Ratio Analysis of National Payments Corporation of India

A Summer Training Project Report

Submitted in Partial Fulfillment of the Requirements for the

Award of Degree of Master of Business Administration

2020– 2022

Submitted by Guided by

Miss. Sakshi Priyadarshi Dr. Sucheta Kanchi

Roll No – 134

Division: D
 Certificate from the Organization

Date: 5.11.2021

To Whom It May Concern

This is to certify that Sakshi Priyadarshi, student of Bharati Vidyapeeth Institute of Management and
Entrepreneurship Development Pune, bearing Roll no 134 has undergone Summer Internship at National
Payments Corporation of India. During the 3 months of internship, she has successfully completed the project on
Ratio Analysis of National Payments Corporation of India.

During the internship, we found the intern sincere, hardworking and having a good behavior and moral character.

We wish intern all success in future endeavors.

Ritu Sharma
 Certificate of Originality

This is to certify that the project report entitled “Ratio Analysis of National Payments

Corporation of India” Submitted to Bharati Vidyapeeth (Deemed to be University), Pune in

partial fulfillment of the requirement for the award of the degree of Masters in Business

Administration (MBA) is an original work carried out by Miss Sakshi Priyadarshi under the

guidance of Mr. Prabhakar N Padiyar. The matter embodied in this project is a genuine work

done by Sakshi Priyadarshi to the best of my knowledge and belief and has not been submitted

before,neither to this University nor to any other University for the fulfillment of the

requirement of any course of study.

Signature of the Student Signature of the Guide

 CERTIFICATE

This is to certify that the Project titled Ratio Analysis is an academic work done by Miss.
Sakshi Priyadarshi submitted in the partial fulfillment of the requirement for the award of the
Degree of Masters in Business Administration from Bharati Vidyapeeth (Deemed to be
University), Pune. It has been completed under the guidance of Dr. Sucheta Kanchi. We are
thankful National Payments Corporation of India for having allowed our student to undergo
project work training. The authenticity of the project work will be examined by the viva
examiner which includes data verification, checking duplicity of information etc. and it may be
rejected due to non-fulfillment of quality standards set by the Institute.

Dr. Sachin S. Vernekar

Dean FMS, BVDU

Director IMED
 Acknowledgement

Apart from my efforts, the success of my project depends largely on the encouragement and
guideline of many others. I take this opportunity to express my gratitude to the people who
have been instrumental in the successful completion of this project.
I am gratefully indebted to our esteemed guide Dr. Sucheta Kadam her sincere guidance and
priceless support which would have been impossible for us to complete this project.
I express my gratitude to the staff members of Bharati Vidyapeeth (Deemed to be
University) who directly or indirectly helped me.
I would also like to express my sincere gratitude to all my office colleagues in National
Payments Corporation of India.
Finally I thank Institute of Management and entrepreneurship Development (IMED) for
giving me this golden opportunity to do my summer internship in National Payments
Corporation of India

Name and Signature of the Student

Ms. Sakshi Priyadarshi

 PREFACE

In this era of fast changing world, mere class room teaching is not sufficient to attain maturity
and perfection for application of theory into practice. The dynamic economy, political and
technological environment in which we live continually place demand on us to change,
improve and learn more about jobs, superiors and subordinates. Two years of continuous
classroom teaching is sufficient for students to implement directly their knowledge in the
market. A practical approach is needed.

The knowledge through project report is an essential requirement for M.B.A students. The
purpose of this project report is to study the RatioAnalysis with special reference to National
Payments Corporation of India

I have tried my level best to do justice to the project. And I hope the study which was
conducted will help not only the organization but also me and the society too.

Name and Signature of the student.

Ms. Sakshi Priyadarshi

 INDEX

SR PARTICULARS PAGE
NO.
1. Introduction 05

2. Industry Profile 07-09

3. Company & Product Profile 10-18

4. Literature Review 20-21

5. Need Scope & Objective of the Project 23-25

6. Research Methodology 27-28

7. Introduction Of Ratio Analysis 30-45

8. Data Analysis & Interpretation 47-84

9. Observations & Findings 86

10. Suggestion 88

11. Conclusion 90

12. Bibliography & Annexure 92-99

CHAPTER-I
INTRODUCTION
ABOUT RATIO ANALYSIS
The ratio analysis is the most powerful tool of financial analysis. Several ratios
calculated from the accounting data can be grouped into various classes according to financial
activity or function to be evaluated.
• DEFINITION:
“The indicate quotient of two mathematical expressions “and as “The relationship
between two or more things. “It evaluates the financial position and performance of the firm.
As started in the beginning many diverse groups of people are interested in analyzing
financial information to indicate the operating and financial efficiency and growth of firm.
These people use ratios to determine those financial characteristics of firm in which they
interested with the help of ratios one can determine.

• The ability of the firm to meet its current obligations.

• The extent to which the firm has used its long-term solvency by borrowing funds.

• The efficiency with which the firm is utilizing its assets in generating the sales
revenue.

• The overall operating efficiency and performance of firm.

The information contained in these statements is used by management, creditors,

investors and others to form judgment about the operating performance and financial
position of firm. Uses of financial statement can get further insight about financial strength
and weakness of the firm if they properly analyze information reported in these statements.
Management should be particularly interested in knowing financial strength of the firm to
make their best use and to be able to spot out financial weaknesses of the firm to take
suitable corrective actions. The further plans firm should be laid down in new of the firm’s
financial strength and weaknesses. Thus financial analysis is the starting point for making
plans before using any sophisticated forecasting and planning procedures. Understanding
the past is a prerequisite for anticipating the future.

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 CHAPTER – II
INDUSTRY PROFILE

6|Page
 INDUSRTY PROFILE

Payment systems are not only the lifeline of an economy but are increasingly being recognised
as a means of achieving financial inclusion and ensuring that economic benefits reach the
bottom of the pyramid.

In view of the above India has enacted a separate law for Payment and Settlement Systems
which has enabled an orderly development of the payment eco-system in the country.
The first Payment and Settlement Systems Vision announced by the Reserve Bank in 2001,
and successive vision statements every three years later, have made sure that payment and
settlement systems receive focused attention.

The present state-of-the-art payment systems that are affordable, accessible, convenient,
efficient, safe and secure are a matter of pride for the nation. The systems and efforts have not
only resulted in a rapid growth in digital payments, but have also led to unique innovations.
Small steps taken over time have transformed into giant strides in respect of payment and
settlement systems and retail payments space.

To document these achievements for the wider public, the Reserve Bank has prepared this
Booklet which contains payment systems managed by the country and developments in this
sphere in the last one decade.

The Booklet attempts to cover all payment systems in India, their enablers, institutions that run
these systems and supporting infrastructure acceptance. The challenges encountered, and
prospects are also touched upon. I congratulate the Department of Payment and Settlement
Systems for undertaking this initiative.

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The decade of 2010-20 can be termed as the decade of payments in India. There have been
many defining moments that transformed the payments ecosystem of the country and attracted
international recognition.

During the decade, the country has witnessed the introduction of innovative payment systems,
entry of non-bank players, and a gradual shift in the customer behaviour from cash to digital
payments.

We have an unique secure and interoperable Unified Payments Interface (UPI) for retail
payments, biometric based as well as the QR code-based payments. Throughout this journey,
the Reserve Bank has played the role of a catalyst and facilitator, regulator and supervisor, as
the occasion demanded, towards achieving its public policy objective of developing and
promoting a safe, secure, sound and efficient payment system.

Reserve Bank has always fostered innovation and growth of payment and settlement systems
without deviating or losing its focus towards constant improvement in safety, security,
soundness, efficiency and effectiveness.

All these efforts have resulted in availability of a wide choice of 'anytime and anywhere'
interoperable payment systems for the common man at reasonable rates. Reserve Bank had
earlier come up with a Booklet on its payment systems in the years 1998 and 2008. Building
on the earlier exercises, this Booklet is an attempt to spread awareness about the various
developments around payments landscape in the country during the last decade.

It gives an overview of the products, players, infrastructure and institutions in the payments
ecosystem along with regulatory measures of Reserve Bank. It also offers the reader a peek
into the future of the payment systems in the country. Efforts of the team in the Department of
Payment and Settlement Systems to bring out this concise yet comprehensive Booklet deserve
appreciation.

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India has been enjoying a healthy evolution of payment systems over the past three decades.
This has been the result of the measured road maps periodically adopted by the Reserve Bank,
as a developer in the initial years and as a catalyst and facilitator in later years.

Though the advancements in the payment systems were gradual in the early days, the two
decades of this century have truly witnessed a revolution. From barter system to Unified
Payments Interface (UPI), payment systems in India have come a long way.

Our payment systems are not only best-in-class, but also offer a bouquet of systems suited to
serve every Indian. Proactive regulation and supervision with safety and customer centric
initiatives have been the hallmark of developments in the retail payments systems arena and it
is a proud feeling to be recognised as a leader across the globe in this sphere.

Reserve Bank has been continuously setting goals and targets in the form of Payment Systems
Vision document, every three years since 2001, presenting the road map for improving the
payment systems of our nation. Empowering every Indian with access to a bouquet of
epayment options that is safe, secure, convenient, quick and affordable is Reserve Bank's
Payment System's Vision for 2019-2021.

A journey which has transformed the way banking is done in the country today. As Brett King,
the author of 'Bank 4.0', rightly puts it: "Banking is no longer somewhere you go, it's
something you do." I take this opportunity to convey my kudos to the thought leaders in
Reserve Bank, earlier and present, for nurturing and guiding payment system development. I
and my team remain committed to continue this catalytic and facilitating role for enabling
innovations in payment systems, while unyieldingly performing our responsibilities as
regulator and supervisor. We rededicate ourselves to pursue this mission [ i ] . relentlessly and
place India at the highest pedestal amongst all countries in payments systems space for years
to come. It has been my privilege and pleasure to be part of this memorable journey towards
excellence

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 CHAPTER - III
COMPANY & PRODUCT
PROFILE

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 COMPANY & PRODUCT PROFILE
The need for payments and settlements is as old as the need for goods and services. The
earliest known Payment and Settlement System (PSS) was the barter system facilitating
exchange through goods and / or services.

With the concept of money, people progressed to settling their economic transactions using
currency notes and coins. The evolution of the banking system and advent of bank accounts
led to an easy and safe method for making payments by transfer of money through bank
accounts. This transaction required a payment instrument, and cheque emerged as the primary
instrument for payment transactions. Thus, started the tale of payment systems.

An efficient payment system promotes market efficiency and reduces the cost of exchanging
goods and services. By the same token, its failure can result in loss of confidence in the
financial system and in the very use of money.

In India, the oversight of the payment systems is entrusted to the Reserve Bank of India (RBI)
where the Board for Regulation and Supervision of Payment and Settlement Systems (BPSS),
chaired by the Governor, RBI, spearheads this responsibility. The creation of a new
department viz., Department of Payment and Settlement Systems (DPSS) by RBI in the year
2005 to focus exclusively on payment and settlement systems, and subsequent legislation of
the Payment and Settlement Systems Act, 2007 (PSS Act) set the stage for a new era in the
history of payment systems in the country. Payment and Settlement Systems Act, 2007.

A sound and appropriate legal framework is a necessary requirement for efficient payment
systems. The legal environment should include (i) laws and regulations of broad applicability
that address issues such as insolvency and contractual relations between parties; (ii) laws and
regulations that have specific applicability to payment systems (such as legislation on
electronic signature, validation of netting, and settlement finally.

Payment and Settlement Systems in India the rules, standards, and procedures agreed to by all
participants of a payments system. Considering the importance of regulation for the
development and orderly functioning of not only financial services but also payment systems,
the Payment and Settlement Systems Act was legislated in 2007. India is one of the few
countries that has a specific payment systems law to "provide for the regulation and
supervision of payment systems in India and to designate RBI as the authority for the purpose
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and for matters connected therewith or incidental thereto." RBI's scope for regulation extends
to the whole gamut of payment systems and instruments as also services provided by banks
and non-banks.

National Payments Corporation of India (NPCI), an umbrella organisation for operating retail
payments and settlement systems in India, is an initiative of Reserve Bank of India (RBI) and
Indian Banks’ Association (IBA) under the provisions of the Payment and Settlement Systems
Act, 2007, for creating a robust Payment & Settlement Infrastructure in India.

Considering the utility nature of the objects of NPCI, it has been incorporated as a “Not for
Profit” Company under the provisions of Section 25 of Companies Act 1956 (now Section 8
of Companies Act 2013), with an intention to provide infrastructure to the entire Banking
system in India for physical as well as electronic payment and settlement systems.

The Company is focused on bringing innovations in the retail payment systems through the
use of technology for achieving greater efficiency in operations and widening the reach of
payment systems.

The ten core promoter banks are State Bank of India, Punjab National Bank, Canara
Bank, Bank of Baroda, Union Bank of India, Bank of India, ICICI Bank, HDFC Bank,
Citibank N. A. and HSBC. In 2016 the shareholding was broad-based to 56 member banks to
include more banks representing all sectors.

Journey
NPCI, during its journey, has made a significant impact on the retail payment systems in the
country. Dedicated to the nation by our former President, Shri Pranab Mukherjee, endorsed by
the Hon’ble Prime Minister, Shri Narendra Modi and later made the card of choice for the
ambitious Pradhan Mantri Jan Dhan Yojana, RuPay is now a known name.

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PRODUCTS

RuPay:
RuPay is an Indigenously developed Payment System – designed to meet the expectation and
needs of the Indian consumer, banks and merchant eco-system.
RuPay supports the issuance of debit, credit and prepaid cards by banks in India and thereby
supporting the growth of retail electronic payments in India.
RuPay is well poised to explore innovative payment opportunities such as Contactless –
offline and online to drive adoption of low value payments. All RuPay Cards will now have
the functionality of NCMC which can enable low value contactless payments (like transit, toll,
parking, retail) using Offline technology.
The alliances with international network partners (Discover Financial Services, Japan Credit
Bureau and China Union Pay) provides valuable access to global acceptance footprint and
offer world class payment solutions to RuPay cardholders.

IMPS
With Immediate Payment Service (IMPS), India has become the leading country in the world
in real time payments in retail sector.

NACH
National Automated Clearing House (NACH), an offline web based system for bulk push and
pull transactions. NACH provides electronic mandate platform to register mandates
facilitating paper less collection process for the corporates and banks. It provides for both
account based and Aadhaar based transactions.

ABPS
Aadhaar Payment Bridge (APB) System is helping the Government and Government agencies
in making the Direct Benefit Transfers for various Central as well as State sponsored schemes.

AePS
To access these funds at door step & drive the financial inclusion in India, Aadhaar enabled
Payment System (AePS) has been introduced. Since inception it has become instrumental to

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increase accessibility of basic banking services in underserved areas. To extend the
convenience of biometric to merchant payments, BHIM Aadhaar has been launched by
Hon'ble Prime Minister Narendra Modi.

NFS
National Financial Switch (NFS) is the largest network of shared Automated Teller Machines
(ATMs) in India facilitating interoperable cash withdrawal, card to card funds transfer and
interoperable cash deposit transactions among other value added services in the country.

UPI
Unified Payments Interface (UPI) has been termed as the revolutionary product in thepayment
system.

Bharat Bill Payment System

Bharat Bill Payment System is offering one-stop bill payment solution for all recurring
payments with 200+ Billers in the categories Viz. Electricity, Gas, Water, Telecom, DTH,
Loan Repayments, Insurance, FASTag Recharge, Cable etc. across India.

NETC
National Payments Corporation of India (NPCI) has developed the National Electronic Toll
Collection (NETC) program to meet the electronic tolling requirements of the Indian market.
It provides an electronic payment facility to customer to make the payments at national, state
and city toll plazas by identifying the vehicle uniquely through a FASTag. FASTag are Radio-
Frequency Identification (RFID) stickers which are affixed on the vehicle windshield and
enable the driver to make toll payments electronically while the vehicle is in motion without
stopping at the Toll plazas by saving Fuel and Time.
With these products the aim is to transform India into a ‘less-cash’ society by touching every
Indian with one or other payment services. With each passing year we are moving towards our
vision to be the best payments network globally.

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GROUP OF COMPANIES

About NIPL

NPCI began its journey way back in 2008 with one product and today it has various innovative
and unique digital payment products in its portfolio. Today, NPCI has touched every layer of
the society with one or the other products and doing exponentially well in domestic market.

NPCI’s visionary management had foreseen this growth and identified need to expand its
wings outside of India. It started with setting up of vision of ‘becoming best global payment
network’, NPCI successfully established partnerships with Discover Financial Services (DFS)
USA, Japan Credit Bureau (JCB) Japan, Union Pay International (UPI) China, Royal
Monetary Authority (RMA) of Bhutan and Network for Electronic Transfers (NETS),
Singapore.

However looking at the growth potential as well as scope in global market and NPCI’s
capability of providing easy, cost-effective & secure payment services, NPCI board identified
the need of dedicated resources allocation to international expansion and directed to establish
separate entity dedicated for internationalization of RuPay & UPI. Hence, International
Alliance team at NPCI which was working on international alliances for NPCI’s products
became a separate entity with few more offerings.

In pursuance of NPCI Board & RBI approval, NPCI International Payments Limited (NIPL)
has been incorporated (“Company”) on April 3, 2020 as a wholly owned subsidiary of
National Payments Corporation of India (NPCI). NIPL is devoted for deployment of RuPay
(domestic card scheme) and UPI (mobile payment solution) outside of India.
NIPL is building huge acceptance network for RuPay and UPI which will help Indian travelers
pay with these payment channels in destination country of travel. With the evolution and
growth of NIPL network, any Indian travelling to any country across the globe will be able to
use our products.

NPCI has successfully developed and proved its product and technological capabilities in
domestic market by transforming payment segment in India. Conversely, there are several
countries which want to establish a ‘real time payment system’ or ‘domestic card scheme’ in
their own country. NIPL, with its knowledge and experience, can offer these countries
technological assistance through licensing, consulting for building real time payment system
to meet the rapidly evolving need of fast growing global business.

NIPL is focused on transforming payments across the globe with use of technology and
innovation. It will not only enable payment for Indians but also uplift other countries by
enhancing their payment capabilities through technological assistance, consulting and
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infrastructure. These countries have potentials but lack in resources i.e. financial,
technological etc. NIPL is ready to fill this gap with its rich experience and advance
understanding of payments.

The Bharat Bill payment system is a Reserve Bank of India (RBI)

It is a conceptualised system driven by National Payments Corporation of India (NPCI). It is a

one-stop ecosystem for payment of all bills providing an interoperable and accessible
“Anytime Anywhere” Bill payment service to all customers across India with certainty,
reliability and safety of transactions.

Bharat BillPay - The One stop destination for all recurring payments
Bharat BillPay has multiple modes of payment and provides instant confirmation of payment
via an SMS or receipt. It offers myriad Bill collection categories like electricity, telecom,
DTH, gas, water bills, etc. and also other repetitive payments like insurance premium, mutual
funds, school fees, institution fees, credit cards, fastag recharge, local taxes, housing society
payments, etc. at one single window. An effective mechanism for handling consumer
complaints has also been put in place to support consumer regarding any Bill related problems
in Bharat BillPay

Different Payment Channels

Bharat BillPay transaction can be initiated through multiple payment channels like Internet,
Internet Banking, Mobile, Mobile-Banking, Mobile Wallets, Kiosk, ATM, Bank Branch,
Agents and Business Correspondents, by just looking at the Bharat BillPay logo

Different Payment Modes

Bharat BillPay facilitates myriad payment modes enabling Bill payments. The payment modes
options facilitated under the ecosystem are Cards (Credit, Debit and Prepaid), NEFT Internet
Banking, UPI, Wallets, Aadhar based Payments and Cash.

Key Participants

About Bharat Bill Payment Central Unit (BBPCU)

National Payments Corporation of India (NPCI) has been authorized by RBI as the Bharat Bill
Payment Central Unit (BBPCU) and is responsible for setting business standards, rules and
procedures for technical and business requirements for all participants. The BBPCU
undertakes clearing and settlement activities related to transactions routed through Bharat
BillPay.

About Bharat Bill Payment Operating Unit (BBPOU)

Bharat Bill Payment Operating Unit aka BBPOU is the entity that is authorized by Reserve
Bank of India. It can be a Bank or a Non-Bank. BBPOU may choose to integrate either with
the customers, (COU: Customer OU) or with the billers (Biller OU) or may wish to participate
as both – which means such BBPOU will be integrated with customers as well as billers.
Going forward, only authorised BBPOU - both banks and non-banks authorised by RBI - can
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handle payment and aggregation of payment services relating to bills under the scope of
Bharat BillPay.

Agent Institutions
Eligible Entities who wish to offer or those who are currently in Bill payment, collection and
aggregation business, would operate under a COU (Customer BBPOU).
Customer BBPOU will on-board Agent institutions which may further on-board agents and/ or
set up customer service points in various regions and locations.

Agents
Agents are the customer touch points and service points in the Bharat BillPay ecosystem
available in the form of agent outlets, Business Correspondent outlets, Bank branches,
collection centres, retail outlets.

Biller/Utility Company
Service providers, who shall receive payments from customers for services rendered. By
participating in the Bharat BillPay scheme, the biller will be able to receive payments from
third party channels for the services provided to the customer. A biller may tie up with up to
two BBPOUs to access the entire universe of its consumers and all payment channels.

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 Awards

NPCI wins Golden Peacock Award for BHIM UPI

National Payments Corporation of India (NPCI) has been awarded the prestigious Golden Peacock
Innovative Product/Service Award for the year 2018 for its revolutionary product Bharat Interface for
Money – Unified Payments Interface (BHIM UPI).

The award was conferred at the presentation ceremony in Dubai on April 13 by His Highness Sheikh
Nahyan bin Mubarak Al Nahyan, Hon'ble Cabinet Member & Minister of Tolerance, Govt. of UAE to
Mr. Vishal Anand Kanvaty, Senior Vice President – Innovation & Product, NPCI and UPI team
members. Also seen on the dais Lt. Gen. J. S. Ahluwalia, PVSM (Retd.), President, Institute Of
Directors, India in Dubai. The Awards Jury that selected the winners was chaired by Justice (Dr.) Arijit
Pasayat, former Judge, Supreme Court of India.

NPCI wins ‘Employer Branding Best Practices 2018 – Talent Attraction’ award.

NPCI won Employer Branding Best Practices 2018 award for Talent Attraction. NPCI’s Human
Resource vertical had conducted a pan-India series of financial literacy campaigns under its ‘Campus
Connect’ initiative.

The objective was to create awareness about significance of having a less-cash society. It also served
the purpose of pre-placement talk at the campuses before NPCI visits the institute for campus hiring.
The financial literacy workshops was initiated in August 2017 to integrate digital payments in
campuses across the country.

Reputed management institutes of Pune, Hyderabad, Bangalore, Chennai, Mumbai & Delhi had hosted
over 3,500 students from about 45 universities where students were familiarised with financial
products like Bharat Interface for Money - Unified Payments Interface (BHIM UPI). Besides, they
were encouraged to participate in ‘NPCI Ideathon’ - brainstorming sessions for presenting fresh ideas
to improvise on BHIM UPI Apps. NPCI received over 250 ideas of which few could be implemented.
This initiative has enhanced perception about NPCI among students as a preferred place to work. It
also led to the increase in number of quality applicants who wish to work with NPCI.

Mint-SAP felicitates MD & CEO with Digitalist Award

Mint and SAP had organised a programme which was aimed at identifying and recognizing business
leaders who have demonstrated significant business or social impact through digital innovation.

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.

CHAPTER - IV
LITERATURE REVIEW

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 REVIEW OF LITERATURE
FINANCIAL ANALYSIS

Financial analysis is the process of identifying the financial strengths and weakness of
the firm. It is done by establishing relationships between the items of financial statements viz.,
balance sheet and profit and loss account. Financial analysis can be undertaken by management
of the firm, viz., owners, creditors, investors and others.
Objectives of the financial analysis
Analysis of financial statements may be made for a particular purpose in view.

1. To find out the financial stability and soundness of the business enterprise.
2. To assess and evaluate the earning capacity of the business
3. To estimate and evaluate the fixed assets, stock etc., of the concern.
4. To estimate and determine the possibilities of future growth of business.
5. To assess and evaluate the firm’s capacity and ability to repay short and long term
loans
Parties interested in financial analysis
The users of financial analysis can be divided into two broad groups.

Internal users

1. Financial executives
2. Top management
External users

1. Investors
2. Creditor.
3. Workers
4. Customers
5. Government
6. Public
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Significance of financial analysis

Financial analysis serves the following purpose:

To know the operational efficiency of the business:

The financial analysis enables the management to find out the overall efficiency of the firm. This
will enable the management to locate the weak Spots of the business and take necessary remedial
action.

Helpful in measuring the solvency of the firm:

The financial analysis helps the decision makers in taking appropriate decisions for
strengthening the short-term as well as long-term solvency of the firm.

Comparison of past and present results:

Financial statements of the previous years can be compared and the trend regarding
various expenses, purchases, sales, gross profit and net profit can be ascertained.

Helps in measuring the profitability:

Financial statements show the gross profit, & net profit.

Inter‐firm comparison:

The financial analysis makes it easy to make inter-firm comparison. This comparison can
also be made for various time periods.

Bankruptcy and Failure:

Financial statement analysis is significant tool in predicting the bankruptcy and the failure

of the business enterprise. Financial statement analysis accomplishes this through the

evaluation of the solvency position.

Helps in forecasting:The financial analysis will help in assessing future development by

making forecasts and preparing budgets.

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 CHAPTER - V
NEED SCOPE & OBJECTIVES

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 NEED OF THE STUDY

The prevalent educational system providing the placement training at an industry being
a part of the curriculum has helped in comparison of theoretical knowledge with practical
system. It has led to note the convergences and divergence between theory and practice.

The study enables us to have access to various facts of the organization. It helps in
understanding the needs for the importance and advantage of materials in the organization, the
study also helps to exposure our minds to the integrated materials management the various
procedures, methods and technique adopted by the organization. The study provides knowledge
about how the theoretical aspects are put in the organization in terms of described below

❖ To pay wages and salaries.

❖ For the purchase of raw materials, spares and components parts.
❖ To incur day-to-day expenses.
❖ To meet selling costs such as packing, advertising.
❖ To provide credit facilities to customers.
❖ To maintain inventories and raw materials, work-in-progress and finished stock.

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 SCOPE OF THE STUDY

The scope of the study is limited to collecting financial data published in the annual
reports of the company every year. The analysis is done to suggest the possible solutions. The
study is carried out for 4 years (2009– 14).

Using the ratio analysis, firms past, present and future performance can be analyzed
and this study has been divided as short term analysis and long term analysis. The firm should
generate enough profits not only to meet the expectations of owner, but also to expansion
activities.

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 OBJECTIVES OF STUDY

1. To study and analyze the financial position of the Company through ratio analysis.

2. To suggest measures for improving the financial performance of organization.

3. To analyze the profitability position of the company.

4. To assess the return on investment.

5. To analyze the asset turnover ratio.

6. To determine the solvency position of company.

7. To suggest measures for effective and efficient usage of inventory.

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 CHAPTER - VI
RESEARCH METHODOLOGY

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 RESEARCH METHODOLOGY

Research Design
In view of the objects of the study listed above an exploratory research design has
been adopted. Exploratory research is one which is largely interprets and already available
information and it lays particular emphasis on analysis and interpretation of the existing and
available information.
• To know the financial status of the company.
• To know the credit worthiness of the company.
• To offer suggestions based on research finding.

Data Collection Methods

Primary Data
Information collected from internal guide and finance manager. Primary data is first
hand information.

Secondary Data
Company balance sheet and profit and loss account. secondary data is second hand
information.
Data Collection Tools
To analyze the data acquire from the secondary sources “Ratio Analysis”The scope of
the study is defined below in terms of concepts adopted and period under focus.
First the study of Ratio Analysis is confined only to NPCI . Secondly the study is based on the
annual reports of the company for a period of 4 years
from 2009-14 the reason for restricting the study to this period is due time constraint.

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 LIMITATIONS

• The study was limited to only four years Financial Data.

• The study is purely based on secondary data which were taken primarily from
Published annual reports of NPCI.

• There is no set industry standard for comparison and hence the inference is made on
general standards.

• The ratio is calculated from past financial statements and these are not indicators of
future.

• The study is based on only on the past records.

• Non availability of required data to analysis the performance.

28 | P a g e
 CHAPTER - VII
INTRODUCTION OF RATIO
ANALYSIS

29 | P a g e
 FINANCIAL ANALYSIS
Financial analysis is the process of identifying the financial strengths and weakness of
the firm. It is done by establishing relationships between the items of financial
statements viz., balance sheet and profit and loss account.

Financial analysis can be undertaken by management of the firm, viz., owners,

creditors, investors and others.

Objectives of the financial analysis

Analysis of financial statements may be made for a particular purpose in view.

To find out the financial stability and soundness of the
business enterprise. To assess and evaluate the earning
capacity of the business
To estimate and evaluate the fixed assets, stock etc., of the concern.
To estimate and determine the possibilities of future growth of business.
To assess and evaluate the firm’s capacity and ability to repay short and long term
loans

NATURE OF RATIO ANALYSIS

Ratio Analysis is a powerful tool of financial analysis. A ratio is defined as "the

indicated quotient of mathematical expression" and as "the relationship between two
or more things". A ratio is used as benchmark for evaluating the financial position and
performance of the firm. The relationship between two accounting figures, expressed
mathematically, is known as a financial ratio. Ratio helps to summarizes large
quantities of financial data and to make qualitative judgment about the firm's
financial performance.
The persons interested in the analysis of financial statements can be grouped
under three head owners (or) investors who are desired primarily a basis for
estimating earning capacity. Creditors are the people who are concerned primarily
30 | P a g e
 with Liquidity and ability to pay interest and redeem loan within a specified period.
Management is interested in evolving analytical tools that will measure costs,
efficiency, liquidity and profitability with a view to make intelligent decisions.

STANDARDS OF COMPARISION
The ratio analysis involves comparison for a useful interpretation of the financial statements.
A single ratio in itself does not indicate favourable or unfavourable condition.
It should be compared with some standard. Standards of comparison are:

1. Past Ratios
2. Competitor's Ratios
3. Industry Ratios
4. Projected Ratios
Past Ratios: Ratios calculated from the past financial statements of the same firm.

Competitor's Ratios: Ratios of some selected firms, especially the most

progressive and successful competitor at the same point in time.
Industry Ratios: Ratios of the industry to which the firm belongs.
Projected Ratios: Ratios developed using the projected financial statements
of the same firm.

TIME SERIES ANALYSIS

The easiest way to evaluate the performance of a firm is to compare its present
ratios with past ratios. When financial ratios over a period of time are compared,
it is known as the time series analysis or trend analysis. It gives an indication of
the direction of change and reflects whether the firm's financial performance has
improved, deteriorated or remind constant over time.

31 | P a g e
 CROSS SECTIONAL ANALYSIS
Another way to comparison is to compare ratios of one firm with some selected

firms in the industry at the same point in time. This kind of comparison is known as
the cross-sectional analysis. It is more useful to compare the firm's ratios with ratios of
a few carefully selected competitors, who have similar operations.

INDUSTRY ANALYSIS
Its ratio may be compared with average ratios of the industry of which the firm is
a member.

The financial standing and capability of the firm & other firms in the industry. Industry
ratios are important standards in view of the fact that each industry has its
characteristics which influence the financial and operating relationships.
METHODS OF ANALYSIS:

A financial analyst can adopt the following tools for analysis of the financial
statements. These are also termed as methods of financial analysis.
A. Comparative statement analysis
B. Common-size statement analysis
C. Trend analysis
D. Funds flow analysis
E. Ratio analysis

Parties interested in financial analysis

The users of financial analysis can be divided into two broad groups.
Internal users
1. Financial executives
2. Top management
External users
1. Investors
2. Creditor.
3. Workers
4. Customers
5. Government
32 | P a g e
 6. Public
7. Researchers
Significance of financial analysis

Financial analysis serves the following purpose:

➢ To know the operational efficiency of the business:

The financial analysis enables the management to find out the overall
efficiency of the firm. This will enable the management to locate the weak .

33 | P a g e
 ➢ Helpful in measuring the solvency of the firm:
The financial analysis helps the decision makers in taking appropriate
decisions for strengthening the short-term as well as long-term
solvency of the firm.
➢ Comparison of past and present results:
Financial statements of the previous years can be compared and the
trend regarding various expenses, purchases, sales, gross profit and
net profit can be ascertained.

➢ Helps in measuring the profitability:

Financial statements show the gross profit, & net profit.
➢ Inter‐firm comparison:
The financial analysis makes it easy to make inter-firm comparison. This
comparison can also be made for various time periods.
➢ Bankruptcy and Failure:
Financial statement analysis is significant tool in predicting the
bankruptcy and the failure of the business enterprise. Financial statement
analysis accomplishes this through the evaluation of the solvency position.
➢ Helps in forecasting:
The financial analysis will help in assessing future development by making
forecasts and preparing budgets

TYPES OF RATIOS:
Management is interested in evaluating every aspect of firm's
performance. In view of the requirement of the various users of ratios, we may
classify them into following four important categories:
A.LIQUIDITY RATIOS
It is essential for a firm to be able to meet its obligations as they become due.
Liquidity Ratios help in establishing a relationship between cast and other current
assets to current obligations to provide a quick measure of liquidity. A firm should
ensure that it does not suffer from lack of liquidity and also that it does not have
excess liquidity. A very high degree of liquidity is also bad, idle assets earn nothing.
The firm's funds will be unnecessarily tied up in current assets. Therefore it is
necessary to strike a proper balance between high liquidity.
Liquidity ratios can be divided into three types:
• Current Ratio
• Quick Ratio
• Cash Ratio
34 | P a g e
 1. CURRENT RATIO:

Current ratio is an acceptable measure of firm’s short-term solvency Current assets

includes cash within a year, such as marketable securities, debtors and inventors.
Prepaid expenses are also included in current assets as they represent the payments that
will not made by the firm in future. All obligations maturing within a year are included in
current liabilities. These include creditors, bills payable, accrued expenses, short-term
bank loan, income-tax liability in the current year. The current ratio is a measure of the
firm's short term solvency. It indicated the availability of current assets in rupees for
every one rupee of current liability. A current ratio of 2:1 is considered satisfactory.
The higher current ratio, greater the margin of safety, the larger the amount of current
assets in relation to current liabilities, then it indicate more the firm's ability to meet its
obligations. It is a cured –and -quick measure of the firm's liquidity. Current ratio is
calculated by dividing current assets and current liabilities.
CURRENT ASSETS
CURRENT RATIO = -------------------------------------------------
CURRENT LIABILITIES

2. 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. Cash is the most liquid asset, other assets that are
considered to be relatively liquid asset and included in quick assets are debtors and
bills receivables and marketable securities (temporary quoted investments). Generally,
a quick ratio of 1:1 is considered to represent a
satisfactory current financial condition. Quick ratio is a more penetrating test of
liquidity than the current ratio, yet it should be used cautiously. A company with a
high value of quick ratio can suffer from the shortage of funds if it has slow- paying,
doubtful and long duration outstanding debtors. A low quick ratio may really be
prospering and paying its current obligation in time.

QUICK ASSETS
QUICK RATIO = ----------------------------------
QUICK LIABILITIES

35 | P a g e
 GLOSSORY:
Quick assets: current assets-stock-prepaid expenses
Quick liabilities: current liabilities-bank overdraft-cash credit

3. Cash Ratio:

Cash is the most liquid asset; a financial analyst may examine Cash Ratio and its
equivalent current liabilities. Cash and Bank balances and short-term marketable
securities are the most liquid assets of a firm, financial analyst stays look at cash
ratio. Trade investment is marketable securities of equivalent of cash. If the
company carries a small amount of cash, there is nothing to be worried about the
lack of cash if the company has reserves borrowing power.
Cash Ratio is perhaps the most stringent Measure of liquidity. Indeed, one can argue
that it is overly stringent. Lack of immediate cash may not matter if the firm stretch
its payments or borrow money at short notice.

BANK+CASH+MARKETABLE SECURITIES
CASH RATIO= ---------------------------------------------------------------------
CURRENT LIABILITIES

36 | P a g e
 B.LEVERAGE RATIOS:

Financial leverage refers to the use of debt finance while debt capital is a
cheaper source of finance: it is also a riskier source of finance. It helps in
assessing the risk arising from the use of debt capital. Two types of ratios are
commonly used to analyze financial leverage.
1. Structural Ratios &
2. Coverage ratios.
Structural Ratios are based on the proportions of debt and equity in the financial
structure of firm. Coverage Ratios shows the relationship between Debt Servicing,
Commit ments and the sources for meeting these burdens. The short-term creditors
like bankers and suppliers of raw material are more concerned with the firm's current
debt-paying ability. On the other hand, long- term creditors like debenture holders,
financial institutions are more concerned with the firm's long-term financial strength. To
judge the long-term financial position of firm, financial leverage ratios are calculated.
These ratios indicated mix of funds provided by owners and lenders. There should be
an appropriate mix of Debt and owner's equity in financing the firm's assets. The
process of magnifying the shareholder's return through the use of Debt is called
"financial leverage" or "financial gearing" or "trading on equity". Leverage Ratios
are calculated to measure the financial risk and the firm's ability of using Debt to share
holder's advantage.
1. Debt equity ratio:

It indicates the relationship describing the lenders contribution for

each rupee of the owner's contribution is called debt-equity ratio. Debt equity
ratio is directly computed by dividing total debt by net worth. Lower the debt-
equity ratio, higher the degree of protection.

37 | P a g e
debt-equity ratio of 2:1 is considered ideal. The debt consists of all short term as
well as long- term and equity consists of net worth plus preference capital plus
Deferred Tax Liability.

TOTAL DEBT
DEBT EQUITY RATIO= -----------------------------------------------------
TOTAL DEBT+ TOTAL EQUITY

2. Interest Coverage Ratio:

The interest coverage ratio or the time interest earned is used to test the
firms’ debt servicing capacity. The interest coverage ratio is computed by dividing
earnings before interest and taxes by interest charges. The interest coverage ratio
shows the number of times the interest charges are covered by funds that are ordinarily
available for their payment. We can calculate the interest average ratio as earnings
before depreciation, interest and taxes divided by interest.

EBIT
INTEREST COVERAGE RATIO= -------------------------
INTEREST

3. Proprietary ratio

The total shareholder's fund is compared with the total tangible

assets of the company. This ratio indicates the general financial strength of
concern. It is a test of the soundness of financial structure of the concern. The
ratio is of great significance to creditors since it enables them to find out the
proportion of share holders funds in the total investment of business.
SHAREHOLDERS FUNDS
PROPRIETOTY RATIO= -------------------------------------------
TOTLA ASSETS/FIXED ASSETS

4. DEBT RATIO:

Several debt ratios may used to analyze the long-term solvency

38 | P a g e
 of a firm. The firm may be interested in knowing the proportion of the interest-
bearing debt in the capital structure. It may, therefore, compute debt ratio by
dividing total total debt by capital employed on net assets. Total debt will include
short and long-term borrowings from financial institutions,
debentures/bonds, deferred payment arrangements for buying equipments,
bank borrowings, public deposits and any other interest-bearing loan. Capital
employed will include total debt net worth.

TOTAL DEBTS
DEBT RATIO= ------------------------------------
TOTAL ASSETS

5. Capital gearing ratio:

This ratio makes an analysis of capital structure of firm. The ratio shows
relationship between equity share capital and the fixed cost bearing i.e., preference
share capital and debentures.

EQUITY CAPITAL
CAPITAL GEARING RATIO= ------------------------------------------------
P.SHARE CAPITAL +DEBENTTURES +LOANS

C. ACTIVITY RATIOS

Turnover ratios also referred to as activity ratios or asset management ratios,

measure how efficiently the assets are employed by a firm. These ratios are based
on the relationship between the level of activity, represented by sales or cost of
goods sold and levels of various assets. The improvement turnover ratios are
inventory turnover, average collection period, receivable turn over, fixed assets
turnover and total assets turnover.

Activity ratios are employed to evaluate the efficiency with which the firm
manages and utilize its assets.
These ratios are also called turnover ratios because they indicate the speed with which
assets are being converted or turned over into sales. Activity ratios thus involve a
relationship between sales and assets. A proper balance between sales and assets
generally reflects that asset utilization.

39 | P a g e
 1. INVENTORY TURNOVER RATIO/STOCK TURNOVER RATIO:

Inventory turnover ratio indicates the efficiency of the firms in

producing and selling its products. It’s calculated by dividing the cost of
goods sold by average inventory.

Cost of goods sold

STOCK TURNOVER RATIO= ---------------------------------------
Average inventory

1. DEBTORS TURNOVER RATIO:

Debtor’s turnover ratio indicates the relationship between sales and average
debtors. It’s calculated by dividing sales by average debtors. Higher the
turnover ratio indicates better performance and lower turnover indicates
inefficiency.

NET SALES
DEBTORS TURNOVER RATIO= -------------------------------
AVERAGE DEBTORS

2. FIXED ASSET TURNOVER RATIO:

The firm may which to know its efficiency of utilizing fixed assets
and current assets separately. The use of depreciated value of fixed assets in
computing the fixed assets turnover may render comparison of firm's performance
over period or with other firms. The ratio is supposed to measure the efficiency
with which fixed assets employed a high ratio indicates a high degree of
efficiency in asset utilization and a low ratio reflects inefficient use of assets.
However, in interpreting this ratio, one caution should be borne in mind, when
the fixed assets of firm are old and substantially depreciated the fixed assets
turnover ratio tends to be high because the denominator of ratio is very low.

NET SALES
FIXED ASSETS TURNOVER RATIOS= -----------------------
FIXED ASSETS

40 | P a g e
 3. WORKING CAPITAL TURNOVER RATIO:

This ratio measures the relationship between working capital and sales. The ratio shows the number of times the
working capital results in sales. Working capital as usual is the excess of current assets over current liabilities.
The following formula is used to measure the ratio:

SALES
WORKING CAPITAL TURNOVER RATIO= ------------------------------
WORKING CAPITAL

4. CURRENT ASSET TURNOVEER RATIO:

This ratio is calculated by dividing sales into current assets. This ratio
expressed the number of times current assets are being turnover in standard period.
This ratio shows how well the current assets are being used in the business.

NET SALES
CURRENT ASSET TURNOVER RATIO= -----------------------------
CURRENT ASSETS

5. TOTAL ASSET TURNOVER RATIO:

This ratio expresses relationship between the amount invested in the asset
and the result in term of sales. This is calculated by dividing the net sales by
total assets. The higher the ratio means the better utilization and vice-versa.

NET SALES
TATAL ASSET TURNOVER RATIO= ---------------------------
TOTAL ASSETS

D. PROFITABILITY RATIOS:
A company should earn profits to survive and grow over a long period of time.
Profits are essential but it would be wrong to assume that every action initiated by
management of a company should be aimed at maximizing profits. Profit is the difference
between revenues and expenses over a period of time. Profit is the ultimate 'output' of
41 | P a g e
a company and it will have no future if it fails to make sufficient profits. The financial
manager should continuously evaluate the efficiency of company in terms of profits.
The profitability ratios are calculated to measure the operating efficiency of company.
Creditors want to get interest and repayment of principal regularly. Owners want to get a
required rate of return on their investment. Generally, two major types of profitability
ratios are calculated:
o Profitability in relation to sales
o Profitability in relation to investment
Profitability Ratios can be divided into six types:

➢ Gross profit ratio

➢ Operating profit ratio
➢ Net profit ratio
➢ Return on investment
➢ Earns per share
➢ Operating expenses ratio

1. GROSS PROFIT RATIO:

First profitability ratio in relation to sales is the gross profit margin the
gross profit margin reflects the efficiency which management produces each unit of
product. This ratio indicates the average spread between the cost of goods sold and
the sales revenue. A high gross profit margin is a sign of good management. A gross
margin ratio may increase due to any of following factors: higher sales prices cost of
goods sold remaining constant, lower cost of goods sold, sales prices remaining
constant. A low gross profit margin may reflect higher cost of goods
sold due to firm's inability to purchase raw materials at favourable terms, inefficient
utilization of plant and machinery resulting in higher cost of production or due to fall
in prices in market.
This ratio shows the margin left after meeting manufacturing costs. It
measures the efficiency of production as well as pricing. To analyze the factors
underlying the variation in gross profit margin, the proportion of various
elements of cost (Labour, materials and manufacturing overheads) to sale may
study in detail.

GROSS PROFIT
GROSS PROFIT RATIO= ------------------------------100
NET SALES

42 | P a g e
 2. Operating profit ratio:

This ratio expresses the relationship between operating profit and sales.
It is worked out by dividing operating profit by net sales. With the help of this ratio,
one can judge the managerial efficiency which may not be reflected in the net profit
ratio.

OPERATING PROFIT
OPERATING PROFIT RATIO = ----------------------------------100
NET SALES

3. NET PROFIT RATIO:

Net profit is obtained when operating expenses, interest and taxes

are subtracted from the gross profit. Net profit margin ratio established a
relationship between net profit and sales and indicates management's efficiency
in manufacturing, administering and selling products.
This ratio also indicates the firm's capacity to withstand adverse economic
conditions. A firm with a high net margin ratio would be in an advantageous position
to survive in the face of falling selling prices, rising costs of production or declining
demand for product this ratio shows the earning left for share holders as a
percentage of net sales. It measures overall efficiency of production, administration,
selling, financing. Pricing and tax management. Jointly considered, the gross and
net profit margin ratios provide a valuable understanding of the cost and profit
structure of the firm and enable the analyst to identify the sources of business
efficiency / inefficiency.

NET PROFIT
NET PROFIT RATIO= ------------------------------------ 100
NET SALES

43 | P a g e
 4. RETUN ON INVESTMENT :
This is one of the most important profitability ratios. It indicates the relation
of net profit with capital employed in business. Net profit for calculating return of
investment will mean the net profit before interest, tax, and dividend. Capital
employed means long term funds.

E.B.I.T
RETURN ON INVESTMENT= ------------------------------------
CAPITAL EMPLOYED

5. EARNING PER SHARE:

This ratio is computed by earning available to equity share holders by the total
amount of equity share outstanding. It reveals the amount of period earnings
after taxes which occur to each equity share. This ratio is an important
index because it indicates whether the wealth of each share holder on a per
share basis as changed over the period.

NET PROFIT
EARNING PER SHARE= ------------------------------------------
NUMBER OF EQUITY SHARES

6. OPERATING EXPENSES RATIO:

It explains the changes in the profit margin ratio. A higher operating expenses
ratio is unfavourable since it will leave a small amount of operating income to meet
interest, dividends. Operating expenses ratio is a yardstick of operating efficiency,
but it should be used cautiously. It is affected by a number of factors such as external
uncontrollable factors, internal factors. This ratio is computed by dividing operating
expenses by sales. Operating expenses equal cost of goods sold plus selling
expenses and general administrative expenses by sales.

OPERATING EXPENSES
OPERATING EXPENSES RATIO= -----------------------------------x100
SALES

44 | P a g e
 7. DIVIDEND PER SHARE:

The net profit after tax belongs to shareholders. But the income they
really receive is the amount of earning as cash dividends.

DIVIDEND
DIVIDEND PER SHARE=------------------------
NUMBER OF SHARES
8. DIVIDEND PAYOUT RATIO:
It measures the relationship between the returns available to equity
shareholders and the dividend paid to them. It reveals what portion of earning
per share has been used for paying dividend and what has been retained for
sloughing back.

DIVIDEND PER SHARE

DIVIDEND PAYOUT RATIO=-----------------------------------
EARNING PER SHARE

45 | P a g e
 CHAPTER – VIII
DATA ANALYSIS AND
INTERPRETATION

46 | P a g e
 1. LIQUIDITY RATIO’S

A. CURRENT RATIO

The current ratio is the between all current assets and all current
liabilities; another way of expressing liquidity. It is a measure of the
firm’s short-term solvency. It indicates the availability of current assets
in rupees for every one rupee of current liability. A ratio of greater than
one means that the firm has more current assets than current claims against
them.

CURRENT ASSETS
CURRENT RATIO= -----------------------------------
CURRENT LIABILITIES

Table: 4.1

YEAR CURRENT ASSETS CURRENT LIABILITIES CURRENT RATIO

2009-10 1,593,241,430 6,35,941,300 2.50

2010-11 1,612,642,497 638,958,266 2.52

2011-12 2,280,704,176 1,181,003,846 1.93

2012-13 3,500,193,294 1,312,272,610 2.67

2013-14 5,975,961,025 2,020,744,952 2.96

47 | P a g e
 CHART: 4.1: CURRENT RATIO

CURRENT RATIO

2.5

2
CURRENT RATIO

1.5
2.5 2.52

1 1.93

0.5

0
2009-10 2010-11 2011-12 2012-13 2013-14
current ratio 2.5 2.52 1.93 2.67 2.96

INTERPRETATION:

The standard norm for current ratio is 2:1. During the year 2009 the current ratio is 2.5 and During
the year 2010-11 the ratio is 2.52 and it has decreased to 1.93 during the y ear 2011-12 and increased
to 2.67 in 2012-13 and it is increased to 2.67 in the year 2013-14 and it has increased to 2.96 in the
year 2014. The ratio above was standard except in the year 2011. So the ratio was satisfactory.

48 | P a g e
 B. 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.

QUICK ASSETS
QUICK RATIO= ------------------------------------------
CURRENT LIABILITIES

TABLE: 4.2

YEAR QUICK ASSETS CURRENT LIABILITIES QUICK RATIO

2009-10 1,171,600,450 628,525,100 1.86

2010-11 1,171,683,584 638,958,266 1.83

2011-12 1,708,741,955 1,181,003,846 1.45

2012-13 2,578,479,879 1,312,272,610 1.96

2013-14 4,032,625,321 2,020,744,952 1.99

49 | P a g e
 CHART4. 2: QUICK RATIO

QUICK RATIOS
QUICK RATIOS

0
2009-10 2010-11 2011-12 2012-13 2013-14
QUICK 1.86 1.83 1.45 1.96 1.99
RATIOS

INTERPRETATION:

The standard form of a quick ratio is 1:1. Quick ratio is decreased in the year 2010 to 1.83
from 2.45. Then, it decreased to 1.45 in the year 2011. And it has increased to 1.96 in the
year 2012 and then it increased to 1.99 in the year 2013-14.however the ratio is more than
the standard norms so it is satisfactory.

50 | P a g e
 C. CASH RATIO

Cash ratio is the ratio between cash plus marketable securities and current
liabilities.

CASH+BANK+MARKETABLE SECURITIES
CASH RATIO= -----------------------------------------------
CURRENT LIABILITIES

TABLE4.3: CASH RATIO

Cash +bank +marketable securities Current liabilities Cash ratio

YEAR

2009-10 169,120,500 638,910,250 0.26

2010-11 169,121, 827 638,958,266 0.26

2011-12 205,212,363 1,181,003,846 0.17

2012-13 256,000,280 1,312,272,610 0.20

511,453,739
2013-14 2,020,744,952 0.25

51 | P a g e
 CHART4.3: CASH RATIO

cash ratio

0.25
CASH RATIO

0.15

0
2009-10 2010-11 2011-12 2012-13 2013-14
cash ratio 0.26 0.26 0.17 0.2 0.25

INTERPRETATION:

In all the above years the absolute quick ratio is very low. The standard norm for absolute
quick ratio is 1:2 the company is failed in keeping sufficient Cash & Bank Balances and
Marketable Securities.

52 | P a g e
 2. LEVERAGE RATIOS

A. TOTAL DEBT RATIO

TOTAL DEBT
TOTAL DEBT RATIO= ---------------------------------------------
TOTAL DEBT+ NET WORTH

TABLE 4.4: TOTAL DEBT RATIO

year Total debt Total debt+ net worth Total debt ratio

2009-10 232,111,700 2,035,900,500 0.11

2010-11 233,058,880 2,039,907,551 0.11

2011-12 378,672,427 2,391,525,347 0.16

1,407,083,880
2012-13 3,843,741,557 0.37

2013-14 3,162,620,560 3,493,635,030 1.10

53 | P a g e
 CHART4.4: TOTAL DEBT RATIO

Total debt
ratio
1.2

0.8
debt ratios

0.6 1.1

0.4

0.2 0.37
0.11 0.11 0.16
0
2009-2010 2010-11 2011-12 2012-13 2013-14
Total debt ratio 0.11 0.11 0.16 0.37 1.1

INTERPRETATION:

This ratio gives results relating to the capital structure of a firm. Debt ratio is 0.08 in the year
2010 it increased to 0.11 & 0.16 in the corresponding years 2011 & 2012. Again it is increased to
0.37 & 1.10 in the year 2013& 2014. From the above in fluctuating trend we can conclude that
the company’s dependence on debt is increasing. It is not better position in collection of debt.

54 | P a g e
 B. DEBT EQUITY RATIO

Debt equity ratio indicates the relationship describing the lenders contribution for each
rupee of the owner’s contribution is cal ed debt- equity ratio. Debt equity ratio is computed by
dividing Long term Liabilities divided by Equity. Lower debt – equity ratio higher the degree of
protection. A debt-equity ratio of 2:1 is considered ideal.

LONG TERM DEBTS

DEBT EQUITY RATIO= ----------------------------------------
EQUITY CAPITAL

TABLE4.5: DEBT EQUITY RATIO

year Long terms debts Equity capital Debt-equity ratio

2009-10 232,100,550 1,804,550,420 0.12

2010-11 233,058,880 1,806,848,650 0.13

2011-12 378,672,427 2,012,852,920 0.19

2012-13 1,407,083,880 2,436,657,677 0.58

2013-14
3,162,620,560 3,331,014,470 0.95

55 | P a g e
 CHART NO 4.5: DEBT EQUITY RATIO

D-E RATIO

1
0.9
0.8
0.7
D-E RATIOS

0.6
0.5
0.4
0.3
0.2
0.1 0.12 0.13
0
2009-10 2010-11 2011-12 2012-13 2013-14
D-E 0.12 0.13 0.19 0.58 0.95
RATIO

INTERPRETATION:

The ratio gives results relating to the capital structure of a firm. Debt equity ratio is 0.09 in the
year 2010 and it increased to 0.13 & 0.19 in the year 2011 and 2012. In the year 2013 & 2014 the
ratio has increased to 0.5 8 & 0.95. We can conclude that the company depends on the debt fund is
increasing.

56 | P a g e
 C. INTEREST COVERAGE RATIO

The ratio shows the number of times the interest charges are covered by funds
that are ordinarily available for their payment.

EBIT
INTEREST COVERAGE RATIO=-------------------------
INTERST

TABLE4. 6: INTEREST COVERAGE RATIO

YEAR EBIT INTEREST INTEREST COVERAGE RATIO

2009-10 136,750,450 1,446,430,4 94.54

2010-11 137,259,583 1,448,42754 94.76

2011-12 386,899,738 1,3435,515 28.80

2012-13 742,908,741 3,0924,293 24.02

1 ,588,690,299
2013-14 129,308,874 12.29

57 | P a g e
 CHART 4.6: INTEREST COVERAGE RATIO

interest coverage ratio

100

90

80

70
interest coverage ratio

60

50 94.56 94.76

40

30

20
28.8
10

0
2009-10 2010-11 2011-12 2012-13 2013-14
interest coverage ratio 94.56 94.76 28.8 24.02 12.29

INTERPRETATION:

Interest coverage ratio is 07.56 in the year 2009. It is increased automatically to 94.76 in the year
2010. But, it is decreased to 28.80 in the year 2011 and decreased to 24.02 in the year 2012 and it
again decreased to 12.29 in the year 2013-14. In this position outside investors is interested to invest
the money in this company.

58 | P a g e
 D. SHAREHOLDERS EQUITY RATIO/PROPRIETORY RATIO:

This ratio indicates the extent to which the total assets of the entity are financed by proprietary
funds.

SHAREHOLDERS FUNDS
PROPRITORY RATIO= -----------------------------------------
TOTAL ASSETS

TABLE4.7: PROPRITORY RATIO

year Net worth Total asset Proprietary ratio

2009-10 1,804,846,650 2,805,770,200 0.64

2010-11 1,806,848,671 2 ,809,793,132 0.64

2011-12 2,012,852,920 3 ,692,541,508 0.54

2012-13 2,436,657,677 5 ,292,107,128 0.46

2013-14 3,331,014,470 8 ,683,886,037 0.38

59 | P a g e
 GRAPH 4.7: PROPRIETORY RATIO

proprietory ratio

0
2009-10 2010-11 2011-12 2012-13 2013-14
propritory ratio 0.64 0.645 0.54 0.46 0.38

INTERPETATION:

The funds financed by the proprietaries in the total funds are continuously decreased from year
2010 to 2014.

60 | P a g e
 3. ACTIVITY TATIO :

A. INVENTORY TURN OVER RATIO

It indicates the firm efficiency of the firm in producing and selling its product. It is
calculated by dividing the cost of goods sold by the average inventory.

COST OF GOODS SOLD

INVENTORY TURNOVER RATIO= -----------------------------------
AVERAGE INVENTIRY

CHART4.8: INVENTORY TURNOVER RATIO:

YEAR COST OF GOODS AVERAGE INVENTORY TURNOVER

SOLD INVENTORY RATIO

2009- 2,218,490,920 371,098,120 5.97

10

2010- 2,228,549,828 374,102,223 5.96

11

2011- 3,499,805,230 506,460,567 6.91

12

2012- 5,324,665,192 746,837,818 7.13

13

2013- 9,782,463,974 1,432,524,559 6.83

14

61 | P a g e
 GRAPH 4.8: INVENTORY TURNOVER RATIO

inventory turnover ratio

7.2

6.8
inventory turn over ratio

6.6

6.4

6.2 7.13
6.91
6

5.8

5.6 5.97 5.96

5.4

5.2
2009- 2010- 2011- 2012- 2013-
10 11 12 13 14
inventory turnover ratio 5.97 5.96 6.91 7.13 6.83

INTERPRETATION:

Inventory turnover ratio is 5.57 Times in the year 2009. But, it is increased to 5.96 in the
Year 2010. Then, it is increased to 6.91 in the year 2011 and again increased to 7.13 in the year
2012. But, it is decreased to 6 .83 in the year 2013-14. Inventory turnover ratio increased for year
Year that is company production is also increased. Subsequently sales are also increased.

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 B. DEBTORS TURNOVER RATIO

It is found out by dividing t he credit sales by average debtors. Debtor’s turnover indicates the
number of times debtor’s turnover each year.

sales
Debtors turnover ratio=----------------------------------------
Average debtors

TABLE 9: DEBTORS TURNOVER RATIO

year sales Average debtors Debtors turnover ratio

2009-10 2,596,350,100 550,720,552 4.71

2010-11 2,685,436,096 560,689,881 4.79

2011-12 4,458,29 5,779 753,113,338 5.92

1 ,158,032,767
2012-13 7,451,03 2,998 6.43
1 ,862,113,498
2013-14 13,499,867,499 7.25

63 | P a g e
 GRAPH 9: DEBTORS TURNOVER RATIO

DEBTORS TURNOVER RATIO

6
DEBTORS TURNOVER RATIO

3 5.92
4.71 4.79
2

0
2009- 2010- 2011- 2012- 2013-
10 11 12 13 14
DEBTORS TURNOVER 4.71 4.79 5.92 6.43 7.25
RATIO

INTERPRETATION:

Debtor’s turnover ratio is 4.71 times in the year 2010 and it is increased to 4.7 9 times in the
year 2011 and increased to 5.92 times in the year 2012 and it increased t o 6.43 times &7.25
times in the years 2013 &2014.

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 C. FIXED ASSET TURNOVER RATIO

The ratio is supposed to measure the efficiency with which fixed assets are employed a high ratio
indicates a high degree of efficiency in asset utilization and a low ratio reflects inefficient use of
assets. However, in interpreting this ratio, one caution should be borne in mind. When the fixed
assets of the firm are old and substantially depreciated, the fixed assets turnover ratio tends to be
high because the denominator of the ratio is very low.

NET SALES
FIXED ASSET TURNOVER RATIO=-------------------------------
NET FIXED ASSETS

TABLE4.10: FIXED ASSET TURNOVER RATIO

YEAR NET SALES NET FIXED ASSETS FIXED ASSET TURNOVER RATIO

2009-10 2,543,521,120 930,571,365 2.73

2010-11 2,685,436,096 948,631,374 2.83

2011-12 4,458,295,779 1,043,547,559 4.27

2012-13 7,451,032,998 1,568,304,581 4.75

2013-14 13,499,867,499 1,888,508,475 7.15

65 | P a g e
 GRAPH 4.10: FIXED ASSET TURNOVER RATIO

fixed asset turnover ratio in

times
8

7
fixed asset turnover ratio

5
7.15
4
4.75
3
4.27
2
2.73 2.83
1
0
2009-10 2010-11 2011-12 2012-13 2013-14
fixed asset turnover ratio in times 2.73 2.83 4.27 4.75 7.15

INTERPRETATION:

Fixed assets turnover ratio is 2.83 in the year 2010 and it is increased to in the year 2011. I n
the year 2012 the ratio is 4.27 and it continued up to 4.75 and to 7.15 in the years 2013&2014.

66 | P a g e
 D. TOTAL ASSET TUENOVER RATIO

This ratio ensures whether the capital employed has been effectively used or not. This is also test
of managerial efficiency and business performance. Higher total capital turnover ratio is always
required in the interest of the company.

NET SALES
TOTAL ASSET TURNOVER RATIO= -------------------------------------
CAPITAL EMPLOYED

TABLE 4.11: TOTAL ASSET TURNOVER RATIO

YEAR NET SALES CAPITAL EMPLOYED TOTAL ASSET TURNOVER RATIO

2009-10 2,564,351,141 2,756,921,250 0.93

2010-11 2,685,43 6,096 2 ,809,793,132 0.96

2011-12 4,458,29 5,779 3 ,692,541,508 1.21

2012-13 7,451,03 2,998 5 ,292,107,128 1.41

2013-14 13,499,867,499 8 ,683,886,037 1.55

67 | P a g e
 GRAPH 4.11: TOTAL ASSET TURNOVER RATIO

TOTAL ASSET TURNOVER RATIOS IN TIMES

1.6

1.4
TOTAL ASSET TURNOVER TATIO

1.2

0.8

0.6
0.93 0.96
0.4

0.2

0
2009-10 2010-11 2011-12 2012-13 2013-14
TOTAL ASSET TURNOVER
RATIOS IN 0.93 0.96 1.21 1.41 1.56
TIMES

INTERPRETATION:

Total assets ratio is 0.93 in the year 2010 and it gradually increased year by year and
reached to 1.56 in the year 2014. It means Total Assets is increased in every year.

68 | P a g e
 E. WORKING CAPITAL TURNOVER RATIO

A firm may also like to relate net current assets or net working capital to sales. Working capital
turnover indicates for one rupee of sales the company needs how many net current assets. This
ratio indicates whether or not working capital has been effectively utilized market sales.

SALES
WORKING CAPITAL TURNOVER RATIO=---------------------------------------
WORKING CAPITAL

TABLE 4.12: WORKING CAPITAL TURNOVER RATIO

YEARS SALES WORKING WORKING CAPITAL TURNOVER

CAPITAL RATIO

2009-10 2,751,456,125 965852720 2.84

2010-11 2 ,685,436,096 973684291 2.76

2011-12 4 ,458,295,779 1,099700330 4.05

2012-13 7 ,451,032,998 2,187920684 3.41

2013-14 1 3,499,867,4 99 3,955216073 3.41

69 | P a g e
 GRAPH 4.12: WORKING CAPITAL TURNOVER RATIO

wirking capital turnover ratio in times

4.5
working capital turnover ratio

3.5

2.5

0
2009-10 2010-11 2011-12 2012-13 2013-14
wirking capital turnover ratio in
2.84 2.76 4.05 3.41 3.41
times

INTERPRETATION:

Working capital turnover ratio is 2.84 in the year 2010 and it is increased to 2.76 in the year
2011. In the year 2012 increased to 4.05. Again it decreased to 3.41 in the year 2013&2014.The
higher the working capital turnover then more favorable for the company.

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 F. NET ASSET TURNOVER RATIO

SALES
NET ASSET TURNOVER RATIO= -----------------------------
NET ASSET

TABLE 4.13: NET ASSET TURNOVER RATIO

YEARS SALES NET ASSET NET ASSET TURNOVER RATIO

2009-10 2,751,456,125 1,752,324.530 1.57

2010-11 2,685,436,096 1, 935,207,71 4 1.39

2011-12 4,458,295,779 2, 191,397,00 6 2.03

2012-13 7,451,032,998 3, 817,892,86 2 1.95

2013-14 13,499,86 7,499 6, 501,134,46 0 2.08

71 | P a g e
 GRAPH 4.13: NET ASSET TURNOVER RATIO

NET ASSET TURNOVER RATIO IN TIMES

NET ASSET TURNOVER RATIO

0
200 201 201 201 201
9-10 0-11 1-12 2-13 3-14
NET ASSET TURNOVER
1.57 1.39 2.03 1.95 2.08
RATIO IN TIMES

INTERPRETATION:

Net Assets turnover ratio is 1.57 in the year 2010 and it is increased to 1.39 in the year
2011 and it is increased to 2.0 3 in the year 2012. And, it decreased to 1.95 in the year 2013 and
it slightly increased to 2.08 in the year 2014.

72 | P a g e
 G. CAPITAL TURNOVER RATIO

The ratio obtains by dividing sales with the capital employed.

SALES
CAPITAL ASSEET TURN OVER RATIO= ----------------------------------
CAPITAL EMPLOYED

TABLE 4.14: CAPITAL TURNOVER RATIO

YEARS SALES CAPITAL EMPLOYED CAPITAL TURNOVER RATIO

2009-10 2,751,456,125 2,221,920,756 1.23

2010-11 2,685,436,096 2,1 70,834,866 1.24

2011-12 4,458,295,779 2,5 11,537,662 1.78

2012-13 7,451,032,998 3,9 79,834,518 1.87

2013-14 13,499,867, 499 6,6 63,141,085 2.03

73 | P a g e
 GRAPH 4.14: CAPITAL TURNOVER RATIO

capital turnover ratio in times

capital turnover ratio

0
2009- 2010- 2011- 2012- 2013-
10 11 12 13 14
capital turnover ratio in times 1.23 1.24 1.78 1.87 2.03

INTERPRETATION:

Capital turnover ratio is 1.23 in the y ear 2010 and it is increased 1.24 in the year 2011 and it is
increased to 1.7 8 in the year 2012 and again it is increased to 1.87 in the year 2013.Then, it
increased to 2.03 in the year 2014.

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 4. PROFITABILITY RATIOS

A. GROSS PROFIT RATIO:

This ratio shows that the margin left after meeting manufacturing costs. It measures the
efficiency of production as well as pricing.

GROSS PROFIT
GROSS PROFIT RATIO= ----------------------------
NET SALES

Gross profit= Net sales-Cost of goods sold

Cost of goods sold= Opening stock+ material consumed+ mfg .exp- closing stock

TABLE 4.15: GROSS PROFIT RATIO

YEARS GROSS PROFIT NET SALES GROSS PROFIT RATIO

2009-10 453,720,910 2,751,456,125 16

2010-11 456,886,268 2,685,436,096 17

2011-12 958,490,549 4,458,295,779 21.5

2012-13 2,126,367,806 7,451,032,998 28.5

2013-14 3,717,403,516 13,499,867,499 27.5

75 | P a g e
 GRAPH 15: GROSS PROFIT RATIO

gross profit in ratios

gross profit ratios

0
2009-10 2010-11 2011-12 2012-13 2013-14
gross profit in ratios 16 17 21.5 28.5 27.5

INTERPRETATION:

From the above we can say that gross profit ratio is 16% in the year 2010 but it increased
to 17 % &21.5% in 2011&2012 and a gain it increased to 28.5% in the year 2013 and
it is decreased to 27.5% in the Year 2014.The company is maintaining proper contr ol on
Trade Activities.

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 B. NET PROFIT RATIO

This ratio also indicates the firm's capacity to wit h stand adverse economic conditions. A firm with
a high net margin ratio would be in an advantageous position to survive in the face falling selling
prices, rising costs of production or declining demand for the product.

NET PROFIT
NET PROFIT RATIO= --------------------------
NET SALES

TABLE 4.16: NET PROFIT RATIO:

YEARS NET PROFIT NET SALES NET PROFIT RATIO

2009-10 84,750,325 2,751,456,125 3.08

2010-11 86,900,563 2,685,436,096 3.2

2011-12 238,465,730 4,458,295,779 5.3

2012-13 470,434,575 7,451,032,998 6.3

2013-14 9,436,315,11 13, 499,867,49 9 6.99

77 | P a g e
 GRAPH 4.16: NET PROFIT RATIO

net profit in ratios

0
2009-10 2010-11 2011-12 2012-13 2013-14
net profit in ratios 3.08 3.2 5.3 6.3 6.99

INTERPRETATION:

During the year 2010 the net profit margin is 3.08 it suddenly increased to 3.2% in the year 2011
because of decreased in administration and selling expenses. In the next year, it again increased to
5.3 in the year 2012 and it again increased to 6.3 in 2013 and to 6.99 in the year 2014.

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 C. OPERATING EXPENSES RATIO:

The Operating expenses ratio explains the changes in the profit margin ratio. A higher
operating expense is unfavourable since it will leave a small amount of operating income to meet
interest, dividends.

OPERATING EXPENSES
OPERATING EXPENSES RATIO=---------------------------------------- 100
SALES

TABLE 4.17: OPERATING EXPENSES RATIO:

YEARS OPERATING SALES OPERATING EXPENSES

EXPENSES RATIO

2009-10 354,543,827 2,751,456,125 12.8

2010-11 376,620,609 2,685,436,096 14.02

2011-12 550,626,756 4,458,295,779 12.35

2012-13 767,790,197 7,451,032,998 10.30

2013-14 1,388,735,777 13,499,867,499 10.30

79 | P a g e
 GRAPH 17: OPERAING EXPENSES RATIO

operaing expenses in ratios

16

14
operaing expenses in ratios

12

10
8
14.02
12.8 12.35
6
10.3 10.3
4

0
2009- 2010- 2011- 2012- 2013-
10 11 12 13 14
operaing expenses in ratios 12.8 14.02 12.35 10.3 10.3

INTERPRETATION:

Operating expenses ratio is 12.80%of sales in the year 2010 it decreased to 14.02% in
the year 2011 and decreased in 2012 to12.35% and again it decreased in the next year 2013 to
10.30% and continued the same way. Then, it reached 10.30% in the year 2014.

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 D. RETURN ON INVESTMENT

The conventional approach of calculated ROI is to divide PAT by investment.

EBIT
RETURN ON INVESTMENT= ------------------------------------
CAPITAL EMPLOYED

TABLE 4.18: RETURN ON INVESTMENT

YEARS EBIT CAPITAL EMPLOYED RETURN ON INVESTMENT

2009-10 135,350,510 2,350,743,945 0.05

2010-11 137,259,583 2,170,834,866 0.06

2011-12 386,899,738 2,511,537,662 0.15

2012-13 742,908,741 3,979,834,518 0.19

2013-14 1,588,690,299 6,663,141,085 0.24

81 | P a g e
 GRAPH 4.18: RETURN ON INVESTMENT

RETURN ON INVESTMENT

RETURN ON INVESTMENT

0
2009- 2010- 2011- 2012- 2013-
10 11 12 13 14
RETURN ON 0.05 0.06 0.15 0.19 0.24
INVESTMENT

INTERPRETATION:

Return on Investment is very low in all years. But, in the year the 2013-14 in increased to 0.24 .it
was continuously increasing comparing to past years

82 | P a g e
 E. RETURN ON EQUITY

The return on equity share holders fund explains about the return of share holders with they get
on their investment.

NET PROFIT
RETURN ON EQUITY= ----------------------------------
EQUITY SHEREHOLDES FUNDS

TABLE 4.19: RETURN ON EQUITY

YEARS EQUITY SHAREHOLDERS RETURN ON

NET PROFIT FUNDS EQUITY

2009-10 84,750,325 1,755,920,375 4.7

2010-11 86,900,563 1,806,848,671 4.8

2011-12 238,465,730 2,012,852,920 11.8

2012-13 470,434,575 2,436,657,677 19.3

2013-14 943,631,511 3,331,014,470 28.33

83 | P a g e
 GRAPH 4.19: RETURN ON EUITY SHAREHOLDERS FUNDS

RETURN ON EQUITY
RETURN ON EQUITY

0
2009-10 2010-11 2011-12 2012-13 2013-14
RETURN ON 4.7 4.8 11.8 19.3 28.33
EQUITY

INTERPRETATION:

Return on equity in the year 2010 is 4.7 and it increased suddenly to 4.8 in the year 2011 and again
it increased to 11.8 in the year 2012. Return on Equity of the company is at satisfactory level and
then it increased to 19.3 in 2013 and again increased to 28.33 in 2014.

84 | P a g e
 CHAPTER – IX
FINDINGS

85 | P a g e
 FINDINGS

➢ Except in the year 2012, the company is maintaining current ratio as 2 and
more, standard which indicates the ability of the firm to meet its current
obligations is more. It shows that the company is strong in working funds
management.
➢ The company is maintaining of quick assets more than quick ratio. As the
company having high value of quick ratio. Quick assets would meet all its
quick liabilities without any difficulty.
➢ The company is failed in keeping sufficient cash & bank balances and
marketable securities.
In above all current assets and liabilities ratios are better that also
it is double the normal position. Observe the absolute & super
quick ratio the company cash performance is down position.
➢ Debt Equity ratio is increasing every year. It indicates the company depends
on the debt fund increasing.
➢ In the year 2010, the interest coverage ratio 7.56 which increased to 94.76 in
the year 2013 and high fluctuations in the followed years. In this position,
outside investors are interested to invest their money in this company.
➢ The net profit of the company is increasing over the study period. Hence the
organization maintaining good control on all trees of expenses.

86 | P a g e
 CHAPTER – X
SUGGESTIONS

87 | P a g e
 SUGGESTIONS

➢ The company has to increase the profit maximization and has to decrease the
operating expenses.
➢ By considering the profit maximization in the company the earning per share,
investment and working capital also increases. Hence, the outsiders are also
interested to invest.
➢ The company should maintain sufficient cash and bank balances; they should
invest the idle cash in marketable securities or short term investments in shares,
debentures, bonds and other securities.
➢ The company must reduce its debtors collection period from 83 & 84 days to
40 days be adopting credit policy by providing discounts to the debtors.

88 | P a g e
 CHAPTER – XI
CONCLUSION

89 | P a g e
 CONCLUSION

• Liquidity ratios, both current ratio and quick ratio are showing effectiveness in liquidity
as in all the years current ratio is greater than the standard 2:1 and quick ratio is greater
than the standard 1:1 ratio.

• The firm is maintaining a low cash balance and marketable securities which means
they done cash payments.

• Debt equity ratio, solvency ratio and interest coverage ratio are showing an average
increase in the long term solvency of the firm.

• The proprietary ratio is showing an average increase which means, the shareholders
have contribute more funds to the total assets.

• Average payment period of the firm is showing the credit worthiness of the firm to its
suppliers.

• Fixed assets turnover ratio is showing that the firm needs lesser investment in fixed
assets to generate sales.

• The increasing trend of current assets turnover ratio indicates that the firm needs more
investment in current assets for generating sales.

• The gross profit ratio, net profit ratio is showing the increasing trends. The profitability
of the firm the increasing

• Operating ratio of the company has observed decreasing trend, hence it may be good
control over the operating expenses.

• The interest that has to be paid is very less when compared to the sales. The firm is not
utilizing the debt conservatively.

• The firm is retaining much of the earnings (based on dividend payout ratio) .

• The company financial performance is very good and also they will increase their
business year by year by expanding their branches.

90 | P a g e
 CHAPTER – XII
BIBLIOGRAPHY & ANNEXURE

91 | P a g e
 BIBLOGRAPHY

1. I.M.Pandey : Financial Management

2. M.Y.Khan & P.K.Jai : Financial Management

3. S.P. Jain & K.L. Narang : Cost & Managem ent

accounting

4. K.Rajeswara rao & G. Prasad : Accounting & Finance

5. P.Kulakarni : Financial Management

Web-sites:

www.npci.co.in
https://www.npci.org
.in/newsletter/May_
Month/moment-of-
month.html
https://www.npci.org.in/

92 | P a g e
 BALANCE SHEET AS AT 31st MARCH 2007

Schedule
Particulars No. As at 31.03.2007 As at 31.03.2006
Rupees Rupees Rupees Rupees
SOURCES OF FUNDS
Shareholders Funds
Share Capital 1 113,875,000 113,875,000
Reserves & Surplus 2 1,692,973,671 1,632,042,302
1,806,848,671 1,745,917,302
Loan Funds
Secured Loans 3 73,665,914 44,945,252
Unsecured Loans 4 159,392,966 103,853,138
233,058,880 148,798,390
Deferred Tax liability 5 130,927,315 145,000,360
Total 2,170,834,866 2,039,716,052
APPLICATION OF FUNDS
Fixed Assets 6
Gross Block 1,672,298,054 1,583,508,897
Less: Depreciation 723,666,680 591,622,548
Net Block 948,631,374 991,886,349
Capital Work-in-Progress 12,892,109 9,514,644
961,523,483 1,001,400,993
Investments 7 235,627,152 208,778,082
Current Assets, Loans &
Advances
Inventories 8 440,958,913 307,245,534
Sundry Debtors 9 649,706,121 471,673,642
Cash & Bank Balances 10 169,121,827 152,292,556
Loans, Advances & Deposits 11 342,929,588 251,402,682
Other Current Assets 12 9,926,048 7,622,683
1,612,642,497 1,190,237,097
Less: Current Liabilities &
Provisions 13
Liabilities 345,042,817 162,283,498
Provisions 293,915,449 198,416,622
638,958,266 360,700,120
Net Current Assets 973,684,231 829,536,977
Misc. Expenditure 14 -- --

Total 2,170,834,866 2,039,716,052

PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 MARCH

2007

93 | P a g e
 Schedule Year Ended on 31.03.07 Year Ended on 31.03.06
Particulars No. Rupees Rupees
INCOME
Sales 2,368,057,275 1,759,017,304
Other Income 15 63,043,449 41,581,593
Increase / (Decrease) in stocks 16 71,015,819 11,120,770
Total 2,502,116,543 1,811,719,667
Expenditure
Raw Material Consumed 17 1,382,962,610 831,843,012
Payments & Benefits to Employees 18 170,091,901 157,730,759
Mfg., Selling Admn., & Other
Expenses 19 494,265,237 561,985,559
Taxes & Licenses 20 181,230,080 123,834,416
Interest 21 1,448,427 1,754,335
Depreciation 136,307,132 123,052,249
Total 2,366,305,387 1,800,200,330
Profit Before Taxation 135,811,156 11,519,337
Add: Excess provision of Income Tax -- 4,954,943
Less: Tax Provision for earlier years 14,073,045 30,473,038
Provision for Income Tax 59,500,000 33,000,000
Provision for Wealth Tax 3,440,615 --
Add: Excess provision for Dividend
Tax Written Back 43,023 49,721
Profit After Taxation 86,900,563 13,897,597
Profit brought forward 512,460,202
Year from Previous 518,882,390
Profit available for appropriation 599,360,765 532,779,987
Less: Transfer to General Reserve 6,517,542 1,050,000
Proposed Dividend 22,775,000 17,081,250
Dividend Tax 3,194,194 2,188,535
Balance carried to Balance Sheet 566,874,029 512,460,202
Basic Earnings per equity share 7.63 1.22

94 | P a g e
 BALANCE SHEET AS AT 31 MARCH 2009

Schedule
Particulars No. As at 31.03.2009 As at 31.03.2008
Rupees Rupees Rupees Rupees
SOURCES OF FUNDS
Shareholders Funds
Share Capital 1 113,875,000 113,875,000
Reserves & Surplus 2 2,322,782,677 1,898,977,921
2,436,657,677 2,012,852,921
Loan Funds
Secured Loans 3 1,074,874,049 189,001,189
Unsecured Loans 4 332,209,831 216,407,580
1,407,083,880 405,408,769
Deferred Tax liability 5 136,092,961 120,012,315
Total 3,979,834,518 2,538,274,005

APPLICATION OF FUNDS
Fixed Assets 6
Gross Block 2,577,786,073 1,907,116,068
Less: Depreciation 1,009,481,492 863.568,510
Net Block 1,568,304,581 1,043,547,558
Capital Work-in-Progress 61,667,597 48,149,118
1,629,972,178 1,091,696,676
Investments 7 161,941,656 320,140,656
Current Assets, Loans &
Advances
Inventories 8 921,713,415 571,962,221
Sundry Debtors 9 1,459,544,977 856,520,556
Cash & Bank Balances 10 256,000,280 205,212,363
Loans, Advances & Deposits 11 859,824,054 634,750,549
Other Current Assets 12 3,110,568 12,035,439
3,500,193,294 2,280,481,128
Less: Current Liabilities &
Provisions 13
Liabilities 735,304,583 673,895,907

Provisions 576,968,027 480,148,548

1,312,272,610 1,154,044,455
Net Current Assets 2,187,920,684 1,126,436,673

Misc. Expenditure 14 -- --
Total 3,979,834,518 2,538,274,005

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 PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 MARCH
2009

Particulars Year Ended on Year Ended on

INCOME Schedule 31.03.09 31.03.08
Sales No. Rupees Rupees
Other Income 5,958,016,404 3,636,709,293
Increase / (Decrease) in stocks 15 97,738,804 72,509,746
Total 16 181,845,189 41,637,449
Expenditure 6,237,600,397 3,750,856,488
Purchase Of Finished Goods Raw Material Consumed
Payments & Benefits to Employees Mfg., Selling 1,190,212 4,353,496
Admn., & Other Expenses 17 3,937,812,454 2,229,601,146
18 265,997,094 207,269,383
Taxes & Licenses 19 1,093,657,443 760,841,717
Interest 20 26,007,989 14,881,894
Depreciation 21 30,924,293 13,435,515
Total 170,026,464 147,009,114
Profit Before Taxation 5,525,615,949 3,377,392,265
Add: Excess provision of Income Tax 711,984,448 373,464,223
Less :Tax Provision for -Current Tax Including Deferred tax, -- 10,915,000
Earlier Tax, Wealth tax, Fringe
benefits tax
241,549,873 145,913,493
Profit After Taxation
Profit brought forward 470,434,575 238,465,730
Year from Previous
Profit available for appropriation Less: Transfer to 749,031,694 566,874,029
General Reserve Proposed Dividend Dividend Tax 1,219,466,269 805,339,759
Balance carried to Balance Sheet 47,043,458 23,846,573
39,856,250 28,468,750
6,773,570 3,992,742
1,125,792,991 749,031,694
Basic Earnings per equity share 41.31 20.94

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 BALANCE SHEET AS AT 31 MARCH 2010

Schedule
Particulars No. As at 31.03.2009 As at 31.03.2010
Rupees Rupees Rupees Rupees
SOURCES OF FUNDS
Shareholders Funds
Share Capital 1 113,875,000 113,875,000
Reserves & Surplus 2 2,322,782,677 3,217,139,470
2,436,657,677 3,331,014,470
Loan Funds
Secured Loans 3 1,074,874,049 2,266,545,502
Unsecured Loans 4 332,209,831 896,075,058
1,407,083,880 3,162,620,560
Deferred Tax liability 5 136,092,961 169,506055
Total 3,979,834,518 6,663,141,085

APPLICATION OF FUNDS
Fixed Assets 6
Gross Block 2,577,786,073 3,105,843,108
Less: Depreciation 1,009,481,492 1,217,334,633
Net Block 1,568,304,581 1,888,508,475
Capital Work-in-Progress 61,667,597 657,409,912
1,629,972,178 2,545,918,387
Investments 7 161,941,656 162,006,625
Current Assets, Loans &
Advances
Inventories 8 921,713,415 1,943,335,704
Sundry Debtors 9 1,459,544,977 2,264,682,019
Cash & Bank Balances 10 256,000,280 511,453,739
Loans, Advances & Deposits 11 859,824,054

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 1,248,478,477
Other Current Assets 12 3,110,568 8,011,086
3,500,193,294 5,975,961,025
Less: Current Liabilities &
Provisions 13
Liabilities 735,304,583 1,027,373,819
Provisions 576,968,027 99,371,133
1,312,272,610 2,020,744,952
Net Current Assets 2,187,920,684 3,955,216,073
Misc. Expenditure 14 -- --
Total 3,979,834,518 6,663,141,085

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 PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 MARCH
2010
Schedule Year Ended on 31.03.09 Year Ended on 31.03.10
Particulars No. Rupees Rupees
INCOME
Sales 5,958,016,404 10,833,256,904
Other Income
15 97,738,804 256,100,643
Increase / (Decrease) in stocks
Total 16 181,845,189 582,065,982
Expenditure 6,237,600,397 11,671,423,529
Purchase Of Finished Goods
Raw Material Consumed 1,190,212 6,378,425
Payments & Benefits to 17 3,937,812,454 7,794,794,675
Employees Mfg., Selling 18 265,997,094 408,078,078
Admn., & Other Expenses
19 1,093,657,443 1,579,591,221
Taxes & Licenses
Interest 20 26,007,989 49,538,561
Depreciation 21 30,924,293 129,308,874
Total 170,026,464 244,452,070
Profit Before Taxation 5,525,615,949 10,212,042,104
Add: Excess provision of 711,984,448 1,459,381,425
Income Tax Less :Tax --
Provision for -Current Tax
Including Deferred tax, Earlier
Tax, Wealth tax, Fringe
benefits tax 241,549,873 523,262,294

Profit After Taxation

Profit brought forward
470,434,575 943,631,511
Year from Previous
Profit available for 749,031,694 1,125,792,991
appropriation
1,219,466,269 2,069,424,502
Less: Transfer to General Reserve 47,043,458 94,363,151
Proposed Dividend 39,856,250 39,856,250
Dividend Tax 6,773,570 6,773,570
Balance carried to Balance Sheet 1,125,792,991 1,928,431,531
Basic Earnings per equity share 41.31 82.87

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