LOVELY PROFESSIONAL UNIVERSITY

Lovely school of business

Report on Summer Training

Ratio analysis of ANDRITZ HYDRO

Submitted to Lovely Professional University

Mr. Manoj Kumar, Asst Prof .

In partial fulfillment of the

Requirements for the award of Degree of

Master of Business Administration

Submitted by:

Rohit Singh

10901313

LOVELY SCHOOL OF BUSINESS

LOVELY PROFESSIONAL UNIVERSITY

PHAGWARA
TABLE OF CONTENTS
Acknowledgement………………………………………………….
CHAPTER I……………………………………………………….
Introduction ………………………………………………………
Objective……………………………
Need of study………………………
Scope of study……………………
Significance of study………………

Review of literature………………………………………………
Methodology……………………………………………………….
Problem recognition………………………………………
Research design……………………………………
Data collection……………………………
Limitation………………………………
CHAPTER II
Company profile………………………………………………….
History and organization of Andritz in India……………
Vision of Andritz
Board Members
Recent trend in Andritz Industry……………………………….
SWOT Analysis………………………………………………….
Analysis and interpretation…………………………………….
Findings…………………………………………………………
Recommendation………………………………………………
Conclusion……………………………………………………
Limitation……………………………………………………….

Bibliography……………………………………………………..
 Executive summary

Every countries economic condition depends upon the performance of its Industry. How the

investors are interested in it as it will help in the increment in the flow of foreign exchange. A

sound and well performing industry will always attract investors as it will give them a return in a

less time period. But it is not easy for a layman to understand or to properly analyze the

performance of the company.

To understand the performance of any company we have to do financial statement analysis.

Ratio analysis is a widely used tool of financial analysis. It is defined as the systematic use of

ratio to interpret the financial statements so that the strength and weaknesses of a firm as well as

its historical performance and current financial condition can be determined. The term ratio

refers to the numerical or quantitative relationship between two variables.

Ratio analysis helps in inter-firm comparison by providing necessary data. An inter firm

comparison indicates relative position. It provides the relevant data for the comparison of the

performance of different departments. If comparison shows a variance, the possible reasons of

variations may be identified and if results are negative, the action may be initiated immediately to bring

them in line.

In my study I have tried to make out a clear picture of Andritz Hydro PVT ltd.

Performance in the turbine industry with the help of Ratio analysis. While doing my

interpretation through Ratio analysis I have focused on 5 main areas:

1. Liquidity

2. Investment/shareholder
 3. Gearing

4. Profitability

5. Financial

With the help of ratio analysis we measures relationship between resources and financial flows.
It show ways in which firm‘s situation deviates from

Its own past.

Other firm‘s

The industry

All firms…
There are some other tools through which the investors try to bring out the clear picture of the
company so that the investor can easily understand that on which company they should invest
their money and the tools are:

1. Cash flow statement

2. Comparative income statement

3. Fund flow statement

 PREFACE
As a new paradigm based on proper integration of formal teaching and actual practice, this
Summer Training has been introduced under the Degree of Master of Business Administration
(M.B.A) to get a feel of actual Business Environment.

To bridge the gap between theory & practice and to cultivate proper temperament and generate
much needed morale i.e. to help the students to identify their strong and weak points in the
following and appreciating various organizational activities. So that appropriate measures can be
taken at an earliest time.

Finance is the heart of any organization. Proper utilization of financial resources is necessary for
any organization to survive. With the purpose of getting myself well dressed with the atmosphere
of Prevailing industry, I went for eight week training at ―ANDRITZ HYDRO PVT LTD‖.

This report presents the workings, findings and recommendations from the study of Ratio
Analysis at ANDRITZ HYDRO PVT LTD. It gives the better understanding of the financial
position of ANDRITZ HYDRO PVT LTD.

Finally I shall consider my hard work worthwhile if this endeavor is able to satisfy all those
concerned and proves useful to anyone or for any further study in future.
 ACKNOWLEDGMENT

I am grateful to all those who have helped me directly or indirectly in company this project. I
firmly believe that there is always scope for improvement and accordingly. I shall take forward
to receive Suggestions.

First of all I would like to thank God for his grace .I am further thankful to ANDRITZ HYDRO
PRITHLA which give me chance to held my project study upon of it

I exuberantly thankful to Mr. Rajesh Sharma (finance manager) I further want to thank to all
staff members of hydro Andritz who guide me and helps to make project report. I further
welcome inspiration and suggestion to make it best.

I sincerely believe that the road of improvement is never ending. Hence I shall forward to end
gratefully acknowledge all suggestions received. I am highly grateful to Mr. Manoj Kumar
faculty of LSB, Jalandhar for acting as a Guiding star for me and helped me in their own way to
complete this interim report.

Rohit Singh
(10901313)
Introduction
Financial Management is the specific area of finance dealing with the financial decision
corporations make, and the tools and analysis used to make the decisions. The discipline as a
whole may be divided between long-term and short-term decisions and techniques. Both share
the same goal of enhancing firm value by ensuring that return on capital exceeds cost of capital,
without taking excessive financial risks.

Capital investment decisions comprise the long-term choices about which projects receive
investment, whether to finance that investment with equity or debt, and when or whether to pay
dividends to shareholders.
Short-term corporate finance decisions are called working capital management and deal with
balance of current assets and current liabilities by managing cash, inventories, and short-term
borrowings and lending (e.g., the credit terms extended to customers).
Corporate finance is closely related to managerial finance, which is slightly broader in scope,
describing the financial techniques available to all forms of business enterprise, corporate or not.

Role of Financial Managers:

The role of a financial manager can be discussed under the following heads:
1. Nature of work
2. Working conditions
3. Employment
4. Training, Other qualifications and Advancement
5. Job outlook
6. Related occupations

Let us discuss each of these in a detailed manner.

1. Nature of work
Almost every firm, government agency and organization has one or more financial managers
who oversee the preparation of financial reports, direct investment activities, and implement cash
management strategies. As computers are increasingly used to record and organize data, many
financial managers are spending more time developing strategies and implementing the long-
term goals of their organization.
The duties of financial managers vary with their specific titles, which include controller,
treasurer or finance officer, credit manager, cash manager, and risk and insurance manager.

Controllers direct the preparation of financial reports that summarize and forecast the
organization‘s financial position, such as income statements, balance sheets, and analyses of
future earnings or expenses. Regulatory authorities also in charge of preparing special reports
require controllers. Often, controllers oversee the accounting, audit, and budget departments.

Treasurers and finance officers direct the organization‘s financial goals, objectives, and
budgets. They oversee the investment of funds and manage associated risks, supervise cash
management activities, execute capital-raising strategies to support a firm‘s expansion, and deal
with mergers and acquisitions. Credit managers oversee the firm‘s issuance of credit. They
establish credit-rating criteria, determine credit ceilings, and monitor the collections of past-due
accounts. Managers specializing in international finance develop financial and accounting
systems for the banking transactions of multinational organizations.

Cash managers monitor and control the flow of cash receipts and disbursements to meet the
business and investment needs of the firm.
For example, cash flow projections are needed to determine whether loans must be obtained to
meet cash requirements or whether surplus cash should be invested in interest-bearing
instruments.

Risk and insurance managers oversee programs to minimize risks and losses that might arise
from financial transactions and business operations undertaken by the institution.
They also manage the organization‘s insurance budget.
Financial institutions, such as commercial banks, savings and loan associations, credit unions,
and mortgage and finance companies, employ additional financial managers who oversee various
functions, such as lending, trusts, mortgages, and investments, or programs, including sales,
operations, or electronic financial services. These managers may be required to solicit business,
authorize loans, and direct the investment of funds, always adhering to State laws and
regulations.
Branch managers of financial institutions administer and manage all of the functions of a branch
office, which may include hiring personnel, approving loans and lines of credit, establishing a
rapport with the community to attract business, and assisting customers with account problems.
Financial managers who work for financial institutions must keep abreast of the rapidly growing
array of financial services and products.
In addition to the general duties described above, all financial managers perform tasks unique to
their organization or industry. For example, government financial managers must be experts on
the government appropriations and budgeting processes, whereas healthcare financial managers
must be knowledgeable about issues surrounding healthcare financing. Moreover, financial
managers must be aware of special tax laws and regulations that affect their industry.
Financial managers play an increasingly important role in mergers and consolidations and in
global expansion and related financing.
These areas require extensive, specialized knowledge on the part of the financial manager to
reduce risks and maximize profit. Financial managers increasingly are hired on a temporary basis
to advise senior managers on these and other matters. In fact, some small firms contract out all
accounting and financial functions to companies that provide these services.

The role of the financial manager, particularly in business, is changing in response to

technological advances that have significantly reduced the amount of time it takes to produce
financial reports. Financial managers now perform more data analysis and use it to offer senior
managers ideas on how to maximize profits. They often work on teams, acting as business
advisors to top management. Financial managers need to keep abreast of the latest computer
technology in order to increase the efficiency of their firm‘s financial operations.

2. Working conditions
Financial managers work in comfortable offices, often close to top managers and to departments
that develop the financial data these managers need. They typically have direct access to state-of-
the-art computer systems and information services. Financial managers commonly work long
hours, often up to 50 or 60 per week. They generally are required to attend meetings of financial
and economic associations and may travel to visit subsidiary firms or to meet customer

3. Employment
While the vast majority is employed in private industry, nearly 1 in 10 works for the different
branches of government. In addition, although they can be found in every industry,
approximately 1 out of 4 are employed by insurance and finance establishments, such as banks,
savings institutions, finance companies, credit unions, and securities dealers.

4. Training, Other qualifications and Advancement

A bachelor‘s degree in finance, accounting, economics, or business administration is the
minimum academic preparation for financial managers. However, many employers now seek
graduates with a master‘s degree, preferably in business administration, economics, finance, or
risk management. These academic programs develop analytical skills and provide knowledge of
the latest financial analysis methods and technology.
Experience may be more important than formal education for some financial manager
positions—notably, branch managers in banks.
Firms often provide opportunities for workers to broaden their knowledge and skills by
encouraging employees to take graduate courses at colleges and universities or attend
conferences related to their specialty. Financial management, banking, and credit union
associations, often in cooperation with colleges and universities, sponsor numerous national and
local training programs. Persons enrolled prepare extensively at home and then attend sessions
on subjects such as accounting management, budget management, corporate cash management,
financial analysis, international banking, and information systems. Many firms pay all or part of
the costs for employees who successfully complete courses. Although experience, ability, and
leadership are emphasized for promotion, this type of special study may accelerate advancement.
In some cases, financial managers also may broaden their skills and exhibit their competency by
attaining professional certification. There are many different associations that offer professional
certification programs.
Financial managers should be creative thinkers and problem solvers applying their analytical
skills to business. They must be comfortable with the latest computer technology. As financial
operations increasingly are affected by the global economy, financial managers must have
knowledge of international finance. Proficiency in a foreign language also may be important.
Because financial management is critical for efficient business operations, well-trained,
experienced financial managers who display a strong grasp of the operations of various
departments within their organization are prime candidates for promotion to top management
positions. Some financial managers transfer to closely related positions in other industries. Those
with extensive experience and access to sufficient capital may start their own consulting firms.

5. Job outlook
Some companies may hire financial managers on a temporary basis, to see the organization
through a short-term crisis or to offer suggestions for boosting profits. Other companies may
contract out all accounting and financial operations. Even in these cases, however, financial
managers may be needed to oversee the contracts.
Computer technology has reduced the time and staff required to produce financial reports. As a
result, forecasting earnings, profits, and costs, and generating ideas and creative ways to increase
profitability will become a major role of corporate financial managers over the next decade.
Financial managers who are familiar with computer software that can assist them in this role will
be needed.

6. Related occupations
Financial managers combine formal education with experience in one or more areas of finance,
such as asset management, lending, credit operations, securities investment, or insurance risk and
loss control. Workers in other occupations requiring similar training and skills include
accountants and auditors; budget analysts; financial analysts and personal financial advisors;
insurance underwriters; loan counselors and officers; securities, commodities, and financial
services sales agents; and real estate brokers and sales agents.
NEED FOR THE STUDY

The study has great significance and provides benefits to various parties whom directly or
indirectly interact with the company.
It is beneficial to management of the company by providing crystal clear picture
regarding important aspects like liquidity, leverage, activity and profitability.
The study is also beneficial to employees and offers motivation by showing how actively
they are contributing for company‘s growth.
The investors who are interested in investing in the company‘s shares will also get
benefited by going through the study and can easily take a decision whether to invest or
not to invest in the company‘s shares.

OBJECTIVES

The major objectives of the resent study are to know about financial strengths and weakness of
ANDRITZ through FINANCIAL RATIO ANALYSIS.
The main objectives of resent study aimed as:
To evaluate the performance of the company by using ratios as a yardstick to measure the
efficiency of the company. To understand the liquidity, profitability and efficiency positions of
the company during the study period. To evaluate and analyze various facts of the financial
performance of the company. To make comparisons between the ratios during different periods.
OBJECTIVES
1. To study the present financial system at Andritz.
2. To determine the Profitability, Liquidity Ratios for know about liquidity of the company.
3. To analyze the capital structure of the company with the help of Leverage ratio.
4. To offer appropriate suggestions for the better performance of the organization
5. To check the return on equity and return on capital employed of Andritz
6. To derive findings, conclusions and means to improve various ratios.
 SCOPE OF THE STUDY

It become quite difficult rather impossible to make judgment about the position of any business
by way of analyzing the financial statements of one year.

To get a view about the business happiness, the past data of some year relating to the problem
are studied and trend is determined. The present study covers a period of years from 2005 –2010.
A large period may prove inconvenient while a short period would not give desired results.

A period of five years is to be considered to be the optimum one.

The present study has been undertaken to analyze the Ratio analysis is being managed in the
company and how far it contributes to the overall objective of maximization of shareholders
wealth and the organization wealth.

SIGNIFICANCE OF THE STUDY

It is useful for the management.

It gives information to the investors about the earning capacity of the business.
With the help of Ratio Analysis comparison of profitability and
Financial soundness can be made between one firm and another.
Current year's ratios are compared with those of previous years and if some weak spots
are thus located remedial measures are taken to correct them.
It gives information to the financial institution for providing the finance to the company.
It gives information to the taxation authorities.
It gives information to the researchers for conducting research in respect of profitability ,
efficiency , financial soundness and growth of that company.
Review
PROJECT: AN OVERVIEW

Managerial persons have vital role in this new management era. Industry's growth is depend
upon these managerial personnel‘s because the production field is depend upon these
personnel‘s. This industrial training project gives the pre idea about planning of the industries
and deals with various field of industry. By this project persons get the opportunity to face the
problems that will come ahead in his path. Before making the project planning of requirement is
necessary, by this we can improve our quality of estimation. After planning, execution,
completion and evaluation are the future process of the project. In general words ―Project is
scheme of work to be completed within stimulated time by an adequate man & machine‖
complete or proper information can be grasp by trainee on the pre - assigned project's subject.

Meaning of PROJECT: - The work project has generate significance role in the field of
management. It is essentially required for management work as detailed scene in order to give
the practical form of work as indicated. Before starting the project, we should fully aware about
the meaning of project. It's each word or letter has it own meaning.
P : Planning :- In planning stage all the aspect has regards to types of work to be carried out is
taken into consideration estimate with full details of requirement cost and probable activity of the
project is prepared.
R: Resources: - These are guided to promote the function of a plan from which the way problem
will be solved and the matter will be select.
O: Organization: - It is way of performing different type of works in a systematic way of
procedure.
J: Joint efforts: - The work which has been planned is done by the help of co - operation of
labor. It means that the effort of jointing to all these procedures which come in the work is
known as joint effort.
E: Execution / Engineering junction: - As per estimate man and material are arranged and
work is organized according to the time schedule.
A well educated engineer which is related, to do this working better way to find out the better
result. Hence the project is an engineering junction.
C: Construction: - Each of the activity in accordance with the plan is completed. When all the
activity is completed, the project as whole is considered to be completed.
OR
Co-operation:- This tells about the phenomenon of construction which is the most essential for
doing the work.
T: Technique: - The technique of working with due to co-operation of working project and then
controlled the body.
The general form of conclusion, the project is a systematic consideration discussed and proposed
on a particular subject.
As the matter of fact project is the work which used for construction purpose before work
planned and performed. In general form of conclusion, the project is systematic and
consideration subject.
In my project topic ―ratio analysis‖ various research has been held
The reviews of these researches are as follows: -
1. Academon 2006 has analyzed in his article ratio Analysis is an early warning indicator
that enables the business owner and manager to spot trends in a business and to compare
its performance and condition with the average performance of similar businesses in the
same industry. The author relates that Ratio Analysis is done by comparing the specific
company's ratios with the average of similar businesses and comparing the business's
own ratios for several successive years, watching especially for any unfavorable trends
that may be starting. The paper states that the current ratio measures the ability of the
firm to pay is current bills, while still allowing for a safety margin above the required
amount needed to pay current obligations.
2. Academon 2006 has focuses on two large retailers in the area of retail home
improvements, Lowes and Home Depot, and compares and contrasts their financial
ratios in a five-year trend table along with the most recent industry averages. The
information presented in this report can be used to help determine the over-all financial
status of these two companies. Financial Ratios Used Home Depot Lowes Efficiency
Ratio Analysis Liquidity Ratio Analysis Leverage Analysis Profitability Analysis.

3. Firth, Michael, Mear, Ross1986 has analysed in his research the results of an
investigation into the financial structure of accounting variables and ratios of New
Zealand listed firms. Seven major factors were identified and these accounted for more
than 82 percent of the information contained in a set of forty-four variables. These factors
are labeled profitability, size, activity, solvency, liquidity, growth in size and, growth in
profits-profitability. Although the first five factors have also been identified as separate
corporate dimensions in studies conducted in the United States and elsewhere, variables
representing growth have not been examined before. Our study suggests that the growth
variables represent two distinct and significant factors.

4. D.G., Hamilton, R.T. Ferner,1987 has analyzed in his study is Multiple discriminant
analysis is applied to financial ratios of New Zealand listed companies and a model
developed which exhibits better classification ability than other New Zealand-based
models. The predictive ability of the New Zealand model is tested on a hold-out sample
of listed companies and performs reasonably well for predictions close to the point of
failure.

5. Singh, Ramadhar 1996 has analyzed in his study the Group and individual decisions on
what is fair allocation differ. Group analyses favored the ratio model, while the majority
of the individuals favored the more accurate subtractive model. The discrepancy may be
due to the differences in the models per se, or in the number of observations which affect
statistical power of the tests used. Culture and age also inform decision making
discrepancies at both group and individual levels. These results show the need for an
 alternative approach to predict decision making strategies regarding allocations and the
role of the individual allocator.

6. Mills, Roger 1993 has analyzed in his study the extent to which financial ratio covenants
are used and lenders' reactions to covenant violations and potential violations were
surveyed among 50 UK banks. The survey showed that at least two-thirds of loans
exceeding one billion pounds sterling were covered by financial ratio covenants. High
cost penalties such as immediate loan repayment or conversion to an on-demand loan
were imposed on borrowers that violate these covenants. Other lenders renegotiate the
contracts with temporary waiver of the breach if the borrower constantly communicates
with the bank. Contract renegotiations may involve helping secure the lender's position or
ensuring retention of funds within the company by dividend capital spending restrictions.
The study also showed that disclosed voluntary accounting policy changes to produce
favorable financial statements were not acted on by the lenders in 60% of cases.

7. Cheng F., Wu, Chunchi 1988 has analyzed is offered of financial ratio adjustment
processes when there is expensive adjustment and uncertainty about information. A
generalized partial adjustment-adaptive expectations model is proposed. The model is
designed to characterize financial adjustment processes that are dynamic. The model
incorporates the endurance of industry averages changes into the financial ratio
adjustment process. The Gauss-Newton non-linear regression technique is employed to
estimate the generalized model's structural boundaries. Results indicate that target ratio
adjustment is not instantaneous. Results also suggest that differences exist in companies'
ratio adjustment patterns in different industries of different sizes.

8. Taffler, R.J., Sudarsanam, P.S. 1995 has analyzed in his study of 500 firms belonging
to six different industries in the UK was undertaken to find out the effectiveness of the
use of financial ratio analysis in achieving its desired results. This financial tool was
designed to control firm size, a condition that could be satisfied if the ratio's numerator
and denominator are proportional. Empirical results gained from this study, however,
 indicate that no such proportionality has been observed, a fact that should warn users of
ratio analysis to exercise caution in the derivation of their conclusions.

9. Healey, Nigel 1997 has analyzed in his study those Companies are listed on the UK stock
market have to issue financial reports from which a number of ratios can be calculated.
Performance ratios include return on capital employed, and stock turnover. Liquidity
ratios relate to cash flow, while financing ratios relate to gearing. Financial ratio analysis
can be misleading on its own. Performance ratios vary from one industry to another. The
value of a brand may be included in a balance sheet. The methods that companies use to
compile their accounting data are important for successful financial analysis.

10. Timo Salmi and Teppo Martikainen (1994), has analyzed in this paper provides a
critical review of the theoretical and empirical basis of four central areas of financial ratio
analysis. The research areas reviewed are the functional form of the financial ratios,
distributional characteristics of financial ratios, classification of financial ratios, and the
estimation of the internal rate of return from financial statements. It is observed that it is
typical of financial ratio analysis research that there are several unexpectedly distinct
lines with research traditions of their own. A common feature of all the areas of financial
ratio analysis research seems to be that while significant regularities can be observed,
they are not necessarily stable across the different ratios, industries, and time periods.
This leaves much space for the development of a more robust theoretical basis and for
further empirical research.
Company profile
Andritz AG is an Austrian plant engineering group headquartered in Graz. The group gets its
name from the district Andritz in which it is located.

Andritz employs more than 13,400 employees at 35 production and service facilities and 120
subsidiaries. In 2007, the company reported revenue of €3.28 billion, a gross profit of €242
million and a net profit of €193 million.

The ANDRITZ GROUP is a global market leader for Customized plants, process
technologies, and services for hydropower stations, for the pulp and paper industry, the
metals industry, and other industries (solid/ liquid separation, feed and biofuel). The
Group is headquartered in Graz, Austria and has approximately 13,700 employees
worldwide. ANDRITZ runs more than 150 production sites, as well as service and sales
companies all around the world. Each of the ANDRITZ GROUP’s five business areas is
among the global technology leaders, offering full-line capabilities in all major process
areas. The service offering includes the supply of spare parts, manufacture of engineered
wear products, and technical support to help customers optimize production processes
and reduce overall costs.

Type Aktiengesellschaft (WBAGANDR)

Industry Industrial processing

Founded 1852

Head quarters GRAZ, Austria

Key people Wolfgang Leitner (CEO), Kurt stiassny (Chairman of

the supervisory board)

Products Turnkey equipment for hydro power plants, the

Production of pulp and paper and feed and biofuels,

 Plants for steel production, industrial separation

Technologies.

Revenue €3.198 billion (2009)

Operating income €147.1 million (2009)

Profit €96.8 million (2009)

Employees 13050(2009)

Divisions Pulp and Paper, Hydro Power, Metals,

Environment and Process, Feed and Biofuel

Website www.andritz.com

Key figures

FRS; in MEUR Q1 2010 Q1 2009 2009

Order intake 391.4 574.2 1,693.9

Order backog (as of end of period) 3,024.8 2,823.6 2,894.5

Sales 349.0 316.6 1,378.0

EBITDA 28.4 25.8 120.9

EBITDA margin 8.1% 8.1% 8.8%

EBITA 23.0 20.5 100.5

EBITA margin 6.6% 6.5% 7.3%

Business areas

Andritz consists of 5 business areas:

 Andritz Hydro
 Andritz Pulp and Paper
 Andritz Metals
 Andritz Feed & Biofuel
 Andritz Environment and Process

History

ANDRITZ HYDRO has more than 160 years of experience and expertise in hydraulic power
generation.

In 2000 the hydro business units of the companies SULZER HYDRO, VA TECH VOEST
MCE and VA TECH ELIN were merged to create VA TECH HYDRO, which was purchased
by the International ANDRITZ GROUP in 2006.

The history of ANDRITZ HYDRO is based on a number of pioneers which laid the groundwork
for its success:

ESCHER WYSS

1805 Foundation of Escher Wyss, Zurich, CH

1839 Delivery of the first water turbine
1969 Sulzer acquires Escher Wyss
1995 Change of name to Sulzer Hydro
1999 VA TECH acquires Sulzer Hydro
Change of name to VA TECH ESCHER WYSS and integration
2000
into VA TECH HYDRO Group

BLH / VOEST MCE

1831 Foundation of BALDWIN Locomotive, Philadelphia, USA

1878 Invention of the first Pelton waterwheel in USA
1903 First water turbine of I.P. MORRIS
1950 Manufacturing of turbine parts in Linz, Austria
1957 License of BLH BALDWIN-LIMA-HAMILTON
Acquisition of BALDWIN-LIMA-HAMILTON´s hydro sector, including
1971
I.P.MORRIS and PELTON-WATER-WHEEL
1989 Foundation of VOEST-ALPINE MCE
1991 Foundation of HYDRO VEVEY
1992 Foundation of BOUVIER HYDRO
1993 Strategic alliance with GE Canada
1994 Foundation of VA TECHNOLOGIE AG
1995 Joint Venture VAMEC, Brazil
2000 VA TECH VOEST MCE integrated into VA TECH HYDRO Group

VEVEY

1863 Foundation of Ateliers B.Roy & Cie, Vevey, CH

1895 Ateliers de Construction Mécaniques de Vevey
1981 Takeover of Ateliers des Charmilles
Foundation of HYDRO Vevey;
1991
Integration into VOEST-ALPINE MCE
CHARMILLES

1918 Foundation of Ateliers des CHARMILLES, Genf, CH

1981 Ateliers des CHARMILLES integrated into Vevey

BOUVIER

1874 Foundation of Ateliers Bouviers, Grenoble, F

Foundation of BOUVIER HYDRO; Integration into VOEST-
1992
ALPINE MCE

ELIN

1892 Foundation of Pichlerwerke in Weiz, Austria

1922 Change of name to ELIN AG
1959 Merger with AEG Union
1989 Split into ELIN Energieanwendung and ELIN Energieversorgung
1991 Cooperation with GE USA
1993 Strategic alliance with GE Canada
1994 Foundation of VA TECHNOLOGIE AG
1997 Joint Venture Crompton Greaves
1999 Joint Venture with ENERG Brazil
2000 VA TECH ELIN integrated into the VA TECH HYDRO Group

SAT Automation

1973 Foundation of Schrack Automatisierungstechnik GmbH

1985 Change of name to SAT Systeme fur Automatisierungstechnik
 GmbH
1988-1997 Foundation of Subsidiaries in several countries
Business Unit ACP (Austomation, Control, Protection) with
2000
VA TECH Reyrolle Protection
2001 Participation of VA TECH HYDRO at VA TECH SAT (50%)

Vision
World market leader for plants, process technologies, and services for hydropower
stations, for the pulp and paper industry, the metals industry, and certain other industry.

Mission:-
We want our market partners to recognize us as the number one company when it comes
to hydro power generation
Quality
We lead the industry by continuous important of our products and process
Shareholder
We strive for optimum utilization of resources to exceed industry standards of
profitability
Employees
We shall become the most preferred employer in our industry

Andritz hydro
Electromechanical systems – in particular, turbines, hydropower generators, and turbo
generators – and services for new hydropower stations as well as for modernizations of
existing hydropower stations; pumps for the pulp and paper industry and for other
applications (drinking water supply, etc.).
The Hydro Power business area was renamed ANDRITZ HYDRO as of January 1, 2009
 Recent trends of the company

Market development
During the first quarter of 2010, project activity for hydropower plant equipment remained high
in the main markets served by ANDRITZ. As a result of the high average age of hydropower
plants in Europe and North America, there are a number of projects for modernization,
rehabilitation, and capacity increases at existing plants. In Europe, the rising demand for peak
electricity as well as the capacity increases in wind energy has led to additional investments in
pumped storage power stations in order to secure stability of the European electric grid.
In South America and Asia (especially in India), there are many new hydropower projects in the
development and realization phase in order to meet the rising demand for energy in these rapidly
growing economic regions in the long term. In China, the number of projects realized was
significantly lower than in the previous year.
Project activity continued to be high for irrigation and drinking water pumps in Asia (mainly in
the Middle East and India) and for standard water pumps during the reporting period.

General economic conditions

During the first quarter of 2010, the economic environment continued to stabilize in the main
economic regions of the world. The main concern focused on the considerable national debt in
single countries and the resulting uncertainty regarding their ability to meet their solvency.
In the USA, the economy recovered further during the reporting period; however, this was
mostly driven by investments related to the government‘s incentive program as well as
inventory re-stocking in most industries. Due to the unchanged difficult situation in the labor
market, with over 10% unemployment, private consumption (which is the largest contributor to
the US gross domestic product) remained subdued. As a result, the Federal Reserve Board
(FED) indicated that interest rates will remain at the present low level for the foreseeable future.
In Europe, the economic recovery continued in the first quarter of 2010, but was more modest
than in the USA in most of the member countries due to subdued consumer spending. High un-
employment in most EU member states, as well as government programs initiated to consolidate
and reduce budget deficits, placed a further burden on economic recovery.
 The economies in Asia and in other large emerging regions continued their solid development
during the reporting period. Economic activities in China were supported by the stimulus
program implemented by the Chinese government, as well as by rising export figures. Japan and
most South American countries also developed favorably during the first quarter of 2010.

Sales
Sales of the ANDRITZ GROUP amounted to 732.3 MEUR during the first quarter of 2010, thus
decreasing by 7.3% compared to the first quarter of 2009 (790.1 MEUR).
While sales in the HYDRO business area rose compared to last year‘s reference period (349.0
MEUR in Q1 2010 vs. 316.6 MEUR in Q1 2009), sales in the other business areas saw a decline.
In particular, sales in the METALS (78.0 MEUR in Q1 2010 vs. 135.0 MEUR in Q1 2009) and
the ENVIRONMENT & PROCESS (55.7 MEUR in Q1 2010 vs. 70.8 MEUR in Q1 2009)
business areas dropped significantly compared to the previous year

Major risks during the remaining months of the financial year and risk management
The ANDRITZ GROUP has a long-established Group-wide risk management system whose goal
is to identify nascent risks early and to take countermeasures, if necessary. This is an important
element of active risk management within the Group. However, there is no guarantee that the
monitoring and risk control systems are sufficiently effective.
The essential risks for the business development of the ANDRITZ GROUP in 2010 relate above
all to: the Group‘s dependence on the general economic development and the development of the
industries it serves; whether major orders are received and the risks they entail; and whether
adequate sales proceeds are realized from the high order backlog. The persistent financial crisis
and substantial economic slowdown in the main economic regions of the world also constitute a
serious risk for the ANDRITZ GROUP‘s financial development during the 2010 business year.
The global economic weakness may lead to further delays in the execution of existing orders and
to the postponement or cancellation of projects. Cancellations of existing contracts could
adversely affect the ANDRITZ GROUP‘s order backlog, which would in turn have a negative
impact on utilization of the Group‘s manufacturing capacities.
The global financial and economic crisis may also necessitate complete or partial impairments of
single goodwill created in the course of acquisitions if the business development goals cannot be
reached. This may influence the earnings development of the ANDRITZ GROUP. In addition,
there is always some risk that partial or full provisions will have to be made for some trade
accounts receivable.
For the majority of orders, the risk of payment failure by customers is mitigated by means of
bank guarantees and export insurance, but individual payment failures can have a substantial
negative impact on earnings development of the Group. Risks related to deliveries to countries
with medium to high political risks typically are also insured to a large extent. Interest and
exchange rate risks are minimized and controlled by derivative financial instruments, in
particular forward exchange contracts and swaps. Net currency exposure of orders in foreign
currencies (mainly US dollar, Canadian dollar, and Swiss franc) is hedged by forward contracts.
Cash flow risks are monitored via monthly cash flow reports.

The ANDRITZ GROUP‘s position in terms of liquidity is very good; the Group has sufficient
liquidity reserves and secures access to liquidity. The Group avoids dependence on one single or
only a few banks. To ensure independence, no bank will receive more than a certain defined
amount of the business in any important product (cash and cash equivalents, financial liabilities,
financial assets, guarantees, and derivatives). Nevertheless, if one or more banks were to become
insolvent, this would have a considerable negative influence on earnings development and
shareholders‘ equity of the ANDRITZ GROUP.
Cash is largely invested in low-risk financial assets, such as government bonds, government-
guaranteed bonds, investment funds to cover pension obligations, or term deposits. However, the
financial market crisis and its effects have led to unfavorable price developments for various
securities in which the Group has invested (e.g. money market funds, bonds), or made them non-
tradable. This could have an adverse effect on the ANDRITZ GROUP‘s financial result or share-
holders‘ equity due to necessary depreciation or value adjustments. The crisis has also
heightened the risk of default by some issuers of securities, as well as by customers.
For further information on the major risks for the ANDRITZ GROUP, see the ANDRITZ annual
financial report 2009.

Effects from exchange rates

Changes in exchange rates are hedged by forward rate contracts.
Information pursuant to Article 87 (4) of the (Austrian) Stock Exchange Act
During the first quarter of 2010, no major business transactions were conducted with related
persons and companies.
Significant events after March 31, 2010
The status of the global economy and the financial markets did not change substantially in the
period between the date of the balance sheet and publication of this report.
Outlook
According to recent forecasts by leading economic experts, the economic situation in the relevant
regions is expected to stabilize further over the next few months; however, a substantial
economic recovery is not expected for 2010.
Based on the prevailing economic environment and the current project activity in those markets
that are relevant for ANDRITZ‘s business, the expectations of the ANDRITZ GROUP for its
economic development in the coming quarters have not changed. Continuing positive market
development is expected for the HYDRO business area in the coming months. The
ENVIRONMENT & PROCESS and the FEED & BIOFUEL business areas should also see
satisfactory development. Moderate project activity is expected to continue in the PULP &
PAPER and the METALS business areas.

Status report
On the basis of these expectations and the order backlog of more than 4.7 billion EUR at the end
of March 2010, the ANDRITZ GROUP expects sales in 2010 to remain unchanged or slightly up
compared to the full year of 2009. Cost savings resulting from the restructuring measures
initiated in 2009 should have a positive impact on the net income.
If, however, the global economy weakens again in 2010, a negative impact can be expected on
the future development of sales and earnings of the ANDRITZ GROUP. As a result, there may
be further need for restructuring that will affect the 2010 earnings development accordingly.
Declaration pursuant to Article 87 (1) of the (Austrian) Stock Exchange Act
We hereby confirm that, to the best of our knowledge, the condensed interim financial statements
of the ANDRITZ GROUP drawn up in compliance with the applicable accounting standards
provide a true and fair view of the asset, financial, and earnings positions of the ANDRITZ
GROUP, and that the status report for the first quarter of 2010 provides a true and fair view of
the asset, financial, and earnings positions of the ANDRITZ GROUP with regard to the
important events of the first three months of the financial year and their impact on the condensed
interim financial statements of the ANDRITZ GROUP, and with regard to the major risks and
uncertainties during the remaining nine months of the financial year, and also with regard to the
major business transactions subject to disclosure and concluded with related persons and
companies.
Graz, May 7, 2010
The Executive Board of ANDRITZ AG

Wolfgang Leitner Franz Hofmann Karl Hornhofer Humbert Köfler

(President, CEO)09

Friedrich Papst
‘2009 will be difficult –but we are well positioned for 2009’
The 2008 financial year was characterized by the global economic and financial crisis, which has
impacted practically all areas of the real economy. Wolfgang Leitner, President & CEO of
ANDRITZ AG, discusses the effects of the global financial and economic crisis, the expectations
and strategies of the ANDRITZ GROUP for 2009, as well as the successes achieved during the
year 2008.

The global economy is continuing to cool off, and the world‘s large economic regions have
either already slipped into recession or are seeing a clear slow-down of their economic growth.
Experts expect the effects of this crisis to become even more heavily felt by most industries in
the course of 2009 and, thus, to have a negative influence on the development of the real
economy.
What are the effects of this crisis on ANDRITZ?

Wolfgang Leitner (president & CEO)

The effects of the worldwide economic slowdown have indeed been strongly felt during the past
few months by some of our business areas, mainly PULP & PAPER and METALS, where we
have experienced delays in order awards and order execution on the customer side. The other
business areas have not, or only partially, been affected by the economic slump. Especially in the
HYDRO business area, order intake developed very favorably, and there have been no delays in
order execution either.
It is very difficult to predict how business will develop during the coming months and the full
year 2009. We are prepared for significant decreases in project activity in one business area or
the other. In the PULP & PAPER and METALS business areas, in particular, investments are
likely to remain at a low level during the first half of 2009, if not longer. The other ANDRITZ
business areas should be less affected by the economic weakness. 2009 will be difficult – but, in
general, I believe we are well-positioned to cope with the effects of the financial and economic
criss.
Many industries have been impacted by the global financial and economic crisis already in
2008. What were the essential developments of ANDRITZ in 2008? Despite the heavy
economic turmoil we can be satisfied with the development during the 2008 business year. We
were able to continue our growth both through organic expansion and further important
acquisitions, and to consolidate our market position in many areas. In particular, we achieved a
very positive order intake development in the HYDRO business area, and we have further
strengthened our competitive position in the rapidly growing hydropower market by acquiring
General Electric‘s hydropower activities.

I would also like to stress the very good development of the pumps business, where 2008 has
been another record year. In the METALS area, we have purchased ANDRITZ Maerz, a
company with a very good reputation in the industry. It has considerably extended our product
portfolio for furnaces for the steel and copper industry. With an order intake of more than 150
million Euros and very good profitability, the company, which became a member of the
ANDRITZ GROUP in March 2008, has developed better than expected.
In the PULP & PAPER area, we acquired major assets of Andreas Kufferath GmbH & Co. KG,
Düren, Germany, including the affiliates in Slovakia and China, thus considerably extending our
product portfolio in the services area by paper machine fabrics.

What are the goals and strategies for 2009?

The main goal is the rapid and successful integration of the newly acquired companies. Only
quick integration into the existing ANDRITZ organization will allow utilization of existing
synergies and, thus, create added value for the ANDRITZ GROUP. We must continuously look
for opportunities to become yet more competitive by introducing structural and operative
measures – several operative measures were taken in 2008 already to adjust ANDRITZ to the
changes in the general economic situation. We are watching the economic development very
closely and will immediately take further measures if necessary.
ANDRITZ is prepared for a comparatively rapid recovery of the global economy beginning in
2009 – but also for a continuation of the recession beyond 2009.We will continue to investigate
potential acquisitions in 2009 to further enhance our product and technology portfolio through
the purchase of complementary companies. Our high cash position provides us with the
necessary funds to be able to continue our external growth strategy.

We were able to continue our growth both through organic expansion

and further important acquisitions, and to consolidate our market
position in many areas.

Another important goal for 2009 is to process the high order backlog – especially in the
HYDRO and METALS areas – according to schedule and in conformity with the customer
requirements. Unless we execute all orders to the full satisfaction of our customers, we will not
be able to stand our ground and retain our good market position in an environment that has
become even more competitive than before due to the current financial and economic crisis.
On behalf of the Executive Board, I would like to thank all employees of the ANDRITZ
GROUP for their outstanding performance in 2008, and all customers, business partners, and
shareholders for the confidence placed in us in 2008. We will continue to do our utmost in 2009
and in the future to promote the success of ANDRITZ in the best possible way, despite the global
economic weakness.
Global care and economic crisis do not contradict each other’

Andritz hydro acquires hydro Power activities from general electric

In 2008, ANDRITZ HYDRO took over hydropower activities from General Electric (GE) with
400 employees in Canada, Brazil, Sweden, Finland, Great Britain, and China. Thus,
ANDRITZHYDRO has been able to further strengthen its position as a globally leading supplier
of hydropower equipment.
 Executive Board
President and CEO

Wolfgang Leitner
Joined ANDRITZ in 1987 as CFO and has served as President and CEO since 1994.His
responsibilities encompass central Group functions such as Human Resources Management,
Controlling and Finance, Treasury , Corporate Communications, Investor Relations , Internal
Auditing, Information Technology, as well as Organization and Business Process Development.
Professional career: member of the Managing Board of AGIV AG founder and president of
GENERICON Pharma GmbH Management consultant at McKinsey & Company Research
chemist at Vianova/HOECHST.

Pulp & paper (capital systems)

Karl Hornhofer
Head of the Pulp and Paper Machines division at ANDRITZ AG Head of the Pulp Drying
Systems division at ANDRITZ AG Design engineer at Austrian Energy.

Pulp & paper (service & units)

Humbert Köfler
Head of the Paper Mill Services division at ANDRITZ AG Head of the Mechanical Pulping
Systems division at ANDRITZ AG Regional sales manager at ANDRITZ Sprout-Bauer GmbH
Export marketing manager at Biochemie GmbH.
Hydro, feed & biofuel
Friedrich Papst
Vice President of ANDRITZ Sprout- Bauer Inc. Director of Manufacturing at ANDRITZ AG
Director of Production Planning at ANDRITZ AG.

Kurt Stiassny
(Chairman of the Supervisory Board)
Chief Executive Officer of Buy-Out Central Europe II Beteiligungs-Invest AG; chairman of the
Supervisory Board of ANDRITZ AG since 1999 and elected until the Annual General Meeting
of ANDRITZ AG in 2010.

Hellwig Torggler
(Deputy Chairman of the Supervisory Board)
Attorney-at-law; deputy chairman of the Supervisory Board of ANDRITZ AG since 2004,
member of the Supervisory Board of ANDRITZ AG since 2000 and elected until the Annual
General Meeting of ANDRITZ AG in 2009.

Peter Mitterbauer
Chairman of the Managing Board of MIBA AG; member of the Supervisory Board of ANDRITZ
AG since 2003 and elected until the Annual General Meeting of ANDRITZ AG in 2010.

Christian Nowotny
Full-time professor at the University of Economics in Vienna; member of the Supervisory Board
of ANDRITZ AG since 1999 and elected until the Annual General Meeting of ANDRITZ AG in
2013.

Klaus Ritter
President & CEO of AVI Alpenländische Veredelungs Industry Ges.m.b.H, EVG Entwicklungs-
und Verwertungs-Gesellschaft m.b.H., and Stahl- und Walzwerk Marienhütte Ges.m.b.H.;
member of the Supervisory Board of ANDRITZ AG since 2004 and elected until the Annual
General Meeting of ANDRITZ AG in 2012.
Fritz Oberlerchner
Deputy chairman of the Managing Board of STRABAG SE; member of the Supervisory Board
of ANDRITZ AG since 2006 and elected until the Annual General Meeting of ANDRITZ AG in
2011.

SWOT Analysis of Andritz Hydro

Andritz AG - Strengths
Strength - Diversified Operations
Strength - Global Presence
Strength - Efficient Use of Resources
Strength - Strong Growth in Revenues

Andritz AG – Weaknesses
Weakness - Declining Operating Margin
Weakness - Legal Proceedings

Andritz AG - Opportunities
Opportunity - Strategic Acquisitions
Opportunity - Frowing Importance of Environment Protection
Opportunity - Higher Growth Prospects in Hydro Power Sector

Andritz AG - Threats
Threat - Unfavorable Business Environment
Threat - Volatility of Incoming Orders
Threat - Intense Competition
METHODOLOGY

Research Methodology is a way to systematically solve the research problem. In it, step-by-step
methods are followed to solve a particular problem. It refers to a search for knowledge. It can
also be defined as a scientific and systematic search for pertinent information on a specific topic.
In fact, research is an art of scientific investigation.

Redman & Mory defines research as ―systematized effort to gain new knowledge.‖

RESEACH DESIGN:
Research Design is the way in which the research is carried out. It works as a blue print.
Research Design is the arrangement of conditions for the collection and analysis of data in a
manner that aims to combine relevance to the research purpose with economy in procedure.

Testing Research Design.

The present project is descriptive in nature. The major purpose of descriptive
research is the description of state of affairs, as it exists at present. The main characteristic of this
method is that the researcher has no control over the variables; he can only report what has
happened or what is happening.
Sample size:- In project sample size 1 company i.e. Andritz hydro pvt ltd

PROBLEM RECOGNITION:-
Any type of research study suffers from certain limitation relating to either the research itself or
to the topic thought. The degree and nature of the limitation varies with the topic.
The present study has been undertaken to analyze the Ratio analysis is being managed in the
company and how far it contributes to the overall objective of maximization of shareholders
wealth and the organization wealth.
It become quite difficult rather impossible to make judgment about the position of any business
by way of analyzing the financial statements of one year.
To know the financial position of the company through various ratios.
Is Andritz is able to meets its current liability against its current assets?
The information is collected through secondary sources during the project. That information was
utilized for calculating performance evaluation and based on that, interpretations were made.

DATA COLLECTION:
The data can be of two types:
Primary Data
Secondary Data
The study is based on both primary and secondary data.
Primary Data: Primary data are those data, which is originally collected afresh.
Secondary Data: Secondary Data are those data which are already collected and stored and
which has been passed through statistical research.
In this project, secondary data has been collected from following sources:-
Sources of secondary data:
1. Most of the calculations are made on the financial statements of the company provided
statements.
2. Referring standard texts and referred books collected some of the information regarding
theoretical aspects.
3. Method- to assess the performance of the company method of observation of the work in
finance department in followed.

LIMITATIONS

1. The study provides an insight into the financial, personnel, marketing and other aspects
of ANDRITZ. Every study will be bound with certain limitations.
2. The below mentioned are the constraints under which the study is carried out.
3. One of the factors of the study was lack of availability of ample information. Most of
the information has been kept confidential and as such as not assed as art of policy of
company.
4. Time is an important limitation. The whole study was conducted in a period of 45 days,
which is not sufficient to carry out proper interpretation and analysis.
5. Unawareness: Executives were unaware of many terms related to Financial Analysis
while asking to them.
6. Busy Schedule of Concerned Executives: The concerned executives were not having
very busy schedule because of which they were reluctant to give appointment.
.
RATIO ANALYSIS
FINANCIAL ANALYSIS
Financial analysis is the process of identifying the financial strengths and weaknesses of the firm
and establishing relationship between the items of the balance sheet and profit & loss account.

Financial ratio analysis is the calculation and comparison of ratios, which are derived from the
information in a company‘s financial statements. The level and historical trends of these ratios
can be used to make inferences about a company‘s financial condition, its operations and
attractiveness as an investment. The information in the statements is used by

Trade creditors, to identify the firm‘s ability to meet their claims i.e. liquidity position of
the company.
Investors, to know about the present and future profitability of the company and its
financial structure.
Management, in every aspect of the financial analysis. It is the responsibility of the
management to maintain sound financial condition in the company.

RATIO ANALYSIS
The term ―Ratio‖ refers to the numerical and quantitative relationship between two items or
variables. This relationship can be exposed as
· Percentages
· Fractions
· Proportion of numbers
Ratio analysis is defined as the systematic use of the ratio to interpret the financial statements. So
that the strengths and weaknesses of a firm, as well as its historical performance and current
financial condition can be determined. Ratio reflects a quantitative relationship helps to form a
quantitative judgment.
STEPS IN RATIO ANALYSIS
The first task of the financial analysis is to select the information relevant to the decision
under consideration from the statements and calculates appropriate ratios.

To compare the calculated ratios with the ratios of the same firm relating to the pas6t or
with the industry ratios. It facilitates in assessing success or failure of the firm.

Third step is to interpretation, drawing of inferences and report writing conclusions are
drawn after comparison in the shape of report or recommended courses of action.

BASIS OR STANDARDS OF COMPARISON

Ratios are relative figures reflecting the relation between variables. They enable analyst to draw
conclusions regarding financial operations. They use of ratios as a tool of financial analysis
involves the comparison with related facts. This is the basis of ratio analysis. The basis of ratio
analysis is of four types.

Past ratios, calculated from past financial statements of the firm.

Competitor‘s ratio, of the sum most progressive and successful competitor firm at the
same point of time.
Industry ratio, the industry ratios to which the firm belongs to
Projected ratios, ratios of the future developed from the projected or pro forma financial
statements.
NATURE OF RATIO ANALYSIS
Ratio analysis is a technique of analysis and interpretation of financial statements. It is the
process of establishing and interpreting various ratios for helping in making certain decisions. It
is only a means of understanding of financial strengths and weaknesses of a firm. There are a
number of ratios which can be calculated from the information given in the financial statements,
but the analyst has to select the appropriate data and calculate only a few appropriate ratios. The
following are the four steps involved in the ratio analysis.

Selection of relevant data from the financial statements depending upon the objective of
the analysis.
Calculation of appropriate ratios from the above data.
Comparison of the calculated ratios with the ratios of the same firm in the past, or the
ratios developed from projected financial statements or the ratios of some other firms or
the comparison with ratios of the industry to which the firm belongs.

INTERPRETATION OF THE RATIOS

The interpretation of ratios is an important factor. The inherent limitations of ratio analysis
should be kept in mind while interpreting them.
The impact of factors such as price level changes, change in accounting policies, window
dressing etc., should also be kept in mind when attempting to interpret ratios. The interpretation
of ratios can be made in the following ways.
Single absolute ratio
Group of ratios
Historical comparison
Projected ratios
Inter-firm comparison
GUIDELINES OR PRECAUTIONS FOR USE OF RATIOS:-
The calculation of ratios may not be a difficult task but their use is not easy. Following
guidelines or factors may be kept in mind while interpreting various ratios is:-
Accuracy of financial statements
Objective or purpose of analysis
Selection of ratios
Use of standards
Caliber of the analysis

IMPORTANCE OF RATIO ANALYSIS

Aid to measure general efficiency
Aid to measure financial solvency
Aid in forecasting and planning
Facilitate decision making
Aid in corrective action
Aid in intra-firm comparison
Act as a good communication
Evaluation of efficiency
Effective tool

LIMITATIONS OF RATIO ANALYSIS

Differences in definitions
Limitations of accounting records
Lack of proper standards
No allowances for price level changes
Changes in accounting procedures
Quantitative factors are ignored
Limited use of single ratio
Background is over looked
Limited use and Personal bias
CLASSIFICATIONS OF RATIOS
The use of ratio analysis is not confined to financial manager only. There are different parties
interested in the ratio analysis for knowing the financial position of a firm for different purposes.
Various accounting ratios can be classified as follows:
1. Traditional Classification
2. Functional Classification
3. Significance ratios
1. Traditional Classification
It includes the following.
Balance sheet (or) position statement ratio: They deal with the relationship between
two balance sheet items, e.g. the ratio of current assets to current liabilities etc., both
the items must, however, pertain to the same balance sheet.
Profit & loss account (or) revenue statement ratios: These ratios deal with the
relationship between two profit & loss account items, e.g. the ratio of gross profit to
sales etc.,
Composite (or) inter statement ratios: These ratios exhibit the relation between a
profit & loss account or income statement item and a balance sheet items, e.g. stock
turnover ratio, or the ratio of total assets to sales.

2. Functional Classification
These include
Liquidity ratios
Long term solvency and
Leverage ratios,
Activity ratios and
Profitability ratios.
3. Significance ratios
Some ratios are important than others and the firm may classify them as primary and secondary
ratios. The primary ratio is one, which is of the prime importance to a concern. The other ratios
that support the primary ratio are called secondary ratios.
IN THE VIEW OF FUNCTIONAL CLASSIFICATION THE RATIOS ARE:-
1. Liquidity ratio
2. Leverage ratio
3. Activity ratio
4. Profitability ratio

1. LIQUIDITY RATIOS
Liquidity refers to the ability of a concern to meet its current obligations as & when there
becomes due. The short term obligations of a firm can be met only when there are sufficient
liquid assets. The short term obligations are met by realizing amounts from current, floating (or)
circulating assets The current assets should either be calculated liquid (or) near liquidity. They
should be convertible into cash for paying obligations of short term nature. The sufficiency (or)
insufficiency of current assets should be assessed by comparing them with short-term current
liabilities. If current assets can pay off current liabilities, then liquidity position will be
satisfactory.

To measure the liquidity of a firm the following ratios can be calculated:-

Current ratio
Quick (or) Acid-test (or) Liquid ratio
Absolute liquid ratio (or) Cash position ratio
(a) CURRENT RATIO:
Current ratio may be defined as the relationship between current assets and current liabilities.
This ratio also known as Working capital ratio is a measure of general liquidity and is most
widely used to make the analysis of a short-term financial position (or) liquidity of a firm.

Current ratio = _Current assets__

Current liabilities

Components of current ratio

Current assets C Current liabilities
Cash in hand Outstanding or accrued expenses

Cash at bank Bank over draft

Bills receivable
Inventories
Work-in-progress
Marketable securities
Short-term investments
Sundry debtors
Prepaid expenses
Bills payable
Short-term advances
Sundry creditors
Dividend payable
Income-tax payable

(b) QUICK RATIO

Quick ratio is a test of liquidity than the current ratio. The term liquidity refers to the ability of a
firm to pay its short-term obligations as & when they become due. Quick ratio may be defined as
the relationship between quick or liquid assets and current liabilities. An asset is said to be liquid
if it is converted into cash within a short period without loss of value.
Quick ratio = Quick or liquid assets
Current liabilities

Components of quick or liquid ratio

Quick assets Current liabilities
Cash in hand Outstanding or accrued expenses
Cash at bank Bank over draft
Bills receivable Bills payable
Sundry debtors Short-term advances
Marketable securities Sundry creditors
Temporary investments Dividend payable
Income tax payable

(c) ABSOLUTE LIQUID RATIO

Although receivable, debtors and bills receivable are generally more liquid than inventories, yet
there may be doubts regarding their realization into cash immediately or in time. Hence, absolute
liquid ratio should also be calculated together with current ratio and quick ratio so as to exclude
even receivables from the current assets and find out the absolute liquid assets.

Absolute liquid ratio = Absolute liquid assets

Current liabilities

Absolute liquid assets include cash in hand etc. The acceptable forms for this ratio is 50% (or)
0.5:1 (or) 1:2 i.e., Rs.1 worth absolute liquid assets are considered to pay Rs.2 worth current
liabilities in time as all the creditors are nor accepted to demand cash at the same time and then
cash may also be realized from debtors and inventories.
Components of Absolute Liquid Ratio SOLUTEID ASSETS
Absolute liquid assets Current liabilities
Cash in hand Outstanding or accrued expenses
Cash at bank Bank over draft
Interest on Fixed Deposit Bills payable
Short-term advances
Sundry creditors
Dividend payable
Income tax payable
CURRENT LIABILITIES
2. LEVERAGE RATIOS
The leverage or solvency ratio refers to the ability of a concern to meet its long term obligations.
Accordingly, long term solvency ratios indicate firm‘s ability to meet the fixed interest and costs
and repayment schedules associated with its long term borrowings.
The following ratio serves the purpose of determining the solvency of the concern.
Proprietary ratio

(a) PROPRIETARY RATIO

A variant to the debt-equity ratio is the proprietary ratio which is also known as equity ratio. This
ratio establishes relationship between shareholders funds to total assets of the firm.

Proprietary ratio = Shareholders funds

Total assets

Components of proprietary ratio

Share holder’s fund Total assets
Share Capital Fixed Assets
Reserves & Surplus Current Assets
Cash in hand & at bank
 Bills receivable
Inventories
Marketable securities
Short-term investments
Sundry debtors
Prepaid Expenses

SHARE HOLDERS FUND TOETS

3. ACTIVITY RATIOS
Funds are invested in various assets in business to make sales and earn profits. The efficiency
with which assets are managed directly affects the volume of sales. Activity ratios measure the
efficiency (or) effectiveness with which a firm manages its resources (or) assets. These ratios are
also called ―Turn over ratios‖ because they indicate the speed with which assets are converted or
turned over into sales.
Working capital turnover ratio
Fixed assets turnover ratio
Capital turnover ratio
Current assets to fixed assets ratio

(a) WORKING CAPITAL TURNOVER RATIO

Working capital of a concern is directly related to sales.

Working capital = Current assets - Current liabilities

It indicates the velocity of the utilization of net working capital.

This indicates the no. of times the working capital is turned over in the course of a year. A higher
ratio indicates efficient utilization of working capital and a lower ratio indicates inefficient
utilization.

Working capital turnover ratio= cost of goods sold

Working capital
Components of Working Capital :-CURRENT ASSETS C
Current assets Current liabilities
Cash in hand Outstanding or accrued expenses
Cash at bank Bank over draft
Bills receivable Bills payable
Inventories Short-term advances
Work-in-progress Sundry creditors
Marketable securities Dividend payable
Short-term investments Income-tax payable
Sundry debtors
Prepaid expenses
ABILITIES

(b) FIXED ASSETS TURNOVER RATIO

It is also known as sales to fixed assets ratio. This ratio measures the efficiency and profit
earning capacity of the firm. Higher the ratio, greater is the intensive utilization of fixed assets.
Lower ratio means under-utilization of fixed assets.

Fixed assets turnover ratio = Cost of Sales

Net fixed assets

Cost of Sales = Income from Services

Net Fixed Assets = Fixed Assets – Depreciation

(c) CAPITAL TURNOVER RATIOS
Sometimes the efficiency and effectiveness of the operations are judged by comparing the cost of
sales or sales with amount of capital invested in the business and not with assets held in the
business, though in both cases the same result is expected. Capital invested in the business may
be classified as long-term and short-term capital or as fixed capital and working capital or
Owned Capital and Loaned Capital. All Capital Turnovers are calculated to study the uses of
various types of capital.

Capital turnover ratio = Cost of goods sold

Capital employed

Cost of Goods Sold = Income from Services

Capital Employed = Capital + Reserves & Surplus

(d) CURRENT ASSETS TO FIXED ASSETS RATIO

This ratio differs from industry to industry. The increase in the ratio means that trading is slack
or mechanization has been used. A decline in the ratio means that debtors and stocks are
increased too much or fixed assets are more intensively used. If current assets increase with the
corresponding increase in profit, it will show that the business is expanding.

Current Assets to Fixed Assets Ratio = Current Assets

Fixed Assets
Component of Current Assets to Fixed Assets Ratio CURRENT ASSETS FIXED
Current Assets Fixed Assets
Cash in hand Machinery
Cash at bank Buildings
Bills receivable Plant
Inventories Vehicles
Work-in-progress
Short-term investments
Marketable securities
Sundry debtors
Prepaid expenses

S
4. PROFITABILITY RATIOS
The primary objectives of business undertaking are to earn profits. Because profit is the engine,
that drives the business enterprise.
Net profit ratio
Return on total assets
Reserves and surplus to capital ratio
Earnings per share
Operating profit ratio
Return on investments

(a) NET PROFIT RATIO

Net profit ratio establishes a relationship between net profit (after tax) and sales and indicates the
efficiency of the management in manufacturing, selling administrative and other activities of the
firm.

Net profit ratio= Net profit after tax

 Net sales

Net Profit after Tax = Net Profit (–) Depreciation (–) Interest (–) Income Tax

Net Sales = Income from Services

It also indicates the firm‘s capacity to face adverse economic conditions such as price
competitors, low demand etc. Obviously higher the ratio, the better is the profitability.

(b) RETURN ON TOTAL ASSETS

Profitability can be measured in terms of relationship between net profit and assets. This ratio is
also known as profit-to-assets ratio. It measures the profitability of investments. The overall
profitability can be known.

Return on assets = Net profit

Total assets

Net Profit = Earnings before Interest and Tax

Total Assets = Fixed Assets + Current Assets

(c) RESERVES AND SURPLUS TO CAPITAL RATIO

It reveals the policy pursued by the company with regard to growth shares. A very high ratio
indicates a conservative dividend policy and increased ploughing back to profit. Higher the ratio
better will be the position.

Reserves & surplus to capital = Reserves& surplus

Capital
(d) EARNINGS PER SHARE
Earnings per share is a small verification of return of equity and is calculated by dividing the net
profits earned by the company and those profits after taxes and preference dividend by total no.
of equity shares.

Earnings per share = Net profit after tax

Number of Equity shares

The Earnings per share is a good measure of profitability when compared with EPS of similar
other components (or) companies, it gives a view of the comparative earnings of a firm.

(e) OPERATING PROFIT RATIO

Operating ratio establishes the relationship between cost of goods sold and other operating
expenses on the one hand and the sales on the other.

Operation ratio = Operating cost

Net sales

However 75 to 85% may be considered to be a good ratio in case of a manufacturing under

taking.
Operating profit ratio is calculated by dividing operating profit by sales.

Operating profit = Net sales - Operating cost

Operating profit ratio = Operating profit

Sales
(f) RETURN ON INVESTMENTS
Return on share holder‘s investment, popularly known as Return on investments (or) return on
share holders or proprietor‘s funds is the relationship between net profit (after interest and tax)
and the proprietor‘s funds.

Return on shareholder’s investment = Net profit (after interest and tax)

Shareholder’s funds

The ratio is generally calculated as percentages by multiplying the above with 100.
 Data analysis & Interpretation

Liquidity Ratio
1. Current Ratio
(Amount in rupees)
YEAR CURRENT ASSETS CURRENT LIABILITIES RATIO
2005 1,562,475,862 1,316,312,883 1.187009473

2006 1,723,438,572 1,367,910,032 1.259906377

2007 2,502,250,930 2,066,591,896 1.210810385

2008 3,530,893,480 3,087,897,029 1.143462184

2009 8,288,081,862 7,273,211,337 1.13953541

Current assets & liabilities trend line:-

Current assets tred line Current laibilities trend line

10,000,000,000

8,000,000,000

6,000,000,000

4,000,000,000

2,000,000,000

0
2005 2006 2007 2008 2009

Comment:- This graph represents current assets more than current liabilities because debtors
in all years 2005-2009 regular increased because my company is project based company debtors
can‘t easily converted in to cash till the project is not completed. Inventories are also increased in
2007-2009. Cash &bank balance fluctuates because of purchase of raw material for project and
increased when project is completed.
Current ratio

Current Ratio

1.26
1.28
1.26

1.21
1.24
1.22
1.19

1.2
1.18

1.14

1.14
1.16
1.14
1.12
1.1
1.08
1.06
2005 2006 2007 2008 2009

INTREPETATION:-
As a rule, the current ratio with 2:1 (or) more is considered as satisfactory position of the firm.
In this company initially current ratio is low but next year higher in all year. So finally we can
say that current ratio is in moderate situation.

2. QUICK RATIO: - (Amount in Rs.)

Year Quick assets Current liabilities Ratio

2005 904,098,087 1,316,312,883

0.686841327
2006 782,303,837 1,367,910,032
0.571897141
2007 1,460,616,927 2125249044
0.706775697
2008 1,508,963,160 3,087,897,029
0.488670168
2009 2,681,705,024 7,273,211,337
0.3687099
Quick assets and current liabilities trends :-
12,000,000,000

10,000,000,000

8,000,000,000
current laibilities trend
6,000,000,000 line
Quick assets trend line
4,000,000,000

2,000,000,000

0
2005 2006 2007 2008 2009

Comment:- In project based company the quick assets is very less (cash & bank balance,
sundry debtors) because of cycle of purchase of raw material through cash and it may take a long
time to convert in to cash. in project based company they consider sundry debtors as long term
assets because of long project take long time after the completion of project debtors are turn
liquid. This graph represents current liabilities is more than quick assets because in project based
company initially they deal a contract and send the material at project sight. Initially the other
party can‘t pay more cash as per project so this creates more current liabilities than quick assets.

Quick ratio
0.71

0.8
0.69

0.7
0.57

0.6
0.49

0.5
0.37

0.4
0.3
0.2
0.1
0
2005 2006 2007 2008 2009
 Interpretation:-
As a rule quick ratio is 1:1, or Quick assets are those assets which can be converted into cash
within a short period of time, say to six months. This graph represents quick ratio in moderate
situation. Due to fluctuation in cash balance and debtors take long time converted in to cash.

3. ABOSULTE LIQUIDITY RATIO:-

(Amount in Rs.)
Year Absolute liquid assets Current liabilities Ratio
2005 138,117,113 1,316,312,883
0.104927267
2006 54,668,969 1,367,910,032
0.039965325
2007 376,636,324 2,066,591,896
0.182249976
2008 944,416,663 3,087,897,029
0.30584461
2009 649,916,697 7,273,211,337
0.089357598

Absolute assets & Current laibilities trend line:-

9,000,000,000
8,000,000,000
7,000,000,000
6,000,000,000
5,000,000,000
current laibilities
4,000,000,000
liquid assets trend line
3,000,000,000
2,000,000,000
1,000,000,000
0
2005 2006 2007 2008 2009

Comment:- In this graph represents less in absolute liquid assets as compare to the current
laibilities in this company only cash & bank is consider as absolute liquid asset.
Liquid ratio:-

liquid Ratio

0.31
0.35

0.3

0.25

0.18
0.2
0.10

0.15

0.09
0.1
0.04

0.05

0
2005 2006 2007 2008 2009

Interpretation:-
The current assets which are ready in the form of cash are considered as absolute liquid assets.
Here, the cash and bank balance are absolute liquid assets. In this represents liquid ratio
fluctuates, but in 2008 higher the liquid ratio in all years.

Leverage Ratio
4. Proprietary Ratio :-
(Amount in Rs.)
Year Share holder’s fund Total assets Ratio
2005 186,483,720 633310740 0.294458483

2006 186,483,720 652,464,032 0.28581456

2007 186483,720 685,849,818 0.271901683

2008 583,054,493 744,030,046 0.783643747

2009 1,206,938,747 1,722,435,526 0.700716357
Share holders fund &total assets trend line:-
3,500,000,000

3,000,000,000

2,500,000,000

2,000,000,000 Total assets trend

1,500,000,000
share holder's fund
Trend
1,000,000,000

500,000,000

0
2005 2006 2007 2008 2009

Comments: - In this graph represents company not issued share capital but also increased in
assets means sales increased and company invested in purchasing assets. Total assets are in
increasing trend share capital also increase trend but less to total assets trend.

Properitary Ratio
0.78

0.9
0.70

0.8
0.7
0.6
0.5
0.29

0.29

0.4
0.27

0.3
0.2
0.1
0
2005 2006 2007 2008 2009

Interpretation:-
The proprietary ratio establishes the relationship between shareholders funds to total assets. It
determines the long-term solvency of the firm. This ratio indicates the extent to which the assets
of the company can be lost without affecting the interest of the company. Proprietary ratio of
company is increasing trend, but 2009 due recession company ratio going less but still is good
position.

ACTIVITY RATIOS
5. WORKING CAPITAL TURNOVER RATIO
(Amount inRs.)
Year Income Working capital Ratio
2005 1,290,274,879 203657709 6.335507187

2006 1,644,413,909 311,825,685 5.273503717

2007 1,638,420,661 377,001,886 4.345921657

2008 3,024,373,759 291,758,869 10.36600453

2009 6,310,774,872 722,163,823 8.738702592

Income & working capital trend line:-

8,000,000,000

7,000,000,000

6,000,000,000

5,000,000,000

4,000,000,000 Working capital trend

3,000,000,000 Income trend

2,000,000,000

1,000,000,000

0
2005 2006 2007 2008 2009

Comments: - In this graph represents income trend and working capital are in increased trend
It is good indication of the company. Company earns and reinvested in to future projects.
Working capital ratio:-

Working capital Ratio

10.37
12

8.74
10
6.34

8
5.27

4.35
6

0
2005 2006 2007 2008 2009

Interpretation: - working capital ratio is increased but in 2009 it affects by recession, but it is
good condition.

6. FIXED ASSETS TURNOVER RATIO

(Amount in Rs.)
Year Income Net fixed assets Ratio
2005 1,290,274,879 202,167,657 6.382202268

2006 1,644,413,909 185,739,355 8.853341334

2007 1,638,420,661 172,932,140 9.474356016

2008 3,024,373,759 295,926,980 10.22000008

2009 6,310,774,872 749,261,960 8.422654838

Income & net fixed assets Trend :-
8,000,000,000

7,000,000,000

6,000,000,000

5,000,000,000

4,000,000,000 Net fixed assets

3,000,000,000 Income

2,000,000,000

1,000,000,000

0
2005 2006 2007 2008 2009

Comments:- This graph shows income and fixed assets are in increased trends means income is
further invested in acquiring fixed assets like machines, land etc

Fixed assets Ratio

10.22

12
9.47
8.85

8.42

10
6.38

8
6
4
2
0
2005 2006 2007 2008 2009

Interpretation
Fixed assets are used in the business for producing the goods to be sold. This ratio shows the
firm‘s ability in generating sales from all financial resources committed to total assets. The ratio
indicates the account of one rupee investment in fixed assets . In this graph represents fixed ratio
is in increasing trends but 2009 ratio is affected by recession in economy. But this ratio is good
for the company.
 7. CAPITAL TURNOVER RATIO
(Amount in Rs.)
Year Income Capital employed Ratio
2005 1,290,274,879 186,483,720 6.918967935

2006 1,644,413,909 186,483,720 8.818002499

2007 1,638,420,661 186,483,720 8.785864316

2008 3,024,373,759 583,054,493 5.187120235

2009 6,310,774,872 1,206,938,747 5.228744945

Income & capital employed trend

7,000,000,000

6,000,000,000

5,000,000,000

4,000,000,000 Income trend

3,000,000,000
Capital employed
trend
2,000,000,000

1,000,000,000

0
2005 2006 2007 2008 2009

Comments: - In this graph represents capital employed trend it is a combination of share capital
and reserve and surplus and income trend. In this shows capital employed is almost constant but
income is increase at very high rate. This company‘s income and financial position is very good.
 Capital turnover Ratio

8.82

8.79
10
9 6.92
8
7

5.23
5.19
6
5
4
3
2
1
0
2005 2006 2007 2008 2009

Interpretation:-
This is another ratio to judge the efficiency and effectiveness of the company like profitability
ratio. In this graph shows the capital turnover ratio initially increase but after 2007 it was
decreasing. The company no needs to issue share capital and its reserve. It earns more and more
income through sales without issue share capital and reserves.

8. CURRENT ASSETS TO FIXED ASSETS RATIO

(Amount in Rs.)
Year Current assets Fixed assets Ratio
2005 1,562,475,862 358,532,060 4.357980879

2006 1,723,438,572 368,469,853 4.677285151

2007 2,502,250,930 379,069,669 6.601031775

2008 3,530,893,480 531,512,362 6.643106976

2009 8,288,081,862 1,051,906,496 7.879105123

Current assets & fixed assets trends:-

9,000,000,000
8,000,000,000
7,000,000,000
6,000,000,000
5,000,000,000
current assets trend
4,000,000,000
fixed assets trend
3,000,000,000
2,000,000,000
1,000,000,000
0
2005 2006 2007 2008 2009

Comments:- In this graph represents current assets more than its fixed assets it is good for the
company because in short run current assets is more to pay the day-day expenses so it is good for
the company and its financial position of the company.

CURRENT ASSETS TO FIXED ASSETS RATIO

current assets & fixed assets ratio

7.88

9
8
6.64
6.60

7
6
4.68
4.36

5
4
3
2
1
0
2005 2006 2007 2008 2009

Interpretation:- This graph shows increasing the current assets and fixed assets ratio is good for
the company. It shows sound financial position of the company. The company saves its assets in
recession time also and makes a good structure or position of the company.
PROFITABILITY RATIOS
GENERAL PROFITABILITY RATIOS
9. NET PROFIT RATIO
(Amount in rupees)
Year Net profit after tax Income Ratio
2005 (34,077,703) 1,290,274,879 -0.026411196

2006 48,147,437 1,644,413,909 0.029279391

2007 43,642,334 1,638,420,661 0.026636831

2008 257,386,752 3,024,373,759 0.085104148

2009 413,189,839 6,310,774,872 0.065473709

Profit after tax &income trend:-

7,000,000,000

6,000,000,000

5,000,000,000

4,000,000,000
profit after tax trend
3,000,000,000
income trend
2,000,000,000

1,000,000,000

0
2005 2006 2007 2008 2009
-1,000,000,000

Comments: - In this graph represents income is more than its profit of the company because
of tax depreciation etc. in this graph represents income increasing at very high rate as
comparison of profit.
 NET PROFIT RATIO

Net profit ratio

0.09
0.1

0.07
0.08

0.06
0.03

0.03
0.04

0.02

0
2005 2006 2007 2008 2009
-0.02
-0.03

-0.04

Interpretation:-
The net profit ratio is the overall measure of the firm‘s ability to turn each rupee of income from
services in net profit. If the net margin is inadequate the firm will fail to achieve return on
shareholder‘s funds. High net profit ratio will help the firm service in the fall of income from
services, rise in cost of production or declining demand. This graph shows initially decline but
company profit in 2006 -2007 constant after in will be increased. But 2009 it was decreased due
recession.

10. OPERATING PROFIT RATIO

(Amount in rupees)
Year Operating profit Income Ratio
2005 (25,247,809) 1,290,274,879 -0.019567775

2006 70,299,399 1,644,413,909 0.042750428

2007 64,534,637 1,638,420,661 0.03938832

2008 392,066,234 3,024,373,759 0.12963551

2009 5,651,233,042 6,310,774,872 0.895489565

Operating profit & income trend:-
7,000,000,000

6,000,000,000

5,000,000,000

4,000,000,000
operating profit trend
3,000,000,000
income trend
2,000,000,000

1,000,000,000

0
2005 2006 2007 2008 2009
-1,000,000,000

Comments:-In this graph represents income trend and operating profit(sales – operating cost).
In this graph income is increase and operating profit is also increasing rate but less to the income.
In this company performance is good.

Operating profit ratio:-

operating profit ratio

0.90

0.8

0.6

0.4
0.13

0.2
0.04

0.04

0
-0.02

2005 2006 2007 2008 2009

-0.2

Interpretation:-
The operating profit ratio is used to measure the relationship between net profits and sales of a
firm. Depending on the concept, it will decide. In this graph represents operating profit ratio is
increasing trend means it is good for the company. Initially operating profit ratio decline, and
2006-2008 not more improve in this ratio but 2009 it was achieve highest level in all years
because company involved in various profitable project.

11. RETURN ON TOTAL ASSETS RATIO

Year Net profit after tax Total assets Ratio
2005 (34,077,703) 633,310,740 -0.053808819

2006 48,147,437 652,464,032 0.073793243

2007 43,642,334 685,849,818 0.063632493

2008 257,386,752 744,030,046 0.345935965

2009 413,189,839 1,722,435,526 0.23988697

Net profit & total assets trends:-

2,000,000,000
1,800,000,000
1,600,000,000
1,400,000,000
1,200,000,000
1,000,000,000 Net profit trends
800,000,000 Total assets trends
600,000,000
400,000,000
200,000,000
0
-200,000,000 2005 2006 2007 2008 2009

Comments:- In this graph represents total assets is more than is profits. Company focus in
accquiring as much more assets for future projects.
Return to total assets ratio:-

RETURN ON TOTAL ASSETS RATIO

0.35
0.4
0.35
0.3

0.24
0.25
0.2
0.15
0.07

0.06
0.1
0.05
0
-0.05 2005 2006 2007 2008 2009
-0.05

-0.1

Interpretation
This is the ratio between net profit and total assets. The ratio indicates the return on total assets
in the form of profits. In this graph represents return to total assets is very good position. The
return is good as per standards. Initially the ratio is decline but after it was fluctuates and in 2008
increased but 2009 it was decreased due to recession in economy.

12. RESERVES & SURPLUS TO CAPITAL RATIO

(Amount in rupees)
Year Reserve & surplus Capital Ratio
2005 165,278,080 21,205,640 7.794062334

2006 165,278,080 21,205,640 7.794062334

2007 165,278,080 21,205,640 7.794062334

2008 398,054,493 185,000,000 2.151645908

2009 915,910,547 291,028,200 3.147153942

 Reserve & surplus trends:-
1,000,000,000
900,000,000
800,000,000
700,000,000
600,000,000
reserve & surplus
500,000,000 trends
400,000,000 capital trends
300,000,000
200,000,000
100,000,000
0
2005 2006 2007 2008 2009

Comments:- In this represents reserve of the company increased but the share capital
not much high as compare to the reserve . It will beneficial to company for future
contigencies. It is good for the company or good financial position of the company.

RESERVES & SURPLUS TO CAPITAL

Ratio
7.79

7.79
7.79

9
8
7
6
5
3.15

4
2.15

3
2
1
0
2005 2006 2007 2008 2009

Interpretation:-
The ratio is used to reveal the policy pursued by the company a very high ratio indicates a
conservative dividend policy and vice-versa. Initially the ratio is very high but in 2008- 2009 it is
less because of recession company used it reserves.Higher the ratio better will be the position.
OVERALL PROFITABILITY RATIOS
13. EARNINGS PER SHARE
(Amount in rupees)
Year Net profit after tax No of shares Ratio
2005 (34,077,703) 2,120,564 -16.07011295

2006 48,147,437 2,120,564 22.7050148

2007 43,642,334 2,120,564 20.58053141

2008 257,386,752 18,500,000 13.91279741

2009 413,189,839 291,028,20 14.19758769

Net profit after tax & no of shares trends:-

450,000,000
400,000,000
350,000,000
300,000,000
250,000,000
200,000,000 Net profit after tax
150,000,000 No of shares
100,000,000
50,000,000
0
-50,000,000 2005 2006 2007 2008 2009
-100,000,000

Comments:- In this graph shows net profit after tax is increasing trend and the number of share
is not much high it means company not issued share capital but profit always increased through
its profitable project.
Earnings per share ratio:-

EARNINGS PER SHARE RATIO

22.71

20.58
25

14.20
13.91
20
15
10
5
0
-5 2005 2006 2007 2008 2009

-10
-15
-16.07

-20

Interpretation:-
Earnings per share ratio are used to find out the return that the shareholder‘s earn from their
shares. After charging depreciation and after payment of tax, the remaining amount will be
distributed by all the shareholders.

14. RETURN ON INVESTMENT

(Amount in rupees)
Year Net profit after tax Shareholder’s fund Ratio
2005 (34,077,703) 186,483,720 -0.18273822

2006 48,147,437 186,483,720 0.258185739

2007 43,642,334 186483,720 0.234027582

2008 257,386,752 583,054,493 0.441445448

2009 413,189,839 1,206,938,747 0.342345326

Net profit after tax & Shareholder’s fund Trends:-
1,400,000,000

1,200,000,000

1,000,000,000

800,000,000
Net profit after tax
600,000,000
Shareholder’s fund
400,000,000

200,000,000

0
2005 2006 2007 2008 2009
-200,000,000

Comments:- In this graph shows initially company invested in project so it shows loss in
2005.but after that profit increased but less to share holder‘s fund

Return on investment ratio:-

Return on investment
0.44

0.5
0.34

0.4
0.26

0.23

0.3

0.2

0.1

0
2005 2006 2007 2008 2009
-0.1

-0.2
-0.18

-0.3
 Interpretation:-
This is the ratio between net profits and shareholders‘ funds. The ratio is generally calculated as
percentage multiplying with 100. In this graph shows return on investment ratio fluctuates. It
shows company invests that project gives not proper return on investment.

Summary
General
The interim consolidated financial statements as of March 31, 2010 were prepared in accordance
with the principles set forth in the International Financial Reporting Standards (IFRS) –
guidelines for interim reporting (IAS 34) – which are to be applied in the European Union. The
accounting and valuation methods as of December 31, 2009 have been maintained without any
change. For additional information on the accounting and valuation principles, see the
consolidated financial statements as of December 31, 2009, which form the basis for this interim
consolidated financial report.
Due to the utilization of automatic calculation programs, differences can arise in the addition of
rounded totals and percentages.
The interim consolidated financial statements as of March 31, 2010 were neither subject to a
complete audit nor to an audit review by an auditor.
Application of new standards
ANDRITZ applies the standards IFRS 3 (revised) ‗Business Combinations‘ and IAS 27 (revised)
‗Consolidated and Separate Financial Statements‘ for the financial year beginning on January 1,
2010.
The revised standards IFRS 3 and IAS 27 are the most essential standards for the treatment of
business combinations, consolidated financial statements, and transactions with non-controlling
interests.
The amendments do not have a material impact on the interim consolidated financial statements.
Changes in consolidated companies
The following companies were not, or only partially, included in the ANDRITZ GROUP‘s
consolidated financial statements of the reference period January 1-March 31, 2009:
ANDRITZ Rollteck GmbH: design and manufacturing of winders for the paper industry;
 ANDRITZ Biax S.A.S.: systems and equipment for the production of biaxially stretched
plastic films;
ANDRITZ Perfojet S.A.S.: machinery and systems for the production of nonwovens;
ANDRITZ Frautech S.r.l.: producer of separators for applications in the dairy and olive
oil industry;
ANDRITZ Precision Machine & Supply Inc.: service for the hydropower sector.
The initial accounting for the companies/businesses acquired in 2009/2010 was based on
preliminary figures.
Notes to the consolidated statement of financial position
Total assets of the ANDRITZ GROUP as of March 31, 2010 amounted to 3,538.0 MEUR, thus
228.7 MEUR higher than as of December 31, 2009 (3,309.3 MEUR). The net working capital as
of March 31, 2010 amounted to -316.0 MEUR (December 31, 2009: -104.3 MEUR).
During the current business year, ANDRITZ AG paid dividends in the amount of 51.7 MEUR
for the 2009 business year. No shares were bought back during the first quarter of 2010.

Share price development

In the first quarter of 2010, the ANDRITZ share developed very favorably. The share price
increased by 7.0%, thus again outperforming the ATX, the leading share index on the Vienna
Stock Exchange, which increased by 3.8% during the same period.
The highest closing price of the ANDRITZ share during the reporting period was 46.26 EUR
(March 25, 2010), the lowest was 39.49 EUR (February 12, 2010).

Investor relations
ANDRITZ took 2nd place in the category ‗Share of the Year 2009‘ in the first Austrian retail
investor award, organized by the stock exchange magazine ‗Der Börsianer‘.
During the first quarter of 2010, meetings with institutional investors and financial analysts were
held in Denver, Dublin, Edinburgh, London, San Diego, Tokyo, and Zurich.
Findings & Recommendation
Findings:-
In the project various kinds of findings includes which are as follows:-
1. Current assets of the company is more than its current liabilities this shows good
indications to the company.
2. If we can see the liquid assets in this case current liabilities is more this shows moderate
situation. Liquid ratio is also in moderate situation.
3. Share capital of the company is almost constant .company no need to issue share capital
to its investors
4. Company‘s total assets are at high position. It also shows the good indication to the
company.
5. The recession of economy affects this company. The of effects shows clearly in the
figures.
6. The return on investment of the company is in moderate situation not much high.
7. The EPS of the company is in good situation.
8. Net profit of the company also fluctuates but it still be good.
9. Recession effects all over the organization transaction.
10. The company income is also in increasing trend.

RECOMMENDATION:-
Company is in good condition but still have some kind of suggestions like:-
1. Total assets of the company is much high than its profit so more assets not always good.
2. Company invests in profitable projects and earn more profits
3. Focus on cooperate social responsibilities of the country.
4. In the current assets over fixed assets ratio shows current assets is more but company
fixed assets is less so consider on fixed assets also.
LIMITATIONS

False accounting data gives false ratios.

Comparison not possible if different firms adopt different accounting policies regarding
depreciation, creation of provision for doubtful debts method of valuation of closing
stock etc.
Ratio Analysis becomes less effective due to price level changes.
Ratio may be misleading in the absence of absolute data.
Limited use of a single ratio.
Some companies in order to cover up their bad financial position to Window dressing
i.e., showing a better position than the one which really exists.
Circumstances differ from firm to firm hence no single ratio can be fixed for all firms
against which the actual ratio may compare.
Ratios derived from analysis of statement alone are not sure indicator of good or bad
financial position and profitability of a firm. Effect of personal ability and bias of analyst.

Conclusion:-
After making my project I conclude the financial position of the company is good. The company
meets all the standards and makes good profits through sales of hydro turbines.
Overall all ratios show good return and makes the financial position of the company is good.
Financial position of the company is good.
Return on investment of the company is always good.
Earning per share of company is also very good.
Reserve and surplus in appropriate which meets any kind of contingency.
In above show articles also show ratio analysis is very effective technique for measure
profitability and financial position of the organization.
Bibliography:-

1. AcaDemon November 12, 2006 Book Review Summary rating: 2 stars (4

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5. Singh, Ramadhar 1996 Subtractive versus ratio model of "fair" allocation: can the group
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6. Mills, Roger 1993 Financial ratio covenants in UK bank loan contracts Publication
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7. Lee, Cheng F., Wu, Chunchi1988 Expectation formation and financial ratio adjustment
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Also published on the World Wide Web at http://www.uwasa.fi/~ts/ejre/ejre.html

www.andritzhydro.com
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Books: - financial management I.M Pandey 9th edition VIKAS Publishing PVT ltd.

Financial accounting D.K GOEL 11th edition SHAHITYA Publishing PVT ltd.