The Sohrab Group

Head Office & Works

Table of Contents
Introduction of the Sohrab Group Fact Sheet Quality Policy Products Profitability Analysis Concept of Profit Concept of Profitability Ratio Analysis Profit Margin Assets Turn Over Banking System Conclusions and Suggestions 30 33 24 5 11 12 14 18

Company Profile

About The Sohrab Group:-

The Sohrab Group of Companies has been promoted by Mr.Amjad Ali, MBA. Before starting his own unit, Mr. Amjad Ali had rich experience of 13 years working at various senior positions in reputed companies like Vardhman Spinning & General Mills Ltd. The first unit of the group, Sohrab Textile Mills Limited was started in 1987 with term loan of Rs.5.40 millions from Punjab Financial Corporation Ltd and IDBIs special capital of Rs.0.2 millions from Punjab National Bank. The company has repaid Term Loan. Its present turnover is near Rs.110.30 millions, promoters funds are Rs.9.50 millions and bank borrowings for working capital Rs.2.50 millions. Sohrab Spinning Mills Limited was started in 1994 with a term loan of Rs.6.00 millions from Punjab Financial Corporation and Rs.4.20 millions from Punjab State Industrial Development Corporation Limited. Later on there were expansions with term loan of Rs.25.00 millions and Rs.9.00 millions from PSIDC. The company has working capital loan of Rs.17.60 millions from Punjab National Bank and the fixed assets of the company are of Rs.120.00 millions (purchase price), market value

Rs.200.00 millions. There is term loan of Rs.35.00 millions. Its current turnover is near Rs.230 millions.

That small unit has now become a well known business group with a wide range of products, which are being sold in India as well as across the boundaries. This unit started from textiles and now is also dealing in Spinning Products, Garden Furniture, Hospital Furniture, Almirah, Bed, Chair, Table, Logo art etc. The quality and designs of their products are being set as per the demand in the international market. A new design is developed almost everyday. This Group deals with hotels, restaurants, schools, colleges, office and houses in the domestic market and supplying products to the well-established and prestigious companies in the domestic market as well as all over the world.

The Sohrab Group: Sohrab Textile Mills. Ltd. Sohrab Spinning Mills Ltd. Sohrab Impex Ltd. MLG Exim Ltd. HARF Charitable Trust (Regd.)

 Sohrab Public School

The Chairman
Mr. Amjad Ali did M.B.A in 1974 form Aligarh Muslim University. He started his career as an Executive, and served private, semi government and government organizations for 13 years. He started his own unit in 1987. That unit has now become a well known group with a wide range of products, which are being sold not only in India but also in the global market. He has also started a trust i.e., HARF Charitable Trust (Regd.) The Trust runs a C.B.S.E. affiliated school, a free dispensary, stipend to widows, marriages of the orphan girls and scholarship to sports persons and students.

Awards
National Productivity Award State Productivity Award State Export Award

 Innovative Entrepreneurship Award

Location
This group is setup in a pollution free environment at Malerkotla, which is only 40 kms from Ludhiana, the biggest industrial town in the state of Punjab. It is only 3 hours 40 minutes journey from Delhi.

Office Address
Regd. Office & Works: Sohrab Group Of Companies, Nabha Road, Malerkotla 148023 Punjab (INDIA). Branch Office: 1/2/3, IInd Floor, Amar Shaheedan Gurdwara Complex, Opp. Manju Cinema, Ludhiana, Punjab (INDIA).

Our Trading Partners

Nepal Saudi Arabia

 United Kingdom Sout Ireland North Ireland Holland Germany Canada USA

Map To The Sohrab Group

Fact Sheet
Year of Establishment: 1987

 Legal Status of Firm: Limited Liability/Corporation (Privately Held)

Nature of Business: Manufacturer, Exporter

Number of Employees: 1500 People directly and indirectly.

Turnover: US$ 10-25 Million (or Rs. 40-100 Crore Approx.)

R & D Activities:The Unit has a well equipped R & D laboratory. This department is directly control by the M.D.

Quality

Policy

Quality Policy
The Company believes that the key factor that sets us apart from their competitors is the unsurpassed quality of their Products. Thus, the company has set up a quality control department wherein their quality controllers ensure that no compromise is made on the quality of their products. In order to ensure that every single product delivered to our client is free from any defect, our quality controllers

conduct quality tests and perform supervised throughout the different stages of production. The Company Focus on Time & Quality Accuracy & Reliability Convenience to Non-Stopping Working Customer Satisfaction Efficiency & Effectiveness The raw material used in the production is sourced only from reliable and certified vendors. Our quality controllers check the quality of the raw material and only after being approved from them, the material is further sent to the manufacturing unit for production. Our ISO 9001 certification is a proof of the optimum quality standards followed at our organization

Products of

The Group

Textile Products:-

Nylon Tyre Cord

Cotton tyre Cord

Cotton Twine

Spinning Products:-

Blended Yarn

Cotton Yarn

Impex Products:-

Profitability Analysis

Profitability Analysis:An empirical approach has become very popular during the recent years. The reason for the growing popularity of the subject is that it primarily concerns with the concept and techniques of the analysis of profitability which can be advantage only used by managers, creditors, owners. Analytical and critical assessment of the various aspects of financial principles helps judicious application of assets and enables to take right decision at right time. A comprehensive idea is gained to run day to day business in proper perspective. The significance of production/operation, marketing, finance and personnel management is being increasingly realized in moderncorporate world both in India and abroad. This realization has come into light because of increasing complexities of the task of managers and administrators. These branches of management help the managers to reach the objectives of an organization.

A study of these management activities enables the people, engaged in either small size unit or a large core industry, to understand their objectives and the way how to achieve them successfully.

Profit & Profitability 1. Concepts of Profit :Profit plays an important role in every business organization and its determination is really a tough one. Profit is not only concern with the proprietors but also income-tax authorities, managers, directors etc. because all of them are get a percentage of net profit. Even the accountants are not unanimous on this matter. Now question arises, "What is Profit?" Law and even the accountants have not defined the word "Profit". Generally speaking "The Profit of Business during a given period is the excess of income over expenditure for the period." It may arise from other sources. Maximization of profit has ever been one of the important goals of every business enterprises. The existence, continuance and expansion of business depends, to large extent, on its capacity to earn a good amount of profit every year.

The efficiency of a business is measured by the amount of profit earned. A company should earn profits to serving and grow over a long, period of time. The adequacy of profits says Korn and Boyd. "Underlies the entire financial structure of a firm. Only if a company to earn profit will it survive in the long run. Profits are essential, but it would be wrong to assume that every action initiated by the management of the company should be aimed at maximization of profits, irrespective of social consequences. "It is unfortunate that the word profit is looked upon as a term of abuse since some firms always act to maximize profits at the cost of employee's customers and society." There are three concepts of profit : 1. 2. 3. Economic Profit Accounting Profit Social Profit

2. Profitability:Profitability is used primarily to describe any ongoing process in which a good or a service would produce more benefits than

consequences. Profitability is a term used by corporations and financial experts when they discuss whether to make or sell a good or service. It is an expectation of making more income from sales of the good or service than they spend performing the services or making the goods. Profitability is different from "profit" in that profitability is an idea or expectation while the "profit" is the physical result. A class of financial metrics that are used to assess a business's ability to generate earnings as compared to its expenses and other relevant costs incurred during a specific period of time. For most of these ratios, having a higher value relative to a competitor's ratio or the same ratio from a previous period is indicative that the company is doing well. An example would be during debt consolidation - profitability would be used to describe the steps you would take to get out of debt.

RATIO ANALYSIS" PROFIT MARGIN & ASSETS TURNOVER

Profit Margin :

Profit margin is the margin of profit on sales. It is the percent of sales revenue which remains after deducting expenses and other provision from it. The profit margin depends upon the operating cost and selling price of a company. Generally an increase in the sales volume is favourable to profit but not necessary. A high profit margin on sales is not always a blessing unless it is related to reasonably large volume of sales. The fact is that a lowprofit margin on sales is better compared to a higher-margin if the former is accompanied by a rapid turnover. Ultimately it is a return on profitability. Size of profit margin depends upon ability to control operating costs and suitable pricing policy of a company management. Profit margin is a measure of overall profitability. The more commonly used accounting forms of profit are gross profit in origin and net profit margin. Profit margin figures can be best evaluated by expressing them as % of net sales (sales minus sales return, discounts and return etc.)

1. Gross Profit Margin :

It is the excess of selling price or sale proceeds over the cost of goods sold and it provides the balance for operating expenses, income tax and return on capital employed. It indicates the efficiency of

operation and the price policy of the management. Gross profit ratio is an indication of the extent of average mark up on cost of goods. It is primarily test of efficiency of purchase and sales management. Deducting cost of goods sold from value of net sales has arrived at the Gross profit margin of the company.

2. Net Profit Margin :

Net profit margin establishes a relationship between Net Profit and sales. Net profit may be analyzed on two accounts, first net profit before tax and second net profit after tax. Net profit margin indicates the efficiency of management in administrating, manufacturing and selling products. It is overall measure of a company's ability to turn each rupee of sales into Net profit. Thus if the Net profit margin is inadequate the company will fail to achieve a satisfactory return on owner's equity. Net profit margin differ from the operating profit to sales ratio as it is computed after adding non-operating surplus.

3. Operating Profit Margin :

Operating profit margin is the difference of Net sales and total operating cost. Operating profit margin varies with the disproportionate variation in sales revenue in comparison to costs and vice-versa. When

costs remain the same, it is for the management to mark up or down as the case may be. On the contrary, price per unit remaining the same if the management succeeds in bringing about a down variation in all or same of the components of the cost structure the result will be an upward change in the margin of profit on sales. Thus Operating profit margin can be increased either by marking up prices or by reduction in the cost or partly by both. Thus :

Operating profit margin = Operating income Total revenue

4. Depreciation :
In accounting terminology the word "depreciation" is used for the procedure used to allocate the cost of long term tangible assets to the accounting periods which comprise its useful life. All fixed-assets have a

limited period of useful life except land. It is a process of allocation and not of valuation. It is a systematic procedure for allocating the cost of long lived assets over its useful life. It is important for determining the true profit to retained funds in business so that assets can be replaced at proper time for presenting a true balance sheet and as a tax shield. Under this head, we calculate two types of Ratio : a) b) Depreciation to Gross Block Ratio. Depreciation to Net Sales Ratio.

5. Power & Fuel

Power & Fuel is an essential requirement, not only its adequate supply but continuous availability.

6. Raw Material Consumed :

The modified raw is used in a broader sense, as this category includes all the materials used in production whether in a natural state or changed by previous processing. In other words, raw materials are the

materials used in manufacturing process. These are two types of ratio relating to raw material : a) Ratio of Raw Material consumed to Net Sales. b) Ratio of Raw Material consumed to cost of goods sold.

7. Manufacturing, Administration & Selling Expenses to Sales : (A) Manufacturing Expenses :

In manufacturing a company's prices as well as its profit margin are determined to a large extent by its manufacturing expenses because in most industries manufacturing expenses are primary-factors in production.Manufacturing expenses include power and fuel, wages and salaries, bonus, gratuity, P.F. and other allowances, welfare expenses, store, spares and packing materials consumed, depreciation, excise, royalty and other duties, insurance, factory license fees, repairs & maintenance etc.

(B)

Selling, Distribution & Administrative Expenses to

Sales :

In an enterprise, besides cost of production, certain other expenses which indirectly contribute to production, have to be incurred. Selling, Distribution & Administration Expenses includes commission to selling agents, brokerage & discount, freight, handling & other expenses, Advertisements & Publicity, Insurance, Rent (including Lease Rent), Rent & Taxes, Stationery, Printing, postage & telephone expenses, traveling conveyance, legal & professional charges, bad & doubtful debts, research cont. donations, director's fees & com. Etc.

8. Operating Profit After Interest but Before Tax :

Some companies have been playing corporation tax on the profits earned by them from year to year, whereas some other were exempt from it either because of losses or because of their profits being exempted from tax, but the case of cos. Paying pre-tax and post tax profits is different.

Banking System at Sohrab Group

Introduction of banking system at Sohrab Group:-

In the modern age of banking system is very important for all the business concerns whether it is big or small. Banks are the organization who serve the society and nation. For financial transaction banks plays an important role. To overcome the anxieties, for transfer of funds and to invest the funds in the profitable manner banks are very useful. Sohrab is a large manufacturing unit. To control effective management is most important than other things. Proper management is essential for the sound financial position of the business. Company will have to arrange the funds for the procurement of raw material, payment of salary and wages and for meeting routine type of matters. Banks fulfill various needs of company. Firstly to purchase the raw material. Cotton is the basic raw material for the spinning mill. It is an agriculture product. So in the cotton season there are heavy dealings of funds. To collect the sales receivable the are also very important. The following is main selling media of the group. Direct Sales Agency Sales

Mode of Payment Collection:At Head Office At branches Through Documets

Types of Accounts:The Group use PNB to its major bank. The following are the accounts in which the Sohrab group doing its business: Fixed Deposit Account :It is a type of account in which funds are deposited for a fixed period. Usually a company needs not to open the account. There are two main purposes for opening the Fixed deposited account. To deposit the security of workers ad for bank guarantee. Cash Credit Account :A cash credit is an arrangement in which Banks allows its customers to borrow money up to a certain limit. Cash credit arrangements are made against the security of commodities hypothecated of pledged with the banks. In case of hypothecation the possession of goods is not given to banks. The borrowers furnish periodic return of stock the banks. In case pledge, the goods are placed in custody of the banks with it is name in the godown where they are stored. Company withdraws funds from its cash credit accounts as and when it needs the funds. And deposits any account which it find surplus with it on any day. The bank is charged interest on actual amount utilized by it and for the actual utilization only

 Current Account :-

A current account is a running account which is meant for the convenience of customers who are relieved from maintaining large cash balanced with them for their day to day business. A current account is opened with an initial cash amount Rs. 1000 at rural centers and 5000 with other centers.

Conclusions :-

I have tried to conduct the depth and critical study of the financial and accounting policies being followed by The Sohrab Group. I could not go into much depth due to constraints of time available and financial resources at any command.

Accounting policies which are followed by the company are generally sound and according to the Accounting Principles and Conventions which are prescribed by the Institute of Charted Accountants of India.

Suggestions: The PNB is major bank should be open is extension counter in the units premises.

The company should engage the services of reputed the services of the financial reputed consultants to restructure the business.

 The company wants to earn large profits but have to keep in mind the social responsibility.