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ACKNOWLEDGMENT
Every project big or small is successful largely due to the effort of a number of wonderful people
who have always given their valuable advice or lent a helping hand. I sincerely appreciate the
inspiration; support and guidance of all those people who have been instrumental in making this
project a success.
I, Nitish Jaiswal, have taken efforts in this project. However, it would not have been
possible without the kind support and help of many individuals. I would like to extend my sincere
thanks to all of them.
My thanks and appreciations also go to my friends in developing the project and people who
have willingly helped me out with their abilities.
ABSTRACT
Company analysis refers to the process of evaluating a company’s profitability,
profile and products or services. It is also known as fundamental analysis and investors
generally use it. It incorporates basic company information, such as the mission statement,
goals and values. This process involves reviewing the history of a company and the events
that contributed to shaping the firm. Moreover, it looks into the company’s goods and
services. Company analysis studies the products manufactured by the company and
analyzes the quality and demand for these products. If the firm is in the service sector, the
investor reviews the services offered to the related market.
The domestic tyre industry is expected to post volumes growth of 7-8 per cent to 1,805
lakh tyres during FY2018, despite the weak volumes during the first quarter and part of
second quarter during GST rollout.
In value terms, the growth in exports came a bit lower at 13.3 per cent, as realizations
remained tepid; the pricing was constrained by softened RM prices. While overall tyre
exports grew by 13 per cent during FY2017, the growth in exports to the top 10 countries
was higher at 18 per cent, aided by steady demand in most of the regions, barring the UAE
and Philippines.
TABLE OF CONTENTS
CHAPTER 1- INTRODUCTION
CHAPTER 6 –CONCLUTION
CHAPTER 7- BIBLIOGRAPHY
CHAPTER 1- INTRODUCTION
COMPANY PROFILE
1.1 COMPANY PROFILE OF MRF TYRES AND APOLLO
YRES
Automobile and industry Passenger cars, LCV, Luxury, Style, Utility &
equipment manufacturers HCV, SUVs, Agricultural Safety
/OEMs and off the road vehicle
manufacturers, users and
service providers.
Opportunities Threats
Currently MRF exports tyres to over 65 countries including America, Europe, Middle
East, Japan, and the Pacific region. It presently has overseas offices in Dubai, Vietnam and
Australia.
Products of the company
Awards
It was awarded as Most Trusted Tyre Company in India by TNS 2006 global CSR
study.
The company won the J D Power Asia Pacific award for customer satisfaction
seven times.
MRF was honoured with CAPEXIL award as acknowledgement for its export
performance.
In 2013 Won the JD power award for the 10th time.
Sector Automobiles
Tyres with muscle; Choice of Champions; India’s No.1 Tyre
Tagline/ Slogan Manufacturer
STP
Heavy duty trucks/buses, small cars, luxury cars, SUVs and conveyor
Target Group belts for manufacturing facilities.
Positioning India’s no.1 tyre making company with comprehensive tyre portfolio.
Competition
SWOT Analysis
Strengths 1. Company has remained in no.1 position in tyre industry and was the
first to reach annual turnover ofRs.5000Crore in India.
2. They have 6 manufacturing facilities in India (all in south) in
proximity of rubber belt of India, with sales network divided in 4
zones; east(14), west (23), south(33) and north(27 dealers)- very strong
and developed distribution network.
3. Good export market with company exporting tyres and conveyor
belts to 65 countries
4. Complete product portfolio with tyres for all types of vehicles-heavy
duty vehicles, SUVs, small & luxury cars, two & three wheelers,
conveyor belts, paints & coats and pretreads.
5. It enjoys strong brand equity and loyalty of customers.
6. Company is willing to take innovative measures to suit different
terrains of India.
7. Strong financial position
8. Diversified into Funskool, MRF Pace Foundation, MRF Racing
9. Advertising as India eco-friendly car tyre making company.
1. Price wars
2. Stiff competition from national and international brands
3. Cheaper technologies
Threats
4. Volatility in prices and availability of raw material as India’s rubber
production is less than its demand.
5. Government Policies w.r.t export duties, import duties, tax levied on
automobile industries and economic condition of nation as it
determines the sale of automobiles.
6. Introduction of other transport facilities like metro, monorails and
local trains keeping pollution hazards caused by combustion of
automobile fuels.
2 OBJECTIVE OF THE STUDY
3 RESEARCH METHODOLOGY
METHODOLOGY
4.2.1 SAMPLE
Annual Reports
2. Income statement: Also referred to as Profit and Loss statement (or a "P&L"), reports
on a company’s income, expenses, and profits over a period of time. Profit & Loss
account provides information on the operation of the enterprise. These include sale and
the various expenses incurred during the processing state.
4. Statement of cash flows: Reports on a company’s cash flow activities, particularly its
operating, investing and financing activities.
5.2 BENEFIT OF FINANCIAL STATEMENT ANALYSIS
1. Holding of Share: Shareholders are the owners of the company. Time and again, they
may have to take decisions whether they have to continue with the holdings of the
company's share or sell them out. The financial statement analysis is important as it
provides meaningful information to the shareholders in taking such decisions.
2. Decisions and Plans: The management of the company is responsible for taking
decisions and formulating plans and policies for the future. They, therefore, always
need to evaluate its performance and effectiveness of their action to realize the
company's goal in the past. For that purpose, financial statement analysis is important
to the company's management.
3. Extension of Credit: The creditors are the providers of loan capital to the company.
Therefore they may have to take decisions as to whether they have to extend their
loans to the company and demand for higher interest rates. The financial statement
analysis provides important information to them for their purpose.
4. Investment Decision: The prospective investors are those who have surplus capital to
invest in some profitable opportunities. Therefore, they often have to decide whether
to invest their capital in the company's share. The financial statement analysis is
important to them because they can obtain useful information for their investment
decision-making purpose.
5.3 LIMITATIONS
1. Mislead the user: The accuracy of financial information largely depends on how
accurately financial statements are prepared. If their preparation is wrong, the
information obtained from their analysis will also be wrong which may mislead the
user in making decisions.
2. Not useful for planning: Since financial statements are prepared by using historical
financial data, therefore, the information derived from such statements may not be
effective in corporate planning, if the previous situation does not prevail.
4. Comparison not possible: The financial statements are based on historical data.
Therefore comparative analysis of financial statements of different years cannot be
done as inflation distorts the view presented by the statements of different years .The
limitations mentioned above about financial statement analysis make it clear that the
analysis.
1. The Company: Before diving into a company's financial statements, we're going to
take a look at some of the qualitative aspects of a company. Fundamental analysis
seeks to determine the intrinsic value of a company's stock. But since qualitative
factors, by definition, represent aspects of a company's business that are difficult or
impossible to quantify, incorporating that kind of information into a pricing
evaluation can be quite difficult. On the flip side, as we've demonstrated, you can't
ignore the less tangible characteristics of a company. In this section, we are going to
highlight some of the company-specific qualitative factors that you should be aware
of.
2. Competitive Advantage: Another business consideration for investors is competitive
advantage. A company's long-term success is driven largely by its ability to maintain
a competitive advantage - and keep it. Powerful competitive advantages, such as
Coca Cola's brand name and Microsoft's domination of the personal computer
operating system, create a moat around a business allowing it to keep competitors at
bay and enjoy growth and profits. When a company can achieve competitive
advantage, its shareholders can be well rewarded for decades. If company like Moser
Baer making CDs and DVDs have better competition advantage compare to
company or firm making cassettes for audio and video promotion of movies and
songs.
3. Management: Just as an army needs a general to lead it to victory, a company relies
upon management to steer it towards financial success. Some believe that
management is the most important aspect for investing in a company. It makes sense
- even the best business model is doomed if the leaders of the company fail to properly
execute the plan. So how does an average investor go about evaluating the
management of a company? This is one of the areas in which individuals are truly at
a disadvantage compared to professional investors. You can't set up a meeting with
management if you want to invest a few thousand dollars. On the other hand, if you
are a fund manager interested in investing millions of dollars, there is a good chance
you can schedule a face- to-face meeting with the upper brass of the firm. Every
public company has a corporate information section on its website. Usually there will
be a quick biography on each executive with their employment history, educational
background and any applicable achievements. Don't expect to find anything useful
here. Let's be honest: We're looking for dirt, and no company is going to put negative
information on its corporate website.
4. Ownership and Insider Sales: Just about any large company will compensate
executives with a combination of cash, restricted stock and options. While there are
problems with stock options (See Putting Management under the Microscope), it is
a positive sign that members of management are also shareholders. The ideal
situation is when the founder of the company is still in charge. Examples include Bill
Gates (in the '80s and '90s), Michael Dell and Warren Buffett. When you know that
a majority of management's wealth is in the stock, you can have confidence that they
will do the right thing. As well, it's worth checking out if management has been
selling its stock. This has to be filed with the Securities and Exchange Commission
(SEC), so it's publicly available information. Talk is cheap - think twice if you see
management unloading all of its shares while saying something else in the media.
5. Past Performance: Another good way to get a feel for management capability is to
check and see how executives have done at other companies in the past. You can
normally find biographies of top executives on company web sites. Identify the
companies they worked at in the past and do a search on those companies and their
performance.
6. Corporate Governance: Corporate governance describes the policies in place within
an organization denoting the relationships and responsibilities between management,
directors and stakeholders. These policies are defined and determined in the
company charter and its bylaws, along with corporate laws and regulations. The
purpose of corporate governance policies is to ensure that proper checks and
balances are in place, making it more difficult for anyone to conduct unethical and
illegal activities. Good corporate governance is a situation in which a company
complies with all of its governance policies and applicable government regulations
in order to look out for the interests of the company's investors and other
stakeholders.
a. Financial and Information: Transparency This aspect of governance
relates to the quality and timeliness of a company's financial disclosures
and operational happenings. Sufficient transparency implies that a
company's financial releases are written in a manner that stakeholders
can follow what management is doing and therefore have a clear
understanding of the company's current financial situation.
b. Stakeholder Rights: This aspect of corporate governance examines the
extent that a company's policies are benefiting stakeholder interests,
notably shareholder interests. Ultimately, as owners of the company,
shareholders should have some access to the board of directors if they
have concerns or want something addressed. Therefore, companies with
good governance give shareholders a certain amount of ownership
voting rights to call meetings to discuss pressing issues with the board.
c. Structure of the Board of Directors: The board of directors is composed
of representatives from the company and representatives from outside of
the company. The combination of inside and outside director’s attempts
to provide an independent assessment of management's performance,
making sure that the interests of shareholders are represented. The key
word when looking at the board of directors is independence. The board
of directors is responsible for protecting shareholder interests and
ensuring that the upper management of the company is doing the same.
The board possesses the right to hire and fire members of the board on
behalf of the shareholders. A board filled with insiders will often not
serve as objective critics of management and will defend their actions as
good and beneficial, regardless of the circumstances.
a) Managers and owners: For the smooth operation of the organization, the
manager and the owners need the financial reports essential to make business
decisions. So to provide a more comprehensive view of the financial position of
an organization, financial analysis is performed with the information supplied
in the financial statements.
b) Employees: The financial reports or the financial statements are of immense use
to the employees of the company for making collective bargaining agreements.
Such statements are used for discussing matters of promotion, rankings and
salary.
2. External users
The external users comprise of:
Just as the knowledge level of potential users varies, the information needs of users
vary, depending on the decision at hand. A supplier considering whether or not to
sell goods on account to a particular company wants to evaluate the likelihood of
getting paid; a potential investor in that company wants to predict the likelihood of
increases in the market value of the company’s common stock. Financial statements,
however, are designed for general purposes; they are not aimed at any specific user
group. Some disclosed information, therefore, may be irrelevant to some users but
vital to others. Users must employ different forms of analysis to identify
information most relevant to a particular decision. Financial statements can provide
only highly summarized economic information. The costs to a company of
providing excessively detailed information would be prohibitive. In addition, too
much detail leads to information overload, the problem of having so much data that
important information becomes obscured by trivial information. Users faced with
reams of data may become so frustrated attempting to use it that they lose the value
of key information that is provided.
13,000.00
Rs. in Crore
SALES 16-17
12,000.00
11,000.00
MRF LTD. APOLLO LTD.
SALES
16-17
MRF LTD. 13,346.26
APOLLO LTD. 13,062.97
Sales of MRF Ltd. Rs. 13346.26 and Apollo Ltd. is Rs. 13062.97 .
RATIO ANALYSIS AND INTERPRETATION
Every business organization prepares their financial statements i.e. income statements and balance sheet
on the last date of the year or financial year. The financial statement is prepared in the vertical form and
presented before the management for their kind considerations and information. Then the required ratios
are calculated, followed by its interpretation and comments on them. This is very effective and
important tool of financial statement analysis.
The analysis of the financial statements and interpretations of financial results of a particular period of
operations with the help of 'ratio' is termed as "ratio analysis." Ratio analysis used to determine the
financial soundness of a business concern. Five common categories of ratios exist: liquidity, asset
turnover, leverage, profitability and solvency.
CURRENT RATIO
1.57
1.13
CURRENT RATIO
16-17
Current
CA CL Ratio
MRF LTD. 7,063.57 4,502.04 1.57
APOLLO
LTD. 5,018.20 4,457.18 1.13
INTERPRETATION-
The ideal current ratio is 2:1. It indicates that current assets should be double the current liability as
that is considered to be satisfactory. From the above chart we can conclude that the current ratio of
MRF Ltd is better than APPOLO Ltd. The current ratio of MRF Ltd is close to 1.57 which is close to
ideal ratio.
QUICK RATIO
It is the ratio of quick assets to quick liabilities; indicates a company’s ability to satisfy its
current liabilities with most liquid assets. (The larger the ratio the better is the ability of the
company meet its immediate liabilities)
QUICK RATIO
APOLLO LTD.
MRF LTD.
QUICK RATIO
16-17
Quick Quick Quick
Assets Liabilities ratio
MRF LTD. 4,888.37 4,502.04 1.09
APOLLO
LTD. 2,372.67 4,457.18 0.53
INTERPRETATION-
The ideal Quick Ratio of 1:1 is considered to be satisfactory. We can see that ouick ratio of MRF Ltd
is has reached the standard ratio i.e. 1. But APOLLO Ltd is far bellow the standard ratio.
TOTAL DEBT TO OWNERS FUND/ DEBT EQUITY RATIO
This ratio is calculated to ascertain the firm's obligations to creditors in relation to funds invested
by the owners. The ideal Debt Equity Ratio is 1:1. This ratio also indicates all external liabilities to
owner recorded claims.
Or
INTERPRETATION-
Since MRF is having a debt equity ratio of 0.14 which is better than the the debt equity ratio of
APOLLO .
PROFITABILITY RATIOS
The term profitability means the profit earning capacity of any business activity. Thus, profit
earning may be judged on the volume of profit margin of any activity and is calculated by
subtracting costs from the total revenue accruing to a firm during a particular period.
Gross profit ratio (GP ratio) is a profitability ratio that shows the relationship between gross
profit and total net sales revenue. It is a popular tool to evaluate the operational performance of the
business . The ratio is computed by dividing the gross profit figure by net sales.
INTERPRETATION-
As comparing the gross profit ratio of MRF Ltd i.e. 0.16 is far more than the gross profit of APOLLO
Ltd i.e. 0.11 which mean that MRF is earning more profit than APOLLO tyres.
NET PROFIT RATIO
Net Profit Ratio is also termed as Sales Margin Ratio (or) Profit Margin Ratio (or) Net Profit
to Sales Ratio. This ratio reveals the firm's overall efficiency in operating the business. Net
profit Ratio is used to measure the relationship between net profit (either before or after taxes)
and sales.
Net Profit Ratio = (Net Profit after Tax/ Net Sales) x 100
INTERPRETATION-
As comparing the net profit ratio of MRF Ltd i.e. 0.16 is far more than the net profit of APOLLO Ltd
i.e. 0.11 which mean that MRF is earning more profit than APOLLO tyres.
RETURN ON ASSETS
This ratio measures a company’s earnings before interest and tax against it total net assets.
This ratio indicates that how effectively a company is using its assets
Return on total asset = Earnings before interest and tax/ Total net assets
INTERPRETATION
The return on asset og MRF Ltd. is better than return of assest of APOLLO Ltd.
INVENTORY TURNOVER RATIO
The inventory turnover ratio is an efficiency ratio that shows how effectively inventory is
managed by comparing cost of goods sold with average inventory for a period. In other words, it
measures how many times a company sold its total average inventory dollar amount during the year.
INTERPRETATION
The inventory turnover ratio of MRF Ltd. is better than inventory turnover ratio of APOLLO Ltd.
Management Efficiency ratios
which means that the banks total assets are not utilized efficiently. Thus we can say that the bank has
to look upon this ratio to increase the overall utilization of total assets.
DEBTORS TURNOVER RATIO
INTERPRETATION
In the above graph we can see low receivables turnover ratio that implies that the company
should re-assess its credit policies in order to ensure the timely collection of credit sales that is not
earning interest for the firm
CONSOLIDATED BALANCE SHEET OF MRF LTD (In Cr.)
Particulars As at 31.03.2017 As at 31.03.2016
ASSETS
Non-Current Assets
Property, Plant and Equipment 5489 4599.2
Capital Work-in-Progress 847.9 1059.3
Other Intangible Assets 13.2 9.1
Financial Assets:
Equity
Equity Share Capital 4.2 4.2
Other Equity 8636.5 7220.1
Total Equity 8640.8 7224.3
LIABILITIES
Non-Current Liabilities
Financial Liabilities
Borrowings 1238.3 1486.5
Provisions 137.5 125.3
Current Liabilities
Financial Liabilities
Borrowings 834.1 885.6
Trade Payables 1408.4 1126.2
WEBSITES:
1. www.economictimes.com
2. www.investopedia.com
3. www.wikipedia.com
4. www.mrftyres.com
5. www.apollotyres.com
BOOKS: