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A Summer Training Project Report On “RATIO ANALYSIS” Of OMAX Autos Pvt. Ltd. Submitted in partial fulfillment for Post Graduate Diploma in Management Shekhawati Business School, Sikar. 2009-2011 Affiliated to All India Council Of Technical Education SUBMITTED TO:SUBMITTE BY: S. K. Bisnoi Ravi Kumar H. O. D. (Department of Management)PGDM 3rd Sem. SHEKHAWATI BUSINESS SCHOOL PREFACE Difference in academic life & practical life is revealed when we enter the real life where there is cut throat competition & in order to exist in this world of competition one has to be fully aware of all the aspects of Industrial life.
To survive in today’s competitive business environment, one has to mould his personality accordingly. These types of projects help a lot in improving one’s personality, developing intellectual state of mind and increasing conceptual and analytical skills to lead in this business run. Someone has rightly said that practical training is better than classroom training. Practical Knowledge is the lifeblood of the management. The Summer Training of a management student plays an important role to develop him as a well, groomed professional.
It is a golden opportunity for him to give the theoretical concepts a practical shape in the field of application. It gives him an idea of dynamic and versatile professional world as well as an exposure to the intricacies and complexities of corporate world. This project has been prepared in the fulfillment of POST GRADUATE DIPLOMA IN MANAGEMENT (ALL INDIA COUNCIL OF TECHNICAL EDUCATION, DELHI). I have tried my best to present the best for my project “STUDY OF RATIO ANALYSIS OF OMAX AUTOS PVT. LTD. ” under the able guidance of Mr. NARESH TONDON (FINANCE MANAGER) OF OMAX AUTOS PVT. LTD.
OF DHARUHERA BRANCH, DHARUHERA (HARYANA) and my faculties of Shekhawati Business School, Sikar. Ravi Kumar DECLARATION I Mr. Ravi Kumar hereby declare that this project is the record of authentic work carried out by me during the academic year 2009 ??? 2011 and has not been submitted to any other University or Institute towards the award of any degree. Signature of the student (Ravi Kumar) ACKNOWLEDGEMENT I am very much obliged and indebted to Mr. Jatender Kumar Mehta, Managing Director of Omax Autos (India) Private Limited for his approval and valuable suggestions to take up the project.
I also extend my gratitude to Mr. Naresh Tandon, Manager Finance, Commercial and Administration, for his approval and valuable suggestions to take up the project in Omax Autos (India) Private Limited. I express my deep sense of gratitude to M/s Garg & Garg Charted Accountants (Internal Auditors), Commercial and Administration for his valuable suggestions, consistent help and personal interest during my project work. I am also thankful to Mr. B. Vimal kumar, Accountant Trainee for his support and suggestions during the project.
I am very pleased to express my deep sense of gratitude to Mr. Surjeet Bishnoi, Associate professor for his consistent encouragement. I shall forever cherish my association with Mr. Mukesh Sharma Lecturer of Finance, Mr. Harsh Kumawat Lecturer of Finance, Mr. Avinash Lata Lecturer of Accounts & Finance and all of faculty members of my college for their exuberant encouragement, perennial approachability, absolute freedom of thought and action I have enjoyed during the course of the project. Ravi Kumar EXECUTIVE SUMMARY I have completed my summer training at OMAX Autos Pvt.
Ltd. , Dharuhera (Haryana). This was my another experience to work in an organization and get practical knowledge about its finance department in the duration of one and a half month. Omax Autos Limited (Omax) is an India-based company. The Company is engaged in the business of manufacturing auto components. Omax is a manufacturer of sheet metal parts, machined, tabular, electroplated and painted components with integrated welding facilities in India. The Company manufactures component and accessories for two wheeler, four wheeler and commercial vehicles.
The Company manufactures sheet metal component that range in thickness from 0. 6 millimeter to 10 millimeter. I found that the company has a lot of competition from other private auto parts company like Bharat Forge, Amtek Auto, Capex Plans, Rico Auto, Sono koyo, Sundaram Fasteners, MICO, Appolo Tyres, Balkrishna Industires. Fully attuned to evolving customer needs & requirements, over the years, the omax group has grown from strength to strength. It has not only multiplied its manufacturing and engineering capabilities in a big way, but also taken a giant leap in the highly dynamic international market.
The group is working hand in hand with a multitude of new clients across many industries. * Amongst top three companies in sheet metal and tubular segment ??? (Process 85k Tons Steel per annum). * Largest Sprocket manufacturing capacity (11 Million per annum) in South East Asia. * Largest Tri Nickel Chrome Plating facility (120 million DM2). * Largest welding facility in India with 800 machines (100 km welding capacity per day). * 7 Manufacturing Plants ??? located across the country. * Land Area ??? 204,000 Mts2 and Covered Area ??? 100,600 Mts2. Composite solution provider to customer requirement. Omax Autos Pvt. Ltd. is a good place to work at. Every new recruit is provided with extensive training on unit linked funds, financial instruments and the products of Omax. This training has enabled me to understand how actually finance department work. Omax Autos is holding very good position in domestic market but still it has to make huge efforts for getting itself the No. 1. Instead, it has also to create its image in international market. My project was on “Ratio Analysis” of the company.
For this I set my objectives and worked according to these predefined objectives. I worked according to the following steps: – * At first I got knowledge about the company profile, its main products etc. * After that I read books of Management Accounting and other related articles and acquired knowledge about various ratios, their advantages and disadvantages etc. * After that I met with various officers of finance department and interviewed them and got knowledge about Accounting system of the company. Then I studied last five years balance sheet of the company, starting from March 2005 to 2010 and analyze these ratio on the basis of statements of income and expenditure, Cash Flow Statements, and Balance sheets of the company. * After studying and analyzing these annual ratio analyses, I made conclusion and recommendations of my project. TABLE OF CONTENTS CONTENTS OF THE REPORT * INDUSTRY PROFILE08. * COMPANY PROFILE15. * INTRODUCTION TO THE TOPIC20. * RESEARCH METHODOLOGY37. * RESEARCH DESIGN37. * ANALYTICAL DESIGN37. * DATA COLLECTION37. * NEED OF THE STUDY39. * OBJECTIVES OF THE STUDY40. REVIEW OF LITERATURE41. * LIMITATIONS OF THE STUDY47. * DATA INTERPRETATION & ANALYSIS48. * FACTS & FINDINGS78. * SWOT ANALYSIS80. * CONCLUSION82. * RECOMMENDATIONS AND SUGGESTION83. * APPENDIX84. * BIBLIOGRAPHY87. Introduction to Auto Parts Industry Automotive parts consumption is directly linked to the demand for new vehicles, since roughly 70 percent of U. S. automotive parts production is for Original Equipment (OE) products. The remaining 30 percent is for repair and modification (aftermarket). If vehicle production goes down, automotive parts production and sales follow.
Last year was a difficult year for U. S. -based automakers, as the economy struggled to emerge from a recession and consumers reduced their spending on vehicles. General Motors, Ford, and Chrysler continued to lose U. S. market share to other automakers, but even foreign transplant automakers had a difficult year due to the falling market. Suppliers faced added hardships of reduced orders as vehicle production was cut by automakers starting roughly in September 2008. Industry analysts estimated that suppliers were running at only about 55 percent capacity in 2009, which was about the breakeven point for many.
Suppliers were able to rationalize capacity by dropping the breakeven point from 10. 5 million units in North America in May 2009 to about 9. 5 million units in September 2009. The impact of the recession and decreased automotive sales that began in late 2008 had vehicle makers making drastic cut-backs, job reductions, and restructuring. Automakers delayed payments to suppliers, while suppliers, struggling to meet their own financial obligations, found little help from the credit markets. Chrysler and GM requested billions from the Federal Government to stay afloat.
The loss of one of these automakers would have hurt the U. S. economy further and would have been disastrous to automakers and the automotive supply chain. The supply chain is interwoven with many suppliers serving several automakers and OE suppliers. For example, over 51 percent of Ford’s suppliers also supply GM. Following years of contraction and a generally difficult business climate for automotive parts producers, suppliers continued to fail with about 50 new automotive supplier bankruptcies and up to 200 liquidations reported in 2009.
Production increased at the end of the 2009 because of the need to replenish inventories after the Federal Cash-for-Clunkers program and the launch of 2010 models. GM increased production while Chrysler resumed production after emerging from bankruptcy. The increase in production at end of 2009 along with cost-cutting measures allowed many suppliers to survive and in some cases turn a profit. Industry analysts predict that the automotive market will improve in 2010, but that it will be years, if ever, before the automotive industry returns to levels of the past decade.
Industry analysts forecast that the retail market for vehicles will go up about 1 million units and there are indications more credit will be available in 2010. Automotive Parts Sector Definitions Automotive parts are defined as either Original Equipment (OE), or aftermarket parts. Original equipment parts that are used in the assembly of a new motor vehicle (automobile, light truck, or truck) or are purchased by the manufacturer for its service network are referred to as Original Equipment Service (OES) parts. Suppliers of OE parts are broken into three levels.
The first level is “Tier 1” suppliers who sell finished components directly to the vehicle manufacturer. The next level is “Tier 2” suppliers who sell parts and materials for the finished components to the Tier 1 suppliers. The third level is “Tier 3” suppliers who supply raw materials to any of the above suppliers or directly to vehicle assemblers. There is often overlap between the tiers. Original equipment production accounts for an estimated two-thirds to three-fourths of the total automotive parts production. Aftermarket parts are divided into two ategories: replacement parts and accessories. Replacement parts are automotive parts built or remanufactured to replace OE parts as they become worn or damaged. Accessories are parts made for comfort, convenience, performance, safety, or customization, and are designed for add-on after the original assembly of the motor vehicle. Overview of Industry Market Conditions: The U. S. auto industry is a key component of the nation’s manufacturing base. In a typical year, it accounts for about five percent of GDP and 16 percent of all durable goods shipments.
The automotive industry, including the automakers and automotive parts sectors, accounted for about 666,300 domestic employees in 2009, a decline of 24 percent from 875,500 in 2008, and accounted for 5. 6 percent of all manufacturing employees. THe Center for Automotive Research found that the automotive parts sector indirectly contributed to 4. 5 million jobs nationwide in 2004. While trying to work more collaboratively with suppliers, automakers put pressure on them by seeking price concessions and tasking their suppliers to take on more research, design and manufacturing responsibilities, and by absorbing the higher costs for their inputs.
Suppliers that survived 2009 have slashed costs by cutting capacity, laying off workers, and restructuring financially. The Original Equipment Suppliers Association (OESA) reported that the automotive supply sector was operating at about 55 percent capacity utilization. This is an improvement over the 45 percent capacity utilization in early 2009, but far from the 80 percent historically needed for profitability. Pressure is further exacerbated by global competition in the parts industry. As Japanese, German, and Korean-based vehicle manufacturers gain shares of the U.
S. market, they maintain relationships with their traditional supplier base. Many of those home market suppliers have been creating or expanding “transplant” capacity in the United States to meet their traditional automaker’s production needs. At the same time those transplant suppliers are aggressively seeking business from the Detroit 3. In addition, suppliers in many lower cost markets are improving their quality and becoming capable of supplying even greater shares of U. S. demand from abroad. The Detroit 3 has also advocated that U. S. -based suppliers ove production to lower cost countries or risk losing future contracts. To survive, many domestic parts manufacturers are adapting to these numerous challenges. Some suppliers are willingly taking on the new responsibilities offered to them by the automakers. Some have transformed themselves into “Tier One-Half systems integrators,” that engineer and build complete modules (for example, an entire interior, 4-corner suspension sets, or an entire rolling chassis) and assume both product design and development responsibilities, and down stream supply chain management functions previously undertaken by the automakers.
Due to shifting and then declining demand for vehicles, automakers have been dramatically cutting production. The impact upon suppliers when an automaker sharply curtails operations can be severe. It takes many months and significant resources to win business from vehicle assemblers or from the major “Tier 1” suppliers. Most U. S. suppliers are ill-situated to withstand major disruptions to their sales. Dramatic growth in China and other Asian economies (i. e. , India), has also led to increased costs for critical raw materials.
Examples of some of the raw material price increases by July 2008, include plastic resins (up 45 percent since January 2007), rubber for tires (up 20 percent since May 2008), oil for petrochemical feedstock (up 43 percent since early January 2008), and steel for bodies, frames and bumpers (up nearly 100 percent since December 2007). Demand in the developing world, primarily China, has been a major driver behind increasing raw materials and energy commodity prices.
However, as automakers and other manufacturing industries cut back worldwide in the later part of 2008 and into 2009, the demand for many raw materials has decreased, leading to moderate price declines. Steel prices were high due to strained capacity and dramatic industrial growth in the developing world, but around June 2008 the bidding war eased and the prices started going down. The price of hot-dipped galvanized steel used in vehicle bodies, peaked at $1,303 per ton in June 2008 and dropped 11. 7 percent by October 2008, but still cost nearly twice as much as it did in January 2008.
Prices for materials and energy commodities saw some increases late in 2009 because of an improved outlook for world economic growth, strong import demand from China, and the weakness of the U. S. dollar. Steel prices jumped in the fourth quarter of 2009 partly because of rising automotive demand following the Cash-for-Clunkers program. The spot price for hot-rolled band used for vehicle body panels was around $559 per ton in October 2009, up from $381 in June 2009. Financial pressures from raw material prices have been affecting ties between suppliers and automakers, and between higher tier suppliers and their lower tier suppliers.
Automakers are increasingly allowing material cost pass-through from suppliers, usually on a case-by-case basis, if the supplier can prove extraordinary pressures because of raw material costs and demonstrate efforts to keep costs down. Nonetheless, sometimes automakers and suppliers rely on the courts to enforce their price agreements. Dana Holding Corp. , which emerged from Chapter 11 in 2008, asked the courts to enforce an agreement with Chrysler to establish a “mutually rewarding supply agreement. ” Johnson Controls Inc. iled suit against three of its suppliers that threatened to withhold shipments if they were unable to raise prices to compensate for the cost of steel. Many analysts and industry members expect the North American industry restructuring to continue into 2011, so the pressures driving industry consolidation will remain for some time. Industry analysts predict that at least 500 of the remaining 5,000 or so U. S. automotive suppliers will fail in the next few years. The continued pressure is forcing automotive suppliers to seek work in alternative fields including military, space and wind energy.
While many have not been able to find sufficient work to keep their doors open, the increasing diversification of those successful combined with an improving automotive market, lower or steady raw materials costs and improved fundamentals at GM, Ford, and Chrysler should help to slow market share loss. It is an industry consolidation that has cut the number of U. S. automotive suppliers by roughly one half since 2000 and about five sixths since 1990. The pressure for consolidation may decline but it will not end. Improving production efficiency alone will continue to require fewer producers for the same level of industrial output.
Either unit sales will have to continually rise to accept the added output or the pressure to combine or reduce suppliers will exist. Chinese and Indian-based automotive manufacturers will also contest for U. S. market share as will parts makers from these markets. Any share they gain will come at the expense of current market participants. The pressure for consolidation will be particularly acute for companies competing in commodity markets without technical advantages or intellectual property to provide them with pricing relief against their peers.
Economic Indicators Historically, the automotive sector closely tracks general economic indicators, in part because the automotive sector is a major component of these indicators (Charts 1 and 2). The United States was officially in a recession in 2009. Although the recession officially ended in July/August 2009, the U. S. economy remained weak. With the economy depressed, consumers and businesses cut vehicle purchasing. Likewise, suppliers and automakers have been finding it difficult to secure the capital needed to purchase materials and finance sales. Total U. S. roduction of light vehicles was 5. 6 million units in 2009, a decline of 34 percent from the already reduced levels of 2008. The record high production of light vehicles was in 1999 with 12. 6 million units. Production increased slightly at the end of 2009, following the government’s Cash-for-Clunkers program. The slight production increase boded well for 2010, and industry sales forecasts for 2010 predict an increase to somewhere between 11. 2-12. 4 million units, up from 10. 4 million in 2009. Trends in the automotive parts industry follow the motor vehicle industry.
There is a perception that in periods of downturn in the motor vehicle sector, lost OE automotive parts production and sales will be offset somewhat by aftermarket sales as demand for replacement parts for vehicles increases. On the other hand, some industry analysts suggest that this relationship is not always correct, as consumers will also tend to delay all but essential repairs during a recession particularly deep recessions like this past year. The aftermarket was fairly flat in 2009, but fared better than the OE market. The durability of parts has increased over time which results in less need for repairs.
This trend has been heightened by increased imports of aftermarket parts including many counterfeits from low cost countries further eroding the aftermarket for U. S. -based OE producers. Therefore, declines in OE parts production and sales may no longer be substantially offset by increases in the demand for aftermarket parts. According to the most recent Economic Census (with the latest data available through 2007), auto parts industry shipments were $213 billion, accounting for about 4 percent of the total U. S. manufacturing shipments (Tables 1 and 2). This is one of the highest shares of any single U.
S. industrial sector. Industry employment in 2007 accounted for 4. 7 percent of total manufacturing employment. The U. S. automotive parts industry was also one of the largest U. S. exporters, accounting for four percent of total U. S. goods exports in 2009 (Table 3). The Original Equipment Suppliers Association (OESA) estimated that the worldwide market for OE automotive parts decreased to $695 billion in 2009 (Table 4). The North American market accounted for $119 billion, or 17 percent of the global demand. The North American parts content of vehicles was estimated to be $13,9008.
OESA also estimated that in 2009 Europe accounted for $204 billion worth of OE parts; China $123 billion; and Japan and Korea $136 billion. Domestic Market DesRosiers, an automotive consulting firm, reported that the U. S. market for OE and aftermarket automotive parts dropped 13. 8 percent in 2008 to $210 billion, from $243. 7 billion in 2007 (Table 5, Charts 3 and 4). 9 The amount of OE and aftermarket parts supplied from U. S. based suppliers dropped 15. 5 percent to $140. 3 billion in 2008 from$166. 3 billion in 2007. U. S. based suppliers accounted for 66. percent of the U. S. parts market. Market share of U. S. based suppliers has been declining since 1998 when they accounted for 81 percent of the market. International Developments and Trade Global automotive industry production and sales are expected to remain depressed over the next few years, with only gradual improvement. Despite weakening in the United States market in previous years, suppliers globally managed to eke out profitability. Suppliers in developed country markets faced more difficulty, while those in developing markets generally experienced growth.
In its 2006 Global Automotive Supplier Study, Roland Berger Strategy Consultants found that suppliers based in Western Europe, South Korea and other parts of the world maintained steady profitability between 2000 and 2005, while Japanese suppliers posted 3. 2 percent gains. During the same period, North American suppliers declined 3. 6 percent. Those most successful had a narrowly focused product portfolio, broad customer base globally, low reliance on business with the Detroit 3, and aggressively used component sourcing from low-cost regions of the world.
Going forward, the BRIC (Brazil, Russia, India, and China) countries are expected to experience growth in the automotive sector while developed countries are likely to see static sales or declines. Some U. S. suppliers found that while they are having difficulties in home markets, their foreign operations were profitable. Large suppliers, such as Johnson Controls Inc. , Lear Corporation, TRW Automotive Inc. , ArvinMeritor Inc. , and DuPont Automotive Systems, received at least 35 percent of their total revenue from Europe in 2007.
Some suppliers tried to reduce their dependence on the high-cost, low margin American market and shift manufacturing to lower cost countries. Suppliers, often with the encouragement of automakers, are exploring growth opportunities in the BRIC developing countries. These countries are seeing more growth in the automotive industry than North America, Japan, and Western Europe. Still the growth in the developing world was moderate in 2009 and expected to remain moderate another year or two as the automotive sector gradually improves. The U. S. trade deficit in automotive parts dropped 38. percent in 2009 to $20. 3 billion, down from $33. 1 billion in 2008 (Table 13, Charts 11 and 12). The parts deficit increased the past few years because U. S. -made automotive parts manufacturers lost market share to increasingly competitive foreign production. However, in addition to a global reduction in demand for automotive parts, the weak dollar has made U. S. exports more competitive while restraining U. S. imports. Both automotive parts exports and imports declined in 2009 because of the global automotive slump, though, imports declined at a greater rate than exports.
According to U. S. Census data, the United States exported $42. 7 billion worth of automotive parts in 2009. This is a decrease of 25. 7 percent from the $57. 5 billion exported in 2008 (Table 14, Charts 11 and 13). Automotive parts exports to Canada ($19. 4 billion) and Mexico ($12. 1 billion) accounted for 73. 8 percent of the total U. S. parts exports in 2009 (Chart 14). U. S. automotive parts exports to Japan and the EU-15 accounted for $4. 2 billion, or 9. 9 percent, of the total U. S. automotive parts exports. In 2009, automotive parts exports to China rose 4. percent to $937 million. However, exports to Brazil declined 34. 4 percent to $553 million, declined 78. 4 percent ($53 million) to Russia, and 33. 3 percent ($131 million) to India in 2009. Automotive parts imports to the United States from almost every country declined in 2009. U. S. automotive parts imports declined 30. 5 percent to $63 billion in 2009 from $90. 6 billion in 2008 (Table 15, Charts 11 and 15). In 2009, Canada accounted for $10. 5 billion worth of U. S. automotive parts imports and Mexico accounted for $18. 3 billion.
Together, automotive parts from these two countries accounted for 46 percent of the total U. S. automotive parts imports (Chart 16). Rounding out the top five supplier countries of automotive parts to the United States in 2009 were Japan ($8. 8 billion), China ($7. 4 billion), and Germany ($4. 8 billion). Japanese auto parts shipments to the United States were down 34. 9 percent in 2009 from 2008 levels. A large portion of these imports are components for assembly at the Japanese transplant facilities. The Japanese produced roughly 2. 2 million vehicles in the United States in 2009.
Japanese-based firms’ U. S. auto plants are now sourcing more of their components in the United States, Canada, and Mexico due at least in part to the higher Yen exchange rate. Automotive parts imports from China declined 17. 8 percent in 2009 (Charts 17 and 18). Imports from China had been steadily increasing the past several years, including 4. 8 percent in 2008 to $9 billion, from $8. 6 billion in 2007 and passed Germany as the United States’ fourth largest source of auto parts after Mexico, Canada, and Japan. However, Parts imports from Brazil dropped 45. 1 percent to $953 million, 32. percent to $498 million from India, and 7. 4 percent to $535 million from Russia. Fact Sheet Production ??? U. S. automotive parts industry production declined further in 2009 compared with 2008, in large part because of the collapse of the global vehicle market, production cutbacks especially at the Detroit 3, and the GMs and Chrysler bankruptcies. Industry analysts predict that 2010 will improve slightly, but will still be a very difficult year for U. S. automotive parts suppliers and vehicle makers as the market remains depressed and competition remains fierce.
This is especially true for the Detroit 3 and the suppliers that rely heavily on them. ??? The Bureau of Labor Statistics (BLS), U. S. Department of Labor, reported that employment in the automotive parts industry was an estimated 470,000 jobs in 2009. This is a decline of 22. 2 percent from the 603,800 jobs in 2008. The last time the number of jobs increased in the automotive parts industry occurred in 2000, when employment grew 0. 3 percent to 920,300. ??? Regardless of production and employment declines, automotive manufacturers and suppliers directly and indirectly account for more jobs than any other manufacturing sector. According to the most recent Economic Census (with data through 2007), auto parts industry shipments were $213 billion, accounting for about 4 percent of the total U. S. manufacturing shipments. This is one of the highest shares of any single U. S. industrial sector. Sales ??? The U. S. original equipment parts market was down 35. 3 percent from $149. 9 billion in 2008 to $97 billion in 2009. ??? The 150 largest North American OE suppliers had sales of $162. 2 billion in 2008, down 16 percent from 2007. The top 10 North American suppliers accounted for 33. 8 percent of the total in 2008, down slightly from 36. percent of the total in 2007. Canadian supplier, Magna International, maintained its position as the largest supplier of parts in North America. ??? The U. S. aftermarket parts market in wholesale dollars was $72. 2 billion in 2009, up slightly (1. 8 percent) from $70. 9 billion in 2008. International Trade ??? The 2009 U. S. trade deficit in automotive parts significantly decreased 38. 7 percent, to $20. 3 billion, from $ 33. 1 billion in 2008. ??? U. S. exports of automotive parts in 2009 were $42. 7 billion, a decrease of 25. 7 percent from 2008 levels. ??? Exports to Canada and Mexico accounted for 74 percent of the total U.
S. automotive parts exports in 2009, reaffirming the importance of the NAFTA. ??? U. S. exports to China increased 4. 9 percent in 2009, from $893 million in 2008 to $937 million in 2009. ??? U. S. imports of automotive parts were $63 billion in 2009, a decrease of 30. 5 percent from 2008 levels. ??? The United States imported $28. 8 billion worth of automotive parts from Mexico and Canada in 2009. These imports accounted for 46 percent of total U. S. automotive parts imports. ??? Automotive parts imports from China have grown significantly in recent years. In 2000, the United States imported $1. 6 billion worth of automotive parts.
By 2007, these imports grew to $8. 6 billion, passing Germany as the fourth largest supplier of auto parts to the United States. However, imports from China decreased 17. 8 percent to $ $7. 4 billion in 2009. ??? The U. S. -China auto parts trade deficit had grown six-fold from only $1. 5 billion in 2001 to almost $8. 2 billion in 2008. These exponential increases peaked in 2008. The current global recession allowed the U. S. trade deficit with China in 2009 to drop 20. 3 percent to $6. 5 billion. Industry Issues ??? In 2009, a reduction in global automotive sales and decreased automotive production impacted many U. S. arts suppliers. It was reported that there were over 50 bankruptcies among automotive suppliers and between 150-200 liquidations in 2009. Introduction to Omax Autos Pvt. Ltd. Omax Autos Limited was incorporated in 1983 with a vision to emerge as a niche player in Auto Industry and has grown exponentially into truly diversified and globalised corporate entity since then. In the last Twenty-Six years of its existence, the Omax Autos Group has created and executed projects that were a part to touch every walk of life and human endeavor, while setting new benchmarks in quality. Today the Group enjoys a Gross Turnover Rs. 77. 32 crores, spanning its horizon and providing fulfilled management. The group enjoys huge reserves of goodwill that has led to some of the biggest names in the corporate world putting their trust in us and constantly strives to provide products and services that enhance the quality of life and work, and to address a gamut of human needs. OMAX Autos Ltd is in the business of manufacturing auto components. Omax is one of the largest manufacturers of Sheet Metal parts, Machined Tubular, Electroplated & painted components, Welding Facilities with integrated world-class features in India.
With growing opportunities & enhanced experience base Omax Autos has strengthen horizontally. In the last 26 years the company has widened its customer base and products by entering into 4 wheeler industry, producing for central railways and defense and producing home accessories apart from 2 wheeler industry. Not only within the domestic market our footsteps have also left their mark globally through IKEA, TENNECO, PIAGGIO & TOYOTA. Though the Company has moved towards new frontiers in the last 26 successful years, yet it nourishes old relationships with undying passion and perseverance.
With 8 plants as facilities, a strong infrastructure base and enlightened human resource we have reached the zenith of success. Through continuous and aggressive strategy building and disciplined execution of the same it has been possible to attain high level of growth and experience. The key features of the strategy are ??? a) To make major improvements towards customer’s satisfaction. b) To develop a competitive edge – to optimize its cost and move up in value chain. c) To progress through a strong base laid on in depth research and development.
The Company has also made significantly major changes namely ??? a) Applied for in house R;D activity recognition to the Govt. of India, Ministry of Science ; Technology, and New Delhi. The on site inspection visit has been successful and we expect formal approval letter soon. b) Actively working on Solar, Hydro, Wind and Gas Energy options and our solar projects have been recommended to centre for approval. c) With the present scenario of power and fuel, Omax is working on priority for energy efficiency, conservation as well as new ; renewable resources of energy. ) The plant heads in all Omax Plants have taken the challenges to improve efficiency of operations, especially focused to meet the planned product output; Quality gates at critical points in the manufacturing chain; effective P. D. I leading to defect free products to the customers. e) OPS (Omax Production Systems) has been developed by a team consisting of engineers from the plants and Corporate Engineering, to ensure efficiency and effectiveness of total operational aspects and also to ensure uniformity across all the plants of the group.
Mission : “we are a dedicated, proactive, loyal & accountable group of people with a quest for excellence through latest technology, people empowerment and brand equity to produce world class products by adopting best business practices and ethics. ” IMS Policy : “In line with our vision & mission, we remain committed for total satisfaction of our customers, associates and society at large, through excellence in quality, value for money, on time deliveries and continual improvement.
While achieving this, we remain committed to comply with legal and other requirements relating to environment, health & safety, for prevention of pollution, ill-health & injury. ” Core Values : ” Honesty, Commitment, Sincerity. ” Aspiration : To build a world class company through reliability and be a great place to work. Our vision is to make our company the best in class in whatever we do, globally. The products and servics we offer should be comparable to the best in the world, our business process and systems should set benchmark for others.
We should earn the respect of our competitors and be loved by our stakeholders. Our Company should be the most preferred company to work for, for any employee. He should feel like an owner, be able to live his dream fulfill all his professional goals and enjoy while doing so. Milestones: 1983 The year marked the beginning of the name “Omax Autos Limited”. 1985 The first unit started in Dharuhera as an ancillary supplier to Hero Honda for Sheet Metal and Tubular Welded components. 1986 Omax Autos Limited went public with more than 7500 shareholders. 1988 Established its second unit Automax in Gurgaon. 989 Diversified its customer base by roping in Carrier Aircon Ltd. in Air Conditioning Components. 1997 Bagged ISO 9002 certificate from TUV of Germany. 1999 Established its third unit- Speedomax in Sidhrawali. Tied up with Honda- Siel Cars India Ltd. and New Holland Tractors Ltd. for supply of Body and Axle parts. 2000 Set up the ultra modern Paint Shop with latest technology from ABB India Ltd. 2001 A new phase of Kaizen activity- Various Training ; HR activities started in all plants. 2002 Established its Fourth Plant at IMT Manesar with a capital outlay of Rs. 00 million equipped with modern Tool Room, R;D Centre with state of the art machinery began production. 2003 Established its Fifth Plant- Sprocket division in Dharuhera. Bagged ISO/TS- 16949, ISO 14001 ; OHSAS- 18001 Certification from UL India for all plants. 2004 Established its Sixth Plant at Bangalore having machining ; sheet metal manufacturing facilities. Established its Seventh Plant- Indital at Dharuhera. Started Exports to North America and Europe with clients such as Delphi, Tenneco, Cummins, Piaggio etc. 2005 Established its Eighth Plant at Binola, Gurgaon for catering export clients. 006 SAP rolled out in all Eight plants across India. 2007 Automax, Gurgaon-Sohna Road Plant merged with Binola Plant. 2008 Established its latest Plant at Lucknow to manufacture chassis for commercial vehicles for Tata Motors. Established new Corporate Office in Gurgaon. 2009 Tied up with IKEA for supply of Metal Houseware Products. Reached the remarkable heights of 26 years of manufacturing and rendering quality products ; services to customers. …………………… and the journey continues. Omax Infrastructure: 8Manufacturing Plants situated across India, which forms the backbone of the structure called “OMAX AUTOS LIMITED”. 0Facilities including Stamping Facility; CNC Pipe Bending Facility; Welding Facility; Sprocket Facility; Machining Facility; Piston Rod Manufacturing Facility; Tri Nickel Chrome Plating Facility; Tool Room Facility; Induction Hardening Facility and Tube Manufacturing facility. 30Main Products that form the vital ; significant component and accessories for two wheeler, four wheeler and commercial vehicles. Sheet Metal Component that range in thickness from 0. 6mm to 10mm. 50Customers / Clients that include OEMs ; Tier I Manufacturers, which are Big Brand Names, provided with timely and quality product delivery.
To research ; develop new products, designs and equipment as well as to focus on better performance by the existing product by cost minimization to the highest level possible. Clientele: Indian Customers (OEMS)Indian Customers (Tier 1) Hero Honda Motors Ltd. Bharat Seats Ltd. Maruti Udyog Ltd. (Suzuki J. V. )Carraro India Ltd. Honda Motorcycle ; Scooters India Pvt. Ltd. Caparo Maruti TVS Motors Ltd. Deiphi Automotives SuzukiMotorcycle Ltd. Denso India Ltd. New Holland Tractors (India) Pvt. Ltd. Gabrial India Ltd. Yamaha Motors India Pvt. Ltd. India-Nippon Electricals Ltd.
Hero Motors Ltd. Mitsuba Sical India Ltd. International Tractor Ltd. Sundram Clayton Ltd. IKEA Honeywell European CustomersNorth American Customers Delphi-SpainDeiphi Automotive Inc. USA Delphi-PolandTenneco Automotive (Maxico) Honeywell Piaggio Tenneco Automotive-Belgium Supersprox-Czech The Significant Aspects of the Manufacturing at Omax Autos: ??? Amongst the top three companies in sheet metal and tubular segment – (Process 85k Tons Steel p. a. ) ??? Largest Sprocket manufacturing capacity (11 Million p. a. ) in South East Asia. ??? Largest Tri Nickel Chrome Plating facility (120 Million DM Sq. ??? Largest welding facility in India with 800 machines (100 Km welding capacity per day) ??? 7 Manufacturing Plants – located across the country. ??? Land Area – 204,000 Mts Sq and Covered Area – 100,600 Mts Sq ??? Composite solution provider to customer requirement The Process Capability at Omax Autos is: ??? Designing ??? Stamping ??? Tubular Forming ??? Machined Parts – Sprockets/ Piston Rods/ Oil ??? Welding – MIG/ TIG/ SPOT/ ROBO ??? Painting ; Tri Nickel Chrome Plating/ED Painting ??? Supporting infrastructure – Met Labs ??? World Class Tool room and R;D Centre Plant Locations:
Registered Office ; Dharuhera Plant:Sidhrawali Plant: Omax Autos Limited Speedomax (A unit of omax Autos Ltd. ) 64 KM Stone, Delhi Jaipur Highway64 KM Stone, Delhi-Jaipur Highway Dharuhera, Distt. Rewari, Haryana-122 106Village Sidhrawali, Gurgaon, Haryana 123 413 Manesar Plant:Sproket Division: Omax Autos Ltd. , Plot No. 6,Omax Autos Ltd. , 69 KM Stone, Sector-3, IMT Manesar,GurgaonDelhi-Jaipur Highway, Dharuhera, Haryana- 122 050Distt. Rewari, Haryana ??? 122 106 Bangalore Plant:Binola Plant ??? II Omax Autos Ltd. , Plot No. 6,Automax??? A unit of Omax Autos Ltd. Bommasandra ??? Jigani Link RoadDelhi jaipur Highway, Village ; P.
O. Bommasandra,Bangalore, Binola, Gurgaon, Haryana ??? 122 106 Karnataka ??? 560 099 Dharuhera Plant ??? IILuckhnow Plant??? UnderConstruction Indital (A unit of Omax Autos Ltd. )Omax Autos Ltd. Tata MotorsVender 69 KM Stone, Delhi-Jaipur HighwayPark, Chinhat Industrial Area Dharuhera, Distt. Rewari, Haryana-122106Deva Road, Luckhnow ??? 226019 Introduction to Ratio Analysis Financial Analysis: Financial analysis is the process of identifying the financial strengths and weaknesses of the firm and establishing relationship between the items of the balance sheet and profit ; loss account.
Financial ratio analysis is the calculation and comparison of ratios, which are derived from the information in a company’s financial statements. The level and historical trends of these ratios can be used to make inferences about a company’s financial condition, its operations and attractiveness as an investment. The information in the statements is used by * Trade creditors, to identify the firm’s ability to meet their claims i. e. liquidity position of the company. * Investors, to know about the present and future profitability of the company and its financial structure. * Management, in every aspect of the financial analysis.
It is the responsibility of the management to maintain sound financial condition in the company. Ratio Analysis: The term “Ratio” refers to the numerical and quantitative relationship between two items or variables. This relationship can be exposed as * Percentages * Fractions * Proportion of numbers Ratio analysis is defined as the systematic use of the ratio to interpret the financial statements. So that the strengths and weaknesses of a firm, as well as its historical performance and current financial condition can be determined. Ratio reflects a quantitative relationship helps to form a quantitative judgment. Steps In Ratio Analysis: The first task of the financial analysis is to select the information relevant to the decision under consideration from the statements and calculates appropriate ratios. * To compare the calculated ratios with the ratios of the same firm relating to the pas6t or with the industry ratios. It facilitates in assessing success or failure of the firm. * Third step is to interpretation, drawing of inferences and report writing conclusions are drawn after comparison in the shape of report or recommended courses of action. Basis Or Standards Of Comparison: Ratios are relative figures reflecting the relation between variables.
They enable analyst to draw conclusions regarding financial operations. They use of ratios as a tool of financial analysis involves the comparison with related facts. This is the basis of ratio analysis. The basis of ratio analysis is of four types. * Past ratios, calculated from past financial statements of the firm. * Competitor’s ratio, of the some most progressive and successful competitor firm at the same point of time. * Industry ratio, the industry ratios to which the firm belongs to * Projected ratios, ratios of the future developed from the projected or pro forma financial statements Nature Of Ratio Analysis:
Ratio analysis is a technique of analysis and interpretation of financial statements. It is the process of establishing and interpreting various ratios for helping in making certain decisions. It is only a means of understanding of financial strengths and weaknesses of a firm. There are a number of ratios which can be calculated from the information given in the financial statements, but the analyst has to select the appropriate data and calculate only a few appropriate ratios. The following are the four steps involved in the ratio analysis. Selection of relevant data from the financial statements depending upon the objective of the analysis. * Calculation of appropriate ratios from the above data. * Comparison of the calculated ratios with the ratios of the same firm in the past, or the ratios developed from projected financial statements or the ratios of some other firms or the comparison with ratios of the industry to which the firm belongs. Interpretation Of The Ratios: The interpretation of ratios is an important factor. The inherent limitations of ratio analysis should be kept in mind while interpreting them.
The impact of factors such as price level changes, change in accounting policies, window dressing etc. , should also be kept in mind when attempting to interpret ratios. The interpretation of ratios can be made in the following ways. * Single absolute ratio * Group of ratios * Historical comparison * Projected ratios * Inter-firm comparison Guidelines Or Precautions For Use Of Ratios: The calculation of ratios may not be a difficult task but their use is not easy. Following guidelines or factors may be kept in mind while interpreting various ratios are * Accuracy of financial statements Objective or purpose of analysis * Selection of ratios * Use of standards * Caliber of the analysis Importance Of Ratio Analysis: * Aid to measure general efficiency * Aid to measure financial solvency * Aid in forecasting and planning * Facilitate decision making * Aid in corrective action * Aid in intra-firm comparison * Act as a good communication * Evaluation of efficiency * Effective tool Limitations Of Ratio Analysis: * Differences in definitions * Limitations of accounting records * Lack of proper standards * No allowances for price level changes * Changes in accounting procedures Quantitative factors are ignored * Limited use of single ratio * Background is over looked * Limited use * Personal bias Classification Of Ratios: The use of ratio analysis is not confined to financial manager only. There are different parties interested in the ratio analysis for knowing the financial position of a firm for different purposes. Various accounting ratios can be classified as follows: 1. Traditional Classification 2. Functional Classification 3. Significance ratios 1. Traditional Classification It includes the following. * Balance sheet (or) position statement ratio: They deal with the elationship between two balance sheet items, e. g. the ratio of current assets to current liabilities etc. , both the items must, however, pertain to the same balance sheet. * Profit ; loss account (or) revenue statement ratios: These ratios deal with the relationship between two profit ; loss account items, e. g. the ratio of gross profit to sales etc. , * Composite (or) inter statement ratios: These ratios exhibit the relation between a profit ; loss account or income statement item and a balance sheet items, e. g. stock turnover ratio, or the ratio of total assets to sales. . Functional Classification These include liquidity ratios, long term solvency and leverage ratios, activity ratios and profitability ratios. 3. Significance Ratios Some ratios are important than others and the firm may classify them as primary and secondary ratios. The primary ratio is one, which is of the prime importance to a concern. The other ratios that support the primary ratio are called secondary ratios. In The View Of Functional Classification The Ratios Are: 1. Liquidity ratio 2. Leverage ratio 3. Activity ratio 4. Profitability ratio 1. LIQUIDITY RATIOS
Liquidity refers to the ability of a concern to meet its current obligations as ; when there becomes due. The short term obligations of a firm can be met only when there are sufficient liquid assets. The short term obligations are met by realizing amounts from current, floating (or) circulating assets The current assets should either be calculated liquid (or) near liquidity. They should be convertible into cash for paying obligations of short term nature. The sufficiency (or) insufficiency of current assets should be assessed by comparing them with short-term current liabilities.
If current assets can pay off current liabilities, then liquidity position will be satisfactory. To measure the liquidity of a firm the following ratios can be calculated * Current ratio * Quick (or) Acid-test (or) Liquid ratio * Absolute liquid ratio (or) Cash position ratio (a) Current Ratio Current ratio may be defined as the relationship between current assets and current liabilities. This ratio also known as Working capital ratio is a measure of general liquidity and is most widely used to make the analysis of a short-term financial position (or) liquidity of a firm Current assets
Current ratio = Current liabilities Components of current ratio CURRENT ASSETS| CURRENT LIABILITIES| Cash in hand| Out standing or accrued expenses| Cash at bank| Bank over draft| Bills receivable| Bills payable| Inventories| Short-term advances| Work-in-progress| Sundry creditors| Marketable securities| Dividend payable| Short-term investments| Income-tax payable| Sundry debtors| ??| Prepaid expenses| ??| (b) Quick Ratio Quick ratio is a test of liquidity than the current ratio. The term liquidity refers to the ability of a firm to pay its short-term obligations as ; when they become due.
Quick ratio may be defined as the relationship between quick or liquid assets and current liabilities. An asset is said to be liquid if it is converted into cash with in a short period without loss of value. Quick or liquid assets Quick ratio = Current liabilities Components of quick or liquid ratio QUICK ASSETS| CURRENT LIABILITIES| Cash in hand| Out standing or accrued expenses| Cash at bank| Bank over draft| Bills receivable| Bills payable| Sundry debtors| Short-term advances| Marketable securities| Sundry creditors| Temporary investments| Dividend payable| | Income tax payable| c) Absolute Liquidity Ratio Although receivable, debtors and bills receivable are generally more liquid than inventories, yet there may be doubts regarding their realization into cash immediately or in time. Hence, absolute liquid ratio should also be calculated together with current ratio and quick ratio so as to exclude even receivables from the current assets and find out the absolute liquid assets. Absolute liquid assets Absolute liquid ratio = Current liabilities Absolute liquid assets include cash in hand etc. The acceptable forms for this ratio is 50% (or) 0. 5:1 (or) 1:2 i. e. , Rs. worth absolute liquid assets are considered to pay Rs. 2 worth current liabilities in time as all the creditors are nor accepted to demand cash at the same time and then cash may also be realized from debtors and inventories. Components of Absolute Liquid Ratio ABSOLUTE LIQUID ASSETS| CURRENT LIABILITIES| Cash in hand| Out standing or accrued expenses| Cash at bank| Bank over draft| Interest on Fixed Deposit| Bills payable| | Short-term advances| | Sundry creditors| | Dividend payable| | Income tax payable| 2. LEVERAGE RATIOS The leverage or solvency ratio refers to the ability of a concern to meet its long term obligations.
Accordingly, long term solvency ratios indicate firm’s ability to meet the fixed interest and costs and repayment schedules associated with its long term borrowings. The following ratio serves the purpose of determining the solvency of the concern. * Proprietary ratio (a) Proprietary Ratio A variant to the debt-equity ratio is the proprietary ratio which is also known as equity ratio. This ratio establishes relationship between share holders funds to total assets of the firm. Shareholders funds Proprietary ratio = Total assets SHARE HOLDERS FUND| TOTAL ASSETS| Share Capital| Fixed Assets| Reserves & Surplus| Current Assets| Cash in hand & at bank| | Bills receivable| | Inventories| | Marketable securities| | Short-term investments| | Sundry debtors| | Prepaid Expenses| 3. ACTIVITY RATIOS Funds are invested in various assets in business to make sales and earn profits. The efficiency with which assets are managed directly effect the volume of sales. Activity ratios measure the efficiency (or) effectiveness with which a firm manages its resources (or) assets. These ratios are also called “Turn over ratios” because they indicate the speed with which assets are converted or turned over into sales. Working capital turnover ratio * Fixed assets turnover ratio * Capital turnover ratio * Current assets to fixed assets ratio (a) Working Capital Turnover Ratio Working capital of a concern is directly related to sales. Working capital = Current assets – Current liabilities It indicates the velocity of the utilization of net working capital. This indicates the no. of times the working capital is turned over in the course of a year. A higher ratio indicates efficient utilization of working capital and a lower ratio indicates inefficient utilization. Working capital turnover ratio=cost of goods sold/working capital.
Components of Working Capital CURRENT ASSETS| CURRENT LIABILITIES| Cash in hand| Out standing or accrued expenses| Cash at bank| Bank over draft| Bills receivable| Bills payable| Inventories| Short-term advances| Work-in-progress| Sundry creditors| Marketable securities| Dividend payable| Short-term investments| Income-tax payable| Sundry debtors| ??| Prepaid expenses| ??| (b) Fixed Assets Turnover Ratio It is also known as sales to fixed assets ratio. This ratio measures the efficiency and profit earning capacity of the firm. Higher the ratio, greater is the intensive utilization of fixed assets.
Lower ratio means under-utilization of fixed assets. Cost of Sales Fixed assets turnover ratio = Net fixed assets Cost of Sales = Income from Services Net Fixed Assets = Fixed Assets – Depreciation (c) Capital Turnover Ratio Sometimes the efficiency and effectiveness of the operations are judged by comparing the cost of sales or sales with amount of capital invested in the business and not with assets held in the business, though in both cases the same result is expected. Capital invested in the business may be classified as long-term and short-term capital or as fixed capital and working capital or Owned Capital and Loaned Capital.
All Capital Turnovers are calculated to study the uses of various types of capital. Cost of goods sold Capital turnover ratio = Capital employed Cost of Goods Sold = Income from Services Capital Employed = Capital + Reserves & Surplus (d) Current Assets To Fixed Assets Ratio This ratio differs from industry to industry. The increase in the ratio means that trading is slack or mechanization has been used. A decline in the ratio means that debtors and stocks are increased too much or fixed assets are more intensively used. If current assets increase with the corresponding increase in profit, it will show that the business is expanding.
Current Assets Current Assets to Fixed Assets Ratio = Fixed Assets Component of Current Assets to Fixed Assets Ratio CURRENT ASSETS| FIXED ASSETS| Cash in hand| Machinery| Cash at bank| Buildings| Bills receivable| Plant| Inventories| Vehicles| Work-in-progress| ??| Marketable securities| ??| Short-term investments| ??| Sundry debtors| ??| Prepaid expenses| ??| 4. PROFITABILITY RATIOS The primary objectives of business undertaking are to earn profits. Because profit is the engine, that drives the business enterprise. * Net profit ratio * Return on total assets * Reserves and surplus to capital ratio * Earnings per share Operating profit ratio * Price ??? earning ratio * Return on investments (a) Net Profit Ratio Net profit ratio establishes a relationship between net profit (after tax) and sales and indicates the efficiency of the management in manufacturing, selling administrative and other activities of the firm. Net profit after tax Net profit ratio= Net sales Net Profit after Tax = Net Profit (???) Depreciation (???) Interest (???) Income Tax Net Sales = Income from Services It also indicates the firm’s capacity to face adverse economic conditions such as price competitors, low demand etc. Obviously higher the ratio, the better is the profitability. b) Return On Total Assets Profitability can be measured in terms of relationship between net profit and assets. This ratio is also known as profit-to-assets ratio. It measures the profitability of investments. The overall profitability can be known. Net profit Return on assets = Total assets Net Profit = Earnings before Interest and Tax Total Assets = Fixed Assets + Current Assets (c) Reserves And Surplus To Capital Ratio It reveals the policy pursued by the company with regard to growth shares. A very high ratio indicates a conservative dividend policy and increased ploughing back to profit.
Higher the ratio better will be the position. Reserves; surplus Reserves ; surplus to capital = Capital (d) Earnings Per Share Earnings per share is a small verification of return of equity and is calculated by dividing the net profits earned by the company and those profits after taxes and preference dividend by total no. of equity shares. Net profit after tax Earnings per share = Number of Equity shares The Earnings per share is a good measure of profitability when compared with EPS of similar other components (or) companies, it gives a view of the comparative earnings of a firm. e) Operating Profit Ratio Operating ratio establishes the relationship between cost of goods sold and other operating expenses on the one hand and the sales on the other. Operating cost Operation ratio =Net sales However 75 to 85% may be considered to be a good ratio in case of a manufacturing under taking. Operating profit ratio is calculated by dividing operating profit by sales. Operating profit = Net sales – Operating cost Operating profit Operating profit ratio = Sales (f) Price ??? Earning Ratio Price earning ratio is the ratio between market price per equity share and earnings per share.
The ratio is calculated to make an estimate of appreciation in the value of a share of a company and is widely used by investors to decide whether (or) not to buy shares in a particular company. Generally, higher the price-earning ratio, the better it is. If the price earning ratio falls, the management should look into the causes that have resulted into the fall of the ratio. Market Price per Share Price ??? Earning Ratio = Earnings per Share Capital + Reserves ; Surplus Market Price per Share = Number of Equity Shares Earnings before Interest and Tax Earnings per Share =
Number of Equity Shares (g) Return On Investment Return on share holder’s investment, popularly known as Return on investments (or) return on share holders or proprietor’s funds is the relationship between net profit (after interest and tax) and the proprietor’s funds. Net profit (after interest and tax) Return on shareholder’s investment = Shareholder’s funds The ratio is generally calculated as percentages by multiplying the above with 100. Research Methodology Research involves scientific and inductive thinking and promotes the development of logical habits of thinking and organization.
Research also makes its own contribution to the existing stock of knowledge, enabling its advancement. Research Design: A research design is the specification of the methods and procedures for acquiring the information needed to structure or solve the problems. Its overall operation pattern or framework of the project that stipulates what information is to be collected. Which sources and with what procedures. The researcher used descriptive research design for the research study. Research design is a statement or specification of procedures for collecting and analyzing the information required for the solution of some specific problem.
It provides scientific framework for conducting source investigations. According to Clifford Woody,” research is defining and redefining problems, formulating hypothesis, collecting, organizing and evaluating and at last carefully testing the conclusion to determine whether they fit the formulated hypothesis”. Analytical Design: The research has to use the factors or information already available and analyze the facts to make critical evaluation of the material. Data Collection: Data refers to information or facts. There are two types of data available, they mainly includes, * Primary data * Secondary data Primary Data:
In this research study the primary data is collected through discussion with the senior finance staff of the company. Secondary Data: Secondary data means the data that are already available in the organization. The researcher has to look into various sources for the data from where he can obtain data. This can be either published or unpublished (Magazines, Journals, books, Public records, historical documents etc. )?? ????????????As the study involves use of secondary data such as budget of various departments in the organization. Analysis and interpretation of financial statements with the help of ‘ratios’ is termed as ‘ratio analysis’.
These statements help in making inter period and inter firm comparison and also highlights the trends in performance efficiency, and financial positions. Need For The Study 1. The study has great significance and provides benefits to various parties who directly or indirectly interact with the company. 2. It is beneficial to management of the company by providing crystal clear picture regarding important aspects like liquidity, leverage, activity and profitability. 3. The study is also beneficial to employees and offers motivation by showing how actively they are contributing for company’s growth. 4.
The investors who are interested in investing in the company’s shares will also get benefited by going through the study and can easily take a decision whether to invest or not to invest in the company’s shares. Objectives Of The Study The major objectives of the resent study are to know about financial strengths and weakness of OMAX through FINANCIAL RATIO ANALYSIS. The main objectives of resent study aimed as: To evaluate the performance of the company by using ratios as a yardstick to measure the efficiency of the company. To understand the liquidity, profitability and efficiency positions of the company during the study period.
To evaluate and analyze various facts of the financial performance of the company. To make comparisons between the ratios during different periods. Objectives: 1. To study the present financial system at OMAX. 2. To determine the Profitability, Liquidity Ratios. 3. To analyze the capital structure of the company with the help of??Leverage??ratio. 4. To offer appropriate suggestions for the better performance of the organization. Review Of Literature Financial Statements: Financial Statements refer to formal and original statements prepared by a business concern to disclose its financial information.
AICPA (American Institute of Certified Public Accountants) says financial statements are prepared for the purpose of presenting a periodical review or report on the progress by the management and deal with (i) the Status of Investments in the business and (ii) the results achieved during the period under review In the words of Hampton JJ, The Statement disclosing status of investments is known as balance sheet and the statement showing the result is known as profit and loss account. Thus, the term financial statement has been widely period. They are: (i) profit and loss account or Income Statement; and ii) Balance sheet or statement of financial position. Of late, another statement is also being prepared, called ‘surplus statement” or “retained earnings statement”. Numbers of schedules are also usually prepared to supplement the data and information contained in the balance sheet and profit and loss account. Schedule of fixed assets, schedule of debtors, schedule of creditors, schedule of investments, etc. , are examples of some of the schedules which are attached to the financial statements. A “statement of changes in financial position” is also sometimes added t