A

PROJECT REPORT

ON FINANCIAL ANALYSIS

OF

ASIAN FOOD INDUSTRIESImporters, Exporters of All Kind Of Food stuff & Manufacturers

of All Kinds of Spices

-: PREPARED BY:-Mitul. D. Shah

Enrol. No. 4740900308

-: GUIDED BY:- MAYANK MEHTA NEHA PANCHAL TAPAN SHAH

PREFACE

As a management student of M.B.A. I have visited “ASIAN FOOD INDUSTRIES” Dabhan Ta. Nadiad as a part of my study the report is the direct out come of the visit conducted by me.

We learn theoretical portion. It may not be enough for the students of M.B.A. and therefore practical training is useful. It is very true that, “Experience is the best teacher”. This sentence is true in every field, so summer internship is arranging by the college to enhance the skill, attitude and abilities. I have also expressed those industrial training a great opportunity which has provided me a great satisfaction where I had given all the possible information regarding FINANCIAL MANAGEMENT.

ACKNOWLEDGEMENT

I should feel my self lucky that I got the great opportunity to have the practical training at “ASIAN FOOD INDUSTRIES“ permitting me. I am very thankful to the staff as provided us information.

I am also very much thankful to our honorable directed Mr. Manish Amin for function of our studies which proved very helpful in our practical studies.

I express my sincere thanks to Mr. Ajay Kumarlal Tahelayani, without whose permission and support this report will not have been in existence.

I am extremely very thankful to Mr. Mayank Mehta (Chief accountant) who had encouraging and helping us in preparing the project report and I also thankful to Ms. Neha Panchal (Proprietor assistant).

Lastly I would like to thank my friends for their marvel support.

Shah Mitul D.

INTRODUCTION OF

THE

COMPANY

ASIAN FOOD INDUSTRIES

A successful organization is a combination of an efficient management and latest technology. Asian Food Industry strongly believes that third and most important element in this combination is a product that is nurtured from the finest.

Asian Food Industries started 30 years back with a traditional grinding mill. It grew steadily to own up a successful market share in the domestic market.

We are located at every heart or centre of spices Gujarat. This means that we procure the best raw material from the market as well as the farmers in order to develop quality products for their consumer at most competitive rates.

OFFICE ADDRESSChanaky Building,B/H, Sales India,

Ashram Road,Gujarat. (India)

FACTORY ADDRESSN.H… No.8 Opp.ESCORT TRACTORS,

At Post, Dabhan,Ta. Nadiad,

Dist. Kheda-387320,Gujarat. (India)

ARAB & INDIA SPICES [L.L.C]

Feeling the pulse of every customer’s requirement. That is what has taken ARAB & INDIA SPICES [L.L.C] ahead of its competition.

Establishment in 1986, ARAB & INDIA SPICES was one of the first millers of various kinds of pulses in the whole of Middle East region. Though starting modesty with per day production of 4 mt, today the company has surpassed production capacities of more that 12,000 mt per month and its annual turnover exceeds Us $ 125 million.

Currently, the company imports raw pulses from most of the major pulses producing countries like Myanmar, Australia, Canada, U.S.A., China and India and specialized in MASOOR DAL ( red spilt lentils ), CHANA DAL, MOONG DAL & URAD DAL ( washed split ) located within every region in UAE with offices in Dubai, Sharjah & Ajman. They also have offices in Doha, Oman, & India. They also cater to needs of selected customers in UK, USA, CANADA, AUSTRALIA, and FAR EAST.

AJMANARAB & INDIA SPICES,P.O BOX 17799 AJMAN,

UAE.

DUBAIARAB & INDIA SPICES,P.O BOX 28203 AJMAN,

UAE.

COMPANY PROFILE

NAME OF COMPANY Asian Food Industries

ADDRESS ASIAN FOOD INDUSTRIES, N.H No. 8, OPP ESCORT TRACTOR, AT, DABHAN, TA. NADIAD, DIST. KHEDA-387320, GUJARAT (INDIA)

PARTNERS OF COMPANY Mr. Kumarlal Meghraj Tahelyani Mrs. Radhaben Kumarbhai Tahelyani Mr. Ajay Kumarbhai Tahelyani Mr. Harish Kumarbhai Tahelyani

AUDITOR Mr. Chetan Shah (C.A)

PROPRIETOR ASSISTANT Ms. Neha Panchal

TYPE OF COMPANY Partnership firm

HISTORY:-

Asian Food Industries is a partnership firm is established in January 1999. There are other two firms in the group

(1) INDIAN FOOD INDUSTRIES(2) SPICES INDIA EXPORTS Asian Food Industries is a main firm and mainly

exporting spices and food stuff the others two firms are trading locally and conducting export activities.

Asian Food Industries is registered SPICEBOARD, COFFEE BOARD, TOBACCO BOARD, DIRECTORATE GENERAL OF FOREIGN TRADE, AGRICULTURAL & PROCESSED FOOD PRODUCTS EXPORT DEVELOPMENTAUTHORITY, FEDERATION OF INDIAN EXPORT ORGANIZATION, SHELLAC, etc.

Firm mainly deals in chilly, chilly powder, turmeric powder, tarmind, coriander, coriander powder, cumin seeds, ajwan, fenugreet, groundnut, mustard seed, pulses, and 100 other items.

The customers are spread over the world in countries like UAE, USA, UK, and Australia, Singapore, Arabian countries, etc.

The main partners are:-

(1) Mr. Kumarlal Meghraj Tahelyani born in Nadiad Mr. Kumarlal has started his business career at the age of 18 years only and he is now a business tycoon in spices business. He has established these firms in 1999 after dissolution of his family business. He has also established manufacturing as well as trading business in U.A.E. He is a mentor of his family business.

(2) Mr. Harishbhai Kumarlal Tahelyani is a young energetic personality handling the business firm in the name of Arab & India spices ltd., at U.A.E. which is also a part of family business.

(3) Mr. Ajaybhai Kumarlal Tahelyani aged 30 years is also another young asset of Kumarlal Meghraj family. He is handling the business successfully from Nadiad to many other countries. He is in the business since last 12 years.

Organizational structure

Every organisation made up of more than one person will need some form of organisational structure. An organisational chart shows the way in which the chain of command works within the organisation.

The way in which a company is organised can be illustrated for a packaging company. The company will be owned by shareholders that choose directors to look after their interests. The directors then appoint managers to run the business on a day-to-day basis. In the company structure outlined above: The Managing Director has the major responsibility for running of the company, including setting company targets and keeping an eye on all departments.

The Distribution Manager is responsible for controlling the movement of goods in and out of the warehouse, supervising drivers and overseeing the transport of goods to and from the firm.

The Production Manager is responsible for keeping a continuous supply of work flowing to all production staff and also for organising manpower to meet the customers' orders.

The Sales Manager is responsible for making contact with customers and obtaining orders from those contacts.

The Company Accountant controls all the financial dealings of the company and is responsible for producing management accounts and financial reports.

Structures

Other organisations will have different structures. For example most organisations will have a marketing department responsible for market research and marketing planning. A customer services department will look after customer requirements. A human resources department will be responsible for recruitment and selection of new employees, employee motivation and a range of other people focused activities. In addition there will be a number of cross-functional areas such as administration and Information Technology departments that service the functional areas of the company. These departments will provide back up support and training.

Organisations are structured in different ways:

1. by function as described above

2. by regional area - a geographical structure e.g. with a marketing manager North, marketing manager South etc

3. by product e.g. marketing manager crisps, marketing manager drinks, etc

4. into work teams, etc.

Reporting in organisations often takes place down the line. An employee might be accountable to a supervisor, who is accountable to a junior manager, who is then accountable to a senior manager - communication and instructions can then be passed down the line.

Bankers:- Bank of Baroda Bank of India I.C.I.C.I bank ltd. Indian bank

Oriental bank of commerce State bank of India

Reasons For Selecting This Location

The location of company in the state of Gujarat is consider as the center of spices, and has enabled it to avail the advantage of procuring the best raw material directly from the market as well as the farmers in order to deliver quality products to its consumers’ at most competitive rates.

ASIAN FOOD INDUSTRIES,N.H No. 8,

OPP ESCORT TRACTOR,AT, DABHAN,TA. NADIAD,

DIST. KHEDA-387320,GUJARAT (INDIA)

Infrastructure

A successful organization is a combination of an efficient management and latest technology to ensure this the production unit of company is well equipped with latest machinery like individual spices grinding machines, automatic sieves, sortex cleaning plant, ETO sterilizers etc. which is handled by skilled and experienced staff completed set up for manual cleaning is also included to deliver best quality product to its clients.

Measures Of Quality Control

To meet the customer concerns of food safety, company have a fully equipped laboratory managed by skilled personnel who continuously monitor and analyze the quality of the products right from the procurement stage to the final dispatch of the products.

Quality Standards

All the products of Asian Food Industries are processed in most hygienic conditions and environment. For Asian Food Industries, quality is not an end but a journey. It is imbibed in every product or service. A better quality of product and service will never imply a higher a price as quality is a way of living for Asian Food Industries.

Asian Food Industries believes in “WHO ELSE CAN DEFINE OUR QUALITY STANDARDS IF NOT OUR PROSPECTORS: OUR CLIENTS.”

With Asian food industries vast experience is this business, a network of experienced and selected suppliers have been developed to ensure that all of them follow the same principles and philosophy to quality as Asian Food Industries do.

All consignments are examined by independent and reputed laboratories for a full quality assurance to every client.

PROCEDURE:-

Asian Food Industries deals two procedures. Direct trading Factory trading

Direct Trading:-

In direct trading both purchase and sales orders are going parallel. Both purchase and sales price vary everyday. So the price list also fluctuates (sometimes price list is to be prepared 3to4 times a day). On one side owner inquires the price of items and on other side selling price list is made. According to the estimation of requirement owner makes the purchase order. But do not provide marking(branding) to the supplier. On other hand marketing department brings the export (sales) order. After the order is received marking is given to the supplier. Supplier according to order fills the container ad directly send to the port and also send sample to the main office once the container reaches the port company’s CHA breaks the seal of the container and sends sample to main office. The samples are matched and if quality is good the container is accepted or otherwise rejected. The goods are checked by the custom people on the port fumigation is done if required, Central Excise checking is done if requried, spice board is informed for checking if requried. If everything is ok, the container is closed with firms seal or excise seal whichever is applicable and is loaded in ship bill of lading is received by export department. Once bill of lading is received post-shipment documents are sent to buyers’ bank. Then tracking is done by export department to see where the ship has reached and to see ETD, ETA etc. and our buyer is informed accordingly. When buyer receives the post shipment document from bank after paying the sales amount in the bank after receiving the payment the transaction is completed.

FACTORY STUFFING:-

The purchasing is made by the owner.Once the goods are packed export house is informed. If the goods are chilly powder, curry powder, garam masala powder, turmeric powder. It is mandatory to get spice board clearance. So export department informs spice board executives of (Inspectorate Griffith India Pvt. Ltd) Spice board comes in factory and takes the sample and seals the rest of the finished goods of that particular order. And after the result are declared and are in favor of firm. The container is called by the export department person, and all the process of fumigation, custom and excise if required. Then the container is loaded and sealed under self-sealing or excise sealing whichever is applicable and is sent to port to firms CHA for loading purpose. And after the container is loaded in the ship the process is same according to direct trading.

COMPANYPRODUCTS

DESCRIPTION (Ground spices )

Amchur powder Black pepper powder Black salt powder Cardamom powder Chilly crushed Chilly powder gondal Chilly powder kashmiri Chilly powder reshampatti Chilly white powder Cinnamon powder Cloves powder Coriander powder Coriander-cumin powder Cumin powder Curry powder Fennel powder Fenugreek powder Ganthoda powder Garam masala powder Garlic powder Ginger powder (desi) Ginger powder (kali cut) Javentary powder Methi kuria Mustard powder Nutmeg powder Papad khar Pav bhaji masala Pickle masala Rai kuria Red chilly powder (ex. Hot) Turmeric powder White pepper powder

DESCRIPTION (whole spices)

Sesame seeds brown Sesame seeds black Amchur slices Takaria Dhana dal yellow White pepper Whole Sesame seeds roasted Charoli Ajwian seed Bay leaves Black cardamom Black pepper whole Cardamom seeds 8MM Charmagaj Chilly whole round Chilly whole wlostem Cinnamon stick flat Citric acid Cloves Coriander whole Cumin seeds Dhana dal roasted Dill seeds Fennel seeds Shah jeeru Kalonji Kokum lunavla Kokum phool Fennel seeds lucknowee Javentari whole Methi seeds Mustard seeds Nutmeg whole Poppy seeds Red chilly whole (w/o stem) Red chilly whole round

DESCRIPTION (miscellaneous)

Wheat whole Wheat cracked Dalia whole Dalia split Sabudana Jowar Bajri Chana with skin Basmati mumra Kolapuri mumra Surti mumr Poha thick Poha thin Poha nylon

DESCRIPTION (Flours)

Moong flour (green) Moong flour (white) Corn flour Cream of rice/ Rava idli flour Laddu besan Chappati flour Sooji fine Rajagra flour Singoda flour Maida flour Bajra flour Wheat flour Jowar flour Handwa flour Mathia flour Dhokla flour Kodri flour

DESCRIPTION (Mukhwas)

Gujarati mukhwas Manpasand mukhwas Pan masala mukhwas Poona special mukhwas Rangoli mukhwas

DESCRIPTION (miscellaneous)

Fatakdi Chana mahabaleshwari Himaj black Fennel seeds sugar coated Edible gum (gundar) Phoa makai Bhel mumra special Daria salted

DESCRIPTION (Dals)

Chora dal Green chana Muth beans Red chori Toor dal (dry) Toor dal (oily)

Val dal Val whole Vatana yellow

FINANCIALDEPARTMENT

FINANCIAL DEPARTMENT

Financial management is in many ways an integral part of the jobs of manager. However, we can list out the following important functional areas of modern management, which are the responsibility of financial managers are dispersed throughout the organization.

Functional areas of financial management:

The two key financial officers of the firm are the treasure and the controller.

Determining financial needs

Determining of sources of funds

Financial analysis

Optimal capital structure

Cost volume profit analysis

Profit planning & control

Fixed assets management

Profit planning & evaluation

Capital budgeting

Working capital management

Corporate taxation

Functional areas of financial management

TREASURE:-

The responsibility of treasure is to Obtain finance Banking relationship Cash management Credit administration

The responsibility of finance manager at Asian Food Industries is that of the treasure officer. The financing of AIT is done by the banks named.

Indian Bank Oriental Bank of commerce State Bank of India

Financing are of two types: Fund Based activities Non Fund Based activities

And some of the types of the credit they include are

Fund Based

Over draft Packing credit etc.

Non Fund based

Bank guarante Letter of credit etc.

FINANCIALANALYSIS

(1) Result Of Operation

Result Of Operation

SALES 2008-2009 1,30,65,40,732.73 2009-2010 1,64,80,67,101.95

NET PROFIT

2008-2009 1,45,73,502.39 2009-2010 4,51,64,471.32

TOTAL ASSET

2008-2009 9,72,09,894.57 2009-2010 82,65,99,123.35

TOTAL CAPITAL

2008-2009 19,92,54,301.48 2009-2010 17,58,12,111.38

FINANCIAL HIGHLIGHTS

SALES

2008-2009 1,30,65,40,732.73 2009-2010 1,64,80,67,101.95

2008-2009 2009-20100

200000000

400000000

600000000

800000000

1000000000

1200000000

1400000000

1600000000

1800000000

Series3

NET PROFIT

2008-2009 1,45,73,502.39 2009-2010 4,51,64,471.32

2008-2009 2009-20100

5000000

10000000

15000000

20000000

25000000

30000000

35000000

40000000

45000000

50000000

Series3

TOTAL ASSET

2008-2009 9,72,09,894.57 2009-2010 82,65,99,123.35

2008-2009 2009-20100

100000000

200000000

300000000

400000000

500000000

600000000

700000000

800000000

900000000

Series3

TOTAL CAPITAL

2008-2009 19,92,54,301.48 2009-2010 17,58,12,111.38

2008-2009 2009-2010160000000

165000000

170000000

175000000

180000000

185000000

190000000

195000000

200000000

205000000

Column2

RATIOANALYSIS

Meaning:

Ratio shows the relationship between two or more variable. For example in order to obtain the rate of return on paid up capital, the net profit of the business is divided by the paid up share capital the figure obtained is the ratio. If the same is multiplied by 100, a percentage rate of return on paid up capital is obtained.

IMPORTANCE

Ratio is very important concept in financial analysis. Which are as follow.

PROFITABILITY: Useful information about the trend of profitability is available from profitability ratios. The gross profit ratio, net profit ratio & ratio of return on investment give good idea of the profitability of business. On the basis of these ratios, investors get an idea about the overall efficiency of business, the managements gets an idea about the efficiency of managers and bank as well as other creditors draw useful conclusions about repaying capacity of the borrowers.

LIQUIDITY: Infect, the use of ratios was made initially to ascertain the Liquidity for business. The current ratio, liquid ratio & quick ratio will tell whether the business will be able to meet its current liability as and When they mature. Banks and other lenders will be able to conclude from these ratios whether the firms will be able to pay regularly the interest and loan installments.

EFFICIENCY: The turnover ratios are excellent to measure the Efficiency of managers. For example, the stock turnover will indicate how efficiently the collection department will work and asset turnover show the efficiency with which the assets are used in business all such ratios related to sales present a good picture of the success or otherwise of the business.

INTER FIRM COMPARISION:

The absolute ratios of the firm are not of much use, unless they are compared with similar ratios of the other firms belonging to the same industry. This is interring firm comparision, which shows the strength and weakness of the firm as compared to other firms and will indicate corrective measures.

INDICATE TREND: The ratios of the last three to five years will indicate the trend in the respective fields. For e.g. the current ratio of the firm is lower than the industry average but if the ratios of last five years show an improving trend, it is an encouragement trend.

USEFUL FOR BUDGETARY CONTROL: Regular budgetary reports are prepared in a business where the system of budgetary control is in use. If various ratios are presented in those reports; it will give a fairly idea about various aspects of financial position.

USEFUL FOR DECISION MAKING: Ratio guide the management in making some of the important decision. The liquidity ratios show an unsatisfactory position then management may decide to get additional liquid funds. Even for capital expenditure decision, the ratio of return on invetment will guide the management about the efficiency of various departments. Scan is judged on the basis of their profitability ratio and efficiency of each department.

PROFITABILITY RATIO

(1) Gross Profit Ratio:- It is a ratio expressing relationship between gross profits earned to net sales. It is auseful indication of the profitability of business.

FORMULA:

Gross Profit Ratio = GROSS PROFIT * 100 NET SALES

2009-2010 = 120265595.22 * 100 1648067101.95

= 7.30%

2008-2009 = 90548622.72 * 100 1306540732.73

= 6.93%

GRAPH

2008-2009 2009-20106.70%

6.80%

6.90%

7.00%

7.10%

7.20%

7.30%

7.40%

Series3

INTERPRETATION:-

This ratio shows percentage of gross profit on sales. The higher the ratio the higher the profitability of the company. Here the ratio of 2009-2010 is 7.30% & in 2008-2009 it was 6.93% which is less compare to current year. So, it is good for the company.

(2)Net Profit Ratio:-

The ratio is valuable for the purpose of ascertaining the overall profitability of business and show the efficiency or operation of business. It is the reverse of the operating ratio.

FORMULA:

Net Profit Ratio = Net PROFIT * 100 NET SALES

2009-2010 = 45164471.32 * 100 1648067101.95

= 2.74%

2008-2009 = 14573502.39 * 100 1306540732.73

= 1.12%

GRAPH

2008-2009 2009-20100.00%

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

Series3

INTERPRETATION:- This ratio shows percentage of net profit on sales. The higher the ratio the higher the profitability of the company. Here the ratio of 2009-2010 is 2.74% & in 2008-2009 it was 1.12% which is less compare to current year. So, it is good for the company.

(3) Operating Expense Ratio:- It is a ratio showing relationship between costs of goods sold, operating expense to a net sale. It shows the efficiency of the management. The higher the ratio the less will be the margin available to proprietors.

FORMULA:

Operating Ratio = COST OF GOODS SOLD + OPERATING EXPENSES * 100 NET SALES

2009-2010 = 1527801506.73+78222588.81 * 100 1648067101.95

= 97.45%

2008-2009 = 1215992110.01+79098017.57 * 100 1306540732.73

= 99.41%

Where, COGS = net sales – gross profit 08-09 = 1306540732.73 - 90548622.72 09-010 = 1648067101.95 – 120265595.22

GRAPH

2008-2009 2009-201096.50%

97.00%

97.50%

98.00%

98.50%

99.00%

99.50%

Series3

INTERPRETATION:-

This ratio shows percentage of operating expenses on sales. The lower the ratio it is good for the company. Here the ratio of 2009-2010 is 97.45% & in 2008-2009 it was 99.41%. So in current year it is less as compare to previous year. This is good for company. & it shows good position of company.

(4) Return On Capital Employed Ratio:- It is an index of profitability of business and it is obtain by comparing net profit with capital employed the ratio is normally expressed in the percentage. The more the EBIT in relation to the amount of capital employed the more efficient the success of company. As the success of the enterprise is judged with the help of this ratio.

FORMULA:

Return On Capital Employed Ratio = EARNING BEFORE INT & TAX * 100 CAPITAL EMPLOYED

2009-2010 = 45620811.32 * 100 605251025.14

= 7.54%

2008-2009 = 10205485.26 * 100 491444759.3

= 2.08%

GRAPH

2008-2009 2009-20100.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

7.00%

8.00%

Series3

INTERPRETATION:-

This ratio shows the rate of return on capital employed. The higher the ratio, the higher profitability of the business. Here, the ratio in 2009-2010 is 7.54% & in 2008-2009 it is 2.08%. So, compare to previous year the ratio is more in current year, which shows good position of the company.

LIQUIDITY RATIO

(1) Current Ratio:- The most widely used ratio shows the proportion of current assets to current liabilities. It is also knows as working capital ratio as it is measure of working capital available at a particular time the ratio is obtained by dividing current asset by the current liabilities. It is measure of short term financial strength of the business and shows whether the business will be able to meet its current liabilities as and when they mature.

FORMULA:

Current Ratio = Current Asset Current Liabilities

2009-2010 = 499736694.15 176183626.89

= 2.84:1

2008-2009 = 332287312.37 1057675135.27

= 3.14:1

GRAPH

2008-2009 2009-2010260.00%

270.00%

280.00%

290.00%

300.00%

310.00%

320.00%

Series3

INTERPRETATION:-

This ratio shows liquid position of the business. The higher the ratio, the liquid position of the business is better. 2:1 is the ideal ratio. Here, the ratio in 2009-2010 is 2.84:1 & in 2008-2009 it was 3.14:1.So the ratio in current year is good as compare to ideal ratio 2:1 but compare to previous year it is less. This is not good for company.

(2)Liquid Ratio:-

A variant of current ratio is the liquid ratio or quick ratio which is designed to show the amount of cash available to meet immediate payments. It is obtained by dividing the liquid assets by liquid liabilities.

FORMULA:

Liquid Ratio = Liquid Asset Liquid Liabilities

2009-2010 = 321926800.15 176183626.89

= 1.83:1

2008-2009 = 175421812.37 105765135.27

= 1.66:1

Where,Liquid asset = Current asset – stockLiquid liabilities = Current liabilities - BOD

GRAPH

2008-2009 2009-2010155.00%

160.00%

165.00%

170.00%

175.00%

180.00%

185.00%

Series3

INTERPRETATION:-

This ratio shows better liquid position of the business. 1:1 is the ideal ratio. Here, the ratio in 2009-2010 is 1.83:1 & in 2008-2009 it was 1.66:1.So the ratio in current year is good as compare to ideal ratio 1:1 & compares to previous year it is also more. This is good for company.

(3)Quick Ratio:- The measure of absolute liquidity may be obtain by comparing only cash and bank balance as well as readily marketable securities with liquid liabilities. This is very exactly standard of liquidity and it is satisfactory if the ratio is 0.5:1. It is computed by the dividing the value of quick assets by liquid liabilities. It’s also known as acid test ratio & some called it as absolute liquidity ratio.

FORMULA:

Quick Ratio = Quick Asset Liquid Liabilities

2009-2010 = 96560993.11 176183626.89

= 0.55:1

2008-2009 = 10685771.87 105765135.27

= 0.10:1

Where,Quick asset = Current asset – stock- debtorsLiquid liabilities = Current liabilities - BOD

GRAPH

2008-2009 2009-20100.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

Series3

INTERPRETATION:-

This ratio shows whether the company will be paid its current liabilities immediately or not. 1:1 is the ideal ratio. Here, the ratio in 2009-2010 is 0.55:1 & in 2008-2009 it was 0.10:1. In 2009-2010 it is near to ideal ratio as compare to previous year. This is good for company.

LEVERAGE RATIO

(1) Proprietary Ratio:- The ratio shows the proportion of proprietor’s funds to the assets employed. In the business the proprietor’s funds or shareholders equity consist of share capital and reserve & surplus.

FORMULA:

Proprietary Ratio = Proprietor’s funds Total Asset

2009-2010 = 175812111.38 826599123.35

= 21.27%

2008-2009 = 199254301.48 597209894.57

= 33.36%

GRAPH

2008-2009 2009-20100.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

35.00%

40.00%

Series3

INTERPRETATION:-

It shows the proportion of proprietary fund with total real assets. This ratio indicates unsatisfactory position of the business. Because proprietary funds are lower than industry average in both the years.

(2)Debt Equity Ratio:- This ratio is only another form of proprietary ratio and establishes relationship between the outside long term liabilities and owner’s funds. It shows the proportion to long term external equities and internal equities i.e. proportion of funds provided by shareholders or proprietors.

FORMULA:

Debt Equity Ratio = Long term Liabilities Owner’s fund

2009-2010 = 429438913.76 175812111.38

= 2.44:1

2008-2009 = 292190457.82 199254301.48

= 1.47:1

GRAPH

2008-2009 2009-20100.00%

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

Series3

INTERPRETATION:-

This ratio shows the proportion of long-term liabilities with owner’s fund. This ratio indicates poor financial position of the business. Because the company more depends upon to outside liabilities. In 2009-2010 the condition is poorer as compare to previous year 2008-2009.

(3)Total Debt Equity Ratio:-

This ratio is establishes relationship between the outsider long term liabilities plus short term liabilities and owner’s funds. It shows the proportion of total long term external equities and internal equities.

FORMULA:

Total Debt Equity Ratio = Total Debt Equity

2009-2010 = 605622540.65 175812111.38

= 3.44:1

2008-2009 = 397955593.09 199254301.48

= 1.20:1

GRAPH

2008-2009 2009-20100.00%

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

3.50%

4.00%

Series3

INTERPRETATION:-

This ratio shows the proportion of long-term liabilities with owner’s fund. This ratio indicates poor financial position of the business. Because the company more depends upon to outside liabilities. In 2009-2010 the condition is poorer as compare to previous year 2008-2009.

(4)Long Term Fund To Fixed Asset:- This ratio is establishes relationship between the long term fund & fixed assets. It shows the proportion of long term fund used to purchase fixed assets. It also show if short term funds have been used in purchasing fixed assets & proportion of short term obligations firm have.

FORMULA:

Long Term Fund to Fixed Asset = Long Term Funds Fixed Assets

2009-2010 = 605251025.14 112711684.20

= 5.37:1

2008-2009 = 491444759.3 72876162.20 = 6.74:1

GRAPH

2008-2009 2009-20100.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

7.00%

8.00%

Series3

INTERPRETATION:-

This ratio shows the relationship of long term funds to fixed assets. The ratio must be 1:1 or more. Here, the ratio in 2009-2010 is 5.37:1 & in 2008-2009 it was 6.74:1. So, the ratio was good in previous year than the current year. So, in current year the ratio did not show the good position as compare to previous year.

EFFICIENCY RATIO

(1)Stock Turnover Ratio:- The number of times average stock is turned over during the year is known as stock turnover ratio. Average stock is average of opening and closing stock of the year. The higher the ratio more profitable the business would be & lower turnover indicates low quality of goods which is danger signal for the management.

FORMULA:

Stock Turnover Ratio = Cost Of goods Sold Average Stock 2009-2010 = 177809894 164806710.95

= 10.78 times

2008-2009 = 1215992110.01 138452075 = 8.78 times

GRAPH

2008-2009 2009-20100.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

Series3

INTERPRETATION:- This ratio indicates the no. of time the stock was turnover. Here, the ratio in 2009-2010 is 10.78 times & in 2008-2009 it was 8.78 times which show that in current year the position is good as compare to previous year.

(2)Fixed Asset Turnover Ratio:-

To ascertain the efficiency and profitability of business, the total fixed assets are compared to sales. The more the sales in relation to their amount invested in fixed assets the more efficient is the use of fixed assets. It indicates higher efficiency. If the sales are less as compared to investment in fixed assets, it means that fixed assets are not adequately utilized in business.

FORMULA:

Fixed Asset Turnover Ratio = Sales Fixed Asset

2009-2010 = 1648067101.95 112711684.20

= 10.78 times

2008-2009 = 1306540732.73 72876162.20

= 17.93 times

GRAPH

2008-2009 2009-20100.00%

200.00%

400.00%

600.00%

800.00%

1000.00%

1200.00%

1400.00%

1600.00%

1800.00%

2000.00%

Series3

INTERPRETATION:-

This ratio indicates the efficiency and the profitability of the business, the more the ratio the more efficient the business is. In 2009-2010 it is 10.78times & in 2008-2009 it was 17.93times which show that in previous year the position of company was better than current year.

(3)Total Asset Turnover Ratio:-

To ascertain the efficiency and profitability of business, the total assets are compared to sales. The more the sales in relation to their amount invested in total assets, the more efficient is the use of total assets. It indicates higher efficiency. If the sales are less as compared to investment in total assets, it means that total assets are not adequately utilized in business.

FORMULA:

Total Asset Turnover Ratio = Sales Total Asset

2009-2010 = 1648067101.95 826599123.35

= 1.99 times

2008-2009 = 1306540732.73 597209894.57

= 2.19 times

GRAPH

2008-2009 2009-20101.85

1.9

1.95

2

2.05

2.1

2.15

2.2

2.25

Series3

INTERPRETATION:-

This ratio indicates the efficiency and the profitability of the business, the more the ratio the more efficient the business is. In 2009-2010 it is 1.99times & in 2008-2009 it was 2.19times which show that in previous year the position of company was better than current year.

(4)Capital Turnover Ratio:- To ascertain the efficiency and profitability of business, the total fixed assets are compared to sales. The more the sales in relation to their amount invested in fixed assets the more efficient is the use of fixed assets. It indicates higher efficiency. If the sales are less as compared to investment in fixed assets, it means that fixed assets are not adequately utilized in business.

FORMULA:

Capital Turnover Ratio = Sales Capital Employed

2009-2010 = 1648067101.95 605251025.14

= 2.72 times

2008-2009 = 1306540732.73 491444759.3

= 2.65 times

GRAPH

2008-2009 2009-2010260.00%

262.00%

264.00%

266.00%

268.00%

270.00%

272.00%

274.00%

Series3

INTERPRETATION:-

It shows the proportion of preference share capital and debenture with equity share capital. The ratio in 2009-2010 is 2.72 times and in 2008-2009 it was 2.65times. So, in current year the ratio is more than previous year which is not good for company. It shows worst position of company.

SWOTANALYSIS

SWOT ANALYSIS

Asian Food Industry has a successful operation of a business unit. They managed all resources in a strategic manner.

Strategic management considered as a four variable analysis known as SWOT Analysis. The relationships of such four factors are as under.

STRENGTHS WEAKNESS OPPORTUNITY THREATS

S STRENGTHS

W WEAKNESS

O OPPORTUNITY

T THREATS

Firm has core competence.

High investment in machines & poor capacity of utilization.

Favorable economic environment like high economic growth, low interest rate, low inflation, good exports.

Quick change in customer tastes & choices.

Good quality High cost of production.

Favorable political environment.

Lower profitability & thus lower capacity to generate internal funds.

Good Research & development.

Lack of proper management.

Favorable technological environment like quick adoption of technology, cost reduction, quality improvement.

-

AUDITORSREPORT

PART (A)

Name of assessee: - Asian Food Industry

Address: - N.H No.8 Opp. Escort tractors, At. Dabhan- 387320

Status: - Partnership firm

PART (B)

(1)

(a) The firm has maintained proper records showing full particular including quantitative details & situation of fixed assets in respect of all its locations.

(b)The fixed assets have been physically verified by the management at all locations at reasonable intervals. No material discrepancies between book record and the physical inventories have been notified on such verification.

(2)

(a) The inventories have been physically verified during the year at reasonable intervals by the management.

(b) In our opinion the procedures of physical verification of inventories followed by the management are reasonable & adequate in relation to the size of the firm and the nature of its business.

(c) The firm is maintaining proper record of inventory. The discrepancies notified on verification between the physical stocks and book forward.

(3)

(a) The firm has also given the information about the secured loan and unsecured loan are covered in register maintained.

(4)

(a) In our opinion and according to the information and explanation given to us, there is an adequate internal control system in the firm. & its natures of business for purchase of inventories and fixed assets for the sales of goods & services.

(5)

(a) Based on audit procedure applied by us and according to the information and explanation provided by the management. We are of the opinion that the transactions that need to be entered in the registered.

(b)According to the information & explanation given to us the transaction of sale and purchase made in assurance of contracts or arrangements entered in the registered.

(6)

The firm has given details about trading concern, quantitative details of Principal items of goods traded: -

Opening stock Purchase during the previous year Sales during the previous year Closing stock Shortage excess, if any

(7)

In case of manufacturing concern give quantitative details of the principal Items of raw materials, finished products and by products.

(a) RAW MATERIALS:- Opening stock Purchase during the previous year Sales during the previous year Closing stock Shortage excess, if any Consumption during the previous year Yield of finish products Percentage of yield

(b)FINISHED PRODUCTS / BY PRODUCTS:- Opening stock Purchase during the previous year Sales during the previous year Closing stock Shortage excess, if any Quality manufacturing during the previous year

(8)

Based on audit procedure applied by us and the information & explanation list books of account are prescribed u/s 44AA are examined.

(9)

Other clauses of the order are not applicable to the firm for the year.

ACCOUNTINGPOLICY

ACCOUNTING POLICY

Method of accounting:- The accounts have been prepared on the basis of mercantile method of accounting.

Income & expenditure:- All expenses and income to the extent consider payable and receivable respectively unless specifically stated to the otherwise are accounted for an accrual basis.

Sales & income:- The sales are recorded when supply of goods takes place in accordance with the sales and on change of title in the goods and inclusive / not inclusive of sales tax and excise duty the sales is shown net of the discount on sales and sales return. The income of annual maintains contract is recorded on prorate basis. The incomes from contract activities are shown “The completion of contract” / “percentage of completion” basis.

Purchase & expenses:- The purchases are shown net of sales-tax / purchase tax set off and gross/net credit of excise modvat. The major items off the expenses are accounted for on time / prorate basis and necessary provision for the same are made.

Fixed assets:-

The fixed assets are stated at the cost and related expense like freight taken. And other incidental and execution expenses at the written down value after depreciation.

Depreciation:- The depreciation on fixed assets is provided as per the written down value method.

Investment:- The investments are shown at cost and are inclusive of related expenses.

Stock:- Stock is valued at cost price.

Foreign exchange transaction:- Transactions arising in foreign currencies during the year are converted at rates prevailing on the date of transaction or settlement or at the rates covered by the forward contracts, if any. All exchange differences arising from conversion are taken to profit & loss account expects liabilities on purchase of fixed assets & expenditure towards know how which are capitalized. The outstand payable & receivables in foreign currency as at the date balance sheet are restated at the year and exchange rates.

PURCHASE BILL

Firm make purchase in two ways:-(1)Registered dealer purchase

(2)Unregistered dealer purchase

Registered dealer purchase:- When the firms turnover is more than 10,00,000 firm gets TIN no. this TIN no. should be both the buyer and seller, when both the party have this TIN no. firm gets the facility of C form and H form. Firm purchase the goods by three ways. Central Sales tax / value added tax:- Under this type of purchase firm has to pay state wise central sales tax / value added tax.

C form:- C form facility gets from sales tax office. Buyers keeps one copy with himself and gives one copy to their state sales tax office & one copy with firm. By producing this copy firm has to pay only 2%cst/ vat +8% additional tax 4% penalty. From the date of bill within 90 days c form send to sales tax department. From 1st April to 30th June 1st June to 30th September 1st October to 30th December 1st January to 31st March

H form:- H form facility gets from sales tax office. Under which firm has not to pay sales tax, because H form shows that goods are for export purpose. One copy will remain with buyers and one copy will remain with the firm. One copy will submit to sales tax office. And when the firm fails to produce H form firm is liable to pay 10% interest as per central government.

Unregistered dealer purchase:- When the firm directly purchases from farmers or any other business person who does not has TIN no. in that case do not have to pay tax.

CONCLUSION

CONCLUSION

Asian food industries being one of the most reputed company. It is now, day by day increasing its production process. The performance of the company is very good. The firm is also trying to improve almost in all the fields that are marketing, exporting, foreign trading financial etc.

PROFITABILITY RATIO:- Gross profit ratio & net profit ratio are low it means that the firm is not able to earn high profit after tax which is not satisfactory in the interest of the partners.

LIQUIDITY RATIO:- The liquidity ratio like current ratio, liquid ratio, and quick ratio of the company are sufficient and it is satisfactory for the business.

LEVERAGE RATIO:- The leverage ratio like debt equity ratio are less in both years, which suggest that the company does not have to depend on outsiders for borrowing of funds and they do not have fixed obligation of payment to outsiders.

GENERALLY:- Overall view of all the ratio say that the position financial sector is quite good and company’s management will have to undertake sufficient measures to make financial sector compitable.

BIBILIOGRAPHY

Financial Report of Asian Food Industries

Financial year 2007-2008Financial year 2008-2009

BooksAdvanced Accountancy – 5 by Sudhir Prakashan

WEBSITE www.asianfood.in

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