the commissioning of dry dock during the year 1971. It has capability for handing vessels up to 70000 DWT. Hindustan Shipyard Limited ship repair department has accomplished intricate jobs on variety of Naval vessels include sub marines, merchant ships oil rigs, foreign and Indian flag vessels totaling about 1600 ships. 4. OFF SHORE PLATFORM DIVISION: Hindustan Shipyard Limited set up exclusive off shore platform yard (OPF) adjacent to main ship building yard during the year 1985, as a captive yard to construct well head platforms for ONGC. The OPE yard has facilities for fabrication of two platforms per year. The man power exclusively trained for fabrication of platforms was diverted to main yard to carry out ship building and ship repair works. 5. HUMAN RESOURCE IN HSL: Hindustan Shipyard Limited is a heavy engineering industry under public sector ad is under the administrative control of ministry of surface transport. The employees are broadly categorized as officers, staff and workmen. The present strength of the officers is 389. Staff is 952 and workmen are 2216, making a total of 3694 as on 1 st Jan, 2006.
GROWTH OF THE SHIPYARD:
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The Hindustan Shipyard Limited emerged as an emblem of swadesh spirit. In spite of the fact that Indian shipping since independence has increased eighteen flod and the country is on the top in shipping tonnage among the developing countries. India still carries only about 20% of its total trade in India ships. It has to depend to a large extent on foreign shipyard to meet its increasing demand of many types of vessels. Efforts to argument the ship building capacity with in country are continuing. Within the year of government take over Hindustan Shipyard Limited was realized that the ship construction should be supplemented with repair work. Ship repairing is one of the few enviable industries where the customer brings the foreign exchange to the door steps.
DATA ANALYSIS AND INTERPRETATION
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THEORITICAL FRAMEWORK O FINANCIAL PERFORMANCE

Financial Performance is a subjective measure of how well a firm can use assets from its primary mode of business and generate revenues. This term is also used as a general measure of a firms overall financial health compare similar firms across the same industry or to compare industries of sectors in aggregation. Financial performance is measuring the results of a firms policies and operations in monetary terms. These results are reflected in the firms return on investment, return on assets and value added, etc.
MESUREMENTS OF THE FINANCIAL PERFORMANCE:

There are many different ways to measure financial performance, but all measures should be taken in aggregation. Line items such as working capital, cash flow analysis, funds flow analysis and ratio analysis. Further more, the analyst or investor may wish to look deeper into financial statements and seek out margin growth rates or any declining debt. 1. Working Capital Management 3. Funds Flow Analysis 2. Cash Flow Analysis 4. Ratio Analysis
1) WORKING CAPITAL:
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Working capital refers to short term funds, the need to meet operating expenses. It is concerned with the management of the firms current assets and current liabilities 1. It relates to the problems that arise in attempting to manage the current assets, current liabilities and their inter-relationship that exists between them. It a firm cannot maintain a satisfactory level of working capital; it is likely to become insolvent and may even be forced into bankruptcy.
The concept of working capital has been a matter of great controversy among the financial wizards and they view it differently. There is no universally accepted definition of working capital. Broadly there are two concepts of working capital commonly found in the existing literature of finance. Gross working capital. Net working capital
Note:
Gross working capital referred as the total of current assets. It is also known as quantitative or circulating capital. It refers to firms investments in short term assets such as cash, short term securities, accounts receivables and inventories2. Net working capital referred as the difference between the current assets and the current liabilities. It is also known as quantitative concept of working capital.
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TYPES OF WORKING CAPITAL: A. Concept Base3 Working capital B. Time Base
Concept Base
Time Base
Gross WC Or Quantitative
Net WC Or Qualitative
Permanent Or Regular WC
Temporary Or Variable WC
Per manent Wor king Capital: Permanent working capital is the minimum investment kept in the form of inventory of raw materials, work-inprocess, finished goods, stores and spaces, and book debts to facilitate uninterrupted operation of a firm. It is also in short run; it certainly varies in long run4. Temporar y Wor king Capital :
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A firm is required to maintain additional current assets temporarily over and above permanent working capital to satisfy cyclical demands. Any additional working capital apart from permanent working capital required to support the changing production and sales activities is referred to as temporary or variable working capital.
2) CASH FLOW ANALYSIS:

An analysis of cash flow of a concern during a period, presented in the form of a statement is known as cash flow analysis. The cash flow statement can be for the past of can be a projection for the future5. The cash flow of the concern in the near future, say for a period of 6 months of 1 year, can be prepared based on the past trends and expectations of the concern regarding factors that would affect its cash receipts and cash payments. Such an estimate of future cash flows is better termed cash budget5. Cash flow statement generally refers to the statement showing the receipts (inflows) and payments (outflows) of cash during the period covered by two consecutive balance sheets. Cash flow analysis enables the management to plan and co-ordinate the financial operations of the enterprise, and furnish the basis for evaluating financing policies. It provides a barometer for ensuring the profitability of the business, and makes financing problems of the business much more manageable.
Classification of cash flows: The model prescribed accounting standards, cash flow statement, classifies cash flows into 3 categories namely Cash flow from operating activities, cash flow from investing activities and cash flow from financing activities6.
37
i)Operating activities: Operating activities are those transactions which are considered in the determination of net income. Examples of cash inflows in the category are cash received from debtors for goods and services, interest and dividend received on loan and investment. Examples of cash outflows in this category are cash payments for goods and services; merchandise; wages; interest; taxes; supplies and others. ii)Investing activities: Investing activities include acquisition of long term or Fixed assets; disposal debentures and other securities; lending of money and its subsequent collection. Cash inflows from investing activities generally include cash sales of property, plant, equipment and intangible assets, cash sales of investments in shares, debentures and other securities, cash collection from borrowers. Cash outflows are purchase of shares, debentures and plant, equipment and other long term assets, loan given to other firms7. iii)Financing activities: Financing activities are related to long term liability and equity capital. A firm engages in financing activities when it obtains resources from owners, returns resources to owners, borrowed. Cash inflows include proceeds from issue of shares and short term and long term borrowings. Cash outflows include repayments of loan and payments to owners, including cash dividends. Repayments of accounts payable or accrued liabilities are not considered repayment of loans under financing activities but are classified as cash outflows under operating activities.
38
3) FUNDS FLOW STATEMENT:

The funds slow statement describes the sources from which additional funds were derived and the uses to which these funds were put. Significant technique of financial performance is funds flow analyze. Its designed to highlight changes in the financial condition of a business concern between two points of time which generally conform to beginning and ending financial statement dates. Funds flow statement is also termed as a statement of changes in financial position, statement of sources and applications of funds, statement of changes in working capital, statement of funds supplied and applied, statement of funds generated and expended, where got and where gone statement, funds statement8. Thus, funds flow statement is a report which summarizes the events taking place between the two accounting periods. It spells out the sources from which funds were derived and the uses to which these funds were put. This statement is essentially derived from an analysis of the changes that have occurred in assets and liabilities items between two balance sheet dates. In this statement, only the net changes are shown so that the outcome of a transaction or of a series of transactions upon the financial condition of a business enterprise is reflected more sharply. Importance of funds flow statements, a fund flow statement is an essential tool for the financial performance and is of primary function management. The importance of funds flow statement is as follows: With the help of funds statement, a firm can plan the deployment of its resources and allocates them among various applications. A project funds flow statement acts as a guide for future to the management the firms future needs of funds can be projected well in advance and also the timing of these needs.
39
A funds flow statement helps in explaining low efficiently the management the firms its working capital and also suggests ways to improve working capital position of the firm. Funds flow statement is a device that indicates the various means through which funds have been obtained, during a specified period and the way they have been used. Simply, it show the different sources of procuring funds and their varied application during that period it shows the inflow and outflow of funds9. Funds flow statement is the statement of sources and application of funds. It is also called as funds where got and where gone statement; Almond Coleman observed. There are 4 steps involving in preparation of funds flow statement: Statement of changes in working capital. Calculation of Funds from operations Finding out hidden information, if required Finally preparation of funds flow statement10.
4) RATIO ANALYSIS:
Ratios are among the best known and most used tools of financial performance. Ratio is defined formally as the indicated quotient of two mathematical expressions. An operational definition of a financial ratio is the relationship between two financial values.
40
These become meaningful to judge the financial condition and a comparison. Ratios are very useful to calculate the financial performance and condition of the any company.
Classification of Ratios:
There are 4 categories of ratios. They are as follow: Liquid ratios Leverage ratios Profitability ratios Activity or turnover ratios
1) Liquid Ratios:
Liquid ratios provide test to measure the ability of the corporation to cover its short term obligations out of its short term resources. A. Cur rent ratio: Current ratio expresses relationship between current assets and current liabilities. current ratio = Current Assets Current Liabilities
41
NOTE: Current assets = Inventories + sundry debtors + cash and + loans and advances. Current liabilities = Liabilities other than provisions B. Quick ratio: It is also called as liquid ratio. It is a measure of judging the immediate ability of the company to pay off its current obligations. Quick Ratio = Quick Assets Current Liabilities bank + other current assets
NOTE:
Quick assets = Current assets other than inventories.
C. Inventor y tur nover Ratio: It expresses relationship between inventory and working capital. Inventory to working capital Ratio= Inventory Working capital
2. Lever a ge Ratios:
42
Leverage Ratios are generally designed to measure the contribution of the companys owners vis-vis the funds provided by its creditors.
A. Debt equity Ratio: This is a measure of contribution of the shareholders or owners to the long term finances of the company, as compared to the contribution of its long term creditors. Debt equity Ratio = NOTE: Long term debt = borrowing from government and other loans. Net worth = capital + Reserves and surplus past accumulated Losses. B. proprietar y Ratio: The total shareholders funds (net worth) are compared with the total tangible assets of the company. This ratio indicates the general financial strength of the concern. Proprietary Ratio = Net worth X 100 Total assets long term debt Net worth
43
3) Pr ofitability Ratios:
Profitability ratios are as a matter of fact, best indicators of overall efficiency of the business concern because they compare return or value over and above the values put into a business with sale or service carried on by the enterprise with the help of assets employed. A. Gross profit Ratio: This ratio establishes relationship between gross profit and sales to measure the relative operating efficiency of the corporation and to reflect its pricing policies.
Gross profit Ratio =
Gross profit X 100 Net sales
B. Net profit Ratio: Net profit to sales, also called net profit margin, is calculated by dividing net income after tax by net sales. Net profit Ratio= Net profit X 100 Net sales
44
C. Retur n on investment (or) capital employed: This is one of the most important profitability ratio. It indicates the relation of net profit with net worth in the business. Return on investment= Net profit/loss X 100 Net worth D. Retur n on Assets: It indicates the relation of net profit with the total assets. Return on Assets= Net profit/loss X 100 Total assets
4) Activity (or) tur nover (or) perfor mance Ratios:

A. Inventor y tur nover Ratio: This ratio measures how many times on an average stock is sold during the year. It also shows efficiency of the concern. Higher inventory turnover ratio is always beneficial to the concern. Inventory turnover Ratio= cost of goods sold Average inventor
B. Debtor s tur nover Ratio:
45
It is also known as receivable turnover ratio. It establishes relationship between credit sales and average debtors. Debtors turnover Ratio= Total sales Average debtors C. Fixed assets tur nover Ratio: Fixed assets are used in the business for producing goods to be sold. The effective utilization of fixed assets will result in increased production and reduced cost. Fixed assets turnover Ratio= sales of cost of sales Fixed assets D. Wor king capital tur nover Ratio: This ratio measures the relationship between working cap
46
STATEMENT OF WORKING CAPITAL OF HINDUSTAN SHIPYARD LIMITED FOR THE YEAR 31 ST MARCH 2006
Par ticular s
Amount (in lakhs)
Amount (in lakhs)
47
Current Assets: Inventory Sundry debtors Cash and Bank Other current assets Loans and advances Total (A) Current Liabilities: Sundry creditors Other current liabilities Provisions( Excluding provision for Gratuity) Interest accrued and due Total (B) 6192.35 16617.91 4634.88 42330.68 69775.82 4621.73 8054.86 3675.50 185.36 2688.63 19226.08
48
INTERPRETATION: It shows the statement of working capital in the Financial year of 2004 the total current assets Rs. 19,226.08. In this Financial year the total current Liabilities Rs. 69,775.82. Here the total current liabilities are higher than that of the total current assets. In this year the net working capital is in negative term that is -50,549.74.
49
STATEMENT OF WORKING CAPITAL OF HINDUSTAN SHIPYARD LIMITED MARCH 2007
FOR THE YEAR 31 ST
Par ticular s
Amount (in lakhs)
Amount (in lakhs)
50
Current Assets: Inventory Sundry debtors Cash and Bank Other current assets Loans and advances Total (A) Current Liabilities: Sundry creditors Other current liabilities Provisions( Excluding provision For gratuity) and due Total (B) 9235.81 14064.78 27521.18 258.29 6926.80 33237.89
Interest accrued
20032.93 14610.58 2405.57 42330.68 79379.76
51
INTERPRETATION: It shows the statement of working capital in the financial year of 2005 the total current assets Rs. 33,237.89. In this financial year the total current Liabilities Rs. 79,379.76. Here the total current liabilities are higher than that of the total current assets. In this year the net working capital is in negative terms that is -46,141.87, but is higher than that of working capital of 2004.
52
Par ticular s
Amount (in lakhs)
Amount (in lakhs)
53
Current Assets: Inventory Sundry debtors Cash and Bank Other current assets Loans and advances Total (A) Current Liabilities: Sundry creditors Other current liabilities Provisions( Excluding provision For gratuity) Interest accrued and due Total (B) 11365.83 50145.05 2776.98 38423.56 102711.42 15537.71 5149.30 18419.69 8979.83 13813.79 61900.32
54
INTERPRETATION: It shows the statement of working capital in the financial year of 2006 the total current assets Rs. 61,900.32. In this financial year the total current Liabilities Rs. 1,02,711.42 Here the total current liabilities are higher than that of the total current assets. In this year the net working capital is in negative terms that is -40,811.10, but is lesser than that of working capital of 2005.
55
Par ticular s
Amount (in lakhs)
Amount (in lakhs)
56
57
INTERPRETATION: It shows the statement of working capital in the financial year of 2007 the total current assets Rs. 80,820.14. In this financial year the total current Liabilities Rs. 1,28,186.05. Here the total current liabilities are higher than that of the total current assets. In this year the net working capital is in negative terms that is -47,365.91, but is higher than that of working capital of 2006.
58
Par ticular s
Amount (in lakhs)
Amount (in lakhs)
59
60
INTERPRETATION: It shows the statement of working capital in the financial year of 2008 the total current assets Rs. 81,871.99. In this financial year the total current Liabilities Rs. 1,25,059.20. Here the total current liabilities are higher than that of the total current assets. In this year the net working capital is in negative terms that is -43,187.21, but is lesser than that of working capital of 2007.
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par ticular s Current Assets: Inventory Debtors Cash and Bank Other current Assets Loans & advances Total (A) Current Liabilities: Sundry creditors Other current liabilities Provisions Interest accrued and due Total (B) Working capital(A-B)
2004
2005
Increase Source (+)
Decrease Source (-)
4621.73 8054.86 3675.50 185.36 2688.63 19226.08
9235.81 14064.78 2752.18 258.29 6926.80 33237.89
4614.08 6009.92 72.93 4238.17
923.32 -
6192.35 16617.91 4634.88 42330.68 69775.82 (50549.71)
20032.93 14610.58 2405.57 4233.68 79379.76 (46141.87)
2007.33 2229.31
13840.58 STATEMENT OF CHANGES IN WORKING CAPITAL IN HINDUSTAN SHIPYARD LIMITED FOR THE YEAR 31 ST MARCH 2006-07
Increase in net working capital
4407.84
INTERPRETATION:
62
It shows the statement of changes in working capital in the financial year of 2004-05 the inventories is increased to Rs. 4,614.08.
The sundry debtors are increased to Rs. 6,009.92. The Bank balance and cash in hand decreased to Rs.923.32. The current liabilities and provisions are increased to Rs. 9,603.94. In this year net working capital is increased to Rs. 4,407.84.
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par ticular s Current Assets: Inventory Debtors Cash and Bank Other current Assets Loans & advances Total (A) Current Liabilities: Sundry creditors Other current liabilities Provisions Interest accrued and due
2004
2005
Increase Source (+)
Decrease Source (-)
9235.81 14064.79 2752.19 258.30 6926.80 33237.89
15537.71 5149.30 18419.69 8979.83 13813.79 61900.32
6301.90 15667.5 8721.53 6886.99
8915.49 -
20032.93 14610.57 2405.57 42330.68
11365.83 50145.05 2776.98 38423.56 102711.42 (40811.11)
8667.10 3907.12
35534.48 371.41 STATEMENT OF CHANGES IN WORKING CAPITAL IN HINDUSTAN SHIPYARD LIMITED FOR THE YEAR 31 ST MARCH 2007-08
Total (B) Working capital(A-B)
79379.76 (46141.87)
INTERPRETATION: Increase in net working capital
5330.76
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It shows the statement of changes in working capital in the financial year of 2005-06 the inventories is increased to Rs. 6,301.90.
The sundry debtors are decreased to Rs. 8,915.49. The Bank balance and cash in hand increased to Rs. 15,667.50. The current liabilities and provisions are increased to Rs. 23,331.66. In this year net working capital is increased to Rs. 5,330.76.
65
STATEMENT OF CHANGES IN WORKING CAPITAL IN HINDUSTAN SHIPYARD LIMITED FOR THE YEAR 31 ST MARCH 2008-09 Increase Source (+) Decrease Source (-)
par ticular s
2006
2007
66
Current Assets: Inventory Debtors Cash and Bank Other current Assets Loans & advances Total (A) Current Liabilities: Sundry creditors Other current liabilities Provisions Interest accrued and due Total (B) 11365.83 50145.05 2776.98 38423.56 102711.42 Working capital(A-B) (40811.10) 12893.72 69269.65 13219.32 32803.36 128186.05 (47365.90) 5620.20 1527.89 19124.60 10442.34 15537.71 5149.30 18419.69 8979.83 13813.79 61900.32 13205.73 14054.91 28169.94 8191.36 17198.20 80820.14 8905.61 9750.25 3384.41 2331.98 788.47 -
Decrease in net Working capital
6554.81
67
INTERPRETATION: It shows the statement of changes in working capital in the financial year of 2006-07 the inventories is decreased to Rs. 2,331.98. The sundry debtors are increased to Rs. 8,905.61. The Bank balance and cash in hand increased to Rs. 9,750.25. The current liabilities and provisions are increased to Rs. 25,475.63. In this year net working capital is decreased to Rs. 6,554.81.
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STATEMENT OF CHANGES IN WORKING CAPITAL IN HINDUSTAN SHIPYARD LIMITED FOR THE YEAR 31 ST MARCH 2009- 10 Increase Source (+) Decrease Source (-)
par ticular s
2007
2008
69
Current Assets: Inventory Debtors Cash and Bank Other current Assets Loans & advances Total (A) Current Liabilities: Sundry creditors Other current liabilities Provisions Interest accrued and due Total (B) 128186.05 125059.20 12893.72 69269.65 13219.32 32803.36 15740.11 62420.28 11168.17 35730.64 6849.37 2051.15 2846.39 2927.28 13205.73 14054.91 28169.94 8191.36 17198.20 80820.14 25355.22 14805.34 21183.74 7169.86 13357.83 81871.99 12149.49 750.43 6986.20 1021.50 3840.37
Working capital(A-B) Increase capital in networking
(47365.90)
(43187.21)
4178.70
70
INTERPRETATION It shows the statement of changes in working capital in the financial year of 2007-08 the inventories is increased to Rs. 12,149.49. The sundry debtors are increased to Rs. 750.43. The Bank balance and cash in hand decreased to Rs. 6,986.20. The current liabilities and provisions are decreased to Rs. 3,126.85. In this year net working capital is increased to Rs. 4,178.70.
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FUNDS FLOW ANALYSIS

FUNDS FLOW STATEMENT:
The funds slow statement describes the sources from which additional funds were derived and the uses to which these funds were put. Significant technique of financial performance is funds flow analyse. Its designed to
72
highlight changes in the financial condition of a business concern between two points of time which generally conform to beginning and ending financial statement dates. Funds flow statement is also termed as a statement of changes in financial position, statement of sources and applications of funds, statement of changes in working capital, statement of funds supplied and applied, statement of funds generated and expended, where got and where gone statement, funds statement. Thus, funds flow statement is a report which summarizes the events taking place between the two accounting periods. It spells out the sources from which funds were derived and the uses to which these funds were put. This statement is essentially derived from an analysis of the changes that have occurred in assets and liabilities items between two balance sheet dates. In this statement, only the net changes are shown so that the outcome of a transaction or of a series of transactions upon the financial condition of a business enterprise is reflected more sharply. There are 4 steps involving in preparation of funds flow statement:
Statement of changes in working capital. Calculation of Funds from operations Finding out hidden information, if required Finally preparation of funds flow statement.
73
FUNDS FLOW STATEMENT OF HINDUSTAN SHIPYARD LIMITED FOR THE YEAR ENDED 2006
Par ticular s
Amount
Amount
Sources of funds:
Increase in share capital Increase in Borrowings Sale of assets Depreciation Decrease in working capital 750.00 1376.61 33.72 431.52 2009.13
4600.98
74
Utilization of funds:
Increase in Fixed assets and capital work in progress Funds applied in operation: Loss for the year Add: profit on sale of assets Less: Increase in provision for gratuity 5202.54 29.42 662.75 31.77
4569.21
4600.98
INTERPRETATION: The Funds Flow Statement of the company in 2004 sources procured from shareholders funds and outsiders funds.
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The sources procured from issue of share capital Rs. 750.00. The procured sources use to purchase of fixed assets Rs.31.77. The procured sources use to sale of fixed assets Rs. 33.72. The company net working capital decrease in the year. So the liquidity position is low. The net working capital amount is Rs. 2,009.13. The company has gotten Rs. 4,569.21 from business operations. The company has paid the amount of borrowings that is unsecured loans Rs. 1,376.61. So the overall company funds flow and application is satisfactory.
76
Par ticular s
Amount
Amount
Sources of funds:
Increase in share capital Increase in Borrowings Sale of fixed assets Depreciation 750.00 3767.52 18.94 414.76
77
4951.22
Increase in Fixed assets and capital work in progress 99.73 Funds applied in operation: Loss for the year Add: profit on sale of fixed assets Less: Increase in provision for gratuity 789.64 15.81 361.84
Increase in working capital 443.61 4407.88
4951.88 INTERPRETATION:
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The Funds Flow Statement of the company in 2005 sources procured from shareholders funds and outsiders funds. The sources procured from issue of share capital Rs. 750.00. The procured sources use to purchase of fixed assets and work in progress to used Rs. 99.73. The procured sources use to sale of fixed assets Rs. 18.94. The company net working capital increase in the year. So the liquidity position is high. The net working capital amount is Rs. 4,407.88. The company has gotten Rs. 443.61 from business operations. The company has paid the amount of borrowings that is unsecured loans Rs. 3,767.52. So the overall company funds flow and application is satisfactory.
79
Par ticular s
Amount
Amount
Sources of funds:
Increase in share capital Increase in Borrowings Sale of fixed assets Add: increase in provision of gratuity Depreciation 750.00 3363.28 1.02 985.62 986.64 407.24
5507.16
80
Increase in Fixed assets Increase in working capital 176.39 5330.77
5507.16
INTERPRETATION:
81
The Funds Flow Statement of the company in 2006 sources procured from shareholders funds and outsiders funds. The sources procured from issue of share capital Rs. 750.00. The procured sources use to purchase of fixed assets Rs. 176.39. The procured sources use to sale of fixed assets Rs. 986.64. The company net working capital increase in the year. So the liquidity position is high. The net working capital amount is Rs. 5,330.77. The company has gotten Rs. 986.64 from business operations. The company has paid the amount of borrowings that is unsecured loans Rs. 3,363.28. So the overall company funds flow and application is satisfactory.
82
Par ticular s
Amount
Amount
Sources of funds:
Increase in share capital Increase in Borrowings Sale of assets Profit of the year Add: loss on sale of fixed assets Less: Decrease in provision of gratuity Depreciation 500.00 6517.47 15.25 300.93 8.81 258.84 50.90 406.35
83
7489.97
Increase in fixed assets Increase in working capital
935.16 6554.81
7489.97
84
INTERPRETATION: The Funds Flow Statement of the company in 2007 sources procured from shareholders funds and outsiders funds. The sources procured from issue of share capital Rs. 500.00. The procured sources use to purchase of fixed assets Rs. 935.16. The procured sources use to sale of fixed assets Rs. 15.25. The company net working capital increase in the year. So the liquidity position is high. The net working capital amount is Rs. 6,554.81. The company has gotten Rs. 50.90 from business operations. The company has paid the amount of borrowings that is unsecured loans Rs. 6,517.47. So the overall company funds flow and application is satisfactory.
85
Par ticular s
Amount
Amount
86
Sources of funds:
Increase in share capital Sale of fixed assets Depreciation Increase in provision of gratuity 13170.00 90.48 624.43 250.93
Decrease in Borrowings Increase in fixed assets and capital work in progress Funds from operation: Profit for the year Less: profit on sale of assets 1590.08 85.56
14135.84 6665.85 1786.77
87
1504.52 Increase in working capital 4178.70
14135.84
INTERPRETATION: The Funds Flow Statement of the company in 2008 sources procured from shareholders funds and outsiders funds. The sources procured from issue of share capital Rs. 13,170.00. The procured sources use to purchase of fixed assets and work in progress to used Rs. 1,788.77. The procured sources use to sale of fixed assets Rs. 90.48. The company net working capital increase in the year. So the liquidity position is high. The net working capital amount is Rs. 4,178.70. The company has gotten Rs. 1,504.52 from business operations. The company has paid the amount of borrowings that is unsecured loans Rs. 6,665.85.
88
So the overall company funds flow and application is satisfactory.
CASH FLOW ANALYSIS:
89
An analysis of cash flow of a concern during a period, presented in the form of a statement is known as cash flow analysis. The cash flow statement can be for the past of can be a projection for the future5. The cash flow of the concern in the near future, say for a period of 6 months of 1 year, can be prepared based on the past trends and expectations of the concern regarding factors that would affect its cash receipts and cash payments. Such an estimate of future cash flows is better termed cash budget. Cash flow statement generally refers to the statement showing the receipts (inflows) and payments (outflows) of cash during the period covered by two consecutive balance sheets. Cash flow analysis enables the management to plan and co-ordinate the financial operations of the enterprise, and furnish the basis for evaluating financing policies. It provides a barometer for ensuring the profitability of the business, and makes financing problems of the business much more manageable. Classification of cash flows: The model prescribed accounting standards, cash flow statement, classifies cash flows into 3 categories namely Cash flow from operating activities, cash flow from investing activities and cash flow from financing activities. i)Operating activities: Operating activities are those transactions which are considered in the determination of net income. Examples of cash inflows in the category are cash received from debtors for goods and services, interest and dividend received on loan and investment. Examples of cash outflows in this category are cash payments for goods and services; merchandise; wages; interest; taxes; supplies and others.
90
ii)Investing activities:
Investing activities include acquisition of long term or Fixed assets; disposal debentures and other securities; lending of money and its subsequent collection. Cash inflows from investing activities generally include cash sales of property, plant, equipment and intangible assets, cash sales of investments in shares, debentures and other securities, cash collection from borrowers. Cash outflows are purchase of shares, debentures and plant, equipment and other long term assets, loan given to other firms. iii)Financing activities:
Financing activities are related to long term liability and equity capital. A firm engages in financing activities when it obtains resources from owners, returns resources to owners, borrowed. Cash inflows include proceeds from issue of shares and short term and long term borrowings. Cash outflows include repayments of loan and payments to owners, including cash dividends. Repayments of accounts payable or accrued liabilities are not considered repayment of loans under financing activities but are classified as cash outflows under operating activities.
91
CASH FLOW STATEMENT OF HINDUSTAN SHIPYARD LIMITED FOR THE YEAR ENDED 31 ST MARCH 2006 Par ticular s A. Cash flow from operating activities: Net profit/(loss) Adjustment for: Depreciation Interest paid Interest received Loss/(profit) on sale of fixed assets Operating cash flow Before working capital changes Adjustments for working capital changes: 431.52 181.61 (69.98) (29.42) 4751.81 (5202.53) Amount
92
Inventories Trade and other receivables Trade and other payables Cash generated from operation (A) B. Cash flow from investing activities: Purchase of fixed assets Capital work in progress Sale of fixed assets Interest received Net cash from investing operation (B) C. Cash flow from financing activities: Proceeds from share capital Proceeds from Borrowings Interest paid Net cash from financing operation (C) D. Net increase in cash and cash equivalent (A) + (B) + (C) Cash and cash equivalent at the beginning of the year Cash and cash equivalent at the end of the year
687.23 (707.10) 320.75 (4450.92)
(27.28) (4.47) 33.71 69.98 71.94
750.00 1376.60 (118.61) 2007.99 2370.98 6046.48 3675.50
93
INTERPRETATION: The cash flow statement of the company in the year 2004 it procured the cash sources from operating activities is Rs. -4,450.92. Cash from investing activities is Rs. 71.94. Cash from financing activities is Rs. 2,007.99. Finally cash and cash equivalent at the end of the year is Rs. 3,675.50.
So the overall cash flow position is satisfactory.
94
CASH FLOW STATEMENT OF HINDUSTAN SHIPYARD LIMITED FOR THE YEAR ENDED 31 ST MARCH 2007 Par ticular s A. Cash flow from operating activities: Net profit/(loss) Adjustment for: Depreciation 414.75 789.64 Amount
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Interest paid Interest received Loss/(profit) on sale of fixed assets Operating cash flow Before working capital changes Adjustments for working capital changes: Inventories Trade and other receivables Trade and other payables Cash generated from operation (A) B. Cash flow from investing activities: Purchase of fixed assets Capital work in progress Sale of fixed assets Interest received Net cash from investing operation (B) C. Cash flow from financing activities: Proceeds from share capital Proceeds from Borrowings Interest paid Net cash from financing operation (C) D. Net increase in cash and cash equivalent
561.03 64.17 (15.80) 106.16
(4614.08) (10321.03) 9966.61 (4862.34)
(148.78) 49.06 18.09 64.17 (17.45)
750.00 3767.51 (561.03) 3956.48
96
(A) + (B) + (C) Cash and cash equivalent at the beginning of the year Cash and cash equivalent at the end of the year INTERPRETATION:
(923.31) 3675.50 2752.18
The cash flow statement of the company in the year 2007 it procured the cash sources from operating activities is Rs. -4,862.34.
Cash from investing activities is Rs. -71.45. Cash from financing activities is Rs. 3,356.48. Finally cash and cash equivalent at the end of the year is Rs. 2,752.18
So the overall cash flow position is satisfactory
97
CASH FLOW STATEMENT OF HINDUSTAN SHIPYARD LIMITED FOR THEYEAR ENDED 31 ST MARCH 2008 Par ticular s Amount
98
A. Cash flow from operating activities: Net profit/(loss) Adjustment for: Depreciation Interest paid Interest received Loss/(profit) on sale of fixed assets Operating cash flow Before working capital changes Adjustments for working capital changes: Inventories Trade and other receivables Trade and other payables Cash generated from operation (A) B. Cash flow from investing activities: Purchase of fixed assets Capital work in progress Sale of fixed assets Interest received Net cash from investing operation (B) C. Cash flow from financing activities: (143.88) (32.51) 1.02 166.26 (9.12) (6301.90) (6693.04) 26997.95 15355.43 407.15 492.78 (166.26) (0.75) 1352.41 619.49
99
Proceeds from share capital Proceeds from Borrowings Interest paid Net cash from financing operation (C) D. Net increase in cash and cash equivalent (A) + (B) + (C) Cash and cash equivalent at the beginning of the year Cash and cash equivalent at the end of the year
750.00 63.97 (492.78) 321.19 15667.50 2752.19 18419.69
INTERPRETATION: The cash flow statement of the company in the year 2006 it procured the cash sources from operating activities is Rs. 15,355.43. Cash from investing activities is Rs. -9.12.. Cash from financing activities is Rs. 321.19. Finally cash and cash equivalent at the end of the year is Rs. 18,419.69.
100
101
CASH FLOW STATEMENT OF HINDUSTAN SHIPYARD LIMITED FOR THE YEAR ENDED 31 ST MARCH 2009 Par ticular s A. Cash flow from operating activities: Net profit/(loss) Adjustment for: Depreciation Interest paid Interest received Loss/(profit) on sale of fixed assets Operating cash flow Before working capital changes Extraordinary items: Expenditure under V.R. scheme (net of grant in aid from Govt. of India) Prior period items: net expenditure Operating cash flow before working capital changes and after extraordinary and prior period items Adjustments for working capital changes: Inventories Trade and other receivables Trade and other payables Cash generated from operation (A) Amount (7590.46) 406.35 3469.67 (1289.89) (8.81) (5013.14)
4130.99 (38739.86) 29595.73 2331.98 (12566.99) 24074.86 43435.58
102
B. Cash flow from investing activities: Purchase of fixed assets Capital work in progress Sale of fixed assets Interest received Net cash from investing operation (B) C. Cash flow from financing activities: Proceeds from share capital Proceeds from Borrowings Interest paid Net cash from financing operation (C) D. Net increase in cash and cash equivalent (A) + (B) + (C) Cash and cash equivalent at the beginning of the year Cash and cash equivalent at the end of the year
(935.16) (349.22) 15.25 1289.89 sss 20.76 500.00 (30736.42) (3469.67) 33706.09 9750.25 18419.69 28169.94
INTERPRETATION: The cash flow statement of the company in the year 2007 it procured the cash sources from operating activities is Rs. 43,435.58. Cash from investing activities is Rs. 20.76.
103
Cash from financing activities is Rs. 33,706.09. Finally cash and cash equivalent at the end of the year is Rs. 28,189.94.
104
CASH FLOW STATEMENT OF HINDUSTAN SHIPYARD LIMITED FOR THE YEAR ENDED 31 ST MARCH 2010 Par ticular s A. Cash flow from operating activities: Net profit/(loss) Adjustment for: Depreciation Interest paid Interest received Loss/(profit) on sale of fixed assets Operating cash flow Before working capital changes Extraordinary items: Expenditure under V.R. scheme (net of grant in aid from Govt. of India) Provision towards liability on sock leave of previous year Prior period items: net expenditure Operating cash flow before working capital changes and after extraordinary and prior period items Amount 1590.08 585.86 4450.96 (2437.35) (85.56) 4103.99 7.72 252.37 (765.83) 4609.73
105
Adjustments for working capital changes: Inventories Trade and other receivables Trade and other payables Cash generated from operation (A) B. Cash flow from investing activities: Purchase of fixed assets Capital work in progress Sale of fixed assets Interest received Net cash from investing operation (B) C. Cash flow from financing activities: Proceeds from share capital Proceeds from Borrowings Interest paid Net cash from financing operation (C) D. Net increase in cash and cash equivalent (A) + (B) + (C) Cash and cash equivalent at the beginning of the year Cash and cash equivalent at the end of the year
(12149.49) 4111.44 (6352.13) (9780.45) (1565.71) (221.06) 90.48 2437.35 741.06 13170.00 (6665.85) (4450.96) 2053.19 (6986.20) 28169.94 21183.74
INTERPRETATION:
106
The cash flow statement of the company in the year 2008 it procured the cash sources from operating activities is Rs. 9,780.45
Cash from investing activities is Rs. 741.06. Cash from financing activities is Rs. 2,053.19. Finally cash and cash equivalent at the end of the year is Rs. 21,188.74. So the overall cash flow position is satisfactory.
107
RATIO ANALYSIS:
Ratios are among the best known and most used tools of financial performance. Ratio is defined formally as the indicated quotient of two mathematical expressions. An operational definition of a financial ratio is the relationship between two financial values. These become meaningful to judge the financial condition and profitability performance of the company only when there is a comparison. Ratios are very useful to calculate the financial performance and condition of the any company.
108
Classification of Ratios:
There are 4 categories of ratios. They are as follow: Liquid ratios Leverage ratios Profitability ratios Activity or turnover ratios
109
LIQUID RATIOS:
CURRENT RATIO:
current ratio =
Current Assets Current Liabilities
CURRENT RATIO OF HINDUSTAN SHIPYARD LIMITED DURING THE PERIOD 2005 2010 particulars Inventories Sundry debtors Cash and bank Other assets current 05-06 4621.72 8054.86 3675.50 185.36 2688.63 19226.07 22810.27 0.84 84% 06-07 9235.81 14064.78 2752.18 258.29 6926.80 33237.89 34643.51 0.95 95% 07-08 15537.71 5149.30 18419.69 8979.83 13813.79 61900.32 61510.88 1.01 101% 08-09 13205.73 14054.91 28169.94 8191.36 17198.20 80820.14 82163.37 0.98 98% 09-10 25355.22 14805.34 21183.70 7169.86 13357.83 81871.95 78160.39 1.05 105%
CURRENT ASSETS = Inventories + sundry debtors + cash and bank + other current assets + loans and advances. CURRENT LIABILITIES = Liabilities other than provisions.
Loans and advances Total current assets Current liabilities Ratio in times In percentage
110
DIAGRAMATIC REPRASENTATION OF CURRENT RATIO OF HSL DURING THE PERIOD 2005 - 2010
1.2 1 0.8 0.6 0.4 0.2 0
PERCENTAGE
CURRENT RATIO
Series1
2005-06
2006-07
2007-08 YEARS
2008-09
2009-10
111
INTERPRETATION:
From the above table it is clear that the current ratio of Hindustan Shipyard Limited for 5 years 2005- 06 to 2009- 10. In the year 2006 07 the ratio increased by 13% from 2005 06 due to increase in current assets like inventory, sundry debtors and loan and advances. In the year 2007 08 the ratio increased by 6% due to increase in current assets. In the year 2008 09 the ratio decreased by 4% from 2007 08 due to increase in current liabilities. In the year 2009 10 the ratio increased by 7% from 2008 09 due to decrease in current liabilities. By analyzing overall position of the company short-term solvency is good and it is not in a position to meet its short-term obligations.
QUICK RATIO:
Quick Ratio =
Quick Assets Current Liabilities
112
QUICK RATIO OF HINDUSTAN SHIPYARD LIMITED DURING THE PERIOD 2005 2010 particulars Sundry debtors Cash and bank Other assets current 05-06 8054.86 3675.50 185.36 2688.63 14604.35 6192.35 16617.91 22810.26 0.64 64% 06-07 14064.78 2752.18 258.29 6926.80 24002.05 20032.93 14610.58 34643.51 0.69 69% 07-08 5149.30 18419.69 8979.83 13813.73 46362.55 11365.83 50145.05 61510.88 0.75 75% 08-09 14054.91 28169.94 8191.36 17198.20 67614.41 12893.72 69269.65 82163.37 0.82 82% 09-10 14805.34 21183.74 7169.86 13357.83 56516.77 15740.11 62420.28 78160.39 0.72 72% QUICK ASSETS = Current assets other than inventories.
Loan and advances Total Sundry creditors Other current liabilities Total current liabilities Ratio in times In percentage
DIAGRAMATIC REPRASENTATION OF QUICK RATIO OF HSL DURING THE PERIOD 2005 - 2010
113
0.8 0.6 0.4 0.2
PERCENTAGE
QUICK RATIO
Series1
0 2005-06 2006-07 2007-08 YEARS 2008-09 2009-10
INTERPRETATION:
The above table indicates the quick ratio of Hindustan Shipyard Limited for 5 years 2005-06to 2009-10 In the year 2006-07 the ratio increased by 5% from 2005-06 due to increase in sundry debtors, other current assets and loans and advances. In years 2007-09 the ratios increased 6% and 7% respectively from previous years. In the year 2009-10the ratio decreased by 10% from 2008-09due to decrease of quick assets and current liabilities. By overall comparison the ratio is fluctuating.
114
INVERTORIES TO WORKING CAPITAL RATIO:
Inventory to working capital ratio = Inventory Working capital

INVERTORIES TO WORKING CATPITAL RATIO OF HINDUSTAN SHIPYARD LIMITED DURING THE PERIOD 2005 2010 Particulars Inventories Current assets Less: Current liabilities Less: 2005-06 4621.72 19226.08 27445.14 06-07 9235.81 33237.90 37049.08 07-08 15537.71 61900.32 64287.86 08-09 13205.73 80820.14 95382.69 09-10 25355.22 81871.99 89328.56
115
interest accrued and due Total Working capital Ratio in times In percentage
42330.68 -50549.7 -0.09 -9.14%
42330.68 -46141.8 -0.20 -20.02%
38423.56 -40811.1 -0.38 -38.07%
32803.36 -47365.9 -0.27 -27.88%
35730.64 -43187.2 -0.58 -58.71%
WORKING CAPITAL = Current assets current liabilities provision for gratuity) Interest accrued and due. Note: Current liabilities include provisions excluding provision for gratuity.
(excluding
DIAGRAMATIC REPRESENTATION OF INVENTORIES TO WORKING CAPITAL RATIO OF HSL DUING THE PERIOD 2003 -2008
116
PERCENTAGE
INVENTORIES TO WORKING CAPITAL RATIO
0 2005-06 2006-07 2007-08 2008-09 2009-10
-0.1 -0.2 -0.3 -0.4 -0.5 -0.6 -0.7
Series1
YEARS
INTERPRETATION:
The above table reveals the inventories to working capital ratio of Hindustan Shipyard Limited for 5 years 2005-06to2009-10. According to that ratio is compared between inventories and working capital. The working capital is in negative figures as the current liabilities more than the current assets. So it can be concluded that the liquidity position of the organization is not good. For increasing the liquidity position the working capital has to be maintained properly and
117
this can be possible if the current assets are increased. This step can be helped for bringing up the organization to a satisfactory level.
LEVERAGE RATIOS :
DEBT EQUITY RATIO:
Debt equity Ratio =
Long term debt Shareholder funds
LONG TERM DEBT TO EQUITY SHAREHOLDERS RATIO OF HINDUSTAN SHIPYARD LIMITEDDURING THE PERIOD 2005 2010 Particulars Borrowings from Govt. Other Total Capital 2005-06 77678.98 0 77678.98 12931.22 06-07 78428.00 0 78428.00 13681.22 07-08 40682.41 0 40682.41 14431.22 08-09 35312.50 0 35312.50 14931.22 09-10 33612.50 0 33612.50 28101.22
118
Reserves and surplus Total Less: Pass accumulated losses Share holders funds Ratio in times In percentage
9.5 12940.72 115545.79 -102605 -0.75 -75.70%
9.5 13690.72 116335.43 -102645 -0.76 -76.40%
9.5 14440.72 115715.94 -101275 -0.40 -40.17%
9.5 14940.72 85622.85 -70682 -0.40 -49.96%
9.5 28110.72 84741.69 -56631 -0.59 -59.35%
LONGTERM DEBT = Borrowings from government and other SHARE HOLDERS FUNDS = Capital + Reserves and surplus accumulated losses.
loans. past
DIAGRAMATIC REPRESENTATION OF DEBT EQUITY RATIO OF HSL DURING THE PERIOD 2005 - 2010
119
0 -0.1 -0.2 -0.3 -0.4 -0.5 -0.6 -0.7 -0.8
PERCENTAGE
DEBT EQUITY RATIO
2005-06
2006-07
2007-08
2008-09
2009-10
Series1
YEARS
INTERPRETATION:
The above table reveals the long-term debts to equity shareholders ratio of Hindustan Shipyard Limited for 5 years2005-06 to2009 2010. According to that ratio is compared between long-term debts and equity shareholders funds (or) net worth. The net worth is in negative figures as capital and Reserves and surpluses less than the past accumulated losses. So it can be concluded that the organization debt equity is not good.
120
RETURN ON INVESTMENT:
Return on investment = Net profit/loss X 100 Net worth

RETURN ON INVESTMENT OF HINDUSTANSHIPYARD LIMITEDDURING THE PERIOD2005 2010 particulars Net profit/loss Net worth: a) Capital b) R & S Total losses 2005-06 -5202.54 12931.22 9.50 12940.72 115545.80 06-07 -789.64 13681.22 9.50 13690.72 116335.43 07-08 619.49 14431.22 9.50 14440.72 115715.94 08-09 300.93 14931.22 9.50 14940.72 85622.85 09-10 1133.54 28101.22 9.50 28110.72 84741.69
121
Net worth ROI
-102605.1 -5.07%
-102644.7 -0.76%
-101275.2 -0.61%
-70682.1 -0.42%
-56630.9 -2.0%
Net worth (or) share holders funds = Capital + Reserves and accumulated losses.
surplus last
DIAGRAMATIC REPRESENTATION OF RETURN ON
122
INVESTMENTOF HSL DURING THE PERIOD 2005 2010 RETURN ON INVESTMENT
0 -1 -2 -3 -4 -5 -6
PERCENTAGE
2005-06
2006-07
2007-08
2008-09
2009-10
Series1
YEARS
INTERPRETATION:
The above table reveals the Return on Investment of Hindustan Shipyard Limited for 5 years 2005-06 to 200910 According to that ratio is compared between net profit and shareholders funds (or) net worth. The net worth is in
123
negative figures so that we cannot calculate the Return on Investment. So it can be concluded that the organization Return on Investment is not good.
RETURN ON ASSETS:
Return on assets =
Net profit/loss X 100 Total assets
RETURN ON ASSETS RATIO OF HINDUSTAN SHIPYARD LIMITED DURING THE PERIOD 2005 2010 Particulars 2005-06 net profit/loss -5202.54 Total assets: 06-07 -789.64 07-08 619.49 08-09 300.93 09-10 1133.54
124
a) fixed assets b) current assets Total ROA
4531.99 19226.08 23758.07 -21.89%
4213.83 33237.89 37451.72 -2.11%
3982.71 61900.32 65883.03 0.94%
4854.24 80820.14 85674.38 0.35%
6050.22 81871.99 87922.21 1.29%
Total assets = Current assets + Fixed assets (including capital
work in progress).
125
DIAGRAMATIC REPRESENTATION OF RETURN ON ASSETS OF HSL DURING THE PERIOD 2005 2010 RETURN ON ASSETS
PERCENTAGE
5 0
-5
2005-06
2006-07
2007-08
2008-09
2009-`10 Series1
-10 -15 -20 -25 YEARS
INTERPRETATION:
The above table reveals the Return on Assets of Hindustan Shipyard Limited for 5 years 2005 06 to 2009 10. In the period 2005 07 there are net losses so that we cannot calculate the ratios. In the year 2007 08 the ratio increased from 2006 07 due to occurrence of net profit and increase in total assets. In the year 2008 09 the ratio
126
decreased by 62% due to decrease in net profit. In the year 2009 10 the ratio increased by 268% from 2008 09 due to increase in net profit. By overall comparison the ratio is fluctuating.
ACTIVITY FOR TURN OVER RATIOS:

INVERNTORY TURNOVER RATIO:
Inventory turnover ratio = cost of goods sold Average inventory Inventory holding period = 365 days Stock turnover ratio
INVERTORY TURNOVER RATIO OF HINDUSTAN SHIPYARD LIMITED DURING THE PERIOD 2005 2010 particulars 2005-06 06-07 07-08 08-09 09-10
127
Cost of goods sold Inventories: a) Opening inventory b) closing inventory Total Average inventory Ratio in times
17922.47 5308.95 4621.72 9930.67 4965.34 3.61
24486.25 4621.72 9235.81 13857.53 6928.77 3.53 103days
31268.31 9235.81 15537.71 24773.52 12386.76 2.52 145days
46218.16 15537.71 13205.73 28743.44 14371.72 3.22 113days
47843.09 13205.73 25355.22 38560.95 19280.48 2.48 147days
Inventory 101days holding period
Cost of goods sold = Opening stock + purchases + Direct Gross profit. Average inventory = Opening inventory + closing inventory 2
expenses + closing stock or sales
DIAGRAMATIC REPRESENTATION OF INVENTORY TURNOVEROF HSL DURING THE PERIOD 2005 2010
128
4 3.5 3 2.5 2 1.5 1 0.5 0
PERCENTAGE
INVENTORY TURNOVER RATIO
Series1
2005-06
2006-07
2007-08 YEARS
2008-09
2009-10
INTERPRETATION:
The above table reveals the Inventory Turnover ratio of Hindustan Shipyard Limited for 5 years 2005-06 to 2009 10. In the year 2006 07 the ratio decreased by 2% from 2005 06 due to slow movement of stock. In the year 2007 08 the ratio decreased by 28% from 2006 07 due to slow movement of stock. In the year 2008 09 the ratio increased by 27 % from 2007 08 due to accurate movement of stock. In the year 2009 10 the ratio decreased by 22% due to slow movement of stock. By overall comparison the ratio is fluctuating.
129
FIXED ASSETS TURN OVER RATIO:
Fixed assets turnover ratio =
sales Fixed assets
FIXED ASSETS TURNOVER RATIO OF HINDUSTAN SHIPYARD LIMITED DURING THE PERIOD 2005 2010 particulars Sales Fixed assets Ratio in times 2005-06 11914.61 4531.99 2.61 06-07 22529.91 4213.83 5.35 07-08 24357.73 3982.71 6.12 08-09 31413.84 4854.24 6.47 09-10 38452.02 6050.22 6.36
Fixed assets including work in progress.
130
DIAGRAMATIC REPRESENTATION OF FIXED ASSETS TURNOVER RATION OF HSL DURING THEPERIOD 2005 2006 FIXED ASSETS TURNOVER RATIO
7 6 5 4 3 2 1 0
PERCENTAGE
Series1
2005-06
2006-07
2007-08 YEARS
2008-09
2009-10
INTERPRETATION:
131
The above table reveals the fixed assets Turnover ratio of Hindustan Shipyard Limited for 5 years 2005 06 to 2009 10. In the year 2006 07 the ratio increased by 100% due to increase in sales. In the year 200708 the ratio increased 14% from 2006 07 due to increase in sales. In the year 2008 09the ratio increased by 5% due to increase in sales and the fixed assets. In the year 2009 10 the ratio decreased by 1% from 2008 09. By overall comparison the company fixed assets turnover ratio is good.
WORKING CAPITAL TURNOVER RATIO:
Working capital turnover ratio =
sales Working capital
WORKING CAPITAL TURNOVER RATIO OFHINDUSTAN SHIPYARD LIMITED DURING THE PERIOD 2005 2010 Particulars Sales Working capital: Current assets Less: 2005-06 11914.61 19226.08 06-07 22529.91 33237.89 07-08 24357.73 61900.32 08-09 31413.84 80820.14 09-10 38452.02 81871.99
132
Current liabilities Provisions Total Less: Interest accrued and due working capital Ratio
22810.26 4634.88 27445.14 42330.68 -50549.7 -0.23
34643.51 2405.57 37049.08 42330.68 -46141.9 -0.49
61510.88 2776.98 64287.86 38423.56 -40811.1 -0.59
82163.37 13219.32 95382.69 32803.36 -4736509 -0.66
78160.39 11168.17 89328.56 35730.64 -43187.2 -0.89
Working capital = Current assets Current liabilities (including provisions (excluding provision for gratuity)) interest accrued and DIAGRAMATIC REPRESENTATION OF WORKING CAPITAL TURNOVER RATION OF HSL DURING THE PERIOD 2005 2010
133
PERCENTAGE
WORKING CAPITAL TURNOVER RATIO
0 2005-06 2006-07 2007-08 2008-09 2009-10
-0.2 -0.4
Series1 -0.6 -0.8 -1 YEARS
INTERPRETATION:
The above table reveals the working capital Turnover ratio of Hindustan Shipyard Limited for 5 years 200506to 2009-10 According to that ratio is compared between sales and working capital. The working capital is in negative figures as the current liabilities more than the current assets. So it can be concluded that the liquidity position of the organization is not good.
134
FINANCIAL PERFORMANCE OF SHIPYARD LIMITED

HINDUSTAN SHIPYARD LIMITED AS ON 31 ST MARCH 2006
BALANCE SHEET OF
Par ticular s
Amoun t
Amount
Par ticular s
Amoun t
Amoun t
Share funds:
holders
Current assets: Inventory Sundry debtors Cash and bank Other current assets Loans and advances 4621.73 8054.86 3675.50 185.36 2688.63
Share capital 12931.22 Reserves and surplus 9.5 12940.72
135
626.61 95001.99 16689.83 12226.69 6192.35 16617.91 4463.14 68.85 19226.08
Loans funds: Secured loans Un-secured loans 95628.60 Current liabilities: Creditors Fixed assets: Gross block Depreciation Net block 4531.99 139303.8
139303.8
BALANCE SHEET OF HINDUSTAN SHIPYARD LIMITED
136
AS ON 31 ST MARCH 2007
Par ticular s
Amoun t
Amount
Par ticular s
Amoun t
Amount
Share funds:
holders 13681.22 9.5 13690.72
Current assets: Inventory 9235.81 Sundry debtors 14064.79 Cash and bank 2752.19 Other current assets 258.29 Loans and advances 6926.80 33237.89
Share capital Reserves and surplus
Loans funds: Secured loans Un-secured loans 644.13 98751.99 Fixed assets: 99396.12 Current liabilities: 20032.93 Creditors Other current 14610.58 liabilities Gross block Depreciation 16790.48 12596.43
4194.05 Net block Capital work in 19.78 progress
137
4213.83 34643.51 provisions 153787.15 Profit & loss A/c 116335.43 153787.15
BALANCE SHEET OF HINDUSTAN SHIPYARD LIMITED AS ON 31 ST MARCH 2008
Par ticular s
Amoun t
Amount
Par ticular s
Amoun t
Amount
Share funds:
holders
Current assets: Inventory Sundry debtors Cash and bank Other current assets 15537.71 5149.30 18419.69 8979.83
Share capital 14431.72 Reserves and surplus 9.5
138
14440.72 Loans funds:
Loans advances
and 13813.79 61900.32
Secured loans Un-secured loans
683.24 98169.04 98852.28
Fixed assets: Gross block Depreciation 16928.96 12998.54
Current liabilities: Creditors Other current 11365.83 liabilities 50145.05
Net block Capital work in 3930.42 progress 52.29
3982.71 61510.88 provisions 6795.09 Profit A/c & loss 115715.94
181598.97
181598.97
139
Par ticular s
Amoun t
Amount
Par ticular s
Amoun t
Amount
Share funds:
holders
Current assets: Inventory Sundry debtors Cash and bank Other current assets Loans and advances 13205.73 14054.91 28169.94 8191.36 17198.20 80820.14
Share capital 14931.22 Reserves and surplus 9.5 14940.72 Loans funds: Secured loans Un-secured loans 7046.84 61069.02
68115.86
Fixed assets: Gross block Depreciation 17754.92 13302.19 4452.73
Current liabilities: Creditors Other current liabilities 69269.65
Net block Capital work in progress 401.51
140
12893.72
4854.24 10901.31 tax 85622.85 182198.54
82163.37 182198.54 Deferred asset
Par ticular s
Amoun t
Amoun t
Par ticular s
Amoun t
Amount
141
Share funds:
holders
Current assets: Inventory Sundry debtors Cash and bank Other current assets Loans and advances Fixed assets: Gross block Depreciation 61450.01 Net block Capital work progress 19214.45 in 13786.80 5427.65 622.57 6050.22 10235.59 84741.69 25355.22 14805.34 21183.74 7169.86 13357.83 81871.99 8977.54 52472.47
Share capital 28101.22 Reserves and surplus 9.5 28110.72 Loans funds: Secured loans Un-secured loans Current liabilities: Creditors 15740.11 Other current 62420.28 liabilities
78160.39 15178.3 provisions 7
Deferred asset
tax
Profit & loss A/c
142
182899.4
182899.4
FINDINGS:
Low working capital ratio indicates in ability of meeting the short-term obligations hence it is suggested that the
company should maintain an appropriate amount of working capital.
Investment in inventory can be reduced to improve the liquidity position of the firm. The company should try to acquire more contracts from abroad to earn more amount of foreign exchange.
143
HSL incurred a loss on account on excess of cost of production due to idle labor. The capital is negative because of the past accumulated losses and current losses. Return on investment ratio is on negative net profit because the past accumulated losses. Current losses and
heavy panel interest burden on the barrowings have coded the share holders funds completely brought the net worth of negative balance.
The sundry debtors increased in the position yea of 06- 07s showing the inability of the company to collect them in
time.
Due to the negative funds cash from operations the industry financial performance is not in a proper manner. When compared the current year profits with overall performance the current position is good in ship repairs but
not in ship building.
In over view the HSL is facing lot of threats from the fluctuations is the financial position. So that the organization is
under losses.
144
The creditors are increased to 2005 06 in the year of 2006 07 hence the company is inability to pay its debts in
time.
The provision of the year 2008 09 RS. 135219.32 is the highest among the 5 years period an least among the 5
year period in the year 23004 05 Rs.2405.56.
The gross working capital also called as total current assets, the gross working capital showed an increased from
the last 3 years from 2006 07 to 2008 09 is 33237.89 to 80820.14.
The company has covered the losses from 1157 crores to 856 crores in the year 2008-10. The net working capital refers to the difference between current assets to current liabilities, the position of the net
working capital showed a decrease in the last year.
145
conclusion
A study is conducted on the Analysis of financial performance the net working capital of a company is satisfactory. The liquidity position of a company is also good. Hence , the financial position of a company is satisfactory.
146
SUGGESTIONS:
The financial condition of the company is very weak. To improve the condition some major steps have to be taken
like restructuring of capital, reducing the cost of production.
To adopt the new technology; accounting standards should also be included. The inventory maintained by the company is very low but the inventory should be improved.
147
To reduce the construction period from the date of keel laying, delivery period. In advisable to the firm to increase the sundry debtors. The delivery dates are delayed too much, which should be checked. Inadvisable to the firm the finding in cash and bank of the firm maintained same. The creditors maintained by the company are very high; it is advisable to reduce the creditors to increase the
financial position of the company.
The net working capital is decrease every year hence it should increase the current assets. Efforts should be made to mobilize working capital in order to met working capital requirement. To bring more financial strength govt. should offer some state of HSL to private people for issue of Bonds or
Debenture
148
Govt. should permit Indian shipyard to operate on delay importing goods can be rectified. Capital restructuring proposals are to make on a big scale. Maximum utilization of capacity should be achieved & idle should be reduced. Generally in public sector under taking things will be pending especially relating to financial matter. HSL has to take measures to reduce or decrease the overhead expenditure. In this connection some of the
measures under take by HSL to be implemented are as follows.
Reduce of the lead time & avoiding a critical situation like running out of stock. In other words it has to improve its
inventory management.
149
BIBILIOGRAPHY
The study quotes valuable inputs authors and contains authentic statement and photographs. PANDAY .I.M PRASANNA CHANDRA Management. KHAN M.Y AND JAIN P.K Problems. KOTHARI C.R Management. Annual reports of HSL for last five years. Other printed leaflets of HSL. Research Methodology Financial Management text and Financial Management Fundamentals of Financial
150
General Articles about the ship Building Industry. HSL web site: WWW.hsl.gov.in WWW.HSL.COM
151

Financial Performance of HSL

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Financial Performance of HSL

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INTRODUCTION TO THE STUDY

SCOPE OF THE STUDY:

OBJECTIVES OF THE STUDY:

T he major objectives of the study:

Diag r ammatic Repr esentation:

Inside the Company

Secondary Sources Outside the Company Textbook and websites

LIMITATIONS OF THE STUDY:

INDIAN SHIPBUILDING INDUSTRY:

Ship Building and Ship Repairs W ing (SBR W ing):

AREAS IDENTIFIED FOR PRIVATE SECTOR PARTICIPATION IN INDIA:

RESEARCH CENTERS FOR SHIP DESIGN:

National Ship Design And Research Center (Nsdrc):

THE MAJOR NINE SHIPYARDS:

Three slipways of 30,000DWT capacity, each

PRIVATE SHIPYARDS IN INDIA:

Hindusthan shipyard limited

public sector undertaking 1940 Vishakapatnam ISO 9000:2001

TRANSFER FROM PRIVATE TO PUBLIC SECTOR:

I) II) III) IV)

Accounts department. Personal department. Internal Audit department. General department.

ACTIVITIESS OF HINDUSTAN SHIPYARD LIMITED:

GROWTH OF THE SHIPYARD:

DATA ANALYSIS AND INTERPRETATION

THEORITICAL FRAMEWORK O FINANCIAL PERFORMANCE

MESUREMENTS OF THE FINANCIAL PERFORMANCE:

TYPES OF WORKING CAPITAL: A. Concept Base3 Working capital B. Time Base

2) CASH FLOW ANALYSIS:

3) FUNDS FLOW STATEMENT:

Quick assets = Current assets other than inventories.

Gross profit Ratio =

Gross profit X 100 Net sales

4) Activity (or) tur nover (or) perfor mance Ratios:

B. Debtor s tur nover Ratio:

Amount (in lakhs)

Amount (in lakhs)

STATEMENT OF WORKING CAPITAL OF HINDUSTAN SHIPYARD LIMITED MARCH 2007

FOR THE YEAR 31 ST

Amount (in lakhs)

Amount (in lakhs)

20032.93 14610.58 2405.57 42330.68 79379.76

Amount (in lakhs)

Amount (in lakhs)

Amount (in lakhs)

Amount (in lakhs)

Amount (in lakhs)

Amount (in lakhs)

Increase Source (+)

Decrease Source (-)

4621.73 8054.86 3675.50 185.36 2688.63 19226.08

9235.81 14064.78 2752.18 258.29 6926.80 33237.89

4614.08 6009.92 72.93 4238.17

6192.35 16617.91 4634.88 42330.68 69775.82 (50549.71)

20032.93 14610.58 2405.57 4233.68 79379.76 (46141.87)

Increase in net working capital

Increase Source (+)

Decrease Source (-)

9235.81 14064.79 2752.19 258.30 6926.80 33237.89

15537.71 5149.30 18419.69 8979.83 13813.79 61900.32

6301.90 15667.5 8721.53 6886.99

20032.93 14610.57 2405.57 42330.68

11365.83 50145.05 2776.98 38423.56 102711.42 (40811.11)