PROFILE INTRODUCTION:

Granite know as king of stones because of its inherent characteristics such as extra fine mirror polish, scratch free glossy surface and durability.

Indian granite has become the most sought after and extensively used stone material in building constructions and massive structural works throughout the world and is well known in the international market not only for its elegance and aesthetic quality but also for its durability.India accounts for 30 per cent of the world’s export of high quality natural stones like granite, marble, sandstone. India has emerged as one of the leading countries in the production and export of granite and other stones

India has vast resources of granite with about 1120 varieties of different colours and textures. The industry is producing a wide range of granite based products, viz. granite tiles, slabs/blocks, monuments, tombstones, table tops and several handicraft items like Costume jewellery boxes, ashtrays, pen stands, paper weights etc.

INDIAN SCENARIO:

The granite industry in India is concentrated mainly in the states of Karnataka, Andhra Pradesh, Tamil Nadu and Rajasthan. Realising huge potential of granite, many others states have set up granite units. These include: Orissa, Madhya, Assam, Gujarat, Maharashtra and Bihar.

Chemicals and allied products export promotion council(capexil) has submitted a proposal to the ministry of commerce and industry, government of industry for creating a mineral up gradation fund worth Rs 5,000 crores.

Demand for Indian granite both in the domestic & foreign markets has been increasing.

PRODUT CONSTRAINTS:

One of the most disturbing trend witnessed in the export of Indian granite in recent years related with China emerging as the major importer of Indian rough granite.

Another constraint which the granite industry today is facing relate to technological impediments. Only 20 per cent of the total 10,000 quarries both large and medium sized in India resort to mechanized extraction of stones.

India’s Exports—Country wise: USA continues to be the largest market for Indian granite and granite-based products. There was a phenomenal increase in exports to this market .over the previous year when the same reached a level of Rs. 3,490.58 crore as against Rs. 2,562.26 crore in the previous year. The other markets showing a steep growth during the period comprised

EXPORT STRATEGY: There is a need to evolve a suitable export strategy to tap tremendous export potential of granite. Some of the points to be made in the strategy should include (i)Modernising the industry by providing all govt. support viz. R&D activity and liberal policy for import of latest machinery for mining, cutting and processing of granites at the concessional rate of duty;

(ii) Restricting export of rough granite to enable the Processing units to source the same without any hurdles;

(iii) Upgrading granite as a “Major Mineral. At present, it is classified as a minor mineral coming under the states’ list;

(iv) Putting granite in the list of principal export products. The data on principal export commodities from India is being compiled by the Directorate General of Commercial Intelligence & Statistics (DGCI&S) in the Annual Publication entitled “Foreign Trade Statistic of India – Principal Commodities & Countries”.

1. Cost Structure:

2. Operating Performance:

3. Financial Performance:

4. Growth Rate:

Where = current year

= base year r = growth rate

× 100

× 100

TOOLS OF ANALYSIS

5. Trend analysis:

Y=a + bxIn order to determine the values of the constants a and b the following normal equations are to be solved.∑ y = Na + b∑x --- (1) ∑ (x y) = a ∑ x + b ∑ ---- (2)

6. Coefficient of correlation:

ANALYSIS OF DATA1. Cost structure:

S.no particulars 2003 2004 2005 2006 2007 2008

1 sales 678.77 891.21 874.27 765.96 907.38 845.022 Raw material 283.29 340.92 359.86 378.71 410.29 359.86

3 Power & fuel 37.84 42.83 44.39 37.12 45.04 43.79

4 Compensation to employees

55.52 59.9 61.57 43.79 73.64 77.08

5 Interest paid 59.81 44.13 20.46 21.80 22.5 45.65

6 Depreciation 34.87 36.07 36.48 38.95 40.57 38.09

7 Value added (1-2-3)

357.64 507.46 470.03 350.13 452.05 441.37

8 Fixed charges(4+5+6)

150.2 150.2 150.2 150.2 150.2 150.2

9 Cost structure (8/7)

0.419 0.295 0.319 0.428 0.332 0.340

Table 1. Calculation of cost structure during 2003-2008 (Rs in crores)

Interpretations: From the above table graph it is observed that the cost structure of the granite industry showing slight fluctuations and it is high in the year 2007 because of increased interest, depreciation and employee compensation.

Graph 1

2. Operating performance: × 100

Year EBIT Net assets Ratio (%)2003 66.77 1139.52 5.852004 145.57 1085.25 13.412005 106.20 1139.86 9.312006 83.74 1016.17 8.242007 86.48 1467.72 5.892008 82.09 1502.84 5.46

Table 2. Calculation of operating performance during 2003-2008 (Rs in crores)

Graph 2

Interpretation: The table shows the operating performance of the industry. Initially it is low but in the next year it has increased and after that the operating performances is gradually decreased, it is because of decrease in EBIT.

3. Financial performance: × 100

Table 3. Calculation of financial performance during 2003-2008 (Rs in crores)

Year Profit after tax Net worth Ratio(%)2003 -1.78 151.05 -1.12004 93.96 300.2 31.22005 72.65 471.62 15.42006 53.71 296.96 18.02007 51.7 468.54 11.02008 23.95 477.83 5.0

Graph 3

Interpretation: The table shows the financial performance of the industry. It is observed that the financial performance shows fluctuations during the study period. During 2003 it is very low and in the next year it has a drastic growth due to increase in PAT, and later there is a gradual decrease of financial performance due to decrease in PAT.

4. Growth rate of sales:

Where = current year = base year

r = growth rate

Table 4. Calculation of growth rate of sales (Rs in crores)

Year sales Growth rate2003 789.51 ---2004 678.77 -0.14022005 815.61 0.20152006 712.84 -0.12602007 873.53 0.22542008 805.61 -0.077

Interpretation: It is observed that the growth rate of sales is fluctuating. The growth rate in 2008 is negative because of the less growth in sales.

5.TREND ANALYSIS

Y=a + bx∑ y = Na + b∑x --- (1) ∑ (x y) = a ∑ x + b ∑ ---- (2)

5.1. Trend analysis for sales:

Year Sales2003 678.772004 789.512005 815.612006 712.842007 873.532008 805.61

Estimated sales for 2009: 857.66Estimated sales for 2010: 880.04

Table 5.1 (Rs in crores)

Interpretation: The estimated sales for 2009 is 857.66The estimated sales for 2010 is 880.04

5.2. Trend analysis for profits:

Year Profits2003 106.692004 183.562005 143.892006 1242007 127.32008 120.2

Estimated profits for 2009: 122.16

Estimated profits for 2010: 118.70

Interpretation: The estimated profits for 2009 is 122.16The estimated profits for 2010 is 118.70

Table 5.2 (Rs in crores)

Coefficient of correlation:6.1. Correlation between income and expenditure:

Year Income Expenditure 2003 714.56 726.342004 891.21 801.562005 874.27 816.992006 765.96 713.072007 907.38 887.362008 845.02 856.06 The value of co-efficient of correlation is: 0.8474

Table 6.1 (Rs in crores)

Graph 6.1

Interpretation: The above table shows the co-efficient of correlation between Income and Expenditure of industry. The co-efficient of correlation is 0.8474 indicates positive relationship between Income and Expenditure.

6.2. Correlation between sales and profit:

Table 6.2 (Rs in crores)

Year sales profit2003 678.77 106.692004 789.51 183.562005 815.61 143.892006 712.84 1242007 873.53 127.32008 805.61 120.2 The value of co-efficient of correlation is: 0.340659

Graph 6.2

Interpretation: The above table shows the co-efficient of correlation between sales and profits of the industry. The co-efficient of correlation is 0.3406 indicates positive relationship between sales and profit.

6.3. Correlation between current assets and current liabilities: Table 6.3 (Rs in crores)

Year Current assets Current liabilities2003 602.23 376.482004 603.67 310.612005 629 274.812006 541.61 293.62007 822.5 355.662008 771.34 340.36 The value of co-efficient of correlation is: 0.45976

Graph 6.3

Interpretation: The above table shows the co-efficient of correlation between current assets and current liabilities of the industry. The co-efficient of correlation is 0.4597 indicates positive relationship between current assets and current liabilities.

6.4.Correlation between profit after tax and net worth:

Table 6.4 (Rs in crores)

year Profit after tax Net worth2003 -1.78 151.052004 93.96 300.22005 72.65 471.622006 53.71 296.962007 51.7 468.542008 23.95 477.83 The value of co-efficient of correlation is: 0.333687

Graph 6.4

Interpretation: The above table shows the co-efficient of correlation between profit after tax and net worth of the industry. The co-efficient of correlation is 0.3336 indicates positive relationship between profit after tax and net worth.

6.5. Correlation between working capital and sales:Table 6.5 (Rs in crores)

year Working capital sales 2004 293.06 789.512003 225.75 678.772005 354.19 815.612006 248.01 712.842007 466.84 873.532008 430.98 805.61 The value of co-efficient of correlation is: 0.91181

Graph 6.5

Interpretation: The above table shows the co-efficient of correlation between working capital and sales of the industry. The co-efficient of correlation is 0.9118 indicates positive relationship between working capital and sales.

6.6. Correlation between investments and expenses:

Table 6.6 (Rs in crores)year Investments Expenses2004 48.11 726.342003 31.57 801.152005 32.85 816.992006 26.69 713.072007 145.36 887.362008 146.53 856.06 The value of co-efficient of correlation is: 0.7765

Graph 6.6

Interpretation: The above table shows the co-efficient of correlation between investments and expenses of the industry. The co-efficient of correlation is 0.7765 indicates positive relationship between investments and expenses.

SWOT ANALYSIS

STRENGTHS:

•Inherent characteristics such as extra fine mirror polish scratch free glossy surface & durability.•It has vast resources of granite with about 112o varieties of different colours & textures.•The industry is providing a wide range of granite based products.WEEKNESS:

•No government subsidies to the granite industry on par with iron ore industry to overcome crisis.•Small size of Indian companies•High cost of labour.

OPPORTUNITIES:

•Rapid domestic growth•With the emergence of Dimension Stone Granite (DSG) as a major foreign exchange earner, next only to iron ore, the GSI has set out, in 1992-93, on a long-term programme of assessing the resource potential of this commodity in the country. •Dimension stone granite appraisal by granite industry in India

THREATS:

•In recession time the industry had to reduce the product price by 20 – 30%.•Demand from us is reduced by 50%, demand from China & Europe has dropped by nearly 30%.•Major threat for the industry is to payment of 12.5% of service tax on the commission paid to agents abroad for getting business.

FINDINGS•The cost structure of the granite industry showing slight fluctuations and it is high in the year 2007 because of increased interest, depreciation and employee compensation.

•The operating performance of the industry at initially it is low but in the next year it has increased and after that the operating performances is gradually decreased, it is because of decrease in EBIT.

•The financial performance of the industry shows fluctuations during the study period. During 2003 it is very low and in the next year it has a drastic growth due to increase in PAT, and later there is a gradual decrease of financial performance due to decrease in PAT.•It is observed that the growth rate of sales of the industry is fluctuating. The growth rate in 2008 is negative because of the less growth in sales.

•The co-efficient of correlation between Income and Expenditure of industry is 0.8474. It shows that there is a positive relationship between Income and Expenditure

•The co-efficient of correlation between Sales and Profit of industry is0.3406. It shows that there is a positive relationship between Sales and Profit.

•The co-efficient of correlation between Current assets and Current liabilities is 0.4597. It shows that there is a positive relationship between Current assets and Current liabilities.

•The co-efficient of correlation between Profit after tax and Net worth of industry is 0.3336. It shows that there is a positive relationship between Profit after tax and Net worth

•The co-efficient of correlation between Working capital and Sales of industry is 0.9118. It shows that there is a positive relationship between Working capital and sales

•The co-efficient of correlation between Investments and Expenses of industry is 0.7765. It shows that there is a positive relationship between Investments and Expenses.

CONCLUSION

The granite industry is one of the largest developing industries in India. The cost structure of the industry is fluctuating and operating performance efficiency decreases year by year of the industry. Financial performance shows weak financial position of the industry. Growth rate of sales indicates decrease in demand for granite in India. Hence, in overall, the industry’s financial position is considered to be poor.