Acknowledgement

I express my hearty congratulations to those people who timely supported me a long way in the completion of project report

I like to express my sincere thanks to

The workers in that organization also co-operated with me to complete this project

I would like to express my sincere thanks to my guide Prof. Nityanand Malekar who provided guidance all the way for the completion of the project.

At the same time, I would like to thank all lecturers who provided support for completion of this project.

I express my sincere thanks and dedicated thanks my work to my friends and family members who always been a moral support and strong pillars at all walks of my life.

I also express my sincere thanks to all those who supported directly and indirectly for the completion of the project

Sandeep S. Kulkarni

DECLARATION

I, Mr. Sandeep S. Kulkarni hereby declare that this project titled as “Financial Statement Analysis” in Allied Foundries Pvt Ltd is submitted to Karnataka University Dharwad in partial fulfillment of award of the degree of “Master of Commerce”. It has not been submitted previously in part or full to any Universities or Institutes for the award of any degree or diplomas.

It has been under the guidance and supervision of Prof. Nityanand Malekar faculty and internal guide of KLS Gogte College of Commerce, M.Com. Programme, Belgaum.

To the best of my knowledge and belief, this report is original and bonafide work prepared by me.

Place: Belgaum

Date: Sandeep S. Kulkarni

INDEX

SL.NO CONTENTS PAGE NO.

CHAPETR 1 INTRODUCTION

Objectives of the study

Scope of the study

Methodology

Purpose of the study

Limitations of the study

CHAPETR 2 BACKGROUND OF THE COMPANY SELECTED

Industry profile and history

Company profile

Background and inception of the company

Nature of the business carried

CHAPER 3 CONCEPTUAL FRAMEWORK

Statement of the study

Vision, Mission and Aims of the study

Organization structure

Power and responsibilities of the co.

SWOT Analysis

P&L Account and Balance Sheet- 2009-2010

CHAPTER 4 FINANCIAL STATEMENT ANALYSIS

Financial analysis and financial and income statements

Data analysis and Interpretations

Ratio analysis

CHAPTER 5 FINDINGS AND SUGGESTIONS

Findings

Suggestions

Conclusions

Bibliography

CHAPETR 1

INTRODUCTION

1.1 Objectives of the study

For the purpose of any research, objective is must. It shows the directions with which the task is accomplished.

The objectives of the study are:

1) To study or know

a) Liquidity status of the firm

b) Is management generating adequate operating on the assets

c) How the firm financing its assets?

d) The owners receiving adequate returns on the investment?

2) To determine progress of the company

3) To identify the financial strength and weakness that the firm might have

4) To measure the operational efficiency of the concern

5) To analyze the change in the financial statements

1.2 Scope of the study

The scope of the study is to find out how assets and liabilities are maintained it is done through the balance sheet of the company for the periods

1.3 Methodology

This project is an analytical research where in the researcher has to use the available facts as information and analyze these to make critical evaluation of materials. This also an applied research with an aim to find to solution for immediate problems facing industry or the firm.

The methodologies followed in the analysis of the financial statements are comparative statement, common size statement, trend analysis, and ratio analysis,

1.4 Purpose of the study

1) The purpose of doing this analysis is mainly to make through study of the financial analysis of the company

2) To access the company’s trends for the last 5 years with regard to liquidity performance

3) The purpose also includes assessing the impact of financial analysis on liquidity strength of the company

IMPROTANCE OF THE STUDY

By “FINANCIAL PERFORMANCE ANALYSIS OF SAIL” we would be able to

get a fair picture of the financial position of SAIL.

By showing the financial performance to various lenders and creditors it is

possible to get credit in easy terms if good financial condition is maintained in the

company with assets outweighing the liabilities.

Protecting the property of the business.

Compliances with legal requirement,

1. Primary Data:

The data required for the project was collected minor through primary data. That is through interviewing and discussion with concerned authorities in the company

2. Secondary Data:

The major source of data for this project was collected from annual reports, profit and loss account, manuals and some more information collected through the internet.

PLAN OF ANALYSIS

The study is conducted with the help of statistics figures and techniques like graphs and charts for better comparison and interpretation.

Tools and techniques used for analysis:

The following are the methods of financial analysis used in general.

1) Comparative financial statements

2) Common –size financial statements

3) Trend projection

4) Ratio analysis

5) Du pont analysis

6) Cash flow statements

LIMITATIONS OF THE STUDY

The analysis and interpretation are based on secondary data contained in the

published annual reports of ALLIED FOUNDRIES for the study period.

Due to the limited time available at the disposable of the researcher the study has

been confined for a period of 3 years (2007-2010).

Ratio itself will not completely show the company’s good or bad financial

position.

Inter firm comparison was not possible due to the non availability of competitors

data.

The study of financial performance can be only a means to know about the

financial condition of the company and cannot show a through picture of the

activities of the company.1.5 Sources of data collections

Chapter 2

COMPANY PROFILE

2.1) INDUSTRY PROFILE

THE HISTORICAL BACKGROUND OF THE INDIAN FORUNDRY INDUSTRY

INTRODUCTION

The Indian metal industry is as old as Indian Civilization and its primordial manifestation were found in religious statues of god like NATARAJA and other figures. The roof of modern casting Industry was laid out in the year 1850 AD and grows with the growth of engineering sector.

The Indian Metal casting (Foundry Industry) is well established. According to the recent World Census of Castings by Modern Castings, USA India Ranks as 2nd largest casting producer producing estimated 7.4 Million MT of various grades of Castings as per International standards.

The various types of castings which are produced are ferrous, non ferrous,Aluminium Alloy, graded cast iron, ductile iron, Steel etc for application in Automobiles, Railways, Pumps Compressors & Valves, Diesel Engines, Cement/Electrical/Textile Machinery,Aero & Sanitary pipes & Fittings etc & Castings for special applications.However,Grey iron castings is the major share approx 70 % of total castings produced.

NATIONAL SCENARIO OF INDIAN FOUNDRY INDUSTRYThere are approx 4500 units out of which 80% can be classified as Small Scale units & 10% each as Medium & Large Scale units. Approx 500 units are having International Quality Accreditation. The large foundries are modern & globally competitive & are working at nearly full capacity. Most foundries use cupolas using LAM Coke. There is growing awareness about environment & many foundries are switching over to induction furnaces & some units in Agra are changing over to coke less cupolas.

The production of castings is gradually increasing from 2.77 million tones in the year 1998-99 reaching 7.44 million tones in the year 2009-2010.

Exports

The Exports are showing Healthy trends approx 25-30% YOY as can be seen from the charts below .The current exports for FY 2005-06 are approx USD 800 Million.

HISTORY OF THE BELGAUM CLUSTER

The history of Foundry Industry of Belgaum goes back to 1940 when late Shri. Angolkar and Ambewadekar of Belgaum started their first cupola for the manufacture of agricultural implements. In the year 1950 and onwards the foundry units in Belgaum started manufacturing castings for machine tools, floor mills parts and components. In the year 1960’s there was a boom for 5/10 H.P Diesel engines in the country. In this period local foundry units started manufacturing castings for oil engines. The growth in automobile industry in and around Pune, like Telco, Mahindra and Mahindra and Bajaj Company has given further growth in the demand for C.I castings which is met by Belgaum Foundries. Setting up of public sector plants like BHEL and HMT in Bangalore and Kirloskar group of companies of Hubli and Bangalore also helped in the growth of foundry cluster at Belgaum. The Belgaum foundry industry has witnessed a speedy growth in 1970’s and 1980’s. A number of foundry units have witnessed from 35 units to more than 100 by the end of 8o’s. There are around 110 foundries in and around Belgaum at the end of 2009. Majority of them are located in Udyam bagh, Mac Industrial Area and Angol Industrial Estate. The industry caters to wide range of customers mainly for Automobile Industries, Diesel Oil Engines, Machine Tools, Tractors, Pumps and Valves, Pipes fittings, Electric Motors, Flour Mills and Food Processing Machinery, Drainage Equipments like Manhole Covers.

Structure of the Industry

1) Pattern Makers: There are about 30 pattern units in Belgaum Foundry Cluster. Patterns are made mainly from Wood and Aluminum.

2) Raw Material Supplies: There are about 20 dealers who supplies raw material, like Pig-Iron, Sand and foundry chemicals. These dealers directly from Kudermukha Iron-Ore Plant, Hospet and SESA Goa,

3) Casting Units: In Belgaum Foundry Cluster there are 110 castings units which manufactures various types of castings required by major buyers. These castings are made as per design provided by the buyers.

4) Machining Units: Nearly 400 machining units are working in Belgaum cluster, these units gives final finish to the castings manufactured by Foundry Cluster Units.

5) Major Buyers: There are about 25 large scale units located in Maharastra and Karnataka state of which major units like Mahindra and Mahindra, Telco, Bajaj, Kirloskar Group, BHEL, Kirloskar Electric, Simens, Crompton Greves,.

Unit Operation of Typical Foundry

Sl. NO Name of the Operation Process

1 Stores Management Supply of material to the production unit, records is kept for the supplied material and inventory control.

2 Moulds sand preparation Sand preparation for the mould making

3 Core preparation Sand preparation for core making

4 Melting Preparation of the molten metal of desired quality

5 Molding Making of the mould

6 Knock out / shake out Eliminating sand from the casting

7 Tumbling and shot blasting Cleaning the surface of the casting

8 Inspection Inspection of the casting

9 Fettling Grinding for dimension and good finish of the product.

10 Machining Preparation of the product

Supporting Institutions for the Foundry Industry in Belgaum:

There is well established network of support institutions catering into the needs of the industry which are listed below.

1) Belgaum Material Testing center:-

There is material testing lab at Belgaum which was set up by Belgaum SSI, Association of Udyambag. This testing center was promoted by Government of India, State Government, SIDBI, KSFC, and KSSIDC. Testing lab is equipped with required equipments and machines for the following testing.

a) Testing of foundry products

b) Physical testing

c) Chemical testing

d) Micro structure analysis

e) Metrology

2) Project Uptech:-

The State Bank of India under project Uptech scheme of Government of India has taken up foundry cluster Belgaum since 1997 under the project detailed studies were carried for technology up gradation, organized technical seminars, training shop floor personnel etc. Under this scheme Rs 500000 was given to testing center to acquire radiograph equipments.

3) Government Functionaries:-

Government of India under ministry of SSI and State Government and its undertaking are providing necessary support to the foundry units. KIADB and pollution control board are trying to solve the pollution problem of the foundry units.

4) Associates:-

Belgaum Coal and Coke Association: - This coal and coke association was set up in 1951 under co-operative act. The main business of this association is to buy coal and coke in bulk and supply to the foundry units

Belgaum and SSI Association:- Belgaum SSI Associations is a noted agency which is working for the common cause of SSI units of Belgaum. This association is vary active, organizes seminars on various industry related subjects.

Issues Concerning Belgaum Foundries-

Foundry sector in Belgaum has made significant development. However, there is need to focus on following for holistic development of Foundry units in Belgaum.

1) Technological Issues

a) Bringing better quality in casting by following specifications

b) Improved foundry practices

c) Going for Mechanization

d) Waste Minimization

e) Pollution Norms

2) Managerial Issues

a) Training to the managerial staff and work men

b) Bench mark with other Foundry Industries

3) Financial Issues

a) Better management of working capital

b) Introduction of Just in time inventory

c) Cost reduction through bulk raw material purchase by group of units and marketing by common brand name

4) Marketing Issues

a) Pricing of the products

b) Tapping effectively domestic and export market

5) Support Institutions

a) Interaction with associated Institutions like SISI, DIC, NSIC, PCRA, and other relevant bodies.

2.2 COMPANY PROFILE

NAME OF THE COMPANY : THE ALLIED FOUNDERS PVT. LTD.

FOUNDER RAGHAVENDRA. R. MALLYA (Executive Director)RAM. R. MALLYA (Director)

CORPORATE OFFICE & WORKS LOCATION

PLOT NO N-3, INDUSTRIAL ESTATE UDYAMBAG, BELGAUM- 590008,KARNATAKA, INDIA.

YEAR OF ESTABLISHMENT :

1968

STATUS OF OWNERSHIP : PRIVATE LIMITED COMPANY

PRODUCTS

REVENUE Rs 6,53,09,266 as on 31st March 2010

NET PROFIT Rs11,75,141.64 as on 31st March 2010

TOTAL SQ FEET AREA : 32000 SQ FEET

TOTAL SQ FEET AREA : 32000 SQ FEET

NO OF EMPLOYEES : PRODUCTION STAFF- 10OFFICE STAFF- 9WORKERS- 80 TOTAL – 99

COMPANY WEBSITE www.alliedfoundriesindia.com

INDIRECT EXPORTS :UNITED KINGDOM, MIDDLE EAST & EUROPEAN UNION.

Background and Inception of the Company:

The Allied Founders Pvt. Ltd. is a ferrous foundry manufacturing grey cast iron, ductile iron (speriodial graphite iron) castings, cast components & machined components. It has the privilege of being one of the first foundries in Belgaum, Karnataka, India. Apart from graded cast iron castings, we also manufacture Low Alloy & High Alloy Iron Castings

Our company is backed by two fully equipped Machine Shops dedicated for the foundry and supplies nearly 75% of its castings in fully machined condition to original equipment manufacturers (OEMs). We have established ourselves as a major Casting Source and Cast Iron/Ductile Iron Machined Components.

The Company has been Casting & Machining components of different grades and weights ranging from 5 kgs per pc. to 800 kgs. Per pc.

The company has been accredited with ISO 9001-2000 Certification and is an approved foundry for supply of graded castings to National Thermal Power Corporation India and Nuclear Power Corporation of India Ltd.

BRIEF HISTORY OF ALLIED FOUNDERS

1968 The company was established under the name Allied Engineers & Founders producing 30 m.t. of casting per month like manifolds & valve bodies.

1974 The unit was converted into a Private Limited Company with four directors on board.

1976 Two new moulding machines Kunkel Wagner APM-0 with 20 h.p compressor were installed.

1977 The first foundry in Belgaum to install Shot Blasting Machine along with all equipments.

1978 The first foundry in Belgaum to install Sand Testing & Chemical Testing Laboratory with Metallurgical Microscope.

1979 Purchased two Sand Muller’s & one Sand Mixer to achieve better sand properties.

1980 Two new moulding machines Kunkel Wagner APM-2 with 30 h.p compressor were installed.

1981 Commissioned new 36 inch dia Conventional Cupola with melting rate of 3 to 3.5 m.t. per hour.

1982 A new machine shop was setup to supply castings in machined condition to customers.

1983 Increased production capacity to 60 m.t per month - added moulding boxes.

1984 We became the first NTPC approved foundry is South India to manufacture & supply graded C.I.Castings.

1986 A full fledged machine shop to machine any casting required by our customers.

1987 Increased production capacity to 75 m.t per month - added moulding boxes.

1995 Developed low alloy C.I.Castings with alloy additions like Molybdenum, Nickel, and Chromium in Cupola.

1996 OM VINAYAK ARTS a machine shop was established by installing SPMs to machine sheaves & other components for lifts & diesel engines.

1997 Carbon Silicon Analyser was installed to achieve consistency in Metallurgy. Computerised all processes like marketing, sales, production, stores, accounts etc.

1998 125 kva D.G. set was installed to have uninterrupted power supply.

2000 Increased production capacity to 100 m.t per month - added moulding boxes.

2002 The company was accredited with ISO 9001:2000.

2003 250 kg Sand Muller, Sand Siever & Sand Dryer were installed to achieve better sand properties.

2004 Increased production capacity to 175 m.t per month - added moulding boxes.

NATURE OF BUSINESS CARRIED:

The company is engaged in manufacture of various products mainly for diesel engines, valves and lifts, and elevators like: valve bodies, motor bodies, flywheels, gear cases, covers, and bonnets.

BONNETS

GEAR CASES

VALVE PLATE

BEARING HOUSING

CHAPTER 3

CONCEPTUAL FREMEWORK

DESIGN OF THE STUDY3.1 Statement of the problem

Financial analysis being integral part of overall corporate management and it is one of the powerful tools of financial performance analysis. The analysis of financial statement of ALLIED FOUNDRIES is done in order to know the company’s financial position.

3.2 VISION OF THE COMPANY

To become a world class, consistent & reliable source of castings, machined components & assemblies in terms of quality, delivery & price by the year 2010.

3.3 MISSION OF THE COMPANY

To develop an environment friendly world class infrastructure for all our processes & allied industries.