A STUDY ON RATIO ANALYSIS WITH REFERENCE TO MADDI LAKSHMAIAH & CO. LTD.

, CHILAKALURIPET
A Project report submitted to Acharya Nagarjuna University, Guntur In partial fulfillment of the Requirements for the Award of the degree Of

MASTER OF BUSINESS ADMINISTRATION Submitted by K.VENGALA RAO (Reg. No. Y11BU11052)

Under the Guidance of

Sri R.RAJASEKHAR,
M.Sc. (CSC), M.Tech. (CSE.)

P G DEPARTMENT OF MANAGEMENT STUDIES V.R.S. & Y.R.N.COLLEGE, CHIRALA

(Affiliated to Acharya Nagarjuna University) 2010 2012

P.G.DEPARTMENT OF MANAGEMENT STUDIES

V.R.S. & Y.R.N.COLLEGE, CHIRALA 523 157

(Affiliated to Acharya Nagarjuna University) (2010-2012)

CERTIFICATE
This is to certify that the Project entitled A STUDY ON RATIO ANALYSIS with reference to MADDI LAKSHMAIAHA & CO. LTD., CHILAKALURIPET submitted by K.VENGALA RAO (Y11BU11052) to the V.R.S. & Y.R.N. COLLEGE, CHIRALA Affiliated to Acharya Nagarjuna University, Guntur in partial fulfillment of the requirements for the award of degree in MASTER OF BUSINESS ADMINISTRATION is a record of bonafied work carried out by him under my guidance and supervision. Head of the Department Project Guide

Sri D. GUNA SANKAR

M.B.A., M.Com. D.F.M., M.Phil. (Ph.D.,)

Sri R. RAJASEKHAR
M.Sc.,(CSc.), M.Tech.,(CSE.,)

DECLARATION
I hereby declare that this Project report entitled RATIO ANALYSIS at MADDI LAKSHMAIAH & CO., has been prepared by me in partial fulfillment of the requirement for the award of Post graduate degree of Master of Business Administration. I also declare that this Project report is the result of my own effort and it has not been submitted to any other university for the award of any Degree or Institution.

Place: Date: K.VENGALA RAO (Y11BU11052)

ACKNOWLEDGEMENT
The successful completion of any task is not possible without proper suggestion, guidance and environment. Combination of these three factors acts like backbone to my RATIO ANALYSIS Project. It is great pleasure and privilege for me to express my graduate to Dr. C.PAPARAO, Director PG Unaided Cources, V.R.S. & Y.R.N.COLLEGE,
CHIRALA

for his continuous co-operation and encouragement during my

Project Work. I am also grateful to Sri. D.GUNASANKAR,

(Ph.D.,) M.B.A., M.Com. D.F.M., M.Phil.,

Asso. Professor & Head of the Department of Management Studies

for his continuous co-operation. I am highly indebted to Sri R.RAJASEKHAR,

(CSE),

M.Sc., (CSC), and M.Tech.

Asst. Professor, P.G.Department of Management Studies, Project

Guide, for his valuable and constructive suggestions and guidance and who has been a constant source of encouragement and guidance to make this project work quite realistic and comprehensive. I would like to express my special appreciation all my lecturers in V.R.S. & Y.R.N.College for their valuable support and suggestions. Thanks to one and all.

K.VENGALA RAO

CONTENTS
CHAPTER 1
INTRODUCTION NEED OF THE STUDY OBJECTIVE OF THE STUDY SCOPE OF THE STUDY METHODOLOGY OF THE STUDY LIMITATIONS OF THE STUDY

CHAPTER 2
INDUSTRY PROFILE

CHAPTER 3
COMPANY PROFILE

CHAPTER 4
THEORITICAL FRAME WORK

CHAPTER 5

DATA ANALYSIS & INTERPRETATION

CHAPTER 6
FINDINGS AND SUGGESTIONS GLOSSARY ABBREVIATIONS ANNEXURE

 BIBLIOGRAPHY

CHAPTER I

INTRODUCTION

INTRODUCTION TO FINANCIAL MANAGEMENT

Financial Management is an integral past of overall Management is not a totally independent area. It draws on related disciplines and field of study such as economics, accounting. These disciplines are interrelated. These are key reference among them. Financial management refers to its relationship with closely related field, it function, scope and objectives. Finance is an academic discipline has undergone fundamental changes in scope and coverage. In the easily years of its evaluation it was treated synonymously with the rising of funds. In the current literature pertaining to financial management in addition to procurement of funds efficient use of resources is universally recognized.

DEFINITIONS:
Ezra Solomon has defined The financial management deals with the efficient use of an important economic resource namely capital funds. Financial management is the activity concerned with the planning raising, controlling and administrating the funds used in business. -Guthman and Dougall. Financial management is that managerial activity which is concerned with the planning and controlling of the firms financial resources. -I.M.PANDAY. Financial management is concerned with the efficient use of an important economic resource namely capital funds. -EZRA SOLOMAN.
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Financial management is the operation activity of a business that is responsible for obtaining and effectively utilizing the funds necessary for efficient operations. -JOSEPH AND MASSIE. SCOPE OF FINANCIAL MANAGEMENT The approach to the scope and the functions of financial management is divided for the purpose of expositions into two broad categories. A) Traditional Approach: Traditional approach to the finance function relates to the initial stages of its evolution during 1920s and 1930s when term corporate finance was used to describe in the academic world today as the financial management. The approach was focused on procurement of long-term funds. In that issue allocation of funds which is so important today is completely ignored. The utilization of funds was considered beyond the pure view of finance function. B) MODERN APPROACH The Modern approach views finance function in broader sense. It includes both rising of funds as well as this effective utilization under the preview of finance. The cost of raising and the returns from their use should be compared. The utilization of funds requires decision making. Finance functions covers financial planning rising of funds, allocation of funds, financial control etc. Modern approach is an analytical way of dealing with financial problems of firms.

In that approach considers there are three basic management decisions i.e., investment decisions, financing & dividend decisions with in the scope of finance functions.

OBJECTIVES OF FINANCIAL MANAGEMENT

The objectives of financial management are A) Profit Maximization:According to this approach actions that increase profits should be under taken and those that decrease profits are to be avoided. In specific operational terms as applicable to financial management, the profit maximization implies that the investment financing and dividend policy decisions of affirm should be oriented to the maximization of profits. B) Wealth Maximization: This is also known as value maximization or net present wealth maximization. In current academic literature value maximization is almost universally accepted and appropriate operational criterion for financial management divisions as it removes the technical limitation criterion. It operational features satisfy all the three requirements of a suitable operational objective of financial courses of actions namely exactness, quality of the benefits and the time value of money.

AN OVERVIEW OF FINANCIAL MANAGEMENT

Financial Management

Maximization of share value

Financial Decision

Investment Decision

Financing Decision

Dividend Decision

Liquidity Decision

Return

Trade - Off

Risk

The financial manager, in a bid to maximize owners wealth, should strive to maximize returns in relation to given risk. To ensure maximum return, funds flowing in and out of the firm should be constantly monitored to assure that they are safe guarded and properly utilized.

FINANCE FUNCTIONS:
It may be difficult to separate the finance functions from production, marketing and other functions, yet the functions themselves can readily identify. The function of raiding funds, investing them in assets and distributing returns earned from assets to shareholders are respectively known as financing, investing and dividend decisions. While performing these functions, a firm attempts to balance cash inflows and outflows. This is called liquidity decision. Finance functions or decisions include: Investment or long term mix decision. Financing or capital mix decision. Dividend or profit allocation mix. Liquidity or short term asset mix decision.

Investment Decision:
Investment decision or capital budgeting, involves the decision of allocation of capital or commitment of funds to long-term assets that would yield benefit in the future. Two important aspect of investment decision are: a) Evaluation of prospective return on new investment.
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b) The measurement of a cut-off rate against that the prospective return of new investment. Investment proposal should therefore be evaluated in terms of both expected return and risk.

Financing Decision:
Financing decision is the second important function to be performed by the financial manager. The main issue is to determine the proportion of equity and debt. The mix of debt and equity is known as the firms capital structure. The financial manager must strive to obtain the best financing mix or the optimum capital structure for the firm. The firms capital structure is considered to be optimum when the market value of share is maximized. A proper balance has to be struck between return and risk.

Dividend Decision:
The financial manager must decide whenever the firm should distribute all profits, or retain them, or distribute a portion and retain the balance. Like the debt policy, the dividend policy should be determined in terms of its impact on shareholders value. The optimum dividend policy is one that maximizes the market value of the firms share. The financial manager must determine the optimum dividend payout ratio.

Liquidity Decision:
Investment in current assets affects the firms profitability and liquidity. Current assets management that affects a firms liquidity is yet another important finance function. Current assets should be managed efficiently for safeguarding the firm against the risk of illiquidity. Lack of liquidity (or illiquidity) in

extreme situations can lead to the firms insolvency. A conflict exists between profitability and liquidity while managing current assets. If the firm does not invest sufficient funds in current assets, it may become illiquid and therefore, risky. But it would lose profitability, as idle current would not earn anything. Thus, a proper trade-off must be achieved between profitability and liquidity. The profitability-liquidity trade-off requires that the financial manager should develop sound techniques of managing current assets. RATIO ANALYSIS: Fundamental Analysis has Avery broad scope. One aspect looks at the general factors of company. The other side considers tangible and measurable factor. This means crunching and analyzing numbers from the financial statements. If used in conjunction with other methods, quantitative analysis can produce excellent results. Ratio analysis isnt just comparing different numbers from the balance sheet, income statement. Its companies, the industry, or even the economy in general. Ration look at the relationships between individual values and relate them to how a company has performed in the past, and might perform in the future. MEANING OF RATIO ANALYSIS: A ratio is one figure express in terms of another figure. It is a mathematical yardstick that measures the relationship two figures, which are related to each other and mutually interdependent. Ratio is express by dividing one figure by the other related figure. Thus a ratio is an expression relating one number to another. It is simply the quotient of two numbers. It can be expressed as a fraction or as a decimal or as pure ratio or in absolute
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figures as so many times. As accounting ratio is an expression relation two figures or group contain in the financial statements. Ratio analysis is the method or process by which the relationship of items or group or items in the financial statement are computed, determined and presented. Ration analysis is an attempt to derive quantitative measure or guides concerning the financial health and profitability of business enterprises. Ratio analysis can be used both in trend and static analysis. There are several ratios at the disposal of an analyst but their group of ratio he would prefer depends on the purpose and the objective of analysis. While a detailed explanation of ratio analysis is beyond the scope of this section, we will focus on technique. This is easy to use. It can provide you with a valuable investment analysis tool. This technique is called cross-sectional analysis. Cross-sectional analysis compares financial ratio of several companies from the same industry. Ratio analysis can provide valuable information about a companys financial health. A financial ratio measures a companys performance in a specific area. For example, you could use a ratio of companys determine which company uses greater debt in the conduct of its business. A company whose leverage ratio is higher than a competitors has more debt per equity. You can use this information to make a judgment as to which company is a better investment risk.

How ever, you must be careful not to place too much importance on one ratio. You obtain a better indication of the direction in which a company is moving when several ratios are taken as a group. OBJECTIVE OF RATIOS Ratio is work out to analyze the following aspects of business organization A) Solvency 1) Long Term 2) Shore Term 3) Immediate B) Stability C) Profitability D) Operational efficiency E) Credit Standing F) Structural Analysis G) Effective utilization of resources H) Leverage or external financing FORMS OF RATIO: Since a ratio is a mathematical relationship between to or more variables/accounting figures, such relationship can be expressed in different ways as follows. A) As a pure ratio: For example the equity share capital of a company is Rs.20, 00,000 & the preference share capital of a company Rs.5, 00,000. The ratio of equity share capital to preference share capital is 20, 00,000: 5, 00,000 or simply 4:1.

B) As a rate of times: In the above case the equity share capital may also be described as 4 times that of preference shred capital similarly the cash sales of a firm are Rs.2.5 [30,00,000/12,00,000] or simply by saying that the credit sales are 2.5 times that of cash sales. C) As a percentage: In such a case, on item may be expressed as a percentage of some other item, for example, net sales of the firm are Rs.50,00,000 & the amount of the gross profit is Rs.10,00,000 then the gross profit may be described as 20% of sales [10,00,000/50,00,000]. Steps in ratio analysis: The ratio analysis required two steps as follows: 1. 2. Calculation of ratio Comparing the ratio with some predetermined standards.

The standard ratio may be the past ratio of the same firm or industrys average ratio of a projected ratio or the ratio of the ratio of the most successful firm in the industry. In interpreting the ratio of a particular firm, the analyst cannot reach any fruitful conclusion unless the calculated ratio is compared with some predetermined standard. The importance of a cross standard is oblivious as the conclusion is going to be based on the standard it self. Types of Comparisons: The ratio can be compared in three different ways 1) Cross section analysis: One of the way of comparing the ratio or ratios of the firm is to compare them with the ratio or ratios of some other selected firm in the same industry at the same point of time, so it involves the comparison of two or
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more firms financial ratio at the same point of find out as to how a particular firm has performance may be compared with the performance of the leader in the industry in order to uncover the major operational in efficiencies. The cross section analysis is easy to be under taken as most of the data required for this may be available in financial statement of the firm. 2) Time Series Analysis: The analysis is called time series analysis when the performance of a firm is evaluated over a period of time. By comparing the present performance of a firm with the performance of the same firm over the last few years, an assessment can be made about the trend in progress of the firm. Time series analysis helps to the firm to assess whether the firm is approaching he long-term goals or not. The time series analysis looks for 1) important trends in financial performance 2) shift in trend over the years 3) significant deviation any from the other set of data. 3) Combined Analysis: If the cross section & time analysis, both are combined together to study the behavior & pattern of ratio, then meaningful & comprehensive evaluation of the performance of the firm can definitely be made. A trend of ratio of a firm compared with the trend of the ratio of the standard firm can give good result, for example, the ratio of operating expenses to net sales for firm may be higher than the industry average however, over the years if has been declining for the firm, where as the industry average has not shown any significant changes. Figure 2:1: combined analysis of cross-section and time series. The combined analysis as depicted in the above diagram, which clearly show that the ratio of the firm is above the industry average, but it is decreasing over the years & is approaching the industry average.
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Pre-requisites to ratio analysis: In order to use ratio analysis as device to make purposeful conclusion, there are certain pre-requisites. This must be taken care of it may be noted that these prerequisites are not conditions fro calculations for meaningful conclusions. The accounting figures are in active in them can be used for any ratio but meaningful & correct inter predation & conclusion can be arrived at only if the following points are well considered. 1) 2) 3) 4) The dates of different financial statements from where data is taken must be same. If possible, only audited financial statements should be considered, other wise there must be sufficient evidence that the data is correct. Accounting policies followed by different firms must be same in case of cross section analysis would be distorted. One ratio may not throw light on any performance of the firm. Therefore, a group of ratios must be preferred. This will be conductive to counter checks. 5) Last but not least, the analyst must find out that the two figures being used to calculate a ratio must be related to each other, otherwise there is no purpose of calculating a ratio.

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NEED FOR THE STUDY

The main need of the study is to analyze the financial information of the ML group of industries.

To find out the liquidity or short term solvency of the ML limited. To know the different types of ratio analysis how it shows impact on different Organizations.
To allow the relationship among various aspects in such a way that it

allows drawing conclusion about the performance, strength, and weaknesses of the company. To know the short term surviving ability of the company.

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OBJECTIVES OF THE STUDY

The main objective of the study is to analyze the financial information of the ML Group of companies.

To know the performance of the company in different time periods. To know the future liquidity of the company. To verify liquidity and its impact on ratio analysis. To know the profitability and activity position of ML group of industries. To know the accurate financial position of the company To make appropriate suggestions and measures for the effective working of the Company
To analysis the financial performance of the company from the point of

ratio analysis is through various ratios.

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SCOPE OF THE STUDY

An extensive study is done on the financial transactions and financial information of the ML Group of industries. The study covers the historical financial information of the company to find.

Growth, strategy and weakness of the company. The study covers all the transactions of the ML Group of industries in the Ratio analysis. The study covers the measurement of profitability of the firm and its operating Efficiency and the relationship among different financial aspects.

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METHODOLOGY OF THE STUDY

Methodology is scientific and systematic search for pertinent information on specific Topic. The reliability of management decision depends up on the quality of data. Basically we have two types of data.

Primary data Secondary data Primary Data:Primary data can be collected either through experience or through survey. That which is collected afresh and for the first time and thus happens to be original in character is called primary data. Primary data can be collected in the following ways. By Observation Through personal interview Through telephone interviews. Secondary Data:Secondary data means data that is already available which was collected and analyzed by some one else and which have already been passed through the statistical process. Secondary data May either is published data or UN published data.

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LIMITATIONS OF THE STUDY

While the study is undertaken about the ratios of the ML Groups of industries the Following were encountered.

Due to shortage of time the overall analysis of the financial information of

ML Group of industries becomes difficult. Some of the information was with registered office of the company due to some Statuary requirements, so it became difficult to get the overall information of the company. Since we are new to the company, company refused to provide its financial Information. The calculated ratios are not compared with competitors ratios.
The smaller time frame available for understanding this study is also one

of the significant limitations of the study. Due to lack of information my study is limited to some selected ratios only.

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CHAPTER II

INDUSTRY PROFILE

INDUSTRY PROFILE
IN THE BEGINNING: Tobacco is a plant that grows natively in north and South America. It is in the same family as the potato, pepper and the poisonous nightshade on very dead plant. The seed of a tobacco plant is very small. A 1 ounce sample contains about 3, 00,000 seeds. It is a believed that tobacco began growing in the America about 6,000 B.C., American Indians began using tobacco in many different ways. Such as in religious and medicinal practices. Tobacco was believed to be a cure all and was used to dress wounds, as well as a pain killer. Chewing tobacco was believed to relieve the pain of a toothache. Soon after, sailors brought tobacco back to Europe and the plant was being grown all over Europe. The major reason for tobaccos growing popularity in Europe was its supposed healing properties. Europeans believed that tobacco could cure almost anything, from bad breath. In 1571, a Spanish doctor named Nicolas Monardes wrote a book about the history of medicinal plants of the new world. In this he claimed that tobacco could cure 36 health problems. In 1588, a Virginian named Thomas Harriet prompted smoking tobacco as a viable way to get ones dose of tobacco. Unfortunately, he died nose cancer (because it was popular them to breath the smoke out through the nose).

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During the 1600s, tobacco was so popular that it was frequently used as money! Tobacco was literally as good as gold! This was also a time when some of the dangerous effects of smoking tobacco were being realized by some individuals. In 1610 Sir Francis Bercon noted that trying to quit the bad habit as really hard. In 1632, 12 years after the mayflower arrived on Plymouth Rock, it was Illegal to smoke publicly in Massachusetts! This had more to do with moral benefits of the day than health cancers about smoking tobacco. In 1760, Pierre Lorillard established a company in New York City to process tobacco, cigar and snuff. Today P.Lorillard is the oldest tobacco company in the U.S. TOBACCO: A GROWTH INDUSTRY: In 1776, during the American revolutionary war, tobacco helped finance the Revolution by serving as collateral for loans the American borrowed from finance! Over the years, more and more scientists began to understand the chemical in tobacco, as well as the dangerous health affects smoking produces. In 1826, the pure form of nicotine was finally discovered. Soon after, Scientists concluded that nicotine was dangerous poison. In 1836, New Englander sacral green stated that tobacco was an insecticide, a poison and can kill a man.

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In 1847, the famous Phillip Morris was established selling hand rolled Turkish cigarettes. Soon after in 1849, J.E.Liggette and brother was established in stylus, MO- (the company that has settled out of the big lawsuits recently) cigarettes became popular around this when soldiers brought it back to England from the Russian and Turkish soldiers. Cigarettes in the U.S. were mainly made from scraps left over after the production of other tobacco products, especially chewing tobacco. Chewing tobacco became quite popular at this time with the Cowboys of the American west. In 1875, R.J.Reynolds Tobacco Company (better known for its Reynolds wrap aluminum foil) was established to produce chewing tobacco. It was not until the 1900s that the cigarette became the major tobacco product made and sold. Still, in 1901, 3.5 billion cigarettes were sold, while 6 billion cigars were sold. Along with the popularity of cigarettes however, was a small but growing anti-tobacco campaign, with some states proposing a total ban on tobacco? In 1902, the British Phillip Morris set up a New York headquarters to market its cigarettes including a new famous Marlboro brand. The demand for cigarettes grew however, and in 1913 R.J.Reynolds began to market a cigarette brand called camel.

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WAR & CIGARETTES: A DEADLY COMBO: The cigarette exploded during world war (1914-1918), where cigarettes were called soldiers smoke. By 1923, camel controls 45% of the U.S. market! In 1924, Phillip Morris began to market Marlboro as a womans cigarette that is a Mild as May! To battle this, American tobacco company, maker of the lucky strike brand, began to market its cigarettes to women and gains 38% of the market. Smoking rates among female teenagers soon tripled during the years between 1925-1935. In 1939, American Tobacco Company introduced a new brand, Pall Mall, which allowed American to become the largest tobacco company in the U.S. During World War II (1939-1945), cigarette rates were at an all time high. Cigarettes were included in soldiers C-Rations (like food). Tobacco companies sent millions of cigarettes to the soldiers for free, and when these soldiers came home, the companies had steady stream of loyal customers. During the 1950s, more and more evidence was surfacing the smoking linked to lung cancer I n 1952, P.Lorillard markets its Kent brand with the Micronite filter, which contained asbestos! This was fortunately discontinued in 1956. In 1953, DR.Ernst L.Wynders fined that putting cigarette tar on the back of mice causes tumors! In 1954, RJ Reynolds introduced the Salem brand, which was the first filter tripped menthol cigarette.

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HEALTH HAZARDS REVEALED IN 1964, the surgeon Generals Report on smoking and health came out. This report assisted in allowing the government to regulate the advertisement and sales of cigarettes. The 1960s in general was a time when much of health hazards of smoking were reported. In 1965, television cigarette ads were taken off the air in Great Britain. In 1966, those health warnings on cigarette packs began propping up. In 1968, Bravo a non tobacco cigarette brand was marketed made primarily of Lettuce, it failed: miserably. Because of the negative press about tobacco, the major tobacco companies began to diversity their products Phillip Morris began to buy in to the Miller Brewing company, makers of Miller Beer, Miller lite, and Red Dog Beer. RJ Reynolds Tobacco Company drops the tobacco company in its name, and becomes RJ Reynolds industries. It also began to buy into other products, such as aluminum. American Tobacco Company also drops tobacco from its name, becoming American brands, Inc. In 1971, television ads for cigarettes are finally taken off the air in the U.S.cigarettes. However, was still the most heavily advertised product second to automobiles? In 1977, the first national great American smoke art took place. In 1979, the surgeon general reported on the health consequences of smoking for women. This is in light to the increasing number o women who were taking up the bad habit. Some attribute is to slick and campaign of the Virginia slims brand, youve come a long way baby.

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THE RECENT PAST During the 1980s there were many lawsuits failed against the tobacco industry because of the harmful effects of its products. Smoking became politically in correct, with more public places forbidding smoking. In 1982, the surgeon general reported that second hand smoke may cause lung cancer. Smoking in public areas was soon restricted, especially at the work place. In 1985, lung cancer became the No.1 killer of women, beating out breast cancer! Phillip Morris continued to diversity into other products, buying into general foods corporation and Kraft Inc in 1985. R Reynolds also diversified, buying Nabisco and becoming RJR/NABISCO. In 1987, congress banned smoking on all domestic flights lasting less than two hours. In 1990, smoking is banned, expect to Alaska and Hawaii. In 1990, Ben & Jerrys (of ice cream fame) boy cots RJR/ NABISCO, and dropped Oreos from its ice cream products. During the 80s and 90s the tobacco started marketing heavily in areas outside the U.S, especially developing countries in Asia. Marlboro is considered the worlds No1 most valuable brand of any product with a value over $ 30 billion! Over this period, there is a battle between coca cola and Marlboro as the No1 brand in the world.

In the recent years there is growing evidence that the tobacco industry has known all along that cigarettes are harmful, but continue to market and sell them. There is also

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evidence that they know that nicotine was addictive and exploited this hidden knowledge to get millions of people hooked on this dangerous habit. Tobacco industry is an agro based industry. Tobacco is cultivated mainly in the states of Andhra Pradesh and Karnataka. Most of the tobacco used for the manufacture of cigarettes and for exports (is produced from these two states).Tobacco is also grown in Tamilnadu, West Bengal, Uttar Pradesh, Gujarat, Madhya Pradesh, Maharashtra and Orissa also. However the tobacco grown in these states is of very less quantity and is not used for manufacture of cigarettes and exports. Several varieties of tobacco such as Virginia flue cured, Virginia air cured, light soil burly, sun cured Virginia, nature, chewing tobacco, HDBRG, Wrapper tobacco, Bidi tobacco and Hookah tobacco etc., are grown in India. Virginia flue cured is a major variety grown in India. More than 80% of Indian tobacco crop belongs to this variety. The tobacco cultivation exports and some other industrial activities are regulated by central government (Ministry of commerce) through tobacco board. Tobacco board is headed by I.A.S officer of senior category generally from the central government.

The board consists of several Central government officers, state government officers, political leaders, representatives of farmers and reputed Industrialists. One of the directors of ML Group is always representing the industrialists in the tobacco board.

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Tobacco board issues licenses to the farmers who are permitted to grow tobacco. The license regulates the cultivation area. The farmers have to restrict the cultivation to the given area and must sell the grown tobacco through tobacco board auctions only. Any violation is an offence and is punishable. In Virginia flue cured variety the tobacco leaves are separated from the plant and are cured in tobacco barns are like a furnace when the fumes are used to cure the green leaves of tobacco plant. Tobacco barns appear like small godowns with firing chambers at the bottom fixed to the walls. The green tobacco leaves of the plant will be arranged in the form of rows inside the barns. The temperature inside the barn will be regulated by means of flow of hot air through the firing chambers. This is a simple technical process by which the green leaf exposed to hot air at high temperature and cooled slowly over a period of time. After the curing process, the primary leaf tobacco turns into leman yellow colour, gold colour, brownish yellow colour, brown colour and dark brown colour. This tobacco is called katcha tobacco leaf and is ready for sale. The formers pack different colours in different packages as each colour generally will be classified as a separate grade which will have a separate price in the market? Tobacco must be sold only through tobacco board auction platforms under strict rules and regulations. Former or buyer as permitted to transact in tobacco board auction platforms. Central Government has also established several tobacco research institutes for betterment of quality of tobacco in India. The other varieties of tobacco are not regulated by tobacco board.

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The tobacco purchased from the tobacco board auction platforms will be graded further whenever required. Grading is a process of manual separation of one variety of leaf from the other and is done mainly on the basis of colour. Each grade will generally have unique quality parameters. The graded tobacco is further processed either manually or on machines. The processing is called DEBUTTING and SRRIPPING. Workers separate the butt of the tobacco leaf from the leaf. This process can also be done on machines. The machine processing is called THRESHING. After stripping/ threshing, the tobacco will be further processed for stabilization of moisture. The process is called REDRYING. In the process the tobacco first of all will be derived completely then it will be given stream at the required temperature. After redrying process, the tobacco will be packed in the required packing say bale packing/ case packing etc. The packed tobacco is ready for export. In India, the first threshing plant which is working uninterruptedly for the last 25/30 years an imported one by Maddi Lakshmaiah and co.ltd. This was installed at Ganapavaram and the plant is still running at high efficiency levels in the country with 98% average efficiency level for the last three years. There are two plants owned by ITC which can be compared with this plant in the country. ITC uses their threshing plants for their own consumption. Tobacco industry is fetching more than Rs 9,000 crores of revenue to the central Government. It is providing employment two lakhs of people directly and millions of people indirectly and is also contributing Rs 1,000 crores of forex reserves to the country. The central Government is announcing several restrictions on advertisement and consumption of cigarettes in the country. It is encouraging the

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formers by providing several subsidized fertilizers and by supporting through tobacco board. The major players in tobacco industry in India are as under: Name of the company Occupation % of business in India

ITC LTD

Cigarette manufacturing and unmanufacturing tobacco exports Cigarette manufacturing and unmanufacturing tobacco exports Cigarette manufacturing and unmanufacturing tobacco exports

50%

VST INDUSTRIES LTD

12%

GTC INDUSTRIES LTD

6%

GODFREY PHILLIPS INDIA LTD

Cigarette manufacturing and unmanufacturing tobacco exports

8%

The consumption is linked with the habits of the people; the tobacco usage cannot be eradicated. Even in countries like USA where anti tobacco campaign started in 1962. The production of cigarettes and consumption of cigarettes is still progressing. EXPORTERS:
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S.No A

Name of the company ML GROUP

Occupation Cigarette manufacturing and unmanufacturing tobacco exports Cigarette manufacturing and unmanufacturing tobacco exports Cigarette manufacturing and unmanufacturing tobacco exports Cigarette manufacturing and unmanufacturing tobacco exports Cigarette manufacturing and unmanufacturing tobacco exports

% of business in India 5%

POLISETTY GROUP

5%

BOMIDALA GROUP

3%

MITTAPALLI GROUP

3%

OTHER EXPORTES

8%

Our ML Company has developed strong relationship with overseas manufacturing in Europe, Russian and Middle East. Through there is very good demand from Russian market. Our company is not exporting much because of poor economic conditions of the country. M.L.company as now exporting cigarettes to Middle East and USA by manufacturing the cigarettes on job work basis. The company foresees a very bright future for this company in tobacco in the coming years.
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M.L. Group is the first tobacco company who exported tobacco to China and is the first company who imported from China. There was no imported tobacco in Indian tobacco history before this and after this till now. The group maintains good relationship with the Chinese tobacco monopoly.

One of the trade delegates that accompanied our honorable prime minister during his recent visit to china is from ML Company. Three ambassadors of china have visited our company in the past as our guests and expressed their satisfaction on our infrastructure facilities.

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CHAPTER III

COMPANY PROFILE

COMPANY PROFILE
ML Group was a multifacilitated corporate leader of which the group Consists of five concerns namely.

ML Agro Products LTD

-- Tobacco threshers, packers and

Exporters.
K.S.Subbiah Pillai and co (India) Ltd

--- Tobacco Export

M.L.Exports

--- Export house

Coramandal Agro Products and oils Ltd --- Bulk producers of oils

ML GROUP:The highly competitive tobacco market represented tremendous growth potential to Mr.Maddi Lakshmaiah. Foreseeing the demand for quality Indian tobacco, a long term strategy was formulated. Right from its inception, the company adhered to international standards and made rapid into global tobacco markets. A sophisticated threshing plant of international standards was commissioned in 1976 first in Andhra Pradesh. It created a revaluation in tobacco processing and led to a huge Upsurge in demand. This led to the commissioning of two modern plants with threshers, redryers and other sophisticated equipment for the processing of quality tobacco.

30

ML Group has taken its credo of total quality to the furthest, whether in the Quality of processes, products or working conditions for the vast workforce. The foresighted Innovations of Sri Maddi Lakshmaiah have given the group a strong edge. The personal involvement of the directors in all aspects of the business has resulted in high quality operational parameters. The company can proudly claim some of the most skilled workforce and a Highly efficient management, who have contributed significantly to the prominent position. The Company has earned recognition from apex institutions and is a recognized leader in tobacco markets the world over. The quantum growth in of ML Company spread of investment in infrastructure And diversification in to other business. ML Group under its umbrella the various companies has an annual turnover of Rs 1550 million and an asset base of Rs 200 million. A real estate development wing was set up to Develop and lease commercial properties with working environments that rival the best internationally. The information about the establishment of the group which consists of five Concerns are as follows displayed on the preceding pages. Let us have a look on the various concerns of ML Group individually.

31

MADDI LAKSHMAIAH AND COMPANY LTD:ML and company limited, the fore runner of all the companies of ML Group, the Company enjoys a pre-eminent standing in the world of tobacco, exporting to china, Russia, Western Europe, Africa and Bangladesh among others. Supported by a team of experts, technicians, engineers and a skilled workforce, The Company has forged a head setting standards that have become benchmarks in the industry. Today Chilakaluripet is a well known name in the global tobacco business in no little measure due to the Pioneering efforts of the intrepid founder, Sri Maddi Lakshmaiah. ML AGRO PRODUCTS LTD: ML Agro products ltd was born of a increase in demand for quality tobacco in Both the domestic and foreign markets. Building on the rich experience of running a profitable operation A new plant was set up in 1976 at Martur, Prakasam district. It is fully self-sufficient with modern threshers, lamina redryers, automatic double ram press, sophisticated quality control laboratory and mammoth warehouses. It ranks among the Largest threshing unity in the country. Apart from its export commitments. The company also processes tobacco for domestic cigarette manufacturers. The Company today has a global vision.

K.S. SUBBIAH PILLAI AND COMPANY (INDIA) LTD:-

32

K.S.S.P and company limited was acquiring in 1982 with all its assets K.S. Subbaiah pillai and company (India) limited is the groups leading tobacco exporting unit. In a field that Is extremely competitive, the excellent performance of the company is an indicator of the trust that it Enjoys across the globe.

CORAMANDAL AGRO PRODUCTS OILS LIMITED (CAPOL):CAPOL started in 1976, extracts and refines cotton seed oil. Today it is a multi Product Company with equipments to process all kinds of oil seeds. The plant has a storage capacity of 2100 tonnes for different types of oil. Extreme care is taken to ensure that at every stage in the process of production Right from selecting of the raw material to packaging the products, only the best is passed. Minimum human intervention and rigorous application of quality control Processes to ensure that the final product conforms to all appropriate standards. The by products of the Process in the form of linters, Hulls and De-oiled cakes are in high demand in many parts of the world.

ML EXPORTS: ML Exports is a totally export oriented unit, with clients in a variety of markets around the world. The company enjoys a reputation for excellent delivered schedules and transparent Business practices in global markets.

SHARE HOLDING PATTERN AND MANAGEMENT OF GROUPS:

33

Sri Maddi Lakshmaiah and his family members are holding 100% of shares of the entire group. The group is totally managed and controlled by Sri Maddi Lakshmaiah and his family Members only. The group has been successfully improving its business in all of its activities such As domestic sales, export sales, tobacco processing and other tobacco development activities, Warehousing facilities etc. The group has two tobacco processing plants and one solvent extraction Plant in south India. The group owns around 1 00,000 square meters of warehousing complexes in south India.

IN CORPORATION: ML Company is a limited company (M/s Maddi lakshmaiah and company limited) Which was originally incorporated on 8th day of October 1970 under the name, Maddi lakshmaiah and Company private limited having passed the necessary special resolution on the 23rd day of March 2002, In terms of sec 31(1)/44 of the companies act 1956 the name of the company changed to Maddi Lakshmaiah and company limited.

NATURE OF ACTIVITY:

34

o This factory produces good quality tobacco o The production capacity per each day is one lakh 20 tonnes. o The production capacity per year is around 15/16 million tonnes o The current assets capacity per year is around 1.5 million tonnes.

FINANCIAL STRUCTURE: The initial investment of ML company is 10, 00,000.

TURNOVER OF THE GROUP: The turnover of the group for the financial year 1989-99 standard is at around Rs800 millions. The net earnings after taxes of the group have been maintained at Rs150/200 millions per anum. The group has second asset base having assets spread in most of the prime centers and parts of south India. The group has developed excellent infrastructure during the past 30 years. Which have been yielding a promising regular income of more than Rs 225 millions every year?

THE PRODUCTS OF THE M.L.COMPANY AND THEIR MAIN USES:

35

The various products of the M.L. Company and their economic uses are as follows. 1. Karnataka light soil-My sore: This tobacco is preferred for low nicotine content, high filling capacity and Suitability to blend well any tobacco. 2. Monson burly: Used in us blended cigarettes. . 3...Traditional burly: Used for pipe mixtures, chewing plugs and hookah tobacco paste. 4. Kurnool and telangana (NATU): Primarily used for cigarette blending and for hookah tobacco paste making. 5. Eluru (Natu tobacco): Mainly used for cheroots, snuff pipe tobacco, cigarette blending and for hookah Paste making. 6. Oriental: Used for cigarette blending. 7. Century fire cured tobacco: Used in pipe mixtures and hookah tobacco paste. 8. BIDI Tobacco: Used in the manufacture of Bidis, a hand rolled smoking products made by Wrapping tobacco with natural bony leaves. 9. Cigar wrapper tobacco:

36

Mainly used for wrapping the cigars. 10. Cigar filters tobacco: Mainly used in the manufacture of cigars and exported to some countries for use in hookah tobacco paste. 11. Cheroot tobacco: Used for the manufacture of cigars and hookah tobacco paste. 12. Lanka tobacco: For the manufacture of cigars and cheroots. 13. Tamilnadu: Chewing and cheroot. 14. Black chopadia: Used as chewing tobacco. 15. Red chopadia: Mostly for chewing also called lal-chopadia and safna. The export packing Ranges from 250 grams- 100 grams and is available in bales of up to 100 kages 16. Rustica tobacco: Used as chewing tobacco, hookah tobacco, for tobacco sheet making for kreteks In Indonesia, pipe mixers and cigarette blending to some extent.

17. Motihari:

37

Used in the manufacture of various tobacco products such as chewing tobacco, Hookah paste, bidies etc. 18. Southern light soil: Blend with any tobacco. 19. Black soil (Traditional): Blends well with any tobacco. 20. Northern light soil: This tobacco is flavored to semi flavored with excellent ageing properties. OBJECTIVES OF THE COMPANY: To serve the nations vital interest in the tobacco related sectors. To earn a reasonable return on investment
To create a strong research and development in the field of tobacco and

stimulate research and development of developing of exports

To maximize utilization of the existing facilities in order to improve

efficient and increased productivity.

To work towards achievement of self reliance in the field of tobacco,

threshing Formulation and distribution systems.

To import training, conduct seminars, workshops and educational courses

on computers, Computer maintenance, software development and software export and to develop and Design software in India

38

 A broad and to start software technology park in India or abroad and to

other relationship Management solutions for individuals and organizations both individually and through Strategic alliances with other companies.
To employ experts to investigate and examine in to the condition,

prospects, value, Character and circumstances of any business concern and under takings and generally of Any assets property or rights. To carry on all kinds of agency business. To carry on business as merchants in all kinds of goods.
To improve, manage, work, develop, lease, mortgage, abandon or otherwise

deal with all Or any part of the property, right and concessions of the company.

To maintain victinity of suppliers through M.L. tobacco and marketing network at Optimum costs and provide up to date technical assistance to the consumer to conceive the Valuable energy resources.

ORGANIZATION STRUCTURE: Departmentalization of function: - The group has following different departments. Personal Department: This department deals with the masters of industrial relations, HRD, welfare activities, Labour legislations, recruitment and issues of wages etc. This is the main deparment in the organization.

39

Leaf Department: This department deals with the matters of tobacco leaf. It looks after buying of tobacco from the formers for the processing of tobacco. Export Department: It looks after the export matters of the organization. This organization exports tobacco Leaf to China, Bangladesh and U.K. Production Department: This department takes care to produce quality tobacco to customers. .Marketing Department: This department takes care of marketing the company tobacco to other countries such as Russian, Europe, Middle East, Bangladesh, African countries etc. They sell varieties of tobacco in market and maintain good relations with the customers. This is one of the main/ important departments in this organization. M.L.Group was concentrating on domestic market. It ties up with Indian strongest cigarette manufacturing company, ITC.

MARKET EXPORTS: M.L.Company was exporting tobacco to Russia, Europe, Middle East, Bangladesh, African countries etc. These are the various countries in which M.L. Company is exporting their tobacco.

40

FUTURE PLANS:-

The company (Maddi Lakshmaiah) for an ECB fro 50 million dollars and

development of regular trade and also infrastructure projects in India.

ML Company is also working on joint venture basis with U.K.based

Commodities Company for supply of agro products to South Asian countries.

The company already entered in to joint venture with an U.S. based

company by name CARGIL for their entire South Indian needs. They have worked for joint venture arrangement with Yugoslavian Government for their Requirement for India. This is for above five million dollars of investment in supply of 5000 tones every year. The company is working with Chinese Government for long term association in tobacco.
Negotiation of ambassador level which are completed and favorable

reports are submitted to respective Government.

The only delegating from tobacco industry that is permitted along with

P.M (Mr.Atal Bihari Vajpayee) to the recent tole to china is from M.L. Company.

ACHIEVEMENTS / AWARDS:41

 M.L.Company has no particular / peculiar achievements / awards. M.L.Group (CAPOL Chirala, Prakasam Dt.) got several achievements and awards. CAPOL: All Indian cotton seed crushers association, Mumbai awarded CAPOL as III highest Exporter and III highest domestic seller of cotton seed extraction for the year 1992-1993.
CAPOL is the highest exporter and III highest domestic set of cotton seed

extraction for the year 1993-1994. CAPOL is the III highest domestic seller of cotton seed extraction for the year 1994-95. CAPOL is the II highest domestic seller of cotton seed extraction for the year 1995-96. CAPOL is the II highest domestic seller of cotton seed extraction for the year 1997-98 CAPOL is the III highest domestic cotton seeds in the year 1999-2000. CAPOL is the II highest exporter of cotton linter in the year 2000-2001. CAPOL is the III highest exporter of cotton linters and II highest domestic seller of Cotton seed extraction in the year 2001-2002.
The Company (CAPOL) has been awarded may commendation led by

Government of AP For its continuous harmonious relations with its employees in the years 1994-1997.

42

 The Company (CAPOL) received Gold Udyoga Patra award for its best

quality and Productivity through Sri Pranam Mukharhee, honorable union commerce minister in 1993 and on this Occasion, the company (CAPOL) M.D. has been facilitated by honorable president of India, Dr.Sankar Dayal Sharma. The company got productivity council awards. The company goy II best sport persons in companies in prakasam district.

MARKETING CHANNELS: Normally they send samples and varieties. At the time of requirement they send samples through couriers. Participating in exhibitions every year M.L.company was taking participation in 56years. The people who have connection in tobacco may visit tobacco stalls usually, even from Europe, Russia and china. People like manufacturers, dealers, bankers, merchants of tobacco may visit the tobacco exhibitions.

TOBACCO

EXPORTERS

IN

INDIA

&

COMPETITORS

OF

M.L.COMPANY:43

In India, the tobacco exporters as well as the same exporters are the competitors of M.L. Group. TOBACCO EXPORTERS IN INDIA:The important tobaccos exported in our country are, o ML GROUP
o Mittapalli Group mmidal

o Boa group o I.T.C. and some other small companies. In tobacco exports, I.T.C and out of countries (other countries) like China comes as competitors to this company. In which China produces 50 times more of tobacco than India.
During exporting of tobacco to other countries freight charges may be

bared by the Company it self. For door delivery some other charges may be bared by the company. Tobacco is usually stored in warehouses, redrying plants, threshing plants.

MODE OF TRANSPORTATION:Generally the mode of transportation may be four types.

44

o FOB: Free on board

--

The responsibility may be on the board. Responsibility of boat and freight

o C & F; Cost & freights --

o CIF: Cost insurance and freight -- ware house insurance other o DDC: Door delivery up to.

FINANCE DEPARTMENT:In this department deals with, Cash payments will be checked by cashiers. Cash bills and credit bills may get from threshing factory engineering department. Concerned accounts may be generalized by the accountants and may be sent to concerned heads. Credit bills payments will be given in the form of cheques / D.D In season tobacco may be purchased through action platforms Tobacco board will rise invoices Before purchasing they have to give bank guarantee. The company will give payments by encase the cheques to tobacco boards.

45

CHAPTER IV

THEORITICAL FRAME WORK

THEORETICAL FRAME WORK

Financial Analysis the process of determining the significant operating and financial characteristics of a firm from an accounting data and financial statements. Financial analysis is the process of identifying the financial strengths and weakness of the firm. It is done by establishing relationship between the items of financial statements viz. balance sheet and profit and loss account. Financial statement analysis is a process of evaluating the relationship between the component parts of the financial statements to obtain a better understanding of a firm's position and performance. The analysis and interpretation of financial statements reveal each and every aspect regarding two well being financial soundness, operational efficiency and credit worthiness of the concern concerned. It may be made for a particular purpose in view. However the following are generally considered to the object of financial analysis.

To find out the financial stability and soundness of the business enterprise.

To estimate and evaluate the earning capacity of the business. To evaluate the administrative efficiency of the business enterprise. TYPES OF ANALYSIS: Two types of analysis are undertaken to interpret the position of an enterprise they are 1. 2. VERTICAL ANALYSIS:
46

Vertical analysis Horizontal analysis

It is the analysis of relationships as between different individual components. It is also the analysis between these components and their totals for a given period of time. It does not focus light on changing behavior of the above relationships. It is also regarded as static analysis. The vertical analysis can be made in the following ways.

By preparations of common size statements of the two similar units.

By preparing common size statements of different years of the same business

unit. HORIZONTAL ANALYSIS: It is the analysis of changes in different components of the financial statements over different periods. With help of a series of statements. Such an analysis makes it possible to study periodic fluctuations in different components of the financial statements. It is also known as 'dynamic analysis' it reflect changes in financial position of the company over a long period of time.

Comparison of the financial statements of different years of the same business

unit.
Comparison of financial statements of a particular year of different business

unit.

INTERNAL USERS:
47

 Financial Executions Top management EXTERNAL USERS: Investors Creditors Workers Customers Government Public Researchers

TOOLS & TECHNICS OF FINANCIAL ANALYSIS: 1. 2. 3. 4. Ratio analysis Cash flow analysis or cash flow statements Funds flow analysis or funds flow statements Comparative statements Comparative income statements Comparative balance sheet statement 5. Common size statements Common size Income statements Common size balance sheet statements 6. Trend analysis

48

Ratio analysis is widely used tool of financial analysis. This analysis establishes the numerical or quantitative relationships between to items or variables of financial statements. So that the strength and weaknesses of a firm as well as its historic performance and current financial position can be determined. Ratio helps to summarize large quantitative of financial data and to make Quantitative judgment about firms financial performance.

MEANING: A Ratio is defined as the desired quotient of two mathematical expressions. Ratio is defined as a fixed relationship in degree or number between two items. The term Ratio refers to the Quantitative relationship between the variable in the numerator and the variable in the denominator. It is a mathematical relationship between two quantities. It engages qualitative measurement and show precisely how adequate is one key item in relation to another. Ratio Analysis is a powerful tool of financial analysis; it is a widely used tool of financial analysis and interpretation of ratios should give experienced, skilled analysts a better understanding of the financial. Condition and performance of the firm than they would obtain from the analysis of financial data alone. A ratio analysis is analyzing the information by comparing two different variables.

49

RATIO: Ratio Analysis lies in the fact that it makes related information comparable. A simple figure itself has no meaning but when expressed in terms of related figure, it yields significant inferences. For instance, the fact that the net profits has be considered in relation to other variables is, how does it stand in relation to sales. What does it represent by way of return on total assets used or capital employed? If net profits are shown in terms of their relationship with sales, assets, capital employed etc., a meaningful conclusion can be drawn regarding their adequacy. A ratio indicates a quantitative relationship which intern helps in qualitative judgment. Financial ratio is an index that relates two accounting numbers and is obtained by dividing one accounting variable with another variable. Financial

Ratio analysis is the principal tool of financial statement analysis. It is the process of analyzing the relation between two financial variables. It is also defined as the systematic use of ratio is to interpret the financial statements so that the strengths and weaknesses of a firm as well as its historical performance and current financial condition can be determined. The relationship can be expressed as percentages, fractions or stated comparison between numbers. These methods of expressing items that are related with each other are for the purpose of financial analysis, referred to as ratio analysis. But comparing ratios merely doesnt add any information of profits and sales. They reveal the relationship in more meaningful way which enables to draw better conclusions.

50

PROCESS: Financial Ratio Analysis involvers 3 steps. 1. Calculation of appropriate ratios from the financial statements. 2. Comparison of ratios with standard and past ratios. 3. Drawing the final conclusion so to make suitable better decisions regarding the firms profit maximization. SIGNIFICANCE AND USES: Used to analyze and interpret the financial health of the firm. Analysis of financial statements with the aid of ratios helps the management in decision-making and control. Use of ratio analysis in not confined to financial managers only but also to investors, creditors and financial executives. Ratios can highlight the factors associated with successful & unsuccessful firms. They can reveal strong & weakness firms, overvalued & undervalued firms. Unique set of operating and financial characteristics of an industry can be identified.

51

Importance of analysis for which people seek differs considerably reflecting the purpose that the statements to serve. Investors are concerned with the firms earning capacity where as creditors including Bankers and financial institutions are interested in knowing the ability of the enterprise to meet its financial obligations timely. Financial executives are concerned with evolving analytical tools that will measure and compare costs efficiency, liquidity and profitability with a view to making intelligent decisions. Thus ratio analysis has wiser applications and is of immense use. As a tool of financial management, ratios are of crucial significance. The importance of ratio analysis lies in the fact that it presents facts on a comparative basis and enables the drawing of inferences regarding the performance of a firm. USERS OF RATIOS: These ratios are used by different people and organizations based upon their specific need and convenience. Trade creditors use ratios in measuring the firms liquidity position while granting short-term loans where as bondholders analyze the firms capital structure as their claims are long-term. Investors are concerned primarily with present and expected future earnings and its stability. Management also employs financial analysis for the purpose of internal control.

52

 Government regulatory agencies are concerned with the rate of return a company earns on its assets as well as the proportion of non-equity funds employed in the business. TYPES OF RATIOS: Broadly speaking the operations and financial position of a firm can be described by studying a short term and long term liquidity position, profitability and its operational activities. Therefore ratios can be classified in to following categories. Liquidity Ratios Capital Structure Ratios Activity Ratios Profitability Ratios. Liquidity Ratios: Conclusions regarding liquidity position of a firm can be drawn with the help of liquidity ratio analysis. The liquidity position of a firm would be satisfactory if it is able to meet its short-term or current obligations when they become due. A firm can be said to have the ability to meet its short-term liabilities if it has sufficient liquid fund to pay the interest on its short-term maturing debt usually within a year as will as to pay the principal. This ability is reflected in the liquidity ratios of a firm. The liquidity ratios are particularly useful in credit analysis by banks and other suppliers of short- term loans. The important liquidity ratios are,

53

 Current ratio Quick ratio Absolute liquidity ratio Current Ratio:Current Ratio is also called as working capital ratio. It establishes relationship between total current assets and current liabilities. The current assets of a firm represent those assets this can be converted into cash with in a short period of time. The current ratio is a measure of the Firms short time solvency. Current Assets Current Ratio = Current Liabilities Quick Ratio:Quick Ratio is also called as acid test ratio or liquid ratio. It is concerned with Relationship between liquid assets and liquid liabilities. An assets is liquid it can be converted into cash immediately on reasonable soon with out loss of value. Cash is the most liquid assets. Other assets that a Are considered to be relatively liquid and included in quick assets are debtors and bills receivable and Marketable securities. Quick Assets Quick Ratio = -----------------------Current Liabilities

Absolute Liquid Ratio:54

This Ratio establishes a relationship between absolute liquid assets to quick Liabilities. Which can not included bills receivable, sundry debtors and marketable securities. Absolute Liquid Assets Absolute Liquid Ratio = -----------------------------Quick Liabilities Capital Structure Ratios:Conclusions regarding the long-term solvency or long-term financial Viability of a firm can also be assessed through ratio analysis. This aspect of the financial position of a borrower is concerned with long-term creditors, security analysts, present and potential owners of a business. The long-term solvency is measured by the leverage / capital structure and profitability ratios, which focus on earning power and operating efficiency. Ratio analysis reveals the firms strengths and weaknesses in this aspect. The leverage ratios will indicate whether a firm has a Reasonable proportion of various sources of finance or if it is heavily loaded with debt in which case its solvency is exposed to serious strain. leverage ratios are: Debt Equity Ratio Debt Ratio Fixed Assets Ratio Proprietary Ratio The important

55

Uses of Leverage Ratios: To identify sources of funds To measure financing risk To forecast borrowing prospects. Debt Equity Ratio This Ratio indicates proportion of debts fund in relationship to equity.Debt ratio shows the relative contribution of creditors and owners debt equity ratio is measure of the long term Financial solvency of a firm. This ratio indicated the relative proportion of debt and equity in financing the assets of the firm.

Debt Debt Equity Ratio = -----------Equity Debt Ratio:This Ratio indicates proportion of owners funds to total fund invested in the Business. Debt ratio is used to analyse the long term solvency of a firm. It helps in knowing the Proportion of the interest bearing debt in the capital structure. Debt ratio is computed by dividing total Debt by capital employed or net assets. Owners Fund Owners Ratio = -------------------Total Equity

56

Proprietary Ratio:It establishes the relationship between the proprietary funds and total assets. The total share holders funds are compared with the total tangible assets of the company. The ratio indicates the general financial strength of the concern. Proprietary Funds Proprietary Ratio = ------------------------Total Assets Activity Ratios These are also called as turnover ratios or asset management ratios. The other Dimension of the use of ratio analysis from the viewpoint of management is that, it throws light on the degree of operating efficiency in the management and utilization of its assets. The various activity ratios measure this kind of operational efficiency. These are based on the relationship between the levels of activity and the level of various assets. In fact, the solvency of a firm is in the ultimate analysis, dependent upon the sales revenues general by the use of the assets total as well as its component. The important activity ratios are: Inventory Turnover Ratio Debtors Turnover Ratio Creditors Turnover Ratio Total assets Turnover Ratio Fixed Assets Turnover Ratio Working Capital Turnover Ratio
57

Fixed Assets Turnover Ratio:This Ratio establishes the relationship between fixed assets and sales. This Ratio Is a measure of ratio is a measure of how well the firm was its long term (fixed) assets and shows how many rupees of sales are supported one rupee of fixed assets. Sales Fixed assets Turnover Ratio = --------------Fixed Assets Debtors Turnover Ratio:It is also called as receivables turnover ratio. The purpose of this ratio is to Measure the liquidity of the receivables or to find out the period over which receivables remain Uncollected.

Total Net Sales Debtors Turnover Ratio = ----------------------Avg Net Debtors Creditors Turnover Ratio:This Ratio shows the velocity of debt payment by the firm.

Net Credit Purchases Creditors Turnover Ratio = ----------------------------Avg Creditors

58

Total Assets Turnover Ratio:Total assets turnover measure the turnover of the all the companys assets and is Calculated by total assets average. Net Sales Total Assets Turnover Ratio = ---------------Total Assets Inventory Turnover Ratio:Inventory turnover ratio indicates the efficiency of the firm in producing and Selling its product. It is called by dividing net sales by average stock. The average Stock is the average of Opening and closing balances of stock.

Net Sales Inventory Turnover Ratio = -------------------Avg Stock

Profitability Ratios:
59

The overall profitability and effectiveness of the firm cane assessed with the help of profitability ratios. Unlike the outside parties which are interested in one aspect of the financial position of a firm, the management is constantly concerned about the overall profitability of the enterprise. The parties are concerned about the ability of the firm to meet its short-term as well as long- term obligations to its creditors in order to ensure a reasonable return to its owners and secure optimum Utilizations of the assets of the firm. This is possible if an integrated view is taken and all the ratios are considered together. These reflect the final result of business operations. The profitability ratios would reveal whether the firm is able to offer adequate return to its owners in consistent with the risk involved. The important profitability ratios are: Gross Profit, Ratio Net Profit Ratio,
Operating Expenses Ratio

60

Gross Profit Ratio:This Ratio is measure of general profitability of the business. This ratio helps to find the gross margin of the company over its sales. Grass Profit is the differences between net sales and Cost of goods sold. The gross profit margin reflects the efficiency with which the management Producers each unit of product. This ratio indicates the average spread between the costs of goods sold and sales revenue. Gross Profit Gross Profit Ratio = ----------------- * 100 Sales Net Profit Ratio:This Ratio is widely used as a measure of overall profitability.Net profit margin establishes a relationship between net profit and sales. It indicates managements efficiency in Manufacturing and administrations and selling the product. This ratio is the overall measure of the firms Ability to turn each rupee sales in to net profit. Net Profit Net Profit Ratio = --------------- * 100 Sales

Operating Expenses Ratio:-

61

The operating expenses ratio depending the office and administrative and selling and distribution expenses.

Operating Expenses ratio =

Operating expenses ---------------------------Sales

62

CHAPTER V

DATA ANALYSIS & INTERPRETATION

DATA ANALYSIS AND INTERPRETATION (A). Liquidity Ratios

Current Ratio:
Current assets include cash and those assets which can be converted in to cash within a year, such marketable securities, debtors and inventories. All obligations within a year are include in current liabilities. Current liabilities include creditors, bills payable accrued expenses, short term bank loan income tax liabilities and long term debt maturing in the current year. Current ratio indicates the availability of current assets in rupees for every rupee of current liability.

Current Assets Current Liabilities

Year 2006-07 2007-08 2008-09 2009-10 2010-11

Current Assets 274243926 281256454 365193725 391784538 399857758

Current Liabilities 115648358 151643144 211523300 180032666 89728008

Ratio 2.37 1.85 1.73 2.17 4.45

63

Ratio 5 4.5 4 3.5 3 2.5 2 1.5 1 0.5 0 200607 200708 200809 200910 201011 Ratio

INTERPRETAION: The above table shows the current ratio of ML Company for the successful five years i.e., 2006-07, 2007-08, 2008-09, 2009-2010, and 2010-11. The current of ML Company is decreased for the past three years and in the next two years it is increased i.e. the current liabilities are increased from the year 2007 to 2009 and in the next two years i.e. from 2010 and 11 the current liabilities are decreased.

64

Quick Ratio:
Quick ratios establish the relationship between quick or liquid assets and Liabilities. An asset is liquid if it can be converting in to cash immediately or reasonably soon without a loss of value. Cash is the most liquid asset .other assets which are consider to be relatively liquid and include in quick assets are debtors and bills receivable and marketable securities. Inventories are considered as less liquid. Inventory normally required some time for realizing into cash. Their value also is tendency to fluctuate. The quick ratio is found out by dividing quick assets by current liabilities

Quick Assets Current Liabilities

Year 2006-07 2007-08 2008-09 2009-10 2010-11

Quick Assets 101987605 93322442 125313650 154808776 297543660

Current Liabilities 115648358 151643144 211523300 180032666 89728008

Ratio 0.08 0.62 0.59 0.86 3.31

65

Ratio 3.5 3 2.5 2 1.5 1

20 07 -0 8

Ratio

20 08 -0 9

20 09 -1 0

INTERPRETAION: The above table shows the quick ratio of ML Company for the successful five years i.e., 2006-07, 2007-08, 2008-09, 2009-2010, and 2010-11. The quick ratio of ML Company is decreased from the year 2007 to 10 due to the increase in the current obligations; this ratio is increased in the current year.

20 06 -0 7

66

20 10 -1 1

0.5 0

3. Cash Ratio:

Even though debtors and bills receivables are considered as more liquid then inventories, it can not be converted in to cash immediately or in time. Therefore while calculation of absolute liquid ratio only the absolute liquid assets as like cash in hand cash at bank, short term marketable securities are taken in to consideration to measure the ability of the company in meeting short term financial obligation. It calculates by absolute assets dividing by current liabilities.

Cash + Bank balance Current Liabilities

Year 2006-07 2007-08 2008-09 2009-10 2010-11

Cash + Bank balance 33465753 6059037 7150276 13998934 61538293

Current Liabilities 115648358 151643144 211523300 180032666 89728008

Ratio 0.29 0.04 0.03 0.07 0.68

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Ratio 0.8 0.7 0.6 0.5 0.4 0.3 0.2 0.1 0

20 0- 1 11

Ratio

20 06 -0 7

20 07 -0 8

20 08 -0 9
68

INTERPRETATION: Absolute liquid ratio indicates the availability of cash with company is sufficient because company also has other current assets to support current liabilities of the company. When observe the above graph absolute liquid ratio of the company is decreased from the year 2007-10. In terms of this ratio the company is unsatisfactory in those four years and this company maintained standard ratio in the current year.

20 09 -1 0

(B). LEVERAGE RATIOS

4. Debt Equity Ratio:
The term external equities refers to total outside liabilities that consists of both short term and long term liabilities and the term internal equities refer to share holders funds that consists of both equity and preference capital. In case the ratio 1(i.e., outsiders funds are equal to shareholders funds it is considered to be quite satisfactory). The debt equity ratio is determined to ascertain the sound ness of the long term financial policies of the company. It is also known as external internal equity ratio. It may be calculated as follows:

Debt Equity

Year 2006-07 2007-08 2008-09 2009-10 2010-11

Debt 640764231 589603737 572516150 560278204 161283036

Equity 148167525 143270036 164136957 207200158 215747706

Ratio 4.32 4.11 3.48 2.70 0.74

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Ratio 5 4.5 4 3.5 3 2.5 2 1.5 1 0.5 0 2006-07 2007-08 2008-09 2009-10 2010-11 Ratio

INTERPRETATION: The general norm for debt equity ratio is 1:2 (or) 1:1 this is applicable only for developed countries. In case of developing countries like India, a general norm of 3:1 or 2:1 is maintained by the firms. Because the firms are depending on borrowed capital rather than equity capital. The debt position of the company is decreased from the 2007to 2011. The company did not maintain idle ratio of debt equity ratio.

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5. Debt to total funds ratio:

This ratio is also called solvency ratio. A measurement of a company's financial leverage, calculated as the company's debt divided by its total capital. Debt includes all short-term and long-term obligations. Total capital includes the company's debt and shareholders' equity, which includes common stock, preferred stock, minority interest and net debt.

Debt Total funds

Year 2006-07 2007-08 2008-09 2009-10 2010-11

Debt 640764231 589603737 572516150 560278204 161283036

Total funds 794455378 738669982 742900639 773002348 380869464

Ratio 0.95 0.74 0.77 0.75 0.20

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Ratio 1 0.9 0.8 0.7 0.6 0.5 0.4 0.3 0.2 0.1 0 2006-07 2007-08 2008-09 2009-10 2010-11

Ratio

INTERPRETATION:

The solvency ratio of the ML Company is decreased from the past five years i.e. this ratio decreased in the years 2007, 2008, 2009, 2010 and in 2011 respectively.

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(C). TURNOVER RATIOS

6. Inventory turnover ratio:

In accounting, the Inventory turnover is a measure of the number of times inventory is sold or used in a time period such as a year. The equation for inventory turnover equals the cost of goods sold divided by the average inventory. Inventory turnover is also known as stock turnover ratio.

Cost of goods sold Inventory

Year 2006-07

C.G.S 131772745 96695127

Inventory 1416708465 168188152 202872507 224758820 104506584

Ratio 0.09

2007-08 255762587 2008-09 257993866 2009-10 2412201369 2010-11

0.57 1.26 1.14 2.87

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Ratio 3.5 3 2.5 2 1.5 1 0.5 0 2006-07 2007-08 2008-09 2009-10 2010-11 Ratio

INTERPRETATION:

The above table shows that the company maintained its inventory turnover ratio was increased gradually from 2007 to 2011. In the year 2011 the company increased its inventory turnover ratio highly. A high inventory turnover ratio indicates efficient management of inventory because the stocks are sold more frequently and lesser amount of money is required to finance the inventory.

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7. Creditors turnover ratio:

This Ratio is similar to the debtors turnover ratio. It compares creditors with the total credit purchases. It signifies the credit period enjoyed by the firm in paying creditors. Accounts payable include both sundry creditors and bills payable.

Net Credit Purchases Average Creditors

Year 2006-07 2007-08 2008-09 2009-10 2010-11

N.C.P 155880478 111121750 280314175 211640666 209030297

Avg N.W 86606810 111350819 140578048 136973736 65662487

Ratio 1.79 0.99 1.99 1.54 3.18

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Ratio 3.5 3 2.5 2 1.5 1 0.5 0 2006-07 2007-08 2008-09 2009-10 2010-11 Ratio

INTERPRETATION

By observing the above table, it is clear that the creditors turnover ratio of ML Company has some fluctuations. In the year 2011 it was highly increased.

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8. Debtors turnover ratio:

Debtors turnover ratio or accounts receivable turnover ratio indicates the velocity of debt collection of a firm. In simple words it indicates the number of times average debtors (receivable) are turned over during a year.

Credit Sales Debtors

Year 2006-07 2007-08 2008-09 2009-10 2010-11

Credit Sales 131772745 96695127 255762587 257993866 2412201369

Debtors 24937024 26860540 35992686 36258591 206323026

Ratio % 4.80 3.32 6.42 5.64 1.54

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Ratio 7 6 5 4 3 2 1 0 2006-07 2007-08 2008-09 2009-10 2010-11 Ratio

INTERPRETATION: The above graph shows that the debtors turnover ratio of the company increased in the year 2009 and 2010 and in the years 2007, 08 and 11 it was decreased. The higher the value of debtors turnover the more efficient is the management of debtors or more liquidity. So the company having good position in management of debt.

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9. Capital Turnover ratio:

The Capital turnover ratio measures the ability of a company to use its assets to generate sales. The total asset turnover ratio considers all assets including fixed assets, like plant and equipment, as well as inventory and accounts receivable.

Sales Capital employed

Year 2006-07 2007-08 2008-09 2009-10 2010-11

Sales 131772745 96695127 255762587 257993866 2412201369

Capital employed 670968363 794455378 738669982 742900639 773002348

Ratio 0.14 0.16 0.13 0.34 0.33

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Ratio 0.4 0.35 0.3 0.25 0.2 0.15 0.1 0.05 0 2006-07 2007-08 2008-09 2009-10 2010-11 Ratio

INTERPRETATION: The above graph shows that, the capital turnover ratio of ML Company is decreased from the past three years i.e. from 2007 to 2009 and in the next two years this ratio was increased.

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(D). PROFITABILITY RATIOS

10. Gross profit ratio:
It is calculated by dividing the gross margin by sales. This ratio shows the profits relative to sales after three direct production costs are deducted. It may be used as an indicator of the efficiency of the production operation and the relation between production costs and selling price.

Gross Profit
X 100

Net sales

Year 2006-07 2007-08 2008-09 2009-10 2010-11

Gross Profit 964760800 485264700 2553785100 4009638900 1169730000

Net sales 131772745 96696127 255762587 257993866 2412201369

Ratio % 7.32 5.01 9.98 15.54 48.49

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48.49 Ratio 60 50 40 30 20 10 0 2006-07 2007-08 2008-09 2009-10 2010-11 Ratio

INTERPRETATION: The gross profit ratio is increased from the year 2007 to 2011 this ratio has increased slightly in the years 2007, 08 and 09 but in the years 2010 and 11, this ratio has increased highly.

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11. Net Profit ratio:

Net profit margin establishes a relationship between net profit and sales indicates managements efficiency in manufacturing administrating and selling the product. This ratio is the overall measure of the firms ability to turn each rupee sales into net profit. The net profit margin shows the earning left for shareholders as a percentage of net sales. This ratio also indicates the firms capacity to withstand adverse economic conditions. Gross and net profit margin ratios provide a valuable understanding of the cost and profit structure of the firm and enable to identify the source of business efficiency / inefficiency.

Net profit Net sales X 100

Year 2006-07 2007-08 2008-09 2009-10 2010-11

Net profit 1928493 560882 25141569 60103469 52759783

Net sales 131772745 96696127 255762587 257993866 2412201369

Ratio 14.63 0.58 9.83 23.29 21.87

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48.49 Ratio 25 20 15 Ratio 10 5 0 2006-07 2007-08 2008-09 2009-10 2010-11

INTERPRETAION: This net profit ratio of ML Company is decreased from the year 2007 to 2009 and it decreased highly in the year 2007, in the next two years this ratio has increased highly.

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12. Earning per share

The EPS is the total profits of a company divided by the number of shares. It's also important to remember that if a company issues more shares of stock, it "dilutes" the EPS figures. So investors are usually not happy when companies announce secondary offerings. Unless, of course, the money the company rises will be put to use well.

Net profit after I & T No of Equity Shares

Year 2006-07 2007-08 2008-09 2009-10 2010-11

Net Profit after I &T 1928493 560882 25141569 66103469 52759783

No of Equity Shares 790000 790000 790000 790000 790000

Ratio 2.4 0.7 31.8 76.0 66.7

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Ratio 3.5 3 2.5 2 1.5 1 0.5 0

20 06 -0 7 20 07 -0 8 20 08 -0 9 20 09 -1 0 20 10 -1 1

Ratio

INTERPRETATION:

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The above graph shows that the earning per share of the ML Company is increased from the year 2007 to 2010 and this ratio is decreased slightly in the year 2011.

13. Return on investment:

ROI (Return on Investment) is probably the most important calculation one needs to make to ensure the long-term viability of their business. It is not enough to build in a profit margin on the product or service being offered. One must track with proficiency the amount of dollars being invested into attracting sales and how much ROI those dollars put back into the business. If the investment meets too little return, a product line is doomed to fail in the long-term.

Earning before I&T Shareholders equity

Year

E.B.I.T
87

Shareholders equity

Ratio

2006-07 2007-08 2008-09 2009-10 2010-11

560882 25141569 60103469 260447088 120583786

670968363 794455378 738669982 742900639 773002348

0.08 3.16 8.13 35.05 15.5

Ratio 40 35 30 25 20 15 10 5 0 2006-07 2007-08 2008-09 2009-10 2010-11 Ratio

INTERPRETATION:

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The above graph shows that the return on investment of ML Company is increased for the last four years i.e. in the years 2007, 08, 09 and 10 respectively and this ratio is decreased slightly in the year 2011.

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CHAPTER VI

FINDINGS & SUGGESTIONS

FINDINGS
The current ratio of the company is decreased slightly in the past four

years and it is increased in the current year. The quick ratio is increased highly in the current year and decreased in

the remaining past four years. The average debtors of ML Company are increased in the last four years

and decreased in the current year. The creditor turnover ratio is decreased for the last four years and is has

increased in the present year. The capital turnover ratio of the company is increased in the current year

as compared to its previous years. The solvency ratio of the company is decreased year by year i.e. its debt is

decreased. The return on investment is increased for the past four year and decreased

in the current year.

The earnings per share ratio of the company are increased year wisely. It is found that the absolute liquidity ratio has been very high in the year

2007. The absolute liquidity ratio of the company on a whole is not said to be satisfactory.

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SUGGESTIONS
As the current ratio was satisfactory, the company has to maintain the

standard current ratio in the future also. The company has to reduce its quick assets especially debtors as the ratio is fluctuating near in the ideal mode. The company should utilize its idle cash assets towards appropriate investment to maintain an optimal absolute liquid ratio.
The inventory is in a good position, it has to maintain same in the future also.

The company should maintain the optimal proportion of debtors. The company should decrease its credit purchased in the current year and has to maintain the optimal level of credit purchases.

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GLOSSARY

GLOSSARY
FINANCIAL MANAGEMENT:
In the words of Howard and Upton Finance may be defined as that as that administrative area or set of administrative function in an organization which relate with the arrangement of each and credit so that the organization may have the means to carry out its objectives as satisfactory as possible:

SCENARIO:
Synthetic Description of An Event or Series of Actions.

PROXIMITY
Nearness to something

RATIO:
Ratio is defined as the the indicated quotient of two mathematical expressions and the relationship between two or more things.

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ABBREVIATIONS

92

BIBILOGRAPHY

BIBILOGRAPHY

FINANCIAL MANAGEMENT FINANCIAL MANAGEMENT THEORY AND PRACTICE

-- I.M. PANDEY -M.Y.KHAN P.K.JAIN

COST AND MANAGEMENT ACCOUNTING

-R.P.TRIVEDI MANON TRIVEDI

FINANCIAL MANAGEMENT

-K.GUPTHA

WEBSITES: http://www.mlgroups.com www.google.com www.encyclopedia.com

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ANNEXURE

ANNEXURE
BALANCE SHEET AS AT 31 MARCH 2007
PARTICULARS Sources of Funds: Share capital Reserves and surplus Loan funds: Secured Loans Un Secured Loans Differed Tax Liability Total Application of Funds: Fixed Assets (Gross Block) Less: Depreciation Net Block Add: Capital work in progress Investments Current Assets, Loans and Advances: Inventories Sundry Debtors Cash and Bank Balances Other Current Assets Loans and Advances Total Current Assets Current Liabilities and Provisions: Current Liabilities Provisions Total Current Liabilities Net Current Assets TOTAL 31 March 2007 13000000 135167525 465213017 175551214 148167525 640764231 5523622 794455378

130365742 71209082 59156660 572983185

632139845 3719963

172256321 24937024 33465753 28656816 14928012 274243926

108391431 7256927 115648358 158595568 794455378

BALANCE SHEET AS AT 31 MARCH 2008 PARTICULARS

Sources of Funds: Share capital Reserves and surplus Loan funds: Secured Loans Un Secured Loans Differed Tax Liability Total Application of Funds: Fixed Assets (Gross Block)

31 MARCH 2008
13000000 130270036 390364244 199239493 143270036 589603737 5796209 738669982

711551528 94

Less: Depreciation Net Block Investments Current Assets, Loans and Advances: Inventories Sundry Debtors Cash and Bank Balances Other Current Assets Loans and Advances Total Current Assets Current Liabilities and Provisions: Current Liabilities Provisions Total Current Liabilities Net Current Assets TOTAL

105478021 59156660 2983165

187934012 26860540 6059037 48679846 11723019 281256454

139624184 12018960 151643144 129613310 738669982

95

BALANCE SHEET AS AT 31 MARCH 2009 PARTICULARS

Sources of Funds: Share capital Reserves and surplus Loan funds: Secured Loans Un Secured Loans Differed Tax Liability Total Application of Funds: Fixed Assets (Gross Block) Less: Depreciation Net Block Capital work in progress Investments Current Assets, Loans and Advances: Inventories Sundry Debtors Cash and Bank Balances Other Current Assets Loans and Advances Total Current Assets Current Liabilities and Provisions: Current Liabilities Provisions Total Current Liabilities Net Current Assets TOTAL

31 MARCH 2009
13000000 151136957 379475270 193040880 164136957 572516150 6247531 742900638

726114635 145033137 581081498 5165551 2983165

239880075 35992686 7150276 69640943 12529745 365193725 202449314 9073986 211523300 153670425 742900638

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BALANCE SHEET AS AT 31 MARCH 2010 PARTICULARS

Sources of Funds: Share capital Reserves and surplus Loan funds: Secured Loans Un Secured Loans Differed Tax Liability Total Application of Funds: Fixed Assets (Gross Block) Less: Depreciation Net Block Capital work in progress Investments Current Assets, Loans and Advances: Inventories Sundry Debtors Cash and Bank Balances Other Current Assets Loans and Advances Total Current Assets Current Liabilities and Provisions: Current Liabilities Provisions Total Current Liabilities Net Current Assets TOTAL

31 MARCH 2010
13000000 194200158 478682475 81595729 207200158 560278204 5523986 773002348

738903208 182491726 556411482 1855829 2983165

236975762 36258591 13998934 93657132 10864119 391784538 158452146 21580520 180032666 211751872 773002348

BALANCE SHEET AS AT 31 MARCH 2011 PARTICULARS

Sources of Funds: Share capital Reserves and surplus Loan funds: Secured Loans Un Secured Loans Differed Tax Liability Total Application of Funds:

31 MARCH 2011
12679000 203068706 154680558 6602478 215747706 161283036 3838722 380869464

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Fixed Assets (Gross Block) Less: Depreciation Net Block Capital work in progress Investments Current Assets, Loans and Advances: Inventories Sundry Debtors Cash and Bank Balances Other Current Assets Loans and Advances Total Current Assets Current Liabilities and Provisions: Current Liabilities Provisions Total Current Liabilities Net Current Assets TOTAL

137659762 80840512 56819250 --------139204644

102314098 20632326 61538293 4371041 25311300 399857758 89728008 --------------89728008 310129750 380869464

98