SUMMER INTERNSHIP PROJECT (SIP)

AT
EC INDUSTRIES

A STUDY ON
PROFITABILITY ANALYSIS OF EC INDUSTRIES

SUBMITTED BY
PRASHANT .A. AMBSASANA
MBA SEM – III
ENROLLMENT NO : 117700592001

GUIDED BY
Dr. AJAY SHAH

ACADEMIC YEAR
2011-2013

SUBMITTED TO
JASUKHLAL VADHAR INSTITUTE OF MANAGEMENT
STADIES (JVIMS)
BIPIN T. VADHAR COLLEGE OF MANAGEMENT
JAMNAGAR

AFFILITED TO
GUJARAT TECHNOLOGICAL UNIVERSITY
AHEMDABAD
 DECLARATION

I undersigned Prashant .A. Ambasana a student of MBA 3rd semester declared that I have
prepared this project report on “summer training and research on analysis of financial statement
at EC Industries under Mr. V.D. Gogiya, guided by Ajay Shah of JVIMS.

I also declare that this project report is my own preparation and not copied from anywhere else.

Prashant .A. Ambasana

Enroll No.: 117700592001
 PREFACE

It gives me great pleasure to write about this company which is especially prepared with the aim
to make the learning process complete with practical knowledge in the education program.

I had visited EC Industries at Jamnagar. The project has covered the main point which we felt
necessary and also given by the company incentives. So from this project you can get raw idea of
the huge plant of EC Industries. I hope this project will also receive its generous and kind
encouragement.
 Acknowledgement

It is my pleasure to present this Industry. Getting this report to your hands was a team effort; in
addition to our contribution we got support from members of EC Industries. I am very happy to
express my gratitude towards EC Industries for giving me opportunity to work with on this report.
I must express my thanks to Mr. V.D. Gogiya, Managing Director of EC Industries who despite
remaining very busy has taken efforts to me throughout this training spending their valuable time and
efforts.

And of course I am very much thanks to our honorable Dy. Director Dr. Ajay Shah for giving me
opportunity and his guidance has help me through our preparing this project report. He has also
provided me a valuable suggestions and excellence guidance about this training, which proved very
helpful to me to utilize my theoretical field.

At last I am thankful to all the employees of the organization and my friends, to all known and
unknown individuals who have given me their constructive advise, educative suggestion, co
operation and motivation to prepare this report.
 TABLE OF CONTENTS

[Link] PARTICULARS PAGE

NO.

1. EXECUTIVE SUMMARY 1

2. INDUSTRY DETAILS 3

 INTRODUCTION 3

 MODERN ERA 4

 GLOBAL PRESENCE 4

3. COMPANY DETAILS 5

 HISTORY & DEVELOPMENT 6

 COMPANY PROFILE 8

 OBJECTIVE OF COMPANY 9

 MISSION & VISION 10

 RECOGNITON & AWARDS 11

4. ORGAN IZATIONAL STUDY 12

 FINANCE DEPARTMENT 13-16

 MARKETING DEPARTMENT 17-28

 PERSONNEL DEPARTMENT 29-32

 OPERATIONS DEPARTMENT 33-38

5. COMPETITOR DETAILS 39-41

6. REGULATING FACTORS 42-43

7. ANALYSIS OF FINANCIAL STATEMENTS 44

 CURRENT FINANCIAL POSTION 45

 CONCEPTUAL FRAMEWORK 45
  USERS OF FINANCIAL STATEMENTS 46

8. LITERATURE REVIEW 47-53

9. RESEARCH METHODOLOGY 54

 INTRODUCTION 55

 RESEARCH DESIGN 56

 RESEARCH OBJECTIVE 57

 DATA COLLECTION METHOD 58

10. STUDY ANALYSIS OF VARIOUS RATIO’S 59-61

11. DATA ANALYSIS AND INTERPRETATION 62-67

12. FINDINGS 68

13. SUGGESTIIONS 69

14. CONCLUSION 70

15. APPENDICES 71-72

16. BIBLIOGRAPHY 73

17. COMPANY’S BALANCE SHEET 74-77

18. COMPANY’S PROFIT & LOSS A/C 78-83

 Executive Summary

India is considered as growing Economy. Compare to the past, the Economy of India is growing
faster and faster. And in India the Jamnagar is known as reputed brass part manufacturing centre
for more than half a century. Indian foundry industry is the sixth largest industry in the world
after (1) USA (2) China (3) Japan (4) Russia and (5) Germany. Indian foundry is the second
largest player after china in term of units and numbers of people employed. There are 4500
recognized foundry units including small, medium and large scale sectors in all over the country
and approx 90% foundry units are in the small scale. Indian foundry industry has a sizeable
export turnover at Rs. 2000Cr. per year.

In recent years EC INDUSTRIES has emerged as one of the major players in the manufacturing
industries in Jamnagar, specializing in Brass Sanitary Fittings, Brass Ball Valves.

The project throws a glimpse upon the Financial and operational area of EC Industries by
computing the various Ratio’s and studying the operational efficiency of EC INDUSTRIES. In
this project an entire Organizational Study has been performed to learn about the working of EC
INDUSTRIES.

The main objectives are :

 To study the Profitability of the company

 The main objective of the project is to conduct Analysis of Financial Statement of EC
Industries and also to study about the entire working of EC Industries involving all its
departments like Marketing Department, Operations Department, and Recruitment
Department etc.

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To achieve these objectives, Ratio Analysis was undertaken and the following ratio’s were
calculated:
 Gross Profit Ratio
 Net Profit Ratio
 Current Ratio
 Acid Test Ratio
 Liquidity Ratio

Methodology:

Descriptive research design has been used and data are collected through secondary data
collection method.
I have use Microsoft Excel for the data analysis.

Limitations of Study:

This research is based on the secondary data and during the study of ratio analysis there are so
many data required from various department which was not disclosed by the respective
department, for example budget of the current financial year. Also in-experience of the
researcher, lack of competitor’s financial details, and research restricted only to Balance Sheet
and P&L A/C have proved to be limitations for the study.

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 Introduction
Industry Detail

Brass is an alloy (mixture) of copper and zinc and with the addition of small amount of other
elements may be added to the alloy for special uses. The discovery of metal changed the lives of
the people in the ancient world. Metal and its alloy made agriculture easier, providing farmers
with more efficient tools to work their land. Armies that possessed metal knives, swords, and
shields were no match for those that did not. The first two metal and its alloy widely used by
humans, copper (and its alloy brass) and gold are still important in people’s lives today.

As per account the brass parts industry in Jamnagar above 60 years old. It’s started around the
late 1940s. Jamnagar is known as reputed brass parts manufacturing centre for more than half a
century. Another major landmark in the history of brass part industry in Jamnagar was the
creation of first state sponsored industrial estate in Jamnagar viz. GIDC Phase -I in the year
1969. In 1983 the government of Gujarat through its Gujarat industrial development corporation,
launched the creation of GIDC Phase – II. These public and private industrial estates gave real
boost to brass industry in Jamnagar.

The economy of Jamnagar inextricably linked with that of the brass part industry. At least 70
percent of the machine brass components manufacture in the country comes from Jamnagar. The
major export destinations are: Australia, Canada, China, and France, Germany, Italy, Kenya,
South Africa, UAE, UK and US.

The enormous growth in world copper demand between 1850 and 2000, this growth was initiated
by a series of advances in copper using technologies, Whereas total demand at the end of the 19th
century was about 500,000 mT. 1992 forecasts of world copper consumption were 14,630,000
mT. for the year 2000 and 17, 900,000mT. for 2005.

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The Modern Era

Toward the end of the 20th century, consumption of primary copper products had climbed to a
yearly average (1986-1990 figures) of 8.9 million mT. The 1994 world total consumption
reached 13.4 million mT. For the period 1996-2005, copper consumption has been estimated to
grow at an average rate in excess of 3%. The largest increases are anticipated to occur in
construction, transportation and the electrical and electronics industries. Jamnagar’s brass
industry, which has seen its fortunes remarkably since the last decade The industry made it to the
government’s good books after it recorded an unprecedented growth. Subsequently, the
government is mulling to set up a Technology Demonstration Cum Training Centre (TDTC) in
Jamnagar.

Global Presence :
The brass parts manufactured in Jamnagar finds its place in the overseas market as well.
Jamnagar is one of the largest automobile and cycle tube valve manufacturers in the world.
Because of its precision and quality, these tube valves are exported in European and North
American markets. The products are marketed through various marketing channels to countries
like U.K., USA, Canada, Middle East, Europe, Africa, Sri Lanka, Pakistan, Indonesia, Malaysia,
Singapore, Japan, Bangladesh, Italy, Germany, Australia, France, Norway, Saudi Arabia,
Yemen and more.

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Company
Detail

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 HISTORY & DEVELOPMENT

EC Industries was established in the year 1997 at the farthest western end of India at Jamnagar -
a city, famous the world over as Brass city. Locally, the brass industry serves as an barometer to
its economy. And here, we are undoubtedly placed at the top with an in-house installed capacity
of around 1000 MT per month, achieved with state-of-the-art technology. Today, EC Industries
is a brand name in the Brass ball valves, Brass sanitary fittings and Brass pipe fittings. And this
gets justified by their wide clientele base spread at the length and breadth of India with a
substantial overseas market.

The concept of manufacturing Quality Brass ball valves, Brass sanitary fittings and Brass pipe
fittings was early implemented by EC Industries from the year 1997.

EC Industries was established and set up by Mr. V. D. Gojiya in the year 1997.

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Significantly, at EC Industries they have a very negligible mobility ratio of their staff, which
evolved into a dedicated lot having keen interest in all aspects of our operations. What it means
to you is that, it ensures that you receive the top grade product, on time and at a fair price; and
further cost effective solutions to most of your business query. The Total Quality Management
instills a great sense of responsibility, competitiveness and harmony among all the faculties of
personnel department.

Today, EC Industries is a brand name in the Brass Ball Valves and Brass Sanitary Fittings
industry. And this gets justified by our wide clientele base spread at the length and breadth of
India with a substantial overseas market.

EC Industries manufactures Brass Ball Valves, Copper Manifold, Brass Inserts, Brass Pex
Fittings, Brass Sanitary Fittings, Brass Pipe Fittings, Brass Building Hardware, Brass
Compression fittings, Brass Fasteners, Brass Turned Parts, Brass Flare Fittings, and Brass Hose
Connectors.

The product manufactured by EC Industries is further used in:

Automobile industry

Manufacturing Spectacles and Watches

Electrical industries

Hardware industries

Engineering industries

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 Company Profile
Name: EC Industries

Address: GIDC-III, PLOT NO. 4239 / 4240,

JAMNAGAR - 361004,

GUJARAT, INDIA.

Phone: +91 288-2911458

E-mail: info@[Link]

Website: [Link]

Year of Establishment: 1997

Board of directors: Mr. V.D. Gogiya Chairman & MD)

Mr. Hardik .V. Gogiya (CEO)

Working Hours: 8 Hours

No. of employees: 120

Bankers: State Bank of India & HDFC Bank Ltd.

Size of the Unit: Small Scale Industry

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 Objective of the company
Every organization needs to set up specific and well-defined objectives to be successful in the
competitive business environment. Establishment of the objectives is not only restricted to the
overall company but at the same time the objectives of the individual department and individual
employees as well as workers must also be well-defined. This will ensure the co-ordination in the
achievement of the overall goals of the company.

Let’s see what the primary objectives of the EC Industries are :

 To establish the higher standard of business ethics through fair business practice.

 Reduce deviation in committed schedules for new development item.

 To attain a level of customer satisfaction with maximum customer loyalty by giving

value for money, in times supply & solving customer complaints to their satisfaction.

 To continually improve upon the manufacturing processes & work environment through
total employee involvement.

 To constant quest for standard quality product.

 To innovative effort with blend of technology to give quality product.

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 MISSION & VISION
 Mission Strive for the continual improvement in the quality through application of best
and latest technology in quality up gradation.

 Building highest level of employee motivation through their involvement in decision

making process and through appreciation of their efforts.

 To attain a level of customer satisfaction with maximum customer loyalty by giving

value to the money, in time supplies and solving customer complaints.

 To have best possible co-ordination among personnel of different department.

VISION

 Company is committed to produce and supply quality copper and brass fittings,
continuously focusing on evolving needs of market.

 Company would continuously understand and fulfill the changing needs of customers and
generate greater customer satisfaction and loyalty.

 Company would strive for creating a corporate image that would inspire confidence
through its values and transparency. We at EC Industries would continuously understand
& fulfill the changing needs of customers & generate greater customer’s satisfaction &
loyalty.

 We at EC Industries would strive for creating a corporate image that would inspire
confidence through its value & transparency.

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Recognition and Rewards

[1] It is ISO 9001 : 2008 Certified Company.

[2] SSI certificate in the years of 1999.
[3] ISO certificate in the year of 2001.
[4] Brand "ECV" in the year of 2005.
[5] EC Industries has applied for ISI certificates for water and gas fittings and will achieve it
very soon.

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Organizational
Study

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Finance
Department

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 Introduction

Finance is blood for EC INDUSTRIES. Without finance EC INDUSTRIES would not have
succeeded.

“Financial management is the effective & efficient utilization of financial resources. It

means creating balance among financial planning, procurement of funds, profit
administration & sources of funds.”

For EC INDUSTRIES to manage the finance properly and make the financial management
effective special finance department is created which mainly perform the function like:

Financial planning

Raising the funds

Allocation of funds

Financial control

Acquisition of funds

Building of any business enterprise or any type of work is based on sound and efficient financial
management. Financing is an important function of any business undertaking. It deals with the
acquisition of funds and its effective utilization. So, acquiring of funds is the first and foremost
of any business.

EC Industries refers to the composition of the capital structure. It means the decision regarding
the proportion of owned and borrowed capital. Around 80% of the capital utilize in the
organization by EC INDUSTRIES is its own capital. And around 20% of the capital is it’s
borrowed.

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 Utilization of funds
The fund acquired by the EC INDUSTRIES is utilized in management of fixed capital and
management of working capital which is given below.

Management of fixed capital

EC INDUSTRIES does the selection of various fixed assets in order to create the desired
production facilitates. However the decisions relating to fixed assets involve huge funds for a
long period of time and are generally of irreversible nature affecting the long term profitability of
a concern, an unsound investment decision may prove to be fatal to the very existence of the
organization. Thus, EC INDUSTRIES has vital importance for its management of fixed of
assets.

Process of fixed assets management involves:-

1. Selection of most worthy projects or alternatives of fixed assets.

2. Arranging the requisite funds/ capital for same.

Management of working capital

For business EC INDUSTRIES needs funds for two purposes, i.e., for its establishment and to
carry on its day operations. EC Industries acquires Long term funds to create production
facilities through purchase of fixed assets such as land, building, plant and machinery.
Investment in these assets is its fixed capital. EC INDUSTRIES acquires Short term funds for
purchase of raw materials; payment of wages and for financing short term or current assets such
as cash, debtors and inventories.

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FINANCIAL HIERARCHY

FINANCIAL MANAGER

ASSISTANT MANAGER

ACCOUNTANT

CLERK.

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Marketing
Department

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 INTRODUCTION

EC INDUSTRIES follows the process of management of marketing programs for the

accomplishment of goals and objectives. The process of management includes set of managerial
functions known as planning, implementation and control of program to achieve predetermined
objectives marketing management involves planning, implementation, and control of marketing
program of campaigns. For EC INDUSTREIS marketing management represents an important
functional area of business management efforts for the flow of goods and services from the
producers to the customers. The marketing is very important the clothes you wear to the web site
you use are all the thing is come to you through marketing.

EC INDUSTRIES follows the concept that marketing means find the needs and want of the
consumers and determine then design the product and satisfies the need and wants of the target
consumers more satisfactory then your competitor’s product. Marketing is social and marginal
process through which individuals and groups obtain what they need and want through creating,
offering and exchanging products of value. Marketing is the social-economic and managerial
activity. There is a planned implementation of human relations and monetary exchange. The
main purpose of exchange is to satisfy the need of both the parties. The need of consumer is get a
product at a reasonable price while the main objective of the management is to make long term
profit through consumer’s satisfaction.

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 Products

1.)Brass Ball Valves

2.) Copper Manifold

3.) Brass Inserts

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4.)Brass Pex Fittings

5.) Brass Sanitary Fittings

6.) Brass Pipe Fittings

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7.)Brass Building Hardware

8.) Brass Compression Fittings

9.) Brass Fasteners

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10.)Brass Turned Parts

11.)Brass Flare Fittings

12.)Brass Hose Connectors

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 Marketing segmentation

For EC INDUSTRIES segmentation or sub-division of the market is based upon the marketing
concept i.e. market oriented strategy and philosophy. Segmentation has given EC INDUSTRIES
special emphasis on the demand side of the market. It is a more precise adjustment of product
and marketing efforts.

It is not possible for the entire firm to serve all groups of customers. Therefore EC
INDUSTRIES has divided a market into different segments. After dividing the market in
different segments they select only few segments of the market to serve. That particular segment
of the market is known as target market.

“Market segmentation consists of taking the total heterogeneous market for a product and
dividing it into several sub-market or segment each of which tends to be homogeneous in all
significant aspects”

EC INDUSTRIES has two main approaches to identify market segmentation:

1. People oriented market segmentation

2. Product oriented market segmental

EC INDUSTRIES has segmented their market on the basis of the product related segmentation.
This product related segmentation can be further classified in a four categories.

1. Product usage situation

2. Benefit segmentation

3. Consumption

4. Decision criteria

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 Target Marketing

After dividing the segment into the part or the sector, EC INDUSTRIES has identified the
segment its design and service which is known as the targeting. For deciding its target EC
INDUSTRIES has taken two factors: the segment’s overall attractiveness and the company’s
objectives and resources. Does a potential segment have characteristics that make it generally
attractive, such as size, Growth, profitability, scale economies, and low risk? Does investing in
the segment make sense given the firm’s objectives, competencies, and resources? Some
attractive segments may not more necessary competencies to offer supervisor value.

Effective target marketing requires that marketers:

1. Identify and profit distinct groups of buyers who differ in their needs and preferences

2. Select one or more market segments to enter (market targeting)

3. For each target segment, establish and communicate the distinctive benefits of the company’s
market offering (market positioning).

EC INDUSTRIES comes under the third category of serving to Product specialization market.
EC INDUSTRIES makes Brass fittings that it sells to several segments. It plays the equal
attention to all the market segments that are stated in the above section.

Target market is that segment of the market whose needs and wants exactly matches with the
products offered by the company. That is how the firm can serve the market effectively than the
competitors. EC Industries has its target market as follow:

Automobile industries

Electrical industries

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 Positioning strategy

After targeting the next step EC INDUSTRIES has implemented is positioning their brand into
the mind of the consumer. Basically, positioning means creating a image of the product or
service in the mind of consumer so, that the consumer will buy your product instead of the
competitors product the four P’s of marketing play important role in the creating the image of
our product into the mind of the consumer.

EC INDUSTRIES discovers different needs and groups in the marketplace, targets those need
and groups that it can satisfy in the superior way, and the positions its offering so that the target
market recognizes the company’s distinctive offering and image. If a company dose poor job of
positioning, the market will be confused as to what to expect. If a company does an excellent job
of positioning, then it can work out the rest of its marketing planning and differentiation from its
positioning strategy.

There are the some companies who have adopted the powerful position i.e.: Titan (from the
house of the Tata), close-up (HUL), Liril, Peps, etc. are the company who positioning into the
mind of the consumer successfully. But there is always question how to positioning our brand
into the mind of the consumer so, for that given below points should remember and take into
Consideration.

1) Identify the sustainable advantage

 Benefit position

 Use or application position

 User position

 Competitor position

 Product category position

 Quality or price position

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2 How many ideas to promote?

 Normally the company should promote only one ideas i.e. USP (unique selling point i.e.
US pizza, magi.).

 EC INDUSTRIES has followed the position because the product which is produce in the
EC Industries is produced as per the order and the requirement of the consumer.

CHANNELS OF DISTRIBUTION

0 level: - Manufacturer to direct consumer

1 level: - Manufacturer to retailer to consumer

2 level: - Manufacturer to wholesaler to retailer to consumer

3 level: - Manufacturer to wholesaler to jobber to wholesaler to retailer to consumer.

EC INDUSTRIES follows the 2nd level of channel of distribution.

Pricing policy

EC INDUSTRIES has not set a single price, but rather develop a pricing structure that reflects
variations in geographical demand and costs, market segmentation requirements, purchase
timing, order levels, delivery frequency, guarantees, service contracts, and other factors.

Thus EC Industries the policy of cost plus pricing strategy.

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 ADVERTISING

For EC INDUSTRIES advertising has becomes an important function of marketing in the

competitive world. It has helped EC INDUSTRIES to spread the message about the product and
thus promote its sales.

Advertisement usually provides information about the firm, its product, quality of product, place
of availability of its product, etc. A properly designed advertisement not only increases the sales
of the company but also creates a good image of the company in the minds of the customers. The
term advertising can be defined as the “paid form of non personal presentation of ideas,
goods and services by an identified sponsor.”

Media of advertising use by EC INDUSTRIES:

 Direct mail
 Website
 Broachers
 Internet
 Magazines

Sales Promotional Activities

EC INDUSTRIES main objective of sales promotion is to attract the prospective buyer at the
point of purchase.

So for promoting its Sales EC INDUSTRIES gives discount to its customers on big amount of
order as a sales promotion. It allows both the discounts, i.e., Trade Discount as well as Cash
Discount. Many a times it also allows credit period to the customers to increase the sales of the
firm.

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 TRANSPORTATION

EC INDUSTRIES understands it very well that transportation choice will affect product pricing,
on time delivery performance, and the condition of the goods when they arrive, all of which
affects customer satisfaction. Transportation includes road, water& air.

EC Industries transport their products to customer by only road for domestic customer and for
foreign customer they use shipping transport

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Personnel
Department

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 Introduction

Organizations are made of people and function through people without people organization
cannot work. The resource of men, material, money and machinery are collected, coordinate and
utilized people. These resources by themselves cannot fulfill all the objectives of an
organization. They need to be uniting into team. Without united human efforts, no organization
can achieve its goal. All the activities of an organization are initiated by the persons who make
organization.

In EC INDUSTIRES, the Personnel Department is very effective. It looks after need and desire
of every employee. It believes that a satisfied worker is assets of the company.

Significantly, at EC Industries they have a very negligible mobility ratio of their staff, which
evolved into a dedicated lot having keen interest in all aspects of their operations. What it means
to you is that, it ensures that you receive the top grade product, on time and at a fair price; and
further cost effective solutions to most of your business query. The Total Quality Management
instills a great sense of responsibility, competitiveness and harmony among all the faculties of
personnel department.

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 Recruitment and Selection

EC Industries recruit their Personnel through giving advertisement in:

 News pepper

 Magazines

Sources of recruitment

 Internal Sources External Sources

 Transfer

 Recalling, Retrenched

 Employees

 Friends & Relatives

 Promotion

 Advertisement

 Waiting list

 Placement Agency

 Employment Exchanges

 Recruitment at Gate

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Selection:

EC INDUSTRIES select the proper candidates from the application received.

Selection is to test the knowledge and skill of candidates for a specific job. The success of an
enterprise depends upon more on its personal. So, selection of proper candidates is necessary.

EC INDUSTRIES select the candidates on the basis of:

 Qualifications.

 Experience for a particular job.

 Interviews.

Training and development

Training is the process of increasing the knowledge and skill for doing a particular job it is an
organized procedure by which people learn knowledge and skill for a definite purpose. The
purpose of training is basically bridge the gap between job requirement and present competence
of an employee. Training is aimed at improving the behavior and performance of a person. It is
never ending or continuous process. Training is closely related with education and development
but need to be differentiated from these terms.

EC INDUSTRIES provides On JOB Training to all their new employees and workers. Here old
and experienced workers provide training to new employees or workers.

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Operations
Department

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 Introduction

The term operation management refers to the direction and control of the processes that
transform inputs into product and services.

Production department is the most vital aspects in a set if organizational because the success if
the industry depends upon the targets that are fulfilled by the production department. Thus it is
essential to develop a production structure in the industry.

“Production management is concerned with those processes which convert the inputs into output.
The inputs are various resources like raw material, men, machine method, etc. and the outputs
are goods and services.”

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Material Handling Details

In majority of the processes carried out at EC INDUSTRIES, it is the material that moves from
Raw Material stage to the stage of finished goods. The material is more widely moved rather
than the men or machines. IN EC INDUSTRIES material Handling amounts to 15 to 25 % of
total cost of production. It is the art and science involving the movement, handling and storage of
materials during different stages of manufacturing.

Raw material plays an important role for all the industries. Continuous supply of raw material is
very necessary for the industries. EC Industries produced around 750 metric tons per months.

Maintenances Management

Maintenance of facilities and equipment in good working condition is essential to achieve

specified level of quality and reliability and efficient working of the machineries. Plant
maintenance is an important service function of an efficient production system. It helps in
maintaining and increasing the operational efficiency of plant facilities.

EC Industries install very costly and quality machinery into the plant. The maintenance work of
the machineries and plant is carried on regular basis because they very well knowing that even
one hour stoppage of the plant leads to the loss of lakes of rupees. Necessary parts are changed
and new parts are installed to get the better results or even when the old parts are rust out or
expired then the new parts are installed. In short, the company is taking enough care for maintain
and replacement of parts and machineries to maintain the efficiency in production system.

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 Production flow chart

• Brass Scrap segregation

• Melting process
Brass Scrap • Production of Billets
Process

• Billets Cut into Smaller Lengths

• Reheating Furnace
• Casting Process
Processing

• Brass Rods
• Forging
• End Point Machining
Manufacturing • Machining for various products
Process • Electroplating for different finishes

• Quality Assurance
• Packaging
• Final Products delivery
Final Proces

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 Stores Management

In majority of the industries, raw materials or the incoming materials in the factory do not go for
the production cycle as soon as it arrives. There is a small time lag between the arrival of the
material and its consumption. So, in this time lag, to avoid the problems of theft, spoilage, etc.
the production management must store the incoming material at a proper place where the
material can be stored for a specific period of time. This department or management can be
termed as Stores Management.

In EC Industries they have separate stores rooms for all the different items. They have different
store rooms for the storage of spares, raw materials, and finished goods.

In EC Industries, the materials or spares are issued to the required departments on the basis of
their demands. For this purpose, issue of material requisition slip is prepared by stores
department mentioning their requirements and given to the stores. Then the matters issued daily
are entered into the system which is a computer based system. After that, monthly issued items
are entered in issue register department wise. So, from this it can easily be estimated that which
item is required by which department frequently. To know the balance of items in the stores
room, the above issued items are subtracted from the materials available in the stores, and then if
the stock of any of the items goes below a particular level, order is placed to the suppliers of that
items.

37 | P a g e
 Quality Control Department

Quality is the prime word at EC Industries and all the products are tested, to ensure uniform
quality at all levels. EC INDUSTRIES is yearly awarded for total quality management. The
company has various instruments to check the quality of the product at various stages, like :

Chemical testing, in the sense of purity at the time of incoming of raw material.

Hardness checking instrument is used to check the hardness during the process.

Tensile Tester is used to check the tensile strength and Bend Tester is used to check the
flexibility or cracknels’ of products during process.

Venire/Micrometer is used to check the dimensions at the time of outgoing materials.

After all these checking instruments, the last and the main instrument are Spectrometer. It
gives result in just 20 seconds. It is used to check the quality of the right mixture of melted raw
materials.

EC Industries has also adopted the Total Quality Management system and they are also an
ISO 9001: 2000 registered company.

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Competitor
Detail

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In today’s business world, there will be hardly any field where there will not be competition
among two or more units for increasing the market share of their products. Today this
competition has reached to its top level. It becomes the cut-throat competition. The organizations
have to adopt newer and newer technologies to survive in the market against such cut-throat
competition that they are facing from their competitors.

EC Industries is also facing the competition from various competitors in the local markets as
well as from the overseas markets. If we talk only about the local markets, then also there are
number of competitors available that are in the same field of manufacturing the Brass Ball
Valves and Brass Fittings. But as we all know that, Quality as well as Quantity both plays a
very important role in competitive advantages, EC Industries has understood this technique and
same thing applied to its business activities. It is providing the superior quality products in the
required quality by the customers at the right time, without delaying the orders.

Following are the major competitors of EC INDUSTRIES prevailing in the Market :

1.) Shree Laxmi Brass Industries:

Shree Laxmi Brass Industries with its roots in Jamnagar, has gained wide appreciation for
its products that are highly reliable and durable in various industrial applications.
Incepted in the year 1982, we are a prominent manufacturer, exporter and supplier of
Brass Components, Meter Parts, Sealing Screws, Electrical Parts, Wall Switch Parts,
Cable Gland, etc.
2.) Balaji Enterprise:
Balaji Enterprise are offering a wide range of Brass Air Chuck, Brass High Pressure
Gauge Cock, Brass Needle Valve, Brass Auto Parts, Brass Components, Brass Electrical
Parts, Brass Electrical Pins, Brass Gas Valves & Fittings, Brass LPG Components, Brass
Forged Components, Brass Molding Inserts, Brass Threaded Inserts, Brass Fittings and
Precision Brass Components. These are developed using best material and latest
techniques prevalent in the industry. Widely appreciated for their durability, corrosion
resistance, easy maintenance and other attributes, our products can be tailored as per
client's requirements. Hence, we have been able to stamp our presence in the industry as a
prestigious Manufacturer, Supplier & Exporter.

40 | P a g e
3.) Jain Group of Companies:
Jain Group of Companies was incorporated in the year 1998 with a vision to provide
engineering solutions, right from designing to manufacturing. They are a renowned
manufacturer, supplier and exporter of Brass Electrical Wiring Accessories, Brass
Electrical Switchgear Components, Brass Forging Components, Brass Sheet Metal
Components, Copper Components, Bronze Components, etc. Manufactured using
premium quality raw materials, our products are in exact accordance to latest
manufacturing standards. They are used in diverse industries like electrical/electronic
products, automobile parts, builders' hardware, etc.
4.) Changla Industries:
Changla Industries is one of the leading manufacturers, exporters, and suppliers of
various brass electrical parts and brass components, which are widely known for their
sturdiness and durability. Established in the year 1957, our company is engaged in
offering a wide series of Brass Sprinkler Irrigation Parts, Brass Washers, Brass Anchors,
Brass Bush Pin Rings, Brass Electrical Parts, Brass Inserts, Brass Screw Nut Bolts, Brass
Sanitary Parts, Brass Anchors, Brass Knurling Anchors for Furniture Fittings, Brass
Anchors for Swimming Pool and Ground Safety Cover, Brass Knurling Inserts, Brass
Plumbing Fitting Parts, Brass PPR Fittings and Brass Cable Glands.
5.) Elite Industries:
Hardware fittings play a vital role in enhancing home decor. These days people prefer
brass hardware fittings as they are corrosion resistant and available in different colors,
depending upon amount of zinc added to it. Owing to this, Elite Industries, started
manufacturing Brass Hardware, Brass Spring Hinges, Brass Window Fittings, Brass
Washer Hinges, Brass Building Hardware and many more. With passing time, they have
become one of the leading manufacturers, exporters, suppliers and traders of these
products.

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Regulatory
Environment
Detail

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The main objective of every organization is to earn maximum profit and make maximum
production and sales. But for the profit the organization should not of environment.

EC Industries follows the purview of keeping the environment clean in order to have a healthy
living. So, for the protection of environment they have adopted that type of method of production
that will result in minimum pollution as recommended Gujarat Pollution Control Board
(G.P.C.B.)

 Gujarat Pollution Control Board (GPCB) aims at developing all round capabilities to
protect the environment by preventing and controlling pollution by effective law
enforcement and by adopting best environmental management practices to keep the State
on course of sustainable development. Bring about all round improvement in the quality
of the environment in the State by effective implementation of the laws.

 Control of pollution at source to the maximum extent possible with due regard to
technological achievement and economic viability as well as sensitivity of the receiving
environment. This objective is being fulfilled through laying down the disposal standards
as well as gaseous emission standards.

For POLLUTION CONTROL EC INDUSTRIES follows the norms and pollution control
measures laid down by G.P.C.B.

43 | P a g e
Analysis of
Financial
Statement of EC
Industries

44 | P a g e
Current Financial Data of EC Industries
SALES for the year 2011-2012 : 6,08,18,150.00

Gross Profit for the year 2011-2012 : 78,65,696.65

Net Profit for the year 2011-2012 : 3,83,323.78

Source: As per the co. balance sheet.

Conceptual Framework of Financial statement analysis

Financial information is needed to predict, compare and evaluate the firm’s earning ability. It is
also required to aid in economic decision-making, investment and financing decision making.
The financial information of an enterprise is contained in the financial statement. Three basic
financial statements of great significance to owners, management and investors are balance
sheet, profit and loss account and cash flow statement. Financial statement analysis is the
collective name for the tools and techniques that are intended to provide relevant information to
decision makers. The purpose of financial statement analysis is to assess company’s financial
health and performance. Financial statement analysis consists of comparison for the same
company over periods of time and comparison of different companies either in the same industry
or in different industry.

EC INDUSTRIES objective of Financial statement analysis:

To evaluate past performance and financial position

To predict future performance.

45 | P a g e
Techniques of Financial statement analysis used by EC INDUSTRIES:

In financial statement, very few number are significant in themselves, but meaningful inferences
can be drawn from their relationship to other amounts or their changed from one period to
another. The tools of financial statement analysis helped in establishing significant relationship
and changes. The most commonly used analytical techniques are:

1. Horizontal analysis

2. Trend analysis

3. Vertical analysis

4. Ratio analysis

USERS OF FINANCIAL STATMENTS

 Executives : - To formulate policies.

 Bankers : - To establish basis for Granting Loans.

 Institutions \ Auditors : - To extend Credit facility to business.

 Investors : - To assess the prospects of the business and to know whether they can get a good
return on their investment.

 Accountants : - To study the statement for comparative purposes.

 Government Agencies: - To study from an angle of tax collection duty levee etc.

46 | P a g e
Literature
Review

47 | P a g e
1.) H. W. Collier, T. Grai, S. Haslitt and C. B. McGowan (2004) did a research study on
“Financial Analysis of Motorola”

In this paper, they have demonstrated the use of actual financial data for financial ratio analysis.
They have constructed a financial and industry analysis for Motorola Corporation. The objective
is to show students exactly how to compute ratios for an actual company. This paper
demonstrates the difficulties in applying the principles of financial ratio analysis when the data
are not homogeneous as is the case in textbook examples. They used Motorola as an example
because the firm has several segments, two of which account for the majority of sales and
represent two industries (semiconductor and communications) that have different characteristics.
The case illustrates the complexity of financial analysis. They study analytical financial
performance with ratio analysis to find out that comparing Motorola with Semiconductor
Industry & Telecommunication Equipment Industry. Financial ratio analysis is complicated
for companies that do not readily fall into a single industry. Motorola has six operating units that
fall into several industries with two industries accounting for most of the sales –
telecommunications and semi-conductor. The differences in the industry characteristics of these
two industries complicate the financial ratio analysis of Motorola. However, a more relevant
picture of the operating characteristics of Motorola is achieved by increasing the complexity of
the analysis, that is, by comparing Motorola to both industries.

48 | P a g e
2.) Rakesh Kumar – (2009) did a research study on “A study on financial performance using
ratio analysis at EMAMI Ltd.” published in Indian journal of finance.

The author analyzed the liquidity and profitability position of the company using the financial
tools. This study based on financial statements such as Ratio Analysis, Comparative balance
sheet. By using this tools combined, it enables to determine in an effective manner and made to
evaluate the financial position, the operational results as well as financial progress of a business
concern. The study explains way in which ratio analysis can be assistance for long term
planning. The study not show only throws on financial position but serves as a stepping stone to
remedial measure of EMAMI LTD. This project helps to give suggestion the area of weaker
position of business transaction on EMAMI Ltd.

3.) David G. Coderra – 2005 did a research study on “Ratio Analysis”

Financial ratios that give indications of the relative health of the company fraud ratio point to
possible symptoms of waste, abuse and fraud. Ratio analysis is possibly the most powerful
identifier of potential fraud. Fraud, even more powerful than its better known cousin digit-
frequency analysis using Benford’s law; while both examine the data for pat terns to highlight
possible fraudulent transaction, ratio analysis not only highlights anomalies in large group of
records, but also pinpoints the specific transaction that are usual.

4.) United States Department of Agriculture Rural Business – 2004 did a research study on
“Ratios Analysis for Cooperatives”

This study discusses differences in financial management and goals between the investor-
oriented firms and cooperatives. It briefly reviews what bankers look for when appraising
potential borrowers. A summary of standard financial ratios used to analyze a variety of business
structures is included, along with other modified ratios to address deficiencies evident standard
ratios.

49 | P a g e
5.) Timo Salmi and Teppo Martikainen – 2006 did a research study on “A Review of the
Theoretical and Empirical basis of Financial Ratio Analysis” published in the Finish Journal
of Business Economics

This paper provides a critical review of the theoretical and empirical basis of four central areas of
financial ratio analysis. The research areas reviewed are the functional form of the financial
ratios, distributional characteristics of financial ratios, classification of financial ratios, and the
estimation of the internal rate of return from financial statements. It is observed that it is typical
of financial ratio analysis research that there are several unexpectedly distinct lines with research
traditions of their own. A common feature of all the areas of financial ratio analysis research
seems to be that while significant regularities can be observed, they are not necessarily stable
across the different ratios, industries, and time periods. This leaves much space for the
development of a more robust theoretical basis and for further empirical research.

In this paper they reviewed four areas of financial ratio analysis research:

 The functional form of the financial ratios, i.e. the proportionality discussion,

 Distributional characteristics of financial ratios,

 Classification of financial ratios, and

 Estimation of internal rate of return from financial statements.

50 | P a g e
6.) William F. Slater - July 2003 did a research study on “Financial Ratio Analysis”

This research paper will evaluate Sample Company using review standard financial ratio analysis
techniques and assess its potential as a good investment. This is written in the form of a memo to
the CEO of an Alabama-based firm, looking for sound financial advice with regards to whether
or not buying stock in Sample Company is a sound investment. This research paper will reveal
the financial analysis techniques used to evaluate the financial performance of the Sample
Company, and evaluate the company's worthiness as an investment. The paper is divided into
three sections. The first section is the memo, which is the main body of the paper. The second
section, Appendix A, includes as a reference contains each of the sets of the four financial
statements that show Sample Company's performance from 1999 to 2001. The third section,
Appendix B, contains the actual financial ratio analysis techniques, showing the company's
performance.

7.) An Application to US Energy Industry – 2002 did a research study on “Financial Ratio

Analysis”

Discriminate Analysis (DA) is a decisional tool that can predict the group membership of a
newly sampled observation. Recently, a new type of nonparametric DA approach is proposed to
provide a set of weights of a discriminate function, consequently yielding an evaluation score for
the determination of group membership. The nonparametric DA is referred to as "Data
Envelopment Analysis-Discriminate Analysis (DEA-DA)," because it maintains its discriminate
capabilities by incorporating the nonparametric feature of DEA into DA. The DEA-DA can serve
as a new evaluation method that deals with many financial ratios in performance analysis. Such a
use of DEA-DA is referred to as “Financial Ratio Analysis (FRA).” In this study, FRA is applied
to an US energy industry in order to evaluate the financial performance of energy firms in the
United States.

51 | P a g e
8.) Salmi, T. and T. Martikainen – 1994 did a research study on “Theoretical and empirical
basis of financial ratio analysis" published in The Finnish Journal of Business Economics.

This paper provides a critical review of the theoretical and empirical basis of four central areas of
financial ratio analysis. The research areas reviewed are the functional form of the financial
ratios, distributional characteristics of financial ratios, classification of financial ratios, and the
estimation of the internal rate of return from financial statements. It is observed that it is typical
of financial ratio analysis research that there are several unexpectedly distinct lines with research
traditions of their own. A common feature of all the areas of financial ratio analysis research
seems to be that while significant regularities can be observed, they are not necessarily stable
across the different ratios, industries, and time periods. This leaves much space for the
development of a more robust theoretical basis and for further empirical research.

9.) DORON NISSIM, STEPHEN H. PENMAN – 2007 did a research study on “Ratio
Analysis and Equity Valuation” published at Columbia University, Graduate School of
Business, New York.

Financial statement analysis has traditionally been seen as part of the fundamental analysis
required for equity valuation. But the analysis has typically been ad hoc. Drawing on recent
research on accounting-based valuation, this paper outlines a financial statement analysis for use
in equity valuation. Standard profitability analysis is incorporated, and extended, and is
complemented with an analysis of growth. An analysis of operating activities is distinguished
from the analysis of financing activities. The perspective is one of forecasting payoffs to equities.
So financial statement analysis is presented as a matter of pro forma analysis of the future, with
forecasted ratios viewed as building blocks of forecasts of payoffs. The analysis of current
financial statements is then seen as a matter of identifying current ratios as predictors of the
future ratios that determine equity payoffs. The financial statement analysis is hierarchical, with
ratios lower in the ordering identified as finer information about those higher up. To provide
historical benchmarks for forecasting, typical values for ratios are documented for the period
1963–1999, along with their cross-sectional variation and correlation.

52 | P a g e
10.) Boris Nenide, Robert W. Pricer - 2001 did a research study on “The use of Financial
Ratios for Research: Problems Associated with and Recommendations for Using Large
Databases” published at School of Business, University of Wisconsin-Madison, S. Michael
Camp ,Vice-President of Research, Kauffman Center for Entrepreneurial Leadership

A review of published research in the field of accounting and finance reveals that the use of ratio
calculations with multivariate analysis for predicting the performance of business firms is
common. However, much of this research uses large database information without determining if
sample assumptions needed can be met for reliable conclusions to be drawn by the researchers.
This paper presents recommended adjustment techniques for researchers using large databases
for ratio calculation to allow for confidence that the results of analysis will be meaningful and
that inferences may be drawn from the data. Using a sample from the Kauffman Center for
Entrepreneurial Leadership Financial Statement Database, Balance Sheet and Income Statement
data of 250 firms is used to illustrate and explain techniques for data error identification,
handling the problem of denominators being negative or approaching zero when calculating
ratios, and effective techniques for transforming the data to achieve approximation of normal
distributions. The application of these recommendations will allow researchers to use financial
statement data samples that will meet required characteristics for the use of valid multivariate
statistical analysis.

53 | P a g e
Research
Methodology

54 | P a g e
INTRODUCTION
A research methodology is a systematic way to find solution to the problem. This consists of
certain steps that adopted by research which are as follows:

These steps are under:

1. Research design (i.e. exploratory, descriptive)

2. Unit of analysis

3. Sampling design (such as probability, or non-probability., sample size)

4. Data collection method (interview, questionnaire)

5. Data analysis (method used for analysis)

The above mentioned are steps research has to follow to find out the solution of the problem.

These steps describes as follow.

55 | P a g e
Research design
“A research design is the arrangement of conditions for collection and analysis of data in a
manner that aims to combine relevance to the research purpose with economy in procedure.”

In fact, the research design is conceptual structure within research is conducted; it constitutes the
blueprint for the collection measurement and analysis of data.

There are four steps of research design:

1. Exploratory

2. Descriptive

3. Casual/Experimental

4. Diagnostic

For this purpose, the research design is exploratory design. Experimental design refers to the
framework or structure of an experiment.

56 | P a g e
Research objective
Research refers to a scientific and systematic search for pertinent information on a special topic.
In fact, research is an art of scientific investigation. In sort, research as A systematized effort to
gain new knowledge. So research is systematic way of finding something new.

The purpose of research is to discover answers to question through the application of scientific
procedures. The main aim of research is to find out the truth which is hidden and which has not
been discovered as yet. Through each research study has its own specific purpose. Without any
objectives we cannot do any research. Thus, objectives are very important.

The main objectives behind this research are as follows.

To check the financial position of the EC Industries.

Secondary objectives:

To check gross profit ratio of EC Industries during the study period.

To check net profit ratio of EC Industries during the study period.

To find operating ratio of EC Industries during the study period.

To find out the current ratio of EC Industries during the study period.

To check the proprietary ratio and liquid ratio of EC Industries during the study period.

To find expenses ratio and fixed assets turnover ratio of EC Industries during the study
period.

57 | P a g e
Unit of analysis
Unit of analysis means study of variables associated with research problem. There are several
variables under the study but the main variables have to be studied.

For this research, a unit of analysis taken is EC Industries “Financial Statements for the previous
three years”.

Data collection method

The task of data collection begins after a research problem has defined and research design/plan
chalked out. There are mainly two types of data which have been collected through different
methods.

1. Primary data 2. Secondary data

1. Primary data:

The primary data are those which are collected a fresh and for the first time and thus happen to
be original in character. There are various methods for collecting primary data.

2. Secondary data:

The secondary data on the other hand, are those which have been collected by someone else and
which have already been passed through the statistical process. In this also there are various
methods for data collection.

For this research purpose, the data have been collected through annual reports of the EC
Industries

Study period:

The present study is done for the last three accounting years i.e. 2009-10 to 2011-12. I have
taken 4 years Balance sheet, Profit and Loss a/c, Cash Flow Statement of EC Industries.

58 | P a g e
RATIO ANALYSIS

59 | P a g e
WHAT IS RATIO?
Ratio is a powerful tool of financial analysis. A ratio is defined as “the indicated quotient of two
mathematical expressions” and as “the relationship between two or more things.” In financial
analysis, a ratio is used as a benchmark fore evaluating the financial position and performance of
a firm. The absolute accounting figures reported in the financial statement do not provide a
meaningful understanding of performance and financial position of a firm.

So, Ratio Analysis is the Process of computing, determining and presenting the relationship
of items and group of items in the financial statements.

The use of ratio has become increasing popular during last few years only. Today’s it has
assumed such an importance that anybody connected with business turns to ratio for measuring
the financial strength and earning capacity of the business.

TYPES OF RATIOS

 Liquidity ratios
 Turnover Ratios
 Leverage Ratios
 Profitability Ratios

60 | P a g e
Utility of ratio analysis:

EC INDUSTRIES make use of ratio to determine particular aspects of the financial position of
their company, in which they are interested:

 Judging the Profitability of the business.

 Judging the liquidity of the business.

 Useful for budgetary control.

 The absolute ratios of a firm use for the inter-firm comparison.

 Useful for decision making.

 The ratios also indicate the trend in the respective field.

Limitation of study
Anyone who draws any conclusion on the basis of accounting ratios about the financial
conditions and earning capacity of the business must take account of the following limitation of
ratios:

 Single year’s ratios have limited utility.

 In-experience of the researcher

 Use of one ratio misleading.

 Derivations based on only Balance Sheet and P&L A/c.

 No financial details of Competitors was available

 Inaccurate base

 Limited utility of historical ratios

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DATA ANALYSIS
AND
INTERPRETATION

62 | P a g e
1) Gross profit ratio
Gross Profit Ratio measures the percentage of each sales rupee remaining after the firm has paid
for its goods. It is a ratio expressing relationship between Gross Profit earned to Net Sales. It is a
useful indication of the profitability of business.

Formula:-

Gross Profit Ratio = Gross Profit/Sales*100

Where, Gross Profit = Sales - Cost of Goods sold (COGS)

COGS = Opening Stock + Purchases + Purchase Expenses – Closing Stock

Year Ratio

2009/2010 = 6684455 / 38548324*100 = 17.34%

2010/2011 = 6377997 / 45920905*100 = 13.89%

2011/2012 = 7865697 / 60818150*100 = 12.93%

20

15

10 Year
5

0
2009-2010 2010-2011 2011-2012

Interpretation :

Gross Profit of EC INDUSTRIES is lower than that of standard ratio to achieve ideal ratio. Also,
Ratio is decreasing year by year. The GROSS PROFIT RATIO has decreased. It shows
unsatisfactory state of affairs. There was continues increased in the Net Sales, but at the same
time due to continuous increase in Purchases and Direct Expenses the Gross Profit Ratio is
decreasing.

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2.) Net Profit Ratio
Net Profit Ratio measures the percentage of each sale rupee remaining after all costs & expenses
including interests & taxes have been deducted.

This ratio is valuable for the purpose of ascertaining the overall profitability of the business &
shows the efficiency or other wise of operating the business. This ratio indicates what portion of
sales revenue is left to the proprietors after all operating expenses are met.

A high net profit ratio would ensure adequate return to the owners as well as enable a firm to
withstand adverse economic conditions when selling price is declining, cost of production is
rising & demand for the product is falling. A low net profit ratio has opposite implications.

Formula:-

Net Profit Ratio = Net Profit after Tax/Sales * 100

2009/2010 = 904112 / 38548324*100 = 2.35 %

2010/2011 = 1185991 / 45920905*100 = 2.58 %

2011/2012 = 1598798 / 60818150*100 = 2.63 %

2.7
2.6
2.5
2.4 Year

2.3
2.2
2009-2010 2010-2011 2011-2012

Interpretation

Net Profit of EC Industries is higher in 2011-2012, it is 2.63%. Here, ratio is increasing yearly.
Net Profit ratio indicates what portion of sales revenue is left to the proprietors’ after all
operating expense is met. Higher better the ratio better will be the profitability.

64 | P a g e
3.) Current Ratio
Current Ratio = Current Assets / Current Liabilities

Year Ratio

2009-2010 16854486 / 7683046 = 2.19

2010-2011 23426693 / 13874067 = 1.69

2011-2012 22496719 / 16208310 = 1.39

2
Year
1
Year
0
2009-2010 2010-2011 2011-2012

Interpretation

The Current Ratio indicates the working capital position of the company. There was good
position of the company as current Assets is more than the current liabilities in each year.

But Current Ratio has been decreasing due to high % increase in Current Liabilities than the %
increase in Current Assets. There was 38.99% increase in Current Assets whereas 80.58%
increase in Current Liabilities from year 2009-10 to 2010-11. The Current Ratio decreased
further because there was 3.96% decrease in Current Assets but 16.82% increase in Current
liabilities from the year 2010-11 to 2011-12.

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4.) Acid Test Ratio
Acid Test Ratio = (Current Assets – Inventory) / Current Liabilities

Year Ratio

2009-2010 8558001 / 7683046 = 1.114

2010-2011 12610189 / 13874067 = 0.909

2011-2012 12536416 / 16208310 = 0.773

Acid Test Ratio

1.2
1
0.8
0.6 Acid Test Ratio
0.4
0.2
0
2009-2010 2010-2011 2011-2012

Interpretation

The ratio shows insufficient quick assets in relation to liabilities. There are more liabilities than
quick assets. In the year 2010-2011 and 2011-12, the quick assets were 10% and 29% less
respectively than to current liabilities. The main factor for this was the increase in Loan
Advance’s, Deposits and Debtors. A minimum of 1: 1 is expected which indicates that the
concern can fully meet its financial obligations.

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5.) Liquidity Ratio
Liquidity Ratio = Liquid Assets / Liquid liabilities

Where, Liquid Assets = Current Assets – Stock

Liquid liabilities- = Liquid Liabilities – Bank Overdraft

Year Ratio

2009-2010 8558001 / 5308644 = 1.61

2010-2011 12610189 / 11732653 = 1.075

2011-2012 12536416 / 11674703 = 1.074

2
1.5
1 Year

0.5 Year
0
2009-2010 2010-2011 2011-2012

Interpretation

The ratio is calculated to measure the ability of the company to meet the liquidity requirements
in the immediate future. A minimum of 1: 1 is expected which indicates that the concern can
fully meet its financial obligations. Here, the ratio indicates that the company has met its
financial obligations with efficiency because the ratio indicates Liquid Assets higher than Liquid
liabilities.

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 FINDINGS

 Gross Profit Ratio is indicates ratio between gross profit & sales. When Sales is high or low,
G.P. must increase or decrease proportionally. Average G.P Ratio is 15% approx. But Gross
Profit Ratio is decreasing annually.
 Net Profit Ratio indicates ratio between net profit & sales. When Sales is high or low, N.P.
must increase or decrease proportionally. N.P. Ratio is increasing yearly but at very slow
rate. Average Net profit for 3 years is 2.5% approx.
 Current Ratio is most commonly used perform short term financial analysis. The company
has more current liabilities than current assets with respect to the ideal ratio. Its latest Current
Ratio is 1.39 which is lower than the ideal ratio.
 Acid Test Ratio is a measure of liquidity. The company doesn’t have liquid assets as much
required. The latest Acid Test Ratio of the company 0.773 : 1 is less than the ideal ratio.
 Liquidity ratio of the company is 1.074 : 1 for the year 2011-2012 which indicates it is
almost equal to the minimum required ratio of 1:1.

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 Suggestions

1. EC Industries should focus on timely delivery of goods to the customers.

2. EC Industries should maintain the quality as quality is the biggest strength of the company.

3. Main focus of the company should also be on plant expansion so that more products can be
produced.

4. Company should also look after welfare of the workers so that workers work more efficiently.

5. Company should train the workers so that workers get updated with the latest technology.

6. Company should also keep its web site up to date so that new customers can be generated
easily.

69 | P a g e
 CONCLUSION
Indian foundry industry is at the forefront phase of Indian economy. The Indian foundry has
expanded drastically in the last two decades. Indian foundry industry is the second largest player
after China in terms of Units &Number of People Employed.

There are 4500 recognized foundry units including small, medium and large scale sectors in all
over the country and approx 90% foundry units are in the small scale.

In EC Industries the entire manufacturing activity is carried out under “one roof” under the
constant supervision of their able technical staff. EC Industries has achieved tremendous growth
in the last three and a half year through the total dedication and motivation work force. It is
emerging as a leading manufacturer and exporter of the Copper Alloy (Brass) Fittings products.

At last, I would like to conclude that EC Industries is a very well managed company. The
conclusion can be made from the major discussion that the location of unit is best matching with
its aims & objectives. They are committed to diversity in a working environment where there is
mutual trust & respect & everyone feels responsible for the performance & reputation of their
company.

By observing personnel, marketing & finance detail it can be said that the company is
progressing. I personally feel that future of this unit is very bright & prospective.

The company has smooth & efficient personnel department & having experienced personnel
manager & finance manager who guided me & helped me to understand the function of various
departments. Thus, each & every department of the company is well designed & proving its
worth for the company.

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APPENDICES

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 LIST OF GRAPHS AND CHARTS

SR. NO. LIST OF GRAPH Page. No.

1. GROSS PROFIT RATIO 67

2. NET PROFIT RATIO 68

3. CURRENT RATIO 69

4. ACID TEST RATIO 70

5. LIQIUDITY RATIO 71

LIST OF FIGURES

SR. NO. LIST OF FIGURES Page. No.

1 PLANT OVERVIEW 6
2 BRASS BALL VALVES 25
3 COPPER MANIFOLD 25
4 BRASS INSERTS 25
5 BRASS PEX FITTINGS 26
6 BRASS SANITARY FITTINGS 26
7 BRASS PIPE FITTINGS 26
8 BRASS BUILDING HARDWARE 27
9 BRASS COMPRESSION FITTINGS 27
10 BRASS FASTENERS 27
11 BRASS TURNED PARTS 28
12 BRASS FLARE FITTINGS 28
13 BRASS HOSE CONNECTORS 28
14 PRODUCTION FLOW CHART 36

72 | P a g e
BIBLIOGRAPHY

Books Referred

Ashwathappa K., Human Resource and Personnel Management, Fourth Edition, Tata
McGraw-Hill Publishing Company Ltd., New Delhi

I.M. Pandey, Financial Management, ninth Edition, 2009, Vikas publishing house Pvt. Ltd.,
noida

Kothari C.R., Research methodology, methods and techniques. 2nd edition, new age
international publisher, New Delhi

Donald R. Cooper, Business research method, 9th edition, Tata McGraw hill education private
limited, New Delhi

Kotler Philip, Marketing Management, 13th Edition, Prentice-Hall of India, New Delhi

WEB SITES SURFED

[Link]
[Link]
[Link]
[Link]
[Link]

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Company’s
Balance
Sheet

74 | P a g e
2011-2012
75 | P a g e
2010-2011
76 | P a g e
2009-2010

77 | P a g e
Company’s
Profit &
loss
account

78 | P a g e
79 | P a g e
2011-2012
80 | P a g e
2010-2011
81 | P a g e
82 | P a g e
2009-2010
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