PROJECT REPORT

ON

“RATIO ANALYSIS”

BY
AJEET BHURA

NEYCER INDIA LTD.

Summer Internship Project

(Batch of 2010)
 PROJECT TITLE

RATIO ANALYSIS

A Report Submitted In Partial

Fulfillment of the Requirements Of
MBA Program

COMPANY GUIDE FACULTY GUIDE

Mr. K MOHAN RAO MISS ALKA SWAMI
GENERAL MANAGER

COLLEGE OF ENGINEERING AND TECHONOLOGY

SUBMITTED BY:-
AJEET BHURA
 ACKNOWLEDGEMENT

I am very much obliged and indebted to Mr. K MOHAN RAO, GENRAL

Manager of Neycer India Limited for his approval and valuable suggestions to
take up the project.
.
I am greatly indebted to my guide MISS ALKA SWAMI , faculty guide for
Finance (summer internship),College of engineering & techonology for her
constant guidance, advice and help which enabled me to finish this project report
properly in time.

I am also grateful to Prof. NARENDRA CHOUDHARY, (HOD), college of

engineering & techonology, for permitting me to undertake this study.

Last but not the least, I would like to forward my gratitude to my friends & All
faculty members(RIMS) who always endured me and stood with me and without
whom I could not have completed the project.

My several well-wishers helped me directly or indirectly; I virtually fall short of

words to express my gratefulness to them. Therefore I am leaving this
acknowledgement incomplete in their reminiscence.

(Signature of student)
AJEET BHURA
S.NO. TOPIC PAGE NO.
1. Title Of The Project 2

2. Acknowledgement 3

3. Executive Summery 5

4. Introduction 6

5. Introduction Of Sanitry ware 7

6. Sanitry ware in india 9

7. Company profile 13

8. Tools & techniques of financial analysis 23

9. Ratio analysis 26

10. Type of ratio 27

11. Important of ratio 46

12. Purpose of ratio 48

13. Role of ratio 49

14. Summary 50

15. conclusion 50

16. References 51
 Executive Summary
The objective of the project was to do Market Research and customer
Satisfaction for NEYCER INDIA LTD. for that we have to understand the
customer needs, Income, constraints, response and emotions so that they can
contribute their time for becoming Life advisors for the company.
The objective of this study was to analyze consumer satisfaction of
mechanical splicing in Chennai city with respect to the performance, sales effort
and sales service. As the company was new and it was yet to be marketed to a
large number of customers, it was essential to know the feedback of customers
in order to formulate effective marketing and sales strategies in future and
improve the quality of service to achieve better consumer satisfaction.
The site visits and companying made us possible to measure the
satisfaction of consumer by identifying the attributes, which gave consumer-
varying degrees of satisfaction. Questionnaire based on company format so
attributes like requirement of customer and sales services offered by company
were identified as critical (motivational) factors for providing satisfaction to
consumers, while other factors like excisable deposit center, premium collocation
was time to time and also intimation regaining before the collocation of premium.
But absence of such hygienic factors definitely results in a dis-satisfied
consumer.
 These hygienic factors could result in selling but their absence can
certainly unseal the product offering. For this a questionnaire was prepared
which gave a vague idea about the people who were really interested and
wanted to know about various new opportunities in the insurance sector. Go
through questionnaire in different different area and people in the CHENNAI.

INTRODUCTION
Ceramic Industry
Ceramic Industry in India is about 100 years old. It comprises ceramic tiles,
sanitary ware and crockery items. Ceramic products are manufactured both in
the large and small-scale sector with wide variation in type, size, quality and
standard. India ranks 7th in the world in term of production of ceramic tiles and
produced 200million sq. meters of ceramic tiles, out of a global production of
6400 million sq. meters during 2008-09. State-of-the-art ceramic goods are being
manufactured in the country and the technology adopted by the Indian ceramic
Industry is of international standard.
Capacity and Production
Sanitaryware is manufactured both in the large and small sector with variations in
type, range, quality and standard. At present there are 7 units with capacity of
86,500 tonne per annum and, there are about 200 plants with a capacity of
50,000 tonne per annum in small scale sector. The industry has a turn over of
Rs. 400-500 crore. This industry has been growing at the rate of about 5% per
annum during the last 2 years. There is significant export potential for
sanitaryware. These are presently being exported to East and West Asia, Africa,
Europe and Canada. The exports were of the order of Rs.60 crore during 2008-
09. and small-scale sector. There are 16 units in the organized sector with a
total installed capacity of 43,000 tonnes per annum. In the small-scale sector,
there are about 1200 plants with a capacity of 3 lakh tonnes per annum. Majority
of the production of ceramics tableware is of bone china and stoneware. This
industry in India is highly labour intensive while in USA, UK, Japan and other
countries there is full automation. Quality of finished products, design and
shapes in India are still below international standards. The equipments are old
and need to be updated to meet international standard. The export of
potteryware during 2008-09 was of the order of Rs. 85 crore.
 History of sanitary ware
Unlike body functions like dance, drama and songs, defecation is considered
very lowly. As a result very few scholars documented precisely the toilet habits of
our predecessors. The Nobel Prize winner for Medicine (1913) Charles Richet
attributes this silence to the disgust that arises from noxiousness and lack of
usefulness of human waste. Others point out that as sex organs are the same or
nearer to the organs of defecation, these who dared to write on toilet habits were
dubbed either as erotic or as vulgar and, thus, despised in academic and social
circles. It was true for example of Urdu poets in India, English poets in Britain and
French poets in France. However, as the need to defecate is irrepressible, so
were some writers who despite social as well as academic stigma wrote on the
subject and gave us at least an idea in regard to toilet habits of human beings.
Based on this rudimentary information, one can say that development in
civilization and sanitation have been coterminous. The more developed was the
society, the more sanitized it became and vice versa.
Toilet is part of history of human hygiene which is a critical chapter in the history
of human civilization and which cannot be isolated to be accorded unimportant
position in history. Toilet is a critical link between order and disorder and between
good and bad environment.
In our own country i.e. India, how can any one ignore the subject of toilet when
the society is faced with human excretions of the order of 900 million litres of
urine and 135 million kilograms of faucal matter per day with totally inadequate
system of its collection and disposal. The society, thus, has a constant threat of
health hazards and epidemics. As many as 600 out of 900 million people do
open defecation. Sewerage facilities are available to no more than 30 per cent of
population in urban areas and only 3 per cent of rural population has access to
pour flush latrines.
Seeing this challenge, we think the subject of toilet is as important if not more
than other social challenges like literacy, poverty, education and employment.
Rather subject of toilet is more important because lack of excremental hygiene is
a national health hazard while in other problems the implications are relatively
closer to only those who suffer from unemployment, illiteracy and poverty. Thus
the study of the history of toilet is an important subject matter.
As long as man did not have an established abode, he did not have a toilet. He
excreted wherever he felt like doing so . When he learnt to have a fixed house,
he moved toilet to courtyard and then within his home. Once this was done, it
became a challenge to deal with smell and the need was felt to have a toilet
which can intake human wastes and dispose these out of the house instantly
and, thus , help maintain cleanliness. Man tried various ways to do so i.e.
chamber pots, which were cleaned manually by the servants or slaves, toilets
protruding out of the top floor of the house or the castle and disposal of wastes in
the river below, or common toilets with holes on the top and flowing river or
stream underneath or just enter the river or stream and dispose of the waste of
the human body. While the rich used luxurious toilet chairs or cross stools, the
poor defecated on the roads, in the jungle or straight into the river. It was only in
the 16th century that a technology breakthrough came about and which helped
the human beings to have clean toilets in houses. This breakthrough did not
come about easily and human race had to live in sanitary conditions for
thousands of years.
Historical Evolution:
The perusal of literature brings home the fact that we have only fragmentary
information on the subject of toilet as a private secluded place to help the body
relieve its waste. Sitting type toilets in human history appeared quite early. In the
remains of Harappa civilization in India, at a place called Lothar ( 62 Kilometers
from the city of Ahmedabad in Western India ) and in the year 2500 BC, the
people had water borne toilets in each house and which were linked with drains
covered with burnt clay bricks. To facilitate operations and maintenance, it had
man-hole covers, chambers etc. It was the finest form of sanitary engineering.
But with the decline of Indus valley civilization, the science of sanitary
engineering disappeared from India. From then on , the toilets in India remained
primitive and open defection became rampant.The archaeological excavations
confirm existence of sitting type toilets in Egypt (2100 BC) also. Though we have
been able to mechanize the working of these toilets, the form and basic format of
the toilet system remains the same. In Rome, public bath-cum-toilets were also
well developed. There were holes in the floor and beneath was a flowing water.
When the Romans travelled they constructed the toilets for their use. The stools
were key-hole type so that these could be used for defecation as well as
urination. Excavations in Sri Lanka and Thailand too have brought out a
contraption in which urine was separated and allowed to flow while the other
portion was used at the same time for defecation.
Historical evidence exists that Greeks relieved themselves out of the houses.
There was no shyness in use of toilet. It was frequent to see at dinner parties in
Rome, slaves bringing in urine pots made of silver; while members of the royalty
used it but continued to play at the same time. Whatever little information is
available about history of toilets in India, it was quite primitive. This practice of
covering waste with earth continued till the Mughal era , where in the forts of
Delhi and Agra one can see remnants of such methodologies to dispose of
human waste.

Between the period 500 to 1500 AD was a dark age from the point of view of
human hygiene. It was an era of cess pools and human excreta all around. Rich
man's housing and forts in India had protrusions in which defecation was done
and the excrements fell into the open ground or the river below. The forts of
Jaiselmer in India and big houses on the banks of rivers bear testimony to this
fact. In Europe, it was an era of chamber pots, cess pools and cross stools. So
were the toilets protruding out of the castles and the excrements from which fell
into the river.

SANITARYWARE INDUSTRY IN INDIA:

India is a large, highly populated Country of around one billion people, with an
economy, which is steadily growing. As per the study, there were an estimated
125 million dwellings in India (1995), but 200 million households. This reveals an
acute housing shortage. The U.N. predicts an increase in the population of 1.6%
per annum. There is a gradual migrant shift from rural to urban areas and 27% of
the population now lives in urban areas as compared to 20% in 1971. There is a
large difference in amenities between the urban population and the rural. In
1994, 70% of the urban population had access to adequate sanitation, whereas
in the rural community only 14% had access.
In 1991, approximately 64% of urban households had some kind of toilet facility
compared with 9% of the rural areas. There is a widening difference in income
between different regions, the rich and the poor.
Sanitation is a must for every individual of our society. According to the
Government estimates, more than 50% of the urban population does not access
to sanitation facilities. Condition of the rural areas abysmal that only 6% of the
populations are covered by sanitation.
Population Covered by Sanitation Facilities
Year Rural Urban
1985 0.7% 28.4%
1990 2.4% 45.9%
1997 6.4% 49.3%
2009 26.7% 67.3%
SANITRY WARE INDUSTRY IN INDIA:
Sanitary ware Industries in India for the last 6-7 years has shown very dramatic
growth with major players doubling their production capacity. The Companies
have also upgraded their manufacturing system by introducing Battery Casting,
Beam Casting and have gone in for latest imported Fast Firing Cycle Kiln
Technology. These Companies have also upgraded their quality and have
introduced high value range in the market, which has been accepted and
appreciated. The demand for high value sanitary ware in India is growing very
fast. The Companies are trying to meet the demand as the realization per Metric
Ton for high value product is very good which ultimately results in good
profitability. In order to educate the customers in India to go for quality products
and also for higher value sanitary wares, companies have adopted a very
aggressive advertisement campaign. Companies have also strengthened their
dealer network by offering showroom incentives and some of the companies
have also gone for their own retail outlets in major towns. The demand for
Sanitary wares in India is growing @ 15% -17% every year.
The sanitary ware industry in India is divided in two sectors:-
1) organized
2) unorganized

1) The organized sector consisting of 5 companies (M/s. Hindustan Sanitary

Industries Limited, M/s. Parryware roca, M/s. Swastik Sanitarywares
Limited, M/s. Madhusudan Ceramics, M/s. Neycer India Limited),
manufacturing sanitaryware for the last 15-20 years and have established
their Brand image. The organized sectors produce fully vitrified sanitary
wares, using latest technology and best of Ceramic Raw Materials
available in India.
2) The unorganized sectors have adopted local Indian technology to
manufacture the basic sanitary ware products. Since the availability of raw
material is in abundance and also very cheap in the state of Gujarat &
Rajasthan, various companies have established their factory in these
areas. They are producing the basic sanitary ware in various brands.
Unorganized sector's percentage of production capacity and also their
sales in the local domestic market are higher than that of the organized
sectors' sales. Unorganized sanitary ware manufacturer comes under
small sectors and hence enjoy the benefit of Nil Excise Duty and Sales
Tax and hence they sell their products in the domestic market
approximately 70% cheaper than the organized sector products.

Government of India Policy on Housing Sector is very encouraging. The

Government has announced Income Tax rebate on housing loan to boost the
housing sector. All financial institutions are lending money for construction of
house at a very low rate of interest. Government figure shows that Housing
Sector is growing by approximately 25% every year. The need of Housing in
India with 100 crores population looks to be very potential. As per DGTD Survey
Report there is a shortage of about 20 million houses in the country by the end of
8th Five Year Plan. The housing has become a basic necessity, as people in
India are looking forward for improved sanitary condition. The concept of making
toilet is fast growing even in village areas, where toilet till last two years did not
exist.
DEMAND EASTIMATES:
The total demand for sanitary ware in India for the organized manufacturers is at
present approximately 90,000 M.T. per annum. The region wise demand pattern
can be estimated as follows:

NORTH 18000
SOUTH 32000
EAST 15000
WEST 15000
TOTAL 90000

Note: Every year the above demand is expected to grow by 15 to 17%.

CURRENT MARKET SIZE:

The Indian Sanitary ware market is worth around 1500 crores for the year 2008-
09 with an annual market size of around 13 million pieces. This represents a
yearly growth rate of about 3-4%.
MAJOR PLAYERS:
Until the mid 1940s the only sanitary ware available in India was imported mainly
from UK and was used only in upper class residences in major cities. The first
sanitary ware manufactured in India was by M/s. Parasuram Pottery Works. In
the 1960s, companies like EID Parry, in collaboration with Royal Doulton of UK
and Hindustan Sanitary ware in collaboration with Twyford of UK, started
production of Vitreous China Sanitary ware. Other major players who joined the
organized sector were Madhusudan Ceramics and Neyveli Ceramics. In the
1980s, 7-8 other players had entered the organized sector, but most of them
have since been taken over by the majors. The large foreign players like
American Standard, Toto, Villeroy and Boch have also set up distribution
channels in India.
In addition to the branded products made by the above companies, there are a
large number of small-scale units mainly in Thangad and Morbi districts of
Gujarat.
CONCERNS:
It has been observed that many sanitary ware manufacturers in the small-scale
sector do not manufacture ceramic sanitary ware to standard quality norms.
Moreover some of these manufacturers use the word "Vitreous" along with their
brand name whereas they do not meet the water absorption standards and
thereby are misleading the consumers. .
OUTLOOK FOR THE SANITRY WARE INDUSTRY IN INDIA:
In the next decade, India is expected to be one of the world's fastest growing
countries for sanitary ware consumption. The sanitation penetration has more
from 8% in 1982 to 18% in 1994 and to 29% in 1999 and to 49% in 2009.
The comparative penetration levels in neighboring countries are as follows:
Pakistan: 50%, Sri Lanka: 65%, Malaysia: 94% and Thailand: 96%.

The government impetus to improve hygiene and sanitation is likely to increase

the demand for sanitary ware in India. Moreover the increasing urbanization of
India and the consequent requirement for residential and commercial buildings
will be a major driver for growth of sanitary ware. Along with this the focus of the
central and state governments to provide housing facilities to the poor, is also
expected to generate demand.
The National Housing Policy formulation that envisages "Housing for all" by the
end of Ninth Plan period is a big step towards this. Indira Awaas Yojana, Samgra
Awaas Yojana are programs for providing housing to the rural poor is a key step
taken by the government in this area. The housing development organizations
like HUDCO, State Housing Development Boards and Rajiv Gandhi Rural
Housing Corporation Ltd. are also playing a large role in this initiative.
It is estimated that there is currently a demand for 20 million housing units in
India. Further, a significant number of the 115 million housing units across the
country will need reconstruction for improvement. Therefore a replacement
market will emerge, though currently original equipment sanitary ware market
accounts for nearly 90% of the market.

SANITARYWARE INDUSTRY STATISTICS:

1. World production: 187 Million pieces

2. India's Share: 6.7 Million pieces.

3. World ranking (in production): not in the Top 10 (India A/c for 3.30%)

4. Global Industry Growth Rate: 5-7%

5. Growth Rate (India Domestic Market): 10%

6. Organized sector:
% Share of Production: 43%
 No. of units: 6
Production Capacity: 103300 M.T. per annum
Actual Production: 95000 M.T. per annum

7. Unorganized sector:
% Share of Production: 57%
Production Capacity: 136700 M.T. per annum
Actual Production: 120000 M.T. per annum

INTRODUCTION OF THE TOPIC

The purpose of this training was to have practical experience of working
within the organization, in the filed of marketing and to have exposure to the
important management practices in field of marketing. While writing this report
the language has been keep simple and the entire discussion has been logical
and has coherent outlines. The main motto of the project work was RATIO
ANALYSIS of NEYCER INDIA LIMITED.
It includes through market Research in various plans of Neycer India ltd.
And in detail consumer (Satisfaction) responses analysis, by surveying number
of consumers. The project report is divided into two parts, first part consists
market research for finding out best sold plan of Neycer India ltd , And second
consist survey report of various consumers about there responses about
satisfaction towards Neycer India ltd IMPORTANCE OF THE TOPIC The project
report is all about market research to find out best sold plan of Neycer India ltd
And to mouser the satisfaction level of consumers. Market research help about
the best plan purchased by its consumer satisfaction level helps to know weather
the consumers are satisfied by service/Plans of of Neycer India ltd.

COMPANY PROFILE
Neycer india is formely known as “Neyveli ceramics” and refactories limited was
promoted by south Madras development company of sheshasayee brothers
private limited.
The company was eastablished with a liecenced capacity of manufacturing
“1800” tones saintrywares per annum.
The technical laboraties for this ventures was provide by M/s
Elementalbaykermik vertiebs.GMBH (keramag)of west germany . The project
was completed and the commercial in octomber 1965.
Neycer has the capacity to developed new pattern, products as per the
exclusive requirement of customer and has skilled manpower developed area a
period of more than 4 dacade . Neycer product are famous for wide range with
glassy colour in various size under regular manufacturing . Its manufacturing
technique to produce superior quality products.
RESEARCH AND DEVELOPMENT
Reserch and development is a heart of any ceramic industry . The trails and
testing are done in the laboraties to under the quality material and finished
products.
RAW MATERIAL AND TESTING
Raw colour test
Firing color test
Moisture color test
Residue test
Loss ignition test
Water of plasticity test
Green strength test
Fire strength test
Green shrinkage test
Total shrinkage test
Water obsorption test
Particle ride distribution test (PSD)
Test for crase resistance
Test for acid and alkoli resistance
MOULDING
In the sanitryware industries moulds plays an important role . This moulds
are prepared by plaster of paris . The main property of plaster of [aris os water
obsorption because of more porosity.
For de watering pf s;op and fpr getting the casting rate areusing moulds of a
mould having thickness we are maintaining the porosity pf moulds are ISO
standard
The moulds which are using fpr production is called wprking
moulds.Those are preparing by using the case moulds . This case mould
prepared from the master moulds:-
PROCESS FLOW- MOULDING CHART :-
MODEL DESGING
MODEL
MASTER MOULDS
 TRAIL CASTING
SQE APPROVE
CASE MOULDS
PRODUCTION MOULDS (WORKING MOULDS)

FLOW-SHEET FORP REPERATION SLIP MAKING:-

BALL CLAY CHAINA CLAY SILICA SEND
WATER-> BLENGING <- DEFLONATS
SCRAP
SCREENING (60 MESH)
MIXING
MEGNETIC SAPERATOR
SCREENING
SLIP STOCK ARE BY PUMP
CASTING SHOP
MOULDS MAKING ACTIVITY CHART:-
--Mould Production
--Case Mould Incepection
MOULD MAKING --Mould making
SELECTION --Mould insepection
--Mould Drying
--Casting shop

MOULD MAKING PROCESS FLOW CHART :-

PLASTER STORAGE
PLASTER AND WATER BATCHING
STIRRING
POURING
ELEASING
FINISHING
DRYING
ISSUE TO CASTING
GLAZE:-
Glaze is a nothing but a glassy coating and cermic are finally ground
mixture of minerals and chemicals.
Types of glaze:-
White colour
Coloured glaze.
FLOW SHEET FOR GLAZE MAKING:-
Felspar + quartz + Chaina clay
Addives Weighing
Water  Ball Mills  Reclouted Glaze
Screen
Testing and Approval
Megnetic Separator
Glaze
Issue Glaze Selection

DRY GLAZING PLANT:-

Feldspar or Quartz
Conveyer Belt – 1
Conveyer Belt –2
FAN  Rollor Crusher
CHAMBER  Bucket Ellement—1
feeder  Conical Ball Mill
Bucket Elleventor
Wind Shifter
Particle
Magnetic Drum
Loading and Weighing
Packing and Storage

CASTING:-
Casting is the main important in the sanitryware industry. These moulds
are prepared in moulding de[artment. These moulds are obsorps water from the
slip and gives the casting rate. In these plant two types of casting going on :-
1. Bench Casting

2. Battery Casting

BENCH CASTING:-
 Bench casting is generally for heavy and complicated pattern . This
process is very slow compare to battery casting. In this process we ge 15—35
pieces from each bench.
Mould Clearing
Talc Application
Water Application
Mould Fixing
Slip Casting
Casting Rate (2 Hours )
Unloading
After 2 hours rim mould removing
Slide mould removing (2 hours)
Removing the greenware from the seats
Allow the Drying
Finishing
Sent to dryer Rejection send to
slip house
First the caster is clearing the mould by using brush in the required area.
They fixed moulds and put the slip paste bits and moulds joints. Then slip in
pumping from casting area to the cooling pipelines which attatched with funnel.

BATTERY CASTING:-
Battery casting is generally using for small pattern like wash basin, in
battery casting the moulds are attatched one by one. This process is very fast
as compared to bench casting in this we can 55—65 pieces per day . In this
process one person is enough to handle these 60+ pieces.

PROCESS OF BATTERY CASTING :-

Clearing Moulds
Apply Muddy water talc
Slip Welt pipe
Fix the Pipe
Slip Filling
Casting
Slip Unloading
Sperating Moulding { After 2 Hours }
Purchasing Holes
Fixing Holes
Tab Holes
Demoulding the ware
Keeping the support
Allow the Drying
Finishing the dry Pieces
 Sent to dryier Rejection are
sent to slip house

GLAZING:-
The Glossy coating applied on the ceramic wares in the termal as glaze.
Glazing is a process dried pieces are coated with a uniform glaze in order tofrom
glaze attractive coating on wares after firing . In the Neycer India Limited the
glazing is done by spraying and poursing.

FLOW-SHEET:-
Dried Wares
Inspection
Watering
Glaze Spraying
Scraping
Spraying and Inspection
Coating { in kiln Car’s }
The casted waresare going to drier the ware are after sufficient drying
taken for glazing . The dried wares are inspected in the pieces are creation any
visible defects are finding to the rejection. The Surface of the wares removes
uneven surface pinholes etc. . They uniformally applied water portion.

SPECIFICATION:-
 Glaze thickness is 0.3 to 0.6 mm

 Nozel dia is 2.00 mm

 Taken pressure is 2.00 to 4.00 kg/cm

 Capacity of the glaze tank are 100 to 120 litre

 Glaze spraying line one pieces to 20 to 120 sel

KILN:-
A HIGH TEMPRATURE KILN IS USEDFOR FIRING THE CERAMICS
WARES
THERE ARE THREE TYPES OF KILN FOR FIRING
MUFFLE TUNNEL KILN:-
The kiln is used for glost for open setting although some also fired in the
muffle kiln . The compulation gasses and cooling air [ass counter to the air flow
as in the direct fired kiln but they are saprated from the main fuel by muffle kiln .
The gas flow in the apposite direction to the wares movement as in the direct
firing kiln f It’s control in the confired glost tight passes for that transferred to the
wares partly by redirection and partly collection are as below :-
DESCRIPTION OF ZONES:-
 PRE—HEATING ZONE

 FIRING ZONE

 FAST COLLING ZONE

 SLOW COOLING ZONE

 LENGTH:- 113.385 MTR.

 HEIGHT:- 2 MTR.

 WIDTH:- 1.56 MTR.

The total Length of cars is 2.14 Mtr. Car width is 1.4124 Mtr. And the car’s
position in various zones are as follows:-
PRE – HEATING ZONE:-
In this zone the articles wares fired from moisture which has after drying
process that depending on the composition , some zones to be finished up to a
temperature of 800*c to 900*c at the same time the process of solid face
starting and formation of entectic melt being to occur.
SOAKING:-
Material is said to be in the soaking if it is kept at constant temperature
per certain period in the heat zone the wares under goes vetrification the point
during the firing of body at which the pores becomes filled with glossy material
called vatrification.

FIRING ZONE:-
The firing zone arranged with burner for the firing . The firing of articles to
b done by L.T.O . in this zone the wares to be a completely verified . A blower
sinked the air from the atmostphere that air is pre heated used for completation
cthe firing is being given 2 to 6 hours . The iverall temperature is maintained in
this zone is 1200*c to 1250*c .
FAST COOLING ZONE:-
In this zone thee articles cooled rapidely approximately 600*c to 650*c
temperature is reduce in fast cooling zone in this zone wall and dampers are
provided cool air cause fron cooling ducts and cool can get heated that not
air will sucked by fast cooling fall .
SLOW COOLING ZONE:-
In this zone the articals are looked rapidely according to cooling
curve,very slowly.This cool zone also provided with wall and arch dumpers. The
cool air from dumper gat heated after cooing at the war and that not air is sucked
by slow cooing fan.
ENTRANCE CONTRAVACE FAN:-
This is used to keep the heat in side the kiln without escaping through
entrance and it also heated wares during passing through fast air car position this
maintain the constant pressure at the entrance . it is set on the entrance at the
kiln. The gasses from channel to allow to pass through a pipe through recupertor
cold air from the atmosphere is passed through that pipe but cold air doesnot
come into contact with the few gasses due to that flue gas that cold fresh air from
the atmostphere get heated not air will be injected entrance of kiln.
RECUPERATOR FAN:-
This fan is arrange on the pre heating zone at forth car position. It is used
for supply the fresh air to recuperator for utilize the waste heat.
The flue from the channel arrange in these side kiln sucked by exhausted
fan after coming kiln on way to exhausted fan. There is a recuperator for
purpose of utilize heat which course from flue. The rescuperator is a chamber
having inlet is in a curved position. A cold air from recuperator fan is circulated
the drying channel.

EXHAUSTED FAN:-
It is a set over the pre heating to near the recuperator. It sucks the hot
flame gas from flue fas and that gas is exhausted to the atmostphere through the
chimney. The section of the gases by the dumpers.
COMBUSTION AIR FAN:-
The fan which gives necessary for the combustion it absorve gases from
the atmostphere and pump are air to a pipeline under the burner of hot zone
when it again comes connected to a pipeline which is content with the burner to
give necessary air for the compustion as secondary air.
FAST COOLING AIR:-
In this zone thee articles cooled rapidely approximately 600*c to 650*c
temperature is reduce in fast cooling zone in this zone wall and dampers are
provided cool air cause fron cooling ducts and cool can get heated that not
air will sucked by fast cooling fall .
SLOW COOLING FAN:-
In this zone the articals are looked rapidely according to cooling
curve,very slowly.This cool zone also provided with wall and arch dumpers. The
cool air from dumper gat heated after cooing at the war and that not air is sucked
by slow cooing fan.
SHUTTLE KILN:-
It is one of periodic kiln for firing the first and re-firing for the wares for
pieces re-firing can be done. For this firing nature gases is used for the
temperature is controlled by the pannel board.
CONSTRUCTION:-
 It is a shape like a chamber a bottom of the side wall is constructed with
insulation bricks. For the side wall and top is constructed with the ceramic fiber at
the side wall also constructed with insulation bricks. Remaining all part is
constructed with cast iron jacket. It is having total burner are 36 each side having
10 burner it is having for controlled the temperature each one of the indicator is
allowed as a group of 6 burner in a channel.

CAR CONSTRUCTION:-
At the bottom of the car construction with the ceramic fiber insulation
bricks and cast iron jackets. Car jackets supporting tools are constructed with
silican carbines for the klin 7 cars are used.
FIRING PROCESS:-
First car also loaded with the wares the send into of the kiln by hydrolic
pumping after those two(front and back)doors are close at the firing with stated.
Firing can be done by three steps:-
• Pre heating

• Heating

• Fast cooling and cooling

PRE HEATING:-
In this temperature is gradually raised between 600-700C*. this zone
takes 5 to 6 hours. In this zone open the damper for the controlling the
temperature.
HEATING:-
In this temperature is 1150-1250C*. this take time of 2.5 hours. In this
process wares can be completely verified. In this firing soaking is being given in
the process glaze is completed melted.
FAST COOLING AND COOLING:-
In this fast cooing process the articals are cooled rapidly in the observed
temperature is gradually the cooling process is stated here also can we done
according to the cooling curve in 5.5 hours. At the curve of firing waste gases are
coming to under and going from dumpers to outside.
 OBJECTIVES

1. Prepare and interpret financial statements in comparative and common-

size form.

2. Compute and interpret financial ratios that would be most useful to a

common stock holder.

3. Compute and interpret financial ratios that would be most useful to a

short-term creditor

Compute and interpret financial ratios that would be most useful to long -term
creditors.
SCOPE OF THE STUDY:
• To carry out a critical analysis of NEYCER INDIA LTD financial statement
analysis.

• To find out the opportunity to capture greater market share.

• To find out the areas of weakness in the existing financial system

holding.

Financial statement analysis is defined as the process of identifying

financial strengths and weaknesses of the firm by properly establishing
relationship between the items of the balance sheet and the profit and loss
account.

There are various methods or techniques that are used in analyzing

financial statements, such as comparative statements, schedule of changes in
working capital, common size percentages, funds analysis, trend analysis, and
ratios analysis.

Financial statements are prepared to meet external reporting obligations

and also for decision making purposes. They play a dominant role in setting the
framework of managerial decisions. But the information provided in the financial

Section I.1 Tools and Techniques of Financial Statement Analysis:

Following are the most important tools and techniques of financial statement
analysis:

1. Horizontal and Vertical Analysis

2. Ratios Analysis

Horizontal Analysis or Trend Analysis:

 Comparison of two or more year's financial data is known as horizontal
analysis, or trend analysis. Horizontal analysis is facilitated by showing changes
between years in both dollar and percentage form.

Trend Percentage:

Horizontal analysis of financial statements can also be carried out by computing

trend percentages. Trend percentage states several years' financial data in terms
of a base year. The base year equals 100%, with all other years stated in some
percentage of this base.

Horizontal Analysis of Profit & Loss Account

Vertical Analysis:

Vertical analysis is the procedure of preparing and presenting common

size statements. Common size statement is one that shows the items
appearing on it in percentage form as well as in dollar form. Each item is stated
as a percentage of some total of which that item is a part. Key financial changes
and trends can be highlighted by the use of common size statements.
 RATIO ANALYSIS:
Fundamental Analysis has a very broad scope. One aspect looks at the general
(qualitative) factors of a company. The other side considers tangible and
measurable factors (quantitative). This means crunching and analyzing numbers
from the financial statements. If used in conjunction with other methods,
quantitative analysis can produce excellent results. Ratio analysis isn't just
comparing different numbers from the balance sheet, income statement, and
cash flow statement. It's comparing the number against previous years, other
companies, the industry, or even the economy in general. Ratios look at the
relationships between individual values and relate them to how a company has
performed in the past, and might perform in the future.

MEANING OF RATIO:

A ratio is one figure express in terms of another figure. It is a mathematical

yardstick that measures the relationship two figures, which are related to each
other and mutually interdependent. Ratio is express by dividing one figure by the
other related figure. Thus a ratio is an expression relating one number to another.
It is simply the quotient of two numbers. It can be expressed as a fraction or as a
decimal or as a pure ratio or in absolute figures as “so many times”. As
accounting ratio is an expression relating two figures or accounts or two sets of
account heads or group contain in the financial statements

MEANING OF RATIO ANALYSIS:

Ratio analysis is the method or process by which the relationship of items or

group of items in the financial statement are computed, determined and
presented. Ratio analysis is an attempt to derive quantitative measure or guides
concerning the financial health and profitability of business enterprises. Ratio
analysis can be used both in trend and static analysis. There are several ratios at
the disposal of an annalist but their group of ratio he would prefer depends on the
purpose and the objective of analysis. While a detailed explanation of ratio
analysis is beyond the scope of this section, we will focus on a technique, which
is easy to use. It can provide you with a valuable investment analysis tool. This
technique is called cross-sectional analysis. Cross-sectional analysis
compares financial ratios of several companies from the same industry. Ratio
analysis can provide valuable information about a company's financial health.
A financial ratio measures a company's performance in a specific area. A
company whose leverage ratio is higher than a competitor's has more debt per
equity. You can use this information to make a judgment as to which company is
a better investment risk. However, you must be careful not to place too much
importance on one ratio. You obtain a better indication of the direction in which a
company is moving when several ratios are taken as a group.
TYPES OF COMPARISONS
The ratio can be compared in three different ways –

1] Cross section analysis:

One of the way of comparing the ratio or ratios of the firm is to compare them
with the ratio or ratios of some other selected firm in the same industry at the
same point of time. So it involves the comparison of two or more firm’s financial
ratio at the same point of time. The cross section analysis helps the analyst to
find out as to how a particular firm has performed in relation to its competitors.
The firm’s performance may be compared with the performance of the leader in
the industry in order to uncover the major operational inefficiencies. The cross
section analysis is easy to be undertaken as most of the data required for this
may be available in financial statement of the firm.

2] Time series analysis:

The analysis is called Time series analysis when the performance of a firm is
evaluated over a period of time. By comparing the present performance of a firm
with the performance of the same firm over the last few years, an assessment
can be made about the trend in progress of the firm, about the direction of
progress of the firm. Time series analysis helps to the firm to assess whether the
firm is approaching the long-term goals or not. The Time series analysis looks for
(1) Important trends in financial performance
(2) Shift in trend over the years
(3) Significant deviation if any from the other set of data.

3] Combined analysis:
If the cross section & time analysis, both are combined together to study the
behavior & pattern of ratio, then meaningful & comprehensive evaluation of the
performance of the firm can definitely be made. A trend of ratio of a firm
compared with the trend of the ratio of the standard firm can give good results.
For example, the ratio of operating expenses to net sales for firm may be higher
than the industry average however, over the years it has been declining for the
firm, whereas the industry average has not shown any significant changes.
BASED ON FINANCIAL STATEMENT

Accounting ratios express the relationship between figures taken from

financial statements. Figures may be taken from Balance Sheet, P& P A/C, or
both. One-way of classification of ratios is based upon the sources from which
are taken.

1] Balance sheet ratio:

If the ratios are based on the figures of balance sheet, they are called Balance
Sheet Ratios E.g. ratio of current assets to current liabilities or ratio of debt to
equity. While calculating these ratios, there is no need to refer to the Revenue
statement. These ratios study the relationship between the assets & the
liabilities, of the concern. These ratios help to judge the liquidity, solvency &
capital structure of the concern. Balance sheet ratios are Current ratio, Liquid
ratio, and Proprietary ratio, Capital gearing ratio, Debt equity ratio, and Stock
working capital ratio.

2] Revenue ratio:

Ratio based on the figures from the revenue statement is called revenue
statement ratios. These ratios study the relationship between the profitability &
the sales of the concern. Revenue ratios are Gross profit ratio, Operating ratio,
Expense ratio, Net profit ratio, Net operating profit ratio, Stock turnover ratio.

3] Composite ratio:

These ratios indicate the relationship between two items, of which one is found in
the balance sheet & other in revenue statement. There are two types of
composite ratios:
Investments of the concern. E.g. return on capital employed, return on
proprietors fund, return on equity capital etc.
b) Other composite ratios e.g. debtors turnover ratios, creditors turnover ratios,
dividend payout ratios, & debt service ratios
BASED ON FUNCTION:

Accounting ratios can also be classified according to their functions in to liquidity

ratios, leverage ratios, activity ratios, profitability ratios & turnover ratios.

1] Liquidity ratios:

It shows the relationship between the current assets & current liabilities of the
concern e.g. liquid ratios & current ratios.

2] Leverage ratios:

It shows the relationship between proprietors funds & debts used in financing the
assets of the concern e.g. capital gearing ratios, debt equity ratios, & Proprietary
ratios.

3] Activity ratios:

It shows relationship between the sales & the assets. It is also known as
Turnover ratios & productivity ratios e.g. stock turnover ratios, debtor’s turnover
ratios.

4] Profitability ratios:

a) It shows the relationship between profits & sales e.g. operating ratios, gross
profit ratios, operating net profit ratios, expenses ratios
b) It shows the relationship between profit & investment e.g. return on
investment, return on equity capital.

5] Coverage ratios:

It shows the relationship between the profit on the one hand & the claims of the
outsiders to be paid out of such profit e.g. dividend payout ratios & debt service
ratios.

BASED ON USER:

1] Ratios for short-term creditors:

Current ratios, liquid ratios, stock working capital ratios

2] Ratios for the shareholders:

Return on proprietors fund, return on equity capital

3] Ratios for management:

Return on capital employed, turnover ratios, operating ratios, expenses ratios
4] Ratios for long-term creditors:
Debt equity ratios, return on capital employed, proprietor ratios

LIQUIDITY RATIO: -

Liquidity refers to the ability of a firm to meet its short-term (usually up to 1 year)
obligations. The ratios, which indicate the liquidity of a company, are Current
ratio, Quick/Acid-Test ratio. These ratios are discussed below:
(a) CURRENT RATIO:

Current ratio may be defined as the relationship between current assets and
current liabilities. This ratio also known as Working capital ratio is a measure of
general liquidity and is most widely used to make the analysis of a short-term
financial position (or) liquidity of a firm.

2009 2008 2007

current assets 213,872,627.50 166,335,137.90 131,176,557.55
current liabilities 165,468,787.68 124,300,967.17 65,897,010.96
current ratio 1.29 1.34 1.99

Interpretations:
The current ratio is a financial ratio that measures whether or not a firm has
enough resources to pay its debts over the next 12 months. It compares a firm's
current assets to its current liabilities. The current ratio is an indication of a firm's
market liquidity and ability to meet creditor's demands. Acceptable current ratios
vary from industry to industry but the conventional rule is 2:1.If a company's
current assets are in this range then it is generally considered to have good
short-term financial strength.

(b) QUICK RATIO

Quick ratio is a test of liquidity than the current ratio. The term liquidity refers to
the ability of a firm to pay its short-term obligations as & when they become due.
Quick ratio may be defined as the relationship between quick or liquid assets and
current liabilities. An asset is said to be liquid if it is converted into cash with in a
short period without loss of value.

Quick ratio= quick or liquid assets

Current liabilities

Current liabilities
2009 2008 2007
quick assets 165,481,425.46 128,376,787.24 96,040,203.74
current 165,468,787.68 124,300,967.17 65,897,010.96
liabilities
quick ratio 1 1.03 1.45
Interpretations:
In finance, the Acid-test or quick ratio or liquid ratio measures the ability of a
company to use its near cash or quick assets to immediately extinguish or retire
its current liabilities. Quick assets include those current assets that presumably
can be quickly converted to cash at close to their book values. Generally, the
acid test ratio should be 1:1 or better; however this varies widely by industry.
Here in the last three years leaving 2006-2007, industry has maintained its ratio
near to the rule of thumb but the basic reason for the increase in the ratio is that
the current liabilities are not more quickly convertible into current assets
ACTIVITY RATIOS

Funds are invested in various assets in business to make sales and earn profits.
The efficiency with which assets are managed directly effect the volume of sales.
Activity ratios measure the efficiency (or) effectiveness with which a firm
manages its resources (or) assets. These ratios are also called “Turn over ratios”
because they indicate the speed with which assets are converted or turned over
into sales.

· Working capital turnover ratio

· Fixed assets turnover ratio
· Capital turnover ratio
· Current assets to fixed assets ratio

(a) WORKING CAPITAL TURNOVER RATIO

Working capital of a concern is directly related to sales

Working capital= current assets –current liabilities
It indicates the velocity of the utilization of net working capital. This indicates the
no. of times the working capital is turned over in the course of a year. A higher
ratio indicates efficient utilization of working capital and a lower ratio indicates
inefficient utilization.
Working capital turnover ratio=cost of goods sold/working capital.

2009 2008 2007

cost of good sold 956,597,583.37 784,095,590.36 605,748,315.99
working capital 48,403,839.82 42,034,170.73 65,279,546.59
working capital ratio 19.76284499 18.65376613 9.279297232
 Interpretation
Income from services is greatly increased due to the extra invoice for Operations
& Maintenance fee and the working capital is also increased greater due to the
increase in from services because the huge increase in current assets. The
income from services is raised and the current assets are also raised together
resulted in the decrease of the ratio of 2007 compared with 2006.

(b) FIXED ASSETS TURNOVER RATIO

It is also known as sales to fixed assets ratio. This ratio measures the efficiency
and profit earning capacity of the firm. Higher the ratio, greater is the intensive
utilization of fixed assets. Lower ratio means under-utilization of fixed assets.

Fixed assets turnover ratio= cost of sales

Fixed assets

2009 2008 2007

cost of sales 1,162,962,825.12 945,808,364.75 719,242,057.42
fixed assets 366,895,818.80 316,532,852.68 283,774,550.38
fixed assets turnover ratio 3.169735837 2.988025909 2.534554478
Interpretation
Fixed assets are used in the business for producing the goods to be sold. This
ratio shows the firm’s ability in generating sales from all financial resources
committed to total assets. The ratio indicates the account of one rupee
investment in fixed assets. The income from services is increased in the current
year due to the increase in the Operations & Maintenance fee due to the
increase in extra invoice and the net fixed assets are reduced because of the
charge of depreciation. Finally, that affected a slight increase in the ratio
compared with the previous year’s ratio
(c) CAPITAL TURNOVER RATIOS

Sometimes the efficiency and effectiveness of the operations are judged by

comparing the cost of sales or sales with amount of capital invested in the
business and not with assets held in the business, though in both cases the
same result is expected. Capital invested in the business may be classified as
long-term and short-term capital or as fixed capital and working capital or Owned
Capital and Loaned Capital. All Capital Turnovers are calculated to study the
uses of various types of capital.

Capital turnover ratio= cost of good sold

Capital employed

2009 2008 2007

cost of god sold 956,597,583.37 784,095,590.36 605,748,315.99
share holder fund 271,027,820.28 229,348,314.43 200,223,726.47
capital turnover ratio 3.529518049 3.418798138 3.025357317
Interpretation
This is another ratio to judge the efficiency and effectiveness of the company like
profitability ratio. The income from services is increased in 2008 year compared
with the 2007 year and the total capital employed includes capital and reserves &
surplus. Due to huge increase in the net profit the capital employed is also
increased along with income from services. Both are affected in the increment of
the ratio of current year.

PROFITABILITY

These ratios help measure the profitability of a firm. A firm, which generates a
substantial amount of profits per rupee of sales, can comfortably meet its
operating expenses and provide more returns to its shareholders. The
relationship between profit and sales is measured by profitability ratios. There are
two types of profitability ratios: Gross Profit Margin and Net Profit Margin.

(a) NET PROFIT RATIO

Net profit ratio establishes a relationship between net profit (after tax) and sales
and indicates the efficiency of the management in manufacturing, selling
administrative and other activities of the firm.
2009 2008 2007
net profit 41679505.85 29124587.96 11525457.19
Sales 1162962825 945808364.8 719242057.4
net profit ratio 3.583906979 3.07933288 1.602444834
Interpretation
The net profit ratio is the overall measure of the firm’s ability to turn each rupee of
income from services in net profit. If the net margin is inadequate the firm will fail
to achieve return on shareholder’s funds. High net profit ratio will help the firm
service in the fall of income from services, rise in cost of production or declining
demand. The net profit is increased because the income from services is
increased. The increment results a slight increase in 2009 ratio compared with
the year 2008.

GROSS PROFIT RATIO:-

Meaning: This ratio measures the relationship between gross profit and sales. It
is defined as the excess of the net sales over cost of goods sold or excess of
revenue over cost. This ratio shows the profit that remains after the
manufacturing costs have been met. It measures the efficiency of production as
well as pricing. This ratio helps to judge how efficient the concern is I managing
its production, purchase, selling & inventory, how good its control is over the
direct cost, how productive the concern , how much amount is left to meet other
expenses & earn net profit.

Gp ratio=Earnings before interest & taxes

Sales

2009 2008 2007

operating profit 187939275.4 149021121.8 78935682
Sales 1,162,962,825.12 945,808,364.75 719,242,057.42
operating profit ratio 16.16038547 15.75595304 10.97484236

Interpretation:
The profitability position of the company is satisfactory because of the Gross
profit ratio is satisfactory because of the Gross profit ratio is increasing from year
to year but it is not enough the company should control the cost of goods sold the
company should control the cost of goods sold expenses and increase the sales.

FINANCIAL
These ratios determine how quickly certain current assets can be converted into
cash. They are also called efficiency ratios or asset utilization ratios as they
measure the efficiency of a firm in managing assets. These ratios are based on
the relationship between the level of activity represented by sales or cost of
goods sold and levels of investment in various assets. The important turnover
ratios are debtors turnover ratio, average collection period, inventory/stock
turnover ratio, fixed assets turnover ratio, and total assets turnover ratio. These
are described below:
Debtor’s turnover ratio is calculated by taking the year-end accounts receivable
divided by the average net sales per day. This indicates the average number of
days that sales are outstanding. In other words, it reports the number of days it
takes, on average, to collect credit sales. The average collection period
measures the days of financing that a company extends to its customers.
Obviously, a shorter average collection period is usually preferred to a longer
one.
Another measure that can be used to provide this same information is the
receivables turnover. If the receivables turnover is six, this means the average
collection period is about 2 months (12 months divided by the turnover ratio of 6).
If the turnover is four times, the firm has an average collection period of about 3
months (12 months divided by the turnover ratio of four).
2009 2008 2007
Debtors 22,751,126.52 20,356,414.89 14,165,366.45
Sales 1,162,962,825.12 945,808,364.75 719,242,057.42
avg. collection period 7.140521606 7.855810661 7.188621273

Debtors turnover ratio=credit sales

Avg debtors

Average age of account receivable=months in a year

Debtor’s turnover ratio
Interpretation:
Debtor turnover ratio indicates the velocity of debts collection of a firm. In simple
words it indicates the number of times averaged debtors (receivable) are turned
over during a year. Generally higher the value of the debtors the turnover is more
efficient and better is the management of the company repayment period. In
2006-2007, the ratio was 7.18 times but it keeps on increasing over the years
and in 2007-2008 this was 7.85 times of sales. So, proper attention should be
taken over this area.

INVENTORY OR STOCK TURNOVER RATIO (ITR)

ITR refers to the number of times the inventory is sold and replaced during the
accounting period.

Stock Turnover Ratio = COGS

Average stock

ITR reflects the efficiency of inventory management. The higher the ratio, the
more efficient is the management of inventories, and vice versa. However, a high
inventory turnover may also result from a low level of inventory, which may lead
to frequent stock outs and loss of sales and customer goodwill. For calculating
ITR, the average of inventories at the beginning and the end of the year is taken.
 2009 2008 2007
Inventory 48,391,202.04 37,958,350.66 35,136,353.81
COGS 956,597,583.37 784,095,590.36 605,748,315.99
ITR 19.76800623 20.65673499 17.23993102

Interpretation
Stock turnover ratio shows the relationship between the stock & sales it means
how stock turned over in sales. By seeing in year 2008 the ratio increase means
that the stock turned in very slow manner. But after 2008 the ratio has improved
and the stock turned into sales very quickly.

FIXED ASSETS TURNOVER (FAT)

The FAT ratio measures the net sales per rupee of investment in fixed assets. It
is also known as sales to fixed assets ratio. This ratio measures the efficiency
and profit earning capacity of the firm. Higher the ratio, greater is the intensive
utilization of fixed assets. Lower ratio means under-utilization of fixed assets

Fixed assets turnover = Net sales

Net fixed assets
 2009 2008 2007
Cost of sales 1,162,962,825.12 945,808,364.75 719,242,057.42
Fixed assets 366,895,818.80 316,532,852.68 283,774,550.38
Fixed assets turnover 3.169735837 2.988025909 2.534554478
ratio

Interpretation:
The ideal ratio is 5. The ratio is increasing from year to year which is a good sign
but at a slower rate and we should increase the sales up to the maximum level
and we should use the fixed assets up to full 100% capacity. This ratio measures
the efficiency with which fixed assets are employed. A high ratio indicates a high
degree of efficiency in asset utilization while a low ratio reflects an inefficient use
of assets. However, this ratio should be used with caution because when the
fixed assets of a firm are old and substantially depreciated, the fixed assets
turnover ratio tends to be high (because the denominator of the ratio is very low).
Return on equity

Return on Equity measures the rate of return on the ownership interest

shareholders' equity of the common stock owners. It measures a firm's efficiency
at generating profits from every unit of shareholders' equity (also known as net
assets or assets minus liabilities). ROE shows how well a company uses
investment funds to generate earnings growth.

2009 2008 2007

Net profit 41679505.85 29124587.96 11525457.19
Share capital 23,084,150.00 23,084,150.00 23,084,150.00
ROE 1.805546483 1.261670365 0.49928012
Interpretation:
This ratio shows the relationship between profit & equity shareholders fund in the
company. It is used by the present / prospective investor for deciding whether to
purchase, keep or sell the equity shares. The company is not listed in bse so the
difficulty of paying dividend is not there.

IMPORTANCE OF RATIO ANALYSIS:

As a tool of financial management, ratios are of crucial significance. The

importance of ratio analysis lies in the fact that it presents facts on a comparative
basis & enables the drawing of interference regarding the performance of a firm.
Ratio analysis is relevant in assessing the performance of a firm in respect of the
following aspects:
1] Liquidity position,
2] Long-term solvency,
3] Operating efficiency,
4] Overall profitability,
5] Inter firm comparison
6] Trend analysis.

LIMITATIONS OF RATIO ANALYSIS

Ratio analysis has its limitations. These limitations are described below:

1] Information problems
• Ratios require quantitative information for analysis but it is not decisive
about analytical output. The figures in a set of accounts are likely to be at
least several months out of date, and so might not give a proper indication
of the company’s current financial position.
• Where historical cost convention is used, asset valuations in the balance
sheet could be misleading. Ratios based on this information will not be
very useful for decision-making.

2] Comparison of performance over time

• When comparing performance over time there is needed to consider the
changes in price. The movement in performance should be in line with the
changes in price.
• When comparing performance over time there is needed to consider the
changes in technology. The movement in performance should be in line
with the changes in technology.
• Changes in accounting policy may affect the comparison of results
between different accounting years as misleading.
3] Inter-firm comparison

• Companies may have different capital structures and to make comparison

of performance when one is all equity financed and another is a geared
company it may not be a good analysis.
• Selective applications of government incentives to various companies
may also distort inter company comparison. Comparing the performance
of two enterprises may be misleading.
• Inter-firm comparison may not be useful unless the firms compared are of
the same size and age, and employ similar production methods and
accounting practices.
• Even within a company, comparisons can be distorted by changes in the
price level.
• Ratios provide only quantitative information, not qualitative information.
• Ratios are calculated on the basis of past financial statements. They do
not indicate future trends and they do not consider economic conditions.

PURPOSE OF RATIO ANLYSIS:

• To identify aspects of a businesses performance to aid decision making

• Quantitative process – may need to be supplemented by qualitative
Factors to get a complete picture.
• 5 main areas:-

1) Liquidity – the ability of the firm to pay its way

2) Investment/shareholders – information to enable decisions to be
made on the extent of the risk and the earning potential of a
business investment
3) Gearing – information on the relationship between the exposures
of the business to loans as opposed to share capital
4) Profitability – how effective the firm is at generating profits given
sales and or its capital assets
5) Financial – the rate at which the company sells its stock and the
efficiency with which it uses its assets
ROLE OF RATIO ANALYSIS:
It is true that the technique of ratio analysis is not a creative technique in the
sense that it uses the same figure & information, which is already appearing in
the financial statement. At the same time, it is true that what can be achieved by
the technique of ratio analysis cannot be achieved by the mere preparation of
financial statement.
Ratio analysis helps to appraise the firm in terms of their profitability & efficiency
of performance, either individually or in relation to those of other firms in the
same industry. The process of this appraisal is not complete until the ratio so
computed can be compared with something, as the ratio all by them do not mean
anything. This comparison may be in the form of intra firm comparison, inter firm
comparison or comparison with standard ratios. Thus proper comparison of ratios
may reveal where a firm is placed as compared with earlier period or in
comparison with the other firms in the same industry. Ratio analysis is one of the
best possible techniques available to the management to impart the basic
functions like planning & control. As the future is closely related to the immediate
past, ratio calculated on the basis of historical financial statements may be of
good assistance to predict the future. Ratio analysis also helps to locate & point
out the various areas, which need the management attention in order to improve
the situation. As the ratio analysis is concerned with all the aspect of a firms
financial analysis i.e. liquidity, solvency, activity, profitability & overall
performance, it enables the interested persons to know the financial &
operational characteristics of an organization & take the suitable decision.

SUGGESTIONS:
• Advanced payment should be avoided. If at all advanced payments are
required, it should be against securities like banks, guarantee, etc.

•
SUMMARY OF FINANCIAL POSITION OF NEYCER INDIA LTD.

After going through the various ratios, I would like to state that:

• The short-term solvency of the company is quite satisfactory.

• Immediate solvency position of the company is also quite satisfactory. The
company can meet its urgent obligations immediately.
• Credit policies are effective.
• Over all profitability position of the company is quite satisfactory.
• Stock turnover rate is satisfactory. Stock of the company is moving fast in
the market.
• The Company is paying promptly to the suppliers.
• in du Pont analysis the ratio is at 15 which states the ratio are ideal and
company is strong enough in the market.
• Effective selling technique or product modification may be adopted to face
the competitors and to improve the financial position of the company by
taking appropriate decisions.

CONCLUSION:

The focus of financial analysis is on key figures contained in the financial

statements and the significant relationship that exits. The reliability and
significance attach to the ratios will largely on hinge upon the quality of data on
which they are best. They are as good for as bad as the data it self. Financial
ratios are a useful by product of financial statement and provide standardized
measures of firm’s financial position, profitability and riskiness. It is an important
and powerful tool in the hands of financial analyst.
By calculating one or other ratio or group of ratios he can analyze the
performance of a firm from the different point of view. The ratio analysis can help
in understanding the liquidity and short-term solvency of the firm, particularly for
the trade creditors and banks. Long-term solvency position as measured by
different debt ratios can help a debt investor or financial institutions to evaluate
the degree of financial risk. The operational efficiency of the firm in utilizing its
assets to generate profits can be assessed on the basis of different turnover
ratios. The profitability of the firm can be analyzed with the help of profitability
ratios.
However the ratio analyses suffer from different limitations also. The
ratios need not be taken for granted and accepted at face values. These ratios
are numerous and there are wide spread variations in the same measure. Ratios
generally do the work of diagnosing a problem only and failed to provide the
solution to the problem.
REFERENCES

TEXTS REFERRED

• I M Pandey, 2007. Financial Management. New Delhi: Vikas Publishing

House Pvt Ltd.

• S. David Young and Stephen F O’Brien, EVA and Value Based

Management – A Practical Guide to Implementation.

• SHASHI K. GUPTA & R. K. SHARMA, 2005. Management Accounting

Principles and Practice.

• BREALEY MYERS, 2003. Principles of Corporate Finance. New Delhi:

Tata McGraw Hill Publishing Co. Ltd.