FINANCIAL STATEMENT ANALYSIS - YELURI FORMULATIONS PVT.LTD.doc

CHAPTER-I

INTRODUCTION

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INTRODUCTION:

Financial statements are prepared primarily for decision making. They play a dominant

role in setting the framework of managerial decisions. But the information provided in

the financial statements is not an end in itself as no meaningful conclusions can be drawn

from these statements alone. However, the information provided in the financial

statements is of immense use in making decisions through analysis and interpretation of

financial statements. Financial analysis ‘the process of identifying the financial strengths

and weaknesses of the firm by properly establishing relationship between the items of the

balance sheet and the profit and loss account’ There are various methods or techniques

used in analyzing financial statements financial statements are an important source of

information for evaluating the performance and prospects of firm, if properly analyzed

and interpreted these statements can provide valuable insights into firm’s performance.

Analysis of financial statements is if interest to lenders, investors, security analyst,

manager and others.

Financial statements analysis may be done for a variety of purposes, which may range

from simple analysis of short term liquidity position of the form to a comprehensive

assessment of the strengths and weakness of the firm in various areas, it is helpful in

assessing corporate excellence, judging credit worthiness forecasting bond rating,

evaluating intrinsic value of equity shares predicting bankruptcy and assessing market

risk.

Financial statements:

Managers, shareholders, creditors and other interested groups seek answer to the

following question about firm:

What is the financial position of the firm at a given point of time?

How has the firm performed financially over a given period of time?

What have been the sources an d uses of cash over a given period?

To answer these questions, accountant prepares two principle statements, the Balance

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sheet and the profit and loss account, ancillary statement, the Cash Flow statement.

Analysis of financial statement

Analysis refers to the process of critical examination of the financial information

contained in the financial statement in order to understand and make decisions regarding

the operations of the firm. The analysis is basically study of the relationship among

various financial facts and figure as given in a set of financial statements. Complex figure

as given in this statements are dissected\broken up into simple and variable element and

significant relationship are established between the elements of the same statements are

different financial statements.

This process of dis section, establishing and identifying the financial weaknesses and

strengths of the firm. It is indicative of two aspects of a firm i.e. the profitability and the

financial position and it are what are known as the objectives of the analysis.

Procedure of Financial Statements Analysis

Broadly speaking there are three steps involved in the analysis of financial statements.

There are:

Selection,

Classification,

Interpretation.

The first step involves selection of information (data). The second step involved is the

methodical classification of the data and the third step includes drawing of internees and

conclusions.

The following procedure is adopted for the analysis and Interpretation of financial

statements:

The analyst should acquaint himself with the principles and postulates of

accounting.

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The extent of analysis should be determined so that the sphere of work may be

decided.

The financial data given in the statements should be re-organized and re-arranged.

A relationship is established among financial statements with the help of tools and

techniques of analysis such as ratios, trends, common size, funds flow etc.

The information is interpreted in a simple and understandable way. The

significance and utility of financial data is explained for helping decision-taking.

The conclusions drawn from interpretation are presented to the management in

the form of reports.

Objectives of the study:

To analysis the financial statements and present its financial positions.

To assess and evaluate the performance of the company.

To determine the efficiency of operations as reflected in the financial statements.

To offer appropriate suggestions for better performance of the company.

Need and importance of the study:

Financial analyst analyses the financial statements with various tools of analysis

before commanding upon the financial health of the firm.

Essential to bring out the history of Yeluri formulations Pvt.Ltd

Significance and meaning of the financial statements.

Scope of the study:

Analysis of financial statement can be undertaken by different persons and for different

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purposes, therefore, the scope of the AFS may be varying from one situation to another.

However, the following are some the techniques of the AFS:

Comparative financial statements.

Common-size financial statements.

Trend percentage analysis.

Statement of changes in financial position.

Cost-volume-profit relations, and

Ratio analysis and others.

Research methodology:

Research design

This is a systematic way to solve the research problem and it is important component for

the study without which researches may not be able to obtain the format. A research

design is the arrangement of conditions for collection and analysis of data in a manager

that aims to combine for collection and analysis of data relevance to the research purpose

with economy in procedure.

Meaning of research design

The formidable problem that follows the task of defining the research problem is the

preparation of design of the research project, popularly known as the research design,

decision regarding what, where, when, how much, by what means concerning an inquiry

of a research study constitute a research design. A research design is the arrangement of

conditions for collection and analysis of data in a manager that aims to combine for

collection and analysis of data relevance to the research purpose with economy in

procedure.

Sources of data

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The process of research work done the present project work is “financial statement

analysis” in this project the methodology adopted is the two steps.

Data collection

Data analysis

Data collection :-

Data means the information regarding the topic so researched this can be done using two

sources.

Primary data

Secondary data

Primary data:

The Primary data are those information’s, which are collected afresh and for the first

time, and thus happen to be original in character.

Secondary Data:

The Secondary data are those which have already been collected by some other

agency and which have already been processed. The sources of Secondary data are

Annual Reports, browsing Internet, through magazines.

It includes data gathered from the annual reports of Yeluri formulations Pvt.Ltd

Articles are collected from official website of Yeluri formulations Pvt.Ltd.

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Data analysis :-

Data analysis is the time series analysis where tables and graphs have been used to

analysis the data the following tools has been applied.

Comparative financial statements.

Common-size financial statements.

Trend percentage analysis.

Statement of changes in financial position.

Cost-volume-profit relations, and

Ratio analysis and others.

Limitation of the study:

It is only a study of interim reports.

Financial analysis is based upon only monetary information and non monetary

factors are ignored.

Different people may interpret the same analysis in different ways.

It does not consider the changes in prices level.

Changes in accounting procedure by firm may often make financial analysis

misleading.

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CHAPTER-II

REVIEW OF LITERATURE

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Financial Statement Analysis

Introduction:

The term ‘financial analysis also known as analysis and interpretation of financial

statements’ , refers to the process of determining financial strength and weaknesses of the

firm by establishing strategic relationship between the items of the balance sheet , profit

and loss account and other operative data.

“Analyzing financial statements” by Metcalf and Titard

“Financial analysis is a process of evaluating the relationship between component parts of

a financial statement to obtain a better understanding of a firms position and

performance” by Myers

The purpose of financial analysis is to diagnose the information contained in financial

statements so as to Jude the profitability and financial soundness of the firm. Just like a

doctor examines his patient by recording his body temperature, blood pressure, etc.

Before making his conclusion regarding the illness and before giving his treatment, a

financial analyst analysis the financial statements with various tools of analysis before

commenting upon the financial health or weaknesses of an enterprise.

The analysis and interpretation of financial statements is essential to bring out the

mystery behind the figures in financial statements. Financial statements analysis is an

attempt to determine the significance and meaning of the financial statement data so that

forecast may be made of the future earnings, ability to pay interest and debt maturities

(both current and long term) and profitability of a sound divided policy.

OBJECTIVES OF FINANCIAL STATEMENT

Broadly the objective of the Analysis of Financial statement is to understand the

information contained in the financial statement with a view to the weakness and

strengths of the firm and to make forecast about the future prospects of the firm and their

by enabling the financial analyst to take different decision regarding the operation of the

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firm. The objectives of the analysis can be identified as:

To assess the present profitability and operating efficiency of the firm as a whole

as well as for its different departments.

To find out the relative importance of different components of the financial

position of the firm.

To identify the reasons for change in the profitability\financial position of the

firm.

To assess the short-term as well as the long-term liquidity position of the firm.

To examine the solvency of the firm.

To find out the ability of the firm to meet its current obligations.

Significance of Financial Analysis

Analysis of financial statement is carried out to measure the enterprise’s liquidity,

profitability, solvency and other indicators to assess its operating efficiency, financial

position and performance. Financial Analysis serves the following purpose.

To know the operational efficiency of the business : The financial analysis

enables the management to find out the overall efficiency of the firm.

Department-wise efficiency can also be judged from the available data. This will

enable the management to locate weak spots of the business and take necessary

remedial action.

Helpful in measuring the solvency of the firm : The firm must know its

financial soundness. It should satisfy itself that its current resources are sufficient

to meet its current liabilities. This is possible through the calculations of liquid

ratios. On the other hand, the long term financial position can be measured by

calculated debt equity, proprietary and fixed assets ratios. Thus, the financial

analysis helps the decision makers in taking appropriate decisions for

strengthening the short-term as well as long-term solvency of the firm.

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Comparison of past and present results : Financial statement of the previous

years can be compared and the trend regarding various expenses, purchases, sales

gross profit can be ascertained. The cost of goods sold, values of assets and

liabilities can be compared and the future prospects of the business can be

indicated.

Help in measuring the profitability : Financial statements show the gross profit,

net profit, and other expenses. The relationship of these items can be established

with sales by calculating operating ratios. This type of analysis helps the

managers in taking certain decisions for improving the profitability or reducing

the losses of the firm.

Inter-firm comparison : The financial analysis makes easy to inter-firm

comparison. Various financial characteristics like profitability, liquidity, solvency

of different firms can be compared. This comparison can also be made for various

time periods.

Helps in judging the solvency of the undertaking : creditors are always

interested in knowing the solvency i.e, the capacity of the business to repay their

loans. Through

Financial statement it is possible to known:

Whether current assets are sufficient to meet current liabilities.

Proportion of liquid assets to current assets.

Futures prospects of the business.

Whether debentures and other loans are secured or not.

Managerial efficiency of the company.

Bankruptcy and failure : Financial statement analysis is a significant tool in

predicting the bankruptcy and failure of the business enterprises. Financial

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statement analysis accomplishes this through the evaluation of solvency position.

Helps in forecasting : The financial analysis will help in assessing future

development by making forecasts and preparing budgets. Capital budgets are

prepared after taking into account the profitability of various alternative

proposals. The trend shown by financial analysis will pave way for the future.

Types of financial analysis:-

Financial analysis into different categories depending upon

The material used and

The method of operation followed in the analysis or the modus operandi of

analysis

Types of financial analysis

On the basis of material used on the basis of modus operandi

External Internal Horizontal Vertical

Analysis Analysis Analysis Analysis

On the basis of material used :

According to material used, financial analysis can be of two types

External analysis

Internal analysis

External analysis :-

This analysis is done by outsiders who do not have access to the detailed internal

outsiders include investors, potential investors , Creditors, Potential Creditors,

Government Agencies , Credit agencies and General Public for financial analysis,

these external parties to the firm depend almost entirely on the published financial

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statements.

Internal analysis :-

The analysis conducted by persons who have access to the internal accounting records

of a business firm is known as internal analysis.

On the basis of modus operandi :

According to the modus operandi financial analysis can also be of two types

Horizontal analysis

Vertical analysis

Horizontal analysis :-

Horizontal analysis refers to the comparison of financial data of a company for

several years. The figures for this type of analysis are presented horizontally over a

number of columns. The figures of the various years are compared with standard or

base year a base year is year chosen as beginning point. This type of analysis is also

called ‘dynamic analysis’ as it is based on the data from year to year rather than on

data of any one year. The horizontal analysis makes it possible to focus attention on

items that have changed significantly during the period under view

Vertical analysis :-

Vertical analysis refers to the study of relationship of the various items in the financial

statements of one accounting period in this types of analysis the figures from financial

statement of a year are compared with a base selected from the same years statement.

Parties interested in financial analysis:

Financial Executives :-

The first party interested in the financial analysis in the financial department of the

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business concern who have a deep insight into the financial condition of the enterprise

and view of the past performance, which help in future decisions making.

Management :-

The management of the concern is also interested in the analysis of the statements

because it helps them in reaching conclusion regarding the overall operation of the

business. The management is interested in every aspects of the financial analysis it is

there overall responsibility to see that the resources of the firm are used effectively and

efficiently and the firm’s financial position is sound. As such, return on analysis is very

important for them.

Creditors :-

Creditors also evaluate the financial statements and on the basis of these financial

statements they come about the credit worthiness of the business enterprise and chosen to

extend, maintain of restrict credit. Creditors will be interested to give credit for those

business enterprises having sound financial position and having capable of being

repayments of their credit. Some of the aspects of enterprise operations that are of

interested of the creditors are liquidity of funds, soundness of the financial structure,

profitability of the operations, effectiveness of working capital management etc. The

bankers and trade creditors of a business enterprise are interested in its cash generation

and credit worthiness. They want to assess whether the enterprise will be as interested

payments due as per agreed schedules. The get all this information from the analysis of

balance sheet and income statement of the company.

Investors :-

Investors present as well as prospective, are interested in the business in the

measurements of earning capital of securities. Every investor has the tendency to get fair

return on his or her investment. Investors have been increased concerned with the cash

generation capability of an enterprise primarily in terms of the flexibility availability to

such enterprises to acquire other business and new assets on an advantageous basis. For

this purpose each cash flow analysis and funds flow analysis are very useful.

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Government :-

The financial statements are used to assess the tax liability of the business enterprise. The

government studies economic situation of the country from these statements enable the

government to find out whether business is following various rules and regulations or not.

Bankers : -

The banker is interested to see that the loan amount is secure and the customer is also

able to take the interest regularly. The bankers will analysis the balance sheet to

determine financial strength of the concern and profit and loss account will also be

studied to find out earning position.

The information provided by the analysis and interpretation of various financial

statements is important and useful to those groups also that are interested in working of

the business due to one or other motive.

Procedures for financial analysis:

The following is the procedure to be followed by the interested parties in analyzing the

financial statements.

Determination of nature and extent of analysis: First of all, the depth, object

and extent of analysis is to be determined by the financial analyst. The nature of

analysis will differ depending on the purpose of the analysis. For example, trade

creditors and bankers are interested in knowing whether the firm can pay back their

debt in short period. Their analyses will, therefore, confidence to the evaluation of the

firm’s liquidity position. The suppliers of interested in knowing its ability to generate

cash to be able to pay interest and return their claims. Similarly, investors, who have

invested their money in long-term debt, on the other hand, are interested in the firms

profitability over time. They are the firm’s shares, are most concerned about the firms

earnings. As such, they concentrate on the analysis of the firms financial position to

the extent it influences the firms earnings ability. Finally, management of the firm

would be interest red in every aspect of the financial analysis.

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Vertical of the financial statements: Before analyzing and preparing any

statement or composing financial ratios, it is necessary for the analyst to go through

the various financial statements of the firm.

Collection of necessary statements: The analyst should collect other useful

information from the management useful for analysis. This includes any other

information not being revealed from the published financial statements.

Rearrangement of financial data: Before making actual analysis and

interpretation, the analyst must rearrange the data provided by these statements in

useful manner. The approximation of figures, re-classification of consolidation of

items etc., is done in this step.

Methods of analysis: Now the financial analyst may use one or multiple methods

of financial analysis. The methods of financial analysis are: comparative statements,

common size statements, trend analysis, ratio analysis, funds flow statements, cash

flow statements and cost volume profit analysis (CVP analysis).

Interpretation and presentation: After analyzing the statements the

interpretation is to be made. The interference drawn from the analysis are presented in

the scope of reports to the management.

Limitations of financial analysis :

Historical data : Analysis of the financial statements indicates about the

performance of the business in the processing period or periods. It does not

indicate the present position of the business. Financial statements are prepared on

historical facts and do not throw light on the current and present position of the

business.

Lack of standard terminology : Accounting is not an exact science. It does not

universally accepted terminology. Different meanings are given to a particular

term. There are different methods of providing depreciation. Interest may be

charged on different rates. In this way, there is sufficient possibility of

manipulation and the financial statements have to suffer. As a consequence

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financial analysis also proves to be defective. However, in the recent past the

international accounting board is taking interest and taking measures for

standardizing the accounting terminology as well as bringing standards for being

uniformity in accounting system.

Affects of prices level changes : The results shown by financial statements may

be misleading, if price level changes have not been accounted for. The ratio may

improve with the increase in price, where as actual efficiency may not improve.

Ratios of the two years will not be meaningful for comparison, if the prices of

commodities are different. Change in price affects cost of production, sales and

value of assets and as a consequent comparability of ratios also suffers.

Non-consideration qualitative aspect : financial analysis does not measure the

qualitative aspects of the business it does not show the skill, technical know how

and the efficiency of its employees and managers. It is the quantitative

measurement of the performance. It means that analysis of financial statements

measures only one sided performance of the business. It completely ignores

human resources.

Misleading results : Results shown by financial analysis may be misleading in the

absence of absolute date. For example, the analysis of one firm reveals that the

increase in profits from Rs.20,000 to Rs.80,000 shows that the profit has

increased by four times. In case of another firm the analysis reveals that the profit

of this firm als increased from Rs.100 crores toRs.400 crores, showing four fold

increases. But this analysis ignored the size of the firms. As such, the results may

mislead.

Methods of financial analysis:-

The following methods of analysis are generally used:-

Comparative Statements.

Trend Analysis.

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Common-Size Statements.

Funds flow Analysis.

Cash Analysis

Ratio Analysis

Cost-volume-Profit Analysis

COMPARATIVE STATEMENTS:-

The comparative financial statements are statements of the financial position at

different periods of time .the elements of financial position are show in a comparative

Statement provides an idea of financial position at two or more periods. Generally two

financial statements (balance sheet and income statement) are prepared in comparative

form for financial analysis.

THE COMPARATIVE STATEMENT MAY SHOW:-

Absolute figures (rupee amounts)

Changes in absolute figures i.e. increase or decrease in absolute figures.

Absolute data in terms of percentages.

Increase or decrease in terms of percentages.

THE TWO COMPARATIVE STATEMENTS ARE:-

Comparative balance sheet, and

Income statement.

COMPARATIVE BALANCE SHEET:-

Comparative balance sheet as on two or more different dates can be used for comparing

assets and liabilities and finding out any increase or decrease on those items. Thus, while

in a single balance sheet the emphasis is on present position, it is on change in the

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comparative balance sheet. Such a balance sheet is very useful in studying the trends in

an enterprise.

Comparative financial statements can be prepared for more than 2 periods or on more

than two dates. However, it becomes very cumbersome to study the trend with more than

2 periods data. Trend percentages are more useful in such cases.

Acc to American institute of certified public accountant “the presentation of comparative

financial statements in annual and other reports enhances the usefulness of such reports

and brings out more clearly the nature and trend of current changes affecting the

enterprise. Such presentation emphasis the fact that statements for series of periods are

far more significant than those of a single period and that the accounts of 1 period are but

an installment of what is essentially a continuous history. In any one year, it is ordinary

desired that the balance sheet, the income statement and surplus statement be give for 1

or more proceeding year as well as for the current year”.

The comparative balance sheet analysis is the study of the trend of the same items, group

of items and computed items in two or more balance sheets of the same business

enterprise on different dates. The change in periodic balance sheet items reflect the

conduct of a business the change can be observed by comparison of the balance sheet at

the beginning and at the end of a period and these changes can help in forming an opinion

about the progress of an enterprise.

Guide lines for interpretation of comparative balance sheet:-

While interpreting comparative balance sheet the interpreter is expected to study the

following aspects:-

Current financial position and liquidity position

Long-term financial position

Profitability of the concern.

COMMON SIZE STATEMENT:-

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The common-size statements, balance sheet and income statement are show in analytical

percentages. The figures are shown as percentages of total assets, total liabilities and total

sales. The total assets are taken as 100 and different assets are expressed as a percentage

of the total similarly, various liabilities are taken as a part of total liabilities.

COMMON SIZE BALANCE SHEET:-

A statement in which balance sheet items are expressed as the ratio of each asset to total

assets and the ratio of each liability is expressed as a ratio of total liabilities is called

common size balance. The common size balance sheet can be used to compare companies

of differing size. The comparison of figures in different periods is not useful because total

figures may be affected by a number of factors. It is not possible to establish standard

norms for various assets. The trends of figures from year to year may not be studied and

even they may not give proper results.

Common size balance sheet is prepared by stating the total assets as 100 and reducing

individual assets into % of the total. Likewise, individual liability items are expressed as

percentage of the total liabilities. Thus, the common size balance sheet percentage shows

the relation the of each asset item to total assets and of each liability and owner’s equity.

A closer scrutiny of the common size balance sheet discloses that this statement focuses

on two important aspects.

Distribution pattern of liabilities as between current liabilities, long-term

liabilities and equity capital.

Distribution pattern of assets as between current assets, fixed assets and others.

The common size balance sheet analysis can, of course, be carried further and extended

to the study of what portion of a sub-group, rather than the total, an item is. Thus, in

assessing the liquidity of current assets, it may be of interest to know not only what

proportion of total assets are inventories, but also what proportion of current assets is

represented by this asset. A study of common size statement of the company with that of

a competitive company or the industry would show whether or not the company is the

managing assets efficiently. An analysis of the pattern of distribution of liability reveals

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the debt--equity position of the company too large a % of liabilities. And a relatively low

margin of safety for creditors.

While common size statements do not focus light on the relative sizes of individual

companies which are compared, the problem of actual comparability between them is a

matter to be resolved by the analyst judgment. Comparison of common size statement of

single enterprise over the year’s valuable in that reveals the changing proportions of

components within groups of assets and liabilities. However, care must exercise in

interpreting such changes and the trend which discloses.

Trend analysis :

Trend analysis depicts behavior of the ratios over a period of time and the trends in the

operation of the enterprise. The trend figure are index figures giving a bird’s eye view of

the comparative data by presenting it’s over a period of time. Thus is horizontal analysis

of financial statement, often called as pyramid method of ratio analysis- a guide to yearly

changes. Under this form of analysis, generally financial ratios are studied for a specified

number if years. It is a dynamic analysis depicting the changes over a stated period. Their

method of analysis is one of ‘direction’.

TREND ANALYSIS OF BALANCE SHEET :-

Trend analysis is Very important tool of horizontal financial analysis.

This analysis enables to known the change in the financial function and operating

efficiency in between the time period chosen.

By studding the trend analysis of each item we can known the direction of changes and

based upon the direction of changes, the options can be changed.

Trend = Absolute Value of item in the statement understudy *100

Absolute Value of same item in the base statement

Fund flow statements

Cash flow analysis is a valuable aid to the financial executive and creditors for evaluating

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the uses of funds by the firm and in determining how these uses were financed. A cash

flow statement indicates where funds came from and where it was used during the period

under review. They are important tools for communication and very helpful for financial

executives in planning the intermediate and long-term financing of the firm.

RATIO ANALYSIS

INTRODUCTION :

Ratio analysis is one of the techniques of financial analysis where ratios are used as a

yardstick for evaluating the financial condition and performance of a firm. Analysis and

interpretation of various accounting ratios gives skilled and experienced analysis, a better

understanding of the financial condition and performance of the firm than what he could

have obtained only through a perusal of financial statements.

MEANING OF RATIOS:

Ratios are relationships expressed in mathematical terms between figures which are

connected with each other in some manner. Obviously, no purpose will be served by

comparing two sets of figures which are not at all connected with each other. Moreover,

absolute figures are also unfit for comparison.

There are various techniques or models for analyzing information contained in the

financial statements viz. Comparative statements, common size statements, trend

percentages, funds flow analysis, cash flow analysis and ratio analysis. Financial

analysis is undertaken by the management of the firm or by parties outside to it viz.

owners, creditors, investors, etc.

Ratio analysis is most widely used and powerful tool or technique of financial analysis.

The term ratio refers to the numerical quantitative relationship between two variables. It

shows arithmetical relationship between two figures, which can be expressed in three

ways.

Percentage

Fraction

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Proportion

A study of the trend of strategic ratios helps the management in planning, forecasting and

decision – making. It helps in identifying specific work areas. In short, though the

technique of ratio analysis, the firm’s solvency, efficiency and profitability can be

assessed.

IMPORTANCE OF RATIO ANALYSIS

Ratio analysis helps in simplifying the financial statement for easy understanding.

It helps in drawing out meaningful conclusion from the information provided in

the financial statements which is useful for decision making and framing sound

policies for business in future.

It helps in assessing the financial strength and weakness of the firm and this

enhances the value of the financial statements.

Comparative study of the ratios between the competing firms helps to know the

efficiency of the firm.

It helps the investor to assess the financial position of the concern in which he is

going to invest.

Ratio analysis helps the employees interested in wage increase and fringe benefits

that are related the volume of profits earned by the concern.

Ratio analysis provides data for inter-firm comparison. Ratios highlight the

factors associated with successful and unsuccessful firms. They also reveal strong

firms and weak firms, over – valued and under – valued firms.

Ratio analysis helps in planning and forecasting. Over a period of time a firm or

industry develops certain norms that may include future success or failure. If

relationship changes in firm’s data over different time periods, the ratios may

provide clues on trends and future problems.

Ratio analysis also makes possible comparison of the performance of the different

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divisions of the firm. The ratios are helpful in deciding about their efficiency or

otherwise in the past and likely performance in the future.

Thus, “ratios can assist management in its basic function of forecasting, planning,

coordination, control and communication”.

LIMITATIONS OF RATIO ANALYSIS

Ratios are of limited use and thus single ratio may not be useful. Better

interpretation is possible with the calculation of number of ratios, which may lead

to confusion to the analyst in making any meaningful conclusion.

Ratios are calculated on the basis of past results, which may not necessarily true

indicators of the future, if the business policies are constantly changing.

Change in accounting procedure may be misleading for ratio analysis. For

example, change in inventory valuation methods from LIFO to FIFO may also

influence in the analysis.

Ratio analysis considers only quantitative aspects, but not qualitative factors.

Ratio analysis may give misleading results If the effects of price level changes are

not considered.

Ratio analysis when interpreted by different people in different way may

encounter with the personal bias or prejudice of the analyst.

Ratios are classified as:

liquidity ratios

leverage ratios

coverage ratios

activity ratios (or) turnover ratios

profitability ratios

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LIQUIDITY RATIOS:

A liquidity ratio is also known as short-term solvency. These ratios are used to measure

the firm’s ability to meet short – term obligations. They compare short-term obligation to

short term (or current) resources available to meet these obligations. From these ratios,

much insight can be obtained into the present cash solvency of the firm and firm’s ability

to remain solvent in the event of adversity. The creditors of the firm are primarily

interested in the short – term solvency of the firm. A firm’s liquidity should be neither

too high nor too low but adequate.

Low liquidity implies the firm’s inability to meet its maturing obligations. This will

result in bad credit rating, loss of creditor’s confidence or even technical insolvency,

ultimately leading to the closure of the firm.

A very high liquidity position is also bad. It means that the firm’s current assets are too

high in proportion to maturing obligations. Idle assets earn nothing to the firm. The

firm’s funds will be unnecessarily locked up in current assets, which if, released can be

used to generate profits to the firm.

The ratios, which measure, and indicate the extent of a firm’s liquidity, are known as

liquidity ratios or short-term solvency ratios. Commonly used liquidity ratios include.

current ratio (or) working capital ratio

quick ratio (or) acid test ratio

cash position ratio (or) super stock quick ratio

LEVERAGE RATIO:

These ratios are also known as capital structure ratios or solvency ratios or capital gearing

ratios. The long-term creditors are more concerned with the firm’s long-term financial

position. They judge the financial soundness of the firm in the firm in term of the ability

to pay interest promptly as well as making repayment of the principal. The long-term

solvency of the firm can be examined with the help of leverage ratios. They measure the

funds supplied by owners as compared with the financial provided only a small

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proportion of total financing, the risks of the business are borne mainly by the creditors.

Firm with low leverage have less risk of loss, but they also have lower expected returns.

Conversely, firm with high leverage ratios have the risk of large losses but also have a

chance of earning huge profits. Therefore, before deciding whether a firm should have

debt, it must balance higher expected returns against increased risks. The most commonly

examined leverage: ratios are

debt equity ratio

proprietor ratio

debt to capital ratio

gross fixed assets to shareholders funds

fixed assets ratio

COVERAGE RATIOS:

These ratios indicate the extent to which the interest of the persons entitled to get a fixed

return (i.e. interest or dividend) or a scheduled repayment as per agreed terms is safe. The

higher the cover the better it is. Under this category the following ratios are calculated.

fixed interest coverage ratio

fixed dividend coverage ratio

debt service coverage ratio

ACTIVITY RATIO (OR) TURNOVER RATIO:

The finances obtained by the firm from its owners and creditors will be inverted in assets,

which the firm uses to generate sales and profits. The amount of sales generated and the

profit earned depend on the effective and efficient management of these assets by the

firm. Activity ratios measure the efficiency with which the firm manages and uses its

assets. That is why activity ratios are known as efficiency ratios, because these ratios are

converted or turned over in to sales.

26

Thus the turnover or activity ratios measure the relationship between sales on one side

and various assets on the other side. Higher the turnover ratio, the better the profitability

and use of capital.

Many activity ratios can be calculated to measure the efficiency of assets utilization.

Following are some of the important activity ratios.

total assets turnover ratio

capital employed turnover ratio

fixed assets turnover ratio

current assets turnover ratio

working capital turnover ratio

stock turnover ratio

debtors turnover ratio

creditors turnover ratio

PROFITABILITY RATIOS:

Profitability is the ability to make profits. Every firm should earn adequate profits in

order to survive in the immediate present and grow in future. In fact, profit is what makes

the business run. Profitability is the net results of large number of policies and decisions.

Profitability ratios give final answers about how efficiency the firm is managed. The

profitability ratio relates profits earned by a firm by its parameters like sales, capital

employed and net worth. But while making ratio analysis relating to profits, it should be

remembered that there are different concepts of profit such as concepts of profit such as

contribution, gross profits, net profits, EBIT, operating profits, profits before depreciation

and before tax etc. Profitability ratios are important for a concern. These ratios are

calculated to enlighten the end results of business activities, which is the sole criterion of

the overall efficiency of a business concern. The following are the important profitability

ratio, which are based on.

27

Sales

Investment

gross profit ratio

operating ratio

operating profit ratio

net profit ratio

return on capital employed

return on shareholder’s equity

return on total assets

earnings per share

dividend payout ratio

28

CHAPTER-III

COMPANY & INDUSTRY PROFILE

29

30

31

Yeluri formulations Pvt.Ltd, one of the leading formulations manufactures and exporter

based at Hyderabad, bulk drug capital of India. Yeluri is having two manufacturing units

Both situated at Hyderabad. Both the units are equipped with ulta modern state-of-the-art

Technology and conform to WHO GMP. At Yeluri, stringent quality assurance procedure

for our entire product range as made us synonymous with quality in total. This is

reflected in our commitment in meeting the challenges of the International and domestic

Market for formulations.

Yeluri’s core competence stands out in formulating many new drugs which makes us to

Build good trust among our loyal associated included orchid health care, aurobindo

pharma, hetero drugs etc. and thus it has become one of the leading contract manufacturer

from Hyderabad. Yeluri leverages its strength in formulating new drugs like aztreonam,

cefepime, meropenam etc. We are proud to be one of the leading cephalosporin

manufacturer form India.

Our Strengths

WHO-GMP manufacturing facilities

Well versed in handling contract manufacturing projects for large companies.

Commitment to quality and excellence.

Dedicated and committed team of professionals.

Experts in manufacturing, Q.C and Q.A.

Large capacities to produce bulk quantities.

Innovative and sophisticated packaging facilities.

32

INFRASTRUCTURE:

The plant has built up area of 35,000 sft. In one and a half acre premises It is equipped

with sophisticated machinery for the production of wide range of injectables, and the

complete plant has got the latest version of clean room facility backed up with

decentralized clean air-conditioning and ventilation systems to the respective sections.

Also equipped with complete automatic lines for powder injectables, Liquid vials &

Ampoules in the latest version of clean room facility as per WHO GMP Standards.

MANUFACTURINGFACILITIES:

Following are the sophisticated manufacturing facilities the plant has acquired:

1. Autoline sterile dry powder filling machine(120 Vials per minute)

2. Autoline for small volume parentarels (80 Vials per minute)

3. Automatic Ampoule filling and sealing machines..

4. Automatic Labeling Machine with batch printing device

5. The activity of the autoline filling stations are carried out under the laminar air

Flow (LAF) units.

6. Individual production line has got its dedicated PUF paneled doubled skinned air

handling units fitted with terminal HEPA filter down to 0.3 microns levels to

ensure perfection.

Tablets/capsules&Liquids:

Yeluri is also having manufacturing facilities for tablets, capsules and liquids also. These

facilities are under M/s. Supra Pharmaceuticals Pvt Ltd, sister concern of Yeluri. These

facilities are having both Beta-lactam and Non Beta-Lactam sections.

CENTRALISED AIR VENTILATION & AIR CONDITIOINING SYSTEM:

The products of HEMAIR, Switzerland, manufactured in India by using their imported

plant and machinery is established in the dedicated service floor on and above the clean

rooms having dedicated section wise air handling units with individual condensing units

for air conditioning and ventilation systems which contains 20 micron, 10 micron and

micron pre filters and filtered air enters into ducting and 0.3 micron HEPA terminal

33

filters, S.S. grills there by enter into the clean rooms, which ensures adequate air changes

and positive pressure and will have control on cross contamination.

Quality

We believe that quality is the foremost important aspect and a parameter of success. Our

Q.A and Q.C departments are the backbone of our company which makes us to withstand

34

a long relationship with many Indian international companies in formulating their new

drugs. Internal Audits will be done at regular intervals which includes people from all the

departments including high level management.

Our Quality Objectives:

1. To manufacture the safest formulation in different dosage forms.

2. To keep updating our manufacturing facilities according to International

Standards.

3. To satisfy our customer needs by timely deliver and with zero defect products.

4. To ensure cost effective operations in every stage of formulating a product and

thus achieving quality and productivity.

5. To enhance productivity through improved working methods and by motivating

the employees.

6. To provide good service to our customers.

Quality Assurance:

1. Monitoring good manufacturing practices at each and every stage of

manufacturing and quality control departments.

2. Selection and control of Raw Material and Packing Material.

Internal Audits

A Team of five will be auditing our manufacturing and quality control departments at a

regular interval of to ensure good manufacturing practices and to maintain in house

documentation. These internal audited reports will be maintained by our Quality

Assurance department

35

CONTRACT MANUFACTURING SERVIECES

YELURI has proven expertise in developing and manufacturing that achieve the most

effective therapeutic results. This has earned the group tremendous goodwill and trust

among MNC’s and leading Indian companies. Complemented by its abilities to ensure

compliance with international norms, YELURI leverages its strength its strengths to

undertake contract manufacturing of formulating from pharmaceutical leaders like

Lupin laboratories Ltd

Alembic Ltd.

Nicholas Piramal India Ltd.

Hetero Drugs

Zuventus Ltd

Wander pharma

Wallace Pharma

Zydus Cadila Health Care Ltd

ORCHID Healthcare Ltd

Unichem Laboratories Ltd

36

Indian Immunological ltd

Intervet India

Products:

Yeluri to serve the requirements of various importers and to be at par in the business in

ready to procure the COPP for the following products for which the dossiers are already

available to meet the standards of various countries.

Sterile Powder Injectables:

Exports:

Yeluri is thriving to serve with quality products are preparing to extend its services

to various countries. Yeluri had already started the registrations of its products in

Philippines and in the pipeline are the other countries like sri lanka, Thailand,

Malaysia, Vietnam, and Nigeria which are expected to be completed by August

2007.

Contractmanufacturing:-

Along with its own product registration yeluri is also extended its services for other

countries though contract manufacturing for various companies like M/S Brilliant

Industries etc,.

37

WHO-GMP Products:

Sterile Powder injectables

CEPHALOSPORINS and other Antibiotics

1. Ceftriaxone 250 mg

2. Ceftriaxone 1000mg

3. Ceftoxime 250mg

4. Ceftoxime 1000mg

5. Ceftoxime 500mg

6. Ceftoxime and sulbactum 750mg

7. Ceftoxime and sulbactum 1500m

8. Ceftazidime 250mg

9. Ceftazidime 1000mg

10. Cefuroxime 250mg

11. Cefuroxime 750mg

12. Cefeperazone & sulbactum 750mg

13. Cefeperazone & sulbactum 1gm

14. Cefeperazone & sulbactum 2gm

15. Cefepime 500mg

16. Cefepime 1000mg

17. Cefepime 2gm

18. Cefepirome 500mg

19. cefazolin 1gm

20. Pipracillin and Tazobactum 4.5gm

21. Pipracillin and Tazobactum 2.25gm

22. Meropenam 500mg

23. Meropenam 1000mg

24. Ampicillin 250mg

25. Ampicillin 500mg

26. Ampicillin & cloxacillin 500mg

27. Ampicillin & cloxacillin 250mg

38

28. Amoxicillin & cloxacillin 250mg

29. Amoxicillin & cloxacillin 1000mg

30. Ampicillin 250mg& Sulbactam 125mg



33. Amoxycillin 250mg& Sulbactam 125mg



39

CHAPTER-IV

DATA ANALYSIS

AND

INTERPRETATION

40

COMPARATIVE STATEMENT ANALYSIS 2013 OF YELURI

FORMULATIONS PVT.LTD

Balance Sheet of Yeluri formulations Pvt.Ltd

Mar '13 Mar '12 Mar '11 ABSOLUTE INCREASE/ DECREAES

CHANGE IN %Rs. Cr 12 mths 12 mths

Sources Of Funds

Total Share Capital 39.94 39.94 39.94 0 0

Equity Share Capital 39.94 39.94 39.94 0 0

Share Application Money 0.00 0 0 0 0

Preference Share Capital 0.00 0 0 0 0

Reserves 4,966.30 4,249.89 2,916.12 1333.77 45.74

Revaluation Reserves 0.00 0 0 0 0.00

Networth 5,006 4,289.83 2,956.06 1333.77 45.12

Secured Loans 302.16 994.85 1,458.45 -463.6 -31.79

Unsecured Loans 0.00 0 32.71 -32.71 -100.00

Total Debt 302.16 994.85 1,491.16 -496.31 -33.28

Total Liabilities 5,308.40 5,284.68 4,447.22 837.46 18.83Mar '13 Mar '12 Mar '11

12 mths 12 mths 12 mthsApplication Of Funds

Gross Block 4,427.29 6,308.26 5,538.46 769.8 13.90

Less: Accum. Depreciation 1,356.31 2,522.75 1,458.18 1064.57 73.01

Net Block 3,070.98 3,785.51 4,080.28 -294.77 -7.22

Capital Work in Progress 62.09 193.95 125.14 68.81 54.99

Investments 3,623 3,964.26 5,128.75 -1164.49 -22.71

Inventories 636.76 675.57 524.93 150.64 28.70

Sundry Debtors 665.00 272.31 130.59 141.72 108.52

Cash and Bank Balance 181.04 56.1 47.75 8.35 17.49

Total Current Assets 1,482.80 1,003.98 703.27 300.71 42.76

Loans and Advances 1,401.95 926.99 783.48 143.51 18.32

Fixed Deposits 0.00 20.72 23.77 -3.05 -12.83

Total CA, Loans & Advances 2,884.75 1,951.69 1,510.52 441.17 29.21

41

Deffered Credit 0.00 0 0 0 0

Current Liabilities 2,893.39 3,520.66 5,316.40 -1795.74 -33.78

Provisions 1,439.86 1,090.07 1,081.07 9 0.83

Total CL & Provisions 4,333.25 4,610.73 6,397.47 -1786.74 -27.93

Net Current Assets -1,448.50 -2,659.04 -4,886.95 2227.91 -45.59

Miscellaneous Expenses 0.00 0 0 0 0.00

5,308.40 5,284.68 4,447.22 837.46 18.83

Interpretation:-

1. Total share holders fund are decreased by 18.83% in 2012 to 2013.

2. Reserves & surplus are decreased by 45.12 % in 2012 to 2013. It shows that company

must concentrate on profitability to increase reserves.

3. Fixed assets are decreased by -12.83 % in 2012 to 2013. It points towards expanding

business operations.

4. Debtors are increased by 108.52 % and loans & advances are also increased by

18.32% in 2012 to 2013.

5. Net current assets are decreased by -45.59% from 2012 to 2013.

6. Total application fund are increased by change in percentage of 18.83%.



March 31,2012

March 31,2011

ABSOLUTE INCREASE/ DECREAES

CHANGE IN %

SOURCES OF FUNDSShareholders' funds

42

share capital 39.94 39.940 0

reserves and surplus 4,249.89 2.916.12-508.96 -14.86

4,289.83 2,956.06-508.96 -14.69

Loan funds

unsecured 0.00 32.71-33.32 -50.46

deferred payment credits 994.85 1,458.451458.45

deferred tax liabilities 252.72 252.7292.09 57.33

TOTAL 5,537.40 4,699.941008.26 27.31

APPLICATION OF FUNDS

Fixed assets

gross block 6,308.26 5,538.462787.48 101.33

less: depreciation 2,522.75 1,458.18365.98 33.51

net block 3,785.51 4,699.943041.16 183.34

capital work in progress 193.95 125.1477 159.95

4,205.42 4,205.422498.5 146.38

Investments 3,964.26 5,128.75-3874.42 -98.70

deferred tax assets 5.95 5.95-1.93 -24.50

Current assets, loans and advances

inventories 675.57 524.9388.53 20.29

sundry debtors 272.31 130.5922.2 20.48

cash and bank balances 56.10 47.75-1835.7 -96.25

other current assets 48.87 48.8724.05 96.90

loans and advances 926.99 783.48322.9 79.58

1,504.57 1,504.57-2876.53 -99.48

less: current liabilities and provisions

current liabilities 5,063.68 5,063.681258.62 33.08

provisions 1,505 1,505-1377.6 -47.79

6,144.75 6,144.751313.34 27.18

Net current assets 2,659.04 4,886.952691.35 138.10

TOTAL 5,284.68 4,447.222751.11 141.17

43

0.00500.00

1,000.001,500.002,000.002,500.003,000.003,500.004,000.004,500.00

2011 2012

Amount

4,000.00

4,200.00

4,400.00

4,600.00

4,800.00

5,000.00

5,200.00

5,400.00

2011 2012

Amount

0.00500.00

1,000.001,500.002,000.002,500.003,000.003,500.004,000.004,500.00

2011 2012

Amount



44

March 31,2011

March 31,2010


CHANGE IN %

SOURCES OF FUNDSShareholders' funds


reserves and surplus 2.916.12 3,425.08-508.96 -14.86

2,956.06 3,465.02-508.96 -14.69

Loan funds

unsecured 32.71 66.03-33.32 -50.46

deferred payment credits 1,458.451458.45

deferred tax liabilities 252.72 160.6392.09 57.33

TOTAL 4,699.94 3,691.681008.26 27.31


Fixed assets

gross block 5,538.46 2,750.982787.48 101.33

less: depreciation 1,458.18 1,092.20365.98 33.51

net block 4,699.94 1,658.783041.16 183.34

capital work in progress 125.14 48.1477 159.95

4,205.42 1,706.922498.5 146.38

Investments 5,128.75 3,925.71-3874.42 -98.70

deferred tax assets 5.95 7.88-1.93 -24.50


inventories 524.93 436.4088.53 20.29

sundry debtors 130.59 108.3922.2 20.48

cash and bank balances 71.52 1,907.21-1835.7 -96.25

other current assets 48.87 24.8224.05 96.90

loans and advances 728.66 405.76322.9 79.58

1,504.57 2,882.58-2876.53 -99.48


current liabilities 5,063.68 3,805.061258.62 33.08

provisions 1,505 2,882.58-1377.6 -47.79

6,144.75 4,831.411313.34 27.18

Net current assets 4,640.18 1,948.832691.35 138.10

TOTAL 4,699.94 1,948.832751.11 141.17

45

2010 20110

1000

2000

3000

4000

5000

amou

nt

year

3465.02

2956.06

TOTAL SOURCES OF FUND

2010 20110

1000

2000

3000

4000

5000

amou

nt

year

1948.83

4699.94

TOTAL APPLICATION FUND

46

2010 20110

500

1000

1500

2000

2500

3000

3500am

ount

year

3425.08

2916.12

RESERVES AND SURPLUS

Interpretation:-


8. Reserves & surplus are decreased by 14.86% in 2010 to 2011. It shows that company


9. Fixed assets are increased by 146.37% in 2010 to 2011. It points towards expanding

business operations.

10. Debtors are increased by 20.48% and loans & advances are also increased by 79.57%

in 2010 to 2011.

11. Net current assets are increased by 138.101% from 2010 to 2011.

12. Total application fund are increased by change in percentage of 141.67%.



47

March 31,2010

March 31,2009


CHANGE IN%

SOURCES OF FUNDS

Shareholders' funds


reserves and surplus 3,425.08 3,760.81 -335.73 -8.93

3,465.02 3,800.75 -335.73 -8.83

Loan funds

unsecured 66.3 78.49 -12.19 -15.53

deferred tax liabilities 160.63 153.08 7.55 4.93

TOTAL 3,691.68 4,032.32 -340.64 -8.45


Fixed assets

gross block 2,750.98 2,516.27 234.71 9.33

less: depreciation 1,092.20 942.56 149.64 15.88

net block 1,658.78 1,573.71 85.07 5.41

capital work in progress 48.14 120.54 -72.4 -60.06

1,706.92 1,694.25 12.67 0.75

Investments 3,925.71 3,368.75 556.96 16.53

deferred tax assets 7.88 8.65 -0.77 -8.90


inventories 436.40 326.83 109.57 33.53

sundry debtors 108.39 149.94 -41.55 -27.71

cash and bank balances 1,907.21 219.57 1687.64 768.61

other current assets 24.82 5.89 18.93 321.39

loans and advances 405.76 311.26 94.5 30.36

1,504.57 2,882.58 -286753.43 -99.48


current liabilities 3,805.06 1,525.85 2279.21 149.37

provisions 1,026.35 526.97 499.38 94.76

4,831.41 2,052.82 2778.59 135.35

Net current assets 1,948.83 1,039.33 909.5 87.51

TOTAL 3.691.68 4,032.32 -340.64 -8.48

48

2009 20100

500

1000

1500

2000

2500

3000

3500

4000am

ount

year

4032.32

3691.68

TOTAL SOURCES OF FUND

2009 20100

500

1000

1500

2000

amou

nt

year

1039.33

1948.83

NET CURRENT ASSETS

49

2009 20100

20

40

60

80

100

120

140

160

amou

nt

year

149.94

108.39

SUNDRY DEBTORS

Interpretation:-


2. Reserves & surplus are increased by 8.92% in 2009 to 2010. It shows that company


3. There is a slight increase of 0.74% in fixed assets from 2009 to 2010. It shows that

company trying to expand business operations.

4. Debtors are decreased by 27.71% and loans & advances are increased by 30.36% in

2009 to 2010.

5. Net current assets are increased by 87.50% in 2009 to 2010.

6. Total application fund increased by 8.44% in 2009 to 2010.



March 31, March 31, ABSOLUTE CHANGE

50

2009 2008INCREASE/ DECREAES

IN %

SOURCES OF FUNDS

SHAREHOLDERS' FUNDS

share capital 39.94 39.94 0 0

reserves and surplus 3,760.81 2,946.30 814.51 27.65

3,.800.75 2,986.24 814.51 27.28

loan funds

unsecured 78.49 132.00 -53.51 -40.54


TOTAL 4,032.32 3,248.83 783.49 24.12


FIXED ASSETS

gross block 2,516.27 1,938.78 577.49 29.79

less: depreciation 942.56 782.52 160.04 20.45

net block 1,573.71 1,156.26 417.45 36.10

capital work in progress 120.54 392.44 -271.9 -69.28

1,694.25 1,548.70 145.55 9.40

pre – operative expenses (pending allocation) 16.05

16.05 -100

investments 3,368.75 2,566.82 801.93 31.24

deferred tax assets 8.65 5.22 3.43 65.71

current assets, loans and advances

inventories 326.83 317.10 9.73 3.07

sundry debtors 149.94 297.44 -147.5 -49.59

cash and bank balances 219.57 131.09 88.48 67.50



1,013.49 913.27 76.71 8.19


CURRENT LIABILITIES 1,525.85 1,324.98 200.87 15.16

provisions 526.97 499.76 27.21 5.44

2,052.82 1,824.74 228.08 12.50

Net current assets 1,039.33 887.96 151.37 17.05

TOTAL 4,032.32 3,248.83 783.49 24.17

51

2008 20090

500

1000

1500

2000

2500

3000

3500

4000

amou

nt

year

2986.24

3800.75

TOTAL SHARE HOLDER'S FUND

2008 2009

0

500

1000

1500

2000

2500

3000

3500

amou

nt

year

2566.82

3368.75

TOTAL INVESTMENTS

52

Interpretation:-

1. Total share holders fund are increased by 27.27% in 2008 to 2009.

2. Reserves & surplus are increased by 27.64% in 2008 to 2009. It shows company

efficiency in maintaining the share profits.

3. Fixed assets are increased by 9.39% in 2008 to 2009. It shows that company trying to

expand business operations.

4. Debtors are decreased by 49.58% and loan & advances are increased by 67.83% in

2008 to 2009.

5. There is a slight increase in net current assets by 17.04% from 2008 to 2009.

6. Total application fund are increased by 24.11%in 2008 to 2009.

53



March 31,2008

March31,2007


CHANGE IN %

Sources Of Funds

Shareholders' Funds

Share Capital 39.94 39.94 0 0

Reserves And Surplus 2,946.30 2,430.12 516.18 21.24

2,986.24 2,470.06516.18 20.90

Loan Funds

Unsecured 132 165.17 -33.17 -20.08

Deferred Tax Liabilities 130.59 129.58 1.01 0.78

Total 3,248.83 2,764.81 484.02 17.51

Application Of Funds

Fixed Assets

Gross Block 1,938.78 1,800.63 138.15 7.67

Less: Depreciation 782.52 635.1 147.42 23.21

Net Block 1,156.26 1,165.53 -9.27 -0.80

Capital Work In Progress 392.44 189.92 202.52 106.63

1,548.70 1,355.45 193.25 14.26

Pre – Operative Expenses (Pending Allocation) 16.05

16.05

Investments 2,566.82 1,973.87 592.95 30.03

Deferred Tax Assets 5.22 1.38 3.84 278.26

Current Assets, Loans And Advances

Inventories 317.1 275.58 41.52 15.07

Sundry Debtors 297.44 335.25 -37.81 -11.28

Cash And Bank Balances 131.09 35.78 95.31 266.38

Other Current Assets 5.69 3.6 2.09 58.06

Loans And Advances 185.46 263.06 -77.6 -29.50

936.78 913.27 23.51 2.57

Less: Current Liabilities And Provisions

Current Liabilities 1,324.98 1,041.92 283.06 27.18

Provisions 499.76 1,479.16 -979.4 -66.21

1,824.74 1,479.16 345.58 23.36

Net Current Assets 887.96 585.89 302.07 51.56

Total 3,248.83 2,764.81 484.02 17.51

54

2007 20080

50

100

150

200

250

300

350

amou

nt

year

335.25

297.44

SUNDRY DEBTORS

2007 20080

500

1000

1500

2000

2500

3000

3500

amou

nt

year

2764.81

3248.83

TOTAL APPLICATION FUND

55

Interpretation:-

1. Total share holder fund are increased by 20.89% in2007 to 2008.

2. Reserves & surplus are increased by 21.24% in 2007 to 2008. It shows that company

efficiency in maintaining the share profits.

3. Fixed assets are increased by 14.25%. It shows that company expanding business

operations.

4. Debtors are increased by 11.27% and loan & advances are increased by 29.47% in

2007 to 2008.

5. Net current assets are increased are increased by 51.55% in 2007 to 2008.

6. Total application fund are increased by 17.50% in 2007 to 2008.

56

COMMON SIZE STATEMENT ANALYSIS 2013 OF YELURI FORMULATIONS PVT.LTD


Mar '13Change in % Mar '12

Change in %

Rs CR 12 mths 12 mthsSources Of Funds

Total Share Capital 39.94 0.76 39.94 0.90Equity Share Capital 39.94 0.76 39.94 0.90Share Application Money 0 0Preference Share Capital 0 0Reserves 4,966.30 83.67 4,249.89 66.27

Revaluation Reserves 0.00 0

Networth 5,006 81.17 4,289.83 66.47

Secured Loans 302.16 18.83 994.85 32.79

Unsecured Loans 0.00 0 0.44

Total Debt 302.16 18.83 994.85 33.53

Total Liabilities 5,308.40 100.00 5,284.68 100.0012 mths 12 mths

Application Of Funds

Gross Block 4,427.29 119.37 6,308.26 124.54

Less: Accum. Depreciation 1,356.31 47.74 2,522.75 32.79

Net Block 3,070.98 71.63 3,785.51 91.75

Capital Work in Progress 62.09 3.67 193.95 2.81

Investments 3,623 75.01 3,964.26 115.32

Inventories 636.76 14.65 675.57 10.80

Sundry Debtors 665.00 6.75 272.31 3.44

Cash and Bank Balance 181.04 1.06 56.1 1.07

Total Current Assets 1,482.80 19.00 1,003.98 15.81

Loans and Advances 1,401.95 16.34 926.99 12.73

Fixed Deposits 0.00 0.39 20.72 0.45

Total CA, Loans & Advances 2,884.75 36.93 1,951.69 28.58

Deffered Credit 0.00 0

Current Liabilities 2,893.39 66.62 3,520.66 100.60Provisions 1,439.86 20.63 1,090.07 20.46

57

Total CL & Provisions 4,333.25 87.25 4,610.73 121.06

Net Current Assets -1,448.50 -50.32 -2,659.04 -92.47

Miscellaneous Expenses 0.00 0.00 0 0.00Total Assets 5,308.40 100.00 5,284.68 100.00

Interpretation:-

1. There is no change in share capital

2. In 2012 reserves & surplus was 66.27% but in 2013 it was decreased to 83.67%.

3. Unsecured loan are increased from 0% to 0.44% 2012 to 2013.

4. In 2012 inventories was 14.65% and it has increased to 10.80% in 2013.

5. Sundry debtors in 2012 were 3.44% and it decreased to 6.75% in 2013.

6. Loans & advances in 2012 was 12.73% but in 2013 it was increased to 16.34%.

58



Mar '12Change in % Mar '11

Change in %

Rs CR 12 mths 12 mthsSources Of Funds

Total Share Capital 39.94 0.76 39.94 0.90Equity Share Capital 39.94 0.76 39.94 0.90Share Application Money 0 0Preference Share Capital 0 0Reserves 4,249.89 80.42 2,916.12 65.57Revaluation Reserves 0 0Networth 4,289.83 81.17 2,956.06 66.47Secured Loans 994.85 18.83 1,458.45 32.79Unsecured Loans 0 32.71 0.74Total Debt 994.85 18.83 1,491.16 33.53Total Liabilities 5,284.68 100.00 4,447.22 100.00

12 mths 12 mthsApplication Of FundsGross Block 6,308.26 119.37 5,538.46 124.54Less: Accum. Depreciation 2,522.75 47.74 1,458.18 32.79Net Block 3,785.51 71.63 4,080.28 91.75Capital Work in Progress 193.95 3.67 125.14 2.81Investments 3,964.26 75.01 5,128.75 115.32Inventories 675.57 12.78 524.93 11.80Sundry Debtors 272.31 5.15 130.59 2.94Cash and Bank Balance 56.1 1.06 47.75 1.07Total Current Assets 1,003.98 19.00 703.27 15.81Loans and Advances 926.99 17.54 783.48 14.83Fixed Deposits 20.72 0.39 23.77 0.45Total CA, Loans & Advances 1,951.69 36.93 1,510.52 28.58Deffered Credit 0 0Current Liabilities 3,520.66 66.62 5,316.40 100.60Provisions 1,090.07 20.63 1,081.07 20.46Total CL & Provisions 4,610.73 87.25 6,397.47 121.06Net Current Assets -2,659.04 -50.32 -4,886.95 -92.47Miscellaneous Expenses 0 0.00 0 0.00Total Assets 5,284.68 100.00 4,447.22 100.00

59

Interpretation:-

7. There is no change in share capital


9. Unsecured loan are increased from 0% to 0.74% 2011 to 2012.

10. In 2011 inventories was 12.78% and it has increased to 11.80% in 2012.


Loans & advances in 2011 was 14.83% but in 2012 it was increased to 17.54%.

60


March 31, 2011Change in % March 31,

2010Change in %

SOURCES OF FUNDS

Shareholders' funds

share capital 39.94 0.85 39.94 1.082

reserves and surplus 2,916.12 62.05 3,425.08 92.78

2,956.06 62.90 3,465.02 93.86

Loan funds

unsecured 32.71 0.70 66.03 1.79

deferred payment credits 1,458.45 31.03


TOTAL 4,699.94 100 3,691.68 100.00


Fixed assets

gross block 5,538.46 117.84 2,750.98 74.52

less: depreciation 1,458.18 31.06 1,092.20 29.59

net block 4,699.94 100 1,658.78 44.93

capital work in progress 125.14 2.66 48.14 1.30

4,205.42 89.48 1,706.92 46.23

Investments 5,128.75 109.12 3,925.71 106.34



inventories 524.93 11.17 436.40 11.82

sundry debtors 130.59 2.78 108.39 2.94

cash and bank balances 71.52 1.52 1,907.21 51.66



1,504.57 32.01 2,882.58 78.08

Less: current liabilities and provisions

current liabilities 5,063.68 107.74 3,805.06 103.07

provisions 1,505 32.02 2,882.58 78.08

6,144.75 130.74 4,831.41 130.87

Net current assets 4,640.18 98.73 1,948.83 52.79

TOTAL 4,699.94 100 3691.68 100

61

2010 20110

20

40

60

80

100

amou

nt

year

92.77

62.04


2010 20110.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

1.8

amou

nt

year

1.79

0.69

UNSECURED LOANS

62

Interpretation:-

12.There is slight increase in share capital


14. Unsecured loan are decreased from 1.78% to 0.69% 2010 to 2011.

15. In 2010 inventories was 11.82% and it has decreased to 11.16% in 2011.


17. Loans & advances in 2010 was 10.99% but in 2011 it was increased to 15.50%.

63


March 31,2010

Change in%

March 31,2009

Change in%

SOURCES OF FUNDS

Shareholders' funds

share capital 39.94 1.08 39.94 0.99


3,465.02 93.86 3,800.75 94.26

Loan funds

unsecured 66.3 1.80 78.49 1.95


TOTAL 3,691.68 100 4,032.32 100


Fixed assets

gross block 2,750.98 74.52 2,516.27 62.40

less: depreciation 1,092.20 29.59 942.56 23.36

net block 1,658.78 44.93 1,573.71 39.03


1,706.92 46.24 1,694.25 42.02

Investments 3,925.71 106.34 3,368.75 83.54



inventories 436.40 11.82 326.83 8.11

sundry debtors 108.39 2.94 149.94 3.72

cash and bank balances 1,907.21 51.66 219.57 5.45



1,504.57 40.76 2,882.58 71.48



provisions 1,026.35 27.80 526.97 13.07

4,831.41 130.87 2052.82 50.91

Net current assets 1,948.83 52.79 1,039.33 25.77

TOTAL 3.691.68 100 4,032.32 100

64

2009 20100

20

40

60

80

100am

ount

year

37.84

103.07

CURRENT LIABILITIES

2009 20100.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

amou

nt

year

3.71

2.93

DUNDRY DEBTORS

Interpretations:-

1. In 2009 share capital was 0.99% and in 2010 it was increased to 1.08%.

65

2. Reserves & surplus in 2009 was 93.26% but in 2010 it was decreased to 92.77%.

3. Unsecured loan are decreased from 1.94% in 2009 to 1.79% in 2011.

4. In 2009 inventories was 8.10% and in 2010 it was increased to 11.82%.

5. Sundry debtors in 2009 were 3.71% and it is decreased to 2.93% in 2010.

6. Loans & advances in 2009 was 7.71% and in 2010 it is increased to 10.99%


March 31,2009Change in % March 31,

2008Change in %

SOURCES OF FUNDS

66

Shareholders' funds

share capital 39.94 0.99 39.94 1.23


3,800.75 94.26 2,986.24 91.92

Loan funds

unsecured 78.49 1.95 132.00 4.06


TOTAL 4,032.32 100 3,248.83 100


fixed assets

gross block 2,516.27 62.40 1,938.78 59.68


net block 1,573.71 39.03 1,156.26 35.59


1,694.25 42.02 1548.70 47.67


0.49

Investments 3,368.75 83.54 2,566.82 79.00



inventories 326.83 8.12 317.10 9.76

sundry debtors 149.94 3.72 297.44 9.16




1,013.49 25.13 936.78 28.83



provisions 526.97 13.07 499.76 15.38

2,052.82 50.91 1,824.74 56.17

Net current assets 1,039.33 25.77 887.96 27.33

TOTAL 4,032.32 100 3,248.83 100

67

2008 20090

2

4

6

8

10

amou

nt

year

9.76

8.11

INVENTORIES

2008 20090

1

2

3

4

5

6

7

8

amou

nt

year

5.71

7.72

LOANS AND ADVANCES

68

Interpretation:-

1. In 2008 share capital was 1.22% and in 2009 it is decreased to 0.99%

2. Reserves & surplus was 90.68% in 2008 but in 2009 it was increased to 93.26%.

3. Unsecured loans are decreased from 4.06% in 2008 to 1.94% in 2009.

4. In 2008 inventories was 9.76% and in 2009 it was decreased to 8.10%.

5. Sundry debtors in 2008 were 9.15% and it is decreased to 3.71% in 2009.

6. Loans & advances in 2008 was 5.70% and in 2008 it increases to 7.71%.

69


March 31,2008

Change in%

March 31,2007

Change in%

SOURCES OF FUNDS

Shareholders' funds

share capital 39.94 1.23 39.94 1.44


2,9862.4 91.92 2,470.06 89.34

Loan funds

unsecured 132.00 4.06 165.17 5.97


TOTAL 3,248.83 100 2,764.81 100


Fixed assets

gross block 1,938.78 59.68 1,800.63 65.13


net block 1,156.26 35.59 1,165.53 42.16


1,548.70 47.67 1,355.45 49.03


0.49

Investments 2,566.82 79.00 1,973.87 71.39



inventories 317.10 9.76 275.58 9.98

sundry debtors 297.44 9.16 335.25 12.13




936.78 28.83 913.27 33.03



provisions 499.76 15.38 1,479.16 53.50

1,824.74 56.17 1,479.16 53.50

Net current assets 887.96 27.33 585.89 21.19

TOTAL 3,248.83 100 2,764.81 100

70

2007 20080

20

40

60

80am

ount

year


87.8990.69

2007 20080.00

0.02

0.04

0.06

0.08

0.10

0.12

0.14

0.16

amou

nt

year

OTHER CURRENT ASSETS

0.13

0.16

71

Interpretation:-

1. In 2007 share capital was 1.44% and in 2008 it decreases to 1.22%.

2. In 2007 reserves & surplus was 87.89% but in 2008 it was increased to 90.68%.

3. Unsecured loans are decreased from 5.97% in 2007 to 4.06% in 2008.

4. In 2007 inventories was 9.96% and in 2008 it was slightly decreased to 9.76%.

5. Sundry debtors on 2007 were 12.12% but in 2008 it decreased to 9.15%.

6. Loans & advances in 2007 was 9.51% and it decreases to 5.70% in 2008.

72

CHAPTER-V

FINDINGS SUGGESTIONS

CONCLUSION

FINDINGS

73

1. Net working capital and negative for all the three years. So company should

thoroughly look into increase the current assets and decreases the current

liabilities.

2. Gross profit 63.33% in 2007-08, 86.26% in 2008-09, 88.79% in 2009-10 and

98.79% in 2010-11& 82.32 in 2011-12. So gross profit is showing an increasing

trend.

3. The current liabilities more than current assets the working capital is negative

4. The company has turned up with a minimum profit in the years 2006-2010 and

within the remaining financial years over all financial Position is satisfactory.

5. The comparative balance sheet of the reveals that during the year 2008, fixed

assets increased by RS. 2589.36crores.While long term liability from outsides

(loans) has increased by 5663.68crores and there is neither increase nor decrease

in share capital. The pattern of investment towards Fixed Assets reveals that long

term sources of funds are utilized for fixed assets.

6. The percentage of current assets to total assets was increased in 2012. The

percentage of current liabilities to total liabilities has also decreased in 2008.Thus

the proportion of current assets has decreased by 27.82 %, where as decrease in

the current liabilities is 30.54 % in the years the company liquidity position is

satisfactory

74

CONCLUSION

Even though company is utilizing its own funds there is very need that company should

improve its liquidity position, debtors collection period and proper management of its

current assets and current liabilities.

The external debt of the company decreased gradually. This is mainly due to repayment

of a portion of term loans. Another reason for decrease in external debt is due to increase

in reserves and surplus.

The year was 356.24crores this indicates there is possible growth of the company in the

market during 2011-2012.

Yeluri formulations Pvt.Ltd. has under taken research program, modernization and

technology up gradation, for the above said expansion programs it has made use of

surplus funds only and did not go for outsider’s debts, which is one of the good long-term

financial policy of Yeluri formulations Pvt.Ltd.

75

SUGGESTIONS

1. Company may look into increasing various forms of currents assets and

decreasing current liabilities to effective manage working capital requirement.

2. Company may maintain current gross profit in the coming financial years.

3. To meet the short term requirements the company has to raise short term as well

as long term loans.

4. To attract to the new customers the company has to adapt new products and new

technology.

76

BIBLIOGRAPHY

Quality Strategy – putting people at the heart of our NHS. The Scottish

Government. May 2010. www.scotland.gov.uk/Publications/2010/ 05/10102307/0

Safe Use of Medicines Policy and Procedures. NHS Lothian. July 2012.

http://intranet.lothian.scot.nhs.uk/NHSLothian/NHS%20Lothian/

Board Committees/Area Drug Therapeutics/ Documents/Forms/AllItems.aspx

The Lothian Joint Formulary. NHS Lothian. www.ljf.scot.nhs.uk

The Patient Rights (Scotland) Act. 2011.www.legislation.gov.uk/asp/2011/5/

Contents/enacted The Right Medicine: A Strategy for Pharmaceutical Care in

Scotland Scottish Executive 2002. www.scotland.gov.uk/Resource/ Doc/158742/

0043086.pdf

The Scottish Management of Antimicrobial Resistance Action Plan [ScotMARAP].

Healthcare Associated Infection Task Force. The Scottish Government. March

2008. www.scotland.gov.uk/Publications/2008/ 03/12153030/0

WEBSITES:

http://www.yeluri.net/

77

http://www.scotland.gov.uk/Publications/2008/

http://www.scotland.gov.uk/Resource/

http://www.ljf.scot.nhs.uk/

http://intranet.lothian.scot.nhs.uk/NHSLothian/NHS%20Lothian/

http://www.scotland.gov.uk/Publications/2010/