fazal navin flour finance

8/8/2019 Fazal Navin Flour Finance

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PREFACE

Finance is regarded as a blood ofbusiness organization. Financial Managementis concerned with the efficient use of animportant economic resource.

Financial Management is an importantorgan of the Management. Without Financial

Management the body of Management isworkless.As a student of Business Administration I

get an opportunity to make a report onNavin Fluorine International Limited in thearea of finance. I get practical knowledgeabout finance which is different form

theories.


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ACKNOWLEDGEMENTIt is great pleasure to me to get an

opportunity to prepare a project report in the

finance area.I am really thankful to faculty and

Dharmsinh Desai University which providestheoretical as well as practical knowledge tous.

I am thankful to our Director Mr. G. S.Shah and also hardly thankful to our

Mrs.Pallavi Dave under her kind guidance Imake myself to prepare this report.

I am extremely thankful to my parentswho provide me all possible help.

Last but not least, I would like to thank allthose persons who directly or indirectlyhelped me to prepare this report.

Shaikh FAZAL M.

76SY BBA


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INDEX

1) Company Profile

2) Result of operation

3) Ratio Analysis and Interpretation

4) Directors Report

5) Auditors Report

6) Cash flow statement

7) Common size statement

8) Accounting Policies

9) Conclusion


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Company Profile

Name of Company:

Navin Flourine InternationalLimitedAddress:

Navin Flourine ,Surat 395023.

(Gujarat)Navin Flourine ,Dewas 455022.(M.P.)

Registered Office:

1st floor Kalptaru Point,Kamani Marg,Sion. (East),Mumbai 400022.Tel: 91 22 2404 0404 / 2404 3300Fax: 91 22 2401 4077E-mail: [email protected]: www.nfil.in

Register & Share Transfer Agents:

Sharepro services (India) PrivateLimited.

Board Of director:

Chairman :Shri H.A.Mafatlal

Director: Shri A.k.Puri
mailto:[email protected]://www.nfil.in/mailto:[email protected]://www.nfil.in/


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Director: Shri T.M.M. Nambiar

Director

: Shri P.N.KapadiaDirector: Shri S.S.Lalbhai

Director: Shri S.M.Kulkarni

Director: Shri R.Sankaran

Director: Shri V.P.Mafatlal

M.D.: Shri V.P.SadekarCompany Secretary :

Shri N.B.Mankad

Product of the Company:

Company is producing basicallytextiles, petrochemicals, apparel,garments, knitwear and dress for thesafety soldiers of Indian army.

Bankers:State Bank Of Hyderabad.UTI Bank Limited.HDFC Bank Limited.Export Import Bank Of India.Dena Bank.

Auditors:M/sC.C.Chokshi & Co.

(Chartered Accountant)


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Subsidiary Companies:Sulakshana Securities Limited.

Profitability Chart:-

Gross Profit

2500

2550

2600

2650

2700

2750

2800

2850

2005-06 2006-07

Gross Profit

Net Profit After Tax


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0

200

400

600

800

1000

1200

1400

2005-06 2006-07

Net Profit

Earning Per Share

0

2

4

6

8

10

12

14

2005-06 2006-07

Rs.

Dividend Per Share

0

0.5

11.5

2

2.5

3

3.5

4

2005-06 2006-07

Rs.


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Result of Operations:

2005-06 2006-07

A.

B.

C.

Operation Result:

SalesOther IncomeNet Profit After Tax

Financial Position:Fixed Asset (Net)Current Asset (Net)

Others (Net)Total assetsShare capitalReserves and surplusShareholders fundsLoan FundsTotal Capital Employed

Equity Share Data:

23276.09359

.13855

.22

14165.5415946.408110.5

036584.99

1008.8333843.85

34852.68

25639.501343.4

21259.8

4

17252.1115109.6110210.9639717.88

1009.5036125.0637134.56

28775.20


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Earning Per Share (Rs)Dividing Per Share (Rs)Number of Share (in lacs)

26390.9426232.94

8.472.65100.99

27814.73

12.474.00100.99

Ratio Analysis

Meaning of Ratio:The Comparison between two or more

variables. It can be represented as

percentage (%), Oblique (/), times,isto (:).

A ratio is customarily expressed inthree different ways. It may beexpressed as a proportion between two

variable. E.g If the current asset are


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twice then current ratio is 2:1.Second way is to percentage. E.g Therate on return on capital employed is

to express the ratio as rate forexample stock turnover is six times ayear.

Importance of Ratio:

The use of ratios was started bybanks for ascertaining the liquidityand profitability of companiesbusiness for the purpose of advancingloans to them.

1.Profitability:

The trend of profitability isavailable from profitability ratios.The gross profit ratio, net profitratio and ratio of return oninvestment give a good idea of theprofitability of business, Themanagement gets an idea about the

overall efficiency of managers andbank as well as other creditors drawuseful conclusions about repayingcapacity of the borrowers.

2.Liquidity:

The current ratio, liquid ratio andacid-test ratio will tell whether the


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business will be able to meet itscurrent liability as and when theymature. Banks and other lenders will

be able to conclude from these ratioswhether the firm will be able to payregularly the interest and along withinstallments.

3.Efficiency:

The turn over ratio are excellent

guides to measures the efficiency ofmanagers, E.g the stock turnover willindicate how efficiently the sale isbeing made, the debtors turnover ofcollection department and assetsturnover shows the efficiency withwhich the assets are used in business.

4.Inter-firm Comparison:

The absolute ratio of firm are notof much use, unless they are comparedwith similar ratios of other firmsbelonging to the same industry. Thisis inter-firm Comparison , which showsthe strength and weakness of the firmas compared to other firms and willindicate corrective measures.

5.Indicate Trend:

The current ratio of a firm is

lower than the industry average, but


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if the ratio of last five years showsan improving trend, it is anencouraging trend. Only ratio analysis

will provide this information.

6.Useful for Budgetary Control:

Regular Budgetary report are

prepared in a business where thesystem of budgetary control is in use.If various ratios are presented inthese reports, it will give fairlygood idea about position.

7.Useful for Decision-making:

Ratios guide the management inmaking some of the importantdecisions. Suppose, the liquidityratios shows an unsatisfactoryposition, the expenditure decision theratio of return on investment willguide the management.


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Ratios of Navin FlourineInternational Limited

A. Profitability Ratio:-

1.Gross Profit Ratio:Meaning:

The gross profit ratio measures thegross earning of the company to itsnet sales. If the ratio is less itsshows the inefficiency of company. Thegross profit ratio is expressed inpercentage(%).

Formula:

Gross profitRatio =Gross profit *100

Net sales

2005-06= 2824.57 * 10023276.09


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=12.14%

2006-07 2636.49 * 10025639.50

=10.28%

Graph and Table:Year Percentage2005-

06

12.14

2006-07

10.28

9

9.5

10

10.5

11

11.5

12

12.5

2005-06 2006-07

Percentage

Interpretation:


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The gross profit ratio of the year2005-06 is 12.14% and in current

year10.28%, it means at Rs.100 sale ofcompany a margin of Rs. 12.14 in year2005-06 and Rs. 10.28 in year 2006-07is available from which the operatingexpenses of the business arerecovered. But in the year 2006-07 thegross profit ratio is decreased at

12.14% to 10.28% i.e. 1.86%. Itindicates that the cost of sale ishigh during the current year. Themanagement must investigate and try tobring up this ratio.

2.Net Profit Ratio:Meaning:

Net profit ratio is useful tomeasure the overall performance of thebusiness and efficiency of the companyto earn amount on net profit on netsales.

Formula:


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Netprofit ratio=Net profit*100

Net sales

2005-06= 855.22 * 10023276.09

=3.67%

2006-07=1259.84 * 10025639.50

=4.91%

Graph and Table:Year Percentage2005-06

3.67

2006-07

4.91


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0

1

2

3

4

5

2005-06 2006-07

Percentage

Interpretation:

The net profit ratio of the companyin the year 2005-06 is 3.67% and inyear 2006-07 4.91%. It means that thecompany is making the net profit ofRs.3.67for sales of every Rs.100 in2005-06. And the net profit of Rs.4.91for net sales of every Rs.100in 2006-07. It shows that the current yearsnet profit increased by Rs. 1.24 whichshows better profitability of thecompany as compared to last year.


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3. Operating Expense Ratio :

Meaning :

The operating ratio shows therelationship between the cost of goodssold plus operating expense and netsales. It shows the efficiency of themanagement. The higher the ratio, theless will be the profit margin

available to proprietors andinefficiency of the management. Thisratio is expressed in percentage.

Formula :

Operating expense ratio= Cost of goods sold + operatingexpense*100

Net Sales2005-06 = 26791.92 x 100

23276.09= 115.1 %

2006-07 = 30514.24 x 10025639.5

= 119.01 %


115.10

2006-

07

119.01


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113

114

115

116

117

118

119

120

2005-06 2006-07

Percentage

Interpretation:

The operating ratio of the companyin year 2005-06 and 2006-07 are 115.1and 119.01 respectively. These ratiosshows that in year 2005-06 the ratiois 115.1 and increase in year 2006-07at 119.01. It means operating expensesincrease in current year. So, netprofit decreased in current year whichis not good for the company.


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4.Return on Capital Employed:

Meaning:

It is an index of profitability ofbusiness and is obtained by comparingnet profit with total capital employedby the Company. The ratio is expressedin (%) percentage. The Capital

employed includes share capital,reserves and long term Loans andBonds.

Formula:Return on Capital Employed=

EBIT *100Capital Employed

2005-06= 1096.83 * 100

26232.94=4.18 %

2006-07=2131.27 * 100

27814.73


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=7.66%


4.18

2006-07

7.66

0

1

2

3

4

5

6

7

8

2005-06 2006-07

Percentage

Interpretation:

This ratio shows that by investingRs.100 how much proprietor gets. Theratio of year 2005-06 and 2006-07 are4.18% and 7.66% respectively. Intheyear2005-06 company invested Rs.100and they will get the return of Rs.4.18 and in current year companyinvested 100 Rs. and they will get


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return of Rs.7.66. The current yearsreturn increase as compared to lastyear which is good for the company.

5.Return on Shareholder Fund: Meaning:

It is a profitability of business

from the viewpoint of shareholders ascompare to their investment. Return onshare holders ratio expressed inpercentage(%).

Formula:Return on shareholders fund

=Net profit aftertax *100

Shareholders fund

2005-06=855.22 *100

17426.34


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=4.91 %

2006-07=1259.84 *10018567.28

=6.79%


4.91 %

2006-07

6.79 %

0

1

2

3

4

5

6

7

2005-06 2006-07

Percentage

Interpretation:The ratio of year 2005-06 & 2006-07

are 4.91% & 6.79% respectively. It


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shows that the shareholders earn 4.91%Rs. for their investment in year 2005-06 which increase in year 2006-07 is

Rs. 6.79. This is good for companysshareholders and also for thecompanys reputation in the market.

6. Return On equityshareholders fund:Meaning:

It shows what percentage of profitis earned on the capital invested byordinary shareholders. The ratio isobtained by dividing net profit afterdeduction of preference dividend bythe amount of ordinary share capitalplus free reserves.


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Return on equity shareholders fundratio is expressed in percentage (%).

Formula: Return on equity shareholdersfund

= Net Profit-PreferenceDividend

Equity sharecapital + free reserves

2005-06= 855.22 *10017426.34

=4.91 %

2006-07=1259.84 *10018567.28

=6.79%


4.91 %

2006-

07

6.79 %


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0

1

2

3

4

5

6

7

2005-06 2006-07

Percentage

Interpretation:The ratio of year 2005-06 and 2006-

07 are 4.91% and 6.79% respectively.It shows that the equity shareholdersearn 4.91 Rs. for their investment in

year 2005-06 which increase in year2006-07 is Rs. 6.79. This is good forcompanys shareholders and also forthe company.

It increases the companysreputation in the current market.


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7.Earning Per Share: Meaning:

Earning per share measures theearnings available to the equityShareholders as compare to theirinvestment made per share.

Formula: Earning per Share

=Profit after Tax Preference Dividend

Number ofequity shares

2005-06=855.22

100.99=8.47 Rs2006-07=1259.84

100.99= 12.47 Rs

Graph and Table:Year Amount(Rs)2005-06

8.47

2006-07

12.47


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0

2

4

6

8

10

12

14

2005-06 2006-07

Rs

Interpretation:Earning per share ratio measures

the earning of the equity shareholders

as compared to investment made on eachshare. Here the ratio of 2005-06is8.47 Rs. and ratio of 2006-07is 12.47Rs. It shows that if the face value ofone share is Rs.10 then shareholdersgets Rs.8.47 in year 2005-06 andRs.12.47 in year 2006-07.


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8.Devidend Per Share:Meaning:Dividend per share ratio measures

the dividend a valuable to the shareholders as compare to there investmentdone per share.

Formula:-

Dividend per share=Total dividenddeclared

Number of equity share

2005-06=268100.99

=2.65 Rs

2006-07=404

100.99=4 Rs

Graph & Table:-


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Years Amount(Rs)2005-06 2.652006-07 4

00.5

1

1.5

2

2.5

3

3.5

4

2005-06 2006-07

amount

Interpretation:

The ratio measures dividend

available to the shareholders ascompared to their investment made pershare. Here the current year ratioshows 4 Rs. it means it shows almostaverage dividend to shareholderswherein, last years ratio shows 2.65Rs. means less than current year. So

that it shows the efficiency of thecompany. Dividend per share isincreased by 1.35 Rs. in current year.


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9.Stock Turnover Ratio:Meaning:

Stock turnover ratio represents theturnover of stock done during a year.Higher the ratio found better for thecompany. Stock turnover ratio isexpressed in times.

Formula:

Stock TurnoverRatio=Cost of Goods*100Average Sales

2005-06=20451.52 * 100

2333.05

=8.77 times

2006-07=23003.01 * 100


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2782.82

=8.27 timesGraph and Table:Year Times2005-06

8.77

2006-07

8.27

8

8.1

8.2

8.3

8.4

8.5

8.6

8.7

8.8

2005-06 2006-07

Times

Interpretation:

In the company there is a stockturnover ratio of year 2005-06 is 8.77times and ratio of year 2006-07 is8.27 times. It means ratio is decreaseby 0.5 times during the current yearwhich is not good for the company.


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10.Debtors Turnover Ratio:Meaning:

Debtors ratio shows the number of

times the rotation of debtor cycle isdone during a year. The ratio showsthe number of days taken to collectthe dues of credit sale. The lower theratio good for the Company.

This ratio is also known as averagecollection period or debtors days ordebt collection period.

Formula:Debtors Turnover Ratio

=Debtors + Billseceivable *365

Credit Sales


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2005-06=5627.94 *365

23276.09

=88 days

2006-07=7127.88

25639.5

=102 days

Graph and Table:

Year Days2005-06

88

2006-07

102

80

85

90

95

100

105

2005-06 2006-07

Days


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Interpretation:

Debtors velocity ratio of the year2005-06 and 2006-07 are 88 and 102days respectively. It shows that thedebtor cycle or average collection ismade in 88 days in year2005-06 whilein year 2006-07 the average collectionperiod is 102 days. This means thatthe average collection period hasincreased from 2005-06 to 2006-07 by14 days. So, this ratio does not showthe satisfactory position of thecompany.

11.Creditors Turnover Ratio: Meaning:Creditors velocity ratio shows the

number of days within which company

make payment to the creditor. It


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measures the number of times therotations of creditors cycle is doneduring a year.

This ratio is also known as averagepayment period or creditors days orcredit payment period.

Formula:

Creditors Velocity Ratio=Credit Purchase

Creditors + Bills Payable

2005-06=662.38

9179.49

=0.07times

2006-07=392.44

9530.11

=0.04times

Graph and Table:Year Times


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2005-06

0.07

2006-

07

0.04

0

0.01

0.02

0.03

0.04

0.05

0.06

0.07

2005-06 2006-07

Times

Interpretation:

The creditors ratio of the year2005-06 and 2006-07 are 0.07 and 0.04respectively. It shows that the 0.07times amount of credit purchase ispaid in 2005-06 and 0.04 times in year2006-07. In the year 2006-07 amount of

credit purchase is paid earlier ascompared to year 2005-06. It is notsatisfactory for the firm.


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12.Fixed Asset Turnover Ratio :Meaning :The fixed asset turnover shows the

sales of the business as compared toits assets used. It is useful toascertain the efficiency andprofitability of business. Here thetotal fixed assets are compared tosales. The more the sales in relationto the amount invested in fixed

assets, the more efficient is the useof fixed assets. It indicates higherefficiency.

Formula :

Fixed Asset Turnover Ratio=Sales

Fixed

Assets2005-06 = 23276.09

14165.54= 1.64 times

2006-07 = 25639.5017252.11

= 1.49 times


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Graph and Table:

Year Times2005-06

1.64

2006-07

1.49

1.4

1.45

1.5

1.55

1.6

1.65

2005-06 2006-07

Times

Interpretation:

The fixed assets turnover ratio ofthe year 2005-06 and 2006-07 are 1.64times and 1.49 times respectively. Theratio of the current year is less thanprevious year. It means that fixedassets were being not used effectivelyin year 2006-07. This is not good forthe company.


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13.Current Ratio:Meaning:

Current ratio measures thecapability of the company to pay itsliability within next 12 months ascompare to its current assets. Idealcurrent ratio 2:1 and chore commissionratio is 1.33:1, It is also known asWorking Capital Ratio.

The assets which can be converted

in cash within a time period is calledcurrent assets.

The liability which will be paid bythe Company within a time period iscalled Current Liability.

Formula:


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CurrentRatio=Current Assets

Current Liability

2005-06=15946.4

9876.85= 1.61 : 1

2006-07=15109.61

11044.76=1.37 : 1

Graph and Table:Year Times2005-

06

1.61:1

2006-07

1.37:1


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1.25

1.3

1.35

1.4

1.45

1.5

1.55

1.6

1.65

2005-06 2006-07

Times

Interpretation:

The companys current ratio ofyear2005-06 is 1.61 and in year 2006-07 is 1.37 times. This ratio showswhen at Rs. 1 liability of the companythen excess of assets is 1.61 in year2005-06 and 1.37 in year 2006-07. Theratio is decreased in year 2006-07 ascompared to 2005-06. It means thatthere is decline in current assets andincrease in liability which is notgood for the company.


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14.Liquid Ratio:Meaning:

Liquid ratio measures the liquidposition of the Company to pay off itsdebt within very short period ascompared to it liquid assets. Idealliquid ratio is 1:1 .

Liquid assets can be obtained by

deducting stock and prepaid expensesfrom current assets.Liquid liability can be obtained by

deducting bank overdraft from currentliability.

Formula:

Liquid Ratio=Liquid assets

Liquid Liabilities

2005-06=13463.84

9876.85

=1.36 : 1

2006-07=12026.5311044.76


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=1.09 : 1

Graph and Table:

Year Times2005-06

1.36:1

2006-07

1.09:1

0

0.2

0.4

0.6

0.8

1

1.2

1.4

2005-06 2006-07

Times

Interpretation:

This ratio shows the liquidposition of the company. The liquidratio of the year 2005-06 is 1.36 andin year 2006-07 is 1.09. The idealratio is 1:1. According to, liquid

ratio it is higher than the ideal


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ratio. It means company having a goodand satisfactory level.

15.Quick Ratio:

Meaning:

Quick ratio measures the immediatecash capabilities of company to meetits very quick liabilities. Idealquick ratio is 0.5 : 1 .

Quick ratio is obtained by dividing

quick assets by quick liabilities.Quick assets=liquid assets-debtors-Bills Receivables

Quick liabilities=liquidliabilities.

Formula:


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Quick Ratio=QuickassetsQuick Liabilities

2005-06=7835.9

9876.85

=0.79: 1

2006-07=4898.6511044.76

=0.44: 1

Graph and Table:Year Times2005-06

0.79:1

2006-07

0.44:1


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0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

2005-06 2006-07

Times

Interpretation:

The quick ratio of the company ofthe year 2005-06 is 0.79 and of year2006-07 is 0.44. It shows that howmuch quick funds are available to payoff quick liabilities. The standardquick ratio is 0.5:1. Here, the quick

ratio of current year is less thanstandard ratio, it means company hasinsufficient quick assets to pay outits quick liabilities.


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16.Proprietary Ratio:

Meaning:

The proprietary ratio is measurethe proportion of contribution made bythe propriety as compare to the totalassets of the business. This proprietyor Shareholders Fund consist of Share

capital and reserve and surplus. Thisratio can be measured in percentage.

Formula:Proprietary Ratio=Proprietary Fund

*100Total Assets

2005-06=17426.34*100

36584.99

=47.63 %

2006-07=18567.28*100

39717.88


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=46.75 %

Graph and Table:

Year Percentages2005-06

47.63%

2006-

07

46.75%

46.2

46.4

46.6

46.847

47.2

47.4

47.6

47.8

2005-06 2006-07

Percentage

Interpretation:

The higher the ratio, the strongerthe financial position of the companyas it signifies that the proprietorshave provided larger funds to purchasethe assets. The current years ratiois 46.75% it means the company usesoutside funds. This ratio cannot

exceed 100%. If it is 100% then it


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means that the business uses onlyproprietors funds and not outsidersfunds.

17.Debt Equity Ratio:

Meaning:Debt equity ratio measures

outsiders funds as compared toowners funds. It means debt ismeasures with equity its ideal ratiois 1:1.

Debt include outsiders fund(Debenture + Long Term Borrowing +secured and unsecured loans.)

Equity includes share capital,equity share capital + Owners fund(All reserve and surplus fictitious

assets.


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Formula:

Debt equity ratio= Debt

Equity

2005-06=13017.34

17426.34=0.75:1

2006-07=14860.37

18567.28

=0.80:1

Graph And Table

Year Times

2005-06 0.75:1

2006-07 0.80:1


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0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

2005-06 2006-07

times

Interpretation:

The ratio of the year 2005-06 and2006-07 are 0.75 and 0.80 times

respectively. It means the debt is Rs.0.75 for every 1Re. in year2005-06 and0.80 Rs. for every 1Re. in year 2006-07. It is a good for the company whenthis ratio is high means outsidecreditors have a large claim than theowners. It shows the company has good

equity funds.

18. Capital Gearing Ratio:Meaning:

This ratio expresses the proportionof preference capital and ordinary


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capital. This ratio should be lower.It includes funds bearing fixedinterest and charges.

Formula:

Capital Gearing Ratio=Fixed interest bearing

capitalOrdinary Capital

2005-06=8806.617426.34

=0.5:1

2006-07=9247.45

18567.28

=0.5:1

Graph And Table

Year Times

2005-06 0.5:1

2006-07 0.5:1


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0

0.1

0.2

0.3

0.4

0.5

2005-06 2006-07

times

Interpretation:

The capital gearing ratio of the

company in year 2005-06 is 0.5 andalso in year 2006-07 is 0.5. Thisratio shows the proportion of capitalwhich bearing fixed interest andordinary capital. Here company uses50% ordinary capital and 50% capitalbearing fixed interest.


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Directors Report

Directors have pleasure inpresenting their report and auditedaccounts of the company for the yearended march 31, 2007

Business Performance:

The business performance during theyear has been commendable. The netprofit Rs 1259.84 lacs is the highestever achieved by the company. Thecompanys strong results demonstrate

the merits of your company growthstrategies.Sale for the year have increased by

10 percent at Rs 25639.50 lacs asagainst Rs 23276.09 lacs during 2005-06. After absorbing the amount onimpairment of asserts, accelerateddetentions and diminution in the valueof companys investment in its wholly-owned subsidiary called SulakshanaSecurities Limited. Companys overallperformance can be said well in theyear 2006-07.

Dividend:-


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The Board of Directors are pleasedto recommend a dividend of Rs.4 perequity share on 10099889 equity shares

of a nominal value of Rs.10 eachaggregating Rs.4 lacs. In the year2006-07 The dividend of the companyhas rose up to 50% as compared toyear 2005-06.

Responsibility Statement:-

The companies act 1956, thedirectors based on the representationreceived from the operatingmanagement.

(a) In the preparation of the annualaccounts, the applicable accountingstandards have been followed and thatno material departures have been madefrom the same.

(b) Consulted the statutory auditors

and have applied them consentient andmade judgment and estimates that arereasonable and prudent.

(c) Companies act, 1956 forsafeguarding the asset of the companyand for preventing and detecting foundand other irregularities.


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(d) The Board of Directors haveprepared the annual account on a goingconcern basis.

Foreign Exchange:-

Companies act,1956 read with thecompany the rule,1988 with respect toconservation of energy, technologyabsorption and foreign exchangeearning and outgo as required to bedisclosed in terms of Section 217 (1)(e) of the companies act 1956 readwith the companies rules,1988 isannexed hereto and forms part of thisreport.

Research & Development:-

The companys research anddevelopment team created new valueadded molecules based on customerrequirements. These molecules

currently at different stages ofcommercialization are expected toreport strong commercial success overthe coming years.

Social Responsibility:-


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During the year under review, thecompany has made donation of Rs.10lacs for charitable and other

purposes.

Insurance:-

The properties and insurableinterests of company like building,plant, machinery and stock etc. are

properly insured.

AUDITORS REPORT:-

(1) They have audited the attachedbalance sheet of Navin FlourineInternational Limited as at March31st 2007, the profit and loss

account and also the cash flowstatement for the year ended of


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that date, annexed there to.These financial statements arethe responsibility of companys

management. Their responsibilityis to express an opinion on thesefinancial statements based ontheir audit.

(2) They conducted their audit inaccordance with the auditingstandards generally accepted inIndia. Those standards requirethat they plan and perform theaudit to obtain reasonableassurance about whether thefinancial statement are free ofmaterial misstatement. An auditincludes examining on a test

basis, evidence supporting theamounts and disclosure in thefinancial statements. An auditalso includes assessing theaccounting principles used andsignificant estimates made by themanagement, as well as evaluating

the overall financial statementpresentation. They believe thattheir audit provides a reasonablebasis for their opinion.


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(3) As required by the companiesorder, 2003, issued by theCentral Government in terms ofsection 227 (4A) of the companiesAct, 1956, they enclose in theannexture a statement on thematters specified in paragraphs 4& 5 of the said order.

(4) Further to their comments, in theannexture referred to above, theyreport that;

(a) They have obtained all the

information and explanation which tothe best of our knowledge and beliefwere necessary for the purpose oftheir audit.

(b) In their opinion, proper booksof accounts as required by law have

been kept by the company so for asappears from their examination ofthose books.

(c) The balance sheet, profit andloss account and cash flow statementdealt with by this report are in

agreement with the books of account.


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(d) In our opinion, subject to note16.a. of schedule 17, regarding non-disclosure of information required

under Accounting Standard 27 inrespect of a joint venture of thecompany, the Balance sheet, Profit &Loss account and cash flow statementdealt with by this report complywith the accounting standardsreferred to in sub-section (3C) ofsection 211 of the Companies Act1956.

(e) On the basis of writtenrepresentations received from thedirectors, as on 31st March 2007 andtaken on record by the Board ofDirectors, we report that none of

the directors is disqualified as on31st March 2007 from being appointedas a director in terms of clause(g)of sub-section (1) of section 274 ofthe Companies Act, 1956.

(f) In our opinion, and to the best

of our information, and according tothe explanations given to us, thesaid accounts, read with thesignificant accounting policies,note 16.a., and other notes thereon,give the information required by theCompanies Act, 1956, in the manner

so required, and give a true andfair view in conformity with the


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accounting principles generallyaccepted in India:

i. In the case of the Balancesheet, of the state of affairsof the company as at March 31st

2007

ii. In the case of the profit andLoss account, of the profitfor the year ended on thatdate; and

iii. In the case of the Cash flowstatement, of the cash flowsfor the year ended on thatdate.

CASHFLOW STATEMENT

Meaning:-

Cash is the most liquid asset of abusiness. All business transactionsare ultimately results into cashinflow or cash outflow. Hence, a

statement that shows a cash flow is


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considered to be an important one. Itcan be said that cash is both thebeginning and the end of the business

operations. The business should havesufficient cash on hand so that theliabilities can be paid as & when theyfall due. The cash on hand should notbe excessive; otherwise the cash wouldremain idle, reducing the overallprofitability. The fund flow statementshows the changes in the net workingcapital, while the cash floe statementshows the inflow and outflow of cashonly. The statement shows the amountof cash received due to eachtransaction of the business and cashpaid. The total cash inflow is addedto the opening balance of cash and the

total cash outflow is deducted therefrom. This gives the final cashbalance.

Importance:-

(1)Efficient Cash Management:-If the finance manager has clear

idea of cash receipts and paymentsthen cash resources can be efficientlymanaged. Excess cash found at anytimes may be profitable invested for


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the time being and profitability isincreased.

(2)Useful For Internal FinancialManagement:-

The management can plan out paymentof dividend, repayment of long termloans, purchase of machines orequipment etc. If it has good ideaabout the timing when enough cash willbe on hand. This will avoid thepossibility of borrowing funds athigher rate of interest.

(3)Information About Cash Receipt AndPayments:-

Such a statement will give

information about the trend of cashreceipt and payment. Such informationis useful to the management in meetingany future contingencies and alsoseizing any profitable opportunity.

(4)Useful For Control:-

The historical cash flow statementprepared for last year is useful forcomparing the figures of cash budgetsand points of difference may belocated this facilitates managerialcontrol on the use of cash.

(5)Ease In Obtaining Funds:-


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By comparing the figures of cashflow statement and cash budgets, thecash planning and control becomes more

effective. In turn this facilitatesraising of additional fund easily whenneeded.

CASH FLOW STATEMENT FOR

THE YEAR ENDED 31STMARCH,2007

Schedule Rs inLacs 2007

Rs. inLacs 2006

A. Cash flow fromoperatingactivities

Profit before tax 2654.55 1794.04Adjustment for:

Depreciation 883.00 750.33

Profit on sale offixed assets

_ (52.22)

Loss on sale offixed assets

36.41 _

Provision fordoubtful advances

(509.64) (15.72)

Interest expenses 783.08 817.78Interest income (187.90) (161.62)Share of loss inthe partnershipfirm where the

company is a

0.03 0.06


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partnerDividend on longterm investments

(134.85) (39.20)

Surplus on buybackof sales by investcompanys held aslong terminvestment

(378.20) _

Bad Debts W/off 466.95 _

Sundry creditbalances writtenback

_ (22.36)

Excess provisionof earlier yearswritten back

(1.03) (13.02)

Provision fordoubtful debts

302.26 228.51

Operating Profitbefore workingcapital changes

3914.66 3286.58

Increase/ Decreasein tradereceivables

(425.99) 145.41

Increase in

inventories

(221.38) (1685.63)

Increase in loansand advances

(2723.16) (1222.70)

Increase in tradeand other payables

499.27 789.58

(2871.26) (1973.34)

Cash generated

from operation

1043.40 1313.24


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Direct Taxes andfringe benefitstax paid

(566.10) (594.06)

Net cash generatedfrom operatingactivities

477.30 719.18

B. Cash flow frominvestingactivities

Purchase of fixed

assets

(3977.17) (3113.56)

Capitalcontribution inthe partnershipfirm where thecompany is partner

(0.03) (0.06)

Share of loss inthe partnershipfirm where thecompany is partner

(0.03) (0.06)

Withdrawal formcapitalcontribution inthe partnershipfirm where the

company is partner

1494.51 _

Buyback ofinvestment

897.24 _

Sale of fixedassets

9.84 72.57

Dividend income 134.85 39.20Interest income 162.11 38.95

Net cash investing (1278.68) (2962.96)


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activitiesC. Cash flow fromfinancing

activitiesProceeds fromissue of equityshare capitalincluding sharepremium

_ 1506.13

Calls in arrears

received duringthe year

3.98 _

Expenses on issueof share W/offagainst sharepremium

_ (2.68)

Proceeds from longterm borrowings

1285.42 2563.00

Repayment of longterm borrowings

(480.32) (1163.91)

Proceeds fromother borrowings

1212.69 398.59

Compensationreceived pursuantto Montreal

Protocol forphasing outproduction ofozone depletingsubstances

455.12 436.34

Dividend paid (339.89) (136.52)Interest Expenses (848.85) (841.73)

Net cash (711.79) 2759.19


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Increase in cashand cashequivalent

(1513.17) 515.41

Cash and cashequivalents at thebeginning of theyear

5921.85 5406.44

Cash and cashequivalent at theend of the year

4408.68 5921.85

4588.52 6075.90179.84 154.054408.68 5921.85


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Table Of Ratios:

Particulars 2005-06 2006-07

1 Gross Profit ratio 12.14% 10.28%2 Net profit ratio 3.67% 4.91%3 Operating ratio 115.1% 119.01%4 Return on capital

employed ratio4.18% 7.66%

5 Return onshareholders fund

ratio

4.91% 6.79%

6 Return on equityshareholders fundratio

4.91% 6.79%

7 Earning per share 8.47Rs. 12.47Rs.8 Dividend per share 2.65Rs. 4Rs.9 Stock turnover

ratio

8.77times 8.27times

10 Debtors turnoverratio

88days 102days

11 Creditors turnoverratio

0.07times 0.04times

12 Fixed assetsturnover ratio

1.64times 1.49times

13 Current ratio 1.61:1 1.37:114 Liquid ratio 1.36:1 1.09:115 Quick ratio 0.79:1 0.44:116 Proprietary ratio 47.63% 46.75%17 Debt Equity ratio 0.75:1 0.80:118 Capital gearing

ratio0.50:1 0.50:1


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COMMON SIZE STATEMENT OFBALANCE SHEET

Particular Sch.No. 2006-07 (%) 2005-06 (%)

Sources ofFunds

Shareholders Fund

1 1009.5 3.51 1008.83 3.82

Capital

Reserve &Surplus

2 17557.78 61.02 16417.51 62.21

Total 18567.28 64.53 17426.34 66.03Loan Funds

Secured Loans 3 9247.45 32.14 8806.60 33.37Deferred taxliability

960.47 3.34 158.00 0.59

Total 28775.20 100 26390.94 100

Applicationof Fund

Fixed Assets 4Gross block 17830.32 61.96 16390.85 62.11--Less Dep. 6282.54 21.83 5425.97 20.56Net block 11547.78 40.13 10964.88 41.55

Capital work 5704.33 19.82 3200.56 12.13


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in progressTotal 17252.11 59.95 14165.54 53.68Investment 5 1743.24 6.06 2262.31 8.57

Currentassets,loans andadvancesInventories 6 5942.06 20.65 5720.68 21.68

Sundrydebtors

7 4579.03 15.91 4149.82 15.72

Cash andbank bal.

8 4588.52 15.95 6075.90 23.02

Loans andadvances

9 5612.92 19.51 4210.74 15.96

Total 20722.53 72.02 20157.14 76.38

Less

Current

liabilityandprovisions.Currentliability

10 10084.29 35.05 9718.85 36.83

Provisions 11 858.39 2.98 475.20 1.80

Total 10942.68 38.03 10194.05 38.63

Net currentassets

9779.85 33.99 9963.09 37.75

Total 28775.20 100 26390.94 100


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COMMON SIZE STATEMENT FOR

PROFIT & LOSS A/CParticular Sch.No.

2006-07 % 2005-06 %

IncomeTurnover(gross)

28084.32 109.54

25331.24

108.83

Less :ExciseDuty

2444.82 9.54 2055.15 8.83

Turnover(net)

25639.5 100 23276.09

100

Processingcharge

409.67 1.59 193.32 0.83

26049.17 101.59

23469.41

100.83

Otherincome

12 1343.42 5.24 359.13 1.54

Inc. instock

13 600.52 2.34 299.02 1.28

Total 27993.4 109.18

24127.56

103.66

Less

:Expenditu


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rePurchaseof goods

392.44 1.53 662.38 2.85

Manu. &other exp.

14 22966.32 89.57

19816.39

85.14

Exciseduty

53.92 0.21 166.07 0.71

Depreciation

882.97 3.44 750.30 3.22

Dep. On

immovableproperties

0.03 0.00

01

0.03 0.00

01

Interest 15 738.08 3.05 817.78 3.51Total 25078.76 97.8

122212.95

95.43

Profitbeforeexceptional itemsand tax

2914.35 11.37

1914.61 8.23

Provisionfordoubtfuladvances

(259.80) (1.01)

(120.57)

(0.52)

Profit

before tax

2654.55 10.3

5

1794.04 7.71

Provisionfor taxCurrenttax

(555.27) (2.17)

(473.82)

(2.04)

Deferredtax

(809.94) (3.16)

(422.00)

(1.81)

Fringe (29.50) (0.1 (43.00) (0.1


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benefittax

2) 8)

(1394.71

)

(5.4

40

(938.82

)

(4.0

3)Profitafter tax

1259.84 4.91 855.22 3.67

Surplusbroughtforward

920.36 3.59 706.74 3.04

Amount

availableforappropriation

2180.20 8.50 1561.96 6.71

APPROPRIATIONTransferred togeneralreserve

125.98 0.49 85.52 0.37

Transferred tocontingency reserve

250.00 0.98 250.00 1.07

Proposed

dividend

404.00 1.58 268.42 1.15

Corporatedividendtax

68.68 0.27 37.66 0.16

Shortprovisionof

dividend

39.02 0.15 ------- -------


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Total 887.68 3.46 641.80 2.76Surpluscarried to

Balancesheet

1292.52 5.04 920.36 3.95

Accounting Policies

(1)Fixed assets:-Fixed assets are recorded at cost

of acquisition or construction. Theyare stated at historical cost lessaccumulated depreciation andimpairment loss, if any.

(2)Depreciation:-Depreciation on fixed assets is

provided on the straight-line basis inaccordance with the Companies Act,1956. (refer note 4 of schedule 17).

(3)Impairment loss:-Impairment loss is provided to the

extent the carrying amount(s) ofassets exceed their recoverable

amount(s). Recoverable amount is thehigher of an assets net selling priceand its value in use. Value in use isthe present value of estimated futurecash-flows expected to arise from thecontinuing use of the asset and fromits disposal at the end of its useful

life. Net selling price is the amountobtainable from sale of the asset in


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an arms length transaction betweenknowledgeable, willing parties, laysthe costs of disposal.

(4)Investment:-Long terms investment are carried

at cost. Provision is made torecognize a decline, other thantemporary, in the carrying amount oflong-term investments.

(5)Inventories:-Items of inventory are valued at

cost or net realizable value, whichever is lower. Cost is determined onthe following basis:

A. Raw materials, stores and sparesWeighted average

B.Process stocks and finished goodsAt material cost plus

appropriate value of overheadsC.Trading goods

FIFO

(6)Retirement and other employee

benefits:-A. Contributions are made towards

Provident fund, family pensionfund and superannuation fund, whichare defined contribution schemes.Liability in respect thereof isdetermined on the basis of

contribution as required under thestatute/rules.


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B. Gratuity liability, a definedbenefit scheme, and provision for

leave encashment is accrued andprovided for on the basis ofactuarial valuations made at theyear end.

(7)Foreign currency transactions:-Transactions in foreign currency

(including those related toacquisition of fixed assets fromoutside India) are recorded at theoriginal rates of exchange in force atthe time the transactions areeffected. At the year-end, monetaryitems denominated in foreign currencyand forward exchange contracts are

reported using closing rates ofexchange. Exchange differences arisingthereon and on realization/ payment offoreign exchange are accounted, in therelevant year, as income or expense,except in respect of liabilitiesincurred in foreign currency for

acquiring fixed assets from outsideIndia, in which case, these areadjusted in the carrying amounts ofrespective fixed assets.

In case of forward exchangecontract, or other financialinstruments that are in substance

forward exchange contracts, thepremium or discount arising at the


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inception of the contracts isamortized as expense or income overthe life of the contracts. Gains/

losses on settlement of transactionarising on cancellation/ renewal offorward exchange contracts arerecognized as income or expense.

(8)Borrowing costs:-

Borrowing costs that areattributable to the acquisition,construction or production ofqualifying assets are capitalized aspart of the cost of such assets. Aqualifying asset is one thatnecessarily takes a substantial periodof time to get ready for its intendeduse. All other borrowing costs are

charged to revenue.

(9)Revenue recognition:-Revenue (income) is recognized

when no significant uncertainty as toits determination or realizationexists.

(10)Taxes on income:-Tax expense comprises both current

and deferred tax at the applicableenacted/ substantively enacted rates.Current tax represents the amount of

income tax payable/ recoverable inrespect of the taxable income/ loss


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for the reporting period. Deferred taxrepresents the effect of timingdifferences between taxable income and

accounting income for the reportingperiod that originate in one periodand are capable of reversal in one ormore subsequent periods.

(11)Provisions and contingencies:-A provision is recognized when the

company has a legal and constructiveobligation as a result of a pastevent, for which it is probable thatcash outflow will be required and areliable estimate can be made of theamount of the obligation. A contingentliability is disclosed when thecompany has a possible or present

obligation where it is not probablethat an outflow of resources will berequired to settle it. Contingentassets are neither recognized nordisclosed.


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Conclusion:-

NAVIN FLOURINE INTERNATIONALLIMITED is a well know company amongtheir entire consumers goods. It iswidely famous and reputed and not onlyin home countries but also foreigncontries. The company is famous forits entire products quality and itsreasonable price and the servicesprovided by the company among theconsumer.

The various ratios which we havestudied are very important ratios.The company seems to maintain better

ratios at a satisfactory level.

This companys liquidity positionand profitability is good. The companyis able to maintain its ratios atsatisfactory level.


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fazal navin flour finance

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