"A Study On Budget and With Reference To Rajsriya Automotive Industries PVT LTD.," by K.Boopathy (REG - NO.11509631009)

“A STUDY ON BUDGET AND FINANCIAL PERFORMANCE ANALYSIS WITH
REFERENCE TO RAJSRIYA AUTOMOTIVE INDUSTRIES PVT LTD.,”

By
K.BOOPATHY
(REG.NO.11509631009)
Of
SRIRAM ENGINEERING COLLEGE
A PROJECT REPORT
Submitted to the
DEPARTMENT OF MANAGEMENT SCIENCES
In Partial fulfillment of the requirements

For the award of the degree
Of
MASTER OF BUSINESS ADMINISTRATION
IN
MARKETING AND FINANCE MANAGEMENT
SEP-2010
1
BONAFIDE CERTIFICATE
Certified that this project title “A STUDY ON FINANCIAL
PERFORMANCE ANALYSIS WITH REFERENCE TO RAJSRIYA AUTOMOTIVE
INDUSTRIES PVT LTD.,” is a bonafide research work carried out by MR.
K.BOOPATHY (REG NO: 11509631009) under my supervision. Certified
further that to the best of my knowledge the work reported here in does
not form part of any other project or dissertation on the basis of which a
degree or award was conferred on an earlier occasion on this or any
other candidate.
Dr.K.KARUPPIAH MR.S.POUGAJENDY
DIRECTOR (MBA) PROJECT GUIDE
EXTERNAL EXAMINER
2
ABSTRACT
This study is the outcome of the title “A study on FINANCIAL

PERFORMANCE ANALYSIS WITH REFERENCE TO RAJSRIYA AUTOMOTIVE
INDUSTRIES PVT LTD.,”
Service quality is between customer perceptions of the current service

being provided by a given organization and customer expectations of excellent
service within that given industry and there have been many different approaches
or methods for measuring service quality. The relationship of customer
expectations with customer perceptions, it is appropriate to calculate service
quality by subtracting expected from perceived service.
The main objective of the study is to evaluate the service quality using
servqual dimensions and to find out the tangible benefits and maximum reliability
and company responsiveness, ensure the best assurances and finally empathies
the customer needs in the RAJSRIYA AUTOMOTIVE INDUSTRIES PVT LTD.,
The research design used in the study is descriptive research design

and the sampling procedure is convenient sampling. Due to time and resource
constraint the study was restricted to AVADI.
3
ACKNOWLEDGEMENT
I take this opportunity to express my sincere thanks to Mrs.

VIJAYASAMUNDISHWARI (Financial Chief) for his encouragement and support
during the course of my project work in their esteemed organization.
I also like to thank Mr. J. SRINIVASA BABU (TRAINING MANAGER) for

giving this opportunity and I also thank the employees of the organization for
answering the questionnaires.
I like to thank director Dr. K. KARUPPIAH., MBA, MCOM, MA, M.PHIL,

Ph.D Head, Department Of Management Sciences, for giving us an opportunity
to carry out a project, through which we gained a practical knowledge.
I would like to thank my project guide Mr.S. POUGJENDY, Lecturer, for

her valuable suggestions and inspiring guidance throughout my project.
I thank all my department staff members for their kind co-ordination.
Finally I thank all my friends and my parents who helped me to complete my

project work.
(K.BOOPATHY)
COMPANY’S PROFILE
4
HISTORY:
RAJSRIYA GROUP was founded in 1977 to take advantage of the

opportunities in Chennai automotive market.
RAJSRIYA GROUP being one of the largest automobile assembly & systems
manufacturer in Chennai and Hosur, supplies products with high quality at
competitive price to both domestic and international markets.
RAJSRIYA GROUP has extensive manufacturing facilities at Chennai and

Hosur to manufacture more than 350 assemblies using 900 machines with 1200
skilled work force.
RAJSRIYA GROUP specialized in the manufacture of components, modules

and systems used in Two wheelers, Three wheelers and Four wheeler vehicles.
The Two wheeler products include Exhaust systems for entire range from
moped to motorcycles, various type of foot rests, mud-guards & oil fork
assemblies, carrier assemblies, steering column assemblies etc.,.
The Four wheeler products include steering column assemblies, DDU tank
assemblies, vacuum booster assemblies, clutch servo - Pneumatic body
assemblies etc., for brakes of heavy vehicles, auto electric parts like wiper
assemblies, Brush gear assemblies, contact sets etc,.
Also, we do lot of deep drawn parts our four wheeler assemblies

comprises of deep drawn parts (height of 200mm) with high degree of surface
finish for brakes & Servo clutches and precision pressed sheet metal components
5
for steering columns for four wheelers.
A dedicated team of Managers / Engineers in Design, Methods, PPC,

Production, Quality, Tooling and Administration work efficiently to meet the
stringent requirements of various reputed customers. The GROUP uses latest
technology in all departments and follows best practices in the industry .
Company has a centralized engineering design department, equipped with

latest press tool design soft wares, soft ware for optimum utilization of material,
proto sample building shop etc,.
All Plants are interconnected by SAP – ERP System.
RAJSRIYA GROUP is equipped with latest measuring & testing equipment to

check dimensions, surface finish, hardness, painting & plating thickness, full
fledged laboratory with imported equipment to conduct various tests for powder
coating, including salt spray. Quality and process controls are very closely
monitored using latest statistical techniques.
RAJSRIYA GROUP practices high quality standards, process capabilities,

research and problem solving techniques to meet its quality objective. These are
achieved by continuous training, weekly review by the top management for the
movement of quality indicators & Total employee involvement.
6
Primary Objectives:
The primary objectives of the study to Financial Performance Analysis by

Raj Sriya Automotive company.
Secondary Objectives :
1. To estimate the earning capacity of the firm.
2. To determine the long term liquidity of the funds as well as solvency.
3. To determine the debt capacity of the firm.
4. To decide about the future prospect of the firm.
5. To guage the financial position and financial performance of the firm.
7
Need:
1. Financial analysis is used to identify the treads and

relationship between financial statement items.
2. Internal management and external management

financial statements needs to evaluate a company’s
profitability liquidity and solvency.
3. Financial analysis are trend analysis common size

Statements and ratio analysis.
8
SCOPE OF THE STUDY
It helps to take short term financial decision.It indicates the cash requirement
needed for plant or equipment expansion programmers.To find strategies for
efficient management of cash.It helps to arrange needed funds on the most
favorable terms.It helps to meet routine cash requirement to finance the
transaction.It reveals the liquidity position of the firm by highlighting the various
sources of cash and its uses.
9
1.1 RATIO ANALYSIS
1.1 CURRENT RATIO (Rs. in Lakhs)
Year Current Assets Current Liabilities CA/CL
2004-2005 580600 520000 1.12
2005-2006 662900 662900 0.90
2006-2007 600691 686310 0.87
2007-2008 787100 686310 1.14
2008-2009 805000 686310 1.17
Source: www.rajsriya.com
CURRENT RATIO
3
2.5
2
1.5 11 1.14 1.17
0.9 0.87
1
0.5
0
2004-2005 2005-2006 2006-2007 2007-2008 2008-2009
INTERPRETATION
This is insisted because even if Current Assets are reduced to half i.e.
1, the creditors will be able to get their dues in full. Here, the ratio is
showing a decreasing trend, though it indicates the efficient use of funds it
is necessary to maintain ideal ratio. This trend may be due to rise in
Production
10
1.2 QUICK RATIO
(Rs. in Lakhs)
Year Quick Assets Quick Liabilities QA/QL
2004-2005 460100 2680000 0.17
2005-2006 480034 3595605 0.13
2006-2007 480191 3121195 0.15
2007-2008 666600 4414201 0.15
2008-2009 684500 5414216 0.12
Note: Quick Liabilities = Current Liabilities less Bank overdraft
QUICK RATIO
0.2 0.17
0.15 0.15
0.15 0.13 0.12
0.1
0.05
0
2004-2005 2005-2006 2006-2007 2007-2008 2008-2009
INTERPRETATION
The ideal Quick Ratio is 1. This is a ratio between Quick Assets and
Quick Liabilities. This ratio is showing a slightly decreasing trend. This is
because of non-maintenance of sufficient amount of liquid cash and
decrease of sundry debtors The phenomena is however temporary.
11
1.3 PROPRIETORY RATIO (Rs. in Lakhs)
Year Networth Tangible Assets NW/TA

2004-2005 2324202 3024381 0.76
2005-2006 2679023 2916372 0.91
2006-2007 2935439 2705309 1.06
2007-2008 3216992 3333024 0.96
2008-2009 3535692 4618434 0.76
Note: Tangible assets include investments, current assets and fixed assets
excluding work-in-progress.
PROPRIETARY RATIO
1.2 1.06
0.91 0.96
1 0.76 0.76
0.8
0.6
0.4
0.2
0
2004- 2005- 2006- 2007- 2008-
2005 2006 2007 2008 2009
INTERPRETATION
For the last five years the ratio is moderate and the financial position
of the company is fair. Hence it is advisable to rise the shareholder’s funds
of the company in the long run.
12
1.4 CAPITAL GEARING RATIO
(Rs. in Lakhs)
Year Fixed Interest Networth FIBF/NW
Bearing Funds
2004-2005 1200000 2324202 0.51
2005-2006 1205020 2679023 0.44
2006-2007 1216890 2935439 0.41
2007-2008 2108100 3216992 0.65
2008-2009 2507000 3535692 0.70
Note: Fixed interest bearing funds include unsecured loans, fixed deposits
and others.
CAPITAL GEARING RATIO
0.8 0.65 0.7

0.6 0.51
0.44 0.41
0.4
0.2
0
2004-2005 2005-2006 2006-2007 2007-2008 2008-2009
INTERPRETATION
The capital structure of the company is increased during 2004-
2005, 2007-2008 and decreased during 2006-07. The low gearing ratio
indicates overcapitalization. This is because of rise in borrowings to fund
the procurement of Raw Material and for the 3MMTPA Expansion Refinery.
1.5 RETURN ON TOTAL ASSETS
13
(Rs. in Lakhs)
Year PAT + Int. Total Assets PAT + Int./TA *100
2004-2005 312256 820000 38.08
2005-2006 322256 1040550 30.96
2006-2007 443810 1569766 28.27
2007-2008 465217 1488700 31.24
2008-2009 480000 1569766 28.24
RETURN ON TOTAL ASSETS
38.08
40
30.96 31.24
28.27 28.24
30
20
10
0
2004-2005 2005-2006 2006-2007 2007-2008 2008-2009
INTERPRETATION
This ratio is used to analyze the productivity of the Total Assets to the
profit of the company. Higher ratio indicates more productivity of the total
Assets. Lower ratio was due to shut down of the refinery in 2005-06.
14
1.6 INTEREST COVER RATIO
(Rs. in Lakhs)
Year EBIT Interest EBIT/Interest

2004-2005 120300 312256 0.38
2005-2006 140350 322256 0.43
2006-2007 161642 443810 0.36
2007-2008 185731 465217 0.39
2008-2009 205630 480000 0.42
Note: The interest here means the interest paid by the company on
borrowings taken by it.
INTEREST COVER RATIO
0.44 0.43
0.42
0.42
0.4 0.39
0.38
0.38 0.36
0.36
0.34
0.32
2004- 2005- 2006- 2007- 2008-
2005 2006 2007 2008 2009
INTERPRETATION
This ratio highlights the ability of the business to meet its commitment
to pay interest and to raise additional funds in future. The ratio is very low
in 2004-05 indicating the high risk of the company to meet its commitment.
The ratio for the year 2008-09 is high indicating the better position for long-
term creditors and the company’s risk is lower.
15
1.7 EARNINGS PER SHARE
(Rs. in Lakhs)
Year PAT No. Of Equity PAT/No.

shares of shares
2004-05 28390 100000 0.28
2005-06 31215 100000 0.31
2006-07 35975 100000 0.35
2007-08 38100 100000 0.38
2008-09 50500 100000 0.50
EARNINGS PER SHARE
0.6 0.5
0.5
0.35 0.38
0.4 0.31
0.28
0.3
0.2
0.1
0
2004-2005 2005-2006 2006-2007 2007-2008 2008-2009
INTERPRETATION
This analysis reflects the capacity of the concern to pay dividend to its
equity shareholders. This analysis determines the market price from the
owner’s point of view. The increasing trend for the last two years indicates
good point to invest in the company from the investor’s point of view.
16
WORKING CAPITAL GROUP RATIOS
1.9 CURRENT ASSETS TO TOTAL ASSETS RATIO
(Rs. in Lakhs)
Year Current Total CA/TA

Assets Assets
2004- 820000 2260324 0.04
2005
2005- 1040550 1950571 0.06
2006
2006- 1569766 2444821 0.07
2007
2007- 1488700 2672821 0.07
2008
2008- 1699500 2644950 0.09
2009
CURRENT ASSETS TO TOTAL ASSETS

RATIO
0.07 0.09
0.07
0.8 0.04 0.06
0.6
0.4
0.2
0
2004-2005 2005-2006 2006-2007 2007-2008 2008-2009
INTERPRETATION
This ratio indicates the proportion of Current Assets to the Total
assets of the company. The current assets have been on the decreasing
17
trend for the last five years. This is because of reduction in the maintenance
of Other Current Assets of the company.
1.10 WORKING CAPITAL TO TOTAL ASSETS
(Rs. in Lakhs)
Year Working Total WC/TA

Capital Assets
2004- 110000 2260324 0.04
2005
2005- 120500 1950571 0.06
2006
2006- 180500 2444821 0.07
2007
2007- 201560 2672840 0.07
2008
2008- 251560 2644950 0.09
2009
WORKING CAPITAL TO TOTAL ASSETS

0.07 0.07 0.09
0.06
0.08
0.04
0.06
0.04
0.02
0
1 2 3 4 5
INTERPRETATION
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This represents the amount of long-term resources used for the purchase
of Current Assets, which also form part of the Total Assets. This is also a
good indicator of total performance of the company in the industry as a
whole.
2.1 COMPARATIVE BALANCE SHEET ANALYSIS
2.1 COMPARATIVE BALANCE SHEET (2004 & 2005)
Absolute
PARTICULARS 2004 2005 Change
SOURCES OF FUNDS
1. SHARE HOLDERS FUNDS
a. Capital 110000 120500 10500
b. Reserves & Surplus 1025600 1994124 968524
1135600 2114624 979024
2. LOAN FUNDS
a. Secured Loans 1200000 1205020 5020
TOTAL 2335600 3319644 984044
APPLICATION OF FUNDS
1. FIXED ASSETS
a. less: Depreciation & 120300 140350 20050
b. Capital Work-in-progress 110000 120500 10500
230300 260850 30550
2. CURRENT ASSETS, LOANS & ADVANCES

a. Sundry Debtors 640000 895260 255260
b. Cash & Bank Balances 180600 490426 309826
c. Loans Advances 1319224 384335 934889
2139824 1770021 1499975
3. Less: CURRENT LIABILITIES & PROVISIONS
a. Provisions 580600 600534 19934
4. NET CURRENT ASSETS 226034 295057 16902
5. MISCELLANEOUS 520000 2633795 139868
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EXPENDITURE
TOTAL 2159824 2633795 139868
Interpretation
i. Current financial position and liquidity position
a. The current assets have increased by Rs. 233763 lakhs (44%) and
sundry debtors have increased by Rs 14450 lakhs (198%). On the
other hand, there has been an increase in inventories amounting
to Rs. 32647 lakhs. The current liabilities have increased by Rs.
221026 lakhs (49%). This further confirms that the company has
no improvement in the liquidity position.
ii. Long term financial position
a. There is an increase in fixed assets of about Rs. 53049 Lakhs
(35.55%). There is also an increase in secured loans of about Rs.
16907 lakhs (455%). This fact depicts that the policy of the
company is to purchase fixed assets from the long term sources
of finance thereby not affecting the working capital.
b. There is an increase in loaned funds than the share capital, so this
increases the interest liability for the company.
iii. Profitability of the concern
a. There is an increase in the reserves and surplus of the company of
about Rs. 8879 lakhs (9.7%). This fact depicts that there is an
increase in the profitability of the concern.
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SOURCES OF FUNDS
a. Capital 120500 180500 60000
2134624 1206100 102524
2. LOANS AND FUNDS
a. Secured Loans 1205020 1200000 5020
TOTAL 3319644 2411120 107544
1. FIXED ASSETS
a. less: Depreciation 140350 161642 10892
260850 342192 21292

a. Sundry Debtors 895260 640000 255260
c. Loans Advances 490426 180600 309826
1770021 2139824 1499975
b. Provisions 580600 600534 19934
5. MISCELLANEOUS EXPENDITURE 662900 520000 142900

TOTAL 2633795 1346566 231859
21
Interpretation
a. The current assets have decreased by Rs. 586683 lakhs (77.26%)
and sundry debtors have increased by Rs 2449 lakhs (11.27%).
On the other hand, there has been a decrease in inventories
amounting to Rs. 1.538 lakhs. The current liabilities have
decreased by Rs. 607095 lakhs (90.37%). There is an increase in
the working capital. This further confirms that the company has
improvement in the short term financial position.
a. There is an increase in fixed assets of about Rs. 3342.13 Lakhs
(1.65%). There is also an increase in long term loans of about Rs.
32007 lakhs (40%). This depicts that fixed assets are not only
financed by long term sources but part of working capital has also
been financed from long term sources. This fact depicts that the
policy of the company is to purchase fixed assets from the long
term sources of finance thereby not affecting the working capital.
about Rs. 9489 lakhs (9.45%). This fact depicts that there is an
22
Absolute
PARTICULARS 2006 2007 Change
SOURCES OF FUNDS
a. Capital 180500 201560 21060
1206100 1858408 652308
2. LOAN FUNDS
a. Secured Loans 1200000 1216890 16890
TOTAL 2411120 3075298 669198
1. FIXED ASSETS
342192 387291 45099

a. Sundry Debtors 640000 914805 274805
b.Cash & Bank Balances 180600 822824 642224
c. Loans Advances 1319224 505632 813592
2139824 2243261 17309621
a. Provisions 580600 600691 20091

TOTAL 2633795 2856767 1318208
Interpretation
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a. The current assets have decreased by Rs. 14923 lakhs (8.64%)
and sundry debtors have increased by Rs 12642 lakhs (52%). On
the other hand, there has been a decrease in inventories
amounting to Rs. 10075 lakhs. The current liabilities have
increased by Rs. 7270.98 lakhs (11.24%). This further confirms
that the company has no improvement in the short term financial
position.
10572 lakhs (9.44%). This depicts that fixed assets are not only
a. There is a decrease in the reserves and surplus of the company of
about Rs. 19723 lakhs (17.94%). This fact depicts that there is a
deccrease in the profitability of the concern.
24
2.4 COMPARATIVE BALANCE SHEET (2007& 2008)
PARTICULARS 2007 2008 Absolute Change
SOURCES OF FUNDS
a. Capital 201560 251560 5000
1858408 1885533 72875
2. LOAN FUNDS
a. Secured Loans 3242.94 17500.00 14257.06
3075298 3993633 964085
TOTAL 255828.60 354419.09 98590.49

1. FIXED ASSETS
387291 457190 69899

a. Sundry Debtors 914805 95070 819735
c. Loans Advances 822824 665230 157594
2243261 1565650 1277047
b. Provisions 600691 787100 186409

TOTAL 2856767 2962110 267475
Interpretation
25
a. The current assets have increased by Rs. 53328 lakhs (33.81%)
and sundry debtors have increased by Rs 24169 lakhs (65%). On
the other hand, there has been an increase in inventories
amounting to Rs. 44564 lakhs. The current liabilities have
increased by Rs. 47017 lakhs (65%). This further confirms that the
company has no improvement in the liquidity position.
about Rs.24405 lakhs (27%). This fact depicts that there is an
26
PARTICULARS 2008 2009 Absolute change
SOURCES OF FUNDS
a. Capital 251560 286000 34440
1885533 1905188 49225
2. LOAN FUNDS
a. Secured Loans 17500.00 94728.99 77228.99
TOTAL 3993633 4412188 448125
1. FIXED ASSETS
457190 191630 34440
a.Sundry Debtors 950700 950700 0
c. Loans Advances 805350 645250 160100
1565650 2358950 257870
4.Less: CURRENT LIABILITIES & PROVISIONS
b. Provisions 787100 805000 17900

TOTAL 2962110 3190810 228700
Interpretation
a. The current assets have decreased by Rs. 7505 lakhs (3.56%) and
sundry debtors have decreased by Rs 8463 lakhs (13%). On the
other hand, there has been an increase in inventories amounting
to Rs. 5.52 lakhs. The current liabilities have decreased by Rs.
27
3019 lakhs (2.5%). This further confirms that the company has no
improvement in the liquidity position.
(30%). There is also an increase in secured loans of about Rs.
There is an increase in the reserves and surplus of the company of
about Rs. 31604 lakhs (27%). This fact depicts that there is an
28
3.1 STATEMENT OF CHANGES IN WORKING CAPITAL
3.1 STATEMENT OF CHANGES IN WC (2004-2005)
PARTICULARS 2004 2005 INCREASE DECRESE
Current Assets
Sundry Debtors 6400000 895260 255260
Cash & Bank Balance 1319224 490426 1269798
Loans & Advances 180600 384335 203735
Total CA (A) 2139824 960021
Current Liabilities
Liabilities 1000000 1200000 200000
Provisions 580600 600534 19934 5926.39
Total CL (B) 1580600 1800534
Working Capital (A-B) 359487 779487
Net Increase in WC 420000

779487 779487
INTERPRETATION
In the year 2004-05, there is an increase in sales. The increase in Inventory is
mainly on account of increase in price levels. The decrease in cash and bank
balance reflects the prudent cash management by temporary parking of idle
funds. The shift in loan & advances and also in current liabilities is due to
change in the basis of representation of inter company crude oil loan
transaction in line with industry’s practices.
29
Particulars 2005 2006 Increase Decrease
Current Assets
Sundry Debtors 895260 914805 19548
Loans & Advances 384335 822824 438489
Total CA (A) 960021 2243261
Current Liabilities
Liabilities 1200000 1700000 500000
Provisions 600534 600691 157
Total CL (B) 1800534 2300691
57430 57430
INTERPRETATION
In the year 2005-06, there is a huge increase in Working Capital. It is due to
repayment of current liability in that year which is presumed to be a year-end
phenomenon. There is a decrease in the amount of inventory due to changes in
the raw material inventory and finished goods inventory.
30
Current Assets
Sundry Debtors 914805 950700 35895
Loans & Advances 822824 665230 157594

Total CA (A) 2243261 2421280
Current Liabilities
Liabilities 1700000 1900000 200000
Provisions 600691 2687100
Total CL (B) 2300691 2687100
Net Decrease in WC 208390
265820 265820
INTERPRETATION
During the year 2006-07, there is a decrease in inventory, which is due
to decrease in price levels of finished goods inventory. There is a decrease in
other current assets and loan advances. It is due to settlement of loan and
advances during the year. There is an increase in liabilities that indicates the
company’s policy has been changed in line with the industry and also due to
changes in price levels of crude oil purchases.
Current Assets
Sundry Debtors 950700 950700 0
31
Cash & Bank
Balance 805350 645250 160100
Loans & Advances 665230 763000 97770
Total CA (A) 2421280 2358950
Current Liabilities
Liabilities 1900000 2300000 400000
Provisions 787100 805000 17900
Total CL (B) 2687100 3105000
Working Capital (A-

B) 265820 746050
746050 746050
INTERPRETATION
The statement of changes in working capital reveals a net increase in working
capital of Rs. 6311.27 Lakhs. In the year 2007-08 there is a huge increase in
the amount at inventory, sundry debtors due to company’s credit policy. There
is a sudden decrease in cash and bank balance that indicates that the amount
might be used for project funding and repayment of borrowings.
Current Assets
Sundry Debtors 950700 994000 856700
Loans & Advances 763000 564240 198760
Total CA (A) 2358950 1625183
32
Current Liabilities
Liabilities 2300000 2400000 100000
Provisions 805000 904500 99500
Total CL (B) 3105000 3304500
Net Decrease in WC 933267
1679317 1679317
INTERPRETATION
The statement of changes in working capital reveals a net decrease in working
capital of Rs. 4485.13 Lakhs. The statement of sources and applications of
funds while confirming the decrease in working capital discloses that it is due
to purchase of fixed assets during the year to the tune of Rs. 149474 Lakhs.
The purchase of fixed assets have been partly financed through working
capital. Hence, working capital has been utilized to buy fixed assets which may
lead to working capital shortage and difficulties in paying current liabilities in
the future.
CONCLUSIONS
SUMMARY OF FINDINGS
 A budget is a financial plan for a business, prepared in advance.
 Budget are used to plan and control the business.
33
 Budgets – for income or expenditure – are prepared for each section of the
business like as purchase, sales, creditors, debtors.
 Budgetary planning is the process of setting the budget for the next period.
 Budgetary control uses the budgets to monitor actual results with budgeted figures.
 Responsibility for budgets is given to managers and supervisors – the budget
holders.
 A cash budget sets out the expected cash/bank receipts and payments expected to
pass through the bank account, usually on a month-by-month basis. A cash budget
enables the managers of a business to take action when a surplus of money is
shown to be available or when a bank overdraft needs to be arranged
SUGGESTIONS AND RECOMMENDATION
It is difficult to reconcile personal/individual and corporate goals
34
Financial performance analysis could forces managers may overestimate costs
so that they will not be blamed in the future should they overspend
Financial performance analysis can be seen as pressure devices imposed by

management, thus resulting in: bad labor relations
I have addressed the problem of a manager selecting the optimal level of for the
financial performance analysis case of companies facing seasonality. However,
this optimal decision is potentially, indeed, most likely, dynamic: most companies
not only observe seasonal variation in economic activity but also grow over time.
CONCLUSIONS
The fundamental difference between the classical approach to project

financial performance analysis investing and with its emphasis on form as
described by King, and contemporary practices.
35
By factoring cost of capital metrics (what companies need to return to
investors and lenders) into discounting formulae such as Net Present Value (NPV)
companies are effectively and efficiently enabled to identify satisfactory returns.
Compensating managers to achieve in excess of the shareholder return
requirement is another key element of the modern approach. Shareholders want
managers to invest only if the expected rate of return exceeds the cost of capital.
Because of this managers cannot ignore the financial performance imperative and
indeed their focus should be on returns over and above the financial performance.
This has given rise to a growing number of companies using EVA in manager
compensation packages, especially since it resolves agency problems and
generates incentives for managers to focus on increasing shareholder wealth.
Annexure
BALANCE SHEET
36
RAJSRIYA AUTOMOTIVE INDUSTRIES PVT LTD
BALANCE SHEET AS ON 31ST MARCH2005
Liabilities RS RS Assets RS RS
Share Capital Computers 480000
Authorized Capital Furniture & Fittings 340000 820000

100000 Equity Shares Rs
10/Each 1000000 Investment
Subscribed & Issued Capital 1000000 Deposit with Bank(FD) 3200000

Current Assets & Loan &
Reserves & Surplus 1025600 Advances
Add:-Transferred for the year
2004 1994124 3019724 Sundry Debtors 640000
Secured Loan By Working-In-Progress-Closing 120500
Cash Credit with Bank 1200000 Loans & Advances 180600
Current Liabilies Cash & Bank Balance 1319224 2260324
Provision For Expenses 580600
Miscellaneous Expenditure 520000
6800324 6800324

TRADING,PROFIT&LOSS A/C FOR THE YEAR 01.AP.05
37
RS RS RS RS
To Working-In-Progress-Opening 120500 By Service charges Received 9264200

By Working-In-Progress-
To Development&Training costs 2935500 Closing 180550
To Gross Profit(B/F) 3056000 6388750
9444750 9444750
To Salaries 1505000 By Gross Profit 6388750
To Rent 290000 By Other Income-Interest 322256
To Local Conveyance 130400
To Traveling Expenses 280920
To Telephone Expenses 70580
To Electricity Expenses 50351
To Staff Welfare Expenses 140720
To Interest Paid 39487
To Depreciation 140350
To Other Expenses 31215

To Net Profit to Appropriation
Account 2679023 4031983
6711006 6711006
38
AS ON 31ST MARCH2006


2005 1656848 3650972 Sundry Debtors 895260
Current Liabilies Cash Bank Balance 384335 1950571
Provision For Expenses 600534 Miscellaneous Expenditure 662900
7856526 7856526
39
RS RS RS RS
To Development&Training costs 3462150 By Working-In-Progress-Closing 201560
9880180 9880180
To Net Profit to Appropriation Account 2935439 3745851
6681290 6681290
40
100000 Equity Shares Rs 17/Each 1700000 Investment
Reserves & Surplus 1656848 Current Assets & Loan & Advances
2005 1633973 3290821 Sundry Debtors 914805
Current Liabilies Cash Bank Balance 505632 2444821
8508402 8508402
41
RS RS RS RS

By Working-In-Progress-
To Development&Training costs 3939725 Closing 251560
10104054 10104054

To Net Profit to Appropriation
Account 3216992 3210994
6427986 6427986
42

100000 Equity Shares Rs 1900000 Investment

19/Each
Reserves & Surplus 1633973 Current Assets & Loan &

Advances
Add:-Transferred for the year 1619188 3253161 Sundry Debtors 950700
2005
Current Liabilities Cash&Bank Balance 805350 2672840
TOTAL 9948361 9948361
43
RS RS RS RS
To Development&Training costs 4697200 By Working-In-Progress-Closing 286000
11854350 11854350
To Net Profit to Appropriation Account 3535692 3849898
7385590 7385590
44
Authorized Capital Furnitures & Fittings 768000 1699500


2008 1600098 3219286 Sundry Debtors 950700
Current Liabilies Cash&Bank Balance 645250 2644950
11131286 11131286
45

"A Study On Budget and With Reference To Rajsriya Automotive Industries PVT LTD.," by K.Boopathy (REG - NO.11509631009)

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"A Study On Budget and With Reference To Rajsriya Automotive Industries PVT LTD.," by K.Boopathy (REG - NO.11509631009)

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“A STUDY ON BUDGET AND FINANCIAL PERFORMANCE ANALYSIS WITH

REFERENCE TO RAJSRIYA AUTOMOTIVE INDUSTRIES PVT LTD.,”

SRIRAM ENGINEERING COLLEGE

DEPARTMENT OF MANAGEMENT SCIENCES

In Partial fulfillment of the requirements

MASTER OF BUSINESS ADMINISTRATION

MARKETING AND FINANCE MANAGEMENT

Certified that this project title “A STUDY ON FINANCIAL

PERFORMANCE ANALYSIS WITH REFERENCE TO RAJSRIYA AUTOMOTIVE

INDUSTRIES PVT LTD.,” is a bonafide research work carried out by MR.

K.BOOPATHY (REG NO: 11509631009) under my supervision. Certified

degree or award was conferred on an earlier occasion on this or any

This study is the outcome of the title “A study on FINANCIAL

Service quality is between customer perceptions of the current service

The research design used in the study is descriptive research design

I take this opportunity to express my sincere thanks to Mrs.

I also like to thank Mr. J. SRINIVASA BABU (TRAINING MANAGER) for

I like to thank director Dr. K. KARUPPIAH., MBA, MCOM, MA, M.PHIL,

I would like to thank my project guide Mr.S. POUGJENDY, Lecturer, for

I thank all my department staff members for their kind co-ordination.

Finally I thank all my friends and my parents who helped me to complete my

RAJSRIYA GROUP was founded in 1977 to take advantage of the

RAJSRIYA GROUP has extensive manufacturing facilities at Chennai and

RAJSRIYA GROUP specialized in the manufacture of components, modules

Also, we do lot of deep drawn parts our four wheeler assemblies

A dedicated team of Managers / Engineers in Design, Methods, PPC,

Company has a centralized engineering design department, equipped with

All Plants are interconnected by SAP – ERP System.

RAJSRIYA GROUP is equipped with latest measuring & testing equipment to

RAJSRIYA GROUP practices high quality standards, process capabilities,

The primary objectives of the study to Financial Performance Analysis by

1. To estimate the earning capacity of the firm.

2. To determine the long term liquidity of the funds as well as solvency.

3. To determine the debt capacity of the firm.

4. To decide about the future prospect of the firm.

5. To guage the financial position and financial performance of the firm.

1. Financial analysis is used to identify the treads and

2. Internal management and external management

3. Financial analysis are trend analysis common size

1.1 CURRENT RATIO (Rs. in Lakhs)

Year Current Assets Current Liabilities CA/CL

2004-2005 580600 520000 1.12

2005-2006 662900 662900 0.90

2006-2007 600691 686310 0.87

2007-2008 787100 686310 1.14

2008-2009 805000 686310 1.17

showing a decreasing trend, though it indicates the efficient use of funds it

is necessary to maintain ideal ratio. This trend may be due to rise in

Year Quick Assets Quick Liabilities QA/QL

2004-2005 460100 2680000 0.17

2005-2006 480034 3595605 0.13

2006-2007 480191 3121195 0.15

2007-2008 666600 4414201 0.15

2008-2009 684500 5414216 0.12

Note: Quick Liabilities = Current Liabilities less Bank overdraft

Quick Liabilities. This ratio is showing a slightly decreasing trend. This is

because of non-maintenance of sufficient amount of liquid cash and

decrease of sundry debtors The phenomena is however temporary.

Year Networth Tangible Assets NW/TA

of the company is fair. Hence it is advisable to rise the shareholder’s funds

of the company in the long run.

Year Fixed Interest Networth FIBF/NW