PROJECT REPORT

ON

“INDIRECT TAXATION SYSTEM AND RATIO ANALYSIS

OF PRISM CEMENT LTD."

UNDER GUIDANCE OF
Mr.Tarun Gupta
(G.M.)
&
Mr.V.K. Tiwari
(AGM)

SUBMITTED BY
Meenakshi Dubey

M.B.A. PROGRAMME
Jaypee Business School,
Noida
 Declaration

I declare that the dissertation report entitled “TAXATION” at Prism

Cement Ltd. Satna (M.P.)” is my own work conducted under the
supervision of Mr. Tarun Gupta (G.M.) and Mr. V.K. Tiwari(A.G.M.)
Accounts department, Prism Cement Satna (M.P.)

I further declare that to the best of my knowledge, the project report

does not contain any part of any work, which has been submitted for the
award of any degree either in the university or any other university without
proper citation.

Date: 1st July 2013

Meenakshi Dubey
M.B.A. IInd Yr.
Jaypee Business School
Noida
 ACKNOWLEDGEMENT

This project report has been prepared for partial fulfillment of the course of
M.B.A. and being submitted as an essential part of the course. The study has
been done in PRISM CEMENT LTD, SATNA, for the project report from 15th
April to 15th June. The project report has been written as a study program with
the aim of applying a real scientific system of management in the industry.

Preparation of the project report is such a tedious work which is not possible
without help and proper guidance .In accordance with this I express my sincere
gratitude to Mr. Tarun Gupta(GM, Accounts) for providing his proper guidance
through the preparation of this project report.

I am also thankful to Mr. V.K. Tiwari (AGM, Accounts), Mr. Sumit Shukla
(Sr.Mgr, Accounts) and Mr. Rahul Tiwari (AGM, HRD) their patience in
providing me deep knowledge and the right approach to accomplish the task and
helped me knowledge and understanding of the subject.

I also wish to extent my greater thanks to Mr. M.L. Vyas (Sr.GM, Purchase)
prism cement ltd. Without whose valuable help the training programme could not
have been done properly.

Most importantly, it was the blessing of my parents and love of my doe’s friends
that motivated me throughout the project work.

Meenakshi Dubey
 PREFACE

I was highly obliged to be presented with the golden opportunity

of working with PRISM CEMENT. A Company having huge
infrastructure and networking .With the launch of Champion
brand it has added a new weapon to its army.

My project Titled “ACCOUNTS & INDIRECT TAXATION SYSTEM OF

PRISM CEMENT LTD.” was undertaken for a period of 6 week.

In the first chapter titled “COMPANY PROFILE”, I have tried to

give a brief introduction of Prism cement which is the first
company collaborated with F.L. Smith leading company in
cement industry.

INDIRECT TAX has been dealt with rules of taxation system and
tax schemes are the main thrust area of my study .This study
has been done on the basis of prism cement ltd. taxation system.

Although the project was complied and completed using limited

resources .I would be highly obliged if this proves beneficial
.
 TABLE OF CONTENTS

 DECLARATION
 ACKNOWLEDGEMENT
 PREFACE

1. SUMMARY.
2. INTRODUCTION & OBJECTIVE.
3. COMPANY’S PROFILE.
4. INDUSTRY ANALYSIS.
5. FINANCIAL ANALYSIS.
6. DETAILED STUDY / RESEARCH PROJECT.
7. CONCLUSION.
8. RECOMMENDATION.
9. KEY LEARNING’S.
10. REFERENCES.
 SUMMARY OF THE PROJECT

 Discussed about project and its guidelines, how to carry

out project with domain faculty.

 Discuss with Faculty and Prepare the Questionnaire.

 Collect the relevant data to support the project from the

respondent.

 Analyzing the data using the appropriate tools in

discussion with domain faculty.

 Design the data in the form of charts and tables so that it

will be easy to understand for the readers.
Objective

 To understand the process and flow of the activities

performed in accounts department.

 To gain experience by performing all the work.

 To observe the amount of cash flow taking place in the plant and

marketing office.

 To understand the tax process and the procedure followed to fill

return.

 To understand the working in SAP (software application program).

COMPANY PROFILE
 Introduction
PRISM CEMENT - A BRIEF HISTORY
(OVERVIEW OF THE COMPANY)
Prism cement ltd. Is an ISO 9001-2000,
ISO – 14001, OHSAS – 18001 AND SA –
8000 certified company. It is one of the most
advanced concerns in the world indulged in
manufacturing Ordinary Portland Cement of
every grade e.g. 53, 43 and 33 and Pozzolona
Portland cement.
Initially, this company was incorporated
under the name of Rasi cement by DR.B.V. RAI,
then it was taken by “RAJAN RAHEJA” and
the name of the company was changed to Karan cement; afterwards the
name was again changed to prism cement ltd.
Presently, the company is jointly promoted by Rajan Raheja group of
Mumbai, F.l. Smith & company A/S, Denmark (FLS and industrialization
fund for developing countries, Denmark (IFU).

This plant is started its production from June 1, 1997 in village Mankahari,
near Satna in M.P. with 2 million tons per year, which can be translated in
terms of 50 million bags of Ordinary / Pozzolana Portland cement.
Raw material assessment and finalization of the plant technical design has
been carried out with the support of FLS and also the main equipment from
the lime stone crusher to the electronic packers were supplied by FLS.

With an objective of being an active participant in the dynamics of the

nation march towards total industrialization prism cement limited has set up
a state-the-art cement plant near Satna in Madhya Pradesh.

The 2.51 million ton capacity ultra modern cement plant of prism is one of
the most advanced cement producers in the world with machinery and
technology imported from the world leaders, and state of art processes that
lend it a futurist environment. The company has set up a packing unit at
Allahabad to cater to the requirement of customer in eastern/central U.P.

The company is jointly promoted by RAJAN RAHEJA GROUP of Mumbai

F.L.SMITH and CO. A/S Denmark (FLS), world leaders in cement
technology and industrialization fund for developing countries DENMARK
(IFU).

A team of experienced engineers and a dedicated workforce, rich deposited

of high quality limestone, a high level of automation and sophisticated
quality control system. With unbeatable facilities prism cement production
to global standards.
Prism achievements have been made possible by our people – people with
vision, united by shared values and their commitment to excellence in the
world of contraction. No wonder, on quality, strength and consistency,
Prism cement is a world part.
 Name of organization -: Prism Cement

 Location -: Mankaheri

 Date of Establishment -: “1994”

 Human Resource -: 1787 Approx

1>Top authority -: 10-20

2>Employee -: 316
3>Labors -: 1451

 Type of Organization -: manufacturing

WHO’S WHO
LIST OF BOARD OF DIRECTORS

S.NO. NAME DESIGNATION

1 Mr. Rajesh G.Kapadia Chairman
2 Mr. Rajan Raheja Non-Executive
3 Mr. Aaziz H. Parpia Director
4 Mr. Satish B. Raheja Director
5 Mr. Akshay Raheja Director
6 Mr. James Arthur Brooks Director
7 Mr. Manoj Chhabra Managing Director
8 Mr. Vijay Aggarwal Managing Director
9 Mr. Ganesh Kaskar Executive Director

Details of the shares of the company held by the directors as on june 30,2007are as under

NAME NO. OF SHARES

Mr.Rajan Raheja 5,12,82,099
Mr. Manoj Chhabra 600
Mr. Aziz h. Parpia 1,06,799
Mr. Rajesh G. Kapadia 99
Mr. Satish B. Raheja 500
Mr. Akshay R. Raheja 55,50,000
 VISION & MISSION
Our Vision
 To be acknowledged as a leading player in the
industry with the highest level of integrity.

Our Mission

• State of the art cement plants

• Transparent dealings with all

stakeholders.

• Committed to the principles of good

corporate governance.

Highlights & Features

Highlights of Plant Design Features:

 The plant presently capable of

Producing 6800MT clinker par day is
All set to be increased to 15800 MT
Per day with the expansion work by
September 2010.

 The capacity will further be increased to 24800 MT per day once the work on
our Andhra Pradesh plant is commissioned by the year 2011.

Some Special Design and Features of our Plant:

 The entire cement manufacturing
process at all Prism Cement Plant
represents the latest relevant state-
of-the-art
technology.

 Our all Plant equipment are supplied By M/s F.L. Smidth & Co.,
Denmark and its subsidiaries, Ventomatic; Krupp Industries Ltd.,
ABB, Siemens And Crompton greaves.
 Computerized mining activities using three dimensional imaging
for optimum blending of raw material.
 The Vertical Roller Press mill for efficient grinding of raw meal.
 Six stages low pressure drop pre-heater for lower power
consumption.
 Online computerized quality control by x-ray spectrometer to
ensure raw meal to final product cement.
 A combination of Roller Press and Ball Mill for improved finish
grinding of cement.
 Quality grinding through closed circuit grinding system.
 Pollution control system e.g. ESP and Bag filters for all Plant
Building to meet stringent pollution control requirement.
 All Electronic Packers each capable of packing accurately 120 MT of
finished cement per hour.
 Automatic Truck Loaders each capable of loading 15 MT of cement
in 10 minutes.
 Wagon loaders each capable of loading one full rake in 5 hours.
 Total self reliance in power requirement through DG Sets.
 CEMENT MANUFACTURING PROCESS

Cement is a fine, soft, powdery-type substance. It is made from a

mixture of element found in natural materials such as limestone, clay,
sand and /or shale. When cement with Water, it can bind sand and
gravel into a hard, solid mass called concrete.

CEMENT CAN BE PURCHASED FROM MOST BUILDING SUPPLY

STORES IN BAGS

DID YOU KNOW?

Four essential elements are needed to make cement. They are silicon,
aluminum and iron.

Calcium (which is the main ingredient) can be obtained from limestone

.where can be obtained from sand and /or clay. Aluminum and iron
can be extracted from and iron ore, and only small amounts are
needed.

Cement is usually gray .white cement can also be found but it is

usually more ex gray cement.

Cement mixed with water , sand and gravel , forms

concrete.

Cement mixed with water, and sand ,forms cement

plaster.

Cement mixed with water, lime and sand, forms mortar.

Cement powder is very, very fine. One kilo (2.2ibs) contains over
300billion gray we haven’t actually counted them to see if that is
completely accurate. The powder will pass through a sleeve capable of
holding water.

Product

 Portland Pozzolona Cement (P.P.C)

 Ordinary Portland Cement (O.P.C)

Prism Cement Ltd manufactured two types of Cement:

I. Portland Pozzolona Cement (P.P.C.):- With the brand name ‘Champion’ is general-
purpose cement popular for all application during house construction by individuals.
It is finely ground blend of high quality clinker and carefully selected high quality
Pozzolonic material (Fly Ash) with high fineness and optimum range of chemical
composition.

Raw Material Used in P.P.C.

 Lime Stone
 Gypsum
 Laterite
 Fly Ash
 Coal
 Bags
Prism Champion Cement, an optimum blend of………

 Strength
 Workability
  Resistance to chemical attack
 Sustained strength gain
 Durability

Careful selection of Pozzolona is one of the crucial factor for the superiority of prism
Champion Cement.

 Optimum dosage of Pozzolona to ensure high level of 28 days strength.

 Balancing the fineness and the reactivity of Pozzolona to ensure proper
hydration character, thus ensuring sustained strength gain over long period
without sacrificing on the early age strength.
 Low heat of hydration helps in prevention of cracks ensuring durability of
structure.
 Also ensures durability of structure even in adverse environmental condition.

II. Ordinary Portland cement (O.P.C.):- Is made in three grades i.e. 33Grade, 43Grade
and 53Grade Cement. Prism cement OPC is in demand for specialized cement
concretes application like high-rise buildings, bridges, manufacturing AC sheets,
pipes, roles etc.

Raw Material Used in O.P.C.

 Lime Stone
 Gypsum
 Laterite
 Coal
 Bags

43 Grade
Features :-
 Achieve more than the specified strength as per the relevant IS Code through
proper adjustment in the chemical composition.

 High quality lime stone deposit results in:

- Higher strength of cement.
- Moderate sulphate resisting properties.
Applications:-
Optimally higher strength of cement makes it suitable for:

 All General and semi specialized construction works like plain and
reinforced cement concrete works, brick and stone masonry, plastering and
flooring.

 Manufacturing of concrete pipes, blocks, tiles and poles.

 Suitable for application like pre-cast, pre stressed and slip form
construction work.
 Also suitable for all type of specialized concrete repair works like
gunniting etc.

53 Grade

Features:-
 Higher strength than 43 grade is achieved through further improvement in the
raw meal chemical composition and also grinding finer than 43 grade cement.

 Higher quality lime stone deposit results in

- Higher strength of cement.
- Moderate sulphate resisting properties.
- Lower level of chloride concentration.

 Efficient quality control and high level of control in process parameters results in
lower free lime, low insoluble residue and loss on ignition.

 Closed circuit cement grinding system using high efficiency separator controls
the particle size distribution resulting proper hydration character.

Applications:-
High strength of cement makes it suitable for:
 Making high grade concrete with proper mix design.
  Early from work removal due to high early strength development results in
quicker construction.
 Optimally higher fineness gives better cohesiveness, improved workability
resulting denser concrete and superior surface finish.

HEAD OFFICES OF THE COMPANY:-

Allahabad: 16/1/6-A Tagore Town,
Jawaharlal Nehru Road.
Allahabad -211002 (UP)
Ph. (0532) 2465228, 2467288.

REGIONAL OFFICE:-
Varanasi: Unit -1, C 19/40, VIP, Fatiman Road Sigra
Behind the Kashi Gramin Bank
Varanasi – 221002
Ph. (0542) 2227427, 2227428.

Kanpur: X-1/170- Krishna puram

Ph. (0512) 2404123, 2400932.

Lucknow : 3/113-Vivek khand

Gomati nagar Lucknow -2260110
Ph. (0552) 2396847, 2397589.

Bareli: C-77/3 – in front of Tagore Park

Rajendra Nagar Bareli.
Ph. (0581) 2530089, 2530091.

Satna: Rajdeep Hotal, Near Rewa Road

Satna - 485002
Ph. (07672) 404400, 404403
Jabalpur: 4 – HIG –Residency Road
South civil line Jabalpur, 482001
Ph. (0761) 26200256, 2326907.

Patna : 302 C- Abhishek Plaza

Exhibition Road Patna, 800001
Ph. (0612) 2238744, 22240

QUALITY POLICY & CERTIFICATION

Quality Policy:-

National Accreditation Board for testing and Celebration Laboratories has granted
accreditation to our laboratory in accordance with ISO/IES 17025:2005 for the
chemical & mechanical testing.

We are committed to strive foe customer satisfaction by supplying consistent quality

cement and clinker as per mutually agreed product specifications.
This shall achieved by:
 Continual improvement in productivity levels and quality management system
 Enhancing employee’s skills.
 Focusing on customer’s needs and creating awareness regarding proper use of
cement.
 ENVIRONMENT CONSIDERATIONS

The Company is committed to mitigate potential environmental impacts associated

with cement plants. The Pyro processing and pollution control systems for Raw Mills
and all kiln, Cooler, Cement Mills and all Transfer points are designed to meet the
stringent requirements for Dust and NOx Emission. Green belt development through
large scale plantation of trees in and around the plant and residential areas.

Social Welfare:-
A well established township provides facilities like School, Hospital,
Banks, Post and Telegraph office and Recreational facilities for employees and their
families.
Human Welfare:-
Company considers its human resources as one of its most important
assets. At every stage, concept of ‘ownership’ is instilled in them to ensure full
commitment and dedications. Training of personnel is an integral part of the
Company’s operation. Right from level of worker’

Health & Safety Policy :-

The Health & safety of our people is the prime concern of the Company. Our
commitment to create & maintain safe & healthy work environment against hazards
and risks shall be achieved by:
 Continuously developing & maintaining safe work practices
 Focusing on operational & occupational hazards & risks

Creating awareness about preventive health……………

OBJECTIVES OF PRISM CEMENT LTD. :-

The main objective of Prism Cement is to continuously

improve the quality of its products and services in order to
meet the customer satisfaction.
COMPETITORS OF PRISM CEMENT LTD:-

 In intensive competition Prism Cement Ltd. has many competitors

as JP CEMENT, PRISM CEMENT SAMRAT (Satna), PRISM
GOLD (Maihar) CEMENT and ACC CEMENT.
 The most competitor of Prism Champion is JPCement.in this
competition scenario Prism Champion is facing competition.

 Increase discount structure provided by JP Cement there market

share.

 JP Cement Ltd. is increasingly more wide open in the area of

advertisement comparing to Prism Cement.
BUSINESS ENVIRONMENT

The Indian economy continued its march ahead by registering a 9% growth

over the previous year. The manufacturing sector has contributed
significantly to this impressive growth .The outlook for the cement industry
remains positive, with a lot expected to happen on the capacity addition
front in the market. The industry dispatched 167.67 Mn. During the year
2007-08, registering a growth of 8%. Installed capacity during the same
period increased by about 16%, from 167.83 Mn.T to 195.77 Mn.T.

For the current year too there are healthy signs, with the government
continuing its measures for raising investment in the infrastructure and
housing sector. Initiatives by the government to increase housing
affordability and home ownership are likely to spur demand for housing
loans. At the same time, increase in prices of fuel and power may have a
dampening effect on cement demand but looking at the consistent growth of
the construction and infrastructure sector, it is expected that cement will
have a sustained demand.

REVIEW OF OPERATION AND FUTURE

OUTLOOK

 Production of clinker and cement registered a growth of 5.45% and

9.20%, respectively.
 Sales of cement and clinker increased from 26.93 lack tones during
the year 2006-07 to 30.64 lack tones during the year 2007-08, an
increase of 13.78%.
 Revenues increased by 15.42% to Rs.1019.75 cores during the year
under review from Rs.883.48 crores during the previous year.
 PAT for the year-ended june30, 2008 at Rs.241.63 crores, was higher
by Rs.48.86 crores, registering a increase of 25%.
 Power consumption down by 5.75% to 68.08 units Ksh per tone
cement.
INTERNAL CONTROL SYSTEM

The management maintains adequate internal controls commensurate with

the nature and size of operations of the company, which is designed to
provide reasonable assurance that assets are safe-guarded, transaction are
correctly executed and recorded in accordance with managements
authorization and accounting policies.

The company’s internal control system provides high level of system based
checks and controls. Regular internal audits and checks ensure that
responsibilities are executed efficiently. The audit committee of the board
of directors actively reviews the adequacy and effectiveness of internal
control systems and suggests improvement for strengthening them from
time to time.
The statutory auditors independently evaluate internal checks and controls
during the conduct of their audit they also participate in audit committee
meeting to express their opinion on issues of concern.

HUMAN RESOURCES

Prism’s strength continues to be its employees. Delegation and

empowerment is provided to senior managers to enable the concept of
“OWNERSHIP” to be instilled in them. This ensures full commitment and
dedication from each employee and is working very satisfactorily.

The company continuously strives to upgrade the skills and motivation

levels of its human resources through various mechanisms. Efforts are made
in developing them in keeping with organizational goals and priorities and
at the same time caring for their individual aspirations of growth.
The efforts put in by employees at all levels are highly commendable and
have contributed immensely to the excellent performance of the company.

CORPORATE
SOCIAL RESPONSIBILY

For prism, corporate social responsibility is not just a program but it is the
way business is done every day. The company has always been conscious of
its social obligations and has initiated welfare programmes for the benefit
of its employees and villagers living near the plant by providing the basic
facilities and a better way of living, right from its inception.
Besides providing emergency and basic medical facilities to its employees
and contractors and their families at the plant, a mobile medical van
provides free medical aid to the villagers and their families.

Operation of a cement plant has inherent potential to emit dust and gases
that may affect air quality negatively. At prism, the installation of pollution
control equipment of international standard are in place to improve air
quality at and around the operations.

Water management and water quality remain the key focus areas of the
management. The quality of both surface and ground water is monitored
regularly to ensure that the mining and plant operations do not pollute the
water resources of the communities living around the mining and plant area.

In recognition of the above, the company was awarded the energy

conservation award by the Government of India, Ministry of Power for the
year 2006. The company was also awarded the 1st Prize for
Environment Management by the the Government of Madhya Pradesh
, Ministry of Environment announced in 2007.

SAFETY, HEALTH & ENVIRONMENT

Safety is a top priority issue at prism, especially with regard to mining and
its risks. The processes of cement manufacture be it mining, production,
processing, or packing, have a direct impact on the plant site and its
surrounds. Therefore all efforts are made to anticipate, prevent as far as
possible and mitigate the effects of its actions.

Pre-employment and annual examinations are performed on all employees

to ensure that they are fit to perform the work for which they are employed
and to ensure the early detection and treatment of any occupational disease
that may arise.
Prism consciously strives to enhance the health and wellness of the
employees and their dependants by addressing and managing their health
risks while simultaneously providing access to comprehensive healthcare
facilities. The company also runs a number of programmes designed to
promote safety, Health and Environment (SHE) awareness among its
employees and thus improve SHE management system.
 INDUSTRY ANALYSIS

1.1 Industry Size & Trends of Growth:

 After the global financial crisis of 2008-09, the Indian economy grew strongly in
excess of 8.5% per annum for the next two years due to fiscal and monetary
stimulus. However, with high inflation rates, the Reserve Bank of India started
raising policy rates in March 2010.
 High rates and policy constraints adversely impacted investment and as a result
the economy grew only 6.2% in 2011-12. In 2012-13, the growth rate further
slowed down and the economy is expected to have grown at only 5.0%, lowest
since a decade.
 Manufacturing sector is expected to have just marginally grown at 1.9% during
the year.
 Thus, on the whole, it was a year of economic uncertainties and weak
sentiments. The Government of India is taking measures to stabilize the
economy and revive the sentiments which are expected to have positive effects
for the economy in medium to long-term.
 Prism Cement Limited is one of India’s leading building materials’ company. In
the above economic backdrop, the Company achieved a consolidated sales
turnover of ` 5,212 crores, resulting in a growth of 6.5%. The consolidated Profit
before Depreciation, Interest and Tax (EBITDA) of the Company was ` 323
crores, thereby marginally growing by 1.7% as compared to the last year.
 The Company is organized into three key Divisions, viz. Prism Cement, H & R
Johnson (India) and RMC Ready mix (India).

Cement Division
 The Indian cement industry experienced subdued demand growth during the
year under review. Cement demand and prices demonstrated an unusual trend.
 Construction activities remained muted owing to various reasons. Prolonged
monsoon, heavy winter and delay in execution of infrastructural projects due to
environmental hurdles led to lower cement demand growth in FY 2012-13.
 Slowdown in the housing sector due to rising interest rates also impacted
cement off-take.
 There was a temporary blip in volumes during the 1st quarter of FY 2012-13 due
to suspension of clinker
 production in Unit II at Satna as a result of an unfortunate. accident in the
Blending Silo. The Company resumed clinker production in July 2012 by
installation of an intermediate system. The construction of the new silo at Unit II
at Satna is at an advanced stage, upon completion of which production of
clinker will normalise.

1.2 Position of the Company in terms of Market Share etc

OPERATIONS
The gross sales and other income for the year ended March 31, 2013 was ` 5,155.00
crores as against ` 4,850.60crores for the previous year. The Company incurred a loss
before tax of ` 82.99 crores and net loss of ` 59.48 crores during the year ended March
31, 2013 as against loss before tax of ` 45.99 crores and net loss of ` 30.01 crores
during the year ended March 31, 2012, primarily due to depressed markets, increased
power and fuel costs, higher freight charges and subdued realizations. For the year
ended March 31, 2013, the consolidated net loss of the Company and its subsidiary
companies amounted to ` 62.47 crores as against a net loss of ` 18.44 crores for the
previous year.

FINANCE
The Company has repaid loans of ` 491.71 crores during the year and tied-up fresh
loans of ` 803.50 crores to enhance, inter alia, its ongoing long term working capital
and capital expenditure during the year. The total borrowings of the Company stood at
` 1,609.30 crores as on March 31, 2013.The loans were used for the purpose that they
were sanctioned for by the respective banks/ financial institutions.

FIXED DEPOSITS
Out of the total 10,968 deposits of ` 37.01 crores from the public and the shareholders
as at March 31, 2013, 418deposits amounting to ` 0.89 crores had matured and had not
been claimed as on that date. Since then, 19 of these deposits aggregating to ` 0.04
crores have been claimed. During the year, the Company has transferred a sum of `
0.05 crores to the Investor Education and Protection Fund in compliance with Section
205C of the Companies Act, 1956 which represents unclaimed fixed deposits and
interest thereon.
Distribution of Shareholding and Shareholding Pattern:
Distribution of Shareholding
No. of Shares No of Shareholders
1 – 100 51,141

101 – 200 20,210

201 – 300 7,186

301 – 400 3,081
401 – 500 6,849
501 – 1000 7,206
1001 – 5000 4,863
5001 – 10000 485
10001 – 50000 304
50001 and above 132
Total 1,01,457

The Board at its Meeting held on January 24, 2013 has, subject to the requisite
approvals, re-appointed Mr. Vijay Aggarwal as Managing Director and Mr. Ganesh
Kaskar as Executive Director of the Company for a period of three years with effect
from March 3, 2013, upon terms and conditions mentioned at Item Nos. 6 and 7 read
with the Explanatory Statement of the accompanying Notice of the ensuing Annual
General Meeting. In accordance with the requirements of the Companies Act, 1956 and
the Articles of Association of the Company, Mr. Rajesh G. Kapadia, Mr. Akshay R.
Raheja and Ms. Ameeta A. Parpia retire by rotation at the forthcoming Annual General
Meeting and being eligible, have offered themselves for re-appointment. As required,
the requisite details of Directors seeking re-appointment are included in this Annual
Report.
1.3 SWOT ANALYSIS
STRENGTH:
 Satna brand equity is excellent.
 Prism Cement name can be encased.
 Good dealer’s network.
 Consistent market growth in area.
 Ready availability.
 Attractive packaging.
WEAKNESS:

 No sales tax exemption.

 Inflexible Pricing System.
 Absence of credit facilities.
 Compulsive high pricing.
 Lack of dump facility.
 Lack of adequate manpower, professional attitude required.
 Insufficient dealers’ orientation programme.
 Tight advertising budget.

OPPORTUNITIES:
 Expected growth in economy.
  Liberal housing loan scheme.
 Expansion of dealer’s network.
 Thrust in unrepresented areas.
 Large home market.
 Lange untapped area.
 Demand in non-trade/Govt. sectors.

THREATS:
 Price war amongst the major players to gain share.
 Deep inroads by low price brands.
 New entrants from Chhattisgarh.
 Aggression by sales tax exempted plants.

1.4Sector and Market Segment:

Sector Dynamics:
India is the second largest cement manufacturer after China, providing about 7% of the
global production. The country is also among the leading exporters worldwide. Since
cement is a cyclical commodity, the dynamics of production are highly dependent on
the overall economic activity in India. Thus, the recent slow-down in GDP growth and
especially the unstable situation in the construction sector have resulted in decreasing
demand and excess capacities.

Demand:
 The housing sector is the main driver of demand for cement manufacturing, as
over 65% of the production is directed to housing construction. Another 13% are
used in commercial construction and 11% in infrastructure projects, with
approximately 9% of the cement used in industrial construction.
 The demand for cement was affected by the economic slowdown in recent years,
subdued construction activity and delays in execution of infrastructure projects.
Prolonged monsoon periods also have a negative effect on the sector. According
to market estimates, the sector capacity has reached around 330 million tonnes in
 FY 2012, while the utilization rate is about 80%, putting pressure on the
profitability of sector players.

Market Segmentation:
Cement production in India is a fragmented industry with more than 160 players.
However, the sector is rather oligopolistic in nature as the top 10 producers control
about 70% of the domestic market. The recent slowdown in demand has affected the
sector but small producers experienced the biggest reductions in capacity utilization,
which suggests a room for consolidation in the industry.
A number of foreign have entered the market - French cement maker Lafarge,
Germany's Heidelberg Cement, Italy's Italcementi and Swiss cement maker Holcim.

Regional Segmentation:
 With cement being a bulk, transport-expensive commodity, the production has
been concentrated on regional basis. India is divided into five main regions –
northern, eastern, western, southern and central. The southern has the highest
installed capacity, while the eastern is the only region with a demand-supply
gap.
 Responsible for 7-8 percent of global cement production, India is the second
largest cement market in the world, and also an exporter to 30 countries. The
cement industry in India is divided into five geographical segments, wherein the
North and South regions are the leading suppliers of cement. The East, West and
Central regions face deficit of cement, thereby relying on purchases from the
North and South. According to the Cement Manufacturers’ Association (CMA),
there are 139 large cement plants and 365 mini and white cement plants in the
country.

1.5 Factors that will drive growth in this sector

 Housing segment growth is leading to higher demand for cement for

homebuilding.
 Government’s 12th Five Year Plan focuses on increasing infrastructure
(upgraded airports, ports, railway expansion, etc.) to drive construction activity.
 Rise in commercial and retail spaces, along with hotels in near future, will
account for increased demand for cement.
 Use of alternate fuels will help reduce low production costs and emissions and
further drive this sector.
  There is an increase in the sale of blended varieties of cement - Portland
Pozzolana Cement (PPC) and Portland Blast Furnace Slag Cement (PBFC)

GLOBAL SCENARIO
Cement is one of the key infrastructure industries.
Price and distribution controls were lifted on the 1 st march 1989 and licensing was
dispensed with since 25th July 1991.
However, the performance of the industry and prices of cement are monitored on a
regular basis. The industry is subject to quality control order issued on 17.02.2003 to
ensure quality standards.

1.6Expansions
 Mine development activities for the project at Kurnool District, Andhra Pradesh,
have commenced. Further project activities will be taken up in due course.
 The basic infrastructure work and work on the incline is under progress at the
Coal Block at Chhindwara, Madhya Pradesh.
 The mined coal will be used for captive consumption of the cement plant
located at Satna, Madhya Pradesh. During the year, the number of plants
operated by the RMC Division increased by one plant.

1.7Industry Scenario / Future Outlook

 Bulk of HRJ Division’s products is targeted towards affordable housing
segment which is growing at a healthy rate and is likely to continue in
future as well due to India’s economic growth and favorable
demographics.

 HRJ has recently launched a slew of lifestyle products to enhance its

offerings at premium price points.
  The robust distribution network, strong brand equity, wide-spread
manufacturing locations, and a comprehensive product portfolio of tiles,
baths, kitchens, and engineered marble & quartz enable HRJ to enjoy a
distinct competitive advantage over others in the market.

 The Ready-mixed Concrete Industry in India is over 15 years old and has
been growing at a healthy rate over the last few years.

 The markets in 2-tier & 3-tier cities have also been showing maturity
which will help the industry’s growth.

a) Prism Cement
 Prism Cement commenced production at its Unit I in August, 1997 and Unit II
in December, 2010.
 It manufactures Portland Pozzolana Cement (PPC) with the brand name
'Champion' and Ordinary Portland Cement (OPC).
 It has the highest quality standards due to efficient plant operations with
automated controls.
 It caters mainly to markets of UP, MP and Bihar, with an average lead distance
of 425 kms from its plant at Satna, MP
 . It has a wide marketing network with about 3,300 dealers serviced from 163
stocking points.

b) H & R Johnson (India)

 Established in 1958,
 Is the pioneer of ceramic tiles in India.
 Today, HRJ enjoys the reputation of being the only entity in India to offer end-
to-end solutions of Tiles, Sanitary ware, Bath Fittings, Kitchens and Engineered
Marble & Quartz.
 In ceramic/vitrified tiles, HRJ along with its Joint Ventures and subsidiaries has
a capacity of over 54 million m2 per annum spread across 9 manufacturing
plants across the country which is the largest in India.
 Offers glazed wall and floor tiles, bath products, kitchens, laminate/engineered
wooden flooring, and engineered marble & quartz. Johnson Marbonite brand
offers a complete range of vitrified tiles (polished and glazed).
 Johnson Endura offers industrial tiles and tiles for special applications like
bathrooms/high traffic areas/swimming pools etc.
C) RMC Ready-mix (India)
 One of India’s leading ready-mixed concrete manufacturers, set-up in 1996.
 Currently operates 88 ready-mixed concrete plants in 37 cities/towns across the
Country.
 The Division has been able to secure new positions in its existing markets which
will help it to maintain its growth.
 RMC has also ventured into the Aggregates business and operates large
Quarries and Crushers.
 At present, RMC has 8 Quarries across the country.
 RMC has been at the forefront in setting high standards for plant and machinery,
production and quality systems and product services in the ready-mixed
concrete industry.

Investor Relations
 Prism Cement Limited is committed to creating long-term sustainable
Shareholder value through successful implementation of its growth plans.
 The company’s investor relations mission is to maintain an ongoing
awareness of its performance among shareholders and financial community.

BRAND NAME STRATEGY

 The company and its product is named after the place where its first
manufacturing plant was set up .i.e. Prism Cement Limited Satna.
 Due to limited products they are named under the product family name of Prism
Cements. The company was initially named Prism Ltd. which was changed after
Holcim bought 46% stake in Prism Ltd.
 The only way the products in the product line can be differentiated through is
the different grades the cements have and the different types of cement i.e. PPC,
OPC, white cement.

PACKAGING
 Woven sacs are the most cost effective packaging.
 There are various types of bags made out of PP/ HDPE and with or without
lamination.
 There are Jumbo bags which are used to pack bulk quantities.
 Off late Woven fabric which is the first stage of Woven sacks, is a preferred
medium for bale wrapping and rain protection in the form of Tarpaulin.
  Visual appeal is not a major concern. Thus, it does not require any specialized
designing .The major concern is ease of transportation, storage, minimizing
pilferage.
 The package of Prism cement is WHITE in color with woven ends and has
hooks so that the porters find it easy to load and unload without hampering the
main package.
 lt also has its trademark logo of a macho holding building which highlights the
message “PRISM CHAMPION”.
 The package should not allow entry of water as cement hardens when it comes
in contact with water. The sac should be lightweight as the product itself is
bulky.

PLACE: DISTRIBUTION CHANNELS INVOLVED

 They have a nationwide reach with strong

footprints in the West, North and East India.
 A wide dealer network of over 26000 dealers and
retailers nurtured on empowered partnership
enables Prism cement to reach even the tiniest
village.
 The concept of a two-tier distribution chain
comprising of manufacturers and dealers
functions very well.
 It is a perfect and simple set-up, in the sense that
manufacturers sale cement to dealers.
 Company invariably hires c & f agents or transport cements to own or
government warehouses either via roadway or railways.
 In case of exports, cement reaches the nearest port via roadways or railways
and is then transferred to the importing country.
 Domestically, from c & f agents or warehouses the cement is transported to the
dealers/distributors and in turn to sub dealers who finally sell it to the end users.
There may or may not be physical ownership of goods.
 In the second case, dealers and sub dealers take order from buyers and place it
to the companies, co ordinate and monitor the timely dispatch of said orders,
transportation of goods and final delivery.
 Distributor network in cement industry is highly dominating and companies are
compelled to hire as they do not really have that rapport and touch with the end
consumer of their product.
  The distributors have storage facilities as well which help control well in the
entire supply chain as they are the ones who bring orders and therefore are
directly responsible for the business that a manufacturer would do.
 With the mushrooming of large plants engaging in cut-throat competition to
grab a bite of the market pie, Indian cement companies are now beginning to
adopt innovative strategies that have revolutionized the way cement is sold in
India.
 With a view to adding value to their products, manufacturers have now started
selling concrete instead of cement.

PRICING

DISTRICT PRICE in Rs/50 kg

Satna 279
Nagpur 289
Allahabad 284
Varanasi 276
Kanpur 276
Patna 282

 This variation in prices can be observed all over India.

 The major factors contributing towards the variation in prices are the regional
transportation costs, the variations in regional supply and demand, difference in
the intensity of competition amongst local retailers and distributors.
 Apart from this the prices keep on varying throughout the year depending upon
the demand and supply dynamics, the costs of raw material used and other
factors.

DISCOUNTS:
 The company does provide discount in case of bulk purchases. The profit
margins are already low in cement industry thus discounting is not practiced in
case of small quantities.
 Prism Cement is a premium brand having an edge when it comes to cost
because of their transportation system they have minimized costs and thus, have
a price advantage.
 PROMOTION
 ROLE OF SALES PERSONAL IN PROMOTION
 The major customer base which buys cement in India even today is the
household owner. Though the end customer the purchase is influenced by
opinion leaders viz. contractors, masons, architects, etc. Thus, to attract them
Prism cements sales teams organize seminars for contractors and masons.
 They also interact with retailers and distributors who are the channel members
representing the company to the end customer. They act as the connecting link.
They also act as a channel between the company and contractors.
 The retailers or distributors play an important part in influencing the end
customer.
 USE OF ADVERTISEMENTS IN PROMOTION

 Prism cements are the pioneer of branding in cement industry.

 Prism Cements is one of the companies that realized the potential of brand as a
differentiator.
 It also uses outdoors for advertising to enhance the brand recall.

 SALES PROMOTION SCHEMES:

 The sales promotion schemes are not directly implemented for the end user but
channel members are the one who benefit from sales promotions.
 Apart from this they also felicitate the best performers. They provide
performance based incentives.
 Prism Cements has worked out an equity-incentive scheme for its retailers.
.
 They are given the option by the dealers to convert their cash incentives into
equivalent number of shares.
  Retailers can also avail of a combination of two incentive offerings depending
on his sales performance.
 The scheme is an innovative incentive to retailers, and has the effect of tying the
retailer closely to the company.

FINANCIAL ANALYSIS
OVERVIEW OF FINANCE DEPARTMENT

Functions and Responsibilities

Functions and responsibilities of the finance and accounts wings include the
following.
 1. Determine the financial resources required to meet the corporation
operating and capital expenditure program.
2. Forecast how much of there of these required would be met by internal
generation of funds by the corporation and will have to be obtained outside
the corporation.
3. Develop the best plan to obtain the external funds needed.
4. Establish and maintain the system of financial control governing the
allocation and use of funds.
5. Analysis of financial result of all the operation reports the fact to
management and makes recommendation concerning future operations.
6. Carryout special studies with a view to reduce cost improve efficiency and
profitability.

The above are dealt with in detail here under.

Feasibility Study and Project Report
In regards capital expenditure relater to new project or expansion feasibility
studies and details project report are to be prepared by the management and the
financial wing to ensure should examine these reasonable profits. The financial
resources for meeting the expenditure would be available.

Budgeting

Long term operating cornering period of 10 years indicating the likely profit
loss earned during period.
 Preparation of long term capital expenditure budget covering a period of about
5-10 years and advice the management in regards to the timing of the incurrence of
capital expenditure.

The budget returns that flow out of the comprehensive budgetary system in
operating.

Cash Flow Statement:

Baled on the long term budget the financial wing would prepare a cash flow
statement indicating the inflow and outflow statement indicating the inflow and
outflow of cash during the period similarly it will also prepare a detailed monthly cash
flow statement for the year based on the annual budgets.

Working Capital
It will also make an assessment of the total working capital and working capital
requirement for the fiscal year and advice the management regarding the sources of
financing the working capital requirement.

Purchase:
Finance wing will be associated on a matter relating to purchase of equipments,
machinery etc. it would also lay down suitable procedure for purchase to ensure that
adequate control is exercised over such purchase and that there is no un-economic
purchase.

Pricing Policies:
It will also advice the chief executive on pricing policies taken by the
organization in regards to the selling price of power inter department issues charging
of material to job contract.

SYSTEM Condition:
It would advice the management on all the SYSTEM matter having financial
implication such as scale of pay dearness allowance, bonus, gratuity etc.

Accounting Matter
General finance and accounts being is in charge of allows, budgets and internal
audit of the corporation. It shall maintain adequate records of assets n liabilities and
transaction of the corporation see the adequate internal audits there of the correct and
regular made and recommended and enforced duly approved method and procedure
where by the business of the corporation with the maximum safety efficiency and
economy.
It shall examine all proposal disbursement from the corporation’s fund and
approve in the advance payment required take made in accordance with the prescribed
administrative and accounting requirement and procedures.

Stores Account:
Finance and account wings are responsible for the maintenance of adequate
system of stores accounts. It would assists the management in determining the
minimum, maximum and ordering levels of various items and also be responsible for
the introduction and for operation of the ABC method of control with a view to reduce.
The inventory holding is the optimum level.
 It will also be responsible to ensure that the verification of stocks of various
items of stores is carried out by ensuring.

1. That physical stack of selected items is verified everyday.

2. That each item of stock is verified at least once a year.

3. That the surprise element in regard to stock verification is maintained.

4. Internal audit: it will be organized on effective internal audit department

and will process the report submitted by the internal audit and place the same
before the chief executive.

5. Annual accounts and audit: it will ensure that the annual accounts are
prepared in time according to provision of law. It will attend to all matters
relating to the statutory audit and the audit by the controller and audit
general.

6. Tax matters: it will be responsible for attending to all tax matters relating
to the corporation.

Special Studies
It may take up from time to time special studies particularly with reference to
economics in administration and other overhead expenditure and such other areas,
which have a bearing on the profitability of the corporation. It may also take up for
study the administrative, accounting and other procedures prescribed with a view to.
 1. Eliminate unnecessary movement of paper and
2. Reduce clerical work.

Reporting
The following reports are taking submitted to the management
1. Resource employed.
2. Summary of the cash flow for the quarter.
3. Forecast of the cash flow for the next quarter.
4. Capital expenditure incurred during the quarter compared with sanctioned
amount, Budget estimate etc.
5. Any other report prescribed by the undertaking relating financial matters.

Head Office Finance & Accounts wing.

1. Establishment
2. Bills & banking
3. Management information systems & financial Concurrence.
4. Assets accounts.
5. Book keeping and compilations.
6. Budget and finance.

Profit & Loss Account

Annual results in brief
(Rs crore)

Mar ' 13 Mar ' 12 Mar ' 11 Mar ' 10 Mar ' 09
Sales 4,768.47 4,504.71 3,388.71 2,856.03 629.86
 Mar ' 13 Mar ' 12 Mar ' 11 Mar ' 10 Mar ' 09
Operating profit 259.97 262.64 341.15 511.28 172.52
Interest 190.31 163.54 101.16 48.31 3.54
Gross profit 75.19 104.09 243.00 465.82 176.29
EPS (Rs) -1.18 -0.60 1.90 4.99 3.23
Annual results in details
Mar ' 13 Mar ' 12 Mar ' 11 Mar ' 10 Mar ' 09
Other income 5.53 4.99 3.01 2.85 7.31
Stock adjustment 84.17 -33.49 -25.01 -27.92 3.73
Raw material 1,213.67 1,174.69 815.34 608.58 53.74
Power and fuel 750.25 719.03 428.20 308.54 174.58
Employee expenses 258.93 222.99 172.80 134.88 27.42
Excise - - - - -
Admin and selling expenses - - - - -
Research and development
expenses - - - - -
Expenses capitalized - - - - -
Other expenses 2,201.48 2,158.85 1,656.23 1,320.67 197.87
Provisions made - - - - -
Depreciation 159.80 147.28 113.30 89.85 24.31
Taxation -23.51 -15.98 34.87 107.20 55.75
Net profit / loss -59.48 -30.01 95.79 251.05 96.23
Extra ordinary item 1.62 -2.80 0.96 -17.72 -
Prior year adjustments - - - - -
Equity capital 503.36 503.36 503.36 503.36 298.25
Equity dividend rate - - - - -
 Mar ' 13 Mar ' 12 Mar ' 11 Mar ' 10 Mar ' 09
Agg.of non-prom. shares
(Lacs) 1264.75 1264.75 1264.75 1264.75 1141.24
Agg.of non promotoholding
(%) 25.13 25.13 25.13 25.13 38.26
OPM (%) 5.45 5.83 10.07 17.90 27.39
GPM (%) 1.57 2.31 7.16 16.29 27.67
NPM (%) -1.25 -0.67 2.82 8.78 15.10

Prism Cement
Cash Flow Statement
(Rs crore)

Mar ' 13 Mar ' 12 Mar ' 11 Mar ' 10 Mar ' 09
Profit before tax -82.99 -45.99 130.66 358.25 151.98
Net cash flow-operating
activity 235.85 248.55 253.76 367.34 104.86
Net cash used in investing
activity -272.14 -215.22 -435.76 -556.56 -60.34
Net cash used in financial
activity 16.52 -37.71 189.62 195.63 -36.55
Net inc/dec in cash and
equivalent -19.77 -4.38 7.62 6.41 7.97
Cash and equivalent begin of
year 52.00 59.89 52.28 45.87 12.89
Cash and equivalent end of year 32.23 55.51 59.90 52.28 20.86

Prism Cement
Balance sheet
(Rs crore)
 Mar ' 13 Mar ' 12 Mar ' 11 Mar ' 10 Mar ' 09
Sources of funds
Owner's fund
Equity share capital 503.36 503.36 503.36 503.36 298.25
Share application money - - - - -
Preference share capital - - - - -
Reserves & surplus 586.35 645.21 704.47 666.14 363.40
Loan funds
Secured loans 1,149.52 854.49 925.47 743.20 -
Unsecured loans 132.00 184.46 244.37 58.37 -
Total 2,371.23 2,187.52 2,377.67 1,971.07 661.65
Uses of funds
Fixed assets
Gross block 3,198.38 2,932.62 2,785.75 1,783.13 733.39
Less : revaluation reserve - - - - -
Less : accumulated
depreciation 1,188.96 1,019.47 898.97 792.00 340.69
Net block 2,009.42 1,913.15 1,886.78 991.13 392.70
Capital work-in-progress 83.94 66.42 57.44 621.23 109.16
Investments 378.24 390.00 354.31 326.67 203.81
Net current assets
Current assets, loans &
advances 1,578.28 1,347.71 1,036.43 702.29 173.94
Less : current liabilities &
provisions 1,678.65 1,529.76 957.29 670.25 217.96
Total net current assets -100.37 -182.05 79.14 32.04 -44.02
 Mar ' 13 Mar ' 12 Mar ' 11 Mar ' 10 Mar ' 09
Miscellaneous expenses not
written - - - - -
Total 2,371.23 2,187.52 2,377.67 1,971.07 661.65
Notes:
Book value of unquoted
investments 354.19 365.95 330.26 302.62 203.81
Market value of quoted
investments 51.88 62.75 65.16 69.54 -
Contingent liabilities 344.38 218.95 162.77 479.05 552.54
Number of equity shares
outstanding (Lacs) 5033.57 5033.57 5033.57 5033.57 2982.50

CALCULATION OF RATIOS
(Rs crore)
 Mar ' 13 Mar ' 12 Mar ' 11 Mar ' 10 Mar ' 09
Per share ratios
Adjusted EPS (Rs) -1.21 -0.34 1.92 5.39 3.22
Adjusted cash EPS (Rs) 1.96 2.58 4.17 7.17 4.03
Reported EPS (Rs) -1.18 -0.59 1.90 4.99 3.23
Reported cash EPS (Rs) 1.99 2.33 4.15 6.77 4.04
Dividend per share 7.5 0.50 1.00 2.50 1.50
Operating profit per share (Rs) 10.02 5.55 6.42 10.02 5.75
Book value (excl rev res) per
share EPS (Rs) 21.65 22.82 24.00 23.23 22.18
Book value (incl rev res) per share
EPS (Rs) 21.65 22.82 24.00 23.23 22.18
Net operating income per share
EPS (Rs) 94.73 89.46 66.84 56.33 21.10
Free reserves per share EPS (Rs) - 11.94 13.66 13.02 12.18
Profitability ratios
Operating margin (%) 5.45 6.20 9.60 17.78 27.23
Gross profit margin (%) 2.10 2.93 6.24 14.61 23.37
Net profit margin (%) 5.8 -0.66 2.82 8.80 15.09
Adjusted cash margin (%) 2.06 2.87 6.19 12.65 18.86
Adjusted return on net worth (%) -5.60 -1.52 8.00 23.17 14.49
Reported return on net worth (%) -5.45 -2.61 7.93 21.46 14.54
Return on long term funds (%) 5.01 6.60 10.33 22.64 23.45
Leverage ratios
Long term debt / Equity 0.93 0.80 0.90 0.62 -
Total debt/equity 1.18 0.90 0.96 0.68 -
 Mar ' 13 Mar ' 12 Mar ' 11 Mar ' 10 Mar ' 09
Owners fund as % of total source 45.95 52.50 50.79 59.33 100.00
Fixed assets turnover ratio 8.2 1.97 1.22 1.61 0.86
Liquidity ratios
Current ratio 1.05 0.88 1.08 1.05 0.79
Current ratio (inc. st loans) 0.72 0.76 0.92 0.87 0.79
Quick ratio 0.66 0.54 0.62 0.61 0.42
Inventory turnover ratio 11.02 13.90 12.95 14.81 26.28
Payout ratios
Dividend payout ratio (net profit) 8.2 - 59.98 49.12 54.40
Dividend payout ratio (cash profit) - 24.94 27.48 36.17 43.42
Earning retention ratio - - 40.56 54.51 45.43
Cash earnings retention ratio 100.00 77.47 72.64 65.84 56.47
Coverage ratios
Adjusted cash flow time total debt 12.98 8.00 5.57 2.22 -
Financial charges coverage ratio 1.40 1.67 3.32 9.91 50.71
Fin. charges cov.ratio (post tax) 8.2 1.69 2.98 7.49 35.05
Component ratios
Material cost component (%
earnings) 46.80 48.31 49.83 45.62 19.80
Selling cost Component - 16.86 15.20 13.73 11.79
Exports as percent of total sales 0.50 0.64 0.60 0.62 0.61
Import comp. in raw mat.
Consumed 5.18 4.44 2.13 1.98 -
Long term assets / total Assets 0.60 0.63 0.68 0.73 0.80
Bonus component in equity capital - - - - -
 Mar ' 13 Mar ' 12 Mar ' 11 Mar ' 10 Mar ' 09
(%)
RATIO ANALYSIS
 Ratio Analysis can be defined as the study and interpretation of relationships
between various financial variables, by investors or lenders.
 It is a quantitative investment technique used for comparing a company's
financial performance to the market in general.
 A change in these ratios helps to bring about a change in the way a company
works.
 It helps to identify areas where the management needs to change.

THE FORM OF RATIO

1.} In Form of Ratio

2.} In Form of Percentage

3.} In Form of Rate or Time

OBJECTIVE OF RATIO ANALYSIS

1) Measurement of profitability
2) Analysis of Financial Position
3) Financial Forecasting and Planning
4) Helpful in Control
5) Helpful in Communication
6) Helpful in Comparative Study
7) Examination of Solvency Position
 TYPES OF RATIOS

1) Profitability Ratio

2) Activity Ratio

3) Liquidity Ratio

4) Solvency Ratio

1. PROFITABILITY RATIO: Can be defined as a ratio that explains the

profitability of a company during a specific period of time. It explains how profitable a
company is. These ratios can be compared during different financial years to see the
overall performance of a company. Some of the profitability ratios calculated is:

 Return on assets  Degree of financial leverage

 Return on common stock equity  Per share ratios
 Profit margin  Earnings per share
 Leverage ratio  Price earnings ratio
 Debt ratio  Book value per share
 Equity ratio  Yield on common stock
 Debt to equity ratio
 Dividend payout ratio
 Times interest earned
Profitability Analysis Ratios

Net Income
Return on Assets
----------------------------------
(ROA) =
Average Total Assets

Average Total Assets = (Beginning Total Assets + Ending Total Assets) / 2

 Return on Equity (ROE)
Net Income
Return on Equity (ROE) = --------------------------------------------
Average Stockholders' Equity

Average Stockholders' Equity

= (Beginning Stockholders' Equity + Ending Stockholders' Equity) / 2

Return on Common Equity (ROCE)

Net Income
Return on Common Equity (ROCE)
--------------------------------------------
=
Average Common Stockholders' Equity

Average Common Stockholders' Equity

= (Beginning Common Stockholders' Equity + Ending Common Stockholders'
Equity) / 2

Profit Margin
Net Income
Profit Margin
-----------------
=
Sales

Earnings Per Share (EPS)

Net Income
Earnings Per Share (EPS)
---------------------------------------------
=
Number of Common Shares Outstanding

*Return on Equity
This ratio measures the profitability of the capital invested in the business by equity
shareholders. As the business is conducted with a view to earn profit, return on equity
capital measures the business success and managerial efficiency. It is the relationship
between net income after taxes, interest and a dividend to preference share holders.

*Return on total assets

In this ratio the net profit is compared with the assets.

*Net profit ratio

This ratio establishes relationship between net profit and net sales. Net profit and net
income is the gross profit less selling distribution and financial expenses.

*Earning Per Share (EPS)

The profit available for distribution of dividend to equity shareholder when dividend
by the number of equity shares derives the earning per share.

2. LIQUIDITY RATIO

 Liquidity ratios are calculated to measure the short term financial soundness of
the business. The ratio assesses the capacity of the company to repay its short
term reliability.
 Bank and other money lenders for short period are interested in the current
assets of the company that is short term financial position of the business.
 The ratio is also an effective source to ascertain whether the working capital
has been effectively utilized. Liquidity ratio means ability to repay loans.

 The ratios, calculated to ascertain the short term solvency of the company are
known as Liquidity ratio.

 These ratios indicate the ease of turning assets in to cash. They include the
Current Ratio, Quick Ratio, and working capital.

*QUICK RATIO
It is also known as Liquidity Ratio or Acid Test; it measures the ability of a company
to pay off its short-term obligations from current assets, excluding inventories. The
reason of excluding inventories is due to it's low liquidity and thus quick ratio provide
better measurement of company ability to paid off it current obligations compare to
current ratio. Quick ratio does not apply to companies with inventory is easily
converted into cash, use current ratio instead.

*CURRENT RATIO
It is use to measure the efficiency of the firm to pay off its short term liabilities. This
ratio establishes the relationship between current assets and current liabilities. This
 ratio shows the whether the current assets of the firm and adequate to meet out its
current liabilities or not.

*NET WORKING CAPITAL

The difference between current assets and current liabilities excluding short term
borrowing is called networking capital (NWC) or net current assets (NCA).

Liquidity Analysis Ratios

.
Current Assets
Current Ratio = ------------------------
Current Liabilities

Quick Ratio
Quick Assets
Quick Ratio = ----------------------
Current Liabilities

Quick Assets = Current Assets – Inventories

Net Working Capital Ratio

Net Working Capital
Net Working Capital
--------------------------
Ratio=
Total Assets

Net Working Capital = Current Assets - Current Liabilities

3. ACTIVITY or TURNOVER or VELOCITY ratio

Thi
s ratio indicates how efficiently and profitability the resources of the firm
have been used. The ratio helps in measuring the turnover and operational
efficiency of the firm. These ratios are related to sales because turnover
Assets Turnover Ratio
 Sales
Assets Turnover Ratio = ----------------------------
Average Total Assets

Average Total Assets = (Beginning Total Assets + Ending Total Assets) / 2

Accounts Receivable Turnover Ratio

Sales
Accounts Receivable Turnover Ratio
-----------------------------------
=
Average Accounts Receivable

Average Accounts Receivable

= (Beginning Accounts Receivable + Ending Accounts Receivable) / 2

Inventory Turnover Ratio

Cost of Goods Sold
Inventory Turnover Ratio = ---------------------------
Average Inventories

Average Inventories = (Beginning Inventories + Ending Inventories) / 2

4) SOLVENCY RATIO

 It means to measure the ability of the firm to meet out its external liabilities and
total assets.
 Solvency here means the ability of the firm to meet out its long-terms loans.
Long term liabilities include long term loans (debentures) and shareholder’s
funds.
 The basic purpose of this ratio is to examine the financial position of the firm
to know whether the firm is able to meet out its long term liabilities or not.

Total outside Liabilities

* Solvency Ratio = Total Assets
 External Liabilities/Long Term Loans
* Debt-Equity Ratio= Internal Liabilities/Shareholders’
Fund

* External Liabilities= Total Debt- Current Liabilities

Owner’s Funds
* Proprietary Ratio= Total Assets

Long- term funds

* Fixed Asset Ratio= Net Fixed Assets

Analysis and Interpretation

All three companies use the operating profit per share. In this chart prism is
in peek point. The operating per share is 10.02; birla is 6.25, and j.p.is 7.2.
All three companies use the Dividend per shaer. In this chart Birla is in
peek point, The Dividend per share is 7.5; prism is 2.5, and j.p.is 1.4.
All three companies use the Net profit margin. In this chart Prism is in peek
point, The Dividend per share is 5.8; Birla is 3.2, and j.p.is 1.4.
All three companies use the Dividend per share. In this chart Prism is in
peek point, The Fixed assets turnover ratio is 8.2, Birla is 3.2,and j.p.is
5.75.
All three companies use the Current Ratio. In this chart J.P is in Peek point,
The Current Ratio is 3.2; prism is 1.05, and j.p.is 2.25.
All three companies use the Dividend payout ratio. In this chart Birla is in
peek point, The Dividend payout ratio is 11.68; prism is 8.2, and j.p.is 6.25.
All three companies use the financial coverage ratio. In this chart Birla is in
peek point, The Financial coverage ratio is 9.63; prism is 8.2, and j.p.is
7.82.
All three companies use the Long term assets. In this chart Birla is in peek point, The
Long term assets is 8.2, Birla is 1.4, and j.p.is 3.2.
DETAILED STUDY / RESEARCH PROJECT

TYPES OF TAX

1. INDIRECT TAX
2. DIRECT TAX

MEANING OF DIRECT TAX- Direct tax are those which the tax payer pays
directly from his income / wealth / estate etc. important direct tax is

1. Income tax
2. Gift tax
3. Wealth tax

MEANING OF INDIRECT TAX- Indirect tax are those which the tax payer pays
indirectly i.e. while purchasing commodities ,paying for services broadly speaking
,direct taxes are those which are paid after the income reaches hands of tax payer
;while indirect tax are paid before the goods /services reach the tax payer.
Indirect taxes are convenient for both the tax payer and government .as taxes are paid
only when goods are purchased, so, tax payer does not feel the burden of the tax. This
tax is convenient to the government as it collect the amount from producers or
importers.

INDIRECT TAX IN INDIA

The indirect tax in India constitutes a group of tax laws and regulations. The indirect
taxes in India are enforced up activities including manufacturing, trading and imports.
Indirect taxes influence all the business lines in India.

INDIRECT TAXES :EXAMPLES

EXCISE TAX: it is a Duty levied on the sale of a specific good. It is vital source of
revenue for the go India.

STAMP DUTY: This is an additional charge levied on documents, like promissory

notes, bills of exchange insurance and debentures.

SALES TAX: It is an indirect tax levied by the govt. at the point of sale on retail
goods and services. It is collected by the retailer, which is ultimately forwarded to the
state of India.

Important indirect tax are-

1. Central Sales tax
2. Vat
3. Custom Duty
4. Luxury Tax
5. Entry tax
6. Professional Tax
7. Central Excise Duty is the tax on manufacture service tax
8. Octroi
9. Expenditure tax

ADVANTAGES OF INDIRECT TAX

Indirect taxes have certain advantages:-

1. psychological advantage to tax payer
2. Manufacturers/ dealers/psychology favors indirect taxes
3. easier to collect
4. lower collection costs
5. control over wasteful expenditure
6. channelize industrial growth
7. supporting local industry
 8. high revenue from indirect taxes

DISADVANTAGES OF INDIRECT TAX

Certain disadvantages of indirect taxes are as follows:-

1. Regressive in nature
2. reduces demand of goods
3. increases project costs
4. shield inefficient local industries
5. modern technology becomes costly
6. increase smuggling / tax evasion
7. indirect taxes are perceived as inflationary

Despite these difficulties, advantages outweigh disadvantages and in near future

at least, government has no option but to rely on indirect tax .however, government is
making efforts to reduce proportion of indirect taxes and increase proportion of direct
taxes in total tax revenue.
 1) CENTRAL SALES TAX

“CENTRAL SALES TAX MAINLY CHARGED ON GOODS PURCHASES AND SALES. THIS TAX
CHARGED BY CENTRAL GOVERNMENT BUT THEIR COLLECTION DONE BY STATE
GOVERNMENT.

According to S3, a sale or purchase shall be deemed to take place in the course of

interstate trade or commerce in the following cases:

 When the sale or purchase occasions the movement of goods from one State to

another;

 When the sale is affected by a transfer of documents of title to the goods during

their movement from one State to another.

Where the goods are delivered to a carrier or other bailee for transmission, the

movement of the goods for the purpose of clause (b) above, is deemed to start at the

time of such delivery and terminate at the time when delivery is taken from such

carrier or bailee. Also, when the movement of goods starts and terminates in the same

State, it shall not be deemed to be a movement of goods from one State to another.

To make a sale as one in the course of interstate trade, there must be an obligation to
transport the goods outside the state. The obligation may be of the seller or the buyer.

It may arise by reason of statute or contract between the parties or from mutual

understanding or agreement between them or, even from the nature of the transaction,

which linked the sale to such transaction. There must be a contract between the seller

and the buyer. According to the terms of the contract, the goods must be moved from

one state to another. If there is no contract, then there is no inter-state sale.

There can be an interstate sale even if the buyer and the seller belong to the same state;

even if the goods move from one state to another as a result of a contract of sale; or,

the goods are sold while they are in transit by transfer of documents.

To whom is Sales Tax Payable?

Sales tax is payable to the sales tax authority in the state from which the movement of

goods commences. It is to be paid by every dealer on the sale of any goods effected by

him in the course of inter-state trade or commerce, notwithstanding that no liability to

tax on the sale of goods arises under the tax laws of the appropriate state

Main Principles in State Sales Tax Laws

1. A sale or purchase of goods is said to take place when the transfer of property in

the existing goods or future goods takes place for consideration of money.

2. The goods have been divided into different categories and different rates of

sales tax are charged for different categories of goods.

 3. In most of the cases related to the sales tax, the tax on the sale or purchase of

goods is at single point.

4. Under the provisions of some state laws the assesses are divided into several

categories such as manufacturer, dealer, selling agent etc. and such as assess is

required to obtain a registration certificate to that effect. The sales tax or the

purchase tax is levied on that assessee on the basis of his category such as

dealer, manufacturer etc. on production of certain forms or certificates (and

differential rates of sales tax are levied).

5. Generally, a quarter returns of sales or purchases is insisted upon and the

assessee is required to furnish the return in the prescribed form.

6. At the time of assessment, the assessee has to furnish all the documentary

evidence and satisfy the concerned sales tax / commercial tax officer.

7. The sales tax laws of the states prescribe the procedure to be followed in case an

assessee prefers to make an appeal.

8. Every dealer should apply for registration and obtain a registration certificate to

that effect. The registration certificate number should be quoted in all the bill /

cash memos.

Transactions not amounting to inter-state sales

Not all dispatches of goods from one state to another result in interstate sales rather the

movement must be on account of a covenant or incident of the contract of sales. There

are some instances wherein the goods are moved out of the selling state and yet they

are not considered interstate sales:-

 Intra-state sales

 Stock transfer from head office to branch & vice versa

 Import and Export sales or purchases

 Sale through commission agent / on account sales

 Delivery of Goods for executing works contract

Exception in the sales taxes

 Sales to resellers such as wholesalers and retailers that have a valid state resale

certificate.

 Sales to tax-exempt institutions such as schools or charities.

LIABILITY OF TAX ON INTERSTATE SALES

 All each businessman are paid tax those are include in the process of interstate
sales
 This tax charged on interstate sales not purchases
 This tax are not charged on sale of electric energy
 If any sale of goods exempted in state sales tax, vat ,commercial tax

RATES OF INTERSTATE SALE

 DECLARED GOODS: - Declared goods defined those goods which are included in
sec.14 of central sales tax.
 On the sale of declared goods any state government will not charged excess of 4%
rate. But if seller not received form C or D from the side of purchaser, tax will be
charged double rate.

 UNDECLARED GOODS:- Undeclared goods are those which are not included in
the list of declared goods.

DIFFERENT DECLARATION FORM

FORM”

 Form “C”(when goods sold to registered dealer)

 Form D(when goods sold to government)
 Form E-I &E-II(in case of subsequent sale)
 Form H (in case of export)
 Form-F (in case of transfer of stock to branch
 Form-I (in case of sales to special economic zone)

RATES APPLICABLE UNDER CENTRAL TAX

DECLARED Sale to Sale to Sale to

GOODS government Regis. unregist.deale
Dealer r
 When form Rate of state} Without C-
C or D w.e.l. Form Tax Rate of VAT
submitted Or 2% Tax Rate of will be apply
 When form VAT will be
C or D not Double rate apply
submitted when form D
not submitted
 Other goods

 Given form VAT tax rate of VAT rate tax or Tax Rate of VAT
C OR form state or 2%. 2%. will be apply
D VAT rate of state
 NOT given will be apply VAT rate of Tax Rate of VAT
form C OR state will be will be apply
FORM D apply

2) VALUE ADDED TAX (VAT)

Value Added Tax (VAT) is a general consumption tax assessed on the value added to
goods and services. It is a general tax that applies, in principle, to all commercial
activities involving the production and distribution of goods and the provision of
services. It is a consumption tax because it is borne ultimately by the final consumer.

It is not a charge on companies. It is charged as a percentage of prices, which means

that the actual tax burden is visible at each stage in the production and distribution
chain.

It is collected fractionally, via a system of deductions whereby taxable persons can

deduct from their VAT liability the amount of tax they have paid to other taxable
persons on purchases for their business activities. This mechanism ensures that the tax
is neutral regardless of how many transactions are involved.

In other words, it is a multi-stage tax, levied only on value added at each stage in the
chain of production of goods and services with the provision of a set-off for the tax
paid at earlier stages in the chain. The objective is to avoid 'cascading', which can have
a snowballing effect on prices. It is assumed that due to cross-checking in a multi-
staged tax; tax evasion will be checked, resulting in higher revenues to the
government.
Main Features of M.P. Value Added Tax

1) Threshold limit Rs. 5lakh has been fixed under VAT Act.
2) there is no tax on liquor in the VAT also.
3)Articles of Gold, Silver including coins, bullion and species and other specific
stones like Diamond, gold& Silver ornaments of personal wear will be taxed at 1%
4) Residual items will attract 12.5%.
On goods like, petrol, diesel, aviation Turbine fuel will attract tax@28.75%, while
Natural Gas including Compressed Natural Gas will attract tax @12.5%.

Advantages of VAT

1) Coverage

If the tax is carried through the retail level, it offers all the economic advantages of a
tax that includes the entire retail price within its scope, at the same time the direct
payment of the tax is spread out and over a large number of firms instead of being
concentrated on particular groups, such as wholesalers or retailers.

. 2) Revenue security

VAT represents an important instrument against tax evasion and is superior to a

business tax or a sales tax from the point of view of revenue security for three reasons.

3) Selectivity

VAT may be selectively applied to specific goods or business entities. We have already
addressed essential goods and small business. In addition the VAT does not burden
capital goods because the consumption-type VAT provides a full credit for the tax
included in purchases of capital goods.

4) Co-ordination of VAT with direct taxation

Most taxpayers cheat on their sales not to evade VAT but to evade personal and
corporate income taxes. The operation of a VAT resembles that of the income tax more
than that of other taxes, and an effective VAT greatly aids income tax administration
and revenue collection

Disadvantages of VAT

1) VAT is regressive

It is claimed that the tax is regressive, ie its burden falls disproportionately on the poor
since the poor are likely to spend more of their income than the relatively rich person.

2) VAT is too difficult to operate from the position of both the administration and
business.

(a) The administration

It is often argued that VAT places a special burden on tax administration. However, it
is worth noting that wherever VAT was introduced one of its effects was the
rationalization and simplification of the previous indirect tax system and its
administration.

(b) Business

It is true that the VAT is collected from a larger number of firms than under any form
of income tax or single state sales tax; to the typical smaller firms the complexities of
the tax and the need for more extensive records (for example, to justify deductions) are
likely to prove serious.

3. VAT is inflationary

Some businessmen seize almost any opportunity to raise prices, and the introduction
of VAT certainly offers such an opportunity

4. VAT favors the capital intensive firm

It is also argued that VAT places a heavy direct impact of tax on the labor-intensive
firm compared to the capital- intensive competitor, since the ratio of value added to
selling price is greater for the former. This is a real problem for labor-intensive
economies and industries.

Necessity of VAT in India

India, particularly the trading community, has believed in accepting and

adopting loopholes in any system administered by the state or the Centre. If a
well-administered system comes in, it will close avenues for traders and
businessmen to evade paying taxes. They will also be compelled to keep proper
records of their sales and purchases.
Many sections hold the view that the trading community has been amongst the
biggest offenders when it comes to evading taxes.
Under the VAT system, no exemptions will be given and a tax will be levied at
each stage of manufacture of a product. At each stage of value-addition, the tax
levied on the inputs can be claimed back from the tax authorities.
It could help address the fiscal deficit problem and the revenues estimated to be
collected could actually mean lowering of the fiscal deficit burden for the
government

Items Covered in Indian VAT

550 items covered 270 items of basic needs, like Rests 12.5% VAT. Gold &
medicine, drugs, agro & silver jewellery - 1%
industrial inputs, capital &
declared goods 4% VAT
Tea-producing states Petrol, diesel, liquor, lottery Sugar, textile & tobacco
options either percentage not included * excluded for one year
VAT
Traders with turnover of less than 500,000 rupees are exempt from the new tax.

3) CUSTOM DUTY
Customs Duty Act, 1962 accorded consent by president of India on 13.12.1962 and it
came in to force as on 1.2.1963.
Custom Duty refers to the Duty levied on the import of import of the goods as well on
the export of the goods. Duty imposed on the goods imported into the country is
called import Duty and the Duty levied on the goods exported out of the country is
called export Duty.

Basis of determining the Duty: import Duty and export Duty may be determined on
the following two bases:

1) AD Val Orem Duty: when the Duty is determined on the basis of the value of the
goods it is referred to as ‘AD Val Orem Duty’.

2) Specific Duty: when the Duty is determined on the basis of the measurement of
goods, it is called Specific Duty.

COMPUTATION OF CUSTOM DUTY

1. BASIC CUSTOM DUTY

Assessable value of goods ****
*rate of duty say 10% u/s 3 (1) of CTA ********
2. ADDITIONAL CUSTOM DUTY:
Assessable value
Add:
Basic custom duty ****
Value of add. Custom (a+b) ****
 *Rate of ACD including Education cess (c*rate)
****
Add: Education cess@ 3% on total of basic custom duty
And additional custom duty
****
Total
3. SPECIAL ADDITIONAL CUSTOM DUTY
Assessable value of goods ****

+basic custom duty

****
+additional custom duty ****
+education cess
****

Special additional custom duty u/s 3(5) of CTA

4% on total (e)
4. SAFE GUARD DUTY /PRODUCT SPECIFIC SAFE ****
GUARD DUTY ON IMPORT FROM CHINA, IF ANY
5. COUNTER VAILING DUTY ON SUBSIDIZED ARTICLES ****
6. ANTI-DUMPING DUTY ON DUMPED ARTICLES ****
7. ADDITIONAL ON TEA AND TEA WASTE ****
8. NATIONAL CALAMITY CONTINGENT DUTY ****
TOTAL CUSTOM DUTY ****

Types of duties

Under the custom laws, the following are the various types of duties which are

leviable.
Basic Duty:

This is the basic Duty levied under the Customs Act. The rate varies for different items

from 5% to 40%.

Additional Duty (Countervailing Duty) (CVD):

This additional Duty is levied under section 3 (1) of the Custom Tariff Act and is equal

to Excise Duty levied on a like product manufactured or produced in India. If a like

product is not manufactured or produced in India, the Excise Duty that would be

leviable on that product had it been manufactured or produced in India is the Duty

payable. If the product is leviable at different rates, the highest rate among those rates

is the rate applicable. Such Duty is leviable on the value of goods plus basic custom

Duty payable. e.g. If the customs value of goods is Rs. 5000 and rate of basic customs

Duty is 10% and Excise Duty on similar goods produced in India is 20%, CVD will be

Rs.1100/-.

Anti-dumping Duty:
Sometimes, foreign sellers abroad may export into India goods at prices below the

amounts charged by them in their domestic markets in order to capture Indian markets

to the detriment of Indian industry. This is known as dumping. In order to prevent

dumping, the Central Government may levy additional Duty equal to the margin of

dumping on such articles, if the goods have been sold at less than normal value.

Pending determination of margin of dumping, such Duty may be provisionally

imposed.

Protective Duty:

If the Tariff Commission set up by law recommends that in order to protect the

interests of Indian industry, the Central Government may levy protective anti-dumping

duties at the rate recommended on specified goods. The notification for levy of such

duties must be introduced in the Parliament in the next session by way of a bill or in

the same session if Parliament is in session. If the bill is not passed within six months

of introduction in Parliament, the notification ceases to have force but the action

already undertaken under the notification remains valid. Such Duty will be payable up

to the date specified in the notification. Protective Duty may be cancelled or varied by

notification. Such notification must also be placed before Parliament for approval as

above.
Duty on Bounty Fed Articles:

In case a foreign country subsidizes its exporters for exporting goods to India, the

Central Government may import additional import Duty equal to the amount of such

subsidy or bounty. If the amount of subsidy or bounty cannot be clearly determined

immediately, additional Duty may be collected on a provisional basis and after final

determination; difference may be collected or refunded, as the case may be.

Export Duty:

Such Duty is levied on export of goods. At present very few articles such as skins and

leather are subject to export Duty. The main purpose of this Duty is to restrict exports

of certain goods. The Central Government has been granted emergency powers to

increase import or export duties if the need so arises. Such increase in Duty must be by

way of notification which is to be placed in the Parliament within the session and if it

is not in session, it should be placed within seven days when the next session starts.

Notification should be approved within 15 days.

Restriction on import and export of goods

Section 111(d) and Section 113(d), “any goods which are imported or attempted to be

imported and exported or attempted to be exported, contrary to any prohibition

imposed by or under the Customs Act or any other law for the time being in force shall

be liable to confiscation.”
The terms "Prohibited Goods" have been defined in sub-section 33 of Section 2 of the

Customs Act as meaning "any goods the import or export of which is subject to any

prohibition under the Customs Act or any other law for the time being in force".

Principles of Restriction

DGFT may, through a notification, adopt and enforce any measure necessary for:-

 Protection of public morals.

 Protection of human, animal or plant life or health.

 Protection of patents, trademarks and copyrights and the prevention of deceptive

practices.

 Prevention of prison labor.

 Protection of national treasures of artistic, historic or archaeological value.

 Conservation of exhaustible natural resources.

 Protection of trade of fissionable material or material from which they are

derived; and

 Prevention of traffic in arms, ammunition and implements of war.

Terms and Conditions of a License / Certificate / Permission

Every license/certificate/permission shall be valid for the period of validity specified

in the license/ certificate/ permission and shall contain such terms and conditions as

may be specified by the licensing authority which may include:

 The quantity, description and value of the goods;

 Actual User condition;

 Export obligation;

 The value addition to be achieved; and

 The minimum export price.

License / Certificate / Permission not a Right

No person may claim a license/certificate/ permission as a right and the Director

General of Foreign Trade or the licensing authority shall have the power to refuse to

grant or renew a license/certificate/permission in accordance with the provisions of the

Act and the Rules made there under.

Penalty

If a license/certificate/permission holder violates any condition of the

license/certificate/ permission or fails to fulfill the export obligation, he shall be liable

for action in accordance with the Act, the Rules and Orders made there under, the

Policy and any other law for the time being in force.
Registration-cum-Membership Certificate

Any person, applying for (i) a license/ certificate/ permission to import/ export,

[except items listed as restricted items in ITC(HS)] or (ii) any other benefit or

concession under this policy shall be required to furnish Registration-cum-

Membership Certificate (RCMC) granted by the competent authority in accordance

with the procedure specified in the Handbook (Vol.1) unless specifically exempted

under the Policy.

Illegal Imports and Illegal Exports

Definitions

"illegal import" means the import of any goods in contravention of the provisions of

this Act or any other law for the time being in force;

"Intimated place" means a place intimated under sub-section (1), subsection (2) or sub-

section (3), as the case may be, of section 11C; “notified date", in relation to goods of

any description, means the date on which the notification in relation to such goods is

issued under section 11B; "notified goods" means goods specified in the notification

issued under section 11B.

Power of Central Government to notify goods

If, having regard to the magnitude of the illegal import of goods of any class or

description, the Central Government is satisfied that it is expedient in the public

interest to take special measures for the purpose of checking the illegal import,

circulation or disposal of such goods, or facilitating the detection of such goods, it

may, by notification in the Official Gazette, specify goods of such class or description.

Persons possessing notified goods to intimate the place of storage, etc. –

 Every person who owns, possesses or controls, on the notified date, any

notified goods, shall, within seven days from that date, deliver to the proper

officer a statement (in such form, in such manner and containing such

particulars as may be specified by rules made in this behalf) in relation to the

notified goods owned, possessed or controlled by him and the place where

such goods are kept or stored.

 Every person who acquires, after the notified date, any notified goods, shall,

before making such acquisition, deliver to the proper officer an intimation

containing the particulars of the place where such goods are proposed to be

kept or stored after such acquisition and shall, immediately on such acquisition,

deliver to the proper officer a statement (in such form, in such manner and

containing such particulars as may be specified by rules made in this behalf) in

relation to the notified goods acquired by him.

Precautions to be taken by persons acquiring notified goods

No person shall acquire (except by gift or succession, from any other individual in

India), after the notified date, any notified goods -

i. unless such goods are accompanied by, -

o the voucher referred to in section 11F or the memorandum referred to in

sub-section of section 11G, as the case may be, or

o in the case of a person who has himself imported any goods, any evidence

showing clearance of such goods by the Customs Authorities; and

ii. Unless he has taken, before acquiring such goods from a person other than a

dealer having a fixed place of business, such reasonable steps as may be

specified by rules made in this behalf, to ensure that the goods so acquired by

him are not goods which have been illegally imported.

 4) ENTRY TAX ACT, 1976
“ENTRY TAX’’ means a tax on entry of goods into a local area for consumption, use
or sale there in levied and payable in accordance with the provisions of this act and
includes composition money payable under section 7A;

 Entry tax substituted for octroi –does not restrict freedom of trade or commerce
– legislature of state competent to levy entry tax, not consignment tax-not tax on
goods but tax on entry of goods in local area –avoids multiple taxes.

 Local area means the area comprised within the limits of a local authority.

 Local authority means an authority constituted under a law relating to local

authority but shall not include a janapada panchatat.

 Local goods in relation to a local area means goods of local origin as distinct
from goods which enter into that local area

 Entry tax not a tax on goods but a tax on purchase goods on entry of goods into
local area for particular purpose.

 entry tax would be levied on specified goods either manufacturing or produced

within the state or imported from outside on their entry into a local area
INCIDENCE OF TAXATION

 On the entry in the course of Business of Dealer of goods specified in

SCHEDULE –II , into each local area for consumption , use or sale therein;

 On the entry in course of a Business of a dealer of goods specified in

SCHEDULE –III into each local area of Consumption or use of such goods but
not for sale therein.

RATE OF TAX AT WHICH ENTRY

TAX TO BE CHARGED

 The entry tax payable in respect of goods specified in schedule –II, other than
those specified in serial no.3 which are consumed or used as raw material for
the manufacture of other goods, shall be 1%, if tax rate specified in schedule –II
exceeds 1%.

 Where the dealer contravenes any of the conditions or restrictions or has not
consumed or used the goods as raw material in any local area in Madhya
Pradesh. He pay equal amount of full rate as mentioned in schedule-II or
schedule-III.
 RATE OF TAX OF DIFFERENT GOODS ACCORDING TO
SCHEDULE-II

 Coal including coke in all its forms - 2.5%

 Iron and steel as specified in clause (iv) of section 14 of the central sales tax
act,1956 - 2.5%

 all types of titles ,marble and granite - 1%

 all types of batteries and cells - 1%

 petrol and diesel oil - 1%

 lubricants - 1%

 all types of sanitary woods and fittings - 1%

 5) PROFESSIONAL TAX
Tax on Profession, trade, calling and employment .

1) "Employee” means a person employed on salary and includes,

2) A Government servant receiving pay from the revenue of the Central

Government or any State Government;

3) A person in the service of a body whether incorporated or not, which is owned

or controlled by the Central Government or any State Government, where, such
body operates within the municipal limit even though its headquarters may be
outside the municipal limit; and

4) A person engaged in any employment by an employer not covered by sub-

clauses (i) and (ii);

5) "Employer" in relation to an employee earning any salary on a regular basis

under his means, the person or the officer who is responsible for disbursement of
such salary and includes the head of the office or any establishment as well as the
Manager or Agent of the employer;

6) "half-year" shall be from the 1st day of April to the 30th day of September and
from the 1st day of October to the 31st day of March of a year;

7) "Month" means a calendar month;

8) "Person" means any person who is engaged actively or otherwise in any

profession, trade, calling or employment in the State of
 TamilNadu and includes a Hindu undivided family, firm, company, corporation or
other corporate body, any society, club, body of persons or association, so
engaged, but does not include any person employed on a casual basis;

9) "Tax" means the tax on profession, trade, calling and employment levied under
this Chapter.

6) CENTRAL EXCISE DUTY

Central Excise Duty is the main sources of the income of Indian government. This tax
provides more part of income to government rather than other indirect tax. Financial
act 2000, given new name to central Excise tax this is central value added tax
(Cenvat).

Some laws relating to central Excise.

 Central Excise act ,1944
 Central Excise tariff act,1985
 Central Excise valuation rules
 Cegat(procedure) rules ,1982
 Addition Duty on goods of special importance

“EXCISE DUTY refers tax which are payable on goods manufacturing or production.”

Characteristics or Features of Excise Duty

 Central tax
 Indirect tax
 Basis of taxation
 Classification of goods
 Registration
 Cenvat credit
 Special discount to small scale industries
 Administration of central Excise
 Penalty
 Record of Excise Duty
 TYPES OF CENTRAL EXCISE
There are basically two type of Excise Duty:

 Central basic Excise Duty:- This tax payable on goods manufacturing

those are charges by Indian government. now, this tax called “CENVAT”
according to CETA previous rate are (8%,16%,24%,32%) but in march 1,2000
one normal rate follow 16% . some goods are exempted and some provided
discount.

 Provincial Excise Duty:- Even central government charged tax on goods

but some alcoholic consumable goods provide tax to state government.

 Duties under other acts:- This type of Duty and cess are given below

 national calamity contingent Duty

 Additional Excise Duty on panmasala, and tobacco.
 Duty on medical and toilet preparations
 additional Duty on mineral products
 educational cess

BASIC CONDITION OF EXCISE DUTY

There are four basic conditions for Excise Liability:

1. The Duty levied on GOODS: - first basic condition for Excise Duty that tax
payable on goods. Goods term are defined as all movable assets.
According to ACT366 (12 “goods include all material, commodities, and articles”

Goods basically fulfill below two needs:

 Goods must be movable.
 Goods must be marketable.
2. the goods must be excisable :-

In favor this term this fact important

 Goods not included in CETA are not excisable goods.
 Mere mention in seta is not enough.
 Nil Duty paid goods are also excisable goods.

3. the goods must be manufactured or produced

4. such manufacture or production must be in India

Central Excise Officer

 Chief commissioner of central Excise

 Commissioner of central Excise
 Commissioner of central Excise(appeal)
 Additional commissioner of central Excise
 Joint commissioner of central Excise
 Deputy commissioner of central Excise
 Assistant commissioner of central Excise
 Any other officer of central Excise

Basis of calculation of central Excise Duty

 Calculation of assessable value for advalorem Duty.

 Calculation of central Excise Duty according to given rate.
Transaction value of goods

Add:- following item if there is not included in transaction value,

1. Advertisement exp.
2. Packing charges.
3. Design and engineering charges, consultancy fees.
4. Loading charges and haulage with in factory.
5. after sales service expenses
6. curtail in prices due to advance

Less; ……
1. Discount (trade discount, cash discount or quantity discount). +…..
2. Sales tax, Excise Duty etc.
(if included in transaction value price).
3. Post removal charges (included in price) .
……
……
……
assessable value
Excise Duty payable

education cess
(-)…
Less:
 CENVAT credit for input and capital goods
*on inputs 100%
*on input services 100%
*on capital goods 50%

Computation of Central Excise Chart

Liability to pay Central Excise Duty

Section 3 of the Central Excises and Salt Act,1944 provides that there shall be levied

and collected in such manner as may be prescribed, duties of Excise on all excisable

goods other than salt which are produced or manufactured in India at the rates set forth

in the schedule to the Central Excise Tariff Act,1985.it is therefore clear that as soon as

the goods in question are produced or manufactured, they will be liable to payment of

Excise Duty. However for convenience Duty is collected at the time of removal of the

goods. While Section 3 of the Central Excises and salt Act, 1944 lays down the taxable

event, Rules 9 and 49 of the Central Excise Rules, 1944 provides for the collection %.

(As per changes made on Feb 24, 2009)

 Extension of the earlier 4 percent cut in Excise Duty beyond 31 March 2009.

(As per changes made on Feb 24, 2009)

 1% cess for secondary and higher education introduced.

 For small scale exemption, the turnover ceiling is increased from Rs 10 million

to Rs 15 million.

 The valuation rule for all the goods manufactured by job worker has been

introduced.

 The effective rates on petrol and diesel are reduced from 8 per cent to 6 per

cent.
  The settlement commission provisions are to be amended. The e-payment has

become mandatory in cases where the annual Excise Duty payable is in excess

of Rs 5 million.

Types of Excise Duties

There are three types of Central Excise duties collected in India namely

1. Basic Excise Duty: This is the Duty charged under section 3 of the Central

Excises and Salt Act, 1944 on all excisable goods other than salt which are

produced or manufactured in India at the rates set forth in the schedule to the

Central Excise tariff Act, 1985.

2. Additional Duty of Excise: Section 3 of the Additional duties of Excise (goods

of special importance) Act, 1957 authorizes the levy and collection in respect of

the goods described in the Schedule to this Act. This is levied in lieu of sales

Tax and shared between Central and State Governments. These are levied under

different enactments like medicinal and toilet preparations, sugar etc. and other

industries development etc.

3. Special Excise Duty: As per the Section 37 of the Finance Act, 1978 Special

Excise Duty was attracted on all excisable goods on which there is a levy of

Basic Excise Duty under the Central Excises and Salt Act, 1944.
Liability to Pay Excise Duty

Goods themselves cannot pay Duty so the person, who creates the taxable event must

discharge the liability which he had created. The liability to pay tax Excise Duty is

always on the manufacturer or producer if goods. There are three types of parties who

can be considered as manufacturers-

 Those who personally manufacture the goods in question

 Those who get the goods manufactured by employing hired labor

 Those who get the goods manufactured by other parties

The following have been held to be real manufacturers:

 In case where the factories are leased out, Duty liability is on the lessee as he is

the person who actually manufactures the said goods

 When goods are manufactured from others by supplying raw material, the Duty

liability will rest on the person who actually carried out the manufacturing

activity and not on the person who supplied the material.

In the manufacturer is a mere dummy of the customer or supplier of raw material, then

the goods are said to be manufactured on behalf of the customers / suppliers and the

latter is liable to Duty

Excise Duty Charged on Cement

During preparation of this report, I study about central Excise in the case of cement.

 In the case of cement, cement industry pay Excise at the rate of 12.5%
 Central Excise charged on manufacturing but in the case of cement Excise Duty

charged on dispatching
 Excise Duty based on MRP of cement bags.
 Excise Duty payable Rs. 350 per ton cement
 If MRP increase but Excise Duty not more than Rs. 900 per ton of cement.
 7) SERVICE TAX

Service tax is tax on services which are taxable under service tax act. It is an indirect
tax levied by central govt. person who provides the service is liable to pay service tax
at prescribed rate.

“Service tax was imposed firstly in 1994 in India. In starting it was levied on only
three services –
(1) Share broking
(2) Telephone services
(3) General insurance services

BACKGROUND OF SERVICE TAX

SERVICE SECTOR contributes about 50% of “gross domestic product” in our
economy.
Growth of service sector increased from 28%of G.D.P. in 1950 to 41% in 1990-91.

FEATURES OF SERVICE TAX

(1) No registration fee, deemed registration, if registration not granted within 7

days to penalty of Rs.500/- for non-registration or delay in registration.

(2) No specific records have been prescribed.

(3) Tax on uniform rate for all taxable services.

(4) Payment of tax on realization of value of taxable services. Payment of

quarterly basis for non corporate assesses and monthly for corporate assesses.

(5) Simple interest @ 13% per annum on delay of tax.

(6) Penalty on delay of payment of tax

(7) Credit of service tax paid on input service.

(8) Self assessment.

 (9) Administrated by central Excise department.

Service Tax Provisions at a Glance

Taxable services Value of taxable Person liable to
services pay service tax
1)Stock broking Aggregate of the Stock broker
commission or
brokerage on sale or
purchase of securities
(2) Telephone Gross amount Telegraph authority
Services (excluding initial
deposits but including
adjustment from initial
deposit) charged from
the subscribers.
Gross amount Telegraph authority
(3) Pager Services (excluding initial
deposits but including
adjustment from initial
deposit) charged from
the subscribers.
(4) General Insurance Amount of the premium Insurer
business services charged from the policy
holder.
(5) Advertising Services Gross amount charged Advertising agency
from the clients for
services in relation to
advertisements.
(6) Courier Services Gross amount charged Courier agency
from the customers in
relation to
transportation of time
sensitive documents,
goods and articles.
(7) Practicing Chartered Gross amount charged Practicing charted
Accountant’s Services from the clients for accountant
services rendered in
 professional capacity
(8) Practicing Cost Gross amount charged Practicing cost
accountant’s services from the clients for Accountant
services rendered in
professional capacity
(10) Practicing Gross amount charged Practicing company
company from the clients for secretary
secretary’s services rendered in
services professional capacity

(11)Scientific or Gross amount charged Scientific or technocrat

Technical Consultancy from the clients for or science or technology
Services services rendered in institution or
professional capacity organization
(12) Goods Transport Gross amount charged Goods transport agency
agency/operators from the clients for
services rendered in
professional capacity

Rate of Service Tax

 This tax was first time introduced with effect from 1-7-1994 on three services.

The rate was 5%. It was subsequently increased to 8% w.e.f. 14-5-2003. It was

10% plus education cess of 2% w.e.f. 10-9-2004 (total 10.2%) during 10-9-2004

to 17-4-2006. Service tax rate was 12% plus education cess of 2% (total 12.24%)

during 18-4-2006 till 10-5-2007.

 Presently (w.e.f. 11-5-2007), service tax is payable @ 12% of value of taxable

services referred in section 65(105) of Finance Act, 1994. In addition, education

 cess of 2% and SAH education cess of 1% is payable. Thus, total service tax is

12.36%.

Taxable Event in Service Tax

Section 66 (which is a charging section), reads, ‘There shall be levied a tax

(hereinafter referred to as the service tax) at the rate of ten percent of value of taxable

services referred to in sub-clauses (a), (b), - - - (zzzzc) and (zzzzd) of clause (105) of

section 65 and collected in such manner as may be prescribed.

Opening sentence of section 65(105) as amended w.e.f. 16-6-2005 reads as follows,

‘taxable service’ means any service provided or ‘to be provided’. Thus, following are

taxable events -

(a) Entering into contract for service - Entering into contract for providing

service. Once you enter into a contract, it is certainly ‘service to be provided’. (Service

tax is actually payable after payment is received, but receipt of advance is not a

taxable event. It only defers the liability).

 (b) Provision of service - This will happen in cases where contract for

providing service was entered into before the service became taxable, but service was

provided after the service became a ‘taxable service’.

Person liable to pay Service tax

In most of the cases, service provider, i.e. person who is providing taxable service is

liable to pay service tax. However, in few cases, exceptions have been made and

service receiver is made liable to pay service tax. The provision that service receiver is

liable to pay service tax is termed as ‘Reverse Charge’. The exceptions are as follows -

Services provided to non-resident - In relation to taxable service provided or to be

provided by any person from a country other than India and received by any person

under section 66A of Finance Act, service tax is payable by recipient of service [Rule

2(1)(d)(iv)]

Services of insurance agents - In case of insurance auxiliary service by an insurance

agent, the tax will be payable by insurance company (general insurance or life

insurance as the case may be). The insurance agent is not liable to register and pay tax.

[However, the insurance agent is not entitled to avail exemption available to a small

service provider].
Consignor/consignee paying freight, in case of GTA services - In case of services of

Goods Transport Agency (GTA), service tax is payable by consignor/consignee who is

paying freight [rule 2(1)(d)(v)] [However, the consignor/consignee is not entitled to

avail exemption available to a small service provider].

Services of Agents of mutual fund - In case of distributors/agents of mutual funds, the

liability will be on the recipient of service, namely, mutual funds [Rule 2(1)(vi)]

[However, the mutual fund agent is not entitled to avail exemption available to a small

service provider].

Body corporate or firm located in India receiving sponsorship service - In case of

sponsorship service provided to a body corporate or firm located in India, the body

corporate or firm receiving such sponsorship service will be liable to pay service tax

[rule 2(1)(d)(vii) inserted w.e.f. 1-5-2006 and amended w.e.f. 1-4-2007]. If the

recipient of sponsorship service is located outside India, service tax is required to be

paid by the service provider and not by the recipient.

CENVAT credit of tax paid - The Body corporate or firm paying such service tax will

be eligible to avail CENVAT credit of the service tax paid, on the basis of TR-6/GAR-

7 challan by which the tax is paid [Rule 9(1)(e) of CENVAT Credit Rules, as amended

w.e.f. 1-5-2006]. It may be noted that when person receiving service is liable to pay
service tax, he is not entitled to exemption which is available to a small service

provider.

Large Taxpayer Unit (LTU) - A concept of LTU has been introduced for large

taxpayers of direct taxes and indirect taxes. In case of service tax, Large Taxpayer has

meaning assigned to it in Central Excise Rules [rule 2(cccc) of Service Tax Rules].

LTU has started functioning in Bangalore w.e.f. 1-10-2006.

16.1-4 Service on sub-contract basis

CBE&C vide circular No. 999.03/23.8.07 has clarified that a sub-contractor is also a

taxable service provider. His services are taxable even if these are used by main

provider for completion of his work. The sub-contractor is liable even if the service is

input service of the main contractor and main contractor is paying service tax on entire

value of contract.

Amount need not be ‘charged’ by service provider - money paid to third party may

also be includible - It is not necessary that the money should be paid to service

provider himself. Amount paid even to third party is includible in ‘value’ of service if

it is for provision of service and at the instance of service provider.

Service tax payable on net amount excluding Vat/sales tax - Rule 2A(1)(i)(a) of

Service Tax Valuation Rules and rule 3(1) of Works contract (Composition Scheme for

Payment of Service Tax) Rules, 2007 make it clear that Vat/sales tax is not to be
included in value for purpose of service tax. Thus, service tax is payable only on net

amount excluding Vat/sales tax payable on the transaction.

Tax payable only on amount actually received - Rule 6(1) of Service Tax Rules

makes it clear that service tax is payable on value of taxable services received. Thus, if

service provider does not receive any payment from his customer, there is no liability

of service tax. Service tax is payable only on ‘value of taxable service’ actually

‘received’, and not on amount ‘billed’.

Calculation of service tax by back calculations

The gross amount charged can be taken as inclusive of service tax and the ‘value’ and

‘service’ tax is to be calculated by back calculations.

For example, if Bill amount is Rs. 1,000 and service tax is not shown separately in

Invoice, the tax payable calculated by a simple mathematical formula is as follows -

Assessable Value = (Cum tax price) / ( 1 + rate of tax)

Assume that Assessable Value (AV) is equal to ‘Z’.

AV = 1.000 Z

Duty @ 12.36% = 0.1236 × Z

Sub-Total = 1.1236 × Z

Now :
 1.1236 × Z = 1,000
Hence, ‘Z' = 1,000/1.1236

i.e. Z = 890.00

Thus, ‘Z’, i.e. Assessable Value is Rs 890 and service tax @ 12% will be Rs 106.79.

Education cess @ 2% of service tax will be Rs 2.14. SAH education cess is Rs 1.07.

Thus, total tax will be Rs 110.00.

Exemptions from service tax

Central Government can grant partial or total exemption, by issuing an ‘exemption

notification’ u/s 93 of Finance Act, 1994. Such exemption may be partial or total.

Exemption may be conditional or unconditional. The only limitation is that exemption

cannot be granted by Central Government with retrospective effect. There are

following general exemptions -

Small service providers - Small units whose turnover less than Rs. eight lakhs per

annum are exempt from service tax. Provisions are discussed a little later (The

exemption limit was Rs four lakhs up to 31-3-2007).

Export of Services - There is no service tax on export of services, if service is

exported as per ‘Export of Service Rules’.

Services to UN Agencies - Services provided to UN and International Agencies are

exempt [Notification No. 16/2002-ST dated 2-8-2002].

Services provided within SEZ - Services provided to SEZ unit or SEZ developer for

consumption within SEZ are exempt [Notification No. 4/2004-ST dated 31-3-2004 in

respect of SEZ]. The wording of notification is such that services consumed within the

zone are alone exempt. Thus services provided outside SEZ (e.g. customs clearance,

transport etc.) are not exempt.

Services provided by RBI exempt - Exemption from service tax has been provided to

all taxable services provided by Reserve Bank of India. Services where RBI is liable to

pay service tax are also exempt (Notification No. 22/2006-ST dated 31-5-2006 –

earlier Notification No. 7/2006-ST dated 1.3.2006).

Specific Exemptions
In case of some services e.g. catering services, man dap keeper services and

construction services, service tax is payable at lower rates, i.e. partial abatement is

available from gross value, vide 1/2006-ST dated 1-3-2006. The lower rate is

applicable if the service provider does not avail CENVAT credit of Duty/tax on inputs,

input services and capital goods. Till 28-2-2006, he was entitled to avail CENVAT

credit on input services. W.e.f. 1-3-2006, he cannot avail any CENVAT credit, if he

avails the partial abatement.

CONCLUSION

This project report helped me for better understanding towards taxation system in
prism cement ltd. basically; tax is divided in two category direct tax and indirect tax.
Direct tax is the tax on income and some deduction rules are follows for computation
of tax. Some tax saving schemes is provided in the taxation system.
Prism cement Ltd. Follows all taxation rules, saving schemes in there taxation system
& submits all taxes form on due date.
Apart from that it has been noticed that in this industry the most prevalent method of
analyzing a balance sheet is through ratio analysis. The ratio analysis can be for a
single year or it may extend to more than one year. The ratios can also be compared
with similar ratios of others concerns to make a comparative study.

 First, all ratios will be worked out for each year and each set of comparable
items.
 The ratios worked out will be put in the context of a trend over several years.
 They will be compared with similar companies/ standard ratios.

i) For the year concerned, and

ii) Over a period of time.

Working environment of prism cement Ltd. mainly finance department is very

appreciative & supportive.
This project has helped me in understanding taxes and other functioning of the
accounts department.

After studying and analyzing, the conclusion part includes that Prism Cement Plant
has a very fast growth of pace. Having run successfully for the last years as it was
established in the year 1984, it has gained success.

This study has helped in gaining knowledge about the Working Capital Management
& Ratio Analysis at Prism Cement.

The firm Prism Cement Liquidity position in terms of short term and long term are
good. The efficiency of the company is also good.
The above analysis enables the company to understand efficient and effective use of
current assets.
Finally, I can conclude that it is a professionally managed company equipped with
machinery and technical support from world leaders, F. L. Smidth & Co. A/S,
Denmark. Prism Cement has created a niche for itself in the cement industry.
A team of experienced engineers and a dedicated workforce combined with a high
level of automation and sophisticated control systems have placed the Division's
products in the premium segment.
Prism Cement has successfully established a high brand preference among its
consumers through its excellent quality products and transparent policies
 RECOMMENDATION

Presently, there are parallel systems of indirect taxation at the Central and State levels.
Each of the systems needs to be reformed to eventually harmonize them. There is a
need to implement GST so that all goods and services, barring a few exceptions, will
be brought into the GST base. There will be no distinction between goods and
services.

What is GST?
GST is a consumption based levy. Destination principle would be applicable in normal
course. In an ideal GST, all the credit of taxes paid on purchase of inputs, inputs
services and capital goods are seamlessly allowed for set-off against the tax payable on
subsequent sale of goods that are either sold as such or sold upon conversion, or in the
context of services, are supplied.

GST is needed to match the international phenomenon. It is needed to reduce the

burden of Excise Tax.

The introduction of GST will certainly change the federal system of Governance in our
country in which states also have the right to collect taxes on goods.

Integration of Goods and services taxation would give India a world class tax system
and improve Tax collections. It would end the long standing distortions of differential
treatments of manufacturing and Service Sector.

GST will facilitate seamless credit across the entire supply chain and across all states
under a common tax base. The various advantages that will come along with the
introduction of GST can be summed up as under:

 It will boost economic unification of India.

 It will assist in better conformity and revenue resilience.
 It will evade the cascading effect in Indirect Tax regime. For instance, when a
paper making company produces registers, the Central Government charges an
Excise Duty on them as they leave the factory. Whereas on the lower end of the
Supply chain i.e. at the retail level, VAT is charged, without giving credit of the
Excise Duty levied earlier. But in GST system, Both Central and State taxes will
 be collected at the point of Sale. Both components (Central and State GSTs) will
be charged on the Manufacturing Cost.
 It will certainly reduce the tax Burden of Consumers.
 It will result in a simple, transparent, and easy Tax structure, merging all levies
of goods and serviced into one GST.
 It will bring uniformity into tax rates with only one or two tax rates across the
supply chain.
 It will result in a good administration of tax structure.

KEY LEARNING’S
1. Ratio Analysis is defined as the study & interpretation of
relationships between various financial variables, by investors or
lenders.
Four basic types of ratios are there:
 Profitability Ratio
 Activity Ratio
 Liquidity Ratio
 Solvency Ratio

It helps to identify areas where the management needs to change.

2. Two types of Taxes are there:

 Direct Tax
 Indirect Tax

3. Indirect taxes are those which the tax payer pays indirectly, i.e.
while purchasing commodities, paying for services, while direct
taxes are those which are paid after the income reaches hands of
tax payer.

4. Different types of indirect taxes are:

 Central sales tax
 VAT
 Custom Duty
 Entry tax
 Professional tax
 Central excise duty

REFERENCES
 Website :- www.google.com

 Internal data provided by the company

 www.prismcementlimited.com

 www.birlacement.com

 www.jaypeecement.com

 Books Used: Dr.V.S.Dutey (Indirect Taxes)