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A

PROJECT REPORT

ON

ANALYSIS OF FINANCIAL

STATEMENT OF

LIBERTY SHOES LIMITED

Submitted in partial fulfillment of the requirement for the award of

Masters of Business Administration (MBA)

Submitted by: Under the guidance of:

_________________ ____________________

MBA 3rd SEMESTER

BHARATI VIDYAPEETH INSTITUTE OF

MANAGEMENT & RESEARCH,

NEW DELHIAn ISO 9001:2008 Certified Institute

NAAC Accredited Grade A UniversityRanked in Top 50 B schools in India by Business India

CRISIL Grading MBA Programme


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A * - National Level, A ** - State levelRecipient of B school leadership award from star news

ACKNOWLEDGEMENT

This project would not be completed today if it was not for the help and support

that I received throughout its development and completion. First and foremost, I

would like to express my deepest appreciation and gratitude to my mentor in the

company _____________ for her good will, time, devotion, guidance and help

during the realization of this project. Thank you. These times were exceptional to

me and I have learned a great deal. Special Thanks to my parents who taught me

to work hard in life; it made me what I am today.

Finally, I would like to express gratitude all those who have contributed to the

achievement of this work.

Thank you

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PREFACE

LIBERTY shoes Ltd. Is the only Indian company that is among the top five

manufacturers of leather footwear in the world with a turnover exceeding US $100

million. This report is all about study of Inventory Management of Liberty shoes

Ltd. In this, I studied annual reports of different years of Liberty shoes Ltd.

My objective is to study Financial Analysis of Liberty shoes Ltd. With the

help of Ratio Analysis. For this report, research design used is exploratory

research design. Exploratory research design main purpose is to formulate a

problem for more precise investigation.

In this, I define clearly what I want to measure and employ adequatemethod for measuring it. Data is collected from annual reports of different years

of Liberty shoes Ltd., manual, websites and books.

The study contains certain limitations because enough data was not

available but all the efforts have been made to collect the relevant information

through the source available.

The Company is highly dependent on external debt, which bring in

inflexibility in companys operation. But still the company is in stronger position

because the profits have increased with sales.

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TABLE OF CONTENT

Particulars Page No.

Acknowledgement

Preface

INTRODUCTION

RESEARCH METHODOLOGY

CONCEPTUAL DISCUSSION

DATA ANALYSIS

Findings & Recommendations

Conclusion

Bibliography

Questionnaire

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CHAPTER-1

INTRODUCTION

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LIBERTY SYMBOL

INTRODUCTION TO FOOTWEAR INDUSTRY

Footwear is a man made outer covering of foot. It is genially made out of leather

but the same can be made with synthetic material. When the human being came

into existence, they were needed to protect themselves from heat, cold dampness,

dust and roughness of ground while walking, standing, or even running. So they

innovate shoes for the protection of their feet.

The importance of footwear is highly recognized in western and other advanced

countries, so the footwear industry grew in full swing that originated big

companies like Nike, Reebok, Gucci, and Addidas etc. But the scenario in India is

somewhat different and regretfully as the industry could not develop itself despite

the fact that India being second largest populated country in the world, surplus

manpower and resource of raw material, whatever the reason being.

Till the mid of 20th century, the bulk of shoe industry was in cottage sector.

Professional cobblers were responsible for production of every type of shoes. But

in the past one decade the situation has completely changed because new

generation of professionals did not adopt this line as shoemaker and preferred to

join white-collar jobs.

It resulted in the diversification from schedule caste to other class of people as

industrial workers. Up to eighties, Bata was the main source of supply of footwear

to the cites and towns with higher standard of living. But taking into consideration

the growing standard of living and demand, many new footwear companies came

into light like Liberty,Corona, Action, Lakhani etc. Production of footwear at this

movement is mainly at Agra, Karnal, Faridabad, Delhi, Kolkatta, Kanpur,

Mumbai, Madras, and Banglore etc.

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Footwear industry in India can never be a heavy industry in general and small

entrepreneurs with small investments in machinery and capital could remain for

all purposes the backbone of industry. It is the ideal industry for entrepreneurs

without much of investment in the industry assuring growing demand and profits.

Availability of raw material and manpower is not a problem. So the small sector

has to play a vital role in industry development.

Depending upon the styles, type and purpose, the footwear can be broadly

classified into three groups:

Chappal or open type footwear.

Sandal or strap attached footwear.

Boot & shoe or closed type footwear covering most part of the feet.

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COMPANY INFORMATION

Board of Directors

Adesh gupta CEO & Executive Director

Shammi bansal Executive Director

Adarsh Gupta Executive Director

Harish Kumar goel Director(Law & Taxation)

Sunil bansal Director

Amitabh Taneja Independent Director

Prem Chand Garg Independent Director

Raghu Goel Independent Director

Siddharth Sanghi Independent Director

Surendra Kumar Arya Independent Director

Vivek Bansal Independent Director

Audit committee

Sunil Bansal

Prem Chand Garg

Raghu Dayal

Vivek Bansal

Share transfer committee

Adarsh Gupta

Sunil Bansal

Prem Chand Garg

Remuneration/Selection Committee

Raghu Dayal

Prem Chand Garg

Membership & certificate

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Confederation of India industry (CII)

Federation of India chambers of commerce & industry (FICCI)

PHD chamber of commerce and industry (PHDCCI)

The associated chambers of commerce and industry of India

(ASSOCHAM)

Federation of Indian export organization (FIEO)

Council for leather export (CLE)

ISO 9001

Company secretary & Vice President

Munish kakra

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GROUP DATA AT A GLANCE

Year of Establishment 1954

Employment More than 5000 employees

Business Investment US $ 100 Million

Status of Business Flagship company of the Group, Liberty Shoes Ltd., a public

limited company listed in all major stock exchanges of India.

Present Activities Second largest footwear manufacturer in the country having

fully integrated plants to manufacture various kind of

footwear with Annual Production of over 10 million pairs.

Annual Turnover Over US$ 125 MillionBrand Equity Mother Brand LIBERTY is ranked among Top 100 brands

in the country. Other 10 Successful National brands, known

for its respective segment of footwear

Infrastructure Various plants spread over 200 acres of land in and around

Karnal, Libertypuram, Gharaunda in Haryana, Dehradun &

Roorkee in Uttarakhand, Pounta Sahib in Himachal Pradeshsupported by strong Marketing Network having

14 Branch offices

02 Overseas offices

300 Liberty Exclusive Distributors

350 Liberty Exclusive Retail Stores

20 Overseas showrooms

Export Markets All over the world, mainly with Europe in

Germany

United Kingdom

France

Spain

Hungary

Technology Libertys patented technology HUMANTECH is a

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combination of human craftsmanship and technological

excellence with following technologies available in the

world for Footwear Industry.

Cemented Construction Direct PVC Injection

Direct PU Injection

Direct EVA Injection

Direct TPU Injection

INTRODUCTION

Liberty Group, come a long way since it began its operations a little over 50 years

ago in the cityof Karnal, Haryana. The emphasis since the very beginning has

been to offer great products at value for money / affordable prices. This led to

the development of Liberty Patented HUMANTECH approach which

synergise traditional workmanship with state of the art technology to provide the

best quality at the most competitive price.

Liberty group companies, set various benchmarks in Footwear Manufacturing

within the Groups Production facilities and also to Industry.

HISTORY:

Liberty Group started operation in 1954 and today comprises of five firms,

namely Liberty Footwear Company, Liberty Enterprises, Liberty Leathers, Liberty

Group marketing Division and Liberty Shoes Limited. The group has an annual

turnover of Rs.500 Crores approximately. Liberty has its own studio for design

and development of footwear. It manufactures footwear both for export and

domestic markets. The company has carved a name for itself in the international

market and is Indias largest exporter of footwear to Germany.

Liberty Shoes Limited, the public company of the group started commercialproduction in 1993 and is the countrys leading footwear manufactures today. The

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company has state of the art production facilities at Libertypuram to manufacturer

high quality footwear and its contribution in Liberty Groups total sale is over

30% and its rising steadily.

CORPORATE PHILOSPHY:

Steeped in a philosophy that has at its core innovation, technology and

advancement, we, at Liberty, pride ourselves over and above everything else on

our healthy and heart-felt respect for the human ethos. That which projects itself

in the expectancy and excitement with which one greets the arrival of the new

combined with a sincere and deep regard for the old. That which is appreciative ofand adopts at every stage the unique balance between modernization and

tradition.

Liberty as a brand is constantly evolving to keep pace with the changing trends,

styles, beliefs and aspirations of people while maintaining the sanctity of certain

traditions like workmanship and good value.

CORPORATE SAGA:

With people as its leitmotif, Liberty has for over 50 years always stayed in touch

with the aspirations of every successive generation even as it developed the largest

range in the industry catering to every income bracket and age segment. Using the

patented 'Humantech' approach that combines the best of talent with the latest in

technology. From the price-conscious, value for money seeking buyer to the

trendy, global, price-indifferent customer, from the with it all attitude teenager tothe conservative seen it all adult just about everybody today finds a good reason

for being in Liberty. Liberty is today consolidating and expanding its following

which extends from the fashion alleys to the sidewalks with styles that

compliment the newest most happening trends and also by turning footwear

selling into a byword for personalized service in an ambience and shoe stations in

India and abroad.

THE CREDO:

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To ensure that the method we use is the latest technology world-over.

To follow the highest standard of honest workmanship in whatever we make.

To walk that extra miles to ensure customer satisfaction worldwide.

To remain a true cosmopolitan to the spirit.

To remain a great corporation to associate with, to work for, to know that:

We Are About People.

LIBERTY RANGE:

The family brand style personified with something for every need. Be it formal or

casual, at office or at the beach, a conference or a soiree - Liberty fits in

effortlessly.

MANUFACTURING:

What gives Liberty the edge is vertically integrated manufacturing infrastructure

on technology basis with completely in-house state of the art production facilities

which includes 8 DESMA machines for PU Direct Injection, 15 Machines for

PVC Direct Injection, 3 Machines for EVA Injection, 3 PU Injection units for unit

sole, six lines for cement lasted injection and one machine for the latest TPU

Injection. Above production facilities are maintained with focus on environment

cleanliness ISES 2000 norms, provides a complete range of family footwear of all

seasons and occasions, covers the entire domain of industrial safety and healthfootwear requirements.

Liberty also has the ISO: 9001-2000 certification for its Quality, Management

System, a testimony to all the system and procedures in place.

Liberty is a technology driven company HUMANTECH Libertys patented

technology is combination of human craftsmanship and technological excellence.

Liberty has production facilities at the following locations:

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Gharaunda, Haryana, (Approx.95 K.M. from Delhi)

Libertypuram, Haryana (Approx.102 K.M. from Delhi)

Karnal, Haryana, (Approx.124 from Delhi)

Satiwala, Pounta Sahib, Himachal Pradesh (Approx 225 K.M. from Delhi)

Batamandi, Paunta Sahib, Himachal Pradesh (Approx 229 K.M. from Delhi)

Dehradun, Uttranchal (Approx. 300 K.M. from Delhi)

Roorkee, Uttranchal (Approx. 150 K.M. from Delhi)

GROUP COMPANIES:

Liberty Retail Revolutions Limited

Liberty Retail Revolutions Limited, the company behind the Revolutions store is

a 100% subsidiary of Liberty Shoes Limited

The company is producing more than 50,000 pairs of footwear a day covering

virtually every age group and income category. Products are marketed across the

globe through 150 distributors, 350 exclusive showrooms and over 6000 multi-

brand outlets, and sold in thousands every day in more than 25 countries including

fashion-driven, quality-obsessed nations like France , Italy , and Germany.

Setting new benchmarks in the retail business in India Liberty Retail Revolutions

caters to the aspirations of the style-driven in India with an exclusive chain of

upmarket showrooms, Revolutions Concept Stores, at fashion centres across India.

Its a concept that has opened new frontiers in retail selling - never seen before

fashion hubs, catering to individual styles and looks, in an ambience as magical

and exciting as the products lined up a world class range in footwear fashion and

accessories.

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Liberty Whiteware Limited

The newest member of the Liberty Group introduced a range of ceramic sanitary

ware and accessories of European design thats inspired by a lifestyle of sheerelegance. Where beauty and functionality achieve perfect harmony. Form

compliments finesse. And tradition blends seamlessly into innovation. Produced at

a Rs.50 crore state-of-the-art plant at Neemrana Industrial Area of Rajasthan the

Beach range of fine bathroom products and accessories including WCs, bidets,

washbasins, and shower trays, comprising five distinctive collections each with its

own definitive character and style.

BRANDS

This family brand is style personified with something for every need. Be it formal

or casual, at office or at the beach, a conference or a soiree Liberty fits in

effortlessly.

COOLERS

Theyre cool and theyre hot. Theyre hap and

theyre happening. Perfect for those hot summerdays. When the sun blisters and the heat strokes,

they keep the feet cool and comfortable. But

why limit the pleasure to summers?! Heres one

brand of sandals that stays cosy and comfy all

year round.

FOOTFUN

Something for those little feet as they learn to

walk. Airy, light and comfortable with lycra

uppers and no laces. In fairy-tale colors and

designs.

FORCE-10

The flair, the style and ease that forces the world

to take notice. A happening range of sports

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shoes in far out colors that provides the perfect

footnote to a head-turning presence.

FORTUNE

Genuine leather uppers and extra light poly soles

help complete the power dressing in men with

lan and panache.

GLIDERS

Cool and comfortable, trendy and with it. A range ofstunning brogues and smart lace ups that will be

noticed and talked about every step of the way.

Unmistakably a part of Generation You.

SENORITA

Walk tall, walk light and walk with amazing style.

Rediscover the little girl that lurks not far behind in

every woman, laughing and loving every moment of

life.

TIPTOPP

Its what Mrs. Junejas of the world love to be seen in.

Strappy styles and comfortable heels. And colors that

become the envy of all and sundry. Perfect for

conquering the neighbourhood in designs that are the

latest rage the world over.

WARRIOR

Smart, stylish professional gear crafted from leather

uppers and direct injection P.U. soles with steel toe

caps and offering the widest range of styles in safety

shoes. To master the art of being confident and sure-

footed on slippery grounds and danger ones.

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WINDSOR

The premium is on lightness, style and comfort

which makes it ideal for men who take every

challenge effortlessly in their stride.

FREEDOM

A new introduction in the safety footwear segment in Nitrile PVC

material, offering customers with waterproof, fire retardant and

shock free product in economic range. A safety footwear for

industrial use.

RESEARCH & DEVELOPMENT:

Our 2-way channel partners dig their feed back deep and constantly. Hammering

String of creative workman at the manufacturing center to produce not just

faceless shows dancing down conveyor belts but shoes with character. So the

centers have poled 53 years of the research and continuous flow of emotions to

redefine the R & D center at Libertypuram. Fusing technology with the sweat of

sagacity. Some call it Research & Development Wing some put a price to

investments in the Emotional Technology that it comes out as. We call the

process HUMANTECH and it priceless.

Liberty also very active in the area of Research & Development and has a number

of firsts to its credit like:

1. Liberty pioneered the PU (Polyurethane) technology in India in footwear

industry in 1982 and today is the largest producers of footwear with this

technology in Asia.

2. Liberty has developed new material TPE (Thermo-Plastic-Elastomer) for high

quality formal footwear.

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3. Liberty has developed a high quality Eva Compound for beach footwear.

4. Liberty was the first company commissioning a latest CAD/ CAM System.

5. Die Less Leather cutting machine which is directly attached with its Design &

Development Section for speedy process of development of new models of

footwear.

6. Liberty is the only factory in India having water proofing technology approved

by SYMPATEX, a name known for water proofing technology worldwide.

7. Liberty Management is very thin in size comparing with a huge work force in

front line operation.

DESIGN & DEVELOPMENT:

Liberty has well established state of the art design centers which are constantly

engaged in designing and developing latest trend setting footwear for the young

fashions conscious Indian consumers. On an average 4000 new styles are

developed every year out of which roughly 1200 styles are selected and

introduced in the market in two seasons i.e. spring / summer and fall, winter.

FINANCIAL

If you think a company that has helped 50 million people think on their feet in

style is big stuff, you have seen very little yet. For us the future plans are not

something that can be termed as crystal gazing but neatly enclosed ideas idea and

deliverables in continuum. We are fast building new brands and products,

improving the all times favorites and expending our marketing infrastructure and

honing to our skills to further the delight of the consumer. With an over all 25%

boom planned each year for the next 5 year you could says that India is only true

blue footwear manufacturing multinational is just peaking over the edge.

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DISTRIBUTION NETWORK:

We have distribution network rivals the human arterial system. An reticulate

network of retailer showrooms, and exclusive outlets with a reach like blue green marine octopus a structured 2-way feeder-feed back system that both gives

and receives an organization of our size would have gone out-of-orbit without a

firm support system. Thanks to the vision and drive of our corporate think tank,

we now have a sales network that brings the breath-taking world of super

footwear right at your feet within seconds. A virtual room service at zero cost, if

you will. A marketing system that we have conceived and created, it is

understandably, the envy of competition.

MORE STORES FROM LIBERTY:

Liberty group is expecting to add Rs.70 crores from its footwear retail business.

The company will invest Rs.7 Crores towards expending Revolution - its

exclusive footwear showroom. This year company will add 10 more stores to take

it to 25. The company has also entered the manufacturing of white ware segmentof sanitary and bathroom products. Liberty is looking at introducing new design

this season too. The company has expended its retail presence in over 100 stores

across small and big cities.

LIBERTY PLANS TO EXPANDS GLOBAL PRESENCE

Liberty group has also establish manufacturing plant in Uttrakhand state and

opening 25 exclusive outlets across the country as well as in 7 overseas centers.

Each outlet is estimated to see an investment of Rs.7.5 million.

With a turnover of Rs.500 crores the company is emerging as an multinational

brands with about 350 Exclusive distributors all over the world. as opposed to the

earlier model of expending retail outlets we plan to bring down the number of

retailer from 5000 to 4000. We do not want retail presence for name shake; the

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ideas to have real brand presence, Liberty plans to open super premium at

Singapore, Kualampur, Dhaka, Columbo and Dubai . The currently exports about

25% of footwear production to Germany, Italy, France, United States and the

Middle East.

STRENGTH:

At Liberty we upgrade and re-engineer our design every 6 months so that you

have something new, with it and futuristic every time you visit us. Our shoes are

much more than just B.E. Witching leather work. We understand that a shoe for

you is an extension of your personality. And for one who keeps moving onto to

stables of desire loaded with exciting world fashions trends we craft the dreamswith the help of Capital Fashion Technologists shut away not in dream bars but

with their heart minds on the pules of future fashion.

LIBERTY SHOES LIMITED

AN INNER VIEW

LOCATION:

The company has entered into a lease agreement for 410 cannals and 17 marlas

(248500sq. yards) of land on national highway no.1 main G.T. road in

Libertypuram, Kutail, district Karnal.

The site is around 115 KM from Delhi on national highway between Chandigarh

and Delhi. The site is 15KM from Karnal and is well connected with major cities

and has all basis infrastructure facilities.

BUILDING:

It mainly consists of eight huge halls meant for manufacturing operation facility,

raw material and finished goods storage, cutting sections, PVC Sole Section, PU

Sole Section, Administrative Block etc. the design and finishing of building is

among the best.

The total area of the building is 170 lacks sq.feet (approx) and total cost of

building is around 550 lacks. The building is of RC framed structure.

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MACHINARY:

Five (new technology) injection-moulding machines are being used by the

company for production purpose. All the machines are imported from Italy and

Germany. Production of shoes as well as quality of shoes has been increased andproblems of pasting, sole cracking have been reduced substantially by this

technology. Recently one new computerized machine has been purchased for

cutting leather. It has also been imported from Italy

INNOVATIVE APPROACHES:

Entire production units of Liberty are interlinked by SAP, a unique ERP Solution

implemented for the first time in India in a Footwear Industry with all modules

related with Finance, Logistics & supply chain.

It is rare to see such clean, state of the art production facility in India with

following management systems and tools.

1. KAIZEN is implemented since 2000 and in practice throughout the

organization.

2. 5 S Concept is introduced and in practice since 2001 and presently in

matured stage. The impact of 5 S implementation is visible in all dept. and

shop floors of the organization. We may even consider these units are the

model units for any Footwear Industry

3. LEAN awareness is existing in all production floors of the organisation.

Value streams are standardized for most of the regularly produced articles.

Now the Group is in the process of integrating Lean Concept with PP

Module of SAP for controlling the flow.

4. ISO 9001:2000 CERTIFICATION is awarded to QMS of one of its units

and Group is in the process of getting for other units. Group is having an

appointed MR exclusively for monitoring the Quality System. DNV is the

Certifying agency and auditors of the QMS

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5. WASTE MANAGEMENT SYSTEM is established in one of their unit

and it is a pilot project. Wastage Identification, handling and disposal are

documented and monitored by frequent internal audits.

6. WATER MANAGEMENT SYSTEM is existing in the group. Water

wastage is almost nil- and water is re-cycled in most of their operations.

8. ISES-2000 norms are followed to ensure the best Social, Health and

Environmental Standards. This standard is monitored by Indo German

Export Promotion Council of India.

9. Liberty is the Committee member for setting the standard for Safety Shoes.

The recently released IS: 15298:2000 for Safety shoes is followed by

Liberty and it is the first in Shoe Industry have applied for Certification to

use ISI Mark.

9. ENGERGY MANAGEMENT SYSTEM of Liberty is unique in Footwear

Industry. Liberty Units have got lot of incentives / discounts from Haryana

State Electricity Board for maintaining maximum Power Factor.

INTERNATIONAL EXPERIENCE:

1. Liberty has more than 25 years of experience in Export Business and enjoying

Status Holder status as Recognized Export House of India. In 80s when

Soviet Market was invaded by Indian Exporters, Liberty was the Market

Leader in USSR.

2. Liberty is having its own office in Russia and Hungary for more than 2

decades.

3. Libertys major operations are mainly with Europe, Middle East, East African,

South African countries and USA.

4. Major brands of Europe, SALAMANDER, JELA, DEICHMANN, ROMIKA

and USA brands like TODDWELSH are selling only Liberty Shoes under

their brand umbrella.

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CONTRIBUTION TO INDUSTRY:

1. Liberty has pioneered in bringing PU Technology to India. Liberty has given a

presentation on Footwear foot prints for the future in Asia Pacific Customer

Conference 2000 organized by Huntsman Polyurethane at Singapore on this

technology.

2. SYMPATEX is a patented technology on Water Proofing recognized world

wide. Liberty is the only company in India having recognition/approval of

SYMPATEX on Waterproofing.

3. Safety Shoes are brought to Indian Market for the first time and an exclusive

brand WARRIOR was launched by Liberty in Industrial Segment shoes. Our

safety shoes are meeting all DIN / EN standards in respective segments.

4. PU technology was introduced to Government Sector, Liberty has set the

standard as member of the BIS Committee. BIS Standard IS: 15298: 2000,

applicable for Safety shoes is the Standard on which Liberty is producing

Safety shoes for more than one decade.

5. Liberty Enterprises is the model unit for above Standard and complete testing

facility is available only with Liberty in India after FDDI.

6. Liberty is the First Footwear Manufacturing facility in India awarded with the

latest ISO 9001:2000 Certification.

7 The first and only footwear Industry in India, having SAP ERP with all

modules related to

Inward/Outward supply chain, Materials, Finance and Costing

8. Liberty has pioneered blend of NITRILE Rubber with PVC in 1996 to make it

more versatile for cold countries usage.

9. Liberty has developed new material TPE (Thermo Plastic Elastomer) for high

quality formal footwear. This material has better properties than PVC or TPR

conventionally

used for formal.

10. Liberty is expanding its operation by manufacturing non woven hags which

are environment clean.

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SOCIAL CONTRIBUTION:

1. Liberty Footwear Training Institute formed by our Directors is developing

the local public as technicians of Footwear Industry.

2. Management of Liberty Sponsors the children of Liberty Employees for

higher studies, gives training and employment after graduation in FDDI.

3. Social and Environmental Standard ISES-2000 is in practice with Liberty.

This standard is being monitored by Indo German Export Promotion

Project in India.

4. The products being used by Liberty are Eco-friendly and providing latest

technology to Industry when Indian Markets related with Environment &

Safety are not even aware about the new standards and technology.

NATIONAL AND INTERNATIONAL AWARDS

Leather Export Promotion Merit Award (1975), till 1982.

Haryana Government Export Award (1978-79).

International Asian Award, Jakarta (1982).

European Awards, Paris (1987).

National Award for best Export of Leather Garments (1987-88).

International Award for Good Quality, Brussels, Belgium (1988).

Leather Export Award for Government of India (1991-92).

National Productivity Award from president (1997).

Council of Leather Export (CLE), Indias apex body of leather products

exporters, during the international leather fair held at Chennai, conferred is

highest award the DOYEN OF INDUSTRY upon Mr.P.D.Gupta on 5th

Feb., 98.

Worldwide Prestige Award (WPA)-2001.

CORPORATE GOALS

Liberty wants to develop a spirit of cooperation between individuals &

group within the company.

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Liberty wants to attain & maintain good relations between its union &

management.

Liberty will endeavor to keep highly qualified employees by appropriate

training and thus raise their morale & competence. Liberty will try to practice management of highest standard of competence

& professionalism.

Liberty will strive to remain or become the technological as well as market

leaders in footwear industry and leather product industry.

Liberty wants to be known for the quality for its products & services.

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CHAPTER-2


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Research is an important pre-requisite for a dynamic organization to be prcised.

Research is more systematic activity directed towards the discovery and

development of organized body of knowledge. Some of the characteristics of

research methodology are as follows:

1. Research is directed towards a solution of problem. It may attempt to

answer a question or determine the relation between two or more variables.

2. Research involves gathering new data for primary of first hand sources or

using existing data for new purposes.

3. Research is based on observable experience or empirical evidence.

4. Research strives to be objective and logical applying every possible test to

validate the proceed are employed the data collection and conclusion

research.

Primary Data

Information collected for the specific purpose at hand or specifically for the

currently undertaken.

Secondary Data

Information that already exists somewhere, have been collected for another

purpose.

I used secondary data for this project. I refer some books and also some websites

for the project. These books and websites are mentioned in the bibliography.

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OBJECTIVE OF THE STUDY

Main Objective

The project is designed to give an overview of Inventory Management.

Sub Objective

The study on Inventory is very important for a firm. The objectives of this

study are as follows:

To determine the changes in the Inventory position of the company.

To determine the increase or decrease in Inventory level.

To determine the various ratios for analyzing the Inventory level of thecompany.

To spot out strengths & weakness of business.

To determine the absolute figures for the last two years

SCOPE OF THE STUDY

This report covers:

1) Credit Administration at LIBERTY SHOES

2) Various types of Bank Finance

3) Term Loans Financing

4) Working Capital Financing

5) Appraisal Process of Term Loans and Working Capital

6) Post Sanction Processes

7) Case Study describing actual appraisal of a Term Loan proposal and a

Working Capital Financing Proposal.

Data Collection

This report is based on primary as well secondary data, however primary data collection

was given more importance since it is overhearing factor in attitude studies. One of the

most important users of research methodology is that it helps in identifying the problem,

collecting, analyzing the required information data and providing an alternative solution to

the problem .It also helps in collecting the vital information that is required by the top

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management to assist them for the better decision making both day to day decision and

critical ones.

1. DATA SOURCES:

(A)Primary Data

Primary data are those, which were collected afresh & for the first

time and thus happen to be original in character. However, there are many

methods of collecting the primary data. All have not been used for the

purpose of this project. The ones that have been used are:

Face to face (Interviewing)

Observation

(B) Secondary Data

When an investigator uses the data that has been already collected by others is

called secondary data. The secondary data could be collected from the journals,

reports and various publications. The advantage of the secondary data can be

economical, both in the terms of money and time spent. In this report secondary

data was collected through:

Company balance sheets

Reports and records

Flow charts and tables

Websites

Primary data was collected through questionnaires

Sample size : 20

Sample area : New Delhi

Sample method : Random sampling method

Duration of Study:

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The study was carried out for a period of two months, from 22nd MAY 2012

to 12th JULY 2012

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Sampling:

(A)Sampling procedure:

The sample was selected of them who are the customers/visitors of Infosys It

was also collected through personal visits to persons, by formal and informal talks

and through filling up the questionnaire prepared. The data has been analyzed by

using mathematical/Statistical tool.

Secondary source of data

1. Reports from the clients

2. Old data of existing clients

LIMITATIONS

Although every effort have been made to collect the relevant information through

the source available, still some relevant information could not be gathered.

1. The time duration could not provide ample opportunity to study every

detail of management in the company.

2. There are restrictions not to visit some specific areas.

3. The concered executives were having very busy schedule.

4. The company on account of confidential reports has not disclosed some

figures

5. Estimates are based upon predictions.

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CHAPTER-3

CONCEPTUAL DISCUSSION

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CONCETUAL DISCUSSION

Literature Review

Financial statements refer to such statements which contains financial information

about an enterprise. They report profitability and the financial position of the

business at the end of accounting period. The team financial statement includes at

least two statements which the accountant prepares at the end of an accounting

period. The two statements are: -

The Balance Sheet

Profit And Loss Account

They provide some extremely useful information to the extent that balance Sheet

mirrors the financial position on a particular date in terms of the structure of

assets, liabilities and owners equity, and so on and the Profit and Loss account

shows the results of operations during a certain period of time in terms of the

revenues obtained and the cost incurred during the year. Thus the financial

statement provides a summarized view of financial position and operations of a

firm

Meaning of Financial Analysis

The first task of financial analysis is to select the information relevant to the

decision under consideration to the total information contained in the financial

statement. The second step is to arrange the information in a way to highlight

significant relationship. The final step is interpretation and drawing of inference

and conclusions. Financial statement is the process of selection, relation and

evaluation.

Features of Financial Analysis

To present a complex data contained in the financial statement in simple and

understandable form.

To classify the items contained in the financial statement inconvenient and

rational groups.

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To make comparison between various groups to draw various

conclusions.

Purpose of Analysis of financial statements

To know the earning capacity or profitability.

To know the solvency.

To know the financial strengths.

To know the capability of payment of interest & dividends.

To make comparative study with other firms.

To know the trend of business.

To know the efficiency of mgt.

To provide useful information to mgt

Procedure of Financial Statement Analysis

The following procedure is adopted for the analysis and interpretation of

financial statements:-

The analyst should acquaint himself with principles and postulated of

accounting. He should know the plans and policies of the managements that he

may be able to find out whether these plans are properly executed or not.

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

decided. If the aim is find out. Earning capacity of the enterprise then analysis

of income statement will be undertaken. On the other hand, if financial

position is to be studied then balance sheet analysis will be necessary.

The financial data be given in statement should be recognized and rearranged.

It will involve the grouping similar data under same heads. Breaking down of

individual components of statement according to nature. The data is reduced to

a standard form. A relationship is established among financial statements with

the help of tools & techniques of analysis such as ratios, trends, common size,

fund flow etc.

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

significance and utility of financial data is explained for help indecision

making.

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The conclusions drawn from interpretation are presented to the management in

the form of reports.

Analyzing financial statements involves evaluating three characteristics of a

company: its liquidity, its profitability, and its insolvency. A short-term creditor,such as a bank, is primarily interested in the ability of the borrower to pay

obligations when they come due. The liquidity of the borrower is extremely

important in evaluating the safety of a loan. A long-term creditor, such as a

bondholder, however, looks to profitability and solvency measures that indicate

the companys ability to survive over a long period of time. Long-term creditors

consider such measures as the amount of debt in the companys capital structure

and its ability to meet interest payments. Similarly, stockholders are interested in

the profitability and solvency of the company. They want to assess the likelihood

of dividends and the growth potential of the stock.

Comparison can be made on a number of different bases.

Following are the three illustrations:

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Ratio Analysis:

Meaning of Ratio Analysis:

Ratio analysis is the method or process by which the relationship of items or

group of items in the financial statement are computed, determined and presented.

Ratio analysis is an attempt to derive quantitative measure or guides concerning

the financial health and profitability of business enterprises. Ratio analysis can be

used both in trend and static analysis. There are several ratios at the disposal of an

analyst but their group of ratio he would prefer depends on the purpose and the

objective of analysis.

While a detailed explanation of ratio analysis is beyond the scope of this section,

we will focus on a technique, which is easy to use. It can provide you with a

valuable investment analysis tool.

This technique is called cross-sectional analysis. Cross-sectional analysis

compares financial ratios of several companies from the same industry. Ratio

analysis can provide valuable information about a company's financial health. A

financial ratio measures a company's performance in a specific area. For example,

you could use a ratio of a company's debt to its equity to measure a company's

leverage. By comparing the leverage ratios of two companies, you can determine

which company uses greater debt in the conduct of its business. A company whose

leverage ratio is higher than a competitor's has more debt per equity. You can use

this information to make a judgment as to which company is a better investment

risk. However, you must be careful not to place too much importance on one ratio.

You obtain a better indication of the direction in which a company is moving

when several ratios are taken as a group.

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Objective of Ratios:

Ratios are worked out to analyze the following aspects of business

organization-

A) Solvency-

Long term

Short term

Immediate

B) Stability

C) Profitability

D) Operational efficiencyE) Credit standing

F) Structural analysis

G) Effective utilization of resources

H) Leverage or external financing

Forms of Ratio:

Since a ratio is a mathematical relationship between two or more variables /accounting figures, such relationship can be expressed in different ways as follows

A) As a pure ratio:

For example the equity share capital of a company is Rs. 20, 00,000 & the

preference share capital is Rs. 5, 00,000, the ratio of equity share capital to

preference share capital is 20, 00,000: 5, 00,000 = 4:1.

B) As a rate of times:

In the above case the equity share capital may also be described as 4 times that of

preference share capital. Similarly, the cash sales of a firm are Rs. 12,00,000 &

credit sales are Rs. 30,00,000. So the ratio of credit sales to cash sales can be

described as

2.5 (30, 00,000/12, 00,000) = 2.5 times are the credit sales that of cash sales.

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C) As a percentage:

In such a case, one item may be expressed as a percentage of some other items.

For example, net sales of the firm are Rs.50, 00,000 & the amount of the gross

profit is Rs. 10, 00,000, then the gross profit may be described as 20% of sales

(10, 00,000/50, 00,000)

Steps in Ratio Analysis

The ratio analysis requires two steps as follows:

1) Calculation of ratio

2) Comparing the ratio with some predetermined standards. The standard ratio

may be the past ratio of the same firm or industrys average ratio or a projected

ratio or the ratio of the most successful firm in the industry. In interpreting the

ratio of a particular firm, the analyst cannot reach any fruitful conclusion unless

the calculated ratio is compared with some predetermined standard. The

importance of a correct standard is oblivious as the conclusion is going to be

based on the standard itself.

1) Liquidity ratios:

It shows the relationship between the current assets & current liabilities of the

concern e.g. liquid ratios & current ratios.

2) Leverage ratios:

It shows the relationship between proprietors funds & debts used in financing the

assets of the concern e.g. capital gearing ratios, debt equity ratios, & Proprietary

ratios.

3) Activity ratios:

It shows relationship between the sales & the assets. It is also known as Turnover

ratios & productivity ratios e.g. stock turnover ratios, debtors turnover ratios.

4) Profitability ratios:

It shows the relationship between profits & sales e.g. operating ratios,

gross profit ratios, operating net profit ratios, expenses ratios

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It shows the relationship between profit & investment e.g. return on

investment, return on equity capital.

5) Coverage ratios:It shows the relationship between the profit on the one hand & the claims of the

outsiders to be paid out of such profit e.g. dividend payout ratios & debt service

ratios.

Based on User

1) Ratios for short-term creditors:

Current ratios, liquid ratios, stock working capital ratios

2) Ratios for the shareholders:

Return on proprietors fund, return on equity capital

3) Ratios for management:

Return on capital employed, turnover ratios, operating ratios, expenses ratios

4) Ratios for long-term creditors:

Debt equity ratios, return on capital employed, proprietor ratios.

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Importance of Ratio Analysis:

As a tool of financial management, ratios are of crucial significance. The

importance of ratio analysis lies in the fact that it presents facts on a comparativebasis & enables the drawing of interference regarding the performance of a firm.

Ratio analysis is relevant in assessing the performance of a firm in respect of the

following aspects:

1) Liquidity position

2) Long-term solvency

3) Operating efficiency

4) Overall profitability

5) Inter firm comparison

6) Trend analysis

1) Liquidity position

With the help of Ratio analysis conclusion can be drawn regarding the liquidity

position of a firm. The liquidity position of a firm would be satisfactory if it is

able to meet its current obligation when they become due. A firm can be said to

have the ability to meet its short-term liabilities if it has sufficient liquid funds to

pay the interest on its short maturing debt usually within a year as well as to repay

the principal. This ability is reflected in the liquidity ratio of a firm. The liquidity

ratio is particularly useful in credit analysis by bank & other suppliers of short

term loans.

2) Long-term solvency

Ratio analysis is equally useful for assessing the long-term financial viability of a

firm. This respect of the financial position of a borrower is of concern to the long-

term creditors, security analyst & the present & potential owners of a business.

The long-term solvency is measured by the leverage/ capital structure &

profitability ratio analysis s that focus on earning power & operating efficiency.

Ratio analysis reveals the strength & weaknesses of a firm in this respect. The

leverage ratios, for instance, will indicate whether a firm has a reasonable

proportion of various sources of finance or if it is heavily loaded with debt in

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which case its solvency is exposed to serious strain. Similarly the various

profitability ratios would reveal whether or not the firm is able to offer adequate

return to its owners consistent with the risk involved.

3) Operating efficiency

Yet another dimension of the useful of the ratio analysis, relevant from the

viewpoint of management, is that it throws light on the degree of efficiency in

management & utilization of its assets. The various activity ratios measure this

kind of operational efficiency. In fact, the solvency of a firm is, in the ultimate

analysis, dependent upon the sales revenues generated by the use of its assets-

total as well as its components.

4) Overall profitability

Unlike the outsides parties, which are interested in one aspect of the financial

position of a firm, the management is constantly concerned about overall

profitability of the enterprise. That is, they are concerned about the ability of the

firm to meets its short term as well as long term obligations to its creditors, to

ensure a reasonable return to its owners & secure optimum utilization of the assets

of the firm. This is possible if an integrated view is taken & all the ratios are

considered together.

5) Inter firm comparison

Ratio analysis not only throws light on the financial position of firm but also

serves as a stepping-stone to remedial measures. This is made possible due to inter

firm comparison & comparison with the industry averages. A single figure of a

particular ratio is meaningless unless it is related to some standard or norm. One

of the popular techniques is to compare the ratios of a firm with the industry

average. It should be reasonably expected that the performance of a firm should be

in broad conformity with that of the industry to which it belongs. An inter firm

comparison would demonstrate the firms position vice-versa its competitors. If the

results are at variance either with the industry average or with those of the

competitors, the firm can seek to identify the probable reasons & in light, take

remedial measures.

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BALANCE SHEET Mar ' 12 Mar ' 11 Mar ' 10 Mar ' 09 Mar ' 08

Sources of funds

Owner's fund

Equity share capital 17.04 17.04 17.04 17.04 17.04

Share application money - - - - -

Preference share capital - - - - -

Reserves & surplus 132.21 124.59 114.50 105.30 97.78

Loan funds

Secured loans 90.02 95.56 75.04 82.65 103.32

Unsecured loans 1.61 4.45 10.00 16.44 15.06

Total 240.88 241.63 216.59 221.44 233.19

Uses of funds

Fixed assets

Gross block 153.31 145.95 136.53 131.73 126.06

Less : revaluation reserve - - - - -

Less : accumulateddepreciation 66.41 59.47 53.25 47.08 40.61

Net block 86.90 86.48 83.28 84.64 85.46

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BALANCE SHEET Mar ' 12 Mar ' 11 Mar ' 10 Mar ' 09 Mar ' 08

Capital work-in-progress 0.05 1.05 - 0.13 1.55

Investments 16.22 17.94 17.50 20.34 20.34

Net current assets

Current assets, loans &advances 230.08 197.74 171.99 171.02 180.59

Less : current liabilities &provisions 92.38 61.58 56.19 54.70 54.75

Total net current assets 137.70 136.16 115.80 116.32 125.84

Miscellaneous expensesnot written - - - - -

Total 240.88 241.63 216.59 221.44 233.19

Notes:

Book value of unquotedinvestments 16.22 17.94 17.50 20.34 20.34

Market value of quotedinvestments - - - - -

Contingent liabilities 11.43 27.35 18.70 9.58 9.71

Number of equitysharesoutstanding (Lacs) 170.40 170.40 170.40 170.40 170.40

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PROFIT LOSS ACCOUNT Mar ' 12 Mar ' 11 Mar ' 10 Mar ' 09 Mar 08

Income

Operating income 332.54 297.32 260.71 241.69 248.79

Expenses

Material consumed 184.07 165.76 146.18 135.80 133.19

Manufacturing expenses 25.23 32.84 28.28 25.92 27.00

Personnel expenses 36.79 35.68 27.03 20.92 22.61

Selling expenses - 16.47 15.76 16.79 18.25

Adminstrative expenses 57.11 22.22 18.15 16.29 16.21

Expenses capitalised - - - - -

Cost of sales 303.20 272.97 235.40 215.72 217.26

Operating profit 29.34 24.35 25.31 25.97 31.54

Other recurring income 0.25 0.64 0.49 1.04 0.59

Adjusted PBDIT 29.58 24.99 25.80 27.01 32.13

Financial expenses 11.73 8.22 9.00 12.59 13.41

Depreciation 7.39 6.81 6.79 6.59 6.38

Other write offs - - - - -

Adjusted PBT 10.47 9.96 10.01 7.83 12.34

Tax charges -0.35 -0.21 -0.35 -0.26 0.12

Adjusted PAT 10.82 10.17 10.36 8.09 12.23

Non recurring items -3.24 0.12 -0.68 -0.54 3.82

Other non cash adjustments 0.05 -0.21 -0.47 -0.02 -0.09

Reported net profit 7.63 10.08 9.20 7.52 15.96

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PROFIT LOSS ACCOUNT Mar ' 12 Mar ' 11 Mar ' 10 Mar ' 09 Mar 08

Earnigs before appropriation 49.30 47.67 43.59 40.39 38.87

Equity dividend - - - - -

Preference dividend - - - - -

Dividend tax - - - - -

Retained earnings 49.30 47.67 43.59 40.39 38.87

CASH FLOW Mar ' 12 Mar ' 11 Mar ' 10 Mar ' 09 Mar ' 08

Profit before tax 18.40 17.69 17.85 19.50 29.05

Net cash flow-operatingactivity 10.78 10.36 15.41 27.13 22.81

Net cash used in investingactivity -6.94 -11.40 -2.62 -4.01 -9.17

Netcash used in fin. activity -11.95 -0.35 -13.54 -21.76 -13.30

Net inc/dec in cash andequivlnt -7.98 -1.34 -1.01 1.36 0.34

Cash and equivalnt begin ofyear 17.54 4.13 5.15 3.79 4.15

Cash and equivalnt end ofyear 9.56 2.79 4.13 5.15 4.49

RATIOS Mar ' 12 Mar ' 11 Mar 10 Mar 09 Mar 08

Per share ratios

Adjusted EPS (Rs) 6.35 5.97 6.08 4.75 7.18

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Adjusted cash EPS (Rs) 10.68 9.96 10.06 8.62 10.92

Reported EPS (Rs) 4.48 6.04 5.40 4.41 9.42

Reported cash EPS (Rs) 8.81 10.03 9.39 8.28 13.16

Dividend per share - - - - -

Operating profit per share

(Rs) 17.22 14.29 14.85 15.24 18.51

Book value (excl rev res) pershare (Rs) 87.59 83.11 77.20 71.80 67.38

Book value (incl rev res) pershare (Rs.) 87.59 83.11 77.20 71.80 67.38

Net operating income pershare (Rs) 195.15 174.48 153.00 141.84 146.00

Free reserves per share (Rs) - 73.09 67.17 61.77 57.36

Profitability ratios

Operating margin (%) 8.82 8.19 9.70 10.74 12.67

Gross profit margin (%) 6.60 5.90 7.10 8.01 10.11

Net profit margin (%) 2.29 3.45 3.52 3.09 6.43

Adjusted cash margin (%) 5.47 5.69 6.56 6.04 7.46

Adjusted return on net worth(%) 7.24 7.18 7.87 6.60 10.64

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Reported return on net worth

(%) 5.10 7.26 6.99 6.14 13.97

Return on long term funds(%) 9.21 12.02 14.20 15.75 19.74

Leverage ratios

Long term debt / Equity 0.61 0.06 0.01 0.05 0.13

Total debt/equity 0.61 0.70 0.64 0.81 1.03

Owners fund as % of totalsource 61.96 58.61 60.73 55.24 49.23

Fixed assets turnover ratio 1.38 2.04 1.91 1.83 1.97

Liquidity ratios

Current ratio 2.49 3.21 3.06 3.13 3.30

Current ratio (inc. st loans) 2.49 0.83 0.81 0.77 0.73

Quick ratio 1.59 1.89 1.82 1.90 1.91

Inventory turnover ratio 4.19 3.93 3.98 3.84 3.52

Payout ratios

Dividend payout ratio (netprofit) - - - - -

Dividend payout ratio (cashprofit) - - - - -

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Earning retention ratio 100.00 100.00 100.00 100.00 100.00

Cash earnings retention ratio 100.00 100.00 100.00 100.00 100.00

Coverage ratios

Adjusted cash flow time totaldebt 5.03 5.89 4.96 6.75 6.36

Financial charges coverageratio 2.52 3.04 2.87 2.15 2.40

Fin. charges cov.ratio (posttax) 2.28 3.08 2.78 2.12 2.67

Component ratios

Material cost component (%earnings) 54.57 56.92 56.68 51.30 56.34

Selling cost Component - 5.54 6.04 6.94 7.33

Exports as percent of totalsales 14.24 14.45 14.11 15.63 17.99

Import comp. in raw mat.

consumed 8.30 7.84 5.50 5.08 6.84

Long term assets / totalAssets 0.30 0.34 0.36 0.38 0.37

Bonus component in equitycapital (%) 50.00 50.00 50.00 50.00 50.00

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CHAPTER-4

DATA ANALYSIS

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ANALYSIS AND INTERPRETATION

1. LIQUIDITY RATIOS

1.1 CURRENT RATIO = CURRENT ASSETS/CURRENT LIABILTIES

YEAR 2009-2010 2010-2011 2011-2012

Current Assets 1,34,94,75,847 1,81,20,38,152 1,80,59,34,193

Current

Liabilities

75,67,58,438 1,37,98,19,154 1,32,78,92,788

Current Ratio 1.78 1.31 1.36

0

0.2

0.4

0.6

0.8

1

1.2

1.41.6

1.8

2

2009-2010 2010-2011 2011-2012

Current Assets

Current Liabilities

Current Ratio

INTERPRETATION

1. IDEAL CURRENT RATIO IS 2:1.

2. The current ratio has increased from 1.47 to 1.78 between the years 2004-

2005 and2009-2010. Then it decreased to 1.31 in the year 2010-2011 and

then increased 1.36 in the year 2011-2012.

3. This shows that the short term liquidity of the company is not good.

1.2 QUICK RATIO = QUICK ASSETS/CURRENT LIABILITIES

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YEAR 2009-2010 2010-2011 2011-2012

Quick Assets 81,29,79,812 1,05,02,99,837 1,04,40,61,085

Current

Liabilities

75,67,58,438 1,37,98,19,154 1,32,78,92,788

Quick Ratio 1.07 0.76 0.79

0

0.2

0.4

0.6

0.8

1

1.2

2009-10 2010-11 2011-12

Quick Assets

Current Liabilities

Quick Ratio

INTERPRETATION

1. THE IDEAL QUICK RATIO IS 1:1

2. The quick ratio of the company has increased from 0.94 to1.07 between

the year 2004-2005 and2009-2010. Then decreased to 0.76 and0.79 in the

year 2010-2011 and 2011-2012.3. This means that the company cannot meet its short term obligations.

1.3 CASH RATIO = CASH AND BANK/CURRENT LIABILITIES

YEAR 2009-2010 2010-2011 2011-2012

Cash 2,94,45,561 4,62,40,483 4,49,26,777Current 75,67,58,438 1,37,98,19,154 1,32,78,92,788

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Liabilities

Cash Ratio 0.039 0.033 0.034

0.03

0.031

0.032

0.033

0.034

0.035

0.036

0.037

0.038

0.039

2009-10 2010-11 2011-12

Cash

Current Liabilities

Cash Ratio

INTERPRETATION

1. The cash ratio has first increased from 0.032 to 0.039 between the year

2004-2005 and2009-2010 and then decreased in the year 2010-2011 and

then increased by 0.001 in 2011-2012.

2. This reveals that the cash position of the company is not sound.

2. ACTIVITY RATIOS

INVENTORY TURNOVER RATIO = NET SALES / INVENTORY

YEAR 2009-2010 2010-2011 2011-2012

Net Sales 2,21,11,97,993 2,37,54,48,269 2,57,89,34,907

Inventory 53,64,96,035 76,17,38,315 76,18,73,108

Inventory

Turnover Ratio

4.12 3.12 3.38

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0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

2009-10 2010-11 2011-12

Net Sales

Inventory

Inventory TurnoverRatio

INTERPRETATION

1. This shows that the company is somehow efficient in generating the

inventory into sales.

2. The inventory turnover ratio has decreased from 4.75 to 3.12 between the

years 2004-2005 and 2010-2011and increased to 3.38 in 2011-2012.

2.1 DEBTORS TURNOVER RATIO = SALES/DEBTORS

YEAR 2009-2010 2010-2011 2011-2012

Sales 2,21,11,97,993 2,37,54,48,269 2,57,89,34,907

Debtors 48,33,85,817 72,08,94,474 72,41,47,983

Debtors

Turnover Ratio

4.57 3.29 3.56

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0

1

2

3

4

5

2009-10 2010-11 2011-12

Sales

Debtors

Debtors TurnoverRatio

INTERPRETATION

1. The debtor turnover ratio has first increased from 4.12 to 4.57 between the

year 2004-2005 and2009-2010 and then decreased in the year 2010-2011

and then increased in 2011-2012.

2. This shows that the debtor management system is try to maintain their

position.

AVERAGE COLLECTION PERIOD = NUMBER OF WORKING DAYS /

DEBTORS TURNOVER RATIO

YEAR 2009-2010 2010-2011 2011-2012

Number of

Working Days

365 365 365

Debtors Turnover

Ratio

4.57 3.29 3.56

Average Collection

Period

80 days 110 days 102 days

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INTERPRETATION

1. The average collection period has decreased from 89 days to 80 days

between the year 2004-2005 and2009-2010 and then increased in the year

2010-2011 and again decreased in 2011-2012.

2. More the average collection period less efficient is the debtor management

system.

WORKING CAPITAL TURNOVER RATIO = SALES /

NET WORKING CAPITAL

YEAR 2009-2010 2010-2011 2011-2012

Sales 2,21,11,97,993 2,37,54,48,269 2,57,89,34,907Net Working

Capital

59,27,17,409 43,22,18,998 47,66,97,765

Working Capital

Turnover Ratio

3.73 5.50 5.41

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0

1

2

3

4

5

6

2009-10 2010-11 2011-12

Sales

Net Working Capital

Working Capital

Turnover Ratio

INTERPRETATION

1. The working capital turnover ratio has first decreased from 5.32 to 3.73

between the year 2004-2005 and2009-2010 and then increased to 5.50 inthe year 2010-2011 and then decreased by 0.09 in the year 2011-2012.

3. PROFITABILITY RATIOS

OPERATING PROFIT RATIO = OPERATING PROFIT X 100

SALES

YEAR 2009-2010 2010-2011 2011-2012

Operating Profit 31,48,62,163 31,28,91,662 32,99,64,549

Sales 2,21,11,97,993 2,37,54,48,269 2,57,89,34,907

Operating Profit

Ratio

14.24 13.17 12.79

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12

12.5

13

13.5

14

14.5

2009-10 2010-11 2011-12

INTERPRETATION

1. The operating profit first increases to 14.24% in the year2009-2010 and

then decreases to 13.17% and 12.79% in the year 2010-2011 and 2011-

2012.

2. This shows that the operating cost of the company has increased from

2004-2005 to 2011-2012.

NET PROFIT RATIO = NET PROFIT AFTER TAX X 100

NET SALES

YEAR 2009-2010 2010-2011 2011-2012

Net Profit After

Tax

18,49,28,514 17,01,94,555 16,05,13,611

Net Sales 2,21,11,97,993 2,37,54,48,269 2,57,89,34,907Net Profit Ratio 8.36 7.16 6.22

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0

2

4

6

8

10

2009-10 2010-11 2011-12

Net Profit After Tax

Net Sales

Net Profit Ratio

INTERPRETATION

1. The net profit ratio first increases from 5.03 to 8.36 in the year 2004-2005

and2009-2010 and then decreases to 7.16 in the year 2010-2011 and too

decreasing in 2011-2012.

2. This reveals that the efficiency in manufacturing, administering and selling

the products is decreasing.

4. LONG TERM SOLVENCY RATIOS

DEBT EQUITY RATIO = OUTSIDERS FUNDS/SHAREHOLDERS

FUNDS

YEAR 2009-2010 2010-2011 2011-2012

Outsiders funds 25,80,06,52

4

38,70,96,269 1,14,81,89,285

Shareholders

funds

81,67,40,225 98,85,72,605 3,95,92,73,396

Debt Equity Ratio 0.32 0.39 0.29

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0

0.05

0.1

0.15

0.2

0.25

0.3

0.35

0.4

2009-10 2010-11 2011-12

Outsiders fundsShareholders funds

Debt Equity Ratio

INTERPRETATION

1. The debt equity ratio is decreasing which means that the companys

dependence on the external debt is decreasing.

2. This shows greater flexibility in the companys operation.

INTEREST NET PROFIT BEFORE INTEREST AND TAXES

COVERAGE = FIXED INTEREST CHARGES

RATIO

YEAR 2005-2006 2010-2011 2011-2012

Net profit

before interest

and taxes

27,48,63,625 26,65,57,054 24,44,21,752

Interest 4,74,18,093 8,81,68,867 13,34,56,945

Interest

Coverage Ratio

5.8 3.02 1.83

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0

1

2

3

4

5

6

2009-10 2010-11 2011-12

INTERPRETATION

1. The interest coverage ratio first increases between the year 2004-2005

and2009-2010 and then decreases in the year 2010-2011 and in 2011-

2012.

2. A low ratio indicates excessive use of debt.

FINDINGS AND RECOMMENDATIONS

1. In India as most of the population is under low-income group, they wearunbranded or local brand shoes. So the company which can capture this

income group especially living in villages and small towns will be the

winner.

2. As the exclusive showroom play an important role in making and marking

the image of company. So there should be policy for exclusive showroom.

3. Quality control operations should be modernized effectively as people are

more educated and give more preference to quality.

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4. Television has become the most effective mode of advertising. New trend

of naming programs before the actual name of programs give more

insertion in the minds of people as there was performance on Zee T.V

called LIBERTY PUBLIC DEMAND.

5. There should be some special brands, which should be available only in

exclusive showrooms to attract the crowd there.

6. There should be no bargain with the quality of the product.

7. Showroom owners tend to heavily tend to heavily depend on the brand

image rather than theyre own skills and knowledge regarding product. So

the big companies should try to internationalize their products and image

and should give a psychological feeling of being a universal brand.

8. Regular meeting should be organized by the companies to educate the

showroom owners regarding new innovation, their features as well as new

policies.

9. Claim policy regarding replacement etc. should be clearly made by the

company and followed in spirit of the world.

CONCLUSIONS

1. Most of customers felt Liberty as a premium product company (which is

true to much extent), which is out of reach of common man. It is

suggested that an economical range of footwear should also be introduced

to capture the low-income group people who account for most of the

population in villages & small towns.

2. Companies should control, review and improve their discount policy so as

to improve companys image.

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3. New designs and colors should be introduced in Ladies section, as ladies

every time demand something new.

4. More attention should be paid to customers complaints and efforts should

be made to remove them.

5. The placement of defected pairs should be paid more attention so as to

remove dissatisfaction among the exclusive showroom owners.

6. A Company persons should regularly visit exclusive showrooms and listen

to the problems and find solution to them as is done by Bata Company.

7. Some special planning on appointment of dealers should be there to avoid

the complications.

8. Trough inspection of stock should be done to avoid mixing of inferior

quality stock with fresh stock, which is send to dealers.

9. The company should allow at the most two exclusive showrooms in one

city. That too should be atleast 23 K.M apart to attract customers from

all the localities.

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BIBLIOGRAPHY

BOOKS

Pandey, I.M., Financial Management, Ed. 2007, VIkas Publishing House

Private Ltd., New Delhi.

Gupta, Shashi K., Management Accounting, Ed.2007, Kalyani

Publishers, New Delhi.

KOthari, C.R., Research Methodology, Ed.2007, New Age International

(P) Limited, Publishers, New Delhi.

MANUAL

Annual Reports

WEBSITES

www.liberyshoes.com

www.libertyfreedom.com

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QUESTIONNAIRE

Question 1) What is the liking of people towards LIBERTY SHOES?

Answer a) Y-yes

b) n- no

c) c- cant say

Question 2) Response of people about LIBERTY SHOES?

Answer a) y-yes

b) n-no

c) c-cant say

Question 3) Response of people that LIBERTY SHOES will give a healthy

competition to small leagues?

Answer a) y- yes

b) n- no

c) c- cant say

Question 4) Response of people that LIBERTY SHOES will bring a

revolution in the industry?

Answer a) y-yes

b) n-no

c) c- cant say

Question 5) Factors why people like LIBERTY SHOES?

Answera) 1-affordability

b) 2-shape

c) 3-design

d) 4-other design

Question 6) Proportion of people who will shift to LIBERTY SHOES?

Answera) Y-yes

b) n-no

c) c-cant say

Question 7) Why would people prefer LIBERTY SHOES?

Answera) 1-comfort

b) 2-safety

c) 3-reputationd) 4-other reasons

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Question 8) Response about LIBERTY SHOES?

Answera) 1-very good

b) 2-good

Question 9) LIBERTY SHOES is made for villages or cities? Discuss

Answera) 1-town/cities

b) 2-villages

c) 3-both

d) 4-cant say

Question 10) What do you think about the service supply of beverages at

outlets?

(a) Very good (b) good (c) normal (d) bad (e) very bad

Question 11) How many times you face the shortage of popular brand of

Liberty Shoes at outlets in a week?

(a) 1time (b) 2times (c) 3 times (d) more than 3 times

Question 12) Which type of scheme provided by Liberty Shoes attract you?

(a) Daily Scheme on brands

(b) Monopoly discount(c) Monthly card scheme

(d) Display schemes

Question 13) How is the behavior of Liberty Shoes official?

(a) Very good (b) good (c) normal (d) bad (e) very bad

Question 14) Did advertisement of Liberty Shoes affect sell?

(a) Yes (b) No

Question 15) What sort of others problems you are having?

Ans.

Documents

S 315 Unit 5nfjhg (Block 1)