Final Project Report On Au Fin. Jaipur

SUMMER TRAINING REPORT
On
AU FINANCIERS (INDIA) PVT.LTD.
FINANCIAL STATEMENT ANALYSIS
Submitted in partial fulfillment of the requirements of the two year

Master of Business Administrative (MBA).
Submitted by
Surendra Kumar
Batch: 2009-2011
Sri Balaji College of Engg. & Tech. Jaipur
{AU Financiers (India) Pvt. Ltd.}

ACKNOWLEDGEMENT
The satisfaction and euphoria that accompanies the successful completion of

any task would be incomplete without mentioning the names of the people
who made it possible, whose constant guidance and encouragement crown
all the efforts with success.
I am deeply indebted to all people who have guided, inspired and helped us
in the successful completion of this project. I owe a debt of gratitude to all of
them, who were so generous with their time and expertise.
I am highly intended and extremely thankful to Mr. Vimal Jain (Company

Mentor) & Mss. Sipra Sharma (College Mentor) who as my external guide
was a constant source of inspiration and encouragement to me. The strong
interest evinced by them has helped me in dealing with the problem; I faced
during the course of project work. I express my profound sense of gratitude
to them for timely help and co-operation in completing the project.
Also I would like to thanks to Mr. Vijender Shekhawat for his continuous
guidance and support.
Last but not the least, I thank everybody of accounts & HR team, who
helped directly or indirectly in completing the project that will go a long way
in my career, the project is really knowledgeable & memorable one.
Surendra Kumar

CONTENTS
Serial. No. TITLE PAGE NO.
Chapter-1 PROFILE OF COMPANY

 Industry study
• Types of NBFCs
• NBFCs are different from Banks
 Company history
• Milestones
 Board of Director
 Number of People in Company
• No. of Customers
• Target Customer of the Company
 Departments
 Financial profile of the company
• Actual & Future projection
• Net Worth w/s AUM
 Products & Services
 Competitors
 Other relative information’s
• Brand
• Strength
• Network
• Investor Relation
• Carreers
• Social Responsibility

Chapter-2 INTRODUCTION
 Introduction of the study
 Purpose of study
 Scope of study
 Objective of the study
 Methodology
 Date collection
 Tools
 Limitation
Chapter-3 PROJEC OVERVIEW

 Introduction of Financial Statement
 Meaning and Concept of Financial Analysis
 Types of Financial Analysis
 Procedure of Financial Statement Analysis
 Methods and Devices of Financial Analysis
 Limitation of financial Analysis
 Overview of Ratio Analysis
Chapter-4 ANALYSIS AND INNTERPRETATION

 Comparative Balance Sheet
 Comparative Income Statement
 Ratio Analysis
Chapter-5 FINDINGS AND SUGGESTIONS

 Findings

 Suggestions
Executive Summary
AU Financiers (India) Private Limited is registered with Reserve Bank of
India (RBI) as Non-Banking Finance Company (NBFCs). AU Financiers is
fast growing company with roots in Rajasthan, and branches spread in
Maharashtra and Gujarat and planning to increase our presence to pan India.
This company provides financial solution to our customer like Vehicle
finance, Small secured loan, life insurance & General Insurance. This
company comes under Assets Finance Company (AFC) & Companies
extensive network in semi-urban and rural areas of Rajasthan, Maharashtra
and Gujarat has brought the benefit of growth to people outside the usual
scope of organized finance and allowed us to propagate the motto of
inclusive growth.
AU Financiers biggest area of operation is commercial vehicle financing

where Company serve the requirements of various categories of the market
right from three wheelers to multi-axle trucks. From first time buyers of new
vehicles to refinancing of running vehicles and this extensive product
portfolio allows this company to cater to a broad cross section of the market.
Company has more than 85 Branches across Rajasthan, Maharashtra &

Gujrat. And No. of customers is increasing very fast as on May 2010
Company has 45,721 Customer across these locations and No. of Employers
is 685 as on May 2010. Company is performing well because in 2007-08
company’s Net Worth was 24.75 and in 2009-10 were 115.55.
This Project will focus on Managing of Fund. It will include Management of

net funds available for investment and external funds purchased from banks.
(Owner’s Capital + funds purchased from banks.)
This Project will help us to understand the shortage of the fund, means by
doing this we can know that when fund will short and accordingly we can
manage fund for further investment activities. By making month wise fund
flow statement we can know shortage and excess of the fund.
This project gives the importance of fund management tools and principles.

Industry study
Non-Banking Financial Companies (NBFCs)
Non-banking financial companies (NBFCs) are fast emerging as an
important segment of Indian financial system. It is a heterogeneous group of
institutions (other than commercial and co-operative banks) performing
financial intermediation in a variety of ways, like accepting deposits, making
loans and advances, leasing, hire purchase etc. They raise fund from the
public, directly or indirectly, and lend them to ultimate spenders. They
advance loans to the various wholesale and retail traders, small-scale
industries and self-employed persons. Thus, they have broadened and
diversified the range of products and services offered by a financial sector.
Gradually, they are being recognized as complementary to the banking
sector due to customer-oriented services, simplified procedures, and
attractive rates of return on deposits, flexibility and timeliness in meeting the
credit needs of specified sectors.
The working and operations of NBFCs are regulated by the Reserve Bank of

India (RBI) with in the framework of the Reserve Bank of India (RBI) Act,
1934.
As per the RBI Act, a 'non-banking financial company' (NBFCs) is defined

as:-
(i) A financial institution which is a company.

(ii) A non banking institution which is a company and which has as its
principal business the receiving of deposits, under any scheme or
arrangement or in any other manner, or lending in any manner.
(iii) Such other non-banking institution or class of such institutions, as
the bank may, with the previous approval of the Central
Government and by notification in the Official Gazette, specify.

The types of NBFCs registered with the RBI are:-
 Equipment leasing company: - is any financial institution whose

principal business is that of leasing equipments or financing of such
an activity.
 Hire-purchase Company: - is any financial intermediary whose

principal business relates to hire purchase transactions or financing of
such transactions.
 Loan company: - means any financial institution whose principal

business is that of providing finance, whether by making loans or
advances or otherwise for any activity other than its own (excluding
any equipment leasing or hire-purchase finance activity).
 Investment Company: - is any financial intermediary whose

principal business is that of buying and selling of securities.
Now, these NBFCs have been reclassified into three categories:-
 Asset finance Companies (AFC)
AFC are financial institutions whose principal business is of financing

physical assets such as automobiles, tractors, construction equipments
material handling equipments and other machines.
E.g.: Bajaj Auto Finance corp., Fullerton India etc
 Investment Companies (IC)

ICs generally are involved in the business of shares, stocks, bonds,
debentures issued by government or local authority that are marketable in
nature.
E.g.: Stock Broking Companies, Gilt firms
 Loan Companies (LC)
LCs is loan giving companies which operate in the business of providing

loans. These can be housing loans, gold loans etc
E.g.: Mannapuram Gold Finance, HDFC
NBFCs are different from Banks
 NBFCs cannot accept demand deposits (Demand deposits are funds

deposited in an institution, that are payable immediately on demand
e.g.: Savings account, Current account etc)
 A NBFC cannot issue cheques, to their customers and is not a part of
the payment and settlement system
 Deposit insurance facility of Deposit Insurance Credit Guarantee
Corporation (DICGC) is not available for NBFC depositors
 They cannot offer interest rates higher than the ceiling rate prescribed
by RBI from time to time. (Currently the ceiling rate is 12.5%)
 They cannot offer gifts/incentives or any other additional benefit to
the depositors.
 They should have minimum investment grade credit rating, from the
credit rating agencies

Company Overview
AU financiers (India) Pvt. Ltd.
AU Financiers (India) Private Limited, registered with Reserve Bank of
India as a Non Banking Finance Company (NBFC) and this company was
promoted by Mr. Sanjay Agarwal in the year 1996. Originally the Company
was incorporated as ‘L.N. Finco Gems Private Limited’ but in 2005
Company has changed its named into ‘AU Financiers (India) Pvt.
Ltd’. The objective was to align the Company name with business line of
the Company.
AU Financiers is a fast growing financing company with our roots in

Rajasthan, and branches spread in Maharashtra and Gujarat and planning to
increase our presence to pan India. Company facilitates access too easy,
affordable financing options for small road transport operators and fleet
owners. Company extensive network in semi-urban and rural areas of
Rajasthan,
Maharashtra and Gujarat has brought the benefit of growth to people outside
the usual scope of organized finance and allowed us to propagate the motto
of inclusive growth.
Its biggest area of operation is commercial vehicle financing where we serve

the requirements of various categories of the market right from three
wheelers to multi-axle trucks. From first time buyers of new vehicles to
refinancing of running vehicles, our extensive product portfolio allows us to
cater to a broad cross section of the market.
It also engaged in small secured business loan products for personal and
business needs. Our excellent track record of high quality lead generation,
high collection ratio and low delinquencies has attracted the attention of high
quality stakeholders and today, besides the promoters, our principal investor
is Motilal Oswal Private Equity Advisors Private Limited. The support of
our investors and our enhanced management bandwidth has given us the
impetus to forge ahead in new geographies and expand our product
portfolio.

Milestones
 The company has disbursed more than Rs.850 crores till January 2010.
 The company is making continuous efforts to provide financial
assistance not only to the people of Rajasthan but also to the people of
Maharashtra and Gujarat.
 CRISIL is continuously monitoring our performance. On the basis of
performance analysis and sustainable growth shown by the company,
company’s rating has been improved to BBB/Stable from BBB/+.
 2008- Private Equity Investment from Motilal Oswal Venture Capital
Advisors Private Limited.
BOARD OF DIRECTORS
• Mr. Sanjay Agarwal, Promoter & Managing Director

• Mr. Uttam Tibrewal, Executive Director
• Mr. Krishan Kant Rathi (Director)
• Mr. Vishal Kumar Gupta (Investor Director)
The company is being managed by its Board of Directors consisting of 4

board members including investor directors.
Mr. Sanjay Agarwal, Managing Director
He is promoter of the company; he is chartered accountant by profession and

is a first generation entrepreneur with 15 years of experience in the finance
industry. Having expertise in various fields, he plays key role in financing and
financing strategy, corporate planning and risk management. He is also a

member of Rajasthan finance companies association.
He believes that: to be successful in life one should have self confidence,

integrity and great passion towards his/her works. And it is equally important
to assign a right task to the right person as per his/her competency and skills at
right time.
Mr. Uttam Tibrewal, Executive Director
He is commerce graduate. He is having 15 years of experience in retail

business and has been working in the finance industry for the last 10 years.
His expertise expands into the area of retail marketing, building customer
relationships and managing operations.
He joined in 2003 and is looking after business development, human resource

and developing strategic relationships.
He being born and brought up in business class family; always had a vision to
become a successful entrepreneur. His commitment and dedication has turned
no stone upturn. He has been able to identify the undetected diversified area
with his creative thinking and long term vision towards life.
He believes that: Hard work and integrity is the key to success.
Mr. Krishan Kant Rathi, Director
He is a Chartered Accountant and a Company Secretary by profession and

having more than 20 years of experience in the field of finance & accounts.
He represents India Business Excellence Fund (“IBEF”) on the board of the
company. He is a director in Motilal Oswal Private Equity (“MOPE”). He has
also worked as chief financial officer of Future Group and in senior positions
at RPG Group and Rajan Raheja Group. He is also the Chairman of the Audit
Committee of the company.
Mr. Vishal Kumar Gupta, Investor Director

He has a Bachelor of Engineering degree from Aligarh Muslim University and
has further done MBA from the University of Chicago. He is a having vast
experience of more than 10 years in business planning, joint ventures, mergers
& acquisitions, fund raising through private equity and stock markets,
corporate governance, treasury management, etc. He represents IBEF on the
board of the Company.

Chief Financial Officer
NUMBER OF PEOPLE
The number of employers is increasing year by year at fastest speed, like in
2006-07 the no. of employees was 155 but in 2010 it is 685.

No. of Employees
685
700 603
600
500
400 304
253
300
155
200
100
0
06-07 07-08 08-09 09-10 As on May 10
Department wise Employees Strength for May 10

Marketing SME &
Credit & Accounts Collections Admin, Total
& Agri
Operations & Finance & Legal Hr & IT Strength
Insurance Business
356 113 83 69 52 12 685
No. of Customers
Year Total No. of Customers

2003-04 189
2004-05 2376
2005-06 6182

2006-07 12335
2007-08 20239
2008-09 26723
2009-10 41995
Apr - 10 43521
May -10 45721
Target Customer of the Company

 Rural
 Semi-Urban areas
 First time users
 Tier-2 Cities
DEPARTMENTS
 Marketing Department.
 Accounts Department.
 Collection Department.

 Credit Departments.
 Human Resources Departments.
 IT Department.
 Insurance Department.
FINANCIAL PROFILE OF THE COMPANY

Figures in Crs
2009- 2008- 2007- 2006-

Particulars 10 09 08 07
Income from Operations 54.27 22.53 12.88 6.50

Profit Before Tax 18.16 7.74 4.19 1.53
Profit After Tax 11.85 5.18 2.58 .99
Net Worth 115.55 40.37 24.75 2.83
Loan Funds 108.06 60.11 2.01 0.34
Capital Adequacy Ratio
31.20 19.00 11.14 6.53
(considering off bal sheet
% % % %
items)
CAR (without off balance 66.18 80.18 143.0 217.8
sheet items) % % 3% 5%

ACTUAL & FUTURE PROJECTIONS
2009-10 2010-11 2011-12

Particulars
Disbursements 414.49 800 1200
AUM 485.58 925 1400
Net Worth 115.55 150 190
NET WORTH v/s AUM
AUM to
%
Net NW
AUM Increase
Particulars Worth
in NW
(in times)
2003-04 1.09 4.15 3.81 --
2004-05 2.74 43.01 15.70 151.38%
2005-06 2.84 79.77 28.09 3.65%
2006-07 8.83 136.74 15.49 210.92%
2007-08 24.24 210.77 8.70 174.52%

2008-09 40.38 247.65 6.13 66.58%
2009-10 115.55 485.58 4.20 186%
Products & Services

 Vehicle Finance
 Small Secured Business Loans
 Secured small Landing to existing customers.
 Insurance
Vehicle Financing:-
Commercial vehicle loans will continue to remain the mainstay for the
Company. Company primarily offer our services for financing various types
of heavy commercial vehicle, light commercial vehicle, multi-utility offer our
services for financing various types of heavy commercial vehicle, light
commercial vehicle, multi-utility vehicle, cars, three wheeler loading, three
wheeler passenger, tractor etc. of different reputed brands like Mahindra &
Mahindra, Tata Motors, Piaggio vehicles, Force Motors, Maruti, Chevrolet,
Toyota, etc.
Features:
• Touch & Feel Policy
• Takeover/ Top-up Loans
• Simple documentation
• Quick credit decision
• Speedy approval & Disbursement
• Loan approval on NIP also i.e. Non Income Proof
• Wide repayment options such as Cash/FPDC/RPDC/ECS
• Variable guarantor facility i.e. guarantor can be Existing Customer/Family

Member/Govt. Employee/Any transporter etc.
Loan against property:-
These are secured loans provided to customers that would meet urgent
economic need of the customers. This new business will be built under a new
brand called shubharambh. One of the unique aspects of this service is that we
also provide loans against Gram Panchayat registered properties which in our
knowledge are not provided by any financial institution.
Features:-
• ‘Touch and feel policy’

• Easy & flexible installment repayment
• Fast processing
• Business establishment support
Small business loans:-
Company renders our financial assistance to promote Small business and

income generation activities. Typical tenure for these loans is between three to
five years.
Features:-
• Loan starting from as little as Rs. 50,000
• Flexibility to choose an EMI based loan
• Fastest processing in the industry
• Providing proper guidance and consultancy to the customer
General Insurance:-
Company creating awareness in the rural areas. The Company has
arrangements with multiple insurance companies to offer advisory services for
General and Life insurance products. It understands our customer, their basic

needs and advises them in the selection of insurance product. It offer products
to match our customers personal and business needs and provide them a
perfect protection cover. Company advice motor insurance with various plans
for private, passengers, and goods carrying vehicles and non motor insurance
like Medi-claim Policy, Hospitalization Policy, Personal accident Policy,
Travel Policy, Fire and burglary Policy, Marine Policy. Company has also
introduced our in-house product ‘Loan Shield Policy’ under the name of
Future Generali India Insurance Company Ltd. This product is a cross sell
opportunity for the company as it is sold out to the customers when they avail
finance. This ensures repayment of the loan taken by the customers in event of
any contingency.
Features:
• New insurance policies
• Renewal of existing policies
• Several options under one roof
• Fair & prompt assistance
• Hassle free claim settlement
• Efficient pre & post advisory services
Life Insurance
Life is full of unexpected surprises; unpredictable events can strike without
warning and disrupt the smooth rhythm of life. Therefore, It offer you a peace
of Mind by advising various life insurance plans for your unique & specific
needs. You must always ensure the financial security of your family and we
are here to give you complete financial solutions. Company understands the
needs of our clients and meets their requirement with best available product
with in well defined time frames and quality assurance.

Life Insurance Plans:
• Protection plans
• Investment plans
• Child plans
• Endowment plans
• Retirement/pension Plans
• Health plans
Competitors
 Mahindra & Mahindra financial services Ltd.
 Meghma Finance Ltd.
 Bajaj Auto Finance Ltd.
 Shriram finance.
 Baid Finance Ltd.
 HDFC bank.
 Hinduja Finance Pvt. Ltd.
 And Unorganized Sector
BRAND
AU means gold which is precious and worthy across all cultures and times. It
symbolizes in service, wealth and happiness. Financiers mean those who
finance. As the name of the company suggests, we are the company who
finance thorough imperil service to create happiness in the lives our precious
and worthy customers. We have launched the new logo of our company which
is having manifolds.
Firstly, it is symbolic to Swastik, the most prominent auspicious symbol of the

present era. Swastik symbolizes auspiciousness, well being and let good
prevail.
Secondly, it is made up with 4 F’s which means- Fast, Fair, Flexible &
Friend.

Thirdly, the color associated with it has deep meaning. Blue color is
considered to be a corporate color which symbolizes calmness, peace,
confidence, intelligence, stability, unity, trust, loyalty, wisdom, faith,
tranquility and sincerity.
Red color which a very emotionally intense color is associated with energy,
strength, courage, power, determination as well as passion, desire, and love.
STRENGTHS
 Relationship based origination model:
We meet every borrower in person before disbursing a loan. The company

works on the concept of ‘touch and feel’ which helps to understand
background, profile & needs of the customers which are overlooked by the
organized sector. Company provides easy finance with hassle (difficulty) free
documentation, speedy and transparent process.
 Centralized & Independent credit verification:
It highly focused on credit quality of the borrowers. Each file has to go

through layered filtration process of the company including credit verification
at different levels and final approval from head office. Company assesses the
synergy & viability between product, customer profile and product’s proposed
use.
 Robust collection process:
Company has in house collection team with expert legal advisors who on
regular basis follows up with delinquent accounts. Company has layered
process which includes telecalling, personal visit, legal actions, repossession
of vehicles etc.
The company has a policy of releasing of REPO vehicles which boosts

customers confidence is us. The company’s collection efficiency is very
strong and has on of the lowest delinquency ratios of in the industry.
 Grass root penetration:
Many analysts believe that the rural economy will grow strongly in the
coming years. There is strong focus by the Government of strengthen the rural
economy. AU Financiers could be a significant beneficiary of this trend. As it
diversifies its loan products and offers other forms of secured financing it
could augur very well for growth prospects of the Company.
 High vintage of team:
AU has a strong, highly motivated and enthusiastic team with rich experience
and knowledge of on-the-ground business. The core team has worked with
each other for the past several years. The team has been able to establish
strong relationships in the marketplace, as well as with various
authorities/establishments.
NETWORK
AUFIPL is the first Rajasthan based NBFC which is functioning in many
states. AUFIPL continually delivers its promise to provide you quality and
hassle-free services through a vast network of virtually connected offices/
branches.
Company branch network continues to expand across the country. As

company continually strives to give our customers the best possible service,
company is able to offer over 4 products lines. The Company sees
geographical expansion as one of its goals, which is aimed on maximizing
access for customers. This aim is being implemented as planned. For
customer’s comfort and faster loan disbursals, creation of regions and
allocation of certain authorities to them have significantly minimized time
spent by clients on receiving loans. Therefore, the Company makes a special

focus on this aspect. It is worth noting that dynamically developing the
Company’s Branches were opened in the largest regions of the state of
Rajasthan. And on the same lines the company is expanding its Network in the
States of Maharashtra and Gujarat. The Company is presently operating
through 84 branches with presence in these three states.
AUFIPL is primarily engaged in originating and underwriting secured loans in

semi urban and rural areas. The company is focused to provide variety of
financial products to its customers such as Commercial Vehicle loan, Car
Loan, Small Secured Business Loans, General and Life-Insurance facility.
The Company originates loans under agriculture and priority sector lending as
per Reserve Bank of India (“RBI”) s Guidelines.
Network of the Company
Rajasthan Maharshtra Gujarat Total No. of Branches

84
75
52
49
44
37
32 34
21 22
16 17 15
10
6
1 0 2 0 1
2006-07 2007-08 2008-09 2009-10 As on May 10

Investor Relation
IFC is a dynamic organization, constantly focusing in creating opportunity to
the people to escape poverty and to improve their lives. To achieve this
Purpose, IFC offers development-impact solutions though firm-level
interventions direct investments, advisory services, and the IFC Asset
Management Company; standard-setting; and business enabling environment
work. IFC is the financially and legally independent private sector arm of the
World Bank Group.
It also coordinates with the other institutions of the World Bank Group for its
activities. IFC’s operations are carried out by its departments, most of which
are organized by world region or global industry/sector. IFC has over 3,400
staff, of which 51% work in field offices and 49% at headquarters in
Washington, D.C.
IFC continues to develop new financial tools that enable companies to manage
risk and broaden their access to foreign and domestic capital markets. IFC has
launched a broad and targeted set of initiatives to help private enterprises cope
with the global financial and economic crisis.
IFC investment in AU financiers will expand borrowing to low-income and

underserved customers. Alliance of IFC with AU financiers will enables us to
mutually attain the purpose by strengthening the business model of AU
Financiers.

CAREERS
Career with AU Financiers (India) Pvt. Ltd.
AU Financiers is rapidly growing company; there are great opportunities for

career advancement.
Company believes our success depends on the exceptional quality and

extraordinary efforts of our people who are associated at the grass root level.
For this reason, we are committed to hire, develop, motivate and retain the
best people in the industry. People who have a great zeal and passion towards
work can be a part of our experienced and expertise team.
Why AU Financiers?
A career at AU Financiers means an opportunity for ample learning & growth.

The Company Offers a challenging assignment, a world class working
environment, professional management, and competitive salaries, along with
exceptional rewards.
If volunteers have an appetite for challenges, we have an exciting career

for you. Some highlights of facilities for employees at AU Financiers:-
Professional Work Environment
Company has a growing pool of talented professionals, including CAs,

MBAs, Lawyers, CSs, and others. This provides a good opportunity to interact
and learn from each other.

Professional & Personal Growth
Performance is the key element that matters at AU Financiers. AU Financiers

has a transparent policy of recognizing and rewarding deserving people.
Company’s performance management systems ensure that the credit goes to
those who deserve it. Qualities like leadership, communication skills,
negotiating skills and an impressive personality get developed automatically,
largely due to the contagiously professional atmosphere and rigorous training
programmes at AU Financiers.
Fun at Work Place
AU Financiers ensures that all team members are adequately rewarded for the
efforts put in. company regularly organizes trips to various exotic locations in
India and abroad for our top performers.
Job Security
At AU Financiers, quality is the key factor in every sphere of activity. That’s

why we have a rigorous screening procedure. Once selected, every team
member is treated like a family member. Everyone is given a chance to work
in different departments in order to get acclimatized. No wonder, many of our
team members have been with us for years. Honest and performing team
members will always find their jobs secure.
Culture
AU Financiers encourages healthy living. All offices are no-smoking areas.
There are no night shifts. Company also organizes yoga sessions to improve
the health and well-being of our team members.
Open Communication
The entire top management and the leaders at AU Financiers are always
accessible. They are ever-willing to help and hear you out whenever you need

them.
Good Compensation
AU Financiers offers a compensation package that is one of the best in the

industry. Company believes and asks our team members to write their own
cheques. Apart from fixed salaries, we offer aggressive bonus and incentives.
Core values
 Company employees are the fixed assets of our company.
 Recognize and reward individual ability and performance appropriately.
 Recruit and promote on the basis of merit and performance.
 Create and maintain a safe and healthy working environment.
Training & Development
Company always strives hard to develop skills, knowledge and competency of

our team through developmental assignments, continuous training, and
development interventions. Company makes ensure that our employees are
given Support, Knowledge, Recognition, Empowerment, and Transformation
from time to time. We organize in- house as well as external training
programmes for our employees.
‘AU Financiers is a growing finance company which provides conducive

environment and platform to grow in person and as a professional.’
SOCIAL RESPONSIBILITY
The company continues to contribute to the economic well being of the

communities it interacts with and enhances their social well being. The
company during the year continued to involve itself in social welfare activities
by contributing to recognized charitable institution, which specifically
benefits the economically disadvantaged and socially weaker sections of the
society. The Company has regularly contributed to the “Akshay Patra
Foundation”.
Akshay Patra Foundation runs “Nutritious food for children in schools” a well

known mid-day meal program targeted towards school going children from
the under privileged sections of society. In the current year the company
donated a Mahindra Vehicle to Akshay Patra foundation”
Company is frontrunner in state of Rajasthan in phasing down old Diesel and

Petrol 3 wheelers with new upgraded LPG/CNG based 3 wheelers. Thereby,
Company is supporting Govt. of India vision of save energy and environment
friendly vehicles on road for better future of our next generation. Company’s
99% of lending is concentrated to vehicle financing and Company’s is focused
on financing of vehicles with greater fuel efficiency, lower emission of
pollutants and new technology including CNG/LPG. Company’s is looking
forward to do “concentrated financing” of vehicles which shall lead to:
1. Saving of fuel with better fuel efficiency with new technology vehicles.
2. Improvement by way of reduction in remission of polluting gases by
funding of EURO certification vehicles.
3. Funding of vehicles run on LPG / CNG with little or no atmospheric
pollution. Company has been financing following vehicles which leads to
lower emission of pollutants and Higher fuel efficiency and with sophisticated
technology.
Company also promoting education by reimbursing the cost of education of

children of our employees who belong to economically weaker section of the
society.
Chapter-2 INTRODUCTION
 Introduction of the study

 Purpose of study

 Scope of study
 Objective of the study
 Methodology
 Date collection
 Tools
 Limitation
Introduction of study
Finance is defined as the provision of money when it is required. Every

enterprise needs finance to start and carry out its operation. Finance is the
life blood of an organization. So finance should be managed effectively.
Financial statements are prepared primarily for decision making. Financial
statement analysis refers to the process of determining financial strength and
weakness of the firm by properly establishing strategic relationship between

the items of the balance sheet and profit and loss account. There are various
methods and techniques used in analyzing financial statements, such as
comparative statements, trend analysis, common size statement, schedule of
changes in working capital, fund flow and cash flow analysis, cost volume
profit analysis and ratio analysis and other operative data the analysis of
financial statement is used for decision making by various parties.
First task is to analyze and select the information which is requiring taking
decision.
Second task is to arrange the information in a way to highlight significant
relationship.
Final task is the interpretation and drawing of inferences and conclusions.
Purpose of study
The present study is made as a part of the MBA Programme for training in
the form of on the job training with the following activities.
1. To know the financial position of the Au- financier’s (India) Pvt. Ltd.
2. The company has the strength to fulfill its obligation or not
3. Find out strength and weakness of Au-Financier’s (India) Pvt. Ltd.

4. Performance of Au- financier’s (India) Pvt. Ltd. For granting credit
providing loan and making investment.
5. Growth rate of Au- financier’s (India) Pvt. Ltd.
6. Know the liquidity position of Au-Financier’s (India) Pvt. Ltd.
7. Know the long term solvency of Au-Financier’s (India) Pvt. Ltd.
8. Know the operation efficiency of Au-Financier’s (India) Pvt. Ltd.
9. Know the overall profitability of Au-Financier’s (India) Pvt. Ltd.
Place of Study
All the activities are carried out in the Au-Financier’s (India) Pvt. Ltd.
Scope of Study
The data and information were gathered during training.

The scope is limited to the secondary data only.
The scope is delimited to the year from 1998
Objective of the Study
The role objective of the project is to help the management of the

organization in decision making regarding the subject matter.
Calculation of financial statement and ration is only the clerical task whereas
the interpretation of its needs immense skill intelligence and foresightedness.

One of the easiest and most popular ways of evaluating performance of the
organization is to compare its present ratios with the past ones called
comparison and through development action plan.
It gives an indication of the direction of change and reflects whether the
organization’s financial position and predominance has improved
deteriorated or remained constant over period of time.
Here much emphasis is given to historical comparison and on forecasting the
immediate future trends
Methodology
The research involved extensive and intensive studies of Au- financier’s

(India) Pvt. Ltd. in this project report a sincere effort has been made to study
the financier statements analysis of the company. During this study, I study
the financial position and performance of the company. At last, I have given
interpretation and conclusion of the study.
Data collection
The whole of my study is based on secondary data of Au- financier’s (India)

Pvt. Ltd. I have not taken any primary data for my study because primary
data would not have been helpful to my study. During the tenure of my
study I have taken help of the following secondary data.
Annual report of Au-Financier’s (India) Pvt. Ltd.

Annual audit report of Au-Financiers (India) Pvt. Ltd..
Balance sheet of Au-Financiers (India) Pvt. Ltd.
Development action plan of Au-Financiers (India) Pvt. Ltd.

Profit and loss account of Au-Financiers (India) Pvt. Ltd.
Tools
There are some of the tools, which are relevant for the study of ration
analysis and performance of Au-Financiers (India) Pvt. Ltd.
Comparative Statements.
Trend Analysis
Common size statements
Funds flow analysis.
Cash flow Analysis
Cost volume profit Analysis
Ratio analysis.
Limitation
It is only based on mathematical interpretation of the figures and ignores the
factors such as management style, motivation of workers leadership etc.
It is affected by the price level changes
It does not give any clue for future.
Chapter No. 3 PROJEC OVERVIEW
 Introduction of Financial Statement

 Meaning and Concept of Financial Analysis
 Types of Financial Analysis

 Procedure of Financial Statement Analysis
 Methods and Devices of Financial Analysis
 Limitation of financial Analysis
 Overview of Ratio Analysis
3.1 –Introduction of Financial Statement: -
Finance is defined as the provision of money when it is

required. Every enterprise needs finance to start and carry out its
operation. Finance is the lifeblood of an organization. So, finance
should be managed effectively.
Financial statements are prepared primarily for decision

making. Financial Statement Analysis refers to the process of
determining financial strength and weakness of the firm by properly
establishing strategic relationship between the items of the balance
sheet and profit and loss account. There are various methods and
techniques used in analyzing financial statements, such as
comparative statements, trend analysis, common size statements,
schedule of changes in working capital, funds flow and cash flow
analysis, cost volume profit analysis and ratio analysis and other
operative data. The analysis of financial statement is used for
decision making by various parties

3.2 Meaning and Concept of Financial Analysis:-
The term ‘financial analysis’ , also known as analysis and

interpretation of financial statements’, refers to the process of
determining financial strengths and weakness of the firm by
establishing strategic relationship between the items of the balance
sheet, profit and loss account and opposite data.”Analysing financial
statements,” according to Metcalf and Titard, “is a process of
evaluating the relationship between component parts of a financial
statements to obtain a better understanding of a firm’s position and
performance”. In the words of Myers, “Financial statement analysis is
largely a study of relationship among the various financial factors in a
business as disclosed by a single set-of statement, and a study of the
trend of these factors as shown in a series of statements.”
The purpose of financial analysis is to diagnose the information

contained in financial statements so as to judge the profitability and
financial soundness of the firm. Just like a doctor examines his
patient by recording his body temperature, blood pressure, etc.
before making his conclusion regarding the illness and before giving
his treatment, a financial analyst analysis the financial statements
with various tools of analysis before commenting upon the financial
health or weaknesses of an enterprise. The analysis and
interpretation of financial statements is essential to bring out the
mystery behind the figures in financial statements. Financial
statements analysis is an attempt to determine the significance and
meaning of the financial statement data so that forecast may be

made of the future earnings, ability to pay interest and debt maturities
(both current and long-term) and profitability of a sound dividend
policy
The term ‘financial statement analysis’ includes both ‘analysis’,

and ‘interpretation’. A distinction should, therefore, be made between
the two terms. While the term ‘analysis’ is used to mean the
simplification of financial data by methodical classification of the data
given in the financial statements, ‘interpretation’ means, ‘explaining
the meaning and significance of the data so simplified however, both
analysis and interpretation are in terlinked and complimentary to each
other aAnalysis is useless without interpretation and interpretation
without analysis is fifficult or even impossible most of the authors
have used the term analysis only to cover the meaning both analysis
and interpredation as the objective of analysis is ti sutudy the
relationship between various items of financial statements by
interpretation. We have also used the terms Financial statement
Analysis or simply Financial Analysis to cover the meaninng of both
analys is and interpretation.
3.3 - Objective and Importance of Financial Statament Analysis:-
The primary objective of financial statements analysis is to

understatd and diagnoe theimformation contained in financial
statement with a view to judge the profitability financial soundness of

the firm and to make forecast about future prospects of the firm. The
purposed of analysis depencds upon the person interested in such
analysis and his object. However the following purposed or objecti es
of finandiaol statements analysis may be stated to bring out
signifiance of such analysis.
1. To assess the earning capacity or profitability of the firm.

2. To assess the operational efficiency and managerial
effectiveness.
3. To assess the short term as wesll as log term solvency of the
firm.
4. To identify the reasons for change in profitability and financial
position of the form.
5. To make inter firem comparisons.
6. To make forecasts about future prospects of the firm
7. To assess the progress of the firm over a perid of time.
8. To help in decision making and control.
9. To guide or determine the dividecnd action
10. To proved important information for granting credit.
Types of Financial Analysis
1. On the basis of material used

2. On the basis of modus operandi,
3. On the bases of entities used,

4. On the basis of time horizon.
On the basis of Material Used.

According to material used, financial analysis can be two types.
(a) External Analysis
(b) Internal Analysis
a. External Analysis: This analysis is done by outsiders who do not

have access to the detailed internal accounting records of the
business firm. There outsiders include investors, potential
investors, creditors, potential creditors, credit agencies,
government agencies and general public. For financial analysis
thus save only a limited purpose, however the recent changes in the
government regulations requiring business firms to make available
more detailed information to the public though audited published
accounts have considerably improved the position of the external
analysis.
b. Internal Analysis:- This analysis is done by persons who have
access who have across to the detailed internal accounting records
of the business firm is known as internal analysis such an analysis
can therefore be performed by executives and employees of the
employee of the organization as well as government agencies
which have statutory powers vested in them financial analysis for
managerial purposed is the internal type of analysis that can be
effected de[ending upon the purpose to be achieved

On the basis of modus operandic
According to the method of operation followed in the analysis can be two
types
(a) Horizontal Analysis
(b) Vertical Analysis
a. Horizontal Analysis:- If refers to the comparison of financial

data of a company for several years. The figures of this type
analysis are presented horizontally over a number of columns.
The figures of the variously years are compared with standard
or base year. A base year is a year chosen as beginning point. It
is also called ‘Dynamic Analysis’. This analysis makes it
possible to focus attention on items that have changed
significantly during the period under review. Comparative
statements and trend percentages are two tools employed in
horizontal analysis.
b. Vertical Analysis:- It refers to the study of relationship of the

various items in the financial statements of one accounting
period. In this type of analysis the figures from financial
statements of a year are compared with a base year selected
from the same year’s statement. It is also called ‘Static
Analysis’. Common size financial statements and financial
ratios are the two tools employed in vertical analysis. Since
vertical analysis considers data for one time period only, it is
not vary conducive to a proper analysis financial statements.

However, it may be used along with horizontal analysis to make
it more effective and meaningful.
On the basis of entities involved:

According to the method of operation followed in the analysis can be two
types
(a) Inter –firm or Cross Sectional Analysis
(b) Intra-firm or Time Series Analysis
a. Inter-Firm or Cross Sectional Analysis:- Cross sectional analysis

involves comparison of financial data of a firm with other firms
(competitors) or industry averages for the same time period
b. Intra-firm or Time Series Analysis:- Time series analysis involves
the study of performance of the same firm over a period of time.
On the basis of time horizon.

According to the method of operation followed in the analysis can be
two types
s
(a) Short term Analysis
(b) Long term Analysis.
a. Short term Analysis:- Short term analysis measures the liquidity

position of a firm, i. e. short term paying capacity of a firm or the
firm’s ability to meet the current obligations.

b. Long term Analysis:- Long term analysis involves the of the firm’s
ability to meet the interest costs and repayment schedules of its long
term obligations. The solvency, stability and profitability are
measured under this type of analysis.
Procedure of Financial Statements Analysis

Broadly speaking there are three steps involved in the analysis of
financial statements. These are
(i) Selection
(ii) Classification
(iii) Interpretation
The first step involves selection of information (data) relevant to the purpose
of analysis of financial statements. The second step involved is the
methodical classification of the data and the third step includes drawing of
inferences and conclusions.
The following procedure is adopted for the analysis and interpretation of
financial statements.
1. The analyst should acquaint himself with principles and postulates of

accounting. He should know the plans and policies of the management
so that he may be able to find out whether these plans are properly
executed or not.

2. The extent of analysis should be determined so that the sphere of work
may be decided. If the aim is to find out the earning capacity of the
enterprise then analysis of income statement will be undertaken. On
the other hand, if the financial position is to be studied then balance
sheet analysis will be necessary.
3. The financial data given in the statements should be re-organized and
re-arranged. It will involve the grouping of similar data under same
heads, breaking down of individual components of statements
according to nature. The data is reduced to a standard form.
4. A relationship is established among financial statements with the help
of tools and techniques of analysis such as ratios, trends, common
size, finds flow etc.
5. The information is interpreted in a simple and understandable way.
The significance and utility of financial data is explained for helping
decision-taking.
6. The conclusions drawn from interpretation are presented to the
management in the form of reports
Methods or Devices of Financial Analysis
A Number of methods or devices are used to study the relationship

between different statements. The following methods of analysis are
generally used:

i. Comparative statement
ii. Trend analysis
iii. Common size statements
iv. Funds flow analysis
v. Cash flow analysis
vi. Ratio analysis
vii. Cost-volume-profit analysis
In this project the Comparative statement and Ratio Analysis is used

to study the financial statements of Au-Financiers (India) Pvt. Ltd.
Comparative Statement:- The comparative financial statements are

statements of the financial position at different periods of time. The
elements of financial position are shown in a comparative form so as to
give an idea of financial position at two or more periods. Any statement
prepared in a comparative form will be covered in comparative
statements. From practical point of view generally two financial
statements.
1. Balance Sheet
2. Income Statement
Comparative balance sheet:- The comparative balance sheet analysis is

the study of the trend of the same items, group of items and computed items,
group of items and computed items in two or more balance sheets of the
same business enterprise on different dates. The changes in periodic balance

sheet items reflect the conduct of a business. The changes can be observed
by comparison of th balance she at the beginning and at the end of a period
and these changes can help in forming an opinion about the progress of an
enterprise. The comparative balance sheet has two columns for the data of
original balance sheet. A third column is used to show this increase in
figures. The fourth column may be added for giving percentage of increases
and decreases.
Guidelines for Interpretation of Comparative Balance Sheet

While interpreting comparative balance sheet the interpreter is
expected to study the following aspects.
1. Current Financial Position and Liquidity Position
2. Long term Financial Position
3. Profitability of the Concern
1. For studying the Financial Position and short term Financial Position
of a concern, one sees the working capital in both the years. The
excess of current assets over current liabilities will give the figure of
working capital. The increase in working capital means improvement
in the current financial position of the business. An increase in current
assets accompanied by the increase in current liabilities of the same
amount will not show any improvement in short term financial
position. One should study the increase or decrease in current assts
and current liabilities and this will enable him to analyze the current
financial position.
2. The second aspect which should be studies in current financial
position is the liquidity position of the concern. If liquid assets like

cash in hand, cash at bank, bills receivable, debtors, etc. Show an
increase in the second year over the first year, this will improve the
liquidity position of the concern, the increase in inventory can be on
account of accumulation of stocks for want customers, decrease in
demand or inadequate sales promotion efforts. An increase in
inventory may increase working capital of the business but it will not
be good for business.
3. The long term financial position of the concern can be analyzed by
studying the changes in fixed assets, long term liabilities and capital.
The proper financial policy of concern will be to finance fixed assets
by the issue of either long term securities such as debentures, bonds,
loans from financial institutions or issue of fresh share capital, an
increase in fixed assets should be compared to the increase in long
term loans and capital if the increase in fixed assets is more than the
long term securities then parts of fixed assets have not only been
financed from long term sources. A wise policy will be to fiancé fixed
assets by raising long term funds.
4. The new aspects to be studied in a comparative balance sheet
questions is the profitability of the concern. The study of increase or
decrease in retained earning, various resources and surpluses, etc will
enable the interpreter to see whether the profitability has improved or
not. An increase in the balance of profit and loss account and he other
resources created from profits will mean an increase in profitability to
the concern. The decrease in such accounts may mean issue divided,
issue dividend, issue of bonus share or deterioration in profitability of
the concern.

5. After studying various assets and liabilities and opinion should be
formed about the financial position of the concern. One cannot say if
short term financial position is good the n long term financial position
will also be good or vice versa. A concluding word about the overall
financial position must be given at the end.
Comparative Income Statement:- The income statement gives the results

of the operation of a business. The comparative income statement gives an
idea of the progress of a business over a period of time. The changes in
absolute data in money values and percentages can be determined it analyze
the profitability of the business. .like comparative balance sheet income
statement also has four columns. First two columns give figures of various
items for two years. Third and fourth columns are used to show increase or
decrease in figures in absolute amounts and percentages respectively.
Guidelines for Interpretation of Comparative Income Statement
The analysis and interpretation of income statement will involve are

following steps.
1. The increase or decrease in sales should be compared with the

increase ore decrease in costs of goods sold. An increase in sales will
not always mean an increase in profit. The profitability will improve if
increase in sales is more than increase in costs of goods sold. The
amount of gross profit should be studied in the first step.
2. The second step of analysis should be the operational profits. The
operating expenses such as office and administrative expenses, selling

and distribution expenses should be deducted from gross profit to find
out operating profits. An increase in operating profit will result from
the increase in sales position and control of operating expenses. A
decrease in operating profit may be due to an increase in operating
expenses or decease in sales. The change in individual expenses
should also be studied. Some expenses may increase due to the
expansion of business activities while others may go u due to
managerial inefficiency.
3. The increase or decrease in net profit will give an idea about the
overall profitability of the concern. Non operating expenses such as
interest paid, losses from sales of assets, writing off deferred
expenses, payment of tax, etc. Decrease the figure of operational
profit, we get a figure of net profit. Some non operating incomes may
also be there which will increase net profit. An increase in net profit
will gave us an idea about the progress of the concern.
4. An opinion should be formed about profitability of the concern and it
should be given at the end. It should be mentioned whether the overall
profitability of the concern is good or not.
Focus on Financial statement Analysis:

Financial statement analysis involves evaluating different aspects of a
business enterprise, which are of great importance to different users such as
management, investors, creditors, bankers, analyst, investment advisers, etc.
generally, the following analyses are made while making Financial
Statement Analysis.
1. Liquidity or short term solvency analysis.
2. Profitability analysis

3. Capital structure or gearing analysis
4. Market strength or investor analysis
5. Growth and stability analysis
Application of Financial Analysis
Following are the application of financial analysis:

1. Assessing Corporate Excellence
2. Judging credit worthiness
3. Forecasting bankruptcy
4. Valuing equity shares
5. Predicting bonds ratings
6. Estimating market risk
Limitations of Financial Statement Analysis

Financial analysis is a powerful mechanism of determining financial
strengths and weakness of a firm. But, the analysis is based on the
information available in the financial statements. Thus, the financial analysis
suffers from serious inherent limitations of financial statements. The

financial analysis has also be careful about the impact of price level changes,
windows dressing of financial statements, changes in the accounting policies
of a firm, accounting concepts and conventions, and personal judgment, etc.
the readers are advised to relate the limitations of financial statements as
given in the previous chapter and also the limitations of ratios as a tool of
financial analysis as discussed in Ratio Analysis. Some of the important
limitations of financial analysis are, however, summed up as below.
1. It is only a study of interim reports.

2. Financial analysis is based upon only monetary information and non-
monetary factors are ignored.
3. It does not consider changes in price levels.
4. As the financial statements are prepared on the basis of a going
concern, it does not give exact position. Thus accounting concepts and
conventions cause a serious limitation to financial analysis.
5. Changes in accounting procedure by a firm may often make financial
analysis misleading.
6. Analysis is only a means and not an end in it self. The analyst has to
make interpretation and drawn his own conclusions. Different people
may interpret the same analysis in different ways.
Overview of Ratio Analysis
Introduction:- Ratio analysis is one of the techniques used to analyze the

financial statement. It is one of the most powerful tools of financial analysis.

It is the process of establishing and interpreting various ratios (quantitative
relationship between figures and group of figures). Through ratio analysis
financial statement can analyze more clearly and decision made from such
analysis.
According to Accountant’s Handbook by Wizon Kell and Bedford, a ratio’is
an expression, of the quantitative relationship between the numbers’.
Nature of Ratio Analysis:- Ratio analysis is a technique of analysis and

interpretation of financial statements. It is the process of establishing and
interpreting various ratios for helping in making certain decision. However,
ratio analysis is not an end in itself. It is only a means of better
understanding of financial strength and weaknesses of affirm. Calculation of
mere ratios does not serve any purpose, unless several appropriate ratio are
analyzed and interpreted. There are a number of ratios which can be
calculated from the information given in the financial statements, but the
analyst select the appropriate data and calculate only a few appropriate ratios
from the same keeping in mind the objective of analysis. The ratios may be
used as a symptom like blood pressure, the pulse rate or the body
temperature and their interpretation depends upon the caliber and
competence of the analyst. The following are the four steps involved in the
ratio analysis:
1. Selection of relevant data from the financial statements depending

upon the objective of the analysis.
2. Calculation of appropriate ratios from the above data.
3. Comparison of the calculated ratios with the ratios of the same firm in
the past, or the ratios developed from projected financial statements or

the ratio of some other firms or the comparison with ratios of the
industry to which the firm belongs.
4. Interpretation of the ratios.
Use and significance of Ratio Analysis
 Helpful in decision making.

 Helpful in financial forecasting and planning.
 Helpful in communication.
 Helpful in co-ordination.
 Helpful in Control.
 Helpful in efficiency appraisal
 Helpful in evaluation of financial position.
 Helpful to investors, financial institution, employee
Limitations of Ratio Analysis:-
The ratio analysis is one of the most powerful tools of financial

management. Though ratios are simple to calculate and easy to understand,
they suffer from some serious limitations.
Limited Use of Single Ratio:- A single ratio, usually, does not convey
much of a sense.
To make a better interpretation a number of ratios have to be calculated
which is likely to confuse the analyst than help him on making any
meaningful conclusion.

1. Lack of Adequate Standards:- There are no well adapted standards
or rules of thumb for all ratios which can be accepted as norms it
renders interpretation of the ratios difficult.
2. Inherent Limitation of Accounting:- Like financial statements, ratio

also suffer from the inherent weakness of accounting records such as
their historical nature. Ratios of the past are not necessarily true
indicators of the future.
3. Change of Accounting Procedure:- Change in accounting procedure

by a firm often makes ratio analysis misleading. E.g.a change in the
valuation of methods of inventories, from FIFO to LIFO increases the
cost of sales and reduces considerably the value of closing stocks
which makes stock turnover ratio to be lucrative and an unfavorable
gross profit ratio.
4. Window Dressing:- Financial statements can easily be window

dressed to present a better picture of its financial and profitability
position to outsiders. Hence, one has to be very careful in making a
decision from ratios calculated from such financial statements. But it
may be very difficult for an outsider to know about the window
dressing made by a firm.
5. Personal Bias:- Ratio are only means of financial analysis and not an
end in itself. Ratios have to e interpreted and different people may
interpret the same ratio in different ways.

6. Incomparable:- Not only industries differ in their nature but also the
firms of the similar business widely differ in their size and accounting
procedures, etc. it makes comparison of difficult and misleading.
Moreover comparisons are made difficult due to differences in
definitions of various financial terms used in the ratio analysis.
7. Absolute Figures Distortive:- Ratios devoid of absolute figures may

prove distortive as ratio analysis is primarily a quantitative analysis
and not a qualitative analysis.
8. Price Level Changes:- While making ratio analysis, no consideration

is made to the changes in price levels and this makes the interpretation
of ratio invalid.
9. Ratios no Substitutes:- Ratio analysis is merely a tool of financial

statements. Hence, ratios become useless if separated from the
statements form which they are computed.
10.Clues not Conclusions:- Ratios provide only clue s to analysts and

not final conclusion. These ratios have to be interpreted by these
experts and there are no standard rules for interpretation.
Classification of Ratios:
The use of ratio analysis is not confined to financial manager only.
There are different parties interested in the ratio analysis for knowing the
financial position of a firm for different purposes. In view of various users of
ratios, there are many types of ratios which can be calculated from the

information given in the financial statements. The particular purpose of the
user determines the ratios that might be used for financial analysis.
Various accounting ratios can be classified as followed

F
u
ti
c
n l
a
n
o
ti
a
R
d
a
r
T
n
g
i
S
o
s
a
l
C
co
ti
fi
fi
i
fi
i
s
a
l
C
e
ti
R
l
n
a
c
ti
a
c
n
o
ti
a
n
o
Balance Sheet Secondary

Ratio Profit & Loss Account Ratio
Composite Ratio Primary Ratio
Ratio
Liquidity
Leverage Ratios Activity Ratios Profitability
Ratios
Ratio
Functional Classification in View of Financial Management or Classification

According to Tests.
Liquidity Ratio:
(A)
1. Current Ratio
2. Liquid Ratio
3. Cash Ratio

4. Interval Measure
(B)
1. Debtors Turnover Ratio
2. Creditors Turnover Ratio
3. Inventory Turnover Ratio
Long-term solvency and Leverage Ratios:
1. Debt/Equity Ratio
2. Debt to total capital Ratio
3. Invest Coverage
4. Cash Flow/Debt
5. Capital Gearing
Activity Ratios or Asset Management Ratio:
1. Inventory Turnover Ratio

2. Debtors Turnover
3. Fixed Assets Turnover Ratio
4. Total Assets Turnover Ratio
5. Working Capital Turnover Ratio
6. Payables Turnover Ratio
7. Capital Employed Turnover
Profitability Ratio;

(A) In relation to Sales
1. Gross Profit Ratio

2. Operating Ratio
3. Operating Profit Ratio
4. Net Profit Ratio
5. Expense Ratio
(B) In relation to investments
1. Return on investments
2. Return on capital
3. Return on Equity capital
4. Return on Total Resources
5. Earnings per share
6. Price-Earning Ratio
Chapter -4

Analysis and Interpretation
1. Comparative Balance Sheet
2. Comparative Income Statement
3. Ratio Analysis
Analysis and Interpretation
I have studied the financial statement of Au-Financier (India) Pvt. Ltd. by using
comparative statements device. It shows as under.
Interpretation of Comparative balance sheet:
Assets. 31th March 31th March Increase/Decrease/ Increase/Decrease

2009 2010 Rs. Persentage
Current Assets.
Debtors Less than 6 201.03 131.81 (69.23) (34.44)

Months
Debtors More than 6 45.44 6.00 (39.44) (86.80)
Months
Loans & Advances 4,000.03 15,144.80 11,144.76 278.62
Accrued Interest on 31.62 113.10 81.48 257.71

Loans
Trade Advances 450.88 566.53 115.65 25.65
Term Deposits 1,850.69 4,201.33 2,350.63 127.01
Cash and other bank 3,745.05 2,845.12 (899.93) (24.03)

balances

Advances recoverable 38.83 337.53 298.71 769.33
in cash/kind
Other current assets 51.86 102.08 50.22 96.83
Current Assets Total 10,415.43 23,448.29 13,032.86 125.13
Fixed Assets.
Owen Assets. 191.32 764.46 573.14 299.57
Depreciation 89.44 112.04 22.60 25.27
Net Block = Owen Assets. – Depreciation

Net Block 101.88 652.42 550.54 540.38
Investments 317.69 342.37 24.68 7.77
Net Block + 419.57 994.79 575.22 548.15

Investments
Total Assets = Total Current Assets. + Total Fixed Assets

Total Assets 10,835.00 24,443.08 13,608.08 125.59
Current Liabilities
Sundry Creditors 114.37 211.56 97.19 84.98
Other current 375.82 612.75 236.93 63.04

liabilities/provisions
EMI Payable Against 182.77 1,001.67 818.90 448.05

Securitisation /
Assignments
Provisions 151.16 339.67 188.51 124.71
Provisions for NPA 44.92 41.02 (3.91) (8.70)
Provision for 52.50 183.34 130.84 249.23

Estimated Loss for
Securitisation /
Assignments
Other Provisions 53.74 115.31 61.57 114.58
Current Liabilities 824.12 2,165.65 1,341.53 162.78

Total

Net Current Assets. = Current Assets – Current Liabilities
Net Current Assets. 9,591.31 21,282.64 11,691.33 121.89
Total Capital Employed = Net Block + Investments + Net Current Assets

Total Capital 10,010.88 22,277.43 12,266.55 122.53
Employed
Represented By
Equity Share Capital 1,000.02 1,393.29 393.27 39.33
Share Application 146.00 - (146.00) (100.00)

Money
Compulsory 2,000.00 7,549.99 5,549.99 277.50
Convertible
Preference Shares
Reserves and Surplus 891.50 2,612.23 1,720.73 193.02
Less : intangibles - - - #DIV/0!
DTA 37.86 84.29 46.43 122.63
Tangible Net worth 3,999.66 11,471.22 7,471.56 186.80
Secured Loans
Term Loan 4,740.06 6,337.53 1,597.47 33.70
Cash Credit 1,267.03 4,468.67 3,201.64 252.69
Total 6,007.09 10,806.21 4,799.12 79.89
Unsecured Loans
From Banks 4.13 - (4.13) (100.00)
Others - - - #DIV/0!
Total 4.13 - (4.13) (100.00)
Deferred Tax - - - -
Liability
Total Liabilities 10,835.00 24,443.08 13,608.08 125.59

Channel Business 15,417.00 13,630.00 (1,787.00) (11.59)
Assigned Portfolio 5,348.00 19,839.87 14,491.87 270.98
Off Balance Sheet 20,765.0 33,469.9 12,704.87 61.18

Assets
Assets Under 24,765.03 48,614.67 23,849.63 96.30

Management
 The comparative balance sheet reveals that during 2010 there has been an increase
in current assets of Rs. 13,032.86 Lacs i. e. 125.13% in the current liabilities have
increased by Rs.1,341.53 Lacs i. e. 162.78% so the current financial position has
increased.
 The liquid Assets that is case in hand, cash in bank shows an decrease in 2010
over 2009 this will not improve the liquidity position of the concern.
 The other assets loans & advances have increase by Rs. 11,144.76 Lacs it’s show
that company business improved. and long term liabilities increase in form of
secured loan then it show that company have good relationship with the banks in
India and mostly it shows that the company depends on banks
 Reserve and surplus have increased from Rs.891.50/- Lacs to Rs.2,612.23/- Lacs and
the profit has increased from Rs.608.82/- Lacs to Rs.1,338.93/- Lacs. i.e. 119.92 %.
It shows that the profitability of the Company has improved.
 The overall financial position of the Company is satisfactory.

Comparison of income statement
31th March 31th March Increase/Decreas Increase/Decrease
2009 2010 e Percentage
Rs.
Expenditure
Salaries and staff 451.38 803.18 351.80 77.94
expenses

Admn. and Misc. 681.18 1,498.53 817.34 119.99
expenses (incl. raw
material)
Operating Expenses 1,132.56 2,301.71 1,169.15 103.23
Provision for NPAs 1.37 (3.91) (5.28) (385.53)
Provision for Credit 52.50 130.84 78.34 149.23

Loss on Securitisation
Provision for Overdue 8.21 (5.21) (13.41) (163.44)
Debtors
Loan Written Off 39.40 66.68 27.28 69.23
Debtors Off - 52.27 52.27 5227
Total Provision / 101.47 240.67 139.20 137.18

Write offs
Total Expenditure = Operating Expenses + Total Provision/Write offs
Total Expenditure 1234.03 2542.38 1308.35 106.02
Income
Interest on own books 546.82 1,556.14 1,009.32 184.6
Income under Channel 912.67 972.86 60.19 6.595

Business
Income from 537.84 2,082.89 1,545.05 287.3

securitisation
Interest on FDR 105.59 191.84 86.25 81.68
Income from 2,102.92 4,803.73 2,700.81 128.4

Operations
Other Income 181.54 623.26 441.72 243.3
Total Income 2,284.46 5,426.99 3,142.53 137.6
PBIDT = Total Income – Total Expenditure

PBIDT 1,050.43 2,884.61 1,834.18 174.61
Less:- Depreciation 30.53 45.81 15.28 50.04

and Impairment of
Fixed Assets
PBIT 1,019.90 2,838.80 1,818.90 178.34

Less:- Interest 185.10 914.06 728.95 393.81
Less:- Prior Period (2.15) 0.40 2.55 (118.60)

Adjustmenst
Less:- Misc. expn. 12.75 - (12.75) (100.00)

written off
PBT 824.19 1,924.35 1,100.15 133.48
Less:- Tax 258.66 631.22 372.56 144.03
PAT 565.53 1,293.12 727.59 128.66
Total Expenses = Total Income – Profit After Tax (PAT)
Total Exp. 1,718.93 4,133.87 2,414.94 140.49
Add : Depreciation 30.53 45.81 15.28 50.04
Gross cash accruals = Profit After Tax + Depreciation
Gross cash accruals 608.82 1,338.93 730.12 119.92
Less : Dividends - - - - -
Pref. (Rs.)
- - - - -
Equity (Rs.)
Net cash accruals 608.82 1,338.93 730.12 119.92
Net cash 26.65 24.67 (1.98) (7.42)

accruals/Total
Income(%)
 The comparative income statement reveals that there has been increase in
Operating Expenses 103.23% Provision for Credit Loss on Securitisation 149.23%,
Loan Written Off 69.23% and debtors off 52.27 Lacs but the other expenditure decrease
Provision for NPAs 385.53% and Provision for Overdue Debtors 163.44%. so the total
expenditure is increased by Rs. 106.02%

 The total income of the bank has increased by 137.6% and the company earn the
profit of Rs 1,338.93/- Lacs which is 119.92% more than the previous year.
 There is a sufficient progress in the Company and the overall profitability of the
bank is good.
Ratio Analysis
Profitability Ratio
The primary objective of business undertaking is to earn profit is the words of lord Keynes :profit
is the engine that drives the Business enterprise”. Profit is not only needed for its existence but
also for its expansion and diversification. The investors want an adequate return on their
investment, workers want higher wages, creditor want high security for their interest and loan
soon.
Following are the important overall profitability ratios, which relevant to the Business Concerns
are:
1. Return on Assets
2. Return on Capital Employed
3. Return on Equity Capital
4. Earning per Share (EPS)
1. Return on Assets:
It states the relationship between net profit and total asses.

Return on assets = Net Profit*100/Total asset

Year Net Profit Total Asset Percentage
2008 294.74 2,894.71 10.18
2009 608.82 10,835.00 5.62
2010 1,338.93 24,443.08 5.48
Relation of Net Profit and Total Asset By Diagram
30000
25000
20000
15000 Total Asset

Net Profit
10000
5000
0
2008 2009 2010
Interpretation :
The return on assets of Au. Financier’s (India) Pvt. Ltd. is not satisfactory. The assets
are not utilized properly.
2. Return on Capital Employed
It is widely used to measure the overall profitability and the efficiency of the business.
Return on Capital Employed = Net Profit*100/Total capital employed
Capital Employed:

Share Capital
Reserve fund & other reserves
Year Net Profit Capital Employed Percentage
2008 294.74 2,613.11 11.28
2009 608.82 10,010.88 6.08
2010 1,338.93 22,277.43 6.01
Relation of Net Profit & Capital Employed by Diagram
25000
20000
15000
Capital Employed
Net Profit
10000
5000
0
2008 2009 2010
Interpretation:
The return on capital employed of Au. Financier’s (India) Pvt. Ltd. is in good trend.
3. Return on Equity Capital
The equity share holders are the real owner of the company. They assume high risk in
the company.
Return on Equity Capital = Net Profit * 100/Equity capital

Year Net Profit Equity Capital Percentage
2008 294.74 1,000.02 29.47
2009 608.82 1,000.02 60.88
2010 1,338.93 1,393.29 96.10
Relation of Net Profit & Equity Capital Diagram
3000
2500
2000
1500 Equity Capital

Net Profit
1000
500
0
2008 2009 2010
Interpretation:
The return on equity share capital of Au Financiers (India) Pvt. Ltd.. Provides a higher rate of
dividend to its equity share holders.
4. Earning per Share (EPS):
It is samall variation of return on equity capital. It shows the profit available to each share holder.
Earning per Share = Net Profit / Equity Share Holders

Year Net Profit No. of Equity Percentage
Diagram
Interpretation:
The EPS of Au fin. Is satisfactory to the equity share holders.
Chapter 5.
Findings
Suggestions
Findings
The current assets have increased in 2010 by Rs. 13,608.08/- lacs i. e. 125.59 %
The case and bank balance decreased by Rs. 899.93/- lacs i.e. 24%
The company provide loan and advances to its customers more than 2009 in 2010 Rs. 11,144.76/-
lacs.
The other assets loans & advances have increase by Rs. 11,144.76 Lacs
Term deposits are increased in the year 2010 by Rs. 2350.63 lacs.
Current liabilities are increased in the year 2010 than previous year Rs. 1,341.53437 lacs i.e.
162.78%
Total capital employed increased by Rs 12,266.55/- lacs in the year 2010
Net income of the company increase in the year than previous year 119.92%
The company have good relationship with the banks.
Suggestions

From all the studies we can suggest some point to improve the profitability of the
organization.
It should be increase advertisement mostly in rural areas because more population of the
Rajasthan does not know about the company in urban area.
The company should focus more on advancing loans and money to customers.
It should reduce the cost of management.
It should recover its money from defaulters in a limited time.
It should control the non operation expenses and other expenditure.
It should ready for the coming competitive as all financier’s Companies are going to be
privatized.
To increase the net profit at higher rate, carefully designed risk management systems and
increasingly higher aspiration levels of customer services should be taken.
Chapter – 6
Conclusion
If properly analyzed and interpreted, financial statements can provide valuable insight
into a firm’s performance. Analysis of financial statements is of interest to lenders (short
term as well as long term) investors, security analysts, managers and others. Financial
statement analysis may be done for a variety of purpose, which may range from a simple
analysis of the short term liquidity position of the firm to a comprehensive assessment of
the strength and weakness of the firm in various areas. It is helpful in assessing corporate
excellence, judging credit worthiness, forecasting bond ratings, predicting bankruptcy
and assessing market risk.
I have studied the attached balance sheet and Profit and Loss Account of Au Financiers
(India) Pvt. Ltd. At 31st March 2010
The financial Statements are the responsibility of the company’s management the
analysis and interpretation of financial statements is essential to bring out the mystery
behind the figure in financial statements.
The transactions of Company, which have come to my notice, have been within the
powers of Company.
Proper books of account s require by law have been kept by the Company in so far as it
appears from my observation of those books.
Proper returns have been received from the Company’s branches.
The balance sheet and profit and loss account are in agreement with the books of account.
Reference
Reference from Journal, Magazine, Newspaper, Annual Report:

Annual Report of Au. Fin. Jaipur
Website
www.Au.fin.com.
www.managementparadise.com

Final Project Report On Au Fin. Jaipur

Enviado por

Dados do documento

Descrição original:

Título original

Direitos autorais

Formatos disponíveis

Compartilhar este documento

Compartilhar ou incorporar documento

Opções de compartilhamento

Você considera este documento útil?

Este conteúdo é inapropriado?

Direitos autorais:

Formatos disponíveis

Final Project Report On Au Fin. Jaipur

Enviado por

Direitos autorais:

Formatos disponíveis

SUMMER TRAINING REPORT

Submitted in partial fulfillment of the requirements of the two year

Sri Balaji College of Engg. & Tech. Jaipur

{AU Financiers (India) Pvt. Ltd.}

The satisfaction and euphoria that accompanies the successful completion of

I am highly intended and extremely thankful to Mr. Vimal Jain (Company

{AU Financiers (India) Pvt. Ltd.}

Chapter-1 PROFILE OF COMPANY

{AU Financiers (India) Pvt. Ltd.}

Chapter-3 PROJEC OVERVIEW

Chapter-4 ANALYSIS AND INNTERPRETATION

Chapter-5 FINDINGS AND SUGGESTIONS

{AU Financiers (India) Pvt. Ltd.}

AU Financiers biggest area of operation is commercial vehicle financing

Company has more than 85 Branches across Rajasthan, Maharashtra &

This Project will focus on Managing of Fund. It will include Management of

{AU Financiers (India) Pvt. Ltd.}

The working and operations of NBFCs are regulated by the Reserve Bank of

As per the RBI Act, a 'non-banking financial company' (NBFCs) is defined

(i) A financial institution which is a company.

{AU Financiers (India) Pvt. Ltd.}

 Equipment leasing company: - is any financial institution whose

 Hire-purchase Company: - is any financial intermediary whose

 Loan company: - means any financial institution whose principal

 Investment Company: - is any financial intermediary whose

Now, these NBFCs have been reclassified into three categories:-

 Asset finance Companies (AFC)

AFC are financial institutions whose principal business is of financing

{AU Financiers (India) Pvt. Ltd.}

LCs is loan giving companies which operate in the business of providing

NBFCs are different from Banks

 NBFCs cannot accept demand deposits (Demand deposits are funds

{AU Financiers (India) Pvt. Ltd.}

AU Financiers is a fast growing financing company with our roots in

Its biggest area of operation is commercial vehicle financing where we serve

{AU Financiers (India) Pvt. Ltd.}

• Mr. Sanjay Agarwal, Promoter & Managing Director

The company is being managed by its Board of Directors consisting of 4

Mr. Sanjay Agarwal, Managing Director

He is promoter of the company; he is chartered accountant by profession and

{AU Financiers (India) Pvt. Ltd.}

He believes that: to be successful in life one should have self confidence,

Mr. Uttam Tibrewal, Executive Director

He is commerce graduate. He is having 15 years of experience in retail

He joined in 2003 and is looking after business development, human resource

He believes that: Hard work and integrity is the key to success.

Mr. Krishan Kant Rathi, Director

He is a Chartered Accountant and a Company Secretary by profession and

Mr. Vishal Kumar Gupta, Investor Director

{AU Financiers (India) Pvt. Ltd.}

{AU Financiers (India) Pvt. Ltd.}

{AU Financiers (India) Pvt. Ltd.}

Department wise Employees Strength for May 10

356 113 83 69 52 12 685

Year Total No. of Customers

{AU Financiers (India) Pvt. Ltd.}

Target Customer of the Company

{AU Financiers (India) Pvt. Ltd.}

FINANCIAL PROFILE OF THE COMPANY

2009- 2008- 2007- 2006-

Income from Operations 54.27 22.53 12.88 6.50

{AU Financiers (India) Pvt. Ltd.}