a project on working capital management or fund management

EXCUTIVE SUMMARY

INDUSTRY PROFILE

Cement industry has been decontrolled from price and distribution on 1st march and

de-licensed on 25th July 1991. However, the performance of the industry, the constraints

faced by the industry are interviewed in the infrastructure co-ordination committee meeting

held in the cabinet secretariat under the chairmanship of secretary.. The industry is subject to

equality order issued on 17-02-2003 to ensure quality standards. The Cement industry

occupies a position of predominance not only an infrastructure for development but also it is

8th largest in the world,

COMPANY PROFILE

The company zuari Agro Ltd was in corporate on 12 th may 1967 zuari cement limited

has been himself off as a separate company with 50-50 share holding by Zuari industries

limited (A.K.K.Birla group company) and Italy cement group (as Italian cement company)

with effect from 1-4-2000 with Head-quarters at Banglore, Zuari and Italy cement group

(through cement Francis group company) have formed joint venture company Viz., Zuari

cement limited. It is projected to increase the cement capacity of 2.2MT.

Need For The Study

One of the most important techniques of financial analysis is a preparation of

funds flow statement. It is statement, which portrays the changes in the financial position of

an enterprise. Balance sheet and income statement even if placed side by side in that much

clarity as the statement of changes in financial position, which focus on the sources and uses

of funds.

Objective Of The Study

To study the liquidity position of the company.

To calculate and compare the operating cycle duration of the company over the study

period.

To analyze the inventory turn over performance of the company over the study

period.

Working Capital Management - 1 -

To analyze the management of working capital that required for smooth running of

the firm.

RESEARCH METHODOLOGY :

Research Design : Analytical Study

Data Sources : Secondary Data

Secondary Data

The secondary data was collected form already published sources such as annual

reports, returns and internal records.

The data collection includes :

a. Data collected from annual reports of Zuari Cement Limited.,

b. Reference form textbooks relating to financial management.

RESEARCH TOOLS :

Working Capital Management.

Current ratio

Quick ratio

Debtors’ turnover ratio

Inventory stock turnover ratio

Cash ratio

Operating ratio

Creditors’ payment period days

Debtors’ collection period

Current assets to sales ratio

Inventory turnover period days

Creditors’ turnover ratio

Debtors’ turnover ratio

Working capital turnover ratio

FINDINGS:Working Capital Management - 2 -

Note:

1. From the year 2005-2009 the zuari cement industry current ratio is 2.327,

2.734 ,1.884,0.963,1.512.From the first year of the current ratio is satisfactory above

three year the current ratio is less than 2:1 it indicate that the firm doesn’t have

liquidity position .

2. During the year 2005-09 the quick ratio of the zuari cements is 1.63, 1.94, 1.61,0.72,

1.33.from the first 3 year and last year was satisfied but 2008 year was not satisfy.

3. During the period 2005-09 the cash ratio position of zuari cement was 0.36, 0.35,

0.82, 0.18, 0.86.the standard cash ratio is 0.5:1. regarding in the year 2007 -0.8,2009-

0.9 and the reaming year 2005-0.36,2006-0.35 and 2008 – 0.2 .it explain that 2007

and 2008 the firm is the having the liquidity position and during year 2005 ,2006 and

2008 the firm doesn’t have the minimum standard ratio of liquidity position .

4. From the year 2005-4657.09,2006-6803.46,2007- 12829.92, 2008—926.04,and 2009-

12499.65. it indicates that from the year 2005-2007 The net working capital is

increased, in the year 2008 the firm doesn’t have the net working capital and in the

year 2009 the firm they recollects the net working capital.

5. Higher the debt equity ratio indicates in flexibility of operation. During the year

2005-2009 the debt equity ratio is 0.42, 0.38 0.07, 0.05, and0.03. the debt equity ratio

of zuari cements is decreases from the year 2005-2009 it implies that the firm in the

position of flexible operation.

6. During the year 2005-2009 the debt ratio of 0.70, 0.72, 0.78, 0.88, and 0.97 increased.

The firm having the higher debt ratio for 2005-2009.

7. In the zuari cements from the 2005-2009 the liability ratio is increases it indicates tha

insufficient utilization of asset value

8. During the year from 2005-2007 the capital employed to net worth ratio is 0.593,

0.594, 0.898,and apart two years of 2008-0.557and 2009-0.5386 capital employed to

net worth ratio is decreases.


9. The inventory turn over ratio shows how rapidly the inventory is turning into

receivable through sales a high inventory turn overt is indicative of good inventory

management. In zuari cement from the fast two years the inventory management is

not well in position the remaining three years 2007-34013, 2008-39097, 2009-46.3

increases. In the three years zuari cement inventory management is well in position.

10. The Among the year 2005-09 the working capital turn over ratio of the firm is

fluctuate from the first year it may acquire better position and the next year it was

decrease and in the year 2008 it will go to losses and then it will recollect it’s position

in the year 2009

11. Among the year 2005-2009 the fixed asset turn over ratio of the firm is increased

from the first four years and then the nest year 2009 it may decreases. From these the

previous year the firm may not satisfied.

12. During the year 2005-20009 the total asset turn over ratio of the firm is increased

rapidly then the firm got better position in the year 2009-10.0582 then the previous

four years. Finally the total asset turn over ratio of the firm is satisfactory level.

13. During the year 2005-2009 the debtors turn over ratio is fluctuated in the year 2005 it

was not satisfied and 2006 it may got high turn over with the 50.606 and again it was

decrease in the year 2008. it was un high turn over with 52.168 and again it’s may

leads to unsatisfactory level.

14. Higher the operating profit ratio performance in zuari cement is increased rapidly

from the year 2005-09 with 99.3018,99.6440,99.6906,99.6633,99.6643 fjrom these

the firm may satisfied with these operating profit ratio.

15. From the year 2005-09 the current asset turn over ratio from the 3 years 2005-07 is

decreased and it again recover in 2008. it increases with 5.6706 and again decreases

in 2009-3.280.

16. From the year 2005-2009 the firm may fluctuated position in the beginning year the

satisfactory level of the firm is low and then it will recollect it’s position from the

next four years it may got the better position the firm is satisfied.

17. During the year 2005-2009the net profit ratio of zuari cements is fluctuated in the

year 2005 the capacity of the net profit ratio 5.2768 and then it decreases in 2006. in


the year 2007 the firm got highest net profit ratio then the previous two years and

again the nest two years2008 and 2009 it may some what decrease..

18. Higher the operating expense ratio indicates in inefficient performance firm operation

if operating excess increases the from losses their working capital in the zuari in the

year 2005.the operating expenses ratio is 0.6982 and the remaining years i.e 2006-

2009. the operating expenses ratio is decreases it indicates that the firm performance

is well in their operations .

19. Higher the operating prfit ratio performance in zuari cement is increased rapidly from

the year 2005-09 with 99.3018, 99.6440,99.6906, 996633,99.6643 from these the

firm may satisfied with these operating profit ratio.

20. Wealth maximization is the one of the most important objective in the financial

management in zuari cement a share holders equity is 2005-0.049,2006-0.052,2007-

0.21,2008-0.462 increase and in the year 2009-0.396 the share holder equity will

decreases

21. Higher the earning per share value is indicate well performance of firm operation

from the year 2005-2009 the zuari cement earning per shares value is fluctuated

SUGGESTIONS

1. The Company should maintain minimum idle working capital and ultimately it

reduces interest burden of organization and it will help to improve profitability of the

organization.


2. It is suggested to company to maintain good relationship for creditors to pay the

credits with in period. It helps to increase the funds by the creditors.

3. Better utilization of sources of funds is suggested for getting maximum benefits.

.

INDUSTRY PROFILE

INTRODUCTION: Cement is a key infrastructure industry. It has been decontrolled from price and

distribution on 1st March 1989 and deli censed on 25th July 1991. However, the performance

of the industry and prices of cement are monitored regularly. The constraints faced by the


industry are reviewed in the infrastructure coordination committee meetings held in the

cabinet secretariat under the chairmanship of secretary (coordination). The cabinet committee

on infrastructure also reviews its performance.

Cement industry is one of the major and oldest established manufacturing industries

in the modern sector of Indian economy. It is an indigenous industry in which the company is

well endowed with the necessary raw materials, skilled manpower and equipment &

machinery technology.

Cement is required by firms, bridges, buildings, water supply projects, dams, roads,

hydroelectric power projects, seaports, airports, and irrigation schemes. It is thus a vital

industry which assumes a crucial part in the economic development of the country.

RAW MATERIALS :

The basic raw material for manufacturing cement is limestone. This is available in

plenty in the form of limestone deposits in the nature. Limestone is excavated for mines by

mechanical equipment with the help of stocker & reclaimed the correct.

The raw materials consist of limestone, iron ore & bauxite. The correct proportions

are fed into a grinding mill where they are reduced to a very fine of compressed air. The

power from the storage ribs is fed into rotator kiln; the material is subjected to a temperature

is about 1500c. chemical reaction takes place between the various materials resulting in the

formation of cement compound like Tricalcium silicate (about 24%), die calcium silicate

(about 20%), Tri calcium alumina (about 7 to 10%) and aluminum ferrate (about 10 to 12%).

CAPACITY AND PRODUCTION:

The cement industry comprises of 125 large cement plants with an installed

capacity of 148.28 million tones and more than 300 mini cement plants with and estimated

capacity of 11.10 million tones per annum. The cement corporation of India, which is a

central public sector undertaking, has 10 units. There are ten large cement plants owed by

various State governments. The total installed capacity in the country as a whole is 159.38

million tones. Actual cement production in 2002-03 was 116.35 million tones as against a

production of 106.90 million tones in 2001-02, regarding a growth rate of 8.84%.

Keeping in view the trend of growth of the industry in previous years, a

production target of 126 million tones has been fixed for the year 2003-04. During the period


April-June 2003, a production (provisional) was 31.30 tones. The industry has achieved a

growth rate of 4.86% during the year.

EXPORTS:

A Part from meeting the entire domestic demand, the industry is also exporting

cement and clinker. The export cement during 2001-02 and 2003-04 was 5.41 million tones

and 6.92 million tones respectively. Export during April-may, 03 was 1.35 million tones.

Major exporters were Gujarat Ambuja Cement ltd. and L&T ltd.

RECOMMENDATIONS ON CEMENT INDUSTRY:

For the development of cement industry “Working Group of cement industry”

was constituted by the planning commission for the formulation of X five year plan. The

working group has projected creation of additional capacity of 40-62 million tones mainly

through expansion of existing plants. The working group has identified following thrust areas

for improving demand for cement.

Further push to housing development programmers

Promotion of concrete Highways and roads; and

Use of ready-mix concrete in large infrastructure projects.

Further, in order to improve global competitiveness of the Indian cement industry, the

dept. of industrial policy & promotion commissioned a study on the global competitiveness of the

Indian cement industry.

The report submitted by the organization has made several recommendations for making

the Indian cement Industry more competitive in the international market. The recommendations

are under consideration.

TECHNOLOGY CHANGE:

Cement industry has made tremendous strides in technological up gradation and

assimilation of latest technology. At present 93% of the total capacity in the industry is based in

modern and environment-friendly dry process technology. There is tremendous scope for waste

heat recovery in cement plants and there by reduction in emission level. One project for

cogeneration of power utilizing waste heat in an Indian cement plant is being implemented with


Japanese assistance under green Aid plan. The induction of advanced technology as helped the

industry immensely to conserve energy and fuel and to save materials substantially.

India is also production different varieties of cement like ordinary Portland cement

(OPC), Potland Pozzolana cement (PPC), Portland Blast Furnance Slag Cement (PBFS), Oil Well

Cement, Rapid Hardening Portland cement, Sulphate resisting Portland cement, While cement

etc. Production of these varieties of cement conforms to the BIS Specifications. It is worth

mentioning that some cement plants have set up dedicated jetties for promoting bulk

transportation and export.

Ital Cement Group:

OUR MISSION:-

“Our shared ambition: Effective and Efficient”

To become the most effective and most efficient cement manufacturer and

distributor in the world.

OUR APPROACH: We are local, we think global

Cement aggregates and ready mixed concrete manure and distribution are

local business. Around the world we serve local customers in local market with local

needs.

OUR WAY OF WORKING: Technological leadership is our goal,

Our technology plays the key role in realizing our ambition we are

committed to increasing the value of our group, our companies, our products and

services, the capabilities of our employees and the ecological standards by which we

operate.

OUR SPIRIT: One team worldwide.

We operate worldwide in many diverse markets, culture and continents.

We are proud of our cultural diversity and our distinctions character.

HISTORY OF CEMENTS:

1. Invention of cement of JOSEPH ASPARIN. Leeds builder in bricklayer.


2. 21st October, 1824 patented as Portland cement.

3. 1904 itish and American standards of Portland cement.

4. 1912 Indian cement company limited established factory at Portlander.

5. 1951 Indian standards.

DIFFERENT TYPES OF CEMENT:

There are varieties of cement based on different compositions according to

specific end uses namely Ordinary Portland Cement, Portland Pozolona cement, Portland

Blast furnace slag cement, and specialized cement. The basic difference lies in the percentage

of clinker used.

ORDINARY PORTLAND CEMENT:

OPC, popularly know as grey cement has 95% clinker and 5% of gypsum

and other materials. It contains for 56% of the total consumption. White cement is a

variation of OPC and is used for decorative purposes like rendering of walls, flooring et.

Contains a very low proportion of oxide.

PORTLAND POZZOLONA CEMENT :

PPC has 80% clinker, 15%pozzolona and 5% gypsum and accounts for 18%

of the total cement consumption. Pozzolona has siliceous and aluminous materials that do

not possess cementing properties in the presence of water. It is cheaply manufactured

because it uses flyash / burnt clay/ coal waste as the ingredient. It has lower heat of

hydration, which helps in preventing cracks where large volumes are being cast.

PORTLAND BLAST FURNACE SLAG CEMENT (PBSFC):

PBSFC consist of 45% clinker, 50% blast furnace slag and 5% gypsum and

accounts for 10% of the total cement consumed. It has a heat of hydration even lower than

PPC and is generally used in construction of dams and similar massive constructions.

RAPID HARDENING PORTLAND CEMENT:

It is similar to OPC, except, that it is ground much finer, so that casting, the

compressible strength increases rapidly.


Water proof cement

OPC, with small portion of calcium separate or non- saponifiable of to

impart waterproofing properties.

CEMENT INDUSTRY INDIA

OVERVIEW

1. Indian cement industry data back to 1914-first unit was setup at proddatur with a

capacity of 1000 tones.

2. Currently India is ranked second in the world with an installed capacity of 114.2

million tones.

3. Current per capita consumption-85 pages. Against world standard of 256 kgs.

4. Cement grade limestone in the country reported to be 89 bt. A large proportion

however is unexplainable.

5. 55-60% of the cost of production is Govt control.

6. Cement sales primarily through a distribution channel. Bulk sales account for < 1% of

the total cement produced.

7. Ready mix concrete a relatively nascent market in India.

CEMENT INDUSTRY: STRUCTURE

Installed capacity 114.2 mn tones per annum

Production around 87.8 mn tones.

Major cement plants Mini cement plants

Companies:59 Nearly 300 plants

Plant: 116 Located in Gujarat, Rajasthan, MP.AP

Typical installed capacity for plant: Above Typical capacity < 200 mntpa installed


1.5 mntpa. capacity around gmm. Tones

Total installed capacity: 1.05 mntpa Production around : 6.2 mn tones/mntpa

Production 98-99:81.6 mntpa Excise : Rs 250/ tone

Excise: Rs 408 tones Mini plants were meant to tap scaterred

limestone reserves.

All India reach through multiple plants However most set up in A.P.

Export to Bangladesh, Nepal, Srilanka, UAE

and Mauritius

Most use vertical Kiln technology

Strong marketing network, tie up with

customers, contractors

Production cost/ tone- Rs 1,000 to 1,400

Wide spread distribution network Infrastructural facilities not to the best

Sales primarily through the dealer channel

However, cement consumption per capita in our country at about 99-kg/ capita is one of

the Lowest. The world average is about 267 kg/ capita. While that of china is 450 kg / capita.

Similar in Japan its 631 kg/ capita while in France it is 447 kg / capita.

Production:

1. Excess capacity exists, through some units are sick.

2. 1999-2000 production expended to reach 95 mn tones

3. Exports around 2 mn tones.

4. Cement manufactured through the wet, semi-dry or process.

5. Dry process accounts for 90% of the installed capacity.

6. Wet process popular in the past- better control over mixing of raw materials.

7. Dry process replacing the wet process as it is space saving energy efficient and

economical.

Prices

a. Price fluctuations.

b. Essentially determined by demand.


c. Prices also vary with grades

AVERAGE MAXIMUM RETAIL PRICE

Delhi Calcutta Chennai Bangalore

Aug 1999 137 146 175 170

Sep 1999 137 139 175 161

Oct 1999 136 125 175 161

Nov 1999 136 125 172 140

Dec1999 128 117 160 136

Jan 2000 120 140 136

1. Over 370 companies in the organized sector.

2. However, industry dominated by 20 companies who account for ever 70% of the

market.

3. Individually no company accounts for over of the market.

Manufacturing Process:

Cement is manufactured by using the wet , semi dry and processes. The wet process

was popular in the past as it provided better control over materials mixing process.

However, the dry process has now gained popularity globally because it is space saving,

energy efficient and economical.

CAPACITY DISTRIBUTION AND CONSUMPTION NORMS

Process Capacity

(TPD)

% of total

Power

Kwh/MT

Fuel

Kcal/kgDry 282486 93 120-125 750-800Semi-Dry 13910 5 115-120 900-1000

Wet 5260 2 110-115 1300-1600

Total 301656 100

GEOGRAPHICAL DISPERSIONWorking Capital Management - 13 -

Limestone is the most important material input into cement manufacture. The

plant locations are primarily determined based on the proximity of ‘cement grade’ limestone

deposits. These limestone deposits have been classified as “cluster”, some of which overlap

two states.

PRODUCTION CAPACITY

Cement plant with a capacity of up to 0.3 mn tpa are classified as mini cement plants

and are eligible for concessional excise duty. Though the minimum economic size of a

cement plant is 1 mn tpa, there are over 300 white and mini cement plants in India a

collective capacity of only 9 mn tpa (8% of the total domestic installed capacity). Most of

the new cement plants being set up have a capacity of 1 mn tpa or more. The average cost of

setting up a mini cement plant is about Rs 1400 per ton, while for large cement it is about Rs

3500 per ton.

Ready mix concrete: Industry

1. RMC-ready to use concrete, a blend of cement, sand and aggregate and water mixed

in convenient proportion.

2. Launched first in Mumbai a few years ago is gaining in other metros in India.

3. Typical cost of a plant- Rs. 7.8 crs (US $ 1.6 to 1.8 mn ) to set up a 100 cubic meter

(cum) plant with 4-5 transit mixers. Gestation period is around 3-4 months

4. Currently RMC is at a very nascent stage, accounts for 0.5% of the demand.

Company No of plants Capacity ( cu m/hr)ACC 13 712

RMC Ready mix 4 440L & T 5 330

Fletcher Challenge 3 320HCC 2 240

Unitech 2 150Jog Construction 1 120

Starmnac 1 120Madras Cement 1 56Birla Cement 1 30

Three units of ACC to be commissioned


Companies planning to enter this Market.

1. Priyadharshini Cements in Hyderabad.

2. Saurashtra Cements in Navy Mumbai.

3. Pioneer a world leader entering the market

4. Capacity additions expected in the next few years

5. ACC plans to treble its capacities.

6. Grasim is setting up four more plants.

7. L & T plans to add another eight more.

Concerns

Cement industry going through a consolidation phase in the last few years.

Transportation

1. Transportation costs high-freight accounts for 17% of the selling and distribution

cost.

2. Road preferred for transportation for distances less than 250 kms. However, industry

is heavily dependent on roads are the railway infrastructure is not adequate shortage

of wagons.

Capacity additions

1. Acquisitions have been the mainstay of the business.

2. Regional imbalance resulting in cross regional movement-limestone availability in

Pockets has led to uneven capacity additions.

3. Capacity additions have slow down.

Industry inputs

1. Highly capacity intensive industry.


2. Nearly 55-60% of the inputs controlled by the controlled.

3. Facing problems due to power shortage.

4. Coal availability the quality affecting production.

5. Mini plants realization of the revenue lower large plants, survival difficult.

Future out look

Most economic forecasts for the Indian cement industry indicate a favorable outlook

for the Indian cement sector. With no significant addition expected, the supply demand

position is expected to the better balanced. Retail housing segment is expected to show

significant demand growth over the next two year. With the industrial production showing an

upward trend, housing construction showing a sign so revival and the government gearing up

to spend more on infrastructure, the sector looks favorably poised. The overall demand

growth is expected to about 7-8 per cent. Withdrawal of sales tax benefits for the new units

will give an added push to consolidation via acquisitions. Consolidations will be more

regional, with companies seeking to gain dominance in their chosen regions.

India’s per capital cement consumption is less than 100 kg compared to the world

average of 250 kg. Currently, the total cement demand in India is lower than the total

capacity. The cement manufacturers association of India projects a demand of 101 mn taps in

2000-01 as against 93 mn yap last year. Against this, the total installed capacity is 109 mn

tap. However seven million tones of Cement Corporation of India and two million tones of

UP cement are lying ideal. An 8-10 per cent growth is projected in the coming years, which

will take the demand to 200 million tones in 10 years.

A focus on more value added products likely Ready Mix Concrete (RMC) is

emerging. RMC is a compound in which sand, gravel additives and water are added to

cement and sold as readymade concrete. Cement products benefit from RMC production as it

involves low capital expenditure. The cost of setting up a 100 metric cube per hour plant is in

the range of Rs 70 to 90 mn. While the central government has declare a zero excise duty on

RMC, the Maharashtra government has made it mandatory to use RMC in construction of ll

the flyovers. With these measures, the total; RMC consumption is expected to touch 6 per

cent of total cement capacity in next four year. To tap is existing potential, leading cement


manufacturers in the country like L & T and ACC have already announced their plans to

expand their RMC capacities is coming years.

Next cost cutting measure appears to be transporting bulk cement. This method is

cement transpiration is preferred by cement manufacturers as it results in lower packaging

costs, hence lower demurrage costs. At present, cement is predominantly sold in 50 kg bags.

But the pattern appears to the changing as cement manufacturers have increasingly started

selling cement in bulk, especially in cities where construction activity as it is peak. Most of

the cement sold in bulk is currently used by the ready mix concrete plants. Cement consumed

in bulk could help save about Rs 110 per tone (Rs 5.50 per 50 kg bag) compared to the use of

conventional bags. Around the world, almost 80% of the cement transportation is carried out

in bulk form. But in India, only about 1%of total cement is transported in this form. This is

because of the attendant problems like inadequate infrastructure in the form of port facilities

and lack of timely availability of wagons from the railways. Cement packaging costs

accounts for nearly 4 per cent of total costs for a cement manufacturer.

The industry will see more action on the mergers and acquisition front. So far, the

market has seen only two major international players. Lafarge and Cement Francais, in

action. But others, such as CEMEX and the big daddy, Holders Bank are waiting in the

wings

COMPANY PROFILE

This cement division project in 1978 and according to the Texmaco it has taken

the steps for acquiring the land at YERRAGUNTLA in KADAPA dist. in 1982. Constructing

activity is started and the cement plant is completed in March 1985. Texmaco is started

production at clinker by March 1985. Original plant capacity was 5 lakh tones per annum at

first.

The Zuari cement is strategically located at Yerraguntla. The plant location

existence of 6km from Yerraguntla. It is connected to the railway station on by a railway

track of 7 km length and is having on exchange plant inside the factory; plant is connected to

the nearest highway by 0.2 km land private load.


Basically this is belongs to DR.K.K. Birla. In 1994 January 1, this cement unit of

Texmaco being handed over to Zuari agro chemical industry. Under working agreement on

7-2-95. This unit is sold by Texmaco to Zuari in 1997 company has conceives expansion

project investing 370 crores and making increasing rated capacity from 5 lakh to 7 lakh. This

project was completed by formally 1999 and in fact from

1-4-2000. Company entered in agreement with joint venture partner with Italy cement with

50% of partnership and working agreement.

The Group has strength of 22,300 employees’ worldwide.

• 62 cement plants.

• 14 Grinding Units.

• 4 stand alone terminals.

• 147 aggregate quarries.

• 575 concrete batching units.

Part of the prestigious Dr.K.K.Birla Group a Rs 4000 crores conglomerate Zuari

cement as within a short time span made its presence felt in the cement industry. It has done

so by making top quality cement.

Consistently, Cement that has won the confidence and trust of millions in the

country. This commitment to quality has being it grow from a modest 0.5 million ton

capacity in 1995 to 2 million tons today. Zuaries quality drive originates in its state of the are

cement plant, situated at yerraguntla, Renewed for rich Narji limestone deposits, this plant is

cement manufacturers envy.

Yet, strategic location is just factor contributing to Zuaries success. There are other

equal important reasons.

Superior work force.

Cutting-edge technology.

Decentralized quality assurance teams.

All this combine seamlessly to ensure that every bag og cement. That leaves the

plants is of consistent quality, and worthy of bearing the zuari label.

World Wide excellence with italcementi group.


Zuari industries ltd has entered into 50:50 joint venture with italcementi group, the

largest producer and distributer of cement in Europe and one of the leaders in cement

production in the world.

Italcement operates in 19 countries including Canada, France, Italy, Morocco, USA

and Bulgaria. Italic cements global industrial network includes more than 50 cement plants,

500 concrete batching units 150 quarries.

Zuaries joint with italcementi gives Sri Vishnu cement a global technological

advantage which reflects in finesses of every grain of Sri Vishnu cement.

History of zuari cements:

Zuari cement was started in 1994 to operate the cement plant of Texmaco Ltd.

Subsequently, Texmacos cement business was taken over by the company in 1995.

Zuari cements manufacturing facility at yerraguntla in Andhra Pradesh is one of the

largest in south India and places Zuari cement among the top 5 manufacturers in the south.

In 2000, Italcementi group the second largest producer and distributor of cement in

Europe and fifth largest cement producer in the world enter into a joint venture with Zuari

cement and Zuari cement Limited was formed.

COMPETITORS:

1. CORAMANDAL CEMENT

2. PENNA CEMENT

3. NAGARJUNA CEMENT

4. DALMIA CEMENT

5. ULTRATECH CEMENT

6. PRIYA CEMENT

Some of the other cements companies. All cement companies are competitors.

Joint venture with Ital cement The scenario of mergers and acquisitions is still vast in the cement industry. The

entry of May multinationals. The other MNC’s planning to enter the Indian market and


consolidation of the companies in India has been forcing mergers in the cement industry.

Now company is under joint venture having rated capacity of 17 lakhs per annum.

Ital cements group CCB’s mother company ( Companies des cements ), and the

Zuari Industries Ltd (ZIL) of India have reached an agreement to create a 50:50 joint venture

which will assume the cement activities of ZIL, consisting of the cement plant of

yerraguntla, in Andhra Pradesh.

Location of the plant: Cement and its raw materials namely coal and lime stone, are all bulky that

make transportation difficult and uneconomical. Given this, cement plants are located close

to both sources of raw materials and markets. Most of lime stone deposits in India are located

in Madhya Pradesh, Rajasthan, Andhra Pradesh, Maharashtra and Gujarat. There is a trade-

off between proximity to markets and proximity to raw materials due to which some cement

plants have been setup near big markets despite lack of raw materials.

Zuari cement industries ltd. is located at Krishna Nagar, in Yerraguntla,

Kadapa district. It was nearest to the railway station and also nearest to the road. It was 6 km

distance to yerraguntla.

Location of the plant at this place is having the following advantages. Location in industrial

belt of Rayalaseema with sophisticated facilities like water.

Present of best suited limestone proved scientifically for cement.

Low free limestone to ensure reduce surface cracks.

Low heat of hydration from better soundness.

Low magnesia content to ensure reduced tensile cracks.

Specially designed setting time to suit Indian working conditions.

PRODUCTION: Cement production during the period has also increased from about 72.23 million

tons about 90 million tons in 2005-2006 excluding the contribution of mini cement plants.

RAW MATERIALS:

The actual requirements of raw material at 100% capacity utilization would be;

1. 12.5 million tons of limestone per annum.


2. 70000 tons of Gypsum per annum.

3. 39000 tons of Bauxite per annum.

4. 20000 tons of Iron ore per annum.

The limestone is major component required for the plant is net from the

mines located adjacent to the proposed site.

1. Gypsum is procured from fertilizer factories at Madras and Cochin.2. Iron is soured partly from mini steel plants located at Tirupathi and partially from

Bellary.3. Bauxite is procured from Goa, Karnataka and Maharashtra.

POWER: Maximum estimated power demand is 45 M.V. The company has an existing

contract 50 M.V demands APSEB, the plant presents has D.G sets with an aggregate general

capacity of 12.6 M.V.

WATER:

Water is required for seeds of consumption make for plant and machinery for

general need in plant. Company has a pumping station and underground bore wells near

Hanuman Gutta village at Penna River to tap the undergrounds water in riverbed.

TRANSPORT: The factory is when connected to different part of the country through rail and road

facilities is near to Yerraguntla railway station and has a railway lint to the factory with an

extern point within the factory premises 605 of the cement is dispatched by rail gal is

received through rail. The plant is connected to the nearest state highway to Bangalore,

Hyderabad and Chennai.

MANPOWER: Existing plant has a total of 500 employees. After and addition of employees may be

required

QUARRY:

It is situated adjacent to the factory. It constituted limestone, one of the major

materials for cement industry. The quarry has a mining base area of 1027.56 acres.


S.no Description Massive (MT) grade limestone

Flagged stone(MT)

Total (MT)

1 Total reserves of limestone

36 blocks108442 9.894 118.36

2 Un workable limestone due to mining obstacles

29530 2540 32.07

3 Workable reserves 79912 7354 86.266

Chambal fertilizers and chemicals ltd (CFCL) promoted by Zuari industries ltd.,

has set up a large gas based area manufacturing plant at Gadapan about 35 km from Keta, a

major industrial town of Rajasthan state in India.

CFCL’s plant is a state-of-the-are-high-tech complex built at a cost of

Rs.12.67 billions. Spread over an area of 1105 acres (or 447 hectares 4.47 sq.kms), containing

the manufacturing units offsite facilities including captive power plant, railways siding and

amenities like residential complex, club, school, etc in a pleasant and green surroundings

snamprogetti of Italy and Haldor topsoe of Denmark provided the technical know-how and

Engineering and other services for Ammonia and urea plant while off-site facilities were built

mainly by Tokyo engineering India ltd. The enterprise value of the unit has been pegged at

Rs. 740 crores. The creation of this joint venture company is a new step in the international of

the Ital cement group in Asia. It is a new opportunity for the group, to further increase its

presence in the emerging countries by entering the promising Indian market, the third largest

in the world. In combination with a very important partner says a release issued by laggard

who advised ital cement on the deal. Here are 6 of the many reasons why Zuari 53 grade and

43 grades cement edges out its competitors.

1. High compressive strengths.

2. Low heat of hydration.

3. Better soundness.

4. Lesser consumption of cement for M-20 concrete grade and above.

5. Faster de-shuttering of formed work.


6. Reduced construction time.

With a superior and wide range of cement cattering to very

conceivable building need, Zuari cement is a formidable player in the cement market. Here

are just a few reasons why Zuari cement is chosen by millions in India.

Ideal raw materials

Low time and magnesia content and high proportion of silicates

Greater fineness

Slow initial and fast final setting

Wide range of applications

Quality customer service

A wide range to address every need:

Residential, commercial, multistoried buildings and complex.

Mass concreting-dams, canals, spillways

Construction and repair of pavements, roads, flyovers and runways.

Spun pipes and poles manufacturing

Cold weather concreting

Pre-fabricated elements such a pipes, sleepers, windows, door frames etc.

Quality customer service: In an effort to reach out to customers better, Zuari cement as set up a technical cell

named Zuari home partner. This cell gives guidance in the field of building.

Technology, architecture, housing finance and economical usage of the high quality.

Technical experts provide the assistance according to the individual requirements. So

that customers get the best value for the investment they have made.

Products

Zuari Cement manufactures and distributes its own main product lines of cement .We aim to optimize production across all of our markets, providing a complete solution for customer's needs at the lowest possible cost, an approach we call strategic integration of activities.

Cement is made from a mixture of 80 percent limestone and 20 percent clay. These are crushed and ground to provide the "raw meal”, a pale, flour-like powder. Heated to


around 1450° C (2642° F) in rotating kilns, the “meal” undergoes complex chemical changes and is transformed into clinker. Fine-grinding the clinker together with a small quantity of gypsum produces cement. Adding other constituents at this stage produces cements for specialized uses.

Zuari Cements range of cement

Zuari Superfine Cement Zuari 43 Grade Cement Zuari Superfine P53 Cement

BOARD OF DIRECTORS

DIRECTORS : Saroj Kumar Poddar, Chairman

Rodolfo Danielli

Yves Rene Nanot

Goran Siefert

Maurizio Caneppele, Managing director

Raghunathan Vishwanathan

EXECUTIVES : Director-Marketing ; K. Srivasthava

Director-Technical : P. Sheoran

Vice President : S. Suresh

COMPANY SECRETARY : L.R Neelakanta

BANKERS : State Bank of India, Andhra bank,

BNP Paribas, Standard chartered Bank,


http://zuaricements.com/scripts/productsOPC53.aspx


http://zuaricements.com/scripts/productsPPCsuperfine.aspx

http://zuaricements.com/scripts/productsPPCsuperfine.aspx



State Bank of Hyderabad.

AUDITORS : BSR & Co.,

Chartered accountants Bangalore

FACTORY : Krishna Nagar, Yerraguntla,

Kadapa Dist.

CARPORATE OFFICE : No.1, 10th Main hall III stage,

Jeevanbima Nagar Bangalore.

BRANCHES: ANDHRA PRADESH KARNATAKA TAMILANDU KERALA GOA ORISS

Organization structure:

The organization structure of cement is simple and flat. The employees are

assigned grades based on their pay packages. These grades are not based on the job


responsibilities of the employees. Employees having similar job responsibilities may have

different grades for reasons like duration of association with the company.

ORGANIZTION CHART:

PRESIDENT

D.G.M D.G.M V.P V.PCOMMERCE PRODUCTION MARKETING FIFNFNCE

General marketing manager

Senior marketing Manger

Assistant marketing manger

Sales officer Sales officer

Working Capital management

Introduction

Working capital may be regarded as the lifeblood of a business. Its effective

provisions can do much to ensure the success of business, which its inefficient management

can lead not only to loss of projects but also the ultimate downfall of what otherwise, might

be considered as promising concern. Thus, its management is considered as one of the most

important aspects of firm's Financial Management.

The term working capital stands for that part of the capital which is required for

the financial working of the company in simple words, we can say that working capital is the

investment needed for carrying out day to day operations of the business smoothly.

Working capital refers to a firm's investment in short term assets, viz. Cash short-

term securities, Accounts receivable (debtors) and inventories of raw materials, work in

progress and finished goods.


It can be regarded as that portion of the firm's total capital, which is, employed in

short-term operations. Funds thus invested in current assets keep revolving false and are

being constantly concerted in to cash and this cash flow out again in exchange for other

current assets. Hence, it is also known as revolving or circulating capital.

According to genestenberg,"circulating capital means current assets of a company

that are changed in the ordinary course of business from one form to another, as for example

from cash to inventories, inventories to receivables, receivables into cash".

These are invariably a time lag between the sale of gods and the receipt of cash.

There is there fore need for working capital in the form of current assets to deal with the

problem arising out of lack of immediate realization of cash against goods sold. Therefore

sufficient working capital is necessary to sustain sales activity.

CONCEPTS OF WORKING CAPITAL

1) Gross working capital.

2) Net working capital.

GROSS WORKING CAPITAL

The gross working capital refers to the firms' investment in the total current assets

of the enterprise. The current assets are those assets with in the ordinary course of business

can converted into cash with in the short period of normally one accounting year.

NET WORKING CAPITAL

The net working capital can be defined into two ways the most common

definition of working capital is difference between current assets and current liabilities.

Net working capital can also be defined as that portion of firm's current assets. Which are

financed with long-term funds.

KINDS OF WORKING CAPITAL

1) Permanent or fixed working capital

2) Temporary or variable working capital

PERMANENT WORKING CAPITALWorking Capital Management - 27 -

Permanent working capital is the minimum amount or minimum level of current

assets. This is continuously required by the enterprise to carry out its normal business

operation. For e.g., every enterprise has to maintain a minimum level of raw materials.

Work-in-progress, finished goods and cash balance for paying Wages, salaries, rent etc.

during the year. This minimum level of current assets is called permanent or fixed working

capital as this part of capital is permanently blocked in current assets.

Regular working capital is the amount of working capital needed for the continuous

operations of the business of the company without any breakage.

TEMPORARY WORKING CAPITAL:

Temporary working capital is the amount of working capital, which is

required to meet the seasonal and special needs of the business.

1) Seasonal working capital refers to that financial requirement that crop up

during a particular season behind the regular working capital most businesses require at

stated intervals large amount of current assets to fill the demands of the seasonal busy

periods

2) Special working capital refers to that part of the working capital, which is

required to meet special extengencies such as launching of extensive marketing campaigns or

conducting research etc.

NEED FOR WORKING CAPITAL

The need for working capital to run the day to day activities cannot be over emphasized we

will hardly find a business firm, which does not require any amount of working capital.

Indeed, every firm differs in these requirements of the working capital.

The main objective of financial decision making is to maximize shareholders wealth and to

endeavor this firm should earn sufficient returns requires a successful sales activity. For a

successful sales activity the firm has to invest sufficient funds in current assets. Current

assets are needed because sales do not concert into cash instantaneously.

OPERATING CYCLE


Operating cycle is the time duration required to convert sales after the conversion of

resources into inventories into cash. In other words, an operating cycles refers to length of

time necessary to complete

The following cycle of events.

1) Conversion of cash into raw materials.

2) Conversion of raw materials into work in progress.

3) Conversion of work-in-progress into finished goods.

4) Conversion of finished goods into accounts receivables.

5) Conversion of accounts receivables into cash

THE WORKING CAPITAL THE WORKING CAPITAL CYCLECYCLE

(OPERATING CYCLE)(OPERATING CYCLE)

Accounts Payable

Cash

RawMaterials

W I P

Finished Goods

Value Addition

AccountsReceivable

SALES

Financing of working Capital


There are different types of financing polices in vague for financing working capital

requirements. The requirements of working capital may be for fixed working capital and

variable working capital requirements.The fixed proportion of working capital should be

generally financed from the fixed capital sources while the variable working requirements of

a concern may be met the short-term sources of capital.

The various sources of financing of working capital are as follows

Long-term financing Short term Financing Spontaneous Financing

Finance Institutions Short-term Credits Trade Creditors

Debentures Loan from Banks Outstanding Expenses

Commercial Papers

Public Deposits Factoring

Shares

Working Capital Policies:

The financial manager should determine the optimum level of currents assets,

so that the wealth of shareholders is maximized. A firm needs fixed current assets to support

a particular level of output. However, to support the same level of output, the firm can have

different levels of current assets to fixed assets. Dividing current assets by fixed assets give

CA/ FA ratio.

Conservative Working Capital Policy:

If firm’s maintains higher investment on current assets to a constant investment

on fixed assets, i.e. assuming a constant level of fixed assets, a higher CA/FA ratio indicates

conservative current assets policy it implies greater liquidity and lower risks.

Aggressive Working Capital Policies:


Sources of Working Capital

If a business firm maintains the lower level of current assets to a constant

fixed assets that is a lower CA/FA ratios means an aggressive current policy. Assuming other

factors constant. It indicates higher risks and poor liquidity.

Average Working Capital Policies: If a business firms maintains moderated level of current

assets to constant fixed assets. That is the current assets policy of the most of the firm may

fall between in conservative and aggressive working capital policy, which is called average

working capital policy. It indicates moderate liquidity and risks.

COMPOSITION OF WORKING CAPITAL

The individual composite items of working capital consist of current asset and

current liabilities.

CURRNET ASSETS

Current assets are those, which can be converted into cash within one year

without effecting the operations of the firm.

List of current assets :

Cash in hand & bank balance

Bills receivables

Sundry debtors

Short term loans and advances

Investments

Government other trustee securities

Fixed deposits with the banks

Inventories of stock

Raw materials

Work in progress

Stores and spares

CURRENT LIABILITIES

Current liabilities are those, which are intended to be paid in the ordinary

course of business within a short period of normally one year out of the current assets or the

income of the business.


LIST OF CURRNET LIABILITIES :

Bills payable

Sundry creditors or accounts payable

Short term borrowings

Banks

Others

Unsecured loans

Public deposits maturing one year

Deposits from dealers, selling against.

Dividends payable

Bank overdraft

Accrued or outstanding expenses

Provision for taxation

Sales tax and excise tax.

THEME OF WORKING CAPITAL

Working capital management is considered as one of the most important aspects

of firm’s financial management. The goal of working capital management is to manage the

firm’s current assets and current liabilities in such a way that the satisfactory level of

working capital is maintained. Each of the current assets should be managed efficiently in

order to maintain the liquidity the firm while not keeping too high a level of any one of them.

The success of business concerns among other things depends upon the

manner in which its working Capital is managed. The interaction between the current assets

and current liabilities is there fore the main theme of the theory of working capital.

It is a task of financial manager to maintain an appropriate level of working

capital i.e. enough current assets to pay off current liabilities, either excess nor less because

in either cases the result could be the failure of the business. Excessive working capital

impairs firm’s profitability, as ideal investment earns nothing. On the other hand, inadequate

amount of working capital can threaten the solvency of the firm because of its inability to

meet its current obligations.

Optimum Working Capital Position:Working Capital Management - 32 -

The firm should maintain a sound working capital position. It should have

adequate working capital to run its business operations. Both excessive as well as inadequate

working capital positions are dangerous from the firm’s point of view. Excessive working

capital means idle funds, which earn no profits for the firm. Paucity of working capital not

only impairs the firm’s profitability but also results in production interruption and

inefficiencies.

SCOPE OF THE STUDY:

The basis scope of the study is to understand & determine working

Capital management adopted by the department. The study also includes an observation of

different year’s working capital of ZUARI CEMENT & its financial position.

NEED FOR THE STUDY:

Working capital is referred to be the lifeblood and nerve center of a business the need

for working capital is to run day to day activities can’t be over emphasized. Firms aim at

maximizing the wealth and should earn sufficient return from its operations. The working

capital is having the great influence on the development and progress of any organization.

The efficient management of working capital is as essential to maintain the smooth

functioning of day to day operations .Hence there is a need to study the importance of

working capital management in “ZUARI CEMENT”

SIGNIFICANCE OF THE STUDY:

The working capital reflects the financial position and operation strengths and

weakness of the concern. These statements are useful to management investors, creditors,

bankers, Government and public at large. It served as a basis to decide the wise dividend

declaration by company.

Objective Of The Study

To study the liquidity position of the company. Working Capital Management - 33 -

To calculate and compare the operating cycle duration of the company over the study

period.

To analyze the inventory turnover performance of the company over the study period.

To analyze the management of working capital that required for smooth running of

the firm.

METHODOLOGY OF THE STUDY:

The data that was obtained for the study can be classified into the following types.

PRIMARY DATA

SECONDARY DATA

Primary data comprises of information obtained during discussions with the officers and

staff in the finance department.

Secondary data comprises of information obtained from ratio analysis and ratio analysis

estimates of other financial statements files and some other important documents maintained by

the organization are also the helpful. The administration report published by ZUVARI CEMENT

is another source of data.

LIMITATIONS OF THE STUDY:

Time is one of the limiting factor of the study the duration of training was two months

which was too short period to study the whole organization.

Second limiting factor is the busy schedule of the executives. As a result of this it is

very difficult to get minute information about the organization.

Some aspects of financial information were not available because of the confidentiality

of ZUVARI CEMENT.

Working Capital AnalysisWorking Capital Management - 34 -

1 .STATEMENT OF CHANGES IN WORKING CAPITAL (2004-05)

Particulars 2004 2005 Increase Decrease

(+) (-)

A) Current Assets

Inventories 2281.92 2503.20 221.28

Sundry Debtors 3109.72 2467.39 642.33

Cash and Bank 1716.40 1290.71 425.69

Loan and advances 1771.46 1906.20 134.74

Total of Current Assets (A) 8879.50 8167.50

B) Current Liabilities

Current Liabilities 3827.41 3381.69 445.72

Provisions 50.43 127.90 77.47

Total of Current Liabilities

(B)

3877.84 3509.59

Working Capital (A-B) 5001.09 4657.91

Net decrease in Working

Capital

343.76 343.76

TOTAL 5001.09 5001.09 1145.49 1145.49

2. STATEMENT OF CHANGES IN WORKING CAPITAL(2005-06)


(+) (-)

A) Current Assets


Inventories 2503.20 3114.57 611.37

Sundry Debtors 2467.39 934.79 1532.6

Cash and Bank 1290.71 1383.35 92.64


Total of Current Assets (A) 8167.50 10725.94



Provisions 127.90 289.62 161.72

Total of Current Liabilities (B) 3509.59 3922.48


increasing in Working Capital 2145.55 2145.55

TOTAL 6803.46 6803.46 4216.8 4216.8



(+) (-)

A) Current Assets

Inventories 2889.51 3971.09 1081.58

Sundry Debtors 1866.11 2531.00 664.89


Cash and Bank 1576.48 12012.16 10435.68


Total of Current Assets

(A)

9774.91 27336.93



Provisions 566.86 1373.63 806.77

Total of Current

Liabilities (B)

6586.95 14506.18


Net increase in

Working Capital

9642.82 9642.82

TOTAL 12830.78 12830.78 17561.27 17561.27



(+) (-)

A) Current Assets

Inventories 3971.01 6071.35 2100.34

Sundry Debtors 2531.00 2640.09 109.09

Cash and Bank 12012.16 4773.47 7238.69



Total of Current Assets

(A)

27336.1 24288.00



Provisions 1373.63 2734.18 1360.55

Total of Current

Liabilities (B)

14506.18 25214.04

Working Capital (A-B) 12829.92 -926.04

decreasing in Working

Capital

13755.96 13755.96

TOTAL 12829.92 12926.04 112816.25 112816.04

5. STATEMENT OF CHANGES IN WORKING CAPITAL (2008-09)


(+) (-)

A) Current Assets

Inventories 6071.35 4378.43 ` 1692.92

Sundry Debtors 2640.09 3922.79 1282.7

Cash and Bank 4773.47 21081.89 18441.8


Total of Current Assets 24288.00 36866.00


(A)



Provisions 2734.18 4921.17 2186.99

Total of Current

Liabilities (B)

25214.04 24366.35

Working Capital (A-B) -926.04 12499.65

Net increase in

Working Capital

13425.69 13425.69

TOTAL 12499.65 12499.65 20625.80 20625.80

DATA ANALYSIS AND INTERPRETATION

LIQUIDITY RATIOS:

1. CURRENT RATIO:

Current ratio is calculated by dividing the current assets by current Liabilities.

Current assets include cash and those assets that can be converted into cash Within a year,

such as marketable securities, debtors and inventories prepaid expenses Also includes in

current assets current liabilities include creditors, bills payable, arrived

Expenses, short term bank loan, income tax liability and long term debt maturing in the

Current year.


Current ratio represents a margin of safety for creditors. Current ratio of 2 to 1 or

more is considered satisfactory. The higher the current ratio the greater the margin of safety.

The larger the amount of current assets in ratio to current liabilities the more the

firms ability to meet its current obligations.

Data:

YEARCURRENT

ASSETS

CURRENT

LIABILITES

CURURRENT RATIO

(Rs in lakhs)

2004-2005 8167.50 3509.59 2.32

2005-2006 10725.94 3922.48 2.73

2006-2007 27336.1 14506.18 1.88

2007-2008 24288.00 25214.04 0.96

2008-2009 36866.00 24366.35 1.51

Table-1

FACTORS

YEAR 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009CURRENT RATIO

2.32 2.73 1.88 0.96 1.51


Graph No-1

Interpretation:

From the year 2005-2009 the zuari cement industry current ratio is 2.327,

2.734 ,1.884,0.963,1.512.From the first year of the current ratio is satisfactory above three

year the current ratio is less than 2:1 it indicate that the firm doesn’t have liquidity position .

QUICK RATIO (or) ACID TEST RATIO:

Quick Ratio establishes a relationship between quick or liquid,

Assets and liabilities. An asset a Liquid if it can be converted into cash immediately.

Inventories are considered to be less liquid. The quick ratio is found out by dividing

Quick assets by current liabilities. A quick ratio of 1 to 1 is considered to represent

A satisfactory current financial condition.

Quick Ratio =(Current assets-Inventories)/Current liabilities

Data:

YEAR QUICK ASSETS

CURRENT LIABILITES

QUICK RATIO(Rs in lakhs)

2004-2005 4657.91 3509.59 1.61

2005-2006 7611.37 3922.48 1.94

2006-2007 23365.09 14506.18 1.61

2007-2008 18216.65 25214.04 0.72

2008-2009 32487.57 24366.35 1.33

Table-2

FACTORS

YEAR 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009QUICKRATIO

1.61 1.94 1.61 0.72 1.33


Graph No-2

Interpretation:

During the year 2005-09 the quick ratio of the zuari cements is 1.63,

1.94, 1.61,0.72, 1.33.from the first 3 year and last year was satisfied but 2008 year

was not satisfy.

CASH RATIO:

Cash is the most liquid asset. A financial analyst may examine cash ratio and

It’s Equivalent to current liabilities. Trade investment or marketable securities are

Equivalent of cash. The standard ratio is 0.5:1 or 50:100(%).

CASH RATIO= (Cash+ Marketable Securities)/Current Liabilities

Data:

YEAR CashCURRENT

LIABILITES

Cash RATIO

(Rs in lakhs)

2004-2005 1290.71 3509.59 0.36

2005-2006 1383.35 3922.48 0.35

2006-2007 12012.16 14506.18 0.82Working Capital Management - 42 -

2007-2008 4793.47 25214.04 0.18

2008-2009 21081.81 24366.35 0.86

Table-3

FACTORS

YEAR 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009QUICKRATIO

0.36 0.35 0.82 0.18 0.86

Graph No-3

Interpretation:

During the period 2005-09 the cash ratio position of zuari cement was 0.36, 0.35,

0.82, 0.18, 0.86.the standard cash ratio is 0.5:1. regarding in the year 2007 -0.8,2009-0.9 and

the reaming year 2005-0.36,2006-0.35 and 2008 – 0.2 .it explain that 2007 and 2008 the firm

is the having the liquidity position and during year 2005 ,2006 and 2008 the firm doesn’t

have the minimum standard ratio of liquidity position .

NET WORKING CAPITAL RATIO:

The difference between current assets and current liabilities excluding short term

Bank barrowing is called net working capital or net current assets. Net working capital

Ratio is some times used as measure of a firm’s liquidity. It is considered that between Two

firms. The one having the larger networking capital has the greater ability to meet its current

obligations.Working Capital Management - 43 -

Net working capital ratio = current assts-current liabilities

Data:

YEAR Current assetsCurrent liabilities

Net working capital ratio

(Rs in lakhs)

2004-2005 8167.50 3509.59 4657.91

2005-2006 10725.94 3922.48 6803.46

2006-2007 27336.1 14506.18 12829.92

2007-2008 24288.00 25214.04 -926.04

2008-2009 36866.00 24366.35 12499.65

Table No-4

FACTORS

YEAR 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009

Net working

Capital Ratio4657.91 6803.46 12829.92 -926.04 12499.65


Graph No-4

Interpretation:

From the year 2005-4657.09,2006-6803.46,2007- 12829.92, 2008—

926.04,and 2009- 12499.65. it indicates that from the year 2005-2007 The net working

capital is increased, in the year 2008 the firm doesn’t have the net working capital and in

the year 2009 the firm they recollects the net working capital.

II. LEVERAGE RATIOS:

Financial leverage refers to the use of debt finance leverage ratio’s help in

Assessing the risk arising from the use of debt capital. To judge the long-term

Financial position of the firm, financial leverage ratios are calculated the ratios

Indicate Mix of funds provided by owners and lenders.

1. DEBT EQUITY RATIO:

Debt equity ratio tells the relation ship between total debt and capital owned. It is

Ratio of amount invested by outsiders to the amount invested by the shareholders. This ratio

reflects the relative claims of share holders and creditors against the assets of the company. A

high ratio shows the creditors have invested more in the business Than shareholders greater

the debt shows the creditors have invested more in the Business than shareholders grater the

debt equity ratio, the greater the risk to the Creditors. In Indian financial institutions usually

permit debt equity of 2:1 i.e. is Rs.200 by way of long-term loans for every Rs.100 promoters

Equity.

Debt equity ratio = Total debt / Net worth

Net worth = Capital + reserves


Data:

YEAR Total debt Net worth

Debt equity ratio

(Rs in lakhs)

2004-2005 27198.44 64698.00 0.42

2005-2006 25196.68 64698.07 0.38

2006-2007 5659.63 80846.56 0.07

2007-2008 5141.16 100619.28 0.05

2008-2009 4360.00 117583.23 0.03

Table No-5

FACTORS

YEAR 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009

DEBT EQUITY

RATIO

0.42 0.38 0.07 0.05 0.03

Graph No-5

Interpretation:

Higher the debt equity ratio indicates in flexibility of operation. During the

year 2005-2009 the debt equity ratio is 0.42, 0.38 0.07, 0.05, and0.03. the debt equity ratio of


zuari cements is decreases from the year 2005-2009 it implies that the firm in the position of

flexible operation.

TOTAL DEBT RATIO:

Debt ratios are used to analyze the long term solvency of a firm. Total debt

Indicates the short and long term borrowings. The firm may be interested in knowing the

Proportion of the interest bearing debt in the capital structure. It may therefore compute the

debt ratio by following formula.

Total Debt Ratio=Total debt/capital employed

Total debt= Secured loans + UN secured loans.

Capital employed = total debt + Net worth

Data:

YEAR Total debt Capital employed Total Debt ratio

(Rs in lakhs)

2004-2005 27198.44 91896.51 0.29

2005-2006 25196.68 89896.69 0.28

2006-2007 5659.63 102960.85 0.21

2007-2008 5141.16 130708.68 0.12

2008-2009 4360.00 181385.48 0.02

Table No-6

FACTORS

YEAR 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009

TOTAL DEBT

RATIO0.29 0.28 0.21 0.12 0.02


Graph No-6

Interpretation:

During the year 2005-2009 the debt ratio of 0.70, 0.72, 0.78, 0.88, and

0.97 increased. The firm having the higher debt ratio for 2005-2009.

TOTAL LAIBILITY RATIO

While contribution the leverage ratios to the current liabilities are excluded even

through it is one of the important elements in the balance sheet and it creates short term

liability to the firm.

One may like to introduce these current liabilities for computation leverage

rations on the ground that they are important determinates of the firms financial risk. They

represent obligation and exert pressure on the firm and restrict its activities. This ratios is

calculated by dividing the total liabilities by total assets.

Total liability ratio = total liabilities / total assets

YEAR Total liabilities Total Assets Total liability

(Rs in lakhs)

2004-2005 3509.59 98086.04 0.035


2006-2007 14506.18 114240.92 0.126

2007-2008 25214.04 120001.83 0.210

2008-2009 24366.35 135594.3 0.179

Table No-7

FACTORS

YEAR 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009

TOTAL DEBT

RATIO0.035 0.038 0.126 0.210 0.179

Graph No-7

Interpretation:


In the zuari cements from the 2005-2009 the liability ratio is increases it

indicates that insufficient utilization of asset value

CAPITAL EMPLOYED TO NETWORTH RATIO:

It is also called “equity ratio”. It indicated the proportion of total assets

financial by owners. This ratio establishers the relation ship between capital employed net

worth of the firm. The ratio of capital employed is an important ratio for determining long

term solvency. This ratio is also called proprietary to total equity or net worth to total assets

ratio.

EQUITY RATIO = CAPITAL EMPLOYED / NETWORTH.

CAPITAL EMPLOYED = TOTAL DEBT + NETWORTH

Data:

YEARCapital

employedNETWORTH

CAPITAL EMPLOYED

TO NETWOTH RATIO

(Rs in lakhs)

2004-2005 91896.51 64698.00 0.593

2005-2006 89896.69 64698.07 0.594

2006-2007 102960.85 80846.56 0.898

2007-2008 130708.68 100619.28 0.557

2008-2009 181385.48 117583.23 0.538

Table No-8

FACTORS

YEAR 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009


Capital

employed to

net worth

ratio

0.593 0.594 0.898 0.557 0.538

Graph No-8

Interpretation:

During the year from 2005-2007 the capital employed to net worth ratio is

0.593, 0.594, 0.898,and apart two years of 2008-0.557and 2009-0.5386 capital employed to


III. ACTIVITY RATIOS:

Activity ratios are employed to evaluate the efficiency with which the firm

managers and utilizes its assets. These ratios are also called Turnover Ratio’s. Because they

indicated the speed with assets are being converted into sales.

INVENTORY TURNOVER RATIO (or) STOCK TURNOVER RATIO:


Inventory turnover ratio is a measure of liquidity. It indicates the speed at which the

inventory is sold out. A high turnover ratio indicates that the inventory is out Fast and a low

turnover ratio show a sale of inventory. This ratio indicates the Efficiency of the firm in

selling its products.

Stock turnover ratio=Cost of goods sold / average inventory

Data:

YEARCapital goods

soldAverage

Inventory

Inventory turnover ratio

(Rs in lakhs)2004-2005 27861.02 2392.56 11.64

2005-2006 16825.32 2808.88 5.99

2006-2007 36172.58 3430.26 10.54

2007-2008 46374.89 5021.18 9.23

2008-2009 40612.42 5224.89 7.77

Table No-9

FACTORS

YEAR 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009

Inventory

turnover ratio

11.64 5.99 10.54 9.23 7.77


Graph No-9

Interpretation:

The inventory turn over ratio shows how rapidly the inventory is

turning into receivable through sales a high inventory turn overt is indicative of good

inventory management. In zuari cement from the fast two years the inventory management is

not well in position the remaining three years 2007-34013, 2008-39097, 2009-46.3 increases.

In the three years zuari cement inventory management is well in position.

WORKING CAPITAL TURNOVER RATIO:

Working capital turnover ratio shows the efficiency of business operations is also

judged by the capital invested to sales. Working capital turnover ratio indicates the utilization

of Working capital and the number of times that the working capital turnover during the year

the better is the utilization of resources of working capital.

Working capital turnover ratio=sales / working capital

Data:

YEAR SalesNet working

capital

Working capital ratio

(Rs in lakhs)

2004-2005 39889.97 4657.91 8.56

2005-2006 47306.18 6803.46 6.95


2006-2007 116900.24 12829.92 9.11

2007-2008 137728.95 -926.04 14.87

2008-2009 120946.74 12449.65 9..71

Table No-10

FACTORS

YEAR 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009

Working

capital ratio

8.56 6.95 9.11 14.87 9..71

Graph No-10

Interpretation:

The Among the year 2005-09 the working capital turn over ratio of the firm is

fluctuate from the first year it may acquire better position and the next year it was decrease

and in the year 2008 it will go to losses and then it will recollect it’s position in the year 2009


FIXED ASSETS TURNOVER RATIO:

The firm may wish to know its efficiency of utilizing fixed assets and

Current assets separately.

Fixed assets turnover=sales / Net fixed assets

Current assets turnover ratio=sales / current assets

Data:

YEAR Sales Fixed assetsFixed assets turnover ratio

(Rs in lakhs)

2004-2005 39889.97 33762.33 1.18

2005-2006 47306.18 31668.8 1.49

2006-2007 116900.24 59832.78 1.95

2007-2008 137728.95 55186.77 2.49

2008-2009 120946.74 50.831.08 2.37

Table No-11

FACTORS

YEAR 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009

Fixed assets

turnover

ratio

1.18 1.49 1.95 2.49 2.37

Graph No-11Working Capital Management - 55 -

Interpretation:

Among the year 2005-2009 the fixed asset turn over ratio of the firm is

increased from the first four years and then the nest year 2009 it may decreases. From these

the previous year the firm may not satisfied.

TOTAL ASSETS TURNOVER RATIO:

The total assets turnover ratio shows the firms ability in

generation sales from All financial resources committed to total assets. Total assets include

net fixed Assets and current assets.

TOTAL ASSETS TURNOVER RATIO=SALES / TOTAL ASSETS.

Data:

YEAR Sales Total assets

Total Assets Turnover

ratio (Rs in lakhs)

2004-2005 39889.97 61777.57 0.6463

2005-2006 47306.18 64931.9 0.7285

2006-2007 116900.24 117019.81 0.9989

2007-2008 137728.95 115827.87 1.1890

2008-2009 120946.74 131329.86 10.058

Table No-12

FACTORS

YEAR 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009

Fixed assets

turnover ratio 0.6463 0.7285 0.9989 1.1890 10.058


Graph No-12

Interpretation:

During the year 2005-20009 the total asset turn over ratio of the firm is increased

rapidly then the firm got better position in the year 2009-10.0582 then the previous four

years. Finally the total asset turn over ratio of the firm is satisfactory level.

DEBTORS TURNOVER RATIO:

The ratio is a test of liquidity of firm and it measures how fast the debtors are

converted into cash in year. The higher the turnover ratio and lower the collection period.

The better is the liquidity of the firm.

DEBTORS TURNOVER RATIO = CREDIT SALES / DEBTORS

Data:

YEAR Sales Debtors Debtors Turnover


ratio (Rs in lakhs)

2004-2005 39889.97 2467.39 16.16

2005-2006 47306.18 934.79 50.60

2006-2007 116900.24 2531.00 46.18

2007-2008 137728.95 2640.09 52.16

2008-2009 120946.74 3922.79 30.83

Table No-13

FACTORS

YEAR 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009

Debtors

turnover ratio 16.16 50.60 46.18 52.16 30.83

Graph No-13

Interpretation:

During the year 2005-2009 the debtors turn over ratio is fluctuated in

the year 2005 it was not satisfied and 2006 it may got high turn over with the 50.606 and


again it was decrease in the year 2008. it was un high turn over with 52.168 and again it’s

may leads to unsatisfactory level.

CAPITAL EMPLOYED OR NET ASSET TURN OVER RATIO :

A firm ability to generate a large volume of sles for a given amount of net assets

is most important aspect of the operating performance. The unutilized of underutilized assets

increase the firms need for costly financing as well as expenses for maintenance and upkeep.

This net assets turnover ratio should be interpreted cautiously.

The net assets turnover ratio can be calculated as sales divided by net assets where net

assets includes net fixed assets, net current assets.

Capita employed turnover or net assets turnover=sales/net assets

Data:

YEAR Sales Net assets

Net assets turnover

ratio

(Rs in lakhs)

2004-2005 39889.97 41420.24 0.96

2005-2006 47306.18 38472.3 1.22

2006-2007 116900.24 72662.73 1.60

2007-2008 137728.95 72662.73 1.89

2008-2009 120946.74 63330.73 19.09

Table No-14

FACTORS

YEAR 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009

Net assets

turnover ratio 0.96 1.22 1.60 1.89 19.09


Graph No-14

Interpretation:

Higher the operating profit ratio performance in zuari cement is increased rapidly

from the year 2005-09 with 99.3018,99.6440,99.6906,99.6633,99.6643 fjrom these the firm

may satisfied with these operating profit ratio.

CURRENT ASSETS TURNOVER RATIO:

Current assets turnover ratio is measured to know the firm’s efficiency of

utilizing of investments in current assets.

The current assets turnover ratio can be calculated as sales divided by current

assets include inventory, debtors, cash & bank balance, other current assets, loans and

advances.

Generally a high current assets turnover ratio indicates efficient utilization of

current assets in generating sales and if the ratio is low then it can be said inefficient

utilization of current assets.

Current assets turnover ratio=sales/current assets

YEAR Sales Current assets Current assets


turnover ratio

(Rs in lakhs)

2004-2005 39889.97 8167.50 4.883

2005-2006 47306.18 10725.94 4.410

2006-2007 116900.24 27336.1 4.276

2007-2008 137728.95 24288.00 5.670

2008-2009 120946.74 36866.00 3.280

Table No-15

FACTORS

YEAR 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009

Current assets

turnover ratio 4.883 4.410 4.276 5.670 3.280

Graph No-15

Interpretation:


Current assets turnover ratio

0

1

2

3

4

5

6

2004-2005 2005-2006 2006-2007 2007-2008 2008-2009

years

per

cen

tag

e

From the year 2005-09 the current asset turn over ratio from the 3

years 2005-07 is decreased and it again recover in 2008. it increases with 5.6706 and again

decreases in 2009-3.280.

PROFITABILITY RATIO’S:

Profitability ratio’s are calculated to measure the operating efficiency of the

company. Besides management of the company, creditors and owners are also interested in

the profitability of Firm. Creditors want to get interest and Repayment of principal regularly.

Owners want to get a required rate of return on their investment. This is possible only when

the company earns enough Profits.

Generally two major types of profitability ratios.

They are calculated

Profitability in relation to sales.

Profitability in relation to investment.

GROSS PROFIT RATIO:

The gross profit ratio indicates the extent to which sales of goods per unit may

Decline with out May loss in the operations of the firm. This is also known as “Gross profit

Margin” (or) Gross profit margin on sales. The gross profit is the difference between sales

and Cost of goods sold.

GROSS PROFIT RATION=GROSS PROFIT / SALES *100

Data:

YEAR GROSS PROFIT SALESGross profit ratio

(Rs in lakhs)

2004-2005 21028.95 39889.97 30.15

2005-2006 31080.16 47306.18 64.87


2006-2007 80727.66 116900.24 69.05

2007-2008 91354.06 137728.95 63.01

2008-2009 80333.32 120946.74 66.42

Table No .16

FACTORS

YEAR 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009

Gross profit

ratio 30.15 64.87 69.05 63.01 66.42

Graph No-16

Interpretation:

From the year 2005-2009 the firm may fluctuated position in the beginning year

the satisfactory level of the firm is low and then it will recollect it’s position from the next

four years it may got the better position the firm is satisfied.


NET PROFIT RATIO:

Net profit is obtained when operating expenses, Interest and taxes are Subtracted

from the gross profit. The net profit margin ratio is measured by Dividing profit after tax by

sales. The ratio also indicates the firm’s capacity To withstand adverse economic conditions.

NET PROFIT MARGIN=PROFIT AFTER TAX / SALES*100

Data:

YEAR profit after tax SalesNet profit Ratio

(Rs in lakhs)

2004-2005 2104.92 39889.97 5.27

2005-2006 2265.11 47306.18 4.78

2006-2007 18057.74 116900.24 15.44

2007-2008 19772.72 137728.95 14.35

2008-2009 16963.95 120946.74 14.02

Table No-17

FACTORS:

YEAR 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009

profit after

tax5.27 4.78 15.44 14.35 14.02


Graph No-17

Interpretation:

During the year 2005-2009the net profit ratio of zuari cements is fluctuated in the

year 2005 the capacity of the net profit ratio 5.2768 and then it decreases in 2006. in the year

2007 the firm got highest net profit ratio then the previous two years and again the nest two

years2008 and 2009 it may some what decrease..

OPERATING EXPENSES RATIO:

Operating expenses ratio is very important for analyzing the profitability if the firm.

It should be compared over a period of time with industry average as well as firms or

Similar type.

The operating expenses ratio explains the change in the profit margin ratio. The

Ratio is computed by dividing operating expenses by sales.

OPERATING EXPENSES RATIO=OPERATING EXPENSES / SALES:


Data:

YEAROperating

expensesSales

Operating expenses

Ratio (Rs in lakhs)

2004-2005 27861.02 39889.97 0.698

2005-2006 16825.32 47306.18 0.355

2006-2007 36172.58 116900.24 0.309

2007-2008 46374.89 137728.95 3.336

2008-2009 40613.42 120946.74 0.335

Table No-18

FACTORS:

YEAR 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009

Net profit

Ratio

0.698 0.355 0.309 3.336 0.335

Graph No-18

Interpretation:

Higher the operating expense ratio indicates in inefficient performance firm operation

if operating excess increases the from losses their working capital in the zuari in the year

2005.the operating expenses ratio is 0.6982 and the remaining years i.e 2006-2009. the Working Capital Management - 66 -

operating expenses ratio is decreases it indicates that the firm performance is well in their

operations .

OPERATING PROFIT RATIO:

The operating profit can be calculated by dividing operating profit by

net sales. The operating profit includes net profit=non operating expenses (interest to be paid,

income tax, loss on of asset) or gross profit minus operating expenses (administrative and

selling expenses).

Return on capital employed=100- operating expenses ratio

Data:

YEARoperating

expenses ratio

Operating profit

Ratio (Rs in lakhs)

2004-2005 0.698 99.301

2005-2006 0.355 99.644

2006-2007 0.309 99.690

2007-2008 3.336 99.663

2008-2009 0.335 99.664

Table No-19

FACTORS:

YEAR 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009

Operating

profit Ratio

99.301 99.644 99.690 99.663 99.664


Graph No-19

Interpretation:

Higher the operating prfit ratio performance in zuari cement is increased rapidly

from the year 2005-09 with 99.3018, 99.6440,99.6906, 996633,99.6643 from these the firm

may satisfied with these operating profit ratio.

RETURN ON SHAREHOLDER EQUITY RATIO:

Ordinary share holders are entitled to the residual profit a return on share

Holder’s equity is calculated to see the profitability of owner’s investment. Return on equity

in cash how the firm is has used the resources of owners. The earning of a satisfactory return

is the most desirable objective business.

RETURN OF SHAREHOLDER EQUITY RATIO = PROFIT AFTER TAX / SHARE

HOLDER EQUITY * 100

Data:

YEAR profit after

tax

share holders

equity

ROE Ratio

(Rs in lakhs)

2004-2005 2104.92 42796.14 4.91

2005-2006 2265.11 42796.14 5.29

2006-2007 18057.74 42796.14 42.10


2008-2009 16963.95 42796.14 39.63

Table No-20

FACTORS:

YEAR 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009

ROE Ratio4.91 5.29 42.10 46.20 39.63

Graph No-20

Interpretation:

Wealth maximization is the one of the most important objective in the financial


0.21,2008-0.462 increase and in the year 2009-0.396 the share holder equity will decreases.

EARNING PER SHARE;

Earning per share is a small variation of return on equity capital and

is calculated by dividing the net profit after tax and preference divided by the total number of

equity shares.

Earning per share= net profit (after tax ) / no. of equity share

Data:

YEAR Net profit No. of equity

share

Earning per share


Ratio

(Rs in lakhs)

2004-2005 2104.92 42796.14 0.049

2005-2006 2265.11 42796.14 0.052

2006-2007 18057.74 42796.14 0.42

2007-2008 19772.72 42796.14 0.46

2008-2009 16963.95 42796.14 0.396

Table No-21

FACTORS:

YEAR 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009

Earning per

share Ratio 0.049 0.052 0.42 0.46 0.46

Graph No-21

Interpretation:

Higher the earning per share value is indicate well performance of firm

operation from the year 2005-2009 the zuari cement earning per shares value is fluctuated.


EARNING PER SHARE

0

0.1

0.2

0.3

0.4

0.5

2004-2005 2005-2006 2006-2007 2007-2008 2008-2009

years

pe

rce

nta

ge

FINDINGS

Note:

22. From the year 2005-2009 the zuari cement industry current ratio is 2.327,

2.734 ,1.884,0.963,1.512.From the first year of the current ratio is satisfactory above

three year the current ratio is less than 2:1 it indicate that the firm doesn’t have

liquidity position .

23. During the year 2005-09 the quick ratio of the zuari cements is 1.63, 1.94, 1.61,0.72,

1.33.from the first 3 year and last year was satisfied but 2008 year was not satisfy.

24. During the period 2005-09 the cash ratio position of zuari cement was 0.36, 0.35,

0.82, 0.18, 0.86.the standard cash ratio is 0.5:1. regarding in the year 2007 -0.8,2009-

0.9 and the reaming year 2005-0.36,2006-0.35 and 2008 – 0.2 .it explain that 2007

and 2008 the firm is the having the liquidity position and during year 2005 ,2006 and

2008 the firm doesn’t have the minimum standard ratio of liquidity position .

25. From the year 2005-4657.09,2006-6803.46,2007- 12829.92, 2008—926.04,and 2009-

12499.65. it indicates that from the year 2005-2007 The net working capital is

increased, in the year 2008 the firm doesn’t have the net working capital and in the

year 2009 the firm they recollects the net working capital.

26. Higher the debt equity ratio indicates in flexibility of operation. During the year

2005-2009 the debt equity ratio is 0.42, 0.38 0.07, 0.05, and0.03. the debt equity ratio


of zuari cements is decreases from the year 2005-2009 it implies that the firm in the

position of flexible operation.

27. During the year 2005-2009 the debt ratio of 0.70, 0.72, 0.78, 0.88, and 0.97 increased.

The firm having the higher debt ratio for 2005-2009.

28. In the zuari cements from the 2005-2009 the liability ratio is increases it indicates tha

insufficient utilization of asset value

29. During the year from 2005-2007 the capital employed to net worth ratio is 0.593,

0.594, 0.898,and apart two years of 2008-0.557and 2009-0.5386 capital employed to


30. The inventory turn over ratio shows how rapidly the inventory is turning into

receivable through sales a high inventory turn overt is indicative of good inventory

management. In zuari cement from the fast two years the inventory management is

not well in position the remaining three years 2007-34013, 2008-39097, 2009-46.3

increases. In the three years zuari cement inventory management is well in position.

31. The Among the year 2005-09 the working capital turn over ratio of the firm is

fluctuate from the first year it may acquire better position and the next year it was

decrease and in the year 2008 it will go to losses and then it will recollect it’s position

in the year 2009

32. Among the year 2005-2009 the fixed asset turn over ratio of the firm is increased

from the first four years and then the nest year 2009 it may decreases. From these the

previous year the firm may not satisfied.

33. During the year 2005-20009 the total asset turn over ratio of the firm is increased

rapidly then the firm got better position in the year 2009-10.0582 then the previous

four years. Finally the total asset turn over ratio of the firm is satisfactory level.

34. During the year 2005-2009 the debtors turn over ratio is fluctuated in the year 2005 it

was not satisfied and 2006 it may got high turn over with the 50.606 and again it was

decrease in the year 2008. it was un high turn over with 52.168 and again it’s may

leads to unsatisfactory level.

35. Higher the operating profit ratio performance in zuari cement is increased rapidly

from the year 2005-09 with 99.3018,99.6440,99.6906,99.6633,99.6643 fjrom these

the firm may satisfied with these operating profit ratio.


36. From the year 2005-09 the current asset turn over ratio from the 3 years 2005-07 is

decreased and it again recover in 2008. it increases with 5.6706 and again decreases

in 2009-3.280.

37. From the year 2005-2009 the firm may fluctuated position in the beginning year the

satisfactory level of the firm is low and then it will recollect it’s position from the

next four years it may got the better position the firm is satisfied.

38. During the year 2005-2009the net profit ratio of zuari cements is fluctuated in the

year 2005 the capacity of the net profit ratio 5.2768 and then it decreases in 2006. in

the year 2007 the firm got highest net profit ratio then the previous two years and

again the nest two years2008 and 2009 it may some what decrease..

39. Higher the operating expense ratio indicates in inefficient performance firm operation

if operating excess increases the from losses their working capital in the zuari in the

year 2005.the operating expenses ratio is 0.6982 and the remaining years i.e 2006-

2009. the operating expenses ratio is decreases it indicates that the firm performance

is well in their operations .

40. Higher the operating prfit ratio performance in zuari cement is increased rapidly from

the year 2005-09 with 99.3018, 99.6440,99.6906, 996633,99.6643 from these the

firm may satisfied with these operating profit ratio.

41. Wealth maximization is the one of the most important objective in the financial


0.21,2008-0.462 increase and in the year 2009-0.396 the share holder equity will

decreases

42. Higher the earning per share value is indicate well performance of firm operation

from the year 2005-2009 the zuari cement earning per shares value is fluctuated


SUGGESTIONS

4. The Company should maintain minimum idle working capital and ultimately it

reduces interest burden of organization and it will help to improve profitability of the

organization.

5. It is suggested to company to maintain good relationship for creditors to pay the

credits with in period. It helps to increase the funds by the creditors.

6. Better utilization of sources of funds is suggested for getting maximum benefits


PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 ST DECEMBER, 2005

Rs in lakhs

Particulars 2005 2004

Income

Sales (Gross) 39,889.97 35,851.44

Less : Excise Duty 7,284.81 6,830.29

Sales (Net) 32,605.16 29,021.15

Other Income 419.40 236.60

33,024.56 29,257.75

Expenditure

Purchase of finished goods for resale 1,574.29 155.08

Manufacturing and other expenses 28,082.30 25,591.08

Depreciation 2,839.05 2,839.05

Interest and other finance charges 2,333.38 2,949.46

Decrease in stocks of work-in-process and

finished goods 92.77 459.71

34,921.99 32,005.66

Loss before extraordinary item 1,897.43 2,747.91

Extraordinary Item – Compensation paid to

employees under Voluntary Retirement and

Others Scheme 207.49

Loss for the year 2,104.92 2,747.91

Debit balance brought forward from previous

year 14,504.26 11,756.35

Debit balance carried to balance sheet 16,609.18 14,504.26


BALANCE SHEET AS ON 31 st DECEMBER, 05

Rs in lakhs

Particulars 2005 20041. Sources of Funds :

Share Capital 42,796.14 42,796.14

Reserve & Surplus 21,901.93 21,901.93

64,698.07 64,698.07

Loans Funds :

Secured Loans / Funds 17,431.03 19,018.51

Unsecured Funds 9,767.41 9,070.5127,198.44 28,089.02

Total 91,896.51 92,787.09

2. Application of Funds:

Fixed Assets

Gross Block 53,550.07 53,331.94

(-) Dep. 19,787.74 16,982.13Net Block 33,762.33 36,349.61

Capital work in progress 140.42 128.23

33,902.75 36,477.84Investments 36,557.57 36,525.14

Current assets, loans & advances :

Inventories 2,503.20 2,281.92

Sundry Debtors 2,467.39 3,109.72

Cash & Bank Balances 1,290.71 1,716.40

Loans & Advances 1,906.20 1,771.46

8,167.50 8,879.50

Current Liabilities & Provisions :

Current Liabilities 3,381.69 3,827.41

Provisions 127.90 50.433,509.59 3,877.84

Net Current Assets 4,657.91 5,001.66

Miscellaneous Expenditure 169.10 278.19

Profit and Loss Account 16,609.18 14,504.26Total 91,896.51 92,787.09

PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 ST DECEMBER, 2006


Rs in lakhs


Income

Sales (Gross) 47,306.18 40,166.84

Less : Excise Duty 7,616.56 7,284.19

Sales (Net) 39,689.62 32,882.65


40,147.03 33,295.20

Expenditure

Purchase of finished goods for resale 3,288.27 1,574.49

Manufacturing and other expenses 29,552.25 28,359.17


Interest and other finance charges 2,234.88 2,333.38

(Increase)/Decrease in stocks of work-in-

process and finished goods (244.60) 86.54

37,690.57 35,192.63

Profit / (Loss) for the year 2,456.46 (1,897.43)

Provision for Tax

Current Tax -- --

Fringe Benefit Tax 65.00 --

Profit / (Loss) for the year 2,265.11 (2,104.92)

Debit balance brought forward from previous

year(16,609.18) (14,504.26)

Debit balance carried to balance sheet 14,344.07 16,609.18

BALANCE SHEET AS ON 31 ST DECEMBER,2006

Rs in lakhs



1. Sources of Funds :

Share Capital 42,796.14 42,796.14

Reserve & Surplus 21,901.93 21,901.9364,698.07 64,698.07

Loans Funds :


Unsecured Funds 9,868.55 9,767.4125,198.68 27,198.44

Total 89,896.69 91,896.512. Application of Funds :

Fixed Assets

Gross Block 54,205.96 53,550.07

(-) Dep. 22,537.12 19,787.74Net Block 31,668.84 33,762.33

Capital work in progress 289.62 140.4231,958.46 33,902.75

Investments 36,723.60 36,557.57


Inventories 3,114.57 2,503.20

Sundry Debtors 934.79 2,467.39

Cash & Bank Balances 1,383.35 1,290.71

Loans & Advances 5,284.23 1,906.20

10,725.94 8,167.50


Current Liabilities 3,758.62 3,38169

Provisions 289.62 127.90

3,922.48 3,509.59


Miscellaneous Expenditure 67.10 169.10

Profit and Loss Account 14,344.07 16,609.18

Total 89,896.69 91,896.51

PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 ST DEC, 2007

Rs. in lakhs


Particulars 2007(Amalgamated) 2006

Income

Sale of manufactured goods 1,16,900.24 47,905.48

Less : Excise Duty 17,521.32 6,388.76

99,378.92 41,516.72

Sale of traded goods - 2,404.44

Other Income 1,832.29 432.61

1,01,211.21 44,353.77

Expenditure

Cost of goods sold 36,172.58 16,825.32

Personnel cost 3,604.81 1,777.200

Other expenses 25,119.28 9,234.53


Amortisation of goodwill 1,7,99.20 --

Interest and other finance cost 950.93 871.49

72,851.03 30,908.95

Profit before tax 28,360.18 13,444.82

Provision for tax 6,542.84 982.00

- Current tax (982.00) -

- MAT credit of earlier years (713.59) -

- fringe benefit tax 115.83 28.00

- deferred tax charge 5,339.36 -

Profit for the year 18,057.74 12,434.82

Debit balance in Profit and Loss account

brought forward (1,909.25) (14,344.07)

Balance in Profit & Loss account carried

forward

16,148.49 (1,909.25)BALANCE SHEET AS ON 31 st DEC 2007

Rs. in lakhs

Particulars 2007(Amalgamated) 2006



Share Capital 42,796.14 42,796.14

Reserve & Surplus 38,050.42 21,901.93

80846.56 64,698.07

Loans Funds :


Unsecured Funds 12,286.48 8,943.65Deferred tax liability 5,659.63 ---------

22,114.29 15,704.14

Total 1,02,960.85 80402.212. Application of Funds :

Fixed Assets

Gross Block 89,683.71 53,811.03

(-) Dep. 29,850,93 24,043.25Net Block 59,832.78 29,767.78

Capital work in progress 320,247.06 3,453.60

80,079.84 33,221.38Investments 10,051.06 42,083.62


Inventories 3971.01 2889.51

Sundry Debtors 2531.00 1866.11

Cash & Bank Balances 12012.16 1576.48

Loans & Advances 8821.93 3442.8127336.1 9774.91


Current Liabilities 131132.52 6020.09

Provisions 1373.63 566.86

14506.18 6586.95


Profit and Loss Account ----------- 1,909.25

Total 1,02,960.85 80402.21


Rs. in lakhs


Income


Sale of manufactured goods 116900.24 137728.95

Less : Excise Duty 17521.32 20207.11

99,378.92 117521.84

Sale of traded goods - 2,404.44

Other Income 1,832.29 1807.18

1,01,211.21 119329.02

Expenditure

Cost of goods sold 36,172.58 46374.89

Personnel cost 3,604.81 4030.09

Other expenses 25,119.28 29017.00

Depreciation 5,204.23 5377.68

Amortisation of goodwill 1,7,99.20 1799.20


72,851.03 87133.05

Profit before tax 28,360.18 32195.97

Provision for tax 6,542.84 12881.45

- Current tax (982.00) -

- MAT credit of earlier years (713.59) -


- deferred tax charge 5,339.36 518.20

Profit for the year 18,057.74 19772.72


brought forward (1,909.25) (16148.49)


forward

16,148.49 (35921.21)

BALANCE SHEET AS ON 31 st DEC 2008

Rs. in lakhs



Share Capital 42,796.14 42,796.14


Reserve & Surplus 38,050.42 57823.14

80846.56 100619.28

Loans Funds :

Secured Loans / Funds 4,168.45 10342.31

Unsecured Funds 12,286.48 14605.93Deferred tax liability 5,659.63 5141.16

22,114.29 15,704.14

Total 1,02,960.85 130708.682. Application of Funds :

Fixed Assets

Gross Block 89,683.71 91539.87

(-) Dep. 29,850,93 36353.10Net Block 59,832.78 55186.77

Capital work in progress 320,247.06 71347.95

80,079.84 126534.72Investments 10,051.06 5100.00





Loans & Advances 8821.93 10803.0927336.1 24288.00



Provisions 1373.63 2734.18

14506.18 25214.04

Net Current Assets 12,829.95 926.04

Profit and Loss Account ----------- -------

Total 1,02,960.85 130708.68


Rs. in lakhs


Income

Sale of manufactured goods 120946.74 137728.95


Less : Excise Duty 12218.19 20207.11

108728.55 117521.84

Sale of traded goods ------- 2,404.44


109524.85 119329.02

Expenditure

Cost of goods sold 40613.42 46374.89

Personnel cost 4427.88 4030.09

Other expenses 29052.66 29017.00

Depreciation 5488.32 5377.68

Amortisation of goodwill 1799.20 1799.20


81805.61 87133.05

Profit before tax 27719.24 32195.97

Provision for tax 11520.00 12881.45

- Current tax ------- -

- MAT credit of earlier years ------- -


- deferred tax charge 781.16 518.20

Profit for the year 16963.95 19772.72


brought forward (35921.21) (16148.49)


forward

52885.16 (35921.21)

BALANCE SHEET AS ON 31 st DEC 2009

Rs. in lakhs



Share Capital 42796.14 42,796.14

Reserve & Surplus 74787.03 57823.14

117583.23 100619.28


Loans Funds :

Secured Loans / Funds 43190.95 10342.31

Unsecured Funds 16251.30 14605.93Deferred tax liability 4364.00 5141.16

Total 181385.48 130708.682. Application of Funds :

Fixed Assets

Gross Block 94463.86 91539.87

(-) Dep. 43632.78 36353.10Net Block 50831.08 55186.77

Capital work in progress 101290.66 71347.95

152121.74 126534.72Investments 16764.09 5100.00





Loans & Advances 7482.89 10803.0936866.00 24288.00



Provisions 4921.17 2734.18

24366.35 25214.04

Net Current Assets 12499.65 926.04

Profit and Loss Account ----------- -------

Total 181385.48 130708.68

BIBLOGRAPHY

The following books have referred during the preparation of this project:-

I.M. pandey - Financial management,

Prasanna Chandra- Financial management


Reports

Annual reports of zuari cements Ltd (From 2003-04 to 2007-2008)

WEBSITE

www.zuaricements.com


a project on working capital management or fund management

Documents