CHAPTER – 1

INTRODUCTION
EXECUTIVE SUMMARY

The training at UltraTech Cement Limited involved the day to day working at corporate
accounts departments with the senior & junior managers and research department in the
company. This project helped me to get the deeper understanding of the process of Financial
Statement Analysis and how decisions are taken to strengthen the financial position.

For this study five years‘comparative Income Statement & Balance Sheet have been
taken for calculating ratio analysis. Main objective in undertaking this project is to supplement
academic knowledge with absolute practical exposure to day to day functions of the sector.

Financial analysis which is the topic of this project refers to an assessment of the
viability, stability and profitability of a business. This important analysis is performed usually by
finance professionals in order to prepare financial or annual reports. These financial reports are
made with using the information taken from financial statements of the company and it is based
on the significant tool of Ratio Analysis. These reports are usually presented to top management
as one of their basis in making crucial business decisions.

During the summer training period at UltraTech Cement Limited, I had close connection
with preparation of financial statements and also their analysis which was made by professionals
in the accounting team of the company. This experience was an emphasis on the importance of
these Ratios which could be the roots of decisions made by management that can make or break
the company. So, I was influenced to allocate the aim of this project to study the details about
these ratios and their possible effects on the decisions made by not only people inside the
company but also the outsiders such as investors.
TITLE OF THE PROJECT
A Study on Financial Statement Performance of Grassim Industry Kumarapattanam-Harihar

STATEMENT OF THE PROJECT

Financial statements are reports prepared by a company’s management to present the
financial performance and position at a point in time. A general purpose set of financial
statements usually includes a balance sheet, income statements, statement of owner’s equity, and
statement of cash flows. These statements are prepared to give users outside of the company,
like investors and creditors more information about the company’s financial positions. Publicly
traded companies are also required to present these statements along with others to regulatory
agencies in a timely manner.

Financial statements refer to the balance sheet, income statement, and statement of cash
flows, statement of retained earnings, and statement of stockholders equity.

The balance sheet reports information as of a date. The income statement, statement of cash
flows, statement retained earnings, and the statement of stockholders equity report information
for a period of time such as a year, quarter, or month.

OBJECTIVES OF THE STUDY

 To find out the reason for inefficient utilization of working capital of the Grasim
industry.
 How they can make utilization of working capital effectively.
 What are the problems Grasim industry is facing with current asset and current liability
 To study the financial management technique and tools to evaluate the working capital
position of the company.
 The net working capital mentioned above is required to stay in a stable equilibrium.
 To maintain inventories of raw materials, work in progress, stores and spares and
finished stock.
SCOPE OF THE STUDY
 The scope of working capital management is to ensure that an organization is able to
continue its operations.
 That it has sufficient ability to satisfy both maturing short term debt.
 Upcoming operational expenses.
 The management of working capital involves managing in entries account receivable and
payable and cash.
 The study covered the development and earns the profit on the success of the organization.

LIMITATION OF THE STUDY

 Since the industry to big with too many departments covering the entire department in
short period is not possible.
 It is assume that information provided by the organization is correct.
 Time duration is very less to study the industry.
 Sometimes the responses depend on their mood.
 The survey was confirmed to Grasim industry Ltd Kumarapattanam

RESEARCH METHODOLOGY
Research is the systematic process of collecting and analyzing data in order to increase our
understanding of the phenomenon about which we are concerned or interested. It is the in depth
search for knowledge. It is a careful investigation or inquiry especially through search for new
facts in any branch of knowledge. The study exhibits both descriptive and analytical character.
Regarding the theoretical concept it is descriptive since it interprets and analysis the secondary
data in order to arrive at appropriate conclusion. It is also analytical in character. The
interpretation of data is done based on ratio and percentage
INDUSTRY PROFILE
Grasim was incorporated on 25th August 1947, exactly 10 days after India achieved
independence. Originally a textile manufacture, Grasim has successfully diversified into VSF,
cement, sponge iron and chemicals. “I firmly believe that our people provide us with the cutting
edge, for sustainable success, their performance orientation and customer focus is imperative. In
my view, only where people grow, the organization grows.”

Grasim industry is the largest producer of viscose rayon fiber in the India export their
material over all 50 country Grasim industries is headquarters in Nagda. The plant at Madhya
Pradesh and Karachi (Kosamba in Gujarat) and Harihar, Davangere district in Karnataka state.

Grasim industries Ltd., a part of Aditya Birla Group, ranks among India’s largest private
sector companies. Its consolidated net revenue was Rs. 328 billion and consolidated net profit of
Rs.32 billion in FY 2017. A Rs.2, 50,000 crore corporation, the Aditya Birla Group is in the
League of Fortune 500, anchored by an extraordinary force of over 120,000 employees,
belonging to 42 nationalities. Over 50 percent of its revenue flows from its overseas operations
spanning 36 countries.

The groups businesses are spread across a swath of industries. These include aluminum,
copper, cement, textiles (pulp, fiber, yarn, fabric and branded apparel) , carbon services, retail
and trading. (Link to Group Website)
 Leading global player in Viscose Staple Fiber, a man – made fiber
 Largest Cement producer in India (Through subsidiary – Ultra Tech Cement)
 Largest Caustic Soda producer in India

Indian marketing environment is largely described as Seller Market. We have chronic storage
and scarcities particularly in convince goods. Demand is invariably greater than supply purchase
power of masses is limited. More than 30% of our population has income in poverty line. Bulk
of our population resides in villages, and marketers have yet to capitalize on rural marketing op-
portunities. The consumers are ignorant, illiterate, unorganized, & hence they have weak
bargaining power. Most of our business enterprises are still racing selling concept, which is
Product Oriented Marketing Approach Bigger business houses going national markets are
adapted, integrate corpsorate planning and market planning as well as strategies of market
programs.

The aim of modern business is to satisfy the consumers and thereby to earn profit
the main intension is to provide quality products at cheap rates to the consumer. In
modern market “consumer is the king” so the producer fate is decided by the action of the
consumer i.e., buyer buying the product or rejecting the product. So a producer had tried
to gain competitive efficiency over the other by adopting new technology in production
and cost reduction measures.

Marketing research and information as well as strategies, marketing planning have

very limited scope at present. A change is taking place in marketing environment at a
reasonable speed and many consumer-oriented marketing companies, beginning to realize
the pressure of competition and pressure of market. But the transition in marketing
orientation is a long and still continuing process. Marketing research has a bright future
of a matured economy.

The project report offers detailed case study regarding marketing of cement in
general and marketing performance of Birla Plus Cement particularly manufactured by
Grassim Industries Ltd., and also a case study of marketing position, has been made on
Sri. UGADI ENTERPRISES.BHADRAVATHI References have been made to marketing
of other cements also as to bring out a comparative analysis of Birla plus Cement with
other competitive cements.

In the modern world cement has gained so much recognition that no building is
build without cement. It seems to be the main construction material at present. Even
though cement is used by almost every man, he does not know much about it.

This project report attempts to bring about details regarding history, role, types of
cements available, grades of cements available in the market, problem in marketing of
cement and other details regarding cement, efforts have also been made to know the
problems of dealer regarding marketing and other aspects of cement etc., attempts have
also been made to assess the marketing activities of Sri. Ugadi Enterprises and certain
suggestions have also been given for promotion of marketing activities by adopting
suitable marketing strategy.

PRODUCTS OF GRASIM INDUSTRY

 Cement :- Grasim industry, Ultra Tech Cement, is the largest producer of cement in India
 VSF :- Grasim is Leading global player in VSF, with an aggregate capacity of 498,000 TPA
 Chemicals :- Grasim is the largest producer of Caustic Soda in the country
 Textile :- Strong presence in fabrics through its unit Jayashree textile

DEFINITION
Industry is the work and processes involved in collecting raw materials, and making them
into products in factories.

Grasim industry located at back of river Tungabhadra. This river Tungabhadra life giving
source for the Grasim industry to produce their goods and services through year after year
Grasim industry started during 1956.

Grasim was incorporated on 25th August 1947, exactly 10 days after India achieved
independence. Originally a textile manufacturer, Grasim has successfully diversified into VSF,
cement, sponge, iron and chemicals. “I firmly believe that our people provide us with the cutting
edge. For sustainable success, their performance orientation and customer focus is imperative. In
my view, only where people grow, the organization grows.”

Grasim industries, the flagship company of the Adyta Birla group were incorporated on
August 25th 1947, it ranks among India’s largest private sector companies. Starting as a textiles
manufacturer in 1948, today Grasim’s businesses comprise viscose staple fiber (VSF), cement
chemicals and textiles, its core businesses are VSF and cement, which contribute to over 90
percent of its revenues and operating profits.
 The Adyta Birla group is the world’s largest producer of VSF, commanding a 24 percent
global market share. It is also the second largest producer of caustic soda (which is used in the
production of VSF) in India.

In cement, Grasim through its subsidiary Ultra Tech cement limited has a capacity of 52
million tap and is a leading player in India. In July 2004. Grasim acquired a majority stake and
management control in Ultra Tech cement. One of the largest of its kind in the cement sector,
this acquisition catapulted the Aditya Birla group to the top of the league in India.

The amalgamation of samruddhi cement limited (SCL) with ultra tech w, e, f, l July 2010
completed the restructuring of the cement business. Earlier, Grasim cement business was
demerged in to SCL. The merger has created the largest cement company in India, providing a
platform that will help in pursuing aggressive growth going forward.

Ultra Tech cement limited in 2013 announced to acquire the Gujarat cement unit of
4.8mtpa of Jaypee cement corporation limited in Gujarat by way of a demerger, comprising of an
integrated cement unit at sew gram and grinding unit at Wanakbori. JCCL is a wholly owned
subsidiary of Jaiprakash associates limited (JAL).

Mr. Kumar Mangalam Birla chairman the Aditya Birla group 30 years, the Aditya Birla
group is India’s first truly global corporation. Its 40 state of the art units anchored by 72000
employees cross 18 countries Including India, Thailand, Malaysia, Egypt, Canada, U.K,
Australia, and China. Among India’s largest business house, its revenue excess of US$ 5.8
billion, with an assets base of $4.35 billion, a market capital of over $3 billion and 7000000
shareholders.

Grasim ranks amongst the ten largest companies in India, in terms of asset, turnover, &
profits. The company secured quality standard system. It is leading supplier of technology &
machinery to the production of man mad fiber. It has received prestigious award in the area of
productivity & total preventive maintenance.
The word ‘GRASIM ‘stands for
G : Gwalior
R & A : Rayon
S & I : Silk
M : Manufacture

The word ‘BIRLA’ stands for

B : Bench marked
I : Innovative
R : Reliable
L : Learning
A : Adopt
Grasim industries ltd, a flagship of the Aditya Birla Group is amongst India’s ten largest
companies in the private sector in terms of assets & sales. It was incorporated in 1947. Grasim
commenced operations as textile manufacturer.

Grasim is the leader in key business like

 Cement
 Fiber
 Textile

CEMENT
Grasim is the 3rd largest producer of Gray cement in India, installed capacity of 11.33
MTPA & is all so South Asia’s largest producer of white cement (Installed capacity of 36
MTPA).

FIBER
Grasim pioneered the manufacture of Viscose Staple Fiber (VSF) in India. Now with
installed capacity of 2, 25, 850 MTPA, Grasim is the India’s largest producer of this manmade
celluloric fiber, Grasim is all so among the world’s most cost efficient producer due to its
integrated operations, company is working on improving VSF application development &
tapping new export markets, while with least control.

TEXTILE
Grasim has built significant brand equity in the suiting fabrics markets. It is Grasim &
groovier have been successfully built on vast distribution network. Grasim is also a prominent
producer and exporter of synthetic and worsted yarns.

HISTORY OF THE COMPANY

A Grasim industry limited was incorporated in 1948; Grasim is the largest exporter of
Viscose Rayon Fiber in the country, with exports to over 50 countries. Grasim is headquartered
in Nagda, Madhya Pradesh and also has a plant at Kharach (Kosamba. Gujarat) and Harihar,
Davangere in the state of Karnataka Indo-Thai Synthetics Company Ltd was incorporated in
1969 in Thailand, started operations in 1970, this was Aditya Birla groups first foray into
international venture.

Aditya Birla groups incorporated P.T. Elegant Textiles in 1973 in Indonesia. That Rayon
incorporated in 1974, this was the second company in Thailand, operating in Viscose Rayon
Staple Fiber. Century Textiles Co. Ltd is taken over by Aditya Birla group in 1974; this company
is a weaving and dyeing plant manufacturing and exporting variety of synthetic fabrics. PT
Sunrise Bumi Textiles incorporated in 1979, it produces yarn exported over 30 countries in 6
continents. P.T Indo Bharat Rayon incorporated in 1980 produces Viscose Staple Fiber in
Indonesia.

Thai polyphosphates and Chemicals was started in 1984 in Thailand to produce Sodium
Phosphates, and has merged with Thai Epoxy and Allied Products Company limited (1992), Thai
Sulphites and Chemicals Company limited (1995) to form Aditya Birla Chemicals ltd.

This company supplies to sectors such as food, textiles, electrical and electronics,
composites, leather, plastics and automobiles. PT Indo Liberty Textiles was incorporated in 1995
to manufacture synthetic spun yarn. In late 1990s and later, the focus was the textile business
following the end of Multi-Fiber Arrangement (MFA). AV Cell Inc., a joint venture between
Aditya Birla Group and Tembec, Canada, established operations in 1998 to produce softwood
and hardwood pulp for the purpose of internal consumption among different units of the group.
Together, Grasim Industries Ltd, and Tembec, Canada acquired AV Nackawic Inc., which
produces dissolving pulp. Grasim Industries Ltd, supplies Viscose Staple Fiber (VSF). The
Aditya Birla Groups VSF manufacturing plants are in Thailand, Indonesia, India and China. The
Groups VSF business operates through its three companies – Grasim industries in India, Thai
Rayon Corporation in Thailand and Indo Bharat Rayon in Indonesia, which also oversees its
Chinese operations of Birla Jingwei Fibers, China. In 2003, its Chemical Division was awarded
the “Best of all” Rajiv Gandhi National Quality Award. Grasim sponsored Grasim Mr. India
event from 1994 to 2012 that sent the winner to compete in international events like Mister
international and Mister World.

Origin of the Aditya Birla Group

By the Birla group reference is made to one of the foremost business houses in India
headed by the Birla family for generations. Its business interests are vast and varied ranging from
petrochemicals and textiles to automobiles and infocom as well as financial services.

The story of the Birla group goes back to 1870 when Seth Shiv Narayan Birla, belonging
to the Marwari community of West Rajasthan, set up a cotton and jute trading business in Pilani,
Rajasthan. In the 19th century Baldeo Das Birla, son of Shiva Narayana Birla, moved to Calcutta.
At that time Calcutta was the hub of activity of the British Empire and consequently the nascent
Freedom Movement. The Birla’s are proud of their closeness and support to the movement and
was very near to Mahatma Gandhi. Even today, about two hundred years after the beginning of
the Birla story, the name is identical with not only with wealth and power but also with dignity
and respect. Business runs in their veins and each generation has been a credit to the legendry
name of Birla.
 In 1919 the Ghanashyam Das Birla, one of the four sons of Baldeo Das Birla, set up jute
mills in West Bengal and thus laid the foundation for the beginning of the Birla industrial
empire. In 1947 the Birla’s set up Grasim weaving plant and from 1958 added rayon to the list.

Aditya Birla, grandson of Ghanashyam Das Birla, continued successfully with the legacy
he had inherited. In 1969 he began to take giant strides outside India targeting international
expansion. In Thailand the Birla’s set up Indo-Thai synthetics. It was followed in 1978 by
Carbon Black production also in Thailand. In 1988 Indo-Gulf was formed under the name of
Hindalco for production fertilizers. Unfortunately in 1995 Aditya Birla died.

The son of Aditya Birla, Kumar Mangalam Birla, picked up the Birla flag. As part of the
first step towards streamlining and restructuring AT & T was formed in 1998 Indo-Gulf copper
production started. In the same year Birla entered Canada with the purchase of Atholville Pulp
Mill in New Brunswick. In 1999 Birla forayed in to the financial arena and entered in to joint
venture with Canada’s Sun Life. The beginning of the new century saw Birla AT& T merge with
Tata Communications. Hindalco acquired India. In 2002 Indo Gulf fertilizers started and
Anapurna Foils was acquired by Birla. Liaonig Birla was started as the beginning of a joint
venture with China in the field of carbon black. Indal merged with Hindalco the following year.
A new aluminium venture was started in Orissa in 2005. In the same year St. Anne Nackawic
Pulp Mill is acquired in Canada. Plans are now afoot to set up a new viscose stable fiber plant in
Laos.

The Birla group has aptly laid out its objectives to be a premium international
conglomerate with a clear focus on each and every business unit. Birla’s mission is to deliver the
very best to its customers, shareholders and employees bearing in mind its commitment to the
welfare of society at large. Birla values are all about integrity, commitment, zeal, seamlessness
and speed.

Kumar Mangalam Birla, born in 1967, the chairman of the Aditya Birla Group, is bearing
the Birla torch with credit. Fortune magazine has listed him as the eighth youngest billionaire
outside India. He is running major companies such as Grasim, Hindalco, Ultra Tech Cement,
Aditya Birla Nuvo and Idea Cellular. JV’s include Birla Sun Life (financial services) and Birla
NGK (Insulators). He is the Chairman of the entire blue chip companies group in India and
serves as director on the board of the group’s international companies stretching across Thailand,
Indonesia, Malaysia, Philippines and Egypt. The wide circle includes Canada, China, Laos,
USA, UK and Australia. Kumar Mangalam Birla is also on the board of G.D. Birla Medical
research and education Foundation and member of the Board of the governors of BITS, Pilani.
He is a member of London Business School’s Asia Pacific Advisory Board, which counsels on
strategy and curriculum. He is honorary fellow of London Business School. The media has not
been left behind in heaping him with accolades. Both NDTV and Hindustan Times have voted
him as the Businessman of the Year.