Vrl Soft Copy

VRL LOGISTICS LTD.

EXECUTIVE SUMMARY

VRL Logistics is one of the leading road transportation companies in

India, with operation in parcel transportation, passenger transportation,

express cargo, and aviation and courier segments.

For the purpose of calculating the various ratios, the financial statement

or Annual reports of recent three years is taken and analyzed. The objectives

of this study are also to find out liquidity position, profitability, efficiency of

VRL Logistics limited – Varur, Hubli.

The project consists of financial performance on the basis of different

ratio. The study will reveal the financial performance of the firm which

enables the management to know their financial strengths of the firm to make

their best use. Ratio analysis is a tool used by individuals to conduct a

quantitative analysis of information in a company's financial statements.

Ratios are calculated from current year numbers and are then compared to

previous years, other companies, the industry, or even the economy to judge

the performance of the company.

Financial statement provides summarized view of the financial position

and operation of the company. Many parties are interested in financial

statement analysis to know about the financial position of the firm. They

include investors, creditors, lenders, suppliers etc. Ratio analysis is the widely

used tool of financial analysis. It is the systematic use of ratio to interpret the

financial statement so that strengths and weaknesses of a firm are determined.

Values used in calculating financial ratios are taken from the balance

sheet, income statement, statement of cash flows or (sometimes) the statement

of retained earnings. These comprise the firm's "accounting statements" or

financial statements. The statements' data is based on the accounting method

and accounting standards used by the organization.

KLES COLLEGE OF BUSINESS ADMINISTRATION 1

VRL LOGISTICS LTD.

Objective of the study

The project “ratio analysis” Conducted at VRL, Varur-Hubli is an

attempt to critically analyze the performance of management of the

organization in financial terms.

A business can survive and grow in the long run only if its financial is

properly and efficiently managed. Also since the organization is dealing with

public funds, it is more obligatory for the organization to take that much that

much more extra care in employing the funds and managing the returns.

The basic objective of this study is to make a detailed analysis, on how the

company has managed its resource over the year, the reason for the current

performance, to know the procedures, problems and complexities involved in

performance, to know the procedures, problems and complexities involved in

the process and also to find out the external factors affecting the operational

decision.

To analyze the trend in performance over the year the year and to study and

understand the changes taking place in the business environment, and how the

organization has adapted to these changes.

Analyze the overall efficiency of the management by using various tools and

techniques and make a comparative study of three year data to Find out the

change in performance levels, and analyze the reasons for the same.

Make a detailed study of the individual components of the financial statement

using various ratio, and analyze how efficiently they are managed and how all

these components can be blended together to optimize the financial

performance.

Keeping in view the limitations of the organization, how activities are better

managed for improved results, profitability and liquidity.


VRL LOGISTICS LTD.

INDUSTRY PROFILE

Logistics is the management of the flow of goods between the point of

origin and the point of destination in order to meet the requirements of

customers or corporations. Logistics involves the integration of information,

transportation, inventory, warehousing, material handling, and packaging, and

often security. Logistics is a channel of the supply chain which adds the value

of time and place utility.

Logistics is one of the main functions within a company. The main

targets of logistics can be divided into performance related and cost related.

They are high due date reliability, short delivery times, low inventory level

and high capacity utilization. But when decisions need to be made, there is

always a trade off between these targets. This is what makes being a

logistician challenging and interesting.

Given the services performed by logistics, one can distinguish the main fields

of it as it follows:

Procurement Logistics

Production Logistics

Distribution Logistics

After sales Logistics

Disposal Logistics

In business, logistics may have either internal focus (inbound logistics),

or external focus (outbound logistics) covering the flow and storage of

materials from point of origin to point of consumption. The goal of logistics

work is to manage the fruition of project life cycles, supply chains and

resultant efficiencies.


VRL LOGISTICS LTD.

Business logistics can be defined as "having the right item in the right

quantity at the right time at the right place for the right price in the right

condition to the right customer".

Transportation like all industries is largely influenced by information

and communication technologies, with the focus being on knowledge of

customer needs and value added services. India is one of the countries of the

world having the largest road network. We have an extensive road network

that links the different parts of the country. The influence of topography in

road construction is noticeable the regions with the largest road network

include:

The Gangetic plains

The Damodar valley

The Punjab-Haryana pains

The south India states such as Tamilunadu, Karnataka, & Kerala

Today the India customer’s standard, and the level of expectation have

gone up dramatically. They have become world class customer service which

is going to give the competitive edge to any to industry in the future.

With the changing scenario, factors such as globalization of the market,

international economic and removal of barriers to business and trade, and

increased competition have enhanced the need of transportation. It is one of

the most important infrastructure requirements, which is essential for the

expansion of opportunities and plays an important role in making or bearing

or breaking competitive positioning.


VRL LOGISTICS LTD.

COMPANY PROFILE

Name of the Industry : VRL LOGISTICS LIMITED

Address of the Industry : VRL LOGISTICS LIMITED

NH-4, Bangalore Road, Varur

Hubli - 581207

Contact No. : 0836-2237511, 2237512

Fax No. : 0836- 2256612

Email : [email protected]

Website : www.vrlgroup.in

www.vrllogistics.in

Register Office. : VRL LOGISTICS LIMITED

Bangalore Road, VARUR,

HUBLI-581207

KARNATAKA

Corporate Office : Giriraj Annexe, Circuit House

Road, HUBLI-580029

KARNATAKA

Year of Establishment : 31st march 1983

Communication Facility : Telephone, Fax, Internet

Turnover per Year : 6506620(in RS. Thousands)

Accounting Year : April to March

Weekly Holiday : Sunday

Ownership Pattern : Proprietorship

Product : Transportation (Passenger &

Goods)

Bankers : KSFC, Other Nationalized &

Co-operative Banks

Factory Area : 43 acre


VRL LOGISTICS LTD.

HISTORY OF THE COMPANY

VRL was established by Mr. Vijay Sankeshwar in Gadag with single

truck during the year 1976 without any background and experience. Then in

the year 1977 he started transportation from Hubli to Gadag. In the year 1978

due to personal management and effective service he purchased a lorry and he

observed the activities of other well known transporter and started first parcel

service. VRL soon expanded its service to Bangalore, Hubli and Belgaum.

Similarly Smt. Lalitha V. Sankeshwar purchased a lorry in the year

1979 and running individually and sometimes hiring out to Vijayanand road

lines which was proprietary concern then company came into existence

effectively from 31st march 1983. Due to efficient management and co-

operation from the staff the total turnover and business picked up. From this

humble beginning VRL has grown into a nationally renowned Logistics and

transport company which is currently the largest fleet owner in India with a

fleet of 2691 Vehicles (Including 196 hi-tech tourist buses &2495 Trucks) as

of 15th August 2008.as published in the Limca Book of Records.

From the above figure, we can say that there is steady increase in the

growth of the company within the 25 years. Now the company is a biggest

industrial house in north Karnataka and created employment opportunity to

more than thirty thousand families and has been growing faster day by day

with varied activities with dedicated sincere and hard working staff at all

levels keeping the principles of the organization always in mind.


VRL LOGISTICS LTD.

CURRENT POSITION

The company has the largest network of branches currently has growth

having achieved a turnover exceeding Rs. 67760.48 lacs for the year ending

March 2010 among all transports companies in south India with over 911

branches in Karnataka, Tamilnadu, Andhra Pradesh, and Kerala. The

company is the largest parcel carrier that has a network spanning cross the

country. From this humble beginning VRL has grown into a nationally

renowned logistics and transport company which is currently the largest fleet

owner in India with a fleet of 2829 Vehicles (Including 256 tourist buses &

2573 Goods Transport Vehicles) as of 30th Sept 2010. VRL finds mentioned

in the Limca book of record as a Single largest fleet owner of commercial

vehicles in India in the private sector.

The company is one of the most efficient transport operators in India

with its operating margins higher than other players in the organized transport

industry. The company is known for its reliable, quality service during its

operations for the last two decades VRL Logistics Ltd. is an established brand

name and this enables the company to change premium rates than competition

to its customer.

Over the years VRL has pioneered in providing a safe and reliable

delivery network in the field of parcel service. It has spread its operations to

Courier Service, Express Cargo & Air Chartering to meet the growing demand

of the burgeoning customer base.

3PL & Warehousing solutions offered by VRL are tailor-made and

cater to unique needs of various customers of the industry. With the largest

network in India, the VRL parcel service is indispensable for large number of

corporate houses. VRL operates through a network of 859 Branch and

franchisees to cater our valuable customers. VRL is now expanding its service

to reach even the remote locations of the Country.


VRL LOGISTICS LTD.

MISSION

To provide the highest quality service to our customers by continuously

increasing cost efficiency and maintaining delivery deadlines. To encourage

our employees / workforce to strive for quality and excellence in everything

they do. To promote team work and create a work environment that

encourages talent and brings out the best in our employees.

VISION:

“To become the premier company that cuts across various segments and

emerges as the torchbearer of each segment that the Group ventures into.”

OBJECTIVES OF THE COMPANY

Quick and safe service.

Customer satisfaction.

Competitive price.

Attain market leadership.

To carry on the business of the public.

To take overall assets and liabilities of VRL which is an existing

proprietorship concern.

To carry on the business of transporters of any description with aid of

buses, lorries, cars, boats, steamers and other services in any part of

India.

To carry on the business as agent for all kind of traveling either by air,

sea, rail and road.

Double drive for the safe journey.

Onwards and return ticket facility.

Having a wide network of branches.

Wide network of booking office.

Clock room facilities at selected branches.

Check point to monitor vehicle movements.


VRL LOGISTICS LTD.

Organization Goal

The customer satisfaction is the key factor in today’s market as

“customer is the king”, hence forecast and analyze the requirements of the

customers is a must. The goal of the company is below:

Quick and safe service

Customer satisfaction and employee satisfaction

Competitive price

Attain market leadership


VRL LOGISTICS LTD.

BUSINESS STRATEGY

THE KEY ELEMENTS OF VRL LOGISTICS:

Consolidation position in south the India market

The company already has the highest network and branches in south

India. The company’s focus thereto has been interstate business delivering

goods to these state (expect Karnataka) with increase in the number of

branches in each of the south India states the company now plans to expand

interstate transportation in these southern state.

Increase its share from the north Indian market.

VRL Logistics hopes to increase its taking from the northern market by

establishing more office in key state like Rajasthan, Haryana etc

Increase its trust on marketing larger share from the corporate market.

The company is in the process of sharing up its marketing function, by

hiring senior people to know all its business, with specific focus on corporate

business and express cargo business.

Shore up its infrastructure through owned yards

One of the key strength of VRL Ltd. is its infrastructure in term of its

yards, around the country these yards enable the company to provide

extensive service in parcel segment by aggregating and distributing goods

through its hub and spoke model VRL Ltd. is currently operates these yards

out of rental premises expect in Hubli where it owns the yard and has built a

modern facility the company intends to established owned premises in the rest

of locations through which it can realize significant cost savings greater

operational efficient.


VRL LOGISTICS LTD.

Established infrastructure

The company has established branches and networking spanning the

entire country, VRL Logistics Ltd. network of the branches and agencies

entire country exceed nine hundred eleven (911) all through the India, and it is

growing fast. The company’s 20 plus yards enable the hub and spoke model of

the company by aggregating goods of small quantities that can be distributed

through its branch network. The network of branches and yard along with a

large fleet of owned vehicles 2691 plus trucks and light motor vehicles, the

company to cover the length and breadth of the country, efficiently with

flexibility in operations, that is unmatched by any other player in the industry.

The infrastructure and enable improved vehicle utilization.

Shift from unorganized to organized sector

Currently it is estimated that the unorganized sector accounts for over

eighty six percent (86%) of the goods transport in the company with the

introduction of VAT significantly there is shift of the business to the

organized sector (given that sales tax evasion is no longer an attraction under

the VAT scheme) and VRL logistic Ltd. is well poised to advantage of this

shift with its wide network and the image of being a reliable service provider.

Employee’s strength

There is a strong employer and employee relationship in VRL Logistics

Ltd. Company such as provident funds, gratuity scheme, medical

reimbursement, pension scheme, educational benefits, and maturity benefits

etc, are provided by the company.

The company introduced various novel schemes like payment to drivers

based on mileage driven by them, even the hamals and drivers of the

organization are extended by the benefit of ESI/PF etc. It is estimated that at

least 30000 people are benefited by way of direct or indirect employment

from company.


VRL LOGISTICS LTD.

ORGANISATION STRUCTURE

Sri V. B. Sankeshwar :

(Chairman & managing director)

Sri Anand. Sankeshwar :

(Managing director)

Sri Sudhir Ghate :

(Director)

Sri C. Karunakara Shetty :

(Director)

Mr. Suresh Angadi :

Managing Director entrusted with

day to day management, looking in

the massive growth and systematic

operation of the company. The

managing director of the company V.

B. Sankeshwar has been conferred

“Udyog Ratna” award in 1994,

“Vishweswarayya Navaratna” award

in 2003.

Managing director looking after the

general administrator, verification of

accounts, bills and payments,

He is also one of the directors in the

VRL Logistics Ltd.

He is also one of directors in the VRL

Logistics Ltd.

He is one of directors in the VRL

Logistics Ltd.


VRL LOGISTICS LTD.

DEPARTMENTAL STUDY

Administration Department

This department manages day to day activities in VRL Company the

administration department includes.

Day to day administration

A/c’s queries and commission letter to agents

Bus breakdown reports

Inspection reports

Introduction and other

Collection reports

Seat occupancy reports

Bus arrival reports

Customer feedback follow-up

Customer suggestions

Other reports

Openings of branches

Agency inspection

Personnel Department

This Department manages the most skilled resource in the organization

i.e. human resources of VRL Company. The Personnel Department looks after

the following area.

Recruitment staff

Training the staff

Allocation of work


VRL LOGISTICS LTD.

Stationary Department

The stationery department generates a list of stationary items. Required

by different departments as per their requisition this includes. Collection

requisition from branches for items. Generates a copy of stationeries sent to

a/c department for verification

Operation and maintenance Department

This department deals with technical & mechanical part in VRL

logistics limited. This department takes part in vehicle planning &

maintaining vehicles.

Vehicle planning

Maintaining the diesel entry card of buses from different branches

In case bus breakdown make alternative arrangements

Maintenances of vehicles

Maintaining the report of breakdown buses

Issue report of repaired bus to the vehicle planning dept. for further

movement for trip

Inspection department

This department look into official examination of different branches or

departments to check whether the flow is continues or not.

It involves following work process.

Visiting & inspecting the branches

Creating the inspection reports on branches

Issuing reports to the administration department for correction or taking

measures.


VRL LOGISTICS LTD.

Booking Department

This department in the travel agency helps to interact i.e. customers and

interaction.

Following are some features of booking department

Collecting customer information

Booking contracts and ticket

Maintain passenger list

Provides boarding for passenger

Entry the time of bus breaks down or any other quires for passenger

Compliant center for customer

Marketing Department

This department is heart of the organization, which plans and decides

about new marketing strategy to be introduced it also involves some activities

such as:

It takes customer feedback

Follow up the customer’s feedback

Form tariff rates

Offers discounts in non peak times

Formulates the promotional tools

Identify the necessity of expansion of new branches, geographically

Generates the reports an operation of new branches

Plans for introducing way of generating funds and the passengers

More offer and facilities


VRL LOGISTICS LTD.

VRL EXPRESS CARGO

"Anywhere Anytime"

Delivery on time zero excuses. This mantra is driving force behind the success

of VRL Express Cargo. Surface, Train & Air Cargo mode services

Dedicated company owned vehicles

Door pick-up and door delivery

On-time delivery

Online track & trace facility

24X365 days operations

Dedicated & well-groomed customer care windows

Extensive nation-wide network

VRL COURIER SERVICE

"On Time Every Time"

Capitalizing on the synergy of our transport network that connects all over

Karnataka, we are into Courier Services focusing on delivering documents

and small parcels in a time bound manner.

Storing & dedicated Operating Team

Time Bound Delivery With An Emphasis "On Time Every Time"

Delivery Schedules Ranging From 24/48/72/96 hours

Dedicated Route Vehicles


VRL LOGISTICS LTD.

VIJAYANAND TRAVELS

"At the forefront of passenger Transport"

200 Plus routes covering more than 50 destinations every day.

Market leader in Karnataka in private tourist operator segment.

Areas of Operation: Karnataka & Maharashtra states with 60-plus

branches and wide-spread network of 1000-plus agents.

Vijayanand Travels is the premier operator to extend service by hi-Tech

& sleeper coaches even to remote places

Onwards & return journey booking facility.

Punctuality in timing and separate seating arrangement for ladies.

Well-maintained coaches with latest seating arrangement.

Double drivers on-board for safe & comfortable journey.

Finance / Account Department

The finance department maintains the report of monetary transaction

and the finance the finance department allocate anticipate and acquire the

funds. In VRL Company this department operates in the following manner.

Collection of reports

H.O copy of tickets

Booking statements

Vouchers

Branches cash statements

Collection of H.O copy of stationary

Collection of passenger list and ticket

Verification of receipts and copies and entry in computer

Generating report on a/c queries and commission letter


VRL LOGISTICS LTD.

METHODOLOGY:

Primary Data:

Primary Data consists of asking the question and direct meet is used in

research study. Primary data includes.

Collecting information from each person of that company.

Some information has been interacting with Manager of that company.

Observation made during the project sessions.

Secondary Data:

Establishment report of the organization.

Some data from brief Note of the Company.

Some information were collected though various Journals, books, Internet

Annual report of the company.


VRL LOGISTICS LTD.

Scope of the study:

Since this is an academic project conducted within a short duration, the scope

and applicability of the study is not vast and extensive. Within the given

constraints and limitations the scope of study extends/limits itself to the

following areas.

The results and findings of this study may be applicable to all medium sized

financial organizations or similar firms in the industry, in general.

The study covers almost all the components or the financial indicators, and an

attempt is made to analyze the overall financial performance, by calculating

the different types of ratio.

The study is limited to a single organization only and no comparisons have

been made with other similar companies in the industry.

The study is based on the past/present trends, but it does not consider the

future trends or forecasts of the external environmental factors, which is

beyond the scope the study


VRL LOGISTICS LTD.

Financial Management

Financial management is concerned with the overall decision making in

general and with the management of economic resources in particular. In other

words it can be defined as the management of cash and fund flow which deals

with financial decision making of firm.

‘Management of Funds’ is an important aspect of financial

management. In a business undertaking or in an educational institution or in a

hospital or in an art society or elsewhere management of funds is the primary

concern of the financial management.

The term financial management has been defined differently by

different authors. According to Solomon “financial management is concerned

with the efficient use of an important economic resource, namely capital

funds”.

Phillippatus has given a more elaborate definition of the tern financial

management. According to him “Financial Management is concerned with the

managerial decision that results in the acquisition and financing of short term

and long term credits”.

The most acceptable definition of financial management as given by

S.C.Kuchhal is that “Financial Management deals with procurement of funds

and their effective utilization in the business”


VRL LOGISTICS LTD.

Techniques of Financial Statement Analysis:

Financial analyst analyzes the financial statement by selecting the

appropriate techniques according to the purpose of analysis. We can analyze

the financial statement from the following techniques.

1. Comparative Statement

2. Common-size Statement

3. Trend Analysis

4. Ratio Analysis

5. Fund Flow Statements

6. Cash Flow Statements

7. Cost Volume Profit Analysis

1. Comparative Statements: The comparative statements are the statement of

the financial position at different periods of times the elements of financial

position at two or more periods. Any statements prepared in a comparative

from will be covered in comparative statement.

2. Common-size Statements: The common size statement, balance sheet and

income statement are shown in analytical percentages. The figures are shown

as percentages of total assets, total liabilities and total sales a statements in

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

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

common size balance sheet.


VRL LOGISTICS LTD.

3. Trend Analysis: The financial statement may be analyzed by computing

trend of series of information. This method determines the direction upwards

or downwards and involves the computation of the percentage relationship

that each statement item bears to the same items in base year.

4. Ratio Analysis: A ratio is defined as “the indicated quotient of two

mathematical expression” and as” the relationship between two quantitative

term between Figures which have a cause and effect relationship or which are

connected with each other in some manner or the other”. A noticeable point is

that a ratio reflecting a quantitative relationship helps to perform a

quantitative judgment. Such is the nature of all financial ratios. Ratio analysis

is a widely used technique

5. Fund Flow Statements: The fund flow statement is a statement which

shows the movement of funds and is a report of the financial operations of the

business undertaking. It indicates various means by which funds were

obtained during a particular period and the ways in which these funds were

employed

6. Cash flow statement: Cash Flow statement which describes the inflows

and outflow of cash and cash equivalent in an enterprise during a

specified period of time. Such a statement enumerates net erects of the

various business transaction on cash.

7. Cost Volume Profit Analysis: cost volume profit analysis is a systematic

method of examining the relationships between selling prices, total sales

revenue, and volume of production, expenses and profit.


VRL LOGISTICS LTD.

LIMITATION OF THE STUDY

Limited use of single ratio:

A single ratio, usually, does not convey much of a sense. To make a better

interpretation numbers of ratios have to be calculated which is likely to

confuse the analyst than in will not help him in making any meaningful

conclusion.

Inherent limitation of accounting :

Like financial statement, ratio also suffers from the inherent weakness of

accounting records such as theirs historical nature.

Limited Information:

The study depends upon the data which was available in the

organization records and information provided by the organization and its

various department.

Lack of adequate standards:

There are no well-accepted standards or rules for all ratios, which can be

accepted as norms. It renders interpretation of the ratios difficult.

Limitation of time period:

Not the limitation of study was the time constraint. It was not possible to

make an extensive study so that the coverage confines to the period of

past three financial year only.


VRL LOGISTICS LTD.

RATIO ANALYSIS:

Ratio Analysis can be defined as the study and interpretation of relationship

between various financial variables, by investors or lenders. It is a quantitative

investment technique used for comparing a company’s financial performance

to the marketing general. It helps to identify areas where the management

needs to change.

Financial ratio analysis is the calculation and comparison of ratios which are

derived from the information in a company’s financial statements. Financial

ratios are calculated from one or more pieces of information from a

company’s financial statements.

Advantages of Ratio Analysis

1. Simplifies Financial Statements: Ratio analysis simplifies the

comprehensiveness of financial statement. Ratio elaborates whole story of

changes in the condition of the business.

2. To improve Future performance: Ratio analysis indicates weak spot of

the business. This helps the management in overcoming such weakness and

improving the overall performance of the business in future.

3. Facilitates Inter-firm comparison: Ratio analysis provides data for inter

firm Comparison. Ratio highlights the factors associated with successful and

unsuccessful firms. They also reveal strong firms and weak firms, over-

valued and under- valued firms.

4. Make inter firm comparison: Ratio analysis makes possible comparison

of the Performances of the different division of firm. The ratio is helpful in

deciding about their efficiency or otherwise in the past and likely

performance in the future.


VRL LOGISTICS LTD.

5. Helps in planning: Ratio analysis helps in planning and forecasting. Over

a Period of time a firm or industry develops certain norms that may

indicate future success or failure.

6. Useful of judging the efficiency of a business: It helps in judging the

efficiency of business liquidity, solvency, profitability etc, of business

can be easily evaluated with helps of various accounting ratio like

current ratio, liquid ratio , debt equity ratio and net profit ratio etc, such

an evaluation enables the management to judge the operating efficiency

of the various aspects of business.

Limitation of the ratio analysis:

1. Comparative study required: Ratio are useful in judging the

efficiency of the business only when they are compared with past results

of the business or with result of a similar business. However, such comparison

only provides a glimpse of the past performance and forecasting for may not

be correct since several other factors market conditions, management

policies, etc may affect the future operation.

2. Limitation of financial statement: Ratio are based only on the

information which has been recorded in the financial statement and they

suffer from number of limitation, the ratios derived there from, therefore,

are also subject to those limitation, For example non financial changes

though important for the business are not revealed by financial

statement. The comparison of one firm with another on the basis of

ratio analysis without taking into account the fact of companies having

different accounting policies, will be misleading and meaningless.

3. Ratio alone is not adequate: Ratio is only indicator; they cannot be taken

as final regarding good or bad financial position of the business. Other things

have also to be seen .The value of ratio should not be regarded as good or bad.


VRL LOGISTICS LTD.

4. No fixed standard: no fixed standard can be lay down for ideal

ratio. Financial analysis is an individual matter and value for ratio which

is perfectly acceptable for one company or one industry may not be at all

acceptable in case of another

5. Ratios are composite of many figures: some cover a time period, other

are at and instant of time while still other are only averages. A balance sheet

figure shows the balance of the account at one moment of one day.

Standard of comparison:

The ratio analysis involves comparison interpretation of the financial

statement. A single ratio in itself does not indicate favorable or unfavorable

condition. Standards of comparison of may consist of:

1. Time series analysis: when financial ratio over a period of time is

compared, it is known as time series analysis.

2. Cross- section analysis: another way of comparison is to compare ratio of

one firm with some selected firms in the industry at the same pint in

time. This kind of comparison is known as cross-section analysis.

3. Industrial analysis: To determine the financial conditions and

Performance of a firm, its ratio may compare with average ratio of the

Industry which the firm is a member. This sort of analysis is known as

industrial analysis.

4. Performa Analysis: Sometime future ratio is used as standards of

comparison. Future ratios can be developed from the projected or Performa,

financial statement.


VRL LOGISTICS LTD.

In my project, I am going to take standards of comparison based on

“Time series analysis”, on financial performance of VRL Logistics Limited,

varur, hubli of last Three year. It gives an indication of the direction of

change and reflects whether the firm’s financial performance has

improved, deteriorated, remained constant over a time.

Classification of Ratio:

Ratio can be classified into different categories depending upon the

basis of classification.

The traditional classification has been on the basis of the financial

statement to which the determinants of a ratio belong. On the basis the

ratio could be classified as,

Profit and loss account Ratio

Balance sheet Ratio

Composite Ratio

However the above basis of classification has been found to be

crude and Unsuitable because analysis of balance sheet and Income

statement cannot be done in isolation. They have to be studied together

in order to determine the profitability and solvency of the business. They

are now classified as:

1.Financial ratio :Financial ratio indicates about the financial position of

the company. A company is deemed to be financially sound, if it is in

position to carry on its business smoothly and meet all its obligation

both long- term as well as short -term without strain. Thus, company

financial position has to be judged in two ways long –term as well as short-

term.


VRL LOGISTICS LTD.

a. Liquidity Ratio

1. Current Ratio

2. Quick Ratio

3. Absolute liquidity Ratio / Cash Ratio

4. Working Capital Ratio

b. Capital structure Ratio:

1. Debt Ratio

2. Debt equity Ratio

3. Proprietary Ratio

4. Interest Coverage Ratio

2. Turnover Ratio:

a. Inventory Turnover ratio

b. Debtor Turnover Ratio

c. Creditor Turnover Ratio

d. Asset Turnover Ratio

1. Net Asset Turnover Ratio

2. Total asset Turnover Ratio

3. Fixed Asset Turnover Ratio

4. Current Asset Turnover Ratio

5. Working capital Turnover ratio


VRL LOGISTICS LTD.

3. Profitability Ratio:

a. Profitability In Relation To Sales:

1. Gross Profit Ratio

2. Net Profit Ratio

3. Operating Expenses Ratio

4. Operating Ratio

b. Profitability In Relation To Investment:

1. Return on Investment

2. Return on Equity

3. Earning Per Ratio

4. Dividend Per Ratio

5. Dividend Payout Ratio


VRL LOGISTICS LTD.

Turnover Ratio:

Funds of creditor and owners are invested in various assets to

generate sales and profit. The better the management of asset, the larger the

amount of sales, Turnover ratio are employed to evaluate the efficiency

with which the firm manages and utilizes its assets. These ratios are also

called as “Activity ratio”.

Turnover ratio indicates the speed with which are being converted or turned

over into sales.

Asset Turnover ratio:

Assets are used to generate sales. Therefore a firm should manage its

assets efficiently to maximize sales. The relationship between sales and assets

is called asset turnover. Several asset turnover ratios can be calculated.

Net asset turnover: It is computed by dividing sales by net assets

Net Sales

Net Asset Turnover = ------------------------

Net Assets

Net Asset= net fixed asset + net current assets (Current assets less Current

liabilities)


VRL LOGISTICS LTD.

(Amt in lacks)

Year Net Sales Net Assets

Net Asset

turnover

Ratio

2008-09 64202.81 58304.54 1.10

2009-10 70598.93 55016.45 1.28

2010-11 88196.68 62054.14 1.42

2011-12 112112.34 57550.081.95

Year 2008-09 2009-10 2010-11 2011-120 0 0 0 00

1.1 1.28 1.42

1.95

Net asset turn over ratio

Interpretation:

The trend is showing increment i.e. Net Asset turnover ratio in 2011-12

is 1.92 times comparing to 1.42 times in 2010-11. Therefore it indicates that

the company producing 1.95 times of sales for one rupee of capital employed

in net assets.


VRL LOGISTICS LTD.

Profit analysis of last 5 years

Profit of the company is identified by dividing the difference between two

year profits divided by net profit of an year, and this helps in finding the profit

analysis of a company

Profit=difference between two year*100/ Net profit

2007-08

2008-09

690.85*100/738.58 95.53

2008-2009

2009-2010

47.73*100/2862.14 6034

2009-2010

2010-2011

2187.81*100/2909.87 75.18

2010-2011

2011-2012

991.8*100/5097.68 19.45

Interpretation

From the year 2007-09 the profit is 95.53 for every 100 and it decreased to -

6034 for every 100 and gradually increased from year 2009-11 to 75.18 for

every 100 and in 2012 it is stabilized at 19.45 for ever hundred. Profit is

stabilized from the year 2011-12


VRL LOGISTICS LTD.

Total Asset Turnover Ratio:

This ratio shows the firm’s ability in generating sales from all

financial resources committed to total assets

Sales

Total asset turnover = ------------------

Total assets

Total assets include net fixed assets and current assets

(Amt in lacks)

Year Sales Total assetsTotal Assets

Turnover

2008-09 64202.81 61690.53 1.04

2009-10 70598.93 64319 1.15

2010-11 88196.68 72906.42 1.20

2011-12 112112.34 92858.43 1.21


VRL LOGISTICS LTD.

Year 2008-09 2009-10 2010-11 2011-120 0 0 0 00

1.041.15 1.2 1.21

TOTAL ASSET TURNOVER RATIO

Interpretation:

The total assets ratio is increasing i.e. from 1.20 & 1.21 in the year

10-11 & 11-12 respectively. The higher ratio indicates that the assets are

utilized properly by the company.


VRL LOGISTICS LTD.

Fixed Asset Turnover Ratio:

To know its efficiency of utilizing fixed assets and current

assets separately.

Sales

Fixed Asset Turnover= ---------------------------

Net fixed assets

(Amt in lacks)

Year SalesNet Fixed

Assets

Fixed asset

turnover ratio

2008-09 64202.81 49130.56 1.30

2009-10 70598.93 47094.16 1.49

2010-11 88196.68 51153.37 1.72

2011-12 112112.34 69457.18 1.61


VRL LOGISTICS LTD.

2008-09 2009-10 2010-11 2011-120 0 0 0

1.3 1.491.72 1.61

FIXED ASSET TURNOVER RATIOYear Series2Series3 Fixed asset turnover ratio

Interpretation:

The ratio for 2011-12 reveals 1.61 of net fixed assets to sales,

compare to 10-11 & 2009-10, therefore the trend indicates the assets are used

not so efficiently in the year 11-12.


VRL LOGISTICS LTD.

Working Capital Turnover Ratio:

Working capital ratio measures the effective utilization of working

capital It also measures the smooth running of business or otherwise the

ratio establishes relationship between cost of sales and working capital.

Working capital turnover ratio is calculated with the help of the following

formula.

Sales

Working Capital Turnover Ratio = ------------------------------

Net working Capital

Net Working Capital = Current Asset – Current Liabilities

(Amt in lacks)

Year SalesNet working

Capital

Working

Capital

Turnover

Ratio

2008-09 64202.81 9173.98 6.99

2009-10 70598.93 7922.29 8.91

2010-11 88196.68 10900.77 8.09

2011-12 112112.34 -12725.10 -8.81

Note: Due to change in classification of current assets and current liabilites

as per requirement of Revised Schedule VI, NWC Ratio is differing

significantly in the current year as compared to previous years.


VRL LOGISTICS LTD.

2008-09 2009-10 2010-11 2011-120 0 0 0

6.998.91 8.09

-8.81

working capital turnover ratioYear Series2Series3 Working Capital Turnover Ratio

Interpretation:

In 2008-09 net working capital ratio is 6.99 and it is increased to 8.91

and it decreased to 8.09 in the year 2009-10 & 2010-11 respectively. It

indicates that working capital is not properly used in making sales in

the year 2010-11.


VRL LOGISTICS LTD.

Profitability Ratio:

A company should earn profit to survive and grow over a long period

of time. Profit is ultimate output of company and company will have no

future if it fails to make sufficient profit. Therefore company should

continuously evaluate the efficiency of the company in terms of profits.

The profitability ratios are calculated to the measure the operating

efficiency of the company. Besides management of the company, creditors

and owners are also interested in the profitability of the firm. Creditors want

to get interest and repayment of principle regularly. Owners want to get a

required rate of return on their investments. Generally, two major types of

profitability ratios are calculated:

Profitability in relation to sales.

Profitability in relation to investment.

Gross profit ratio:

This ratio expresses the relationship between gross profit and sales.

It determines what amount of gross profit company has obtained towards its

sales.

Gross Profit

Gross Profit Ratio= ------------------------- x100

Sales

Gross Profit = sales – cost of goods sold


VRL LOGISTICS LTD.

(Amt in lacks)

Year Gross profit SalesGross profit

Ratio (%)

2008-09 20678.15 64202.81 32.20

2009-10 24708.45 70598.93 34.99

2010-11 28955.46 88196.68 32.83

2011-12 34415.97 112112.34 30.69

2008-09 2009-10 2010-11 2011-12

32.2

34.99

32.83

30.69

gross profit ratio

Interpretation:

Gross profit decrease in 2010-11 32.83% to 2009-10 34.99% and it

decreases in 2011-12 30.69%


VRL LOGISTICS LTD.

Net profit Ratio:

It is relationship between net profits, sales and indicates

management efficiency indicates management efficiency in

manufacturing, administering and selling the products. This ratio is the

overall measure of the firm’s ability to turn each rupee sales into net profit.

Net Profit (Profit after tax)

Net Profit Ratio = ---------------------------------------- x100

Net Sales

(Amt in lacks)

YearProfit after

TaxSales

Net Profit Ratio

(%)

2008-09 47.73 64202.81 0.074

2009-10 2922.55 70598.93 4.13

2010-11 5097.68 88196.68 5.77

2011-12 4105.88 112112.34 3.66


VRL LOGISTICS LTD.

2008-09 2009-10 2010-11 2011-120.074

4.13

5.77

3.66

Net profit ratio

Interpretation:

In the year 2011-12 the NPR ratio is 3.66% has reduced compared

to the last year 2010-11 & also in the year 2009-10 i.e. 4.13% & 5.77%

respectively. The decrease was due to deferred taxes in the year 2011-12.


VRL LOGISTICS LTD.

Operating Expenses Ratio:

The operating expenses ratio explains the changes in the profit

margin (EBIT to sales) ratio. This ratio computed by dividing operating

expenses viz. cost

of goods sold, raw material, manufacturing overhead, administrative

overhead and salaries to employee by sales.

Operating expenses

Operative Cost/ overhead= ----------------------------------- X 100

Net Sales

(Amt in lacks)

YearOperating

expensesSales

Ratio in

percentage

2008-09 44388.05 64202.81 69.13

2009-10 46759.02 70598.93 66.23

2010-11 60336.08 88196.68 68.41

2011-12 72457.56 112112.34 64.63


VRL LOGISTICS LTD.

2008-09 2009-10 2010-11 2011-12

69.13

66.23

68.41

64.63

operating expense (%)

Interpretation:

The Higher operating expenses ratio is unfavorable since it will leave

a small amount of operating income to meet interest, dividends etc. The

temporary variations on ratio are due to change in administration & selling

expenses. The lower percentage of ratio is favorable to the company.


VRL LOGISTICS LTD.

Administrative Cost Ratio:

Administrative cost

Administrative & Selling Expenses = ----------------------------------X100

Ratio Net Sales

(Amt in lacks)

Year Adm & Selling

Expenses

Sales Ratio in

percentage

2008-09 1207.67 64202.81 1.88

2009-10 1475.20 70598.93 2.08

2010-11 1425.35 88196.68 1.61

2011-12 1731.77 112112.34 1.54


VRL LOGISTICS LTD.

2008-09 2009-10 2010-11 2011-12

1.88 2.081.61 1.54

administrative and selling expenses (%)

Interpretation:

The Administrative Expense ratio has decreased to 1.61% in 2010-11,

and again decreased to 1.54 which indicates that the firm is cutting down its

administrative cost which is a good sign.


VRL LOGISTICS LTD.


VRL LOGISTICS LTD.


VRL LOGISTICS LTD.

SWOT Analysis

Strength

There is study increase in the growth of their turnover.

They provide good service that leads to customer satisfaction.

The company is recommended by Indian books association Mumbai.

The company is having wide network of branches spread all over Karnataka,

Andhra Pradesh, Madhya Pradesh, Maharashtra and New Delhi.

They have entered into tourist transport operations.

The luxury bus services have been extended to Bangalore Mumbai Bagalkot

and Mangalore and rest other part of Karnataka

They have their own in house body building of vehicles

They have a new courier service called “cargo express” which refers to the 24

hours of service.

The entire garage operation and account as well as infrastructure control has

been computerized

The efficiency is to extended to 95%

The company did not go any lockouts, strikes etc.

Weakness

The garage operation is centralized. The repairs and maintenance of the

vehicle including buses have come to Varur

There is a heavy work load

Opportunities

They can extent their service to north and south stations

They can enter into international courier and cargo express service

They can tie-up the government transport agencies

Threats

Competitors can Compete for market leadership


VRL LOGISTICS LTD.

Findings:

Fixed asset turnover ratio has been decreased .

The gross profit ratio show the organization gross profit is increasing year by

year.

Sundry debtors, inventories, cash and bank balance have been the main

elements of current assets.

The working capital ratio not properly utilized by the company for the

financial year2011-12.

It was found the inventory turnover ratio is on increasing g trend seeing

the ideal ratio of the company has maintained reasonable amount of

stock in the year.


VRL LOGISTICS LTD.

SUGGESTION:

To company should increase its liquidity position to maintain a standard

current ratio. The VRL Logistics Limited should think on investment in

short term securities that will improve their liquidity position and profitability.

The company should utilized fixed asset optimally in generating the sales. As

the huge funds are blocked in fixed assets, instead investing in current assets

facilitates in meeting out the short term liability.

Since the VRL Logistics Ltd is earning the profit, this will attracts many

investors. Hence the company should concentrate on the expansion of the

business and also they should contribute towards the overhead for the

welfare of the society.

Company of depending more on external funds, It can also study the

feasibility of internal source, so it can still expand its capacity considering the

demand.

Work environment should be improved and good working condition should be

provided.

The company should utilize assets efficiently. The company has to utilizes

fixed assets properly which means they have to get renovate the machineries,

vehicles


VRL LOGISTICS LTD.

CONCLUSION

Operating expenses increasing but not tandem with sales and therefore the

same is affecting the bottom line of the company

The debtor turnover ratio is increase compares to past three year ratio, which

is not a good signal for the company.

Net asset turnover Ratio is decreased i.e. the asset not optimally utilized by

the company.

Debt equity ratio is on higher side which is not a good sign for the company.

The working capital ratio not properly utilized by the company for the

financial year 2007-08.

Although company has increase its investment in current assets.

The recommendation will facilitate the company to grasp new opportunities

and expand the business, improve its profitability


VRL LOGISTICS LTD.

LEARNING EXPERIENCE:

Experience is the crucial aspect for every student to have a successful

and challenging carrier. It is just not enough to know the theoretical aspects

taught inside the classroom, but the real world exposure is very important.

Every student has to gain the knowledge of communication skills, decision

making power etc that is possible only by mingling with all kinds of people. I

would like to say that, this In-plant training has given me an opportunity to

have a corporate exposure so as to face my career challengingly.

My In-plant training at VRL was very helpful and knowledge based, as

it gave a practical experience of corporate functioning of the company. I got a

very co-operative experience, which made to have a successful study of the

company’s activity in each section and was able to acquire practical

knowledge in this field.

Through this training I got to know about how the management theories

and concepts are applied in organizations. I saw how managers efficiently

manage a large number of employees, machines to run the company to lead

towards its goals. More over the in-plant training was a good exposure for me

to the working conditions of the organizations.

The leadership styles, working style and communication flow were

understood from the overall study of each department. The company follows

participative leadership style.

The authority, responsibility, relationship and information flow etc. Prevailing

in the company was studied. How the training techniques like on the job

training are adopted in the organization was learnt. The social responsibility

programs and the corporate governance of the company were studied during

the period. I also got to know the healthy relationship maintained between the

employees, suppliers, distributors management etc.


VRL LOGISTICS LTD.

Bibliography:

Books:

Prasanna Chandra, ‘Financial management theory and practices’,

Himalaya publication, 5th edition

I.M.pandey,’ Financial management’.

Himalaya publication, 7th edition

B.S.Raman,’ Management accounting’,

Mcgraw hill, 10th edition 2005

2008 to 11 annual reports

Website:

www.vrllogistics.in

www.vrlgroup.in

www.wikipedia.com


VRL LOGISTICS LTD.

Annexure


Documents

Vrl Soft Copy