financial analysis of a marble manufacturing company

7/27/2019 Financial Analysis of a Marble Manufacturing Company

1/49

1

PROJECT SUMMARY

Marble is compact crystalline carbonate of limestone. The most popular choice

with architects, interior designers for flooring and wall lading. Marble is found

mainly in India, Greek, Italy, Brazil and Iran etc. Rajasthan produces 95%marble

produced in India.

R.K. Marble came into existence when Ashok Patni group laid the foundation

stone of the company 25 th May 1989. The company started its operation at

Madanganj-Kishangarh with an installed capacity of 1,00,000 cubic feet per annum

of marble slabs. The strategic location of the unit along the highway leading to

Makrana (the world fame marble mandi which provide white marble for Taj

Mahal) also attracted a lot of attention from customers.

We will also arrange knowledge about the process of marble. It can be said in this

way how marble are received from mines and processing. so that we can receive

the slab or cut size marble for decorating our houses, hotels and other things so that

they look attractive and beautiful.

And after knowing all that system we will reach at the documentation and

softwares used in different type of system and their uses. And in last other facilities

that are provided by the R.K. Marble pvt. Ltd. And suggestion that may be applied

in improving of that system and functioning of R.K Marble pvt. Ltd. Because it


2/49

2

should be remember what they are holding today will not remain same because

environment is the changing with a full pace.


3/49

3

Introduction

Name of the company:- R.K. Marble Pvt. Ltd.

Date of Establishment :- 25 May 1989.

Business carried by the Company

R.K. Marble Pvt. Ltd. is probably one of the largest integrated

marble mining and processing unit in the world . A Guinness world record holder

company for the h ighest production of the marble and has taken

ISO 9002 and ISO 14000 certification.

Originally a grain trader, diversified into marble processing in the year 1989 and

mining in the year 1993.

R.K. Marble Pvt. Ltd. has always been a rapidly growing company engaged in

Excavation, mining of marble block and to manufacture of marble slabs and tiles.


4/49

4

HISTORY

R. K. Marble Group was established in 1989 by Patni group to help serve

increasing national and international demand for Indian marble. Since then

wehave enjoyed exponential growth and export too many markets worldwideinclud

ing European Union countries, the Middle East, Japan, China, Malaysia, other

parts of Asia, North America and various African countries.

Our success is based upon our ability to respond flexibly to our customers

individual needs for both large and small projects, our experience and detailed

knowledge of the marble industry, our competitive prices and the excellent

comprehensive service we provide for a very wide range of materials.

We have supplied marble for many major projects including palaces, temples,

mosques, embassies, international hotel chains and office buildings as well as

commercial works requiring large quantities of competitively priced materials in

standard sizes. R. K. Marble Group, started off as an initiative in providing

flooring solutions in 1989 as and in a modest warehouse in Kishangarh, District

Ajmer, Rajasthan. The modest beginning gave shape to a dream of mining marble-

still considered very upper class and distant for many millions all around

the country.


5/49

5

Luck strikes when the people behind the company, Mr. Ashok Patni, Mr. Suresh

Patni and Mr. Vimal Patni win a mining lease in Dharmeta and then follow it up

with mines at Morwad. The Patni brothers realized the importance of using the

latest technology for marble mining and visited Italy a number of times to gain the

technological edge. With dramatic effect the production rose multifold as the

recoveries per unit of land grew.

Ingenuity in the usage of various state of the art machinery such as rock drill,

wire/chain saws, hydraulic pusher arms etc ensured easy usage with a number

of semi skilled work force. Scores of mining engineers and professionals from all

walks of life were picked up to build a company which now is known for its

quality production and processing strength. The total manpower strength is

over 3500 today with three fourths of them working in the three mines of the

company and the rest at the processing plant in Kishangarh.

Achievements of the Company:

1. Guinness Book of World Record holder since 19992.

2. Companys name i s also entered in Limca Book of world record.

3. Company has been awarded by the Model Marble Quarry award-Best

merchandised quarry first Prize.


6/49

6

Directors

Chairman - Mr. Ashok Patni

Managing Director - Mr. Suresh Patni

Joint Managing Director - Mr. Vimal Patni

Director - Mr. R.S. Mahanot

Director Public Relations - Mr. M.P. Kothari

Director Business Development - Mr. Vineet Patni

Director Commercial - Mr.Vikas Patni

Director Sales & Administration - Mr. Sanjay Bakliwal

Director Marketing - Mr. Kamal Kumar Sogani


7/49

7

People

A s u c c e s s f u l c o m p a n y i s o n e l e d b y w o r l d - c l a s s l e a d e r s . O u r

b o a r d i s dedicated to serv ing the interests of not only the

shareholders, but also every other body associated with the company. A highly

motivated team of professionals, a team with a spirit to give in their best every

time. Needless to say, the growth of R. K. Marble Group has been spurred by the

spirit of the individuals who work at various levels to keep ahead of the

rest and constantly rise to the challenges that beckon them at the frontiers of

technology.

The three Patni brothers have been instrumental in shaping up the

destinyof the mining industry/processing technology used in India. They are

backed up by a Board of Directors which includes seasoned finance,investment

and marketing professionals-all groomed for global competition from the family

and industry.


8/49

8

Resources of raw material

The term marble is derived from the Latin word "Marmor" which has the root in

Greek "Marmaros", meaning a shining stone. Marble is a crystallinemetamorphic

rock, a carbonate of lime, compact and polish able and is used for decoration and

building purposes.

Resources

Dharwar, Cuddapah and Vindhyan group of rocks mainly host marble deposits

of India. Marble is known to occur in Jurassic and Cretaceous systems as well. But

these occurrences are of less importance. Though distribution of marble deposits is

widespread in India, deposits of economic importance are limited to the states of

Rajasthan, Gujarat, Haryana and Andhra Pradesh. Inferior grades of marble are

known to occur in the states of Bihar, Jammu & Kashmir, Madhya Pradesh,

Maharashtra, Sikkim, Uttar Pradesh and West Bengal. Rajasthan is renowned

for its marble resources with respect to quality and quantity and accounts for

about91 per cent of the total all-India reserves. Eighteen districts out of 32 districts

contain marble deposits.

Mines

World famous Morwad Mines of the R. K. Marble Group are situated 15 Kms

from Rajnagar on Udaipur - Rajnagar - Ajmer National Highway No.8. It is well


9/49

9

connected by metalled road from Rajnagar. The nearest Airport is at Dabok which

is 68 Kms from the mines and 19 Kms from Udaipur. Nearest Railway station is at

Kankroli, which is 20 Kms from the mines. Electrical power line

of 11KV from State Viduyat Nigam is extended up to mines. Captive Power gener

ation to the tune of 2500 KVA is on Stand-by.

Four Captive Diesel Dispensing Pumps with 80 KL storage capacity Anoverhead

tank of 1.5 lac liters capacity along with a filter plant is maintained for meeting the

requirement of drinking water and domestic use. The quality of water is potable.

Requirement of water for industrial use is met with the help of water tanks filled

from tube wells from the nearby areas.

A four-bed dispensary with Para medical staff and Doctor along with anambulance

is available at mines. A well-equipped Group Vocational Training Center is

established at site to provide initial training to new entrants, refreshers and special

training to existing employees OEMS and other service agencies.

WONDER MARBLE:( An adventure of R.K.Marble pvt. Ltd.)

Zoom in to the corner stone of majoli, in Madhya Pradesh, India to scale the

magnetic fascination of an ISO 9002 adorned Guinness record holder, Engaged as

the largest producer of marble in the world . bedecked with the most sought after


10/49

10

gadgets, the exotic majoli mine is most coveted breeding group of worlds

choicest WONDER MARBLE thats wondrous and

Awesome in myriad hues .Wonder marbles, color panorama and innate design

makes it the right choice for flamboyant user . its fascinating range can be

floored to encompass living rooms drawing arrangements dinning spaces, hotel

lobbies, pool sites ,wall cladding , special lounges and many more .Yes, the

WONDER MARBLE produced at the majoli mines comes in heat warming shades

of deep and dark red , brown to rose patches in creamy base coupled with abrasion

resistant fine grained form, luster and reflective gloss , which makes it truly a

masterpiece for lifetime.


11/49

11

Stones which are exported

1. Wonder Marb

2. Morwad White


12/49

12

INDUSTRY PROFILE

A marble is compact crystalline carbonate of limestone. Limestones gets

converted into marble when heated without the escape of co2 and on subsequent

cooling. Marble and allied rocks are of different geological ages and have

variegated beautiful colors like black, white, grey pink etc. it is the most

popular choice with architects, interior designers for flooring and wall lading.

Marble is found mainly in India, Greek, Italy, Brazil and Iran etc.

Rajasthan in India produces 95% of marble product. Marble is pride of India

with practically inexhaustible deposits of over 1200 million tones. Today India is

one of the lading countries of export of marble and other natural stones. The

domestic market is also growing at phenomenal rate.

The total investment in dimensional sector is estimated at about Rs. 5000 crore.

The present export import trade in natural stone is estimated at US $3 billion and

it is likely to grown at an annual rate of 70%. From a meager export of 50,000 to

60,000 tonnes of stones in 1985. Growth of stone industries has come to 70, 00,000

tonnes.

Affluent gulf countries namely UAE, SAUDI ARABIA, KUWAIT, EGYPT etc

are emerging as the most potential future market , specially for India , because

of its proximity to this area and quality of Indian marble.


13/49

13

India has location advantage to cater to important markets like Japan, for east

Europe and Middle East. The country boasts of about 1100 modern gang saw units

and 50 automatic tiling plants and 5000 trading companies of marble. The industry

is well equipped with fast developing modern mechanized quarries.


14/49

14

ORGANIZATION PROFILE

RK Marble Pvt. Ltd. Is acknowledged as the biggest marble company in the world

and they hold certificate from Guinness World Records to buttress their claim.Today RK Marble Pvt. Ltd. Is most successful in the business but it is worth that

still they have are holding today will not remain same because environment is

changing with pace. When RK Marble Pvt. Ltd. came into existence with Ashok

Patni chairman, Patni Group on 25 May 1989. The company started its operations

at Madanganj-Kishangarh with installed capacity of 100000 cubic feet per annum

of marble slabs. And the location was makrana. Makrana is that mandi of marbles

which supplied marbles for Taj mahal . So it automatically has attraction of

potential customers. The state Government of Rajasthan allotted a virgin marble-

minimizing lease to company in Nov. 1993.And the promoters visited Italy to

study their mining equipments and techniques at that year. After visiting

several mines it was concluded that Italy is dominating the world in the mining

sector because of massive investment in the mining this motivated them to develop

the mines in a systematic way and to invest heavily on mechanization. It was felt

that Indian marbles was such superior in quality and if mined properly, it

could leave countries like Italy behind. This thinking promotes the way for

adoption of innovative and modem techniques, which helped the mines to develop

as the highest producers of marble blocks in the world. The company generated a


15/49

15

favorable responses and goodwill in a very short span of time. It steadily

increased its capacity to 13,75,000 cubic feet per annum in India to cater to the

increased demand. Mr. Suresh Patni, Managing Director of RK Marble Pvt. Ltd. is

the backbone for the development at the factory.

According to Ashok Patni chairman of RK Marble Pvt. Ltd. " our endeavor

at becoming the best in the marble industry and to reach the world leader position

was been achieved by sheer hard work, dedication and determination. If we focus

on the present position of the RK Marble Pvt. Ltd. We will find that today, the

company employs work force of over 2500 persons. It also provides shopping

centers, free mass, adult education and medical facilities at its mining site and slab

has a modern layout and a fully automation marble slurry treatment

plant. Its production linked incentives scheme is unique to the industry

which drives not only the production section but also ensures the partnership of

administration accounts and marketing sector in the profits of the company. In the

consideration of mining equipments we can see that the company has made

extensive use of wireless communication to synergies all activities from drilling to

loading of the end product. The optimum utilization so the country natural

resources can be seen here. Due to latest technologies used, the recovery ratio of

marbles blocks is amongst the highest. The company also keeping with the trends,

the company has adopted state of the art technology in streamlining its operations


16/49

16

in the factory and its various offices. It is also the first marble mining company,

which has very high level of mechanization and computerization with investments

worths Rs. 36.54 crore in equipments for mining purpose.

The company also strives to provide quality by imbibing the latest international

mining technologies. This can be gauged from the fact that the entire mine

operations are controlled by sophisticated internally developed software on oracle

which tracks and evaluates all possible functions, cost areas and productivity of all

mines. In the consideration of Kishangarh for the marbles, there are more than 500

Gang saw machines. So it automatically becomes large potential market of world.

The growth of the company can be gauged from the fact that initial share capital of

12 lacs has now become Rs.63, 15, 57,000 and the fixed assets have also increase

from the last year. According to the records of the Directors mines and geology,

Udaipur - the company quarries yield the highest per hectare production of marble

among all the mines in country. The fully mechanized and automated mines at

village mowed bear testimony to the above with round the clock work by qualified

and the highly trained technicians and workman producing the best quality

marbles. And marble is not all the company has been contributing too.

There is also the social enlistment and development of the region. The approach

road to the mines developed by the company to facilitate smooth transport for its

vehicles are now also being used by the miners and surrounding villages. The


17/49

17

company has assisted in providing drinking water, electricity, telephones and

employment to the surrounding villagers. It has being donating freely for the

upcoming hospitals, educational institutions and social causes. In the consideration

of water plant we can see that the company is very conscious of its commitment

towards maintaining the ecology and environment. It has established the first fully

automatic water treatment plant in India for removing the slurry. The automatic

filter press converter slurry in to dry cakes thus minimizing any chance of

pollution. Similarly, the overburden and waste generated at mines is properly

stacked and tress planted on it. The company has taken ISO 9002 certification in

2001. Objective of the company remains to produce excellent quality products and

adopt leadership stance RK Marble Pvt Ltd.

Is dedicated to maintain the highest standards of quality and excellence through

constant innovation and up-gradation of technology. The name of RK Marbles ltd

has changed to RK Marble Pvt. Ltd. Since July 2003. The companys endeavor is

to remain the world's largest mining company and is poised for aggressive growth

in the coming years within India and abroad. Firstly we have to consider the

relevance of marble. Marble is the pride of India, with practically inexhaustible

deposits of over 1200 million tones. Today India is one of the leading countries in

the export of marble and other natural stones. The domestic market is growing at

a phenomenal rate. The total investment in dimensional stone sector is estimated at


18/49

18

about Rs. 5,000 crore. The present export-import trade in natural stones is

estimated at US $3 billion and it is likely to grow at an annual rate of 7% from a

meager export of 50,000 to 60,000 tonnes of stones in1985, growth of stone

industry has come to 70,00,000 tonnes.


19/49

19

Need for the Study

To know about the different types of system manual being used in RK marble at present.

Objective of the Study

To know about the basic financial system in company.

To analysis the financial statement of a company.

Preparation of comparative statements.

Analysis of cash flow.

Analysis of trend of net profit and sales.

Research Methodology

Research method which are conventionally being used for financial analysis

of comparative study of previous data of Balance Sheets, Profit & Loss A/C and

Cash Flow.

Data Collection : Data collection from the secondary source (data)

ANALYSIS OF STUDY

Financial system

Financial statement

Financial Analysis


20/49

20

THE FINANCIAL SYSTEM

When a business starts, it needs some type of fund in the form of its capital. Then

from where it will gets funds, become a problem. When it is on small scale thefunds of the owner will be sufficient but in the condition of large company own

funds will not be sufficient. So in that condition there is other option of borrowing

funds. Borrowing funds can be received from many parties like -government,

financial institutions, and other non-recognized institutions. So the requirement of

company can be fulfill by the OWN + BORROWED FUNDS. After getting funds

the second most problem will be allocation of fund. In which thing this fund should

be invested. Mainly in business field 2 major things are there -

FIXED ASSETS

WORKING CAPITAL

Working capital is used for the smoothing flow the use of fixed assets .

In working capital use, sincerity should be there. Working capital is used for the

operational activities like-

PURCHASE

PRODUCATION

PROCESS CONTROL

SALES

ACCOUNTING PAYMENT & COLLECTIONS


21/49

21

So, there should be such type of system so that working capital will not

be blocked. After getting employed of working capital and fixed assets, here

may be profit or loss. If there is profit, then the next problem will be that -how much part of profit should be distributed or how much part of the profit

should be kept in reserves of the company. So these decisions are called:

DIVIDENT DECISION

RESERVE KEEPING DECISION

After discussion of all above matter on Financial System we may find that

there are three main decisions:

FUNDS REQUIREMENT DECISION

FUNDS ALLOCATION DECISION

PROFITS DISTRIBUTION DECISION

But according to the scope of the project we will mainly focus on theoperational part of Financial System only. In this project mainly questionarises which should be answered.

WHAT ARE THE STATEMENTS MADE IN THE FINANCIALSYSTEM

AND THEIR USEFULNESS?

WHAT ARE THE SYSTEM MANNUAL ARE CURRENTLY

BEINGUSED IN R.K. MARBLE PVT. LTD.?

WHAT ARE THE ANALYSIS TECHNIQUES SHOULD BE USED?


22/49

22

FINANCIAL STATEMENTS

Financial information is the basis of financial planning and analysis. With the help

of financial information, we can evaluate the earning power and financial positionof the firm. Financial information is also useful for the different parties like -

owner, management, creditors, investors, employees, research team, and other

institutions. So if we find the way, which passes the information to these parties

that will be financial statements. Financial statements contain summarized

information about the financial matters."Financial statement means a statement that

shows the financial position and result of business activities at the end of the

accounting period."

R.N.ANTHONY

Meaning and Objectives of Financial Statements-

Financial statements means that statements which shows result of commercial

functions and financial position of business. In practical life there are mainly two

types of statements:-

Balance sheet.

Profit and Loss account.

Cash Flow.


23/49

23

Objectives of Statements

It gives information about cash flow of firm.

It gives information about the utilization of resources. It gives information about the earning capacity of firm and their analysis.

BALANCE SHEET

Balance Sheet is the most important statements in the financial statements. It

shows information about liabilities and assets of the firm.

The Balance Sheet is a statement which reports the values owned by the

enterprise and the claims of creditors and owners against these properties."

- Howard and Upton

"The Balance Sheet is a screen picture of the financial position of a going concern

at a certain moment."

- Francis R. Stead Functions of Balance Sheet It gives information about liabilities and assets of the firm.

It gives information about working capital of the firm.

It gives information about solvency position of the firm.


24/49

24

Classification of Balance Sheet Items

Assets

Current Assets

Fixed Assets

Investments

Miscellaneous Expenditure

Liabilities

Current Liabilities

Long Term Liabilities

Owner's Equity

Share Capital Reserve and

Surplus

Assets

"Assets have been defined as tangible objects of intangible rights owned by an

enterprise and carrying probable benefits."

- Accounting Standard Board, India.


25/49

25

Current Assets

Current asset is used to designate cash and other assets or resources commonly

identified as those which are reasonably expected to be realized in cash or sold

or consumed during the normal operating cycle of the business."

Fixed Assets

"Fixed assets are the assets of a relatively permanent nature used in the operations

of business and not intended for sale."

Fixed Assets may be of two types -

Tangible Fixed Assets are those assets which have physical existence and

that can be seen. Like - building, furniture, tools, etc.

Intangible Fixed Assets are those assets which do not have any physical

existence and that cannot be seen. Like - goodwill, patent, franchise, etc.

Investment

Investing in the shares and debentures of government institutions or

other institutions for making control on profit or ownership is called Investment.

Miscellaneous Assets

Miscellaneous Assets are that Deferred Expenditure, which give profit to the firm

for coming so many years. Like -preliminary expenditure, discount on issue of

share or debentures, etc.


26/49

26

Liabilities

Liabilities can be described in the claims of outsider parties over firm. Or we can

say that firm is the debtors of the outsider parties. Current Liabilities

"Current Liabilities from the view point of an analyst are all short termobligations

generally due and payable within a year." -Roy. A. Foulke.

Long Term Liabilities

Long-term liabilities are those liabilities, which will be paid after one or more year.

So for the payment of these liabilities we do not need any working capital.

Owner Equity

In the case of company the owner of the company will be the shareholder of the

company. So the owner equity wills the part of total sources of the company which

were supplied by the owner of the company.

Paid Up Capital

It includes the funds, which are supplied by the shareholders. It includes both

equity share capital and preference share capital.


27/49

27

Reserves & Surplus

Its other name is retained earnings also. It is the part of profits of the firm, which

does not distribute among shareholders.

Revenue Reserves

Capital Reserves

These limitations are generated due to old concept and conventions. But in themodern age these limitation can be finished. So on the basis of these limitations it cannot be concluded that these financial statements are not important for thebusiness firm. In real, these financial statements gives information's about various

facts. On the basis of this information we can take accurate decision about thebusiness environment


28/49

28

BALANCE SHEET

LIABILITES Amount ASSETS Amount

SHARE CAPITAL FIXED ASSETSAuthorized share Capital GoodwillIssued share Capital LandPaid up share Capital Building

Plant MachineryFurniture

RESERVE AND SURPLUS INVESTMENTCapital reserve (at cost)

Revenue reserveSecured Loans CURRENT ASSETSDebentures Stock Mortgage Loan Bills Receivable

DebtorsUNSECURED LOANS AdvancesDeposits Fixed deposits

Cash at bank

Cash in handCURRENTLIABLITIES Creditors

Bills Payable MISCELLEANEOUSCustomers EXPENDITURE

Advances Preliminary expenditureUnclaimed Dividend Discount on issue of Provision for Taxation Debenture

Provision for DividendTOTAL TOTAL


29/49

29

PROFIT AND LOSS ACCOUNT OR INCOME STATEMENT

"The statement of profit and loss is the condensed and classified record of the gains

and losses causing change in the owners interest in the business for a period of

time."

Gulhman H.G.

Some item should be described in the profit and loss account

Source of income

Cost of goods sold

Administrative expenses

Sales and distribution expenses

Depreciation

Other income - income from investment

Income tax

Net profit or loss

According to the business firm, Income statement or P& L Account has twotypes


30/49

30

I .SINGLE-STEP INCOME STATEMENT

In this statement all the expenses and cost are deducted from the sales

revenue .

PARTICULARS DETAILS NET AMOUNT

REVENUE

Sales less returns

Other incomesTOTAL REVENUE

TOTAL COST & EXPENSES

Cost of Sales

General Expenses

Selling Expenses

Depreciation

Interest

Non- Operating Expenses

Provision For Tax

Total Cost

Net Profit After Tax

Proposed Dividend

Income Retained In BusinessCost of Sales = Opening stock + Purchases - Closing Stock


31/49

31

II. MULTI-STEP INCOME STATEMENT

In this statement incomes are distributed in multiple head. So according to the

requirement that income can be calculated

P&L ACCOUNT or INCOME STATEMENT

PARTICULARS DETAILS NET AMOUNT

SALES

Less: Cost of Goods Sold

GROSS PROFIT LESS :

OPERATING EXPENSES

Administrative expenses

Selling expenses

Depreciation

OPERATING PROFIT

Add: other revenue

Less: Non-Operating expenses

PROFIT BEFORE TAX

Less: Provision for Tax

NET PROFIT AFTER TAX

Less: Proposed Dividend

RETAINED SURPLUS


32/49

32

CASH FLOW

Cash flow statement is additional information to user of financial statement.

This statement exhibits the flow of incoming and outgoing cash.

This statement assesses the ability of the enterprise to generate cash and cash

equivalents

It also assesses the needs of the enterprise to utilize the cash and cash

equivalents generated

It also assesses the liquidity and solvency of the enterprise.

So financial statements are the useful for the all the parties related to a business

firm . But with this there are some limitations of financial statements, which are as

follows

Lack of Precision

Lack of Exactness or completion

Incomplete Information

Interim report

Hiding the Real Position

Lack of comparability Historical Costs


33/49

33

FINANCIAL ANALYSIS

Financial statements are only the informer, which provides information about

financial position of the firm. But they are only the figures. For understandingthem, we have to do financial analysis. By analysis of statements we can find

conclusions like - management efficiency, future growth etc.

"The science of financial analysis is assuming an increasingly important role as a

tool for appraising the real worth of a going concern. It helps in drawing out the

implications of which is contained in the statements themselves."

Naveen Chandra Joshi

"Analyzing financial statements is a process of evaluating the relationship between

component parts of a financial statement to obtain a better understanding of a

firm's position and performance."

Metcaffand Titard

OBJECTIVE OF ANALYSIS

Profitability

Solvency

Ownership

Financial strength

Trend

Gearing and cover


34/49

34

IMPORTANCE OF FINANCIAL ANALYSIS

Disclosure of facts

Effective Decision-making

Effective operation and control

Planning tool

Comparative study of efficiency

Serving the need of interested parties


35/49

35

TECHNIQUES OF FINANCIAL ANALYSIS

"Methods employed to examine the vertical as well as horizontal relationship

of different financial variables with a view to studying profitability and

financial position of business enterprises are called tools of Financial Analysis.

There may be different techniques, but these techniques should be used

according to the requirements. These techniques may be - COMPARATIVE FINANCIAL STATEMENTS :

Comparative financial statements are those statements which are prepared

according to consider on different facts in respective of time.

Generally in a business firm, there are two most important statements, which show

the financial position of firm

Balance sheet

Profit and loss account

So, firm may make two comparative statements.


36/49

36

COMPARATIVE BALANCE SHEET

(Rupees in Crores )PARTICULARS

2008 2009 INCREASE DECREASE%

Change

In Rs. In Rs. Amount Amount

ASSETS

Fixed assets 45.52 50.93 5.41 -- +11.88

Investment 6.31 11.62 5.31 -- +84.15

Current assets 130.57 146.64 16.07 -- +12.31

Other assets 5.23 5.39 0.16 -- +0.03

TOTAL 187.63 214.58 -- -- --

CAPITAL

& LIABILITIES

Share capital 63.15 63.15 -- -- --

Reserves 72.63 122.23 49.6 -- +68.29

Long-term loans 46.53 23.33 -- 23.2 -49.86

Current liabilities 5.32 5.87 0.55 -- +10.34

TOTAL 187.63 214.58 -- -- --


37/49

37

(Rupees in Crores )

PARTICULARS

2007 2008 INCREASE DECREASE%

Change

In Rs. In Rs. Amount Amount

ASSETS

Fixed assets 60.08 45.52 -- 14.56 -24.23

Investment 3.27 6.31 3.04 -- +92.96

Current assets 77.57 130.57 90.54 -- +116.72

Other assets 1.00 5.23 4.23 -- +423.00

TOTAL 141.92 187.63 -- -- --

CAPITAL

& LIABILITIES

Share capital 21.05 63.15 42.10 -- +200.00

Reserves 75.71 72.63 -- 3.08 -04.07

Long-term loans 17.87 46.53 28.66 -- +160.38

Current liabilities 27.29 5.32 15.73 -- +57.64

TOTAL 141.92 187.63 -- -- --


38/49

38

COMPARATIVE P&L ACCOUNT(Rupees in Crores )

PARTICULARS 2008 2009 INCREASE DECREASE %CHANGE

Rs. Rs. Amount Amount

SALES 190.9 233.62 42.72 -- +22

Less: cost of goods sold (130.01) (148.25) 18.24 -- +14

GROSS PROFIT 60.89 85.37 24.48 -- +4

Selling Expenses (1.37) (2.36) 0.99 -- +72

Administration Expenses (10.32) (11.65) 1.33 -- +12

Other expenses (0.72) -- -- 0.72 -10

NET OPERATING PROFIT 48.48 71.36 22.88 -- +47.19

Add: Other income 14.28 7.95 -- 6.33 -44.32

Less :Other expenses -2.27 -4.49 2.22 -- +97.79

NET PROFIT BEFORETAX 60.49 74.82 14.33 -- +23.6


39/49

39

(Rupees in Crores )

PARTICULARS 2007 2008 INCREASE DECREASE %CHANGE

Rs. Rs. Amount Amount

SALES 171.7 190.9 19.2 -- +11

Less: cost of goods sold (117.89) (130.01) 12.12 -- +10

GROSS PROFIT 53.81 60.89 7.08 -- +13

Selling Expenses (5.45) (1.37) -- 4.08 +74

Administration Expenses (9.34) (10.32) 0.98 -- +10

Other expenses (0.01) (0.72) 0.71 -- -7

NET OPERATING PROFIT 39.01 48.48 9.47 -- +24

Add: Other income -- 14.28 14.28 -- --

Less :Other expenses (4.43) (2.27) -- 2.16 +48.75

NET PROFIT BEFORE TAX 34.58 60.49 25.91 -- +74


40/49

40

TREND ANALYSIS

It is the process of determining changes in successive years from the fixed time

or the initial year. This type of analysis will called trend analysis. Mainly,

3methods are used in this technique -

Trend percentage

Trend ratio

Graphic presentation

1. SALES

The data are as follows (in Crores)

YEAR 2007 2008 2009

SALES 171.69 190.9 233.62

TREND PERCENTAGE OF SALES

YEAR SALESBASE YEAR INCREASE/DECREASE

2007 IN SALES

2007 171.69 -- --

2008 190.90 +19.21 11.19%

2009 233.62 +42.72 22.38%


41/49

41

TREND RATIO

The base year 2007 will be taken as trend ratio 100 and other year will be

calculated by this formula

Trend ratio = sales of year / sales of base year * 100

YEAR 2007 2008 2009

SALES 171.69 190.9 233.62TREND

100 111.19 136.07RATIO

2. NET PROFIT

The data are as follows

YEAR 2007 2008 2009

NET PROFIT 22.37 38.39 48.82

TREND PERCENTAGE OF NET PROFIT

YEAR SALES BASE YEAR INCREASE/DECREASE

2007 IN SALES

2007 22.37 -- --

2008 38.39 +16.62 74.30%

2009 48.82 +09.83 25.21%


42/49

42

TREND RATIO


calculated by this formula

Trend ratio = net profit of year / net profit of base year * 100

YEAR 2007 2008 2009

NET PROFIT 22.37 38.99 48.82

TREND 100.00 174.30 218.24RATIO

3. INVENTORY

The data are as follows

YEAR 2007 2008 2009

INVENTORY 8.01 5.95 16.29

TREND PERCENTAGE OF INVENTORY

YEAR INVENTORYBASE YEAR INCREASE/DECREASE

2007 IN INVENTORY

2007 8.01 -- --

2008 5.95 -02.06 -25.72%

2009 16.29 +10.34 173.78%


43/49

43

TREND RATIO


calculated by this formula Trend ratio = inventory of year / inventory of base year * 100

YEAR 2007 2008 2009

INVENTORY 8.01 5.95 16.29

TREND 100.00 74.28 203.37

RATIO


44/49

44

OTHER TECHNIQUES

RATIO ANALYSIS

"Ratio is simply a means of highlighting in arithmetical terms the relationship

between figures drawn from financial statements.

Ratio analysis of statements is The process of determining and presenting the

relationship of items and groups of items in the statements."

FUND FLOW ANALYSIS

Fund flow analysis are called by three names

Statements of sources and application of funds

Statement of changes in financial position

Funds statement

Funds flow statement is a statement prepared to indicate the increase in the

cashresources and the utilization of such resources of a business during theaccounti

ng period. A statement of source and application of funds is a technical device

designed to analyze the changes in the financial condition of business enterprises

between two dates. The funds flow statement is a statement summarizing the

significant financial changes, which were occurred between the beginning and the

end of a company's accounting period.


45/49

45

BREAK EVEN ANALYSIS

Profit is depend on different factors like - sales volume, sales price per unit,

different costs like - fixed cost and variables costs. Or we can say that profit

is based on the sales and costs. So we can make internal relationship of sales, costs,

and profits. Where costs and sales are equal and profits are nil. This technique is

called break-even analysis. There are four method used in this technique-

Contribution

Profit Volume Ration

Breakeven point

Margin of safety


46/49

46

COMPETATIVES OF R.K.MARBLE PVT. LTD.

R.K. Marble has although captured the whole market business. But in this

marble business world has some competitive, these are as follows.

In state level Digvijay marble industries is his major competitive .Because he

produce the same Marble as Wonder Marble and his cost of Marble is also very

low.

In national & international level the china marble is the competitive of R.K.

Marble.

Marbo Tiles which is cheaper and looks very nice is also the competitive of R.K.

Marbles product.

STRENGTHS-

They have strong financial position.

They have huge capital.

They have the certificate of higher taxpayer, so they have good

Financial image in the market.

Mr. Ashok Patni, Chairman of R.K. Marble Pvt. Ltd., because of his good

leadership R.K. is growing faster, leads R.K.MARBLE PVT. LTD.

R.K. Marble Pvt. Ltd. has Guinness record of producing highest marble

slabs.


47/49

47

WEAKNESS -

There financial investment based only in one product.

This is not growing market and they have very much investment on this product.

OPPORTUNITIES-

They have huge capital so they invest in other field also.

They have good financial position in the market so they take more loans

easily from banks.

They have enough chances to export the product

Which shows the business in dollar.

THREATS-

The uses of ceramic tiles are also increasing very much.

Importing of marble is also a threat for marble industries in India.


48/49

48

CONCLUSION

R.K. Marble Pvt. Ltd., Kishangarh, Ajmer is acknowledged as the biggest

Marble Company in the world and they hold the certificate from Guinness Book of World records to buttress their claim. Today RK Group is the most successful in

this business but it is worth that they have no bigger competitor in front of them. If

we analysis all the we will find some following points

Net profit of the company is continuously increasing.

The companys financial position is continuously increasing.

Balance sheet and Profit & Loss Accounts are maintained properly.

They have good financial image in the market.

The total turnover of the company has registered a growth of 11.1wher e as

the operating profits after tax for the year were higher by 18%.

The cash earning of the company improved substantially to Rs.190.9cores

as against Rs.179.69 crores in the last financial year.

The debts doubtful have been doubl ed over the years but their percentage

on the debts has almost become half this implies a sales and collection

policy that get along with the receivables management of the firm.

The various ratios calculated are an indicator as to the fact that

the profitability of the firm and sales are on a rise and also the deletion of the

inefficiencies in the working capital management.


49/49

Bibliography

News papers 1. Times of India.

2. Economic times.3. Financial time

Books 1 . Dr. M.D.Agrawal, Dr N.P. Agrawal "Financial Management"

2000 Edition.2. S.C. Kuchhal "Financial Management", Ninth Edition.

Magazines

1. Business World.2. Business Today.3. Brand Equity.

Websites 1. www.wikipedia.com2. www.easy2source.com3. www.searchenginecolossus.com

Other Sources 1. Annual Reports of R.K. Marble2. Catalogs of R.K. Marble
http://www.wikipedia.com/http://www.easy2source.com/http://www.searchenginecolossus.com/http://www.searchenginecolossus.com/http://www.easy2source.com/http://www.wikipedia.com/

financial analysis of a marble manufacturing company

Documents