COMPANY PROFILE

1)NAME:

“ HINDUSTANMOTORS LIMITED”

2)ADDRESS: ‘Birla Building’, 10th Floor,

9/1, RajendraNath Mukherjee Road,Kolkata. 700 001

3)PRODUCTS:<1>Automobiles having four or more wheels.

Ambassador Lancer Lancer Cedia Montero Pajero RTV

<2>Brought out components and service parts<3> Manufactured components and service parts

<4> Manufacture of Automobiles and Components namely casting, forgings and stampings

4) BOARD OF DIRECTORS:-Shri C. K. Birla ( Chairman ) ShriNaresh Chandra BurmanShriKrantiSinhaShri S. C. Jain ( LIC nominee )ShriYogesh kr. Rastogi( ICICI nominee ) Shri A. Sankaranarayananan

ShriSubrotaGupta ( IDBI nominee )Shri R. Santhanam( Managing director )

5)BANKERS:-UCO Bank

Bank Of IndiaUnited Bank Of IndiaBank Of BarodaState Bank Of India

6 ) AUDITORS:-Messrs S. R. Batliboi& Company

(Chartered accountants)

7) COMPANY SECRETARY:-YogeshGoenka

8) INTRODUCTION OF COMPANY:-

Hindustan Motors Limited (HML) India’s pioneering automobile manufacturing company and flagship company of the C. K. Birla group was established just before India independence, in 1942 by Mr. B.M.Birla of the industrious Birla family.with the big name of

“HINDUSTAN MOTORS L.T.D”

Commenced operations in a small assembly plant in port Okha, near Gujarat. The manufacturing facilities later moved to Uttarpura, West Bengal in 1948, where it began the production of “ the Ambassador “. Stage of the rat facility for the production of passenger cars, trucks, and multi utility vehicles, and has equipped by Hindustan motors limited over the years, it self.

passenger cars like ambassador , grand ,and avigo ,multiutility vehicles and RTV car,Hindustan motors also

manufactures passenger cars in mid size premium segment and has brought in sports utility vehicle into Indian market in collaboration with Mitsubishi Motors, Japan. Hindustan motors function such as quality ,safety and environmental care from many of cars ,the plants which situated in big cities , in Tiruwallur ,Chennai,exclusive lancer cars in technical collaboration with Mitsubishi motors , japan.

In present time company’s manufacturing facilities are situated in Madhya Pradesh, Tamilnadu, and West Bengal and it functions with a commitment to core value such as quality, safety, and environmental care, combined with customer oriented total solutions.

PLANTS:

Tiruvallur (Chennai):Exclusive stage-of-the-art plant dedicated to the manufacture of Mitsubishi Lancer cars in technical collaboration with Mitsubishi Motors, Japan.

Uttarpura (Kolkata):The automobile division at Uttarpura is engaged in the manufacture of passenger cars.

Pithampur (Indore ):The Pithampur plant houses the Road Trusted Vehicles division in technical collaboration with OKA Motors Company, Australia.

ShriPradip Kumar KhaitanShriAnand C.

9)RESULT OF OPERATION:-

SR. NO.

PARTICULARS 31-03-2011

31-03-2010

1 GROSS PROFIT 10176.90 14521.402 NET SALES 59118.21 66211.453 EARNING BEFORE INTEREST

AND TAX-- 6584.02

4 NET PROFIT AFTER TAX -- 3084.15

5 SHAREHOLDERS FUND 9229 13218

6 EARNING PER SHARE -- 1.91

7 CAPITAL EMPLOYED -- 25116.25

8 FIXED ASSETS 15400.26 16424.35

10)SOCIAL RESPONSIBILITY:-

As responsible corporate citizen, company contributes to the community development in surrounding areas as well as in other places in Gujarat. Company also supports activities of society for village development. Company also fulfills its obligation towards the society, employee satisfaction, and environment.

Ratio Analysis

Meaning:-

The financial statement is prepared and presented annually are of little use for the guidance of prospective Investors, Creditors and even

management. If relationships between various related items in this financial statement are established, they can provide useful clues to gauge accurately the financial health and ability of business to make the profit. This relation between two related items of financial statement is known as Ratio.

Ratio Analysis is a process of comparison of one figure against another and interpreting the strength and weakness of the firm’s operation using those ratios.

Importance of Ratio Analysis:

1. Profitability:-

It is Useful in getting information about the trend of the profitability. The gross profit ratio, net profit ratio and ratio of return on investment given a good idea of profitability of the business. On the basis of these ratio, investors get an idea about the overall efficiency of the business, the management gets an idea about the efficiency of there managers and bank as well as other creditors draw useful conclusion about the repaying capacity of the borrowers.

2. Liquidity:-

In fact, the use of ratio was made initially to ascertain the liquidity of the business. The Current ratio, Liquid ratio and Acid test ratio will tell whether the business will be able to meet its current liabilities as and when they mature. Bank and other lenders will be able to conclude from this ratio whether the firm will be able to pay regularly the interest and loan installments.

3.Efficiency:-

The turnover ratios are excellent guides to measure the efficiency of the manager. For example- The stock turnover will indicate how efficiently the sales is being made the debtors turnover will indicate the efficiency of collection department and assets turnover shows the efficiency with which the assets are used in business. All such ratio related to sales present a good picture of the success or otherwise of the business.

4.Inter Firm Comparison:-

The absolute ratio of a firm are not of much use, unless they are compared with the similar ratio of the other firm belonging to the same industry. This is inter firm comparison, which shows the strength and weakness of the firm and will indicate corrective measures.

5. Indicate Trend:-

The ratio of the last three to five years will indicate the trend in the respective fields. For example- The current ratio of a firm is lower than the industry average but if the ratio of last five year shows of a company for one year may compare favorably with industry average but, if its trend show a deteriorating position, it is not desirable, only ratio analysis will provide this information.

6. Useful for Budgetary Control:-

Regular budgeting reports are prepared in a business where the system of budgetary control is in use. If various ratios are presented in these reports, it will give a fairly good idea about various aspects of financial position.

7. Useful for Decision Making:-

Ratios guide the management in making some of the important decision. Suppose the liquidity ratio show an unsatisfactory position, the management may decide to get additional liquid funds. Even for the capital expenditure decisions, the ratio of return on investment will guide the management. In efficiency of various department can be judged on the basis of their profitability ratios and efficiency of each department can thus be determined.

Calculation

CALCULATIONS:-PROFITABILITY RATIO

1. Gross profit ratio :-Meaning Gross profit ratio measures the gross earning of the company as compared to its net sales. If the ratio is less it shows the inefficiency of the company’s management.Formula:-

GROSS PROFIT RATIO=

2011= 17.21%

= 21.93%

GRAPH:-

Interpretation:-At the end of the year 2010-11

the gross profit ratio is 17.21% so for the sales of 100 Rs, 17.21 Rs is recovered from the operation of business. Gross profit at the end of the year 2009-10 is 21.93% i.e. for the sales of 100 Rs, 21.93 Rs is recovered from the operation of the business.

Thus we can say that there is decrease in gross profit of current year than that of the last year by 4.72%. The company is having 17.21% gross profit ratio in the year 2010-11 so it is not a good condition as compared to the last year.

2. Net Profit Ratio

Meaning

The ratio measures the net earnings of the company as compared to the net sales of the company. This ratio helps to measure the overall profitability performance of the company.

Formula

NET PROFIT RATIO=

2009-10

= 4.66%

GRAPH :

Interpretation:-At the end of the year 2011 there

is loss so the net profit ratio cannot be calculated.At the end of the year 2010, the

net profit ratio was 4.66%. This ratio interprets that at the sales of 100 Rs. the company recover 4.66 Rs.

Thus we can conclude that there is an decrease in the profit of the company is having a bad condition and it must take corrective actions to increase the profit.

3. Operating Ratio:-

MeaningIt is a ratio showing relationship

between cost of goods sold plus operating expense over net sales. It shows the efficiency of the business. The higher the ratio, the less will be the margin available to proprietor.

Formula

2011

= 106.57%

= 95.34%

GRAPH :

Interpretation:-At the end of the year 2010, the

operating ratio is of 106.57%. It shows that against the sales of 100 Rs the operating expenses to the company is of 106.57 Rs.

At the end of the year 2010, the operating ratio is of 95.34% so it indicates that against the sales of 100 Rs the operating expense to the company is about 95.34 Rs.

So that we can conclude that there is a increase in the operating ratio as compared that to the previous year.

4. RETURN ON CAPITAL EMPLOYED:

Meaning

It is an index of profitability of the business and it is obtain by comparing net profit with capital employed and share capital reserve and long term loan such as debentures. In this ratio net profit before deducing interest and taxes is taken into calculation.

Formula

2011

= 26.21%

GRAPH:-

Interpretation:-

Return on capital employed in the year 2011 is nil as company incurred loss. In the year 2008, the return on capital employed is 26.21%. It shows every 100 Rs. invested the return is 26.21 Rs. in the year 2010.

So it represent that there is a decrease in capital employed ratio. It also shows that the company has not used its capital efficiently.

5. Return on Shareholders Fund:-

Meaning

This ratio is used to judge the efficiency which the shareholder fund are employed in business. Shareholder fund includes share capital and reserves.

It indicates whether the return on shareholder fund is in relation to the risks that they undertake. It measures the return that the shareholder get as compared to there investments.

Formula

2011=

2009= = 23.33%

GRAPH :

Interpretation:-At the end of the year 2010, the

return on the shareholder fund is of is not found as there is loss incurred by the company.

At the end of the year 2010, the return on shareholder fund is of 23.33%. It shows that when the shareholder invests 100 Rs in a company the company gets in return Rs 23.33 for every 100 Rs investments.

So we can conclude that there is a decrease in ratio of current year against previous year. So it indicates that the company had not properly utilized there shareholder fund.

6.RETURN ON EQUITY CAPITAL:-

Meaning

This ratio shows what percentage of profit is earned on the capital invested by ordering shareholders.

This ratio is obtained by dividing net profit after tax and preference dividend.

Formula

2011=

For 2009=

= 19.13%

GRAPH :

Interpretation:-This ratio shows the return on

equity capital. At the year end 2010 return on equity capital cannot be found as there is loss in that year.

In the year 2009 the ratio is 19.13%. it interprets that for every 100 Rs. investment of shareholders they get return of 19.13 Rs.

As there is loss in year 2009-11 return on equity capital can not be found , it shows bad condition of the company.

7.EARNING PER SHARE:-

Meaning

This ratio measures the earning available to the share holder as compared to their investment done per share.

Formula

20

Graph

Interpretation:-

This shows that in the year 2009 the shareholders got Rs. 1.91 on their investment of Rs. 10 per share as Earning Per Share is Rs 1.91 in the year 2009-10.

In the year 2009-10, company incurred loss so Earning per Share cannot be found.

TURN OVER RATIO

8.DEBTORS TURNOVER RATIO:-

MeaningThis ratio shows the no of days

taken to collect the dues of credit sales. It calculates number of time the rotation of debtor’s cycle is done during a year. It shows the efficiency of collection policy of the enterprise.

Formula

X no. of days

20 365

=9.90 Days = 10 Days

20 365

25.11 Days = 25 Days

Graph

Interpretation :-

At the end of the year 2009, the debtors turnover ratio is 10 days.

At the end of the year 2008, the debtors turnover ratio is 25 days.

This ratio interprets that in 25 days the amount of the credit sale was collected in 2007-08. And the amount is collected in 10 days in the year 2008-09. The ratio shows a good position of the company as compared to the previous year.

9.CREDITORS TURNOVER RATIO:-

MeaningThe creditors velocity gives us the

number of days within which we make payment to our creditors for credit purchase.

Formula

X no. of days

20 365

=49.33 Days

= 49 Days

20 365

38.13 Days

= 38 Days

Graph

Interpretation:-

In the year 2010, the creditors was 38days.it shows that within 38days the company able to pay the dues of credit purchase.

In the year 2011,the creditors ratio was 49days .it shows that within 49days the company was able to pay the dues of credit purchase.

Thus finally we can say that the creditors turnover ratio has increased as compared to previous year.

10.STOCK TURNOVER RATIO:-

Meaning

The number of times the average stock is turned over during the year is known as stock turnover ratio. It is computed by dividing the cost of goods sold by the average stock in the business. Average stock is the average of opening stock and closing stock of the year. It shows the turnover of the stock done during the year. Higher the ratio found is better for the company.

Formula

20

6.53 Times

20

6.30Times

Graph:

Interpretation:-At the end of the year 2011 the

stock turnover was 6.53 times. It means that 6.53 times the stock has got turn over during the year 2009.

At the end of the year 2010 the stock turnover was 6.3 times. It means that 6.3 times the stock has got turn over during the year 2010.

Thus we can conduct that there is a increase in the stock turnover ratio as compared to previous year. So we can interpret that company is having good condition as compared to the year 2007-08.

11. FIXED ASSETS TURNOVER RATIO:-

Meaning

To ascertain the efficiency and profitability of Business, the total fixed assets are compared to sales. The more the sales in relation to the amount invested in fixed assets, the more efficient is the use of Fixed Assets.

Formula

2009=

= 3.84 Times

2011=

= 4.03 Times

GRAPH :

Interpretation:-At the end of the year 2011, the

FIXED ASSETS TURNOVER RATIO is 3.84 times. It interprets that fixed assets had got turnover 3.84 times in this year.

At the end of the year 2010, FIXED ASSETS TURNOVER RATIO is of 4.03 times. This interprets that the fixed assets had got turnover 4.03 times in the year 201022.

This ratio decrease in the year 2011 as compared to the last year. So this situation shows that company’s position is not well so far as the last year is concerned. By observing fixed asset turnover ratio in 2009 , ratio decrease.

12.TOTAL ASSETS TURNOVER RATIO:-

Meaning

The amount invested in business is invested in all assets jointly and sales are affected through them to earn profits. So in order to find out relation between total assets and sales this ratio is found out.

Formula

2011=

= 2.81 Times

2009=

= 2.64 Times

GRAPH :

Interpretation:-At the end of the year 2011, the

TOTAL ASSETS TURNOVER RATIO is 2.81 times. It interprets that total assets had got turnover 2.81 times in this year.

At the end of the year 2009, TOTAL ASSETS TURNOVER RATIO is of 2.64 times. This interprets that the total assets had got turnover 2.64 times in the year 2007-08.

So in the year 2009 the total assets turnover ratio is high as compared to the previous year.

13.Current Ratio:-

Meaning

This ratio shows the proportion of current assets to the current liability. It is also known as working capital ratio, which the capacity of the company to pay off the liability which are due within twelve months period as compared to its current assets. It shows whether the business will be able to meet its current liability as an when they mature.

Formula

2011

= 0.89 :1

= 1.05 : 1

GRAPH :

Interpretation:-Company’s current ratio of the

year 2009 is 1.05:1 .it shows the efficiency to pay out their current liabilities against their current assets.

The current ratio of the company against every Rs.1 in the year 2009-10 is 1.05:1 and in year 2010-11 is 0.89:1. Here the ratio of both year are less than the standard ratio 2:1. So that firm should take corrective step for it .

14.LIQUID RATIO:-

Meaning

It means the liquid position of the company to pay off its debt within very short period as compared to its liquid liabilities. It gives the better idea of liquid position of the company.

Formula

2011

=0.43:1

2009=

= 0.60 : 1

GRAPH :

Interpretation:-This ratio shows the liquid position

of the company. In the year 2011, the liquid ratio was 0.43:1. It shows that against the liability if 1Rs there is 0.43 Rs assets to pay off the liability.

In the year 2011, the liquid ratio was 0.60:1. It shows that against the liability of 1 Rs there are 0.60 Rs assets to pay off the liability.

Thus we can conclude that there is a decrease in liquid ratio as compared to that of the

previous year. So it is advisable for the company to take corrective steps to improve the liquid position of the company.

DEBT EQUITY PROPORTION15.DEBT EQUITY RATIO:-

MeaningThis Ratio is only other form of

Proprietors Ratio & Establishing relationship between outside long-term liabilities and Owner’s fund. It shows the proportion of long-term external liabilities and owner’s fund. It shows the proportion of long-term external liabilities and equities.

Formula

Debt Equity Ratio

2011

= 1.28:1

2009== 0.90:1

GRAPH :

Interpretation:-Debt equity ratio in the year 2009

is 0.90:1. Means the owner has invested of Rs. 1 in the business against that 0.90 is borrowed from outside creditors.

For the year 2011, debt equity ratio is 1.28:1. In means when owner has invested of Rs. 1 in the business against that 1.28 is borrowed from outside creditors.

finally we can conclude that the debt equity ratio had increased to that of previous year.

16. PROPERITORY RATIO :

Meaning

The ratio shows the proportion of proprietor fund to the total assets employed in the business. The proprietor’s funds are shareholder equity capital and reserve and surplus.

Formula

x 100

2011 x 100

= 43.92%

2009= x 100

= 52.63%

GRAPH :

Interpretation:-At the end of the year 2009, the

proprietary ratio was 43.92%. It shows that investment in total assets of 100 Rs the investment made by the owner is of 43.92 Rs.

At the end of the year 2010, the proprietary ratio was 52.63%. It shows that investment in total assets of 100 Rs the investment made by the owner is of 52.63 Rs.

So we can conclude that the investment made by the owner decrease in the year 2009 as compared to the previous year.

17. ACID TEST RATIO:-

Meaning

Quick Ratio helps the company to know about the Quick Assets & Quick Liabilities of the company. Quick Assets include Current Assets without Stock, Debtors and Bills Receivable. It is also known as Acid Test Ratio.

Formula

2011

=0.05:1

2009=

= 0.08:1

GRAPH :

Interpretation:-In the year 2009, the Quick ratio

was 0.08:1. It shows that against the liability if 1Rs there is 0.08 Rs assets to pay off the liability.

In the year 2011, the Quick ratio was O.O5:1. It shows that against the liability of 1 Rs there is 0.05 Rs assets to pay off the liability.

It shows that company has not sufficient quick assets to pay its quick liabilities.