Ashok Leyland 43d5t

FINANCIAL PERFORMANCE

AT ASHOK LEYLAND LTD BY DIVYA.GUNASHEKARAN 3511140009

COMPANY PROFILE  The company began in 1948 as Ashok Motors, to

assemble Austin cars. The company was renamed and started manufacturing commercial vehicles in 1955 with equity participation by British Leyland.  The company reached its major milestone in 1993 when it became the first in India's automobile to win the ISO 9002 certification and in 2002 received ISO 14001certification for all vehicle manufacturing .

CONTD…..  It has six manufacturing plants today the mother

plant at Ennore near Chennai, two plants at Hosur (called Hosur I and Hosur II, along with a Press shop) and the assembly plants at Alwar and Bhandara.  Ashok Leyland is the flagship company of the Hinduja Group and is the second largest manufacturer of commercial vehicles in India.

PROBLEMS IDENTIFIED  Managing working capital in a manufacturing firm

is very difficult and risky position. It is required to maintain the liquidity position of any firm to be good.  To avoid this problem the company should prepare a financial database at the end of every month and monitor it carefully.

OBJECTIVE OF THE STUDY  To study the overall efficiency and performance of

Ashok Leyland.  To study the financial status and liquidity position

through various ratios .  The study is made by making comparison of five

year of it operation.

NEED FOR THE STUDY  The study could help the management to manage

the problems that arise in finding the relationships between current assets and current liabilities.  The study could take suitable measures to

overcome financial position.

ANALYSIS Particulars

2006-07

2007-08

2008-09

2009-10

2010-11

Current Ratio

1.53

1.26

1.48

1.39

1.23

Liquid Ratio

0.92

0.72

0.85

0.84

0.61

Cash Ratio

0.24

0.19

0.04

0.17

0.05

Stock Turnover Ratio 6.69

6.31

4.49

4.42

5.03

Working Capital Turnover Ratio

7.61

12.81

5.81

6.14

13.25

Current Assets Turnover Ratio

2.65

2.68

1.88

1.75

2.54

Debt Equity Ratio

0.63

0.44

0.21

0.27

0.30

CONTD…. Particulars

2006-07

2007-08

2008-09

2009-10

2010-11

Total Assets Turnover Ratio

7.61

12.81

5.81

6.14

13.25

Gross Profit Ratio

36.55

38.06

82.81

83.07

60.19

Net Profit Ratio

7.91

7.78

3.18

6.95

7.35

Debtors Turnover Ratio

13.7

20.56

6.24

7.08

9.38

Creditors Turnover Ratio

0.13

0.12

0.18

0.13

0.13

Net Working Capital

9,418.59

6.033.16

102,866.99

117,892.71

83,897.13

FINDINGS  Company current assets is high and liabilities are

low.  Debtors of the company is fluctuating so the company should take necessary steps.  Cash and bank balance of the company is low.  Gross profit is decreased in the previous year this is because the company was not able to keep control in the cost of production.

SUGGESTIONS  Company

should take control on debtors collection period which is major part of current assets.  Company should take care of cash balance and reduce the inventory holding period .  Management should have credit policy and proper self realization system for the customers so that s can be maintained efficiently.  Company should take necessary steps to maintain the cash position to meet its expenses