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Index/Content

1. Company

Profile

9

2. Business

Areas

..10

3. Vision and

Mission

...12

4. CMD

Profile

..13

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5. Management

Team

15

6. Major Awards And Land

Marks

....18

7. Industry

Profile

..19

8. Objective of

Study

.22

9. Benefits of

Study

23

10. Limitations ofStudy

..24

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11. Introduction to Financial

Management

.25

Objectives of Financial

Management

26

12. Functions Of Financial

Management

27

13. Challenges to Financial Management in hotel

industry28

14. Findings-Ratio

Analysis

30

15. Overview

5416. Suggestions

....61

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17. Conclusions

62

18. Webography

...63

Company Profile

Bhagwati Group was founded in 1989 by the visionary

thinker & entrepreneur par excellence Mr.NarendraSomani, The Chairman & Managing Director who

with his revolutionary business acumen and

enterprising attitude created this enterprise from

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scratch. Bhagwati Banquets & Hotels Ltd - a

renowned public limited company, listed at BSE and

NSE exchange, with its vision and novel innovations

has created an admired empire in the field of food and

hospitality industry.

Operating as The Grand Bhagwati, it aims to provide

quality, excellent food and great services in food &

catering segment and today, it is the ONLY

ORGANISED CORPORATE CATERING

COMPANY across India.

BBHL is a company offering the best of both worlds.

A unique understanding of the culture and

communities combined with the collective expertise of

an executive team contributing over 22 years of

experience in the service industry.

BBHL has one of its kind and unique banquetingmodels in India. Looking forward and creating

benchmarks in the hospitality segment, the company

opened first of its kind star category Banqueting hotel

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with best of the amenities in the year 2002 under the

brand name "The Grand Bhagwati".

BBHL with the above success has already chartered

the future map fueling more growth. For this,

company has built an exclusive Five Star hotel

convention centre & Club in the city of Surat. The

company now is expanding Pan India with its

Restaurants, Banquet halls & outdoor catering

operations in the city of Jaipur, Bangalore, Nagpur,

Pune, Mumbai, Hyderabad, Jodhpur, Indore etc.

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Business Areas

TGB Hotels

Ahmedabad Rajkot

Surat

Banquets

Ahmedabad Rajkot

Surat

Jaipur

Conventions

Surat

TGB World Cuisine Restaurants

Jaipur

Surat

Forth Coming Restaurants

Mumbai

Bangalore

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Jodhpur

Indore

Pune

Nasik Nagpur

Hyderabad

TGB Outlets

TGB Little Italy

Murugan Express

TGB Bakeries

The Grand Bhagwati

TGB Municipal Market

TGB Iscon Mall TGB Vastrapur

TGB Bopal

TGB Maninagar

TGB Karnavati Club

TGB Judges Bunglow

TGB Sattadhar

TGB Patang TGB Shahibaug

TGB Rajkot

TGB Surat

TGB Little Italy

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Murugan Express

TGB HL Commerce College Circle

TGB Management Outlets

Karnavati Club

Patang (The 1st Revolving Restaurant)

Gujarat Cricket Association (GCA)

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Vision & Mission

Vision

We at The Grand Bhagwati are committed to

meeting and exceeding the expectations of our

guests, through continuous dedication and

perfection by our team, whom we rely upon to

make it happen and are committed to their growth,

development and welfare, resulting to create

extraordinary value for our stake-holders.

Mission

We aim to take our vision not just across Gujarat

but to every metro pan India and wherever else our

imagination takes us. TGB will soon have its

presence across India through Banquets,

Conventions, Hotels, Restaurants and Bakerys &

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Cafs at all major tourist destinations.

CMD Profile

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Management Team

Hotel TGB - NewsTitle: The Best Multi Cuisine Restaurant in

Ahmedabad

Date: Apr 5 2011

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Major Awards & Citation

"The Marketing Man of the Year award -2006"

by Ahmedabad Management Association. Mr.

Narendra Somani CMD of the company has been

felicitated by AMA-Zydus Cadila . This award was

given for his significant & exemplary contribution in

the hospitality segment and taking the brand "The

Grand Bhagwati" to the newer heights. The award was

given by Mr. Praful Patel- Union Civil Aviation

Minister at AMA complex.

"The Most Promising Small Enterprise of the

Year" award declared by CNBC TV-18. Competing

with 35000 SMEs entries The Bhagwati Banquets &

Hotels Ltd won the prestigious award organized by

ICICI Bank powered by CRISIL across India at theIndia Emerging Awards-2006.

"Sindh Bhushan Award" as "Young

Entrepreneur of the year 2006" Mr. Narendra

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Somani was also felicitated and awarded by the All

India Sindhi Association of Industries & Commerce.

National award for excellence in Hotel

Management organized by the International

Association of Education for World Peace (IAEWP),

USA.

Felicitated for Excellent Cooperation extended to India

Tourism by Ministry of Tourism, India.

Landmarks

Landmarks

1989: Incorporation of Bhagwati Group

2002: First Deluxe Hotel The Grand Bhagwati at

Ahmedabad

2006: Awarded Most Promising Small Enterprise

of the Year by CNBC TV-18

2010: Gujarats Biggest 5 Star Hotel & Convention

Centre at Surat

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Industry Profile

As per a report published by the World Travel and

Tourism Council, India stood 18th as far as business

travel was concerned and it featured alongside the top

5 most visited destinations in 2010.

According to a study conducted by the World Travel

and Tourism Council the hospitality industry in India

is all set to grow at a steady rate of 15 percent per

annum. However the growth rate will shoot up in the

next few years considering the number of rooms

required by both luxury and budget hotels. The growth

in the next two to three years is surely going to be

stupendous with almost 2, 00,000 rooms added to theexisting 110,000.

Dwelling perfectly on the principle of ATITHI DEVO

BHAVA' (GUEST IS GOD) the hotels in India are just

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the apt concoction of luxury, humility and unparallel

hospitality. The hotels in India are known for offering

the best of products and services at absolutely pocket

friendly rates.

As per expert hoteliers the hotel industry in India is

estimated to grow at a rate of 8.8 percent between the

years 2007-16. This will place India on the second

position in the list of the fastest growing tourism

industries in the world. The phenomenal growth of the

hotel industry in India would not have been possible

without the Initiatives taken the government. The open

sky policies and the enormous infrastructural

investments made by the Indian government have only

fastened the development of the hospitality sector in

the country.

The Indian hotel industry is affecting the economy

both directly and indirectly. The growth of the hotel

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industry in India has created employment

opportunities for millions of Indians. According to

estimates almost 20 million people are employed with

the hotel industry in India.

Over the last decade and half the mad rush to India,

business opportunities has intensified and elevated

room rates and occupancy levels in India. Even budget

hotels are charging Rs.11250 per day. The successful

growth story of 'Hotel Industry in India' seconds only

to China in Asia Pacific.

'Hotels in India' has a supply of 110,000 rooms.

According to the India tourism ministry, 4.4 million

tourists visited India in 2009 and the figure went up to

almost 10 million in 2010. 'Hotels in India' has ashortage of 150,000 rooms fueling hotel room rates

across India. With tremendous pull of opportunity,

India is a destination for hotel chains looking for

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growth. The World Travel and Tourism Council,

India, data says, India ranks 18th in business travel

and will be among the top 5 in this decade. Sources

estimate, demand is going to exceed supply by at least

100% over the next 2 years. Five-star hotels in metro

cities allot same room, more than once a day to

different guests, receiving almost 24-hour rates from

both guests against 6-8 hours usage. With demand-

supply disparity, 'Hotel India' room rates are most

likely to rise 25% annually and occupancy to rise by

80%, over the next two years. 'Hotel Industry in India'

is eroding its competitiveness as a cost effective

destination. However, the rating on the 'Indian Hotels'

is bullish.

'India Hotel Industry' is adding about 60,000 qualityrooms, currently in different stages of planning and

development and should be ready by

2012. MNC Hotel Industry giants are flocking India

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and forging Joint Ventures to earn their share of pie in

the race. Government has approved 300 hotel projects,

nearly half of which are in the luxury range. Sources

said, the manpower requirements of the hotel industry

increased from 7 million in 2002 to 15 million in

2010.

With the Rs.1035 billion software services sector

pushing the Indian economy skywards, more and more

IT professionals are flocking to Indian metro cities.

'Hotel Industry in India' is set to grow at 15% a year.

This figure will skyrocket in 2010, when Delhi hosts

the Commonwealth Games. Already, more than 50

international budget hotel chains are moving into India

to stake their turf. Therefore, with opportunities galore

the future 'Scenario of Indian Hotel Industry' looksrosy.

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List of Key Players in Hotel Industry in India

Below is a list of the major hotel groups in India

Inter Continental

Taj Group

Oberoi Group of Hotels

ITC Welcome group of Hotels

The Park Group of Hotels

Le Meridien Group of Hotels

Welcome Heritage Group of Hotels

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Objective of Study

To gain the practical experience in the field of

interest.

To get the overview of functional as well as the

managerial areas of the company.

To gain the knowledge about the industry and the

company as well.

To get the training from well qualified and trained

personnel.

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To study the companys procedures and

functioning in detail.

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Benefits of Study

There are various benefits of performing the summer

training at The Grand Bhagwati.

Firstly, I got to learn and experience the day to

day functioning of a 5 star hotel.

Got a chance to be a part of it and observe the

managerial as well as the functional areas.

Quality guidance and co-operation by the HODs.

Got an opportunity to know about the back offices

or the functional areas of the hotel

Experienced the functioning on the practical

basis.

Got to know how the things work in practical life.

It feels prestigious while working with one of the

best hotels in the state.

Learnt about the financial management and how it

is settled.

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Got to experience the hard working HR

department and the tactics they utilize to control

the human resource.

Experienced the food and beverage production

department and learnt how the things were

managed and operated over there.

Learnt about the sales and marketing departmentand what are the strategies that are used.

Limitations of Study

No limitations of study.

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Study of the department

Finding of the study

Recommendations Conclusion

Bibliography

What is financial management?

Financial Management means planning, organizing,

directing and controlling the financial activities such

as procurement and utilization of funds of the

enterprise. It means applying general management

principles to financial resources of the enterprise.

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Objectives of Financial Management

Scope/Elements

1. Investment decisions includes investment in fixed

assets (called as capital budgeting).Investment in

current assets are also a part of investment

decisions called as working capital decisions.

2. Financial decisions - They relate to the raising of

finance from various resources which will depend

upon decision on type of source, period of

financing, cost of financing and the returns

thereby.

3. Dividend decision - The finance manager has to

take decision with regards to the net profit

distribution. Net profits are generally divided into

two:

Dividend for shareholders- Dividend and the

rate of it has to be decided.

Retained profits- Amount of retained profits

has to be finalized which will depend upon

expansion and diversification plans of the

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The financial management is generally concerned with

procurement, allocation and control of financial

resources of a concern. The objectives can be-

1. To ensure regular and adequate supply of funds to

the concern.

2. To ensure adequate returns to the shareholders

which will depend upon the earning capacity,

market price of the share, expectations of the

shareholders?

3. To ensure optimum funds utilization. Once the

funds are procured, they should be utilized in

maximum possible way at least cost.

4. To ensure safety on investment, i.e., funds should

be invested in safe ventures so that adequate rate

of return can be achieved.

5. To plan a sound capital structure-There should be

sound and fair composition of capital so that a

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balance is maintained between debt and equity

capital.

Role and Importance of Finance Department

ensure that there are adequate funds available to

acquire the resources needed to help the organization

achieve its objectives.

ensure costs are controlled.

ensure adequate cash flow.

establish and control profitability levels.

One of the major roles of the finance department is to

identify appropriate financial information prior to

communicating this information to managers and

decision-makers, in order that they may make

informed judgments and decisions.

Finance also prepares financial documents and final

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accounts for managers to use and for reporting

purposes (i.e. Annual general Meeting, etc)

Functions of Financial Management

1. Estimation of capital requirements: A finance

manager has to make estimation with regards to

capital requirements of the company. This will

depend upon expected costs and profits and future

programmes and policies of a concern.

Estimations have to be made in an adequate

manner which increases earning capacity of

enterprise.

2. Determination of capital composition: Once

the estimation has been made, the capital structure

have to be decided. This involves short- term and

long- term debt equity analysis. This will depend

upon the proportion of equity capital a company

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is possessing and additional funds which have to

be raised from outside parties.

3. Choice of sources of funds: For additional funds

to be procured, a company has many choices like-

a. Issue of shares and debentures

b. Loans to be taken from banks and financial

institutions

c. Public deposits to be drawn like in form of

bonds.

Choice of factor will depend on relative merits

and demerits of each source and period of

financing.

4. Investment of funds: The finance manager has

to decide to allocate funds into profitable ventures

so that there is safety on investment and regular

returns is possible.

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5. Disposal of surplus: The net profits decision has

to be made by the finance manager. This can be

done in two ways:

a. Dividend declaration - It includes identifying

the rate of dividends and other benefits like

bonus.

b. Retained profits - The volume has to be

decided which will depend upon expansion,

innovational, diversification plans of the

company.

6. Management of cash: Finance manager has to

make decisions with regards to cash management.

Cash is required for many purposes like payment

of wages and salaries, payment of electricity and

water bills, payment to creditors, meeting current

liabilities, maintenance of enough stock, purchaseof raw materials, etc.

7. Financial controls: The finance manager has not

only to plan, procure and utilize the funds but he

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also has to exercise control over finances. This

can be done through many techniques like ratio

analysis, financial forecasting, cost and profit

control, etc.

Hotel Industry Financial Challenges

Hotel industry is an exciting and multifaceted industry

that offers a variety of career opportunities to those

who have earned a hotel/restaurant management

degree. Careers with hotel, restaurant, gaming, and

wine and spirit companies are readily available to such

graduates. In addition, careers with service firms that

support hospitality companies in the areas of

accounting, consulting, real estate development,

architecture, interior design, real estate brokerage,

hotel valuation, investment banking, mortgage

brokerage, insurance, advertising, and technology are

also available to those with hospitality degrees.

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Financial Challenges:

A multifaceted industry

Low profitability

Fluctuating sales volume

Labor intensive

Capital intensive

Reliance on discretionary income

While a hospitality business typically requires a

relatively low level of operating inventories, it

requires a relatively high level of capital for its real

estate component. This component often includes

buildings, operating systems, guest room furniture,

and restaurant equipment. Securing financing to

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acquire these assets is a continuing challenge for

management.

Finally, hospitality businesses rely heavily on the

discretionary income of their customers. During a

weak economy, when household discretionary income

is low, the hospitality industry usually suffers. High-

end establishments, such as resorts and fine dining

restaurants, normally feel the effects of a weak

economy first, but eventually, the entire industry feels

the financial pain. However, as soon as the economy

takes a turn for the better, consumers return,

discretionary spending increases, and the industry

prospers. Accurately predicting these economic

fluctuations, and knowing when to buy and sell

hospitality assets, can be financially lucrative for the

astute hospitality investor.

The financial tools utilized by modern-day management to

address these challenges and

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Opportunities are the focus of this book.

Understanding of these financial tools and applying

them to the challenges and opportunities they will

soon face when they take jobs in the industry will

serve hospitality graduates well throughout their

business careers.

Findings: Balance sheet as at 31st march, 2010

(Rs. In Lacks)

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Particulars As on

31/3/

2010

As on

31/3/

2009

SOURCES OF FUNDS:

Share Holders Funds

Share capitalReserve & Surplus

Amount for Preferential

convertible warrants

Loan Funds

Secured Loan

Deferred Tax Liabilities

2928.6410745.85

0.00

9898.34

392.38

2928649852.21

620.22

4120.31

349.22

TOTAL 23965.21 17870.60

APPLICATION OF FUNDS:

Fixed Assets

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Gross Block

Less: Accumulated

Depreciation

Net Block

W.I.P. & advances on

capital AC

INVESTMENTS

CURRENT ASSETS,

LOANS AND

ADVANCES

Inventories

Sundry debtors

Cash and bank balance

Loans and advances

5191.24

1358.00

3833.24

15702.73

540.99

1116.26

835.09

1877.02

3517.01

4496.01

1162.65

333.35

7873.88

540.95

710.68

827.13

1912.74

3271.27

7345.39 6721.83

LESS: CURRENT

LIABILITIES &

PROVISIONS

3635.51 1153.08

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NET CURRENT ASSETS 3709.88 5568.75

MISCELLANEOUS

EXPENDITURE

(To the extent not written off or

adjusted)

Branch division

178.36 553.67

TOTAL 23965.21 17870.60

Ratio Analysis

It is the most important technique offinancial

analysis in which quantities are converted into

ratios for meaningful comparisons, with past

ratios and ratios of other firms in the same or

different industries. Ratio analysis determines

trends and exposesstrengths or weaknesses of

a firm. It is a tool used by individuals to

conduct a quantitative analysis of

information in a company's financial

39
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statements. Ratios are calculated from

current year numbers and are then compared

to previous years, other companies, the

industry, or even the economy to judge the

performance of the company. Ratio analysis is

predominately used by proponents of

fundamental analysis.

Ratiobasics

Ratio Analysis compares one figure in one financial

statement (say P&L account or Balance Sheet) with

another figure in the same financial statement or inanother financial statement of the company. A ratio is

expressed in the numerator denominator format. Thus

the numerator and denominator can be either from the

P&L account or the Balance sheet of the same

company. Ratios gives color to absolute figures. For

example a profit of Rs.100 lakhs means very little to

an analyst because he needs to know what the sales

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was or what the net worth was against which the

Rs.100 lakhs was earned. More than the

profit, the ratio of profit to sales and the ratio of profit

to net worth are useful to

understand the performance of a company. Thus if

profit grew from Rs 100 lakhs to Rs 125 lakhs, while

it is good, what is more important is how it stacked up

against the sales achieved or the net worth deployed.

Hence, ratio analysis facilitates intra firm

comparison. I.e. comparison of your companys

performance in the current year with your companys

performance in the previous year. It also facilitates

inter firm comparison. I.e. Comparison of your

companys performance in the current year with your

competitors performance in the current year. Peer

review, as this is called, helps you benchmark yourperformance with your peers. Ratios help in

ascertaining the financial health of the company and

also its future prospects. These ratios can be classified

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under various heads to reflect what they measure.

There may be a tendency to work a number of ratios.

Being thorough in the computation and interpretation

of a few ratios would be ideal.

Computing Ratios

When a ratio has a P&L figure both in the numerator

and in the denominator or has aBalance sheet figure both in the numerator and in the

denominator it is called a Straight

Ratio. Where it has the P&L figure in the numerator

and the balance sheet figure in the

Denominator or the balance sheet figure in the

numerator and the P&L figure in the

Denominator it is called a Cross or Hybrid Ratio.

Following table shows the category of the ratios

and their respective measures:

Categories of ratio What they Measure

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Liquidity ratios Short term solvency

Capital Structure

Ratio

Long term solvency

Profitability ratios Ability to make profit

Coverage ratios Adequacy of money for

payments

Turnover ratios Usage of Assets

Capital Market ratio Wealth maximization

A: Liquidity or Short Term Solvency Ratios

Liquidity refers to the speed and ease with which an

asset can be converted to cash.

Liquidity has two dimensions: ease of conversion

versus loss of value. Any asset can be quickly

converted to cash if the price is slashed. A house

property valued at Rs 25 lakhs can be converted to

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cash within 24 hours if you slash the price to Rs 5

lakhs!

So a liquid asset is really one which can be converted

to cash without major loss of value.

An illiquid asset is one that cannot be en-cashed

without a major slash in price.

Current assets are most liquid. Fixed assets are least

liquid. Tangible fixed assets like

land and building and equipment arent generally

converted to cash at all in normal

business activity. They are used in the business to

generate cash. Intangibles such as

trademark have no physical existence and arent

normally converted to cash.

Liquidity is invaluable. The more liquid a business is,

the less is the possibility of itfacing financial troubles.

But too much of liquidity too is not good. Thats

because liquidity has a price tag.

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Liquid assets are less profitable to hold. Therefore

there is a trade off between the

advantages of liquidity and foregone potential profits.

Liquidity or Short term solvency ratios provide

information about a firms liquidity. The

primary concern is the firms ability to pay its bills

over the short run without undue

stress. Hence these ratios focus on current assets and

current liabilities. These ratios are

particularly useful to the short term lenders. A major

advantage of looking at current assets and current

liabilities is that their book values approximate

towards their market values. Often these assets and

liabilities do not live long enough for the two to step

out of line.

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Current Ratio

This is the ratio of current assets to current liabilities.

Also known as liquidity ratio, cash asset ratio, and

cash ratio; a liquidity ratio that measures a company's

ability to pay short-term obligations. it is computed as

follows:

Current Ratio=Current Assets / Current

Liabilities

Because current assets are convertible to cash in one

year and current liabilities are

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payable within one year, the current ratio is an

indicator of short term solvency. The unit

of measure is times. For instance if the current ratio

is 1.4 we say that the ratio is 1.4 times. It means that

current assets are 1.4 times the current liabilities. To a

short term lender, including a creditor, a high current

ratio is a source of comfort. To the firm, a high current

ratio indicates liquidity, but it also may mean

inefficient use of cash and other current assets. The

current radio is affected by various types of

transactions. For example suppose the firm borrows

over the long term to raise money. The short term

effect would be an increase in cash and an increase in

long term debt. So the current ratio would rise.

Finally, a low current ratio is not necessarily bad for a

company which has a largeReservoir of untapped borrowing.

Ideal current ratio preferred by bank is 1.33

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Current ratio=7345.39/3635.51=2.02

Net Working capital

This is the ratio of sales to net working capital. Networking capital would mean current assets less current

liabilities.

Net working capital=Current asset-current

liability

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The amount of money a company has on hand, or will

have, in a given year. Working capital is calculated by

subtracting current liabilities from current assets That

is, one takes the value of all debts and obligations for

the current year and subtracts that from the value of all

cash and assets that might reasonably be converted

into cash in the current year. This is a good measure of

the short and medium-term financial health of a

company, and may indicate by how much it can

expand its operations without resorting to borrowing

or another capital raising tactic. Working capital is

also called operating assets or net current assets.

Net working capital=7345.39-3635.51=3709.88

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Debt Equity Ratio

It is a measure of a company's financial leverage

calculated by dividing its total

liabilities by stockholders' equity. It indicates what

proportion of equity and debt the company is using to

finance its assets. Also known as the Personal

Debt/Equity Ratio, this ratio can be applied to personal

financial statements as well as corporate ones.

A high debt/equity ratio generally means that acompany has been aggressive in financing its growth

with debt. This can result in volatile earnings as a

result of the additional interest expense.

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If a lot of debt is used to finance increased operations

(high debt to equity), the company could potentially

generate more earnings than it would have without

this outside financing. If this were to increase earnings

by a greater amount than the debt cost (interest), then

the shareholders benefit as more earnings are being

spread among the same amount of shareholders.

However, the cost of this debt financing may outweigh

the return that the company generates on the debt

through investment and business activities and become

too much for the company to handle. This can lead to

bankruptcy, which would leave shareholders with

nothing. The debt/equity ratio also depends on the

industry in which the company operates. For example,

capital-intensive industries such as auto manufacturingtend to have a debt/equity ratio above 2, while

personal computer companies have a debt/equity of

under 0.5.

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Debt Equity Ratio=Long Term

liability/Shareholders funds

Hence,

D.E.R=9898.34/13674.49=0.7239

Proprietary ratio

It indicates the extent to which the tangible assets are

financed by owners fund. This is a variant of the debt-

to-equity ratio. It is also known as equity ratio or net

worth to total assets ratio.This ratio relates the

shareholder's funds to total

assets. Proprietary / Equity ratio indicates the long-

term or future solvency position of the business.

This ratio throws light on the general financial

strength of the company. It is also regarded as a test of

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the soundness of the capital structure. Higher the ratio

or the share of shareholders in the total capital of the

company better is the long-term solvency position of

the company. A low proprietary ratio will include

greater risk to the creditors.

Proprietary ratio= (tangible net worth/total

tangible assets)*100

PR = (3632.32/4521.49)*100= 80.33

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Gross Profit Ratio

GPR is the ratio ofgross profit to net sales expressed

as a percentage. It expresses the relationship between

gross profit and sales.

(Gross Profit / Sales)*100

The term gross profit refers to the difference between

sales and works cost.

Higher the percentage the better it is for the company.

Gross profit ratio may be indicated to what extent the

selling prices of goods per unit may be reduced

without incurring losses on operations. It reflects

efficiency with which a firm produces its products. As

the gross profit is found by deducting cost of goodssold from net sales, higher the gross profit better it is.

There is no standard GP ratio for evaluation. It may

vary from business to business. However, the gross

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profit earned should be sufficient to recover all

operating expenses and to build up reserves after

paying all fixed interest charges and dividends.

Causes/reasons of increase or decrease in gross profit

ratio:

It should be observed that an increase in the GP ratio

may be due to the following factors.

Increase in the selling price of goods sold without any

corresponding increase in the cost of goods sold.

Decrease in cost of goods sold without corresponding

decrease in selling price. Omission of purchaseinvoices from accounts. Under valuation of opening

stock or overvaluation of closing stock. On the other

hand, the decrease in the gross profit ratio may be due

to the following factors. Decrease in the selling price

of goods, without corresponding decrease in the cost

of goods sold. Increase in the cost of goods sold

without any increase in selling price. Unfavorable

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purchasing or markup policies. Inability of

management to improve sales volume, or omission of

sales. Over valuation of opening stock or under

valuation of closing stock Hence, an analysis ofgross

profit margin should be carried out in the light of the

information relating to purchasing, mark-ups and

markdowns, credit and collections as well as

merchandising policies.

Gross Profit Ratio= (1601.50/8298.23)*100 =

19.30%

Operating Profit

This is the ratio of operating profit to sales.

Operating Profit / Sales

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The term operating profit is the difference between

gross profit and administration and

selling overheads. Non operating income and expenses

are excluded. Interest expenditure

is also excluded because interest is the reward for a

particular form of financing and has

nothing to do with operational excellence.


Operating Profit= (97604 / 8298.23) = 11.76

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Net profit Ratio

This is the ratio of net profit to sales.

(Net Profit / Sales)*100

The term net profit refers to the final profit of the

company. It takes into account all

incomes and all expenses including interest costs.


NP ratio is used to measure the overall profitability

and hence it is very useful to proprietors. The ratio isvery useful as if the net profit is not sufficient, the firm

shall not be able to achieve a satisfactory return on its

investment.

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This ratio also indicates the firm's capacity to face

adverse economic conditions such as price

competition, low demand, etc. Obviously, higher the

ratio the better is the profitability. But while

interpreting the ratio it should be kept in minds that

the performance of profits also is seen in relation to

investments or capital of the firm and not only in

relation to sales.

It measures Overall Profitability of the company.

Net Profit Ratio = (976.04 / 8298.23)*100 =

11.76%

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Inventory Turnover Ratio

A ratio showing how many times a

company's inventory is sold and replaced over a

period.

This ratio should be compared against industry

averages. A low turnover implies poor sales and,

therefore, excess inventory. A high ratio implies either

strong sales or ineffective buying.

High inventory levels are unhealthy because they

represent an investment with a rate of return of zero. It

also opens the company up to trouble should prices

begin to fall.

The days in the period can then be divided bythe inventory turnover formula to calculate the days it

takes to sell the inventory on hand or "inventory

turnover days".

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It can also be expressed as the ratio of cost of goods

sold to average inventory. While

closing inventory is technically more correct, average

inventory could be used since an

external analyst is unsure whether the year end

numbers are dressed up. The numerator is Cost of

goods sold and not sales because inventory is valued

at cost. However to use Sales in the numerator is

also a practice that many adopt. If the inventory

turnover ratio is 3, it means that we sold off the entire

inventory thrice. As long as we are not running out of

stock and hence losing sales, the higher this ratio is,

the more efficient is the management of inventory. If

we turned over inventory over 3 times during the year,

then we can say that we held inventory for

approximately 121 days before selling it. This is calledthe average days sales in Inventory and is given by

the following formula:

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365 / Inventory turnover ratio

The ratio measures how fast we sold our products.

Note that inventory turnover ratio and

average days sales in inventory measure the same

thing.

It is calculated as follows:

Inventory turnover ratio = sales / inventory

It may also be calculated as

= COGS / inventory

Hence, I.T.R. = sales / inventory

= 8298.23 / 1116.26 = 7.43

Average days sales in Inventory = 365 /

Inventory turnover ratio

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= 365 /7.43 = 49.13

Average Inventory ratio

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It indicates the number of times the inventory is

rotated during the relevant accounting period.

It is obtained by the summation of the opening stock

and closing stock and further divided by 2.

Average Inventory Ratio= (Opening stock +

Closing stock)/2

= (427.44+680.16) /2= 767.52

Debtors Turnover Ratio

This is the ratio of sales to closing debtors.

Sales / Debtors

While closing debtors is technically more correct,

average debtors could be used since anexternal analyst is unsure whether the year end

numbers are dressed up.

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If the debtors turnover ratio is 8, it means that we

collected our outstanding 8 times a

year. As long as we do not miss out sales, the higher

this ratio is, the more efficient is the

management of debtors. This ratio is far easier to

grasp if we converted it into number of days. If we

turned over debtors 8 times a year, we can say that

debtors on an average were 45 days. This is called the

average days sales in receivable and is given by the

following formula:

365 / Receivable turnover ratio

The ratio is often called the Average Collection

period.

Debtors Turnover Ratio= (8298.23 / 835.09) = 9.94

times

Average Collection period= 365 / 9.94 = 36.72 days

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Creditors Turnover Ratio

In so far as we wanted to know how well we used our

debtors we must also know how well we utilize the

creditors. Towards this we compute the Creditors

turnover ratio which is the ratio of purchases to

closing creditors.

Credit Purchases / Creditors

Average creditors could also be used since an external

analyst is unsure whether the year

end numbers are dressed up.

If the creditors turnover ratio is 5, it means that we

paid our outstanding 5 times a year.As long as we do not miss out purchases, the smaller

this ratio is, the more efficient is the

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management of creditors. This ratio becomes more

understandable if we convert it into number of days. If

we turned over creditors 5 times a year, we can say

that creditors on an average were 73 days. This is

called the average days purchases in payables and

is given by the following formula:

365 / Creditors turnover ratio

The ratio is often called the Average Payment

period.

Creditors Turnover Ratio= 2706.29 / 1941.69

= 1.40 times

Average Payment period =.365 / 1.40 = 260.71

Days

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Asset Turnover Ratio

This is the ratio of sales to total assets.

Sales / Total Assets

While total assets is technically more correct,

average assets could also be used.

Average asset is the simple average of opening and

closing assets.

If the total assets turnover ratio is 4, it means that for

every rupee invested we have

generated Rs.4 of sales. The term total assets would be

the sum of fixed assets andcurrent assets.

The higher the ratio the better it is for the company.

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The reciprocal of the total assets turnover ratio is the

Capital Intensity ratio. It can be

interpreted as the rupee invested in assets needed to

generate Re.1 of sales. High values

correspond to capital intensive industries.

1 / Total assets turnover ratio

Asset Turnover Ratio= 8298.23 / 3833.25 = 0.8

Fixed Assets turnover ratio

This is the ratio of sales to fixed assets.

The fixed assets should typically be on net basis i.e.

net of accumulated depreciation.

Sales / Net fixed assets

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Average fixed assets i.e. the simple average of

opening and closing fixed assets can also

be used. If the fixed assets turnover ratio is 3, it means

that for every rupee invested in fixed assets we have

generated Rs.3 of sales.

The higher the ratio the better it is for the company.

Fixed Assets turnover ratio = 8298.23 / 3833.25 =

2.16

Current Asset Turnover Ratio

Ratio that indicates how efficiently a firm is using

its current assets to generate revenue.

Net sales/Current Assets

Current Asset Turnover Ratio = 8298.23 / 3709.88

= 2.24

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Return on Assets

An indicator of how profitable a company is relative to

its total assets. ROA gives an idea as to how

efficient management is at using its assets to generate

earnings. Calculated by dividing a company's annual

earnings by its total assets, ROA is displayed as a

percentage. Sometimes this is referred to as "return on

investment".

ROA tells you what earnings were generated from

invested capital (assets). ROA for public companies

can vary substantially and will be highly dependent on

the industry. This is why when using ROA as a

comparative measure, it is best to compare it against a

company's previous ROA numbers or the ROA of a

similar company.

The assets of the company are comprised of both debtand equity. Both of these types of financing are used

to fund the operations of the company. The ROA

figure gives investors an idea of how effectively the

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company is converting the money it has to invest into

net income. The higher the ROA number, the better,

because the company is earning more money on less

investment. For example, if one company has a net

income of Rs.1 million and total assets of Rs. 5

million, its ROA is 20%; however, if another company

earns the same amount but has total assets of Rs.10

million, it has an ROA of 10%. Based on this example,

the first company is better at converting its investment

into profit. When you really think about

it, management's most important job is to make wise

choices in allocating its resources. Anybody can make

a profit by throwing a ton of money at a problem,

but very few managers excel at making large profits

with little investment.

ROA= NPAT / Total Assets = 976.04 / 23965.21 =

0.04

Return on Capital Employed

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This is the more popular ratio and is the ratio of EBIT

to capital employed

(EBIT / Capital employed)*100

The term capital employed refers to the sum of net

fixed assets and net working capital.

This ratio measures the productivity of money.


ROCE= (1385.54/2928.64)*100 = 47.31%

Return on Equity Capital

In real sense, ordinary shareholders are the real owners

of the company. They assume the highest risk in the

company. (Preference share holders have a preference

over ordinary shareholders in the payment

of dividend as well as capital.

Preference share holders get a fixed rate

of dividend irrespective of the quantum of profits of

the company). The rate of dividends varies with the

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availability of profits in case of ordinary shares only.

Thus ordinary shareholders are more interested in the

profitability of a company and the performance of a

company should be judged on the basis of return on

equity capital of the company. Return on equity capital

which is the relationship between profits of a company

and its equity can be calculated as follows:

Return on Equity Capital = [(Net profit after

tax Preference dividend) / Equity share

capital] 100

This ratio is more meaningful to the

equity shareholders who are interested to know profits

earned by the company and those profits which can be

made available to pay dividends to them.

Interpretation of the ratio is similar to the

interpretation of return on shareholders investment

and higher the ratio better is.

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ROEC = [(976.04 - 0.00) / 2928.64]*100 =33.33

Earnings per Share

This is the ratio of profit after tax and preference

dividends to number of equity shares outstanding.

(Profit after tax / No. of equity shares)

This measures the amount of money available per

share to equity shareholders.

The EPS has to be used with care. Two companies

raising identical amounts of money

and making identical after tax profits can report

substantially different EPS.

Consider this example. A Ltd. raises Rs.100 lakhs of

equity with each share having a

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face value of Rs.10. The premium on issue is Rs.90

implying that 1, 00,000 shares are

raised. In accounting speak, Rs.10 lakhs goes to equity

account and Rs.90 lakhs goes to

share premium account. Suppose the company makes

a profit after tax of Rs.50 lakhs.

Since there are 1 lakhs shares outstanding the EPS is

Rs.50. The return on net-worth is

50%. Now B Ltd. raises Rs.100 lakhs of equity with

each share having a face value of Rs.10. The premium

on issue is Rs.40 implying that 2,00,000 shares are

raised. In accounting speak, Rs.20 lakhs goes to equity

account and Rs.80 lakhs goes to share premium

account. Suppose the company makes a profit after tax

of Rs.50 lakhs. Since there are 2 lakhs shares

outstanding the EPS is Rs.25. The return on net-worthis 50%.

Both companies have the same RONW, the same face

value per share, but the first

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company returns an EPS of Rs.50 and the second an

EPS of Rs.25

EPS= (976.04 / 2928.64)*10= 3.33

Price Earning Ratio

This is the ratio of market price per equity share to

earning

per share. Also known as the PE multiple, the

following is the formula:

Market price per share / Earnings per share.

Suppose the PEM is 12. Typically, this means that if

all earnings are distributed as

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dividends then it would take the investor 12 long years

before he recovers his initial

investment. If that be so, why do investors invest in

companies with high PEM? Reason:

Investors expect the companys earnings to grow. The

PEM can hence be looked upon as

an investors confidence in the growth prospects of the

company.

PER = 10 / 3.33 = 3

Dividend per Share

The the sum of declared dividends for every ordinary

share issued. Dividend per share (DPS) is the total

dividends paid out over an entire year (including

interim dividends but not including special dividends)divided by the number of outstanding ordinary shares

issued.

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Dividend per Share (DPS) = (Dividends

announced during the period / Number of

Shares in issue)

Dividends per share are usually easily found on quote

pages as the dividend paid in the most recent quarter

which is then used to calculate the dividend yield.

Dividends over the entire year (not including any

special dividends) must be added together for a proper

calculation of DPS, including interim dividends.

Special dividends are dividends which are only

expected to be issued once so are not included. The

total number of ordinary shares outstanding is

sometimes calculated using the weighted average over

the reporting period.

Dividends are a form of profit distribution to theshareholder. Having a growing dividend per share can

be a sign that the company's management believes that

the growth can be sustained.

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DPS = (292.86 / 2928.64) = 0.10

Dividend Payout Ratio

The payout ratio provides an idea of how well

earnings support the dividend payments. More mature

companies tend to have a higher payout ratio.

Dividend per share/EPS

Dividend payout ratio is the fraction of net income a

firm pays to its stockholders in dividends. The part of

the earnings not paid to investors is left for investment

to provide for future earnings growth. Investors

seeking high current income and limited capital

growth prefer companies with high Dividend payoutratio. However investors seeking capital growth may

prefer lower payout ratio because capital gains are

taxed at a lower rate. High growth firms in early life

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generally have low or zero payout ratios. As they

mature, they tend to return more of the earnings back

to investors.

DPR = 0.10/3.33 = 0.03

Capital Gearing Ratio

Closely related to solvency ratio is the capital

gearing ratio. Capital gearing ratio is mainly used toanalyze the capital structure of a company.

The term capital structure refers to the relationship

between the various long-term form of financing such

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as debentures, preference and equity share capital

including reserves and surpluses. Leverage of capital

structure ratios are calculated to test the long-term

financial position of a firm.

The term "capital gearing" or "leverage" normally

refers to the proportion of relationship between equity

share capital including reserves and surpluses to

preference share capital and other fixed interest

bearing funds or loans. In other words it is

the proportion between the fixed interest or dividend

bearing funds and non fixed interest or dividend

bearing funds. Equity share capital includes equity

share capital and all reserves and surpluses items that

belong to shareholders. Fixed interest bearing funds

includes debentures, preference share capital and other

long-term loans.Capital gearing ratio is important to the company and

the prospective investors. It must be carefully planned

as it affects the company's capacity to maintain a

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uniform dividend policy during difficult trading

periods. It reveals the suitability of company's

capitalization.

Capital gearing ratio = (Preference

share capital + Debentures + long term

borrowings) / Equity funds

CGR = (9898.34 / 2928.64) = 3.38

Return on Capital Employed

A ratio that indicates the efficiency and profitability of

a company's capital investments.

ROCE should always be higher than the rate at

which the company borrows; otherwise any increase in

borrowing will reduce shareholders' earnings.

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A variation of this ratio is return on average capital

employed (ROACE), which takes the average of

opening and closing capital employed for the time

period. This is the more popular ratio and is the ratio

of EBIT to capital employed

(NPAT / Capital employed)*100

The term capital employed refers to the sum of net

fixed assets and net working capital.

This ratio measures the productivity of money.


ROCE = (976.04/ 2928.64)*100 = 33.33

Return on owners Fund

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This ratio is of practical importance to the proprietors

as well as prospective investors. It enables them to

compare the earning capacity of the enterprise with

that of other enterprise. There should be a minimum

return on investment to shareholders. Bankers and

financers will not be ready to finance if it does not

show adequate profit.

(NPAT / Shareholders Funds)*100

ROF= (976.04 / 13674.49)*100 =7.14

Overview

Sources of long term finance

Working Capital Management

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Management of Inventory


finance is the life blood of business. It is of vital

significance for modern business which requires huge

capital. Funds required for a business may be

classified as long term and short term. Finance is

required for a long period also. It is required for

purchasing fixed

assets like land and building, machinery etc. Even a

portion of working capital, which is required to meet

day to day expenses, is of a permanent nature. Tofinance it we require long term capital. The amount of

long term capital depends upon the scale of business

and nature of business. A business requires funds to

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purchase fixed assets like land and building, plant and

machinery, furniture etc. These assets may be regarded

as the foundation of a business. The capital required

for these assets is called fixed capital. A part of the

working capital is also of a permanent nature. Funds

required for this part of the working capital and for

fixed capital is called long term finance.

Purpose of long term finance

Long term finance is required for the following

purposes:

1. To Finance fixed assets:

Business requires fixed assets like machines, Building,

furnitureetc. Finance required to buy these assets is for a long

period,

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because such assets can be used for a long period and

are not for

resale.

2. To finance the permanent part of working

capital:

Business is a continuing activity. It must have a

certain amount of

working capital which would be needed again and

again. This part

of working capital is of a fixed or permanent nature.

This

requirement is also met from long term funds.

3. To finance growth and expansion of business:

Expansion of business requires investment of a hugeamount of

capital permanently or for a long period.

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The main sources of long term finance are as follows:

1. Shares:

These are issued to the general public. These may be

of two types:

(i) Equity and (ii) Preference. The holders of shares

are the owners

of the business. Here Equity shares are issued.

Authorized share capital is 50000000 Equity

shares of Rs.10/- each

Issued, Subscribed and paid up capital is

29286400 Equity shares of Rs.10/- each fully paid-

up.

2. Debentures:

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These are also issued to the general public. The

holders of

debentures are the creditors of the company.

No debentures are issued here.

3. Public Deposits :

General public also like to deposit their savings with a

popular

and well established company which can pay interest

periodically

and pay-back the deposit when due.

4. Retained earnings:

The company may not distribute the whole of its

profits among its

shareholders. It may retain a part of the profits andutilize it as

capital.

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5. Term loans from banks:

Many industrial development banks, cooperative

banks and commercial banks grant medium term loans

for a period of three to five years.

Here, Term Loans are granted from Axis Bank

Ltd., Indian Overseas Bank , SBI.

Foreign Currency Term Loan from SBI.

Cash credit from SBI and Axis Bank Ltd.

6. Loan from financial institutions:

There are many specialized financial institutions

established by

the Central and State governments which give long

term loans at

reasonable rate of interest. Some of these institutionsare:

Industrial Finance Corporation of India (IFCI),

Industrial

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Development Bank of India (IDBI), Industrial Credit

and Investment

Corporation of India (ICICI), Unit Trust of India

(UTI ), State

Finance Corporations etc.

Vehicle Loans from:

Reliance Capital Ltd. - 4.48 lac

ICICI Bank Ltd. - 2.56 lac

Kotak Mahindra Bank Ltd. 44.50 lac

Axis Bank Ltd 2.83 lac

Working Capital Management

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A managerial accounting strategy focusing on

maintaining efficient levels of both components of

working capital, current assets and current liabilities,

in respect to each other. Working capital management

ensures a company has sufficient cash flow in order to

meet its short-term debt obligations and operating

expenses.

Implementing an effective working capital

management system is an excellent way for many

companies to improve their earnings. The two main

aspects of working capital management are ratio

analysis and management of individual components of

working capital.

A few key performance ratios of a working capital

management system are the working capital ratio,

inventory turnover and the collection ratio. Ratioanalysis will lead management to identify areas of

focus such as inventory management, cash

management, accounts receivable and payable

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management. Here the Net Working Capital of the

company is Rs. 3709.88

Management of Inventory

Inventory management is primarily about specifying

the shape and percentage of stocked goods. It is

required at different locations within a facility or

within many locations of a supply network to proceed

the regular and planned course of production and stock

of materials.

The scope of inventory management concerns the fine

lines between replenishment lead time, carrying costs

of inventory, asset management, inventory forecasting,

inventory valuation, inventory visibility, future

inventory price forecasting, physical inventory,

available physical space for inventory, quality

management, replenishment, returns and defectivegoods and demand forecasting. Balancing these

competing requirements leads to optimal inventory

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levels, which is an on-going process as the business

needs shift and react to the wider environment.

Inventory management involves a retailer seeking to

acquire and maintain a proper merchandise assortment

while ordering, shipping, handling, and related costs

are kept in check. It also involves systems and

processes that identify inventory requirements, set

targets, provide replenishment techniques, report

actual and projected inventory status and handle all

functions related to the tracking and management of

material. This would include the monitoring of

material moved into and out of stockroom locations

and the reconciling of the inventory balances. Also

may include ABC analysis, lot tracking, cycle

counting support etc. Management of the inventories,

with the primary objective of determining/controllingstock levels within the physical distribution function to

balance the need for product availability against the

need for minimizing stock holding and handling costs.

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The reasons for keeping stock

There are three basic reasons for keeping an inventory:

Time - The time lags present in the supply chain,

from supplier to user at every stage, requires that

you maintain certain amounts of inventory to use

in this "lead time."

Uncertainty - Inventories are maintained as

buffers to meet uncertainties in demand, supply

and movements of goods.

Economies of scale - Ideal condition of "one unit

at a time at a place where a user needs it, when he

needs it" principle tends to incur lots of costs in

terms of logistics. So bulk buying, movement and

storing brings in economies of scale, thusinventory.

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There are basically three main categories/stages of

inventory.

Raw Material- In the company, the raw

materials that are used mainly includes the raw

eatable items such as fruits and vegetables,

cereals and dry fruits, different types of flour,

spices, juices, milk, etc.These are some of the

raw materials that are daily used in kitchen of

the hotel.

Work in Progress-When the raw materials are

inputted for the production process, it is known

as work in progress.

Finished goods-finished goods are the final

product that is obtained after the production

process.

Each and every department keeps the

checklist of the Inventories that are used

during a particular period of time and than

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the financial data is handed over to the

finance department. it is checked weekly ,

monthly , quarterly and yearly.

Suggestion

Hotel should increase the wages level of the

employees.

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Hotel provides food & accommodation for free as

additional facilities localize dont take

advantage of accommodation although they are

not provided the additional allowances to

compensate this faculty; therefore they feel like

loosing something. Therefore Hotel should

provide allowances to those who are not using

food and/or accommodation or any other

complimentary services/facilities provided by

hotel.

The authority of Hotel must take steps to reduce

stress and monotony among employees for job

The hotel can put a suggestion/complain box

where every body can drop their

views/problems/complains/suggestions.

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Conclusion

From the research material reviewed, itappears that the extensive investment in TGBhotels all over Gujarat is proved to be a hugesuccess. There is evidence of the Peoplessatisfaction which supports revenue

maximization objectives.The hospitality industry has a stronger passionfor customer satisfaction than ever before andTGB should support this trend.Winning customers heart and satisfaction

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through unique hospitality allow themanagement to cater the business successfully.

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Webography

1. http://www.accountingformanagement.com/

2. http://www.investopedia.com/

3. http://thegrandbhagwati.com/
http://www.accountingformanagement.com/http://www.investopedia.com/http://thegrandbhagwati.com/http://www.accountingformanagement.com/http://www.investopedia.com/http://thegrandbhagwati.com/

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