A
PROJECT REPORT
ON
“STUDYING THE IMPACTS OF DEBT ON THE PROFITABILITY AND
LIQUIDITY OF THE KRISHNA MARUTI LIMITED”
KRISHNA MARUTI LIMITED
SUBMITTED TO:
Kurukshetra University, Kurukshetra
in the Partial Fulfillment for the Degree of Master in Business Administration
(Session 2008-20010)-MBA-3rd Semester
Under Supervision of :
Submitted By ;
Ms.Shilpa Chawla
RICHA NANDA
Faculty,MBA
D/o Sh. ASHOK NANDA
Univ. Reg No. :04- DGY-611
Univ. Roll No.
Institute Roll No, 1133/08
Tilak Raj Chadha Institute of Management and Technology (TIMT)
(Affiliated to Kurukshetra University, Kurukshetra & Approved by AICTE)
M.L.N.College Educational Complex, Yamuna Nagar-135001 (Haryana)
Ph. 01732-220103, 234110. Fax: +91 -1732- 220103.
E-mail: info@timt.ac.in , Web Site: www.timt.ac.in
//DECALARATION//
I hereby certify that the work which is presented in this Summer Training Project
Entitled as:-
“STUDYING THE IMPACTS OF DEBT ON THE PROFITABILITY AND
LIQUIDITY OF THE KRISHNA MARUTI LIMITED”
in partial fulfillment of the requirements for the award of the Degree of Masters in Business
Administration (MBA), Kurukshetra University, Kurukshetra, is a authentic record of my
original work carried out during the period from 20 June 2009 to 4 August 2009.
I have not submitted the matter embodied in the project report for the award of any other degree.
Place:
Date:
Richa Nanda
D/o Sh. Ashok Kumar Nanda
Unv. Reg No :04-DGY-611
Unv. Roll No.:
Institute Roll No.: 1133/08
ACKNOWLEDGEMENT
Perseverance, diligence, inspiration and motivation have always played a key role in the triumph
of any venture. In the present world of walloping competition, a project is likely to apocalypse a
nexus between theoretical knowledge and practical working.
First of all, I would like to thank the paramount power, the ultimate impeccable creator, the
almighty God, who is the one who has always directed me to work on the right path of my life.
With his grace, this project could become a reality.
“STUDYING THE IMPACTS OF DEBT ON THE PROFITABILITY AND
LIQUIDITY OF THE KRISHNA MARUTI LIMITED”.
Any accomplishment requires the effort of many people and this work is not different .Firstly, I
would like to extend my sincere thanks and gratitude to Mr. SAHANI (Executive Director,
operations) KRISHNA MARUTI LTD. ,GURGAON for his able guidance, regular counseling,
keen interest and constant encouragement, without which the project would not have brimmed to
fruition. I am extremely grateful to Dr. VIKAS DARYAL (DIRECTOR), Ms. GARIMA
GUPTA H.O.D. (TIMT) and my research guide also, for their helpful attitude, regular coaching
and inspiration.
I owe my sincerely thanks to all employees of KRISHNA MARUTI LTD., for their
support given to me time to time. Also, I would like to thank all my friends and family members
for their support given to me time to time. I don’t have words to express my thanks; nonetheless,
my heart is full of gratitude for the favors received by me from every person.
EXECUTIVE SUMMARY
The prime objective of my study was to study the impact of increasing debt on the profitability
and liquidity of the company. I also took the help of ratio analysis in my study to know about the
financial position of the company.
The first section includes introduction to Krishna Maruti Ltd. The successive chapter introduces
us with the project, gives proper definition to the problem, objectives of the study, significance
of undertaking this project and defines the limitations and scope of the study.
The third section briefs us about the way of carrying out the research methodology, which in
turns tells about the sampling, data collection methods, field work, analysis and interpretation etc
then is given the results and findings devised out of the research project. The bibliography and
annexure follow this. I hope that this report will prove o be useful for the management to carve
out the proper solutions put forth.
CONTENTS
TABLE OF CONTENTS
Topic
Page No.
1) Introduction
2) Profile of the study
i)
Justification of the study
3) Objectives of the Study
4) Literature Review
5) Research Methodology and Analytical tools
a. Sampling and Sampling Design
b. Data Collection
c. Analytical Tools
-Statistical tools
d. Hypothesis Testing
e. Limitations of the Study
6) Observations of the study
7) Results and Discussions/ Findings
8) Recommendations, Policy Implications
9) Bibliography
10) Annexure
Indian
Automobile
Industry
Indian Automobile Industry
Indian automobile industry has come a long way to from the era of the Ambassador car to Maruti
800 to latest M&M Xylo. An industry is highly competitive with a number of global and Indian
companies present today. It is growing at a pace of around 18% per annum for the last five years
and is projected to be the third largest auto industry by 2030 and just behind to US & China,
according to a report. The industry is estimated to be a US$ 34 billion industry.
Indian Automobile industry can be divided into three segments i.e. two wheeler, three wheeler &
four wheeler segment. Two wheeler segments enjoys 75% market share of automobile industry,
followed by passenger vehicles with the 16% share of market. Three wheeler segments have
merely 4% share in domestic market. The domestic two-wheeler market is dominated by Indian
as well as foreign players such as Hero Honda, Bajaj Auto, Honda Motors, TVS Motors, and
Suzuki etc. Maruti Udyog and Tata Motors are the leading passenger car manufacturers in the
country. And India is considered as strategic market by Suzuki, Yamaha, etc.
The major players have not left any stone unturned to be global. Major of the players have got
into the merger activities with their foreign counterparts. Like Maruti with Suzuki, Hero with
Honda, Tata with Fiat and latest Mahindra with Renault.
In two-wheeler segment, motorcycles have the major share, Hero Honda, the leading bike
manufacturer has more than 50% share in two-wheeler segment, followed by Bajaj Auto. In
passenger car segment, Maruti Suzuki contributes the 52% market share, with complete
monopoly over the small car segments. M&M enjoy the 42% market share in Multi Utility
Vehicle in domestic market.
The automobile industry in India — the ninth largest in the world with 2008 production of over 2.3 million cars and
commercial vehicles — is one of the fastest-growing global automotive industries. A number of domestic
companies, as well as the growing multinational investment, has led to rapid increases in automobile production.
Following economic liberalization in India in 1991 the Indian automotive industry has demonstrated sustained
growth as a result of increased competitiveness and relaxed restrictions. The monthly sales of passenger cars in India
exceed 150,000 units.
History
REVA, known as G-Wiz in Europe, is the world's largest selling
car.
electric
Tata Nano is the least expensive car in production in the world. The
price is about Rs. 100,000 (US$2,500).
Maruti Suzuki's A-Star vehicle during its unveiling in Pragati Maidan, Delhi. AStar, Suzuki's fifth global car model, was designed and is made only in India.
An embryonic automotive industry emerged in India in the 1940s.
Following the independence, in 1953, the Government of India and the private sector launched
efforts to create an automotive component manufacturing industry to supply to the automobile
industry. However, the growth was relatively slow in the 1950s and 1960s due to nationalization
and the license raj which hampered the Indian private sector. After 1970, the automotive industry
started to grow, but the growth was mainly driven by tractors, commercial vehicles and scooters.
Cars were still a major luxury Japanese manufacturers entered the Indian market ultimately
leading to the establishment of Maruti Udyog. A number of foreign firms initiated joint ventures
with Indian companies.
In the 1980s, a number of Japanese manufacturers launched joint-ventures for building
motorcycles and light commercial-vehicles. It was at this time that the Indian government chose
Suzuki for its joint-venture to manufacture small cars. Following the economic liberalization in
1991 and the gradual weakening of the license raj, a number of Indian and multi-national car
companies launched operations. Since then, automotive component and automobile
manufacturing growth has accelerated to meet domestic and export demands.
Timeline of Indian automobile industry:
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1897 First Person to own a car in India - Mr Foster of M/s Crompton Greaves Company, Mumbai
1901 First Indian to own a car in India - JamshedJi Tata
1905 First Woman to drive a car in India - Mrs. Suzanne RD Tata
1905 Fiat Motors
1911 First Taxi in India
1924 Formation of traffic police
1928 Chevrolet Motors
1942 Hindustan Motors
1944 Premier Automobiles Limited
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1945 Tata Motors
1947 Mahindra & Mahindra Limited
1948 Ashok Motors
1948 Standard Motors
1974 Sipani Motors
1981 Maruti Suzuki
1994 Rover Company
1994 Mercedes-Benz
1994 General Motors India - Opel brand launch
1995 Ford Motor Company
1995 Honda Siel Cars India
1995 REVA Electric Car Company
1995 Daewoo Motors
1996 Hyundai Motor Company
1997 Toyota Kirloskar Motors
1997 Fiat Motors (Re-Entry)
1998 San Motors
1998 Mitsubishi Motors
2001 Škoda Auto
2003 General Motors India - Chevrolet brand launch
2005 BMW
2007 Audi
2009 Land Rover and Jaguar
Industry Today
Following India's economic liberalization in 1991, the automobile industry was opened for 100
percent foreign direct investment. A surge in the country's economic growth rate and purchasing
power has fueled a 17% annual growth rate in the Indian automobile industry since 1991. The
automotive industry generates direct and indirect employment to about 13.1 million people as of
2006-07.
The automotive parts and cars exports has grown at an annual rate of 30% per year in the 21st
century. However, the India's share of the overall global automotive industry remains low as of
2007. Increased competitin amongst automobile manufacturers provides for a variety of
competitive options for the consumer.
India was one of the largest manufacturers of tractors in the world in 2005-06, when it produced
293,000 units. India produced 65 Million tyres during FY 2005-06. India's tyre production meets
domestic demand, as well as are exported to over 60 countries.
Outlook
India’s car market has emerged as one of the fastest growing in the world. The number of cars sold domestically is
projected to double by 2010, and domestic production is skyrocketing as foreign makers are setting up their own
production plants in India. The government’s 10-year plan aims to create a $145 billion auto industry by 2016.
According to McKinsey & Company, the automotive sector’s drive for lowering costs will lead
to outsourcing. The global automotive industry's sourcing from emerging markets will reach
$375 billion by 2015, up from $65 billion in 2002. McKinsey thinks India can capture $25
billion of this export potential. Out of 400 Indian suppliers, 80 percent are ISO 9000 certified —
the international standard for quality management.
Most of India's current automobile production meets domestic demand. Forecasts predicts sales
of 4.2 Million four-wheel automobiles in India by 2015. But, several manufacturers are now
focusing on exports, and a diverse range of automotive components are now built and exported
from India. India's passenger vehicle exports are forecast to rise from 170,000 in 2006 to
500,000 in 2010.
Exports
Hyundai i20, one of the most widely exported cars solely made in India.
India has emerged as one of the world's largest manufacturers of small cars. According to New
York Times, India's strong engineering base and expertise in the manufacturing of low-cost, fuelefficient cars has resulted in the expansion of manufacturing facilities of several automobile
companies like Hyundai Motors, Nissan, Toyota, Volkswagen and Suzuki.
In 2008, Hyundai Motors alone exported 240,000 cars made in India. Nissan Motors plans to
export 250,000 vehicles manufactured in its India plant by 2011. Similarly, General Motors
announced its plans to export about 50,000 cars manufactured in India by 2011.
India automobile companies, mainly Maruti Suzuki, Tata Motors and Mahindra, have been
aggressively expanding their overseas market too. Prominent India-made automobiles which are
widely exported include:
Maruti Suzuki - exports Suzuki Alto, Maruti 800, Maruti Omni, Maruti Wagon-R and Zen Estilo
Hyundai Motor Company - exports Hyundai Santro, i10, Hyundai Getz, i20 and Hyundai Accent
- 42% of its India production
Tata Motors - exports Tata Safari, Tata Novus and Tata Xenon
Mahindra & Mahindra Limited - exports Mahindra Scorpio and Mahindra Xylo
In addition to Bangalore-based REVA, which currently is the only company actually selling EVs
today, electric cars made in India includes:
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Mahindra & Mahindra: Four-seat model by 2010.
Tata: 2008-2009 (Also possibly a compressed air car).
Ajanta Group: clockmaker with plans for low-cost EV.
Tara: Low-cost EV less than a Tata Nano.
Hero Electric: 2013 Electric car.
The list of foreign cars sold in India as CBU is given below:
A Maruti 800 assembled at Gurgaon, Haryana, India.
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Audi: Audi A4, Audi R8, Audi A6, Audi A8, Audi TT, and Audi Q7.
BMW: BMW 7 Series, BMW X5, BMW X3, BMW M3, BMW M5, and BMW M6.
Land Rover: Range Rover and Range Rover Sport.
Nissan: Teana and X-Trail.
Porsche: Porsche 911, Porsche Boxster, Porsche Cayenne, and Porsche Cayman.
Rolls Royce: Rolls Royce Phantom.
Toyota: Land Cruiser Prado VX.
Volkswagen: Volkswagen Jetta, Volkswagen Passat, and Volkswagen Touareg.
Volvo: Volvo XC90 and Volvo S80.
LamborghiniLamborghini Gallardo and Lamborghini Murciélago
Production facilities in India
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Ashok Leyland: Ennore, Chennai, Tamil Nadu; Hosur, Tamil Nadu (3 plants)
Audi: Aurangabad, Maharashtra.
BMW: Chennai, Tamil Nadu.
Bajaj Auto Ltd: Akurdi, MIDC Pimpri-Chinchwad, Pune, Maharashtra
Caparo : Chennai, Tamil Nadu.
Chevrolet: Halol, Gujrat.
Daimler : Chennai, Tamil Nadu.
Fiat: Pune (Ranjangaon), Maharashtra.
Ford: Chennai, Tamil Nadu.
Force Motors: Pune, Maharashtra
General Motors: Talegaon Dabhade (Pune), Maharashtra
Hindustan motors: Chennai, Tamilnadu, and Kolkata, West Bengal.
Honda: Greater Noida, Uttar Pradesh.
Hyundai: Chennai, Tamil Nadu.
John Deere (Tractor): Sanaswadi (Pune), Maharashtra
Kinetic Motor Company Limited: M.I.D.C., Pimpri-Chinchwad Pune, Maharashtra
Mahindra: Nashik, Maharashtra; Kandivali, Maharashtra; Igatpuri, Maharashtra; Zahirabad, Andhra
Pradesh; and Haridwar, Uttarakhand.
Mercedes-Benz: Pune, Maharashtra.
Mitsubishi: Thiruvallur, Chennai, Tamil Nadu.
Renault-Nissan: Chennai, Tamil Nadu.
Škoda: Aurangabad, Maharashtra
Suzuki: Gurgaon, Haryana, and Manesar, Haryana.
TAFE Tractors : Chennai, Tamil Nadu.
Tata: Lucknow, Uttar Pradesh; Pimpri-Chinchwad (Pune) Maharashtra; Jamshedpur, Jharkhand; Haridwar,
Uttarakhand and Sanand, Gujarat.
TVS Motors, Chennai, Tamil Nadu.
Toyota: Bangalore, Karnataka.
Volkswagen: Talegaon Dabhade (Pune), Maharashtra
Volvo Trucks: Bangalore, Karnataka
Indian Automobile Industry -2008
All the major auto companies enjoyed the high growth ride till the mid 2008. But at the end of the year,
industry had to face the hard truth and witnessed the fall in sales compared to last year. In December
2008, overall production fell by 22 % over the same month last year. Global recession has hit the Indian
auto industry, India is strong and growing industry but the impact of recession is evident now on industry
as
sales
&
growth
of
automobile
companies
have
declined.
Passenger Vehicles segment registered negative growth. One of its supporting facts is that the sales in
December 2008 for passenger vehicles fell by 13.86% over December 2007. Maruti- the leading car
manufacturer, registered 10% fall in sells (56293 units), as compared to December’07 (62,515 units). But
interestingly, Hyundai motors, the second largest car maker of country, registered a growth in sells, with
the help of export; Hyundai Motors reported 19% growth.
Two Wheelers registered minor growth of 1.85 % during April – December 2008. However, Two
Wheelers sales recorded 15.43 percent fall in December 2008 over the same month last year. In two
wheeler segment, Hero Honda has witnessed 10% fall (215,931 units in Dec 2008) in sales as compared
to December 2007 (240,532 units). Bajaj Automobile has registered 33% fall in its over all two wheeler
sells, compared to last year. The company has reported 37% negative growth in bike sells.
Although the year 2008 saw a record launches of new products of various categories. Maruti launched A
Star, its new small segment car. Honda Motors launched the new version of Honda city, its best selling
sedan, also Civic Hybrid. Hyundai motor was not also far behind, in the end of the year, Hyundai
launched its much awaited sedan i20.
In Bikes segments, this year was full of happening. Yamaha introduced its two new hi-end models YZF &
R15. Suzuki Motorcycle India also launched its legendary bike Hayausa & Intruder in Indian market.
Introduction
To
Krishna Maruti
KRISHNA MARUTI LIMITED
KML entered the auto interior manufacturing business with a single product (seating system for
Maruti 800 CC Car) in year 1994. Krishna Maruti Ltd. (KML) was incorporated in year 1994 as
an ancillary to Maruti Udyog Ltd. (MUL), for the supply of Car seats. KML is joint venture
between Mr. Ashok Kapur, MUL, and Suzuki Motor Corporation and has technical collaboration
with SNIC of Japan for seat design and manufacturing. The state of the art plant is located at
Delhi-Jaipur Highway, Narsinghpur Gurgaon (Haryana), and spread over an area of five acre.
The
installed
capacity
of
plant
is
4,000,000
seat
set
per
annum.
Today Krishna Group has six plants for a different range of car interiors like door trims, Roof
Head liners, Rear view mirrors, Sheet metal components and auditorium seats all are located in
Gurgaon. (Please see Annexure). Total group outlay is Rs. 6500 Million. Today KML
manufacture
8
different
products
with
over
100
different
models.
KML came into the existence, when there were established seat manufacturer for supplies to
Maruti. We strived hard to prove ourselves better than others and today we got the distinction as
the most favored supplier to MUL, and enjoying 59% of MUL seating business, which is much
more than any other competitor who were in business before we came into business.
KML has been the proud recipient of following five major awards from MUL, at last year vendor
conference.
Best VA/VE award
Best Overall performance award
Best effort of Cost reduction award
Best effort for vendor up gradation award
KAIZEN award
Nevertheless, Satisfied with most delighted customer like, MUL, KML never looked back,
relaxed but kept on revising and achieving set targets, KML achievements in the area of quality,
Cost, Delivery, has become a benchmark for others industries.
KML has also achieved following quality certificates.
TS16949
ISO 14000
OHSAS 18000
Deming award
Pursuing towards TQM.
Over the past few years, KML has been upgrading software design tools, prototyping facilities,
testing equipments and above all engineering and design skills for better prepared for the
Challenge of AFTA, WTO and Trade Globalization. Our engineers have been working together
with our technical partners to upgrade their skills and technical knowledge.
The backbone of Krishna group is its corporate R&D center, established with an investment of
Rs. 100 million and has distinction as a approved lab by govt. of India, capable of conducting
tests as per Japanese standards, European Homologation. EEC/ECE, JASO & JIS.
ISO 14001, environment certificate serves to show that KML is committed to being a responsible
corporate citizen by ensuring that we take heed to minimize and where possible eliminate,
environment unfriendly substance.
Major customers are Maruti Udyog Ltd., Honda Siel, GM, FORD and HREC (STU).
KML are India's First Total Auto Interior Group of Companies manufacturing all the
requirements of auto interiors including Seating Systems, Rear View Mirrors, Head Rest
Assemblies, Arm Rest Assemblies, Seat Trims (Covers), Injection Moulded Door Trims, Roof
liners & Moulded Carpets.
KML reached all this in short span of time because KML firmly practice ' 6 - F' principle
throughout the organisation:
Focused: Focus towards customer delight, engineering infrastructure,
cost consciousness and continuous improvements through '5 - S',
'Kaizens', Quality Circle Meetings and Suggestion Meetings.
Fast: Fast system & technological up - gradation and implementation.
Flexible: Flexible towards customer requirements.
Friendly: Creating friendly environment among customer, employees &
vendors.
Firm: Firmly adhering to laid down policies & procedures &
Fun: Achieving the targets in stipulated time.
In order to be a leader in its field, a strong centralized R & D Center (first of its kind in country)
was established with an investment of $ 1.5 Million. This center is the best in the country and is
recognized by the Department of Scientific & Industrial Research, Ministry of Science &
Technology, Govt. of India.This center is capable of not only testing as per International
Standards but can also issue Test Certificates to other Seat manufacturers. This test center can
also perform test for non - Automotive components for Endurance & Repeatability.
HISTORY OF KML
It was in 1993 when Mr. Ashok Kapur started Krishna Maruti Ltd. seat division, a joint venture
to supply car seats to Maruti Udyog Ltd. Since then he has never turned back and believes in
only looking ahead.
It is the hard work and perseverance of 13 years & a brain of an architect who knows how to
build a high rise on a solid platform that has paved the way for The Krishna Group.
Today the existence of Krishna group with 8 manufacturing plants, infrastructure company,
media, floor & furnishing, tours & travels are the best example of his never dying approach of
diversifying in the age of competition. Mr. Kapur's philosophy of putting the customer first has
paid of handsomely & now Krishna group is one of the youngest diversified group which is
going to touch a turnover of INR 10 billion (1000 crore) by next year.
His son, Mr.Sunandan Kapur teamed up with him in 1999. Since then he has been responsible
for various companies under The Krishna Group and is currently in-charge of a newly acquired
company called SKH Metals Ltd.
Mr. Kapur has been honored 3 times consequently by his customers for best overall performance.
School of innovation management, Tokyo has honoured Mr. Kapur by passing on his teachings
to the new graduates.
His desire to prioritise quality perfection laid our seating division to not only win the Deming
Award but also to become the world's first & youngest seating company to have this honour.
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1994-1995 - Established Krishna Maruti Ltd., a joint venture between Ashok Kapur &
Associates, Maruti Udyog Ltd., and Suzuki Motor Corporation to manufacture
automotive seats in technical collaboration with SNIC Co. Ltd. of Japan.
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1996-1997 - Established Krishna Toyo Ltd., a joint venture between Ashok Kapur &
Associates and Toyo Ltd. to manufacture automotive mirrors in technical collaboration
with Toyo Ltd. of Japan.
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1997-1998 - Established Krishna Pads Ltd., a joint venture between Ashok Kapur &
Associates and Krishna Maruti Ltd. to manufacture automotive head rests and
PolyUrethane (PU) products.
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1997-1998 - Established Research & Development (R&D) center as per European
Homologation.
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1998-1999 - Established Krishna Trims Ltd., a joint venture between Ashok Kapur &
Associates and Krishna Maruti Ltd. to manufacture automotive seat trims.

1999-2000 - Established Krishna Maruti Ltd. - Door Trim Division, in technical
collaboration with Suzuki Kasei of Japan (formerly Ohta Sheet) to manufacture injection
moulded door trims.

2000-2001 - Established Krishna Maruti Ltd. - Roof Headliner Division.

2002-2003 - Established Krishna Grupo Antolin (P) Ltd., a joint venture between Krishna
Maruti Ltd. and Grupo antolin to manufacture roof headliners in technical collaboration
with Grupo Antolin of Spain.
 Established Krishna Quinette Galley, a joint venture between Ashok Kapur &
Associates and Quinette Galley to manufacture auditorium & cinema seats in
technical collaboration with Quinette Galley of France.

2004-2005 - Acquired Mark Auto Industries Ltd. (now SKH Metals Ltd.), a joint venture
between Ashok Kapur & Associates and Maruti Udyog Ltd. to manufacture fuel tank,
front suspension, and metqal parts in technical collaboration with Fatuba of Japan,
Okamoto of Japan, and Magnetti Marelli of Italy.
 Established SKH Auto Components Ltd. through a merger of Krishna Trims Ltd.
and Krishna Pads Ltd.
 Established Krishna Maruti Ltd. - Moulded Carpet Division.
The journey towards perfection is still on....
KML philosophy
Krishna Group take a turn for better in totality .Smaller , fewer, lighter , shorter, & beautiful.
Maxim quality & minimize expenses.
KML corporate philosophy is "RESPECT FOR INDIVIDUAL". Their employees, are their
greatest assets. Their future growth depends greatly upon excellence in human resource
management and evelopment.
Their offer equal growth opportunities across the Organisation. Company provides conducive
environment for employee's growth, by providing training and exposure for overall development
with a view to make them able to shoulder added responsibilities.
Krishna have a friendly work atmosphere in the day-to-day working. All family members are
free to collaborate and communicate, and maintain a smooth and steady rhythm of work with full
commitment.
Board of Directors
Testing facility
The R & D Center has been established with the aim of bringing innovation in seating systems
by incorporating latest principles in seat design. KML is the first seating manufacturing company
in the country to establish such an advance facility. This center was established with an
investment of $ 1.5 Million. This center is capable of conducting tests as per European
Homologation (EEC/ECE/FMVSS) and Japanese Standards (JASO) on not only automotive
seating systems but also on other components wherein repeatability and endurance life has to be
ascertained.
The test rigs are certified by Vehicle Certification Agency (VCA) of UK. The center is
recognised by the Department of Scientific & Industrial Research, Ministry of Science and
Technology, Govt. of India.
The set - up includes Vibration Test Rig, Free Flight Impact Test Rig and Static/Dynamic
Strength Test Rig. The software used for these Rigs produces precise waveforms e.g. Sine,
Triangular, Square and Ramps.
Products Of Krishna Maruti
We are known for our innovative products and advanced technology which have been significant
factors in our growth. Our continued focus on quality, craftsmanship, execution and global
benchmarking are key elements of our way of doing business.
We have expertise in manufacturing the following products: Automobile Seats
 Seating Systems
 Rear View Mirrors
 Head & Arm Rests
 Seat Trims
 Auditorium Seat
 Injection Moulded Door Trims
 Roof liners
KML started its operations with only 1 model and a
production capability of
40 sets/day. Toady we
manufacture 16 different models. Krishna Maruti
Limited has a production capacity of 400,000 Seating
Systems/ annum.
Presently Krishna Maruti Limited produces 16 different Variants of seating systems of following Models: BALE
ESTEEM , WAGON R, ZEN, OMNI, MARUTI 800cc & ALTO.
Krishna Maruti Limited has capabilities to Manufacture Seating Systems as an OE to potential customers for thei
range of products
Company produces a range of Outside & Inside Rear View Mirror Assemblies for Maruti Udyog
Limited and Honda Siel Cars India Limited.
With 35% OE market share, Every Fifth Indian Car has Rear View Mirror Assembly
manufactured by Krishna Toyo Limited.
The range can easily be extended to suit the requirements of other Auto Manufacturers.
The Joint Venture agreement between Ashok kapur & Associactes and Toyo Industries Co.
Ltd. was signed on 20th day of Dec. 1995. The Commercial production started in September
1996.
Toyo Limited is Japan's Third largest Mirror Manufacturer and caters to 90% of Suzuki's
total requirements in Japan.
Toyo has manufacturing facilities in Thailand and Indonesia as well.
toyo's Five decade of Experience in field of Auto Mirror have been incorporated at all levels and
at all stages.
All facilities required for ensuring the Quality of Input Parts and Products have been provided.
Facilities for testing Mirror Assemblies as per International Standards are available. Very
specialized test are conducted at Toyo's Facility in Japan. All the Components, Parts &
Products are productionised after due approval from Toyo's Q.C, Japan.
Krishna Pads Limited uses NC Controlled Puromat High - Pressure Foaming Machine for its
foaming application for producing Head Rest & Arm Rest Assemblies for all models of
Maruti's Car.
Krishna Pads is working towards acquiring ISO 9002 certification in this year. Towards this
end, all quality/work procedures have been implemented and are being strictly followed.
Headrest defeletion test and impact tests are conducted regularly to ensure compliance as per
statutory required performance parameters of seats. As a Backward Integration Exercise,
Krishna Pads Limited (KPL) was established in Year 1996. Krishna Maruti Limited holds 10%
equity in the company.
This company manufactures Head Rest and Arm Rest Assemblies and is the single source for
Krishna Maruti Limited. Krishna Pads Limited is India's Largest Manufacturer of Head Rest &
Arm Rest Assemblies.
This Krishna Maruti Limited promoted Company to
manufacture Seat Trims (Cover) was established in Year
1996. Krishna Maruti Limited holds 10% equity in the
company.
Krishna Trims Limited is India's Largest Seat Cover Manufacturing Company. State of art
cutting & stitching machines are used to manufacture products
The Company has a manufacturing capacity of 200,000 Set per annum.
Krishna Trims Limited is catering Krishna Maruti Limited's total requirement of trims. KPL
provides these items for the following cars :
Standard 800
Omni Van HR
Zen
Esteem
Wagan R
Baleno
Trim being a most important component for quality seat, KML decided to establish Krishna
Trims Limited for ensuring supply of high quality trims. Working on Group Quality Policy, KTL
sends its team on regular basis to SNIC Company - Japan for training. Experts from SNIC
Company - Japan are invited regularly to KTL for imparting training into designing
Cutting & Stitching patterns for Trims to team at KTL.
It was this effort that resulted in KTL acquiring ISO 9002 certificate within 1 year of its
inception.
Krishna Quinette is a 50:50 Joint
Venture Company of Krishna
Maruti Limited with Quinette
Gallay
of
FRANCE.
Quinette Gallay is the World
Leader in the field of Auditorium
Seats with over 70% of its total
production servicing the Export
Business. Quinette Gallay has
presence in all the 6 Continents and
installations in over 50 Countries.
Krishna Quinette produces special
seating system for auditorium
applications. The company started
its Commercial Operations since
July 2003.
Company produces a range of seating systems for auditorium applications.
Krishna Quinette offers Sliding, Rocking, Tip-up and Fixed Seats with many options of
Armrests, Cup Holders & Quilting Patterns. Some of the models being offered by Krishna
Quinette in India are:Action BR
Action Club
Action Udine
Europa
Slider
Metz
West Palm Beach
The Joint Venture agreement between Krishna Maruti Limited and Quinette Gallay of
FRANCE was signed on 31th day of Jan 2003.
Quinette Gallay of France has fifty years of experience, is now amongst the world leader in the
field of activity.
Quinette has manufacturing plant on 22000 sq mtr plot located in the suburbs of Paris.
A design department utilizing both CAO/DAO data processing equipment.
The
use
of
modern
method,
machinery
and
equipment.
A reliable and prompt after sales service and, on top of all, a well
trained
and
competent
work
force,
able
to
cope
with
the
many
variable challenges offered.
KRISHNA QUINETTE Installations
PVR MGF Main Stream Gurgaon
PVR MGF Europa Gurgaon
PVR Plaza Delhi
PVR Forum Main Stream Bangalore
PVR Forum Europa Bangalore
Wave Cinemas Noida
Wave Cinemas Lucknow
Wave Cinemas Gold Lounge Lucknow
Sahara Shahar Lucknow
Rajshri Lucknow
Novelty Lucknow
Movie Talkies Mumbai
Manipal Academy of Higher Education
Scientific Conventional
KGMU - Lucknow
Centre
at
PVR Hyderabad
PVR Mumbai
This division manufacturers:
Door Trims
Roof Headliners
Carpets
For producing Injection Moulded Door Trims, we have Toshiba's (Japan) 1300 Tonne Machines
and for the Assembling of various plastic parts together, we use Branson's (USA) Ultrasonic
Welding Process.
For our Roofliners, we have Meyer's (Germany) Lamination Machine & Thermoforming
Machine. We are the only Indian Company to use Twin Head Robotic Water - Jet Cutting
Machine from ABB - IR Sweden.
The company is all set to use its specialty in Injection Molding for producing components for
White Good Industry.
In line with our vision to
become India's First Single
Stop
Solution
for
Complete Auto Interiors,
this division was established
.For producing Door Trims,
this division has Technical
Collaboration with OHTA
SHEET
of
Japan.
The main objective of this division is to produce:
Door Trims
Roof Headliners
Carpets
This division incepted in June 1999. In Line with company philosophy of doing the projects
without cost or Time overrun this project was completed within a record time of 66 days
and production was started on 67th day (18th December 2000).
This division has helped its customer in Cost Reduction by successfully localizing of Door Trims & Roof Headliners for Wagon R and Alto.
The Door Trim manufacturing facility has been established with Technical Collaboration with
M/s OHTA SHEET of Japan. This agreement was signed on 7th April 1999.
OHTA SHEET is one of the leading Auto Interior Company of Japan and is in the business of
manufacturing Door Trims, Roof Headliners & Moulded Carpets. OHTA SHEET is one of the
Biggest Suppliers of Door Trims to Suzuki Motor Corporation in Japan
.
As per the Technical Collaboration Agreement OHTA SHEET provides the total Know - How
right from the selection of Raw Materials, Machines, Manufacturing Process and testing
Facilities.
In line of Vision of becoming a World Class Manufacturing Company the Philosophy of TQM is
followed through - out. The Organisation implements the best of Manufacturing and
Management Techniques since inception.
KML - DTD works on the principal that 'Customer is God'. For us Quality is the Way of Life.
The Company is committed to Quality and Customer Delight in terms of Total Quality, Cost &
Delivery i.e. Right Quantity, Right Price & Right Place.
KML - DTD is working progressively towards QS 9000 and is hopeful of achieving the same
within this year.
The division was setup in July 2000 & the machines for lamination & thermofoaming was
commission in December 2000. The commercial production started in Feb 2001.This plant can
manufacture 2,00,000 Roof Headliners of various models per year.
For Lamination of Substrates, Fully Automatic & Continuous Lamination Machine from
Meyer - Germany is used. The Machine is capable of laminating upto five different materials
together in a single operation. For moulding the Laminated Substrates into the required shape,
the Thermoforming Press is used. This Press is High Capacity Single Acting Hydraulic
Machine with advance controllers governing accurate controls over required parameters
for consistent results..
Outsourcing
At Krishna the basic raw materials used are :








Polyurethane raw materials to produce moulded cushion pads -Polyols & Isocynates.
CRCA sheet metal components.
Tubular lengths of various sizes.
Water soluble black paints & pre treatment chemical.
PVC fabrics.
Laminated polyester & cotton fabrics.
Wire Spring
Polypropylene for injection moulded components.














Hardware items.
Various industrial consumables like mig wire, adhesives, safety items, spot welding
electrodes etc.
Seat adjuster mechanism assemblies.
Seat recliner mechanism assemblies.
Rear seat lock assemblies.
Automotive fabric.
Treads.
Substrate for roof headliner(rigid foam).
Mirror sheets.
Felt for moulded carpet.
Needle punch fabric for moulded carpet.
CRCE sheet.
Non - woven fabric
Fasteners for various sizes.
Quality
Company has been certified as ISO 9002 in year 1996 by TUV Bayran and QS 9000 in Year
1997 by AV Vincotte, Belgium.
Towards our quest to become a World Class Company, we at KML commenced the TQM
Mission jointly organized by CII and MUL since 1998.
At Krishna Maruti Limited we are totally committed to Quality Standards set by our customers.
Our line rejection is less than 500 PPM and we have achieved Zero MARU 'A' Defect.
Kaizen and 5 S principals are followed at all levels through the organization.
Krishna group offers a very challenging work culture with emphasis on developing individual's
creativity.
Krishna group is the leader in its field of operation and has joined hands with World leaders in
their respective fields:
a)Suzuki Motor Corporation - Japan.
b)SNIC Company Limited - Japan (Seating Systems).
c)Toyo Industries Company Limited - Japan (Rear View Mirrors)
d)Ohta Sheet Company Limited - Japan (Door Trims)
In order to develop and manufacture world-class product the best machines and tooling are there
in the company. Individuals who look for a bright & promising career with Krishna Group please
PROFILE OF
THE STUDY
DEBT PROFILE OF THE COMPANY
Total Debt raised by KML:
2005 – Rs. 338938569
2006 – Rs. 454092269
2007 – Rs. 715018431
2008 – Rs. 996820254
Division of debt into secured and unsecured debt
Year
Total Debt
Secured Debt
Unsecured Debt
2008
996820254
969967830
13426212
2007
715018431
693138323
21880108
2006
454092269
423658613
30433656
2005
338938569
295062090
43336479
Sources of secured and unsecured debt raised by the company
RATIO ANALYSIS ( Ratios related with the Profitability and Liquidity of KML)
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
Different parties are interested in knowing about the various ratios of the company.
The following are various parties and their related interest:
Investors
To help them determine whether they should buy shares in the business,
hold on to the shares they already own or sell the shares they already
own. They also want to assess the ability of the business to pay dividends.
Lenders
to determine whether their loans and interest will be paid when due
Managers
might need segmental and total information to see how they fit into the
overall picture
Employees
information about the stability and profitability of their employers to
assess the ability of the business to provide remuneration, retirement
benefits and employment opportunities
Suppliers and other businesses supplying goods and materials to other businesses will read
their accounts to see that they don't have problems: after all, any supplier
trade creditors
wants to know if his customers are going to pay their bills!
Customers
the continuance of a business, especially when they have a long term
involvement with, or are dependent on, the business
Governments and
their agencies
the allocation of resources and, therefore, the activities of business. To
regulate the activities of business, determine taxation policies and as the
basis for national income and similar statistics
Local community
Financial statements may assist the public by providing information about
the trends and recent developments in the prosperity of the business and
the range of its activities as they affect their area
Financial analysts
they need to know, for example, the accounting concepts employed for
inventories, depreciation, bad debts and so on
Environmental
groups
many organisations now publish reports specifically aimed at informing
us about how they are working to keep their environment clean.
Researchers
researchers' demands cover a very wide range of lines of enquiry ranging
from detailed statistical analysis of the income statement and balance
sheet data extending over many years to the qualitative analysis of the
wording of the statements
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
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
CLASSIFICATIONS 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 relationship 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.
2. 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.
The various groups will be interested in different ratios:
Interest Group
Ratios to watch
Investors
Return on Capital Employed
Lenders
Gearing ratios
Managers
Profitability ratios
Employees
Return on Capital Employed
Suppliers and other trade creditors Liquidity
Customers
Profitability
Governments and their agencies
Profitability
Local Community
This could be a long and interesting list
Financial analysts
Possibly all ratios
Environmental groups
Expenditure on anti-pollution measures
IN THE VIEW OF FUNCTIONAL CLASSIFICATION THE RATIOS ARE
1. Liquidity ratio
2. Leverage ratio
3. Activity ratio
4. Profitability ratio
We will discuss in details the Liquidity and Profitability Ratios as these are relevant to my study.
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 shortterm 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 LIQUID 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.1 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. 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 to capital =
Reserves& surplus
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 ratio =
Operating profit
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.
Price – Earning Ratio =
Market Price per Share
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 INVESTMENTS
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.
Ratios Of
KML
LIQUIDITY RATIO
1. CURRENT RATIO
(Amount in Rs.)
Current Ratio
Year
Current Assets
Current Liabilities
Ratio
2005
383222867
253066203
1.51
2006
384183841
255701566
1.50
2007
518352735
340425415
1.52
2008
981970741
688935052
1.42
2. QUICK RATIO
(Amount in Rs.)
Quick Ratio
Year
Quick Assets
Current Liabilities
Ratio
2005
200637827
253066203
0.79
2006
179181676
255701566
0.70
2007
196523103
340425415
0.58
2008
457150547
688935052
0.66
3. ABOSULTE LIQUIDITY RATIO
(Amount in Rs.)
Absolute Cash Ratio
Year
Absolute Liquid Assets
Current Liabilities
Ratio
2005
17293347
253066203
6.7
2006
1598190
255701566
6.2
2007
1738793
340425415
0.5
2008
1581744
688935052
0.2
PROFITABILITY RATIOS
GENERAL PROFITABILITY RATIOS
4. NET PROFIT RATIO
(Amount in Rs.)
Net Profit Ratio
Year
Net Profit After Tax
Income from Sales
Ratio(%)
2005
21919419
1415228253
1.5
2006
29675318
1457487364
2.1
2007
30091531
1872953336
1.6
2008
83901327
3460757092
2.4
5. OPERATING PROFIT
(Amount in Rs.)
Operating Profit
Year
Operating Profit
Income From Sales
Ratio
2005
1415228253
2006
1457487364
2007
1872953336
2008
3460757092
6. RETURN ON TOTAL ASSETS RATIO
(Amount in Rs.)
Return on Total Assets Ratio
Year
Net Profit After Tax
Total Assets
Ratio(%)
2005
21919419
841446948
2.6
2006
29675318
996622755
2.9
2007
30091531
1053968849
2.8
2008
83901327
1643477509
5.1
7. RESERVES & SURPLUS TO CAPITAL RATIO
(Amount in Rs.)
Reserves & Surplus To Capital Ratio
Year
Reserves & Surplus
Capital
Ratio
2005
152430709
54300000
2.8
2006
182106027
3.5
2007
212197558
54300000
54300000
292829576
54300000
5.4
2008
3.9
OVERALL PROFITABILITY RATIOS
8. EARNINGS PER SHARE
(Amount in Rs.)
Earnings Per Share
Year
Net Profit After Tax
2005
21919419
2006
No of Equity Shares
Ratio
4.1
29675318
5430000
5430000
2007
30091531
5430000
5.5
2008
83901327
5430000
15.4
5.5
14. RETURN ON INVESTMENT
(Amount in Rs.)
Return on Investment
Year
Net Profit After Tax
Share Holders Fund
Ratio (%)
2005
21919419
206730709
10.6
2006
29675318
236406027
12.5
2007
30091531
266497558
11.3
2008
83901327
347192576
24.2
BALANCE
SHEET &
P&L
ACCOUNT
Balance sheet
2008
2007
2006
2005
54000000
54300000
54300000
54300000
292829567
212197558
182106027
152430709
969967830
693138323
423658613 2950620090
b)Unsecured Loans
13426212
21880108
30433656
43336479
3)Deferred Tax Liability
90658186
74537038
54637691
45107053
1421181804 1056053027
745135987
590236331
SOURCES OF FUNDS
1) Share capital
a)Capital
b)Reserves & Surplus
2) Loan Funds
a)Secured loans
TOTAL
APPLICATION OF FUNDS
1)Fixed Assets
a)Gross Block
1373378562 1206374464
888991905
789600274
b)less : depreciation
527895377
461633635
413246467
423492469
c)Net Block
845483185
744740629
475744628
366107805
d)Capital Work In Progress
232671238
61820220
118507580
72007622
e)Preoperative Expenses Pending
22273037
-------
-------
-------
2)INVESTMENTS
25014360
69480680
19147689
19147680
11105
10049
27673
115149
a)Interest Accrued
364984656
194784310
128679827
137256202
b)Inventories
455568803
194032428
177583486
183344480
1570639
1728744
1570517
17178198
159835538
127797204
76322338
45328828
671551795
329421414
247794086
239221600
17383257
11004001
7907580
13844603
293035689
177927321
128482275
130156664
2704295
2084178
3253824
2816560
1421181804 1056053027
745135987
590236331
2006
2005
3)CURRENT ASSETS LOANS &
ADVANCES
c)Sundry Debtors
d)Cash & Bank Balances
e)Loans & Advances
LESS: Current Liabilities &
Provisions
a)Current Liabilities
b)Provisions
Net Current Assets
4)MISCELLANEOUS EXPENSES
TOTAL
PROFIT & LOSS ACCOUNT
PARTICULARS
2008
2007
INCOME
Turnover
Less : Excise Duty
Net Sales
Add : Other Incomes
TOTAL
4345858766 2531564274 1900930309 1858778891
885101678
658610938
443442945
443550638
3460757092 1872953336 1457487364 1415228253
165317436
88671206
63728019
62350512
3626074528 1961624542 1521215383 1477578765
EXPENDITURE
Cost Of Materials
Personnel Expenditure
Financial Charges
Other Expenses
Depreciation
Miscellaneous Expenses Written Off
TOTAL
PROFIT BEFORE TAX
2947670855 1513611425 1140192525 1053982898
224255639
160813185
136784980
128649899
89982381
53862177
29071944
22975964
166160070
114697924
115261944
150336804
66544087
57992081
52924251
76912287
935668
2222871
2800066
2697140
3495548700 1903199663 1477035700 1435554992
130525828
58424878
44179683
42023772
Current Tax
26669080
6600000
3965700
18435000
Deferred Tax
17804588
19899347
9530638
1669353
2050833
1744000
1008027
-------
100000
90000
-------
-------
Net Profit After Tax
83901327
30091531
29675318
21919419
Profit Brought Forward
92387557
62296026
32620709
19231159
176288884
92387557
62296027
41150578
Fringe Benefits
Wealth Tax
Profit Carried to Balance Sheet
Objectives
Of The
Study
Primary objectives :
 To study the impact of debt (bifercated into secured and unsecured debt) raised during
2005-2008 on profitability of the firm.
 To study the impact of debt (bifercated into secured and unsecured debt) raised during
2005-2008 on liquidity of the firm.
Secondary objectives :
 To study the financial position of the company.
 To study the various ratios of the company in the year 2005 to2008.
THEORITICAL
FRAMEWORK
CONSTRUCT
Impacts of debt rose during 2005-2008 on the profitability and liquidity of the company.
VARIABLES
 Independent Variable: Debt (bifercated into secured and unsecured debt).
 Dependent Variable: Profitability, Liquidity.
Literature
Review
CONCEPTUAL LITERATURE
CONCEPTUAL LITERATURE is that which relates with concepts & theories. Help from different books should be
taken for different concepts & theories.
EMPIRICAL LITERATURE
Empirical literature consists of study made by others in the same field.

PUBLISHED DATA IN NEWSPAPER

BOOKS & MAGAZINES AVAILABLE

DISCUSSION WITH PEOPLE OF ORGANIZATION
The literature review includes the academic books,
internet access etc.
1. Donald R. Cooper and Pamela S. Schindler1, “Business Research Methodology” Eighth
Edition’ Tata McGraw Hill Publishing Company Limited, New Delhi. Chapter 3, Page
82, 86, 87. Chapter 4, Page 101,102 (helped in research design)
2. Kothari C.R., “Research Methodology Methods and Techniques”2 (Second Edition) New
Age International Publishers, Ansari Road, Daryaganj, New Delhi-110002. Chapter 4,
Page 55-58. Chapter 6, Page 95,100,111. (Methods of data collection, collection of data
and collection of secondary data” are referred before the data collection”.)
3. Jain, ,T.R., and Aggarwal, Dr. S.C., “Statistics For M.B.A”3,VK publication, PP1-3 Part
b, , 2nd Edition ,PP 131-134 Part (“Correlation” is studied to use these test in study.)
4. “Gupta S.P.””STATISTICAL METHODS”. The information regarding the statistical
tools and their limitations in different fields the research is given in this section. This
section explains why to use regression and what are the situations in which regression can
be used and what is the meaning of regression. Statistics”, 30th edition, “Sultan Chand &
sons” (page no: 378-418).
5. Statistical Methods- Sultan Chand Publication The information regarding the statistical
tools and their limitations in different fields the research is given in this section. This
section explains why to use trend analysis and what are the situations in which regression
can be used, and what does regression means
6. Maheshwari S.N “Management accounting & financial control” the information
regarding the mean of inventory capital management. The basic idea to take that
Project I have got from this book” (page no134-145).
7. Khan M.Y. & Jain P.K. “Financial Management” the information regarding the inventory
management etc.,”Financial Management”,3th edition(page no-4.75).
8. Beri G.C. - Marketing Research 3rd edition: This book helped in understanding the
different research designs and statistical tools used here.
9. Chandra Parshant,” Financial Management”5th edition,(pageno-82-83)
10. “Jain T.R. & Aggarwal S.C” Statistics for MBA, V.K. Publication(Page no.59-88)
11. Patel Rashna( 2002),“ India’s strengths –Tremendous sourcing centers”, Home Fashion ,
Servewell Printers, Mumbai, Vol-1, No.1,pp-08-09.
12. Gupta S.P. and Gupta M.P., “Business Statistics”4, Twelth Edition, Sultan Chand and
Sons Publications. PP 237-241,628-629 (test hypotheses testing).
13. Murray R. Spiegel, “Theory and Problem of Statistics”5, Third edition, Tata Mc Graw
Hill Publication, Chapter 12, Pg No.45-48 (correlation and regression)
14. khan and Jain,” FInancial Management”, ed 2003., McGraw Hill Publishing Co. Ltd
NEW DELHI10
15. Leopold A. Bernstein & John J. Wild
1,
“Analysis of Financial Statements” ,
Revealed application of special cash flow adequacy ratio& comparative financial
analysis.
16. Wachonicz Jr. John M. & Van Horme James C. “Financial Management” ed. 1993. (PHI)
Eight Edition , Mumbai11
17. Annual Report 2005-06 of Chinar Textiles Industries Limited “The balance sheet and
profit & loss account of Chinar Textiles Industries Limited. And corporate governance is
an integral element of the company’s value system, management ethos and other business
practice”.
18. Annual Report 2006-07of Chinar Textiles Industries Limited15, “The information
regarding the balance sheet and profit & loss account for the year 2006-07.”
Research
Methodology
RESEARCH METHODOLOGY
Research is a systematic and continuous method of defining a problem, collecting the facts and
analyzing them, reaching conclusion forming generalizations.
Research is defined as “a scientific & systematic search for pertinent information on a specific
topic”. Research is an art of scientific investigation. Research is a systemized effort to gain new
knowledge. It is a careful inquiry especially through search for new facts in any branch of
knowledge. The search for knowledge through objective and systematic method of finding
solution to a problem is a research.
THE RESEARCH PROCESS:
1
OBSERVATION
Broad area of
research interest
identified
3
PROBLEM
DEFINITION
Research
Problem
Delineated
4
THEORETICAL
FRAMEWORK
5
GENERATION
OF
HYPOTHESES
Variables clearly
identified and
labelled
2
PRELIMINARY
DATA
GATHERING
Interviewing
Literature Survey
7
DATA
COLLECTION,
ANALYSIS AND
INTERPRETATION
6
SCIENTIFI
C
RESEARCH
DESIGN
8
DEDUCTION
Hypotheses
substantiated?
Research
question
answered?
NO
Yes
9
Report
writing
10
Report
Presentat
ion
11
Manager
ial
decision
making
So we should consider the following steps in research methodology12:
Problem statement
Research design
Sample design
Data collection
Organization Of Data
Presentation Of Data
Analysis and Interpretation of data
PROBLEM STATEMENT
The research problems, in general, refers to sum difficulty with a researcher experience in the
contest of either a particular or a theoretical situation and want to obtain a salutation for same.
The present report has been undertaken to know the impact of debt raised during 2005-2008 on
the profitability and liquidity of KML.
RESEARCH DESIGN
A research is the arrangement of the conditions for the collections and analysis of the data in a
manner that aims to combine relevance to the research purpose with economy in procedure. In
fact, the research is design is the conceptual structure within which research is conducted; it
constitutes the blue print of the collection, measurement and analysis of the data. As search the
design includes an outline of what the researcher will do from writing the hypothesis and its
operational implication to the final analysis of data.
The design is such studies must be rigid and not flexible and most focus attention on the
following;
What is the study about?
Why is the study being made?
Where will the study be carried out?
What type of data is required?
Where can be required data be found?
What period of time will the study include?
What will be sample design?
What techniques of data collection will be used?
How will the data be analyzed?
In what style will the report be prepared?
Research Design can be categorized as12:
TYPES OF RESEARCH
DESIGN
EXPLORATORY
RESEARCH
DESCRIPTIVE &
DIAGONOSTIC
RESEARCH DESIGN
EXPERIMENTAL
RESEARCH
DESIGN
The present study is descriptive in nature, as it seeks to discover ideas and insight to bring out
new relationship. Research design is flexible enough to provide opportunity for considering
different aspects of problem under study. It helps in bringing into focus some inherent weakness
in enterprise regarding which in depth study can be conducted by management.
SAMPLING & SAMPLING DESIGN:
A sample design is a definite plan for obtaining a sample from the sampling frame. It refers to
the technique or the procedure that is adopted in selecting the sampling units from which
inferences about the population is drawn. Sampling design is determined before the collection of
the data.
Several decisions have to be taken in context to the decision about the appropriate sample
selection so that accurate data is obtained and efficient results are drawn.
Following questions have to be considered while sampling design
What is the relevant population?
What is the parameter of interest?
What is the sampling frame?
What is the type of sample?
What sample size is needed?
How much will it cost?
RESEARCH DESIGN:
Research design involves a series of rational decision making benefits at each point from such
sophisticated design to ensure accuracy, confidence and commensurate with large investment of
resources.
Purpose of study:
 Exploratory
 Descriptive
 Hypothesis testing
The purpose of my study is descriptive. A descriptive study is undertaken in order to ascertain be
able to describe the characteristics of variables of interest in a situation.
It is also hypothesis testing also. Because studies that engage in hypothesis testing usually
explain the nature of certain relationship or establish the difference among groups or
independence of the two or more factors in the situation.
Types of investigation:
Establishing
 Casual relationship
 Correlation
 Group differences, ranks etc.
Type of investigation in my study will be correlation. Because my main motive is to check
whether there is significant relationship between the debt raised and profitability and liquidity of
the company. So investigation type will be correlation type.
Extent of researcher interference in study:
 Minimal: studying events as they normally occurs
 Manipulation and/or control and/or simulation
The extent of research interference in my study will be minimal. I’ve to just collect and analyze
the data for findings. There will be no need for simulation tests etc.
Study setting:
 Contrived
 Non-contrived
Measurements and measures:





Operational definition
Items (measures)
Scaling
Categorization
Coding
Units of analysis (population to be studied)
 Individuals
 Dyads
 Groups
 Organization
 Machines etc.
The units of analysis or the population that will be studied in my research will be the balance
sheet, P&L account, cash flow statements, etc.
Sampling design: It is a definite plan for obtaining a sample from sampling frame. It is
determined before collection of data.
Sampling size for my study will be the data of last four years i.e from 2005 to 2008.
Time horizon:
 One shot (cross sectional)
 Longitudinal
The time horizon for my study is the four years time period.
Data collection method:
 Primary data
 Secondary data
 Interviewing
 Questionnaires
 Observations
 Unobtrusive methods.
My data collection is based on secondary data i.e. from websites, books, prowess, company’s
balances sheets, etc.
Data analysis
 Feel for data
 Goodness of data
 Hypothesis testing
For data analysis mostly the hypothesis testing will be used. By using SPSS Software it will be
performed. Statistical tools will also be used. Analytical tools will also be used.
Hypothesis
Testing
With the help on ANNOVA we will use the following hypothesis

Null Hypothesis: there’s no significant impact of secured debt on profitability of the
company.
Alternate Hypothesis: there’s significant impact of secured debt on profitability of the
company.

Null Hypothesis: there’s no significant impact of unsecured debt on profitability of the
company.
Alternate Hypothesis: there’s significant impact of unsecured debt on profitability of the
company.

Null Hypothesis: there’s no significant impact of secured debt on liquidity of the
company.
Alternate Hypothesis: there’s significant impact of secured debt on liquidity of the
company.

Null Hypothesis: there’s no significant impact of unsecured debt on liquidity of the
company.
Alternate Hypothesis: there’s significant impact of unsecured debt on liquidity of the
company.
Analytical and
Statistical Tools
Correlation
1) Between secured debt and liquidity
Correlations
secured_debt
secured_debt
Pearson Correlation
Liquidity
1
Sig. (2-tailed)
.000
N
Liquidity
**
.860
2381826856
2.E9
**
1
Pearson Correlation
.860
Sig. (2-tailed)
.000
N
2381826856
2.E9
**. Correlation is significant at the 0.01 level (2-tailed).
High degree of correlation exists between secured debt and liquidity of the company i.e. 86%.
2) Between unsecured debt and liquidity
Correlations
Liquidity
Liquidity
Pearson Correlation
unsecured_debt
1
Sig. (2-tailed)
N
unsecured_debt
Pearson Correlation
**
.324
.000
2.E9
2381826856
**
1
.324
Sig. (2-tailed)
.000
N
2.E9
2381826856
**. Correlation is significant at the 0.01 level (2-tailed).
Low degree of correlation exists between unsecured debt and liquidity of the company i.e.
32.4%.
3) Between secured debt and profitability of the company.
Correlations
secured_debt
secured_debt
Pearson Correlation
profitability
**
1
.891
Sig. (2-tailed)
.000
N
profitability
2381826856
2.E9
**
1
Pearson Correlation
.891
Sig. (2-tailed)
.000
N
2381826856
2.E9
**. Correlation is significant at the 0.01 level (2-tailed).
High degree of correlation exists between secured debt and liquidity of the company i.e. 89.1%.
4) Between unsecured debt and profitability of the copany
Correlations
unsecured_debt
unsecured_debt
profitability
1
.378
Pearson Correlation
Sig. (2-tailed)
N
profitability
.000
2381826856
2.E9
**
1
Pearson Correlation
.378
Sig. (2-tailed)
N
**
.000
2381826856
2.E9
**. Correlation is significant at the 0.01 level (2-tailed).
Low degree of correlation exists between unsecured debt and profitability of the company i.e.
37.8%.
ANOVA
1) Let null hypothesis be that there is no significance effect of secured debt on the profitability
of the company.
b
ANOVA
Model
1
Sum of Squares
df
Mean Square
Regression
1.908E15
1
1.908E15
Residual
5.431E14
2
2.716E14
Total
2.451E15
3
F
Sig.
7.026
.118a
a. Predictors: (Constant), secured_debt
b. Dependent Variable: profitability
As the level of significance is greater than 0.05, we reject our null hypothesis and accept our
alternate hypothesis i.e. secured debt effects the profitability of the company.
2) Let null hypothesis be that there is no significance effect of unsecured debt on the
profitability of the company.
ANOVA
Model
1
Sum of Squares
df
Mean Square
Regression
3.018E14
1
3.018E14
Residual
2.149E15
2
1.075E15
Total
2.451E15
3
F
Sig.
.281
a
.649
a. Predictors: (Constant), unc
b. Dependent Variable: profit
As the level of significance is greater than 0.05, we reject our null hypothesis and accept our
alternate hypothesis i.e. unsecured debt effects the profitability of the company.
3) Let null hypothesis be that there is no significance effect of secured debt on the liquidity of the
company.
ANOVA
Model
1
Sum of Squares
df
Mean Square
Regression
9.956E18
1
9.956E18
Residual
4.396E18
2
2.198E18
Total
1.435E19
3
F
Sig.
.167a
4.530
a. Predictors: (Constant), secured debt
b. Dependent Variable: Liquidity
As the level of significance is greater than 0.05, we reject our null hypothesis and accept our
alternate hypothesis i.e. secured debt effects the liquidity of the company.
4) Let null hypothesis be there is no significance effect of unsecured debt on liquidity.
ANOVA
Model
1
Sum of Squares
Regression
Df
Mean Square
9.373E17
1
9.373E17
Residual
1.341E19
2
6.707E18
Total
1.435E19
3
F
Sig.
.140
a. Predictors: (Constant), unc
b. Dependent Variable: liquid
As the level of significance is greater than 0.05, we reject our null hypothesis and accept our
alternate hypothesis i.e. unsecured debt effects the liquidity of the company.
.744a
MULTIPLE REGRESSION
1) Multiple Regression between secured debt, unsecured debt and liquidity of the company.
b
Model Summary
Std. Error of the
Model
R
R Square
a
1
.833
Adjusted R Square
.694
Estimate
.081
2.09628E9
a. Predictors: (Constant), unsecured_debt, secured_debt
b. Dependent Variable: Liquidity
Coefficientsa
Standardized
Unstandardized Coefficients
Model
1
B
(Constant)
Std. Error
-2.356E9
2.900E9
secured_debt
6.055
4.226
unsecured_debt
2.045
113.104
a. Dependent Variable: Liquidity
Coefficients
Beta
t
Sig.
-.812
.566
.830
1.433
.388
.010
.018
.988
2) Multiple Regression between secured debt, unsecured debt and profitability.
Model Summaryb
Model
R
1
R Square
.887a
Adjusted R Square
.787
Std. Error of the Estimate
.362
2.28304E7
a. Predictors: (Constant), unsecured_debt, secured_debt
b. Dependent Variable: profitability
a
Coefficients
Standardized
Unstandardized Coefficients
Model
1
B
(Constant)
Std. Error
-1.147E7
3.159E7
secured_debt
.081
.046
unsecured_debt
.253
1.232
a. Dependent Variable: profitability
Coefficients
Beta
t
Sig.
-.363
.778
.853
1.767
.328
.099
.205
.871
Reliability Analysis
Cronbach’s alpha is most commonly used reliability coefficients, which is based on the average
correlation of items within a test if the items are standardized. If the items are not standardized, it
is based on the average covariance among the items. Because Cronbach’s alpha can be
interpreted as a correlation coefficient, it ranges in value from 0 to 1.
Reliability Statistics
Cronbach's
Alpha
N of Items
.045
4
Here the value of our Cronbach’s alpha is 4.5% which is less then 5% I means that our data is
reliable.
Limitations
Except the supreme power, the Almighty, no one is impeccable and prowess enough to
accomplish anything without any faults and limitations. A research is no exception. No study is
devoid of certain shortcomings. Some problems encountered in this study are under mentioned:
 Time Constraints:
Time was a bit short to fathom into the depth of the study. But still all efforts to the best possible
extent have been made to collect the data.
 Data collection Constraints:
Since data used is secondary in nature, this poses the constraints on the validity and reliability of
the data.
 Secrecy of Internal Data
In today’s day the companies are very sensitive regarding their internal data, this proved
a hindrance to my study.
 Period of Analysis
Sample size of four years was taken by me i.e. from 2008-2009 which was sufficient but
a bigger sample would have helped to reach too more precise findings.
Findings
Recommendations