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

“CASH AND FUND FLOW ANALYSIS AND RATIO ANALYSIS OF DKSSKN, CHIKODI”

Contents

Titles Page No.Chapter I

Executive summary

Chapter II

Industrial profile Company profile Organization structure Product profile

Chapter III

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

Chapter IV

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

Chapter V

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

Chapter VI

Findings and suggestions

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Chapter VII

Conclusion

Chapter VIII

Bibliography

Chapter IX

Annexure

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LIST OF TABLES

Table

No.

Name of the Table Page

No.

1 Comparative Balance sheet 56

2 Comparative Income Statement 58

3 Common-size Income Statement 60

4 Common-size Balance Sheet 61

5 Trend Income Statement 62

6 Trend Balance Sheet 63

7 Current Ratio 65

8 Quick Ratio 67

9 Proprietary Ratio 69

10 Solvency Ratio 70

11 Fixed Assets Turnover Ratio 72

12 Working Capital Turnover Ratio 74

13 Gross Profit Turnover Ratio 76

14 Operating Cost Turnover Ratio 77

15 Return On Investment 79

16 Fund Flow Statement 81

17 Cash Flow Statement 84

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LIST OF CHARTS

Chart

No.

Name of the Chart Page

No.

1 Current Ratio 66

2 Quick Ratio 67

3 Proprietary Ratio 69

4 Solvency Ratio 71

5 Fixed Assets Turnover Ratio 73

6 Working Capital Turnover Ratio 74

7 Gross Profit Turnover Ratio 76

8 Operating Cost Turnover Ratio 78

9 Return On Investment 79

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CHAPTER- I

EXECUTIVE SUMMARY

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

Nanadi village.

By conducting the organization study it is found that

All the departments were actively working towards the achievement of the goals of

the company.

My topic is

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

Financial statements summarizes that the financial position and operation

of the company. Many companies are used comparative, ratio analysis, fund flow

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

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

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

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

determined.

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

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

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My Objectives are

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

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

using trend analysis.

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

4. To identify the financial strength and weakness that the firm

might have.

Suggestions

1. The firm should concentrate on enhancing the operating

efficiency of the firm.

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

assets which should be avoided.

CONCLUSION

By analyzing the topic of “CASH AND FUND FLOW

ANALYSIS AND RATIO ANALYSIS OF DKSSKN LTD. CHIKODI”

I conclude that the company liquidity position is not satisfactory

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

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

efficiency of the company and also the liquidity position.

6



CHAPTER- II

INDUSTRIAL PROFILE

THE BRITISH

AT FIRST

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

the French force of the General Decaen, the French capitulated in December 1810.

From the Treaty of Paris of 1814, Mauritius and its dependencies became British,

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

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

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

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

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

trade to that of an agricultural one.

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

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

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

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

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

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Administration was the abolition of slavery in 1835 EMANCIPATION OF

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

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

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

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

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

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

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

took importance.

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

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

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

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

to bring independence in 1968.

TOWODRS INDEPENDENCE

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

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

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

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

which two forth of the population could vote. The elections of 1953 made

8



democracy move ahead when the Labour party obtained more seats. It was in 1957,

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

the leadership of the Labour party.

PICTURE OF SUGAR MAKING

SUGAR INDUSTRY IN INDIA:

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

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

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

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

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

When sugar industry was granted tariff protection the history of sugar

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

9



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

minimum prices of cane and maximum prices of sugar.

This incentive scheme increased the production of sugar but dis-couraged

the cane production. We will see later on how contradictory government. Policies

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

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

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

1957-58 both consumption and production of sugar rose to; 20 lakhs tones each.

During 1969’s production of sugar rose to 35lakshs tones and during 1970’s it was

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

lakhs tonnes.

POLICY

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

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

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

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

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

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

of surplus production and accumulated sugar stocks.

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

year based on recommendations of the Commission for Agricultural Costs and

Prices (CACP).

COMPANY PROFILE

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

Taluka – chikodi, dist.- Belgaum

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

Location : Nanadi Village.

Tal.-Chikodi, Dist.- Belgaum

Karnataka.

Regi .office : Chikodi.

Ph. No. – 08338-276931 To 35

Fax: 08338 – 276105

E-Mail – [email protected]

Construction : Building Layout, Garden & Light

Facilities.

Capacity : 5500 tones sugar cane crashing / day.

20.7 M. W. Power Generation.

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mailto:[email protected]


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

Turnover : 450 to 500 Crores / Annum.

Employees : 756.

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

BOARD OF DIRECTORS

The following composition of directors on the board of Shree

Doodhaganga Krishna Sahakari Sakkare Karkhane Niyamit, Chikodi.

Name Designation

1. Sri Mahantesh M Kavatagimath Chairman

2. Sri Ajit S Desai Vice Chairman

3. Sri Annasaheb S Jolle Director

4. Sri Ashok A Patil Director

5. Sri Prakash J Patil Director

6. Sri Tatyasaheb D Kate Director

7. Sri Mallikarjun G Kore Director

8. Sri Kallappa K Maishale Director

9. Sri Shantappa Y Miraji Director

10.Sri Amit P Kore Director

11.Sri Satappa N Saptasagar Director

12.Sri Parasagouda I Patil Director

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13.Sri Bharatesh S Banawane Director

14.Sri Subhash N Katrale Director

15.Sri Mallikarjunayya V Hiremath Director

16.Sri Nandakumar M Nashipudi Director

17.Sri S B Umarane The Managing Director

BACKGROUND

SHREE DOODHAGANGA KRISHNA SAHAKARI SAKKARE

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

Karnataka co-operative society’s Act in 1969. The industrial license number of the

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

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

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

present has an attractive campus with magnificent buildings over it.

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

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

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

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

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

13



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

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

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

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

forming community but also created a sustainable employment opportunity in this

rural area.

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

construction work started in year 1971 and comp elected in the year 1974. The

factory was inaugurated by Vice-president Shri B.D Jatti on 6th November 1974.

The regular production has been started from December 1974.

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

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

lakhs.

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

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

taluka and 4 villages are from Athani taluka.

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

acres with average yield per acre of 25 MT.

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

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

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

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

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

phase expansion and has been repaid as per their

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

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

factory from 3500 to 5500 TCD. Every expansion was not easy and had created a

financial set backs due to the lack of professionalism both in technical and

financial managements.

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

only in sizes but not adopted the range of different bi-product activities and had

suffered due to a weak governance on efficiency, effectiveness, adaptability and

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

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

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

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

have to be prosperous.

Nature of Business

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

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

DOODHAGANGA KRISHNA SAHAKARI SAKKARE KARKHANE

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

operative society’s Act in 1969. The object of business is to encourage proper

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

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

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

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

Vision, mission and quality policy

Vision

“Total customer satisfaction”

Mission

Encourage agro-based co-operative industry.

To develop co-operative movement in rural sector.

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

its by-products.

AIMS & OBJECTIVE OF THE COMPANY

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

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

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

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

purpose.

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

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

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

quarters etc and for installations of machineries.

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

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

best advantage.

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

development of the society etc.

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

raw material and sell finished product is the course of utilizing and

marketing the by products.

OWNERSHIP PATTERN

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

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

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

Rs.4,000/-each reserved for the grower members called as “A”Class.

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

each reserved for Co-operative Institutions. Called as “B”Class.

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

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

Karnataka/Maharastra called as “C”Class.

17



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

each reserved for non grower members called as “D” Class.

INFRASTRUCTURAL FACILITIES

Nearer to raw materials.

Good transportation facilities.

Nearer to rivers place. (Krishna River)

Good networking.

Proper accommodation for its employees

ACHIVEMENTS AND AWARDS

ACHIEVEMENTS

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

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

“THE BEST EFFICIENCY & PERFORMANCE SUGAR FACTORY” in

the country for the year 2004-05. The award was given by Hon’ble Union

Minister for agricultural, food & Civil Supplies, in presence of Hon’ble

Chief Minister of Andhra Pradesh.

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

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

through Hon’ble Chief Minister of Karnataka, on 14/11/2004.

18



Energy Department of Government of Karnataka and KREDL have

awarded us he “excellence Award” through Deputy Chief Minister of

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

on the occasion of RAJIV GANDHI AKSAYA URJA DIWAS ON

20/8/2004 .

The companies have the Honour of achieving the Highest Sugar Recovery

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

2002-03 also.

Awards

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

honored the company with the following awards for the:-

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

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

prize of Rs .10.000/- and a certificate.

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

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

certificate.

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ORGANISATION CHART

BOARD OF MANAGEMENT

MANAGING DIRECT

SECRETARY

GENERAL CIVIL STORE MEDICAL HEAD TIME CHIEF CHIEF A\C OFFICE L.W.O. WATCH &MANAGER ENG. KEEPER OFFICER KEEPER C.D.O. OFFICER SPDT WARD TOOLROOM&DIESEL PUMP

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

GODOWN SECTION GENERAL CANE SALES CASH A\C. A\C.

COMPUTER

GAD EST MEETING INWARD & SHARE TYPING GUEST LEGAL PURC.SECTION SECTION SECTION OUTWARD SECTION SECTION HOUSE SECTION SECTION

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PRODUCT PROFILE

BYPRODUCTS OF SUGAR CANE

The chief by products of sugar manufacturing are -

1) Bagasse

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

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

materials in paper manufacturing industry.

2) Molasses

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

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

maintained by the organization.

3) Pressmud

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

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

AREA OF OPERATION

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

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

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

of Kolhapur District Maharastra State only.

FLOW CHART OF SUGAR MANAFACTURING

Weighed cane-hauled to crushing yard

Cane unloaded on to the carrier

Cane cut into pieces

Crushed in successive mills

Juice treated with line and surplus dry chaff fed into boilers & Heated as fuel

Subsider

Sucm clear juice

Filter cake used clear evaporatesAs manure juice

Concentrated syrup Surplus syrup to vacuum pans

Boiler to mane cite

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Centrifugal

Sugar molasses

Bagging

Dispatching power alcohol portable alcohol

MC KINSEY 7 S MODEL

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The first three element are strategy, structure and system are

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

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

1. Structure

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

and these are downwards communication in the company. The information flows

from the top level of management to the lower levels.

2. System

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

and security system is maintained in its company.

a. Production System

The process of production consisting of input of sugar come and

output of the sugar.

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b. Distribution System

The distribution system of the products produced is in the following

way:

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

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

also made.

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

wholesales.

c. Information System

Structure of information system

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CHAIRMAN

MANAGING DIRECTOR

SENIOR GENERAL MANAGER

HEAD OF THE DEPARTMENT

SECTION


d. Security System

The DKSSK has strict security system.

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

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

higher authority.

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

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

department from whom they took the permission.

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3. Strategy

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

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

organization.

In DKSSK, introduce new technologies and products strategies importance in

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

attaining the international standards.

4. Skills

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

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

a) On the job

This is one of the oldest method, under this method, the individual

place is on the regular job and taught the skill necessary to perform that job on the

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

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

b) Off the job

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

attention is focused upon learning the material related to his future job

performance. There is an opportunity for freedom of expression for the trainees.

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5. Style

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

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

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

its structure.

a) Top down / Bottom up

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

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

towards lower level.

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

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

which is framed by the upper level.

b) Authoritarian / Participative

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

factory.

Regarding policy matter

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

Financial matter

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

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

then the board will take the decision.

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6. Staff

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

employees are responsible for the success or failure of company.

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

divided as follows

No. of Workers

1) Permanent worker 285

2) Seasonal workers 183

3) Consolidated worker 288

4) Daily wage worker -

756

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

7. Shared values

Shared values are refers to company policies. In Mysore Sugar

Company limited the following policies are maintained.

Quality policies

29



Environment policies

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

QUALITY POLICY

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

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

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

holders.

ENVIRONMENT POLICY

The DKSSK is committed to comply with the requirement of relevant

environment regulation and standards by implementing environment management

system and the continually improve its effectiveness.

TOTAL PRODUCTIVE MANAGEMENT

The DKSSK is committed in maximizing limited is committed in

maximizing overall plants effectiveness to make Mysore sugar company a world

class company through total productive manufactured by

30



Promoting automates maintenance culture.

Involving all employees and building culture.

Minimizing the losses and reduced the cost.

PROCEDURE FOLLOWED IN SALE OF SUGAR, MOLASSES,

BAGASSE, RECTIFIED SPIRIT AND ARRACK

SUGAR

Domestic Sale of Sugar

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

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

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

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

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

site.

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

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

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

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

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

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

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

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

31



Export of sugar

When the international price of sugar is remunerative compared to domestic

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

undertaken through the mercantile export or through EXIM Corporation New

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

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

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

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

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

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

export against full payment of the consignment.

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

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

the excise department.

Molasses Bagasses

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

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

32



enquiries to the prospective purchasers in order to get competitive offers and better

price realization.

PRODUCTION PROCESS

The main raw material in the production of sugar is.

Sugar cane.

The raw materials has to go through following stages before it become

finished product. The process in each stage is as under:

STAGE: 1 SUGAR CANE SUPPLY.

The harvested and transported sugar can received is weighed on the weigh

Bridge. It is unloaded and kept on the feeder tables. It is fed to the cane carrier as

per the requirement.

STAGE: 2 MILLING OF CANE/ EXTRACTION OF JUICE.

This cane is passed through leveler and furzier by making the fine making

the fine chips. It is crushed through series of mills. Imbibitions hot water is added

33



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

is carried through bagasse conveyor and required quantity of bagasse is fed to the

boilers and excess quality is sent for storage.

STAGE: 3 CLARIFICATION AND EVAPORATIONS.

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

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

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

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

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

60oc Brix.

The settled mud from the bottom of the clarifier is taken to mud mixer to

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

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

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

STAGE: 4 CRYSTALLIZATION PURGING AND SUGAR

MANUFACTURE

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

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

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

34



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

crystals are scraped to hopper and treated with hot air and cold air blower. It is

sent to grader the size for gradation. This graded sugar is stared in SILOS.

Weighed and bagged sugar bags are transferred to respective godowns for

stocking.

STAGE: 5 FURTHER PROCESS

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

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

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

used as B- seed and excess is melted and fed to ‘A’- masscult’s. White purging

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

grain as footing.

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

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

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

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

graining also.0

FINANCE AND ACCOUNTS DEPARTMENT

35



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

the life blood of the organization. In sugar Industry Finance and accounts

Department has very vital roles. The financial plan basically deals with raising and

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

by raising loans various sources.

The finance manager supported with accountant manager and an accountant

assistant looks finance department

FUNCTIONS:

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

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

is maintained.

3. Costing and accounting is framed and maintained.

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

requirements.

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

cost forecasting, purchase forecasting etc. which submitted by

respective departments.

Finance Department consists of following sub branches:

1. General Accounts Section

2. Cane Accounts Section

3. Sales Section

36



4. Cash Section

Accounts offices are the head of this department. Accountant sales manager,

and head cashier assist him.

Finance controlling repayment of term loans. Taking loans excepting and

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

normal bills.

As functioning of each section is summarized follows -

1. GENERAL ACCOUNTS SECTION:

General Accounts are looking after the passing of bills and

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

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

general accounts section.

2. CANE ACCOUNTS SECTION:

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

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

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

3. SALES SECTION:

It is looking after sales of sugar and by products molasses, Rectified spirit

and other scrap materials. It is keeping records of the concerned to all sales

section.

4. CASH SECTION:

37



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

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

All accounts are maintained in usual manner.

Various records and books kept are:

a) General ledger

b) Sub ledger

c) Subsidiary

d) Cash book

e) Vouchers.

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

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

PURCHASE DEPARTMENT

Purchase Department is headed by purchase officer is responsible for

purchasing the spare parts required for the industry. The storekeeper is responsible

for stacking quality maintaining and issuing to the concerned section.

38



The important functions of the department are:

Purchasing materials

Calling quotations

Preparing C.S.Q (comparative statement quotation)

Placing before meeting for decision

Placing orders for supply of materials.

Passing bills to Accounts section for payment.

PURCHASE DEPARTMENT HIERARCHY

PROCEDURE OF PURCHASING

1. DETERMINATION OF PURCHASE BUDGET:

39


PURCHASE MANAGER

GODOWN SUPERVISORS

STORE KEEPERS

ASSISTANTS


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

production planning department, prepare a purchase budget. This budget quads

him in knowing what when he has to buy and also quality, Size and quantity of

purchase.

2. DETERMINATION OF QUANTITY:

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

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

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

determined and compared with actual requirements these quantities to be

purchased are determined.

3. PURCHASE ORDER:

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

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

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

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

the storekeeper.

4. RECEIVING AND ISSUING RAW MATERIALS:

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

raw materials received respectively. The storekeeper enters the details of

purchased materials in the store receipt book store receipt after the details are

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

the general manager passes the amount for payment.

40



MECHANICAL DEPARTMENT

This department is headed by General Manager and Chief Engineer.

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

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

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

content in fazes that is more extraction.

MANUFACTURE DEPARTMENT

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

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

losses in bye-products to maintain the register and calculations of sugar entering in

the house and production submit day to day report of production and recoverable

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

boiling house plant.

WATCH AND WARD

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

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

security point of view.,

41



STORES DEPARTMENT

This department is headed by store keeper. To keep the sores and required

materials for the factory section wise in a proper way and to maintain their

registers and big cards of indents (order goods)

FUNCTIONS:

1> Receiving the materials

2> Unfolding the packing.

3> Takes entry in store receipt Book (SRB)

4> Preparing bills after receiving quality memo back.

5> Stacking the materials.

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

TIME OFFICE DEPARTMENT

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

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

personal services register of the staff.

ADMINISTRATIVE OFFICE

The office time is from 10.30 to 5.30pm

The lunch break is from 1.30 to 2.00 pm

FACTORY PREMISES

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

42



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

AGRICULTURAL DEPARTMENT

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

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

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

CIVIL DEPARTMENT

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

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

factory building etc.

LABOUR WELFARE

This department is headed by labour welfare officer. To look into the

welfare activities of the worker and solve the labour problems. The factory

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

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

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

factory provides well planned residential accommodation, medical facilities,

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

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

Consumers society, uniforms to watchman production and engineering workers

etc.

43



OBJECTIVES

1) To secure for the worker fair wage.

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

profitability.

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

of the society.

4) To establish relationship between management and employees.

FUNCTION:

1) To promote harmonious relation between the factory management and

workers.

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

act as a liaison officer between management and labour.

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

management to shape and formulate labour welfare policies.

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

obligations.

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

operative societies and welfare committee and supervise their work.

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

shelter, rest rooms, launch rooms etc.

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

workers and in general to promote their well being.

44



SWOT- ANALYSIS-

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

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

sale of sugar under government restriction. How much government permits to sell

the sugar that much only factory has to sell not more than that it sells through

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

appointment of employees.

STRENGHTS -

The major strength is crushing capacity and highest chimney and

packing of bags per day.

It is producing own electricity it reduces the cost of electric bills.

It also sells electricity to the KPTCL.

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

reduces transportation charges.

They have foreign customers too.

Good Administration

Healthy management labour relations

Superior product quality

Skilled and efficient staff and labour force

Maximum profitability due to various by products

Well structured distribution channel.

Improved infrastructure.

In total this factory has a very good organization structure

45



WEAKNESS-

It does not have separate HR department, so the selection of employees is

not satisfactory and it creates lot of burden on labour welfare officer.

Too much stock of sugar in godown.

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

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

They don’t have particular employee for particular work. Anybody can do

any work assigned by their respective superiors.

High cost of production.

No control on minimizing the losses in process.

Company can’t sell as much as sugar in the market at any specific time, as

sugar release mechanism is controlled by government of India.

OPPORTUNITIES-

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

Offer replacement of machinery to new machinery for good running of

factory.

Present production performance per tone is excellent.

Non-establishment of the programs to motivate and develop effective

manpower.

Restricted market opportunities shirked a better price for finished products.

Reducing the overhead expenditure.

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

46



To facilitate the smooth running of the manufacturing process.

THREATS-

The production comes under hazardous activities, competition are

updating latest technology.

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

High competition in procurement of raw material.

The main raw material sugarcane may not sufficiently be available in future.

Change in various government policies.

CHAPTER- III

DESIGN OF THE STUDY

3.1 Statement of the problem

Financial analysis being an integral part of overall corporate

management and it is one of the powerful tools of financial performance analysis.

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

company’s financial position.

3.2 Objectives of the study

47



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

direction with which the task can be accomplished.

The specific objectives of the study are

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

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

analysis.

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

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

3.3 Scope of the study

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

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

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

3.4 Methodology

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

use the available facts as information and analyze these to make a critical

evaluation of materials. This is also an applied research with an aim to find a

solution for immediate problems facing industry or the firm.

The methodologies followed in the analysis of the financial

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

analysis, fund flow analysis and cash flow analysis.

48



3.5 Purpose of the study

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

financial analysis of the company.

To access the company’s trends for the last four years with regard to

liquidity performance.

The purpose also includes assessing the impact of financial analysis on

liquidity strength of the company

3.6 Sources of data collection

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

through primary data. That is through interviewing & discussion with

concerned authorities in the company.

2. Secondary data : The major source of data for this project was collected

from annual reports, profit and loss account, manuals & some more

information collected through the internet.

Plan of analysis

This study is conducted with the help of statistics figures &

techniques like Graphs & charts for better comparison and interpretation.

Tools and techniques used for analysis

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

1. Comparative financial statements

49



2. Common-size financial statements

3. Trend percentage analysis

4. ratio analysis

5. fund flow analysis

6. cash flow analysis

3.7 Limitations

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

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

CHAPTER- IV

FINANCIAL ANALYSIS

Financial analysis is the selection, evaluation and interpretation of

financial data, along with other pertinent information, to assist in investment and

financial decision- making. Financial analysis may be used internally to evaluate

issues such as employee performance, the efficiency of operations, and credit

policies, and externally to evaluate potential investments and the credit-worthiness

of borrowers, among other things.

The analyst draws the financial data needed in financial analysis from many

sources. The primary source is the data provided by the firm itself in its annual

50



report and required disclosures. The annual report comprises the income

statements, the balance sheet, and the statement of cash flows. Certain businesses

are required by securities law to disclose additional information.

The financial analyst must select the pertinent information, analyze it, and

interpret the analysis, enabling judgments on the current and future financial

condition and operating performance of the firm. In this reading, we introduce you

to financial ratios------ the tool of financial analysis. In financial ratio analysis we

select the relevant information---- primarily the financial statement data--- and

evaluate it. We show how to incorporate market data and economic data in the

analysis and interpretation of financial ratios and we show how to interpret

financial ratio analysis.

4.1 FINANCIAL STATEMENTS

The Financial statements are the end product of the financial accounting

process. The financial statements are nothing but the financial information

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

information relating to the financial position of any firm. Therefore the financial

statements are the depiction of the financial position of firm.

The basic source which provides the financial information is the annual

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

annual general meeting. This annual report contains the chairman’s report, the

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

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

51



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

financial statement.

1. The Balance Sheet

2. The Income Statement

4.2 BALANCE SHEET

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

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

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

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

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

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

the firm and this can be stated as

Total assets = Total claims (Debt + shareholders)

= Liabilities + shareholders equity

The Balance sheet includes:

1. Assets

2. Liabilities

ASSETS

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

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

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

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

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

52



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

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

cost of the company discount on issue of debentures etc.

Fixed assets

Current assets

Fixed assets

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

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

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

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

deducting the depreciation there on.

a) Intangible fixed assets:

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

goodwill etc.

b) Long term investment:

These assets represent the firm’s long term investments like

investments in share, investments in debenture and bonds of other firms or

government bodies.

c) Other non current assets:

These assets are those which represent the deferred charges etc.

d) Current assets:

53



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

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

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

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

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

employees.

LIABILITIES

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

CONTENS OF ANNUAL REPORT:

The Shree Doodhaganga Krishna Sahakari Sakkare Karkhane Niyamit, Chikodi

annual report for the year 2007-2008 contains

a) Report of the board of directors

b) Auditors report

c) Accounting policies

Report of the board of directors

Directors report provides a summery of profits made and appropriated

by the company and other relevant information such as industrial relations,

investments, financing, reorganization, appointment of auditors and directors

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

company profit and dividend during the 2005-2006.

54



Auditors report

Auditors report to shareholders verifies whether the balance sheet and

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

company’s affairs. Auditors should obtain all necessary informations and

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

have been prepared by the company.

Accounting policies

Companies adopt different accounting policies for preparing their balance

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

policies as well as changes made in current year.

4.3 INCOME STATEMENTS

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

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

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

provides the summery of the operating results of the firm for a specific period. It

matches the revenues with the costs that are incurred in generating the revenues,

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

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

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

55



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

period under consideration.

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

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

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

Net sales

Cost of goods sold

Gross profit

Operating expenses

Operating income

Non operating expenses

Non operating income

Profit

Loss

4.4 ANALYSIS OF FINANCIAL STATEMENT

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

information contained in the financial statement in order to understand and make

decisions regarding the operations of the firm. The AFS is basically a study of the

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

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

the preceding section contain a whole lot of historical data.

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

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

56



statement. Analysis of financial statements contains comparison between different

figures of different periods, comparison.

Process of the analysis of the financial statements:

Financial statement analysis contains the following steps:

Analysis of all transaction one by one to determine the accounts

to credited and debited evaluate all transactions to ascertain the

amount involved in that.

Analysis of recording of the transactions in the journal,

summaries that in ledger and preparation of trial balance.

Preparation of final accounts or financial statements.

Get different information by analyzing these statements and

provide the information to the interested parties like the bankers,

investors, creditors and managerial personals.

4.5 Significance of the financial statement analysis:

The analysis of financial statement is very important for the different

parties related to the concern i.e. internal users and external users. The

significance of the financial statement analysis will be clear from the

following points:-

This analysis simplifies, summarizes and present the accounting figures

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

different parties for taking the valuable decisions.

57



Financial statement analysis is provide in valuable aid to management

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

ordaining and control.

This analysis diagnose the financial health of the concern by evaluating

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

capital gearing etc.

The financial statement analysis involves the different ways of analysis

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

decision according to his/her requirement.

The analysis of financial statements provides important and useful

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

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

statements.

TECHNIQUES/TOOLS OF THE AFS

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

another. However, the following are some of the common techniques of the AFS:

1. Comparative financial statements

2. Common-size financial statements

3. Trend percentage analysis

4. Ratio analysis

5. Fund flow analysis

6. Cash flow analysis

58



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

the AFS.

4.6 STATEMENT OF CHANGES IN FINANCIAL POSITION

Two basic financial statements of importance to owners, management and

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

summery of firm’s resources(assets) and obligations ( liabilities and owners equity)

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

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

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

equity. This statement is intended to summaries.

Changes in assets and liabilities resulting from financial and investment

transactions during the period, as well as those changes which resulted

due to change in owner’s equity.

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

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

It summarizes the sources from where the funds might have been

arranged by the firm and the uses for which the funds might have been

used by the firm during the year. The following are the important

concepts of funds.

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

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

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

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

59



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

monetary transaction such as purchase of fixed assets by issue of

debenture will not be reported in a SCFP.

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

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

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

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

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

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

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

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

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

the scope of SCFP.

CHAPTER-V

DATA ANALYSIS AND INTERPRETATION

5.1 COMPARATIVE FINANCIAL STATEMENL (CFS)

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

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

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

provided a times perspective in order to facilitate periodic comparison.

60



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

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

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

the long and continuous history of the firm.

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

5.1 a) COMPARATIVE BALANCE SHEET (CBS)

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

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

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

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

Table No. 1


KARKHANE NIYAMIT, CHIKODI

Comparative Balance Sheet

(Amts in crores)

Particulars 2006-2007 2007-2008 INCREASE/ INCREASE /

DECREASE(Amt)

DECREASE

(%tage)

LIABILITIES -

Share Capital 132.19 133.66 1.47 1.12

61



Reserves & Surpluses 676.80 757.90 81.10 11.99

Term loan 409.49 502.83 93.34 22.80

Working capital loan 912.46 717.85 (194.61) 21.33

Bank O. D. payable 8.40 12.83 4.43 52.74

Statutory and other deposits 683.18 666.17 (17.01) 2.49

Suspense, sundries & other 555.99 471.07 (84.92) 15.28

Total 3378.51 3262.31 (116.20) 3.44

ASSETS -

Fixed assets 1296.30 1307.44 11.14 0.86

Investments 2.62 16.73 14.11 583.55

Current assets 1242.47 1039.87 (202.6) 16.31

Loans and advances 48.55 101.44 52.89 108.94

Debtors 272.93 274.33 1.40 0.52

Cash in hand 0.32 0.30 (0.02) 6.25

Cash at bank 158.33 132.40 (25.93) 16.38

Profit and loss account 356.99 389.80 32.81 9.19

Total 3378.51 3262.31 (116.20) 3.44

INTERPRETATION

Current assets

The investments in the current assets are low and it has decreasing trend

over the period under study. The current assets have decreased by Rs. 202.60

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

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

capital of the company.

Net fixed assets

62



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

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

company.

Investments

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

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

will be Rs. 16.73 (crores).

Current liabilities

Current liabilities include current liabilities and provisions. Current

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

2007 when composed to Rs.1201.75 in 2008.

. Reserve and surplus

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

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

5.1 b) COMPARATIVE INCOME STATEMENT (CIS)

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

absolute terms, the absolute changes from one period to another and if desired, the

changes in percentage form. The CIS is helpful in deriving meaningful conclusions

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

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

or decreasing and by how much amount or by how much percentage.

Table No. 2

63





COMPARATIVE INCOME STATEMENT

(Amounts in crores)

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

Details AMOUNT (%tage)

Income

Sales (Revenues) 1640.81 1773.10 132.29 8.07

Other Income 10.48 3.25 7.23 68.99

Total 1651.29 1776.35 125.06 7.58

Expenditure

Cost of goods sold 1517.95 1624.81 106.86 7.04

Gross Profit 133.34 151.54 18.2 13.65

Selling and Administration

Expense(operating exp) 40.23 94.75 54.52 135.52

Operating income 42.35 1.36 40.99 96.79

Non operating exp 124.37 161.62 37.25 29.95

Non operating income 7.13 70.66 63.53 891.03

Loss 18.22 32.81 14.59 80.08

INTERPRETATION

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

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

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

sold increased by Rs.106.86.

64



The selling and Administrative expenses increased by 135.52% Non

operating income for the year 2008 is increased by 891.03%. The non operating

expense is increased by 29.95% during the year 2008. The Net loss is increased

80.08%.

5.2 COMMON SIZE STATEMENT

The CSS represents the relationship of different items of a financial

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

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

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

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

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

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

calculated can be easily compared with the corresponding percentages in some

other period.

Table No. 3



COMMON SIZE INCOME STATEMENT

(Amts in crores)

Particulars 2005 2006 2007 2008

65



Net sales 100 100 100 100

less-cost of goods

sold 79.08 96.78 92.52 91.64

G.P. 20.89 3.22 7.49 8.37

less-selling

&administrative exp 24.25 11.28 2.46 5.35

Add-operating

income 21.13 1.30 2.59 0.08

Less-Non operating

exp 15.45 6.93 7.58 9.12

Add-Non operating

income 0.24 0.79 0.44 3.99

Profit 2.56 0.48

Loss 12.90 2.04

Table No. 4



COMMON SIZE BALANCE SHEET

(Amts in crores)

Particulars 2004-05 2005-06 2006-07 2007-08

66



LIABILITIES -

Share Capital 3.91 3.44 3.92 4.10


Term loan 19.25 16.43 12.12 15.42

Working capital loan 22.75 25.23 27.01 22.01

Bank O. D. payable 0.96 0.18 0.25 0.40

Statutory and other deposits 27.24 23.73 20.23 20.41

Suspense, sundries & other 9.15 12.85 16.45 14.43

Total 100 100 100 100

ASSETS -

Fixed assets 40.18 39.31 38.37 40.08

Investments 0.05 0.07 0.08 0.52

Current assets 45.71 48.67 36.78 3.11


Debtors 8.79 7.95 8.08 8.41

Cash in hand 0.05 0.04 0.01 0.01

Cash at bank 2.97 1.97 4.67 4.06

Other assets 0.45 0.44 - -

Profit and loss account - - 10.57 11.95

Total 100 100 100 100

5.3 TREND PERCENTAGE ANALYSIS

The TPA is a technique of studying several financial statements

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

taking the figure of that item for some base year as RS. 100. So, the trend

percentage is the percentage relationship which each item of different years bears

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

67



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

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

percentage of the base year.

Table No. 5



TREND ANALYSIS INCOME STATEMENT

(Amounts in crores)

Trend percentage (%)

Particulars 2006 2007 2008

Sales 100 120.17 129.86

Less- cost of sales 100 114.87 122.96

Gross profit 100 279.49 337.33

Less- admin & selling exp. 100 26.14 61.56

Add- operating income 100 238.73 7.67

Less- Non operating exp 100 135.53 59.54

Add- Non operating income 100 0.33 57.13

Profit 100 66.64

Loss 100 660.38

Table No. 6



TREND ANALYASIS BALANCE SHEET

(Amounts in crores)

Particulars 2005-2006 2006-07 2007-08

68



LIABILITIES -

Share Capital 100 1206.93 1220.30

Reserves & Surpluses 100 117.22 131.27

Term loan 100 96.13 78.28

Working capital loan 100 113.62 89.39

Bank O. D. payable 100 139.07 212.41

Statutory and other deposits 100 90.44 88.19

Suspense, sundries & other 100 135.88 115.12

Total 100 106.12 102.47

ASSETS -

Fixed assets 100 103.60 104.50

Investments 100 103.98 666.53

Current assets 100 80.18 67.10

Loans and advances 100 98.41 205.63

Debtors 100 107.83 108.38

Cash in hand 100 28.31 26.54

Cash at bank 100 251.79 210.55

Other assets 100 - -

Profit and loss account 100 - -

Total 100 106.12 102.47

INTERPRETATION:

Current Assets and Current Liabilities

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

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

Liabilities are 128.08% in 2008.

Net fixed assets

69



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

shows the company is more invested in fixed assets.

Investments

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

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

5.4 RATIO ANALYSIS

MEANING

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

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

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

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

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

some logical manner. The relationship between two or more accounting

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

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

and conclusion about the performance and positions of a firm.

TYPES OF RATIO

Ratio can be classified into four broad groups:

LIQUIDITY RATIOS

LEVERAGE RATIOS

ACTIVITY RATIOS

PROFITABILITY RATIOS

70



LIQUIDITY RATIO

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

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

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

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

liquidity.

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

Current ratio

Quick ratio

Current ratio

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

Current ratio = current assets

_______________________

Current liabilities

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

within a year, such as marketable securities, debtors and inventories. The standard

ratio is 2:1.

Table No. 7

CHART SHOWING CURRENT ASSETS

TO CURENT LIABILITIES

Details 2004- 2005- 2006- 2007-

71



05 06 07 08

1. CURRENT

RATIO 1.51 1.25 1.41 1.21

Current Assets 1402.88 1521.07 1673.74 1446.92

Current Liabilities 932.47 1216.50 1472.95 1200.52

Chart No. 1

72



0

500

1000

1500

2000

2500

3000

3500

2004-05

2005-06

2006-07

2007-08

YEAR

CURRENT RATIO

Current Liabilities

Current Assets

INTERPRETATION

As a matter of policy or as referred to as banker’s rule of thumb, the

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

current ratio position of the DKSSK is not fully satisfactory. That is 1.51 times in

2005, 1.25 times in 2006, 1.14 times in 2007, 1.21 times in 2008.

Quick ratio

Quick ratio establishes a relationship between quick, or liquid, assets and

current liabilities. An asset is liquid if it can be converted into cash immediately or

reasonably soon without a loss of value. Inventories are considered to be less

liquid. The quick ratio is found out by dividing quick asset by current liabilities.

The standard ratio is 1:1.

Quick ratio = liquid assets

73



_______________________

liquid liabilities

Table No. 8

CHART SHOWING LIQUID ASSETS

TO LIQUID LIABILITIES

Details

2004-

05

2005-

06

2006-

07

2007-

08

2. QUICK RATIO 0.50 0.38 0.41 0.46

Liquid assets 450.60 454.32 595.45 535.79

Liquid Liabilities 905.20 1210.45 1464.55 1187.68

Chart No. 2

0

500

1000

1500

2000

2500

2004-05

2005-06

2006-07

2007-08

YEAR

QUICK RATIO

Liquid Liabilities

Liquid assets

INTERPRETATION

74



The quick ratio of 1:1 is considered satisfactory. The company is not

having a good liquidity. That is in the years 2005, 2006, 2007 and 2008 the quick

conversion ratio is 0.50, 0.38, 0.41, and 0.46 times respectively of the current

liabilities.

SOLVANCY RATIO

These ratios are used in analyzing long term solvency of a firm.

These ratios indicate the pattern of financing i.e. whether long term requirements

have been met out of long term funds or not.

Proprietary ratio

Solvency ratio

Proprietary ratio

It is the ratio of proprietor’s funds to tangible assets. The standard is

75% to 85%.

Proprietary ratio = Share holders funds

_______________________

Total tangible assets

Table No.9

CHART SHOWING SHARE HOLDERS

75



TO TANGIBLE ASSETS

Details

2004-

05

2005-

06

2006-

07

2007-

08

3. PROPRIETARY

RATIO 0.40 0.44 0.47 0.61

Share holders funds 533.89 631.98 754.11 836.68

Total tangible assets 1349.90 1466.18 1618.85 1392.03

Chart No. 3

0

500

1000

1500

2000

2500

2004-05

2005-06

2006-07

2007-08

YEAR

PROPRIETARY RATIO

Total tangibleassets

Share holdersfunds

INTERPRETATION

76



This ratio shows the risk means, high ratio shows the lesser risk to the

creditors. In 2005 it is 0.40, 2006 it is 0.44, 2007 it is 0.47 and 2008 it is 0.61. The

proprietary ratio will be satisfactory.

Solvency ratio

It refers to the ability of the firm to pay both short term and long term

liabilities. A co is solvent, if it can meet its outside liability out of its total assets.

Solvency ratio = Out side liabilities

_______________________* 100

Total assets

Table No. 10

CHART SHOWING OUT SIDE LIABILITY

TO TOTAL ASSETS

Details

2004-

05

2005-

06

2006-

07

2007-

08

4. SOLVENCY

RATIO 0.62 0.64 0.60 0.71

Out side liabilities 828.09 935.63 969.12 984.61

Total assets 1349.90 1466.18 1618.85 1392.03

Chart No. 4

77



0

500

1000

1500

2000

2500

3000

2004-05

2005-06

2006-07

2007-08

YEAR

SOLVENCY RATIO

Total assets

Out side liabilities

INTERPRETATION

The company cannot meet solvency because there is high solvency

ratio. High solvency ratio shows insolvent. The company cannot pay both short

term and long term liabilities. i.e. 2005, 2006, 2007 and 2008 are 0.62, 0.64, 0.62

and 0.71 respectively.

EFFICIENCY RATIO

Efficiency ratios measures efficiency with which the assets are managed

in the business. High ratio indicates efficient management of assets and low ratio

depicts inefficient management of assets.

Fixed assets turn over ratio

Working capital turnover ratio

78



Fixed assets turnover ratio

This ratio indicates the extent to which the investment in fixed assets

contribute towards sales.

Fixed assets turnover ratio = Net sales

_______________________

Fixed assets

Table No. 11

CHART SHOWING NET SALES

TO FIXED ASSETS

Details

2004-

05

2005-

06

2006-

07

2007-

08

5. FIXED

ASSETS

TURNOVER

ROTIO 1.00 1.10 1.27 1.36

Net sales 1143.15 1365.47 1640.81 1773.10

Fixed assets 1142.11 1251.15 1296.30 1307.44

Chart No.5

79



0

500

1000

1500

2000

2500

3000

3500

2004-05

2005-06

2006-07

2007-08

YEAR

FIXED ASSETS TURNOVER RATIO

Fixed assets

Net sales

INTERPRETATION

There is a more investment in fixed assets. All fixed assets are

contributed towards sales. In 2005 it is 1.00, 2006 it is 1.10, 2007 it is 1.27 and

2008 it is 1.36 there is increase in fixed assets.

Working capital turnover ratio

This ratio shows whether working capital has been efficiency used in

making sales. High ratio indicates higher operating efficiency of a firm.

Working capital turnover ratio = Net sales

_______________________

Working capital

Table No. 12

80



CHART SHOWING NET SALES

TO WORKING CAPITAL

Details

2004-

05

2005-

06

2006-

07

2007-

08

6.WORKING

CAPITAL

TURNOVER

RATIO 4.64 6.80 5.39 3.77

Net sales 1143.15 1365.47 1640.81 1773.10

Working capital 246.40 200.78 304.56 470.40

Chart No. 6

0

500

1000

1500

2000

2500

2004-05

2005-06

2006-07

2007-08

YEAR

WORKING CAPITAL TURNOVER RATIO

Working capital

Net sales

INTERPRETATION

81



Decrease in working capital turnover ratio.i.e. 4.46, 6.80, 5.39 and

3.77 in 2005, 2006, 2007 and 2008 respectively. It shows the working capital does

‘not efficiently used in making sales.

PROFITABILITY RATIO

Profitability is an indicator of efficiency with which the operations of the

business are performed. Profitability ratios are used to know how efficiently

operations are carried out.

Gross profit ratio

Operating cost ratio

Return on investment

Gross profit ratio

It is ratio of gross profit to net sales expressed as a percentage. It shows

the relationship between gross profit and sales.

Gross profit ratio = Gross profit

_______________________* 100

Net sales

Table No. 13

82



CHART SHOWING GROSS PROFIT

TO NET SALES

Details

2004-

05

2005-

06

2006-

07

2007-

08

7. GROSS

PROFIT 0.21 0.04 0.08 0.09

Gross profit 238.75 43.96 122.86 148.29

Net sales 1143.15 1365.47 1640.81 1773.10

Chart No. 7

0

500

1000

1500

2000

2004-05

2005-06

2006-07

2007-08

YEAR

GROSS PROFIT RATIO

Net sales

Gross profit

INTERPRETATION

83



The gross profit ratio will be slightly increased from 2006 to 2008.

i.e. 0.04, 0.08 and 0.09 respectively. It helps to ascertain the average gross margin

to be maintained on sales.

Operating cost ratio

This is the ratio of net profit to net sales. It indicates whether the cost

component in the sales is higher or low.

Operating cost ratio = operating cost

_______________________* 100

Net sales

Table No. 14

CHART SHOWING OPERATING COST

TO NET SALES

Details

2004-

05

2005-

06

2006-

07

2007-

08

8.OPERATING COST

RATIO 103.37 14.50 9.94 13.71

Operating cost 1181.59 197.88 163.09 243.04

Net sales 1143.15 1365.47 1640.81 1773.10

Chart no. 8

84



0

500

1000

1500

2000

2500

2004-05

2005-06

2006-07

2007-08

YEAR

OPERATING COST RATIO

Net sales

Operating cost

INTERPRETATION

The operating cost ratio shows the operating efficiency of a firm.

There is a standard up to 75% to 85%.i.e 103.37, 14.50, 9.94 and 13.71 in 2005,

20006, 2007 and 2008 respectively.

Return on investment ratio

This is the ratio which indicates percentage of return on capital invested

in the business. It shows the efficiency of the business as a whole.

Operating profit

ROI ratio = _______________________* 100

Capital employed

Table No. 15

85



CHART SHOWING OPERATING PROFIT

TO CAPITAL EMPLOYED

Details

2004-

05

2005-

06

2006-

07

2007-

08

1.RETURN ON

INVESTMENT

RATIO - 0.03 - 0.09 0.07 0.04

Operating profit - 38.44

-

109.66 82.63 53.54

Capital employed 1134.04 1209.93 1218.49 1394.40

Chart No. 9

-2000

200400600800

1000120014001600

2004-05 2005-06 2006-07 2007-08

YEAR

RETURN ON INVESTMENT RATIO

Capital employed

Operating profit

86



INTERPRETATION

Return on investment shows the capital is fruitfully employed in

the business or not. The ROI ratio will be low compare to 2007 i.e. 0.07 and 0.04

in 2008.there is no ROI in 2005 and 2006.

5.5 FUND FLOW STATEMENT

MEANING

Fund flow statement is a statement of sources and application of

funds. According to Robert Anthony, “the funds flow statement describes the

sources from which funds were derived and the uses to which these funds were

put.”

In other words of Smith and Brown,” A funds flow statement is

prepared in summary form to indicate changes occurring in terms of financial

condition between two different balance sheets. In short, it is a statement which

shows how the working capital is obtained and how it is put to use.

87



Table No. 16



SCHEDULE OF CHANGES IN WORKING CAPITAL

(Amounts in crores)

Particulars Previous

year

Current

year

Increases in

w.c.

Decreases in

w.c.

Current assets

Current assets 1242.47 1039.87 - 202.60

Loans & advances 48.55 101.44 52.87 -

Receivables 272.93 274.33 1.40 -

Cash 0.32 0.30 0.02 -

Bank 158.33 132.40 - 25.93

(A) 1722.60 1548.34

Current liabilities

Short term loan 912.46 717.85 194.61 -

B.O.D. 8.40 12.83 - 4.43

Suspense, sundries & cane

payables

555.99 471.07 84.92 -

(B) 1476.85 1201.75

Working capital (A-B) 245.75 346.59

Increase or decrease in w.c. 100.84 100.84

346.59 346.59 333.80 333.80

88





FUNDS FROM OPERATIONS

(Amounts in crores)

Loss from p&l a\c - 32.96

Add – non fund items debited to p&l a\c

Interest paid 161.62

Management expenses 1.17

Rates and taxes 22.37

Total

185.16

152.20

Less – non operating incomes credited to p&l a\c

Interest on dividend 1.36

Funds from operations 150.84

89





FUND FLOW STATEMENT FOR THE YEAR ENDING 31-03-2008

(Amounts in crores)

Sources of funds Amount Application of funds Amount

Issue of funds 1.47 Paid to statutory & other

deposits

17.00

Long term loans 93.30 Purchases of fixed assets 11.00

Funds from operations 150.84 Purchases of investment 14.00

Reserve & surplus 81.00

Tax paid 22.16

Increase in w.c. 100.84

246.00 246.00

INTERPRETATION

The fund flow statement shows the increase in working capital

because there is increase in current assets and the sources of funds are hugely used

in purchasing fixed assets and investment.

90



5.6 CASH FLOW STATEMENT

MEANING

A cash flow statement is a statement, which shows the changes in cash

position of a firm from one period to another. It is a statement indicating inflow

and out flow of cash during a financial period.

In other words it is a statement which provides information about the cash

receipt and payments of a firm for a given period.

The Institute of Cost and Works Accountants of India has defined cash

flow of statement as “a statement setting out the flow of cash under distinct heads

of sources of funds and their utilization to determining the requirements of cash

during the given period and to prepare for its adequate provision”

Table No. 17



STATEMENT OF CASH FROM OPERATIONS

(Amounts in crores)

Funds from operations 150.84

Add – notional cash received

Decrease in current assets 174.26

325.10

Less – notional cash paid

91



Decrease in current liabilities 275.10

Cash from operations 50.00



CASH FLOW STATEMENT FOR THE YEAR ENDING 31- 3- 2008

(Amounts in crores)

Opening balance (Cash) 158.65

Add – sources of cash

Issue of shares 1.46

Long term loans 93.30

Cash from operations 50.00 144.76

303.41

Less – application of cash

Purchase of fixed assets 11.14

Purchase of investment 14.12

Paid to statutory & other deposits 17.00

Reserve and surplus 81.10

Tax paid 22.35

Non trading payments 25.00 170.71

Closing balance (cash) 132.70

INTERPRETATION

In cash flow statement the application of cash is more compare to

sources of cash and it is also helpful in planning for immediate future to avoid

cash shortages.

92



FINANCIAL STRENGTH AND WEAKNESSES OF THE COMPANY

STRENGTH

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

for the year 2008 has increased by Rs.13.65% over the profit for the year

2007. The Net sales during the same period have increased by Rs.8.07%.

In comparative balance sheet the fixed assets, investments and reserve and

surplus are increases i.e. 0.86%, 583.55% and 11.99% respectively. Current

liabilities are decrease by 18.63%.

Based on common size income statement the gross profit is gradually

increases i.e. 20.89% in 2005, 3.22% in 2006, 7.49% in 2007 and 8.37% in

2008.

In common size balance sheet the share capital, reserve and surplus, fixed

assets and investments are increases in 2008 i.e. 4.10%, 23.23%, 40.08%

and 0.52% respectively.

On the basis of trend income statement the sales are increased by 129.86%

in 2008 to 120.17 in 2007. The gross profit is also increase by 20.70%.

In trend balance sheet the share capital, reserve and surplus, fixed assets and

investments are increases i.e. 120.30, 159.31, 114.48 and 1186.53.

Based on ratio analysis the current ratio, liquidity ratio and gross profit ratio

slightly increases. It shows the company liquidity.

93



Based on fund flow statement it shows the sources from which funds were

derived and the uses to which these funds were put.

On the basis of cash flow statement it shows the inflow and out flow of cash.

WEAKNESSES

Based on comparative income statement the selling and Administrative

expenses increased by 135.52% Non operating income for the year 2008 is

increased by 891.03%. The non operating expense is increased by 29.95%

during the year 2008. The Net loss is increased 80.08%.

In comparative balance sheet the current assets are decrease by 16.31%. And

cash & bank balance also decrease by 22.65%.

On the basis of common size income statement the cost of goods sold is high

i.e. 79.08% in 2005, 96.78% in 2006, 92.52% in 2007 and 91.64% in 2008

on total sales.

In common size balance sheet the current assets are decreased by 3.11%.

The current liabilities are also increased by 36.84%.

Based on trend income statement the cost of goods sold are increase in 2007-

114.87 and 2008 -122.96.

In trend balance sheet the current assets are decreased by 80.04 and the

current liabilities are increased by 314.39.

Based on ratio analysis the solvency ratio shows the insolvent of the

company and return on investment shows the capital is not fruitfully

employed in the business.

94



Based on fund flow statement there is a decrease in working capital and it

shows the sources of funds are hugely used in purchasing fixed assets.

On the basis of cash flow statement the application of cash is more compare

to sources of cash.

CHAPTER VI

FINDINGS AND SUGGESTIONS

FINDINGS:

a) The current ratio and quick ratio are not satisfactory because the current

ratio is not up to the standard limit for efficient utilization of current assets.

b) In quick ratio the liquid liabilities are more than liquid assets.

c) The proprietary ratio is good because the share holder’s funds are up to the

standard limit. It shows lesser risk but solvency ratio is not satisfactory due

to increases in out side liability.

d) The fixed assets turnover ratio indicates the efficient management of assets.

In working capital turnover ratio the working capital is not efficiently used

in making sales.

e) The gross profit ratio and operating cost ratio are satisfactory because the

gross profit is high towards sales and operating cost is less compare to last

two years.

f) Return on investment and gross profit also is found to be very very low i.e.

negative in the year 2005-2006 and it is slightly positive in 2006 and 2007.

g) The major application of fund is decrease of working capital and not

purchase of long term assets.

95



SUGGESTIONS

1. Ratio analysis indicates the firm is not in good health none of the ratios are

reaching the ideal ratios necessary for enhancement of share holder’s wealth.

Hence the firm should concentrate on enhancing the operating efficiency of

the firm.

2. From the study it is found that the funds are used for short term assets which

should be avoided. The long term sources of fund should be used for long

term assets and not short term assets.

CHAPTER VII

CONCLUSION

By analyzing the topic of “CASH AND FUND FLOW

ANALYSIS AND RATIO ANALYSIS OF DKSSKN LTD. CHIKODI”

I conclude that the company is more concentrate on raising the

fixed assets rather than operating activities which decreases working capital of the

96



company. Which affects the operational efficiency of the company and also the

liquidity position is not satisfactory due to these reasons.

This project report helped me to get the good knowledge on to

improve the liquidity position for better maintenance of the company.

CHAPTER IX

ANNEXURE



97



BALANCESHEET AS AT

MARCH 31st - 2005, 2006, 2007 AND 2008

(All amounts in crores of Indian rupees unless otherwise stated)

PARTICULARS 2004-2005 2005-2006 2006-2007 2007-2008

LIABILITIES -

Share Capital 111.11 109.53 132.19 133.66


Term loan 547.17 523.06 409.49 502.83

Working capital loan 647.04 803.01 912.46 717.85

Bank O. D. payable 27.26 6.04 8.40 12.83

Statutory and other deposits 774.01 755.33 683.18 666.17

Suspense, sundries & other 259.91 409.17 555.99 471.07

Total 2842.25 3183.47 3378.51 3262.31

ASSETS -

Fixed assets 1142.11 1251.15 1296.30 1307.44

Investments 1.41 2.52 2.62 16.73

Current assets 1299.18 1549.60 1242.47 1039.87


Debtors 249.58 253.11 272.93 274.33

Cash in hand 1.52 1.13 0.32 0.30

Cash at bank 84.31 62.88 158.33 132.40

Other assets 13.10 13.74 - -

Profit and loss account - - 356.99 389.80

Total 2842.25 3183.47 3378.51 3262.31

PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31st MARCH

2005, 2006, 2007 AND 2008

(All amounts in crores of Indian rupees unless otherwise stated)

98



PARTICULARS 2004-05 2005-06 2006-07 2007-08

Income

Sales (Net revenue) 1143.15 1365.47 1640.81 1773.10

Other Income - 62.16 10.48 3.25

Total 1143.15 1427.63 1651.29 1776.35

Expenditure

Less - Cost of goods sold 904.40 1321.51 1517.95 1624.81

Gross Profit 238.75 106.12 133.34 151.54

Less - Selling & Administration

Expense (0perating exp) 277.19 153.92 40.23 94.75

Operating profit/loss -38.44 -47.80 93.11 56.79

Add - Operating income 241.49 17.74 42.35 70.66

Less - Non operating expense 176.55 94.59 124.37 161.62

Add - Non operating income 2.72 10.70 7.13 1.36

Profit 29.22

Loss 113.94 18.22 32.81

99


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