Pf Final Project

PROJECT FINANCE

PROJECT REPORT ON

ANALYSIS OF

FINOLEX CABLES LIMITED

Submitted to:

Prof. Shyamji Mehrotra

Submitted by:

Purva Agarwal (JIML-11-125)

Rachit Bhatia (JIML-11-126)

Radhika Chaturvedi (JIML-11-127)

Rahul Chaudhary (JIML-11-128)

Rajat Sahani (JIML-11-129)

ACKNOWLEDGEMENT

It gives us a great sense of pleasure to present the report on “ANALYSIS OF FINOLEX

CABLES ” undertaken in our fourth trimester of Post Graduate Diploma in Management at

Jaipuria Institute Of Management. We owe special debt of gratitude to Prof. Shyamji Mehrotra

for his constant official support, encouragement and motivation for our project work.

COMPANY PROFILE

Finolex Cables Ltd is India's largest manufacturer of electrical and telecommunication cables based in Mumbai, Maharashtra. It is the flagship company of the Finolex Group was established in 1958. The Company also manufactures polyvinyl chloride (PVC) sheets for various applications like roofing, signage and interiors. Its manufacturing facilities located at Pimpri and Urse in Pune as well as at Goa & Uttarakhand. The Company's product application range is used for electrical usage, transmission of voice, data and images (contents) for domestic, commercial and industrial applications to electrical products. Its electrical cables products include 1100 volt PVC insulated cables, motor winding PVC insulated cables and three core flat cables,automotive/battery cables, UPS cables, heavy duty, underground, low voltage, power and control cables, and heavy duty, underground, high voltage, power cables.

FINOLEX AT A GLANCE:

Date of Establishment 1967

Revenue 0 ( USD in Millions )

Market Cap 6148.161669 ( Rs. in Millions )

Corporate Address 26/27 Mumbai- Pune Road,Pimpri, Pune-411018, Maharashtrawww.finolex.com

Management Details Chairperson - DK Chhabria MD - D K ChhabriaDirectors - A K Puri, Adi J Engineer, Atul C Choksey, B G Deshmukh, D K Chhabria, DK Chhabria, H S Vachha, M L Jain, M Viswanathan, Mahesh Viswanathan, P B Parasnis, P G Pawar, P P Chhabria, PP Chhabria, Pradeep R Rathi, R G D'silva, S B (Ravi) Pandit, Sanjay K Asher, V K Chhabria, Vikas G Pai

Business Operation Cable

Background Finolex Cables, the flagship company of the Finolex Group was established in 1958 in Pune. Today, it is India's largest and leading manufacturer of electrical and telecommunication cables with a turnover in excess of Rs.16 Billion (about US $ 320 million).

The company has manufacturing facilities at Pimpri and Urse in Pune as well as at Goa & Uttarakhand. The compa

Financials Total Income - Rs. 21003.5 Million ( year ending Mar 2012) Net Profit - Rs. Million ( year ending Mar 2012)

Company Secretary R G D'silva

Bankers Bank of Baroda, Bank of Nova Scotia, BNP Paribas, Central Bank of India, Citi Bank, Corporation Bank, HDFC Bank, ICICI Bank, Standard Chartered Bank, State Bank of India

Auditors BK Khare & Co

MILESTONES:

Finolex Group was established in 1958 & today has turnover in excess of Rs 4000 crores with 5 companies and 11 modern state-of-art manufacturing facilities located at Pune, Ratnagiri, Goa & Uttarakhand

The prominent group companies, Finolex Cables Ltd & Finolex Industries Ltd manufacture and market a diverse range of products comprising of Electrical and Communication Cables,Copper Rods,PVC Sheets,PVC Resin and PVC Pipes & Fittings,Electrical Switches,Compact Fluorescent Lamps (CFL's). Finolex has also established an advanced IT institute ,I2IT at Pune and an engineering college at Ratnagiri

Finolex has over the years emerged as a very powerful brand synonymous with top quality products. A national distribution network makes its products available across the country

Finolex Cables Limited, the flagship company of the Finolex group started its operations with the manufacturing of Automobile Cables in 1958. In1970 Finolex started manufacturing Electric wires, single & multicore Flexible industrial Cables. Further expanding its product range in 1972 Finolex started manufacturing PVC insulated Winding Wires & 3 Core Flat cables for submersible pumps

In 1980 , Finolex started manufacturing 1.1 KV PVC insulated Power & Control Cables, In 1984 , Finolex started manufacturing Jelly Filled Telephone Cables. Thus Finolex became the first Indian company in Private Organized Sector to supply JFT cables to DoT. Finolex is also 1st Indian company to develop & supply Foam Skin Cable to DoT

In 1993, Finolex added one more product in its product portfolio, Co-axial Cables. In 1993 Finolex Cables became the first cable company to receive ISO 9002 quality certification . In 1996, Finolex diversified its product portfolio & started manufacturing PVC Sheets. Keeping track of global trends in 1996 Finolex launched two products viz. FR-LSH PVC Insulated Industrial Cables & Fibre Optic Cables in. Thus Finolex Cables is the first company in India to introduce

FRLS industrial cables

As communication was becoming need of hour , in 1998 Finolex started manufacturing Telephone & Switchboard cables. Further expanding its product portfolio in 2006 , Finolex launched Electrical Switches & Compact Fluorescent Lamps (CFL's)

In 2008 Finolex started manufacturing HT Cables (upto 33KV) at Urse, Pune. Finolex has also put up a manufacturing unit equipped with latest state of the art modern machinery at Uttarakhand. Finolex is the first company in India to start manufacturing LAN Cables.

The company has set several benchmarks and has been recognized by industry and peers alike. In 1989 Company won the Harvard Business School – Economic Times award for Corporate Excellence; it was also declared the winner of Voice and Data magazine’s Top Telecom Company Award in 2003; the IIM-LIC Award for Marketing Excellence in 1994-95; Star Performer Award for outstanding contribution to Engineering Exports during the year 2005-06 and several other accolades have come its way

Finolex Cables has also featured in the Top 150 Hidden Champions of the World by World Link, Geneva. It ranked among the leading organizations of Business India's Super 500 Corporations. In the survey conducted by Business Today and Stern Standard, Finolex was listed among the Best Wealth Creating Companies of India.

Finolex Cables is the only Superbrand Cable company in India. It has received Superbrand Status for the 3rd consecutive year.

Finolex Industries Limited (FIL) was incorporated in 1981. It had a modest beginning as a rigid PVC (Poly Vinyl Chloride) pipes manufacturer with manufacturing plant in Pune. 

In 1985, FIL pioneered the concept of “Ringfit’ pressure pipes.

From 1984 to 1988, FIL won the PLEXCONCIL "Top Exporter Award" on five consecutive occasions

In 1994 FIL set up a state of the art PVC Resin plant near Ratnagiri on the West Coast of Maharashtra State. The 130,000 M.T. PVC plant was set up in technical collaboration with Uhde GmbH of Germany and under technology license from Hoechst AG. FIL manufactures suspension PVC as well as emulsion/ paste PVC

In 1996, FIL became India’s first manufacturer of PVC pipes and fittings to be awarded the ISO 9001: 2000 certification

In 1999, to meet growing demand, FIL also started manufacturing PVC pipes at Ratnagiri

In 1999 to cater the need of Plumbing sector, FIL introduced ASTM Pipes

In year 2002 both PVC Pipes and PVC Resin plants at Ratnagiri were awarded the IS14001 certificate for Environment Management Systems

In 2006, Finolex Industries Ltd., proudly celebrated 25 years of its success

In 2006 PVC Resin capacity was expanded from 1,30,000 MT to 2,60,000 MT

Further expanding its product range, in 2006, FIL launched ASTM fittings to its product portfolio

In 2007 FIL introduced Underground Sewerage Pipes as per IS: 15328 – 2003

In 2008, taking a step further with advancement in technology, FIL introduced LEAD FREE Plumbing pipes as per ASTM Standards

In 2008, FIL started a brand new state-of-the-art unit for manufacturing agriculture pipes and casing pipes at Urse, Pune with the capacity of 28000 MT p.a. 

 BUSINESS OF THE COMPANY:

The Company operates in two main segments - Electrical Cables and Communication Cables.

To support its requirement of Copper Rods for both type of cables, the Company manufactures Continuous Cast Copper Rods (CCC rods), at its Rod Plant at Goa. A small part of this production of CCC rods is, however, sold to third party customers. The result from this operation is declared under the Copper Segment.

In addition, the Company has expanded its product range to include Electrical Switches and Compact Fluorescent Lamps (CFLs). These items, however, account for less than 5% of the Company’s turnover and are hence reported as "Others" in the Segment Results.

KEY STRENGTHS:

• One of India’s leading cable manufacturers.

• Has the widest range of cable products in both segments and is recognized as a"Total Cable Solutions" Company capable of designing cable solutions for every need.

• Acknowledged as a leader in technology with a strong emphasis on quality

• Has the widest distribution network, which is being further expanded.

• Backward integrated in respect of its major materials CCC Rods, PVC compounds, Optical Fiber and FRP rods which allow the Company a certain technical superiority over its competitor while providing a cost advantage as well.

• A strong brand image and value for long it has been the only cable company to hold the Super Brand status; the brand has also enabled the Company to market its products in overseas markets.

• Expanded into product segments that are complementary to the electrical cable market i.e. CFLs and electrical switches this move has brought additional market reach at minimal cost expansion.

GROWTH DRIVERS:

The Company’s position as the market leader is due to its persistent efforts and emphasis in the following areas:

Product quality Continuous product improvement Introduction of new products through in-house developments Creating customer preferences Competitive pricing and extremely competitive cost structure Dynamic approach to situations Strong and dependable distribution channel spread all over the Country.

OUTLOOK:

Electrical cables are the main focus area of business for the Company. It accounted for82% of total sales for the year under review. Growth during the year under review was driven by the improvement shown by the construction and automobile sectors. The long term out look for this sector remains positive since the economic growth for the country depends on industrial and infrastructural developments.

The Company faces two principal risks in this business firstly competition from a large unorganized sector which produces products of inferior quality but at cheap prices and secondly a highly volatile commodity market where price movements can be very sharp. The Company has been handling the risk of the competitive forces through its organized business approach by the strength of its reach, superior quality products, safe products and maintaining high standards of service levels with its customers. The Company enjoys the advantages of economies of scale and backward integration. As and when GST is rolled out in the country, the Company believes the threat of a competitive force that relies on cheap quality and sharp practices will reduce further. As regards the risk of sharp raw material price movements, though the Company endeavors to pass on the price effect to the customers, there has always been a time lag between the price movement and the passing thereof. The Company negotiates price variation contracts with bulk buyers. The Company has been fair in dealing with its customers and accordingly enjoys customer confidence in pricing decisions.

RISK MANAGEMENT:

The Company has a Risk Management Document in place that defines the policies, lays out the strategies and methodology to decide on the risk taking ability of the organization. In line with the requirements laid down by the Reserve Bank of India in its November and December 2011

notifications, your Company has recently reviewed its Exchange Risk Management Policy and has modified the same to meet with the revised guidelines issued in this regard by the RBI.

The Company constantly reviews its exposure to various types of risk whether it be regulatory, operational, environmental, financial or political it has in place adequate systems to ensure compliance with all regulatory and statutory matters, reviews the same on a periodic basis and takes appropriate corrective action when necessary; likewise, operationally it does not depend on a single vendor for any of its major raw material; has in place a well defined practice on the levels of inventory that need to be maintained which while ensuring customer serviceability also ensures minimal stock holdings; has in place a clearly documented practice where credit risks are analysed prior to taking exposures with customers, etc.

TECHNICAL ANALYSIS

The major products of Finolex Cables are wires and cables, switches, CFL’s, copper rods, PVC U rods & fittings, PVC resins, drip irrigation system & optic fibre. These products are widely used in the B2B as well as B2C market. The buyers in the B2B markets are the automotive sector, agriculture sector, construction sector, telecom service providers, power sector & many more.

Products manufactured by Finolex Cables are also exported to other countries as well. The company was awarded the special trophy for large enterprises in the product group of the Highest Exporter in thrust products for outstanding contribution to engineering exports.

Sterlite techno and Havells India gives neck to neck competition to Finolex cables in the Indian market. Some other competitors of Finolex cables are Vindhya telelin, Aksh optifibre, Bhagyanagar Ind & Birla Ericcson.

The raw material used by Finolex cables are Copper, PVC, Polythene & Fibre.

Finolex Cables has manufacturing facilities in Maharashtra, Goa & Uttarakhand. In Goa company has three plants of which two are in Verna industrial estate & one in Usagaon, Ponda. Plants in Verna industrial estate are manufacturing units whereas the plant in Usagaon is the manufacturing plant of Copper rods which is used as raw material by the Finolex cables whereas the other major raw material i.e. the insulation material is sourced from Finolex Industries Ltd and so the raw materials are easily available round the year as it is manufactured by its own family industry.

As far as technology is concerned:

Advanced machinery & raw material handling system provided for facilitating making of high quality PVC compounds.

High speed energy efficient insulating lines with most modern quick color change facility provided for manufacture of cable as per international standards.

Combining hydraulic circuits of coiler & compactor, reducing the pump capacity & nozzle sizes of descaler system to reduce operation of one 40 hp motor as well as achieve reduction in energy requirement.

Imported technology: VCM & PVC technologies from Germany.

Finolex cables also manufacture wires with REACH & ROHS compliance that are tested and approved by reputed third party testing labs. This ensures the elimination of hazardous substances and provides us a greener, safer environment. Finolex cables also manufacture a complete range of retro 7 non retro CFLs at our fully automated plant in Pune. The mercury content in our CFLs is very low compared to others, this helps minimize the impact of hazardous materials on the environment.

Our IT systems has been designed with the objective to provide enterprise wide SAP & zero defect on critical servers.

MARKETING ANALYSIS

Finolex has entered into a Joint Venture Agreement with Corning of USA to market select telecommunications products. It is expected that the venture would become towards the end of this FY.

The Joint Venture with the J-Power System Corp of Japan, commenced manufacturing operations in Sep 2011. The venture’s plant at Shirwal near Pune is geared to produce extra high voltage electrical cables in the range of 66KV to 500KV.

Finolex Cables continues to hold the “Customers Superbrand” status since many years now. The company is the only Indian cable company to have achieved this enviable distinction.

Managing market research prior to new product introduction; developing and implementing business plan, strategy and budgets for products; managing client/vendor relationships; directing, training and coordinating operational and marketing activities nationally.

Liaising with Print media and Electronic media for advertisements.

Carrying out BTL Activities, Appointing local agencies for outdoor and BTL Promotions, driving the local marketing.

Designing creative ideas & implementing sales promotional strategies as part of brand building and market development efforts.

Brainstorming with product marketing managers to develop innovative marketing strategies for all new products.

Vendor Management for printing activities, Outdoor activities (OOH) like hoardings ,glow-signage, dealer boards, wall paintings, neon signs; Designing and implementing comprehensive communication programs including marketing collaterals, product and corporate audio-visuals, brochures, direct mailers, newsletters etc.

Analyzing latest marketing trends & tracking competitors’ activities; providing valuable inputs for fine Tuning product, sales & marketing strategies.

Identifying marketing initiatives through dealer research.

Effective interactions with Research & Development agency, serving as liaisons between organization and advertising agency for creative related to POP materials, press ads, TVC ads, and others, Print agency, etc.

MANAGERIAL ANALYSIS

MANAGEENT FINOLEX CABLES:

Name Designation

P P Chhabria Chairman / Chair Person

H S Vachha Director

Sanjay K Asher Director

S B (Ravi) Pandit Director

Adi J Engineer Director

M Viswanathan Director (Finance)

Name Designation

D K Chhabria Managing Director

Atul C Choksey Director

P G Pawar Director

Pradeep R Rathi Director

Vikas G Pai Director

INTERNAL CONTROL SYSTEM:

In line with the size and nature of operations, the Company has designed a system of internal controls that provides for:

- Accurate recording of its transactions with checks and balances built in

- Prompt reporting

- Adherence to applicable Accounting Standards and Policies

- Compliance with applicable laws, statutes, as well as internal procedures andpractices

- Safeguard of assets and their proper usage

The system further provides for policies which are documented clearly together withauthorization and approval procedures. To the extent applicable these are also inbuiltinto the Company’s ERP system. Further, there exists a system of internal audit bytwo external agencies. The internal audit is conducted, based on a pre approved plan underthe guidance and advice of the Audit Committee comprising of independent directors. Suchaudit is conducted in respect of all the locations that the Company operates out of aswell as in respect of the various functions. The internal audit thus plays an importantrole as it conducts audit of all key business areas as per a pre drawn and approved auditplan. Reports from the internal audit team are reviewed every quarter by the AuditCommittee for noting and approving corrective actions that may result from the conduct ofsuch audits. The Audit Committee met seven times during the year under review.

FINANCIAL ANALYSIS

BALANCE SHEET

BALANCE SHEET OF FINOLEX CABLES (in millions)

LIABILITIES 2010 2011 2012 ASSESTS 2010 2011 2012

CURRENT LIABILITIES       CURRENT ASSESTS      

SHORT TERM SECURED LOANS

138.69 156.086   INVENTORIES 2209.498

2808.42 2811.4

SHORT TERM UNSECURED LOANS

261.698 135.767   TRADE RECEVIBALES 710.471 1293.351

1140.9

CREDITORS 532.796 516.987 563.8 CASH IN HAND 1.51 1.746 1.8

PROVISIONS 145.574 168.45 187.1 CASH IN BANK 370.111 211.1 488.2

OTHER CURRENT LIABILITIES

1247.614

1380.875

1189.9

LOANS AND ADVANCES 828.82 1006.663

896.1

SHORT TERM BORROWINGS

    383.2 SHORT TERM INVESTMENTS 827.311 361.229 183.3

TOTAL 2326.372

2358.165

2324 TOTAL 4947.721

5682.509

5521.7

TERM LIABILITIES       NON CURRENT ASSESTS      

DEFFRED TAX 319.136 310.426 326.1 INVESTMENT IN SUBSIDARY 1860.89 1986.959

2045.8

SECURED 2327 2283.806

  LONG TERM LOANS AND ADVANCES

    40.2

UNSECURED 23.793 24.797   TOTAL 1860.89 1986.959

2086

LONG TERM BORROWINGS     1162.2

OTHER LONG TERM LIABILITY

    343.9 FIXED ASSESTS      

LONG TERM PROVISIONS     2.7 GROSS BLOCK 8321.413

8562.821

8585.4

TOTAL 2669.929

2619.029

1834.9

DEPRECIATION 3837.02 4223.671

4293.5

        NET BLOCK 4475.393

4339.15 4291.9

        LONG TERM INVESTMENT 142.944 142.944 143

NETWORTH       CAPITAL W.I.P     120.2

SHARE CAPITAL 305.879 305.879 305.9 TOTAL 4618.337

4482.094

4555.1

RESERVES & SURPLUS 6125.195

6868.915

7698.4

TOTAL 6431.074

7174.794

8004.3

INTANGIBLE ASSESTS 0.427 0.426 0.4

        TOTAL 0.427 0.426 0.4

TOTAL 11427.375

12151.988

12163.2

  TOTAL 11427.375

12151.988

12163.2

PROFIT AND LOSS STATEMENT

P & L A/C OF FINOLEX CABLES LTD. (in millions)Particulars 2009-2010 2010-11 2011-12

  %age   %age   %age            Sales 16187.

5100 2035

7.5100 2063

9.5100

           Cost of Production:            Raw Material consumed 12436.

0576.82501

93116391.5

80.51823652

15560.5

75.39184573

Packing Material 216.75 1.338996139

231.1 1.135208154

235.9 1.142954044

Direct Labour 592.25 3.658687259

647.4 3.180154734

694.8 3.366360619

Other manufacturing expenses:   0   0   0Consumption of stores and spares 168.63 1.041729

73183.4 0.900896

476166 0.804283

049Processing Charges 1.069 0.006603

8612.3 0.011298

0476.2 0.030039

487Power and Fuel 291.1 1.798301

158332.4 1.632813

459325.7 1.578042

104Rent ,rate and taxes 21.6 0.133436

29324.1 0.118383

88823.6 0.114343

855Repair and Maintenance 40.024 0.247252

5146.2 0.226943

38745 0.218028

538 522.42

33.227323

552588.4 2.890335

257566.5 2.744737

033Depreciation 372.27 2.299737

452387.8 1.904949

036394.7 1.912352

528Exceptional Item 0 0 344.4 1.691759

794363.6 1.761670

583Total 14139.

74387.34976

3711859

0.691.32064

351781

686.31992

054Add: Opening stock of WIP N/A   547.6 2.689917

721822.8 3.986530

681Less:Closing Stock of WIP N/A   -

822.8-

4.041753653

-652.7

-3.162382

81Cost of Production 14139.

74387.34976

3711831

5.489.96880

7561798

6.187.14406

841Add: Opening stock of FG 508.20

43.139484

171146.

25.630357

3621506.

57.299110

928Less:Closing Stock of FG -1118.7 -

6.910888-

1480.-

7.273977-

1517.-

7.351922

031 8 65 4 285Adjustment for captive consumption

-8.65 -0.053436

293

-5.1 -0.025052

192

-9.5 -0.046028

247Cost of Sales 13520.

59783.52492

35517975.7

88.30013509

17965.7

87.04522881

Gross Profit 2666.903

16.47507645

2381.8

11.69986491

2673.8

12.95477119

By other income 241.1 1.489420849

259.3 1.27373204

364 1.763608615

Selling, General & Administrative expenses

-1842.1

86

-11.38029

961

-1380.

7

-6.782266

978

-1776.

4

-8.606797

645Interest -

168.954

-1.043731

274

-179.6

-0.882230

136

-168.6

-0.816880

254Operating Profit 896.86

35.540466

4091080.

85.309099

841092.

85.294701

907Preliminary & Preoperative Expense written off

-5.498 -0.033964

479

-2.9 -0.014245

364

-0.1 -0.000484

508Provisions 0 0 -7.7 -

0.037823898

0 0

PBT 891.365

5.506501931

1070.2

5.257030578

1092.7

5.294217399

Tax 315.426

1.948577606

204.5 1.00454378

110.8 0.53683471

PAT 575.939

3.557924324

865.7 4.252486798

981.9 4.757382689

INTERPRETATION OF P&L A/c

The P&L A/c shows the correct picture of all the expenses incurred during a given time period.

1. SALES: - The sale of the company is showing an increasing trend which is reflected in the profits of the company. The sales has increased significantly i.e. by Rs. 4170 in the FY 2010 from the previous FY 2011.The sales increase in FY 2012 is by Rs 282.

2. COST OF PRODUCTION (COP):- The Cost of Production includes all the expenses incurred while manufacturing or producing a particular product. All the factors in COP are showing more or less a stable trend over all three financial years. The COP is between 87% to 89% which shows that there in no major increase in any head in manufacturing expenses. The major part that constitutes the cop is raw material consumption. The consumption of Raw Material is more or less at a constant level which shows that the company is not increasing its output level. The raw material consumption is between 75% to 80% in all the FY. In 2012 it is Rs. 15560.5 which is 75% less in comparison to previous year. In 2011 it is Rs 16391.5 which is 80.51%.

3. COST OS SALES (COS):- The COS has increased to Rs 17965.7 which was Rs.17975.5 in the year 2011 and Rs. 13520.59 in 2010. It shows that the cost of sales has increased due to its overall increase in sales during the year. Although the increase the increase is not significant. The COS is also stable at around 85%.

4. GROSS PROFIT: - After meeting all the manufacturing expenses the gross profit for the current year is Rs.2666.903 which increasing from previous year by Rs. 285.103.Whereas in FY 2011 the gross profit was Rs 2381.8 which declined from FY 2010 by Rs. 292.This decline was due to increase in Cost of production.

5. OPERATING PROFIT:- The operating profit is showing an increasing trend. The Operating profit in the FY 2012 has increased from Rs. 1080.8 to 1092.

PROFIT AFTER TAX (PAT) :- The PAT is also showing an increasing trend. The PAT has increased from Rs. 865.7 to Rs. 981.9 in the current year. The increase in PAT shows that the company is profitable and efficient in its operations.

RATIOS;

RATIOS 2010 2011 2012LIQUIDITY RATIO            Current Assets 4947.721 5682.509 5521.7Current Liabilities 2326.372 2358.165 2324CURRENT RATIO 2.126797004 2.409716453 2.375946644      Current Assets 4947.721 5682.509 5521.7Inventory 2209.498 2808.42 2811.4CA-Inventory 2738.223 2874.089 2710.3      Current Liabilities 2326.372 2358.165 2324Bank Borrowing 138.69 156.086 383.2CL-Bank Borrowing 2187.682 2202.079 1940.8QUICK RATIO 1.251654948 1.305170705 1.396485985      Current Assets 4947.721 5682.509 5521.7Current Liabilities 2326.372 2358.165 2324NET WORKING CAPITAL 2621.349 3324.344 3197.7      Sales 16187.5 20357.5 20639.5Assets 11426.95 12151.99 12163.2ASSET TURNOVER RATIO 1.416607231 1.675240022 1.696880755      SOLVENCY RATIO            Term Liabilities 2669.929 2619.029 1834.9      Networth 6431.074 7174.794 8004.3Intangible Assets 0.427 0.426 0.4Tangible Net Worth 6430.647 7174.368 8003.9DEBT EQUITY RATIO 0.415188238 0.365053619 0.22925074      PBIT 1060.319 1249.8 1261.3Interest 168.954 179.6 168.6INTEREST COVERAGE RATIO 6.275785125 6.958797327 7.481020166      Net Fixed Assets 4618.337 4482.094 4555.1Term Liabilities 2669.929 2619.029 1834.9FIXED ASSETS COVERAGE RATIO 1.72976023 1.711357148 2.482478609      PROFITABILITY RATIO      

     PAT 575.939 865.7 981.9Sales 16187.5 20357.5 20639.5RETURN ON SALES 3.557924324 4.252486798 4.757382689      PAT 575.939 865.7 981.9Capital+Reserves 6431.04 7174.794 8004.3RETURN ON EQUITY 8.955612156 12.06585165 12.2671564      PAT 575.939 865.7 981.9FA+CA+NCA 11426.95 12151.56 12162.8RETURN ON ASSETS 5.040181326 7.12418817 8.072976617

Interpretation of Ratios

LIQUIDITY RATIOS:

CURRENT RATIO:-

In 2010- 2.12

In 2011- 2.40

In 2012- 2.37

Comparing the current ratio with the industry benchmark i.e. 1.33:1 we find that the company’s is high as compared to the benchmark ratio it indicates that the company may not be efficiently using its current assets or its short-term financing facilities, it also indicates the poor short term investment policies of the company .amount is also locked up with debtors and is increasing so collection policy is also not very efficient.

QUICK RATIO:-

In 2010- 1.21

In 2011- 1.30

In 2012- 1.39

Comparing the Quick ratio with the industry benchmark i.e. 1:1 we find that the company’s quick ratios are more as compared to the benchmark which is better. This ratio is an indicator of short term liquidity. The quick ratio measures a company's ability to meet its short-term obligations with its most liquid assets. So the company is in a position to meet its current liabilities through its liquid assets, liquidity of the company is quite good.

NET WORKING CAPITAL:-

CURRENT ASSET-CURRENT LIABILITIES

In 2010- 2621.34

In 2011- 3324.34

In 2012- 3197.7

On analyzing the net working capital we find that it is positive which means the liquidity position of the company is good. Net Working Capital is a measurement of the operating liquidity available for a company to use in developing and growing its business. The positive net working capital means that the firm will be able to perform its function well in future and will be able to meet all its operations since its having the sufficient need to perform.

ASSET TURNOVER RATIO:-

SALES /ASSET

In 2010- 1.41

In 2011- 1.67

In 2012- 1.69

This ratio measures the efficiency of the company in able to utilize its assets. So we can find that the firm is able to utilize its assets efficiently since the ratio is quite fine and subsequently it is increasing year by year.

SOLVENCY RATIO:

Debt Equity Ratio:-

In 2010- .415

In 2011- .365

In 2012- .229

On comparing it with industry benchmark ratio which is 3:1, for the company it’s too low. The company has taken a small amount of long term loan (which is decreasing year after year) which can be easily paid by the capital of the firm and the company in future can easily take loan in order to expand their business. We find that the company in future can take more loans to expand and grow their business. A low debt-to-equity ratio, also indicates conservative financing and low risk.

INTEREST COVERAGE RATIO:-

In 2010- 6.27

In 2011- 6.95

In 2012- 7.48

This ratio indicates how many times the interest charges are covered by the profits available to pay interest charges ,an interest coverage ratio of 6 to 7 times is considered appropriate . So it can be inferred that the company has the ability to pay its interest timely . The lenders are also secured in respect of payment of interest.

FIXED ASSET COVERAGE RATIO:-

In 2010- 1.72

In 2011- 1.71

In 2012- 2.48

This ratio indicates the fixed asset available to pay term liabilities the industry benchmark is 1.25:1.In 2010 and 2011 the ratio was almost close to the benchmark ,the fixed asset available was sufficient to pay the term liabilities but in 2012 it is much higher than the benchmark .( the companies fixed assets have decreased over the years ).

PROFITABILITY RATIO:

Returns on Sale

In 2010- 3.55

In 2011- 4.25

In 2012- 4.75

This ratio measures the profitability; it indicates returns a company is earning on its sales. On comparing the return on sales of 3 years we find that the company is performing well as its return on sales are good that means that the company is earning profit.

Return on Equity

In 2010- 8.95

In 2011- 12.06

In 2012- 12.26

The ratio shows the return the company is earning on its equity. The ratios are constantly improving over the years which show that it is providing good returns to its shareholders.

Return on ASSETS

In 2010- 5.04

In 2011- 7.12

In 2012- 8.07

Returns on asset measures profitability, it indicates returns on total assets. The higher the ROA number, the better, because the company is earning more money on investment. The company’s ROA is increasing over the year which is beneficial for the company as it attracts the investors to invest in it.

CASH FLOW OF FINOLEX CABLES

Cash Flow Statement ( 2010-2011)

(in Rs millions)

Sources Amount Uses Amount

Cash generated : Short term:

Profit  865.7 Inventory 598.922

Depreciation 387.8 Trade receivables 582.88

Short Term Sources :      Short term Unsecured Loans 125.931

Investment 466.082                   Creditors 15.809

Short Term Secured loans 17.396             Loans & Advances 177.843

 Provisions 22.876 Long term Uses :

Long Term Sources : Deferred tax 8.71

Net Worth 453.959 Secured loan 43.194

Fixed Assets 136.244 Non-Current Assets 126.069

Unsecured loans 1.004

Total 2351.061 1679.358

Surplus : 671.703

Opening Cash Balance 371.621

Net surplus/deficit 671.703

Closing Cash Balance 1043.324

Cash Flow Statement ( 2011-2012)

Sources Uses

Cash generated : Short term Sources:

Profit  981.9 Inventory 2.98

Depreciation 394.7 Short Term Secured Loans 156.086

Short Term Sources : Short Term Unsecured Loans 135.767

Short Term Investment 177.929 Other Current Liability 190.975

                       Provisions 18.65 Long Term Sources:

                        Creditors 46.813 Long Term secured Loan 2283.806

                Trade Receivables 152.451 Long Term Unsecured Loan 24.797

                 Loan & Advances 110.563 Non Current Assets 99.041

Long Term Sources : Fixed Assets 73.006

Deferred Tax 15.674

Net Worth 713.285

Long term borrowings 1162.2

Other long term Liabilities 343.9

Long Term Provisions 2.7

Total 4120.765 Total 2966.458

surplus : 1154.307

Opening Cash Balance 1043.324

Net surplus/deficit 1154.307

Closing Cash Balance 2197.631

INTERPRETATION:

The company has sufficient cash to pay its obligations.