Azam summer training report

PROJECT REPORT
on
UNDERSTANDING FINANCIAL POSITION
of
RADICO KHAITAN PVT. LTD.
using
RATIO ANALYSIS OF FINANCIAL STATEMENTS
MBA
INDUSTRIAL SUMMER TRAINING
Submitted By
MOHD AZAM
Roll No. : 1504100032
Under the Supervision of
Mr. R.K. SHARMA (Training Supervisor)
Ms. ADA HAQQEE (Internal Supervisor)
ss
Department Of Business Administration
MOHAMMAD ALI JAUHAR UNIVERSITY
(RAMPUR)
2016-17

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STUDENT UNDERTAKING
To, Date --/--/----
The Training & Placement Officer,
Mohammad Ali Jauhar University,
Rampur
I hereby declare that I have undergone my Summer Training sincerely and
have carried out my project work in accordance to the university guidelines
and Industry requirements. I also declare that the entire project work is
original outcome of Industrial Training. There has been no duplicity or
copying of any other study submitted elsewhere.
Signature of student

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CERTIFICATE OF INTERNAL SUPERVISOR
This is to certify that, MOHD AZAM has completed the training in RADICO KHAITAN
Pvt. Ltd, Rampur, Company under the supervision of Mr. R.K. SHARMA. Further,
MOHD AZAM has also completed the project report under my supervision,
satisfactorily. It is an original of his own work.
Signature Signature
Ms. Ada Haqqee Dr. S. Shumaela Naeem
(Internal Supervisor) (Co-ordinator)
Signature
Training and Placement Officer

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CERTIFICATE OF TRAINING SUPERVISOR

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PREFACE
It is a matter of great pleasure and privilege for me to place before the esteemed readers
of this report on “Understanding the Financial Position of Radico Khaitan” for the years
2012-16. The report mainly features the financial analysis of Radico Khaitan Pvt.Ltd, in
the ratio analysis form.
The training involved the day to day working at Radico Khaitan. This project helped me
to understand the professional working environment and helped me to get the deeper
understanding of the process of Ratio analysis & interpretation and how decisions are
taken to strengthen the financial position.
For this study 5 years balance sheet have been taken for ratio analysis & interpretation.
Main objective in understanding this project is to supplement academic knowledge with
absolute practical exposure to day to day function of the business organization.
The first phase of the project is to study and develop a deeper understanding of the concept
of Ratio analysis of financial statements.
Second phase includes the analysis of the company’s financial position based on
calculation of various ratios like liquidity ratios, profitability ratios and turnover ratios.
The final phase is about drawing conclusion about the company’s financial position on the
ratios so calculated.

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ACKNOWLEDGEMENT
Firstly, when I embarked this project, it appeared to me as onerous task. Slowly as I
progressed I did realize that I was not alone after all.
I express my deep sense of gratitude and profound thanks to my project guide Mr. R.K.
SHARMA Financial manager , and internal supervisor Ms. ADA HAQQEE for her
constant encouragement throughout my industrial summer training project report.
My sincere thanks to my all entire faculty and all staff members for offering me all kinds
of support and help in preparing the industrial summer training project report.
I am thankful to my friends and other classmates’ well wishers who with their
magnanimous generous help and support made it a relative easier affair.
My heart goes out to my parents who bear with me all that trouble I caused then with
smile during the entire study period and beyond.
Place: - Rampur
Date:- --/--/---- MOHD AZAM

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LIST OF CONTENTS
S.No. Contents Page No.
1 CHAPTER – 1 11-37
Introduction
Need of the Study
Company Profile of Radico Khaitan
Overview of Rampur Distillery
Scope of the study
2 CHAPTER – 2 38-49
Descriptive Work of sub-topic on study
Ratio Analysis
Principle of Ratio Selection
Advantage of Ratio Analysis
Importance of Ratio Analysis
Limitation of Ratio Analysis
Classification of Ratio Analysis
Review of Literature
3 CHAPTER – 3 50-54
Research Methodology
Objective of the study
Sample Size, Instrument, Research Design, Method
of data Collection

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4 CHAPTER – 4 55-111
Data Analysis & Interpretation
5 CHAPTER – 5 112-114
Conclusions
6 CHAPTER – 6 115-117
Suggestions and Limitations of the study
7 CHAPTER – 7 118-119
Bibliography/References
8 CHAPTER – 8 120-130
Appendices

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LIST OF TABLES
S.No. TABLE PAGE No.
1 Table 4.1 57
2 Table 4.2 58
3 Table 4.3 60
4 Table 4.4 62
5 Table 4.5 65
6 Table 4.6 66
7 Table 4.7 69
8 Table 4.8 71
9 Table 4.9 73
10 Table 4.10 75
11 Table 4.11 76
12 Table 4.12 78
13 Table 4.13 79
14 Table 4.14 81
15 Table 4.15 83
16 Table 4.16 84
17 Table 4.17 87
18 Table 4.18 88
19 Table 4.19 90
20 Table 4.20 92
21 Table 4.21 93
22 Table 4.22 96
23 Table 4.23 99
24 Table 4.24 101
25 Table 4.25 103
26 Table 4.26 105
27 Table 4.27 106
28 Table 4.28 108
29 Table 4.29 109
30 Table 8.1 122
31 Table 8.2 123
32 Table 8.3 124
33 Table 8.4 126
34 Table 8.5 127
35 Table 8.6 128
36 Table 8.7 129
37 Table 8.8 130

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LIST OF FIGURES
S.No. FIGURE PAGE No.
1 Fig.1.1 17
2 Fig.1.2 23
3 Fig.1.3 24
4 Fig.1.4 25
5 Fig.1.5 34
6 Fig. 4.1 59
7 Fig. 4.2 60
8 Fig. 4.3 65
9 Fig. 4.4 66
10 Fig. 4.5 72
11 Fig. 4.6 75
12 Fig. 4.7 78
13 Fig. 4.8 80
14 Fig. 4.9 83
15 Fig. 4.10 87
16 Fig. 4.11 89
17 Fig. 4.12 92
18 Fig. 4.13 94
19 Fig. 4.14 100
20 Fig. 4.15 102
21 Fig. 4.16 105
22 Fig. 4.17 109
23 Fig. 4.18 110

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CHAPTER –1
 NEED OF THE STUDY
 COMPANY PROFILE
 OVERVIEW OF RAMPUR
DISTILLERY
 SCOPE OF THE STUDY

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NEED OF THE STUDY:
As a part of the MBA curriculum, this is study is conducted. The study is also conducted
to enhance my knowledge as a student of finance.
Ratio analysis holds an important place in financial accounting and financial management. This
topic is selected due to its significance in any financial set up. It facilitates the accounting
information to be summarized and simplified in a required form. It provides necessary
information to the management to take prompt decision relating to business. Ratio
analysis reveals profitable and unprofitable activities. Thus, the management is able to
concentrate on unprofitable activities and considers improving the efficiency. Ratio
analysis is used as a measuring rod for effective control of performance of business
activities.
To justify this concept and to get a practical exposure of this concept of financial
management, this study is undertaken.
The following points further highlight the need for study conducted:
For understanding the concept of ratio analysis.
For understanding the relevance of ratio analysis for any company.
Role of Ratio analysis in evaluating overall financial position of any company
For identifying the components of ratio analysis to be able to recognize their
contribution in managerial decision making
For measuring the performance of a company’s profitability position
For measuring the performance of a company’s liquidity position

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INTRODUCTION
Radico Khaitan is one of India's oldest and largest liquor manufacturers. Formerly known
as Rampur Distillery, which was established in 1943. It was only in 1999, that Radico
decided to launch and market its own brands, thereby embarking on a period of
phenomenal growth. To further boost its production capacity of bottled and branded
products, the company has tied up with bottling units in various parts of the country.
HISTORY:-
Radico Khaitan Ltd. was established as Rampur Distillery & Chemical Company Ltd. in
1943 at Rampur, Uttar Pradesh. The distillery in Rampur initially produced extra neutral
alcohol (ENA) and supplied bulk alcohol for several liquor companies such as Shaw
Wallace, Mohan Meakin and the United Breweries Group. It had
a turnover of ₹ 6.5 million in 1979. It was only in 1999 that the company commenced
production of its own brands. Lalit Khaitan's father, G. N. Khaitan, bought out the loss-
making Rampur Distillery from Vishnu Hari Dalmia for ₹ 1.6 million in 1972. According
to Lalit Khaitan, his father was a teetotaler throughout his life, and even Khaitan himself
had never tasted alcohol until his father bought the distillery .G. N. Khaitan divided the
family business (which included construction, real estate, liquor industries and others)
among his 4 sons in 1995, and Lalit Khaitan inherited the relatively small liquor
division. Prior to that the distillery was run by Lalit's cousin and others. In 1991, Radico
set up a malt spirit plant with an installed capacity of 460 KL per annum; a soya

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oil/rapeseed extraction plant with an installed capacity of 300 tpd based
on soyabean seeds & 350 tpd based on rapeseed oil cake at Ratlam, Madhya Pradesh and
a biogas cogeneration and secondary treatment plant. The company also modernized the
distillery unit by installing new copper distillation plant and a fully automatic bottling
line. It also balanced its Single Superphosphate (SSP) plant by putting equipment like
a ball mill and a scrubbing system. The entire modernization-cum-expansion programme
cost the company ₹ 365 million. The company undertook a major expansion of its solvent
extraction plant to increase the capacity from 300 tpd to 600 tpd in 1994, and launched
Contessa Rum, Contessa Whisky and a few other products in CMI markets in 1995.
Contessa Rum is mainly sold to the Canteen Stores Department (CSD). Radico entered
into a joint venture with Whyte & Mackay Group plc. in the same year, and launched
Scotch brands 15 YO, Find later and WMSR in India.
While planning to launch a new brand in 1996, Khaitan and his son Abhishek, who had
joined the company recently, found that more Scotch was consumed in India than was
bottled in Scotland, and there was no Scotch blended whisky brand available in India in
the lower price range at that time. The Khaitans intended to launch a brand to target that
segment, but had low finances, which was compounded by the entry of MNCs into the
Indian liquor industry. The first Radico Khaitan IMFL brand was 8 PM whisky, launched
in 1999, and currently Radico's flagship brand. According to Abhishek Khaitan, the name
was chosen as the company felt that "8 was the simplest thing to depict", and also
because "people usually start drinking at 8 pm." in India. The TV advert for the whisky
was in black-and-white, and depicted opposing soldiers bonding over 8 PM whisky at an
international border. Radico announced in May 1999 that it had submitted a proposal to
set up a distillery in Kyrgyzstan, which had been and it had been accepted by Kyrgyzstan
government.
RKL created an international division, called Radico International, in 2003. Radico
International introduced brands such as Beck's beer and wines from E&J Gallo in the
Indian market. On 14 January 2003, RKL president (finance) RK Mehrotra announced
that the company was planning to set up a bottling facility in Mauritius for their 8PM
brand through a tie-up with a local company. In July 2003, Radico announced the

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installation of an ENA deluxe plant at its Rampur Distillery at a cost of ₹ 200 million.
The company would use some of the ENA for its own IMFL brands, while the rest is sold
in India and exported to liquor majors in Europe and the Commonwealth of Independent
States (CIS) . Radico purchased Bacardi's 51% stake in Whytehall India for
over ₹ 300 million in 2004, gaining control of the Whytehall brand. In a press release on
7 April 2004, Radico announced that it had acquired Anab-e-Shahi, a bottling plant
in Andhra Pradesh. This was the company's first acquisition in South India.
Radico entered the vodka market in November 2005, with the launch of the grain-
based Magic Moments vodka. Although Magic Moments was not an instant success like
8 PM, it earns Radico more revenue than 8 PM. In 2005, the company set up a grain-
based distillery plant in Uttar Pradesh at a cost of ₹ 850 million.
In May 2006, Radico announced that it had entered into two overseas joint ventures in the
United Kingdom and western Africa, becoming the first Indian liquor company to have
overseas production lines. The joint ventures are intended to help Radico launch its
brands in the UK and African markets. Radico handles sales, marketing and distribution
functions, while manufacturing is outsourced to the local partner. The whiskies Radico
sells outside India are grain-based, while its whiskies in India are made from molasses. In
August 2006, Diageo and Radico Khaitan announced a 50:50 JV called Diaego Radico
Distilleries Pvt Ltd in the Indian spirits market, with the latter handling distribution and
manufacturing base and former providing marketing. The move marked Diageo's return
to the IMFL market, which it had previously existed in 2001. Diageo Radico launched
Masterstroke Deluxe Whisky in the premium segment in March 2007. However, the joint
venture did not launch any new brands following that. Diageo instead developed its own
marketing and distribution machinery to strengthen its presence in India. In 2011, Diageo
announced its intention to buy half of Radico's stake in the JV. In October 2007, Radico
entered into a tripartite joint venture with NV Distillers and Ridhi Sidhi Pvt Ltd to set up
a Greenfield distillery in Aurangabad, Maharashtra with a combined investment
of ₹1.60 billion. Radico would have a 36% stake in Radico NV Distilleries Maharashtra
Ltd, which would manufacture ENA, IMFL and ethanol, and also have a bottling facility.
The distillery is Radico's second, after the Rampur Distillery.

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Morpheus brandy was launched in May 2009. Its largest markets are Tamil Nadu, Andhra
Pradesh, Kerala and Karnataka. The company named the brandy afterMorpheus, the
Greek god of dreams, in order to "convey a sense of softness with a European
touch". Radico launched Carlo Rossi wine in Mumbai in April 2009, through its joint
venture with E&J Gallo, which owns the brand. Radico had already been selling other
E&J Gallo brands such as André, Wine Cellars, Sonoma County and Turning Leaf in
India.
Radico announced on 7 April 2011 that it had entered into an agreement with Japanese
firm Suntory Liquors Ltd to market and distribute the latter's Yamazaki single
malt andHibiki blended whiskies in India. Radico launched After Dark, a 100% grain-
based whisky manufactured at its Rampur distillery, in September 2011.
Fig.1.1 Rampur Distillery

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VISION OF THE COMPANY
MISSION OF THE COMPANY

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RADICO'S CORE VALUES
Radico's Core Values are aimed at developing a customer-focused, high-performance
organization, which creates value for all its stakeholders.
FOCUS ON CUSTOMER
Radico Khaitan believes that customer focus is very important. We give importance to
deliver both value & quality to the customer.
EXCELLENCE
Radico will strive for excellence in whatever we do. Radico will take the right path to do
whatever we do and excel in the same.
RESPECT FOR PEOPLE
Radico will value differences in individual perspectives. Radico want individuals to
dream, create and experiment in pursuit of opportunities and achieve leadership through
teamwork.

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BOARD OF DIRECTORS
MANAGEMENT
Dr. LALIT KHAITAN
CHAIRMAN & MANAGING DIRECTOR
RADICO KHAITAN LTD.
A veteran of the Indian liquor industry (over 45 years), Dr. Khaitan oversees the entire
business of Radico Khaitan. He has been instrumental in improving quality standards and
seeking and achieving customer satisfaction, leading to substantial growth in sales and
revenues, and increased market shares. In the process, he has succeeded in transforming
Radico Khaitan from a small, behind-.
Dr. Khaitan has been widely recognized for his contribution to the liquor industry. He
has been associated the-scenes player to a Rs. 995 crore company, the most profitable in
its sector, and a sought-after partner by leading international liquor brands seeking to
enter the Indian market. His unique management style has helped maintain Radico as an
open, ethical and transparent organization with a number of developmental projects, has
represented India with several international delegations, and is involved in social &
educational activities across India. He is currently:
Chairman, U.P. Committee of PHD Chamber of Commerce and Industry
Member, Managing Committee, ASSOCHAM
Member, Managing Committee, All India Distillers Association
Member, Managing Committee, U.P. Distillers Association
Trustee, Khaitan Public School, Noida 11

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Mr. ABHISHEK KHAITAN
MANAGING DIRECTOR
RADICO KHAITAN LTD
Mr. Abhishek Khaitan is a Bachelor of Engineering (Industrial Production) from
Bangalore, and has done a Managerial Finance & Managerial accounting course at
Harvard, USA.
He joined Radico Khaitan in 1997, and supervised the establishment of the company's
Marketing Division in the same year. The first brand to be launched by the division, 8
PM Whisky, was a runaway success. In the first year alone, it sold one million cases - a
record for any Indian or foreign brand operating in India. This also made it the first brand
in the liquor industry to make it to the Limca Book of Records.
Under Abhishek Khaitan's leadership, Radico Khaitan's brand portfolio is wide and deep,
with brands that straddle almost every market segment, taste preference and price
category.
To recognize Mr. Abhishek Khaitan's contribution to Indian Industry, Economic
Development & Research Association bestowed the Bhartiya Udyog Ratan Award on
him. The World Economic Progress Society has honored him with the National Industrial
Excellence Award. 12

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PET DIVISION
Radico Khaitan's PET division, started in 2003, produces a wide range of PET bottles and
jars for the pharmaceutical, cosmetics, home & personal care, edible oil and
confectionery industries. It utilizes single stage machines of Nissei ASB Machine Co.
Ltd., Japan to meet in-house needs, but eventually began supplying PET bottles even to
competitors. The PET division operates as an independent profit group. The company has
a 750 ml kidney shape PET bottle manufacturing plant in Uttarakhand. The unit started
with a production rate of 08.5 million bottles annually in October 2004, and currently
produces 600 million PET bottles that cater to Radico's own captive consumption of
300 million bottles annually, while the sold to outside clients in liquor, pharmaceuticals
and FMCG. Companies it supplies include Keo Karpin Hair Oil, BL Agro Hair Oil Ltd.,
Khandelwal Oils Ltd, Perfetti, Amrut Distilleries, Allied Blenders & Bottlers Ltd, Jagatjit
Industries, John Distilleries, Khoday’s, Mohan Meakin and NICOL.
THE BRANDS STORY:-
Radico Khaitan Ltd today has three millionaire brands in its portfolio. Radico's flagship
brand, 8 PM Whisky, launched in 1999, was a runaway success. In the first year alone, it
sold one million cases - a record for any Indian or foreign brand operating in India. This
also made it the first brand in the liquor industry to make it to the Limca Book of
Records.
Drinks International, the acclaimed international liquor magazine has rated 8 PM whisky
as the fastest growing whisky in the world in the regional category (2004-05). The other
millionaire brands are: Contessa Rum has won the prestigious Monde Selection award for
its overall quality for the past three executive years.
It has a large market share in the defense market... Old Admiral Brandy has also been
rated by Drinks International as the fastest growing Brandy in the world in the regional
category (2004-05 and 2005-06) also it has won the Monde Selection award for its
overall quality in 2004-05.

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Today, Radico Khaitan has brands that straddle almost every market segment - whisky,
rum, brandy, vodka & gin - and price category. Our fine blends, consistent quality,
distinctive packaging and superior value have resonated with customers.
BRANDS
Radico made its foray into the International Market a few years back and today Radico's
brands are present in more than 30 countries. Radico has been consistently providing
excellent quality in terms of both product and packaging along with outstanding service.
Two of our brands 8 PM Whisky and Old Admiral brandy featured in Drinks
International Magazine as the fastest growing brands in the world in the regional
category. Three of our brands, Contessa XXX Rum, 8 PM Bermuda White Rum and Old
Admiral brandy have won Silver Medal in prestigious Monde Selection for overall
quality Our brands have already attained the leadership position in many countries.
Radico Khaitan is now breaking into newer and sophisticated markets with liquor brands
developed to appeal to a wider palate.
SOME BRANDS OF THE COMPANY
Fig 1.2 COMPANY BRANDS

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RADICO KHAITAN
MANUFACTURES WHISKY, RUM, BRANDY, VODKA AND GIN.
BRANDS OF THE COMPANY
WHISKY
The base for Indian whisky is ENA. The other ingredients used are matured Indian malt
sprit, Scotch whisky concentrate, added flavors, and caramel & dm water. All these
ingredients are not added at a time but different stages.
1. Special appointment whisk.
2. 8pm Royale whisky
3. Whitefield whisky
4. 8pm whisky
5. Radico gold supreme whisky
6. Radico gold whisky
7. Contessa deluxe whisky
8. Rampur no.1 whisky
BRANDY
Brandy is a Dutch word means (Brunt Wine). In India we make brandy by blending with
ENA, matured grape spirit, added flavoring.
1. Contessa Brandy
2. Old Admiral Brandy
3. White Field Brandy
4. 8pm Excellency Brandy

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RUM
Rum is distilled liquor made from sugarcane products, cane juice spirit along with base ENA and
flavoring.
1. Contessa rum
2. Largest Rum
3. 8pm Bermuda
4. Black Cat Rum
5. Rampur No.1
6. Big Hit Rum
7. Contessa White Rum
GIN
Gin is alcoholic liquor obtained by distilling grain mash or redistilling sprit with
botanicals such as juniper berries, angelica, lemon and orange peels, cassia bark,
coriander and cardamom.
1. Contessa Gene
2. Big Hit Gene
3. Magic Moment Gene
VODKA
1. Magic Moments Vodka
2. Magic Moments Remix Vodka
3. Magic Moments verve vodka
4. Magic moments verve Flavored Vodka

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HUMAN RESOURCES
Radico Khaitan believes that the growth of a company depends on the collective efforts of its
employees. The Human Resources Department seeks to create an environment that fosters the
emergence of empowered leaders. We hire people who have the fire to grow, the potential to lead
and the zeal to excel. All new hires undergo a 7-day induction and familiarization program.
MARKETING
In the short span of time, Radico Khaitan has been able to make the transition from being
a manufacturer of Extra Neutral Alcohol to being a company with a portfolio of hugely
successful brands. Our understanding of market demands and ability to satisfy consumer
needs has been responsible for this. Consistently superior quality, a wide range of
products, innovative packaging, pricing to suit all pockets, a nation-wide distribution
network that covers 95% of retail points, clubs and bars in the country, effective
advertising, and popular events and promotions. All these elements go to making up
Radico Khaitan's winning marketing mix.
SALES
Radico Khaitan’s young and enthusiastic sales force services retail outlets across the
country, understanding requirements and fulfilling them, thereby developing enduring
relationships. The Sales team comprises professionals with vast domain expertise, years
of experience in the liquor industry and a deep understanding of varied markets.
ACCOUNTS FINANCE
Radico Khaitan Ltd has been continuously showing growth over previous years and
registering healthy profits. This has been made possible through the steps taken by the
Finance department like bringing down the cost of borrowings substantially. The Efforts
of the finance department has made Radico one of the best prospects for timely
repayment of debts and providing the highest safety of funds for lenders. The department

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also has excellent financial management with strong fundamentals in the short and
medium term.
PRODUCTION
The Production Department is responsible for operations in Radico Khaitan's bottling
units. It works towards the smooth production and delivery of all the Radico Khaitan
brands as per market needs.
RAMPUR DISTILLERY:-
Rampur Distillery, located in Rampur, Uttar Pradesh, is Radico Khaitan's first and largest
distillery, with a production capacity of 125 million litres per annum. It manufactures
high grade ENA from molasses and grain with a production capacity of 75 Million litres
of molasses ENA, 30 million litres of grain neutral spirit and 460 thousands litres of malt
whisky annually. Rampur Distillery also manufactures country liquor and IMFL, of
which some IMFL meets the domestic requirement and the rest is exported.
The unit is self-sufficient in meeting its fuel and power requirements by utilizing its
effluent for generating the biogas which, in turn, is utilized for generating the steam and
power for its captive requirement. The distillery complies with the zero discharge concept
set up by the Central Pollution Control Board (CPCB). Primary treatment of
the effluent yields biogas, which is used as fuel in a Cogen boiler to generate steam and
then power through a backpressure turbine. The backpressure steam is used again in the
distillation plant to produce ENA and rectified spirit. The treated effluent is not
discharged outside, in keeping with pollution control norms, and is in turn mixed and
cured with organic mass like press mud of sugar mills and suitable organic manures to
manufacture bio manure or bio compost, a bio fertilizer used in growing crops like sugar
cane.
The cogeneration plant of the Rampur Distillery consists of 26 MT capacity of a stand-
alone, biogas fired steam boiler, a 2 MW turbine generator, a 30 MT capacity biogas
andrice husk based boiler, and 2.5 MW in tandem to make the unit self-reliant in meeting
power requirements for normal operation.

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OWN BOTTLING UNITS
Rampur Distillery has 14 state-of-the-art bottling lines, including those imported from
Italy, equipped with tunnel bottle washing, filling, sealing and labeling machines with a
capacity to produce 1500 cases (1 case = 12 bottles of 750 ml each) of liquor in a single
shift of operation. Line capacities vary from 750 cases to 3,000 cases in a shift. To keep
pace with the growing demand, Radico Khaitan has significantly increased its bottling
capacity by acquiring/setting up bottling plants in the states of Maharashtra, Rajasthan,
Uttarakhand and Andhra Pradesh.
Radico Khaitan owns 5 units in India. Their locations are listed below:
Rampur Distillery (Rampur, Uttar Pradesh)
Thimmapur, Telangana
Aurangabad, Maharashtra
Reengus, Rajasthan
Bajpur, Uttarakhand
STRATEGIC BOTTLING UNITS
Radico Khaitan Ltd is working continuously towards increasing its reach through the
strategic bottling units across the country. The focus underlines comprehensive quality
control and enhanced market penetration. Strategic Bottling Units through out India.
NORTH
NV Distilleries Ltd. (Haryana)
Himalayan Gold Beverages (P) Ltd. (Himachal Pradesh)
Oakland Bottlers Pvt. Ltd. (Jammu and Kashmir)
New India Distillers (Jammu and Kashmir)
Rajasthan Liquors (P) Ltd. (Punjab)
NV Distilleries & Breweries Pvt. Ltd. (Punjab)

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EAST
United Brothers Distilleries Pvt. Ltd. (Arunachal Pradesh)
Seven Sister Trade & Distilleries Pvt. Limited (Assam)
Goodhost Liquors Pvt. Ltd. (Bihar)
Gemini Distilleries (Jharkhand) Pvt. Ltd. (Jharkhand)
Bacchus Bottling Pvt. Ltd. (Odisha)
Diamond Bottling Plant company (West Bengal
SOUTH
Kamal Wineries (Andhra Pradesh)
Gowthami Agro Industries Pvt. Ltd (Andhra Pradesh)
GSB & Company (Andhra Pradesh)
Sri Venkateshwara Distilleries (Karnataka)
Nethravathi Distilleries Pvt. Ltd. (Karnataka)
Polsons Distillery (Kerala)
United Distilleries (Kerala)
Ravikumar Distilleries Limited (Pondicherry)
Southern Agrifurane Industries Ltd. (Tamil Nadu)
SNJ Distillers Private Limited (Tamil Nadu)
Midas Golden Distilleries (Pvt) Ltd (Tamil Nadu)
Empee Distilleries Ltd. (Tamil Nadu)
WEST
Tilaknagar Industries Ltd, Tilaknagar, (Maharashtra)
Bhatia Wines Merchants Pvt Ltd (Chhattisgarh)
Welcome Distilleries Pvt. Ltd. (Chhattisgarh)
Gwalior Distillers Ltd. (Madhya Pradesh)
Radico NV Distilleries Maharashtra Ltd. (Maharashtra)

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THE UNIT HAS A SERIES OF FIRSTS TO ITS CREDIT
 It is the first Indian distillery to obtain ISO 9001:2000 certifications.
 It has achieved capacity utilization of over 100% in the alcohol plant.
 It is the first environment-friendly distillery in the country.
EFFLUENT TREATMENT PLANT
The effluent Treatment Facility in Rampur Distillery is unique in nature when compared
among and in the Industry. The Distillery complies with Zero Discharge concept set up
by CPCB. The treatment has varied by products, which not only improves operational
stability of the plants but also adds on to company's profitability. Primary Treatment of
the Effluent yields Bio Gas, which is used as fuel in Cogen Boiler to generate steam and
then Power through a backpressure Turbine. The backpressure steam is used again in the
Distillation Plant to produce Extra Neutral Alcohol and Rectified Spirit.
COGENERATION PLANT
The cogeneration plant of Rampur Distillery consist of 26 MT capacity India's first stand
alone Bio Gas fired steam boiler and 2 MW Turbine Generator in tandem to make Radico
Khaitan self reliant on its requirement for power for its normal operation.
BACKWARD INTEGRATION
The very first backward integration project has come in the form of setting up a fully
automatic 750 ml Kidney shape PET bottle manufacturing plant in low cost and tax
benefited area like Uttaranchal. The unit started with production rate of 85 lacs bottle per
year in October 2004 and is now geared up to produce 255 lacs PET bottles to cater
Radico's own captive consumption of approx. 150 lacs bottle per year and rest is being
sold to outside clients in similar businesses. The unit has not only eliminated the pressure
of PET bottle suppliers but has also provided a kind of diversified manufacturing base for
future business exploration.

33
PRODUCTION CAPACITY
 Molasses Distillery 75 million litres per annum .
 Grain Distillery 30 million litres per annum.
 Malt Distillery 460 thousands liters per annum.
 The overall licensed capacity has been increased to 125 million liters per annum.
ENVIRONMENTALLY FRIENDLY
Meeting out 100% Pollution Control norms, the Treated Effluent is not discharged
outside and in turn is mixed and cured with organic mass like Press Mud of Sugar Mills
and suitable organic manures to manufacture Bio Manure or Bio Compost, a bio fertilizer
used successfully in growing the crop of sugar canes etc.
THE INTERNATIONAL LINK
In a significant move aimed at catapulting the Indian liquor industry to international
standards, Radico Khaitan set up its international division - Radico International - to
distribute and market some of the world's best-known liquor brands, including Wines
from Ernest & Julio Gallo (makers of the world's largest-selling wine, Carlo Rossi),
Famous Grouse Whisky (from Highland Distillers).
STRONG FINANCIALS
Radico Khaitan is not just a company of great brands; it is a company of great financials.
The equity shares of the company are quoted on the Mumbai and National Stock
Exchanges, and the company has more than 35,000 shareholders. It is the most profitable
company in the domestic liquor industry.

35
Location Details - Radico Khaitan
Location Type Address
Registered Office &
Factory
Bareilly Road
Rampur - 244901
Uttar Pradesh - India
Phone : 2350601, 2350602
Fax : 2350009
Email : Rampur@radico.co.in
Internet : N.A.
Corporate Office Plot No. J-1, Block B-1, Mohan Co-Operative Industrial
Area, Mathura Road
New Delhi - 110044
Delhi - India
Phone : 40975400, 40975500, 40975444, 40975555
Fax : 41678841, 41678842
Email : info@radico.co.in
Internet : N.A.
Factory/plant Plot No. B-24, A-25, Shri Khatushyamji, Industrial
Complex, Reengus
Sikar District -
Rajasthan - India
Phone :
Fax :
Email : N.A.
Internet : N.A.
Factory/plant B-3, UPSIDC Industrial Development Area, Phase-I,
Sultanpur Patti, Bajpur
Udham Singh Nagar Di -
Uttaranchal - India
Phone :
Fax :
Email : N.A.
Internet : N.A.
Factory/plant S. No. 59, Timmapur Village, Palmakul Post, Shadnagar Tq.
Mahboobnagar Dist. - 509325
Telangana - India
Phone :
Fax :
Email : N.A.
Internet : N.A.
Factory/plant 44 KM Stone, Delhi Rohtak Road, Village & Post Rohad,
Bahadurgarh
Jhajjar District -
Haryana - India
Phone :

36
Fax :
Email : N.A.
Internet : N.A.
Factory/plant A-1/A-2/B-3, Bazpur Industrial Area, Phase-I, P.O.
Sultanpur Patti, Bazpur
Udham Singh Nagar Di - 262123
Uttarakhand - India
Phone :
Fax :
Email : N.A.
Internet : N.A.

37
SCOPE OF THE STUDY
 The scope of the study is identified after and during the study is conducted. The
main scope of the study is to put into practical the theoretical aspect of the study
into real life work experience.
 Using ratio analysis, firms past, present and future performance is analyzed and
this study can been divided into short term analysis and long term analysis.
 The scope covers the opportunity realized and experience gained of actually
calculating ratios on the true facts and figures of the company.
 The company’s performance is observed for a period of 5 years through Ratio
analysis.
 Also the recent trends in company’s performance have been studied for the
current year.

38
CHAPTER-2
DESCRIPTIVE WORK OF SUB-TOPIC
ON STUDY
 RATIO ANALYSIS
 PRINCIPLE OF RATIO SELECTION
 ADVANTAGE OF RATIO ANALYSIS
 IMPORTANCE OF RATIO ANALYSIS
 LIMITATION OF RATIO ANALYSIS
 CLASSIFICATION OF RATIO
ANALYSIS
 REVIEW OF LITERATURE

40
RATIO ANALYSIS
INTRODUCTION:-
The analysis of the financial statements and interpretations of financial results of a
particular period of operations with the help of 'ratio' is termed as "Ratio Analysis.” Ratio
Analysis is a form of Financial Statement Analysis that is used to obtain a quick
indication of a firm's financial performance in several key areas. The ratios are
categorized as Short-term Solvency Ratios, Debt Management Ratios, Asset Management
Ratios, Profitability Ratios, and Market Value Ratios.
MEANING AND DEFINITION:-
The term 'ratio' refers to the mathematical relationship between any two inter-related
variables. In other words, it establishes relationship between two items expressed in
quantitative form.
According J. Batty, Ratio can be defined as "the term accounting ratio is used to describe
significant relationships which exist between figures shown in a balance sheet and profit
and loss account in a budgetary control system or any other part of the accounting
management."
Ratio can be used in the form of (1) percentage (20%) (2) Quotient (say 10) and (3)
Rates. In other words, it can be expressed as a to b; a: b (a is to b) or as a simple fraction,
integer and decimal. A ratio is calculated by dividing one item or figure by another item
or figure.
ANALYSIS OR INTERPRETATION OF RATIOS
The analysis or interpretations in question may be of various types. The following
approaches are usually found to exist:
(a) Interpretation or Analysis of an Individual (or) Single ratio.
(b) Interpretation or Analysis by referring to a group of ratios.
(c) Interpretation or Analysis of ratios by trend.
(d) Interpretations or Analysis by inter-firm comparison.

41
PRINCIPLES OF RATIO SELECTION
The following principles should be considered before selecting the ratio:
(1) Ratio should be logically inter-related.
(2) Pseudo ratios should be avoided.
(3) Ratio must measure a material factor of business.
(4) Cost of obtaining information should be borne in mind.
(5) Ratio should be in minimum numbers.
(6) Ratio should be facilities comparable.
ADVANTAGES OF RATIO ANALYSIS
Ratio analysis is necessary to establish the relationship between two accounting figures to
highlight the significant information to the management or users who can analyse the
business situation and to monitor their performance in a meaningful way. The following
are the advantages of ratio analysis:
1) It facilitates the accounting information to be summarized and simplified in a
required form.
2) It highlights the inter-relationship between the facts and figures of various segments
of business.
3) Ratio analysis helps to remove all type of wastages and inefficiencies.
4) It provides necessary information to the management to take prompt decision
relating to business.
5) It helps to the management for effectively discharge its functions such as planning,
organizing, controlling, directing and forecasting.
6) Ratio analysis reveals profitable and unprofitable activities. Thus, the management is
able to concentrate on unprofitable activities and consider to improve the efficiency.
7) Ratio analysis is used as a measuring rod for effective control of performance of
business activities.
8) Ratios are an effective means of communication and informing about financial
soundness made by the business concern to the proprietors, investors, creditors and
other parties.

42
9) Ratio analysis is an effective tool which is used for measuring the operating results
of the enterprises.
10) It facilitates control over the operation as well as resources of the business.
11) Effective co-operation can be achieved through ratio analysis.
12) Ratio analysis provides all assistance to the management to fix responsibilities.
13) Ratio analysis helps to determine the performance of liquidity, profitability and
solvency position of the business concern.
IMPORTANCE OF RATIO ANALYSIS
Ratio analysis stands for the purpose of determining and presenting the relationship of
items and group of items in the financial statements. It is an important technique of
financial analysis. It is a way which financial stability and health of a concern can be
judged. The following are the main points of importance of ratio analysis: -
1. Useful in financial position analysis: - Accounting ratios reveal the financial
position of any concern. This helps the banks, insurance companies and other
financial institutions in lending and making investment decisions.
2. Useful in simplifying accounting figures: - Accounting ratio simplify, summaries
and systematize the accounting figures in order to make them more understandable
and in a lucid form. They highlight the interrelationship which exists between various
segments of the business as expressed by accounting statements. Often the figures
standing alone cannot help them convey any meaning and ratios help them to relate
with other figures.
3. Useful in assessing the operational efficiency: - Accounting ratios help to have an
idea of the working of a concern. The efficiency of the firm becomes evident when
analysis is based on accounting ratios. They diagnose the financial health by
evaluating liquidity, solvency, profitability, etc. This helps the management to access
financial requirements and the capabilities of various business units.

43
4. Useful in forecasting purpose: - If accounting ratios are calculated for a number of
years, then a trend is established. This trend helps in setting up future plans and
forecasting. For example, expenses as a percentage of sales can be easily forecasting
on the basis of sales and expenses of the past years.
5. Useful in locating the weak spots of the business: - Accounting ratios are of great
assistance in locating the weak spots in the business even though the overall
performance may be efficient. Weakness in financial structure due to incorrect
policies in the past or present are revealed through accounting ratio. For example, if a
firm finds that increase in distribution expenses is more than proportionate to the
result expected or achieved, it can take remedial steps to overcome this adverse
situation.
6. Useful in comparison of performance: - Through accounting ratios comparison can
be made between one departments of the firm with another of the same firm in order
to evaluate the performance of the various departments in the firm. Manager is
naturally interested in such comparison in order to know the proper and smooth
functioning of such departments. Ratios also help him to make any change in the
organization structure.
LIMITATIONS OF RATIO ANALYSIS
Ratio analysis is one of the important techniques of determining the performance of
financial strength and weakness of a firm. Though ratio analysis is relevant and useful
technique for the business concern, the analysis is based on the information available in
the financial statements. There are some situations, where ratios are misused, it may lead
the management to wrong direction. The ratio analysis suffers from the following.

44
1) Ratio analysis is used on the basis of financial statements. Number of limitations of
financial statements may affect the accuracy or quality of ratio analysis.
2) Ratio analysis heavily depends on quantitative facts and figures and it ignores
qualitative data. Therefore this may limit accuracy.
3) Ratio analysis is a poor measure of a firm's performance due to lack of adequate
standards laid for ideal ratios.
4) It is not a substitute for analysis of financial statements. It is merely used as a tool for
measuring the performance of business activities.
5) Ratio analysis clearly has some latitude for window dressing.
6) It makes comparison of ratios between companies which is questionable due to
differences in methods of accounting operation and financing.
7) Ratio analysis does not consider the change in price level, as such, these ratio will
not help in drawing meaningful inferences.
CLASSIFICATION OF RATIOS
Accounting Ratios are classified on the basis of the different parties interested in making
use of the ratios. A very large number of accounting ratios are used for the purpose of
determining the financial position of a concern for different purposes. Ratios may be
broadly classified in to:
(1) Classification of Ratios on the basis of Balance Sheet.
(2) Classification of Ratios on the basis of Profit and Loss Account.
(3) Classification of Ratios on the basis of Mixed Statement (or) Balance Sheet and
Profit and Loss Account.
1. This classification further grouped in to:
I. Liquidity Ratios
II. Profitability Ratios
III. Turnover Ratios
IV. Solvency Ratios
V. Over all Profitability Ratios

45
2. These classifications are discussed hereunder:
I. Classification of Ratios on the basis of Balance sheet.
II. Classification on the basis of Income Statements
III. Classification on the basis of Mixed Statements.
A chart for classification of ratios by statement is given below showing clearly the types
of ratios may be broadly classified on the basis of Income Statement and Balance Sheet.
Classification of Ratios by Statement
On the basis of On the basis of On the basis of
Profit and Loss AccountBalance sheet Profit and Loss
Account and Balance
sheet
1. Stock Turnover Ratio
2. Debtors Turnover Ratio
3. Payable Turnover Ratio
4. Fixed Asset Turnover
Ratio
5. Return on Equity
6. Capital Turnover Ratio
7. Working Capital
Turnover Ratio
8. Total Assets Turnover
1. Gross Profit Ratio
2. Operating Ratio
3. Operating Profit Ratio
4. Net Profit Ratio
5. Expense Ratio
6. Interest Coverage Ratio
1. Current Ratio
2. Liquid Ratio
3. Absolute Liquid
Ratio
4. Debt Equity Ratio
5. Proprietary Ratio
6. Capital Gearing
Ratio
7. Assets-
Proprietorship
Ratio

46
REVIEW OF RELATED LITERATURE
Justin (1924) argued that the method of gathering industry data and calculates averages
were called “Scientific ratio analysis”. The word “scientific” in this title was not entirely
correct because no evidence had been found that the hypothesis formulation and
hypothesis testing actually carried out.
Horrigan (1968) says ratios analysis has come into existence since early ages and the
main reason of the development of ratio analysis was its use in the analysis of the
properties of ratios in 300 B.C. in recent time it is used as a standard tool for the analysis
of financial statement. In nineteenth century main reasons of using ratio analysis are
power of financial institutions and shifting of management to professional managers.
Ratio analysis used for two purposes that are credit and managerial. In managerial
approach profitability and in credit approach capacity of firm to pay debts is the main
point of focus. Generally, ratio analysis is used credit analysis.
There was rapid expansion of financial knowledge in nineteenth century and to study this
rapidly expanding knowledge analyst first compared similar items then moved further
and compared current assets and liabilities as well with other ratios. In that period current
ratio was the most significant ratio among all other available ratios. To analyze the
operating results dupont analysis is also used. The result divided into three parts and then
compared with other companies to point out the problem and strong areas of business.
Bliss (1923) says basic relationship within the business is indicated by the ratios and
developed complete model based on the ratios. The purpose model was not mature but
inspired others to start working on this theory.
Different critics of ratio analysis also appeared. Gilman (1925) has following concerns
on ratio analysis (1) ratios are bond with time and changed as time passed so cannot be
interpreted (2) ratios are not natural measure for judging the performance companies
manipulated them (3) ratios easily affect the mind of viewers and hide the actual position
and (4) ratios swing widely that also affect the dependability.

47
Foulke (1931) create and promoted own set of financial ratios successfully. This set of
financial ratios was printed and promptly known as important and prominent group of
ratios.
Fitzpatrick (1932) with the help of thirteen different type of ratios analysis 120 failed
firms and found that three out of thirteen ratios predict the failure of firms with precise
accuracy while other ratios also shown some prediction power.
Rasmer and foster (1931) used eleven ratios to examine that the successful firms has
higher ratios than unsuccessful firms. Although this study was immature but immaturity
was ignored by considering the vital contribution this study has in the evaluation of
usefulness of ratios. Security and exchange commission of America was formed in 1934.
This also expands the flow and number of financial statements and with the help of this
peripheral factor importance of ratio analysis further enhanced and realized.
Marwin (1942) by using several ratios analyze financial trends of huge successful and
unsuccessful firms. Compared normal ratios of industry with mean ratios of large
unsuccessful firms and find out that the three ratios current ratio, net working capital to
total assets and net worth to debt were able to foresee failure before actual failure
happened. This study shows the actual power of prediction of ratio analysis and results
were still reliable.
Walter (1957) included cash flow statement items in ratio analysis. At the end of world
war fund statement came into existence and with fund statement fund statement ratios
was also produced.
Hickman (1958) used times interest earned ratio and net profit ratio to predict the default
rate on corporate bond.
Saulnier (1958) says firms with low current ratio and debt ratio has greater chance to
default then firms with high ratios.
Moore and Atkinson (1961) point out the relationship between capacity to pay and
financial ratios and shows results of ratio analysis influence the borrowing ability of
firms.

48
Beaver (1967) also examined the prediction power of ratio analysis and point out ratios
ability to predict failure as early as five years before the collapsed. Statistical technique
used in the study was more powerful than earlier studies and fund statement data was
used to calculate ratio. This study set the foundation for future research on ratio analysis.
Sorter and Becker (1964) examined the relationship between psychological model and
corporate personality of financial ratios and find out that long-established corporation
maintain greater liquidity and solvency ratios.
Gombola and Ketz (1983) found that the fund and income statement are produced for
different purpose and profitability ratios did not has the information that cash flow ratios
provide. In other words both ratios gave important as well as different information from
one and other.
Pinches and Mingo (1973) evaluate the structure of ratios and found that ratios can be
divided into different groups. Present general classification of financial ratios on logical
basis. Results concluded that the ratios can be divided into four groups that are financial
leverage, short-term capital intensiveness, return on investment and long-term capital
intensiveness.
Stevens (1973) also studies the topic of ratio classification and grouped the financial
ratios in four categories that include activity, liquidity, leverage and profitability.
Pinches, Mingo, and Caruthers (1973) and Pinches, Eubank, Mingo, and Caruthers
(1975) carry on further worked on this subject and categorized the financial ratios in
seven factors that include receivable turnover, capital turnover, short-term liquidity,
return on investment, inventory turnover, financial leverage and cash position.
Libby (1975) also studies the division of financial ratios and condenses that division
from seven to five. Five divisions include liquidity, activity, cash position, profitability
and assets balance. Johnson (1979) further studies the research of Pinches (1973) and
added another factor that is decomposition measure into seven factors.

49
Twelve different factors or division of financial ratios are presented in five different
studies. On the basis of five published studies assortment of financial ratios are very time
consuming because the results of published studies was very diverse.
Chen and Shimerda (1981) deeply examined five published studies and find out that
some of the twelve factors that has been presented in the studies has same and simply
name is changed. Therefore, twelve factors are grouped into seven factors. Seven factors
are cash position, financial leverage, inventory turnover, short-term liquidity, return on
investment, receivable turnover and capital turnover.

50
CHAPTER –3
 RESEARCH METHODOLOGY
 OBJECTIVE OF THE STUDY
 SAMPLE SIZE, INSTRUMENT,
RESEARCH DESIGN,
METHOD OF DATA
COLLECTION

52
RESEARCH METHODOLOGY
1. RESEARCH PROBLEM:
The Problem of the study is ‘Understanding Financial Position of Radico Khaitan
Pvt. Ltd. Using Ratio Analysis of Financial Statements’.
2. OBJECTIVE OF THE STUDY:
 To develop practical understanding of ratios based on financial statements.
 To develop clarity about different types of ratios and their significance in financial
set up.
 To study and analyze the financial position of the Company through ratio
analysis.
 To suggest measures for improving the financial performance of organization.
 To study and compare the financial position of company with its competitors
through ratio analysis.
3. RESEARCH DESIGN:
Research design is a framework or plan to be used as a guide in collecting and analysing
data. It is a blueprint that is followed in completing a study. The research design may be
exploratory or descriptive in nature.
This project is based on descriptive research design. The objective of the descriptive
research is used for frequencies, averages and other statistical calculations. Qualitative
research often has the aim of description and researchers may follow-up with
examinations of why the observations exist and what the implications of the findings are.

53
4. TYPE OF DATA USED:
 Primary data:
The Primary data has been collected directly from Finance manager Mr. RK Sharma and
other staff members.
 Secondary Data:
The Secondary data was used. Secondary data is data collected by someone other than
the user for some other purpose but has some relevance and utility for the user.
Secondary data analysis saves time that would otherwise be spent collecting data and
provides larger and higher-quality databases that would be unfeasible for any
individual researcher to collect on their own. The secondary data is often the most
convenient and cost-effective option. Secondary data was collected from official
website of Radico Khaitan.
The secondary data includes the Financial Statements of the firm for last five years; i.e.
from
Financial Statements for the year 2012
Period: The Study covers a period of five years data from 2012,2013,2014,2015 & 2016
mean an Accounting year of the company consisting of 365 working days.
5. PROCEDURE OF DATA COLLECTION:
Data in the form of balance sheet and Income statement has been collected from the
official website of Radico Khaitan Private Limited
6. SAMPLING DESIGN: The sampling design adopted is Convenience Sampling
which comes under Non- Probability Sampling.

54
7. SAMPLING SIZE:
Sampling unit: Financial Statements (Balance Sheet and Profit & loss A/c)
Sampling Size: Last five years financial statements
The accuracy of the ratios is subject to the validity of information provided through
Balance sheet, Profit and Loss A/c.
8. STATISTICAL TOOLS USED:
Statistical tools like bar -graphs, excel sheets & ANOVA test have been used in the report
so as to make the data more expressive and easily understandable.
Bar Graphs are used to show the classification of various main heads under Sources and
Application of Funds.

55
CHAPTER-4
DATA ANALYSIS &
INTERPRETATION

56
CLASSIFICATION OF RATIOS ON THE BASIS OF
BALANCE SHEET
Balance sheet ratios which establish the relationship between two balance sheet items.
For example, Current Ratio, Fixed Asset Ratio, Capital Gearing Ratio and Liquidity
Ratio etc.
I.LIQUIDITY RATIOS
Short-term Solvency Ratios attempt to measure the ability of a firm to meet its short-term
financial obligations. In other words, these ratios seek to determine the ability of a firm to
avoid financial distress in the short-run. The two most important Short-term Solvency
Ratios are the Current Ratio and the Quick Ratio. (Note: the Quick Ratio is also known as
the Acid-Test Ratio.)
a. CURRENT RATIO:-
The Current Ratio is calculated by dividing Current Assets by Current Liabilities. Current
Assets are the assets that the firm expects to convert into cash in the coming year and
Current Liabilities represent the liabilities which have to be paid in cash in the coming
year. The appropriate value for this ratio depends on the characteristics of the firm's
industry and the composition of its Current Assets. However, at a minimum, the Current
Ratio should be greater than one.
Current Assets are those assets which can be converted into cash within a short period i.e.
not exceeding one year. It includes the following:
Cash in hand, Cash at Bank, Bill receivables, Short term investment, Sundry debtors,
Stock, Prepaid expenses. Current liabilities are those liabilities which are expected to be
paid within a year. It includes the following:
=

57
Bill payables, Sundry creditors, Bank overdraft, Provision for tax, outstandingexpenses
Table 4.1
Solution:-The Current Ratio is calculated (Mar 2012) as follows:
Current assets = 980.73
Current Liabilities = 563.33
Current Ratio =
Current Assets
=
980.73
= 1.74
Current Liabilities 563.33
Current Ratio = 1.74
Current Ratio =
Current Assets
=
1119.45
= 1.87
YEARS 2012 2013 2014 2015 2016
Total Current Assets 980.73 1,119.45 1,240.18 1,319.99 1,292.28
Total Current Liabilities 563.33 597.67 735.09 854.27 960.78

58
Current Ratio =
Current Assets
=
1240.18
= 1.69
Current assets = 1,319.99
Current Ratio =
Current Assets
=
1,319.99
= 1.55
Current Ratio =
Current Assets
=
1292.28
= 1.345
YEARS 2012 2013 2014 2015 2016
Current Ratio 1.74 1.87 1.69 1.55 1.35
Table 4.2

59
Interpretation of Current Ratio:-
1. The ideal current ratio is 2: 1. This ideal is not met in any of the years from 2012 to
2016.
2. However, a current ratio of more than one is also considered to be satisfactory
because it indicates that all the current liabilities can be paid out of available current
assets. This condition is met in all the years.
3. The current ratio is highest in the year 2013 i.e. 1.87. Higher value of current ratio
indicates more liquidity of the firm's ability to pay its current obligation in time.
4. The current ratio is lowest in the year 2016 i.e. 1.35. A low value of current ratio
means that the firm may find it difficult to pay its current liabilities as one which is
generally recognized as the patriarch among ratios.
5. Over the years, current ratio is falling which is a matter of concern.
1.74
1.87
1.69
1.55
1.35
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
1.8
2
2012 2013 2014 2015 2016
CURRENT RATIO
FIGURE 4.1CURRENT RATIO

60
CURRENT RATIO
Table 4.3
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
1.8
2
2012 2013 2014 2015 2016
CURRENT RATIO
RADICO KHAITAN
UNITED SPIRITS
UNITED BREWERIES
GM BREWERIES
YEARS 2012 2013 2014 2015 2016
Radico Khaitan 1.74 1.87 1.69 1.55 1.35
United Spirits 1.01 0.89 0.53 0.69 0.84
United Breweries 1.15 1.32 1.27 1.21 1.15
GM Breweries 0.41 0.27 0.48 0.49 1.33
Fig 4.2 CURRENT RATIOS COMPARISON

61
ANOVA: Single Factor
SUMMARY
Groups Count Sum Average Variance
Radico Khaitan
5 8.20 1.64 0.17753
United Spirits 5 3.96 0.792 0.16642
United Breweries 5 6.10 1.22 0.06693
GM Breweries 5 2.98 0.596 0.37531
ANOVA
Source of Variation SS df MS F P
Between Groups 3.246 3 1.082 21.226
0.000
Within Groups 0.815 16 0.051
Total 4.061 19
Interpretation
There exists very significant difference between Current Ratio of Radico khaitan, United
Spirits, United Breweries, GM Breweries, Regarding their Current Ratio.

62
b.QUICK RATIO OR LIQUID RATIO:-
The Quick Ratio recognizes that, for many firms, Inventories can be rather illiquid. If
these Inventories had to be sold off in a hurry to meet an obligation the firm might have
difficulty in finding a buyer and the inventory items would likely have to be sold at a
substantial discount from their fair market value.
This ratio attempts to measure the ability of the firm to meet its obligations relying solely
on its more liquid Current Asset accounts such as Cash and Accounts Receivable. This
ratio is calculated by dividing Current Assets less Inventories by Current Liabilities.
Quick Ratio =
Current Assets –(Inventory + Prepaid expenses)
Current Liabilities
Solution:- The Quick Ratio is calculated (Mar 2012) as follows:
Inventories = 177.45
Prepaid expenses = 0
Quick Ratio =
Current Assets – (Inventory + Prepaid expenses)
Current Liabilities
Quick Ratio = 1.43
YEARS 2012 2013 2014 2015 2016
Inventories 177.45 184.95 210.31 213.03 232.70
Quick Ratio =
980.73 – 177.45
=
803.28
= 1.43
563.33 563.33
Table 4.4

63
Solution: - The Quick Ratio is calculated (Mar 2013) as follows:
Quick Ratio =
Current Liabilities
Quick Ratio = 1.56
Quick Ratio =
Current Liabilities
Quick Ratio = 1.40
Quick Ratio =
1119.45 – 184.95
=
934.50
= 1.56
597.67 597.67
Quick Ratio =
1240.18 – 210.31
=
1029.87
= 1.40
735.09 735.09

64
Solution:-The Quick Ratio is calculated (Mar 2015) as follows:
Quick Ratio =
Current Liabilities
Quick Ratio = 1.30
Quick Ratio =
Current Liabilities
Quick Ratio = 1.10
Quick Ratio =
1,319.26 – 213.03
=
1106.23
= 1.30
853.55 853.55
Quick Ratio =
1292.28 – 232.70
=
1059.58
= 1.10
960.78 960.78

65
Quick Ratio:-
YEARS 2012 2013 2014 2015 2016
Quick Ratio 1.43 1.56 1.40 1.30 1.10
Table 4.5
Interpretation of Quick Ratio:-
1. The ideal Quick ratio is 1:1. This ideal is not met in any of the years from 2012 to
2016.
2. However, a Quick ratio one is also considered to be satisfactory because it indicates
that all the current liabilities can be paid out of available current assets. This
condition is met in all the years.
3. The Quick ratio is highest in the year 2013 i.e. 1.56. . High Acid Test Ratio is an
indication that the firm has relatively better position to meet its current obligation in
time.
4. The Quick ratio is lowest in the year 2016 i.e. 1.1. A low value of quick ratio
exhibiting that the firm's liquidity position is not good.
5. Over the years, Quick ratio is falling which is a matter of concern.
1.43
1.56
1.4
1.3
1.1
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
1.8
2012 2013 2014 2015 2016
QUICK RATIO
Fig 4.3 QUICK RATIO

66
QUICK RATIO
SUMMARY
Radico Khaitan
5 6.79 1.34 0.15341
United Spirits 5 7.03 1.41 0.11482
GM Breweries 5 2.06 0.412 0.32227
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
1.8
2012 2013 2014 2015 2016
Radico Khaitan
United Spirits
United Breweries
GM Breweries
YEARS 2012 2013 2014 2015 2016
Radico Khaitan 1.43 1.56 1.40 1.30 1.10
United Spirits 1.32 1.24 1.52 1.54 1.41
United Breweries
0.88 0.96 0.92 0.83 0.80
GM Breweries 0.27 0.17 0.31 0.26 1.05
Fig 4.4 QUICK RATIOS COMPARISON
Table 4.6

67
Interpretation:-
There exists very significant difference between Quick Ratio of Radico khaitan, United
Spirits, United Breweries, GM Breweries, Regarding their Current Ratio.
ANOVA
Source of Variation SS Df MS F P
Between Groups 3.220 3 1.073 29.876
0.000
Within Groups 0.575 16 0.036
Total 3.794 19

68
Classification on the basis of Income Statements:-
These ratios deal with the relationship between two items or two group of items of the
income statement or profit and loss account. For example, Gross Profit Ratio, Operating
Ratio, Operating Profit Ratio, and Net Profit Ratio etc.
II. PROFITABILITY RATIOS:-
The term profitability means the profit earning capacity of any business activity. Thus,
profit earning may be judged on the volume of profit margin of any activity and is
calculated by subtracting costs from the total revenue accruing to a firm during a
particular period. Profitability Ratio is used to measure the overall efficiency or
performance of a business. Generally, a large number of ratios can also be used for
determining the profitability as the same is related to sales or investments. The following
important profitability ratios are discussed below:
a) Gross Profit Ratio.
b) Operating Profit Ratio.
c) Net Profit Ratio.
d) Return on Investment Ratio.
e) Return on Capital Employed Ratio.
f) Return on Assets
a) GROSS PROFIT RATIO:-
Gross Profit Ratio established the relationship between gross profit and net sales. This
ratio is calculated by dividing the Gross Profit by Sales. It is usually indicated as
percentage.
FORMULA:-
Gross Profit Ratio =
Gross profit
× 100
Net sales

69
Gross Profit = Sales - Cost of Goods Sold
Net Sales = Gross Sales - Sales Return (or) Return Inwards
Table 4.7
Solution:- The Gross Profit Ratio is calculated (Mar 2012) as follows:
Net sales = 1097.77
Consumption of Raw Materials = 468.61
Purchase of Traded Goods = 94.41
Increase/Decrease in Stocks = –16.96
Cost of Goods sold = 468.61 + 94.41 –( –16.96 )
= 468.61 + 94.41+16.96
COGS = 579.98
Gross Profit = 1097.77– 579.98
= 517.79
517.79
× 100
1,097.77
Gross Profit Ratio = 47.16%
Net sales = 1,217.28
YEARS 2012 2013 2014 2015 2016
Net Sales 1,097.77 1,217.28 1,451.69 1,488.39 1,543.10
Consumption of Raw
Materials
468.67 514.42 666.52 670.78 709.87
Purchase of Traded Goods 94.41 61.81 22.05 39.21 16.65
Increase/Decrease in Stocks -16.96 8.77 -35.47 7.34 -5.91

70
Increase/Decrease in Stocks = 8.77
Cost of Goods sold = 514.42 + 61.81 – 8.77
= 567.46
Gross Profit = 1217.28 – 567.46
= 649.82
649.82
× 100
1,217.28
Net sales = 1451.69
Cost of Goods sold = 666.52 + 22.05 – (–35.47)
= 666.52 + 22.05 + 35.47
COGS = 724.04
Gross Profit = 1451.69 – 724.04
= 727.65
727.65
× 100
1451.69
Gross Profit Ratio= 50.12%
Solution:-The Gross Profit Ratio is calculated (Mar 2015) as follows:

71
Increase/Decrease in Stocks = 7.34
Cost of Goods sold = 670.78 + 39.21 – 7.34
= 702.65
Gross Profit = 1488.39 – 702.65
= 785.74
785.74
× 100
1488.39
Gross Profit Ratio= 52.79%
Net sales = 1543.10
Cost of Goods sold = 709.87 + 16.65 – (–5.91)
= 709.87 + 16.65 + 5.91
COGS = 732.43
Gross Profit = 1543.10– 732.43
= 810.67
810.67
× 100
1,543.10
YEARS 2012 2013 2014 2015 2016
GROSS PROFITRATIO(%) 47.16 53.38 50.12 52.79 52.53
Table 4.8

72
Interpretation of Gross Profit Ratio:-
1. Higher Gross Profit Ratio is an indication that the firm has higher profitability. It
also reflects the effective standard of performance of firm's business.
2. The Gross Profit Ratio is highest in the year 2013 i.e. 53.38%. Higher Gross
Profit Ratio will be result of the following factors:
a) Increase in selling price, i.e., sales higher than cost of goods sold.
b) Decrease in cost of goods sold with selling price remaining constant.
c) Increase in selling price without any corresponding proportionate increase
in cost.
d) Increase in the sales mix.
3. The Gross Profit Ratio is lowest in the year 2012 i.e. 47.16%. A low gross profit
ratio generally indicates the result of the following factors :
a) Increase in cost of goods sold.
b) Decrease in selling price and Decrease in sales volume.
c) High competition.
d) Decrease in sales mix.
4. Gross Profit Ratio increasing 2014 to 2015
47.16%
53.38%
50.12%
52.79% 52.53%
2012 2013 2014 2015 2016
GROSS PROFIT RATIO %
GROSS PROFIT RATIO %
Fig 4.5 GROSS PROFIT RATIO

73
b) OPERATINGPROFITRATIO:-
Operating Profit Ratio indicates the operational efficiency of the firm and is a measure of
the firm's ability to cover the total operating expenses. Operating Profit Ratio can be
calculated as:
FORMULA:-
Operating Profit Ratio =
Operating Profit
× 100
Net sales
Operating Profit = Net Sales – Operating Cost
=
(OR)
Net Sales – (Cost of Goods Sold + Office
and Administrative Expenses + Selling
and Distribution Expenses)
=
(OR)
Gross Profit – Operating Expenses
=
(OR)
Net Profit +Non-Operating Expenses -
=
Non-Operating Income.
Net Sales Sales - Sales Return (or) Return Inwards
Table 4.9
YEARS 2012 2013 2014 2015 2016
Net Sales 1,097.77 1,217.28 1,451.69 1,488.39 1,543.10
Operating Profit 172.05 184.23 193.49 170.40 194.61

74
Solution:- The Operating Profit Ratio is calculated (Mar 2012) as follows:
Operating Profit = 172.05
172.05
× 100
1097.77
Operating Profit Ratio = 15.67%
184.23
× 100
1,217.28
193.49
× 100
1451.69
170.40
× 100
1488.39

75
Solution:-The Operating Profit Ratio is calculated (Mar 2016) as follows:
Operating Profit
× 100
Net sales
194.61
× 100
1543.10
Table 4.10
YEARS 2012 2013 2014 2015 2016
OPERATING PROFIT(%) 15.67 15.13 13.33 11.44 12.61
15.67 15.33
13.33
11.44
12.61
0
2
4
6
8
10
12
14
16
18
2012 2013 2014 2015 2016
OPERATING PROFIT (%)
Fig 4.6 OPERATING PROFIT RATIO

76
Interpretation of Operating Profit Ratio:-
1. The Operating Profit ratio is highest in the year 2012 i.e. 15.67%. Higher the
ratio, the better is the profitability of the business. This ratio is also helpful in
controlling cash.
2. The Operating Profit ratio is lowest in the year 2015 i.e.11.44%. Lower the
operating profit ratio is decrease the business.
.
c) NET PROFIT RATIO:-
Net Profit Ratio is also termed as Sales Margin Ratio (or) Profit Margin Ratio (or) Net
Profit to Sales Ratio. This ratio reveals the firm's overall efficiency in operating the
business. Net profit Ratio is used to measure the relationship between net profit (either
before or after taxes) and sales.
FORMULA :-
Net Profit Ratio =
Net Profit After Tax
× 100
Net Sales
Net profit includes non-operating incomes and profits. Non-Operating Incomes such as
dividend received, interest on investment, profit on sales of fixed assets, commission
received, discount received etc. Profit or Sales Margin indicates margin available after
deduction cost of production, other operating expenses, and income tax from the sales
revenue. Higher Net Profit Ratio indicates the standard performance of the business
concern.
Table 4.11
YEARS 2012 2013 2014 2015 2016
Net Sales 1,097.77 1,217.28 1,451.69 1,488.39 1,543.10
PAT 63.66 77.28 71.26 67.64 76.89

77
Solution:- The Net Profit Ratio is calculated (Mar 2012) as follows:
Net sales = 1097.77
Net Profit after tax = 63.66
Net Profit Ratio =
63.66
× 100
1097.77
=5.80%
Net sales = 1217.28
Net Profit Ratio =
77.28
× 100
1217.28
=6.35%
Net sales = 1451.69
Net Profit Ratio = 71.26 × 100
1451.69
=4.91%
Solution:-The Net Profit Ratio is calculated (Mar 2015) as follows:
Net sales = 1488.39
Net Profit Ratio =
67.64
× 100
1488.39
=4.54%

78
Net sales = 1543.10
Net Profit Ratio =
76.89
× 100
1543.10
=4.98%
Table 4.12
5.8
6.35
4.9
4.54
4.98
0
1
2
3
4
5
6
7
2012 2013 2014 2015 2016
NET PROFIT RATIO (%)
YEARS 2012 2013 2014 2015 2016
Net Profit Margin (%) 5.80 6.35 4.90 4.54 4.98
Fig. 4.7 NET PROFIT RATIO

79
Interpretation of Net Profit Ratio
1. Net profit (NP) ratio is a useful tool to measure the overall profitability of the
business.
2. The Net profit (NP) ratio is highest in the year 2013 i.e. 6.35%. A high ratio
indicates the efficient management of the affairs of business.
3. The Net profit (NP) ratio is lowest in the year 2015 i.e.4.54 %. A low ratio
indicate the minimum profit.
4. There is no norm to interpret this ratio. To see whether the business is constantly
improving its profitability or not, the analyst should compare the ratio with the
previous years’ ratio, the industry’s average and the budgeted net profit ratio.
5. The use of net profit ratio in conjunction with the assets turnover ratio helps in
ascertaining how profitably the assets have been used during the period.
Net Profit Ratio OF All Company:-
Table 4.13
YEARS 2012 2013 2014 2015 2016
Radico Khaitan 5.80 6.35 4.90 4.54 4.98
United Spirits 4.54 3.76 -60.55 -24.60 10.86
GM Breweries
5.38 4.83 7.46 6.06 16.21

80
SUMMARY
Radico Khaitan
5 26.57 5.314 0.66204
United Spirits 5 -65.99 -13.19 26.6578
GM Breweries 5 39.94 7.988 4.20409
-70
-60
-50
-40
-30
-20
-10
0
10
20
30
2012 2013 2014 2015 2016
Net Profit (%)
Radico Khaitan
United Spirits
United Breweries
GM Breweries
Fig. 4.8 NET PROFIT RATIO COMPARISON

81
ANOVA
Between Groups 1438.339 3 479.446 2.628
0.086
Within Groups 2919.341 16 182.459
Total 4357.680 19
Interpretation
There exists not significant difference between Net profit Ratio of Radico khaitan, United
Spirits, United Breweries, GM Breweries, Regarding their Net profit Ratio.
d) RETURN ON INVESTMENT RATIO:-
This ratio is also called as ROL This ratio measures a return on the owner's or
shareholders' investment. This ratio establishes the relationship between net profit after
interest and taxes and the owner's investment. Usually this is calculated in percentage.
This ratio, thus. Can be calculated as:
Return on Investment Ratio =
Net Profit (after interest and tax)
× 100
Shareholders' Fund (or) Investments
Shareholder's Investments = Equity Share Capital + Preference Share Capital + Reserves
= and Surplus - Accumulated Losses
Table 4.14
YEARS 2012 2013 2014 2015 2016
PAT 63.66 77.28 71.26 67.64 76.89
Total Shareholders Funds 695.26 728.19 781.07 829.28 904.47

82
Solution:- The Return on Investment Ratio is calculated (Mar 2012) as follows:
Shareholders Funds =695.26
63.66
× 100
695.26
=9.15%
Solution:- The Return on Investment Ratio is calculated (Mar 2013) as follows:-
Shareholders Funds = 728.19
77.28
× 100
728.19
=10.61%
Solution:-The Return on Investment Ratio is calculated (Mar 2015) as follows:
67.64
× 100
829.28
=8.15%
Solution:-The Return on Investment Ratio is calculated (Mar 2014) as follows:-
71.26
× 100
781.07
=9.12%

83
Solution:- The Return on Investment Ratio is calculated (Mar 2016) as follows:
76.89
× 100
904.47
=8.50%
Table 4.15
Interpretation of Return on Investment Ratio:-
1. The Return on investment ratio is highest in the year 2013 i.e. 10.61%.
2. The Return on investment ratio is lowest in the year 2014 i.e. 8.15%.
9.15
10.61
8.15
9.12
8.5
0
2
4
6
8
10
12
2012 2013 2014 2015 2016
Return on Investment Ratio (%)
YEARS 2012 2013 2014 2015 2016
Return on Investment
Ratio(%)
9.15 10.61 8.15 9.12 8.50
Fig 4.9 RETURN ON INVESTMENT RATIO

84
e) RETURN ON CAPITAL EMPLOYED RATIO:-
Return on Capital Employed Ratio measures a relationship between profit and capital
employed. This ratio is also called as Return on Investment Ratio. The term return means
Profits or Net Profits. The term Capital Employed refers to total investments made in the
business.
FORMULA:-
Return on Capital Employed =
Net Profit After Taxes
× 100
Gross Capital Employed
(OR)
Net Profit After Taxes Before Interest
× 100
Gross Capital Employed
(OR)
Net Profit After Taxes Before Interest
× 100
Average Capital Employed or
Net Capital Employed
Net Capital Employed = Total Assets – Current Liabilities.
Table 4.16
YEARS 2012 2013 2014 2015 2016
PAT 63.66 77.28 71.26 67.64 76.89
Total Assets 1,659.14 1,803.05 2,015.71 2,087.69 2,145.50
Current Liabilities 563.33 597.67 735.09 854.27 960.78

85
Solution:-The Return on Capital Employed is calculated (Mar 2012) as follows:
Net Profit After Tax = 63.66
Total Assets = 1,659.14
Net Capital Employed = Total Assets – Current Liabilities
= 1,659.14 – 563.33
= 1095.81
63.66
× 100
1095.81
=5.80%
=1,803.05– 597.67
= 1205.38
77.28
× 100
1205.38
=6.41%

86
Net Capital Employed =Total Assets – Current Liabilities
=2,015.71– 735.09
= 1280.62
71.26
× 100
1280.62
=5.56%
= 2,087.69 – 854.27
= 1233.42
67.64
× 100
1233.42
=5.48%
= 2,145.50 – 960.78
= 1184.72

87
76.89
× 100
1184.72
=6.49%
YEARS 2012 2013 2014 2015 2016
Return on Capital Employed (%) 5.80 6.41 5.56 5.48 6.49
Table 4.17
5.8
6.41
5.56
5.48
6.49
4.8
5
5.2
5.4
5.6
5.8
6
6.2
6.4
6.6
2012 2013 2014 2015 2016
Return on Capital Employed (%)
Fig 4.10 RETURN ON CAPITAL EMPLOYED

88
Interpretation of Return on Capital EmployedRatio:-
1. The Return on Capital Employed ratio is highest in the year 2016 i.e. 6.49%.
Managers use this ratio for various financial decisions. It is a ratio of overall
profitability and a higher ratio is, therefore, better
2. The Return on Capital Employed ratio is lowest in the year 2015 i.e.5.48 %. A
lowest ratio indicate the minimum profitability.
3. Return on capital employed ratio measures the efficiency with which the
investment made by shareholders and creditors is used in the business..
4. To see whether the business has improved its profitability or not, the ratio can be
calculated for a number of years.
Return on capital employed ratio(%)
Table 4.18
YEARS 2012 2013 2014 2015 2016
Radico Khaitan 5.80 6.41 5.56 5.48 6.49
United Spirits 4.67 4.28 -96.38 -54.93 27.20
United Breweries
6.90 7.98 9.73 10.66 12.39
GM Breweries 15.58 13.34 15.14 12.42 31.43

89
SUMMARY
Radico Khaitan
5 29.74 5.948 0.42395
United Spirits 5 -115.16 -23.032 45.6815
GM Breweries 5 87.91 17.582 7.01967
-120
-100
-80
-60
-40
-20
0
20
40
2012 2013 2014 2015 2016
Radico Khaitan
United Spirits
United Brewerie
GM Breweries
Fig 4.11 RETURN ON CAPITAL EMPLOYED COMPARISON

90
ANOVA
Between Groups 4,703.436 3 1,567.812 2.930
0.065
Within Groups 8,560.072 16 535.005
Total 13,263.509 19
Interpretation
There exists not significant difference between Return on Capital Employed Ratio of
Radico khaitan, United Spirits, United Breweries, GM Breweries, Regarding their
Current Ratio.
f). RETURN ON ASSET
This ratio is compared to know the „Productivity of the total assets‟. There are two
methods of computing Return on Total Assets
Return on Asset =
Net Profit
× 100
Total Assets
Table 4.19
YEARS 2012 2013 2014 2015 2016
Total Assets 1659.14 1803.05 2015.71 2087.69 2145.50
Net Profit 63.66 77.28 71.26 67.64 76.89

91
Solution:-The is Return on Asset calculated (Mar 2012) as follows:
Net Profit = 63.66
Return on Asset =
63.66
× 100
1659.14
= 3.83
Net Profit = 77.28
Return on Asset =
77.28
× 100
1803.05
= 4.28
Net Profit = 71.26
Return on Asset =
71.26
× 100
2,015.71
= 3.53
Net Profit = 67.64

92
Return on Asset =
67.64
× 100
2,087.69
= 3.24
Net Profit = 76.89
Return on Asset =
76.89
× 100
2145.50
= 3.58
YEARS 2012 2013 2014 2015 2016
Return on Asset (%) 3.83 4.28 3.53 3.24 3.58
Table 4.20
3.83
4.28
3.53
3.24
3.58
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
2012 2013 2014 2015 2016
Return on Asset
Fig 4.12 RETURN ON ASSETS

93
Return on assets ratio:
1. Return on Assets indicates the number of cents earned on each dollar of assets.
2. The Operating Profit ratio is highest in the year 2013 i.e. 4.28. A higher value of
return on assets shows that business is more profitable. This ratio should be only
used to compare companies in the same industry. The reason for this is that
companies in some industries are most asset-insensitive i.e. they need expensive
plant and equipment to generate income compared to others.
3. The Return on Assets ratio is lowest in the year 2015 i.e.3.24. Their ROA will
naturally be lower than the ROA of companies which are low asset-insensitive.
An increasing trend of ROA indicates that the profitability of the company is
improving. Conversely, a decreasing trend means that profitability is
deteriorating.
Return on assets ratio:
Table 4.21
YEARS 2012 2013 2014 2015 2016
Radico Khaitan 3.83 4.28 3.53 3.24 3.58
United Spirits
3.67 3.29 -60.23 -27.66 15.07
United Breweries
5.74 6.13 8.28 10.18 11.70
GM Breweries
8.20 7.57 9.76 8.02 25.24

94
-65
-60
-55
-50
-45
-40
-35
-30
-25
-20
-15
-10
-5
0
5
10
15
20
25
30
2012 2013 2014 2015 2016
Radico Khaitan
United Spirits
United Breweries
GM Breweries
Fig 4.13 RETURN ON ASSETS COMPARISON

95
SUMMARY
Radico Khaitan
5 18.46 3.692 0.34867
United Spirits 5 -65.86 -13.172 27.4831
GM Breweries 5 58.79 11.758 6.78126
ANOVA
Between Groups 1,837.534 3 612.511 3.037 0.060
Within Groups 3,226.752 16 201.672
Total 5,064.287 19
Interpretation
There exists not significant difference between Return on Assets Ratio of Radico khaitan,
United Spirits, United Breweries, GM Breweries, Regarding their Current Ratio.

96
CLASSIFICATION ON THE BASIS OF MIXED
STATEMENTS:-
These ratios also known as Composite or Mixed Ratios or Inter Statement Ratios. The
inter statement ratios which deal with relationship between the item of profit and loss
account and item of balance sheet. For example, Return on Investment Ratio, Net Profit
to Total Asset Ratio, Creditor's Turnover Ratio, Earning Per Share Ratio and Price
Earning Ratio etc.
a. EARNING PER SHARE RATIO:-
Earning Per Share Ratio (EPS) measures the earning capacity of the concern from the
owner's point of view and it is helpful in determining the price of the equity share in the
market place. Earning Per Share Ratio can be calculated as :
FORMULA:-
Earning Per Share Ratio =
Net Profit After Tax
No. of Equity Shares
No. of Equity Shares =
Equity Share Capital
Face value of each share
ADVANTAGES
(1) This ratio helps to measure the price of stock in the market place.
(2) This ratio highlights the capacity of the concern to pay dividend to its shareholders.
(3) This ratio used as a yardstick to measure the overall performance of the concern.
YEARS 2012 2013 2014 2015 2016
Equity Share Capital 26.54 26.58 26.61 26.61 26.61
Face value of each shares 2.00 2.00 2.00 2.00 2.00
Profit After Tax 63.66 77.28 71.26 67.64 76.89
Table 4.22

97
Solution:-The Earning Per Share Ratio is calculated (Mar 2012) as follows:
Profit after Taxes = 63.66
Equity Share Capital = 26.58
Face value = 2
26.58
2
No. of Equity Shares = 13.29
63.66
13.29
EPS = 4.80
Face value = 2
26.58
2
77.28
13.29
EPS = 5.82

98
Face value = 2
26.61
2
71.26
13.31
EPS = 5.36
Face value = 2
26.61
2
67.64
13.31
EPS = 5.08

99
Face value = 2
26.61
2
76.89
13.31
EPS = 5.78
The diagrammatic presentation of EPS is shown on the next page.
YEARS 2016 2015 2014 2013 2012
Basic EPS (Rs.) 5.78 5.08 5.36 5.82 4.80

100
Interpretation:
1. The shares are normally purchased to earn dividend or sell them at a higher price
in future. EPS figure is very important for actual and potential common
stockholders because the payment of dividend and increase in the value of stock
in future largely depends on the earnings of the company. EPS is the most widely
quoted and relied figure by investors. In most of the countries, the public
companies are required to report EPS figure on the income statement. It is usually
reported below the net income figure.
2. The Earning Per Share Ratio is highest in the year 2016 i.e. Rs 5.78 . There is no
rule of thumb to interpret earnings per share. The higher the EPS figure, the better
4.8
5.82
5.36
5.08
5.78
0
1
2
3
4
5
6
7
2012 2013 2014 2015 2016
EPS
Fig 4.14 EPS

101
it is. A higher EPS is the sign of higher earnings, strong financial position and,
therefore, a reliable company to invest money. For a meaningful analysis, the
analyst should calculate the EPS figure for a number of years and also compare it
with the EPS figure of other companies in the same industry.
3. The Earning Per Share Ratio is highest in the year 2012 i.e. Rs 4.80
4. A consistent improvement in the EPS figure year after year is the indication of
continuous improvement in the earning power of the company.
Earning Per Share
Table 4.24
The diagrammatic presentation of EPS is given on the next page.
YEARS 2012 2013 2014 2015 2016
Radico Khaitan 5.78 5.08 5.36 5.82 4.80
United Spirits 26.21 24.53 -356.60 -134.62 67.51
GM Breweries 14.78 14.88 23.02 15.93 49.85

102
SUMMARY
Radico Khaitan
5 26.84 5.368 0.39488
United Spirits 5 -372.97 -74.594 157.042
GM Breweries 5 118.46 23.692 13.4314
-400
-375
-350
-325
-300
-275
-250
-225
-200
-175
-150
-125
-100
-75
-50
-25
0
25
50
75
100
2012 2013 2014 2015 2016
Radico Khaitan
United Spirits
United Breweries
GM Breweries
Fig 4.15 EPS COMPARISON

103
ANOVA
Between Groups 29,343.839 3 9,781.280 1.575
0.234
Within Groups 99,392.186 16 6,212.012
Total 128,736.025 19
Interpretation
There exists not significant difference between Earning Per Share Ratio of Radico
khaitan, United Spirits, United Breweries, GM Breweries, Regarding their Current Ratio.
b). TOTAL ASSETS TURNOVER
The Total Assets Turnover Ratio measures how productively the firm is managing all of
its assets to generate Sales. This ratio is calculated by dividing Sales by Total Assets.
FORMULA:-
Total Asset Turnover =
Sales
× 100
Total Assets
YEARS 2012 2013 2014 2015 2016
Net Sales 1,097.77 1,217.28 1,451.69 1,488.39 1,543.10
Total Assets 1,659.14 1,803.05 2,015.71 2,087.69 2,145.50
Table 4.25
Solution:-The is Total Asset Turnover calculated (Mar 2012) as follows:
Sales = 1,097.77

104
1,097.77
× 100
1,659.14
= 66.17%
Sales = 1,217.28
1,217.28
× 100
1,803.05
= 67.51%
Sales = 1,451.69
1,451.69
× 100
2,015.71
= 72.01%
Sales = 1,488.39
1,488.39
× 100
2,087.69
= 71.29%

105
Sales = 1,543.10
1543.10
× 100
2145.50
= 71.92%
Table 4.26
66.17
67.57
72.01
71.29
71.92
63
64
65
66
67
68
69
70
71
72
73
2012 2013 2014 2015 2016
Asset Turnover Ratio (%)
YEARS 2012 2013 2014 2015 2016
Asset Turnover Ratio (%) 66.17 67.51 72.01 71.29 71.92
Fig 4.16 ASSET TURNOVER RATIO

106
Interpretation of Asset turnover ratio:-
1. The Asset turnover ratio is highest in the year 2014 i.e. 72.01. A high asset turnover
ratio indicates greater efficiency.
2. The Asset turnover ratio is lowest in the year 2012 i.e.66.17. A low asset turnover
ratio indicates inefficiency, or high capital-intensive nature of the business. A low
total asset turnover can indicate many problems. The firm may have unsold
inventory and may be finding it difficult to sell it fast enough. There could be a
problem with receivables, as the firm may have a long collection period. The firm
may also not be under utilizing its fixed assets. Reading this ratio along with other
ratios will provide a more clear picture about the firm.
c).WORKING CAPITAL TURNOVER RATIO:-
This ratio highlights the effective utilization of working capital with regard to sales. This
ratio represent the firm's liquidity position. It establishes relationship between cost of
sales and net working capital. This ratio is calculated as follows :
Working Capital Turnover Ratio =
Net Sales
Working Capital
Working Capital = Current Assets - Current Liabilities
Table 4.27
YEARS 2012 2013 2014 2015 2016
Net Sales 1,097.77 1,217.28 1,451.69 1,488.39 1,543.10

107
Solution:-The Working Capital Turnover Ratio is calculated (Mar 2012) as follows:
Net Sales = 1097.77
= 980.73–563.33
= 417.40
Working Capital Turnover ratio =
1097.77
417.40
= 2.63 times
Net Sales = 1217.28
=1119.45–597.67
= 521.78
1217.28
521.78
= 2.33 times
Net Sales = 1451.69
= 1240.18–735.09
= 505.09
Working capital turnover ratio =
1451.69
505.09

108
= 2.87 times
Solution:-Working Capital Turnover Ratio is calculated (Mar 2015) as follows:
Net Sales = 1488.39
= 1319.99–854.27
= 465.72
1488.39
465.72
= 3.19 times
Net Sales = 1543.10
= 1292.28–960.78
= 331.50
1543.10
331.50
= 4.65 times
YEARS 2012 2013 2014 2015 2016
Working Capital Turnover Ratio 2.63 2.33 2.87 3.19 4.65
Table 4.28

109
Interpretation of Working Capital Turnover Ratio:-
1. It is an index to know whether the working capital has been effectively utilized or
not in making sales.
2. The Working Capital Turnover Ratio is highest in the year 2016 i.e. 4.65. A
higher working capital turnover ratio indicates efficient utilization of working
capital, i.e., a firm can repay its fixed liabilities out of its working capital.
3. The Working Capital Turnover Ratio is lowest in the year 2013 i.e. 2.33. A lower
working capital turnover ratio shows that the firm has to face the shortage of
working capital to meet its day-to-day business activities unsatisfactorily.
Working Capital Turnover ratio
2.63
2.33
2.87
3.19
4.65
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
5
2012 2013 2014 2015 2016
Working Capital Turnover Ratio
YEARS 2012 2013 2014 2015 2016
Radico Khaitan 2.63 2.33 2.87 3.19 4.65
United Spirits 1.96 2.26 2.05 2.11 3.53
United Breweries -2.30 -4.08 -3.23 -3.02 -3.78
GM Breweries -5.46 -4.99 -7.10 -7.28 23.70
Fig 4.17 WORKING CAPITAL TURNOVERRATIO
Table 4.29

110
SUMMARY
Radico Khaitan
5 26.84 5.368 0.39488
United Spirits 5 -372.97 -74.594 157.042
GM Breweries 5 118.46 23.692 13.4314
-10
-7.5
-5
-2.5
0
2.5
5
7.5
10
12.5
15
17.5
20
22.5
25
2012 2013 2014 2015 2016
Radico Khaitan
United Spirits
United Brewerie
GM Breweries
Fig 4.18 WCTR COMPARISON

111
ANOVA
Between Groups 29,343.839 3 9,781.280 1.575
0.234
Within Groups 99,392.186 16 6,212.012
Total 128,736.025 19
Interpretation
There exists not significant difference between Radico khaitan, United Spirits, United
Breweries, GM Breweries, Regarding their Current Ratio.

113
FINDINGS & CONCLUSION
Liquidity Ratios:
1. Current ratio is not that must satisfactory as it is not meeting the ideal
requirement. But in each year Current Assets are more than Current liabilities
which shows the company in a position of paying its liabilities.
2. The quick ratio is ideal but it is continuously declining. The company needs to
find reason of such decline.
Conclusion: The Company’s liquidity position is satisfactory but there is scope
for better results.
Profitability Ratios:
1. After the decline of 2014 the company is restoring its profitability condition as
Gross Profit Ratio, Operating Profit Ratio & Net Profit Ratio are seen to be
increasing in the years after 2014.
2. The Return on Investment & Return on Assets has been stable in the last five
years as it varies between 8% to 10% & 3% to 4% respectively in all the years.
This highlights consistency in investment returns.
3. In the present year return on Capital Employed has restored from the downfall
witnessed in 2014 and 2015. This is positive sign about the performance of the
company.
4. The shareholders of the company should be satisfied because the company has
been earning a promising stable earning per share which ranges between Rs. 4 to
Rs. 5.The highest EPS is observed in 2016 which is a good indicator of the
company’s financial position as well as marketing position in the recent year. But
overall, industry wide the EPS of the company is low.
Conclusion: The Company’s profitability position is quite satisfactory.

114
Turnover Ratios:
1. The Assets turnover ratios represent a positive sign for the company because the
sales are able to cover a large portion of total assets in the recent.
2. The company’s satisfactory Working Capital Turnover Ratio is reflecting that the
company is able to effectively utilize it sales.
Conclusion: The company’s turnover ratios are indicating that company is in a
healthy position.

115
CHAPTER – 6
SUGGESTIONS & LIMITATIONS
OF STUDY

116
SUGGESTIONS
1. The company should keep a check on its Current liabilities in order to make the
current Ratio an ideal one.
2. The company should strive to keep a check at its Quick Ratio as it is declining
when compared to company’s competitors .This can be done by controlling
Current liabilities.
3. The company’s profitability is stable on individual level as well as industry wide.
It is suggested to ensure maintenance of this stability or profitability. Also the
company should take steps to further improve profitability.
4. EPS is low as compare to other companies in the industry. The company should
pay attention towards it so as to retain its shareholders in the long run.

117
LIMITATIONS OF THE STUDY
1. The time provided for the project was not sufficient. For conducting a detailed
analysis more time is required.
2. The project provides a general overview of the company and not specific one.
3. Ratio analysis in itself has various limitation like it is based on qualitative data and
it ignore quantitative data. So while judging a company’s performance, one cannot
completely rely on ratios.
4. Confidentiality regarding data collection was faced. So the study is mostly based on
secondary data.
5. Restrictions on Behalf of the company.

118
CHAPTER – 7
BIBLIOGRAPHY

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