A

Project Report
On
Financial Statement Analysis
Of
Jaipur Rugs
Submitted in Partial Fulfillment for the Degree of
Bachelor of Business Administration

.
S.S. JAIN SUBODH P.G. (AUTONOMOUS) COLLEGE,
JAIPUR (2017-18)

SUBMITTED BY SUBMITTED To
ABHISHEK JAIN Dr. RITA JAIN
ZUBAIR KHAN (H.O.D BBA)
ABHISHEK JANGIR
ABHISHEK MISHRA
ABHISHEK PATIDAR
(VI Semester)

i
 CERTIFICATE

This is to certify that the Project Report entitled “Financial Statement

Analysis of Jaipur Rugs” is a record of project work done independently by
Mr. Abhishek Jain under my guidance and supervision and that it has not
previously formed the basis for the award of any degree, fellowship or
associate ship.

Dr. Rita Jain

H.O.D BBA

S.S. Jain Subodh P.G. (Autonomous) College Jaipur

ii
 DECLARATION

I, Abhishek Jain student of BBA Semester VI hereby declare that the project
work presented in this report is my own work and has been carried out under the
supervision of Dr. Rita Jain of S.S Jain Subodh P.G (Autonomous) College.

This work has not been previously submitted to any other university for any
examination.

Abhishek Jain

S.S. Jain Subodh P.G. (Autonomous) College Jaipur

iii
 ACKNOWLEDGEMENT

It is not often in life that you get a chance of appreciating and expressing your
feelings in black and white to thank the people who have been a crucial part of
your successes, your accomplishments, and your being what you are today. I take
this opportunity to first of all thank the Faculty at S.S. Jain Subodh
P.G.(Autonomous) College, especially Dr. K.B.Sharma, Principal, and Dr. Rita
Jain, Head, Department of BBA for inculcating and instilling me the knowledge,
learning, will-power, values and the competitiveness and professionalism
required by me as a management student.

I would like to give special thanks to Dr. RITA JAIN for educating me silver
lining in every dark cloud. Her enduring efforts, guidance, patience and
enthusiasm have given a sense of direction and purposefulness to this project and
ultimately made it a success.

I express my sincere and heartiest thanks to everyone who has contributed

towards the successful completion of the Project.

Last but not the least; I would like to thank my family: my parents for supporting
me spiritually throughout my life.

The errors and inconsistencies remain my own.

Abhishek Jain

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S.No Chapter Name Page No.

Introduction To The
1 1
Topic

2 Profile of the Company 31

3 Literature Review 45

4 Research Methodology 55

5 Analysis & Interpretation 59

6 Bibliography 80
 CHAPTER 1

INTRODUCTION TO THE TOPIC

1
INTRODUCTION

The Financial Statements Module Area is eight interconnected Module Areas of a spreadsheet
model as shown in the diagram below. These generic Module Areas can be used to develop a
“whole-of business financial model”.

The Financial Statements Module Area is comprised of three Module Types, representing each
of the three financial statements. Each of these financial statements has the purpose of
summarizing a different component of an entity‟s financial position. The three different Module
Types within the Financial Statements Module Area are:

1. Income Statement;

2. Balance Sheet; and

3. Cash Flow Statement.

It is important to understand the purpose of each of these three Financial Statements Module
Types, and the functionalities that can be included within them to meet the requirements of
model users. It is also important to understand how they can be interlinked with modules from
other Module Areas, to ultimately create the required components of a spreadsheet model.

1.2

Financial Modeling for Project Appraisal

Each of the Financial Statements Module Types that may be included in a spreadsheet model is
briefly explained below. Financial Statements Modules Types The three Financial Statements
Module Types within the Financial Statements Module Area are defined as follows: Module
Type Definition

1. Income Statement

• Provide a summary of the revenues, costs and expenses of an entity during an accounting
period.

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• An Income Statement is generally used to calculate the Net Profit after Tax (NPAT) of an
entity

• Also referred to as a „Statement of Financial Performance‟ or a „Profit & Loss Statement‟.

2. Balance Sheet

• Shows the status of an entity‟s assets, liabilities and owner‟s equity at a point in time, usually
the close of a month.

• A Balance Sheet provides a snapshot of the entity‟s financial position, including the cumulative
results of the Income Statement and Cash Flow Statement, at a point in time.

• Also referred to as „Statement of Financial Position‟.

3. Cash Flow Statement

• Shows how changes in Income Statement and Balance Sheet accounts affect cash and cash
equivalents during an accounting period.

• A Cash Flow Statement breaks the analysis down according to operating, investing and
financing activities.

• Also referred to as a „Statement of Cash Flows‟.

These three Financial Statement Modules can be built into a spreadsheet model independently,
or linked together to establish relationships between them – e.g. Income Statement, Balance
Sheet and Cash Flow Statement Modules might link in data from Operational, Working Capital
and Assets Modules and then link to each other such that live, linked financial statements can be
analyzed.

3
Understanding Financial Statements and Annual Reports

Investors and owners have struggled with communicating and analyzing financial performance
for centuries. Since the beginning of business activity – and with it, delegation of responsibility –
the owner of the invested resources has sought to monitor and evaluate the stewardship of the
operating manager. Accounting is the language of business. It is the vehicle for communicating
financial information about a company to many different groups of people: managers, owners,
creditors, investors, customers, suppliers, government agencies, economists and others. Each of
these groups may have different uses for the information. Owners are concerned that the
company produce a profit and increase their wealth. Creditors want to know that the company is
liquid enough to make debt payments and solvent enough to repay the loan principle if the
business fails. Managers want to be compensated for their work and have confidence that their
employer will provide job security. Customers and suppliers want to benefit from the ongoing
business relationships. The government wants to ensure the public good, by collecting taxes and
improving financial reporting. All these stakeholders can benefit and achieve their objectives if
they have good accounting information. Accounting is an ever-changing communicative system.
All parties with a stake in the economic environment, upon which accounting reports,
continually press for improvements in the information that accounting systems provide.

What the Financial Statements Don‟t Tell

Us The financial statements provide a great deal of information about a company, but there is
still more that we may want to know. The financial scams in the recent past have brought more
attention to what the statements don‟t tell us. In particular, the focus has shifted to a company‟s
off-balance sheet liabilities. Off-balance sheet financing are methods used to finance a company
without showing debt on the face of the balance sheet. Fortunately, there has been a significant in
the accounting principles in the recent years that bring many of the formerly off-balance sheet
liabilities at least in the notes to accounts or disclosures.

What to Watch for in a Financial Disclosure Here are a few things to watch for in analyzing
financial statements:

(a) In the financial statements, look for :

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In the footnotes, look for:

• adoption of new accounting standard before the company is required to adopt it

• related parties transactions

• shifting of receivables to or from subsidiary

• reducing in a line of credit

• change in assumptions for employee benefits (AS-15)

• change in depreciation lives or salvage values or methods of charging depreciation

• contingent liabilities and provisioning norms

Comparing to year-to-year changes and overall trends, look for:

• Change in accounting method

• Substantial increase in deferred revenue

• Increase in the valuation allowance

• Cash flow from operations that is increasing or decreasing at a rate different from that of net
income

• Falling reserves for bad debts and accounts receivable.

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FINANCIAL STATEMENT ANALYSIS

Financial Statement A statement is numerical report to express some facts. A financial statement
is a numerical report covering financial information to express the financial results and financial
condition of the concern. According to John Myer, the term financial statement refers to the two
statements, which the accountant prepares at the end of the period for a business enterprise. They
are the balance sheet or statement of financial position and the income statement or profit and
loss statement. According to Kohler, financial statements are those statements, which show both
the performance and the financial position. They include balance sheet, income statement, fund
statement or any supporting statement or other presentation of financial data derived from
accounting records. According to J.J. Hampton, 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 Financial Modeling for Project Appraisal balance sheet, or may reveal
a series of activities over a given period of time, as in the case of an income statement.
According to AICPA (American Institute of Certified Public Accountants), financial statements
reflect a combination of recorded facts, accounting principles and personal Judgements.
According to Smith and Ashburne, the financial statement is the end product of financial
accounting, prepared by the accountant of an enterprise, the result of its represents financial
position, and analysis of worked has been done with earnings. The components of financial
statements are:

(1) Income Statement: It shows financial results of a business.

(2) Balance Sheet: It shows financial position of a business at a particular moment of time. It
represents proprietors‟ fund, liabilities to outsiders, investment in all assets.

(3) Statement of Retained Earnings: It shows appropriation and distribution of earnings.

(4) Statement of Changes in Financial Position: It shows the movement of working capital or
cash or financial position for a better understanding of the affairs of the business. Thus financial
statements are prepared for presenting a periodical review or report on the progress by the
management and deal with

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(i) the status of investments in the business and

(ii) the results achieved during the period under review.

Nature of Financial Statement Financial statement is prepared for external reporting in the form
of Balance Sheet and Profit & Loss Account. These statements are contained in company‟s
annual report, which includes chairman‟s speech, the director‟s report, the auditor‟s report and
accounting policy changes. Number of schedules, supplementary statements, explanatory notes,
footnotes etc supports these statements.

According to AICPA, these statements reflect a combination of recorded facts, accounting

conventions, personal judgment‟s and the judgment‟s & conventions applied affect them
materially.

The natures of financial statement are as follows:

(1) Recorded Facts: The events that changed the financial position are recorded in primary
book, in journal proper. From these books, ledgers are prepared and there from trial balance is
prepared. All the facts and figures recorded in these books and statements are called recorded
facts. The financial statements are prepared from these recorded facts. Therefore, the financial
statement published only recorded facts in accounting. Many important unrecorded facts are not
disclosed in financial statement. For example, efficiency of labour is important matter but not
shown in financial statement. However, some unrecorded facts (such as market value of
investment, contingent liability) are disclosed in bracket or in footnotes to make the significant
financial statement.

(2) Accounting Conventions: Accounting is based on a number of conventions, which are to be

taken into account in preparing financial statement. For example, there are many conventions in
respect of charging some portion of a particular expense to Profit and Loss Account and rest
portion of the same to capital account. Because of the above facts, financial statements have
following features: -

(i) data shown in financial statements are subject to the validity of the conventions used in their
preparation

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(ii) the same pattern of conventions should be followed by the all concerns under same industry
for comparison purpose.

(3) Generally Accepted Accounting Principles (GAAP): Accounting is based on some

accepted and running rules, assumptions, ideas known as concepts and conventions. GAAP
includes these concepts, conventions, principles which are used as standard for recording the
financial transactions. Consequently, the financial statements are influenced by the GAAP, e.g.
closing stock is valued at cost or market price whichever is lower followed by conservatism
convention. Profit is measured by „revenue‟ minus „cost‟ followed by matching concept.

(4) Personal Judgements: Although a number of conventions and concepts have been
propounded in accountancy, their use is greatly affected by the personal judgement of the
accountants. In some cases, accountants find a number of alternative solutions, e.g. there are
number of methods of calculating cost of stock such as LIFO, FIFO, Simple Average, Weighted
Average etc. Out of these methods, one method is selected by the accountant on the bases of his
opinion and his personal judgement. So the personal judgement of the accountants may affect the
amount kept for the reserve for doubtful debts, depreciation, allocation of expenses, value of
stock etc. Importance or Uses or Functions or Purposes of Financial Statement Financial
statements contain much useful and valuable information regarding the profitability, position and
future prospects of the concerns, which are very helpful in analysis and interpretation of these
statements.

The uses and importance of financial statements have been discussed as

under:

(1) To the management: For proper execution of managerial functions, management needs
correct and reliable information. In the absence of such information, management can neither
plan nor fulfill other functions. For efficient use of capital employed, for determination of credit
standard, for improving financial position, the guidance of financial statement is necessary.
Well-drawn and properly constructed financial statements have great help in policy formulation.
It helps in analysis of net results of different activities and the efficiency of employees concerned
with those activities.

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(2) To the suppliers: The supplier of trade credit always strives to attract a good number of
new traders. Due to tough competition, supplier of trade credit feels that the financial position of
the traders must be examined before selling him goods on credit. They should check whether the
financial position of traders sound and satisfactory or traders are very lazy in making payments
at the right time. The financial statement can show the exact position in these matters and can
suggest about trader‟s ability to make the payment in future.

(3) To the owners: Owners of the concern are interested to know whether the business is
being carried on efficiently and the amount invested is efficiently employed from the view point
of risk and return. It is obvious that owners will get this information through the financial
statement.

(4) To the investor: Financial statements are significant for present and prospective investor.
If investor is prospective shareholder then he will be interested about adequate earning power,
potentialities of growth and managerial ability, future change in capital structure, potentialities of
future development. If the investor is debenture holder, he wants to know about the long-term
solvency, earning capacity. Financial statement gives this information in analytical manner.

(5) To the banker: Financial statements help banks in taking decisions regarding the
extension of loans to their customers. Banks needs analytical information regarding customer‟s
present financial position, liquidity position, credit standard, earning capacity, assets-distribution
and future development programme So, financial statements have great significance for the
banking company.

(6) To the Government: Government (Company Law Board) acquires a copy of financial
statements from every company to assess whether these statements have been prepared and
published according to the rules or not. Again, government has recently started active
participation in economic activities. So the government is interested in position of companies, in
taxable income, in net wealth, which is available in financial statements.

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(7) To the stock exchange: The shares of company are listed in the stock exchange. To
analysis the operating performance, financial strength, stability, fix up price of share the financial
statement will provide information to the share brokers.

(8) To the employees and trade unions: Financial statements provide information to the
employees & unions about operating performance, wages policy to make ground for claiming
bonus and other profit sharing.

(9) To the customers: The financial statement is useful to customers to know the cost
structure, credit policy, profit margin etc.

(10) To the research scholar: Various research institutions and individual researchers have
deeper interests in the financial records of the concerns operating in the country. Limitations of
Financial Statement Analysis or Financial Statement Financial statement is prepared with the
object of presenting a periodical report on the progress by management and deal with the status
and result of the business.

But these objectives are not fulfilled due to following limitations:

(i) Financial statement is essentially interim report. This report is mostly dependent on estimated
facts and on inaccurate information because expenses and incomes are allocated between
different periods based on inappropriate base, assets are amortised over a period of estimated
life. The exact position can be shown only when the business is closed down. This problem may
be solved if the time of going concern is divided in suitable accounting period according to
accounting period concept and capital expenditure / income; revenue expenditure/income is
identified and suitably matched and then financial statement will disclose the real position.

(ii) It shows many contingent assets and liabilities and fictitious assets, which have no realizable
value. Beside this, the disclosed value of assets is not realizable value or replacement value. So
the financial statement does not disclose the real position of the concern. This problem may be
solved if assets and liabilities are revalued from time to time, efficient valuer makes valuation,
fictitious assets are written off against retained earnings, contingent items are valued from past
experience.

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(iii) Balance Sheet is considered to a static document and it reflects the position of the concern at
a moment of time. The real position of the concern may be changing day to day. As a result,
there is possibility of window-dressing in the Balance Sheet.

(iv) Financial statement may not be realistic and reliable because of the fact that it is based on
certain concepts & conventions, which are not at all sound and realistic. For example, according
to conservatism convention probable losses are ignored so it cannot disclose true position. This
problem can be overcome if all the concepts and conventions are balanced and if contradictions
among them are eliminated and if emphasis is given on that convention which are suitable for the
concern.

(v) It shows the financial items that have taken place during a period at historical cost. It also
includes the effect of transactions of the previous periods. Such historical statement can never be
100% helpful for future planning. This problem can be solved by the inflation accounting, which
may disclose the effect of change in price and current position.

(vi) The analysis which is based on single year‟s statement, will not be very much useful. For
this purpose comparative analysis, common size analysis, trend analysis is necessary.

(vii) If different methods of accounting are followed by different concerns under same industry,
then it is difficult to compare the position. This problem may be solved by application of uniform
costing and uniform accounting system.

(viii) It discloses only recorded monetary fact. But, non-monetary facts (such as quality of
product, efficiency of labour, industrial relation etc.) which have great effect on financial
position are not shown here. At present, quality control technique, value added analysis etc. are
implemented to minimise there problems.

(ix) The financial statement is influenced by personal judgement of accounting personnel. For
example, Accountant selects methods of depreciation, methods of valuation of stock etc. So this
statement cannot be blindly relied upon. The soundness of such judgement will depend upon
Accountant‟s or Manager‟s competence. At present, this problem is solved by the guidelines of
Accounting Standard, which helps, in comparative analysis.

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(x) The most important asset of the business is human resource but it is not shown in Balance
Sheet. So the financial statement cannot show the real strength of the business in terms of quality
and quantity of human asset. At present, this problem is minimised by human resource
accounting.

Meaning of Analysis and Interpretation Robert H. Wessal

A Comparative Study The significance of financial statements lies not in their preparation but in
their analysis and interpretation. The analysis and interpretation of financial statement is the
comprehensive and intelligent presentation of information that helps the interested parties for
judgement and decision-making.

Robert H. Wessal has defined analysis and interpretation of financial statement as a technique of
X-Raying the financial position as well as the progress of a company. Financial statement
analysis is a study of relationship among different financial data as disclose by single statement
and a study of trend of this factors as shown in series of statement, which helps in finding the
strength and weakness of the concern and which supplies required data for forecasting and
budgeting. Analysis means proper arrangement of the data and methodical classification of the
data given in the financial statement and regrouped into their distinct and different components
parts. It involves the division of facts based on some definite plans, classifying them into classes
based on certain condition and presenting them in most convenient simple and understandable
form. The figures given in the financial statement will not help unless they are put in a simplified
form. Interpretation means explaining the meaning and significance of the data so simplified. It
is comparison and examination of components for making conclusion about the profitability,
efficiency, financial soundness of the business. It is really an art, it involves many processes; like
arrangement, analysis, establishing relations between available facts and drawing conclusion on
that basis. Interpretation and analysis are closely connected because interpretation is impossible
without analysis and without interpretation analysis is useless. The data of financial statement are
not uniform and homogeneous so analysis is made for reclassified, re-arranged to make relation
between them. Interpretation is conclusion and representing of such arrangements to supply
information to the interested parties. Analysis is always followed by interpretation and this

12
interpretation is performed through a process called comparison. Therefore, whenever the word
analysis is used it implies both analysis and interpretation.

According to material use: Financial analysis is of two types – external

analysis and internal analysis.

External Analysis: If analysis of financial statement is made by external persons who non
related to the accounting records of the concern and have to depend on published financial
statement is external analysis.

Outsiders use only the figures of financial statement and other supplementary of the annual
reports to get an idea and to take appropriate decision. As it is used by the external people so it is
called external analysis. Generally it is made by bank, money lenders, creditors, govt. agencies,
prospective investors etc.

Internal Analysis: If the analysis of financial statement is made by internal person who are
related to the accounting records of the concerns from internal records and books is known as
internal analysis. It is made by members of the concern such as, staff of finance and accounting
department, executives etc. to help the management in assessing the profitability, solvency,
liquidity etc. and to indicate the reasons of weakness of the firm. This is conducted by the people
inside the firm and for the benefits of the organisation so it called internal analysis.

(2) According to Modus Operandi of analysis (or Method of Operation) :

Financial analysis may be of two types: - Horizontal and vertical:

Horizontal Analysis: When financial statement of one year of a particular organisation are
analysed and interpreted with comparing another year or years, it is called horizontal analysis.
Vertical Analysis: When financial statement of an organisation for one period is analyzed
then it is called vertical analysis. This analysis is useful in inter firm comparison.

(3) According to objectives: Financial statement analysis may be long term and short-term
analysis.

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Long Term Analysis: Long term analysis is made to study long term financial stability,
solvency, and profitability of a concern. This analysis helps to know whether the firm will
survive in long run and helps in long term financial planning.

Short Term Analysis: Short term analysis is made to study current financial stability,
solvency, and profitability of a concern. This analysis helps to know whether the firm will have
sufficient fund to meet its short term requirement that is helps in working capital analysis.
Benefits

(i) Importance to management: According to Robert. H. Wessel through the financial

statement analysis the management can measure the effectiveness of its own policies; can
determine the ability of adopting new policies & procedures and can measure the result of their
managerial efforts. Through this analysis, they can study the relative efficiency and weakness of
different departments and can find the ways to overcome the deficiencies.

(ii) Importance to investors: From this analysis, the investor can able to know the earning
capacity, soundness of dividend policies, and degree of financial growth. By analyzing the
financial statement, the prospective investor can take investment decision.

(iii) Importance to creditors: From this analysis, creditors can able to know the credit
worthiness, capacity to pay the outsiders obligation and solvency of the firm.

(iv) Importance to financial analysts and research scholars: According to N.K.

Kulshrestha, financial analysis can look through the financial policies persuade by the
management and offered constructing suggestion to overcome the financial problems. (v)
Importance to economists: An economist can study the extent of concentration or economic
power, can analyze the financial policies, and can make an option about the pattern of
investment.

(vi) Importance to labour union: The labour union can understand the fairness of wages
policy, degree of exploitation, goodness of work environment etc.

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(vii) Importance to legislation: Legislation can get the information about licensing, price
fixing and other regulations.

Limitations

(i) It is difficult to decide on the proper basis of comparison.

(ii) The comparison is difficult because of difference in situation of two companies or of one
company over years.

(iii) It is invalid if the price level changes.

(iv) Historical financial statements are not indicator of future.

Role of Financial Statements in Exhibiting True & Fair View

Before going into the debate whether published accounts present a „true and fair view‟ or not, it
is necessary to know – what is true and fair view? Section 129(1) of Company Act, 2013 states
that financial statement should give a true and fair view but the word „true and fair view‟ has not
been defined by the Company Act.

According to different judgements, true and fair view means the presentation of assets and
liabilities accurately, correctly and logically in Balance Sheet and presentation of profit or loss
after accurate matching of correct revenue and corrects expenses in Profit & Loss Account.
Financial statements of company show a true and fair view when the following conditions are
satisfied:

(i) All expenses and income relating to the period of account are included and all related
expenses are matched against realized revenue.

(ii) There is no secret reserve.

(iii) There is no window-dressing, i.e. no attempt to show the position better than actual position,
either by inflating the value of assets or by suppressing the liabilities.

(iv) In presenting information Generally Accepted Accounting Principles should be followed.

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(v) Fixed assets are valued at cost less depreciation. Current assets are valued at cost or market
price whichever is lower.

(vi) It discloses all material facts and unusual, exceptional items. Exhibit „true and fair view‟ –

Arguments against this statement :

(a) It fails to reveal qualitative facts and features. Qualities like obsolesces of stock, efficiency of
workers, managerial ability, discipline, interrelation among worker etc. are not disclosed through
accounts.

(b) Fixed assets are recorded at historical costs, not in current market price. So assets shown in
the Balance Sheet do not reflect their true values.

(c) Assets and liabilities are shown at their acquired prices and recorded in Balance Sheet at
acquisition costs. Current assets are recorded at their market value and liabilities at their
committed amount. So Balance Sheet is a mixture of different prices and it does not expressed
according to purchasing power of money at the date of Balance Sheet.

(d) Fictitious assets have no utility but recorded in Balance Sheet.

(e) Since costs are measured at historical cost and revenues are measured at current price i.e. they
are measured in two different units, so Profit and Loss Account does not present true and fair
picture.

(f) Many items such as valuation of stock, estimation of provision for bad debt etc. are based on
estimation/ assumption/ discretion of Accountant.

(g) It does not disclose non-monetary information.

(h) It ignores the effect of price changes.

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Exhibit „true and fair view‟ arguments in favour of this statement:

(a) Balance sheet shows that at any point of time, all assets are equal to total liabilities both in
side and outside.

(b) It is difficult to express all quantitative and qualitative, monetary and non-monetary items in
same units. In this respect, all items expressed in terms of money are acceptable for comparison
purpose.

(c) Published accounts are prepared in accordance with legal provisions and with Generally
Accepted Accounting Principles and Accounting Standard.

(d) Since a business assumes continuity so the adjustment for accrual, outstanding, advance etc.
must be considered and taken into account. Published accounts are prepared with regard to these
necessary adjustments.

So published accounts present true and fair picture as far as possible. Most of the criticism
against true and fair are based on weak arguments. Published accounts contain all particulars
required by articles and laws. It follows the cost convention, conservatism convention,
consistency convention, going concern concept, realisation concept etc. So published accounts
present true and fair view.

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Financial Statement Analysis - Traditional Approach vs. Modern Approach
Financial

Statement Analysis is a process of evaluating the relationship between component parts of

financial statement to obtain a better understanding of the firm‟s position and performance. This
analysis is made based on two approaches – Traditional approach and Modern approach.

Traditional approach:- Traditional approach refers to subject matter of financial statement

analysis as a separate branch of study. It is based on basic conceptual and analytical framework.
It is not applicable in internal decision making.

(i) In traditional approach, financial statement analysis is not an integral part of the various
disciplines concerned with decision making. Economists and finance experts do not rely on the
information reported in the financial statements and they ignore financial statement analysis.

(ii) Here the frameworks (within which analytical methods and techniques are developed) are not
defined appropriately, resulting in the lack of direction and progress.

(iii) Here financial statement analysis is completely detached from economic theories and
models.

(iv) Here no statistical tools or techniques are used, but simple mathematical tools like ratio,
percentage, average etc. are applied.

(v) Here accounting data are conventionally reported in financial statements.

Modern approach:- Modern approach of financial statement analysis is broad based

approach that provides a conceptual and analytical framework for financial decision making. It is
an integral part of overall management.

(i) In modern approach, financial statement processing system as an information processing

system designed to generate relevant information as input to the application of various decision
making models, e.g., the portfolio selection model, bank lending decision models etc.

18
(ii) Here tools and techniques are developed and tested within the well defined framework of
decision theory.

(iii) Here financial statement analysis is closely connected with economic and finance models.

(iv) Here various statistical tools and techniques as well as complicated mathematical models are
used.

(v) Here reported accounting data, unreported accounting data (such as, market value of assets)
and non-accounting data (e.g., share prices) are taken into consideration.

COMPARATIVE ANALYSIS OF THE BALANCE SHEET AND INCOME

STATEMENT
Comparative Financial Statement
If the financial statement is recasted for comparing the all elements of financial conditions from
year to year in absolute term as well as in percentage then the recasted statement is called
comparative financial statement. This statement is designed to provide time view of various
elements of financial statement. This statement is made by:
Showing absolute money values of each elements of income statement and Balance Sheet of
different periods.
Showing increase / decrease in absolute money value of each elements by deducting elements of
current period from past period.
Showing increase / decreasing value in terms of percentage i.e. Increasing / decreasing amount in
past period × 100
Keeping in mind that the principles and procedures followed in the collection, and presentation
of data should not materially differ over the periods.

Advantages:

Figures for two or more periods are placed side by side to facilitate inter-firm comparison and in
horizontal analysis.
It brings out more clearly the nature and trend of current changes that affect the enterprise.
It helps in estimating weakness in the operating cycle, financial health and future position of the business.

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Disadvantages :

It may be misleading, if frequent changes have been allowed in principles and procedures over the
periods.
Without the knowledge of internal analysis, it may be extremely misleading.
It does not show the relation of any items to total assets or to total liabilities or to total net sales in a year.
Proper comparison between two or more firms cannot be possible by this statement because there is no
common base of comparison.

Common Size Statement

Common size financial statement is restated financial statement showing percentage of total
items with common base for comparison.

This statement is made in the following procedure:

Assets side is classified in fixed assets, investments, current assets (CA), fictitious assets showing
individually and in total. Then total assets (TA) are taken as common base 100. Then Investments TA x
100, CA TA x 100, Fictitious Assets TA x 100 etc. are calculated.
Liabilities side is classified in proprietor‟s fund, long term loan, and current liabilities showing
individually and in total. Then percentage of each liability to total liability is calculated.
Income statement is classified in sales, cost of goods sold, operating expenses, net profit, interest, tax,
EAT (earning after tax) etc. Then percentage of each element to sales is calculated.
The Analysis of the Balance Sheet and Income Statement
Advantages :
It shows the changes over the years in relation to total assets, total liabilities, sales.
It helps in inter-firm comparison with common base.
It helps in vertical analysis of figures.
It helps in understanding financial strategy of the firms in comparison.
It shows the relative efficiency of each cost items of two firms.
Disadvantages :
It shows the percentage of each item to the total in each period but not changes of each items from period
to period.
Its observations are not very useful because there are more definite norms for the proportion of each item
to total.

20
If there is no uniform costing system, no same accounting practice among the all firms of an industry,
then it is meaningless for studying the comparative financial position of two firms.

Trend Ratio

Trend ratio is index number of each financial item in the financial statement of different
periods. The method of calculating trend percentages involves the calculation of percentage
relation of necessary items with the same items of base year. i.e., trend percentages are not
calculated for all items of financial statements. They are calculated only for major items
since the purpose is to highlight important changes. On the other hand, any year may be
taken as base year – generally the earliest year is taken as base. Any intervening year may
also be taken as the base year.

Thus trend percentage or trend ratio =

Value of each item in financial statement of any period 100 Value of same item in financial
statement of base period× While calculating trend percentages care should be taken regarding the
following matters :
The uniform costing system should be followed from year to year for horizontal analysis.
The accounting principles and practices should follow consistency convention throughout the
period of analysis. Without such consistency, the comparison will be adversely affected.
The base year should be that normal year which is monitor and representative of the items shown
in the statement.
Trend percentages should be calculated only for items having logical relationship with one
another.
Trend percentages should be studied after considering the absolute figures on which they are
based, otherwise, they may give misleading results. For example, one expense may increase from
` 100 to ` 200 while other expenses may increase from ` 10,000 to ` 15,000. In the first case,
trend percentage will show 100% increase while in second case it will show 50% increase. This
is misleading because in the first case, the change though 100% is not at all significant in real
terms as compared to second case.
The figures for the current year should also be adjusted in the light of price level changes as
compared to the base year before calculating the trend percentage, otherwise comparison will
meaningless.

21
Uses :

It shows the trend of items with passage of time.

It shows the nature and rate of movement of various financial factors.

It shows horizontal and vertical analysis to reflect the behavior of various financial items with
passage of time.
It helps in estimating the financial factor in future.

Limitations :
If there is no uniform accounting system year after year, then trend ratios give misleading result.
It does not take into consideration the inflation accounting system. So figures of base period are
incomparable with the figures of current period in case of inflation.
Trend ratios must be always read with absolute data on which they are based, otherwise the
conclusion drawn may be misleading. It may be said that a 10% change in trend ratio may
represent an absolute change of ` 1000 only in one item, while a 10% change in another item
may represent an absolute change of ` 10,000.

22
Information about Indian carpet

Carpet weaving may have been introduced into the area as far back as the eleventh century
with the coming of the first Muslim conquerors, the Ghaznavids and the Ghauris, from the
West. It can with more certainty be traced to the beginning of the Mughal Dynasty in the
early sixteenth century, when the last successor of Timur, Babar, extended his rule from
Kabul to India to found the Mughal Empire. Under the patronage of the Mughals, Indian
craftsmen adopted Persian techniques and designs. Carpets woven in the Punjab made use
of motifs and decorative styles found in Mughal architecture.

Akbar, a Mogul emperor, is accredited to introducing the art of carpet weaving to India
during his reign. The Mughal emperors patronized Persian carpets for their royal courts and
palaces. During this period, he brought Persian craftsmen from their homeland and
established them in India. Initially, the carpets woven showed the classic Persian style of
fine knotting. Gradually it blended with Indian art. Thus the carpets produced became
typical of the Indian origin and gradually the industry began to diversify and spread all over
the subcontinent

During the Mughal period, the carpets made on the Indian subcontinent became so famous
that demand for them spread abroad. These carpets had distinctive designs and boasted a
high density of knots. Carpets made for the Mughal emperors, including Jahangir and Shah
Jahan, were of the finest quality. Under Shah Jahan's reign, Mughal carpet weaving took on
a new aesthetic and entered its classical phase.[citation needed] The Indian carpets are well
known for their designs with attention to detail and presentation of realistic attributes , The
carpet industry in India flourished more in its northern part with major centres found in
Kashmir, Jaipur, Agra and Bhadohi. Indian carpets are known for their high density of
knotting. Hand-knotted carpets are a speciality and widely in demand in the West. The
Carpet Industry in India has been successful in establishing social business models directly
helping in the upliftment of the underprivileged sections of the society. Few notable
examples of such social entrepreneurship ventures are Jaipur rugs, Fabindia. Another
category of Indian rugs which, though quite popular in most of the western countries, have
not received much press is hand-woven rugs of Khairabad (Citapore rugs).[citation needed]

23
Khairabad small town in Citapore (now spelled as "Sitapur") district of India had been ruled
by Raja Mehmoodabad. Khairabad (Mehmoodabad Estate) was part of Oudh province
which had been ruled by Shi‟a Muslims having Persian linkages. Citapore rugs made in
Khairabad and neighboring areas are all hand-woven and distinct.

PRESENT SCENARIO OF INDIAN CARPET INDUSTRY VIS-À-VIS

INTERNATIONAL MARKET

The Indian carpet industry during the post-independence era has witnessed an export-led
growth. The prospect of carpet industry is very much dependent on the exports. Export
prospects of carpets basically depend on overseas demand and domestic supply potential. In
this paper, an attempt is made to identify the major issues of Indian carpet industry and
India's supply potential for hand made carpet exports.

1. Carpet industry- an overview

The carpet industry in India is an age-old, well established decentralised sector, employing
over 2 million rural workers, and who are mostly non-agricultural rural populace. Indian
carpet is an export oriented item & above 90% of its production being exported. The
industry has made rapid strides during the post-independence era especially during and after
70s in the wake of overseas demand which stimulated carpet production and exports. As a
result, exports which were worth around 3 crore in 1947-48 and 11 crore in 1970-71
registered manifold increase and exceeded Rs 3,600 crore in 2006-07. But after 2007-08
there is a sharp decline in export due to worldwide economic recession. Indian carpet has a
special place particularly in the heart of the people in the developed countries which absorb
88-90% of Indian carpet exports. USA and Germany, the two largest and established
markets for carpets together account for 76% of India's exports. The other developed
countries and only a few developing countries account for the rest of the part. The carpet
industry is basically both export-oriented and labour intensive. Apart from earning foreign

24
exchange, the industry provides employment to a large number of people mostly in rural
areas and helps in generating supplementary income for their families.

2. Global market of carpets

Global imports of floor covering averaged US$9 billion during 1991-93 including US$2.2
billion worth of imports of woolen knotted carpets which shared nearly 26 percent of the
global imports of floor covering.

Although the World market for floor coverings is dominated by synthetic and tufted carpets,
the world imports of knotted carpets including carpet of wool seems to be sizeable and
growing steadily

RANK Country on area World Cummulative

share% World share%
1 Germany 43 43

2 USA 12 55

3 Japan 8 63

4 Italy 6 69

5 Switzerland 5 74

6 United kingdom 4 78

7 Austria 4 82

8 Belgium luxumberg 2 84

9 Sweden 1.5 85.5

10 Australia 1 86.5

25
 From the above table it is clear that Germany continues to be biggest carpet importer

Rank Country of Area World share% Cummulative world

share%
1 USA 14.9 14.9

2 Germany 11.6 26.4

3 United kingdom 10.3 20.3

4 Canada 6.5 43.2

5 France 4.9 48.1

6 Japan 4.7 52.3

7 Netherlands 3.6 56.4

8 Australia 2.5 58.9

9 Italy 2.1 60.1

10 Belgium 2.2 63.0

11 Poland 2.0 65.9

12 Switzerland 1.9 66.7

13 Austria 1.7 72.5

14 Czech republic 1.3 68.6

15 Sweden 1.7 75.9

In present scenario USA and Germany still continues to hold their top position in the table
of 2009, but good point is that some other countries also included into the table at top
positions, which indicates that market is now globalised and new horizons in carpet exports

26
in different which indicates that market is now globalised and new horizons in carpet
exports in different countries are opening up, which shows new trends in carpet
consumption and potential of different countries to be a big market in the future.
Marketwise, the German market is dominated by the demand for low to medium quality
(Persian as well as Nepali) carpets in the proportion of 40:50 and demand for high
qualitycarpets is reportedly shrinking. In the low quality (with carpets under 50 knots per
sq. inch) segment, the German market is dominated by Nepal followed by India, while the
medium quality carpet (with carpets between 50 and 300 knots per sq. inch) segment, Iran
dominates with a substantial share followed by India. The carpet market in USA, on the
other hand, dominated by medium to high quality segments in the proportion to 60:20,
where India dominates followed by china, Pakistan and others in absence of Iranian carpets.
In view of this, Indian carpet industry , in general ,is facing tough competition from iran,
china, Nepal and Pakistan.

3. Major issues of the carpet industry

Against the background of rising world demand and India's promising export potential of
carpets, the major issues of concern for carpet industry and trade which are creating or
likely to create major impediments to export growth are broadly as follows-

Lack of reforms in the production system hampering productivity, organised production and
supply of carpets
Shortage of carpet grade wool - Indian carpet industry imports a large quantity of wool, prices of
which increased substantially in the recent years. However, due to increased competition it is
not possible to pass it onto the final prices
Raw material prices of wool, woollen yarn, cotton yam shot upto by 50% in last few years.
Shortage of skilled carpet weavers- Due to lack of skilled labour, the labour cost are surging.
There is an urgent need of training of weavers to fill the gap caused by NREGA. Another fact is
that the new generation is not keen to learn carpet weaving techniques. If sufficient efforts are
not made then in coming years carpet weaving will face the threat of weavers extinction.
Lack of modern production facilities particularly dyeing, washing, processing, designing etc.

27
Upgrading and maintaining carpet quality- since carpet is not a full time job, most of the labour
involve in carpet weaving is unskilled and primarily depend on agriculture, so the don't know the
importance of quality of a carpet and don't give much attention to quality aspect.
Indian Carpet industry is getting a intensified competition from the major carpet producing
countries viz. Iran, Pakistan etc. This situation becomes even grimmer as the currency exchange
rates of these countries are under-values Vis-a-Vis US Dollar than Indian Rupee which is
stronger Vis-a-vis US Dollar, making Indian carpets less competitive compared to Iranian
carpets
The need of hour is to initiate some R&D actitvities in terms of material and machine
development
Reduce Paleness and odour problem in latexing by usage of polymer sheets in the process of
latexing
Cost reduction measures without compromising with quality of carpet-like usage of primary
cloth (Non-woven backing material),usage of polymer sheets in the process of latex ing, care
instructions on the usage of carpet to the buyers / Importers
Organizing training programmes for the masters in latexing process to counter the odour and
backing problem
Lessening the corrosive and hazardous chemicals in carpet washing by adopting herbal washing.
Facilitate adequate infrastructure, communication channels for marketing, proper finance
assistance to Indian exporters for the quantitative and qualitative improvement of Indiancarpet
industry.
Problems due to decentralised and unorganised sector(lack of management)

28
4. Points for consideration- There are some points that are worth noted for
consideration for improvements.

At present looms are scattered in the villages and there is no such production time on a particular
loom for a particular qualit) )f carpet but if the looms are installed in shed under the campus then
not only it will improve productivity but also help to monitor and plan the production and
keeping the secrecy of design, and finally may encourage the female weavers to participate in the
trade.

There is shortage of Indian carpet grade wool (like chokla, Patanwadi), and the average diameter
of presently available carpet grade wool is getting coarser day by day ,hence it is important not
only to increase wool production but also maintain wool quality. For this purpose breed
improvement through selective breeding should be done. There are some CWDB schemes (like
SWIS) in which genetically improvement of sheep through adopting modern scientific practises.

Quality consistency is essential to remain competitive in the overseas market which can be
maintained by use of required quality wool, proper blend proposition, weaving by the skilled
weaver and improved processing, finishing etc.

There is a huge shortage of carpet weavers (especially for hand-knotted carpet) as most of the
weavers shifted to NREGA scheme which is providing more wages per day. So skill
development programs should run more rapidly by government agencies and exporters should
think of welfare of weavers to mitigate the migration.

Emphasis should be given on the R&D activities in terms of raw material, machine
development/modification or process development/modification. Like in process development,
presently we are using corrosive chemicals in carpet washing; which produce a bad impact on

29
the carpet. Inspite of this chemical washing, we can go for herbal washing. the carpet will be
ecofriendly and less hazardous to health of user.WRA has taken the initiative and done some
work in herbal washing of carpets. Also in recent years, IICT has developed a carpet backing
machine, Horizontal Bar Cross Loom and non-woven primary backing cloth to lower down the
price of carpet without compromising with quality of carpet. IIT-Delhi has developed process of
carpet washing through machine inspite of manually by harrows. Incorporating these
developments will not only increase the productivity but also will upgrade the quality. Thus the
final product will be cheaper.

To rescue the Indian carpet industry from the ongoing crisis, the government need to undertake
important initiatives and introduce the tax exemptions on a long term basis at least till carpet
industries make full recovery and back on track.

Financial institution can help by providing adequate finances to carpet industries for technology
up gradation and put low interest rate on export finance in order to help in revive the carpet
industry
At present carpet industry is passing through its tough time, especially the hand knotted carpet
sector. Nothing is going in its way, on the one side, carpet industry is still reviving from the
recession blow and on the other side industry is facing a huge depreciation in skilled weavers in
order to complete the export order in time. Cost of production has increased, but buyers want the
carpet at old prices. Indian rupee is getting stronger vis a vis US dollar, the countries like Iran is
getting tougher and tougher in competition. In this crisis government agencies and financial
institution should take forward steps to revive and boost the carpet industry.

30
 CHAPTER 2

PROFILE OF THE COMPANY

31
 Jaipur Rugs
Jaipur Rugs Company Pvt. Ltd.

Industry Handmade Carpet Industry

Founded 1978

Founder Nand Kishore Chaudhary

Headquarters Jaipur, India

Products Floor coverings

Website https://www.jaipurrugs.com/

Jaipur Rugs is one of India's largest manufacturers of hand knotted rugs. Headquartered in
Jaipur, India, the company‟s operations span across 20+ branches, 6 states and 600 villages in
India with distribution to over 40 countries with its independent base of over 40,000 artisans.
The company also has a large distribution base in Atlanta, United States.

About

Jaipur Rugs was founded by Nand Kishore Chaudhary in 1978, who started the carpet business
with two looms. Over time he moved to Gujarat and the business operations were expanded
primarily in tribal regions. Chaudhary moved to Jaipur in 1999, to launch his independent firm
called Jaipur Carpets. Jaipur Carpets was converted to Jaipur Rugs Company Pvt Ltd in 2006. At
present Jaipur Rugs have businesses in more than 40 countries.

Founded in 1978, Jaipur Rugs revolutionized the carpet industry by creating an entirely new
business model - working directly with artisans and uplifting their lives and communities as a
result. Since then, they have grown to become a global, award-winning brand, sharing a unique
point of view through their range of home décor products.

In 1978, Mr. N K Chaudhary, Chairman of Jaipur Rugs, initiated his carpet business operations
with just two looms and 9 artisans. Over time he moved to Gujarat and the business operations
were expanded primarily in tribal regions. Chaudhary moved to Jaipur in 1999, to launch his

32
independent firm called Jaipur Carpets. Jaipur Carpets was changed to Jaipur Rugs Company Pvt
Ltd in 2006. Today, it has converted into a network of 40,000 artisans, spread across 600 villages
of India. Starting with a belief in the enormous potential of Indian artisans, he decided to form a
company that would showcase this potential to the world, while also upgrading the weaving
techniques and lives of the artisans. Headquartered in Jaipur, India and with an international
office in Atlanta, USA, Jaipur is committed to pursuing business practices that not only produce
beautiful, luxurious carpets, but one that helps its artisans hone their skills in a secure
environment. Jaipur presents a selection of over 40 technical variants of rugs woven with the
finest yarns.

Jaipur Rugs Foundation is currently associated with over 40,000 artisans in 6 states of India.
80% of the artisans are women and live in disadvantaged rural communities. Our core focus
at JRF is to provide skill building and skill up-gradation training to those artisans who are
associated with carpet weaving and thereby substantially increase their income. Since most
artisans involved are women, increased income will make meaningful contributions in
alleviating poverty. We facilitate income generating opportunities at the door steps of
artisans residing in the remotest of the locations and forward & backward linkages with the
aid of our strategic partners. We believe there are 3 basic necessities for anyone to live a
decent life: 1. Access to a Sustainable Source of Income We create & transform skills into a
sustainable source of income by training low-income people in rural areas in different
processes of making a rug & giving them access to manufacturing companies. 2. Access to
Education & Health Services We facilitate the access to medical services by partnering with
healthcare providers and we develop alternative education programs for women & girls in
artisans` communities. 3. Awareness on Ones Rights We create local awareness on the
regional or central governmental programs for people living in the rural areas. Mr. Nand
Kishore Chaudhary, the founder, has a dream to empower the weaving community and
improve the rural artisans` standard of living while developing human capabilities and skills
at the grassroots level. Please visit http://www.nkchaudhary.com/ to know more about our
founder.

33
Jaipur Rugs Foundation

Jaipur Rugs Foundation is the service arm of Jaipur Rugs Group, which stays connected to the
company‟s grassroots. It was registered in 2004 under the Rajasthan Public Trust Act with the
aim of integrating rural people into its value chain by training them to become home-based
artisans and giving them a market for their products. Through the foundation, potential weavers
are trained in weaving, hand-knotted carpets using manually operated looms. Now, ready for
work, the artisans are independent weavers with the freedom to work for Jaipur Rugs or any
other rug company.

Thus, the overall work mandate of the Jaipur Rugs Foundation is to empower the marginalized
communities, especially women, living in the un-served and underserved areas. This is achieved
by developing their skills, capacities and providing them with a sustainable livelihood option.
Such weaving of lives is done through two intertwined verticals: „entrepreneurship development‟
and „social development‟. The entrepreneurship development vertical focuses on the economic
well-being of the artisan and their communities through skill development and livelihood
support. The social development vertical focuses on their social well-being through
interventions, awareness generation and linkages. The foundation connects them with literacy
and financial education, health care and artisan cards, enabling certified artisans in India to
access additional social services. These two complement each other and facilitate the artisans to
advance in their development trajectories. The sense of personal worth and recognition worked
magically as more and more women artisans were fascinated with this transformation process
and decided to be part of this journey. This created a model of „Inclusive Growth‟ where the
women artisans gained financial and emotional stability. Mr. Chaudhary believes that „He made
the weavers - The weavers made Jaipur Rugs‟.

Accreditations

1. C. K. Prahalad included a case study of Jaipur Rugs in his book The Fortune at the Bottom of
the Pyramid citing it as an example of a social business which helps in tackling world poverty.
The Jaipur Rugs Case Study is acclaimed to be the best success story at the Bottom of the
Pyramid. Another pillar of the unique business model of Jaipur Rugs is its complex and robust

34
supply chain which has been acclaimed by Harvard and is being further studied to implement in
other similar businesses.

2. Ongoing international collaborations with world-class designers: Kavi (India), Kate Spade
(US), Jenny Jones (Australia), Luli Sanchez (US), The Museum of New Mexico & National
Geographic (US).

Awards and recognition

1. German Design Award Gold & Winner 2018: Bimla Devi, a weaver turned designer with
Jaipur Rugs journeyed from rural Rajasthan to Frankfurt, Germany to receive the prestigious
German Design Award for her rug, Kamal, along with Design Director, Kavita Chaudhary, who
brought home the GDA 2018 Gold Award for her rug, Asthai. Till date, Jaipur Rugs is the only
Indian brand to bring home GDA awards three years in a row.

2. German Design Award 2017: After winning the prestigious German Design Award 2016
Jaipur Rugs has garnered German Design Award 2017 (Special Mention: Excellent Product
Design), second time in a row.

3. TiE QGLUE, Design-Led Entrepreneurship Award 2017: Won the TiE QGLUE, Design-
Led Entrepreneurship Award 2017. The award was announced jointly by TiE and QGLUE (the
design venture of QAI).

4. EDIDA Awards 2017: Jaipur Rugs launched the Artisan Originals Collection with the aim of
creating a personal connection between rural weavers and the international market. The range
that wins their first EDIDA Award 2017 showcases traditional Rajasthani culture, motifs
inspired by nature, personal stories and shakkarparas.

5. Carpet Design Award 2017: Jaipur Rugs won the Carpet Design Award 2017 for their latest
collection „Unstring‟ by designer Kavi has become the first ever Indian collection of rug designs
to win at the annual Carpet Design Awards 2017 for Best Modern Collection in Hanover,
Germany.

35
6. The Social Media for Empowerment Award: Social Commerce & Enterprise category
2017: Jaipur rugs has adjudged social media award for its recently launched initiative, „Unstring
a Story‟. Unstring a Story is an initiative to bring a traditional connect to untravelled India, home
to thousands of women spinners who make some of India‟s finest hand spun yarn. Jaipur Rugs
celebrates the efforts of these women, strives to sustain the age-old craft, and bring in the true
essence of one-of-a-kind in handmade carpets.

7. German Design Award 2016: Won the German Design Award 2016 (Special mention:
Product Excellence) and a winner of over 20 awards in the last 5 years for product design and
social impact.

8. CNBC TV18 Emerging India Award December 2014: Jaipur Rugs was meritorious in the
December, 2014 CNBC Emerging India Awards. This was recognized for the benefit of the
society as well as the underprivileged.

9. NASSCOM Social Innovation Honours 2014: The award was conferred under the ICI led
social Innovation by a corporate (Responsible Business) Category. The Honours recognize
innovations that creatively leverage Information And Communication Technology to create
solutions to address gaps in social development.

10. India MART Leaders Of Tomorrow Awards: It aims to acknowledge exceptional and
distinguished products and services of SME‟s in building a robust foundation for a company.
Jaipur Rugs won "Leaders of Tomorrow 2014" for 2nd Consecutive year under the category
Home Décor and Handicrafts.

11. The Times of India Social Impact Award 2012: Mr. N.K. Chaudhary was awarded by Mr.
Pranab Mukherjee, honourable president of India as the winner of „The Times of India - Social
Impact Awards-2012‟ under the Livelihood - Corporate Category, for providing livelihood
opportunities for people living in remote distant areas mostly Under the poverty belt.

12. Carpet Design Award - Domotex 2012: The Rug Ruby Room in Aqua colour, in the
designer collection titled CONNEXTION and signed by Jenny Jones and JAIPUR has been
awarded as the Best Modern Design Superior at the Carpet Design Awards (CDA) 2012. The

36
prestigious awards are organized by Domotex, the world‟s leading floor covering fair in
partnership with HALI and COVER magazines.

Specialties

Women Empowerment, Skill Development Training, Sustainable Livelihood, Grassroots

Entrepreneurship, Alternate Education Programs, Social Development, Awareness &
Health Camps, Financial Inclusion, Community Outreach, Grassroots Economic
Development
Tucked inside the most remote corners exist the community of artisans, who produce some
of India's finest carpets through the age-old craft of hand-weaving, a practice embarking on
the verge of near extinction. With this predicament in the mind, Jaipur Rugs Foundation
began as a simple dream, to make the lives behind handmade rugs have every opportunity
to live and work with dignity.

Vision:
To create a society where equality, justice and peace prevail through socio-economic
development opportunities for all

Mission:
To serve as a social innovator promoting the cause of artisans by providing them with decent
work opportunities and lead them towards their socio-economic well-being Jaipur Rugs
Foundation was born in 2004 as a non-profit organization. Built on the bedrocks of love and
compassion, foundation‟s work is to engage communities to develop their creative capacities and
sustain them as a part of an entire movement of empowerment.
Over 10 million craftspeople form part of India‟s living heritage, practicing unmatched hand
skills. Traditional crafts symbolize the cultural identity of human civilization, while each
handmade product has an identity of its own. Mechanized mass production is endangering the
timeless traditional craft forms by killing human creativity. Consequently, artisanal communities
are forced to abandon ancient family traditions as they are deemed „worthless‟.
JRF‟s goal is to bring positive sustainable change in lives of artisanal communities, to provide a
life of happiness and dignity.

37
Jaipur rugs came into existence in the year 2004 when it got registered under the Rajasthan
Public Trust Act, 1959. It forms an integral part of the Jaipur Rugs group that is known for
its unique socio-economic business model. Apart from getting featured in „The Fortune at
the Bottom of the Pyramid‟, Jaipur Rugs has received a number of awards and its model is
constantly talked, researched and written about by a diverse set of stakeholders from the
government, industry, media and academia.

The overall work mandate of JRF is to reach out to remote rural areas and establish bonds
with the village communities, enabling them to start weaving not just rugs but also their
own lives. Such weaving of lives is done Via two intertwined vertical: „entrepreneurship
development‟ and „social development‟. Whereas the entrepreneurship development
vertical focuses on the economic well-being of the artisans and their communities through
skill development and livelihood support, the social development vertical focuses on their
social well-being through interventions, awareness generation and linkages. These two
complement each other and facilitate the artisans to advance in their development
trajectories.

Vision

The mission of JRF is to create a society where equality, justice and peace prevail through
socio-economic development opportunities for all.

Mission

The mission of JRF is to serve as a social innovator promoting the cause of artisans by
providing them with decent work opportunities and thus leading them towards their socio-
economic well-being.

38
Entrepreneurship Development

Entrepreneurship Development is the original field of action of Jaipur Rugs Foundation.

Our primary target is to bring marketable skills at the grassroots, and to make people
behave as owner of their work.

To achieve this target, JRF undertakes several activities:

Skill Development Training: Reaching out topoor communities in rural areas, the training
enables the transformation of unemployed people to skilled artisans, ready to integrate the
production chain of Jaipur Rugs Company.

Skill Upgradation Training: With the years, our artisans become capable to realize more
complex designs and rugs of better quality. It is then our duty to give them higher skills to
improve their work;

Grassroots Entrepreneurship: Recently, JRF has extended its activities under the
Entrepreneurship Development Support, by adding a Weaver‟s Engagement program, aiming at
developing owner‟s mindset at the grassroots. With this training, our artisans get a full
understanding of the production process and awareness about customers‟ requirements.

These actions are the first step in our wish to empower grassroots communities, as they
result in sustainable livelihoods, a crucial condition to engage people on the development
path.

39
RUG PRODUCTION
MAT - Rug Weaving Process:-

Step 1: Turn Wool into Yarn

The process of making a wool rug begins when unprocessed wool arrives at the factory in
large bales. The wool is then separated by hand to remove sticks and break up clumps.
Next, the wool is fed into a machine that separates and pulls the wool into individual
strands. The wool is then spun into yarn. The yarn spinning process occurs over many types
of machines until the yarn becomes twisted and strong enough.

Step 2: Wash Yarn

Before the yarn is dyed, it is first cleaned. Yarn is submerged into a detergent bath, and then
wrung out several times before moving to the next phase of washing. The yarn is washed
again in clean water to remove all remnants of detergent.

Step 3: Design Drawing

After the design is completed, it will then be enlarged to be the blue print and marked with
colors in different columns for the weavers to follow.

Step 4: Dyeing the Yarn

Dyes are created using a very precise combination of colors to produce the exact desired
hue. Yarn is hung onto a large rack and submerged into the dye. The dye is heated to a near-
boiling temperature for a predetermined amount of time. The amount of time is based on the
color, the type of dye and darkness desired. Once dyed, the yarn is placed outside into the
sunlight until it 0146.) is completely dry.

Step 5: Warp Hanging

Warps are fixed on the loom rack, almost like a standing frame which consists of 4 bars.
The warps will be looped tightly between the top bar and the bottom one. The density of the
warps is the key to the quality of the carpet and with more warps, the design looks more
clear and vivid and accordingly, this requires more work.

Step 6.: Weaving

There are two primary ways to weave a handmade rug: hand knotting and hand tufting.
When hand knotting rugs, the weaver knots a continuous strand of yarn onto itself. When
hand tufting rugs, the weaver uses a tool to push the yarn back. and forth through a rug

40
backing. For both types of rugs, a rug map, cartoon or talim is used to follow the design and
color scheme of the rug. Typically, two weavers will work on one rug together and use a
scaffolding system to raise and lower themselves along the entire length of the rug.

Step 7: Shearing and Trimming

A special machine is used to shave and level the rug across its entire width and length. This
process also brings out the details of the weave and bold colors. Next, the design of the rug
is defined using a steel spike to separate the pattern and colors.

Step 8: Washing
Again, the entire rug is washed to remove all remaining detergent, dirt and yarn particles.
The rug is laid flat on the ground, then fresh water is poured over it. The rug washers then
use a wood plank, sharpened on one edge, to force the water through the rug pile. This
removes impurities picked up during the creation process.

Step 9: Drying
The rug then lies in the sunlight until it is completely dry or kept in a special drying
chamber during the wintertime until it is completely dry.

Step 10: Stretching

The next step is to stretch the finished rug. The rug is stretched over the wooden panels to
flatten the wrinkles and to ensure the rug lays properly on the floor.

Step 11: Final Finishing

A tufted rug is always finished with a backing cloth. This is done in two stages. First a think
net, covered with high quality latex. Thereafter, a backing cloth is attached, which forms the
- .10 underside of the rug. The quality of our latex complies with directives of IWS
(International Wool Secretariat) directives and provides excellent durability. All sewing of
edges, pile work and embossing is done by hand.

Step 12: Packing

Lastly, the rug is rolled, packaged and shipped for sale.

41
MARKETING
The research report on the global carpets and rugs market offers a granular view of this
market using industry leading methodologies and analytical tools. The report identifies the
key growth propellers and restraints in the global carpets and rugs market, and provides
recommendations for growth based on these very factors. Our analysts offer you an view of
the overall market in the executive summary. The report then studies the rugs and carpets
market on the basis of materials, product type and applications. The data from these
analyses will prove useful for both new and existing market players. Another highlight of
the report is the use of models such as Porter's five forces, which helps determine the future
bargaining power of buyers and suppliers, and the threat from alternatives and degree of
competition.
The report is a valuable supplementary resource for marketing, sales, and financial teams of
manufacturers and suppliers alike. It can be used for formulating robust marketing, sales,
and expansion strategies in the regional or global carpets and rugs market. Our analyses and
forecasts also prove useful for formulating financial and investment models.

Overview of the global carpets and rugs market

Carpets and rugs are used for their aesthetic and functional properties. In addition to
covering floors and further improving the overall appeal of home or office decor, rugs and
carpets lend a protective layer to floors. In regions with a predominantly cold climate, rugs
and carpets are used for keeping the floor getting too cold. Until a few decades ago, the
demand for carpets and rugs was the highest in developed economies. However, this trend
has changed in the last few years, with more and more consumers spending more money on
bringing about aesthetic improvement to their homes or office spaces.
This demand has, to some extent, also been stoked by the easing economic crisis, which has
led to a renewed demand for carpets and rugs. Construction activity in emerging economies
is on upswing; this has fuelled a demand for construction materials and floor and wall
covering alike. Carpets and rugs are a segment within the larger floor and wall covering
industry. However, the floor coverings market also comprises other hard flooring materials,
which directly compete with the carpets and rugs market. Yet, the threat from hard floor
coverings will not significantly dent the carpets and rugs market. Almost all segments
within this market-such as woven carpets, tufted carpets, and others-are experiencing a
surge in demand. All of these factors create favorable environment for the carpets and rugs
industry.
Opportunities for the carpets and rugs market primarily lie in the research and
manufacturing technology development domains. Heightened awareness about the benefits
of using environment-friendly materials in carpet and rug manufacturing is another
opportunity that can be profitably harnessed by companies in the carpets and rugs market.

42
Segmentation of the global carpets and rugs market
By product, the carpets and rugs market can be segmented as: Tufted, needle-punched,
woven, and knotted.
By market/application type, the carpets and rugs market is classified as: Non-residential
buildings, residential buildings, and transportation equipment.
The carpets and rugs market can also be classified on the basis of material as: adhesives,
face fibers, secondary backing, and primary backing.

This report gives you access to decisive data such as:

• Market growth drivers
• Factors limiting market growth
• Current market trends
• Market structure
• Market projections for the coming years

Key highlights of this report

• Overview of key market forces propelling and restraining market growth
• Up-to-date analyses of market trends and technological improvements
• Pin-point analyses of market competition dynamics to offer you a competitive edge
• An analysis of strategies of major competitors
• An array of graphics and SWOT analysis of major industry segments
• Detailed analyses of industry trends
• A well-defined technological growth map with an impact-analysis.
SWOT ANALYSIS
Strengths (S): TO MAINTAIN
• Commitment of committed intellectuals: to continue
• Situated in industrial hub: Interaction with many but small units to continue.

Weaknesses (W): TO OVERCOME

• Intervention of Technology & economy of the Art & Craft sector: Massive campaigning
and awareness.

43
• Brand Imaging: To be created appropriately through publicity etc.

Opportunities (O): TO EXPLOIT

• Multi use of Facilities: Conversion of IICT to Indian School of Textiles (IST).
• Skill gap: Training through Modular Employable Skill (MES).
• Further up gradation of Laboratory to take care of Non Tariff Barrier.
• Industrial scholarship: adoption by industry

Threats (T): STRATEGY FORMATION TO COMBAT

• HRD and R&D: Inadaptability: Paradigm Shifting.
• Location or disadvantage: Poor show in Students/faculty:: Upgradation in living /
communication and work/service conditions.
• Time to time business recession: Poor exploration of IICT portfolios:: Tie up with other
sectors of textiles also to cover up the gap.
• De motivation resulting apathy to work: Appropriate motivation whether subjective and or
objective.

44
 CHAPTER 3
LITERATURE REVIEW

45
 1. LITERATURE REVIEW
Manish Mittal and Arunna Dhademade (2005) they found that higher profitability is the only
major parameter for evaluating banking sector performance from the shareholders point of view.
It is for the banks to strike a balance between commercial and social objectives. They found that
public sector banks are less profitable than private sector banks. Foreign banks top the list in
terms of net profitability. Private sector banks earn higher non-interest income than public sector
banks, because these banks offer more and more fee based services to business houses or
corporate sector. Thus there is urgent need for public sector banks to provide such services to
stand in competition with private sector banks.

I.M. Pandey (2005): An efficient allocation of capital is the most important financial function in
modern times. It involves decision to commit the firm's funds to the long term assets. The firm‟s
value will increase if investments are profitable and add to the shareholders wealth. Financial
decisions are important to influence the firm‟s growth and to involve commitment of large
amount of funds. The types of investment decisions are expansion of existing business,
expansion of new business and replacement and modernization. The capital budgeting decisions
of a firm has to decide the way in which the capital project will be financed. The financing or
capital structure decision. The assets of a company can be financed either by increasing the
owners claims on the creditors‟ claims. The various means of financing represent the financial
structure of an enterprise.

Medhat Tarawneh (2006) financial performance is a dependent variable and measured by

Return on Assets (ROA) and the intent income size. The independent variables are the size of
banks as measured by total assets of banks, assets management measured by asset utilization
ratio (Operating income divided by total assets) operational efficiency measured by the operating
efficiency ratio (total operating expenses divided by net income)

Vasant desai (2007): The Reserve Bank of India plays a very vital role. It is known as the
banker‟s bank. The Reserve Bank of India is the head of all banks. All the money formulations
of commercial banks are done under the Reserve Bank of India. The RBI performs all the typical

46
functions of a good central bank as it is involved in planning the economy of the country. The
main function is that the RBI should control their credit. It is mandatory for the Bank to maintain
the external value of the rupee. Major function is that it should also control the currency.

K. C. Sharma (2007): Banking has entered the electronic era. This has been due to reforms
introduced under the WTO compliances. Private sector banks have been permitted to open their
shops in the country. These banks are either foreign or domestic banks with foreign partnerships.
Some of them have been set up by Development Financial Institutions in order to embrace
concept of universal banking, as practiced in advanced countries. The private sector on the other
hand have began their high tech operations from the initial stage and made the elite of the
country to taste the best banking practices that happens in the western countries. They have
foreseen the digital world and have seen the emerging electronic market, which has encouraged
them to have a better customer service strategy that would be able to deliver the things as per
customer‟s requirement.

Hr Machirajn international publishers (2009): Efficiency can be considered from technical,

economical or empirical considerations. Technical efficiency implies increase in output. In the
case of banks defining inputs and output is difficult and hence certain ratios of costs to assets or
operating revenues are used to measure banks efficiency. In the Indian context public sector
banks accounts for a major portion of banking assets, it is necessary to evaluate the financial
decisions of these banks and compare them with private sector banks to know the quality of
financial decisions on its impact or performance of banks in terms of efficiency, profitability,
competitiveness and other economic variables.

DR.S. Gurusamy (2009): One of the key elements of importance for shaping the financial
system of a country is the pension fund. The fund contributes to the development of social
security systems of a country is the pension fund. The fund contributes to the development of
social security system of a country. A fund is established by private employers, governments, or
unions for the payment of retirement benefits. Pension funds are designed to provide for poverty
relief, consumption smoothing etc. Pension funds not only provide compensation for the loyal
service rendered in the past, but in a broader significance. Works as a measure of socioeconomic

47
justice. Pension system refers to the framework of arrangement under which individuals gain
specified entitlements to a regular income in retirement called pension.

Dangwal and kapoor (2010) also undertook the study on financial performance of nationalized
banks in India and assessed the growth index value of various parameters through overall
profitability indices. They found that out of 19 banks, four banks had excellent performance, five
banks had good performance and six banks had poor performance. Thus the performance of
nationalized banks differ widely

Prasana Chandra (2010): Fundamental of financial management covers all the aspects of the
subject from the basics overview of the financial environment to the financial analysis and
financial planning. The basic consists of forms of business organization which gives detailed
information about the financial management of the organization. After the analysis part
budgeting of capital and fundamental valuation of concept is in detail. It provides an introduction
to the financial management and to the financial environment. The fundamental of financial
management provides a good coverage of the basic concepts relating to the financial
environment. The topics are explained with various examples like the tax system, financial
institution, banking arrangement & the regulatory framework. All the concepts are explained
using numerous examples & illustration besides the illustration given within the chapter,
additional concepts, tools & technique with illustration are provided at the end of chapter section.
The book takes an analytical approach and explains the various analytical methods in context.

Jha DK and D S Sarangi (2011): The financial performance of seven public sector and private
sector banks during the period 2009-10. They used three sets of ratio, operating performance
ratio, financial ratio and Efficiency ratio. The study revealed that Axis bank was on the top of
these banks followed by ICICI, BOT, PNB, SBI, IDBI and HDFC.

Neeru Mundrai, Kamni Tandon, Nidhi Malhotra (2011) excel books found that there is
significant impact on the SBI‟s performance due to entry of new private sector banks as the new

48
banks are profit oriented institutions while traditional banks are operating with the shackles of
social responsibility towards the society. The other reasons that can be attributed are slow
technological up gradation, poor staffing and employment practices which affect long term
profitability of public sector banks. The study revealed that profitability of SBI is lower than that
of private sector banks even predicting of private sector banks (business per employee) is higher
than state banks.
Fernando Ferreng (2012) it is generally agreed that recent economic crisis intensified
worldwide competition among financial institution. This competition has direct impact on how
bank deal with their customer and achieve its objectives performance evaluation of banks is the
key function for improving banks performance. Banks profitability and success to a large extent
depends on bank branch financial performance

Ramchandan Azhagasahi and Sandanvn Gejalakshmi (2012): In their study found the impact
of assets management operational efficiency and bank size on the financial performance of the
public sector and private sector bank. The research revealed that bank with higher total capital
deposits and total assets do not always mean that they have better financial performance. The
overall banking sector is strongly influenced by assets utilization, Operational efficiency and
interest income.

NutanTroke and P K Pachorkar (2012): The study related that the private sector bank the
percentage of other income in the total income is higher than public sector bank. Public sector
bank depend on intent income for their efficiency and performance. The operational efficiency of
private sector banks is better than public sector banks. Private sector bank use their assets quality
better than public sector banks.

Dr.Dhanabhakyam & M.kavitha (2012) in their research used some important ratio to analyses
the financial performance of selected public sector banks such as ratio of advances to assets, ratio
of capital to deposit, ratio of capital to working fund, ratio of demand deposit to total deposit,
credit deposit ratio, return on average net worth ratio, ratio of liquid assets to working fund etc.
The ratio of advances to assets shows an increasing trend for most of the public sector bank. It
shows aggressiveness of bank in lending which ultimately result in high profitability. The ratio
of capital to deposit also indicates an increasing trend in the capital of banks. This ratio enables

49
the bank to meet the contingencies of repayment of deposit. The ratio of capital to deposit in
decline. The ratio capitals to working fund also indicate that the overall efficiency of the selected
public sector banks are good. On the other hand the ratios of demand depart to total deposit is
declining. This indicates better liquidity position of bank. The credit deposit ratio of most of the
bank show an increasing trend. It shows that the profitability of the banks in government. The
return on average net worth also shown an increasing trend.

Debashish Sur (2012) a financial statement is a collection of data organized interims of some
laid down accounting procedures. Financial statements are blue print of the working or
performance of any organization. The users of financial statements are direct users and indirect
users

The direct users are

Owners of business
Management
Creditors
Tax authorities
Customers

Indirect users are

Stock exchanges
Financial analysis
Trade associations
Competitors Financial press
General public.

Ravinder Kaur (May 2012): A comparative study of SBI and ICICI Bank, the author has
written an International Multidisciplinary Research Journal. Due to globalization, banking sector
has developed a lot. The banking sector in India has very large network. One of the popular
banks is the State Bank of India. The SBI has over 16,000 branches over a wide range of
banking. The main objective of study is to examine the financial performance of SBI and ICICI

50
Bank. SBI is a public sector bank and ICICI bank is a private sector bank . Ratio analysis was
applied to analyze and to compare the trends in banking business and financial performance.

Dr. Anurag B Singh and Ms.Priyanka Tandon (2012): The researcher has mentioned the
importance of the banking sector in the economic development of the country. In India banking
system is featured by large network of Bank branches, serving many kinds of financial services
of the people. The research Methodology used by there is a comparative analysis of both the
banks based on the mean and compound growth rate (CGR). The study is based on secondary
data collected from magazines, journals & other published documents. Which was a limitation
since it‟s difficult to prove the geniuses of the data.

Pawankumar Avdhanam and Sriniwas Kolluru, Ramkrishne Fonnd, (2013) in their study
that state bank group other than SBI home finance has performed better throughout the period of
study. Though there was a decline in PAT for the year 2000-01 but then there was continuous
rise in PAT. Most public sector banks have performed better over year.

Vasant Desai, (2013): The performance of a bank can be assessed in there broad dimension viz.
business development, customer service and housekeeping. The resources that a branch has are
manpower, premises, planning, system procedure, organizational structure and general
administration. The efficiency of a branch would be measured by the extent which it has
balanced between three parameters

William George A J and Dr. Manoj P K (2013): This research paper is a study of the modern
management philosophy of customer relationship management (CRM) which deals with the
maintenance of a sound relationship with the customers. The study is carried out in the Kerala
based commercial banks. Also this study compares the CRM between the public and private
sector banks of the same region. Kerala has been very conducive and of great benefit for the
development of banking sector. The Indian banking sector is undergoing many changes and the
banks are facing many challenges. Customers switch banks and go to other banks where they
find better services and thus the find it difficult to retain their old customers.

51
MS. Foiza (2013): The development of electronic commerce is growing at a fast pace because of
advancing global infrastructure. To meet these demands businesses need innovative ways to
create value such as different IT infrastructure, different enterprise architectures and different
ways of thinking about doing business. By adopting technology in banks it has established the
use of different technology tools in banking. Which enables bank to reduce transaction cost,
saving money and also saving time‟s E-Banking refers to deploying banking services over
electronic and communication networks directly to customers. Internet banking provides benefits
such as cost saving reaches new segment of population, efficiency, enhancement of the banks
reputation and better customer service.

Cheenu Goel, Chitwan Bhutani Rekhi, (2013)

The commercial banking system provides a large portion of the medium of exchange of a given
country and is the primary instruments through which monetary policy is implemented.
Commercial banks make the productive utilization of idle finds and thus assist the society to
produce wealth. Berry, Kehoe and Lindgreen‟s study (1980) revealed that the most frustrating
aspects of bank marketing were lack of management support, lack of interdepartmental
cooperation, crisis management and government intrusion. It shows that during the earlier period
there was not much focus on marketing of financial services. There was hardly any marketing
done by banks but after 1991 there are tremendous changes in the banking sector in India
competition among banks emerged due to entry of private sector banks and foreign banks.

E. Gordon and K. Natrajan (2014): The economic development of any country depends on the
existence of a well-organized financial system. It includes financial markets and financial
institutions which support the system. Financial system provides the intermediation between
savings and investment and promoters faster economic development.

Garimachoudhary(2014): used network of banks, productivity of banks, capital adequacy ratio,

growth of banks as an indicator of measuring banks performance. The study related that private
sector banks have expanded faster than public sector banks. The capital adequacy of new private
sector banks is above RBI minimum requirements. However the assets base of public sector
banks raise faster than private sector banks.

52
Dr. (Mrs.) Anita (2014): It is very important for the customer to spend some of their time in
banks to avail all services. Relationship marketing should be emphasized on the co-operate staff
members and special training should be provided also private banks are ahead of public banks in
the strategic intent. Also in order to keep the customer satisfied the infrastructure of the banks
decor sitting facility are adequate also overall improvement of the banks is necessary by making
the customers available with the latest technology and services. Naloni studied the service
quality model for customers in PSB's she stated that the entry of new private sector banks has led
to improve customer service and products.

Renu Bagoria (2014): The main objective of this paper is to make a comparative study between
private sector banks and public sector banks and the adoption of various services provided by
this bank. The different services provided by these banks are M-Banking, Net banking, ATM,
etc. One of the services provided by the bank i.e. Mobile banking helps us to conduct numerous
financial transactions through mobile phone or personal digital assistant (pda). Data analysis had
been made in private sector banks like ICICI Bank, INDUSSIND Bank, HDFC Bank, Axis Bank
and public sector banks like SBI Bank, SBBJ, IDBI and OBC Bank. These banks also provide
Mobile Banking service. The overall study showed that the transaction of Mobile banking
through public sector bank is higher than private sector.

Neetu sharma, dr. Richa chaudhary, dr.harsh purohit (2014): Banking institution try to
spread Green environment product by way of Finance to those Industries which make "Green
Product" Eg : Automobile Industry give more importance to battery bike or solar car etc. Green
banking is an umbrella that makes bank sustainable in Economic, environment & Social
dimensions. Green banking is making technological improvement in banking sector. It is a smart
way of thinking with a vision of future sustainability. Green banking is still a major issue & can
take an important for development of our country India. The environmental friendly activities
such as using energy efficient alliance, implement green data centers help in improving their
operational efficiency as well as cost saving factor for a long run.

53
AlpeshGajera (2015) in his research article an financial performance evaluation of private and
public sector banks found that there in significance difference in the financial performance of
these banks and private sector banks are performed better than public sector banks in respect of
capital adequacy ratio and financial performance,

Dr Richa Jain, Prof. Mitali Amit Shelankar & Prof Bharti Sumit
Mirchandani, (2015)
Tools / Techniques of financial statement analysis:- The various tools and techniques of financial
statement analysis are
Trend Percentage Analysis: It is also known as Intra firm comparison in which the financial
statements of the same company for few years are compared for some important series of
information.

Comparative Statement: These are the statement of financial positions at different periods of
time. The financial position is shown in a comparative form over two period of time.

Common Size Statements: The common size statements, balance sheet and income
statements are shown in terms of percentages. The data is shown as percentage of total assets,
liabilities and sales.
Ratio Analysis: It is a technique of analysis and interpretation of financial statements. It is the
process of establishing and interpreting various financial ratios for helping in taking decisions.

Funds Flow Statements: It is a statement of studying the changes in the financial position of a
business enterprise between the beginning and the end it is a statement indicating rises of funds
for a period of time. Cash Flow Statements: It shows the changes in cash flow between two
periods.

54
 CHAPTER 4
RESEARCH METHODOLOGY

[55]
What We Do

Jaipur Rugs Foundation focuses attention on the ideas and solution that create
social value. JRF reaches out to the grassroots populace and initiate a
dialogue about opportunities of becoming skilled artisans in carpet value
chain and get sustainable livelihoods as well as social development
facilitation.

JRF helps in the process of opening bank accounts for the artisans. Locally
accessible banking services (conventional as well as innovative) are
identified and artisans are connected with these institutions. Also seeks to
equip artisans with basic knowledge and skills to save money to shape a
brighter future for their families. JRF organizes various demand drive Health
Camps in rural areas in partnership with local healthcare providers. The
primary objective is to provide basic health education to the communities and
motivate them to live a healthy lifestyle. They are also provided with health
check -ups including free medicines and referrals to specialty hospitals for
major illnesses.

JRF brought the world‟s first social innovation with artisan community which
addresses the creative potential of Indian artisan community. This innovation
is one of the steps by foundation for creating awareness about sustainable yet
creative.

Products:

Flat woven rugs & rugs in natural fibers.

Floor coverings.
Hand knotted/handmade carpets & rugs.
Hand woven chenille.
Cotton & Woolen durries.
Jute floorings & Door mats.
Jute products, Rag rugs.

[56]
Our five core values into everything we do

Customer Service
Individual Development
Teamwork
Trust
Integrity and Open Communication.

Vision

To create a society where equality, justice, and peace prevail through socio-
economic development providing opportunity for all.

Mission

To serve as a social innovator promoting the cause of artisans by providing

them with job opportunities resulting in an uplifted rural society.

METHODOLOGY:

Methodology is the systematic, theoretical analysis of the methods applied to

a field of study. It comprises the theoretical analysis of the body of methods
and principles associated with a branch of knowledge.

This chapter is presented under the following heads;

1. Period of the study

2. Nature and source of data

3. Methods of analysis

1. Period of the study:

The study was conducted during the month of January and February.

[57]
2. Nature Sources of data :

Secondary data: Sources of secondary data were collected from referred

books, reports, and conference papers, referred journals, magazines/
periodicals. In the present study, following statistical tools were used for
analysis of data, simple tabular and percentage method is applied.

3. Method of analysis:

Tabular analysis was done by working out simple averages and percentages
and shown by various diagrams and graphs to make meaningful inferences.
Simple bar diagram was used for representing the productions, consumptions,
exports and imports trends of the selected products. To analyze the data
fundamentally simple bar and line graphs were used.

Objective of the study :

 To understand overall business Carpet industry leader Jaipur Rugs

private Ltd company.
 To analyze role and performance of Jaipur rugs Pvt. Ltd in the carpet
sector.
 To give suggestion for the betterment of the company.
 To get the clear idea about the execution and management of the
company.
 To identify strength and weakness of the company.
 To understand financial statement of any firm.
 Analysis procedure of financial statement
 Comparative balance sheet to find out profitability, growth, market
trend and growth opportunity of the firm.

[58]
 CHAPTER 5

ANALYSIS AND INTERPRETATION

[59]
Financial Analysis & Interpretation

Balance sheet As At 31st March 2014

PARTICULARS SCHEDULE AS AT 31st MARCH AS AT 31st MARCH
NO. 2014. 2013.
Details in Amount in Details in Amount in
Rs. Rs. Rs. Rs.
1. SOURCES
OF
FUNDS
Corpus Fund 1. 7,02,197 7,02,197
Capital Fund 1. 54,47,919 56,56,734
General Fund 1. (16,40,739) (17,64,172)
Unspent Project
Balances 2. 1,98,056 69,631
Unsecured 85,40,000 78,25,000
Loans 3.

TOTAL 1,32,47,434 1,24,89,390

2.
APPLICATION
OF FUNDS
Fixed Assets 4.
(a) Gross Block 1,13,74,756 1,06,52,523
Less: 59,26,836 49,95,789
Depreciation
Net Block 54,47,919 56,56,734

Current Assets &

Loans Advances
(a) Cash & bank
Balances 5. 7,68,359 4,00,351
(b) Loans &

[60]
 Advances 5.
(c) Other Current
Assets 5. 1,19,962 4,200
(d)Receivable
Project Balances 2. 99,20,356 1,03,70,009
1,08,08,677 1,07,74,560
Less: Current
Liabilities
(a) Payable
against 95,950
Capital Goods
(b) Payable
against 29,13,213 39,41,904
Expenses
Net Current 77,99,514 68,32,656
Assets

TOTAL 1,32,47,434 1,24,89,390

Comparative Statement of 2013-2014

PARTICULARS AS AT 31st MARCH AS AT 31st MARCH COMPARISION
2014 2013
Details in Amount in Details in Amount in
Rs. Rs. Rs. Rs. Amount
1. SOURCES OF
FUNDS
Corpus Fund 7,02,197 7,02,197
Capital Fund 54,47,919 56,56,734 208,815
General Fund (16,40,739) (17,64,172) (123,433)
Unspent Project
Balances 1,98,056 69,631 128,425
Unsecured Loans 85,40,000 78,25,000 715,000

[61]
 TOTAL 1,32,47,434 1,24,89,390 758,004

2. APPLICATION
OF FUNDS
Fixed Assets
(a) Gross Block 1,13,74,756 1,06,52,523 722,233
Less: Depreciation 59,26,836 49,95,789 931,047
Net Block 54,47,919 56,56,734 208,815

Current Assets &

Loans Advances
(a) Cash & Bank
Balances 7,68,359 4,00,351 368,008
(b) Loans &
Advances
(c) Other Current
Assets 1,19,962 4,200 115,762
(d) Receivable
Project Balances 99,20,356 1,03,70,009 449,653
1,08,08,677 1,07,74,560 34,117
Less: Current
Liabilities
(a) Payable against
Capital Goods 95,950 95,950
(b) Payable against
Expenses 29,13,213 39,41,904 1,028,691
Net Current Assets 77,99,514 68,32,656 966,858

TOTAL 1,32,47,434 1,24,89,390 758,044

[62]
Interpretation of Comparative balance sheet of 2014
1. As per comparative balance sheet of 2014 it is clearly shown that the
comparison between sources of funds from 2 years of data. The corpus of
fund in 2 years is equal and capital fund is decreased from 208,815 in
2014.Other items in sources of fund are general fund decreased from
123,425 and unspent project balances, unsecured loans are increased from
128,425 & 715,000.The total of sources of fund increased from 758,004
in 2014.
2. The second item in comparative balance of 2014 is application of
funds. The items included in applications of funds are gross block which
is increased from 208,815 as per net block after depreciation. The current
assets and loans advances include the items are cash & bank balances,
other current assets are increased from 368,008 and 115,762 respectively
and receivable project balances is decreased from 449,653.The total
balance of applications of fund before deducting the current liabilities is
increased from 34,117.
The final balance of the comparative balance sheet after deducting the
items which are included in current liabilities are payables against capital
goods and payables against expenses are 95,950 and 1,028,691 as per
comparative balance sheet 2014. Net current asset is 966,858 and the total
balance of the sources of funds and applications of funds is 208,815 and
758,044. The total funds have been increased in 2014.

[63]
 Balance Sheet At As 31st March 2015
PARTICULARS SCHEDULE AT AS 31st MARCH AT AS 31st MARCH
NO. 2015. 2014.
Details in Amount Details in Amount
Rs. in Rs. Rs. in Rs.
1. SOURCES
OF
FUNDS
Corpus Fund 1. 7,02,197 7,02,197
Capital Fund 1. 46,02,261 54,47,919
General Fund 1. (18,63,922) (16,40,739)
Unspent Project
Balances 2. 90,288 1,98,056
Unsecured Loans 85,40,000 85,40,000
3.

TOTAL 1,20,70,823 1,32,47,434

2.
APPLICATION
OF FUNDS
Fixed Assets 4.
(a) Gross Block 1,13,74,755 1,13,74,755
Less: 67,72,494 59,26,836
Depreciation
Net Block. 46,02,261 54,47,919

Current Assets,
Loans Advances
(a) Cash & Bank
Balances 5. 3,41,855 7,68,359
(b) Other Current
Assets 5. 94,200 1,19,962
(c) Receivables

[64]
Project Balances 5. 99,20,356 99,20,356
1,03,56,411 1,08,08,677

Less : Current
Liabilities
(a) Payables
against 95,950
Capital Goods
(b) Payables
against 28,87,849 29,13,213
Expenses
Net Current 74,68,562 77,99,514
Assets

TOTAL 1,20,70,823 1,32,47,434

Comparative Statement of 2015

PARTICULAR 31st 2015 31st 2014 COMPARISIO
S N
Details in Amount in Details in Amount
Rs. Rs. Rs. in Amount
Rs.
1. SOURCES
OF
FUNDS
Corpus Fund 7,02,197 7,02,197
Capital Fund 46,02,261 54,47,919 845,658
General Fund (18,63,922 (16,40,73 (223,183)
) 9)
Unspent Project
Balances 90,288 1,98,056 107,768
Unsecured
Loans 85,40,000 85,40,000 --

[65]
 TOTAL 1,20,70,82 1,32,47,4 1,176,611
3 34

2.
APPLICATION
OF FUNDS
Fixed Assets
(a) Gross Block 1,13,74,75 1,13,74,755 --
5
Less: Dep. 67,72,494 59,26,836 845,658
Net Block. 46,02,261 54,47,919 845,658

Current Assets,
Loans
Advances
(a) Cash &
Bank 3,41,855 7,68,359 426,504
Balances
(c) Other
Current 94,200 1,19,962 25,762
Assets
(d) Receivables
Project 99,20,356 99,20,356 --
Balances
1,03,56,41 1,08,08,677 452,266
1
Less : Current
Liabilities
(a) Payables 95,950 95,950
against Capital
Goods
(b) Payables
against 28,87,849 29,13,213 25,364
Expenses

[66]
 Net Current 74,68,562 77,99,514 330,665
Assets

TOTAL 1,20,70,82 1,32,47,4 1,176,611

3 34

Interpretation of Comparative balance sheet of 2015

1. As per comparative balance sheet of 2015 it is clearly shown that the comparison
between sources of funds from 2 years of data. The corpus of fund in 2 years is equal
and capital fund is decreased from 845,658 2014.Other items in sources of fund are
general fund increased from 223,183 and unspent project balances is decreased
from107,768 and unsecured loans is equal .The total of sources of fund decreased
from 1,176,611 in 2015.
2. The second item in comparative balance of 2015 is application of funds. The items
included in applications of funds are gross block which is equal 845,658 as per net
block after depreciation. The current assets and loans advances include the items are
cash & bank balances, other current assets are decreased from 426,266 and 25,762
respectively and receivable project balances is equal 99,20,356.The total balance of
applications of fund before deducting the current liabilities is increased from 452,266.
The final balance of the comparative balance sheet after deducting the items which
are included in current liabilities are payables against capital goods and payables
against expenses are 95,950 and 25,364 as per comparative balance sheet 2014. Net
current asset is 330,665 and the total balance of the sources of funds and applications
of funds is are equal that is 1,176,611.
The total funds have been increased in 2015.

[67]
 Balance Sheet At As 31st 2016
PARTICULARS SCHEDULE NO. AT AS 31st AT AS 31st
MARCH 2016 MARCH 2015
Details Amount Details Amount
in in (USD) in In (USD)
(USD) (USD)
1. SOURCE OF
FUNDS
Corpus Fund 1. 10.586 10.586
Capital Fund 1. 59.189 69.381
General Fund 1. (31.033) (28.100)
Unspent Project
Balances 2. 2.838 1.361
Unsecured Loans 180.860 128.745
3.

TOTAL 222.440 181.973

2. APPLICATION
OF FUNDS
Fixed Assets 4.
(a) Gross Block 171.839 171.480
Less : Depreciation 112.650 102.099
Net Block 59.189 69.381

Current Assets &

Loans Advances
(a) Cash & Bank
Balances 5. 12.116 5.154
(b) Loans &
Advances 5.
(c) Other Current
Assets 5. 2.282 1.420

[68]
 (d) Receivables
Project Balances 2. 213.459 149.554
227.857 156.128
Less : Current
Liabilities
(a) Payables against
Capital Goods
(b) Payables against
Expenses 64.606 43.536
Net Current Assets 163.251 112.592

TOTAL 222.440 181.973

Comparative Statement of 2016

PARTICULARS 31st 2016 31st 2015 COMPARISION
Details Amount Details Amount
in (USD) in (USD) in (USD) in (USD) Amount
1. SOURCE OF
FUNDS
Corpus Fund 10.586 10.586
Capital Fund 59.189 69.381 10.192
General Fund (31.033) (28.100) (2.903)
Unspent Project
Balances 2.838 1.361 1.477
Unsecured Loans 180.860 128.745 52.115

TOTAL 222.440 181.973 40.467

2. APPLICATION
OF FUNDS
Fixed Assets
(a) Gross Block 171.839 171.480 0.359
Less : Depreciation 112.650 102.099 10.551

[69]
 Net Block 59.189 69.381 10.192

Current Assets &

Loans Advances
(a) Cash & Bank
Balances 12.116 5.154 6.962
(b) Loans &
Advances
(c) Other Current
Assets 2.282 1.420 0.862
(d) Receivables
Project Balances 213.459 149.554 63.905
227.857 156.128 71.729
Less : Current
Liabilities
(a) Payables against
Capital Goods
(b) Payables against
Expenses 64.606 43.536 21.07
Net Current Assets 163.251 112.592 50.659

TOTAL 222.440 181.973 40.467

Interpretation of Comparative balance sheet of 2016

1. As per comparative balance sheet of 2016 it is clearly shown that the comparison
between sources of funds from 2 years of data. The corpus of fund in 2 years is equal
and capital fund is decreased from 10.192 (USD) 2016. Other items in sources of fund
are general fund increased from 2.903 (USD) and unspent project balances, unsecured
loans are increased from 1.477 (USD) and 52. 177 (USD). The total of sources of
fund increased from 40.467(USD) in 2016.
2. The second item in comparative balance of 2014 is application of funds. The items
included in applications of funds are gross block which is increased from 0.359(USD)
as per net block after depreciation. The current assets and loans advances include the
items are cash & bank balances, other current assets are increased from 10.551 (USD)

[70]
and 10.192(USD) respectively and receivable project balances is increased from
6.962(USD) .The total balance of applications of fund before deducting the current
liabilities is increased from 71.729(USD).
The final balance of the comparative balance sheet after deducting the items which
are included in current liabilities are payables against expenses 21.07(USD) as per
comparative balance sheet 2016. Net current asset is 50.659(USD) and the total
balance of the sources of funds and applications of funds is equal to 40.467(USD).
The total funds have been increased in 2016.

[71]
 Balance Sheet At As 31st March 2017
PARTICULARS SCHEDULE AT AS 31st MARCH AT AS 31st MARCH
NO. 2017 2016
Details Amount Details Amount
in Rs. in Rs.
Rs. Rs.
1. SOURCES OF
FUNDS
Corpus Fund 1. 10,481 702,197 10,586 702,197
Capital Fund 1. 49,621 3,324,617 59,189 3,926,181
General Fund 1. (43,081) (2,886,402) (31,033) (2,058,542)
Unspent Project
Balances 2. - - 2,838 188,238
Unsecured Loans 135,030 9,047,000 180,860 11,997,000
3.

TOTAL 152,051 10,187,412 222,440 14,755,074

2. APPLICATION
OF FUNDS
Fixed Assets 4.
(a) Gross Block 58,600 3,926,181 171,839 11,398,562
Less: Depreciation 8,979 601,565 112,650 7,472,381
Net Block 49,621 3,342616 59,189 3,926,181

Current Assets &

Loans Advances
(a) Cash & Bank
Balances 5. 11,575 775,535 12,116 803,672
(b) Loans &
Advances 5. 9,483 635,346 2,282 151,368
(c) Other Current
Assets 5. 154,140 10,327,401 213,459 14,159,382

[72]
 (d) Receivable
Project Balances 2. 175,198 11,738,282 227,857 15,114,422

Less : Current
Liabilities
(b) Payables
against 72,768 4,875,486 64,606 4,285,529
Expenses

TOTAL 152,051 10,187,412 222,440 14,755,074

Comparative Statement of 2017

st
PARTICULARS 31 MARCH 2017 31st MARCH 2016 COMPARISON
Amount Amount in Amount Amount in
in Rs. in Rs. Amount
(USD) (USD)
1. SOURCES OF
FUNDS
Corpus Fund 10,481 702,197 10,586 702,197
Capital Fund 49,621 3,324,617 59,189 3,926,181 601,564
General Fund (43,081) (2,886,402) (31,033) (2,058,542) 827,860
Unspent Project
Balances - - 2,838 188,238 188,238
Unsecured Loans 135,030 9,047,000 180,860 11,997,000 2,950,000

TOTAL 152,051 10,187,412 222,440 14,755,074 4,567,662

2.
APPLICATION
OF FUNDS
Fixed Assets
(a) Gross Block 58,600 3,926,181 171,839 11,398,562 7,472,381
Less: 8,979 601,565 112,650 7,472,381 6,870,816

[73]
 Depreciation
Net Gross 49,621 3,342,616 59,189 3,926,181 583,565

Current Assets &

Loans Advances
(a) Cash & Bank
Balances 11,575 775,535 12,116 803,672 28,137
(b) Loans &
Advances 9,483 635,346 2,282 151,368 483,978
(c) Other Current
Assets 154,140 10,327,401 213,459 14,159,382 3,831,981
(d) Receivable
Project Balances 175,198 11,738,282 227,857 15,114,422 3,376,140

Less : Current
Liabilities
(b) Payables
against 72,768 4,875,486 64,606 4,285,529 589,957
Expenses

TOTAL 152,051 10,187,412 222,440 14,755,074 4,567,662

Interpretation of Comparative balance sheet of 2017

1. As per comparative balance sheet of 2017 it is clearly shown that the comparison
between sources of funds from 2 years of data. The corpus of fund in 2 years is equal
and capital fund is decreased from 601,564. Other items in sources of fund are general
fund increased from 827,860 and unspent project balances 188,238 and unsecured
loans are decreased from 2,950,000 .The total of sources of fund increased from
4,567,662 in 2017.
2. The second item in comparative balance of 2017 is application of funds. The items
included in applications of funds are gross block which is increased from 583,565 as
per net block after depreciation. The current assets and loans advances include the
items are cash & bank balances, other current assets are decreased from 28,137,
483,978 and 3,831,981 respectively and receivable project balances is decreased from

[74]
3,831,981.The total balance of applications of fund before deducting the current
liabilities is increased from 3,376,140.
The final balance of the comparative balance sheet after deducting the items which
are included in current liabilities are payables against expenses are 589,957 as per
comparative balance sheet 2017. Net current asset is and the total balance of the
sources of funds and applications of funds is equal to 4,567,662.
The total funds have been increased in 2017.

[75]
Value of Net Current Asset during the period of 5 years.
Year Value in Rs
2013 1,07,74,560
2014 1,08,08,677
2015 1,26,77,603
2016 1,58,74,911
2017 1,17,38,282

16000000

14000000

12000000

10000000

8000000

6000000

4000000

2000000

0
2013 2014 2015 2016 2017
Value in Rs 10774560 10808677 12677603 15874911 11738282

[76]
Value of Net Current Liability over a period of 5 years.
Year Value in Rs
2013 39,41,904
2014 30,09,163
2015 28,87,849
2016 42,85,549
2017 48,75,486

5000000

4500000

4000000

3500000

3000000

2500000

2000000

1500000

1000000

500000

0
2013 2014 2015 2016 2017
Value in Rs 3941904 3009163 2887849 4285549 4875486

[77]
Value of Balance Sheet of Jaipur rugs during the period of 5 years.

YEAR AMOUNT IN Rs

2013 1,24,89,390

2014 1,32,47,434

2015 1,20,70,823

2016 1,47,55,074

2017 1,01,87,412

16000000

14000000

12000000
Value in Rupees

10000000

8000000

6000000

4000000

2000000

0
2013 2014 2015 2016 2017
Series 1 12489390 13247434 12070823 14755074 10187412

[78]
Value of capital of Jaipur rugs during the 5 years

YEAR AMOUNT IN Rs

2013 56,56,734

2014 54,47,919

2015 48,31,970

2016 41,22,158

2017 33,24,617

6000000

5000000

4000000

3000000

2000000

1000000

0
2013 2014 2015 2016 2017
Series 1 5656734 5447919 4831970 4122158 3324617

[79]
 CHAPTER 6

BIBLOGRAPHY AND REFRENCES

[80]
BOOKS
1. Agarwal N.P., “Analysis of Financial Statements”- National Publishing

House, 23 Darya Ganj, New Delhi , 1981.

2. Fregmen J.M., “Accounting for Managerial Analysis” - Homewood, Irwin,

1972.

3. Ghosh P.K. and Gupta S.C., “Fundamental of Management Accounting” –

National Publishing House, New Delhi, 2nd Ed., 1979.

4. Joy O.M., “Introduction to Financial Management” - Homewood, Irwin,

1977.

5. Lav.B., “Financial Statement Analysis – A New Approach” – Englewood,

Cliffs, Prentice Hall, 1974.

6. Lee C.A., “Modern Financial Accounting”- Thomas Nelson and Sons

Ltd., Londan, 2nd Edn. 1975.

7. Bright M.G., “Financial Management”- Tata Mcgrew Hill Publishing Compay

Ltd., New Delhi, 1978.

8. Mohsin M., “Financial Planning and Control” – Vikas Publishing House,

New Delhi, 1977.

9. Kulkarni P.V., “Financial Management -A Conceptual Approach” –

Himalaya Publishing House, Bombay, 2nd Edn., 1983.

10. Pandey I.M., “Financial Management” – Vikas Publishing House, New Delhi,

1st Edn., 1979.

[81]
JOURNALS, MAGAZINES AND REPORTS:

Datt G. and A. Mahajan (2012): Datt and Sudharam Indian Economy (New

Delhi: S. Chand & Company Ltd.).

Department of Industrial Policy & Promotion. (2010-11). Annual Report 2010

-11. Ministry of Commerce and Industry, Government of India.

Indiastat, Statistical database, various years, www.indiastat.com accessed on

2 August 2011.

Annual Reports of the Companies.

WEB SITES:

http://www.jaipurrugs.com

http://www.wikipedia.com/financialmanagement

http://www.financeguru.com

http://www.google.co.in/financialanalysis

http://www.iimahd.ernet.in

http://icmr.icfai.org/casestudies

http://usda.mannlib.cornell.edu/report

www.scribd.com

www.icra.com/jaipurrugs/report

[82]