financial performance of hsl

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INTRODUCTION TO THE STUDY The area of financial management in our present day economy, finance is defined as the provision of moneyat the time when it is required. Finance may be defined as the art and sciences of managing money. Finance holds key to

all human activity. No business activity can ever be pursued without financial support. Finance is the only common

decision denominator for a vast range of corporate plan must be expressed in financial terms. The major areas of finance

are:

1. Finance services.

2. Managerial Finance (or) corporate Finance (or) financial management.

Financial management is the managerial activity, which is concerned with the planning and controlling of the

firms financial resources through it was a branch of economics till 1890 as a separate discipline it is of recent origin. Still

it has no unique body of knowledge of its theoretical concepts even today. Of great interest to academicians because the

subject is still developing and there are still certain areas where controversies exit for which no unanimous solutions

have been reached as yet. Practicing managers are interested in this subject because among the crucial decisions of the

firm are those which relate to finance and on undertaking of theory of financial management provides them with

conceptual and analytical incites to make those decisions skillfully.

The areas of financial management have undergone Far- reaching changes over a time. The finance function

assumes a lot of significance in the modern days in the view of increased size of business operations and growing

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complexilities associate there to. A firm performs finance functions simultaneously and continuously in the normal

course in the business.

They do not necessarily occur in a sequence. Finance function call for skillful planning, control andexecution of business activities. The financial statements provide a summarize view of the financial position and

operation of the organization. Therefore much can be learnt about the organization by a careful examination of its

financial statements or they are the invaluable documents regarding the financial performance of an organization. This

analysis of financial statements is an important id to financial analysis. The focus on key figures in the analysis of

financial statements is a process of evaluating relationship between components parts of financial statements to obtain a

better understanding of the financial position and performance.

Managements of the organization are confronted with taking decision about source of finance its capital

structure and credit policy its application of funds. In order to take strategic decision the management needs to asses the

progress and performance of the organization. Working capital, cash flow analysis, funds flow analysis and ratio analysis

are the some of the measurements to the financial performance.

A study of financial management with particular reference to the financial performance in the large public

sector undertaking is a challenging task and Endeavor in this direction is to analyze the funds flow statements, cash flow

statements, ratio analysis and working capital is the amount required to meet day to day operation at the organization. An

absence of this makes the functioning of the organization blind. A proper study on financial performance results in

prevention of Mis-management and Mis-utilisation of funds.

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SCOPE OF THE STUDY:Firms create manufacturing capacities for production of foods some services to consumers. They sell their

goods or services to earn profit. They raise funds to acquire manufacturing and other facilities. Thus, the 3 most

important activities of the business firms are:

Finance

Production

Marketing

The firm secures whatever capital it needs and employs if (finance activity) in activities which generate

returns on invested capital (production and marketing activities).

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1. The scope of this project report is limited to only possible calculated ratio for analyzing the financial position. The

calculations of ratios are based on the financial statements of the last five years only [2003 to 2008].

2. there are 4 important tools for commenting on the results of the analysis of financial performance namely working

capital, funds flow statement, cash flow statement and ratio analysis, comparison with standards of shipping

industry were not available, comparison is made with the general standard.

3. Financial statements of the other shipping companies were also no available so the least two basis of comparison

were not used in this report. Only trend analysis method is used in this report for comparison. This is useful to

know the financial position of the company.

OBJECTIVES OF THE STUDY:The present study in Hindustan shipyard limited has been undertaken to evaluate the overall performance by

applying theoretical concepts to a particular situation in Hindustan Shipyard Limited and to compare and correlate the

actual achievements with the theoretical conclusion. The efficiency of the financial performance is determined by the

efficiency administration on its components.

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The major objectives of the study:

To know the process of working capital management of Hindustan Shipyard Limited.

To study the cash inflow and outflow of Hindustan Shipyard Limited.

To study the funds inflow and outflow of Hindustan Shipyard Limited.

To examine the various ratios of Hindustan Shipyard Limited.

To measure the financial performance and financial position of Hindustan Shipyard Limited.

This study is to determine the efficiency and effectiveness of the management in each segment of the finance

activities.

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METHODOLOGY:Methodology is a systematic procedure of collecting information in order to analyze and verify a

phenomenon. The present study is based o data collected from primary and secondary sources.

Primary Data:It is the information collected directly without any references. Primary data consists of information obtained

from interaction and discussion with concerned official of the organization to elicit their opinions on various relevant

matters. In the process of interaction with officials it is planned to confirm through secondary sources.

The Data Collection Includes: Conducting personnel interviews with the concerned officer of finance department of Hindustan Shipyard

Limited accounts department.

Secondary Data:Secondary source of data includes collection of data through study of official records, journals, annual

reports, administration reports and various magazines related to Hindustan Shipyard Limited.

The Data Collection Includes: Collection of required data from annual reports of Hindustan Shipyard Limited.

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References from textbooks and journals relating to financial management.

Statistical tools have been applied for the information so collected. Application of statistical techniques helps

to draw useful conclusions and to enable to give appropriate suggestion to improve the efficiencies of the organization.Diagrammatic Representation:

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DATASOURCE

PrimarySources

SecondarySources

ManagementRespondents

Inside the

Company

Outside theCompany

AnnualReports

Textbookandwebsites

Personalobservation

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PERIOD OF STUDY

The period of study was 2 months and it is from 15th may to july 15th 2010.

LIMITATIONS OF THE STUDY:Though the project is completed successfully a few limitations can be observed in the study.

The time allotted for the project study is too short, to depict a clear and real picture of the company and its

operations.

Reliability on usage of secondary data.

The study was conducted with the data available and the performance was made accordingly.

Some aspects of financial information were not available because of the confidentiality of the Hindustan Shipyard

Limited.

Interpretations are based on the valid its of the data collected.

During the period of analysis the companys current financial information is not available.

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more than 10,000 DWT size crafts, in spite of so many shipyards in the country, shipbuilding industry is in doldrums

partly because of very high cost of indigenous ships, unduly long delivery periods and poor viability of the shipyards and

because of the ability of foreign shipyards.

The foreign shipyards to construct ships at marginal cost and shorter delivery period consequent on world-

wide recession in shipbuilding industry, hence, it is not proposed to set up any new shipbuilding yards in the 8 th plan.

Efforts would, however be made to improve productivity and viability of the existing yards. Certain other measures pricing

formula as recommended by BICP, treating the shipbuilding industry as 100% export oriented industry with all related

benefits, allowing duty free imports up to a limit of 60% of the realizable price of the vessel, providing working capital

loans to shipyards on short terms etc.

So, the government of India used to change intension towards their activity from shipbuilding to ship repair

because ship repair activity is far more profitable than shipbuilding. At the same time, to reduce outgo of foreign

exchange (to the tune of Rs.50 cores every year) on account of Indian vessels repairs at foreign shipyards can be avoided

if domestic capabilities are strengthened. Keeping this in view, most of the units in this sector re drawing up plans to

increase their capacities. The government has recognized the strength of this industry and given it the states of deemed

export industry. A number of concessions, as available to 100% export oriented units, have been provided.

INDIAN SHIPBUILDING INDUSTRY:There are 28 shipyards in India, which include 7 large shipyards, which fall under public sector control, which

offers a wide range of products and services. Indian shipyards are eligible for government subsidy for construction of

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ocean going vessels to maintain competitive edge in international competition. The public sector shipyards under the

administrative control of the ministry of defiance (MOD) are:

Garden Reach Shipbuilders and Engineers (GRSE)

Megaton Dock Limited (MDL)

Goal shipyard Limited (GSL).

The public sector shipyards under the administrative control of the Ministry of shipping are:

Hindustan shipyard Limited (HSL).

Cochin Shipyard Limited (CSL)

Hough Dock and Port Engineers Limited(HDPE) Central Inland Water Transportation Limited (CIWTC)

Investment Opportunities in Shipbuilding Facilities at par with 100% Export oriented units for Ship Repairs Industry.

Duty free import of raw materials components, consumables and spares for shipyards constructing vessels under

bond for exports.

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Indian shipping companies placing orders on Indian shipyards are permitted to raise funds through External

Commercial Borrowings. 30% subsidy for Indian shipyards from Government for both domestic and exports orders on ocean going vessels.

SHIPBUILDING AND SHIP REPAIR:There are 32 shipyards including 7 Government owned companies engageed in shipbuilding and ship

repairs. They offer a wide range of products and services. Indian shipyards are eligible For government subsidy for

construction of ocean going vessels to maintain competitive edge in international competition.

Ship Building and Ship Repairs Wing (SBR Wing): SBR wing, the apex technical organization with in the Ministry is the nodal authority for developmentof shipbuilding and ship repairs industry. It offers expert advice on a range of subject concerning the industry. Investment

opportunities in shipbuilding ship repairs in India:

Facilities at par with 100% Export oriented units for Ship Repairs Industry.

Duty free import of raw materials components, consumables and spares for shipyards constructing vessels

under bond for exports.

Indian shipping companies placing orders on Indian shipyards are permitted to raise funds through External

Commercial Borrowings.

30% subsidy for Indian shipyards from Government for both domestic and exports orders on ocean going

vessels.

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AREAS IDENTIFIED FOR PRIVATE SECTOR PARTICIPATION IN INDIA:

Selling up of going ventures in shipbuilding and ship repair.

Setting up of ship repair facilities at its available land and water front areas of ports.

Building and repairs of Hi-tech vessels such as oil Tankers and container-cum-cargo vessels.

RESEARCH CENTERS FOR SHIP DESIGN:Government offers grant in-aid to educational and Research institutions for carrying out R & D schemes on a

project-to-project basis.

At present seven R & D projects are in progress involving a grant in aid of Rs.103.62 lakhs.

National Ship Design And Research Center (Nsdrc):Visakhapatnam based NSDRC administered by the ministry offers support to Indian shipbuilding and ship

repair industry in the fields of ship design, research in Hydrodynamic structures, vibrations, ocean/water transport

Economy, shipyard management.

THE MAJOR NINE SHIPYARDS:

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COCHIN SHIPYARD:REAR ADMIRAL R. WIR, chairman and managing director.

Cochin is one of the largest shipyards, in India and is the only yard capable of building ships up to about 1,25,000DWT. It was established in 1972 under technical collaboration with Mitsubishi heavy industries of Japan. The

yard has the distinction of having the international standards organization (ISO) 9001 certification for shipbuilding,

ship repair, and marine engineering training. The company has consistently shown a profit. In the latest reporting year

(2000), there was a net income (including subsidy) of US$9.5 millions.

HINDISTAN SHIPYARD:D. K. VARMA, chairman and managing director.

The Hindustan Shipyard was established in 1941. The Government took over operation of the facility in 1952

and acquired ownership in 1962. The facility was the 1st yard in India to be awarded ISO 9001 certification for quality

assurance. The shipyard has a work force of about 5000 that are capable of processing about 1600-1700 tons of

steel/month.

The main features of the yard are:

Three slipways of 30,000DWT capacity, each

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Building dock of 80,000DWt capacity

Outfit jetty and ship quay of 457 meter length.

A Two berth wet basin.

HOOGHLY DOCK AND PORT ENGINEERS:M.M. KUILA, chairman and managing director.

It is the one of the oldest shipyard in India and has two product units: the salka works and the nazirgunga for

ship repairs and for new construction. The installed capacities in shipbuilding are 1100 tons/annum, and in ship repair

about 125ships/annum. In 2001 the yardsmanagement decided to increase emphasis on ship repairs, and revamped arepair unit at kid deport, near the Calcutta Dock system.

CENTERAL ISLAND (RAJABAGAM) DOCK YARD:S.C.DUA, Chairman and managing director.

It is the Calcutta dock system 3 miles down stream (on the Hooghly River) of the Calcutta dock system. The

facility has 3 dry docks for construction and repair of small and medium size vessels. The operation has integrated

facilities for hull fabrication, casting operations, machining, repair and outfitting of machinery and equipment, there

are about 1700 employees. The yard was established in 1972 and consistently turns a small profit from its operation. In

2000, the net income which was largely from ship repair was Rs.39 cores (US$ 8.3 million). It has been recommended

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that the operation be privatized as quickly as possible, there being no strategic or commercial rationale for public

ownership.

GARDEN REACH SHIPBUILDING AND ENGINEERS:REAR ADMIRAL VOHRA, Chairman and managing director.

The company was originally organized in 1884 as a small factory on the Hooghly River, near Calcutta. It was

taken over by the government in 1960. The enterprise was gradually expended and modernized to meet growing

maritime needs especially those of the Indian Navy and Coast guard.The company has 6 facilities in and around

Calcutta, and one operation in Bihar. Most of the facilities are ISO 9000 qualified. There is a 160-meter dry dock for new

construction and repair. The dock can handle ship up to 20,000DET. In additional to the dry dock garden reach has

another building berth (162 m 825 m) and two slipways (90m*77m*44m) with supporting cranes. There is a repair and

over haul shop for over hauling medium and slow speed diesel engines.

MAZAGON DOCK LIMITED:REAR ADMIRAL D.V.TANEJA, director and shipbuilding.

MOZAGON DOCK (MDL) is the Largest shipyard in India, employing over 10,000 workers. The yard has

designed and constructed surface combatants (6700 ton destroyers), submarines, cargo vessels, tankers, tugs,

dredges and offshore structure. The yard has ISO 9001 accreditation. An indication of the capabilities of the yard isevidenced by the fact that the Indian Navy has designed it as the facility to build two attack submarines that would be

delivered by 2005.

ABG SHIPYARD GROUP:

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Mr.R.NAKRA, managing director.

ABG is the largest privately owned shipyard in India, and is considered the most efficient. Its annual

sales/employee monetary statistic is about Rs. 7, 50,000 (apex US$ 16.150), a number much better than that at any

other yard in the country. [As a comparison, the average revenue per employee in the U.S. shipbuilding industry is

about $1, 15,000].

BHARATHI SHIPYARD LIMITED:Mr.V.KUMAR, director and Mr.P.C.KAPOOR, director.

Bharathi shipyard is one of the two leading shipyards in the private sector. It is engaged in the design and

construction of sea and coastal craft up to a maximum of approximately 25 meters in length. The wet basic is reported

to have a capability of accommodating up to 8 vessels simultaneously.

PRIVATE SHIPYARDS IN INDIA:While the big public sector shipyards in the country are smarting under a frail under book position, their

smaller counterparts in the private sector that are engaged in building smaller vessels are being bolstered by a surge in

demand interestingly, the private shipyards are getting an increasing flow of orders from foreign companies for smallervessels, as world wide the big shipyards are full with new building orders. while the PSU shipyards engaged in building

large vessels are non-competitive in the global market due to their cost over-runs and Government restrictions, it makes

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sense for foreign ship owners to place orders for smaller vessels on Indian yards due to the cheap labor costs and

efficient working an industry analyst pointed out.

There are about 30 to 35 shipyards in the private sector in the country of which are the leading players.

Bharathi Shipyard

ABG Heavy Industry

Western India

Chowgule and stebma

Most of them especially Bharathi shipyard and ABG Industries are sitting on rich order books. While the ABGshipyard has an order book of RS.1, 300 cores involving some 25 ships. Bharathi shipyard doubled its sales of ships from

Rs.610 cores in 2003-2004 to Rs.1, 213 cores last fiscal. Only recently we bagged two contracts from the Bourbon Group

of France for supply of two multi-purpose long-platform supply vessels, the contract value for each vessel being $7.9

million. The vessels are scheduled for delivery in June 20065 and September 2006, an official of Bharathi shipyard said.

The healthy trend is prompting many private shipyards to think in terms of expansion or acquiring other

shipyards. ABG for example is investing RS.375 cores for setting up a new shipyard in Gujarat. Work has already started

and it is expected to be operational by 2006. We see interesting possibilities in the shipbuilding and ship repair market in

the coming months. Mr. Rishi Agarwal, Managing Director of the company told Business Line.

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Along with the shipbuilding industry, the ship repair industry is also riding on an upbeat market. This is so

especially in the wake of the growing fear of pollution and stricter norms and regulations on ocean going vessels. We

expect a further spurt in ship repair orders in the coming years, says Mr.S.K. Shahi, chairman of SKS (ship) Limited. The

company is planning to set up a new ship repair unit with Danish collaboration. While it is the boom in the freight market

that is the primary driver of growth in the ship building market, the cheap labor costs in India are also prompting foreign

companies to have their ships built here.

The labor cost per worker in India is at present estimated at $1,192 per year, while it is $ 10,743 and $21,317

per day in Korea and Singapore (both leading shipbuilding nations) respectively.

COMPANY PROFILE

Company name : Hindusthan shipyard limited

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Type : public sector undertaking

Establishing : 1940

Head quarters : Vishakapatnam

Quality : ISO 9000:2001

Tag line : A pioneer. . . . .in time with the changing time

Products : offshore platform, patrol boat

Services : ship design, ship building, ship repair.

Web site : www.hsl.nic.in


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The ascidia steam company limited was sequestered in Bombay (presently Mumbai) in March 1919. Sri NAROTHAMMARARJEE was the chairman of the founders of the country. Sri NAROTHAM MARARJEE and Sri WATCHAND

HIRACHAND invited MR. KNUSEN a well known ship building except from united kingdom is 1920, to visit India. He was to

formulate a plan for establishing a shipyard project, but he died suddenly. Scandias were unable to make concrete

progress till 1990. In 1940 m/s ALEXANDER GINN, partners and LONDON recommendation on the shipyard project. After

examining various sites at Visakhapatnam for establishing the shipyard and submitted their reports in march 1941, to

draw inference keeping in view the above objective a period of five years that is from 1993-94 to 1997-98 is consider. The

annual performance reports and other printed reported, dated of M/s Hindustan shipyard Limited, Visakhapatnam is

considered as secondary data.

The foundation stone was laid on 21st June 1941 by Sir BABU RAJENDRA PRASAD, the president of India

Nation congress with blessing of Mahatma Gandhi. The landed area is about 55 acres; the site is provided

accommodation for 8 launching berths (slip ways) and for associated workshop. Construction works were stopped due to

the st6acks of warplanes in April 1942. it was resumed in 1943 but progress could be achieved only after cessation of

hostilities in 1945.

The Government provided impetus for the shipping industry by resolving on July 12, 1947. India like other

important maritime countries must adopt a dynamic policy with regard to here shipping. The reconstruction policy

subcommittees report in 1947 recommended that India must builder own Nation shipping line to carry her own cargo


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overseas, the sub-committee also recommended that entire coastal trade ought to be forth with reserved for national

shipping and nation bottoms should at least carry 50% of her maritime trades.

TRANSFER FROM PRIVATE TO PUBLIC SECTOR:After building eight ships of JALA series, Scandias found it difficult to turn the shipyard without the

financial assistance form the Government and appeal to Government in 1948 for payment of construction different

subsidy. In 1950, the financial position of the yard was so critical that large scale retrenchment and even closure of the

yard were apprehended on 16th March Sri SHYAMA PRASAD MUKHERJEE, Ministry in Parliament.

The Visakhapatnam shipbuilding yard is a nation concern it is the duty of any national Government, to see

that it is not compelled to down, not in a single civilized country had the ship building industry proposed without such

subsidy or assistance from the state. Other counter had spent millions of pound for year on encouraging shipbuilding.

.

Finally, it was decided by the Government, that it would go ahead with the take over proposal. A new

company under corporate of THE HINDUSTAN SHIPYARD LIMITED was registered on 21st Jan 1952 with the

Government, holding two-third. Scandias signed on an agreement for the above sale on 23 rd Feb 1952. The HSL took

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possession of Visakhapatnam yard on 1st march 1952. In July 1961 the shares held by the Scandias were also acquired by

the Government of India because the company realized that it could not keep the industry going. Since then the HSL

continues to be fully owned and controlled as a Government company.

FEATURES: Steel processing capacity 1600 tons per month.

Three slipway of 30,000 DWT.

Outfit jetty and ship, 457 m.

Wet basin has 2 berths.

DEPARTMENTS IN HSL:The departments can be mainly categorized as follows:

1. PRODUCTION DEPARTMENT

2. ADMINISTRATION DEPARTMENT

3. SERVICE DEPARTMENT

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1. PRODUCTION DEPARTMENT:The production department mainly consists of the following sections.

I) HULL SHOP: It deals with material preparation like plates used for the construction of ship.

II) PREFABEICATION SHOP:It deals with ship parts like the funnel, wheel house, and engine roots.

III) ERECTION DEPARTMENT:Assembling is the ship parts to bring the complete shape

IV) WELDING DEPARTMENT:It deals with attaching the parts to make complete ship work.

V) BLACKSMITH DEPARTMENT:It deals with rallying work, leader work and flooring work.

VI) SHEET MENTAL DEPARTMENT:It deals with air conditional works.

VII) RIGGING DEPARTMENT:It is holding the ships with repairs.

VIII) PAINTING DEPARTMENT:Painting is the ship with required colors.

IX) ELECTRICAL DEPARTMENT:

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It is a department to fix all the electrical equipments.

IV) PLUMBING DEPARTMENT:Plumbing works to trappers.

V) ENGINEERING DEPARTMENT:Facilitating and assembling the main engine.

QULITY ASSURANCE ISO- 9001 CERTIFECATE:Hindustan Shipyard Limited is the first shipyard in the country the

ISO-9001 quality accreditation certificate awarded by LRGA London with accent placed on quality improvement in the

construction, Hindustan Shipyard Limited was awarded ISO-9001 certificate by Lloyds register of quality assurance,

London for construction.

ISO-9001 QUALITY POLICY:To produce consistency Quality Product to national and international standards in time for customer

satisfaction at optimum cost.

2. ADMINISTRATION DEPARTMENT: The administration department consists of the following sections.

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I) Accounts department.

II) Personal department.

III) Internal Audit department.IV) General department.

I) ACCOUNTS DEPARTMENT:The following are the sections in accounts departments.

a) Cost Accounts.

b) Bills and Insurance.

c) Provident fund.

d) Salaries section.

a) COST ACCOUNTS:Cost Accounts deal with compilation of Final Accounts, Budgets, and Cost reports to ministry, Direct and

indirect taxation that is central excise, income tax and sales tax.

b) BILLS AND INSURANCE:Bills and Insurance deals with payment of bills, that is passing of bills and insurance of materials etc.

c) PAY ACCOUNT SECTION:

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Pay Account section deals with the payment of wages, salaries, provident fund gratuity, VR and up to 5000

only. The provident fund is allowed and remaining goes to the Hindustan Shipyard Limited provident fund trust.

II) PERSONAL DEPARTMENT:

a) Staff cell.

b) Work man cell.

c) Executive cell.

Staff cell deals with the staff of 958 members and work man 2694 and officers on executive of 386 totally

strength of Hindustan Shipyard Limited comes to 3589.

Acts which are present in the HSL are:Promotions, leave management, medical reimbursements, canteen management, facilities, general

administration, shifts, time keeping etc.

III) INTERNAL AUDIT DEPARTMENT:This department checks the values of inventories and bills different braches of accounts are awaited

annually.

IV) GENERAL DEPARTMENT:

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This is responsible for procurement of the stationery and functional goods other incidental items.

3. SERVICE DEPARTMENT:The service department consists of the following sections.

I) DESIGN OFFICE:It deals with ship design and off-fit design etc, design office is also called drawing office.

II) PRODUCTION PLANNING DEPARTMENT:It deals with the way how to execute the work and they design the flow charts of the works.

III) QUALITY CONTROL DEPARTMENT:It deals with the certificate of IRS, LRS works relating to the ISD certificate and inspection of material and

stores is also done by this section.

IV) PURCHASE DEPARTMENT:It deals with purchase of all types of materials

V) GENERAL STORES:General stores are those stores which will be coming to this store after the inspection of material and this

generally maintain like material receipts reports, material requisition and bin cards etc.

VI) CLEARANCE DEPARTMENT:It deals with receipts to imported goods for clearance.

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VII) MAINTENANCE DEPARTMENT:It deals with maintenance of machinery.

VIII) CIVIL ENGINEERING DEPARTMENT:It deals with the construction of civil works and maintenance of colony housing estate.

IX) MEDICAL AND HEALTH DEPARTMENT:It deals with medical aspects like giving medicines to the sick employees and family etc.

X) SECURITY DEPARTMENT:It deals with only the HSL security with supervisory to safeguard the organization.

BOARD OF DIRECTORS:1. CMDE NARESH KUMAR, VSM --- Chairman and Managing Director.2. SRI RAJNEESH GUPTA, IAS --- part time official Director.

3. SRI K.V.DRAHMANANDA REDDY, IRAS --- part time official Director.

4. CAPT.P.V.K. MOHAN --- part time Non-official Director.

The Board is constituted by the Government of India with senior officials, civil servants drawers from the

ministry of shipping and transport ministry of finance and other department/agencies of the Government senior

executives of the port trust are also appointed as directors.

ACTIVITIESS OF HINDUSTAN SHIPYARD LIMITED:

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According to the 51st annual general meeting of the company held for the year 2002-03, the division wise

performance of the Hindustan Shipyard Limited is as follows.

1. SHIP BUILDING:Ever since the shipyards first ship S.S.JALA USHA An 8000 DWT stream ship was launched on 14th march,

1948 by the prime minister of India PANDIT JAWAHARLAL NEHRU. Hindustan shipyard Limited has come a long way in

building a range zero ships numbering more than 144 aggregating to over 1 million dead weighted tonnage. the range

varied from conventional bank carries to general cargo and supply vessels, petrol vessels to highly sophisticated drill

ship Iceland defense sectors. a part from conventional merchant shipping SAGAR BHUSHAN a highly sophisticated and

complex drill ship was constricted first time in India. for ONGC is just an example of shipyards capability for hi-tech

products.

Each assignment is taken up as a new challenge to meet the requisite standard quality, time and cost

constraints; technology of gradation, methods improvement, well coordinated input services and dedicated efforts made

the proof achievements of Hindustan Shipyard Limited possible.

2. INFRASTRUCTURE FOR SHIP BUILDING:The Hindustan Shipyard Limited is spread over an area of about 300000 square meters work shop and

facilities are systematically planned and functionally laid out to ensure unidirectional flow of material. The steel

processing material consists of a stock yard to hold 30000 tones of steel. A modern plate and certain pressure, self

evaluating trucks capable to handle flock up to 250 tones and large prefabrication cranes of adequate capability.

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The hull construction facilities include a modern covered building dock with intermediated gate facility and

three shipways. Cutting, welding and assembling of steel to any specification are handling with care and accuracy by

skilled operations, which are continuously trained to upgrade their skills.

3. SHIP REPAIR DIVISIONS:Hindustan Shipyard Limited established full-fledged ship repair division with the commissioning of dry dock

during the year 1971. It has capability for handing vessels up to 70000 DWT. Hindustan Shipyard Limited ship repair

department has accomplished intricate jobs on variety of Naval vessels include sub marines, merchant ships oil rigs,

foreign and Indian flag vessels totaling about 1600 ships.

4. OFF SHORE PLATFORM DIVISION:Hindustan Shipyard Limited set up exclusive off shore platform yard (OPF) adjacent to main ship building

yard during the year 1985, as a captive yard to construct well head platforms for ONGC. The OPE yard has facilities forfabrication of two platforms per year. The man power exclusively trained for fabrication of platforms was diverted to main

yard to carry out ship building and ship repair works.

5. HUMAN RESOURCE IN HSL:Hindustan Shipyard Limited is a heavy engineering industry under public sector ad is under the

administrative control of ministry of surface transport. The employees are broadly categorized as officers, staff and

workmen. The present strength of the officers is 389. Staff is 952 and workmen are 2216, making a total of 3694 as on 1 st

Jan, 2006.

GROWTH OF THE SHIPYARD:

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The Hindustan Shipyard Limited emerged as an emblem of swadesh spirit. In spite of the fact that Indian

shipping since independence has increased eighteen flod and the country is on the top in shipping tonnage among the

developing countries. India still carries only about 20% of its total trade in India ships. It has to depend to a large extent

on foreign shipyard to meet its increasing demand of many types of vessels. Efforts to argument the ship building

capacity with in country are continuing.

Within the year of government take over Hindustan Shipyard Limited was realized that the ship construction

should be supplemented with repair work. Ship repairing is one of the few enviable industries where the customer brings

the foreign exchange to the door steps.

DATA ANALYSIS AND INTERPRETATION

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THEORITICAL FRAMEWORK O FINANCIAL PERFORMANCE

Financial Performance is a subjective measure of how well a firm can use assets from its primary mode of

business and generate revenues. This term is also used as a general measure of a firms overall financial health compare

similar firms across the same industry or to compare industries of sectors in aggregation. Financial performance is

measuring the results of a firms policies and operations in monetary terms. These results are reflected in the firms return

on investment, return on assets and value added, etc.

MESUREMENTS OF THE FINANCIAL PERFORMANCE:There are many different ways to measure financial performance, but all measures should be taken in

aggregation. Line items such as working capital, cash flow analysis, funds flow analysis and ratio analysis. Further more,

the analyst or investor may wish to look deeper into financial statements and seek out margin growth rates or any

declining debt.

1. Working Capital Management 2. Cash Flow Analysis

3. Funds Flow Analysis 4. Ratio Analysis

1) WORKING CAPITAL:

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Working capital refers to short term funds, the need to meet operating expenses. It is concerned with the

management of the firms current assets and current liabilities1. It relates to the problems that arise in attempting to

manage the current assets, current liabilities and their inter-relationship that exists between them. It a firm cannot

maintain a satisfactory level of working capital; it is likely to become insolvent and may even be forced into bankruptcy.

The concept of working capital has been a matter of great controversy among the financial wizards and they view it

differently. There is no universally accepted definition of working capital. Broadly there are two concepts of working

capital commonly found in the existing literature of finance.

Gross working capital.

Net working capital

Note:

Gross working capital referred as the total of current assets. It is also known as quantitative or circulating

capital. It refers to firms investments in short term assets such as cash, short term securities, accounts

receivables and inventories2.

Net working capital referred as the difference between the current assets and the current liabilities. It is

also known as quantitative concept of working capital.

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A firm is required to maintain additional current assets temporarily over and above permanent working

capital to satisfy cyclical demands. Any additional working capital apart from permanent working capital required to

support the changing production and sales activities is referred to as temporary or variable working capital.

2) CASH FLOW ANALYSIS:An analysis of cash flow of a concern during a period, presented in the form of a statement is known as cash

flow analysis. The cash flow statement can be for the past of can be a projection for the future5. The cash flow of the

concern in the near future, say for a period of 6 months of 1 year, can be prepared based on the past trends and

expectations of the concern regarding factors that would affect its cash receipts and cash payments. Such an estimate of

future cash flows is better termed cash budget5. Cash flow statement generally refers to the statement showing the

receipts (inflows) and payments (outflows) of cash during the period covered by two consecutive balance sheets. Cash

flow analysis enables the management to plan and co-ordinate the financial operations of the enterprise, and furnish the

basis for evaluating financing policies. It provides a barometer for ensuring the profitability of the business, and makes

financing problems of the business much more manageable.

Classification of cash flows:The model prescribed accounting standards, cash flow statement, classifies cash flows into 3 categories

namely Cash flow from operating activities, cash flow from investing activities and cash flow from financing activities6.

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i)Operating activities:Operating activities are those transactions which are considered in the determination of net income.

Examples of cash inflows in the category are cash received from debtors for goods and services, interest and dividendreceived on loan and investment. Examples of cash outflows in this category are cash payments for goods and services;

merchandise; wages; interest; taxes; supplies and others.

ii)Investing activities:Investing activities include acquisition of long term or Fixed assets; disposal debentures and other

securities; lending of money and its subsequent collection. Cash inflows from investing activities generally include cash

sales of property, plant, equipment and intangible assets, cash sales of investments in shares, debentures and other

securities, cash collection from borrowers. Cash outflows are purchase of shares, debentures and plant, equipment andother long term assets, loan given to other firms7.

iii)Financing activities:Financing activities are related to long term liability and equity capital. A firm engages in financing activities

when it obtains resources from owners, returns resources to owners, borrowed. Cash inflows include proceeds from

issue of shares and short term and long term borrowings. Cash outflows include repayments of loan and payments to

owners, including cash dividends. Repayments of accounts payable or accrued liabilities are not considered repayment of

loans under financing activities but are classified as cash outflows under operating activities.

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3) FUNDS FLOW STATEMENT:The funds slow statement describes the sources from which additional funds were derived and the uses to

which these funds were put. Significant technique of financial performance is funds flow analyze. Its designed to

highlight changes in the financial condition of a business concern between two points of time which generally conform tobeginning and ending financial statement dates. Funds flow statement is also termed as a statement of changes in

financial position, statement of sources and applications of funds, statement of changes in working capital,

statement of funds supplied and applied, statement of funds generated and expended, where got and where gone

statement, funds statement8. Thus, funds flow statement is a report which summarizes the events taking place between

the two accounting periods. It spells out the sources from which funds were derived and the uses to which these funds

were put. This statement is essentially derived from an analysis of the changes that have occurred in assets and liabilities

items between two balance sheet dates. In this statement, only the net changes are shown so that the outcome of a

transaction or of a series of transactions upon the financial condition of a business enterprise is reflected more sharply.

Importance of funds flow statements, a fund flow statement is an essential tool for the financial performance

and is of primary function management. The importance of funds flow statement is as follows:

With the help of funds statement, a firm can plan the deployment of its resources and allocates them among

various applications.

A project funds flow statement acts as a guide for future to the management the firms future needs of funds can be

projected well in advance and also the timing of these needs.

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A funds flow statement helps in explaining low efficiently the management the firms its working capital and also

suggests ways to improve working capital position of the firm.

Funds flow statement is a device that indicates the various means through which funds have been obtained, during a

specified period and the way they have been used. Simply, it show the different sources of procuring funds and their

varied application during that period it shows the inflow and outflow of funds9.

Funds flow statement is the statement of sources and application of funds. It is also called as funds where

got and where gone statement; Almond Coleman observed.

There are 4 steps involving in preparation of funds flow statement:

Statement of changes in working capital.

Calculation of Funds from operations

Finding out hidden information, if required

Finally preparation of funds flow statement10.

4) RATIO ANALYSIS:Ratios are among the best known and most used tools of financial performance. Ratio is defined formally as

the indicated quotient of two mathematical expressions. An operational definition of a financial ratio is the relationship

between two financial values.

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These become meaningful to judge the financial condition and a comparison. Ratios are very useful to

calculate the financial performance and condition of the any company.

Classification of Ratios:There are 4 categories of ratios. They are as follow:

Liquid ratios

Leverage ratios

Profitability ratios

Activity or turnover ratios

1) Liquid Ratios:Liquid ratios provide test to measure the ability of the corporation to cover its short term obligations out of

its short term resources.

A. Current ratio:Current ratio expresses relationship between current assets and current liabilities.

current ratio = Current Assets Current Liabilities

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NOTE:

Current assets = Inventories + sundry debtors + cash and bank + other current assets+ loans and advances.

Current liabilities = Liabilities other than provisions

B. Quick ratio:It is also called as liquid ratio. It is a measure of judging the immediate ability of the company to pay off its

current obligations.

Quick Ratio = Quick AssetsCurrent Liabilities

NOTE: Quick assets = Current assets other than inventories.

C. Inventory turnover Ratio:It expresses relationship between inventory and working capital.

Inventory to working capital Ratio= Inventory

Working capital

2. Leverage Ratios:

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Leverage Ratios are generally designed to measure the contribution of the companys owners vis-vis the

funds provided by its creditors.

A. Debt equity Ratio:This is a measure of contribution of the shareholders or owners to the long term finances of the company, as

compared to the contribution of its long term creditors.

Debt equity Ratio = long term debt

Net worth

NOTE:

Long term debt = borrowing from government and other loans.

Net worth = capital + Reserves and surplus past accumulated

Losses.

B. proprietary Ratio:The total shareholders funds (net worth) are compared with the total tangible assets of the company. This

ratio indicates the general financial strength of the concern.

Proprietary Ratio = Net worth X 100

Total assets

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3) Profitability Ratios:Profitability ratios are as a matter of fact, best indicators of overall efficiency of the business concern

because they compare return or value over and above the values put into a business with sale or service carried on by the

enterprise with the help of assets employed.

A. Gross profit Ratio:This ratio establishes relationship between gross profit and sales to measure the relative operating efficiency

of the corporation and to reflect its pricing policies.

Gross profit Ratio = Gross profit X 100

Net sales

B. Net profit Ratio:Net profit to sales, also called net profit margin, is calculated by dividing net income after tax by net sales.

Net profit Ratio= Net profit X 100

Net sales

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It is also known as receivable turnover ratio. It establishes relationship between credit sales and average

debtors.

Debtors turnover Ratio= Total sales

Average debtors

C. Fixed assets tur nover Ratio:Fixed assets are used in the business for producing goods to be sold. The effective utilization of fixed assets

will result in increased production and reduced cost.

Fixed assets turnover Ratio= sales of cost of sales

Fixed assets

D. Working capital turnover Ratio:This ratio measures the relationship between working cap

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STATEMENT OF WORKING CAPITAL OF HINDUSTAN SHIPYARD LIMITED FOR THE YEAR 31 STMARCH 2006

Particulars Amount(in lakhs)

Amount(in lakhs)

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Current Assets:

InventorySundry debtorsCash and Bank

Other current assetsLoans and advances

Total (A)

Current Liabilities:

Sundry creditors

Other current liabilitiesProvisions( Excluding provision forGratuity)

Interest accrued and due

Total (B)

4621.738054.863675.50185.36

2688.63

6192.35

16617.914634.88

42330.68

19226.08

69775.82

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INTERPRETATION:

It shows the statement of working capital in the Financial year of 2004 the total current assets Rs. 19,226.08.

In this Financial year the total current Liabilities Rs. 69,775.82.

Here the total current liabilities are higher than that of the total current assets.

In this year the net working capital is in negative term that is -50,549.74.

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STATEMENT OF WORKING CAPITAL OF HINDUSTAN SHIPYARD LIMITED FOR THE YEAR 31STMARCH 2007

Particulars Amount(in

lakhs)Amount

(in lakhs)

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Current Assets:



Total (A)


Sundry creditors

Other current liabilitiesProvisions( Excluding provisionFor gratuity) Interest accrued

and due

Total (B)

9235.8114064.7827521.18

258.296926.80

20032.9314610.58

2405.5742330.68

33237.89

79379.76

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INTERPRETATION:

It shows the statement of working capital in the financial year of 2005 the total current assets Rs. 33,237.89.

In this financial year the total current Liabilities Rs. 79,379.76.


In this year the net working capital is in negative terms that is -46,141.87, but is higher than that of working capital of 2004.

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Particulars Amount (inlakhs)

Amount(in lakhs)

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Current Assets:



Total (A)


Sundry creditorsOther current liabilitiesProvisions( Excluding provision

For gratuity)Interest accrued and due

Total (B)

15537.715149.30

18419.698979.83

13813.79

11365.83

50145.05

2776.9838423.56

61900.32

102711.42

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INTERPRETATION:


In this financial year the total current Liabilities Rs. 1,02,711.42


In this year the net working capital is in negative terms that is -40,811.10, but is lesser than that of working capital of 2005.

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Particulars Amount(in lakhs)

Amount(in lakhs)

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Current Assets:



Total (A)




Total (B)

13205.7314054.9128169.948191.36

17198.20

12893.72

69269.65

13219.3232803.36

80820.14

128186.05

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INTERPRETATION:


In this financial year the total current Liabilities Rs. 1,28,186.05.


In this year the net working capital is in negative terms that is -47,365.91, but is higher than that of working capital of 2006.

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Particulars Amount(in

lakhs)Amount

(in lakhs)

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Current Assets:



Total (A)




Total (B)

25355.2214805.3421183.74

7169.8613357.83

15740.11

62420.28

11168.1735730.64

81871.99

125059.20

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INTERPRETATION:


In this financial year the total current Liabilities Rs. 1,25,059.20.


In this year the net working capital is in negative terms that is -43,187.21, but is lesser than that of working capital of 2007.

61

particulars 2004 2005 IncreaseSource DecreaseSource


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STATEMENT OF CHANGESIN WORKING CAPITAL INHINDUSTAN SHIPYARDLIMITED FOR THE YEAR31 ST MARCH 2006-07

INTERPRETATION:

(+ ) (- )Current Assets:

InventoryDebtorsCash and BankOther current

AssetsLoans & advances

Total (A)


Sundry creditorsOther current liabilitiesProvisions


Total (B)

Working capital(A-B)

Increase in net workingcapital

4621.738054.863675.50

185.362688.63

19226.08

6192.3516617.914634.88

42330.68

69775.82

(50549.71)

9235.8114064.782752.18

258.296926.80

33237.89

20032.9314610.582405.57

4233.68

79379.76

(46141.87)

4614.086009.92

-

72.934238.17

-

2007.33

-

2229.31

-

--

923.32

--

13840.58

-

-

-

4407.84

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It shows the statement of changes in working capital in the financial year of 2004-05 the inventories is increased to Rs.

4,614.08.

The sundry debtors are increased to Rs. 6,009.92.

The Bank balance and cash in hand decreased to Rs.923.32.

The current liabilities and provisions are increased to Rs. 9,603.94.

In this year net working capital is increased to Rs. 4,407.84.

63

particulars 2004 2005 IncreaseSource DecreaseSource


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STATEMENT OF CHANGESIN WORKING CAPITAL INHINDUSTAN SHIPYARD

LIMITED FOR THE YEAR31 ST MARCH 2007-08

INTERPRETATION:

(+ ) (-)Current Assets:

InventoryDebtorsCash and BankOther current

AssetsLoans & advances

Total (A)


Sundry creditorsOther current liabilitiesProvisions


Total (B)


Increase in net workingcapital

9235.8114064.792752.19

258.306926.80

33237.89

20032.9314610.572405.57

42330.68

79379.76

(46141.87)

15537.715149.3018419.69

8979.8313813.79

61900.32

11365.8350145.052776.98

38423.56

102711.42

(40811.11)

6301.90-

15667.5

8721.536886.99

8667.10--

3907.12

-

-8915.49

-

--

-

35534.48

371.41

5330.76

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6,301.90.

The sundry debtors are decreased to Rs. 8,915.49.

The Bank balance and cash in hand increased to Rs. 15,667.50.



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STATEMENT OF CHANGES IN WORKING CAPITAL IN HINDUSTAN SHIPYARD LIMITED FOR THEYEAR 31ST MARCH 2008-09

particulars 2006 2007IncreaseSource

(+)Decrease

Source(-)

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Current Assets:

InventoryDebtorsCash and Bank

Other currentAssetsLoans & advances

Total (A)


Sundry creditorsOther current liabilitiesProvisionsInterest accrued and due

Total (B)


Decrease in net Workingcapital

15537.715149.30

18419.69

8979.8313813.79

61900.32

11365.83

50145.052776.98

38423.56

102711.42

(40811.10)

13205.7314054.9128169.94

8191.3617198.20

80820.14

12893.72

69269.6513219.32

32803.36

128186.05

(47365.90)

-8905.619750.25

-3384.41

-

--

5620.20

6554.81

2331.98--

788.47-

1527.89

19124.6010442.34

-

-

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INTERPRETATION:

It shows the statement of changes in working capital in the financial year of 2006-07 the inventories is decreased to Rs.2,331.98.

The sundry debtors are increased to Rs. 8,905.61.

The Bank balance and cash in hand increased to Rs. 9,750.25.


In this year net working capital is decreased to Rs. 6,554.81.

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STATEMENT OF CHANGES IN WORKING CAPITAL IN HINDUSTAN SHIPYARD LIMITED FOR THEYEAR 31ST MARCH 2009- 10

particulars 2007 2008 IncreaseSource(+)

DecreaseSource(- )

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Current Assets:

InventoryDebtorsCash and Bank

Other currentAssetsLoans & advances

Total (A)


Sundry creditorsOther current liabilities

ProvisionsInterest accrued and due

Total (B)


Increase in networkingcapital

13205.7314054.9128169.94

8191.3617198.20

80820.14

12893.72

69269.6513219.3232803.36

128186.05

(47365.90)

25355.2214805.3421183.74

7169.8613357.83

81871.99

15740.11

62420.2811168.1735730.64

125059.20

(43187.21)

12149.49750.43

-

--

-

6849.372051.15

-

-

--

6986.20

1021.503840.37

2846.39

--

2927.28

4178.70

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INTERPRETATION


12,149.49.

The sundry debtors are increased to Rs. 750.43.

The Bank balance and cash in hand decreased to Rs. 6,986.20.

The current liabilities and provisions are decreased to Rs. 3,126.85.


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FUNDS FLOW ANALYSIS

FUNDS FLOW STATEMENT:The funds slow statement describes the sources from which additional funds were derived and the uses to

which these funds were put. Significant technique of financial performance is funds flow analyse. Its designed to

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highlight changes in the financial condition of a business concern between two points of time which generally conform to

beginning and ending financial statement dates. Funds flow statement is also termed as a statement of changes in

financial position, statement of sources and applications of funds, statement of changes in working capital,

statement of funds supplied and applied, statement of funds generated and expended, where got and where gone

statement, funds statement.

Thus, funds flow statement is a report which summarizes the events taking place between the two

accounting periods. It spells out the sources from which funds were derived and the uses to which these funds were put.

This statement is essentially derived from an analysis of the changes that have occurred in assets and liabilities items

between two balance sheet dates. In this statement, only the net changes are shown so that the outcome of a transaction

or of a series of transactions upon the financial condition of a business enterprise is reflected more sharply.

There are 4 steps involving in preparation of funds flow statement:

Statement of changes in working capital.

Calculation of Funds from operations

Finding out hidden information, if required

Finally preparation of funds flow statement.

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FUNDS FLOW STATEMENT OF HINDUSTAN SHIPYARD LIMITEDFOR THE YEAR ENDED 2006

Particulars Amount Amount

Sources of funds:

Increase in share capitalIncrease in BorrowingsSale of assetsDepreciation

Decrease in working capital

750.001376.6133.72431.52

2009.13

4600.98

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Utilization of funds:

Increase in Fixed assets and capital work in progress

Funds applied in operation:

Loss for the yearAdd: profit on sale of assets

Less: Increase in provision for gratuity

5202.5429.42

662.75

31.77

4569.21

4600.98

INTERPRETATION:

The Funds Flow Statement of the company in 2004 sources procured from shareholders funds and outsiders funds.

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The sources procured from issue of share capital Rs. 750.00.

The procured sources use to purchase of fixed assets Rs.31.77.

The procured sources use to sale of fixed assets Rs. 33.72.

The company net working capital decrease in the year. So the liquidity position is low. The net working capital

amount is Rs. 2,009.13.

The company has gotten Rs. 4,569.21 from business operations.

The company has paid the amount of borrowings that is unsecured loans Rs. 1,376.61.

So the overall company funds flow and application is satisfactory.

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Sources of funds:

Increase in share capitalIncrease in BorrowingsSale of fixed assetsDepreciation

750.003767.5218.94414.76

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Increase in Fixed assets and capital work in progress

Funds applied in operation:

Loss for the yearAdd: profit on sale of fixed assets

Less: Increase in provision for gratuity

Increase in working capital

789.6415.81

361.84

4951.22

99.73

443.61

4407.88

4951.88

INTERPRETATION:

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The procured sources use to purchase of fixed assets and work in progress to used Rs. 99.73.


The company net working capital increase in the year. So the liquidity position is high. The net working capital


The company has gotten Rs. 443.61 from business operations.



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Sources of funds:

Increase in share capitalIncrease in BorrowingsSale of fixed assetsAdd: increase in provision of gratuity

Depreciation

1.02985.62

750.003363.28

986.64

407.24

5507.16

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Increase in Fixed assetsIncrease in working capital

176.395330.77

5507.16

INTERPRETATION:

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Sources of funds:

Increase in share capitalIncrease in BorrowingsSale of assetsProfit of the yearAdd: loss on sale of fixed assetsLess: Decrease in provision of gratuity

Depreciation

300.938.81

258.84

500.006517.4715.25

50.90406.35

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Increase in fixed assetsIncrease in working capital

7489.97

935.166554.81

7489.97

84


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INTERPRETATION:



The procured sources use to purchase of fixed assets Rs. 935.16.




The company has gotten Rs. 50.90 from business operations.



85


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\



86


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Increase in working capital

1504.52

4178.70

14135.84

INTERPRETATION:


The sources procured from issue of share capital Rs. 13,170.00.

The procured sources use to purchase of fixed assets and work in progress to used Rs. 1,788.77.




The company has gotten Rs. 1,504.52 from business operations.


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CASH FLOW ANALYSIS:

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An analysis of cash flow of a concern during a period, presented in the form of a statement is known as cash

flow analysis. The cash flow statement can be for the past of can be a projection for the future5. The cash flow of the

concern in the near future, say for a period of 6 months of 1 year, can be prepared based on the past trends and

expectations of the concern regarding factors that would affect its cash receipts and cash payments. Such an estimate of

future cash flows is better termed cash budget. Cash flow statement generally refers to the statement showing thereceipts (inflows) and payments (outflows) of cash during the period covered by two consecutive balance sheets. Cash

flow analysis enables the management to plan and co-ordinate the financial operations of the enterprise, and furnish the

basis for evaluating financing policies. It provides a barometer for ensuring the profitability of the business, and makes

financing problems of the business much more manageable.

Classification of cash flows:The model prescribed accounting standards, cash flow statement, classifies cash flows into 3 categories

namely Cash flow from operating activities, cash flow from investing activities and cash flow from financing activities.

i)Operating activities:Operating activities are those transactions which are considered in the determination of net income.

Examples of cash inflows in the category are cash received from debtors for goods and services, interest and dividend

received on loan and investment. Examples of cash outflows in this category are cash payments for goods and services;

merchandise; wages; interest; taxes; supplies and others.

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ii)Investing activities:

Investing activities include acquisition of long term or Fixed assets; disposal debentures and other

securities; lending of money and its subsequent collection. Cash inflows from investing activities generally include cash

sales of property, plant, equipment and intangible assets, cash sales of investments in shares, debentures and other

securities, cash collection from borrowers. Cash outflows are purchase of shares, debentures and plant, equipment and

other long term assets, loan given to other firms.

iii)Financing activities:

Financing activities are related to long term liability and equity capital. A firm engages in financing activities

when it obtains resources from owners, returns resources to owners, borrowed. Cash inflows include proceeds from

issue of shares and short term and long term borrowings. Cash outflows include repayments of loan and payments to

owners, including cash dividends. Repayments of accounts payable or accrued liabilities are not considered repayment of

loans under financing activities but are classified as cash outflows under operating activities.

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CASH FLOW STATEMENT OF HINDUSTAN SHIPYARD LIMITEDFOR THE YEAR ENDED 31ST MARCH 2006

Particulars AmountA. Cash flow from operating activities:Net profit/(loss)

Adjustment for:

DepreciationInterest paidInterest received

Loss/(profit) on sale of fixed assets

Operating cash flow Before working capital changes

Adjustments for working capital changes:

(5202.53)

431.52181.61(69.98)

(29.42)

4751.81

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InventoriesTrade and other receivablesTrade and other payables

Cash generated from operation (A)

B. Cash flow from investing activities:

Purchase of fixed assetsCapital work in progressSale of fixed assetsInterest received

Net cash from investing operation (B)

C. Cash flow from financing activities:

Proceeds from share capitalProceeds from BorrowingsInterest paid

Net cash from financing operation (C)

D. Net increase in cash and cash equivalent(A) + (B) + (C)

Cash and cash equivalent at the beginning of the year

Cash and cash equivalent at the end of the year

687.23(707.10)320.75

(4450.92)

(27.28)(4.47)33.7169.98

71.94

750.001376.60(118.61)

2007.99

2370.98

6046.48

3675.50

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INTERPRETATION:

The cash flow statement of the company in the year 2004 it procured the cash sources from operating activities is Rs.

-4,450.92.

Cash from investing activities is Rs. 71.94.

Cash from financing activities is Rs. 2,007.99.

Finally cash and cash equivalent at the end of the year is Rs. 3,675.50.

So the overall cash flow position is satisfactory.

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Particulars AmountA. Cash flow from operating activities:

Net profit/(loss)

Adjustment for:

Depreciation

789.64

414.75

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Interest paidInterest receivedLoss/(profit) on sale of fixed assets



InventoriesTrade and other receivablesTrade and other payables



Purchase of fixed assets

Capital work in progressSale of fixed assetsInterest received





D. Net increase in cash and cash equivalent

561.0364.17

(15.80)

106.16

(4614.08)(10321.03)

9966.61

(4862.34)

(148.78)

49.0618.0964.17

(17.45)

750.003767.51(561.03)

3956.48

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98/151

CASH FLOW STATEMENT OF HINDUSTAN SHIPYARD LIMITEDFOR THEYEAR ENDED 31ST MARCH 2008

Particulars Amount

98


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A. Cash flow from operating activities:Net profit/(loss)

Adjustment for:

DepreciationInterest paidInterest receivedLoss/(profit) on sale of fixed assets



InventoriesTrade and other receivables

Trade and other payables



Purchase of fixed assetsCapital work in progressSale of fixed assetsInterest received



619.49

407.15492.78(166.26)(0.75)

1352.41

(6301.90)(6693.04)

26997.95

15355.43

(143.88)(32.51)

1.02166.26

(9.12)

99


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D. Net increase in cash and cash equivalent(A) + (B) + (C)Cash and cash equivalent at the beginning of the year


750.0063.97

(492.78)

321.19

15667.50

2752.19

18419.69

INTERPRETATION:


15,355.43.

Cash from investing activities is Rs. -9.12..

Cash from financing activities is Rs. 321.19.



100


101/151

101


102/151


Particulars AmountA. Cash flow from operating activities:Net profit/(loss)Adjustment for:DepreciationInterest paidInterest receivedLoss/(profit) on sale of fixed assets


Extraordinary items:

Expenditure under V.R. scheme (net of grant in aid from Govt.of India)Prior period items: net expenditure

Operating cash flow before working capital changes and afterextraordinary and prior period itemsAdjustments for working capital changes:InventoriesTrade and other receivables

Trade and other payables


(7590.46)

406.353469.67

(1289.89)(8.81)

(5013.14)

4130.99(38739.86)

29595.73

2331.98(12566.99)

24074.86

43435.58

102

B C h fl f i i i i i (935 16)


103/151

B. Cash flow from investing activities:Purchase of fixed assetsCapital work in progressSale of fixed assetsInterest received

Net cash from investing operation (B)C. Cash flow from financing activities:Proceeds from share capitalProceeds from BorrowingsInterest paidNet cash from financing operation (C)




(935.16)(349.22)

15.251289.89

sss

20.76

500.00(30736.42)(3469.67)

33706.09

9750.25

18419.69

28169.94

INTERPRETATION:


43,435.58.


103

C h f fi i ti iti i R 33 706 09


104/151




104


105/151


Particulars AmountA. Cash flow from operating activities:Net profit/(loss)

Adjustment for:DepreciationInterest paidInterest receivedLoss/(profit) on sale of fixed assets

Operating cash flow Before working capital changesExtraordinary items:Expenditure under V.R. scheme (net of grant in aid from Govt. ofIndia)Provision towards liability on sock leave of previous year

Prior period items: net expenditure

Operating cash flow before working capital changes and afterextraordinary and prior period items

1590.08

585.864450.96

(2437.35)(85.56)

4103.99

7.72252.37

(765.83)

4609.73

105

Adj stments for orking capital changes


106/151

Adjustments for working capital changes:InventoriesTrade and other receivablesTrade and other payables


B. Cash flow from investing activities:Purchase of fixed assetsCapital work in progressSale of fixed assetsInterest received

Net cash from investing operation (B)C. Cash flow from financing activities:Proceeds from share capitalProceeds from Borrowings

Interest paid





(12149.49)4111.44

(6352.13)

(9780.45)

(1565.71)(221.06)

90.482437.35

741.06

13170.00(6665.85)

(4450.96)

2053.19

(6986.20)

28169.94

21183.74

INTERPRETATION:

106

The cash flow statement of the company in the year 2008 it procured the cash sources from operating activities is Rs


107/151


9,780.45





107


108/151

RATIO ANALYSIS:Ratios are among the best known and most used tools of financial performance. Ratio is defined formally

as the indicated quotient of two mathematical expressions. An operational definition of a financial ratio is the

relationship between two financial values.

These become meaningful to judge the financial condition and profitability performance of the company

only when there is a comparison. Ratios are very useful to calculate the financial performance and condition of the anycompany.

108


109/151

Classification of Ratios:

There are 4 categories of ratios. They are as follow:

Liquid ratios

Leverage ratios

Profitability ratios

Activity or turnover ratios

109


110/151

LIQUID RATIOS: CURRENT RATIO:

current ratio = Current Assets Current LiabilitiesCURRENT RATIO OF HINDUSTAN SHIPYARD LIMITED

DURING THE PERIOD 2005 2010

CURRENTASSETS =Inventories +sundry debtors+ cash andbank + othercurrent assets+ loans andadvances.

CURRENTLIABILITIES =Liabilitiesother thanprovisions.

particulars 05-06 06-07 07-08 08-09 09-10Inventories 4621.72 9235.81 15537.71 13205.73 25355.22

Sundry debtors 8054.86 14064.78 5149.30 14054.91 14805.34

Cash and bank 3675.50 2752.18 18419.69 28169.94 21183.70

Other currentassets

185.36 258.29 8979.83 8191.36 7169.86

Loans andadvances

2688.63 6926.80 13813.79 17198.20 13357.83

Total current

assets

19226.07 33237.89 61900.32 80820.14 81871.95

Currentliabilities

22810.27 34643.51 61510.88 82163.37 78160.39

Ratio in times 0.84 0.95 1.01 0.98 1.05

In percentage 84% 95% 101% 98% 105%

110


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DIAGRAMATIC REPRASENTATION OF CURRENT RATIOOF HSL DURING THE PERIOD 2005 - 2010

CURRENT RATIO

0

0.2

0.4

0.6

0.81

1.2

2005-06 2006-07 2007-08 2008-09 2009-10

YEARS

PERCENT

AGE

Series1

111


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INTERPRETATION:From the above table it is clear that the current ratio of Hindustan Shipyard Limited for 5 years 2005- 06 to

2009- 10. In the year 2006 07 the ratio increased by 13% from 2005 06 due to increase in current assets like inventory,sundry debtors and loan and advances. In the year 2007 08 the ratio increased by 6% due to increase in current assets.

In the year 2008 09 the ratio decreased by 4% from 2007 08 due to increase in current liabilities. In the year 2009 10

the ratio increased by 7% from 2008 09 due to decrease in current liabilities. By analyzing overall position of the

company short-term solvency is good and it is not in a position to meet its short-term obligations.

QUICK RATIO:

Quick Ratio = Quick Assets

Current Liabilities

112


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QUICK RATIO OF HINDUSTAN SHIPYARD LIMITEDDURING THE PERIOD 2005 2010

QUICK ASSETS =Current assetsother thaninventories.

DIAGRAMATIC REPRASENTATION OF QUICK RATIOOF HSL DURING THE PERIOD 2005 - 2010

particulars 05-06 06-07 07-08 08-09 09-10Sundry debtors 8054.86 14064.78 5149.30 14054.91 14805.34

Cash and bank 3675.50 2752.18 18419.69 28169.94 21183.74

Other currentassets

185.36 258.29 8979.83 8191.36 7169.86

Loan andadvances

2688.63 6926.80 13813.73 17198.20 13357.83

Total 14604.35 24002.05 46362.55 67614.41 56516.77Sundrycreditors

6192.35 20032.93 11365.83 12893.72 15740.11

Other currentliabilities

16617.91 14610.58 50145.05 69269.65 62420.28

Total currentliabilities

22810.26 34643.51 61510.88 82163.37 78160.39

Ratio in times 0.64 0.69 0.75 0.82 0.72

In percentage 64% 69% 75% 82% 72%

113


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INTERPRETATION:The above table indicates the quick ratio of Hindustan Shipyard Limited for 5 years 2005-06to 2009-10 In the

Documents

financial performance of hsl