02-11-2012, 04:26 PM
A STUDY ON FINANCIAL PERFORMANCE ANALYSIS AT VI JAY TEXTILES LTD
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INTRODUCTION
Financial statement:
A financial statement is an organized collection of data according to logical and consistent accounting procedures. Its purpose is to convey an understanding of some financial aspects of a business firm. It may show a position at a moment of time as in the case of a balance sheet, or may reveal a series of activities over a given period of time, as in the case of an income statement.
Thus, the term financial statement generally refers to the basis statements;
i) The income statement
ii) The balance sheet
iii) A statement of retained earnings
iv) A statement of charge in financial position in addition to the above two statement.
Financial statement analysis:
It is the process of identifying the financial strength and weakness of a firm from the available accounting data and financial statement. The analysis is done by properly establishing the relationship between the items of balance sheet and profit and loss account the first task of financial analyst is to determine the information relevant to the decision under consideration from the total information contained in the financial statement. The second step is to arrange information in a way to highlight significant relationship. The final step is interpretation and drawing of inferences and conclusion. Thus financial analysis is the process of selection relating and evaluation of the accounting data/information.
Ratio analysis:
Ratio analysis is a widely used tool of financial analysis. The term ratio in it refers to the relationship expressed in mathematical terms between two individual figures or group of figures connected with each other in some logical manner and are selected from financial statements of the concern. The ratio analysis is based on the fact that a single accounting figure by it self may not communicate any meaningful information but when expressed as a relative to some other figure, it may definitely provide some significant information the relationship between two or more accounting figure/groups is called a financial ratio helps to express the relationship between two accounting figures in such a way that users can draw conclusions about the performance, strengths and weakness of a firm.
INDUSTRY PROFILE
Indian Garment Industry- an Overview
The Garment industry is one of India's largest foreign exchange earning industries. This accounts to 16% of the country’s total exports earnings. As per the 1996 Indian textile exports records total garment export value was Rs.35,000 crores of which ‘apparel’ occupied over Rs14, 000 crores.
It has been estimated that India has 30,000 readymade garment manufacturing units and around three million people are working in this industry. Today garment export business grows, with the help of enthusiasm shown by the foreign buyers at a high level. Today many leading fashion labels are being associated with Indian products. India is increasingly being looked upon as a major supplier of high quality fashion apparels and Indian apparels are highly appreciated in major markets internationally. The credit goes to the exporters and the government which spontaneously helping in liberalizing the export policies and tax reduction methods.
Consistent efforts towards extensive market coverage, improving technical capabilities and putting together an attractive and wide merchandise line has paid rich dividends. But till today, our garment industry is dominated by sub-contractors and it consists mainly small units having 50 to 60 machines. India's supply base is medium quality, relatively high fashion, but small volume of business.
Recent recession in Europe and the South Asian currency crisis have also contributed their own bits to the decimating Indian exports. Though these are expected to fizzle out soon, there is no reason for complacency on the part of Indian exporters or of the garment industry. The industry will soon competitively face the short falls faced with regard short of quotas, tariffs, etc.
Thus the need of the hour is to enlarge both manufacturing as well as the marketing base. Inculcation of a spirit of innovation by way of research and development and tapping new markets especially in South Africa, Central Africa, East European countries, Latin America and Australia is also mandatory for export growth.
RECENT TRENDS
Plans to boost textile exports to $10 bn by 2010
The Union government is planning to boost the export of textiles to the tune of $10 billion by 2010, said EVKS Elangovan, Union minister of state for textiles. The minister while speaking on the sidelines of a week-long jute exhibition informed that the five-year Technology Up gradation Fund Scheme (TUFS) launched in 2003 would come to an end in 2007.
However, the government may extend TUFS, as the scheme had evoked overwhelming response in the sector. He also added that the Centre would consider the expert's suggestion for letting out treated effluent water from the Torpor dyeing and bleaching units in the sea by setting up an exclusive pipeline. A fixed export target for jute products has been set by the government at Rest 5,000 crore by 2010 against the present annual export of Rest 1,000 crore.
The government under the joint venture with state government and private entrepreneurs was going to establish five textile parks, including one at Cuddlier, Palladium and Perunthurai at a cost of Rest 50-100 crore.
Jute, once popular in West Bengal and its surroundings, has now spread all over Tamil Nadir, Andhra Pradesh and Karnataka.
Infrastructure
Machinery:
Latest world class machines from Durkopp Adler of Germany , Juki, Tajima and Brother of Japan have been installed at the manufacturing units for an installed capacity of 1,40,000 garment units per month.
800 sewing machines including special purpose machines have been installed for quality production i9n large volumes.
Two TAJIMA computerized Embroidery Machines with 20 heads each, A BARUDAN computerized Embroidery Machine with 20 heads each , A pocket welting machine for cut pockets from Durkopp Adler, Germany and CAD machine from Gerber, USA for pattern development , complete sophisticated machinery set up in the factories of the East West Group . We have recently added a TAJIMA Embroidery @ sequin attaching machine.