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CHAPTER I

INTRODUCTION

1.1 FINANCIAL PERFORMANCE

Finance is regarded as the lifeblood of a business enterprise. In

general, finance may be defined as a provision of money at the time it

is wanted. Business finance can broadly be defined as the activity

controlling, and administering of the funds used in the business.

According to Solomon, Financial management is concerned

with the efficient use of an important economic resource, namely,

capital funds.

A company ability to generate new resources, from day-to-day

operations, over a given period time.

According to Philippians, Financial management is concerned

with the management decisions that result in the acquisition and

financing of long term and short term credits for the firm. As such it

deals with the situation that require selection of specific assets (or

combination of liabilities) as well as the problem of size and growth

of an enterprise. The analysis of these decisions is based on the

expected inflows of funds and their effects upon managerial

objectives.

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Financial Performance Management is more than satisfying

the obstacles of regulations. It is applying best practices that have

emerged to improve the financial strength and reporting capabilities

of an enterprise. Through performance management systems,

analytics, dashboards and technology, corporate financial processes

can become a cornerstone for making decisions and growing an

organization.

NATURE OF FINANCIAL PERFORMANCE

The term finance can be defined as the management of

the flows of money through an organization. A firms success and its

survival depended upon how efficiency it is able to generate funds, as

and when needed. Financial management refers to that part of the

management activity which is concerned with the planning ad

controlling of firms, financial resources, managing, controlling of

firms, financial resources. Managing f finance is on important task in

industry. It requires both short-term and long term planning. The

business finance may be said to deal with acquisition of funds and

distribution of profits by a business organizations.

1.2. OBJECTIVES OF THE STUDY

PRIMARY OBJECTIVE:

The main purpose of the study the financial performance of

PHYTO CHEM (INDIA) LIMITED.

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SECONDARY OBJECTIVES:

To study the financial position of the firm.

To find out the liquidity and profitability of the firm.

To find out the nature of changes in the financial position of

the company.

To make a comparative study through trend analysis.

1.3. RESEARCH METHODOLOGY

STUDY PERIOD:

This study cover the period of five years from 2003-2007. The

accounting year commenced from April to March.

SECONDARY DATA:

The data formulate company records were used for the

analysis. It includes the annual reports and other published sources.

TOOLS USED:

RATIO ANALYSIS:

Ratio Analysis is one of the techniques of financial analysis

where ratios used as a yardstick for evaluating the financial

condition and performance of a firm. Analysis and interpretation of

various accounting ratios gives a skilled and experienced analyst, a

better understanding of the financial condition and performance of

the firm than what he could have obtained only through a perusal of

financial statements.

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Ratios represent the relationship, expressed in mathematical

terms between figures, which are connected with each other in some

manner. Obviously, no purpose will be served by comparing two sets

of figures, which are not at all connate with each other. Moreover,

absolute figures are also unfit for comparison. They are expressed as

percentage, times and in ratio.

COMPARATIVE STATEMENTS ANALYSIS:

The single balance sheet shows assets and liabilities as on a

particular date. The comparative balance sheet shows the value of

assets and liabilities on two different dates. A comparative balance

sheet has two columns to record the figure of the current year and

the previous year. A third column is used to show the increase or

decrease in figures. A forth column may be added for given

percentage of increase or decrease.

TREND ANALYSIS:

In financial analysis the direction of changes over a period of

years is of crucial important, time series or trend of change. This

kind of analysis is practically applicable to the items of profit and

loss account. It is advisable that trends of sales.

Trend Analysis or Trend percentage also plays a significant

role in the analysis of horizontal financial statements. The world

Trend means future possibilities. An efficient and effective

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management tries to know the actual performance and also discovers

future prospects of the business.

1.4. REVIEW OF LITERATURE

1Bharati pathak, December 2003

The bulk of the banking business in the country is in the public

sector comprising the State Bank of India and its seven associate

banks and twenty nationalized commercial banks. Till 1991, the

Indian banking industry was operating in a highly regulated and

protected regime. But with the acceptance of Narsimham committee

recommendations, competition has been injected into the banking

industry in two forms.

In this study, it has been found that HDFC Bank emerged as a

leader in this financial analysis of the year ended 2000-01. Its closest

competitor was ICICI Bank. Financial performance of the other

three, no doubt, lagged behind them, but it by no means, depressing.

These banks obviously, have to focus more improving parameters

like credit quality and cost control for the emerge as the top

performers.

1 Bharathi pathak, Finance India, vol, xvii, No-4, December 2003 .

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2R. Hamsalakshmi, M. Manicham, September 2005

In this study, it has been found that liquidity position and

working capital position were favorable and good during the period

of study. Regarding turnover ratios, efficiency in management of

fixed assets and total assets must be increased. Regarding Return on

Investment and Return on Equity was proved that the overall

profitability position of the software companies had been increasing

at a moderate rate.

3G. Sudarsana Reddy, September 2003

In this study, it has been found that the paper industry in

Andhra Pradesh needs the induction of additional funds along with

restructuring of finances, modernization of technology for better

operating performance, use of fixed assets efficiently, creation of

adequate depreciation provision, optimizing inventory, investments,

the degree of liquidity, adoption of sound credit policies, creative

efforts on marketing frond and government concessions and support.

These would go a long way towards strengthening the profitability of

paper mills. With this, there is a very possibility of the industry

flourishing and touching the new heights in future.

1.5 SCOPE OF THE STUDY

2 R.Hamsalakshmi, M.Manicham, Finance India, vol xix, No-3, September 2005.3 G.Sudarsana reddy, Finance India, vol xvii, September 2003.

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The scope of the study is defined below in terms of concepts

adopted and the period under focus:

The study which deals with the management of comparison of

financial performance is confined only to the PHYTO CHEM

(INDIA) LTD.

The study is based on annual reports of the company for a

period of four years from 31-03-2003 to 31-03-2007.

The study will help to analyze the financial status of the firm.

The study reveals the present liquidity and profitabilityposition of the company.

CHAPTER II

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COMPANY PROFILE

PHYTO CHEM (India) Ltd, State-of-the-art plant is

strategically situated in Bonthapally about 40 kms from Hyderabad.

It is well connected by road, rail and air as well as the latest

communication facilities. The most shophisticated carboforah plant.

One of the very few in country has been installed to ensure

economical and top quality products.

PHYTO CHEM (India) Ltd was established in Hyderabad on

11th January 1989 as a private limited company and on 8th may 1992,

the company was registered as public limited company. The

company was incorporated with a capital investment of Rs.5 crores.

OBJECTIVES OF THE COMPANY:

1. To manufacture, produce, refine, process, formulate,

buy, sell, import, export, market, develop, distribute or otherwise

engage or deal in all types of pesticides, insecticides, fungicides,

sips, sprays, verifies, medicines, drugs and scientific chemicals or

any nature used or capable of being used in the pharmaceutical

industry, agricultural chemicals, petrol chemicals, industrial

chemicals or any mixtures derivatives and compounds there of.

2. To manufacture, produce, refine, process, formulate,

buy, sell, import, export, market, develop, distribute, trade or

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otherwise engage or deal in all type of organic and inorganic

chemicals fertilizers, micro fertilizers of any nature used or capable

of being used in all types of agricultural and commercial crops and

to carry on the activities of cotton ginning, spinning sale of cotton

bales and seeds.

3. To Extract, produce, refine, process, buy, sell, import,

export, market, develop, distribute, trade or otherwise engage or

deal in all type of oils edible and non-edible oils and its by-product

and any other commodities or products.

4. To manufacture, purchase, sell, export, import, repair,

or otherwise deal in all types of Pac materials, tins required for the

above said products.

5. To manufacture, purchase, sell, export, repair or

otherwise deal in all types of plant and machine used for the

manufacture of the above said products.

6. To acquire, the running proprietor concern PHY TO

CHEM (INDIA) LTD as going concern with all assets and

liabilities.

7. To carry on the research and development work for the

above mentioned main objects.

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Keeping pace with technological revolution around the world,

PHYTO CHEM(INDIA) Ltd, installed the latest technologies to yield

the best products with the rock solid commitment to quality.

ORGANIZATION STRUCTURE

The organization of PHYTO CHEM (INDIA) Ltd is divided

into three levels of management as Top level management, Middle

level management ,Lower level management.

The top level consists of the chairman and managing director.

Chairman of the company is non-official member elected from the

Board of Directors.

The middle level management includes the general manager

and functional manager. The functional manager VIZ production,

finance, personal, marketing, Medical etc are directly reporting to

the general manager and managing director.

The lower level management involved in the implementation of

the policies and strategies of the organization. They include the

supervisors, clerical staff and workers.

BOARD OF DIRECTORS:

Dr. P.Sreemannarayana - Chairman

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Mr. Y. Nayudamm - Managing Director

Mr. U. Venkateswararao - Whole time Director

Mr. P. Anjaneyulu - Director

Mr. C.N.Chary - Director

AUDITORS:

M S F Adinarayana & Co are the chartered accountants who

makes auditing every year.

FUNCTIONAL AREA OF PHYTO CHEM (INDIA) LTD:

This organization has the following departments.

o Finance Department

o Personal Department

o Research and Development

Deportment

o Production Department

o Employees Relation Department

o Technical Service Department

PRODUCTION CAPABILITIESLiquid formulations -- 2700 KL per annum

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(Monocrotophos 36%, Endosulfan 36%, Quinalphos

25%, Fenvalerate 20%, Cypermethrin 10%,

Cypermethrin 25%)

Wettable Powders -- 900 MT per annum

Groundless Formulation -- 4000 MT per annum

TECHNICAL

Cypermethrin _ 150MT per annum

Fenvelerate _ 150MT per annum

PRODUCTS PRODUCED

Insecticides: Accphate, Alphamethrain, Carbofuran, Chlorphriphos,

Cypermethrin, Deltamethrin, Diehlororos, Dimethoate, Dicofol,

Endosulfan, Ethion, Fenvalerate, Lindane, Moulouthion,

Methylaparathion, Monocrotophos, Phorate, Profenphos,

Quinolphos

Fungicides: Captan, Carbendiazim, Hexaconazole, Manconazole,

Ziram, Metalaxyi

Herbicides: Anilophos, Atratine, Butachior, Isoproturon

EXPORTS

The company has been exporting its products within and

outside the country. The major exports were made to South Africa,

Tunisia and Nigeria.

SOURCES OF RAW MATERIAL

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Raw materials purchased from Gujarat, Indore. In order to

manufacture the products the company is importing Raw materials

from Hang Kong and China.

FINANCIAL ASSISTANCE

The capital was contributed in cash by the N R I s and Federal

Bank Ltd and they receive non cash shares issued towards

compensation of technical knowledge. Rest of the share capital was

contributed by the general public.

WORKING CONDITIONS AND WELFARE HOURS OF WORK

AND SHIFT SYSTEM:

1st shift - 23:00 to 7:00 Hrs

2nd shift - 07:oo to 15:00 Hrs

3rd shift - 15:00 to 23:00 Hrs

4th shift - 08:00 to 16:30 Hrs

SAFETY:

The department will conduct periodical training programs in

safety to all the workmen as well as to managerial staff inculcate safe

work habits among the workmen.

AMBULANCE ROOM:

A well furnished Ambulance Room is provided for immediate

medical aid with round the clock service for the benefit of the

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Employees headed by the chief Medical officer major competitors of

PHYTO CHEM (INDIA) Ltd.

GOGGLES AND FACE SHIELDS:

It is necessary to wear splash-proof goggles when working

with pesticides. Not only can the pesticide be absorbed through the

eyes but the acidity of a pesticide can cause permanent eye injuries

also. Use goggles meeting or Exceeding ANSI Standard 287.1,1968

estimate. When pouring or mixing concentrates it is preferable to use

a full-face shied to protect face from splashes. Always wash the

goggles or face shied with soap and water after use.

BOOTS:

Unlined rubber or neoprene (nit rile etc.,) books should be

worn over work shoes or in place of work shoes when mixing or

applying pesticides. Pull the legs of trousers over the tops of boots to

help prevent spilled pesticide from getting inside boots. Wash boots

with soap and water after each use. Never wear cloth or leather

boots when Mixing or Applying Pesticides. Cloth or leather boots

will absorb pesticides and allow the pesticide to contact the skin of

the leg or foot and will be a source of residues causing chronic

exposure.

HEAD WEAR:

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A water proof hat should be worn when mixing or applying

pesticides because pesticides can be readily absorbed through the

scalp. The hat should have a brim to keep drift or splashes off curs

and neck. Plastic Safety hats are ideal for use with pesticides and

should be washed in soap and water after each use. Cloth hats may

absorb pesticides and contaminate the wearer. Do not use Cloth

Hats.

RESPIRATORS:

Respirators are designed to prevent in haling toxic fumes and

mists. They should be used when mixing or applying pesticides. If the

label specifies the need. Choose the correct cartridge for the type of

pesticide being used. The manufacturer or supplier can provide

guidance on selecting correct cartridges. Replace cartridges when the

odor of the pesticide becomes noticeable or when. Breathing becomes

difficult during use. The life of cartridges will vary with the

concentration of pesticide in the air around the air around the

respirator breathing rate of the user temperature humidity and

composition of the cartridge.

PERSONAL PROTECTIVE EQUIPMENT:

Pesticides are necessary for agricultural production but

potential hatreds to users are not adequately emphasized. accidents

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involving pesticides are usually due to improper handling, mixing,

application of pesticides, or failure to use proper personal protective

equipment and clothing.

GENERAL GUIDELINES:

The minimum protection when working with pesticides is long

sleeves, long pants, shoes and socks, rubber gloves and splash-proof

eye protection regardless of the toxicity level of the pesticides.

Rubber boots and a respirator are necessary when working with

moderately or highly toxic pesticides. EPAs recommendations

include wearing a double layer of clothing. This can be accomplished

by wearing coveralls over the long pants and long sleeve shirt, and

rubber boots over the shoes and socks.

UNIFORM:

The company maintains a unique feature on dues uniform all

the individual working in the organization maintain an unique

uniform which is in Blue colored. This shows that all are equal and

there are no discriminations.

GLOVES:

The use of gloves is mandatory when working with highly toxic

pesticides. It is recommended that only unlined rubber or neoprene

(nit rile etc) gloves be used when handling or using all pesticides.

Unlined gloves should be thoroughly washed (Inside and Outside)

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after each use. Gloves should be at least 12 inches long to provide

adequate protection for wrists and the cuffs should be inside sleeves

for most work. This will keep run of pesticide from getting into the

gloves.

CATETERIA:

The PHYTO CHEM (INDIA) Ltd right from its inception is

maintaining highly subsidized canteen. Lunch or dinner is served in

the cafeteria at nominal prices. Snacks, coffee are supplied to

different sections or plants in the company.

TURNOVER:

The turnover the company is around 15 crores.

FUNCTION OF SALES DEPARTMENT:

Organization sales territories and fix sales quota.

Organization and development of channels of distribution.

Organization and development of advertising at souls

promotion strategies.

Planning sales policies for their effective implementation.

Planning the short term as well as long term marketing

program.

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Co-ordination between the wants & needs of the consumers

and their satisfaction.

Co-ordination the achieves of production, finance department.

Ascertaining economic and political conditions and their

influences on the sales of cement.

After sales service in the form of attending to the complaints

and suggestions of the consumers.

BRANCH OFFICES IN EVERY STATE

State Branch

Andhra Pradesh Hyderabad

Gujarat Ahmadabad

Haryana Bathinda

Karnataka Ballary

Maharashtra Nanded

Punjab BathindaRajasthan Sriganganager

Tamilnadu Salem

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COMPETITORS OF THE COMPANY:

1. Hyderabad Chemicals

2. Bayer India Limited

3. Agasya

4. Aries

5. Magmani Chemicals

CHAPTER III

FINANCIAL STATEMENT ANALYSIS

A financial statement is a collection of data organized

according to logical and consistent accounting procedures. Its

purpose is to convey an understanding of same financial aspects of a

business firms. It may show a position at a moment in time as in case

of balance sheet otherwise or it may reveal series of activates over a

given period of time ,as the case of an income statement.

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Finance is regarded as the lifeblood of a business enterprise.

In general, finance may be defined as a provision of money at

the time it is wanted. Business finance can broadly be defined

as the activity controlling, and administering of the funds used

in the business.

Financial statement are used by the management as the

basis for planning operations including procurement of

adequate financing and as a means of exercising control

financing position of the business and efficient and profitable use

of the assets An understanding of different aspects of financial

statement is necessary for the development of financial skills.

Financial statements are used by the management as the

basis for planning operations procurement of adequate

financing and are means of exercising control over financial

position of the business and efficient and profitable use of assets.

An understanding of different aspects of financial statements is

necessary for the development of financial skills.

Thus financial statements generally refer to the two statements

The position statements or balance sheet.

An Income statement or profit and loss a/c.

Financial statements are prepared as an end result financial

accounting and are the major sources of financial informations of

enterprise financial statements are also called as financial reports.

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TYPES OF FINANCIAL STATEMENTS

Financial statement include

A Balance sheet

An Income statement

A statement of changes in owners account

A statement of changes in financial position.

The financial statements are prepared with a view to depict

financial position of the concord Proper analysis and interpretation

of this statement enables a person to judge the profitability and

financial strength of the business.

FINANCIAL STATEMENT ANALYSIS

Use and transformation of financial data into a form that can

be used to monitor and evaluate the firm's financial position, to plan

future financing, and to designate the size of the firm and its rate of

growth. Financial analysis includes the Financial Statement Analysis

and Funds Flow Analysis.

The basis of financial planning, analysis and decision-making is

the financial information. Is needed to predict, compare and evaluate

the firms earning ability. It is also required to aid in economic

decision making, investment and finding decision-making. The

financial information of the enterprise is contained in the financial

statement of accounting reports.

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The financial statements (balance sheet and profit and loss

account) are the basis instruments of an accounting system which

communicate financial information to users, Balance sheet contains

the information about the firms assets and liabilities. Assets

represent economic resources possessed by the firm. Fixed assets are

used in business for more than accounting period of one year, while

current assets are converted into cash payable within an accounting

period are called current liabilities.

Financial analysis is an aspect of the overall business finance

function that involves examining historical data to gain information

about the current and future financial health of a company.

Financial analysis can be applied in a wide variety of situations to

give business managers the information they need to make critical

decisions.

"The inability to understand and deal with financial data is a

severe handicap in the corporate world," Alan S. Donna hoe wrote in

his book What Every Manager Should Know about Financial

Analysis. "In a very real sense, finance is the language of business.

Goals are set and performance is measured in financial terms. Plants

are built, equipment ordered, and new projects undertaken based on

clear investment return criteria. Financial analysis is required in

every such case."

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The profit and loss account shows the profitability of the firm

by giving details above revenues and expenses. Revenues are benefits

which customers contribute of the firm in exchange for goods of

services provided buy the firm. The cost if the economic resource use

in providing goods and service to the customers is called expenses.

Thus the basic purpose of the profit and loss account is to is to

provided a concise summary of the firms revenues and expenses

during period of the time and measure its profitability.

The finance function in business organizations involves

evaluating economic trends, setting financial policy, and creating

long-range plans for business activities. It also involves applying a

system of internal controls for the handling of cash, the recognition

of sales, the disbursement of expenses, the valuation of inventory,

and the approval of capital expenditures. In addition, the finance

function reports on these internal control systems through the

preparation of financial statements, such as income statements,

balance sheets, and cash flow statements.

CONCEPT OF FINANCIAL STATEMENT ANALYSIS

Financial analysis is the process of determining financial

strength and weakness of the company by establishing strategic

relationship between the components of balance sheet and profit and

lose statement and other operative data.

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NEED FOR FINANCIAL STATEMENT ANALYSIS

Stockholders, creditors and management have concerns about

the financial data of a company, which can be resolved to some

degree predictive ability of financial statement analysis. Stockholders

are concerned about the future success of operation and their

leadership.

BENEFITS OF DOING FINANCIAL STATEMENT ANALYSIS

Financial statement are analyzed by different users for

different purposes. Even though aims vary according to the users,

the following may be the general objective of financial statement

analysis.

i. To estimate the profitability or earning capacity of the

enterprise.

ii. To aid in economic decision making investment and financial

decision.

iii. To gauss the financial position and financial performance of

the concern.

iv. To determine the measure of efficiency of operations.

v. To calculate quickly and examine financial ratio and flow of

funds.

vi. To identify areas of mismanagement and potential danger.

vii. To ascertain the maintenance of financial leverage.

viii. To determine the movement of inventory.

ix. To identify diversion of funds.

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x. To decide about the future prospects of the firm. As a matter

of fact, the objectives of financial statement analysis, depend to

a large extent on the view-point of the analysis.

TOOLS OF FINANCIAL STATEMENT ANALYSIS:

A study of the relationship and trends is undertaken as part of

financial statement analysis, to evaluate the financial position, the

operational results as well as financial progress of a business

concern. There are certain tools or techniques used for measuring

the relationship among the financial statement items of a single set of

statement and changes have taken place in this items as disclosed in

successive financial statements.

i. Comparative financial statement

ii. Common-size financial statement

iii. Trend analysis

iv. Ratio analysis

v. Fund flow analysis

vi. Cash flow analysis.

COMPARATIVE FINANCIAL STATEMENTS:

The comparative financial statement can be a comparison

between two time periods for an enterprise. It can also be a

comparison for two or more enterprise for one or more accounting

periods. The former is known as Inter-period (or) Inter-firm

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comparison and the later is known as Inter-unit or Inter-firm

comparison.

For either type of analysis, we can study the comparative

financial statement as follows:

a. Comparative balance sheet

b. Comparative profit & loss account

Comparative balance sheets as on two or more different dates

can be comparing assets, liabilities, capital and finding out any

increase or decrease in those items.

TREND ANALYSIS:

Trend Analysis or Trend percentage also plays a significant

role in the analysis of horizontal financial statements. An efficient

and effective management tries to know the actual performance and

also discovers future prospects of the business. This trend ratio can

be computed by dividing each amount in the other statement with

the corresponding item found in base statement.

Trend analysis is a barometer of the changes taking place in

the economic profile of an enterprise.

Trend analysis indicates the rate of changes in the value of an

item in terms of an index.

Trend analysis rearranges the data in a manner which makes

it easy to identify change and interpret the same.

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CHAPTER IV

ANALYSIS AND INTERPRETION OF FINANCIAL

STATEMENTS

Published financial statements are the only source of

information about the activities and affairs of a business. Groups

interested in the progress, position and prospects of business, are the

public, shareholders, investors, creditors and the government. For

this prose, financial statement have to be carefully studied, analyzed

and intelligently interpreted.

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Analysis and interpretation of financial statements are an

attempt to determine the significance and meaning of the financial

statement data so that forecast may be made of the prospect for

future earnings, to ability to pay interest, debt maturities both

current as well as long term- and probability of a sound dividend

policy. This process involves both the analysis and the interpretation.

Analysis refers to the methodical classification of the data

given in the financial statements. All process which help in drawing

certain results from the financial statement are include in the

analysis. Analysis only establishes a relationship between various

amount mentioned in the balance sheet and the profit and loss

account.

Interpretation refers to the comparison of various components

and the examination of their content, so that useful and definite

conclusion may be drawn about the earning capacity, efficiency,

profitability, liquidity, solvency, trend etc. comparison is, therefore a

pre-requisite for meaningful interpretation.

In this study, the following analysis were made

1. Ratio analysis

2. Trend analysis

3. Comparative statement analysis

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4.1 RATIO ANALYSIS

Ratio analysis is one of the important tools of analyzing

financial statements. The financial statements are detailed and do not

furnish the required information at a glance. Accountants have to

strive hard to dig out the required information.

Ratio analysis is the process of determining and interpreting

numerical relationship between figures of the financial statements.

An absolute figure often does not convey much meaning. Generally,

it is only in the light of other information that the significance of a

figure is realized. It is an effective tool or a device to diagnose the

financial and operation diseases of business enterprise. It is an

important and useful technique to check upon the efficiency with

which working capital is being used in the enterprise.

In simple language, ratio is one number expressed in terms of

another and can be worked out by dividing one number with the

other. Since the analysis and interpretation of financial statement is

made with the help of ratio, it may be called ratio analysis. The ratio

analysis of financial statement stands for the process of arrangement

of data, computation of ratio, interpretation of the ratios so

computed and projections through ratios.

Some ratios indicate the trend or progress or down fall of the

firm. It helps the management in evaluating the financial position

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and performance of the firm. Through leverage and solvency ratios,

ratio analysis helps in assessing the financial position of the firm.

Current and liquid ratios indicate short term financial position,

whereas debt equity ratios, fixed assets ratios and proprietary ratios

show long term financial position. Similarly, activity ratios and

profitability ratios are useful in evaluating the efficiency of

performance.

4.1.1. PROFITABILITY RATIOS

Profitability is an indication of the efficiency with which the

operation of the business are carried on poor operational

performance may indicate poor sales and hence poor profits. A lower

profitability may arise due to the lack of control over the expenses.

1. OVERALL PROFITABILITY RATIO:

It is also called as Return on investment(ROI). It indicates

the percentage of return on the total capital employed in the

business. The Overall performance and the most important,

therefore, can be judged by working out a ratio between profit

earned and capital employed. The resultant ratio, usually expressed

as a percentage, is called Return on Investment.

Operating profit

Overall Profitability Ratio = ------------------------ * 100

Capital employed

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Table No-1 : Overall Profitability Ratio (Rupees in lakhs)

Year Operating profit Capital

employed

Ratio

2002-03 -6,12,44,365 10,87,02,998 -56.34

2003-04 1,74,96,805 11,00,82,045 15.89

2004-05 62,09,979 12,85,06,154 4.83

2005-06 1,65,84,915 22,73,12,955 7.29

2006-07 61,86,590 89,48,47,694 6.91

Source: Annual reports of the company

The above table reveals the overall profitability ratio. The

trend of this ratio is dynamic. The indices of this ratio are -834.13,15.89, 4.83, 7.29 and 6.91. It may be infested that the profitability is

not stable.

Chart No-1 : Overall Profitability Ratio

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-56.3

15.89

4.837.29 6.91

-6 0

-5 0

-4 0

-3 0

-2 0

-1 0

0

10

20

Ratio

2002-03 2003-04 2004-05 2005-06 2006-07

Year

Overall Profitability R

2. GROSS PROFIT RATIO:The gross profit ratio is also known as Gross margin ratio.

This ratio expresses relationship between gross profit on sale and net

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sales in terms of percentage indicating the percentage of gross profit

earned on sales.

Gross profit

Gross Profit Ratio = -------------------- * 100

Net sales

Table No-2 : Gross Profit Ratio (Rupees in lakhs)

Year Gross Profit Sales Ratio

2002-03 59,04,875 6,39,27,820 9.23

2003-04 3,12,06,057 9,28,58,229 33.60

2004-05 2,27,12,871 14,60,40,088 15.55

2005-06 3,68,32,546 16,89,42,238 21.80

2006-07 2,30,86,590 11,82,62,000 19.52


The gross profit ratio shows a dynamic trend. This ratio is

fluctuating year by year. The highest ratio was in 2003-04, i.e. 33.60.

The ratio has the range from 9.23 to 19.52.

Chart No-2 : Gross Profit Ratio

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9 .2

33 .

1 5 . 5

2 1 .1 9 . 5

0

5

1 0

1 5

2 0

2 5

3 0

3 5

Rati

2 0 02 -0 3 2 0 03 -0 4 2 0 04 -0 5 2 0 0 5-0 6 2 00 6 -07

y e a r

Gro ss P rofit R

3. NET PROFIT RATIO:

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This ratio establishes the relationship between the amount of

Net profit and the amount of revenue. This ratio is taken in

percentage. Net profit or Net income is the gross profit less selling,

distribution and financial expenses. Net profit for calculating this

ratio is picked up from the profit & loss A/c.

Net profit

Net profit ratio = ------------------ * 100

Net sales

Table No-3 : Net Profit Ratio (Rupees in lakhs)

Year Net profit Sales Ratio

2002-03 -32,46,716 6,39,27,820 -5.07

2003-04 16,93,569 9,28,58,229 1.82

2004-05 22,86,720 14,60,40,088 1.56

2005-06 15,51,571 16,89,42,238 9.18

2006-07 11,99,732 11,82,62,000 1.01


From the above table, we can inter prt that the Net Profit

Ratio are -5.07, 1.82,1.56,9.18,1.01. The average ratio is 1.7 .The net

profit ratio vary from -5.07 to 1.01, so it gain profits in spite of

having loss in 2002-2003.

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Chart No-3 : Net Profit Ratio

-5.07

1.82 1.56

9.18

1.01

-6

-4

-2

0

2

4

6

8

10

Ratio

20 02 -0 3 2 00 3-0 4 2 00 4-0 5 2 00 5-0 6 2 006 -07

Year

N et profit Ra ti

4. OPERATING EXPENSES RATIO:

This ratio is the test of the operational efficiency with which

the business is being carried. The operating ratio should be low

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105.04

81.16

95.7590.18

94.77

0

20

40

60

80

100

120

Ratio

2002-03 2003-04 2004-05 2005-06 2006-07

Years

Operating Expenses R ati

4.1.2. TURNOVER RATIOS:

Turnover means sales. So turnover ratios are related to

sales. It is an accepted conclusion that sales has a direct relationship

with the performance of the business. The turnover ratio are also

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known as activity or efficiency ratios. They indicated in the efficiency

with which the capital employed is rotated in the business.

1. FIXED ASSETS TURNOVER RATIO:

This ratio indicates the extent to which the investments in fixed

assets contribute towards sales. If compared with a previous period,

it indicates whether the investment in fixed assets has been judicious

or not.

Net sales

Fixed Assets Turnover Ratio = ----------------

Fixed assets

Table No-5: Fixed Assets Turnover Ratio (Rupees in lakhs)

Year Sales Fixed assets In times

2002-03 6,39,27,820 2,31,24,299 2.764

2003-04 9,28,58,229 2,17,58,173 4.267

2004-05 14,60,40,088 2,06,62,370 7.067

2005-06 16,89,42,238 2,14,65,947 7.8702006-07 11,82,62,000 2,09,96,680 5.632


From the above table we can interpret that the highest ratio

(indicated in 2005-06 i.e.) is 7.8. The lowest ratio was in 2002-03 i.e.

2.7. This ratio represents the how many times fixed assets has

turnover to sales. The indices of this ratio are 2.7, 4.2, 7.06, 7.8 & 5.6.

Chart No-5 : Fixed Assets Turnover Ratio

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2.764

4.267

7.067

7.87

5.632

0

1

2

3

4

5

6

7

8

Ratio

2002-03 2003-04 2004-05 2005-06 2006-07

Year

Fixed Assets Turnover Ra

2. WORKING CAPITAL TURNOVER RATIOS:

This is also known as working capital leverage ratio. This ratio

shows the number of times the working capital result in sales. In

other words, this ratio indicates the efficiency or otherwise in the

utilization of short term funds in making sales.

Net sales

Working Capital Turnover Ratios = --------------------

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Working capital

Table No-6: Working Capital Turnover Ratios (Rupees in lakhs)

Year Sales Net working

capital

Ratio

2002-03 6,39,27,820 6,31,60,790 1.01

2003-04 9,28,58,229 6,67,28,301 1.39

2004-05 14,60,40,088 7,74,22,816 0.18

2005-06 16,89,42,238 10,90,50,955 1.54

2006-07 11,82,62,000 10,36,74,753 0.11


From the above table we can interpret that the turnover of Net

working capital is not satisfactory because the ratio is not state.

Chart No-6 : Working Capital Turnover Ratios

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3. DEBTORS TURNOVER RATIO:

Working capital turnover Ratio

1.01

1.39

0.18

1.54

0.11

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1.8

2003 2004 2005 2006 2007

Years

42

Ra

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Debtors constitute an important constituent of current assets

and therefore the quality of debtors to a great extent determines a

firms liquidities.

Sales

Debtors Turnover Ratio = -----------------------------------

Average accounts receivable

Table No-7 :Debtors Turnover Ratio (Rupees in lakhs)

Year Sales Debtors Ratio

2002-03 6,39,27,820 3,83,63,309 1.67

2003-04 9,28,58,229 4,83,44,179 1.92

2004-05 14,60,40,088 5,38,22,496 2.71

2005-06 16,89,42,238 9,11,77,645 1.85

2006-07 11,82,62,000 6,71,68,236 1.76


The debt turnover ratio has been increased year to year. The

highest ratio has indicated in the year 2005. then it has been declined.

The ratio ranges from 1.67 to 1.76.

Chart No-7 : Debtors Turnover Ratio

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Debtors Turnover Rati

1.67

1.92

2.71

1.851.76

0

0.5

1

1.5

2

2.5

3

2002-03 2003-04 2004-05 2005-06 2006-07

Years

Ratio

4.1.3 LIQUIDITY RATIOS

These ratio are also termed as working capital or short-term

solvency ratio. An enterprise must have adequate working capital to

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run its day-to-day operations. Inadequacy of working capital may

bring the entire business operation to a grinding halt because of

inability of the enterprise to pay for wages materials and other

regular expenses.

1. CURRENT RATIO:

This ratio is also known as working capital ratio and can be

expressed as a pure ratio or percent ratio. This ratio is an indicator

of the firms commitment to meet its short-term liabilities. A current

ratio of 2:1 is considered an ideal one.

Current assets

Current Ratio = -----------------------

Current liabilities

Table No-8 : Current Ratio (Rupees in lakhs)

Year Current assets Current

liabilities

Ratio

2002-03 7,43,06,690 1,11,45,900 6.67

2003-04 7,77,74,448 1,10,46,147 7.04

2004-05 9,44,39,400 1,70,16,584 5.55

2005-06 14,38,08,962 3,47,58,007 4.14

2006-07 12,67,84,753 2,31,10,000 5.49


The above table reveals the current ratio of the firm. The ratio

varies from 6.67 to 5.49. The current assets position of the company

is very high. The average ratio is 5.78. This can be in forced that the

firm has been current assets to meet one its current liabilities.

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Chart No-8 : Current Ratio

2. LIQUID RATIO:

This ratio is also termed as acid test ratio. This ratio is

ascertained by comparing the liquid assets to current liabilities.

Prepaid expenses and stock are not taken as liquid assets. The

standard ratio is 1:1.

Current Ratio

6.677.04

5.55

4.14

5.49

0

1

2

3

4

5

6

7

8

2003 2004 2005 2006 2007

Years

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Ra

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Liquid Assets

Liquid Ratio = ---------------------

Current Liability

Liquid Assets = Current Assets-Inventory

Table No-9 : Liquid Ratio (Rupees in lakhs)

Year Liquid assets Current liabilities Ratio

2002-03 4,68,73,623 1,11,45,900 4.24

2003-04 6,21,69,352 1,10,46,147 5.68

2004-05 5,93,65,098 1,70,16,584 3.52

2005-06 7,69,01,069 3,47,58,007 2.79

2006-07 7,47,44,779 2,31,10,000 3.25


The above table reveals the liquidity ratio of the firm. The

ratio varies from 4.24 to 3.25. The liquidity assets position of the

company is very high. The average ratio is 3.89.

Chart No-9 : Liquid Ratio

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The difference between current assets and current liabilities

excluding short-term Bank borrowing is called net working capital

(NWC) or net current assets (NCA). NWC is used as a measure of a

firms liquidity.

Net Working Capital

NWC = ---------------------------

Net Assets

Table No-10: Net working capital ratio (Rupees in lakhs)

Year Net working capital Fixed assets Ratio

2002-03 6,31,60,790 2,31,24,299 2.731

2003-04 6,67,28,301 2,17,58,173 3.066

2004-05 7,74,22,816 2,06,62,370 3.747

2005-06 10,90,50,955 2,14,65,947 5.080

2006-07 10,36,74,753 2,09,96,680 4.937


From the above table, we can interpret that the working

capital position contributing to fixed assets. This ratio ranges from

2.7 to 4.9.

The indices are 2.7 , 3.06 , 3.7 , 5.08 & 4.9The highest

ratio was in the year 2005 06. i.e. 5.08 and lowest ratio was in 2002-

03 i.e. 2.7.

This can be inferred that working capital position is better for

all the years.

Chart No-10 : Net working capital ratio

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4.1.4. SOLVENCY RATIO

Net working capital ratio

2.731

3.066

3.747

5.08

4.937

0 1 2 3 4 5 6

2002-03

2003-04

2004-05

2005-06

2006-07

Ratio

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Solvency means the ability of the business to repay its outside

liabilities. These liabilities are categorized as short term liabilities

and long term liabilities. Ratios concerning the short term solvency

of the business have been discussed under liquidity ratio.

LONG-TERM SOLVENCY RATIO:

1.FIXED ASSETS RATIO:

This ratio is also known as ratio of capital or long term funds

to fixed assets. one of the key principle of financial policy is that fixed

assets acquisition should be financed by long term funds only.

Fixed assets

Fixed assets ratio = ------------------------

Shareholder funds

Table No-11 : Fixed Assets Ratio (Rupees in lakhs)

Year Fixed assets Shareholder funds Ratio

2002-03 2,31,24,299 4,78,71,467 0.482003-04 2,17,58,173 4,95,65,037 0.43

2004-05 2,06,62,370 5,18,51,758 0.39

2005-06 2,14,65,947 5,34,03,329 0.40

2006-07 2,09,96,680 5,46,03,062 0.38


This ratio shows relationship between fixed assets and

shareholders fundsthis ratio shows how much fixed assets has been

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contributed by share holders fund. The higher the ratio indicates in

2002-03.i.e. 48%.

,

Chart No-11 : Fixed Assets Ratio

Fixed Asse ts R

0.48

0.43

0.39 0. 4 0.38

0

0. 1

0. 2

0. 3

0. 4

0. 5

0. 6

2002-03 2003-04 2004-05 2005-06 2006-07

Year

Ratio

2. DEBT- EQUITY RATIO:

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Debt- Equity Rati

0.74

0.71

0.81

1.36

1.22

0 0.2 0.4 0.6 0.8 1 1.2 1.4 1

2002-03

2003-04

2004-05

2005-06

2006-07

Years

Ratio

4.1.5. LEVERAGE RATIOS

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Chart No-13 : Proprietary Ratio

2. DEBT-RATIO:

Debt-ratio may be used to analyze the long-term solvency of a

firm. This helps to know the proportion of the interest-bearing debt

(also called funded debt) in the capital structure.

0.530.55

0.52

0.410.43

0

0.1

0.2

0.3

0.4

0.5

0.6

Ratio

2002-03 2003-04 2004-05 2005-06 2006-07

Years

Proprietary Ratio

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Total Debt

Debt ratio = ---------------------

Net assets

Table No-14 : Debt-Ratio (Rupees in lakhs)

Year Total debt Net assets Ratio

2002-03 6,39,27,820 4,55,42,208 1.40

2003-04 9,28,58,229 4,33,53,744 2.14

2004-05 14,60,40,088 5,10,83,338 2.86

2005-06 16,89,42,238 11,82,62,000 2.33

2006-07 11,82,62,000 79,11,72,941 1.49


From the above table, we can interpret, total debts is having

more share in net assets. The highest ratio was indicated in 2004-05

is 2.86.

Chart No-14 : Debt-Ratio

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4.2.TREND ANALYSIS

Trend analysis acquaints us with the profitability and the short

term, and long-term liquidity of the business. In addition it also

Debt Ratio

1.4

2.14

2.86

2.33

1.49

0

0.5

1

1.5

2

2.5

3

3.5

2003 2004 2005 2006 2007

Years

58

Ra

tios


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discovers the future prospects of the business in terms of

profitability, operational efficiency and financial soundness of the

enterprise. Under this technique, the profit and loss account and the

balance sheet of an accounting year are taken as base.

The rate of fixed expansion or secular trend in the growth of

the business and the general price level. It might be found in practice

that a number of firms would show a consistent growth over a period

of years. But to get a real trend of growth, the sales figures are

adjusted by a situated index of general prices. In other words, sales

figures should be defined for rising price level.

When the resulting figure are shown in graph, we will get

trend of growth prices. Another method of securing trend of growth

and one, which can be used instead of the adjusted, sales figure or as

check on then is to tabulate and plot the out put or physical volume

of sales expressed in suitable units of measures. If the general price

level is not considered while analyzing trend of growth, it can

mislead management. They may become unduly optimistic in periods

of prosperity and presumptive in dull periods

4.2.1 TREND ANALYSIS FOR SALES:

Table No-15 : Trend analysis for sales (Rupees in lakhs)

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Years Sales (Y) Base year

(X)

X XY

2002-03 6.39 -2 4 -12.78

2003-04 9.28 -1 1 -9.78

2004-05 14.60 0 0 0

2005-06 16.89 1 1 16.89

2006-07 11.82 2 4 23.64

Y=58.98 X=0 X2=10 XY=18.47

Y = Na + bX ; XY = aX + bX2

Y = Na + bX XY = aX + bX2

58.98 = 5a + b(0) 18.47 = a(0) +10b

5a = 58.98 10b = 18.47

a =16.452 b = 1.85

YC = a + bX

Y2008 = 16.452 +1.85(4) = 16.452 +7.4 = 23.852

Y2009 = 16.452 +1.85(5) = 16.452 +9.25 = 25.705

Y2009 = 16.452 +1.85(6) = 16.452 +11.1 = 27.55

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FUTURE PREDICTION:

(Rupees in lakhs)

Years Sales

2008 23.852

2009 25.705

2010 27.55

The sales in future may be increased.

4.2.2 TREND ANALYSIS FOR STOCK:

Table No-16 : Trend analysis for stock (Rupees in lakhs)

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Years Stock

(Y)

Year base

year

(X)

X XY

2002-03 2.72 -2 4 -5.44

2003-04 1.53 -1 1 -1.53

2004-05 3.48 0 0 0

2005-06 4.69 1 1 4.69

2006-07 52.03 2 4 104.06

Y= 64.45 X= 0 X2=10 XY=

101.78

Y = Na + bX XY = aX + bX2

64.45 = 5a + b(0) 101.78 = a(0) +10b

5a = 64.45 10b = 101.78

a =12.89 b = 10.18

YC = a + bX

Y2008 = 12.89 +10.18(4) = 53.61

Y2009 = 12.89 +10.18(5) = 63.79

Y2010 = 12.89 +10.18(6) = 73.97

FUTURE PREDICTION:

(Rupees in lakhs)Years Stock

2008 53.61

2009 63.79

2010 73.97

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Statement on which balance sheets, income statements, or

statements of changes in financial position are assembled side by side

for review purposes. Changes that have occurred in individual

categories from year to year and over the years are easily noted. The

key factor revealed is the trend in an account or financial statement

category over time. A comparison of financial statements over two to

three years can be undertaken by computing the year-to-year change

in absolute dollars and in terms of percentage change. Longer-term

comparisons are best undertaken by means ofIndex-Number Trend

Series.

4.3.1.a Comparative income statement of 5 years (Rupees in lakhs)

Particulars 2003 2004 Increase or

decrease

%

Sales 6,39,27,820 9,28,58,229 2,89,30,409 45.25

Cost of goods sold 5,80,22,945 6,16,52,172 36,29,277 6.25

Gross profit 59,04,875 3,12,06,057 2,53,01,182 428.47

64
http://www.answers.com/topic/index-number-trend-serieshttp://www.answers.com/topic/index-number-trend-serieshttp://www.answers.com/topic/index-number-trend-serieshttp://www.answers.com/topic/index-number-trend-series


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Administrative &

selling expenses

91,26,295 1,37,09,252 45,82,957 50.22

Financial charges 38,03,328 45,53,070 7,49,742 19.71

Other operating

expenses

14,82,009 15,13,702 31,693 2.09

Total 1,44,11,632 1,97,76,024 53,64,392 37.22

Operating profit -85,06,757 1,14,30,033 1,99,36,790 234.36

Less: operating

expenses

- - - -

Profit before tax -85,06,757 1,14,30,033 1,99,36,790 234.36

4.3.1.b. Comparative income statement of 5 years (Rupees in lakhs)


decrease

%

Sales 6,39,27,820 14,60,40,08

8

8,21,12,268 128.44

Cost of goods

sold

5,80,22,945 12,33,27,21

7

6,53,04,272 112.54

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Gross profit 59,04,875 2,27,12,871 1,68,07,996 74.00

Administrative &

selling expenses

91,26,295 1,65,02,892 73,76,597 284.64

Financial charges 38,03,328 35,98,205 2,05,123 5.39

Other operating

expenses

14,82,009 16,02,118 1,20,109 8.10

Total 1,44,11,632 2,17,03,215 72,91,583 50.59

Operating profit -85,06,757 10,09,656 95,16,413 111.87

Less: operating

expenses

- 32,727 - -

Profit before tax -85,06,757 9,76,929 94,83,686 111.48

4.3.1.c Comparative income statement of 5 years (Rupees in lakhs)


decrease

%

Sales 6,39,27,820 16,89,42,23

7

10,50,14,41

7

1642.65

Cost of goods

sold

5,80,22,945 13,21,09,69

1

7,40,86,746 127.79

Gross profit 59,04,875 3,68,32,546 3,09,27,671 523.76

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Administrative

& selling

expenses

91,26,295 2,02,47,631 1,11,21,336 121.86

Financial

charges

38,03,328 41,83,130 33,85,018 89.00

Other operating

expenses

14,82,009 17,75,955 2,93,946 19.83

Total 1,44,11,632 26,20,67,16 1,17,95,084 81.84

Operating profit -85,06,757 1,06,25,830 1,91,32,587 224.91

Less: operating

expenses

- - - -

Profit before tax -85,06,757 1,06,25,830 1,91,32,587 224.91

4.3.1.d Comparative income statement of 5 years (Rupees in lakhs)


decrease

%

Sales 6,39,27,820 11,82,62,00

0

8,21,12,268 128.45

Cost of goods

sold

5,80,22,945 9,51,75,410 6,53,04,272 112.55

Gross profit 59,04,875 2,30,86,590 1,68,07,996 284.65

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Administrative

& selling

expenses

91,26,295 1,69,00,000 77,73,705 85.179

Financial

charges

38,03,328 62,29,397 2,05,123 5.39

Other

operating

expenses

14,82,009 18,53,974 1,20,109 8.10

Total 1,44,11,632 2,49,83,371 1,05,71,739 73.35

Operating

profit

-85,06,757 18,96,781 1,04,03,538 122.30

Less: operating

expenses

- - - -

Profit before

tax

-85,06,757 18,96,781 1,04,03,538 122.30

From the above tables, the facts of last four years are

compared to the base year 2003. For these years, there has been an

increasing trend of accounting information. Gross profit ratio is

fluctuating year by year. The highest ratio was in 2003-04, i.e. 33.60.

The ratio has the range from 9.23 to 19.52. Administrative & selling

expenses compared to proves years decreasing. The higher the ratio

occurred in 2003. The operating cost is having more contribution

towards sales.

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4.3.2.a Comparative Balance Sheet of 5 years

(Rupees in lakhs)

PARTICULARS 2003 2004 Increase

(+) anddecrease (-)

%

(1) Shareholder funds

A) Capital 4,30,02,000 4,30,02,000 - -

B) Reserve and Surplus 48,69,467 65,63,037 16,93,570 34.77

(2) Loan Funds

A) Secured Loans 2,89,48,760 2,72,71,596 -16,77,164 6.14B) Unsecured Loans 67,39,880 82,11,527 14,71,617 17.82

(3) Deferred Tax 51,31,750 51,31,750 - -

Total 8,86,91,857 9,01,79,911 14,88,054 1.67

ii. Application of funds

(1) Fixed assets

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A) Gross block 3,32,29,680 3,33,77,257 1,45,577 0.44

B) Less Depreciation 1,01,05,381 1,16,19,084 15,13,703 13.02

C) Net Block 2,31,24,299 2,17,58,173 13,66,126 6.27

D) Investments 16,66,745 13,23,426 3,43,319 25.94(2) Current Assets

A) Inventories 2,72,14,332 1,53,15,751 1,18,98,581 77.68

B) Sundry debtors 3,83,63,309 4,83,44,179 99,80,870 20.64

C) Cash and bank

balances 3,60,164 6,49,006

2,88,842 44.50

D) Loans and advances 83,68,884 1,34,65,512 50,96,628 37.84

Less: Current Liability& Provisions 1,11,45,900 1,10,46,148 -99,752 0.90

Net current assets 6,31,60,790 6,67,28,300 35,67,510 5.34Miscellaneous

Expenditure

A) Preliminary

Expenses 7,40,023 3,70,012

-3,70,011 99.99

Total 8,86,91,857 9,01,79,911 14,88,054 1.67


(Rupees in lakhs)PARTICULARS 2003 2005 Increase

(+) and

decrease (-)

%


A) Capital 4,30,02,000 4,30,02,000 - -

B) Reserve and Surplus 48,69,467 88,49,758 39,80,291 44.97

(2) Loan Funds

A) Secured Loans 2,89,48,760 3,15,65,784 26,17,024 8.29

B) Unsecured Loans 67,39,880 1,07,64,922 40,25,042 37.39(3) Deferred Tax 51,31,750 51,31,750 - -

Total 8,86,91,857 9,93,14,214 1,06,22,357 10.69


(1) Fixed assets

A) Gross block 3,32,29,680 3,38,70,700 6,41,020 1.89

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C) Net Block 2,31,24,299 2,06,62,370 -24,61,929 11.91

D) Investments 16,66,745 12,29,027 -4,37,718 35.61

(2) Current AssetsA) Inventories 2,72,14,332 3,48,07,347 1,11,93,015 32.15

B) Sundry debtors 3,83,63,309 5,38,22,496 1,54,59,187 64.89

C) Cash and bankbalances 3,60,164 8,39,699 4,79,535 57.10

D) Loans and advances 83,68,884 49,69,858 -33,99,026 68.39

Less: Current Liability& Provisions 1,11,45,900 1,70,16,584 58,70,684 34.49

Net current assets 6,31,60,790 7,74,22,817 1,42,62,027 18.43

MiscellaneousExpenditure

A) Preliminary

Expenses 7,40,023 -

- -

Total 8,86,91,857 9,93,14,214 1,06,22,357 10.69

4.3.2.b Comparative Balance Sheet of 5 years

(Rupees in lakhs)

PARTICULARS 2003 2006 Increase

(+) anddecrease (-)

%


A) Capital 4,30,02,000 4,30,02,000 - -

B) Reserve and Surplus 48,69,467 1,04,01,329 55,31,862 53.18

(2) Loan Funds

A) Secured Loans 2,89,48,760 4,86,58,734 1,97,09,974 40.50

B) Unsecured Loans 67,39,880 2,40,96,075 1,73,56,195 72.09(3) Deferred Tax 51,31,750 51,31,750 - -

Total 8,86,91,857 13,12,89,889 4,25,98,032 32.44


(1) Fixed assets

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A) Gross block 3,32,29,680 3,64,50,232 32,20,552 8.83


C) Net Block 2,31,24,299 2,14,65,947 -16,58,352 7.72

D) Investments 16,66,745 7,72,987 -8,93,758 115.62(2) Current Assets

A) Inventories 2,72,14,332 4,69,07,893 1,96,93,561 41.98

B) Sundry debtors 3,83,63,309 9,11,77,645 5,28,14,336 57.92

C) Cash and bank

balances 3,60,164 18,51,768 14,91,604 80.55

D) Loans and advances 83,68,884 38,71,656 -44,97,228 116.15

Less: Current Liability

& Provisions 1,11,45,900 3,47,58,007 2,36,12,107 67.93

Net current assets 6,31,60,790 10,90,50,956 4,58,90,166 42.08Miscellaneous

Expenditure

A) Preliminary

Expenses 7,40,023 -

- -

Total 8,86,91,857 13,12,89,889 4,25,98,032 32.44


(Rupees in lakhs)

PARTICULARS 2003 2007 Increase (+)

and

decrease (-)

%


A) Capital 4,30,02,000 4,30,02,000 - -

B) Reserve and Surplus 48,69,467 1,16,01,062 67,31,595 58.02

(2) Loan Funds

A) Secured Loans 2,89,48,760 5,14,38,000 2,24,89,240 43.7B) Unsecured Loans 67,39,880 1,52,12,000 84,72,120 55.69

(3) Deferred Tax 51,31,750 51,31,750 - -

Total 8,86,91,857 12,63,84,812 3,76,92,955 29.82


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(1) Fixed assets

A) Gross block 3,32,29,680 3,92,61,430 60,31,750 15.36


C) Net Block 2,31,24,299 2,09,96,680 -21,27,619 10.13D) Investments 16,66,745 17,13,378 46,633 2.72

(2) Current Assets

A) Inventories 2,72,14,332 5,20,39,974 2,48,25,642 47.70

B) Sundry debtors 3,83,63,309 6,71,68,236 2,88,04,927 42.88

C) Cash and bank

balances 3,60,164 19,27,000 15,66,836 81.30

D) Loans and advances 8368884 56,49,544 -27,19,340 48.13

Less: Current Liability

& Provisions 1,11,45,900 2,31,10,000 1,19,64,100 51.77Net current assets 6,31,60,790 10,36,74,754 4,05,13,964 39.07

MiscellaneousExpenditure

A) PreliminaryExpenses 7,40,023 -

- -

Total 8,86,91,857 2,63,84,812 -6,23,07,045 236.14

These tables reveals that, the share capital of the company

remains the same during 2003 2007. And net block shows the

decreasing trend every year. And then the reserves & surplus of the

company is increasing every year.

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CHAPTER V

FINDINGS & CONCLUSION

5.1 FINDINGS

The factory should take necessary steps for the study up of

market department, which enables the factory to increase its

able in an effective manner. Similarly it should also establish a

Finance Department for making the best investment plans

raising of funds rate.

Gross profit ratio indicates low performance of the company so

it is suggested that the company as to take steps in order to

increase sales and reduce cost of production.

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The operating expenses ratio of the company is high so that the

company should try to reduce the manufacturing expenses so

as to improve the operating efficiency of the business.

The Debtors ratio is increases year to year it means there is an

increase in receivable investment. It indicates the firm is not

managing the debtors effectively.

The liquidity position of the division is in the better position.

On the average, it is good. The management should maintain

same liquidity position in feature also.

Higher current ratio indicates grater margin of safety of the

firm.

If the debtors are maintains same position in future also it will

be effective.

Net profit ratio indicates low performance of the company.

The company followed the idle current ratio from the past 5

years.

5.2 CONCLUSION

The companys financial strength has to be reviewed by the

management and the excess fund, which is unnecessarily blocked in

inventory, has to be disposed of immediately. That means the

company can accept a project on the future cash flow that is likely to

accrue in the years.

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In handling of the financial statements professionalism may be

encouraged. The companys overall position is satisfactory. During

my project work I had got good experience, regarding the PHYTO

CHEM INDIA LTD., HYDERABAD.

vara final1

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