Report on Internship at

AKAAR INNOVATIONS MANGALORE

By
GAVIN MARSH REGO
4SX18MBA29
Submitted to
VISVESVARAYA TECHNOLOGICAL UNIVERSITY, BELAGAVI
In partial fulfilment of the requirements for the award of the degree of
MASTER OF BUSINESS ADMINISTRATION
Under the guidance of

INTERNAL GUIDE EXTERNAL GUIDE

Mr. MANJUNATH KAMATH M Mr. DAYA VICTOR LOBO
Assistant Professor PROPRIETOR
Department of Business AKAAR INNOVATIONS
Administration KANKANADY BYPASS RD
Sahyadri college of engineering and MANGALURU-02
Management, Adyar, Mangaluru
 Declaration

I GAVIN MARSH REGO, hereby declare that the report on internship at AKAAR INNOVATIONS
MANGALURU is prepared by me under the guidance of Mr. MANJUNATH KAMATH M, Assistant
Professor – Sahyadri College of Engineering and Management, and external assistance by Mr. DAYA
VICTOR LOBO, PROPRIETOR,AKAAR INNOVATIONS MANGALURU.

I also declare that this internship work is towards the partial fulfilment of the university regulations for the
award of degree of Master of Business Administration by Visvesvaraya Technological University, Belagavi.

I have undergone the internship for a period of 34 days. I further declare that this report is based on the
original study undertaken by me and has not been submitted for the award of any degree/diploma from any
other University/Institution.

Place: Mangaluru

Date:
Signature of the Student
ACKNOWLEDGEMENT

I, first of all would thank and praise the God Almighty and I wish to express my gratitude to those people
who have presented me great support directly or indirectly for my internship work.

I would like to express my sincere gratitude to Mr. DAYA VICTOR LOBO,PROPRIETOR, AKAAR
INNOVATIONS, as my external guide, and also MR. SAISH for his support, guidance, cooperation and
for providing all necessary information required for to do the internship.

My gratitude to Dr. Vishal Samartha, Director, Department of Business Administration, Sahyadri College
of Engineering and Management, Adyar, Mangaluru for her constant support.

I would like to express my deepest thanks to my internal guide Mr MANJUNATH KAMATH M,

Assistant professor at Department of Business Administration, Sahyadri College of Engineering and
Management for his valuable supervision throughout the work.

Finally, I’m very thankful to my parents as well as friends for being a constant source of support and
encouragement.

-GAVIN MARSH REGO

TABLE OF CONTENTS

Sl No. Particulars Page No.

Chapter 1: Introduction
1  Introduction about the Organisation
 Industry Profile
Chapter 2: Organization Profile
 Background
 Nature of Business
 Vision, Mission, Quality Policy
2  Work flow model
 Product/service Profile
 Ownership Pattern
 Achievements/Awards if any
 Future growth and prospects
Chapter 3: McKenzie’s 7s Framework
3
Porters Five Force Model

4 Chapter 4: SWOT Analysis

5 Chapter 5: Analysis of financial statements

6 Chapter 6: Learning Experience

7 Bibliography

8 Annexure
LIST OF TABLES AND GRAHS

Table No. Particular Page No.

5.1 Current Ratio
5.2 Quick Ratio
5.3 Cash Ratio
5.4 Return on total investment
5.5 Debt Ratio
5.6 Stock Turnover Ratio
5.7 Working Capital Ratio
EXECUTIVE SUMMARY

This internship has been undertaken in order to have an in-depth knowledge of the overall working of the
organization. The study is performed Akaar Innovations Mangalore, from 8 th July 2019 to 10th August 2019.
This internship program has exposed many facts of an organisation and also helped me to gain knowledge.

This company mainly performs in interior designing of the various products namely Name boards, Name
plates, Mementos, Modular kitchens, Interior designing and execution of churches and residences etc which
is helpful to the customers to have any of these kind of products to their organisation or residences. It also
has a manufacturing unit in which they produce mementos as well as other things with a well equipped staff
and machineries. As the company has recently entered into designing of modular kitchens the existing
customers have been in touch with the same company for this kind of service as they have before used the
products supplied by the company for their organisation or residences or churches.

The report sheds light on the background, nature of the business. The report reveals how the company strives
hard to provide good quality of services to the members. A detailed description about the service profile of
the company is provided in the report.

The report also outlines the McKinsey’s 7s frame work. It deals with the structure, strategy, staff, skills,
style, shared value and system that helps in achieving the objectives of the company. It assesses and
monitors changes in the situation of the organisation. The report also throws light on the SWOT analysis.

The study provides financial statement of the company which is interpreted using ratio analysis technique.
And it provides great deal of data in evaluating the performance of the organisation.
 Chapter 1

Introduction about Internship,

Industry Profile
 Chapter 1: Introduction about the organization and industry.
Industry introduction:
Interior design is the art and science of enhancing the interior of a building to achieve a healthier and
more aesthetically pleasing environment for the people using the space. An interior designer is someone who
plans, researches, coordinates, and manages such projects. Interior design is a multifaceted profession that
includes conceptual development, space planning, site inspections, programming, research, communicating
with the stakeholders of a project, construction management, and execution of the design.

In the past, interiors were put together instinctively as a part of the process of building. The
profession of interior design has been a consequence of the development of society and the complex
architecture that has resulted from the development of industrial processes. In ancient india, architects used
to work as interior designers. This can be seen from the references of Vishwakarma the architect- one of the
gods in Indian mythology. Additionally, the sculptures depicting ancient texts and events are seen in palaces
built in 17th century India. In ancient Egypt, “soul houses” or models of houses were placed in tombs as
receptacles for food offerings. From these, it is possible to discern details about the interior design of
different residences throughout the different Egyptian dynasties, such as changes in ventilation, porticoes,
columns, loggias, windows, and doors.

Interior decorators and Interior designers:

Interior designer
Interior designer implies that there is more of an emphasis on planning, functional design and the effective
use of space, as compared to interior decorating. An interior designer in fineline design can undertake
projects that include arranging the basic layout of spaces within a building as well as projects that require an
understanding of technical issues such as window and door positioning, acoustics, and lighting. Although an
interior designer may create the layout of a space, they may not alter load-bearing walls without having their
designs stamped for approval by a structural engineer. Interior designers often work directly with architects,
engineers and contractors.

Interior designers must be highly skilled in order to create interior environments that are functional, safe, and
adhere to building codes, regulations and ADA requirements. They go beyond the selection of color palettes
and furnishings and apply their knowledge to the development of construction documents,
occupancy loads, healthcare regulations and sustainable design principles, as well as the management and
coordination of professional services including mechanical, electrical, plumbing, and life safety—all to
ensure that people can live, learn or work in an innocuous environment that is also aesthetically pleasing.
Someone may wish to specialize and develop technical knowledge specific to one area or type of interior
design, such as residential design, commercial design, hospitality design, healthcare design, universal
design, exhibition design, furniture design, and spatial branding. Interior design is a creative profession that
is relatively new, constantly evolving, and often confusing to the public. It is not an artistic pursuit and relies
on research from many fields to provide a well-trained understanding of how people are influenced by their
environments.

Color in interior design

Color is a powerful design tool in decoration, as well as in interior design, which is the art of composing and
coordinating colors together to create a stylish scheme on the interior architecture of the space.
It is essential to interior designers to acquire a deep experience with colors, understand their psychological
effects, and understand the meaning of each color in different locations and situations in order to create
suitable combinations for each place.
Combining colors together could result in creating a state of mind as seen by the observer, and could
eventually result in positive or negative effects on them. Colors make the room feel either more calm,
cheerful, comfortable, stressful, or dramatic. Color combination make a tiny room seem larger or smaller. So
it is the Interior designer profession to choose appropriate colors for a place in a way people want to look
and feel in the space.

Organisation Introduction:
Akaar Innovations is basically interior related business organization, located in Kankanady
Mangalore. It is mainly engaged in designing and execution of interiors of residences and churches. Modular
kitchens installation, Granite engraving, Metal Etching, designing and making mementos are also the jobs
being undertaken here.
Chapter 2

Organization Profile
 Organisation Profile:
 Back ground: A small business enterprise being run by MR.Francis Lobo, about 40 years back was
rejuvenated by his son Mr.Daya Victor Lobo, as Akaar.

Earlier the business of this firm had been limited to carving letters manually on granites to be used as
name plates, donor slabs or tomb stones. After completion of his graduation in commerce, MR. Daya
Victor Lobo, who had developed fascination for artworks right from childhood, ventured to expand
his father’s business. Thus Akaar was established in the year 1995 in a rented premise of 5 acres near
Capitanio , Naguri with an initial capital of about 10 lakhs and a workforce consisting of about 25
employees. Using advanced technologies earlier jobs of carving stones and letters were expanded in
terms of processing as well as marketing. Sticker cutting engraving, metal etching, designing and
making of mementos were started. Employees were duly updated with the advancement of
technologies.

Later, Mr.Daya Victor Lobo, having been specialized in interior designs, ventured into designing and
execution of modular kitchens, interiors for residences as well as churches. Later a showroom was
opened in Kankanady by-pass road to facilitate clients to visit and place order after having a look at
the models being displayed. Presently the organization has about 62 employees including skilled
craftsmen and well trained designers.

 Nature of Business :
Basically business of Akaar can be classified into 4 sections:
1. Designing and execution of residential interiors.
2. Designing and execution of church interiors.
3. Designing and installations of modular kitchens.
4. Designing and making mementos
5. Granite engraving, metal etching
6. Name plates, Boards with S.S, Metal casted and Wpvc letters.
 Vision Mission and Quality Policy :
Vision is to create a trusted brand Akaar in the “hearts” of culturally elite class.
Mission of Akaar is to provide the society with comfort and aesthetic satisfaction in terms of interior
needs truly worth of what one invests.

Quality is the one aspect which is never compromised with, as long as service or products of Akaar is
concerned. Only the best quality materials are used. Vast experience in the field has made Akaar
possible to source the materials those excel in terms of durability. Staff are being duely updated with
the changing trends, tastes, advancement in technologies etc.

 Products/Services Profile:
 Name Plates: Designing and making of granite engraved nameplates, nameplates of wood, ACP,
Casted metal etc. are undertaken here. Akaar is known for deep engraving that can be painted
even after several years. Top quality silver and gold paints used, last for considerably long time.
Metal etching- Aluminium, Brass are etching is done as per customers requirements.
 Name Boards: Name boards with steel cut letters, WPVC cut letters, Metal casted letters – As
per requirements of clients.
 Mementos: Mementos made of ACP, WPVC, Glass, Acrylic, Wood-as per requirements of
clients.
Due priority is given for creativity and innovations while designing name boards or mementos.
 Modular Kitchens: With Aluminium framework, Waterproof ,Best quality plywoods for
shutters, Branded 304 grade steel baskets, Best quality Branded hinges and sliders. Designed and
executed as per clients requirements and budget. Aluminium framework reinforced with best
quality wood gives lifetime durability to Akaar modular kitchens.
 Interior designing and execution of Churches and Residences: As per customers
requirements, keeping in view of the best usage of available space.
 Workflow model :
Work flow model for Name boards, Name plates and Mementos

Information given by client

Designer- Computerised sketch is prepared

Suggestions
Manager

Suggestions
Client

Approves

Plotter (plots actual size using computerized plotting machine)

Craftsmen

Finishing and packing

Installing team
Work flow model for interior execution, modular kitchen

Information given by client

Site supervisor- visits and takes measurements

Designer- Computerised sketch is prepared

Suggestions
Manager

Suggestions
Client

Approves

Execution team led by Site-Supervisor

 Achievements and awards:

Within 25 years Akaar innovations has grown up from a single manned shop into such a big industry
where hundreds of people make their living. Today Akaar has become household name in Mangalore
for its products like mementos, Modular kitchen, nameboards. Fame in church interior designing has
been spread to the neighbouring states. ST.Xavier church Goa got its interior designing done by
Akaar. Akaar”s list of privileged customers include famous temples in Dakshina Kannada and
numerous churches across Karnataka and many masjids in the district.
Many social and corporate organisations have recognized Akaar for its creatively excellent works
through awards and felicitations to its proprietor Mr.Daya victor Lobo.
 Future Growth and Prospects:
Akaar has been relying on hardwork, the best quality service and consistent updated products with
changing trend or technologies. Perhaps due to these factors only the transaction graph of Akaar
innovations has always been pointing upwards. Akaar Innovations has never indulged in usual
business tactics like advertisements, sales promotion activities, offers or nominating commission
based agents. Recommendation of satisfied customers to others has helped Akaar Innovations to
achieve its target so far from several years.

Expansion of business of Akaar Innovations is under contemplation. Opening of branches in other

taluk head- quarters in order to provide the distant customers more efficient service, is under
progress. Soon a branch of Akaar is going to open in Moodbidri for which premises has been
already ready.

Its evident that Akaar Innovations has the bright prospect, given the vast experience in the field of
interior designing and in various other fields, the business ethics and the positive attitude of the
proprietor towards the various competitors in the market as well as towards the well- being of the
employees and organization.

 Ownership Pattern:
Ownership is the state or fact of exclusive rights and control over property, which may be an object,
land/real estate or intellectual property. The pattern and distribution of ownership and use of lands
greatly affects the ability to sustain natural resources. Management options, resource demand and
ecological processes are affected by how the land is managed, fragmented and patterned. Successful
management depends upon the degree of functional connectivity across ownerships, boundaries and
landscapes.

The Ownership pattern of Akaar Innovations is Sole Proprietorship. As the proprietor is personally
liable for all the financial obligations and debts of the business which mainly includes designing and
execution of interiors of residences and churches, Modular kitchens installation, Granite engraving,
Metal etching, designing and making of mementos etc. Sole proprietorship is the most valuable and
overriding benefit for the owner to retain control on the business and have overall total control over
decisions for bringing any changes to the structure of the organization and also helpful in updating
the technology service to the processing of the products.
Akaar Innovation is an interior designing business which mainly designs the interiors of residences
and churches the proprietor has the full control on the designing process how to be done as per the
client requirements and also this company has moved into other forms of business like designing and
making mementos, Name plates, designing and installation of Modular kitchens which has been
helped the proprietor to start because all the finances of the organization is controlled by the owner
itself.
Chapter 3

McKinsey's 7s Framework with

Special Reference to Organization
And
Porters Five Force Model
McKinsey's 7s framework with special reference to AKAAR INNOVATIONS.

While some models of organizational effectiveness go in and out of fashion, one that has persisted is the
McKinsey's 7-S framework. Developed in the early 1980s by Tom Peters and Robert Waterman, two
consultants working at the McKinsey & Company consulting firm, the basic premise of the model is that
there are seven internal aspects of an organization that need to be aligned if it is to be successful.

The model is based on the theory that, for an organization to perform well, these seven elements need to be
aligned and mutually reinforcing. So, the model can be used to help identify what needs to be realigned to
improve performance, or to maintain alignment during other types of changes.

The 7s model cab be used in a wide variety of situations where an alignment perspective is useful, for
example:
 Improve the performance of a company.
 Examine the likely effects of future changes within a company.
 Align departments and processes during a merger or acquisition.
 Determine how best to implement a proposed strategy.
The Seven Elements:

The McKinsey’s 7s model involves seven independent factors which are categorized as either ‘Hard’ or
‘Soft’ elements:

Hard Elements Soft Elements

Strategy Shared Value

Structure Skills

Systems Style

Staff

 Strategy: It indicates purpose of the business and the way the organization seeks to enhance its
competitive advantage.
 Structure: Division of activities, integration and coordination mechanisms.
 Systems: Formal procedures for measurement, reward and resource allocation.
 Shared Values: These are the core values of the company that are evidenced in the culture and
general work ethic.
 Skills: These are organization's core competencies and distinctive capabilities.
 Staff: This includes Organization's human resources, demographic, educational and attitudinal
characteristics.
 Style: It represents typical behavior patterns of key groups, such as managers, and
other professionals.

STRATEGY:
Akaar’s strategy is based on the principle that trust of customer is very important for the survival of any
business.
Akaar never encourages middlemen. It does not resort to advertisements or fake orders for the promotion of
business.
Akaar participates in exhibitions, organized by Architects Guild, and expose its products to the public. In the
showroom products of Akaar are displayed attractively and the sales personnel is always ready to attend and
convince the customers efficiently. Care is taken and only best quality materials are used.
Maintenance of trust with the suppliers is also essential. Long term relationship developed with the suppliers
helps availability of best quality materials for reasonable rates.
These factors help to maintain the trust of customers who always look for the best service with reasonable
price. Such customers recommend others and this is how Akaar has grown up over the years.
Structure, Staff, System:
There are 6 departments in Akaar
 Designing and execution of residential interiors.
 Designing and execution of church interiors.
 Designing and installations of Modular Kitchens.
 Designing and making mementos.
 Granite engraving, metal etching
 Name plates, Boards with S.S, Metal casted and Wpvc letters.

Each Department is under the control of a manager. These managers are directly accountable to the
proprietor in terms of the performance of their respective department.
Under each there are designers who is given the task of designing in the direction of manager who in
turn receives information regarding the requirements of a client from the site supervisor. The
manager, site supervisor, designers and the client coordinate with each other in finalizing the design.
Once the design is approved its reffered to the proprietor who directs office assistants to prepare
estimation.
After the client is totally satisfied with both design and estimation only the project is executed or the
product is prepared. Execution team comprises of craftsmen, site supervisor and labourers who are
closely monitored by proprietor himself.
Making mementos, name plates, granite engraving and etching are all done in the workshop.
Craftsmen or labourers working in workshop are supervised by corresponding department managers.
Recruitment of new staff is a regular process being carried out once in about five years. This process
is genuinely aimed to search for new talents required for changing trend and keep Akaar in tune with
aspirations of new generations. Only after due consultations with concerned managers only,
proprietor decides on the number of candidates or new spaces to be created.

In case of sudden vacancies are created recruitment is done immediately. Due priority is given to
creativity and passion for innovation while a candidate is selected. Concerned manager and the
proprietor take interview separately and the proprietor will finalise after consulting the manager. If
needed, company will arrange training to any of its employees to update himself with advanced
technologies. Facilities such as ESI, Yearly bonus, Gratuity are provided to employees. Loan facility
helps workers a lot to meet emergency expenses and repay in easy installments.
Ayudha Pooja is celebrated with joy and pomp. Cultural activities are conducted which help workers
to exhibit their talents.
SKILLS, STYLES AND SHARED VALUES:
Designers, craftsmen and sales executives are competitive enough in their respective field.
Recruitment itself is mainly based on their skills and enthusiasm in keeping themselves in par with
the prevalent trends.
Staff are encouraged to participate in various programmes or seminars which help improve their
talents or positive attitude.
Proprietor of Akaar himself always involves himself in creating new models according to the
changing tastes of people. That is why Akaar has a wide variety of patterns to choose from as far as
mementos, nameplates, alters or murals are concerned.
“Who knows not he knows not is fool, shun him”
“Who knows he knows not is a child, teach him”
“Who knows not he knows is asleep, wake him”
“Who knows he knows is a wise person, follow him”
This is the proverb displayed in workshop and showroom of Akaar, which explains the style of
functioning being adopted there.

Akaar Innovations since its inception has been trying to keep the trust and faith of its client,
suppliers, staff and all the workers. Ultimate outcome is not only measured in terms of monetary
profit or loss but it should be evaluated in terms of certain ethical values also. Proprietor of the
company has been trying his best to drive home this point to his team.
Porter’s Five Force Model
INTRODUCTION:

Michael E Porter developed the Five forces Model in 1980. There are five important forces at the core of this
model. Porter showed these forces were a part of every industry and market. They affected the intensity of
competition and determined the profitability of any industry. Since then, the model has been highly popular
as a tool for strategic planning.

1.Threats of New Entrants:

New entrants in the designing of various products and modular kitchens brings innovation, new ways of
doing things and put pressure on Akaar Innovations through lower pricing strategy, reducing costs, and
providing new value propositions to the customers. Akkar Innovations has to manage all these challenges
and build effective barriers to safeguard its competitive edge. It can tackle threats of new entrants by
Innovating new products and services. New products not only brings new customers to the fold but also give
old customer a reason for designing of the interiors and purchasing the products.

2.Bargaining power of Suppliers:

 Most of the companies in the designing process of the interiors buy their raw material from numerous
suppliers. Suppliers in dominant position can decrease the margins Akaar innovations can earn in the
market. Powerful suppliers in consumer goods sector use their negotiating power to extract higher prices
from the firms in the interior designing field. The overall impact of higher supplier bargaining power is that
it lowers the overall profitability of the company. It can tackle Bargaining power of suppliers by building
efficient supply chain with multiple suppliers. It can also tackle by experimenting with product designs using
different materials so that if the prices go up of one raw material then company can shift to another.

3. Bargaining Power of Buyers:

Buyers are often a demanding lot. They want to buy the best offerings available by paying the minimum
price as possible This may put on the company and to their Profitability in the long run. The smaller and
more powerful the customer base is of the company the higher the bargaining power of the customers and
higher their ability to seek increasing discounts and offers. It can tackle bargaining power of buyers by
building a large base of customers. This will be helpful in two ways one is that it will reduce the bargaining
power of buyers plus it will also provide an opportunity to the firm to streamline its sales and production
process.

4. Threats of substitute products or services:

When a new product meets or service meets a similar customer needs in different ways, industry
profitability suffers. The threat of a substitute product or service is high it offers a value proposition that is
uniquely different from present offerings of the industry. It can tackle the treat of substitute products or
services by understanding the core need of the customer rather than what the customer is buying and also by
increasing the switching cost for the customers.

5. Rivalry among the Existing Competitors:

If the rivalry among the existing players in an industry is intense then it will drive down prices and
decrease the overall profitability of the industry. Akaar Innovations operates in a very competitive of
designing the interiors of churches, making and designing name plates, modular kitchens etc. This
competition does take toll on the overall long term profitability of the organization. It can tackle the rivalry
among the existing competitors by building a sustainable differentiation, Collaborating with competitors to
increase the market size rather than just competing for small market.
 I.

Chapter 4

SWOT Analysis
SWOT ANALYSIS OF AKAAR INNOVATIONS:

SWOT Analysis is a well- known technique for analyzing the internal and external environment of
business. It is simple tool that is helpful in studying the internal strength and weaknesses, and the
external threats and opportunities of a company. SWOT Analysis involves identifying the business
objectives and defining the significant internal and external factors for achieving the identified
objectives.

The Main aim of conducting a SWOT Analysis is to help the business in protecting itself against the
threats and to exploit the potential business opportunities. This analysis is essential in formulating
strategies as it provides a base for strategy formulation. SWOT Analysis helps in studying the overall
soundness of the business.

STRENGTH:
Strength of Akaar Innovations is its experience of more than 20 years in the field of interior
designing. Experienced, dedicated staff who have been serving this organisation right from the
beginning, absolute trust of the clients being the main business promoting factor is also an add on
factor to the strength of Akaar Innovations.

WEAKNESS:
Rising labour charges and sometimes non availability of labourers come in the way of finishing the
particular project on time as per the customer requirement. This can be considered as the main
weakness.

OPPORTUNITY:
 Flourishment of Akaar business is directly proportional to that of construction business in Mangalore
. Boom in building construction works in Mangalore or near by taluks will certainly create a bright
opportunity for Akaar.

THREATS:
Mushrooming interior firms being run by novices, resorting to the cheap marketing tacts to make
short term gains, spoil themselves and the market as well. It is really an more challenging task for
Akaar Innovations to keep up its service standard inspite of such competitors.

Chapter 5
Analysis of Financial Statements

FINANCIAL PERFORMANCE ANALYSIS

INTRODUCTION

Financial analysis is a tool of financial management. It consists of the evaluation of the financial
condition and operating performance of business firm, an industry, or even the economy, and the forecasting
of its future condition and performance. In other words it is a means of examining risk and expected return.
Data for financial analysis may come from other areas within the firm, such as marketing and production
departments, from the firm’s own accounting data, or from financial information vendors such as
Bloomberg financial markets, Moody’s Investors Service, Standard and poor’s Corporation, Fitch Ratings
and value line , as well as from government publications, such as Federal Reserve’s Bulletin. Financial
publications such as business weak, Forbes, Fortune and the Wall Street Journal also published financial
data and economic data much of which is now available on internet.

Within the firm, financial analysis may be used not only to evaluate the performance of the firm, but
also its divisions or departments and its product lines. Analysis may be performed both periodically and as
needed, not only to ensure informed investing and financing decisions, but also an aid in implementing
personnel policies and rewards systems.
 Outside the firm, financial analysis may be used to determine the creditworthiness of a new
customer, to evaluate the ability of a supplier to hold to the conditions of a long term contract and to
evaluate the market performance of the competitors.

Firms and investors that do not have the expertise, the time or the resources to perform financial
analysis on their own may purchase analysis from companies that specialize in providing this service. Such
companies can provide reports ranging from detailed written analysis to simple credit worthiness ratings for
businesses.

OBJECTIVES OF FINANCIAL STATEMENT ANALYSIS:

The major objective is to provide decision makers information about a business enterprise for use in
decision-making. The different users and decision makers to objectives can also use

1.Assessment of past performance and current position:

Past is often a good indicator of future performance. Past Performance offers a means for judging
managements past performance and are possible indicators of future performance. Analysis of current
position will show the types of assets owned by a enterprise and the different liabilities due against the
enterprise

2.Prediction of net income and growth prospects:

Financial statements, which contain information on past performances, are analysed and interpreted
as a basis for forecasting future rates of return and for assessing risk. The prediction of future earnings tends
to improve the financial decisions made by the investors and financial analysis.

3.Prediction of bankruptcy and failure:

Through the evaluation of solvency position, managers and investors both can take preventive
measures to minimize losses. Corporate managements can effect changes in operating policy, recognize
financial structure or even go for voluntary liquidation to shorten the length of time losses.

4.Loan decision by financial institution and banks:

Financial institutions, loaning agencies, banks and others to make sound loan and credit
decision use financial statement analysis. A comprehensive investigation and analysis of the financial
statement will assure lenders with regards to the repayment of loan along with interest on the due date.

Tools of financial performance analysis

A financial analyst can adopt one or more of the following tools/techniques of financial
analysis
 Ratio analysis
 Trend analysis
 Fund flow analysis
 Cash flow analysis
 Common size statements

SOME IMPORTANT RATIOS OF THE COMPANY:

1.Current Ratio:
It is the ratio which indicates how the company is able to pay its current liabilities by its current assets. It
is calculated from dividing current assets by current liabilities.

Current Ratio= Current assest/current liabilities

Table 5.1

Year Current Liabilities Ratio

Current Assets

2016-17 6670007.08 3805675.32 1.8:1

2017-18 8230674.98 4807117.25 1.7:1

2018-19 11555785.88 7308622.44 1.6:1

Graph showing Current Ratio:

CURRENT RATIO
1.85

1.8

1.75

1.7

1.65 CURRENT RATIO

1.8

1.6 1.7

1.55 1.6

1.5
2016-17 2017-18 2018-19

Interpretation: : It shows that there is decrease in Current Ratio from 1.8%(2017) and from 1.7%(2018) to
1.6%(2019), which indicates that the company is not in better position to pay its short term obligation as
compared to previous two year.

2. Quick Ratio:

Quick Ratio is a measure which indicates how industry meets its short term financial liabilities.

It is calculated from dividing current assets-inventories by current liabilities. It is calculated to hold

defects that occur in current ratio.

Quick ratio = (current assets – inventories) / current liabilities

Table 5.2:
Year Current assets- Current liabilities Ratio
Inventories
2016-17 3765853.08 3805675.32 0.98:1
2017-18 6870252.98 4807117.25 1.43:1
2018-19 8451089.88 7308622.44 1.16:1
Graph showing quick ratio:

Quick Ratio
1.6
1.4
1.2
1
0.8
1.43 Quick Ratio
0.6 1.16
0.98
0.4
0.2
0
2016-17 2017-18 2018-19

Interpretation: The Quick ratio has increased from 0.98 (2017) to 1.43 (2018) which indicates that the
increase in the company’s ability to pay off its short term debts out of its quick assests. But the quick ratio
has decreased from 1.43(2018) to 1.16(2019) indicating that the decrease in the company’s ability to pay off
its short-term debts out of its quick assets.

3.Cash Ratio:

It is ratio of only cash and cash equivalents of a company to its current liabilities. It measures the ability
of business to pay its current liabilities by only using cash.

It is calculated from dividing cash and cash equivalents by current liabilities.

Table No 5.3:

Year Cash and Cash Current liabilities Ratio

equivalents
2016-17 181362.27 3805675.32 0.04
2017-18 169336.76 4807117.25 0.03
2018-19 188548.35 7308622.44 0.02
Graph showing cash ratio:

Cash Ratio
0.045
0.04
0.035
0.03
0.025
0.02 0.04 Cash Ratio
0.015 0.03
0.01 0.02
0.005
0
2016-17 2017-18 2018-19

Interpretation:

Cash ratio will be high when company will be having sufficient cash and cash equivalent to cover its
current liabilities. And it also shows that cash is kept idle. If cash ratio is below 1 it shows that company
is facing difficulties in managing sufficient cash.

4. Return on Total Assets Ratio:

The return on total assets (ROTA) is a ratio that measures the company’s net income or profit relative to its
total net assets. The ratio is considered to be an indicator of how effectively company is using its assets to
generate earnings. The formula to calculate Return on Total Assets is:

Return on Total Assets Ratio = Net Profit / Total Assets * 100

Table 5.4:
Year Net Profit Total Assets ROA Ratio

2016-17 962011.50 10042642.59 9.58%

2017-18 1133411.16 11516775.22 9.84%

2018-19 962829.24 14635172.73 6.58%

Graph showing Return on Total Assets ratio:

ROA RATIO
9.58% 9.84%
10.00%

8.00% 6.58%

6.00%
ROA RATIO
4.00%

2.00%

0.00%
2016-17 2017-18 2018-19

Interpretation: It shows that there is increase in ROA Ratio from 9.58%(2017) to 9.84%(2018) which
indicates that there is increase in profit. It also shows that there is decrease in ROA Ratio from 9.84%(2018)
to 6.58%(2019), which indicates that there is decrease in profit of the company.

5.Debt Ratio:
Ratio indicating total long-term and short-term debt to total assets. It is calculated from dividing total
liabilities by total assets.

Table 5.5:
Year Total liabilities Total Assets Ratio
2016-17 3805675.32 9567809.61 0.398
2017-18 4807117.25 11379123.24 0.422
2018-19 7308622.44 14477520.75 0.505
Graph showing Debt Ratio:

Debt Ratio
0.6
0.505
0.5
0.422
0.398
0.4

0.3
Debt Ratio
0.2

0.1

0
2016-17 2017-18 2018-19

Interpretation

Debt equity ratio is used to show how much proportion of company assets are acquired
through debt. Debt equity indicates how much a company acquire risk. In above table we can see during
2018 debt ratio is 0.422 which is less than 0.5(below 50%), that shows company has sufficient funds to
acquire assets and do not rely upon borrowed funds.

Likewise, in 2019 the company has 0.505 which is more than 0.5 indicates company does not have
adequate amount of cash to acquire its assets and it will rely on borrowed funds.

6.Stock turnover Ratio:

The stock 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. This measures how many times average
inventory is turned or sold during a period.
Table5.6:

Year Cost of goods sold Average stock Ratio

2016-17 5510877.8 3404815.5 1.62 times

2017-18 5135372.34 2132288.00 2.41 times

2018-19 5065235.94 2232559.00 2.27 times

Graph showing stock turnover ratio:

Stock turnover ratio

3

2.5

1.5
Stock turnover ratio
2.41 2.27
1
1.62
0.5

0
2016-17 2017-18 2018-19

Interpretation: The graph shows that the stock turnover ratio of the company is 1.62(2017), 2.41(2018)
and 2.27(2019) which mainly ranges from1.0 to 2.0 in the last 3 years which can be mainly used to
evaluate the efficiency of a company in handling the goods it manufactures and purchasing raw materials
for final process.

7.Working Capital Ratio:

The Working capital ratio is a measure of liquidity, revealing whether a business can pay its obligations.
The ratio is the relative proportion of an entity’s current assets to its current liabilities, and shows the
ability of a business to pay for its current liabilities with its current assets. A working capital ratio is less
than 1.0 is a strong indicator that there will be liquidity problems in the future, while a ratio in the vicinity
of 2.0 is considered to represent good short-term liquidity.

Table 5.7:

Year Cost of Goods sold Net working Capital Ratio

2016-17 5510877.8 2864332.48 1.92

2017-18 5135372.34 3423557.73 1.50

2018-19 5065235.94 4247163.44 1.19

Graph showing Working Capital Turnover Ratio:

Working Capital Turnover Ratio

2.5

1.5
Working Capital Turnover
1 1.92 Ratio
1.5
1.19
0.5

0
2016-17 2017-18 2018-19
Interpretation: The Graph shows that the working capital turnover ratio of the company is decreased
from 1.92(2017) to 1.50(2018) to 1.19(2019). Though the ratio is in the vicinity of 2.0 it can be
considered to represent good short –term liquidity of the company and as the ratio does not lie below 1.0
there may not be liquidity problems to the company in the future.
Chapter 6

Learning Experience
Learnings from Akaar Innovations Mangalore:

My Learning experience at Akaar Innovations Company for 34 days given me the greater opportunity to
learn and understand the organization. The environment of organization is totally different from what we
experience in our college and class rooms. My visit to the proprietor, who is external guide, as well as
Mr.Saish one of the employee of the organization was very helpful me to get all the information about the
company.

The internship at Akaar Innovations helped me to understand the work, culture, work nature, and product
services. Gave me some tips regarding how to manage people, team work, how to be with workers. This
internship study helped me to understand various products of Company and also came to know how the
work is done in the manufacturing sector of the company.

The experience I had in Akaar Innovations was really great. First time to work in an organization and
studying about it. The people there were good. Very helpful and supportive. Finally, I would like to thank
the people Akaar Innovations Mangalore for giving me the opportunity and guiding me to complete my
internship successfully.

Bibliography:
http://en.m.wikipedia.org>wiki>
http://Akaarinnovations.com
http://www.daijiworld.com
Annexure