a project report on cash and fund flow analysis and ratio analysis of dksskn, chikodi

7/31/2019 A Project Report on Cash and Fund Flow Analysis and Ratio Analysis of Dksskn, Chikodi

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CASH AND FUND FLOW ANALYSIS AND RATIOANALYSIS OF DKSSKN, CHIKODI

Contents

Titles Page No.Chapter I

Executive summary

Chapter II

Industrial profile Company profile Organization structure Product profile

Chapter III

Design of the study Statement of problem Objectives of the study Scope of the study Methodology of data collection Sources of data collection Limitations

Chapter IV

Financial analysis Financial statement Balance sheet Income statement Analysis of financial statement Significance of financial statement analysis Statement of changes in the financial statement

Chapter V

Data analysis and interpretation Comparative financial statement Common size financial statement Trend analysis financial statement Ratio analysis Fund flow statement Cash flow statement

Chapter VI

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Findings and suggestions

Chapter VII

Conclusion

Chapter VIII

Bibliography

Chapter IX

Annexure

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LIST OF TABLES

Table

No.

Name of the Table Page

No.1 Comparative Balance sheet 562 Comparative Income Statement 583 Common-size Income Statement 604 Common-size Balance Sheet 615 Trend Income Statement 626 Trend Balance Sheet 637 Current Ratio 658 Quick Ratio 679 Proprietary Ratio 6910 Solvency Ratio 7011 Fixed Assets Turnover Ratio 7212 Working Capital Turnover Ratio 7413 Gross Profit Turnover Ratio 7614 Operating Cost Turnover Ratio 7715 Return On Investment 7916 Fund Flow Statement 8117 Cash Flow Statement 84

LIST OF CHARTS

ChartNo.

Name of the Chart PageNo.

1 Current Ratio 662 Quick Ratio 673 Proprietary Ratio 69

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4 Solvency Ratio 715 Fixed Assets Turnover Ratio 736 Working Capital Turnover Ratio 747 Gross Profit Turnover Ratio 768 Operating Cost Turnover Ratio 789 Return On Investment 79

CHAPTER- I

EXECUTIVE SUMMARY

Shree D.K.S.S.K.N. Chikodi is a co-operative unit. It is a situated near

Nanadi village.

By conducting the organization study it is found thatAll the departments were actively working towards the achievement of the goals of

the company.

My topic is

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Cash and fund flow analysis and ratio analysis of DKSSKN, Chikodi

Financial statements summarizes that the financial position and operationof the company. Many companies are used comparative, ratio analysis, fund flow

and cash flow analysis to know about the financial position of the firm. The

comparative, ratio analysis, fund flow analysis and cash flow analysis are widely

used for analyzing the financial statements. It is systematic use of ratio to interpret

the financial statements so that the strength and weaknesses of a firm is

determined.

During my project the firm is not in good health and the company funds are

used only for short term assets not for long term assets.

My Objectives are

1. To determine the operational efficiency of the company using ratio analysis.

2. To know the changes in financial statements for the past 3 years

using trend analysis.

3. To conduct cash and fund flow statement for 2007- 2008

4. To identify the financial strength and weakness that the firmmight have.

Suggestions

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1. The firm should concentrate on enhancing the operating

efficiency of the firm.2. From the study it is found that the funds are used for short term

assets which should be avoided.

CONCLUSION

By analyzing the topic of CASH AND FUND FLOW

ANALYSIS AND RATIO ANALYSIS OF DKSSKN LTD. CHIKODI

I conclude that the company liquidity position is not satisfactory

due to more concentrate on raising the fixed assets rather than operating activities.

which decreases working capital of the company. Which affects the operational

efficiency of the company and also the liquidity position.

CHAPTER- II

INDUSTRIAL PROFILE

THE BRITISH

AT FIRST

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After the blockade and the landing of British troops superior in number than

the French force of the General Decaen, the French capitulated in December 1810.From the Treaty of Paris of 1814, Mauritius and its dependencies became British,

whereas Reunion even that it was captured was given back to France. Mauritius

became British and got back the name the Dutch gave her, but stayed quite close to

France as she kept the language, culture and French laws. Left on their own, under

the same legal system, the ancient French colonist and their descendants was then

able to live a French style as in the past, changing from a colony base on maritime

trade to that of an agricultural one.

Even that the sugar industry started under the French period, it was only

during the British period that it developed in such a way that it became almost a

mono-crop industry until some other crops were cultivated such as tea, tobacco and

more recently small industries for food, textile and household products.

ABOLITION OF SLAVERY. The most important event under the British.

Administration was the abolition of slavery in 1835 EMANCIPATION OF

THE SLAVES. The emancipation of the slaves in 1835 was been opposed by the

colonists same at those of other British colonies for economic reasons since the

sugar industry in development needed man power. The colonists obtained a very

high compensation. Then there were no trouble as expected since everything went

on calmly, but to replace for the sudden lack of human resource, the country had to

ask for free workers from India. The first importation of Indian human resource in

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Mauritius was in 1829. But it was only when the slaves were emancipated that it

took importance.

It resulted in an accelerated development of the sugar industry and brought

prosperity as from 1850. That prosperity of 1850 was also due to a recovery in

trade. Another development during the British period: the change in the

constitution, which was slow at the start, but got speed after the second world war

to bring independence in 1968.

TOWODRS INDEPENDENCE

It is as from 1937 with the requests of the workers and the establishment of

the Labour Party that regrouped the colored people and certain intellectuals from

Indian origin as well as the recognition of the workers unions that progress started

to be done. There was also a new constitution after the elections of 1943 during

which two forth of the population could vote. The elections of 1953 madedemocracy move ahead when the Labour party obtained more seats. It was in 1957,

the year when the ministerial system started in Mauritius that Dr Ramgoolam took

the leadership of the Labour party.

PICTURE OF SUGAR MAKING

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SUGAR INDUSTRY IN INDIA:

Mostly sugar industries are located in U.P, Bihar Maharashtra, A.P.

Karnataka and T.N. The sugar industry is one of the largest organized industries

with total capital investment of more than 500 crores. It employees more than 2.5

lakhs of workers besides creating extensive indirect employment over 25 to 30

million cultivators of sugar cane, dealers in sugar and confectioneries.

When sugar industry was granted tariff protection the history of sugar

industry started again before 1932 which gave limpet us (driving force) to growth

of industry. Again the government in 1951 provided incentives by fixing

minimum prices of cane and maximum prices of sugar.

This incentive scheme increased the production of sugar but dis-couragedthe cane production. We will see later on how contradictory government. Policies

have adversely affected the growth of sugar industry. Unfortunately, government

policy has been that of control and re-control from time to time creating an

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environment inimical (hostility, untrendly) to the growth of sugar industry. Up to

1957-58 both consumption and production of sugar rose to; 20 lakhs tones each.During 1969s production of sugar rose to 35lakshs tones and during 1970s it was

in between 40 to 50 lakh tones. And during 2000-01 it was in-between 80 to 90

lakhs tonnes.

POLICY

The present policy of partial decontrol 10% of production by each unit

is supplied for public distribution system i.e. as levy sugar at Govt. notified prices

admittedly below 20% of the actual cost of production. The levy sugar is I to the

public irrespective of their economic status. The balance 90% is sold in the free

market against monthly\issued by the Government. This policy has been

continuing since 1967-68 except for brief periods of de-control me during the years

of surplus production and accumulated sugar stocks.

Government announces the Statutory Minimum Price (SMP) for sugarcane every

year based on recommendations of the Commission for Agricultural Costs and

Prices (CACP).

COMPANY PROFILE

SHREE D.K.S.S.K.N.- CHIKODI,

Taluka chikodi, dist.- Belgaum

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Name of the Organization : Shree D.K.S.S.K.N.-Chikodi.

Location : Nanadi Village.Tal.-Chikodi, Dist.- Belgaum

Karnataka.

Regi .office : Chikodi.

Ph. No. 08338-276931 To 35

Fax: 08338 276105

E-Mail [email protected]

Construction : Building Layout, Garden & Light

Facilities.

Capacity : 5500 tones sugar cane crashing / day.

20.7 M. W. Power Generation.

30 K.L.P.D. Restrified Spirit.

Turnover : 450 to 500 Crores / Annum.

Employees : 756.

Work Shifts : 3 Shifts / 8 hours per shift (no Holiday)

BOARD OF DIRECTORS

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The following composition of directors on the board of Shree

Doodhaganga Krishna Sahakari Sakkare Karkhane Niyamit, Chikodi.

Name Designation

1. Sri Mahantesh M Kavatagimath Chairman

2. Sri Ajit S Desai Vice Chairman

3. Sri Annasaheb S Jolle Director

4. Sri Ashok A Patil Director

5. Sri Prakash J Patil Director

6. Sri Tatyasaheb D Kate Director

7. Sri Mallikarjun G Kore Director

8. Sri Kallappa K Maishale Director

9. Sri Shantappa Y Miraji Director

10. Sri Amit P Kore Director

11. Sri Satappa N Saptasagar Director

12. Sri Parasagouda I Patil Director

13. Sri Bharatesh S Banawane Director

14. Sri Subhash N Katrale Director

15. Sri Mallikarjunayya V Hiremath Director

16. Sri Nandakumar M Nashipudi Director

17.Sri S B Umarane The Managing Director

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BACKGROUND

SHREE DOODHAGANGA KRISHNA SAHAKARI SAKKARE

KARKHANE NIYAMIT, CHIKODI is a co-operative society registered under

Karnataka co-operative societys Act in 1969. The industrial license number of the

factory is L-25/N-250/-LC dated 16/10/1970 .

Shree D.K.S.S.K.N. Chikodi is a co-operative unit. It is a situated near

Nandi village, at a distance of about 13Km from Chikodi town .and the factory at

present has an attractive campus with magnificent buildings over it.

Agriculture was continues to; be an extremely important sector in our

country and cooperative system, as one of its main pillars providing vital support

services, is crucial for the transformation of agriculture. It is how inspired our

founder Late Sri. Chidanand B Kore , an agriculturist and a co-operator, to

establish this factory during 1972-73 with the financial support from cane growers

of this area and the State Government. With an initial crushing capacity 1250 TCD

and as a stand alone sugar industry, lour factory had faced a lot of problems all

these years in coming out as a viable unit. Though this factory had emerged in this

area with a meager beginning, it had not only provided a source of income for

forming community but also created a sustainable employment opportunity in thisrural area.

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After a lot of dispute on location of plant, near Nandi village, the

construction work started in year 1971 and comp elected in the year 1974. Thefactory was inaugurated by Vice-president Shri B.D Jatti on 6 th November 1974.

The regular production has been started from December 1974.

The factory started on 5/3/1969 with initial Crushing capacity to the extent

of 1250 TCD per day began during the year 1974 with total expenditure of Rs.337

lakhs.

The area of operation covered 111 villages of which 102 villages are from

chikodi talukas, 5 villages are from chikodi taluka, 5 villages are from Raibag

taluka and 4 villages are from Athani taluka.

At present total sugar cane supplied to this sugar industry is from 20,000

acres with average yield per acre of 25 MT.

The entire plant and Machinery has been supplied by m/s National Heavy

Engineering Co-operative Ltd. Pune, A co-operative institution has also been

installed to meet the present requirement of the Crushing capacity. The DKSSK, at

present is equipped with modern machines and skilled personals. Rs. 325 lakhs

long term loan was borrowed from IFC, LIC, IDBI for original plant and First

phase expansion and has been repaid as per their

The crushing capacity was enhanced from 1250 TDC to 2000 in 1984-85

and from 2000 TCD to 3000 IN 1993-94. The factory house hold expenses of

factory from 3500 to 5500 TCD. Every expansion was not easy and had created afinancial set backs due to the lack of professionalism both in technical and

financial managements.

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Thus over the period of two and half decades, the factory had grown

only in sizes but not adopted the range of different bi-product activities and hadsuffered due to a weak governance on efficiency, effectiveness, adaptability and

internal and external accountability in the management. These things have brought

the factory almost to the brink of sickness. Besides resulting a huge negative net

worth and ever-high accumulated losses. However this cooperative and rural

based industry must succeed if the poor farmers and the rural unemployed youths

have to be prosperous.

Nature of Business

Sugar sector is one of the large scale industries in manufacturing sector.

Now a day the competition in sugar sector is very high. SHREE

DOODHAGANGA KRISHNA SAHAKARI SAKKARE KARKHANE

NIYAMIT, CHIKODI is a co-operative society registered under Karnataka co-

operative societys Act in 1969. The object of business is to encourage proper

devolvement of agricultural industrial amongst members on co-operative lives by

promotions of co-operative and joint forming methods so as to secure best merits

of modern large scale agriculture production to the owners of the lands. The nature

of business is to encourage self help, thrift and co-operate amongst members.

Vision, mission and quality policy

Vision

Total customer satisfaction

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Mission Encourage agro-based co-operative industry.

To develop co-operative movement in rural sector.

To encourage the farmers to grow sugar cane for production of sugar and

its by-products.

AIMS & OBJECTIVE OF THE COMPANY

The object of the society is to encourage proper development of Agricultural

Industrial amongst members on Co-operative lives by promotions of principal and

methods of Co-operative and joint forming methods so as to secure best merits of

modern large scale agriculture production to the owners of lands and for this

purpose.a) To encourage self-help, thrift and co-operate amongst members.

b) To acquire lands either by way of purchase or otherwise for cultivation of

sugar cane and other cost and for erection of building. Godawns staff

quarters etc and for installations of machineries.

c) To manufacture sugar jogger and their by products out of sugar-cane grown

and supplied by members of the society and other and to sell the same to the

best advantage.

d) To under take such other activities as are identical and conductive to the

development of the society etc.

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e) To acquire and install machinery for the utilization of the product and buy

raw material and sell finished product is the course of utilizing andmarketing the by products.

OWNERSHIP PATTERN

The authorized share capital of the Society shall be RS.15.20 crores divided

in to total 38,000 shares of RS.4,000/-each as under.

i) Rs.14,51,000/-dividend in to 36,275 shares of the face value of

Rs.4,000/-each reserved for the grower members called as AClass.

ii) Rs.9,00,000/-dividend in to 225 shares of the face value of Rs.4000/-

each reserved for Co-operative Institutions. Called as BClass.

iii) Rs.20,00,000/-dividend in to 500 shares of Redeemable preference

share of Rs.4,000/-each to be issued to Government of

Karnataka/Maharastra called as CClass.

iv) Rs.40,00,000/- dividend in to 1,000 shares of face value of Rs.4,000/-

each reserved for non grower members called as D Class.

INFRASTRUCTURAL FACILITIES

Nearer to raw materials.

Good transportation facilities. Nearer to rivers place. (Krishna River)

Good networking.

Proper accommodation for its employees

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ACHIVEMENTS AND AWARDS

ACHIEVEMENTS

STAI, SISSTA & DSTA in their recent 8 th annual convention at Hyderabad

held on 13-08-2005 have honored with the most prestigious award as the

THE BEST EFFICIENCY & PERFORMANCE SUGAR FACTORY in

the country for the year 2004-05. The award was given by Honble Union

Minister for agricultural, food & Civil Supplies, in presence of Honble

Chief Minister of Andhra Pradesh.

The Karnataka State Co-op Federation Ltd. had adjudged as The Best Co-

operative Sugar Factory in the State and AWARD had been given to us

through Honble Chief Minister of Karnataka, on 14/11/2004.

Energy Department of Government of Karnataka and KREDL have

awarded us he excellence Award through Deputy Chief Minister of

Karnataka for having developed efficiently 20.7 MW Co-gen Power Project

on the occasion of RAJIV GANDHI AKSAYA URJA DIWAS ON

20/8/2004 .

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The companies have the Honour of achieving the Highest Sugar Recovery

@ 11.80% in Southern part of India for the year 2001-02. And 11.90% for 2002-03 also.

Awards

The Karnataka State Cooperative Sugar Factories Federation Ltd., Bangalore had

honored the company with the following awards for the:-

1. Highest sugar recovery in South India during 2001-02.

2. The Best Administration Award to the Managing Director with a cash

prize of Rs .10.000/- and a certificate.

3. The Best chief Chemist Award with Rs.5,000/- Cash prize and a Certificate.

4. Best chief engineer with award worth of Rs.5,000/- cash prize and

certificate.

ORGANISATION CHART

BOARD OF MANAGEMENT

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MANAGING DIRECT

SECRETARY

GENERAL CIVIL STORE MEDICAL HEAD TIME CHIEF CHIEF A\C OFFICE L.W.O. WATCH&MANAGER ENG. KEEPER OFFICER KEEPER C.D.O. OFFICER SPDTWARD

TOOLROOM&DIESELPUMP

CHIEF CHIEF DIST. CO-GEN CANE AGRILENG. CHEMIST CHEMIST YARD DEVPT.

GODOWN SECTIONGENERAL CANE SALES CASH

A\C. A\C.

COMPUTER

GAD EST MEETING INWARD & SHARE TYPING GUEST LEGALPURC.SECTION SECTION SECTION OUTWARD SECTION SECTION HOUSE SECTIONSECTION

PRODUCT PROFILE

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BYPRODUCTS OF SUGAR CANE

The chief by products of sugar manufacturing are -

Bagasse

Bagasse is the by product of sugar left behind after crushing of sugar cane. It

is used as a fuel in the sugar factory boiler. Excess Bagasse finds use as raw

materials in paper manufacturing industry.

Molasses

Molasses is a by product of Sugar refining chiefly used for alcohol

production. The entire molasses output is routed to the distillers unit which is

maintained by the organization.

Pressmud

Pressmud is the by product generated by cane juice filtration during sugar

manufacture, currently Pressmud is used as a fertilizer in sugarcane cultivation.

AREA OF OPERATION

The area of operation of the society shall be confined to the following

villages of chikodi, Athani, Raibag Talukas of Belgaum District and Jamakhandi

Taluka of Bagalkot District of Karnataka State and villages of shirol, kagal Talukas

of Kolhapur District Maharastra State only.

FLOW CHART OF SUGAR MANAFACTURING

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Weighed cane-hauled to crushing yard

Cane unloaded on to the carrier

Cane cut into pieces

Crushed in successive mills

Juice treated with line and surplus dry chaff fed intoboilers

& Heated as fuel

Subsider

Sucm clear juice

Filter cake used clear evaporates As manure juice

Concentrated syrup

Surplus syrup to vacuum pans

Boiler to mane cite

Centrifugal

Sugar molasses

Bagging

Dispatching power alcohol portable alcohol

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MC KINSEY 7 S MODEL

The first three element are strategy, structure and system are

considered as hardware of success, the meet four elements are style, staff, skills

and shared values / super ordinate goals are the software of any company.

1. Structure

The general admission of the company is carried out by the following departments

and these are downwards communication in the company. The information flowsfrom the top level of management to the lower levels.

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2. System

System refers to how the production system, distribution, information system

and security system is maintained in its company.

a. Production System

The process of production consisting of input of sugar come and

output of the sugar.

b. Distribution System

The distribution system of the products produced is in the following

way:

Direct sales are made with in the state and outside the state.

Indirect sales are made outside the country and the depot sales are also made.

The producers are also sold directly to the consumers or sold to the wholesales.

c. Information System

Structure of information system

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d . Security System

The DKSSK has strict security system.

In the maintenance of accounts after the record have been closed, the

records are kept in the room and closed the room is opened only with

permission of higher authority.

If the visitors went to inter they have to take prior permission with the

authority and after entering they are not suppose to go any dept other then the

department from whom they took the permission.

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CHAIRMAN

MANAGING DIRECTOR

SENIOR GENERAL MANAGER

HEAD OF THE DEPARTMENT

SECTION


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3. Strategy

The way in which a business aims to improve its position in relation to its

competition is embodies in its strategy or the way of doing something in an

organization.

In DKSSK, introduce new technologies and products strategies importance in

time with national objective to improve quality reliability of products there by

attaining the international standards.

4. Skills

Skills here refer to how the training will be given to the employees and

employees. The training will be given in 2 months they are

a) On the job

This is one of the oldest method, under this method, the individual place is onthe regular job and taught the skill necessary to perform that job on the job

training has the advantage of giving first hand knowledge and experience under

the actual working conditions. This training is given to employees.

b) Off the job

In this methods trainee is separated from the job situations and his attention is

focused upon learning the material related to his future job performance. Thereis an opportunity for freedom of expression for the trainees.

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5. Style

The style which is portrayed to outside world is derived from the style and

behaviors exhibits inside organization. The internal style of the organization effects

new staff feels thinks and does their jobs. Therefore an organization is reflection of

its structure.

a) Top down / Bottom up

At the time of policy framing, the style flows from top to bottom. If the

policy has to be framed then the policy has to be taken by upper level & it flows

towards lower level.

But when the opinion of the policy is to known, at that time the style flows

from bottom to up. This is to know the attitudes of the employees about the policy

which is framed by the upper level.

b) Authoritarian / Participative

Only the upper level is having the authority to make the decisions in the

factory.

Regarding policy matter

Board of management will take the decision in case of policy making.

Financial matter

If the financial matter is within the amount of Rs 20,000/-, Managing

Director will take the decision. And if financial matter is more than Rs 20,000/-,

then the board will take the decision.

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6. Staff

Good hard working citizen play essential role in the development of nation. The

employees are responsible for the success or failure of company.

The company has totally 778 workers are working in the company. They are

divided as follows

No. of Workers

1) Permanent worker 285

2) Seasonal workers 183

3) Consolidated worker 288

4) Daily wage worker -

756

Company is paying salary of Rs. 55, 00, 000 per month to its workers.

7. Shared values

Shared values are refers to company policies. In Mysore Sugar

Company limited the following policies are maintained.

Quality policies

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Environment policies

T.P.M. policies (Total productivity management)

QUALITY POLICY

Total customer satisfaction is our goal. To achieve this we at

S.D.K.S.S.K.N. committed to produce quality white crystal sugar as per the Indian

sugar standard through continual Improvement in our process, people & stake

holders.

ENVIRONMENT POLICY

The DKSSK is committed to comply with the requirement of relevant

environment regulation and standards by implementing environment management

system and the continually improve its effectiveness.

TOTAL PRODUCTIVE MANAGEMENT

The DKSSK is committed in maximizing limited is committed in

maximizing overall plants effectiveness to make Mysore sugar company a world

class company through total productive manufactured by

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Promoting automates maintenance culture.

Involving all employees and building culture.Minimizing the losses and reduced the cost.

PROCEDURE FOLLOWED IN SALE OF SUGAR, MOLASSES,

BAGASSE, RECTIFIED SPIRIT AND ARRACK

SUGARDomestic Sale of Sugar

The free sale released by Government of India is sold in the domestic

market through tender system. Sugar tenders will be called periodically from the

various sugar traders. The traders will be called advance about the grade and

quantity being offered in tender over telephone. The sugar tender are some time

will be conducted at Karnataka Sugar Institute, Belgaum and also at this factory

site.

The offers of K.S.I will be present at the time of tenders. The rates will be

collected over telephone from the various parties along with grade and quantity of

sugar required by them. The committee will take decision on allotment of sugar to

the parties who have offered higher price. Karkhana has maintained Sugar Sale

Tender register for recording the offers received and allotment made to the parties.

The parties who have purchased sugar in the tender will be sold against 100%

payment. The rate of domestic price of sugar in the state and the rate of

neighboring sugar factories will be compared while selling the sugar in tenders.

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Export of sugar

When the international price of sugar is remunerative compared to domestic

price of sugar, we do export some of the stock of sugar. The sugar export is mainly

undertaken through the mercantile export or through EXIM Corporation New

Delhi. The price for export sugar is negotiated taking into account, the prevailing

international sugar price and the price being offered by various sugar factories for

export of sugar. Once the rates are finalized, they will enter into agreement with

the party. Then the party will obtain a release orders from the Chief Director of

sugar, New Delhi and necessary excise bond from the concerned authority. After

completing all the necessary formalities Sugar will be delivered to the party for

export against full payment of the consignment.

After the export shipmen are completed, necessary documents in proof of export

of consignment will be collected from the parties. The same will be submitted to

the excise department.

Molasses BagassesFor sale of Molasses and Bagasses we use to make a vide publicity in

the various news papers in Karnataka and Maharashtra and also floating the

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prior to the last mill to extract more possible sugar. The bagasse from the last will

is carried through bagasse conveyor and required quantity of bagasse is fed to the boilers and excess quality is sent for storage.

STAGE: 3 CLARIFICATION AND EVAPORATIONS.

The juice from all the mills is pumped to juice weighting scale. It is heated

to about 70-77o c in the juice heaters. It is taken to continuous juice sulphitor in

which milk of lime and sulphur dioxide gas are adjusted to maintain ph 7.0. It is

again heated in juice heaters to about 100 to 105oc and sent to continuous

clarifier. Clear juice is taken to multiple effect evaporators to concentrate up to

60oc Brix.The settled mud from the bottom of the clarifier is taken to mud mixer to

mix with beguile and taken to continuous vaccum filer. The filtrate is transferred

to raw juice receiving tank for treatment. The adhered mud on the screens is

scraped and sent out as filter cake, which will be used for composting the manure.

STAGE: 4 CRYSTALLIZATION PURGING AND SUGAR

MANUFACTUREThe concentrated syrup from evaporator is taken to syrup sulpthitor to adjust

Ph 4.8 to 5.2. This is stored in the supply tanks and fed to A masscult boiling by

taking B-seed as a footing. It is concentrated to 92o Brix and dropped to the

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crystallizes. This masscult is purged in the centrifugal machines. The adhered

crystals are scraped to hopper and treated with hot air and cold air blower. It issent to grader the size for gradation. This graded sugar is stared in SILOS.

Weighed and bagged sugar bags are transferred to respective godowns for

stocking.

STAGE: 5 FURTHER PROCESS

While purging A- massecuite the A-light molasses received is sent to supply

tanks and fed to A- molasses is sent to supply tanks and fed to B- masscult

boiling with b-grain as footing. This is purged in the centrifugals. This sugar is

used as B- seed and excess is melted and fed to A- masscults. White purging

low purity B- Heavy molasses obtained is used for boiling C- masscult with C-

grain as footing.This C- massecuite is taken for purging in C.F.W. Centrifugal machines.

The final molasses is separated, weighed and sent to storage tanks. C.F.Magma is

sent to melt supply tanks and fed to A massecuite boiling. C-light molasses

obtained is tired in supply tanks and used for C- massecuite boiling and C-

graining also.0

FINANCE AND ACCOUNTS DEPARTMENT

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Finance plays a vital role in the functioning of all industrial units. Finance is

the life blood of the organization. In sugar Industry Finance and accountsDepartment has very vital roles. The financial plan basically deals with raising and

proper utilization of funds. The funds can be raised by issue of shares as well as

by raising loans various sources.

The finance manager supported with accountant manager and an accountant

assistant looks finance department

FUNCTIONS:

1. They look after the overall financial requirements of the company.

2. They see that a proper inflow and outflow of income and expenditure

is maintained.

3. Costing and accounting is framed and maintained.

4. Yearly budget is framed so that each department can meet their cash

requirements.

5. Budget prepared is based on sales forecasting, expenses forecasting,

cost forecasting, purchase forecasting etc. which submitted by

respective departments.

Finance Department consists of following sub branches:

1. General Accounts Section

2. Cane Accounts Section

3. Sales Section

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4. Cash Section

Accounts offices are the head of this department. Accountant sales manager,and head cashier assist him.

Finance controlling repayment of term loans. Taking loans excepting and

payment call deposits maintains all Accounts. Payment of all bills statutory and

normal bills.

As functioning of each section is summarized follows -

1. GENERAL ACCOUNTS SECTION:

General Accounts are looking after the passing of bills and

payments. Management is also done by General account section and preparation

of financial statements i.e., Balance sheet, profit and loss account is attended by

general accounts section.

2. CANE ACCOUNTS SECTION :

The Bills and payment concerned to procurement of sugar cane, is attended

by cane accounts section. Payments like cane bills, transport and harvesting bills

etc., are prepared and passed in cane accounts section.

3. SALES SECTION:

It is looking after sales of sugar and by products molasses, Rectified spiritand other scrap materials. It is keeping records of the concerned to all sales

section.

4. CASH SECTION:

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It is looking after the payments of all general bills and salary bills apart from

cane payment and it is also looking after receipt of cash and check payment.

All accounts are maintained in usual manner.

Various records and books kept are:

a) General ledger

b) Sub ledger

c) Subsidiary

d) Cash book

e) Vouchers.

Each branch prepares trading profits and loss account and Balance as on 31 st

March every year. And the government Auditors audits the accounts.

PURCHASE DEPARTMENT

Purchase Department is headed by purchase officer is responsible for purchasing the spare parts required for the industry. The storekeeper is responsible

for stacking quality maintaining and issuing to the concerned section.

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The important functions of the department are:

Purchasing materials Calling quotations

Preparing C.S.Q (comparative statement quotation)

Placing before meeting for decision

Placing orders for supply of materials.

Passing bills to Accounts section for payment.

PURCHASE DEPARTMENT HIERARCHY

PROCEDURE OF PURCHASING

1. DETERMINATION OF PURCHASE BUDGET:

38


PURCHASE MANAGER

GODOWN SUPERVISORS

STORE KEEPERS

ASSISTANTS


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In the beginning of the year the purchase manager, with the help of

production planning department, prepare a purchase budget. This budget quadshim in knowing what when he has to buy and also quality, Size and quantity of

purchase.

2. DETERMINATION OF QUANTITY:

The stock availability in each location is determined and compared with the

actual requirements. After receiving the sales order raw materials needed are

scheduled according to these order level. The stock availability in each location is

determined and compared with actual requirements these quantities to be

purchased are determined.

3. PURCHASE ORDER:

After satisfy with the quantity of materials and reputation of the supplier,

purchase order is send to the supplier. Purchase order contain includes the date of

order, description of materials to be supplied made of supply. The companies of

this send to the Head office, another to accounts departments and one copy send to

the storekeeper.

4. RECEIVING AND ISSUING RAW MATERIALS:

The department heads and the storekeeper check the quality and quantity of

raw materials received respectively. The storekeeper enters the details of purchased materials in the store receipt book store receipt after the details are

entered in the stared receipt book, the materials from the part of inventory. Then

the general manager passes the amount for payment.

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MECHANICAL DEPARTMENT

This department is headed by General Manager and Chief Engineer.

Maintenance of the sugar machinery and plant over having of the some in off

season and to run all the sugar machinery and their devices properly and smoothly

in the season and to extract cane juice for the cane in respect of less losses of sugar

content in fazes that is more extraction.

MANUFACTURE DEPARTMENT

This department is headed by Chief Chemist. To manufacture the maximum

quality the sugar from the cane juice of superior ISI. grade minimize the sugar

losses in bye-products to maintain the register and calculations of sugar entering inthe house and production submit day to day report of production and recoverable

sugar and excise matters in the season. In the off season maintenance of the

boiling house plant.

WATCH AND WARD

This department is headed by security officer. Security of factory and

control on gates and supervision day and night all over the factory area from

security point of view.,

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STORES DEPARTMENT

This department is headed by store keeper. To keep the sores and requiredmaterials for the factory section wise in a proper way and to maintain their

registers and big cards of indents (order goods)

FUNCTIONS:

1> Receiving the materials

2> Unfolding the packing.

3> Takes entry in store receipt Book (SRB)

4> Preparing bills after receiving quality memo back.

5> Stacking the materials.

6> Issue of materials to concerned sections as per their indents.

TIME OFFICE DEPARTMENT

This department is headed by head time keeper. To maintain the register of

attendance of the factory staff to prepare the pay sheets and leave records and

personal services register of the staff.

ADMINISTRATIVE OFFICE

The office time is from 10.30 to 5.30pm

The lunch break is from 1.30 to 2.00 pm

FACTORY PREMISES

Inside: from 8:30am to 5:30pm

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The lunch break is from 12:30 to 1:30 pm

AGRICULTURAL DEPARTMENT

This department is headed by Cane development officer. Cane procurement,

harvesting (to reap) and development of cane. To make the provision of proper

seed of cane to the cultivators, soil testing and proper guideline for measuring etc.

CIVIL DEPARTMENT

This department is headed by civil engineer. Construction of the roads for

proper transport of cane in the area, civil works of the factory, maintenance of the

factory building etc.

LABOUR WELFARE

This department is headed by labour welfare officer. To look into thewelfare activities of the worker and solve the labour problems. The factory

provides all the necessary facilities. The purpose of providing welfare amenities is

to facilitate the development of total personality of working class for physical,

mental, psychological, cultural, social, moral and intellectual development the

factory provides well planned residential accommodation, medical facilities,

educational facilities, drinking and washing water, canteen, cycle stand, library etc.

In addition, the factory has following non-statutory schemes for workers welfare.

Consumers society, uniforms to watchman production and engineering workers

etc.

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OBJECTIVES

1) To secure for the worker fair wage.

2) To improve the working condition and express share in the increased

profitability.

3) To ensure the workers security of employment and protect larger interest

of the society.

4) To establish relationship between management and employees.

FUNCTION:

1) To promote harmonious relation between the factory management and

workers.

2) To bring to the notice of board of directors grievances of workers and to

act as a liaison officer between management and labour.

3) To study and understand the point of view of labour in order to help the

management to shape and formulate labour welfare policies.

4) To advice and assist the management in fulfillment of statutory and other

obligations.

5) To encourage the formation of work joint production councils, co

operative societies and welfare committee and supervise their work.

6) To secure the provision of amentias such as canteen, washing, first aid,

shelter, rest rooms, launch rooms etc.

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7) To suggest the measure which will serve to raise the standard of living of

workers and in general to promote their well being.

SWOT- ANALYSIS-

I have found some strengths and weaknesses, opportunities to the factory

during my training period at this plant. Factory is facing some problems regarding

sale of sugar under government restriction. How much government permits to sellthe sugar that much only factory has to sell not more than that it sells through

quotations. It covers small area only. Even there is no particular system for

appointment of employees.

STRENGHTS -

The major strength is crushing capacity and highest chimney and

packing of bags per day. It is producing own electricity it reduces the cost of electric bills.

It also sells electricity to the KPTCL.

This factory has its own trucks and some other vehicles, which

reduces transportation charges.

They have foreign customers too.

Good Administration

Healthy management labour relations

Superior product quality

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Skilled and efficient staff and labour force

Maximum profitability due to various by products Well structured distribution channel.

Improved infrastructure.

In total this factory has a very good organization structure

WEAKNESS-

It does not have separate HR department, so the selection of employees isnot satisfactory and it creates lot of burden on labour welfare officer.

Too much stock of sugar in godown.

They purchased two wheeler vehicles and trucks on loan. During off-season

they remain idle, but the interest of the loan is always shooting up.

They dont have particular employee for particular work. Anybody can do

any work assigned by their respective superiors. High cost of production.

No control on minimizing the losses in process.

Company cant sell as much as sugar in the market at any specific time, as

sugar release mechanism is controlled by government of India.

OPPORTUNITIES-

It is located in the best area. Here all the resources are available in less cost.

Offer replacement of machinery to new machinery for good running of

factory.

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Present production performance per tone is excellent.

Non-establishment of the programs to motivate and develop effectivemanpower.

Restricted market opportunities shirked a better price for finished products.

Reducing the overhead expenditure.

To provide comfort and convince to employees for doing the work.

To facilitate the smooth running of the manufacturing process.

THREATS-The production comes under hazardous activities, competition are

updating latest technology.

Due to uncertain rainfall procurement of raw material is being affected.

High competition in procurement of raw material.

The main raw material sugarcane may not sufficiently be available in future. Change in various government policies.

CHAPTER- III

DESIGN OF THE STUDY

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3.1 Statement of the problem

Financial analysis being an integral part of overall corporatemanagement and it is one of the powerful tools of financial performance analysis.

The analysis of financial statement of SRSL is done in order to know the

companys financial position.

3.2 Objectives of the study

For the purpose of any research, objective is must. It shows the

direction with which the task can be accomplished.

The specific objectives of the study are

a) To determine the operational efficiency of the company using ratio analysis.

b) To know the changes in financial statements for the past 3 years using trend

analysis.

c) To conduct cash and fund flow statement for 2007- 2008

d) To identify the financial strength and weakness that the firm might have.

3.3 Scope of the study

The scope of the study is to find out how assets and liabilities are

maintained. It is done through the Balance sheet of the company, for the periods,

2004-2005, 2005-2006, 2006-2007 and 2007-2008.

3.4 Methodology

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This project is an analytical research where in the researcher has to

use the available facts as information and analyze these to make a criticalevaluation of materials. This is also an applied research with an aim to find a

solution for immediate problems facing industry or the firm.

The methodologies followed in the analysis of the financial

statement are comparative statement, Common size statement, Trend analysis, ratio

analysis, fund flow analysis and cash flow analysis.

3.5 Purpose of the study

The purpose of doing this project is mainly to make a thorough study of the

financial analysis of the company.

To access the companys trends for the last four years with regard to

liquidity performance.

The purpose also includes assessing the impact of financial analysis on

liquidity strength of the company

3.6 Sources of data collection

1. Primary data : The data required for the project was collected minor

through primary data. That is through interviewing & discussion with

concerned authorities in the company.

2. Secondary data : The major source of data for this project was collectedfrom annual reports, profit and loss account, manuals & some more

information collected through the internet.

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Plan of analysisThis study is conducted with the help of statistics figures &

techniques like Graphs & charts for better comparison and interpretation.

Tools and techniques used for analysis

The following are the methods of financial analysis used in general.

1. Comparative financial statements

2. Common-size financial statements

3. Trend percentage analysis

4. ratio analysis

5. fund flow analysis

6. cash flow analysis

3.7 Limitations

1. The study is done only on the Balance sheet and Profit and loss account.

1. Study is based on information provided by the company.

CHAPTER- IV

FINANCIAL ANALYSIS

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presented in concise and capsule form, and the financial information is the

information relating to the financial position of any firm. Therefore the financialstatements are the depiction of the financial position of firm.

The basic source which provides the financial information is the annual

report of the company, which is presented by the company to its shareholders at the

annual general meeting. This annual report contains the chairmans report, the

balance sheet, the income statement , the auditors report together with number of

schedules, annexure etc. Though the presentation of annual report is a statutory

requirement under the companies Act of 1956. Every firm prepares the following

financial statement.

1. The Balance Sheet

2. The Income Statement

4.2 BALANCE SHEET

The Balance sheet is regarded as the most significant and basic financial

statement of any firm. The Balance sheet is prepared by a firm to present a

summery of financial position at a given point of time, usually at the end of a

financial year. It shows the statement of affairs of the firm and the contribution of

the owners of the firm. The BS in fact balances the assets of firm against its

financing i.e. the total value of the assets must be equal to the total claims against

the firm and this can be stated as

Total assets = Total claims (Debt + shareholders)

= Liabilities + shareholders equity

The Balance sheet includes :

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1. Assets

2. Liabilities ASSETS

Assets are the monetary value of the resources that owned by the

concern at a measurable cost. A resource is valuable if it is in form of the cash or

convertible into cash or expected to benefit in the future operation of the business,

an asset includes a) physical resources like land, machinery, plant, building, stocks

etc. b) non physical resources like cash, securities, accounts receivables etc.)

Intangible resources like goodwill, trademark and d) future benefit like expenses

paid in advance. Some time some fictitious assets also show like as incorporation

cost of the company discount on issue of debentures etc.

Fixed assets

Current assets

Fixed assets

Fixed assets are held in business for use not for sale. These assets provide long-

term benefits to the concern. Fixed assets will be higher in manufacturing concern.

The fixed assets involves Tangible assets includes land, building, machinery,

equipment, furniture, fixtures etc. these assets are shown the balance sheet

deducting the depreciation there on.

a) Intangible fixed assets:

These assets include the patents, copyright, trademarks, trade name

goodwill etc.

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b) Long term investment:

These assets represent the firms long term investments likeinvestments in share, investments in debenture and bonds of other firms or

government bodies.

c) Other non current assets:

These assets are those which represent the deferred charges etc.

d) Current assets :

Current assets consist of cash and other sources of cash which get

converted into cash during the period of operating cycle of the firm. These assets

are owned for a short period of time. The other name of the current assets includes

cash, debtors, bills receivables, stock of work in progress, bank balance, advance

payment of expenses like taxes and insurance, loan and advances to customers and

employees.

LIABILITIES

Liabilities are the obligations of the concern that is to pay the outsiders.

CONTENS OF ANNUAL REPORT:

The Shree Doodhaganga Krishna Sahakari Sakkare Karkhane Niyamit, Chikodi

annual report for the year 2007-2008 contains

a) Report of the board of directors b) Auditors report

c) Accounting policies

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Report of the board of directors

Directors report provides a summery of profits made and appropriated by the company and other relevant information such as industrial relations,

investments, financing, reorganization, appointment of auditors and directors

etc. the report of the SRSL board of directors gives a brief account of the

company profit and dividend during the 2005-2006.

Auditors report

Auditors report to shareholders verifies whether the balance sheet and

profit and loss account provides a true and fair view of the state of a

companys affairs. Auditors should obtain all necessary informations and

explanations and ensure that proper books of accounts as required by law

have been prepared by the company.

Accounting policies

Companies adopt different accounting policies for preparing their balance

sheet and profit and loss account. Annual reports incorporate major accounting

policies as well as changes made in current year.

4.3 INCOME STATEMENTS

Income statement is, also known as the profit and loss account or the

statement of earnings, summarizes the revenues and expenses of the firm for an

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accounting period. It gives a detail of sources of income and expenses and thus it

provides the summery of the operating results of the firm for a specific period. Itmatches the revenues with the costs that are incurred in generating the revenues,

and shows the difference between the two as the net profit made or net loss

incurred during the period. The IS shows the results of the operations of the firm

during the period. The IS therefore, is a flow report against the BS which is a stock

report or a status report. The IS depicts the earning capacity of the firm during the

period under consideration.

Profit and loss account presents the summery of revenues, expenses and

net income of a firm. It serves as a measure of the firms profitability. Revenues

are amount. The main content of the income statement are:

Net sales

Cost of goods sold

Gross profit

Operating expenses

Operating income

Non operating expenses

Non operating income

Profit

Loss

4.4 ANALYSIS OF FINANCIAL STATEMENT

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AFS refers to the process of the critical examination of the financial

information contained in the financial statement in order to understand and makedecisions regarding the operations of the firm. The AFS is basically a study of the

relationship among various financial facts and figures as given in a set of financial

statements. The basic financial statements i.e. the BS and IS, already discussed in

the preceding section contain a whole lot of historical data.

It is very important to analysis the financial statement to know the

different factors to see are behind the change in the figures of the financial

statement. Analysis of financial statements contains comparison between different

figures of different periods, comparison.

Process of the analysis of the financial statements:

Financial statement analysis contains the following steps:

Analysis of all transaction one by one to determine the accounts

to credited and debited evaluate all transactions to ascertain the

amount involved in that.

Analysis of recording of the transactions in the journal,

summaries that in ledger and preparation of trial balance.

Preparation of final accounts or financial statements.

Get different information by analyzing these statements and

provide the information to the interested parties like the bankers,investors, creditors and managerial personals.

4.5 Significance of the financial statement analysis:

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The analysis of financial statement is very important for the different parties related to the concern i.e. internal users and external users. The

significance of the financial statement analysis will be clear from the

following points:-

This analysis simplifies, summarizes and present the accounting figures

in that way that they can provide more and more information to the

different parties for taking the valuable decisions.

Financial statement analysis is provide in valuable aid to management

for complete the basic functions like forecasting, planning, directing, co-

ordaining and control.

This analysis diagnose the financial health of the concern by evaluating

different facts of the business i.e. liquidity, solvency, profitability,

capital gearing etc.

The financial statement analysis involves the different ways of analysis

and interpretation of the financial statements. So anyone can take the

decision according to his/her requirement.

The analysis of financial statements provides important and useful

information to the management as well as other users. If this analysis

does not make then it is difficult to take decision from the financial

statements.

TECHNIQUES/TOOLS OF THE AFS

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The methodology adopted for the AFS may be varying from one situation to

another. However, the following are some of the common techniques of the AFS:1. Comparative financial statements

2. Common-size financial statements

3. Trend percentage analysis

4. Ratio analysis

5. Fund flow analysis

6. Cash flow analysis

The ratio analysis is the most common, comprehensive and powerful tool of

the AFS.

4.6 STATEMENT OF CHANGES IN FINANCIAL POSITION

Two basic financial statements of importance to owners, management and

investors are Balance sheet and profit and loss account. Balance sheet gives a

summery of firms resources(assets) and obligations ( liabilities and owners equity)

at a point of time, the profit and loss account reflects the result of the business

operations by summarizing revenues and expenses during a period of time. Both

these statement fail to explain the changes in assets and liabilities and owners

equity. This statement is intended to summaries.

Changes in assets and liabilities resulting from financial and investment

transactions during the period, as well as those changes which resulteddue to change in owners equity.

The statement of changes in financial position deals with the flow of

funds during the year i.e., the funds coming in and going out of the firm.

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It summarizes the sources from where the funds might have been

arranged by the firm and the uses for which the funds might have beenused by the firm during the year. The following are the important

concepts of funds.

The term funds may be taken to refer to cash only. This is a general

notation of the term funds and is used for expressing the liquidity of a

firm. Therefore, a SCFP based on this concept of funds will report and

include only those transaction which are affecting the cash balance, such

SCFP will be just a summery of the cash transactions. Hence, non-

monetary transaction such as purchase of fixed assets by issue of

debenture will not be reported in a SCFP.

The term funds may also be used to denote the net working capital of the

firm. The net working is the difference between the total current assets

and total current liabilities. Since, cash is only one of the several current

assets; this view of the term funds is broader than the preceding concept.

A SCFP prepared on the basis of the net working capital concept of funds

will include all those transactions which affect the net working capital of

the firm. So, any transaction affecting current assets or current liabilities

will find place in the SCFP. However, there may be different transaction

which do not affect the net working capital and therefore, will be outside

the scope of SCFP.

CHAPTER-V

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DATA ANALYSIS AND INTERPRETATION

5.1 COMPARATIVE FINANCIAL STATEMENL (CFS)

In CFS, two or more BS and/ or the IS of a firm are presented

simultaneously in columnar form. The financial data for two or more years are

placed and presented in adjacent columns and thereby the financial data is

provided a times perspective in order to facilitate periodic comparison.

The preparation of the CFS is based on the premise that a statement covering

a period of a number of years is more meaningful and significant than for a single

year only, and that the financial statement for one period represent only 1 phase of

the long and continuous history of the firm.

The CFS can be prepared for both the BS and the IS.

5.1 a) COMPARATIVE BALANCE SHEET (CBS)

The CBS shows the different assets and liabilities of the firm on different

dates to make comparisons of absolute balances and also of changes if any, from

one date of another. The CBS may be helpful in analyzing and evaluating the

financial position of the firm over a period of number of years.

Table No. 1

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KARKHANE NIYAMIT, CHIKODIComparative Balance Sheet

(Amts in crores)

Particulars 2006-2007 2007-2008 INCREASE/ INCREASE /

DECREASE(Amt)

DECREASE

(%tage)LIABILITIES -Share Capital 132.19 133.66 1.47 1.12Reserves & Surpluses 676.80 757.90 81.10 11.99

Term loan 409.49 502.83 93.34 22.80Working capital loan 912.46 717.85 (194.61) 21.33Bank O. D. payable 8.40 12.83 4.43 52.74Statutory and other deposits 683.18 666.17 (17.01) 2.49Suspense, sundries & other 555.99 471.07 (84.92) 15.28Total 3378.51 3262.31 (116.20) 3.44ASSETS -Fixed assets 1296.30 1307.44 11.14 0.86Investments 2.62 16.73 14.11 583.55Current assets 1242.47 1039.87 (202.6) 16.31Loans and advances 48.55 101.44 52.89 108.94Debtors 272.93 274.33 1.40 0.52Cash in hand 0.32 0.30 (0.02) 6.25Cash at bank 158.33 132.40 (25.93) 16.38Profit and loss account 356.99 389.80 32.81 9.19Total 3378.51 3262.31 (116.20) 3.44

INTERPRETATION

Current assets

The investments in the current assets are low and it has decreasing trendover the period under study. The current assets have decreased by Rs. 202.60

(crores) i.e., Rs.1242.47 in 2007 and Rs.1039.87 in 2008. So it is significantly

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effects on the liquidity position of the company and it also decrease the working

capital of the company.Net fixed assets

The net fixed assets increased by 11.14(crores) i.e., almost 1307.44 in 2008

when composed to 2007. So it is increased the financial performance of the

company.

Investments

There is change in investments for comparing the previous year and the

current year. For previous year it will be Rs. 2.62 (crores) and for current year it

will be Rs. 16.73 (crores).

Current liabilities

Current liabilities include current liabilities and provisions. Current

liabilities and provisions decreased by Rs.275.10(crores) i.e., about Rs.1476.85 in

2007 when composed to Rs.1201.75 in 2008.

. Reserve and surplus

The Reserve and Surplus has increased by Rs.81.10(crores) i.e, about

Rs.676.80 in 2007 to Rs.757.90 in 2008.

5.1 b) COMPARATIVE INCOME STATEMENT (CIS)

A CIS shows the figure of different items of the IS of the firm in

absolute terms, the absolute changes from one period to another and if desired, thechanges in percentage form. The CIS is helpful in deriving meaningful conclusions

regarding changes in sales volume, cost of goods sold, different expenses items etc.

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from the CIS, a financial analyst can quickly ascertain whether sales are increasing

or decreasing and by how much amount or by how much percentage.Table No. 2


KARKHANE NIYAMIT, CHIKODI

COMPARATIVE INCOME STATEMENT

(Amounts in crores)

2006-2007 2007-2008 Increase/decrease Increase/decrease

Details AMOUNT (%tage)Income

Sales (Revenues) 1640.81 1773.10 132.29 8.07

Other Income 10.48 3.25 7.23 68.99Total 1651.29 1776.35 125.06 7.58ExpenditureCost of goods sold 1517.95 1624.81 106.86 7.04Gross Profit 133.34 151.54 18.2 13.65Selling and Administration

Expense(operating exp) 40.23 94.75 54.52 135.52

Operating income 42.35 1.36 40.99 96.79 Non operating exp 124.37 161.62 37.25 29.95Non operating income 7.13 70.66 63.53 891.03Loss 18.22 32.81 14.59 80.08

INTERPRETATION

On the basis of comparative income statement it can be said that gross profit

for the year 2006 has increased by Rs.18.20 over the profit for the year 2008. The

Net sales during the same period have increased by Rs.132.29. The cost of goods

sold increased by Rs.106.86.

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The selling and Administrative expenses increased by 135.52% Non

operating income for the year 2008 is increased by 891.03%. The non operatingexpense is increased by 29.95% during the year 2008. The Net loss is increased

80.08%.

5.2 COMMON SIZE STATEMENT

The CSS represents the relationship of different items of a financial

statement with some common item by expressing each item as a percentage of the

common item. In common size Balance sheet, each item of the Balance sheet is

stated is stated as a percentage of the total of the Balance sheet. Similarly in

common size income statement, each item is stated as percentage of the net sales.

The percentage for different items is computed by dividing the absolute amount of

that item by the common base and then multiplying by 100. The percentage so

calculated can be easily compared with the corresponding percentages in some

other period.

Table No. 3



COMMON SIZE INCOME STATEMENT(Amts in crores)

Particulars 2005 2006 2007 2008

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Net sales 100 100 100 100

less-cost of goodssold 79.08 96.78 92.52 91.64

G.P. 20.89 3.22 7.49 8.37less-selling

&administrative exp 24.25 11.28 2.46 5.35Add-operating

income 21.13 1.30 2.59 0.08Less-Non operating

exp 15.45 6.93 7.58 9.12Add-Non operating

income 0.24 0.79 0.44 3.99Profit 2.56 0.48

Loss 12.90 2.04

Table No. 4



COMMON SIZE BALANCE SHEET

(Amts in crores)Particulars 2004-05 2005-06 2006-07 2007-08LIABILITIES -Share Capital 3.91 3.44 3.92 4.10Reserves & Surpluses 16.74 18.14 20.02 23.23Term loan 19.25 16.43 12.12 15.42

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Working capital loan 22.75 25.23 27.01 22.01Bank O. D. payable 0.96 0.18 0.25 0.40

Statutory and other deposits 27.24 23.73 20.23 20.41Suspense, sundries & other 9.15 12.85 16.45 14.43Total 100 100 100 100ASSETS -Fixed assets 40.18 39.31 38.37 40.08Investments 0.05 0.07 0.08 0.52Current assets 45.71 48.67 36.78 3.11Loans and advances 1.80 1.55 1.44 31.86Debtors 8.79 7.95 8.08 8.41Cash in hand 0.05 0.04 0.01 0.01Cash at bank 2.97 1.97 4.67 4.06Other assets 0.45 0.44 - -

Profit and loss account - - 10.57 11.95Total 100 100 100 100

5.3 TREND PERCENTAGE ANALYSIS

The TPA is a technique of studying several financial statements

over a series of years. In TPA the trend percentage are calculated for each item by

taking the figure of that item for some base year as RS. 100. So, the trend percentage is the percentage relationship which each item of different years bears

to the same item in the base year. Any year may be taken as the base year, but

generally the starting/initial year is taken as the base year. So, each item for base

year is taken as 100and then the same item for other years is expressed as a

percentage of the base year.

Table No. 5



TREND ANALYSIS INCOME STATEMENT

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(Amounts in crores)

Trend percentage (%)Particulars 2006 2007 2008Sales 100 120.17 129.86Less- cost of sales 100 114.87 122.96Gross profit 100 279.49 337.33Less- admin & selling exp. 100 26.14 61.56Add- operating income 100 238.73 7.67Less- Non operating exp 100 135.53 59.54Add- Non operating income 100 0.33 57.13Profit 100 66.64Loss 100 660.38

Table No. 6



TREND ANALYASIS BALANCE SHEET

(Amounts in crores)

Particulars 2005-2006 2006-07 2007-08LIABILITIES -Share Capital 100 1206.93 1220.30Reserves & Surpluses 100 117.22 131.27Term loan 100 96.13 78.28Working capital loan 100 113.62 89.39Bank O. D. payable 100 139.07 212.41Statutory and other deposits 100 90.44 88.19Suspense, sundries & other 100 135.88 115.12Total 100 106.12 102.47ASSETS -Fixed assets 100 103.60 104.50Investments 100 103.98 666.53

Current assets 100 80.18 67.10Loans and advances 100 98.41 205.63Debtors 100 107.83 108.38Cash in hand 100 28.31 26.54Cash at bank 100 251.79 210.55Other assets 100 - -Profit and loss account 100 - -

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Total 100 106.12 102.47

INTERPRETATION:

Current Assets and Current Liabilities

Current assets and current liabilities have declined in current year. It

affected the liquidity of a company. Current assets are 67.10% in 2008 and Current

Liabilities are 128.08% in 2008.

Net fixed assets

The net fixed assets increased in 2008 by 104.50% and 103.60 in 2007. It

shows the company is more invested in fixed assets.

Investments

There is change in investments for comparing the base year and the current

year. For previous year it will be 103.98% and for current year it will be 666.53%.

5.4 RATIO ANALYSIS

MEANING

Ratio analysis is a widely-used tool of financial analysis. It is defined as the

systematic use of ratio to interpret the financial statements to that the strength and

weaknesses of a firm as well as its historical performance and current financial

condition can be determined. A ratio is relationship expressed in mathematical

terms between two individual and groups of figures connected with each other in

some logical manner. The relationship between two or more accounting

figures/groups is called financial ratio. A financial ratio helps to summarize a large

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mass of financial data into a concise form and to make meaningful interpretation

and conclusion about the performance and positions of a firm.TYPES OF RATIO

Ratio can be classified into four broad groups:

LIQUIDITY RATIOS

LEVERAGE RATIOS

ACTIVITY RATIOS

PROFITABILITY RATIOSLIQUIDITY RATIO

Liquidity ratio measures the ability of the firm to meet its current obligation.

In fact, analysis of liquidity needs the preparation of cash budgets and cash and

fund flow statements; but liquidity ratio, by establishing a relationship between

cash and other current assets to current obligation, provide a quick measure of

liquidity.

The most common ratios which indicate the extent of liquidity are:

Current ratio

Quick ratio

Current ratio

The current ratio is calculated by dividing current assets by current liabilities:

Current ratio = current assets

_______________________

Current liabilities

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Current assets include cash and those assets which can be converted into cash

within a year, such as marketable securities, debtors and inventories. The standardratio is 2:1.

Table No. 7

CHART SHOWING CURRENT ASSETS

TO CURENT LIABILITIES

Details

2004-

05

2005-

06

2006-

07

2007-

081. CURRENT

RATIO 1.51 1.25 1.41 1.21

Current Assets

1402.8

8

1521.0

7 1673.74 1446.92

Current Liabilities 932.47

1216.5

0 1472.95 1200.52

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Chart No. 1

0500

1000

1500200025003000

3500

2004-05

2005-06

2006-07

2007-08

YEAR

CURRENT RATIO

Current Liabilities

Current Assets

INTERPRETATION

As a matter of policy or as referred to as bankers rule of thumb, the

current ratio of 2:1 is considered to be satisfactory. The analysis is proved that the

a project report on cash and fund flow analysis and ratio analysis of dksskn, chikodi

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