a financial analysis of ratios & cash flow statetment

A FINANCIAL ANALYSIS OF RATIOS &

CASH FLOW STATETMENT

REPORT ON

PREFACE

The last few years have witnessed the winds of changes and rapid development all over the business world. The area of knowledge based competition is upon us.

Today India has come out as a globalize country the process of globalization has affected the corporate a lot.

The rule of the game has clearly changed business. These technique that had served well in past decades have been rushed a side by technology and knowledge for the existences of the business in the cutthroat competition prevailing in the industrial unites. A total awareness is the first and the foremost thing necessary formula the aspects working smarter seem to reset in the greater economic impact than merely working harder. Today true leaning is borne out of experience and observation; hence business schools offer training looking at the present sceneries education and the administrative method of management of business.

There are so many objective of this program. The main object of these practical studies is for student to be of the industrial environment through industrial visit. We came to know about different industries their acetates to work. Their problems and how they survive. The students get the acetates to work, their problems and how they survive. The students get the knowledge regarding various business functions. A part from this there is many indirect benefits to the students like their communication skill as are developed and they have an opportunity to approach work as a team instead of individual. The industrial changes to gets along group and also creates co-ordination among students.

INDEX

2

Ch.No Chapter Name Page No. 1 Part No.-1

-General Profile of the company 5-Board of director 8-Ragistered office 9-Relelated company 10-Products 11

2 Part No-2-Ratio Analysis 14-Balance sheet 52

3 Part No-3-Cash Flow Statement 55

4 Part No-4-Stock Market Performance 58

5 Part No-5-Common size statement 59

6 Conclusion 61

7 BIBLIOGRAPHY 62

HISTORYThe company was founded in 1986 as a partnership, under the name M/s Gujarat Industries, to manufacture Pigments by our Executive Chairman Mr Jayanti Patel, together with our Managing Directors, Mr Ashish Soparkar and Mr Natwarlal Patel, as well as two of our Executive Directors Mr Ramesh Patel and Mr Anand I Patel (collectively the "Founders").

On 2 January 1995, our Company, Meghmani Organics Limited, was incorporated as a joint stock company with limited liability pursuant to Part IX of the Indian Companies Act. Under Section 566 of the Indian Companies Act, "joint stock Company" means a company having a permanent paid-up or nominal share capital of fixed amount divided into shares.

The Vatva Plant

In 1986, we commenced operations to manufacture Phthalocynine Green 7 more popularly known as Pigment Green 7 (PG-7) at our first manufacturing plant situated at the GIDC Industrial Estate, Vatva, which is approximately 14 km from Ahmedabad City. This industrial estate is developed by the state government's nodal agency, GIDC.

As at 30 November 2003, we have invested Rs 128.49 million in plant and machinery and building at the Vatva Plant. Our manufacturing facilities at the Vatva Plant are ISO 9001-2000 certified.

The Chharodi Plant

3

In 1995, the Founders decided to diversify our business through the manufacture of Agrochemicals. The plant for the manufacture of Agrochemicals is located in Chharodi Village, which is approximately 40 km from Ahmedabad City. The cost of commissioning the Chharodi Plant was approximately Rs 300.7 million.

At the plant, the company manufactures Technical Grade Pesticides which include synthetic pyrethroids such as Cypermethrin, Permethrin and Alpha Cypermethrin and organic phosphorous compounds such as Acephate as well as new Technical Grade Pesticides such as Imidacloprid and Triazophos, Formulations and Pesticides Intermediates such as MPB and CMAC. As at 30 November 2003, the company has invested Rs 440.7 million in plant and machinery and building at the Chharodi Plant. The company manufacturing facilities at the Chharodi Plant is ISO 9001-2000 certified.

The Panoli Plant

In 1996, the Company proceeded to expand Pigments business and to move upstream into the manufacture of CPC Blue, a raw material used in the manufacture of green Pigments and the manufacture of the blue Pigments namely, Alpha Blue and Beta Blue.

The company acquired two plots of GIDC land at the GIDC Industrial Estate, Panoli, to set up the manufacturing facilities. The plant is located on the western side of India near Ankleshwar, which is approximately 200 km south from Ahmedabad and 250 km north from Bombay. This area is one of India's chemical manufacturing centers and is accessible by railway and roads, and has adequate infrastructure facilities for the industries and is in close proximity to sources of raw materials and other inputs.

4

The project was partially funded by way of an equity injection by JF Electra (Mauritius) Limited (now known as Electra Partners Mauritius Limited), a Mauritius based private equity investment company which injected Rs 205.0 million and Pisces Re Ltd, a Mauritius based company which injected Rs 175.0 million. The construction of the plant was completed in the second half of 1997 and we commenced manufacturing CPC Blue, Alpha Blue and Beta Blue in February 1998. At present, the Panoli Plant has a production capacity of 7200 TPA, 600 TPA and 3,000 TPA for CPC Blue, Alpha Blue and Beta Blue respectively. The company manufacturing facilities at the Panoli Plant is ISO 9001-2000 certified.

As at 30 November 2003, the company has invested Rs 550.8 million in plant and machinery and building at the Panoli Plant. In February 2004, the company acquired an adjoining plot of land of 34,000 sq m for Rs 12.0 million.

As Company exports a majority of products manufactured at the Panoli Plant, we converted this division into an Export Oriented Unit (EOU) in FY2003, to enjoy certain tax and duty benefits.

Ankleshwar Plant

In FY2003, the company acquired another plant in Ankleshwar at a purchase price of Rs 31.5 million. The Ankleshwar Plant commenced production on 1 August 2003 to manufacture Chlorpyrifos, a class of Agrochemical products, and has a current installed production capacity of 480 TPA.

As at 30 November 2003, we have invested a further Rs 53.4 million in plant and machinery and building at the Ankleshwar Plant. Mumbai Office

In 1996, we purchased office premises in Mumbai, which is presently headed by Mr Ashvin Raythatha, our Executive Director, who oversees our imports and exports activities.

5

BOARD OF DIRECTOR

Jayanti M.Patel (Executive Chairman)

Ashish N. Soparkar (Managing Director)

Ramesh M. Patel (Executive Director)

Anand I. Patel (Executive Director)

Ashvin K. Raythattha (Executive Director)

Chinubhai R. Shah (Independent Director)

Balkrishna T. Thakkar (Independent Director)

Jayaraman Vishwanathan (Independent Director)

Chandan Bhattacharya (Independent Director)

Foo Meng Tong (Independent Director)

K. N. Venkatasubramanian (Independent Director)

6

REGISTERED OFFICE

Plot No. 184, Phase2,

G.I.D.C. Vatva, Ahmedabad -382445

Telephone No. 91-79-25833403

Fax No. 91-79-25833403

E-mail: [email protected]

7

mailto:[email protected]

RELATED COMPANY

Meghmani Dyes & Intermediates & Meghmani Industries Limited

Ashish Chemicals

Meghmani Pigments

Meghmani Industries Limited

Matangi Industries

8

PRODUCT OF THE COMPANY:- The company has mainly three type of the product these are as under.

Pigments product

Pesticides

New product

The company producing the different type of the Pigments products like,

Pigments for Plastics

Pigments for Printing Inks

Pigments for Coatings

The company also producing the different products of the Pesticides such as

Formulation Products

Technical Products

Intermediates

The new product of the company is Hysol-P based CPC Blue product.

9

Ratio Analysis;-

A ratio is one number expressed in terms of other. It is a mathematical yardstick that measures the relationship between two figures. Ratio analysis helps various interested parties like prospective investors, creditors, banks, employees etc. to draw useful conclusion to serve their purpose.

The use of ratio is becoming increasing popular recently. Originally, the banks used the current ratio to judge the capacity of the borrowing firm to repay the loan and to make regular interest payments. Today it has assumed such an important that anybody connected with the business turns to ratio for measuring the financial strength and earning capacity of their business. Here we classified the ratio on the bases of the Functional Classification.

Traditional classification

Funcational classification

(1)Liquidity ration

(2)Profitability ratio

(3)Leverage ratio

(4)Activity ratio

10

IMPORTANCE OF RATIO

In application to studying the rupee amount shown in the financial statements, relationships between different items may be established by computing various ratios. The relation between two related items of financial statement is known as Ratio. A ratio is thus, one number expressed in terms of other Ratios are particularly useful in comparing one year’s performance with other years, as well as one company’s performance with another’s. In many cases the average ratios relating to companies in particular industries are available, and an individual company’s ratio may be compared with such an average.

Ratios help to make qualitative judgments depending upon the calculations made which are quantitative judgments. The ratio analysis involves comparison for a useful interpretation of the financial statements. A single ratio in itself does not indicate favorable or unfavorable condition. It should be compare with some standard. Standard of comparison may decided by the company or firm itself.

We can understand the important of Ratio Analysis by the following advantage, which can be gained from the ratio analysis.

Efficiency:The turn over ratios is excellent guide to measure the efficiency of managers. The stock turnover ratio will indicate how efficiency sale is being. The debtor’s turnover will indicate the efficiency of collection department and assts turn over shows efficiency with which the assts are used in business. All such ratio related to sales present a good picture of success or otherwise of the business.

Profitability:Useful information about the trend of profitability is available from profitability ratio the gross profit ratio. Net profit ratio and ratio on return on investment give a

11

good idea of a profitability of business on the basis of these ratios investors get and idea about the overall efficiency of business the management gets and idea about the efficiency of managers.

Liquid Infect the use of ratio was made initially to ascertain the liquidity of business. The current ratio, liquid ratio, and acid test ratio will tell whether the business will be able to pay regularly the interest and loan installment.

Inter firm comparison:The absolute ratios of the firm are not of much use unless they are compared with similar ratio of other firms belonging to the same industries, this is inter firm comparison which show the strength and weakness of the firm as compared to other firms and will indicate corrective measures.

Useful for budgetary control: Regular budgetary reports are proposing in a business those the system of budgetary control is in use. It various ratios are presented in this report it will give a fairly good idea about various aspect of finance position.

Indicate Trend:The ratio of the last three to five years will indicate the trends in the a respective field for e.g. the current ratio of a firm is lower that the industry average but the ratio of the last five years shown as improving trend. It is an encouraging trend reverse may also be true a particular ratio of company for one year may compare for variable with industry but if its trend shows deterioration it is not desirable only ratio analysis will provide this information.

12

LIMITATION OF RATIO

Ratio can sometimes be misleading if an analyst doesnot know the reliability and soundness of the figures from which they are computed and the financial position of the business at other times of the year

The mechanics of ratio construction are not important as the proper interpretation of the ratio. As a matter of falt; ratio are only a preliminary step in interpretation. They call attention to certain aspects of the business which need detailed investigation before arriving at any final conclusion.

Ratio can never be the substitute of raw figures. At the time of interpretation there of raw figures should also be referred to.

Interpretation comparison on the basis of ratio analysis is disorted because of the differing practices followed by different companies in respect of allocation of the cost of fixed assets and intangible costs between different time periods.

13

[A] LIQUIDITY RATIOS

1) Current Ratio:-

This most widely used ratio shows the portion of current assets to current liabilities. It is also known as Working Capital Ratio. It is generally believed that 2:1 current ratio shows a comfortable working capital position i.e. the current assets should be twice the current liability. This rule is based on the logic that in a worse situation, even if the value of current assets becomes half, the firm will be able to meet its obligation.

Current Ratio= Current Asset Current liabilities

(Rs in Millions)

Particulars 2007 2008 2009

Current Assets 3469.7 4488.45 5342.89

Current

Liabilities

573.88 905.67 1437.14

Ratio 6.05 4.96 3.72

14

2007 2008 20090

1

2

3

4

5

6

7

Current Ratio

Current Ratio

Interpretation

It is generally believed that 2:1 is a comfortable ratio that is current assets

should be twice the current liabilities. But it is not a very hard and fast rule. There

may be instances when an enterprises may function satisfactorily even with the

ratio of 1: 1.

As we see into the working capital position of the company. But, here in this

company current ratio is almost near to 5:1, i.e., 6.05:1, 5.57:1, 3.50:1 respectively

which means company have more liquidity than the requirement , so we can say

from the debtors’ turnover ratio that current assets are more due to more credit

15

period given to debtors. And we cannot say that it is due to inventory stock

because inventory has enough turnovers which show that the stock is not ideal.

2. Liquid Ratio:-

These Ratios indicates the position of liquidity position of

the company. They are computed to ascertain whether the company is capable of

meeting its short-term obligation from its short-term resources.

Liquid Assets

Liquid Liability

(Rs in Millions)


Liquid Assets 2526.69 3634.00 4288.44

Liquid

Liability

573.88 905.67 1437.14

Ratio 4.40 4.01 2.98

16

Liquid Ratio

2007 2008 20090

0.5

1

1.5

2

2.5

3

3.5

4

4.5

Liquid Ratio

Liquid Ratio

Interpretation

The liquid ratio is a better indicator of liquid position of the company and

shows the company will be able to meet its current obligation due to immediate

payment at short notice. However it is believed that liquid assets should at least

cover the liquid liability so the ratio should be 1:1. Here in the company the liquid

17

position of the company is excess respect 4.40, 4.01, 2.98 so the company has to

invest in the assets.

3. Debt-Equity Ratio

This ratio is only another form of proprietary ratio and establishes relationship

between the outside long-term liabilities and owners’ funds. It shows the

proportion of long-term External Equities and Internal Equities.

Debt- Equity Ratio= Long Term Liability X 100 Share’s Holder Fund

(Rs in Millions)


Long term liability 1718.57 1842.33 1901.19

Sh. Holder fund 2830.68 4074.61 4481.73

Ratio 60.71% 45.21% 42.42%

18

2007 2008 20090

10

20

30

40

50

60

70

Debt Equity Ratio

Debt Equity Ratio

Interpretation

The ratio indicates the relationship between long funds and net worth of the

company. 0.5:1 is normally accepted ratio by the financial institutions, means debt

should be halved of net worth. Debt equity ratio of the company is not fully

satisfactory but in the year by year it is decreasing which is good for the company,

because it shows decreasing debt year by year. Year by year debt was decreasing

and net worth was increasing, so the ratio simply decreased.

19

4. Gross Profit Ratio

(Rs in Millions)

It is a ratio expressing relationship between Gross Profit earned to Net Sales. It

is a useful indication of the profitability of business. This ratio is usually

expressed as a percentage. The ratio shows whether the mark-up obtained on

cost of production is sufficient. In many industries, there are more or less

recognized gross profit ratios and the business should strive to maintain this

standard.

Gross profit ratio: Gross profit x 100 Sales

(Rs in Millions)


Gross Profit 2,151,697,613 1,402,708,495 1,351,583,879

Net Sales 7,683,688,371 5,869,717,005 4,690,593,469

Ratio 28% 23.90% 28.81%

20

2009 2008 20070

5

10

15

20

25

30

Gross Profit Ratio

Gross Profit Ratio

A high ratio impels that the cost of the production is relatively lower or that

purchases are made at low price. Allow ratio suggest that the firm is not able to

buy at reasonable price or production in the under control. Here the gross profit

ratio is fluting over the period of the time. But in 2009, 2007 the ratio is

satisfactory while in the 2008 the ratio is respect low.

21

5. Net Profit Ratio

The ratio is valuable for the purpose of ascertaining the over-all profitability of the

business and shows the efficiency or otherwise of operating the business. It is the

reserve of the operating ratio. Generally, the ratio is computed on the basis of net

profit earned from operation of business and non-operating expenses and income

are excluded. This ratio indicates what portion of sales revenue is left to the

proprietors after all operating expenses are met. The higher the ratio, the better

will be the profitability

Net profit ratio: Net profit x 100

Sales

(Rs in Millions)


PAT 505,306,936 375,971,197 408,808,133

Net sale 7,683,688,371 5,869,717,005 4,690,593,469

Ratio 6.57% 6.40% 8.72%

22

2009 2008 20070

1

2

3

4

5

6

7

8

9

Net Profit Ratio

Net Profit Ratio

The Net Profit Margin indicate management ability to operate the business with sufficient not only to recover from the income of the period.. The higher the ratio indicate that the business stand in good economic condition. Here in this ratio in the year of 2007 the company earns the handsome profit with respect year2008, 2009 the profit is fluctuant so the company has to put too much affords.

23

6. Return on Share holder Fund:-

In order to judge the efficiency with the proprietor Fund are employed in business

this ratio is ascertain. It also indicate whether the return on proprietor fund is

enough in relation to the risk that they undertake this ratio should what amount of

dividend is likely to be received on share.

Return on Share holder Fund = PAT x 100

Share holder Fund

(Rs in Millions)


PAT 408.81 375.97 505.31

Share holder Fund 2830.68 4074.61 4481.73

Ratio 14.44% 9.23% 11.27%

24

2007 2008 20090

2

4

6

8

10

12

14

16

Return on share holder Fund

Return on share holder Fund

The ratio indicate how profitability the fund provided by the owner have been

used in the business. The higher the ratio indicates the company has earned the

handsome profit and the shareholder will get the good return on it so the

reputation of the company will increase. Hare in the ratio in 2007 share holder has

got good reward wet with respect year2008 and 2009 the ratio is go down so the

reputation of the company may be go down.

25

7. Return on Total Assets

The Return on Total Assets measures the profitability of the total

funds/investments of a firm. Here, the profitability ratio is measured in terms of

the relationship between net profits and assets. The ROA may be called profit-to-

assets ratio.

Return on Total Assets = PAT x 100 Total Assets

(Rs in Millions)


PAT 408.81 375.97 505.31

Total Assets 5232.75 6953.56 7946.76

Ratio 7.81% 5.41% 6.36%

26

2007 2008 20090

1

2

3

4

5

6

7

8

Return on Total Assets

Return on Total Assets

27

8. Return on Capital Employed

The ROCE is the second type of ROI. Here the profits are related to the total

capital employed. The term capital employed refers to long-term funds supplied

by the lenders and owners of the firm. It is computed in two ways; first it is equal

to non-current liabilities plus owners’ equity. And second is it is equivalent to net

working capital plus fixed assets. The higher the ratio, the more efficient is the use

of capital employed.

Return on Capital Employed = PBT x 100 Total Capital Employed

(Rs in Millions)


PBT 455.17 474.20 621.23

Capital Employed 3374.98 5316.34 5071.65

Ratio 13.47% 8.92% 12.25%

28

2007 2008 20090

2

4

6

8

10

12

14

Return on Capital Employed

Return on Capital Employed

29

9. Fixed assets turnover ratio

To ascertain the profitability of the business, the total fixed assets are compared to

the sales. The more the sales in relation to the amount invested in fixed assets, the

more efficient is the use of fixed assets, vice-a-versa. If the ratio is low it indicates

that investment in fixed assets is more than necessary and should be reduced. On

the other hand if the ratio is high it reflects that fixed assets are effectively used to

earn profit.

Fixed assets turnover = Net Sale Fixed Assets

(Rs in Millions)


Net Sales 1484.37 1375.06 1501.19

Fixed Assets 4690.59 5932.39 7683.69

Ratio 3.16 4.31 5.12

30

2007 2008 20090

1

2

3

4

5

6

Fix Assets Turn over Ratio

Fix Assets Turn over Ratio

31

10 Current Assets Turnover Ratio:-

To ascertain the working position of the business the current assets are compared

to sales. If the sales are more then as compare to investment in the current assets it

indicate better working position and if the sales are less than as compared to

investment in current assets it menace that current assets are not adequate utilized

in business.

Current Assets turnover Ratio = Sales Current Assets

(In Millions)


Sales 4690.59 5932.39 7683.69

Current Assets 3469.70 4488.45 5342.89

Ratio 1.35 1.32 1.44

32

2007 2008 20091.26

1.28

1.3

1.32

1.34

1.36

1.38

1.4

1.42

1.44

current Assets turnover Ratio

33

11. Debtor’s turnover Ratio

The debtors are created, when credit sales is used as marketing tool along with the

cash sales. The debtors are expected to be converted into cash over a short period

of time and hence they are included in the current assets. The liquidity portion of

the company depends upon the quality of the debtors to a great extent. This ratio

indicates the number of times the debtors turned into cash every year. Generally

higher ratio shows the efficient credit management. It also indicates the efficiency

and promptness in the collection of the debtors. This ratio is calculated with the

following formula:

Debtor’s Turnover Ratio = Net sales Debtors + Bills Receivables

(Rs in Millions)


Credit Sale 4690.69 5932.39 7683.69

Average debtors 1950.76 2306.26 2754.29

Ratio 2.40 times 2.57 times 2.79 times

34

2007 2008 20092.2

2.3

2.4

2.5

2.6

2.7

2.8

Debtors Turnover Ratio

Debtors Turnover Ratio

The higher the debtors turnover or shorter are the collection period the better the

management of the firm. It implies better liquidity, as debtors make prompt

payment. But a longer collection period reflects a poor credit policy on the part of

the management. However, short collection period is not always desirable. It may

mean very strick collection policy which may reduce the volume of sales.

35

12. Debtor’s Ratio

The debtors are created, when credit sales is used as marketing tool along with the

cash sales. The debtors are expected to be converted into cash over a short period

of time and hence they are included in the current assets. The liquidity portion of

the company depends upon the quality of the debtors to a great extent. This ratio

indicates the number of times the debtors turned into cash every year. Generally

higher ratio shows the efficient credit management. It also indicates the efficiency

and promptness in the collection of the debtors. This ratio is calculated with the

following formula:

Debtor’s Ratio = Debtors + Bills Receivables Credit sales

(Rs in Millions)


Credit Sale 4690.69 5932.39 7683.69

Debtors +BR 1950.76 2661.75 2846.82

Ratio 152 days 164 days 135days

36

2007 2008 20090

20

40

60

80

100

120

140

160

180

Debtors Ratio

Debtors Ratio

The debtor ratio indicates affiance of collection of the department. It is difficult to

give and simple figure about the affiance of the collection. Here the date of the

credit is fluctuant in the number of the year. But as the compare to the industry

ratio the company have make the strong policy toward the collection.

37

13. Creditors Ratio

The number of days within us makes payment to our creditor for credit purchase is

obtained from creditor velocity. This ratio is obtained by dividing creditor &bill

payable by credit purchase and multiplying by 365 day.

Creditors Ratio = Creditors + Bills Payable Credit purchase

(Rs in Millions)


Creditors+ Bills

Payable

428.06 778.90 1279.37

Credit purchase 2988.37 3802.46 5231.69

Ratio 52Days 75Days 89Days

38

2007 2008 20090

10

20

30

40

50

60

70

80

90

Series 1

Series 1

The creditor ratio indicates in how many time the company will make the

payment. Here the period of payment is increase in the respect year. So the

company has to make strong policy regarding the payment.

39

14. Creditor Turnover Ratio

The Creditor turnover ratio suggests the number of times the amount of credit

purchase is paid during the year. This ratio is compared by dividing credit

purchase by Avg. coeditors.

Creditor Turnover Ratio = Credit purchase Avg. coeditors

(Rs in Millions)


Credit purchase 2988.37 3802.46 5231.69

Avg. coeditors 428.06 603.48 1029.14

Ratio 6.98 6.30 5.08

40

2007 2008 20090

1

2

3

4

5

6

7

Creditor Turn over Ratio

Creditor Turn over Ratio

41

15. Expenses Ratio:-

For the purpose of ascertain relation between operating expenses and net sales

expenses ratio over a number of year will reveal the extent to which expenses very

in relation to sales.

Expenses Ratio = Expenses x 100 Sales

(Rs in

Millions)


Expenses 4462.92 5396.03 7099.33

Sales 4690.69 5932.39 7683.69

Ratio 95.14% 90.96% 92.39%

42

2007 2008 200988

89

90

91

92

93

94

95

96

Expences Ratio

Expences Ratio

43

16. Long term to fox Assets Ratio:-

The ratio shows the relationship between fix capital and fix assets. The ratio is 1:1 or more.

Long term to fox Assets Ratio = Long term fund Fixed Assets

(Rs in Millions)


Long term fund 4664.88 6047.89 6509.63

Fixed Assets 1484.37 1375.06 1501.19

Ratio 3.14:1 4.40:1 4.34:1

44

2007 2008 20090

0.5

1

1.5

2

2.5

3

3.5

4

4.5

Long term fund to fix Assets Ratio

Long term fund to fix Assets Ratio

45

17. Total Assets Turn Over Ratio:-

The fund used in business is employed in both fixed assets and

current assets and profit is earned with the help of both. Hence it would be useful

to know the proprietor of total assets to sales.

Total Assets Turn Over Ratio= Sales Total Assets

(Rs in Millions)


Sales 4690.59 5932.39 7683.69

Total Assets 5232.75 5953.56 7946.76

Ratio 0.90 0.85 0.97

46

2007 2008 20090.78

0.8

0.82

0.84

0.86

0.88

0.9

0.92

0.94

0.96

0.98

Total Assets Turn over Ratio

Total Assets Turn over Ratio

47

18. Return on Equity Share Capital:-

This ratio indicates profitability of a firm from the view point of real owners who bear all the risk of business. It signifies the success with which the management has been able to earn enough return has been able to earn enough return on funds supplied by the proprietor.

Return on Equity Share Capital= PAT-Pref. Dividend *100 Eq. Sh. Capital

(Rs in Millions)


PAT-Pref.

Dividend

408.81 375.97 505.31

Eq. Sh. Capital 2830.68 4074.61 4481.73

Ratio 14.44% 9.23% 11.27%

48

2007 2008 20090

2

4

6

8

10

12

14

16

Return on Equity Share Caqpital

Return on Equity Share Caqpital

49

Balance Sheet as at 31 st March 2009

Particular Sch.No Rs

As at 31.03.2009 Rs.

As at 31.03.2008 Rs.

As at 31.03.2007 Rs.

SOURCES OF FUNDSShareholders’ FundsShare capital 1 254,314,211 254,314,211 200,630,000

4,227,417,192 3,820,296,777 2,630,052,7954,481,731,403 4,074,610988 2,830,682,795

Loan FundsSecured Loans 3 589,914,873 1,241,730,648 544,292,256Unsecured Loans 4 1,311,270,192 600,600,000 1,174,275,7434

1,901,185,065 1,842,330,648 1,718,567,690

Deferred Tax Liability 126,709,320 130,950,992 115,627,360

Total 6,509,625,788 6,047,892,628 4,664,877,845

APPLICATION OF FUNDSFixed Assets 5Gross Block 2,557,573,253 2,345,437,321 2,294,383,976Less: Depreciation 1,144,090,222 996,535,665 857,982,370Net Block 1,413,483,031 1,348,901,656 1,436,401,370Capital work in progress 87,704,402 26,161,950 47,969,451

1,501,187,433 1,375,063,606 1,484,371,057Investments 6 1,102,688,923 1,090,053,923 284,683,505

Current Assets, loans and AdvancesInventories 7 1,054,448,952 854,445,426 943,014,928Sundry Debtors 8 2,846,822,939 2,661,750,708 1,950,756,709Cash and Bank Balances 9 85,879,942 65,622,573 79,115,600Loans and Advances 10 1,355,735,826 906,628,463 496,812,754Total Current Assets 5,342,887,659 4,488,447,170 3,469,699,991Less: Current Liability & ProvisionsLiabilities 11 1,317,303,791 813,685,562 485,921,585Provisions 12 119,834,436 92,986,509 87,955,123Total Current liability 5,342,887,659 4,488,447,170 573,876,708Net Current Assets 3,905,749,432 3,582,775,099 2,895,823,283

TOTAL

6,509,625,788 6,047,892,628 4,664,877,845

50

SPRED SHEET

PARTICULARS 2007 2008 2009

EQIUTY SHARE CAPITAL 200.63 254.31 254.31

NET WORTH(EQUITY SH. +SURPLUS

4830.68 4074.61 4481.73

LONG TERM DEBT 544.29 1241.73 589.91

CURRENT ASSETS

(A) STOCK

Raw Material 148.01 279.86 213.86

Trading Goods 10.42 2.50 81.47

Work in Progress 246.89 232.65 106.54

Finished Goods 500.74 299.57 613.47

Stock of Stores ,Packing &Other

36.96 39.86 39.10

(B) CASH ON HAND 79.12 65.62 85.88

(C) TOTAL FIXED ASSETS NET OF DEP.

1436.40 1348.90 1413.48

(+) Capital work in Progress 47.97 26.16 87.70

CURRENT LIABILITIES & PROVISIONS

(A) Liabilities 485.92 813.69 1317.30

(b) Provisions 87.96 91.99 119.83

(1) INCOME 4918.09 5870.23 7945.92

51

(2)EXPENDITURE

(a) c.o.g.s. 87.58 772.48 660.82

R.M.Consumed 2947.75 3093.80 4549.20

Manu. Exp. 537.34 573.16 772.01

Employees emoluments 115.84 126.71 162.13

(b) Administrative Exp. 128.02 130.94 243.46

(c) Selling & distribution cost 396.78 470.39 505.83

PROFIT AFTER TAX 408.81 375.97 505.31

PROFIT BEFORE TAX 455.17 474.20 846.60

DIVIDENT 408.81 375.97 505.31

E.P.S 2.04 1.55 1.99

52

CASH FLOW STATEMENT

A statement showing Inflow of Cash and Outflow of Cash during the last year and as a result the balance of the cash at the end of the Year is known as “Cash Flow Statement”. This statement helps management to know the actual liquid position of cash on the hand and also to ascertain whether the business is able to get enough cash to meet the liability as and when they arise.

53

Cash Flow Statement for the year ended 31 st March 2009

Particulars 31.03.2009 31.03.2008 31.03.2007A. Cash flow from Operating activity

Net Profit Before TaxAdjustment for:DeprecationUnrealistic Foreign GainDeferred Revenue Expenses Written offInterest and Finance ChargesDividend ReceivedInterest ReceivedDiminution in InvestmentInterest Received Inter CompanyLoss on sale on the InvestmentLoss on Discarded assetsLoss on Sale of Fixed Assets (Net)

621,233,925

153,625,8867,788,823 -240,055,596(37,000)(27,267,425) - - -680,4581,945,868

474,203,629

143,701,631(73,838,724) -101,779,529(50,278,520)(50,278,520)(190,000)(50,105,954)565,717 -2,812,584

455,165,626

135,013,25120,354,7461,970,339120,764,106(30,000)(390,791) - - - -1,188,512

Operating Profit before Exceptional Item 376,792,206 102,062,259 278,870,163Exception Item 427,109,193 - -Operating Profit before working capital changes

1,425,135,324 576,265,888 734,035,789

Adjustment for:InventoriesDebtorsLoan and AdvancesCurrent liabilityProvision for Employee Benefit

(200,003,526)(185,072,231)(420,992,617)497,899,97218,645,692

88,569,502(710,993,999)(361,680,484)323,157,5331,225,120

(169,561,604)(219,192,103)(140,171,758)51,298,174 -

Sub Total (289,522,710) (659,722,328) (477,627,291)Cash Generated from operationDirect Taxes paid

1,135,612,614(147,563,850)

(83,456,440)(81,146,619)

256,408,498(56,452,692)

Net Cash from operating activity 988,048,764 (164,603,059) 199,955,806B. Cash flow from Investment Activity

Purchase of Fixed assetsDividend ReceivedInterest ReceivedPurchase of Mutual FundSale of Mutual FundInvestment in SubsidiariesSale of Fix Assets

(288,040,537)37,00026,547,869 - -(12,630,000)5,664,498

(39,234,176)21,738,524172,566(1,305,000,000)1,555,565,717(1,055,560,418)2,027,412

(383,006,568)30,000390,791(278,552,750) - -1,791,180

Net Cash Used in Investing Activity (268,426,170) (820,290,375) (659,347,347)C. Cash flow from Financing Activity

Dividend PaidTax on DividendInterest and Financed Charges PaidBank Borrowing (Working capital)Proceeds from other BorrowingOther Borrowing RepaidIncrease in Share CapitalIncrease In Share Premium

(76,018,077)(12,966,210)(227,215,147)(651,815,775)2,091,668,000(1,388,120,000) - -

(72,226,800)(12,274,945)(97,173,085)697,438,392(573,675,434) -53,684,211908,213,82

(70,220,500)(9,848,425)(120,764,106)(140,535,789)829,359,231 - - -

54

Net Cash from Financing Activity (264,467,209) 908,213,l828 488,172,411Net (Decrease)/Increase in cash and Cash Equivalent

455,155,385 (13,493,027) 28,780,870

Cash on Hand-Opening Balance 65,622,573 79,115,600 50,334,730Cash on hand Closing Balance 520,777,958 65,622,573 79,115,600

Interpretation:-

Net cash from operating activities is increase in year 2009 has compare to year 2008 and 2007. It is good position of the company.

Operating activity is key idietor of the extent to which the operation of the enterprise have generated sufficient cash flow:

(i) To maintain the operating ability of the operating ability of the enterprise.

(ii) Pay dividend

(iii)Repay, loans

But in this company not satisfied for above provisions.

The separate disclosure of cash flow arising from investing activities is important because the cash flow represent the extent to which expenditure have made for resources intended to generated future income and cash flows.

55

Stock Market Report:

MONTH HIGH RS. LOW RS. CLOSE RS. NO.OFSHARE DURINGTHE MONTHON NSE

TURN OVER RS. IN LACS.

April-2008 25.00 19.70 23.25 4243068 956.82

May-2008 24.40 20.60 21.10 3646036 832.05

June-2008 21.65 17.00 17.20 1865303 359.13

July-2008 21.65 16.00 20.15 2363318 439.21

August-2008 20.80 17.75 18.30 1487101 287.21

September-2008

18.95 13.35 14.85 1323921 220.87

October-2008 15.90 8.60 11.15 1534519 192.13

November-2008

13.50 7.00 7.70 940860 86.33

December-2008

9.65 6.65 8.10 5763748 458.79

January-2008 10.80 7.00 7.25 3858417 349.07

February-2008

7.80 6.80 6.80 1334374 97.15

March-2008 7.20 6.10 6.80 2525722 166.47

56

Common size statement of profit & loss Account

Rs.(2009) % Rs.(2008) % Rs.(2007) %

Gross Sales

Less: Excise Duty

Less: VAT

Net Sales

Other Income

Total Income

Expenditure

(Increase)/Decrease in stock

Trading Purchases

Raw material Consumption

Manufacturing Expenses

Employees Emoluments

Administration Expenses

Selling and Distribution Ex.

Financial Expenses

Depreciation

Total Expenditure

8,405,274,604

658,629,750

62,956,483

7,683,688,371

262,233,729

7,945,922,100

(266,758,290)

739,777,954

4,549,198,641

772,006,182

162,129,833

243,455,388

505,834,836

240,055,596

153,625,886

100

7.83

0.74

91.42

3.12

94.54

3.17

8.80

5.46

9.16

1.92

2.89

6.01

2.85

1.83

6,377,819,679

476,571,463

31,531,211

5,869,717,005

163,341,672

6,033,058,677

223,319,845

764,565,837

3,069,303,193

573,161,307

126,705,755

121,038,084

435,279,867

101,779,529

143,701,631

100

7.47

0.49

92.03

2.56

94.59

3.50

11.98

48.12

8.98

0.19

1.89

6.82

1.59

2.25

4,985,192,427

266,283,618

28,315,340

4,690,593,469

31,858,594

4,722,452,063

-

81,409,278

2,947,754,097

537,342,722

115,844,289

128,020,084

,396,776,106

120,764,106

135,013,251

100

5.34

0.56

94.09

0.63

94.72

3.92

1.63

59.13

10.78

2.32

2.56

7.95

2.42

2.70

57

PBIT

Exceptional Item

Profit Before Tax

Payment & provision of current Tax

Fringe Benefit Tax

Deffered Tax

Profit After Tax

1,099,326,026

846,596,074

225,362,149

621,233,925

117,668,661

2,500,000

(4,241,672)

505,306,936

84.46

10.07

2.68

7.39

1.39

0.029

0.05

6.011

5,558,855,048

474,203,629

-

474,203,629

80,382,548

2,526,252

15,323,632

375,971,197

87.16

7.44

7.44

1.26

0.039

0.24

5.89

44,62,924,350

455,165,626

-

455,165,626

47,327,423

2,720,693

(3,690,443)

408,808,133

89.52

-

-

9.13

0.94

0.05

0.07

8.2

Interpretation:-

Although the overall income has increased the substantial income has been stable.

In the 2008-09 there’s much more increase in stock, again it increased by current year, here the effect of economic slowdown is been observed.

Gradually the monetary benefits to employee decreases during these three consecutive years.

Admin. & selling expenses has been seen increase which shows that company is spending more in promotional activities.

Lastly the net profit is increasing figure vise but not percentage vise i.e. Profit is not relatively increasing with the sales.

58

CONCLUSION

It can be seen that company’s return on the investments is not high. Net profit of the company is not very high.

We can conclude after observing the ratios that the company does not earn good profit. The net profit ratio has decrease compare with the last year.

Earning per ratio share showing low trend during the current year .Debtor ratio is also not good. Fixed Assets turnover ratio has increased which favorable for the company.

Finally, observing all ratio and situation of the company. We can observe a median position in the market.

59

BIBLIOGRAPHY

www.Meghmani.com

www.google.com

B.S Shah Prakashan of Finance

Khan and Jain

Professor guidance

60

http://www.google.com/

http://www.Meghmani.com/

a financial analysis of ratios & cash flow statetment

Career