Vrl Soft Copy
-
Upload
manoj-a-talikoti -
Category
Documents
-
view
282 -
download
3
description
Transcript of Vrl Soft Copy
VRL LOGISTICS LTD.
EXECUTIVE SUMMARY
VRL Logistics is one of the leading road transportation companies in
India, with operation in parcel transportation, passenger transportation,
express cargo, and aviation and courier segments.
For the purpose of calculating the various ratios, the financial statement
or Annual reports of recent three years is taken and analyzed. The objectives
of this study are also to find out liquidity position, profitability, efficiency of
VRL Logistics limited – Varur, Hubli.
The project consists of financial performance on the basis of different
ratio. The study will reveal the financial performance of the firm which
enables the management to know their financial strengths of the firm to make
their best use. Ratio analysis is a tool used by individuals to conduct a
quantitative analysis of information in a company's financial statements.
Ratios are calculated from current year numbers and are then compared to
previous years, other companies, the industry, or even the economy to judge
the performance of the company.
Financial statement provides summarized view of the financial position
and operation of the company. Many parties are interested in financial
statement analysis to know about the financial position of the firm. They
include investors, creditors, lenders, suppliers etc. Ratio analysis is the widely
used tool of financial analysis. It is the systematic use of ratio to interpret the
financial statement so that strengths and weaknesses of a firm are determined.
Values used in calculating financial ratios are taken from the balance
sheet, income statement, statement of cash flows or (sometimes) the statement
of retained earnings. These comprise the firm's "accounting statements" or
financial statements. The statements' data is based on the accounting method
and accounting standards used by the organization.
KLES COLLEGE OF BUSINESS ADMINISTRATION 1
VRL LOGISTICS LTD.
Objective of the study
The project “ratio analysis” Conducted at VRL, Varur-Hubli is an
attempt to critically analyze the performance of management of the
organization in financial terms.
A business can survive and grow in the long run only if its financial is
properly and efficiently managed. Also since the organization is dealing with
public funds, it is more obligatory for the organization to take that much that
much more extra care in employing the funds and managing the returns.
The basic objective of this study is to make a detailed analysis, on how the
company has managed its resource over the year, the reason for the current
performance, to know the procedures, problems and complexities involved in
performance, to know the procedures, problems and complexities involved in
the process and also to find out the external factors affecting the operational
decision.
To analyze the trend in performance over the year the year and to study and
understand the changes taking place in the business environment, and how the
organization has adapted to these changes.
Analyze the overall efficiency of the management by using various tools and
techniques and make a comparative study of three year data to Find out the
change in performance levels, and analyze the reasons for the same.
Make a detailed study of the individual components of the financial statement
using various ratio, and analyze how efficiently they are managed and how all
these components can be blended together to optimize the financial
performance.
Keeping in view the limitations of the organization, how activities are better
managed for improved results, profitability and liquidity.
KLES COLLEGE OF BUSINESS ADMINISTRATION 2
VRL LOGISTICS LTD.
INDUSTRY PROFILE
Logistics is the management of the flow of goods between the point of
origin and the point of destination in order to meet the requirements of
customers or corporations. Logistics involves the integration of information,
transportation, inventory, warehousing, material handling, and packaging, and
often security. Logistics is a channel of the supply chain which adds the value
of time and place utility.
Logistics is one of the main functions within a company. The main
targets of logistics can be divided into performance related and cost related.
They are high due date reliability, short delivery times, low inventory level
and high capacity utilization. But when decisions need to be made, there is
always a trade off between these targets. This is what makes being a
logistician challenging and interesting.
Given the services performed by logistics, one can distinguish the main fields
of it as it follows:
Procurement Logistics
Production Logistics
Distribution Logistics
After sales Logistics
Disposal Logistics
In business, logistics may have either internal focus (inbound logistics),
or external focus (outbound logistics) covering the flow and storage of
materials from point of origin to point of consumption. The goal of logistics
work is to manage the fruition of project life cycles, supply chains and
resultant efficiencies.
KLES COLLEGE OF BUSINESS ADMINISTRATION 3
VRL LOGISTICS LTD.
Business logistics can be defined as "having the right item in the right
quantity at the right time at the right place for the right price in the right
condition to the right customer".
Transportation like all industries is largely influenced by information
and communication technologies, with the focus being on knowledge of
customer needs and value added services. India is one of the countries of the
world having the largest road network. We have an extensive road network
that links the different parts of the country. The influence of topography in
road construction is noticeable the regions with the largest road network
include:
The Gangetic plains
The Damodar valley
The Punjab-Haryana pains
The south India states such as Tamilunadu, Karnataka, & Kerala
Today the India customer’s standard, and the level of expectation have
gone up dramatically. They have become world class customer service which
is going to give the competitive edge to any to industry in the future.
With the changing scenario, factors such as globalization of the market,
international economic and removal of barriers to business and trade, and
increased competition have enhanced the need of transportation. It is one of
the most important infrastructure requirements, which is essential for the
expansion of opportunities and plays an important role in making or bearing
or breaking competitive positioning.
KLES COLLEGE OF BUSINESS ADMINISTRATION 4
VRL LOGISTICS LTD.
COMPANY PROFILE
Name of the Industry : VRL LOGISTICS LIMITED
Address of the Industry : VRL LOGISTICS LIMITED
NH-4, Bangalore Road, Varur
Hubli - 581207
Contact No. : 0836-2237511, 2237512
Fax No. : 0836- 2256612
Email : [email protected]
Website : www.vrlgroup.in
www.vrllogistics.in
Register Office. : VRL LOGISTICS LIMITED
Bangalore Road, VARUR,
HUBLI-581207
KARNATAKA
Corporate Office : Giriraj Annexe, Circuit House
Road, HUBLI-580029
KARNATAKA
Year of Establishment : 31st march 1983
Communication Facility : Telephone, Fax, Internet
Turnover per Year : 6506620(in RS. Thousands)
Accounting Year : April to March
Weekly Holiday : Sunday
Ownership Pattern : Proprietorship
Product : Transportation (Passenger &
Goods)
Bankers : KSFC, Other Nationalized &
Co-operative Banks
Factory Area : 43 acre
KLES COLLEGE OF BUSINESS ADMINISTRATION 5
VRL LOGISTICS LTD.
HISTORY OF THE COMPANY
VRL was established by Mr. Vijay Sankeshwar in Gadag with single
truck during the year 1976 without any background and experience. Then in
the year 1977 he started transportation from Hubli to Gadag. In the year 1978
due to personal management and effective service he purchased a lorry and he
observed the activities of other well known transporter and started first parcel
service. VRL soon expanded its service to Bangalore, Hubli and Belgaum.
Similarly Smt. Lalitha V. Sankeshwar purchased a lorry in the year
1979 and running individually and sometimes hiring out to Vijayanand road
lines which was proprietary concern then company came into existence
effectively from 31st march 1983. Due to efficient management and co-
operation from the staff the total turnover and business picked up. From this
humble beginning VRL has grown into a nationally renowned Logistics and
transport company which is currently the largest fleet owner in India with a
fleet of 2691 Vehicles (Including 196 hi-tech tourist buses &2495 Trucks) as
of 15th August 2008.as published in the Limca Book of Records.
From the above figure, we can say that there is steady increase in the
growth of the company within the 25 years. Now the company is a biggest
industrial house in north Karnataka and created employment opportunity to
more than thirty thousand families and has been growing faster day by day
with varied activities with dedicated sincere and hard working staff at all
levels keeping the principles of the organization always in mind.
KLES COLLEGE OF BUSINESS ADMINISTRATION 6
VRL LOGISTICS LTD.
CURRENT POSITION
The company has the largest network of branches currently has growth
having achieved a turnover exceeding Rs. 67760.48 lacs for the year ending
March 2010 among all transports companies in south India with over 911
branches in Karnataka, Tamilnadu, Andhra Pradesh, and Kerala. The
company is the largest parcel carrier that has a network spanning cross the
country. From this humble beginning VRL has grown into a nationally
renowned logistics and transport company which is currently the largest fleet
owner in India with a fleet of 2829 Vehicles (Including 256 tourist buses &
2573 Goods Transport Vehicles) as of 30th Sept 2010. VRL finds mentioned
in the Limca book of record as a Single largest fleet owner of commercial
vehicles in India in the private sector.
The company is one of the most efficient transport operators in India
with its operating margins higher than other players in the organized transport
industry. The company is known for its reliable, quality service during its
operations for the last two decades VRL Logistics Ltd. is an established brand
name and this enables the company to change premium rates than competition
to its customer.
Over the years VRL has pioneered in providing a safe and reliable
delivery network in the field of parcel service. It has spread its operations to
Courier Service, Express Cargo & Air Chartering to meet the growing demand
of the burgeoning customer base.
3PL & Warehousing solutions offered by VRL are tailor-made and
cater to unique needs of various customers of the industry. With the largest
network in India, the VRL parcel service is indispensable for large number of
corporate houses. VRL operates through a network of 859 Branch and
franchisees to cater our valuable customers. VRL is now expanding its service
to reach even the remote locations of the Country.
KLES COLLEGE OF BUSINESS ADMINISTRATION 7
VRL LOGISTICS LTD.
MISSION
To provide the highest quality service to our customers by continuously
increasing cost efficiency and maintaining delivery deadlines. To encourage
our employees / workforce to strive for quality and excellence in everything
they do. To promote team work and create a work environment that
encourages talent and brings out the best in our employees.
VISION:
“To become the premier company that cuts across various segments and
emerges as the torchbearer of each segment that the Group ventures into.”
OBJECTIVES OF THE COMPANY
Quick and safe service.
Customer satisfaction.
Competitive price.
Attain market leadership.
To carry on the business of the public.
To take overall assets and liabilities of VRL which is an existing
proprietorship concern.
To carry on the business of transporters of any description with aid of
buses, lorries, cars, boats, steamers and other services in any part of
India.
To carry on the business as agent for all kind of traveling either by air,
sea, rail and road.
Double drive for the safe journey.
Onwards and return ticket facility.
Having a wide network of branches.
Wide network of booking office.
Clock room facilities at selected branches.
Check point to monitor vehicle movements.
KLES COLLEGE OF BUSINESS ADMINISTRATION 8
VRL LOGISTICS LTD.
Organization Goal
The customer satisfaction is the key factor in today’s market as
“customer is the king”, hence forecast and analyze the requirements of the
customers is a must. The goal of the company is below:
Quick and safe service
Customer satisfaction and employee satisfaction
Competitive price
Attain market leadership
KLES COLLEGE OF BUSINESS ADMINISTRATION 9
VRL LOGISTICS LTD.
BUSINESS STRATEGY
THE KEY ELEMENTS OF VRL LOGISTICS:
Consolidation position in south the India market
The company already has the highest network and branches in south
India. The company’s focus thereto has been interstate business delivering
goods to these state (expect Karnataka) with increase in the number of
branches in each of the south India states the company now plans to expand
interstate transportation in these southern state.
Increase its share from the north Indian market.
VRL Logistics hopes to increase its taking from the northern market by
establishing more office in key state like Rajasthan, Haryana etc
Increase its trust on marketing larger share from the corporate market.
The company is in the process of sharing up its marketing function, by
hiring senior people to know all its business, with specific focus on corporate
business and express cargo business.
Shore up its infrastructure through owned yards
One of the key strength of VRL Ltd. is its infrastructure in term of its
yards, around the country these yards enable the company to provide
extensive service in parcel segment by aggregating and distributing goods
through its hub and spoke model VRL Ltd. is currently operates these yards
out of rental premises expect in Hubli where it owns the yard and has built a
modern facility the company intends to established owned premises in the rest
of locations through which it can realize significant cost savings greater
operational efficient.
KLES COLLEGE OF BUSINESS ADMINISTRATION 10
VRL LOGISTICS LTD.
Established infrastructure
The company has established branches and networking spanning the
entire country, VRL Logistics Ltd. network of the branches and agencies
entire country exceed nine hundred eleven (911) all through the India, and it is
growing fast. The company’s 20 plus yards enable the hub and spoke model of
the company by aggregating goods of small quantities that can be distributed
through its branch network. The network of branches and yard along with a
large fleet of owned vehicles 2691 plus trucks and light motor vehicles, the
company to cover the length and breadth of the country, efficiently with
flexibility in operations, that is unmatched by any other player in the industry.
The infrastructure and enable improved vehicle utilization.
Shift from unorganized to organized sector
Currently it is estimated that the unorganized sector accounts for over
eighty six percent (86%) of the goods transport in the company with the
introduction of VAT significantly there is shift of the business to the
organized sector (given that sales tax evasion is no longer an attraction under
the VAT scheme) and VRL logistic Ltd. is well poised to advantage of this
shift with its wide network and the image of being a reliable service provider.
Employee’s strength
There is a strong employer and employee relationship in VRL Logistics
Ltd. Company such as provident funds, gratuity scheme, medical
reimbursement, pension scheme, educational benefits, and maturity benefits
etc, are provided by the company.
The company introduced various novel schemes like payment to drivers
based on mileage driven by them, even the hamals and drivers of the
organization are extended by the benefit of ESI/PF etc. It is estimated that at
least 30000 people are benefited by way of direct or indirect employment
from company.
KLES COLLEGE OF BUSINESS ADMINISTRATION 11
VRL LOGISTICS LTD.
ORGANISATION STRUCTURE
Sri V. B. Sankeshwar :
(Chairman & managing director)
Sri Anand. Sankeshwar :
(Managing director)
Sri Sudhir Ghate :
(Director)
Sri C. Karunakara Shetty :
(Director)
Mr. Suresh Angadi :
Managing Director entrusted with
day to day management, looking in
the massive growth and systematic
operation of the company. The
managing director of the company V.
B. Sankeshwar has been conferred
“Udyog Ratna” award in 1994,
“Vishweswarayya Navaratna” award
in 2003.
Managing director looking after the
general administrator, verification of
accounts, bills and payments,
He is also one of the directors in the
VRL Logistics Ltd.
He is also one of directors in the VRL
Logistics Ltd.
He is one of directors in the VRL
Logistics Ltd.
KLES COLLEGE OF BUSINESS ADMINISTRATION 12
VRL LOGISTICS LTD.
DEPARTMENTAL STUDY
Administration Department
This department manages day to day activities in VRL Company the
administration department includes.
Day to day administration
A/c’s queries and commission letter to agents
Bus breakdown reports
Inspection reports
Introduction and other
Collection reports
Seat occupancy reports
Bus arrival reports
Customer feedback follow-up
Customer suggestions
Other reports
Openings of branches
Agency inspection
Personnel Department
This Department manages the most skilled resource in the organization
i.e. human resources of VRL Company. The Personnel Department looks after
the following area.
Recruitment staff
Training the staff
Allocation of work
KLES COLLEGE OF BUSINESS ADMINISTRATION 13
VRL LOGISTICS LTD.
Stationary Department
The stationery department generates a list of stationary items. Required
by different departments as per their requisition this includes. Collection
requisition from branches for items. Generates a copy of stationeries sent to
a/c department for verification
Operation and maintenance Department
This department deals with technical & mechanical part in VRL
logistics limited. This department takes part in vehicle planning &
maintaining vehicles.
Vehicle planning
Maintaining the diesel entry card of buses from different branches
In case bus breakdown make alternative arrangements
Maintenances of vehicles
Maintaining the report of breakdown buses
Issue report of repaired bus to the vehicle planning dept. for further
movement for trip
Inspection department
This department look into official examination of different branches or
departments to check whether the flow is continues or not.
It involves following work process.
Visiting & inspecting the branches
Creating the inspection reports on branches
Issuing reports to the administration department for correction or taking
measures.
KLES COLLEGE OF BUSINESS ADMINISTRATION 14
VRL LOGISTICS LTD.
Booking Department
This department in the travel agency helps to interact i.e. customers and
interaction.
Following are some features of booking department
Collecting customer information
Booking contracts and ticket
Maintain passenger list
Provides boarding for passenger
Entry the time of bus breaks down or any other quires for passenger
Compliant center for customer
Marketing Department
This department is heart of the organization, which plans and decides
about new marketing strategy to be introduced it also involves some activities
such as:
It takes customer feedback
Follow up the customer’s feedback
Form tariff rates
Offers discounts in non peak times
Formulates the promotional tools
Identify the necessity of expansion of new branches, geographically
Generates the reports an operation of new branches
Plans for introducing way of generating funds and the passengers
More offer and facilities
KLES COLLEGE OF BUSINESS ADMINISTRATION 15
VRL LOGISTICS LTD.
VRL EXPRESS CARGO
"Anywhere Anytime"
Delivery on time zero excuses. This mantra is driving force behind the success
of VRL Express Cargo. Surface, Train & Air Cargo mode services
Dedicated company owned vehicles
Door pick-up and door delivery
On-time delivery
Online track & trace facility
24X365 days operations
Dedicated & well-groomed customer care windows
Extensive nation-wide network
VRL COURIER SERVICE
"On Time Every Time"
Capitalizing on the synergy of our transport network that connects all over
Karnataka, we are into Courier Services focusing on delivering documents
and small parcels in a time bound manner.
Storing & dedicated Operating Team
Time Bound Delivery With An Emphasis "On Time Every Time"
Delivery Schedules Ranging From 24/48/72/96 hours
Dedicated Route Vehicles
KLES COLLEGE OF BUSINESS ADMINISTRATION 16
VRL LOGISTICS LTD.
VIJAYANAND TRAVELS
"At the forefront of passenger Transport"
200 Plus routes covering more than 50 destinations every day.
Market leader in Karnataka in private tourist operator segment.
Areas of Operation: Karnataka & Maharashtra states with 60-plus
branches and wide-spread network of 1000-plus agents.
Vijayanand Travels is the premier operator to extend service by hi-Tech
& sleeper coaches even to remote places
Onwards & return journey booking facility.
Punctuality in timing and separate seating arrangement for ladies.
Well-maintained coaches with latest seating arrangement.
Double drivers on-board for safe & comfortable journey.
Finance / Account Department
The finance department maintains the report of monetary transaction
and the finance the finance department allocate anticipate and acquire the
funds. In VRL Company this department operates in the following manner.
Collection of reports
H.O copy of tickets
Booking statements
Vouchers
Branches cash statements
Collection of H.O copy of stationary
Collection of passenger list and ticket
Verification of receipts and copies and entry in computer
Generating report on a/c queries and commission letter
KLES COLLEGE OF BUSINESS ADMINISTRATION 17
VRL LOGISTICS LTD.
METHODOLOGY:
Primary Data:
Primary Data consists of asking the question and direct meet is used in
research study. Primary data includes.
Collecting information from each person of that company.
Some information has been interacting with Manager of that company.
Observation made during the project sessions.
Secondary Data:
Establishment report of the organization.
Some data from brief Note of the Company.
Some information were collected though various Journals, books, Internet
Annual report of the company.
KLES COLLEGE OF BUSINESS ADMINISTRATION 18
VRL LOGISTICS LTD.
Scope of the study:
Since this is an academic project conducted within a short duration, the scope
and applicability of the study is not vast and extensive. Within the given
constraints and limitations the scope of study extends/limits itself to the
following areas.
The results and findings of this study may be applicable to all medium sized
financial organizations or similar firms in the industry, in general.
The study covers almost all the components or the financial indicators, and an
attempt is made to analyze the overall financial performance, by calculating
the different types of ratio.
The study is limited to a single organization only and no comparisons have
been made with other similar companies in the industry.
The study is based on the past/present trends, but it does not consider the
future trends or forecasts of the external environmental factors, which is
beyond the scope the study
KLES COLLEGE OF BUSINESS ADMINISTRATION 19
VRL LOGISTICS LTD.
Financial Management
Financial management is concerned with the overall decision making in
general and with the management of economic resources in particular. In other
words it can be defined as the management of cash and fund flow which deals
with financial decision making of firm.
‘Management of Funds’ is an important aspect of financial
management. In a business undertaking or in an educational institution or in a
hospital or in an art society or elsewhere management of funds is the primary
concern of the financial management.
The term financial management has been defined differently by
different authors. According to Solomon “financial management is concerned
with the efficient use of an important economic resource, namely capital
funds”.
Phillippatus has given a more elaborate definition of the tern financial
management. According to him “Financial Management is concerned with the
managerial decision that results in the acquisition and financing of short term
and long term credits”.
The most acceptable definition of financial management as given by
S.C.Kuchhal is that “Financial Management deals with procurement of funds
and their effective utilization in the business”
KLES COLLEGE OF BUSINESS ADMINISTRATION 20
VRL LOGISTICS LTD.
Techniques of Financial Statement Analysis:
Financial analyst analyzes the financial statement by selecting the
appropriate techniques according to the purpose of analysis. We can analyze
the financial statement from the following techniques.
1. Comparative Statement
2. Common-size Statement
3. Trend Analysis
4. Ratio Analysis
5. Fund Flow Statements
6. Cash Flow Statements
7. Cost Volume Profit Analysis
1. Comparative Statements: The comparative statements are the statement of
the financial position at different periods of times the elements of financial
position at two or more periods. Any statements prepared in a comparative
from will be covered in comparative statement.
2. Common-size Statements: The common size statement, balance sheet and
income statement are shown in analytical percentages. The figures are shown
as percentages of total assets, total liabilities and total sales a statements in
which balance sheet items are expressed as the ratio of each asset to total
assets and the ratio of each liability is expressed as a ratio liabilities is called
common size balance sheet.
KLES COLLEGE OF BUSINESS ADMINISTRATION 21
VRL LOGISTICS LTD.
3. Trend Analysis: The financial statement may be analyzed by computing
trend of series of information. This method determines the direction upwards
or downwards and involves the computation of the percentage relationship
that each statement item bears to the same items in base year.
4. Ratio Analysis: A ratio is defined as “the indicated quotient of two
mathematical expression” and as” the relationship between two quantitative
term between Figures which have a cause and effect relationship or which are
connected with each other in some manner or the other”. A noticeable point is
that a ratio reflecting a quantitative relationship helps to perform a
quantitative judgment. Such is the nature of all financial ratios. Ratio analysis
is a widely used technique
5. Fund Flow Statements: The fund flow statement is a statement which
shows the movement of funds and is a report of the financial operations of the
business undertaking. It indicates various means by which funds were
obtained during a particular period and the ways in which these funds were
employed
6. Cash flow statement: Cash Flow statement which describes the inflows
and outflow of cash and cash equivalent in an enterprise during a
specified period of time. Such a statement enumerates net erects of the
various business transaction on cash.
7. Cost Volume Profit Analysis: cost volume profit analysis is a systematic
method of examining the relationships between selling prices, total sales
revenue, and volume of production, expenses and profit.
KLES COLLEGE OF BUSINESS ADMINISTRATION 22
VRL LOGISTICS LTD.
LIMITATION OF THE STUDY
Limited use of single ratio:
A single ratio, usually, does not convey much of a sense. To make a better
interpretation numbers of ratios have to be calculated which is likely to
confuse the analyst than in will not help him in making any meaningful
conclusion.
Inherent limitation of accounting :
Like financial statement, ratio also suffers from the inherent weakness of
accounting records such as theirs historical nature.
Limited Information:
The study depends upon the data which was available in the
organization records and information provided by the organization and its
various department.
Lack of adequate standards:
There are no well-accepted standards or rules for all ratios, which can be
accepted as norms. It renders interpretation of the ratios difficult.
Limitation of time period:
Not the limitation of study was the time constraint. It was not possible to
make an extensive study so that the coverage confines to the period of
past three financial year only.
KLES COLLEGE OF BUSINESS ADMINISTRATION 23
VRL LOGISTICS LTD.
RATIO ANALYSIS:
Ratio Analysis can be defined as the study and interpretation of relationship
between various financial variables, by investors or lenders. It is a quantitative
investment technique used for comparing a company’s financial performance
to the marketing general. It helps to identify areas where the management
needs to change.
Financial ratio analysis is the calculation and comparison of ratios which are
derived from the information in a company’s financial statements. Financial
ratios are calculated from one or more pieces of information from a
company’s financial statements.
Advantages of Ratio Analysis
1. Simplifies Financial Statements: Ratio analysis simplifies the
comprehensiveness of financial statement. Ratio elaborates whole story of
changes in the condition of the business.
2. To improve Future performance: Ratio analysis indicates weak spot of
the business. This helps the management in overcoming such weakness and
improving the overall performance of the business in future.
3. Facilitates Inter-firm comparison: Ratio analysis provides data for inter
firm Comparison. Ratio highlights the factors associated with successful and
unsuccessful firms. They also reveal strong firms and weak firms, over-
valued and under- valued firms.
4. Make inter firm comparison: Ratio analysis makes possible comparison
of the Performances of the different division of firm. The ratio is helpful in
deciding about their efficiency or otherwise in the past and likely
performance in the future.
KLES COLLEGE OF BUSINESS ADMINISTRATION 24
VRL LOGISTICS LTD.
5. Helps in planning: Ratio analysis helps in planning and forecasting. Over
a Period of time a firm or industry develops certain norms that may
indicate future success or failure.
6. Useful of judging the efficiency of a business: It helps in judging the
efficiency of business liquidity, solvency, profitability etc, of business
can be easily evaluated with helps of various accounting ratio like
current ratio, liquid ratio , debt equity ratio and net profit ratio etc, such
an evaluation enables the management to judge the operating efficiency
of the various aspects of business.
Limitation of the ratio analysis:
1. Comparative study required: Ratio are useful in judging the
efficiency of the business only when they are compared with past results
of the business or with result of a similar business. However, such comparison
only provides a glimpse of the past performance and forecasting for may not
be correct since several other factors market conditions, management
policies, etc may affect the future operation.
2. Limitation of financial statement: Ratio are based only on the
information which has been recorded in the financial statement and they
suffer from number of limitation, the ratios derived there from, therefore,
are also subject to those limitation, For example non financial changes
though important for the business are not revealed by financial
statement. The comparison of one firm with another on the basis of
ratio analysis without taking into account the fact of companies having
different accounting policies, will be misleading and meaningless.
3. Ratio alone is not adequate: Ratio is only indicator; they cannot be taken
as final regarding good or bad financial position of the business. Other things
have also to be seen .The value of ratio should not be regarded as good or bad.
KLES COLLEGE OF BUSINESS ADMINISTRATION 25
VRL LOGISTICS LTD.
4. No fixed standard: no fixed standard can be lay down for ideal
ratio. Financial analysis is an individual matter and value for ratio which
is perfectly acceptable for one company or one industry may not be at all
acceptable in case of another
5. Ratios are composite of many figures: some cover a time period, other
are at and instant of time while still other are only averages. A balance sheet
figure shows the balance of the account at one moment of one day.
Standard of comparison:
The ratio analysis involves comparison interpretation of the financial
statement. A single ratio in itself does not indicate favorable or unfavorable
condition. Standards of comparison of may consist of:
1. Time series analysis: when financial ratio over a period of time is
compared, it is known as time series analysis.
2. Cross- section analysis: another way of comparison is to compare ratio of
one firm with some selected firms in the industry at the same pint in
time. This kind of comparison is known as cross-section analysis.
3. Industrial analysis: To determine the financial conditions and
Performance of a firm, its ratio may compare with average ratio of the
Industry which the firm is a member. This sort of analysis is known as
industrial analysis.
4. Performa Analysis: Sometime future ratio is used as standards of
comparison. Future ratios can be developed from the projected or Performa,
financial statement.
KLES COLLEGE OF BUSINESS ADMINISTRATION 26
VRL LOGISTICS LTD.
In my project, I am going to take standards of comparison based on
“Time series analysis”, on financial performance of VRL Logistics Limited,
varur, hubli of last Three year. It gives an indication of the direction of
change and reflects whether the firm’s financial performance has
improved, deteriorated, remained constant over a time.
Classification of Ratio:
Ratio can be classified into different categories depending upon the
basis of classification.
The traditional classification has been on the basis of the financial
statement to which the determinants of a ratio belong. On the basis the
ratio could be classified as,
Profit and loss account Ratio
Balance sheet Ratio
Composite Ratio
However the above basis of classification has been found to be
crude and Unsuitable because analysis of balance sheet and Income
statement cannot be done in isolation. They have to be studied together
in order to determine the profitability and solvency of the business. They
are now classified as:
1.Financial ratio :Financial ratio indicates about the financial position of
the company. A company is deemed to be financially sound, if it is in
position to carry on its business smoothly and meet all its obligation
both long- term as well as short -term without strain. Thus, company
financial position has to be judged in two ways long –term as well as short-
term.
KLES COLLEGE OF BUSINESS ADMINISTRATION 27
VRL LOGISTICS LTD.
a. Liquidity Ratio
1. Current Ratio
2. Quick Ratio
3. Absolute liquidity Ratio / Cash Ratio
4. Working Capital Ratio
b. Capital structure Ratio:
1. Debt Ratio
2. Debt equity Ratio
3. Proprietary Ratio
4. Interest Coverage Ratio
2. Turnover Ratio:
a. Inventory Turnover ratio
b. Debtor Turnover Ratio
c. Creditor Turnover Ratio
d. Asset Turnover Ratio
1. Net Asset Turnover Ratio
2. Total asset Turnover Ratio
3. Fixed Asset Turnover Ratio
4. Current Asset Turnover Ratio
5. Working capital Turnover ratio
KLES COLLEGE OF BUSINESS ADMINISTRATION 28
VRL LOGISTICS LTD.
3. Profitability Ratio:
a. Profitability In Relation To Sales:
1. Gross Profit Ratio
2. Net Profit Ratio
3. Operating Expenses Ratio
4. Operating Ratio
b. Profitability In Relation To Investment:
1. Return on Investment
2. Return on Equity
3. Earning Per Ratio
4. Dividend Per Ratio
5. Dividend Payout Ratio
KLES COLLEGE OF BUSINESS ADMINISTRATION 29
VRL LOGISTICS LTD.
Turnover Ratio:
Funds of creditor and owners are invested in various assets to
generate sales and profit. The better the management of asset, the larger the
amount of sales, Turnover ratio are employed to evaluate the efficiency
with which the firm manages and utilizes its assets. These ratios are also
called as “Activity ratio”.
Turnover ratio indicates the speed with which are being converted or turned
over into sales.
Asset Turnover ratio:
Assets are used to generate sales. Therefore a firm should manage its
assets efficiently to maximize sales. The relationship between sales and assets
is called asset turnover. Several asset turnover ratios can be calculated.
Net asset turnover: It is computed by dividing sales by net assets
Net Sales
Net Asset Turnover = ------------------------
Net Assets
Net Asset= net fixed asset + net current assets (Current assets less Current
liabilities)
KLES COLLEGE OF BUSINESS ADMINISTRATION 30
VRL LOGISTICS LTD.
(Amt in lacks)
Year Net Sales Net Assets
Net Asset
turnover
Ratio
2008-09 64202.81 58304.54 1.10
2009-10 70598.93 55016.45 1.28
2010-11 88196.68 62054.14 1.42
2011-12 112112.34 57550.081.95
Year 2008-09 2009-10 2010-11 2011-120 0 0 0 00
1.1 1.28 1.42
1.95
Net asset turn over ratio
Interpretation:
The trend is showing increment i.e. Net Asset turnover ratio in 2011-12
is 1.92 times comparing to 1.42 times in 2010-11. Therefore it indicates that
the company producing 1.95 times of sales for one rupee of capital employed
in net assets.
KLES COLLEGE OF BUSINESS ADMINISTRATION 31
VRL LOGISTICS LTD.
Profit analysis of last 5 years
Profit of the company is identified by dividing the difference between two
year profits divided by net profit of an year, and this helps in finding the profit
analysis of a company
Profit=difference between two year*100/ Net profit
2007-08
2008-09
690.85*100/738.58 95.53
2008-2009
2009-2010
47.73*100/2862.14 6034
2009-2010
2010-2011
2187.81*100/2909.87 75.18
2010-2011
2011-2012
991.8*100/5097.68 19.45
Interpretation
From the year 2007-09 the profit is 95.53 for every 100 and it decreased to -
6034 for every 100 and gradually increased from year 2009-11 to 75.18 for
every 100 and in 2012 it is stabilized at 19.45 for ever hundred. Profit is
stabilized from the year 2011-12
KLES COLLEGE OF BUSINESS ADMINISTRATION 32
VRL LOGISTICS LTD.
Total Asset Turnover Ratio:
This ratio shows the firm’s ability in generating sales from all
financial resources committed to total assets
Sales
Total asset turnover = ------------------
Total assets
Total assets include net fixed assets and current assets
(Amt in lacks)
Year Sales Total assetsTotal Assets
Turnover
2008-09 64202.81 61690.53 1.04
2009-10 70598.93 64319 1.15
2010-11 88196.68 72906.42 1.20
2011-12 112112.34 92858.43 1.21
KLES COLLEGE OF BUSINESS ADMINISTRATION 33
VRL LOGISTICS LTD.
Year 2008-09 2009-10 2010-11 2011-120 0 0 0 00
1.041.15 1.2 1.21
TOTAL ASSET TURNOVER RATIO
Interpretation:
The total assets ratio is increasing i.e. from 1.20 & 1.21 in the year
10-11 & 11-12 respectively. The higher ratio indicates that the assets are
utilized properly by the company.
KLES COLLEGE OF BUSINESS ADMINISTRATION 34
VRL LOGISTICS LTD.
Fixed Asset Turnover Ratio:
To know its efficiency of utilizing fixed assets and current
assets separately.
Sales
Fixed Asset Turnover= ---------------------------
Net fixed assets
(Amt in lacks)
Year SalesNet Fixed
Assets
Fixed asset
turnover ratio
2008-09 64202.81 49130.56 1.30
2009-10 70598.93 47094.16 1.49
2010-11 88196.68 51153.37 1.72
2011-12 112112.34 69457.18 1.61
KLES COLLEGE OF BUSINESS ADMINISTRATION 35
VRL LOGISTICS LTD.
2008-09 2009-10 2010-11 2011-120 0 0 0
1.3 1.491.72 1.61
FIXED ASSET TURNOVER RATIOYear Series2Series3 Fixed asset turnover ratio
Interpretation:
The ratio for 2011-12 reveals 1.61 of net fixed assets to sales,
compare to 10-11 & 2009-10, therefore the trend indicates the assets are used
not so efficiently in the year 11-12.
KLES COLLEGE OF BUSINESS ADMINISTRATION 36
VRL LOGISTICS LTD.
Working Capital Turnover Ratio:
Working capital ratio measures the effective utilization of working
capital It also measures the smooth running of business or otherwise the
ratio establishes relationship between cost of sales and working capital.
Working capital turnover ratio is calculated with the help of the following
formula.
Sales
Working Capital Turnover Ratio = ------------------------------
Net working Capital
Net Working Capital = Current Asset – Current Liabilities
(Amt in lacks)
Year SalesNet working
Capital
Working
Capital
Turnover
Ratio
2008-09 64202.81 9173.98 6.99
2009-10 70598.93 7922.29 8.91
2010-11 88196.68 10900.77 8.09
2011-12 112112.34 -12725.10 -8.81
Note: Due to change in classification of current assets and current liabilites
as per requirement of Revised Schedule VI, NWC Ratio is differing
significantly in the current year as compared to previous years.
KLES COLLEGE OF BUSINESS ADMINISTRATION 37
VRL LOGISTICS LTD.
2008-09 2009-10 2010-11 2011-120 0 0 0
6.998.91 8.09
-8.81
working capital turnover ratioYear Series2Series3 Working Capital Turnover Ratio
Interpretation:
In 2008-09 net working capital ratio is 6.99 and it is increased to 8.91
and it decreased to 8.09 in the year 2009-10 & 2010-11 respectively. It
indicates that working capital is not properly used in making sales in
the year 2010-11.
KLES COLLEGE OF BUSINESS ADMINISTRATION 38
VRL LOGISTICS LTD.
Profitability Ratio:
A company should earn profit to survive and grow over a long period
of time. Profit is ultimate output of company and company will have no
future if it fails to make sufficient profit. Therefore company should
continuously evaluate the efficiency of the company in terms of profits.
The profitability ratios are calculated to the measure the operating
efficiency of the company. Besides management of the company, creditors
and owners are also interested in the profitability of the firm. Creditors want
to get interest and repayment of principle regularly. Owners want to get a
required rate of return on their investments. Generally, two major types of
profitability ratios are calculated:
Profitability in relation to sales.
Profitability in relation to investment.
Gross profit ratio:
This ratio expresses the relationship between gross profit and sales.
It determines what amount of gross profit company has obtained towards its
sales.
Gross Profit
Gross Profit Ratio= ------------------------- x100
Sales
Gross Profit = sales – cost of goods sold
KLES COLLEGE OF BUSINESS ADMINISTRATION 39
VRL LOGISTICS LTD.
(Amt in lacks)
Year Gross profit SalesGross profit
Ratio (%)
2008-09 20678.15 64202.81 32.20
2009-10 24708.45 70598.93 34.99
2010-11 28955.46 88196.68 32.83
2011-12 34415.97 112112.34 30.69
2008-09 2009-10 2010-11 2011-12
32.2
34.99
32.83
30.69
gross profit ratio
Interpretation:
Gross profit decrease in 2010-11 32.83% to 2009-10 34.99% and it
decreases in 2011-12 30.69%
KLES COLLEGE OF BUSINESS ADMINISTRATION 40
VRL LOGISTICS LTD.
Net profit Ratio:
It is relationship between net profits, sales and indicates
management efficiency indicates management efficiency in
manufacturing, administering and selling the products. This ratio is the
overall measure of the firm’s ability to turn each rupee sales into net profit.
Net Profit (Profit after tax)
Net Profit Ratio = ---------------------------------------- x100
Net Sales
(Amt in lacks)
YearProfit after
TaxSales
Net Profit Ratio
(%)
2008-09 47.73 64202.81 0.074
2009-10 2922.55 70598.93 4.13
2010-11 5097.68 88196.68 5.77
2011-12 4105.88 112112.34 3.66
KLES COLLEGE OF BUSINESS ADMINISTRATION 41
VRL LOGISTICS LTD.
2008-09 2009-10 2010-11 2011-120.074
4.13
5.77
3.66
Net profit ratio
Interpretation:
In the year 2011-12 the NPR ratio is 3.66% has reduced compared
to the last year 2010-11 & also in the year 2009-10 i.e. 4.13% & 5.77%
respectively. The decrease was due to deferred taxes in the year 2011-12.
KLES COLLEGE OF BUSINESS ADMINISTRATION 42
VRL LOGISTICS LTD.
Operating Expenses Ratio:
The operating expenses ratio explains the changes in the profit
margin (EBIT to sales) ratio. This ratio computed by dividing operating
expenses viz. cost
of goods sold, raw material, manufacturing overhead, administrative
overhead and salaries to employee by sales.
Operating expenses
Operative Cost/ overhead= ----------------------------------- X 100
Net Sales
(Amt in lacks)
YearOperating
expensesSales
Ratio in
percentage
2008-09 44388.05 64202.81 69.13
2009-10 46759.02 70598.93 66.23
2010-11 60336.08 88196.68 68.41
2011-12 72457.56 112112.34 64.63
KLES COLLEGE OF BUSINESS ADMINISTRATION 43
VRL LOGISTICS LTD.
2008-09 2009-10 2010-11 2011-12
69.13
66.23
68.41
64.63
operating expense (%)
Interpretation:
The Higher operating expenses ratio is unfavorable since it will leave
a small amount of operating income to meet interest, dividends etc. The
temporary variations on ratio are due to change in administration & selling
expenses. The lower percentage of ratio is favorable to the company.
KLES COLLEGE OF BUSINESS ADMINISTRATION 44
VRL LOGISTICS LTD.
Administrative Cost Ratio:
Administrative cost
Administrative & Selling Expenses = ----------------------------------X100
Ratio Net Sales
(Amt in lacks)
Year Adm & Selling
Expenses
Sales Ratio in
percentage
2008-09 1207.67 64202.81 1.88
2009-10 1475.20 70598.93 2.08
2010-11 1425.35 88196.68 1.61
2011-12 1731.77 112112.34 1.54
KLES COLLEGE OF BUSINESS ADMINISTRATION 45
VRL LOGISTICS LTD.
2008-09 2009-10 2010-11 2011-12
1.88 2.081.61 1.54
administrative and selling expenses (%)
Interpretation:
The Administrative Expense ratio has decreased to 1.61% in 2010-11,
and again decreased to 1.54 which indicates that the firm is cutting down its
administrative cost which is a good sign.
KLES COLLEGE OF BUSINESS ADMINISTRATION 46
VRL LOGISTICS LTD.
KLES COLLEGE OF BUSINESS ADMINISTRATION 47
VRL LOGISTICS LTD.
KLES COLLEGE OF BUSINESS ADMINISTRATION 48
VRL LOGISTICS LTD.
SWOT Analysis
Strength
There is study increase in the growth of their turnover.
They provide good service that leads to customer satisfaction.
The company is recommended by Indian books association Mumbai.
The company is having wide network of branches spread all over Karnataka,
Andhra Pradesh, Madhya Pradesh, Maharashtra and New Delhi.
They have entered into tourist transport operations.
The luxury bus services have been extended to Bangalore Mumbai Bagalkot
and Mangalore and rest other part of Karnataka
They have their own in house body building of vehicles
They have a new courier service called “cargo express” which refers to the 24
hours of service.
The entire garage operation and account as well as infrastructure control has
been computerized
The efficiency is to extended to 95%
The company did not go any lockouts, strikes etc.
Weakness
The garage operation is centralized. The repairs and maintenance of the
vehicle including buses have come to Varur
There is a heavy work load
Opportunities
They can extent their service to north and south stations
They can enter into international courier and cargo express service
They can tie-up the government transport agencies
Threats
Competitors can Compete for market leadership
KLES COLLEGE OF BUSINESS ADMINISTRATION 49
VRL LOGISTICS LTD.
Findings:
Fixed asset turnover ratio has been decreased .
The gross profit ratio show the organization gross profit is increasing year by
year.
Sundry debtors, inventories, cash and bank balance have been the main
elements of current assets.
The working capital ratio not properly utilized by the company for the
financial year2011-12.
It was found the inventory turnover ratio is on increasing g trend seeing
the ideal ratio of the company has maintained reasonable amount of
stock in the year.
KLES COLLEGE OF BUSINESS ADMINISTRATION 50
VRL LOGISTICS LTD.
SUGGESTION:
To company should increase its liquidity position to maintain a standard
current ratio. The VRL Logistics Limited should think on investment in
short term securities that will improve their liquidity position and profitability.
The company should utilized fixed asset optimally in generating the sales. As
the huge funds are blocked in fixed assets, instead investing in current assets
facilitates in meeting out the short term liability.
Since the VRL Logistics Ltd is earning the profit, this will attracts many
investors. Hence the company should concentrate on the expansion of the
business and also they should contribute towards the overhead for the
welfare of the society.
Company of depending more on external funds, It can also study the
feasibility of internal source, so it can still expand its capacity considering the
demand.
Work environment should be improved and good working condition should be
provided.
The company should utilize assets efficiently. The company has to utilizes
fixed assets properly which means they have to get renovate the machineries,
vehicles
KLES COLLEGE OF BUSINESS ADMINISTRATION 51
VRL LOGISTICS LTD.
CONCLUSION
Operating expenses increasing but not tandem with sales and therefore the
same is affecting the bottom line of the company
The debtor turnover ratio is increase compares to past three year ratio, which
is not a good signal for the company.
Net asset turnover Ratio is decreased i.e. the asset not optimally utilized by
the company.
Debt equity ratio is on higher side which is not a good sign for the company.
The working capital ratio not properly utilized by the company for the
financial year 2007-08.
Although company has increase its investment in current assets.
The recommendation will facilitate the company to grasp new opportunities
and expand the business, improve its profitability
KLES COLLEGE OF BUSINESS ADMINISTRATION 52
VRL LOGISTICS LTD.
LEARNING EXPERIENCE:
Experience is the crucial aspect for every student to have a successful
and challenging carrier. It is just not enough to know the theoretical aspects
taught inside the classroom, but the real world exposure is very important.
Every student has to gain the knowledge of communication skills, decision
making power etc that is possible only by mingling with all kinds of people. I
would like to say that, this In-plant training has given me an opportunity to
have a corporate exposure so as to face my career challengingly.
My In-plant training at VRL was very helpful and knowledge based, as
it gave a practical experience of corporate functioning of the company. I got a
very co-operative experience, which made to have a successful study of the
company’s activity in each section and was able to acquire practical
knowledge in this field.
Through this training I got to know about how the management theories
and concepts are applied in organizations. I saw how managers efficiently
manage a large number of employees, machines to run the company to lead
towards its goals. More over the in-plant training was a good exposure for me
to the working conditions of the organizations.
The leadership styles, working style and communication flow were
understood from the overall study of each department. The company follows
participative leadership style.
The authority, responsibility, relationship and information flow etc. Prevailing
in the company was studied. How the training techniques like on the job
training are adopted in the organization was learnt. The social responsibility
programs and the corporate governance of the company were studied during
the period. I also got to know the healthy relationship maintained between the
employees, suppliers, distributors management etc.
KLES COLLEGE OF BUSINESS ADMINISTRATION 53
VRL LOGISTICS LTD.
Bibliography:
Books:
Prasanna Chandra, ‘Financial management theory and practices’,
Himalaya publication, 5th edition
I.M.pandey,’ Financial management’.
Himalaya publication, 7th edition
B.S.Raman,’ Management accounting’,
Mcgraw hill, 10th edition 2005
2008 to 11 annual reports
Website:
www.vrllogistics.in
www.vrlgroup.in
www.wikipedia.com
KLES COLLEGE OF BUSINESS ADMINISTRATION 54
VRL LOGISTICS LTD.
Annexure
KLES COLLEGE OF BUSINESS ADMINISTRATION 55