PROJECT WORK:

FINANCIAL ACCOUNTING FOR MANAGERS

ABHISHEK GUPTA 2017142006

AMIT JHA 2017142019

Company- AMD INDUSTRIES LIMITED

ABOUT THE COMPANY

AMD Industries Limited was founded in 1958 as a trading company, and is now one of the leading business
houses in the field of packing solutions. AMD Industries Limited is engaged primarily in the manufacturing
of packaging articles being used in soft drinks, Beverages, water, beer, liquor and pharmaceutical industries.
Company is currently supplying finished products to MNCs like Coca Cola, Pepsi, South African Breweries
(SAB), United Breweries (UB) Dabur, HLL, Hamdard etc. as well as numerous large indigenous beverage
Pharma and health care companies.
AMD has 2 divisons:
Plastic Closures / Caps Division:
AMD Industries Limited provide total packaging solutions, the company has ventured into manufacturing
CSD closures for Carbonated Soft Drinks with fully automatic compression moulding machine purchased
from Sacmi - Italy and Cap Design licensed by Fully Top Franc.
Crown Division:
AMD Industries Limited is one of the largest manufacturers of Crown Caps in India catering to the needs of
all multinational and Indian companies. AMD Industries Ltd. - Crown Caps Division has manufacturing base
at Neemrana-Rajasthan.
 RESEARCH METHODOLOGY

OBJECTIVE OF THE REPORT:

To carry out the Financial Statement Analysis of AMD INDUSTRIES LIMITED.

PERIOD OF THE STUDY:

YEAR 2013-2014, 2014-2015 & 2015-2016.

THE TYPE OF DATA:

Secondary Data

ANALYSIS OF DATA:
Ratio Analysis has been used as a Tool to analyse Financial Statements.
The Ratios that we have used to analyse the financial statements of the company are:-

Net Profit Ratio = 100

And percentage of Profit After Tax to that of Net Operating Revenue.

Operating Profit Ratio = 100

Debt-Equity Ratio = * 100

Current Ratio =

Total Non-Current Fixed Tangible Assets with that of Non-Current Liabilities

Total Assets with that of Non-Current Liabilities

Trade Receivables Turnover Ratio =

Inventory Turnover Ratio =

Cash Flow from Operating Activities with that of Profit after Tax.

Earnings per Share = . /
>>What are the main Revenue Generating Activities (Main Business) of the company?
The main revenue generating activity of company is to manufacture CSD closures for carbonated soft drinks,
manufacturing of crown caps. The plastic closure market has been continuously getting its momentum due to
increased usage of PET Bottles in products like edible oil, personal care products, pharmaceuticals and
confectioneries. Usage of PET bottles in Alcoholic beverages is also increasing. The Company is also
looking for new market segments such as fruit juices, edible oil, milk products etc. and cosmetics items.
Company is expecting development of new market segments in the coming years with continuous efforts in
this direction.

>>What are the areas which are being covered by the Company in its Accounting Policies? Summarize
the Accounting Policies being followed for Depreciation, Inventory Valuation and Basis for Preparation
of Accounts.

Areas covered by the company in its accounting policies are Basis of accounting and preparation of financial
statements, Use of estimates, Inventories, Cash and cash equivalents (for purposes of Cash Flow Statement),
Depreciation and Amortisation, Revenue recognition, Other income, Tangible fixed assets, Intangible assets,
Foreign currency transactions, Government grants, subsidies and export incentives, Investments, Employee
benefits, Borrowing costs, Segment reporting, Earnings per share, Taxes on income, Impairment of assets,
Provisions and contingencies.
Accounting Policies being followed for Depreciation and Amortisation:
The depreciation on Plant & Machinery including Moulds installed in Neemrana Unit and Ghaziabad Unit is
provided on Multiple Shift Basis. The depreciation on all Fixed Assets is provided on straight-line method
based on life assigned to each asset in accordance with Schedule II of the Companies Act, 2013.
Intangible Assets which are amortised over a period of five years as prescribed in Accounting Standard 26.
The Companys management is responsible for establishing and maintaining internal financial controls based
on the internal control over financial reporting criteria established by the Company considering the essential
components of internal control stated in the Guidance Note on Audit of Internal Financial Controls
In order to comply with the mandatory requirements of Accounting Standard -2 Valuation of inventories
prescribed by the Institute of Chartered Accountants of India
Accounting Policies being followed for Inventory Valuation:
Raw Material:
At cost or net realizable value (on FIFO basis) whichever is lower (Rejected raw material at cost
Less claim received thereon)
Finished Goods:
At cost or net realizable value whichever is lower. For arriving at the cost for this purpose the cost
includes material cost and manufacturing expenses.
Semi-Finished Goods:
At cost of input plus apportioned overhead expenses and depreciation.
Job work in Process:
At apportioned manufacturing expenses and depreciation.
Stores and Spares:
At cost or net realizable value (on FIFO basis) whichever is lower.
Scrap:
At estimated realizable value.

The financial statements of the Company have been prepared in accordance with Accounting Principles
Generally Accepted in India, including the Accounting Standards specified under section 133 of Act, Rule 7
of the Companies (Accounts) Rules, 2014. The financial statements have been prepared on accrual basis under
the historical cost convention. The accounting policies adopted in the preparation of the financial statements
are consistent with those followed in the previous year.
>>Comment on the cash flows from Operating Activities, Financing Activities and Investing Activities.
During the period of study, whether these cash flows have improved or otherwise. Provide the reasons
for same.

Cash flow from operating activities in the year 2013-2014 was 313,555,024.10 which reduced to
248,064,884.51 in the year 2014-2015 and to 95,842,935.90 in the year 2015-2016, due to following reasons:
Working capital decreased from 331,816,736.23 in the year 2013-14 to 260,860,973.51 in the year 2014-15 to
252,814,621.49 in the year 2015-16 and also Trade payables increased from 38,145,865.89 to 61,580,241.79,
through this we can see that company was not able to manage its working capital efficiently over the years,
and in near future it can face tough times.
Cash flow from investing activities in the year 2013-2014 was 106,400,391.06 which reduced to
121,022,421.79 in the year 2015-16 due to following reasons: Capital expenditure on fixed assets, including
capital advances 162,053,390.34 in the year 2013-14 reduced to 97,650,010.71 in the year 2014-15 and to
111,781,613.2 in the year 2015-16 and secondly the Loans given in the year 2013-14 was 87,667,619 which
declined to 50,279,585.00 in the year 2015-2016.
Cash flow from financing activities in the year 2013-2014 was 211,295,929.11 which drastically fell to
7,001,670.17 in the year 2015-16, reason being increase in working capital borrowings which was
(14,449,220.67) and currently is 41,878,198.22 through this we can see that company was not able to manage
its working capital efficiently over the years, and in near future it can face tough times. It can also be observed
that amount borrowed for Long term is less than the amount of repayment for borrowings, in the year 2013-
14, 2014-15, 2015-16 the amount borrowed was 43,577,000, 204,446,263, and 270,572,492 whereas the
repayment amount were 117,556,909.30, 277,668,598.98, and 189,427,414.44 respectively. Secondly the
finance cost decreased slightly from 104,156,649.14 in the year 2013-14 to 95,259,821.61 in 2015-16.
Overall we can see that profit before tax is declining in recent years (2014-15, 2015-16) by 12.7% & 50%
respectively which is mainly due to decrease in volume of crown caps and CSD closures. However, this was
marginally set off by increase in volume in PET Preforms. The sales of crowns gone down by 8.77% and
Closures by 13.12% lower than last year. There is an increase in sale of PET Preform of around 24.53 % by
which overall turnover of the Company became at almost at a single step with last years.
RATIO ANALYSIS:

a) Find out the percentage of Profit after Tax with that of Total Revenue.
PROFIT AFTER TAX TO TOTAL REVENUE
YEAR PAT TOTAL REVENUE RATIO
2013-14 61460540.67 1834411212 3.35%
2014-15 53653821.76 1721784438 3.12%
2015-16 26893002.09 1715986106 0.02%

PROFIT AFTER TAX TO TOTAL

REVENUE
4
3
RATIO

2
1
0
2013-14 2014-15 2015-16
YEAR

Defination :. The ratio tells the reader about the percentage of profit(s) generated over the total revenue. This
ratio gives us an idea that how much per unit of profit is being generated over one unit of total revenue.
Explanation of Numerator & Denominator : The Numerator in this ratio is Profit after Tax which is
computed by deducting Total Expenses from Total Revenue. The Denominator in this ratio is Total Revenue
which is the Total Revenue generated from Core Business Activities

Change in ratios: Empirically the ratio declined from 3.12% to 0.02% in 2015-16.

Analysis of Reason for change: The decrease in ratio is due to low sales and increase in expenses.

Find out the percentage of Profit after Tax with that of Net Operating Revenue.
PROFIT AFTER TAX TO NET OPERATING REVENUE
YEAR PAT NET OPERATING REVENUE RATIO
2013-14 61460540.67 1829586626 3.36%
2014-15 53653821.76 1717058555 3.12%
2015-16 26893002.09 1712652401 1.57%

PROFIT AFTER TAX TO NET

OPERATING REVENUE
4
3
RATIO

2
1
0
2013-14 2014-15 2015-16
YEAR
Defination : The ratio tells the reader about the percentage of profits generated over the net operating revenue.
This ratio gives us an idea that how much per unit of profit is being generated over one unit of operating
revenue.
Explanation of Numerator & Denominator : The Numerator in this ratio is Profit after Tax (PAT) . The
Denominator in this ratio is Operating Revenue which is the sum total of Revenue from Core Business
Activities and Operating Income.
Change in ratios: The ratio decreases from 3.12% in 2014-15 to 1.57% in 2015-16.

INTERPRETATION: A decrease in operating revenue will lead to decrease in operating profit ratio.

b) Find out the percentage of Operating Profit with that of Net Operating Revenue.
Operating profit to Operating Revenue
YEAR Operating profit Operating Revenue RATIO
2013-14 197123641.8 1834411212 10.74%
2014-15 164702925.9 1721784438 9.56%
2015-16 139093542.7 1715986106 8.10%

OPERATING PROFIT TO OPERATING

REVENUE
12
10
8
RATIO

6
4
2
0
2013-14 2014-15 2015-16
YEAR

Defination : The ratio tells the reader that how much profit does a company earns after paying off its variable
costs of production. This ratio gives us an idea that how efficient a company is in terms of controlling its costs
and expenses.
Explanation of Numerator & enominator : The Numerator in this ratio is Operating Profit which is
computed by deducting Total Operating Expenses from Net Operating Revenue. The Denominator in this ratio
is Operating Revenue which is the sum total of Revenue from Core Business Activities and Operating Income.
Change in ratios: The ratios are decreasing every year from 10.74% to 8.10% .

INTERPRETATION: The decreasing ratio is due to the decline in sales , increase in COGS or increase in fixed
expenses
c) Find out the percentage of Total Non-Current Liabilities with that of Shareholders funds.
TOTAL NON CURRENT LIABILITIES TO SHAREHOLDERS FUND
YEAR NON CURRENT LIABILITIES SHAREHOLDERS FUND RATIO
2013-14 542304776.2 1196089644 45.34%
2014-15 467846900.7 1214086082 38.53%
2015-16 538317213.3 1229382049 43.79%

TOTAL NON CURRENT

LIABILITIES TO SHAREHOLDERS
FUND
46.00
44.00
42.00
RATIO

40.00
38.00
36.00
34.00
2013-14 2014-15 2015-16
YEAR

Defination : The ratio tells the reader about the soundness of long-term financial policies of a company. This
ratio gives us an idea about the long term solvency of a company.
Explanation of Numerator & Denominator : The Numerator in this ratio is Total Non-Current Liability
which is a sum total of Long Term Borrowings, Long Term Provisions, Deferred Tax Liabilities and Other
Non-Current Liabilities. The Denominator in this ratio is Total Equity & Liability which is a sum total of Share
Capital and Reserves & Surplus.

Change in ratios: The ratio declined only in the year 2014-15 from 0.453 to 0.385.. But again in the year 2015-16
the ratio increased to 0.437

Analysis of Reason for change: The decrease in the ratio means that there is an increase in shareholders fund with
respect to non- current liabilities and increase in 2015-16 due to increase in the outsiders fund (non current
liabilities) invested in the company compared to shareholders fund.

d) Find out the percentage of Total Current Assets with that of Total Current Liabilities.

CURRENT RATIO
CURRENT CURRENT
YEAR ASSETS LIABILITIES RATIO
2013-14 1159465214 857444202.5 1.35
2014-15 1173397068 852153811.4 1.38
2015-16 1101172940 680477963.1 1.62
 CURRENT RATIO
1.70

1.60

1.50
RATIO

1.40

1.30

1.20
2013-14 2014-15 2015-16

YEAR

Defination : The current ratio tells the readers the about the firms short term solvency

Explanation of Numerator & Denominator : The Numerator in this ratio is Total Current Assets which is a
sum total of all the Current Assets of the company. The Denominator in this ratio is Total Current Liabilities
which is the sum total all the Current Liabilities of the Company.
Change in ratios: It is evident that current ratio in year 2015-16 is 1.618 which is better than that of previous
years which is 1.35 in 2013-14 and 1.38 in 2015-16.
Analysis of Reason for change: From the above table we can conclude that the liquidity performance of the
firm is improving every year.

e) Find out the percentage of Total Non-Current Fixed Tangible Assets with that of Non-Current
Liabilities.
TOTAL NON CURRENT FIXED TANGIBLE ASSETS TO NON CURRENT LIABILITIES
YEAR FIXED TANGIBLE ASSETS NON CURRENT LIABILITIES RATIO
2013-14 927795223.6 542304776.2 1.711
2014-15 918543325.3 467846900.7 1.963
2015-16 908817729.1 538317213.3 1.688

TOTAL NON CURRENT FIXED TANGIBLE

ASSETS TO NON CURRENT LIABILITIES
2.000

1.900

1.800
RATIO

1.700

1.600

1.500
2013-14 2014-15 2015-16
YEAR

Defination : The ratio tells the reader about the percentage of profit(s) generated over the net operating
revenue. This ratio gives us an idea that how much per unit of profit is being generated over one unit of
operating revenue.
Explanation of Numerator & Denominator : The Numerator in this ratio is Total Tangible Fixed Assets
which is a sum total of all the Tangible Fixed Assets. The Denominator in this ratio is Total Non-Current
Liability which is a sum total of Long Term Borrowings, Long Term Provisions, Deferred Tax Liabilities and
Other Non-Current Liabilities.

Change in ratios: The ratio

Analysis of Reason for change:

f) Find out the percentage of Total Assets with that of Non-Current Liabilities.
TOTAL ASSETS TO NON CURRENT LIABILITIES
YEAR TOTAL ASSETS NON CURRENT LIABILITIES RATIO
2013-14 2595838623 542304776.2 4.79
2014-15 2534086794 467846900.7 5.42
2015-16 2448177226 538317213.3 4.55

TOTAL ASSETS TO NON CURRENT LIABILITIES

5.60
5.40
5.20
5.00
RATIO

4.80
4.60
4.40
4.20
4.00
2013-14 2014-15 2015-16
YEAR

Defination : The ratio tells the reader about the percentage of profit(s) generated over the net operating
revenue. This ratio gives us an idea that how much per unit of profit is being generated over one unit of
operating revenue.
Explanation of Numerator & Denominator : The Numerator in this ratio is Total Assets which is the sum
total of Non-Current Assets and Current Assets. The Denominator in this ratio is Total Non-Current Liability
which is a sum total of Long Term Borrowings, Long Term Provisions, Deferred Tax Liabilities and Other
Non-Current Liabilities.

Change in ratios:The ratio increased in 2014-15 from 4.79 in 2013-14 to 5.42.

Analysis of Reason for change:

g) Find out Trade Receivables Turnover Ratio and Inventory Turnover Ratio.
TRADE RECEIVABLE TURNOVER RATIO
YEAR NET SALES TRADE RECIEVABLE RATIO
2013-14 1829586626 374305469.4 4.89
2014-15 1717058555 392205993.7 4.38
 2015-16 1712652401 421742812.9 4.06

TRADE RECEIVABLE TURNOVER RATIO

6.00

5.00

4.00
RATIO

3.00

2.00

1.00

0.00
2013-14 2014-15 2015-16
YEAR

Defination : The ratio tells the reader that how efficiently does a company uses its assets i.e., whether it is
effective in extending its credit and collecting its debts on that credit.
Explanation of Numerator & denominator : The Numerator in this ratio is Total Credit Sales which is
computed by deducting Total Cash Sales from Total Sales. The Denominator in this ratio is Closing
Receivables.
Change in ratios: The ratio is decreasing every year from 4.88 in 2013-14 to 2015-16 4.06 in 2015-16 .
Analysis of Reason for change: The high value of trade recievable was more efficient in management of
credit. Therefore we conclude that there is poor trade recievable turnover ratio maintained by AMD
industries.

Find out Inventory Turnover Ratio.

INVENTORY TURNOVER RATIO
YEAR COGS INVENTORY RATIO
2013-14 1062108604 468541038.9 2.27
2014-15 917945004.6 564103944.9 1.63
2015-16 880392058.6 484683902.9 1.82

INVENTORY TURNOVER RATIO

2.50

2.00

1.50
RATIO

1.00

0.50

0.00
2013-14 2014-15 2015-16
YEAR

Defination : The ratio tells the reader that how effectively a company manages its inventory. It shows how
many times does a companys inventory is sold and replaced over a period of time.
Explanation of Numerator & Denominator : The Numerator in this ratio is Cost of Goods Sold which is
the sum total of Materials Consumed, Changes in Stock, Manufacturing Expenses and Purchase of Tradable
Goods. The Denominator in this ratio is Average Inventory which is the Average of Opening and Closing
Inventory.
Change in ratios: The ratio declines in 2013-14 from 2.27 to 1.63 in 2014-15 and the ratio again increased to
1.82 in 2015-16.
Analysis of Reason for change: A decreasing inventory indicates that the company is not converting its
inventory into cash as quickly as before.

h) Find out the percentage of Cash Flow from Operating Activities with that of Profit after Tax.
Cash flow from Operating Activities to PAT
YEAR Cash flow from Operating Activities PAT RATIO
2013-14 313555024.1 61460540.67 5.10
2014-15 248064884.5 53653821.76 4.62
2015-16 95842935.9 26893002.09 3.56

Cash flow from Operating Activities

to PAT
6.00
5.00
4.00
RATIO

3.00
2.00
1.00
0.00
2013-14 2014-15 2015-16
YEAR

Defination : The ratio tells the reader about the percentage of profit(s) generated over the net operating
revenue. This ratio gives us an idea that how much per unit of profit is being generated over one unit of
operating revenue.
Explanation of Numerator & denominator : The Numerator in this ratio is Cash Flow from Operating
Activities which is computed by deducting Total Expenses from Total Revenue. The Denominator in this ratio
is Profit after Tax which is computed by deducting Total Expenses from Total Revenue.
Change in ratios: The ratio decreases from 5.10 in 2013-14 to 3.56 in 2015-16 .
Analysis of Reason for change: From the above we can conclude that the profit after tax is decreasing every
year due to which there is a decline in the ratio.

i) Find out Earning per Share.

EARNING PER SHARE RATIO
YEAR PROFIT AFTER TAX NO. Of Shares Issued RATIO
2013-14 61460540.67 19166749 3.21
2014-15 53653821.76 19166749 2.80
 2015-16 26893002.09 19166749 1.40

EARNING PER SHARE RATIO

3.50
3.00
2.50
2.00
RATIO

1.50
1.00
0.50
0.00
2013-14 2014-15 2015-16
YEAR

Defination : The ratio tells the reader about the portion of a companys profit allocated to each outstanding
share of common stock. It serves as an indicator of a companys profitability.
Explanation of Numerator & Denominator : The Numerator in this ratio is Profit after tax. The Denominator
in this ratio is Number of Equity Shares which is computed by dividing the Share Capital from the Face Value
of each Share.
Change in ratios: The ratio is decreasing from 3.20 in 2013-14 to 2.799 in 2014-15 and a huge decline in
2015-16 to 1.403.
Analysis of Reason for change: The decrease in the ratio is due the decline in Profit after tax (PAT) every year and
constant in the number of shares issued for the respective years. A declining trend can signal to investors that a
company is in trouble, which can lead to a decline in the stock price.

>>Does companys Industry Segment play any role in deciding profitability, Liquidity and solvency of
the company? How?
>>Show the share price movement chart of the company from July 01, 2017 September 15, 2017. Also
show dividend/bonus given by the company during last three years.

Share price movement chart of the company from July 01, 2017 September 15, 2017

Dividend/Bonus given by the company during last three years

BIBLIOGRAPHY
[1.] www.amdindustries.com Annual reports of the years 2013-14, 2014-15, 2015-16.
[2.] www.capitaline.com Company datas.
[3.] www.moneycontrol.com Share Prices, Dividends paid.