A Study on Financial Analysis of Diamond Engineering 2

8/2/2019 A Study on Financial Analysis of Diamond Engineering 2

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INTRODUCTION

1.1 GENERAL INFORMATION

Financial analysis (also referred to asanalysis) refers to an assessment of the viability, stability and profitability of a business,

sub-business or project.

It is performed by professionals who prepare reports using ratios that make use of

information taken from financial statements and other reports. These reports are usually

presented to top management as one of their bases in making business decisions. Based on

these reports, management may:

Continue or discontinue its main operation or part of its business;

Make or purchase certain materials in the manufacture of its product;

Acquire or rent/lease certain machineries and equipment in the production of its

goods;

Issue stocks or negotiate for a bank loan to increase its working capital;

Make decisions regarding investing or lending capital;

Other decisions that allow management to make an informed selection on various

alternatives in the conduct of its business.

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1.2 INDUSTRY PROFILE

A Steel Fabrication Company mainly specializes in the building of machinery and

equipments by cutting, shaping and assembling components made from raw materials.

They purchase steel and fabricate products according to the specific structural designrequirements of the projects. Thus an accurate picture of each steel element and

connections between them with appropriate dimensions can be ascertained.

Another important task they do is steel detailing. For this they usually employ the

services of a steel structural detailer who creates the necessary drawings required to build

and fabricate the structure. Sometimes this work is outsourced to engineering firms.

Steel fabricators are usually proficient in the manufacturing of sturdy steel frames,cutwork grills and decorative motifs. They usually cater to commercial as well as industrial

demands. The beams used for stairways, decks, platforms etc are usually fabricated

products.

Before you entrust work to a particular steel fabrication company, you need to

make sure that they know the intricacies of the trade. Check out the quality of equipment

used for the various processes involved in the fabrication. Most modern fabricators use

laser cutting devices which give an accurate and smooth edge on steel.

Steel fabrication companies will never experience a dearth of good projects since

today's construction industry makes use of a lot of pre-fabricated steel in their designs due

to their ease in assembling and the minimum construction waste involved.

Many of the steel fabrication companies are based in China and India mainly due to

the low cost labor available here. But this is not the only criterion; the staff is highly skilled

and trained to provide the best in fabricated steel with high degree of precision exercised in

every component delivered.

The fabrication company has to employ a number of staff like welders, assemblers,

fabricators and Production and Quality control staff for performing the various processes

involved in fabrication.

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1.3 COMPANY PROFILE

Diamond Engineering Private Ltd was established in 1978, but was later acquired

by P. Mohanraj in 1987, who dedicatedly shouldered the responsibility to turn it into what

is today known as the Diamond Group- Worlds No.1 in fabrication. The organization

possesses the expertise and production facilities to produce a wide range of products like

Stacker, Reclaimer, Classifiers, Mill Stand, Pressure Vessels, Structurals, Bucket Elevators,

Pan Conveyors, Cyclones, Separators, Airslides, Conveyor Galleries, Lime Mud Filters,

Rotary Sluice, Ship Loaders, Industrial Fans, Impellers, Pollution control equipments like

Bag Filters etc.

What started out in a small way with only 10 employees is today coming to be

reputed as the Worlds No.1 fabricator, due to the excellent and innovative leadership,

careful planning and also the hard work and focused dedication of all the people associated

with the Diamond Group.

With a strength of 5000 employees, Diamond Group of Companies have

contributed vastly from modernizing handling facilities and providing for advanced

blasting processes to creating infrastructure to fabricate 10000 MT per month. Diamond

Group of companies is situated on the IT highway, well connected by all means of

transport and very close to Chennai Seaport and Airport.

By constantly updating ourselves with market trends and latest developments, we

are capable of foreseeing in the industrys future and evolve in the process. Our employees

are also trained form time to time. According to the progressive changes in the

organization so that they may keep ahead of the times with the knowledge gained. We

acquire imported world-class machinery and equipments, so that we may continue to

remain one of the best in the global industry providing quality services to our customers.

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FOUNDER:

Diamond group is headed by P. Mohanraj, a gold medalist in mechanical

engineering from Anna university- Chennai, who has used his eight years of professional

experience working with BHEL to embrak upon setting up Indias largest fabrication unit.

Under his excellent ad innovative leadership along with his perseverance, Diamond group

is now competing for the worlds no.1 position in the steel fabrication industry.

Through out this amazing journey from a taking over a sick unit around 10

employees to building a steel fabrication empire of this magnitude in a short span of 23

years, he has always kept his employees welfare uppermost in mind second only to

customer satisfaction. The fact that all the customers gained since 1987 are still with us

stands as a testament to his business acumen and enterprising skills.

MISSION STATEMENT:

We continually improve our business process to maximize value for our customers

and to enhance our company performance. We achieve this through timely supply of

products and services of consistent quality meeting all contractual requirements.

VISION STATEMENT:

We are committed to fabricate and supply high quality steel products to our customers.

As a pioneering steel fabrication unit, the emphasis is always on the achievement of four

indispensable goals:

customer satisfaction

high quality of products and services

offer the most competitive price for our customers

prompt delivery

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towards this end, we would strive to achieve the best international standards of

manufacturing process quality. The manufacturing activity will be given the best logistics

support to deliver the products on time and in full condition to our customers. Our human

resources will be constantly trained and fully equipped with the best material resources and

technologically competent machinery to achieve the goals of quality, customer satisfaction

and prompt delivery.

QUALITY POLICY:

We at diamond engineering are dedicated to manufacture and supply steel products

conforming to customer specification as per agreed quality and effect timely delivery.

Moreover, in order to be in pace with the changing era, we assured to improve upon our

thoughts, activities and quality through continual improvement.

Also, our diamond group will make all staff and employees as crorepathis before 15th

November 2010, make them happy and carry itself to world no.1.

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DEPARTMENT NAME NAME OF THE SUPERIORS

Managing Director

Executive Director

President - Finance-Administration

President - Operations

President - Quality Control

General Manager Projects

General Manager - Purchase

Group General Manager Diamond

General Manager Works

General Manager - WorksDeputy General Manager Projects

Deputy General Manager PPC

Works Manager

Manager - HR.

Deputy General Manager Taxation

Senior Manager - Sales.

Deputy General Manager - QA & QC

Sr. Executive - EXIM

Mr. P. Mohanraj BE gold medalist

Mr. P. Danaraj, MA, M.com, MBA,

AICWA,

L.GabrielDePrasad

P. Jeyaraj

E. Rajagopal

N. G. Thirunavukarasu

K. R. Meenakshi

S. Shanmugha Sundaram

S. P. Mohanasundaram

A. KumaravelJeeva Sabasteen

J. Kamalraj

M. Kiran Pradeep

C. Hemalatha

M. Geetha

D. Jayashree

P. Gunasekaran

S. Sudha

UNITS:

DIAMOND

TOPAZ

EMERALD I

EMERALD II

RUBY

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Diamond Engineering (Chennai) Private Ltd, was established in 1978 and

later transformed to Diamond group by P. Mohanraj who took the organization to give it

the position of the position of the worlds no.1 fabricator. As the first company that was

formed under the diamond group, diamond Engineering is the head office for all other

units. The organization is equipped with the best of technology to support the production

facilities and also has a well-qualified team of experts to run its operations.

Topaz Engineering was the first company that was added to the Diamond

group in 1998. Located in Sholinganallur, Chennai, Topaz Engineering is only 500meters

from Diamond Engineering and is exclusive for horizontal boring machine X - 7100 mm,

Y-3000 mm, Z - 2000 mm, Spindle - 160mm make - Collet with Rotary table10 Tons

Size1500mm x 1800mm, fully structured and equipped with 10tons EOT crane capacity.

3 acres of outdoor workspace is used only for fabricating and as storage area. Our

engineers and skilled trades people work efficiently and to exact specifications and well-

equipped facilities ensure that projects get completed on time and within the estimated

budget.

Emerald Engineering Unit I is a part of the 200 crores Diamond group ofCompanies, located at Pudupakkam village which is 33 kilometers away from Chennai. We

provide steel fabrication solutions to industrial leaders in the areas of cement plants,

process plants and petrochemicals. We also provide erection and commissioning services

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for various plants. The company was started in the year 2003 with a total area of 5 acres.

With the latest and sophisticated machinery and material handling systems like 15 tons

EOT cranes, 15 tons forklifts we can confidently claim that we deliver the best quality

products to our customers.

Emerald Engineering Unit II is a part of the 200 crores Diamond group ofCompanies, located at Mambakkam village and is 40 kilometers away from Chennai. We

cater to industrial leaders by providing steel fabrication solutions in the areas of cement

plants, process plants and petrochemicals. Erection and commissioning services of various

plants are also provided. The company was started in the year 2004 with a total area of 15

acres. We use complex and advanced machineries for sand blasting and material handling

systems like 15 tons EOT cranes, 15 tons of mobile cranes and 15 tons forklifts to deliver

best quality products to our customers.

Ruby Engineering is the biggest company under the Diamond Group ofcompanies. The factory stretches to 60 acres and beyond and is designed to meet world

standards. The company has the best of the latest machineries that are mainly used for sand

blasting, painting, packing and storing.

FACILITIES TO THE EMPLOYEES

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Education plays a vital role in the progress of a nation. That is why we at the

Diamond group provide education, completely free of cost for the first two children

of all the members of the Diamond family from their kindergarten to graduation.

Diamond group provides shelter for the employees with a minimum of 5 years of

service and their families by helping them with housing & land loans

Safety of our employees are our prime concern. Having taken all precautionary

measures, we provide complete first aid services and have ambulances at all our

units

Always aiming for improvement in quality and for meeting the delivery of

products, Diamond group conducts many training & development programs to

improve the skill sets and also to keep our employees updated on the current and

evolving technologies.

Diamond group ensures the security of our employees and their families by

providing insurance facilities. Every employee of our company has medical as well

as life insurance in case any mishaps occur.

Diamond group ensures that our employees have their medical check-ups at least

once every year at our campus.

Diamond group provides free transportation for all its employees through a wide

range of hi-tech buses and cabs owned and operated by the company itself.

We believe in celebrating work and life in our Diamond family. That is why we

celebrate the birthday of each and every employee and follow a policy to make surethat we participate in their marriage functions by wishing them with gifts and

financial support.

Diamond group believes in setting an example and motivating our employees by

recognizing the extra efforts put in by each and every individual who has worked

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hard and selflessly with dedication. We believe that no work should go unnoticed.

That is why we provide motivational prizes for our employees in 10 categories

every month.

SERVICES OFFERED

Packing

At Diamond Group of companies, we are constantly keeping in track of the latest

technological advancements and other developments to continuously provide you with

quality products. And to help our customers, we have exclusively developed Assembly

Guides and Packing Guides for easy use.

Packing Guide

The packing guide has been designed by the Diamond Group exclusively for our clients by

improvising and upgrading constantly. A Packing guide helps the client to ascertain the

number of jobs contained in a single crate. Visual representations are given to make it easy

for the clients to understand better about the jobs and their numbers.

Assembly Guide

Constantly keeping track of the latest technological advancements and other developments,

we at Diamond Group have exclusively developed this user-friendly assembly guide for

our clients, which gives simple directions to help them understand and assemble the

machinery with ease on their own. This will help customers to save time and also get the

process right.

Shipping

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At Diamond Group of companies, we are constantly keeping in track of the latest

technological advancements and other developments to continuously provide you with

quality products. And to help our customers, we have exclusively developed Assembly

Guides and Packing Guides for easy use.

AWARDS

1. Regional award for export excellence 2004-2005

Silver shield for star performer as medium enterprise in the product of

miscellaneous articles of iron\ steel.

2. Regional award for export excellence 2005-2006

Gold trophy for top exporter as medium enterprise.

3. All India Awards for export excellence - 2006-2007

Gold trophy for top exporter.

4. Institute of trade & industrial development

Managing director Mr. P. Mohan raj received Udog patra for self made

industrialists

5. BHEL Trichy

Best sub contractor award for 2008-2009

1.4 PRODUCT PROFILE

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1. STRUCTURAL STEEL:

a) Beams and columns

b) structure

c) conveyor structure

d) rafter

e) column assembly

f) conveyor gallery

2. HEAVY FABRICATION:

a) Travel carriage

b) Rake car

c) Cold stack

d) Jib steel

e) Main girder

f) Mill housing

g) Klin hood

h) Riser duct

1.5 NEED OF THE STUDY

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Financial analysis is helpful to the management in knowing financial strength of the

firms to make their best use and to be able to spot out financial weakness of the firm to take

suitable corrective actions. To provide useful information this can gainfully be utilized to

evaluate the earning capability. To suggest ways and means of improving the financial

position in the company.

The future plans of the firm should be laid down in view of the firms financial

strength and weakness by properly establishing relationship between the items of the

balance sheet and the profit & loss a\c

1.6 OBJECTIVES OF THE STUDY

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PRIMARY OBJECTIVES

To study the financial analysis of the DIAMOND ENGINEERING (CHENNAI) Private

Ltd

SECONDARY OBJECTIVES

1. The main aim of this work is to study the financial performance of last 3 years of

DIAMOND (ENGINEERING) CHENNAI Private Ltd.

2. To measure the profitability position of the firm for the last 3 years.

3. To analyze the changes of previous years income & expenditure a\c and balance

sheet to help the management in forecasting and planning.

4. To review the business operations of the last year and its likely effect on the

current years operations.

1.7 SCOPE OF THE STUDY

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The study aims at identifying financial performance of DIAMOND

(ENGINEERING) CHENNAI Private Ltd. This study includes providing information of

last 3 years balance sheet of the company.

It analysis the financial position of the DIAMOND (ENGINEERING) CHENNAI

Private Ltd. by using some financial techniques based on the financial results of the

company in the previous and the current year.

The analysis was done using the tools like comparative statements, common size

statements and trend analysis. These calculations cover the major area like income and

expenditure, balance sheet.

1.8 LIMITATIONS OF THE STUDY

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The time period is limited and is not possible for analyzing the over all performance of

DIAMOND (ENGINEERING) CHENNAI Private Ltd with maximum accuracy.

The project is fully based on the information from the company schedule.

As the balance sheet is prepared on a particular date it does not reflect the averages.

The values are based in the book value. It does not consider the effect of inflation or

deflation which may lead the value to increase or decrease.

LITERATURE SURVEY

REVIEW OF LITERATURE

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Financial analysis (also referred to as financial statement analysis oraccounting

analysis) refers to an assessment of the viability, stability and profitability of a business,

sub-business or project.

It is performed by professionals who prepare reports using ratios that make use of

information taken from financial statements and other reports. These reports are usually

presented to top management as one of their bases in making business decisions. Based on

these reports, management may:

Continue or discontinue its main operation or part of its business;

Make or purchase certain materials in the manufacture of its product;

Acquire or rent/lease certain machineries and equipment in the production of its

goods;

Issue stocks or negotiate for a bank loan to increase its working capital;

Make decisions regarding investing or lending capital;

Other decisions that allow management to make an informed selection on various

alternatives in the conduct of its business.

Financial statements are records that provide an indication of an individuals,

organizations, or business financial status. There are four basic types of financialstatements: balance sheets, income statements, cash-flow statements, and statements of

retained earnings. Typically, financial statements are used in relation to business

endeavors.

Balance sheet financial statements are used to provide insight into a companys

assets and debts at a particular point in time. Information about the companys shareholder

equity is included as well. Typically, a company lists its assets on the left side of the

balance sheet and its debts and liabilities on the right. Sometimes, however, a balance sheet

has assets listed at the top, debts in the middle, and shareholders equity at the bottom.

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Financial analysts often assess the firm's:

1. Profitability - its ability to earn income and sustain growth in both short-term and long-

term. A company's degree of profitability is usually based on the income statement, which

reports on the company's results of operations;

2. Solvency - its ability to pay its obligation to creditors and other third parties in the long-

term;

3. Liquidity - its ability to maintain positive cash flow, while satisfying immediate

obligations;

Both 2 and 3 are based on the company's balance sheet, which indicates the financial

condition of a business as of a given point in time.

4. Stability- the firm's ability to remain in business in the long run, without having to

sustain significant losses in the conduct of its business. Assessing a company's stability

requires the use of both the income statement and the balance sheet, as well as other

financial and non-financial indicators.

Methods

Financial analysts often compare financial ratios (of solvency, profitability, growth, etc.):

Past Performance - Across historical time periods for the same firm (the last 5

years for example),

Future Performance - Using historical figures and certain mathematical and

statistical techniques, including present and future values, This extrapolation

method is the main source of errors in financial analysis as past statistics can be

poor predictors of future prospects.

Comparative Performance - Comparison between similar firms.

These ratios are calculated by dividing a (group of) account balance(s), taken from the

balance sheet and / or the income statement, by another, for example:

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n / equity = return on equity

Net income / total assets = return on assets

Stock price / earnings per share = P/E-ratio

Comparing financial ratios is merely one way of conducting financial analysis. Financial

ratios face several theoretical challenges:

They say little about the firm's prospects in an absolute sense. Their insights about

relative performance require a reference point from other time periods or similar

firms.

One ratio holds little meaning. As indicators, ratios can be logically interpreted in at

least two ways. One can partially overcome this problem by combining several

related ratios to paint a more comprehensive picture of the firm's performance.

Seasonal factors may prevent year-end values from being representative. A ratio's

values may be distorted as account balances change from the beginning to the end

of an accounting period. Use average values for such accounts whenever possible.

Financial ratios are no more objective than the accounting methods employed.

Changes in accounting policies or choices can yield drastically different ratio

values.

They fail to account for exogenous factors like investor behavior that are not based

upon economic fundamentals of the firm or the general economy (fundamental

analysis)

Financial analysts can also use percentage analysis which involves reducing a series of

figures as a percentage of some base amount. For example, a group of items can be

expressed as a percentage of net income. When proportionate changes in the same figure

over a given time period expressed as a percentage is known as horizontal analysis.

Vertical or common-size analysis, reduces all items on a statement to a common size as a

percentage of some base value which assists in comparability with other companies of

different sizes.

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Another method is comparative analysis. This provides a better way to determine

trends. Comparative analysis presents the same information for two or more time periods

and is presented side-by-side to allow for easy analysis.

TYPES OF FINANCIAL STATEMENT ANALYSIS:

1. EXTERNAL ANALYSIS:

It is conducted by those persons who do not have access to the

detailed record of the enterprise and therefore have to depend on published accounts

and directors and auditors reports. Such type of analysis is made by investors, credit

agencies, government agencies and research scholars.

2. INTERNAL ANALYSIS:

It is conducted by the management for the reason that the management

wishes to know the financial position and operational efficiency of the organization.

The important feature of such analysis is that as the management has access to all

information relating to the organization so the analysis is that as the management has

access to all information relating to the organization so the analysis is more detailed,

extensive and correct.

3. HORIZONTAL ANALYSIS:

This analysis is made to review and analyze financial

statements for a number of years and is, therefore, based on financial data taken for

those years. It is a time series analysis. It shows comparison of financial data for

several years against a chosen base year. It is useful for long-term trend analysis and

planning. Comparative financial statement is an example of this type of analysis.

4. VERTICAL ANALYSIS:

This analysis is made to review and analyze the financial

statements of one year only. Such analysis is also called static analysis as it is

frequently used for referring to ratios developed for one date or for one accounting

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period. Such an analysis is useful in comparing the performance of several companies

of the same type or divisions or departments in one enterprise.

PROCESS OF FINANCIAL STATEMENT ANALYSIS:

1. RE-ARRANGEMENT OF FINANCIAL STATEMENTS:

For analysis, it is necessary to reclassify the data contained in the

financial statements into purposive classes so that maximum information from every

data for analysis can be obtained. Reclassification and rearrangement of different data

depend upon the purpose of analysis.

2. COMPARISON:

After the classification of data of financial statements into different

categories, it is necessary to derive comparative data of the same enterprise of the past

periods if it is a time series analysis. In case of cross-sectional analysis, it is necessary

to derive comparative data of the same accounting period of the similar or comparable

enterprises. For this, comparative study is necessary.

3. ANALYSIS:

Comparative financial data are then analyzed with reference to financial

characteristics like profitability, solvency and liquidity.

4. INTERPRETATION:

The concluding part of financial statement analysis is interpretation of

financial information generated in the process of financial statement analysis. The

interpretation should be precise and pointed towards indicating the movement ofvarious financial characteristics.

RESEARCH METHODOLOGY

3.1 RESEARCH

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Research is an academic activity and as such the term should be used in technical

sense. Research, is thus, an original contribution to the existing stock of knowledge

making for its advancement. It is per suit of truth with the study, observation,

comparison and experiment. In short, the search for knowledge through the objective

and systematic method of finding solutions to a problem is research.

The systematic approach concerning generalization and formulation of a theory is

generalization and formulation of a theory is research. As such the term research

refers to the systematic method consisting of enunciating the problem, collecting the

facts or data, analyzing the facts and reaching certain conclusions either in the form of

solutions towards the concerned problem or in certain generalizations for some

theoretical formulation.

3.2 RESEARCH DESIGN:

The descriptive form of research method is adopted for study. The major purpose

of descriptive research is description of state of affairs of the institution as it exists at

present. The financial statement of DIAMOND (ENGINEERING) CHENNAI Private Ltd

has been described in this study.

3.3 NATURE OF DATA

The data required for the study has been collected from secondary source. The

relevant information was taken from annual reports, journals and internet.

METHODS OF DATA COLLECTION

This study is based on the annual report of DIAMOND ENGINEERING

(CHENNAI) Private Ltd. Hence the information related to profitability, short term and

long term solvency and turnover were, very much required for attaining the objectives of

the present study.

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TOOLS APPLIED

To have a meaningful analysis and interpretation of various data collected, the

following tools were made for this study.

Comparative statements

Common size statements

Expenses ratio

DATA ANALYSIS & INTERPRETATION

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COMPARATIVE INCOME STATEMENT:

Comparative income statement shows the operating results for a number of accounting

periods so that changes in data in terms of money and percentage from one period to

another may be known.

Percentage change = absolute change

------------------------------- * 100

Figures of previous year

COMPARATIVE BALANCE SHEET:

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.

Percentage change = absolute change

------------------------------- * 100

Figures of previous year

TABLE 1

COMPARATIVE INCOME STATEMENT OF DIAMOND ENGINEERING(CHENNAI) PRIVATE LTD FOR 2006 - 2007

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PARTICULARS 2006 2007 INC\DEC PERCENTAGE(%)

INCOME

SALESDomestic salesExport sales

Less: net excise duty after

CENVAT credit

Net salesOther income

Total IEXPENDITURESalaries, bonus & OEB

Materials consumed

Manufacturing expensesAdministrative expenses

Bad debts written off

Financial chargesMarketing expenses

Directors remuneration

Total II

Profit\loss before depreciationLess: depreciation

Provision for ITAY 2006-07

Provision for IT

Provision for FBTProvision for DTL

Add: deferred tax liability no

longer required

Net profit\loss

Net profit\loss carried to balancesheet

30,02,47,3541,14,46,30,998

1,44,48,78,347

72,69,283

1,43,76,09,0641,73,26,836

1,45,49,35,900

5,91,94,590

90,28,63,040

15,80,82,2722,21,94,780

1,58,100

5,66,82,66010,81,93,867

15,00,000

1,30,88,69,309

14,60,66,5911,45,20,962

4,00,00,000

---------

14,48,79219,35,000

8,81,61,837------------

8,81,61,837

8,81,61,837

55,32,35,68310,85,65,66,302

1,63,88,91,985

98,31,787

1,64,87,23,77298,31,787

1,64,87,23,772

11,47,62,662

96,55,21,962

20,22,09,3593,80,61,495

12,000

7,76,56,82411,99,00,255

74,50,000

1,52,55,74,557

12,31,49,2153,09,88,976

9,07,389

33,00,00,000

39,91,200--------------

5,42,61,65015,49,000

5,58,10,650

5,58,10,650

25,29,88,329(5,89,74,691)

19,40,13,638

(72,69,283)

21,11,14,708(74,95,047)

19,37,87,872

5,55,68,072

6,26,58,922

4,41,27,0871,58,66,715

(1,46,100)

2,09,74,1641,17,06,388

59,50,000

21,67,05,248

(2,29,17,376)1,64,68,014

(3,90,92,611)

3,30,00,000

25,42,408(19,35,000)

(3,39,00,187)15,49,000

(3,23,51,187)

(32,51,187)

84.26(5.15)

13.43

(100)

14.68(43.26)

13.32

93.87

6.94

27.9171.49

(92.41)

3710.82

396.67

16.56

(15.69)113.41

(97.73)

------

175.48(100)

(38.45)----------

(36.70)

(36.70)

INTERPRETATION:The table 1: In the year of 2006 & 2007 income statement is

compared it is interpreted that 2007 profit level is higher than 2006.

TABLE 2COMPARATIVE INCOME STATEMENT OF DIAMOND ENGINEERING

(CHENNAI) PRIVATE LTD FOR 2007 - 2008

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INCOMESALES

Domestic salesExport salesNet sales

Other income

Total IEXPENDITURESalaries, bonus & OEB

Materials consumed

Manufacturing expensesAdministrative expenses

Bad debts written off

Financial chargesMarketing expenses

Directors remuneration

Total IIProfit\loss before depreciation

Less: depreciation

Provision for IT AY 2006-07

Provision for IT AY 2007-08Provision for IT AY 2008-09

Provision for FBT

Provision for DTL


longer requiredNet profit\loss

Add: transferred from PY

balance sheet

Less: transferred to generalreserve

Net profit\loss carried to

balance sheet

55,32,35,68310,85,65,66,3021,63,88,91,985

98,31,787

1,64,87,23,772

11,47,62,662

96,55,21,962

20,22,09,3593,80,61,495

12,000

7,76,56,82411,99,00,255

74,50,000

1,52,55,74,55712,31,49,215

3,09,88,976

9,07,389

33,00,00,000-------------

39,91,200

--------------

5,42,61,65015,49,000

55,81,650

3,06,69,159

7,00,00,000

1,64,79,809

159,02,43,77576,03,08,998

2,35,05,52,773

1,58,88,987

2,36,64,41,760

17,85,50,468

1,45,78,18,942

27,03,57,08560,73,57,085

------------

11,47,42,8185,24,96,547

1,08,84,018

2,14,55,93,28822,08,48,472

5,61,77,879

----------------

----------------64,00,00,000

57,25,000

---------------

9,49,45,59324,66,737

9,74,12,330

1,64,79,809

9,50,00,000

1,88,92,139

1,03,70,08,092-32,53,47,30471,16,60,788

60,57,200

71,77,17,988

6,37,87,806

49,22,96,980

6,81,47,7262,26,81,915

(12,000)

3,70,85,994(6,74,03,708)

34,34,018

62,00,18,7319,76,99,257

2,51,88,903

(9,07,389)

(3,30,00,000)6,40,00,000

23,33,800

------------

4,06,83,9439,17,737

4,16,01,680

(1,41,89,350)

2,50,00,000

24,12,330

187.44(299.67)

43.42

61.61

43.53

55.58

50.98

33.7059.59

(100)

47.76(56.22)

46.09

40.6479.33

81.28

(100)

(100)------

68.82

------

74.9759.25

74.54

(46.26)

35.71

14.638

INTERPRETATION:

The table 2: In the year of 2007 & 2008 income statement is compared it is interpreted

that 2008 profit level is higher than 2007.TABLE 3

COMPARATIVE INCOME STATEMENT OF DIAMOND ENGINEERING(CHENNAI) PRIVATE LTD FOR 2008 - 2009

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INCOMESALESDomestic sales

Export sales

Net sales

Other incomeTotal IEXPENDITURE

Salaries, bonus & OEBMaterials consumed

Manufacturing expenses

Administrative expensesBad debts written off

Financial charges

Marketing expensesDirectors remuneration

Total II

Profit\loss before depreciation

Less: depreciationProfit before IT

Less: provision for tax

Profit\loss after tax

Net profit\lossAdd: transferred from PY

balance sheetLess: prior period IT

Less: transferred to general

reserve

Net profit\loss carried tobalance sheet

1,59,02,43,775

76,03,08,998

2,35,05,52,773

1,58,88,987

2,36,64,41,760

17,85,50,4681,45,78,18,942

27,03,57,085

60,73,57,085------------

11,47,42,818

5,24,96,547

1,08,84,0182,14,55,93,288

22,08,48,472

5,61,77,87916,46,70,593

6,72,58,263

9,74,12,330

1,64,79,809

-----------

9,50,00,000

1,88,92,139

2,07,74,13,300

66,91,37,135

2,47,65,50,435

1,85,19,210

2,76,50,69,645

22,08,22,1441,66,66,58,228

34,11,23,298

7,76,62,7235,289

20,33,01,821

2,84,57,328

2,32,94,1622,56,13,24,993

20,37,44,652

8,28,83,41212,08,61,240

4,91,00,330

7,17,60,910

1,88,92,139

25,00,000

5,00,00,000

3,81,53,049

48,71,69,525

(9,11,71,863)

39,59,97,662

26,30,223

39,86,27,885

4,22,71,67620,88,39,286

7,07,66,213

1,69,19,3135,289

8,85,59,003

(2,40,39,219)

1,24,10,14441,57,31,705

(1,71,03,820)

2,67,05,533(4,38,09,353)

(1,81,57,933)

(2,56,51,420)

24,12,330

25,00,000

(4,50,00,000)

1,92,60,910

30.63

(11.99)

16.85

16.55

16.84

23.6714.33

26.17

27.85-------

77.180

(45.79)

114.0219.38

(7.74)

47.54(26.60)

26.99

(26.33)

14.63

---------

47.37

101.95

INTERPRETATION:

The table 3: while comparing the income statement of 2008 & 2009 it isinterpreted that 2009 profit level is higher than 2008.

TABLE 4

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COMPARATIVE BALANCE SHEET OF DIAMOND (ENGINEERING)CHENNAI PRIVATE LTD FOR 2006&2007

PARTICULARS 2006 2007 INC\DEC(in RS)

Percentage(%)

SOURCES OF FUNDSShareholders FundsShare capital

Share application

Reserves & Surplus

Loan fundsa. secured loan

b. unsecured loan

APPLICATION OFFUNDS

FIXED ASSETSGross block

Less: depreciation

Net blockINVESTMENTS

SBI blue chip fund

SBI one India fund

CURRENT ASSETS,LOANS AND

ADVANCES

a. Deposits

& advancesb. closing stock

c. sundry debtorsd. cash & bank

balances

less: current liabilities &provisions

Net current assets

2,00,00,000

------------

11,06,69,159

5,79,89,450

43,91,361

19,30,49,970

1,44,55,59,143

4,30,92,555

10,14,66,588

5,00,000

-----------

9,35,10,406

45,91,87,799

3,47,70,3698,87,511

58,83,56,085

4,97,27,27,7039,10,83,382

19,30,49,970

5,25,00,000

3,50,00,000

13,39,79,809

63,07,20,677

----------

85,22,00,486

26,27,42,098

7,24,43,531

19,02,98,567

5,00,000

5,00,000

20,26,11,352

82,14,01,068

9,41,96,8803,67,038

1,11,85,76,338

45,76,74,41966,09,01,919

85,22,00,486

3,25,00,000

3,50,00,000

2,33,10,650

57,27,21,227

(43,91,361)

65,91,50,516

11,81,82,955

2,93,50,976

8,88,31,979

---------

5,00,000

10,91,00,946

36,22,13,269

59,42,65,110( 5,20,473)

53,02,20,253

(4,51,50,53,284)56,98,18,537

65,91,50,516

162.5

-------

21.06

987.65

(100)

341.440

81.75

68.411

87.548

-----

-----

116.67

78.88

170.91(58.64)

90.12

(90.79)625.60

341.440

INTERPRETATION:The table 4 shows that we can interpret that there is considerable

increase in the value of asset & liabilities in 2007 over 2006.

TABLE 5COMPARATIVE BALANCE SHEET OF DIAMOND (ENGINEERING)CHENNAI PRIVATE LTD FOR 2007&2008

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PARTICULARS 2007 2008 INC\DEC(in Rs)

Percentage(%)

SOURCES OF FUNDS

Shareholders FundsShare capital

Share applicationReserves & SurplusLoan funds

a. secured loan

b. unsecured loan

APPLICATION OFFUNDS


Less: depreciation


SBI blue chip fund

SBI one India fundCURRENT ASSETS,

LOANS AND

ADVANCES

a. Deposits &advance

b. Closing stock

c. sundry debtors

d. cash & bankbalances

e. Deferred assets

less: current liabilities

& provisions

Net current assets

5,25,00,000

3,50,00,00013,39,79,809

---------

63,07,20,677

85,22,00,486

26,27,42,098

7,24,43,531

19,02,98,567

5,00,000

5,00,000

20,26,11,352

82,14,01,068

9,41,96,880

3,67,038

------------1,11,85,76,338

45,76,74,419

66,09,01,919

85,22,00,486

20,00,00,000

-------11,88,92,139

36,90,22,789

80,68,96,307

1,49,48,11,235

82,73,73,774

12,37,75,200

70,35,98,574

5,00,000

5,00,000

21,67,70,121

1,05,67,79,624

24,18,07,511

9,02,862

20,80,7371,51,83,40,855

72,81,28,194

79,02,12,661

1,49,48,11,235

14,75,00,000

(3,50,00,000)10,54,94,330

36,90,22,789

17,61,75,630

64,26,10,749

56,46,31,676

5,13,31,669

51,33,00,007

---------

---------

1,41,58,769

23,53,78,556

23,23,87,631

5,35,824

(20,80,737)

39,97,64,51727,04,53,775

(58,18,80,258)

64,26,10,749

280.95

(100)78.738

---

27.93

75.40

214.90

70.86

269.73

------

------

6.98

28.65

246.70

145.98

----

35.7459.09

(73.64)

75.406

INTERPRETATION:The table 5: while comparing the value of assets and liabilities it

shows that value increase in 2008 than 2007.

TABLE 6

COMPARATIVE BALANCE SHEET OF DIAMOND (ENGINEERING)CHENNAI PRIVATE LTD FOR 2008&2009

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PARTICULARS 2008 2009 INC\DEC(in Rs)

Percentage(%)

SOURCES OF FUNDSShareholders Funds

Share capitalReserves & SurplusRevaluation reserves for land

Loan funds

a. secured loan

b. unsecured loan

APPLICATION OFFUNDSFIXED ASSETS

Gross block

Less: depreciationNet block

INVESTMENTS

SBI blue chip fundSBI one India fund

CURRENT ASSETS,

LOANS AND ADVANCES

a. Deposits&advances

b. closing stock

c. sundry debtors


e. Deferred assets

less: current liabilities &

provisions

Net current assets

20,00,00,00011,88,92,13936,90,22,789

80,68,96,307

--------

1,49,48,11,235

82,73,73,774

12,37,75,200

70,35,98,574

5,00,000

5,00,000

21,67,70,121

1,05,67,79,624

24,18,07,511

9,02,862

20,80,737

1,51,83,40,855

72,81,28,194

79,02,12,661

1,49,48,11,235

20,00,00,00018,81,53,04936,90,22,789

65,32,49,623

22,93,585

1,41,27,19,046

1,02,45,27,027

20,27,45,840

82,17,81,187

5,00,000

5,00,000

68,85,78,929

1,89,97,87,321

29,60,86,975

18,55,014

67,25,837

2,89,30,34,077

2,30,30,96,218

58,99,37,859

1,41,27,19,046

-----------6,92,60,910

-----------

(15,36,46,684)

22,93,585

(8,20,92,189)

19,71,53,253

78,90,640

11,81,82,613

-----------

-----------

47,18,08,808

84,30,07,697

5,42,79,464

9,52,152

46,45,100

1,37,46,93,222

1,57,49,68,024

(20,02,74,802)

(8,20,92,189)

---------58.25

--------

(19.04)

------

(5.492)

23.83

68.80

16.80

-------

-------

217.65

79.77

22.45

105.46

223.24

90.54

216.30

(25.34)

(5.49)

INTERPRETATION: The table 6 shows that there is considerable

increase in the value of asset & liabilities in 2008 than 2009.

COMMON SIZE INCOME STATEMENT:

31


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It is that statement in which net sales figure is assumed to be equal to 100 and other

figures of cost or expenses are expressed as percentage of sales. Common size statements

for different periods help to reveal the efficiency or otherwise of increasing any cost or

expenses. If it is being prepared for two firms it shows the relative efficiency of cost items

of two firms.

COMMON SIZE BALANCE SHEET:

A common size balance sheet depicts the percentage relation of each asset \ liability

to total assets\ total liabilities including capital. In common size balance sheet total assets

or liabilities are taken as 100 and all the figures are expressed as percentage of the total.

Comparative common size balance sheet for different periods helps to highlight the trends

in different items. If it is prepared for different firms in an industry, if facilities to judge

the relative soundness and helps in understanding their financial strategy.

TABLE 7COMMON SIZE BALANCE SHEET OF DIAMOND (ENGINEERING) CHENNAIPRIVATE LTD FOR 2006&2007

PARTICULARS 2006 2006(%)

2007 2007(%)

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SOURCES OF FUNDS


Share application

Reserves & Surplus


b. unsecured loan

APPLICATION OFFUNDS


Less: depreciation


SBI blue chip fundSBI one India fundCURRENT ASSETS,

LOANS AND ADVANCES

a. Deposits&advances

b. closing stock

c. sundry debtors



provisions

Net current assets

2,00,00,000

------------

11,06,69,159

5,79,89,450

43,91,361

19,30,49,970

1,44,55,59,143

4,30,92,555

10,14,66,588

5,00,000-----------

9,35,10,406

45,91,87,799

3,47,70,369

8,87,511

58,83,56,085

4,97,27,27,703

9,10,83,382

19,30,49,970

10.37

-----

57.32

30.04

2.27

100

74.88

22.32

52.56

2.59-----

48.44

237.86

18.01

0.46

304.77

257.58

47.18

100

5,25,00,000

3,50,00,000

13,39,79,809

63,07,20,677

------------

85,22,00,486

26,27,42,098

7,24,43,531

19,02,98,567

5,00,0005,00,000

20,26,11,352

82,14,01,068

9,41,96,880

3,67,038

1,11,85,76,338

45,76,74,419

66,09,01,919

85,22,00,486

15.15

10.10

38.68

36.06

------

100

30.83

8.50

22.33

0.060.06

23.77

96.38

11.05

0.04

131.25

53.70

77.55

100

INTERPRETATION: Table 7 shows that shareholders funds of the company hasincreased by 4.78% in 2007 and secured loan has also increased by 6.02% in 2007.

TABLE 8

COMMON SIZE BALANCE SHEET OF DIAMOND (ENGINEERING) CHENNAIPRIVATE LTD FOR 2007&2008

PARTICULARS 2007 2007(%)

2008 2008(%)

33


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SOURCES OF FUNDS


Share application

Reserves & Surplus

Revaluation Reserves for landLoan funds

a. secured loanb. unsecured loan

APPLICATION OF FUNDS


Less: depreciation


SBI blue chip fundSBI one India fundCURRENT ASSETS, LOANS

AND ADVANCES

a. Deposits& advances

b. closing stock

c. sundry debtors

d. cash & bank balancese. Deferred tax asset


provisions

Net current assets

5,25,00,000

3,50,00,000

13,39,79,809

---------

63,07,20,677------------

85,22,00,486

26,27,42,098

7,24,43,531

19,02,98,567

5,00,0005,00,000

20,26,11,352

82,14,01,068

9,41,96,880

3,67,038------

1,11,85,76,338

45,76,74,419

66,09,01,919

85,22,00,486

15.15

10.10

38.68

-------

36.06------

100

30.83

8.50

22.33

0.060.06

23.77

96.38

11.05

0.04--------

131.25

53.70

77.55

100

20,00,00,000

-------

11,88,92,139

36,90,22,789

80,68,96,307--------

1,49,48,11,235

82,73,73,774

12,37,75,200

70,35,98,574

5,00,0005,00,000

21,67,70,121

1,05,67,79,624

24,18,07,511

9,02,86220,80,737

1,51,83,40,855

72,81,28,194

79,02,12,661

1,49,48,11,235

13.37

------

7.95

24.68

53.97------

100

55.35

8.28

47.06

0.030.03

14.50

70.69

1.62

0.060.14

101.57

48.71

52.86

100

INTERPRETATION: The table 8 shows that revaluation ofreserves for land and deferred tax liability was introduced in 2008.

TABLE 9

COMMON SIZE BALANCE SHEET OF DIAMOND (ENGINEERING) CHENNAIPRIVATE LTD FOR 2008&2009

PARTICULARS 2008(in rs)

2008(%)

2009(in rs)

2009(%)

34


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SOURCES OF FUNDS

Shareholder fundsShare capital

Reserves & Surplus

Revaluation Reserves for land


b. unsecured loan

APPLICATION OF FUNDS


Less: depreciation


SBI blue chip fundSBI one India fundCURRENT ASSETS, LOANS

AND ADVANCES

a. Deposits& advancesb. closing stock

c. sundry debtors

d. cash & bank balances

e. Deferred tax asset

Less: CURRENT

LIABILITIES &PROVISIONS

Net current assets

20,00,00,000

11,88,92,139

36,90,22,78980,68,96,307

--------

1,49,48,11,235

82,73,73,774

12,37,75,200

70,35,98,574

5,00,0005,00,000

21,67,70,121

1,05,67,79,62424,18,07,511

9,02,862

20,80,737

1,51,83,40,855

72,81,28,194

79,02,12,661

1,49,48,11,235

13.37

7.95

24.6853.97

------

100

55.35

8.28

47.06

0.030.03

14.50

70.691.62

0.06

0.14

101.57

48.71

52.86

100

20,00,00,000

18,81,53,049

36,90,22,78965,32,49,623

22,93,585

1,41,27,19,046

1,02,45,27,027

20,27,45,840

82,17,81,187

5,00,0005,00,000

68,85,78,929

1,89,97,87,32129,60,86,975

18,55,014

67,25,837

2,89,30,34,077

2,30,30,96,218

58,99,37,859

1,41,27,19,046

14.16

13.32

26.1246.24

0.17

100

72.52

14.35

58.17

0.030.03

48.74

134.4720.96

0.13

0.47

204.78

163.02

41.76

100

INTERPRETATION:

Table 9 shows deferred tax asset has increased by 0.33% in 2009and the reserves & surplus has also increased by 5.37% in 2009.

TABLE 10

COMMON SIZE INCOME STATEMENT OF DIAMOND (ENGINEERING)CHENNAI PRIVATE LTD FOR 2006&2007

Particulars 2006 2006(%)

2007 2007(%)

35


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Export sales

Less: net excise duty afterCENVAT credit

Net salesOther income

Total IEXPENDITURE

Salaries, bonus & OEBMaterials consumed



Financial chargesMarketing expensesDirectors remuneration

Total II

Profit\loss before depreciationLess: depreciation


Provision for IT

Provision for FBTProvision for DTL

Add: deferred tax liability nolonger required

Net profit\loss


balance sheet

30,02,47,354

1,14,46,30,998

1,44,48,78,347

72,69,283

1,43,76,09,0641,73,26,836

1,45,49,35,900

5,91,94,59090,28,63,040

15,80,82,272

2,21,94,7801,58,100

5,66,82,66010,81,93,86715,00,000

1,30,88,69,309

14,60,66,5911,45,20,962

4,00,00,000

---------

14,48,79219,35,000

8,81,61,837

-----------

8,81,61,837

8,81,61,837

20.88

79.62

100.50

0.50

1001.20

101.20

4.1262.80

11

1.540.01

3.947.530.10

91.04

10.161.01

2.78

------

0.100.13

6.13

--------

6.13

6.13

55,32,35,683

10,85,65,66,302

1,63,88,91,985

98,31,787

1,64,87,23,77298,31,787

1,64,87,23,772

11,47,62,66296,55,21,962

20,22,09,359

3,80,61,49512,000

7,76,56,82411,99,00,25574,50,000

1,52,55,74,557

12,31,49,2153,09,88,976

9,07,389

33,00,00,000

39,91,200-------------

5,42,61,650

15,49,000

5,58,10,650

5,58,10,650

33.76

66.24

100

0.599

100.590.599

100.59

7.0058.91

12.34

2.320.07

4.747.320.45

93.08

7.511.89

0.05

2.01

0.24-------

3.40

0.09

3.40

3.40

INTERPRETATION:Table 10 shows that domestic sales have increased by 12.92% in

2008

TABLE 11


Particulars 2007 2007(%)

2008 2008(%)

36


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Export sales

Net sales

Other incomeTotal IEXPENDITURESalaries, bonus & OEB

Materials consumed



Financial charges

Marketing expensesDirectors remuneration

Total IIProfit\loss before depreciationLess: depreciation


Provision for IT AY 2007-08Provision for IT AY 2008-09

Provision for FBT

Provision for DTL


longer required


balance sheet



balance sheet

55,32,35,683

10,85,65,66,302

1,63,88,91,985

98,31,7871,64,87,23,772

11,47,62,662

96,55,21,962

20,22,09,359

3,80,61,49512,000

7,76,56,824

11,99,00,25574,50,000

1,52,55,74,55712,31,49,2153,09,88,976

9,07,389

33,00,00,000-------------

39,91,200

--------------

5,42,61,65015,49,000

55,81,6503,06,69,159

7,00,00,000

1,64,79,809

33.76

66.24

100

0.599100.59

7.00

58.91

12.34

2.320.07

4.74

7.320.45

93.087.511.89

0.05

------2.01

0.24

-------

3.310.09

0.341.87

4.27

1.00

1,59,02,43,775

76,03,08,998

2,35,05,52,773

1,58,88,9872,36,64,41,760

17,85,50,468

1,45,78,18,942

27,03,57,085

60,73,57,085------------

11,47,42,818

5,24,96,5471,08,84,018

2,14,55,93,28822,08,48,4725,61,77,879

----------------

----------------64,00,00,000

57,25,000

---------------

9,49,45,59324,66,737

9,74,12,3301,64,79,809

9,50,00,000

1,88,92,139

67.65

32.35

100

0.67100.67

7.59

62.02

11.50

2.58-------

4.88

2.230.46

91.289.402.39

--------

--------2.72

0.24

---------

4.040.10

4.140.70

4.04

0.80

INTERPRETATION:

Table 11 shows that domestic sales have increased by 33.89% in2008 and the profit has increased by 1.72% in 2008.

TABLE 12


Particulars 2008 2008 2009 2009

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(%) (%)

INCOMESALES

Domestic salesExport sales

Net salesOther incomeTotal I

EXPENDITURESalaries, bonus & OEB

Materials consumedManufacturing expenses

Administrative expenses

Bad debts written offFinancial charges

Marketing expenses

Directors remunerationTotal II

Profit\loss before depreciation

Less: depreciationProvision before IT

Less: provision for tax

Profit\loss after tax


balance sheet

Less: prior period IT


Net profit\loss carried tobalance sheet

1,59,02,43,77576,03,08,998

2,35,05,52,7731,58,88,987

2,36,64,41,760

17,85,50,468

1,45,78,18,94227,03,57,085

60,73,57,085

------------11,47,42,818

5,24,96,547

1,08,84,0182,14,55,93,288

22,08,48,472

5,61,77,87916,46,70,593

6,72,58,263

9,74,12,330

1,64,79,809

1,64,79,809

-----------

9,50,00,000

1,88,92,139

67.6532.35

1000.67

100.67

7.59

62.0211.50

2.58

-------4.88

2.23

0.4691.28

9.40

2.397.00

2.86

4.04

0.70

0.70

-------

4.04

0.80

2,07,74,13,30066,91,37,135

2,47,65,50,4351,85,19,210

2,76,50,69,645

22,08,22,144

1,66,66,58,22834,11,23,298

7,76,62,723

5,28920,33,01,821

2,84,57,328

2,32,94,1622,56,13,24,993

20,37,44,652

8,28,83,41212,08,61,240

4,91,00,330

7,17,60,910

1,88,92,139

1,88,92,139

25,00,000

5,00,00,000

3,81,53,049

83.8827.01

1000.75

111.65

8.92

67.3013.77

3.14

0.028.21

1.15

0.94103.42

8.23

3.350.76

4.88

1.98

2.90

0.76

0.10

2.02

1.54

INTERPRETATION:Table 12 shows that domestic sales have increased by 16.23% in

2009. On the whole the total income of the company has increased by 11%.

RATIO ANALYSIS

EXPENSES RATIO

These ratios are also known as supporting ratios to operating ratio. They indicate

the efficiency with which the business as a whole functions. It is better for the concern to

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know how it is able to save or waste over expenditure in respect of different items of

expenses. Therefore each aspect of cost of sales and operating expenses are analyzed.

A. MANUFACTURING EXPENSES RATIO:

TABLE 13

TABLE SHOWING CHANGES IN MANUFACTURING EXPENSES RATIO

(RUPEES IN CRORES)

39

S.no YearManufacturing

expensesNet Sales Ratio

1 2007 20.2 163.8 12.38

2 200827.0 235.0

11.5

3 2009 34.1 274.6 12.42


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CHART 1

CHART SHOWING CHANGES IN MANUFACTURING EXPENSES RATIO

Manufacturing Expenses Ratio

0

50

100

150

200

250

300

350

2007 2008 2009

net sales

manufact

INTERPRETATION:The table 13 shows that the manufacturing expenses ratio has

decreased by 0.9% in 2008 and increased by 0.9% in 2009, which helps the company for

its progress.

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B.ADMINISTRATIVE EXPENSES RATIO:

TABLE 14

TABLE SHOWING CHANGES IN ADMINISTRATIVE EXPENSES RATIO

(RUPEES IN CRORES)

41

s.no YearAdministrative

ExpensesNet

SalesRatio

1 2007 3.8 163.8 2.32

2 2008 6.1235.0

2.58

3 2009 7.7 274.6 2.32


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CHART 2

CHART SHOWING CHANGES IN ADMINISTRATIVE EXPENSES RATIO

0 100 200 300

2007

2008

2009

Administrative Expenses Ratio

Series1

Series2

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INTERPRETATION:

The table 14 shows that the administrative expenses ratio has increased by 0.6%

in 2008 and decreased by 0.3% in 2009, which shows that the company has to take

additional attention in administration.

C. MARKETING EXPENSES RATIO:

TABLE 15

TABLE SHOWING CHANGES IN MARKETING EXPENSES RATIO ( RUPEESIN CRORES)

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CHART 3

CHART SHOWING CHANGES IN MARKETING EXPENSES RATIO

44

s.no YearMarketingExpenses

Net Sales Ratio

1 2007 11.9 163.8 7.32

2 2008 5.2235.0

2.23

3 2009 2.8 274.6 1.04


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0

50

100

150

200

250

300

2007 2008 2009

market

net sales

INTERPRETATION:

The table 15 shows that the marketing expenses ratio has declined in both the years 2008

and 2009 by 5.1% and 1.19%, which shows that the company has reduced its marketing

expenses in the past two years.

D.FINANCIAL EXPENSES RATIO:

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TABLE 16

TABLE SHOWING CHANGES IN FINANCIAL EXPENSES RATIO ( RUPEES INCRORES)

46

s.noYear

FinancialExpenses

Net Sales Ratio

1 2007 7.7 163.8 4.7

2 2008 11.5 235.0 4.9

3 2009 20.3 274.6 7.4


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CHART 4

CHART SHOWING CHANGES IN FINANCIAL EXPENSES RATIO

financial expenses

0

50

100

150

200

250

300

2007 2008 2009

Series1

Series2

INTERPRETATION:

The table 16 shows that the financial expenses ratio has increased in both the years 2008

and 2009 by 0.2% and 2.5%. This shows that the company is utilizing the finance required

for them effectively.

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5.1 FINDINGS

The sales figures are increasing year by year. Administrative and other expenses

were fluctuating. The other incomes of the company declined in the base year 2006

but gradually increased year by year.

When comparing income and expenditure statement, the total income exceeds the

total expenditure.

Sundry debtors have been fluctuating over the years. It increased by

RS. 5, 94, 26,511 in the year 2006-2007, in the year 2007-2008 by RS.23,87,631 and

in the year 2008-2009 by RS. 5,42,79,464.

The cash and bank balance of the company has decreased in the year 2006-2007 but

it is consistently increasing in the following 2 years. Liquidity position of the

company is good.

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5.2 SUGGESTIONS

The companys profit is increasing year by year when compared to previous years.

The company must maintain same level it will increase the profit level in the future

periods.

The export sales of the company can be further increased by improving the qualitythrough optimum utilization of companys resources and which will help the

company to yield more return.

The management must study the various expenses that are done by the company

and utilize the fund properly.

The management must also study the market position and it should also find the

demand prevailing in the market for the products and thus this will guide them to

enhance their sales volume.

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5.3 CONCLUSION

On studying the financial analysis of DIAMOND ENGINEERING (CHENNAI)

PRIVATE LTD for a period of 3 years from 2006-2007 to 2008-2009, the study reveals

that the financial performance is good.

The export sales of the company have declined which is to be improved. The present

scenario of steel industry indicates the need for more steel production. The company should

now give more importance to exports. The management should take necessary measures

considering the suggestions provided and improve its position.

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APPENDIX

BIBLOGRAPHY

M.Y. Khan & P.K. Jain, Management Accounting, Tata Mc Graw Hill, 2004

A shish K. Bhattacharya, Introduction to Financial Statement Analysis,

Elsevier, 2007

Uma Sekaran, Research Methods for Business, Wiley India, New Delhi, 2006

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