00CHAPTER NO.

1
(1) INTRODUCTION OF THE SUBJECT

(2) Introduction of Aarti Industries Limited

Aarti was started in the year 1984.The first unit of AARTI group, ALCHEMIE LABORATORIES, commenced commercial production of DIMETHYL SULPHATE (DMS) in the year 1975. Today, AARTI has acquired world-class expertise in the development and manufacturing of basic bulk chemicals, dyes & pigment intermediates, pharmaceuticals & agrochemicals along with their intermediates, rubber chemicals, surfactant intermediates and specialty chemicals. AARTI is amongst the largest producers of Benzene based basic and intermediate chemicals in India. AARTI has attained a total turnover of US $ 189 million in the year April 2003 - March 2004 with flagship companies AARTI INDUSTRIES LIMITED (AIL) & AARTI DRUGS LIMITED (ADL) listed on Stock Exchanges. AARTI has a Subsidiary AARTI HEALTHCARE LIMITED (AHCL), which is engaged in manufacturing of Active pharma ingredients ranging from Ace Inhibitors, Bronchodilators to Steroids. Aarti has manufacturing sites at Gujarat and Maharashtra. In Gujarat mainly at Vapi, Sarigam, and Jhagadia where us in Maharashtra it is located in Tarapur, and Dombivli. The Aarti company mainly chemicals manufacturing the basic bulk dyes and pigment intermediates, Pharmaceuticals and agro-chemicals along with their intermediates and specialty chemicals. The Aarti Company is the world class expertise in manufacturing of their products. Aarti is one of largest producers of the benzene. AARTI has the privilege of catering to the requirements of leading manufacturers of dyes, pigments, pharmaceuticals, agrochemicals and rubber chemicals in countries such as USA, UK, Germany, Spain, Italy, Switzerland, Belgium, Japan, Korea, China Russia, etc. Aarti also has representatives in USA & a subsidiary company in UK to provide better services to its Export Customer.

(3) History of Aarti Industries Limited

Aarti Industries Limited (AIL) was established in 1984 as a small venture by group of technocrats. It is a public limited company. The promoter was Mr. Chandrakant over the last more than 20 years it has evolved to it presents stature crossing several milestones. In the initial stage the company was producing DMS products. In 1992, they expanded their company and started producing pharmacy products. During this evolution period the Aarti industries Limited had set up a member of expansion and diversification project funded by a public issue in 1992, institutional assistance and from internal accruals. We can see that the period from when the company had started in 1984 and now the period of 2006 it had undergone the vast changes many new machines had been recently built, innovation and expansion is done to create the demand and maintain the quality. So we can see that this company is at stage where it can find many company lagging behind.

(4) Mission & Vision Mission

i. ii. iii. iv. v.

To constantly strive to set up and maintain global size plant facilities. To become customer-driven company by providing customized solutions and To maintain consistent quality and timely delivery at competitive prices. To use best cost effective manufacturing methods supported by proven, ecoCommitment to growth by Research and new product developments and

service to meet changing customer requirements.

friendly and safe technologies. progressive increase in Exports.

vi. culture. vii. viii.

Continuous focus on people to encourage and nurture winning organizational To set up facilities with USFDA and other overseas approvals. To meet the challenges of competition by dynamic management drive.

Vision

i. ii. iii. iv.

To retain leadership in domestic market. To attain significant presence in global market. To become supplier of choice to leading Customers. To be always committed to the employees, shareholders and the society at large.

(5) Goal
AARTI group is strategically placed to exploit growth opportunities in the Chemical Industry. In view of its technical expertise and broad base satisfied clientele in India and abroad, AARTI is looking for global partners and strategic alliances in areas of mutual interest viz.

Development of International markets for AARTI's products. Toll manufacturing. Transfer of Technology / Technical know-how.

(6) Corporate Information

Name of the Company Type of Company Size of Company Plants : : : : Aarti Industries limited Public Limited Established Year Large Scale 1. Plot no. 801,801/23, 802,803/1-2-3, GIDC, Phase 3, Vapi-396195 2. Plot no. 902, GIDC ESTATE, PHASE 2, VAPI-396195, DIST: VALSAD, GUJARAT. 3. Plot no. 752-753-754 SARIGAM, TAL: UMARGOAN, DIST: VALSAD, GUJARAT. 4. Plot no.758/1, 758/2, GIDC ESTATE JHAGADIA, DIST: BHARUCH, GUJARAT 5. Plot no. K-18, MIDC, TARAPUR, DIST: THANE, MAHARASHTRA. 6. Plot no. E-50, MIDC, TARAPUR, DIST: THANE, REGISTERED OFFICE : CITI BANK N. A, Plot no.801, 801/23 GIDC ESTATE, PHASE-3, VAPI-396195, VALSAD CORPORATE OFFICE : Udyog Kshetra, 2nd floor, L.B.S.Marg, Mulund-Goregaon Link Road, Mulund (W), Mumbai-400 080 5 : 1984

BOARD OF DIRECTORS

Chandrakant V. Gogri (Chairman) Rajendra V. Gogri (Vice Chairman & Managing Director) Shantilal T. Shah (Vice Chairman)

INDIPENDENT DIRECTORS:

Ramdas M. Gandhi Laxmichand K. Jain Vijay H. Patil Haresh K. Chheda

WHOLE TIME DIRECTORS:

Parimal H. Desai Manoj M. Chheda Rashesh C. Gogri Hetal Gogri Gala Kirit R. Mehta

COMPANY SECRETARY AUDITORS

: :

Mona Patel M/S, Parikh Joshi & Kothare, 49/2341, M.H.B. Colony, Gandhi Nagar, Bandra (East), Mumbai-400051

REGISTRAR & TRANSFER AGENT

Sharepro Services (India) Pvt. Ltd. Satam Estate, 3rd Floor, Above Bank of Baroda, Cardinal Gracious Road, Chakala, Andheri (E), Mumbai-400099.

Phone No.:677300351 / 352 / 353 Registered Office : Plot Nos. 801, 801/23, GIDC Estate, Phase III Vapi 396 195, Dist. Valsad, Gujarat. Corporate Office : Udyog Kshetra, 2nd Floor, L.B.S. Marg, Mulund Goregaon Link Road, Mulund (W), Mumbai 400080. Bankers : Bank of Baroda Union Bank of India State Bank of India ANB Amro Bank Standard Chartered Bank HDFC Bank Ltd. Export-Import Bank of India IDBI Bank N.A. UTI Bank Ltd.

(7) Management of Aarti Industries Limited

There are three levels of the Management. 1) Top Level 2) Middle Level 3) Bottom Level 1. Top Level : 1.1. General Manager 7

1.2. 1.3. 1.4. 1.5. 2.1. 2.2. 2.3. 2.4. 2.5. 2.6. 2.7. 3.1. 3.2. 3.3. 3.4. 3.5.

Assistant General Manager Deputy General Manager Senior Manager Manager Senior Deputy Manager Assistant Deputy Manager Senior Engineer Junior Engineer Senior Engineer Officers Senior Executives Junior Executives Assistants Operators Technicians Supervisors Helpers

2. Middle Level :

3. Bottom Level :

Human Resources department (1) Introduction

Human Resource Department is that of management which is related with management of planning organizing, directing and controlling of the procurement, development, compensation, integration, maintenance and separations of human resources to the end that individual, organization and sociality objectives are accomplished, it s objective is the maintenance of those relationship on the basis of which organization can get maximum personal contribution from employees. The human resource is important to any labor intensive or capital intensive industries. So they should place an important position to an industry. The Aarti Industries Limited Company regular undertakes the training activities and other HR initiatives. The company has also continued its scheme for assistance to employees with a view to ensure that their basic housing needs are fulfilled. The company has been continuously focusing. On people and processes those to encourage and realize their full potential through continuous on job learning and through other HRD initiatives coordinal and harmonious relation with employees continued to prevail through the year under review. Human resource is an asset for any organization for the success of any organization human resource play an important role. If any companys human resource is not a standard or not efficient then it affects the performance of an organization. Human resource play a vital role in each and every department whether it is finance department, marketing department, production/operation department, R & D department or any other. The manpower must be efficiently 9

(2) Function of Human Resource Management The following are main function of human resource manger:
Application and control of company rules and organization policy. Recruitment of manpower intended by HOD and approved by management Employee and trainees induction programmed arrangement. Development of trainees by training and approvals Transport arrangement for required by employees, guests & customer. Booking and reservation as required by employees / guests. Safety of company material and employees. Maintenance of first aid material. Canteen administration Assistance of meeting and conference Company occasions arrangements like annual day, Picnic. Labor welfare activities as decided by management. Arrangement of uniform, shoes, seasonal wear, safety equipment. House keeping of company premises. Casual labor arrangement Building maintenance and office maintenance Public relation activities. Salary wages and perks administration works and recorded keeping. Telecom related activities Appraisal assistant of employee for increments , training, promotions Factory Act related activities Stationary planning and arrangement.

and top head.

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(3) General Rules and Regulation Employees strictly follow their rule and regulation.
Every employee should wear uniform, as well as safety shoes, apron and safety helmet. During working hours the employer should not wonder here there without any reason. Employee should not bring any unwanted material like match or cigarette, alcohol, tobacco, etc. While coming in and going out every employee should make entry by means of purchasing card Employee should always wear his identity card with him. Employee should not remain absent without prior information to his department head and p & A. Dept. unless as until the reason of absent is sickness.

Facilities provided to the workers:

Provide opportunities for workers to talk with each other while they are working. Avoid lay out or job assignment which require work in isolation. Change the work method so as to reduce possibilities for direct handling of Ensure the availability of first aid equipment and aid qualified first aider. Conduct regular healthy examination of workers and provide ready access to

hazardous materials.

treatment by a physician or a nurse.

(4) Recruitment
Man power recruitment is one of the most important and difficult part of the organization. If any mistake is done in the recruitment process than it will be directly affects the result of the organization. Aarti is producing some of the hazardous chemical so for them man power recruitment process is through job.

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Recruitment is the generating of the application of applicants for specific position through three common sources i.e. advertisement, state employee exchange agencies or a private employment. According to Aarti industries formulating a selection policy, due consideration should be given to organizational requirement as well as technical and professional dimension of selection procedure adopted by Aarti Industry is tailor made to meet its particular needs. The thoroughness of the procedure depends upon three factors. 1. 2. 3. Nature of selection. Policy of the company. The length of the probability period or trial period.

The human resource is important to any labor intensive or capital intensive industries. So they should place an important position to industries. The AIL company regular undertakes the training activities and other HR initiatives. The company has also continued their schemes for assistance to employees with a view to ensure that there basic housing needs are fulfilled. The company has been continuously focusing. On people and processes those to encourage and realize their full potential through continuous on job learning and through other HRD initiative cordial and harmonious relation with employee continued to prevail through the year under review. HR is asset for any organization for the success of any organization. HR plays an important role. If any companys HR is not a standard or not efficient then it affects the performance of an organization. HR plays a vital role in each and every department whether it is finance department, marketing department, production/operation department, R&D department or any other. The manpower must be efficiently used.

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Source of recruitment 1) Internal sources

a) b) Retired or retrenched employees who want to return back to company may be Dependents and relative of deceased or disabled employees. rehired.

2) External sources
a) b) c) d) Advertisement Educational institution Labor contractors Recruitment agencies.

Recruitment Process
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NEWSPAPER APPLICATION

RECEIVING APPLICATION

SORTING OUT APPLICATION

Chemist & engineers

INTERVIEW

WRITTEN TEST

FINALIZE

SORT TEST

II INTERVIEW

INTERVIEW

OFFER LETTER

OFFER LETTER

JOINING THE ORGANIZATION

JOINING THE ORGANIZATION

APPOINTMENT LETTER

APPOINTMENT LETTER

NEWSPAPER APPLICATION

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Very firstly the AIL gives the advertisement in the newspaper so that the applicants are attracted towards the advertisement and they apply in the company for the required post. In that newspaper advertisement the AIL gives the required qualification for the post. So that the applicants who are that qualified and capable only they apply for the job.

RECEIVING APPLICATION
After the advertisement placed in the newspapers the AIL receives the application

forms of those candidates who are willing for the job.

SORTING OUT APPLICATIONS

After the applications being received by the AIL, they do the work of sorting out

the applications. A panel is selected and those people in the panel do the work of sorting the received applications and then according to those panel members the candidates who are capable to go a step further i.e. for the interview are being selecte. Before the interview the AIL goes for a test for the candidates which is a written test in which the candidates are given a questionnaire in which the AIL ask few questions which has to be answered in a written form. After the test the answers are gone through and then the candidates whose answers are found to be interesting are further being called out for the interview.

INTERVIEW
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Then the interview is held. Some employees of the AIL from the executive level are being selected so that those people carry out the interview without any biasness. In the interview the employees of the AIL carries on with the question answer sessions. By this interview the panel gets a clear picture of which people are competent for the job and can go for the further process of the recruitment.

FINALIZE
Finally the applicant who is found to be competent enough by the panel is being

finalized after the finalization the employee is asked to go under a physical checkup under the doctors and submit the report in the AIL.

OFFER OR APPOINTMENT LETTER

After all the procedures are completed and a clear chit given by the doctors the

employees are being given an offer or an appointment letter to join the organization the candidate.

(5) Selection
Selection is a process of choosing the most suitable persons out of all the applicants. It is a process of matching the qualification of the applicants with that of the job requirements. It is a process of weeding out the unsuitable candidates and finally identifying the most suitable candidate. The last step of recruitment is selection as recruitment involves identifying the sources of manpower and stimulating them to apply for jobs whereas selection is process of selection the best out of the available alternatives.

Selection process

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Application Form

Interview

Physical Examination

Reference

Final approval

Employment

APPLICATION FORM

The application form is given to the candidates and that the candidates are asked to fill them. The AIL is very much careful while going on with the selection process. The AIL not only selects the people from the external source but also from the internal source.

INTERVIEW

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The AARTI INDUSTRIES LIMITED after the receiving of the application form from the candidates the company goes for the interview. In the interview the AARTI INDUSTRIES LIMITED top level management sees to it that the process is carried out very properly and that the candidates are selected on the basis of their experience, compatibility, competence, and qualifications. The AIL keeps in mind that the candidates selected are experienced and that this is the most important criteria the AIL look at before selecting any of the candidates for their company. PHYSICAL EXAMINATION

The company after going on with the interview process some slot of candidates are selected and also that the selected candidates are being asked to go for the physical checkup as the physical checkup may help the AIL to know whether the candidates are completely healthy or not. The candidates are asked to submit a report of their fitness in the organization and then the further decisions are being taken by the organization. As the physical checkup may help the AIL to avoid future problems. REFERENCE CHECK

After the company carries out with the physical checkup of the selected employees, the company cross checks the reference. For a company reference check is one of the important criteria while selecting the candidate or while giving the employment to the applicant. FINAL APPROVAL

After the reference check is been completed the next step is to give approval to that candidate who has completely satisfied the AARTI INDUSTRIES LIMITED requirement of an employee.

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EMPLOYMENT

After the company has completed all their procedures now is the time to give the employment to the candidates who are selected by the organization for their company.

(6) Remuneration
The remuneration that the AARTI INDUSTRIES LIMITED provides to each of the employees is as follows

Salary

The Board of Directors is to be provided with the Salary of Rs.85, 000/- per month with power to make an annual increment area under discussion to a maximum amount of Rs.1, 50,000/-per month in respect of salary and privilege up to 100% of salary.

Commission

In accumulation to the salary, the whole-time Directors of the AARTI INDUSTRIES LIMITED shall also be entitled to be paid share in comprehensive commission calculated at the rate of 1% of not profit of company computed under section 349 of the companies act, 1956 payable to all company share of such commission shall be payable after the annual accounts are adopted by the shareholders.

Perquisites

Apart from the salary and commission regularly paid, the whole-time Director shall be permitted with the allowances: o o o o House rent allowance of Rs.15000/-per month. Bonus/ex-gratis: Rs.85000/-per annum. Compensation of Medical Expenses and/or Medical Insurance premiums for self Personal Accident Insurance as Per Companys policy.

and family members as per companys policy.

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The power of modifying any issue i.e. increase or decrease the amount of the salary or any other and amount of perquisites to be provided by the company subject to a maximum ceiling of 100% of the salary of the whole-time Director will be in the hand of the Board of Directors, Whole-time Director shall also be entitled to following perquisites which shall not include in the computation of the ceiling on remuneration specified here in: o Contribution to Provident fund. Contributions to super annulations fund or

annuity fund as per the rules of the company. These will not be included in the computation of the ceiling on perquisites to the extent these either singly or put together are not taxable under the Income Tax, 1961. o o o Gratuity payable at rate not beyond half a months salary for each completed Encashment of leave at the end of the tenure. Provision of car for business of the company and telephone at residence shall year of service end.

not be treated as perquisites. Use of car for personal purpose and personal long distance calls on telephone shall be billed by the company.

The Salary Payments

Salary is usually paid in the first week of every month. Salary officer prepare covers with the name and personal code No., of employees and the pay slip along with cash or cheque as per grade.

Mode of payment in cash or Bank Transfer StaffCash option or Bank Transfer

Officer- Usually Bank Transfer. The structure of the wages and the salaries

The Human Resource Department also deals with wages and salary system. For the AIL the happiness and contentment of the employees is the main concern, which is reflected by the health wage and salary structure design in the company. The AARTI

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INDUSTRIES LIMITED pursues the minimum wage rate policy that is fixed by the Government. The salaries are also determined by the minimum wage rate policy which is set by the government.

The Salary Diminution

The time office keeps the documentation of staff employees reporting at duty i.e. the time of entering and the time of leaving. If employees report late on job, in that case the company cuts the salary of that particular employee. The salary diminution rules as per the minutes that are delayed by the employee in reporting themselves to their respective departments are as follows: o o o o If late by 16 min to 35 min If late by 35 min to 45 min If late by 46 min to 60 min If late by 2 hrs. to 3 hrs Enlightenment :For the purpose of this agreement, Family means the spouse, the dependent No sitting fee shall be payable to him for attending the meeting of the Board The other terms and condition of the agreement are such as are customarily = = = = Pay of half hrs Pay of 45 min Pay of 1 hrs

Pay of half days

o o o

children and dependent parents, if any, of the whole-time Director. of Directors or committee thereof. contained in agreement of similar nature.

The Compensation Packages

Basic + Dearness Allowance + other financial pays like cash canteen subsidies, washing allowance, shift allowance, contribution of provident fund, gratuity, medical charges, personal pays, inconvenience allowance, chemical, and hazardous allowance, etc.

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Shift and Working Hours

Timing at AARTI INDUSTRIES LIMITED the shifts are as follows:

General shift 8:00 am to 5:00 pm on all working days. Lunch time is from 12:00pm to 1:00 pm and 1:00 pm to 2:00 pm. There are total 3 shifts in the company i.e. morning, evening, and night.

(7) Wages and Salary Structure

This department also manages wages and salary system. The employees satisfaction is the top priority of the company, which is reflected by the health wage and salary structure design over here. The company follows the minimum wage rate policy, fixed by the Govt.

Salary Determination As per the minimum wage rate policy fixed by the government.

Reduction on Salary The time office keeps the whole record of staff employees reporting to

and from duty. If employees come late on duty, company cut the salary.

Salary Reduction Rules Late by 16 min to 35 min Late by 35 min to 45 min Late by 46 min to 60 min Late by 2 hrs. to 3 hrs = = = = Pay of half hrs Pay of 45 min Pay of 1 hrs Pay of half days

Compensation Package The compensation package includes basic + dearness allowance + other financial pays like cash canteen subsidies, washing allowance, shift allowance, contribution of 22

provident fund, gratuity, medical charges, personal pays, inconvenience allowance, chemical, and hazardous allowance, etc.

Salary Payments

Salary is usually paid in the first week of every month. Salary officer prepare covers with the name and personal code No., of employees and the pay slip along with cash or cheque as per grade.

Mode of payment in cash or Bank Transfer

StaffCash option or Bank Transfer Officer- Usually Bank Transfer.

Shift and Working Hours

Timing at Aarti Industries Limited for general shift are 8:00 am to 5:00 pm on all working days. Lunch time is from 12:00pm to 1:00 pm and 1:00 pm to 2:00 pm. There are total 3 shifts in the company i.e. morning, evening, and night. Production of this company is going on continue around the clock.

Industrial Act. Applicable by Human Resource in our

organization

Factorys Act, 1948 Industrial dispute Act, 1947 Minimum Wages Act, 1948 Employees provident funds and miscellaneous Act, 1942 Payment of Bonus Act,1965 Payment of gratitude Act, 1972 Payment of wages Act, 1936 The Worker mens compensation Act,1923

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Apprentice Act. The employees State Insurance Act, 1948 Contract Labor Act Payment of Gujarat labor welfare fund

(8) Promotion and Transfer

Promotion Aarti Industries Limited gives an up advancement to its employees with better pay, position and work responsibility through promotion. Promotion Policy Aarti Industries Limited has adopted seniority as well as merit basis promotion policy. The seniority of employee is regarded grade wise as per character residence period on the particular grade. Also the various other merits are considered. Promotion Criteria Company gives promotion on the basis of seniority. Company has decided to give promotion by the way of seniority 40% and out of 60%, 20% by the way of personal interview and 40% by performance appraisal. Aarti Industries Limited has decided to give promotion after every two years of period of time. If one not get satisfaction, at that post, he back to his position during the promotion period.

Transfer A Transfer is a lateral shift causing movement of an employee from one job, section, department shift, plant or position to another at some or another place with on charge of salary status and responsibility, etc. 24

Aarti Industries Limited follows a well define transfer policy to avoid any grievances among the employees Internal Transfer Aarti Industries Limited internal transfer or department transfers are avoided as far as possible.

Periodic Transfer This type of transfer mainly carries in the marketing department. Whose regional areas and sales department are located the brought out the country According to policy marketing personal is transfer every four year, so they can come back to the native state. Frequent transfer are avoided in company, they care of its adverse effects.

(9) Leave Structure

Weekly off If an employee is working in factory, i.e. different branch, the weekly off is on Sunday. If an employee is working at head office (Mumbai), the weekly off is on Saturday and Sunday. Paid Holiday The employees are entitled to take eight holidays in a year, which a declared by management in the month of Jan. Sick Leave 9 days sick leave are available per annum and credited on 1st Jan every year during the first year of employment, however this leave benefit will be available on pro-rate basis

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accumulated. Sick leave can be incase at the time of retirement and death only which can be up to a maximum 72 days. Casual Leave 9 days casual leave is available per annum and credited on 1st Jan every year during the first year of employment, however this leaves benefit will be available on pro-rate basis. Since casual leave benefit cannot be carried to the next year at the end of the calendar year the outstanding leave balance will automatically be encased and included in the salary of the subsequent month. Special Leave The managing director under exceptional circumstances will have the discretion to grant any additional leave, termed as special leave to indivisible. Such leave will be normally being leave without pay, unless it is for the benefit of the company. Privilege Leave Privilege leave means which can be enjoyed only after completion of 240 working days in calendar year. 15 PL enjoyed by workers and 25 PL by staff personnel that comprise of executive and above. PL cannot be combined with CL and cannot be taken for less than 3 days. PL can be carry forwarded to the next year if employee has not availed the same and the same is aggregated up to a limit of 35. If the PL limit crosses 35 then the same can be encased. Privilege leave is available at 30 days per calendar years, which is credited at 2.5 leave per month for new management staff, at 2.5 leave per month ID credited after completion of one month. A minimum period of not less than 5 days privilege leave should be availed on every occasion, subject to a maximum of 3 installments. Privilege leave should be approved 15 days in advance before providing on leave privilege leave is computed from first leave and ends on the last day prior to his joining duty. Privilege leave accumulated to 63 days will be encased at the time of superannuation

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treatment/dismissed from the service of the company or death during service. However no leave will be encased during the period of employment. Other Leaves Maternity leave, leave after resignation compensatory leave unauthorized absence etc.

(10) Welfare Schemes

The schemes provided by AARTI INDUSTRIES LIMITED to their employees:

EDUCATION SCHEME The Scheme decided by the AARTI INDUSTRIES LIMITED for the Scholarship for education to the children of all their employees. This scheme is for those children who have top score in their academic year. The scheme decides scholarship to the children on the basis of their merit. The applicability of the scheme is that the scheme will be applicable to all employees of the company and their children studying in STD. 5th to 12th. This will be free from any biasness from the Ataris side. And the deserving child will be getting the benefits of the scholarship scheme. After the submission of the concluding result by the children of their academic year to the specified personnel of AARTI the decisions will be taken. The results will be clustered as per the academic standard & the child who has topped will be sponsored for next year school fees. The approximate budget amount already set and given to the child will be Rs.32000 /-P.A. (Eight students every year x4000/-fees of each.) VOLUNTARY RETIREMENT SCHEME The Human Resource Department has also implemented a special type of policy for the employees named as Voluntary Retirement scheme. Under this scheme, if an employee is above 40 years of age and retire voluntary. He will be entitled to get the

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minimum 4 month salary excluding the benefit for the remaining years. And not many but only two employees have gone for this scheme. MILK SCHEME At present AARTI INDUSTRIES LIMITED is giving milk coupons to all of its employees except some service department that are excluded from the scheme. Along with the milk coupons, AIL is giving tea allowance to all of its employees @ Rs.4/- per attend.

FUNERAL SCHEME The scheme is such that Rs. 2500/- to be given to all the employees on behalf of the society and AARTI INDUSTRIES LIMITED on expiry of any of the dependent family member. Company will compensate the amount to society. This is a small way to show the gratitude and the companys concern towards the employee and their family. WELFARE SCHEMES FOR EMPLOYEES The AARTI INDUSTRIES LIMITED also provides some welfare schemes for their employees so that they can help their employees in some or the other ways. Med claim of employees, Personal accident, Employees D-link insurances scheme, Group gratuity scheme, School admission, Housing admission, Cycle loans, L.I.C through salary. 28

Marketing Department
(1) Structure of Marketing Department
THE MANAGING DIRECTOR

BOARD OF DIRECTORS

MARKETING MANAGER

ADMINISTRATIV E OFFICER

ADVERTISING & SALES PROMOTION

SALES MANAGER

MARKETING OFFICER

SALES MENS

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(2) Introduction of Marketing Management What is Marketing?

It is a social and a managerial process by which individual and group obtain what they need and want through creating, offering and exchanging products of value with each other. The same is in the case AARTI INDUSTRIES LIMITED. The AIL tries its best to satisfy their customers by providing with the best quality products. AIL considers quality of its products as the companys biggest strength. The AIL by giving the proper amount of pricing of its products is able to cater a good amount of customers for the company. AARTI chemical is basically manufacturer of chemical products and the company has a number of chemicals that are manufactured in the company. Being a chemical company, consumers may not be directly using Aarti Industries Limited products, and it may be difficult to see how the chemicals the AIL produce enrich the lives of people. But the AARTI INDUSTRIES do contribute towards improving their quality of life since the end users of their products are industries ranging from agrochemicals and dyes to specialty chemicals and pharmaceuticals - markets that are critical to long-term sustainability. By supplying high quality and good value products to their customers, the AARTI INDUSTRIES LIMITED indirectly help people to have access to better medicines, fertilizers and diverse items of daily use. In other words, greening the supply chain management plays a significant role in AILs business strategy. 50% of the manufacturing of AILs products is exported to the foreign countries. 30% of the AILs products is used by the sister concern of the AIL. 20% of the manufacturing of the AIL is being sent to the Indian market.

Sales Turnover
Year Turn over in Rs cr. March 2008 896.33 March 2009 1341.43 March 2010 1289.38 March 2011 1453.00 March 2012 1673.31

CHART NO:-1

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1400 1200 1000 800 600 400 200 0 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 Tu over in Rs cr. rn

The Competitor of Aarti Industries Limited

Alankar Industries Anami Organics Apurva chemical Chirag Organics Pvt Ltd Kamala Intermediates Nascent Chemical Ind. Ltd Micro Fine Shanti Intermediates Pvt Ltd. Vapi Acid & chemicals Vapi Organic Chemical Pvt Ltd. Panoli Intermediate Deepak Fertilizer Ltd. Industrial Solvent and Camical Ltd.

(3) The Suppliers of AIL

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There are many companies in the suppliers list of the AIL but some of them companies that supply chemical raw materials to AIL are as follows:

NAME OF THE COMPANY Standard Alkaline GSC Reliance Jamnagar & Hajare Deepak nitrite Udaipur

PRODUCT Chlorine Benzene nitric Acid rock phospect

Reliance Industries Ltd. Bharat Petroleum Corporation Ltd. National Organic Chemical Industries Ltd. Standard Albalies Ltd. National Rayon Corporation Ltd. Grasim Industries. Gujarat Narmada Valley Industries Corporation. Deepak Nitrate ltd. Transport ltd Dubai. Helm Chemicals Germany Universal Chemical Bahrain

(4) Marketing Objective of AIL

To make awareness of their product. To become the leader of the manufacturing product. To earn profit. 32

To have maximum sales of their product with maximum customers. Enhancing economic growth Strengthening social responsibility Intensifying environmental commitment Ensuring a better tomorrow

(5) Holistic Market Concept

Internal

Integrated

Holistic Market Concept

Social Responsibility

Relationship

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We can say that AARTI INDUSTRIES LIMITED also follow the holistic marketing concept is by the following reasons. Internal:
The AIL takes care of their employees in a proper way. Right from their senior management to their employees and staff. Everyone is treated as if a family. The AIL takes care of the needs and the wants of the employees and that the employees in return work efficiently and effectively. Also the strategies, principles, recruitment, selection, and motivation to the employees are done very carefully of each and every department.

Integrated:
The integrated marketing is the marketing where the task of the marketing of the products is done. The marketing mix is an essential part of marketing and the 4 Ps is well considered here (Marketing Mix explained in the later part). So the AIL tries its best to develop its marketing mix.

Relationship Marketing:
The relationship marketing is maintaining the relationship with the customers stakeholders, suppliers distributors etc, and being loyal to each of them. The AIL is among those companies who does the relationship marketing as the AIL not only maintains the relationship with each of them but also treat them as their family whether the customers suppliers distributors are oft the local market or of the foreign market.

Socially Responsible:

34

In todays world being socially responsible is very important. The AIL has tried its best to be a socially responsible company by maintaining the ethics and moving on with the environment al, legal and the community trends of the place it is situated.

(6) Marketing Mix

There are four element of Marketing Mix 1) Product 2) Price 3) Promotion 4) Place

(1) Product
Product is anything that is offered to a market to satisfy a want or their needs. The product having nearly all quality, performance, or innovative features are generally easily accepted by the customers. So a product should possess all of these qualities so as to retain their customers for an extended time. The products of the AARTI INDUSTRIES are in the maturity stage of the product life cycle. As in the maturity stage sales of the product is not too high and not low so the same is in the case of the AARTI INDUSTRIES product the products sales are not too high and not too low. There are many product of Aarti Industries Limited. i. Nitro Chloro Benzene (NCB) ii. Mono Chloro Benzene (MCB) iii. Para Nitro Chloro Benzene (PNCB) 35

iv. Ortho Nitro Chloro Benzne (ONCB) v. Dinitro Chloro Benzene (DNCB) vi. Para Dichloro Benzene (PDCB) vii. Ortho Dichloro Benzene (ODCB) viii. Nitro Benzene ix. Alkylated Anilines & Toluidines x. Chloro Phenols xi. Fluoro Compounds xii. Agrochemicals xiii. Sulfuric Acid xiv. Chloro Sulfuric Acid xv. Bulk Drug Intermediates / Special Chemicals xvi. Bulk Drug Under R & D a. b. c. d. e. QUALITY Quality is one of the important and basic aspects of marketing. Being a chemical company, consumers may not be directly using AIL's products, and it may be difficult to see how the chemicals they produce enrich the lives of people. But the AIL do contribute towards improving the peoples quality of life since the end users of their products are industries ranging from agrochemicals and dyes to speciality chemicals and pharmaceuticals - markets that are critical to long-term sustainability. By supplying high quality and good value products to their customers, AIL indirectly help people to have access to better medicines, fertilizers and diverse items of daily use. In other words, greening the supply chain management plays a significant role in their business strategy. DESIGN AND FEATURES Anti-Hypertensive Anti-Diabetic Anti-Cancer Anti-Deprresents Bronchodilators

xvii. Dyes Calsiyam phosphate

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As the product is chemical the design and the features is not possible. The products (chemicals) in the AIL are either in the powdered form or in the liquid form. SIZES For the solid form, the plastic gunny bags have the minimum size of about 50 kg and the maximum above 450 and this is mostly used for the local market packaging and the demand of the customers. For the export purpose he plastic gunny bags are only used but the size of the gunny bag differs. The size turns to be 500 kg when it is sent to the foreign customers. For the liquid form the containers are used. These containers are packed in such a way that the chemical does not react with the drums. These drums are of different sizes BRAND NAME The product i.e. the chemical is marketed in the market in the brand name of AARTI INDUSTRIES LIMITED (AIL) in INDIA as well as in the foreign markets

SERVICES The services offered by the AARTI INDUSTRIES to its customers after their customers receive the order are as follows: Product information, Safety data sheets, Instructions for the of the product if facing any problem, Product handling guidance.

PACKGING The product packing of the Aarti Industries Limited are of two forms they are Solid Form & Liquid Form

Solid Form:
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In AARTI INDUSTRIES LIMITED the chemicals are also in the solid form which is then converted in the crystals like sugar for the customers. These solid crystals are mostly packaged in the white plastic gunny bags. These bags are for the local market as well as for the export purpose also. The plastic gunny bags minimum size is 50 kg and this is mostly used for the local market packaging and the demand of the customers. For the export purpose he plastic gunny bags are only used but the size of the gunny bag differs. The size turns to be 500 kg when it is sent to the foreign customers. This bag has such characteristic which matches the chemicals that are filled in the bags.

Liquid Form

In AARTI INDUSTRIES LIMITED the liquid chemicals are mostly sent in big containers. These containers are packed in such a way that the chemical does not react with the drums. These drums are of different sizes and he drums are made of such material which can bear the highly chemical characteristic so that there is no hazard caused and the chemical reaches the customers safely.

Solid Form:
38

In AARTI INDUSTRIES LIMITED the chemicals are also in the solid form which is then converted in the crystals like sugar for the customers. These solid crystals are mostly packaged in the white plastic gunny bags. These bags are for the local market as well as for the export purpose also. The plastic gunny bags minimum size is 50 kg and this is mostly used for the local market packaging and the demand of the customers. For the export purpose he plastic gunny bags are only used but the size of the gunny bag differs. The size turns to be 500 kg when it is sent to the foreign customers. This bag has such characteristic which matches the chemicals that are filled in the bags.

Liquid Form

In AARTI INDUSTRIES LIMITED the liquid chemicals are mostly sent in big containers. These containers are packed in such a way that the chemical does not react with the drums. These drums are of different sizes and he drums are made of such material which can bear the highly chemical characteristic so that there is no hazard caused and the chemical reaches the customers safely.

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 Labeling
The labeling is done by the company in a most simplest and understandable way. As the labeling is simple the workers also understand it properly and so the chances of damage of any hazard is reduced and the danger is reduced. Format of the labeling that is done on the gunny bags which are sent to the customers by the company. The format of labeling of the domestic and the foreign market that are on the gunny bags are the same with few more additions done in the foreign bags format.

The lot number:

The lot number is there which means that the drum is containing the chemical whose lot number is suppose 56 so that if there is any problem in the chemical than the lot number will help in knowing that whether the whole lot is spoiled or only that particular drum is spoiled.

Gross weight:

Gross weight means the weight of the chemical, whether in solid or liquid forms that is kept in the gunny bags or the drums.

Tare weight:

Tare weight is the weight of the gunny bag or the drum in which the chemical is being filled for transportation.

Net weight:

Net weight is the sum of the gross weight and the tare weight. Bag number: The bag number is given to each and every bag. If the lot of the chemical is spoiled then for knowing that in a particular lot which bag is spoiled and easy to see that whether the whole lot is spoiled or only that particular bag or drum is spoiled.

WARRENTIES
Aarti Industries limited provide warrantee of 1 year for all product. 40

 GUARANTEES Aarti Industries limited provide guarantee of 3 years for all product. The chemical products which exceed the expiry date than those products are recycled in the plant.

(2)

Price
The pricing in the AARTI INDUSTRIES LIMITED are set by the board of

directors with the marketing managers. The companies also set their pricing in many of the ways. As in small companies the pricing is set by the boss. Whereas in the big industries the pricing policies, pricing objectives are set by the product or the department managers and later on it is approved by the top level management of the industries. Even in AARTI INDUSTRIES LIMITED the prices are firstly been set by the managers an then it is given to the top level management with the complete report with reasons of the set prices and after analyzing the whole report the top level management approves it (if the prices that are set are proper then the price is finalized and if not it is again reviewed and then by discussions the prices are set). And also in some industries where there are different department s like the finance department, marketing department, human resource department, production department, research and development, stores department health and safety department etc. the pricing is the key important area there is a separate pricing division which determines the appropriate price. And this pricing department reports to the marketing department, finance department and also the op level manageme

The following method is followed in setting the pricing of the products.

MATERIAL COST

EXPENSES
(Electricity + water + Wages + salary)

OVERHEAD EXPENSES
41

PERCENT OF PROFIT

THE PRICE (SELLING PRICE)

The prices the chemicals of AARTI INDUSTRIES LIMITED are set in the following way: Firstly the material cost is taken into consideration and counted. He 60% of the Then the expenses are being calculated that is used or spent in the making of the

set price is the cost of the raw material involved in the making of the product. product. These expenses are the electricity (power), water expense (pani) and the salary & wages (pagar) that are considered. These expenses involve 20% weightage. After the expenses the overhead expenses are been considered. These overhead Lastly the percentage of profit is been kept by the company. Then finally the selling price of the products is been decided or finalized by the expenses may be the individual overhead cost. This expense has 20 %of weightage. AIL.

(3) Place
There are two types of Marketing place Domestic Market of Aarti Industries Limited Export of Arti Inustries Limited

(i)Domestic Market of Aarti Industries Limited

AARTI INDUSTRIES LIMITED can be said as one of he largest producer of benzene based chemical product and intermediary chemicals in India and the products manufactured by the AARTI INDUSTRIES LIMITED are use in financial transactions

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without working with an agent or a broker. By using the internet, the most used media nowadays. The purchasing agents can search for the best vendors and also the values. Nowadays companies are trying to identify the customers who are more profitable to the company and most importantly who possesses values that are matching the companys values in addition. This will help in developing quite a excellent amount of rape between the company and its customers / consumers to carry out a long lasting relationship. As value helps in building relationships so does the service helps as it is the key point to be considered by the company as by providing the proper amount of service the company can win the heart of their customers. The chemicals that are mostly sent in Indian markets are the 1) 2) 3) 4) 5) benzene-based intermediates Sulphuric acid & its allied products. Agrochemicals & fertilizers Active pharmaceutical ingredients (apis) Other intermediates & specialty chemicals.

The states in which the AARTI INDUSTRIES LIMITED markets its goods are as follows: Gujarat, Maharashtra, Haryana, Himachal Pradesh, and other.

(ii) Export of Arti Inustries Limited

Aarti Export of Last 4 Years

2005 Year Amt. in Crores 2006 341.61 2006 2007 303.57 2007 2008 376.50 2008 2009 588.44

CHART NO :- 2

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600 500 400 300 200 100 0 2005-06 2006-07 2007-08 2008-09 Amt. in Crores

Aarti chemical is exported to Europe more than any other country because in Europe chemical manufacturing industries are prohibited so they are insisted to export maximum quantity of chemical from India through Aarti chemical industries. Products which are exported by the AIL to the different countries these countries are as follows: United States of America, Germany, Italy, Belgium, Japan, United Kingdom, Spain, Switzerland and Korea. The AIL has set up its own Alchemic plant in United Stated of America and

United Kingdom also so as to endow with better service to its North American and European Markets also that the manufactured goods is delivered to their customers on time and they do not have to linger too long for the delivery of the product and also the expenditure and time is not worn out. With the increasing globalization and the trade among the countries, the company i.e. the AARTI INDUSTRIES LIMITED is well geared to make its way into the worlds market and establish its presence among them all. Name of the products that are exported by the AIL. (These products are similar products that are marketed in India) 44

Para Nitro Chloro Benzene (PNCB) Ortho Nitro Chloro Benzne (ONCB) 2:4 Dinitro Chloro Benzene (DNCB) Para Dichloro Benzene (PDCB) Ortho Dichloro Benzene (ODCB) Nitro Benzene Alkylated Anilines & Toluidines Chloro Phenols Fluoro Compounds Agrochemicals Other Major Products Bulk Drug Intermediates / Speciality Chemicals Bulk Pharmaceuticals Bulk Drugs under R & D

These are the above chemical products which are exported by the AIL to the different countries these countries are as follows:United States of America, Germany, Italy, Belgium, Japan, United Kingdom, Spain, Switzerland and Korea. The AIL has set up its own Alchemic plant in United Stated of America and United Kingdom also so as to endow with better service to its North American and European Markets also that the manufactured goods is delivered to their customers on time and they do not have to linger too long for the delivery of the product and also the expenditure and time is not worn out.

45

With the increasing globalization and the trade among the countries, the company i.e. the AARTI INDUSTRIES LIMITED is well geared to make its way into the worlds market and establish its presence among them all.

(4) Promotion
The promotion done by the Aarti Industries Limited is by the following ways.

In the magazines by giving the products the company produces and the quality

that the Aarti Industry provides. In the newspapers by giving the products the company produces and the quality

that the Aarti Industry provides.

(1)
SSP

Production Department plant layout

DMS Plant 3.4 DCNB Distillation Section PNCB Flaking Section

Fire Fighting Pump House Ammonia Storage Tank

Water Reservoir

ETP

MCB Plant HCL Storage Acid Storage

Acid Storage Safety DG 2, 5Security Section G.I.D.C Dept. DCNB

46 Garden OPDA NCB Plant Plant

Layout:Layout refers to the arrangement of facilities in a particular work. Plant layout is an overall arrangement of the production process. Store room, stock room, material handling equipment, employee services & all other accessories required for facilitating the production in the factory. It is a Master Blue Print for cocoordinating all operation performed inside the factory. Objectives Of Plant Layout

To minimize handling and transportation of material To ensure economic utilization of available floor space. To ensure efficient control over the various processes of production.

47

To minimize cost of production. To maximize convenience and safety of the workers.

TYPES OF PLANT LAYOUT The types of layout are given below. 1. Process layout 2. Product layout 3. Fixed Position layout Layout refers to the arrangement of facilities in a particular work. Plant layout is an overall arrangement of the production process. Store room, stock room, material handling equipment, employee services & all other accessories required for facilitating the production in the factory. It is a Master Blue Print for cocoordinating all operation performed inside the factor

Objective of Plant Layou

To ensure economic utilization of available floor space. To ensure efficient control over the various processes of production. To minimize cost of production. To maximize convenience and safety of the workers. To minimize handling and transportation of material

Types of plant layout

Mainly there are few types of layout that are given below. 48

Process layout Product layout Fixed Position layout Combined layout In AARTI INDUSTRY the company follows a combined layout. The combined

layout is relevance of the product layout, process layout or fixed location layout and their firm meaning is difficult to know. As in the most of the industries and the companies the combination of the product layout and process layout is noticed. It is possible to have both types of layout in an efficiently combined form. As AARTI INDUSTRY is producing chemical product, they are applying combination of both product layout and process layout because the machineries from which they are producing chemical are arranged in accordance to their product and the way it is to be processed.

Benefits of locations
It is an GIDC area Easy availability of local employment. Convenience in transportation through rail and road Good earnings. Availability of market Better communication system Availability of water and electricity supply

(2) Material Handling at Aarti Idustries Limited.

In this organization many types of material such as raw material, purchased components, materials-in-process, finished goods, packaging material, maintenance and repair supplies, scrap and waste and rejects or rework are used and handled. Many chemical which is hazardous to human being should be handled very carefully so that the chemical 49

may not harm anybody. Even the raw material or the main product need special handling to protect them from condition such as heat, cold, humidity, light dust, flame. Many types of equipment are used in this organization such as 1. 2. 3. 4. 5. Cranes, Industrial trucks Pipe lines Steal Tank Pallet

(3) Production Process Raw material

The company manufacture its products from the basic raw material-benzene and sulphuric. The other major raw materials are chlorine nitric acid, ammonia, caustic soda, and methanol. All these raw material are available freely in sufficient quantity in the local and international markets. The major suppliers of this raw material are: Reliance industries ltd. Bharat petroleum corporation ltd. National organic chemical Industries ltd. Standard albalies ltd. National rayon corporation ltd. Grasim industries. Gujarat Narmada Valley Industries corporation. Deepak Nitrate ltd. Transport ltd Dubai. Helm chemicals Germany Universal chemical Bahrain. Raw material Mono chlorobenzene Nitric acid Purity 99.99% 98% 50

Sulphuric acid Spent Acid (Part of sulphuric acid)

98% 72%

Process of NCB, ONCB, PNCB

51

Benzene + Chlorine two both Mixed and gives Mono Chloro Benzene (MCB) When MCB is mixed with Benzene + Chlorine it gives Nitro Chloro Benzene (NCB). When NCB is mixed with Benzene + Chlorine + MCB then Crystallization and Nitration it gives as finished goods as Ortho Nitro Chloro Benzene (ONCB) and Para Nitro Chloro Benzene (PNCB)

Nitrator

Separator Spent Acid

Washer

Separator

Water

MCB, Mix Acid, Nitric acid

Storage Tank P cut

NCB ETP

Dryer

Distillation ML

Crystallization

Storage Tank NCB

Pure ONCB

Pure PNCB

Raw material like Mono Chloro benzene, nitric acid, Sulphuric acid, spent acid (part of Sulphuric acid) are brought in the plant and before they get into further process there is tight quality check on it, it eh material is in proper form then it is sent to the plant for further proper form then it is sent to the plant for further processing.

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In the plant the raw material is brought together in a Nitrator, in the nitrator mono chloro benzene is then mixed acid and nitric acid. Then this mixture is further sent to the separator through pipes as it is in liquid form. Through separator NCB is obtained which floats above spent acid sediment down. The NCB is now sent to washer and spent acid is sent to storage tank. The washer machine is filled with water in which NCB is washer and separated. From this the water is sent to ETP. NCB is sent to dryer machine for drying the remaining water. From dryer machine NCB is sent to storage tank. NCB is now ready for crystallization process. Through crystallization process pure PNCB is obtained. ML is also obtained which is sent for distillation process. Through this pure ONCB is obtained. P-cut is also obtained which is again sent for crystallization process. From the above process NCB, PNCB, ONCB are obtained. These are in liquid form when produced. According to customers preference they are converted into flake form or powder form as a required. Liquid forms of chemical are sent by container as they are at different temperature.

(4) Product Uses

product.

Manufacturing of fertilizer, heavy chemical, coal tar product, dyes,

plastic, paints, and pigment. Explosive, textile, inorganic fertilizer like super phosphate, sulphates, etc. In metal processing use for pickling of steel, in purification of petroleum

herbicides.

Pharmaceuticals, making of alcohols, detergent, insecticides, and

In food industry in manufacturing of starch syrups and other products. In transfer of lead accumulators or batteries are used.

(5) Plant Utilities

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Every plant or industry or human being requires certain basic necessities without which it would be impossible to function. Necessities like water, air, energy (power) fall under the category called utilities. It is no wonder that the utility section is called the heart of the plant. At A.I.L, the following utilities are created and consumed such that various other plants producing various products are the major consumer of this utility. These utilities are mainly: STEAM High pressure Low pressure Medium pressure AIR RAW WATER POWER CHILLING WATER Brine water Process air Instrumentation air

Steam
Advantage of steam:Relatively cheap to make

This basic utility is created in bulk at Sulphuric acid plant and Boilers Easily available Provide a good heat transfer medium

Air

A very important utility for any plant, air is basically used for two main purposes. Air used is mainly as compressed air which is created by using air compressor. The end product that is compressed air is then sent for various purposes depending on its main use. When it is used in the process it is called process air. When the compressed air is used for pneumatic purpose like Rota meters, pneumatic valves, which are directly linked to the main digital control room, it is called instrumentation air. At AIL Reciprocating air compressor is used. At AIL 350 CFM (cubic feet per minute) and 320 CFM AC is used, which are in stand by to each other. These are used for

54

instrumentation air. There are three 100 CFM AC, out of this three, two are used for process air while the third one is used for making nitrogen gas.

Raw water

This utility is used mainly for the purpose of being made into steam. The largest supplier of this is the Gujarat board.

Chilled water
At AIL, two kinds of chillers are used. Thus AIL have ammonia based as well as Freon22 as refrigerant. The cooling effect is measured in terms of tones of refrigeration (one tone of refrigeration is equivalent to 12000BTU/hour). Ammonia is used as a refrigerant because of particular thermodynamic properties which enable it to move heat far more efficiently than other refrigerant gases. It is particular suited to working to in the range approximately 0-15c and hence widely used in the chemical industries as well as other industries like food preservation and chilling of milk, dairy product, beer and cold drinks. Freon22 is used when AIL need temperature of -17c. The working principle remains same.

Power

This utility is required and is often considered as the bloodline of the plant. Extraction

Boiler

Turbine

Gearbox

Generator

Transformer

De aerator

Condenser

Tripper

3 Phases R, Y, G. 55

The turbine rotates at RPM of 9720. While AIL supply frequency of 50 hertz. Exposing the generator to such high RPM would lead to damaging of the generator, so for this introduce a gearbox whose primary aim is to lower the RPM. Here the gearbox used is specified in terms of the ratio of the turbine blade RPM to generator RPM. In order to give out power at 50 hertz, the generator must rotate at 1500 RPM. The gearbox is operated at a ratio of 6.4 In the event that any of the major computer system fail, AIL have a back up system. The most important feature of the acid plant is revealed here. AIL operates the back up system in such a manner that the acid plant get top most priority this is done because the plant I is primarily steam producing unit which produces acid also using this steam AIL can run the diesel generator. AIL last option is to lower the load in the power plant, failing which the plant is asked to shutdown.

(6) Maintenance
The maintenance of plant is important for the smooth running of any company. AIL following three types of maintenance are done. They are as follows

Electrical maintenance Civil maintenance Mechanical maintenance

Electrical maintenance

The electrical maintenance includes the maintenance of the following factor: 1. 2. 3. 4. 5. Motors Telephone system Electrical installation Switch gears Meters 56

6. 7. 8.

Generators Lighting Fans

Civil maintenance

The civil maintenance mainly includes the maintenance of the following. They are as follows: 1. 2. 3. 4. 5. 6. 7. 8. Building construction Service facilities (water, A/C, ventilation) Fire fighting House keeping Scrap disposal Janitor Gardening Drainage

Mechanical maintenance

The mechanical maintenance mainly includes the following factors: 1. 2. 3. 4. Machine and equipments Transport vehicles Material handling equipment Steam turbine and electricity.

(7) Machine and equipments

The following are the machine and equipments which are used in the AIL: i. ii. iii. iv. Storage tanks Reactors vessel Distillation columns Condensers 57

v. vi. vii. viii.

Pumps Absorber Scrubber Boiler

Boiler is equipment in which steam is produced from water in an economical way i.e. by using cheap but high calorific value fuel. Steam is required in most of the chemical manufacturing processes.

Types of Boiler:
Depending upon the type of fuel used for steam generation the boilers are divided into different types. 1. 2. 3. Coal fired boiler Oil fired boiler Agro waste fired boiler

In AIL the steam of 24 kg/cm^2 is generated from oil and coal fired boiler. There are two (18 and 13TPH) coal fired boiler and one (10 TPH) oil fired boiler.

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Quality Control And Quality Assurance Department

Quality

It is the sum of the attributes that describes the product. According to the Aarti industry, the objectives of quality are given below.

Objective of Quality

Aarti industry is expert in producing a product with a world class quality. Its objectives are as follows.

To satisfy the consumer. To reduce the cost. To improve the income. To increase the productivity.

Aarti has expertise in developing new products & processes that have world class quality. Aarti is doing research in various areas with special emphasis on pharmaceutical intermediates, Agro intermediates, pharmaceuticals, Agrochemicals & specialty chemicals.

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(1)

Process of Quality Control Department Raw Material comes in the factory

Quality Control Department Checks the Raw Material Not Ok Ok Raw Material Rejected and Returned back to Suppliers

Raw Material Storage in Stores

Material Issued to Production Department

Production department uses it for producing finished Product Final Product Check up by Quality Control Department Not Ok Ok
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Sent to Dispatch Department

Rejected back to the Production Department

For quality control they are checking the quality of the product in the following ways.

They are checking the quality of the raw-material before receiving that raw-material. They are checking that raw-material in the laboratory whether that material is

qualitative or not. They are checking the quality of the product in between of the production process. They are checking the products quality at the end of the production process.

So in this way they are controlling the quality of the product. They are seeing that whether the quality of the product is meeting the customers require criteria or not. So in this way the controlling of quality is done in Aarti industry. AARTI has expertise in developing new products and processes that have world-class quality. AARTI is doing Research in various areas with special emphasis on Pharmaceutical Intermediates, Agro Intermediates, Pharmaceuticals, Agrochemicals and Specialty Chemicals.

Quality management systems:AARTI INDUSTRIES LIMITED is and ISO 9001-2000. AARTI's pharmaceutical plants are GMP (goods manufacturing practices) approved

and some of the plants have got ISO 9002 Certification.

(2) Quality assurance

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The AIL is a company which is able to provide a mass goods of uniform quality. AIL also follows the quality policy according to which it had obtained ISO-9001, 2000 version certificate (obtained from TUV).

Quality policy:-

Good health cannot be achieved without quality products and quality manufacturing facilities. We meet all the pharmacopoeias requirements, industry standards and laws that govern manufacture of APIs & Intermediates. Our Research facilities and plants are designed to meet world-class standards. Our processes are will established and have properly documented quality management systems as per c-GMP guidelines. Our Quality Assurance ensures quality requirements, systems and procedures to meet c-GMP norms. A periodic training facility to people ensures compliance of GMP needs. AIL leading manufacturer of intermediates and specialty chemicals is committed to provide quality products and services leading to total customer satisfaction while conducting business. We shall strive to continually improve performance, process and system with and aim to be world class in terms of productivity, safety, occupational health and environmental performance by harnessing the competence of employees and ensuring their involvement.

Tools used to maintain the quality:AIL is using various tools to control the quality standards. These are

HPLC GLC DCS

High pressure liquid chromatography Gas liquid chromatography Digital Control System scraping 62

Store Department
(1) Structure of Store Management Store Department

Store Department

Store Department

Store Department

(2) Responsibility of Store Manager at Aarti Industries Limited

Reporting to the General Manager. Co ordinate with concerned departments. Maintain organizational discipline. Monitoring the progress on departmental activities. Replenish the stock. Responsible for raising indent of re occurring item to initiate purchase activities. Responsible for improvement and development in stores. Check and confirm the issue of materials to the production department. 63

Ensure that the material is being properly stocked at their respective locations.

(3) Flow Diagram of receipt of Store Material

Receipt of material and inward entry

Preparation of RMAR

Stacking at under Physical inspection by Experts Person

Getting Quality report in terms of approved or rejected

Unloading of material in proper pattern at unloading point and verification with vendors challenge

Rejected material are returned to concerned vendors

Approved material are kept in proper stacking for consumption as per daily requirement

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There are many materials in the stores; the user department gives their monthly

requirement well in advance and depending upon the stock. The process for receipt and issue is same as that of the raw material store, packing material store or engineering store.

The stock in raw material is for a period of one week and that in engineering stores

is of on monthly basis. After the receipts of material and inward entry Raw Material Analysis Report

(RMAR) is prepared. After that the material is sent to lab (quality control) for checking whether it is to be accepted or rejected. Then the material is unloaded and taken into stock. Then it is checked whether it is in accordance with material requisite in the purchase order.

At the last the GRR (Goods Received Report) is prepared

(4) Flow Diagram for Generation of requirement Of Store Material

65

Monthly Requirement of store material by the user

Generation of purchase requisition

Release of purchase order by the purchase department

Verification of released purchase orders by store in terms of monthly requirement of user department

(5) Engineering Material Store

Material constitutes and important ingredient of inputs to the activities of several type of organization. Industries require raw material, components and equipments for manufacturing the products, spares and services required for the maintenance operation and engineering materials storage is playing an important role in running the machines without any time losing and production losing manner. In most of the organization the value of material constitute and average of 40% to 60% of the total money spent on 66

material and related services. In much organization it is regarded as supportive function to attain the maximum contribution to attain the maximum contribution to efficiency of the organization. It comprises of many items. The regular small engineering items are hold in stock for an average period of one month. The entire items required for engineering are stored in engineering stores.

(6) Packing Material Stores

In this department all packing material comes from different vendors and this material is required for the packing of finished goods. Buying material of the right quality, in the right quantity, at right time, at the right price, from the right source with delivering at the right place. The entire items required for packing stored in material stores are 67

Corrugated Box Wooden Box Tanks Plastic bag etc.

Safety Department
(1) Introduction of Safety Department
Safety department is handled by A.K Jhariwala at Aarti Industries Limited. Safety is essentially meant for protecting human life and property. Elimination of unsafe condition in all the operating area and prevention of unsafe practices are given importance by the top management of AIL.

68

It is policy or Aarti Industries Limited, Vapi to provide more suitable and endangers work to its workers. Its also provided safety to visitors as well as any other people. Occupational Health and Safety programs are regularly conducted to achieve our common goal that is Safety that has been defined as control of accidental loss.

Objective of Safety Department: Providing training to workers for running complicated machines. Apply many rules and regulation as per the government requirement. Safety department declare some important safety policy. Purchase of Safety equipment. To make awareness. Maintenance of Safety equipment. Periodically maintain of Safety inspection.

Safety Goal: Zero accident or accident free production maintain safe working equipment and Plan organize check and evaluate safety measures to prevent or reduce personal Ensure availability and high quality of safety equipment by test inspection, check Train and develop term for plant safety inspection, job safety analysis, accident industrial good-house keeping by zero leakage zero spillage and zero discharge. injury, sickness, abnormal event. and maintenances at least once a month. prevention, fire fighting first aid, rescue emergency response, safety precaution while storage, handling transportation and disposal of hazardous chemicals through group meeting discussion internal and external training programmed at least once a month.

General safety awareness:

home. Dont eat anywhere in the plant except in canteen. All employees should wear helmet and shoes in the plant. 69 Smoking and consumption of tobacco is strictly prohibited. Do not run or jump on ladder. Wash hands and rinse mouth properly before eating, take bath before going

Dont spill any oily substance on the floor. Use safety belts while working on high altitudes. Dont repair any machine/equipment when it is operating condition. Use flame proof lamp near M.C.B, benzene, ammonia and methanol.

Safety Equipment:
There are two types of Personal Protection Equipment 1) Respiratory Personal Protection Equipment a) b) c) d) e) f) a) b) c) d) e) f) g) h) i) j) k) l) Medical Oxygen Canister Mask Ayer supply mask (organic) Canister mask (In organic) Canister mask Dust mask Helmet Eye Plugs Eye Mask Face Seal Safety Goggles P.V.C. Shuit Hand Gloves Apron Welding Shoes Safety shoes Safety belt Gum boot

2) Non Respiratory Personal Protection Equipment

(2) SHE Policy:

70

Safety

Heath

Environment

"As a responsible organization engaged in the business of manufacturing chemicals, we, at (SHE) performance related to our activities, products and services, through an effective implementation, monitoring and periodic review of the designed SHE Management System". Ensure continual improvement in the SHE Management System Comply with applicable SHE legal requirements Institutionalize effective resource management, with a specific focus on energy, Strengthen pollution prevention & waste reduction practices and strive to provide

water and basic raw materials a safe and healthy environment Enhance SHE Management System awareness about the desirable practices to be followed by employees and other concerned stakeholders, through proper communication.

SHE INITIATIVES FOR THE YEAR 2007-2008

Three new flame-proof safety torches procured. Non-sparking tools procured. Serial numbers provided to all welding machines. HAZOP study and risk assessment being carried out. Recommended for ISO 14001 & OHSAS 18001 certification. Specific focus on conservation and reduction in consumption of primary raw

materials, energy and water. 71

Scrubber system for NOX & HCl modified for better efficiency. Online Benzene sensor installed in MCB Plant. Implemented the new hot work permit system. Started providing fire extinguisher

from safety dept. to avoid misuse of plant fire extinguishers. Air moisture removal filter installed in fresh air line in chlorine shed. Implemented the safety work permit system for CNA and Methanol tanker

unloading. Acid spillage transfer arrangement made during emergency in Acid plant. Emergency training imparted for dealing with cyclones. Special training sessions organized on skin diseases, AIDS, First Aid and

M.S.D.S. by inviting external experts. Leaflets in Hindi & Gujarati language for emergency preparedness distributed to

all employees. Formulated fire-fighting and rescue squad and trained them to be ready for

tackling any emergency. Hepatitis 'B' injection given to all employees and family members. Pre-employment medical check-up & yearly medical check-up of existing

employees carried out. Eye test of all DMS employees done. Power with photo chromic/without photo

chromic lens provided to all DMS employees. Conferring of the Best Housekeeping Award started. World Environment Day celebrated on 5th June. GPCB members were present on

this occasion. Complied with all legal requirements.

72

Research & Development Department

(1) Introduction of Research and Development Management Aarti has fully equipped laboratory with high-tech advanced instruments & highly qualified technical personnel at its R&D centers. Its advanced Analytical instruments include,

Gas chromatograph & HPLC Auto Titrator Uv visible spectrophotometer 4Digital Polarimeter Digital melting point instrument FTIR spectrophotometer Glass Reaction equipment High pressure Auticlave Distillation equipment Sparkler filter Glasslined Reactors Centrifuges

Air handling system AARTI has fully equipped laboratory with high-tech advanced instruments and highly qualified technical personnel at its R & D centers. Its advanced Analytical Instruments include:

73

Gas Chromatograph & HPLC Auto Titrator UV Visible Spectrophotometer

Digital Polarimeter Digital Melting Point Instrument FTIR Spectrophotometer

AARTI at its Pilot Plant facility has R & D Process Equipments like:
Glass Reaction Equipment High Pressure Autoclave Distillation Equipment Sparkler Filter Glass Lined Reactors SS 316 Reactors Centrifuges Air Handling Systems

Area in which R&D carried out by the company:

The R&D activities are carried out by the company in the areas of bulk and pharmaceuticals formulations, specialty chemicals and intermediate chemicals.

Benefits derived as result of the above R&D:

The companys R&D centers at Vapi are showing satisfactory progress in their of development of new products and improvement in existing product efficiencies.

Future plan of action:

The company will continue with its activities in the field of R&D of development of new products and improvements in existing product efficiencies. The company has incurred the following expenditure in research and development. In the areas of new products and improvement in existing products efficiencies.

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Expenditure on R&D Capital Recurring Total Total R&D expenditure as a percentage of total turn over -

(Rs. In lakes) 18.64 137.06 155.70 0.10%

Finance Department
(1)

Introduction

Finance plays a major role in determining the position of a company. A person not trained in finance management of a company may face N number of problems which may affect the day to day functioning of his company. A person not having knowledge of finance may not be able to the exact suitable return on his investment, account and finance walk parallel but as compare to account finance is a waste subject. A person trained in Finance is able to take financial decision wisely and quickly which gives better return on investment and have a better chance to survive and compete. A business house must necessary keep a systematic record of what happens from day to day, so that it can know where it stands & where it will go in future. A systematic record of the daily invents of a business leading to presentation of a complete financial picture is known as accounting. Financial account includes trading account, profit & loss account and balance sheets. Financial management is the application of planning and control to the finance function of a business to ensure that the funds needed are raised and use effectively for its benefit. Financial management means procurement of funds at minimum cost and its effective use in order to maximize the wealth of shareholders.

FINANCIAL FUNCTION
Find the cheapest source of finance. 75

Effective utilization of money. Capital is raised through issue of shares, debentures; interoperate deposits, financial, institutions, commercial papers, etc. Negotiations with suppliers.

RESPONSIBILITIES OF FINANCE MANAGER

He keeps all the data related to finance and sees that the funds organization is

utilized in the most efficient manner. He is the most important person in shaping the future of the company and has a

vital role in decision of the allocation of capital. Nowadays finance manager solves important management problem and his role is

becoming pervasive and significant.

(2)

Structure of Finance Management

Chairman
Managing director

Vice president

General Manager

Deputy General Manager

Account officer/Casher
76

Finance executive

Account Assistant

(3)

Shareholders Shareholding Pattern as on 31st March 2009

Category
Promoters Indian Bodies corporate Banks, Financial Institutions Mutual Funds FII / NRI / OCB Public

Number of shares
34261097 1 264590 215114 6521432 630371 29916820

%
47.05 1.74 0.30 8.96 0.86 41.09

Total Distribution of Shareholding as on 31st March 2009

72809424

100.00

No of Shares Shareholders Number %

Less than 1000 1001 - 2000 2001 - 4000 4001- 6000 6001- 8000 8001- 10000 10001 - 20000 Above 20001 Total 18316 2682 624 267 94 75 141 234 22433 81.648 11.956 2.782 1.190 0.419 0.334 0.629 1.043 100.00

Shares Held Number %

5440833 3613934 1830079 1364467 659702 701621 1965680 57233108 72809424 7.473 4.964 2.514 1.874 0.906 0.964 2.700 78.607 100.00

77

CHAPTER NO :-2
Literature Review & Theory:(1)THE ANALYSIS AND USE OF FINANCIAL RATIO :- A REVIEW ARTICLE (Paul .Barnes) INTRODUCTION Financial ratios are use for all kinds of purposes. These include the assessment of the the ability of a firm to pay its debts, the evaluation of business and managerial success and even the statutory regulation of a firms performance. Not surprisingly they becomes norms and actually affect performance. The traditional textbooks of financial analysis also emphasise the need for a firm to use industry-wide averages as target (Foulke, 1968),and there is evidence that firms do adjust their financial ratios to such targets Whittington (1980)identified two principal uses of financial ratios The traditional, normative use of the measurement of a firm s ratio compared with a standard and the positive use in cstimating empirical relationship usually for predictive The former dates back to the late nineleenth century and the increase in us bank credit given as a result of the civil war when current and non-current items were segregated and the ratio of current assets to current liabilities was developed (Harrigan, 1968 , and Dev, 1974).From then the use of ratio both for credit purposes and managerial analysis, focusing on profitability measures soon began. Around 1919 the du point company began to use its famous ratio triangle system to evaluate its operating results, underpinning the modern interfirm comparison scheme introduced in the UK by the British Institute of management and the British Productivity council in 1959. The positive use of financial ratios has been of two types: by accountants and analysis to forecast future financial variables, e.g. estimated future Profit by multiplying predicated sales by the profit margin (the profit / sales ratio), and, more recently, by researchers in statistical models for mainly predicative purposes such as corporate failure, credit rating, the assessment of risk, and the testing of economic hypotheses in which inputs are financial ratios. These will be reviewed in the section on predicative studies. The reason ratios are used, as opposed to absolute values, is a mathematical one, and is basically in order to facilitate comparison by adjusting for size. However, this

78

assumes that ratios possess the appropriate statistical properties for handing and summarizing the data. www3.interscience.com

RATIOS THEORY:Ratios are relative figures reflecting the relation between variables. In simple words, a ratio is an arithmetical relationship between two figures. They enable analyst to draw conclusions regarding financial operations. The use of ratios as tool of financial analysis, involves their comparisons, for a single ratio, like absolute figures, fails to reveal the true position. It predicts strength and weakness of the firm in various areas as well as helps in assessing corporate excellence, judging credit worthiness, forecasting bond ratings, predicting bankruptcy and assessing market risk Thus ratio basically represents the relationship between two groups of items taken either from profit and loss account or from the balance sheet or both. In other words, the ratios measure the relationship among the tangible factors affecting the performance and profitability of the company. TYPES OF RATIOS: Various accounting ratios can be classified as follows:

Ratios
Traditional Classification Or
Statement Ratio

Functional Classification Or
Classification According to Test

Significance Ratio Or
Ratio According

Importance 1) Balance sheet Ratios or Position statement Ratio

1) Liquidity Ratios 2) Leverage Ratios 3) Activity Ratios 2) Profit and Loss account Ratio 4) Profitability Ratios. Or Revenue/Income Statement Ratio 3) composite/Mixed Ratio LIQIDITY RATIO:-

1) Primary Ratios 2) Secondary Ratio

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Liquidity mainly relates to the quick availability of cash. While managing the working capital quick availability of cash against the blocked assets is need to be taken into consideration. Cash is needed to pay the liabilities relating working capital such as creditors and bank o/d .On the other hand this cash is collected through debtors or cash sales. Thus various liquidity ratios give us the idea about how the current liabilities can be covered by the current assets. These are short term blocking of funds and normally dont need a bigger amount of funds.

It is worthy to mention that in emergency to pay-off short term current liabilities, long term debts can be used but those are rarely covered by the working capital analysis because it is mainly deal with pay-off of liabilities by realization of current assets.

Current Ratio:- This ratio states that how many times the current liabilities can be covered by current assets. Whether the organization has short-term liquidity (solvency) to cover its debt and how strong the company is in paying its current liability. Normally 2:1 is the ratio, which is considered satisfactory. Quick Ratio:- It is modified form of current ratio, which gives the comparison of immediately available and required cash. It excludes the liabilities and assets, which are accrued but not due; such as provisions. Thus it is wholly based on the cash liquidity aspects.

TURNOVER RATIO
Turnover is the total sales of the company i.e. the main source of the organization can gain. Various turnover ratios are calculated to see the exact proportions of the sales to various other items, which are related to sales. To build up the figure of the sales there are many other items, which contributes to it. There are many factors, which are part and parcel of working capital cycle, which creates the importance in working capital management. Though the sales is the important aspect of any business cost of sales blocking of funds into sales also gains important position in working capital management.

80

Inventory Turnover Ratio:- How the cost of production is blocked in the nature of stock, lying in the go down is one of the important aspects. Huge nature of cost of production and huge inventory built up in the godown can affect the liquidity adversely and vice-a-versa. On the other hand shortage of stock cannot be beneficial to grab the market demand profits. Thus inventory turnover ratio says about, how the cost of goods sold is blocked in the stock . Inventory Period:- This is more useful form of inventory turnover ratio as it gives the time period for which the funds are locked. Thus with comparison of inventory turnover and period ratio we can say that the first gives us the amount blocked and the other says how long it is blocked. Debtors Turnover Ratio:- Debtors turnover ratio is calculated to give an idea about how the debtors can be covered by the total sales i.e. basically for how much times sales realization is blocked in the debtors. As organization receives credit facility from suppliers, it also allows credit period to the debtors for larger volume of sales. Though the funds are blocked in Debtors or B/R this is one of the major marketing strategies to increase the sales. Debtors Collection Period:- In any business, whenever something is sold, the payment has to be received from the other party. Now, Debtor Collection mean indicated is the average number of days taken to receive the money from the other party. Low ratio implies quick cash collection andless working capital required. Creditors Turnover Ratio:- These ratios say that how early you have to make the payments. Basically these ratios are calculated to know the exact cash flow required at the appropriate time. Say, on particular day creditors of Rs.X has to be paid then it should be considered that whether on that bank or cash account has sufficient balance or any debtors or B/R are realizing on that day. Thus creditors turnover ratio is calculated by dividing credit purchase by average creditors carried by the company i.e. how many times the creditors cover the total purchases. Creditors Payment Period:- In any business, whenever something is purchased from another party, then the party needs to be paid. Creditor Payment indicates the average number of days within which other party is paid. High ratio is more credit period and less 81

working capital required. To find the average credit available by the suppliers can be obtained, by dividing 365 to turnover ratio. Working Capital Turnover Ratio:- It is the relationship between turnover (sales) and working capital. It highlights how effectively working capital is being used in terms of the turnover it can help to generate. It enables to find the structure of working capital cycle of the Organization. No ideal values, but higher the ratio stronger the position of the working capital. Current Assets to Total Assets:- Total Assets acquired by Finance Manager can be applied by him in various ways such as expenses and assets. It can be divided into two major aspects Current Assets and Fixed Assets. It should be worth while to observe that how much of the portion of the total assets is occupied by the current assets, as current assets are mainly involved in forming in working capital. Thus the ratio should not be so large to ignore the application of the funds in fixed assets. Also care should be taken that main investment of the organization should be in the operating items. Hence, the ratio of current assets to total assets though depend upon industry to industry should not vary largely. Inventory Ratio:- It states how much portion of current assets is blocked in current assets. It is important from the view of quick realization of the current assets. Inventories can be transformed into cash or debtors depending upon the sales. Thus inventory ratio helps in working capital management as well as production life cycle, costing and management. PROFITABILITY RATIO Profitability ratio reveals how good a business or a company is in terms of earnings. It helps in assessing the adequacy of profits earned by the company and also to discover whether profitability is increasing or decreasing. The profitability of the firm is net result of large number of policies and decisions. The profitability ratios show the combined effect of liquidity, asset management and debt management on operating results. Profitability ratios are measured with reference to sales, capital employed, total assets employed, shareholders funds etc. 82

Cash Profit Ratio:- This ratio is very important from the point of view of liquidity and working capital ratio. Cash profit gives all those expenses and incomes, which are accrued due and receive. The portion of such profit to the sales is a cash profit ratio. Higher the ratio higher will be the profit gaining position of the company, which gives a liberty to the organization to use the liquid profit in another income generating operations or projects. The difference between the cash profit and normal profit is that cash profit is what is actually realized in the hands of the organization to be used for other purposes. Return on Capital Employed:- This ratio is not very important from working capital management point of view but to obtain the funds for short term as well as long term purposes, supplier of the firm will invariably ask of earning capacity of the organization. Return on capital employed is the major indicator of earning capacity, which is compared with market return and the investment decision are taken. How the organization is managing to maintain the profit above the market level shows the success ratio as compared to the other companies in the industry.

Gross profit Ratio:

Gross profit is the result of the relationship between price, sales volume and cost. The gross margin represents the limit beyond which fall in sales prices are outside the tolerance limit. A high ratio of gross profit to sales is a sign of good management as it implies that the cost of production of company is law, higher sales price, COGS decline without decline sales price and vice versa. Profitability is the ability of a business to earn profit over a period of time. Although the profit figure is the starting point for any calculation of cash flow, as already pointed out, profitable companies can still fail for a lack of cash. A company should earn profits to survive and grow over a long period of time.

Profitability is a result of a larger number of policies and decisions. The profitability ratios show the combined effects of liquidity, asset management (activity) and debt

83

management (gearing) on operating results. The overall measure of success of a business is the profitability, which results from the effective use of its resources.

A very high and rising gross margin may also be a result of valuation of stock that is overvaluation of closing stock or undervaluation of opening stock. Normally the gross profit should be rise proportionately with sales.

Net profit margin ratio:

The net profit ratio is the overall measure of a firms ability to turn each rupee of sales into profit. It indicates the efficiency with which a business is managed. Company with a high net profit ratio is in an advantageous position to survive in the face of rising cost of production and falling selling prices. Where the net profit ratio is low

CHAPTER NO :-3
84

(1) OBJECTIVES OF THE STUDY

To analyze the liquidity position of the company by analyzing the various ratios. Compare present performance with past performance by conducting trend analysis. To carryout Interfirm analysis to know the strength and weakness of the company. To know the financial position of firm.

(2) IMPORTANCE OF THE STUDY

In every business organization its financial transactions are recorded in the systematic term, which called Financial Statement such as Profit and Loss Account and Balance Sheet. Financial Statements shows the financial strength and weakness of the firm, hence, the Financial Statements are prepared for the decision-making. Management becomes able to this purpose such financial statement are necessary to be analyzed. The study was useful to understand the Ratio Analysis at Aarti Ind. It was useful in understanding all theoretical concepts, how they are practically implemented. Also the various types of ratios were studied which helps in analyzing the financial statements.

(3) METHODOLOGY
Research in common parlance refers to a search for knowledge. Research may be defined as manipulation of things, concepts or symbols for the purpose of generalizing to extent, correct or verify knowledge, whether that knowledge aids in construction of theory or in the practice of an art.

METHODS OF DATA COLLECTION

Primary data collected from: Personal interview was the main tool for the collection of primary data and information. This study has brought in use very little primary data in relation with the elements of Ratio Analysis.

Secondary data collected from: -

85

Since the study is based on the financial aspects of the company so the annual report of the organization, Trial Balance, Income & Expenditure accounts of the company brought in use. Besides the company profile and theoretical aspects taken from the secondary sources. PRESENTATION OF THE DATA The data collected is presented in the form of: (a) (b) (c) Tables Bar diagrams Pie charts

(4) LIMITATIONS
This project is not far from limitations. The limitations are: -

A company generally cannot disclose its internal policies to outsiders. In such

case, it is very difficult to find out and gather complete and true information in the forms of figures regarding financial matters. Although every effort has been made to study the Ratio Analysis in detail, in an organization of like Aartis, it is not possible to make an exhaustive study in a limited duration of 6 weeks.

CHAPTER NO :-4 Data Analysis

86

(1) Current ratio = Current Assets Current liabilities TABEL NO :-1 Current Ratio (Rupese in Crores) Particular 2005 2006 2007 2008 2009

Current Assets. Current Liabilities. Current Ratio.

199.77 102.45

254.79 120.99

273.16 125.22

367.86 134.36

425.96 120.02

1.95:1

2.11:1 CHART NO :-3

2.18:1

2.74:1

3.55: 1

4 3.5 3 2.5 2 1.5 1 0.5 0 2005 2006 2007 2008 2009

Current Ratio

Interpretation:

A current ratio establishes the relationship between total

current assets and current liabilities. A current ratio of 2:1 is considered ideal as a rule of thumb. The ratio of AIL is 3.55:1, indicating a very comfortable liquid position. Overall condition is good for the company.

(2) Quick ratio = Quick Assets (current assets stock) Current liabilities TABLE NO :-2 87

Quick Ratio(Rupees in Crores) Particular Quick Assets. Current Liabilities. Quick Ratio. 2005 104.69 102.45 = 1.02 2006 133.14 120.99 = 1.10 2007 125.40 125.22 =1.00 2008 170.73 134.36 = 1.27 2009 225.02 120.02 = 1.87

CHART NO :-4 2 1.8 1.6 1.4 1.2 1 0.8 0.6 0.4 0.2 0

Quick Ratio

2005

2006

2007

2008

2009

Interpretation:

This ratio is establishes a relation between absolute

liquid assets to liquid liabilities. The Company has stronger position in the year 2009 as compared to Next Four Year because in the Year 2009, the amount of liquid assets decreases. This ratio differs from the current ratio only because of absence of inventories in current assets. The condition is good for the company.

(3) Debt Equity Ratio = Long term debt Shareholder funds TABLE NO :-3

88

Debt Equity Ratio (Rupees in Crores) Particular 2005 2006 2007 2008 2009

Debt Shareholder funds Deb Equity Ratio

224.92 205.79 1.09:1

300.42 238.66 1.26:1

337.45 258.54 1.30:1

429.30 282.46 1.52:1

482.57 341.34 1.41:1

CHART NO :-5
1 .6 1 .4 1 .2 1 0 .8 0 .6 0 .4 0 .2 0 20 05 20 06 20 07 20 08 20 09 D E eb quityR tio a

Interpretation:
It expresses the relationship between debt and equity. The standard debt-equity ratio is 2:1. It means for every 2 share there is 1 debt. The debt-equity ratio Last fourYears is increase and 2009 is decreases; debt equity ratio is increase compare to last four year though company has been utilizing its debt profitably to generate more profits.

(4) Interest Coverage Ratio = EBIT Interest TABLE NO :-4

89

Interest Coverage Ratio (Rupees in Crores) Particular 2005 2006 2007 2008 2009

EBIT Interest Interest Coverage

Ratio

58.22 14.18 4.11:1

71.61 21.11 3.39:1 CHART NO:-6

34.77 30.19 1.15:1

53.18 39.13 1.36:1

114.01 90.16 1.26:1

4.5 4 3.5 3 2.5 2 1.5 1 0.5 0

Interest Coverage Ratio

2005

2006

2007

2008

2009

Interpretation:
It shows that in the year 2005, company utilized its debt funds more efficiently rather than Next Four Years in 2009 company has borrowed more interest bearing debt as a result interest increased and it has brought down this ratio to 1.26. Though company has been utilizing its debt funds profitably to generate more profits, so it is favorable ratio for the company.

(5)Proprietary ratio = Share holders fund *100 / Total Assets

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TABLE NO :-5 Proprietary ratio (Rupees in Crores ) Particular 2005 2006 2007 2008 2009

Shareholder funds Total Assets

205.79

238.66

258.54

282.46

341.34

430.70

539.09

595.98

711.77

823.94

Proprietary Ratio

47.78:1

44.27:1

43.38:1

39.68:1

41.43:1

CHART No:-7
5 0 4 0 3 0 2 0 1 0 0 20 05 20 06 20 07 20 08 20 09 Proprieta R tio ry a

Interpretation:
This ratio establishes the relationship between the proprietors fund and total assets. Higher the proprietary ratio stronger the financial position and vice-versa. A ratio of 0.5:1 is considered ideal. Here the company proprietors ratio is less they should increase the ratio

(6) Gross profit Ratio = Gross profit * 100 Net Sales 91

TABEL NO :- 6 Gross profit Margin(Rupese in Crores) Particular 2005 2006 2007 2008 2009

Gross Profit Net Sales Gross profit Ratio

114.20 668.48 17.08

89.28 774.35 11.53

119.51 754.46 15.84

231.27 889.42 26.00

203.93 1436.03 14.20

CHART NO :- 8 3 0 2 5 2 0 1 5 1 0 5 0 2005 2006 2007 2008 200 9 Gros profit R s atio

Interpretation:
The sales of 2009 is far more against compared to previous years, as a result, gross profit of 2008 is more as compared to Four years. This ratio is near to industry standard so ratio is satisfactory for the company. Overall condition is good for the company.

(7) Net profit Ratio = Net profit After tax *100 Net Sales 92

TABEL NO :- 7

Net Profit Margin (Rupese in Crores) Particular 2005 2006 2007 2008 2009

Net profit after tax Net Sales Net Profit Ratio

26.51

17.65

20.16

51.76

32.75

668.48 3.97

774.35 2.28 CHART NO :-9

754.46 2.67

889.42 5.82

1436.03 2.28

6 5 4 3 2 1 0 2005 2006 2007 2008 2009 Net Profit R atio

Interpretation:

It expresses the relationship between net profit and sales. This

ratio shows a better profitability of the firm as compared to the whole industry. The company has earned highest net profit i.e. 5.82% in the year 2008 as compared to Four Years. It may be assumed that, the company might have controlled over unnecessary expenses. Though this ratio should be somewhat high and so company should try to increase this ratio as more as possible. This suggests a satisfactory position.

(8) Return on Equity = Profit After tax * 100 Equity Shareholder fund 93

TABEL NO :-8 CHART NO :-10 Return on Equity(Rupees in Crores) Particular 2005 2006 2007 2008 2009

Net profit after tax Equity Shareholder fund Return On Equity

26.51

17.65

20.16

51.76

32.75

205.79

238.66

258.54

282.46

341.34

12.88

7.39

7.80

18.32

9.59

20 15 10 5 0

R eturn O Equity n

2 5 00

20 06

20 07

20 8 0

2 09 0

Interpretation:
The highest Return on Equity i.e. 18.32 % in the year 2008 as compared to Four Years. The roe of the company is showing fluctuations which the company should take a note.

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(9) Fixed assets turnover ratio = COGS Net fixed assets TABEL NO :-9 Fixed Asset Turnover Ratio(Rupees in Crores) Particular 2004 2005 2006 2007 2008

COGS Net fixed Asset Fixed Asset Turnover Ratio

554.28 230.93 2.40

685.07 284.30 2.41 CHART NO :-11

634.95 322.82 1.97

658.15 343.91 1.91

1232.10 397.98 3.10

1 .6 1 .4 1 .2 1 0 .8 0 .6 0 .4 0 .2 0 20 05 20 06 20 07 20 08 20 09 F ixedAsset T urnover R tio a

Interpretation:
From the above table 2009 the ratio is highest as compared to 2005, 2006,2007,and 2008. It means that company would have purchased more fixed assets and utilized them in a better way to raise the sales (operating income). So condition is in favor of the company.

(10) Capital Turnover Ratio: = COGS / Capital Employed 95

TABEL NO :- 10 Capital Turnover Ratio (Rupees in Crores) Particular 2005 2006 2007 2008 2009

COGS Share Capital Capital Turnover Ratio

554.28 36.40 15.22

685.07 36.40 18.82

634.95 36.40 17.44

658.15 36.40 18.08

1232.10 36.40 33.84

CHART NO :-12
35 30 25 20 15 10 5 0 2005 2006 2007 2008 2009 Capital Turnover Ratio

Interpretation:
It shows that in the year 2008, company utilized its capital turnover ratio more efficiently rather than 2005, 2006, 2007, and 2009. Though company has been utilizing its capital employed profitably to generate more profits, so it is favorable ratio for the company.

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(11)Working Capital Turnover Ratio = COGS / Net Working Capital TABEL NO :- 11 Working Capital Turnover Ratio(Rupees in Crores) Particular 2005 2006 2007 2008

2009

COGS Net Working Capital Working Capital Turnover Ratio

554.28 205.79

685.07 238.66

634.95 258.54

658.15 282.46

1232.10 341.37

2.82

2.78 CHART NO :-13

2.60

0.42

3.50

3.5 3 2.5 2 1.5 1 0.5 0 2005 2006 2007 2008 2009 Working Capital Turnover Ratio

Interpretation:
It shows that in the year 2009, company utilized its working capital more efficiently rather than 2005, 2006, 2007, and 2008. Though company has been utilizing its capital employed profitably to generate more profits, so it is favorable ratio for the company

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(12) Total Assets turnover ratio = Net Sales / Net Assets TABEL NO :- 12 Total Assets turnover ratio (Rupees in Crores ) Particular 2005 2006 2007 2008 2009

Net Sales Net Assets Total Assets Turnover Ratio

668.48 430.70 1.55

774.35 539.09 1.44

754.46 595.98 1.27

889.42 711.77 1.25

1436.03 823.94 1.74

CHART NO :- 14
1.8 1.6 1.4 1.2 1 0.8 0.6 0.4 0.2 0

Total A sset Turnover R atio

2 5 00

20 06

20 07

2 08 0

20 09

Interpretation:
This ratio is continuously decreasing up to 1.55%, 1.44%, 1.27% and 1.25% for the year 2005, 2006, 2007 and 2008 respectively, which shows unsatisfactory business and it also reflects inefficient business activities. Total assets Turnover Ratio is increases to 1.25% from 1.74% of last year, which shows improvement in this ratio

(13)Current Assets turnover ratio = Net Sales / current ratio TABEL NO :- 13 98

Current Assets turnover ratio (Rupees in Crores ) Particular 2005 2006 2007 2008 2009

Net Sales Current Assets Current Assets Turnover ratio

668.48 199.77 3.35

774.35 254.79 3.04

754.46 273.16 2.76

889.42 367.86 2.42

1436.03 425.96 3.37

CHART NO :-15
3 .5 3 2 .5 2 1 .5 1 0 .5 0 20 05 20 06 20 07 20 08 20 09 Current AssetsT urnover R tio a

Interpretation:
. This ratio is continuously decreasing up to 3.35%, 3.04%, 2.76% and 2.42% for the year 2005, 2006, 2007 and 2008 respectively, which shows unsatisfactory business and it also reflects inefficient business activities. Current assets Turnover Ratio is increases to 2.42% from 3.37% of last year, which shows improvement in this ratio

(14) Inventory turnover ratio = Cost of goods sold / Average inventory Cost of goods sold =Sales Gross profit

99

Average inventory = Opening stoke + Closing stoke / 2 TABEL NO :- 14 Inventory turnover ratio (Rupees in Crores) Particular 2005 2006 2007 2008 2009

COGS Average inventory

554.28 47.54

685.07 108.37

634.95 134.71

658.15 172.45

1232.10 199.04

Inventory turnover ratio

11.65

6.32 CHART NO :-16

4.71

3.82

6.19

12 10 8 6 4 2 0 2005 200 6 200 7 20 08 20 09 Inventory turnover ratio

Interpretation:
This ratio helps the managers (finance) to evaluate inventory policy. This ratio reveals the number of times finished stock is turned over during a given accounting period. This ratio is continuously decreasing up to 11.65%, 6.32%, 4.71% and 3.82% for the year 2005, 2006,2007 and 2008 respectively, which shows unsatisfactory business and it also reflects inefficient business activities. Inventory Turnover Ratio is increases to 3.82%from 6.19% of last year, which shows improvement in this ratio (15) Equity ratio = Owners equity / Total Assets TABEL NO :- 15 100

Equity ratio (Rupees in Crores ) Particular 2005 2006 2007 2008 2009

Owners equity

205.79 430.70

238.66 539.09

258.54 595.98

282.46 711.77

341.34 823.94

Total Assets

Equity Ratio

0.48

0.44 CHART NO :-17

0.43

0.40

0.41

0 8 .4 0 6 .4 0 4 .4 0 2 .4 0 .4 0 8 .3 0 6 .3 20 05 20 06 20 07 20 08 20 09 E quityR tio a

Interpretation:
The highest Equity ratio i.e. 0.48 in the year 2005 as compared to Four Years. The roe of the company is showing fluctuations which the company should take a note. Owners Equity of 2009 is far more against compared to previous years it is good for the company.

(16) Current Assets to net worth ratio = Current Assets / net worth TABEL NO :- 16 Current Assets to net worth ratio (Rupees in Crores) 101

Particular

2005 199.77 205.79 0.97

2006 254.79 238.66 1.08

2007 273.16 258.54 1.06

2008 367.86 282.46 1.30

2009 425.96 341.34 1.25

Current Assets. Net worth Current Assets to net Worth ratio

CHART NO :-18 1.4 1.2 1 0.8 0.6 0.4 0.2 0 2005 2006 2007 2008 2009 C urrent As ets to net s Worth R atio

Interpretation:
In this ratio net worth is continuous growing up and current assets is continuous falling from 2005 to 2009. In 2008 current assets to net worth is 1.30 which highest in the five years and a grater decline in 2009 which is 1.25 This not good for investors, it creates bad impression to the invertors. (17) Selling & distribution expenses ratio = Selling $distribution expenses ratio *100 / Sales TABEL NO :- 17

102

Selling $ distribution expenses ratio (Rupees in Crores ) Particular 2005 2006 2007 2008 2009

Selling $ distribution Expenses Net Sales Selling $ distribution Expenses ratio

50.55

59.06

51.61

58.37

88.16

668.48 7.56

774.35 7.63

754.46 6.84

889.42 6.56

1436.03 6.14

CHART NO :- 19
8 7 6 5 4 3 2 1 0 20 05 20 06 20 07 20 08 20 09 S elling$distribution E xpensesra tio

Interpretation:
It expresses the relationship between Selling $ distribution Expences and net sales. This ratio shows a better profitability of the firm as compared to the whole industry. The company has earned highest Selling $ distribution i.e. 7.63% in the year 2006 as compared to Four Years. It may be assumed that, the company might have controlled over unnecessary expens

(18) Rate of return on total Assets ratio = EBIT / Total Assets TABEL NO :-18

103

Rate of return on total Assets Ratio (Rupees in Crores) Particular 2005 2006 2007 2008 2009

EBIT Total Assets

Rate of return On total Assets ratio

58.22 430.70 0.14

71.61 539.09 0.13 CHART NO :-20

34.77 595.98 0.06

53.18 711.77 0.07

114.01 823.94 0.14

0.14 0.12 0.1 0.08 0.06 0.04 0.02 0 2005 2006 2 007 20 08 2 9 00 Rate of return on total A ssets ratio

Interpretation:
In this ratio Total asset is continuous falling from 2005 to 2009. In 2005 and 2009 Rate of return on total assets is 0.14 which highest in the five years and a grater decline in 2007 which is 0.06 This not good for company.

19) Sundry debtors ratio = Debtors + Bill Receivable * 365 / Sales TABEL NO :-19

Sundry debtors ratio (Rupees in Crores )

104

Particular Debtors + Bill Receivable Net Sales Sundry debtors ratio

2005 131.61

2006 174.89

2007 161.73

2008 199.03

2009 266.57

668.48 72 days

774.35 83 days

754.46 79 days

889.42 82 days

1436.03 68 days

CHART NO :-21
90 80 70 60 50 40 30 20 10 0

S undry debtors ratio

20 05

20 06

20 07

2 8 00

2 9 00

Interpretation:
The average collection period measures the quality of debtors since it indicates the speed of their collection. The shorter the average collection period, the better quality of debtors, since a short collection period implies the prompt payments by debtors. This companies average collection period is 72 days, 83 days, 79 days, 82 days and 68 days for the financial years 2005, 2006, 2007,2008 & 2009 respectively. It shows that this ratio decreases from the last year, so it is good for the company

(20) Operating Ratio = Operating Profit * 100 / Sales TABEL NO :-20 Operating Profit ratio (Rupees in Crores ) Particular 2005 2006 2007 2008 2009

105

Operating Profit Net Sales Operating Profit ratio

109.42 668.48 16.37 %

83.18 774.35 10.74 %

118.11 754.46 15.65 %

229.13 889.42 25.76 %

202.12 1436.03 14.07 %

CHART NO :- 22
30 25 20 15 10 5 0 2005 2006 2007 2008 2009 Operating Porfit Ratio

Interpretation:
It expresses the relationship between Operating profit and sales. This ratio shows a better profitability of the firm as compared to the whole industry. The company has earned highest Operating profit i.e. 25.76% in the year 2008 as compared to Four Years. It may be assumed that, the company might have controlled over unnecessary expenses. Though this ratio should be somewhat high and so company should try to increase this ratio as more as possible. This suggests a satisfactory position.

Ratio Comparison with Competitors in March 2009

TABLE NO :-23 Particulars 1.Current Ratio 2.Quick Ratio 3.Debt Equity Aarti Ind.
3.55 1.84 1.41

Tata Chemicals
0.57 0.12 0.95

United Phosphorus
2.85 2.23 1.07

BOC India
0.53 0.34 0

106

Ratio 4.Interest Coverage Ratio 5.Proprietary Ratio 6.Gross Profit Ratio 7.Net Profit Ratio 8.Return on Equity 9.Capital Turnover Ratio 10.Working Capital Turnover Ratio 11.Total Assets Turnover Ratio 12.Current Assets turnover Ratio 13.Inventory Turnover Ratio 14.Equity Ratio 15.Current Assets to net worth Ratio 16.Selling $ Distribution expenses Ratio 17.Rate of Return on total Assets Ratio 18.Sundry debtors Ratio 19.operating profit 20.Fixed Assets turnover Ratio

1.26 41.43 14.20 2.28 9.59 33.84 3.50

3.44 51.22 13.03 3.37 11.27 33.92 1.88

1.28 48.28 18.24 4.64 6.00 22.89 1.06

2.62 99.10 25.19 3.04 1.57 4.68 0.39

1.74 3.37 6.19 0.41 1.25 6.14

1.11 6.87 8.94 0.51 0.31 6.23

0.62 0.97 4.71 0.48 1.34 13.18

0.51 4.02 9.12 0.10 0.13 13.13

0.14

0.08

0.06

0.09

68 days 14.07 2.40

44 days 10.72 2.41

108 days 15.31 1.97

59 days 24.06 3.10

CHART NO :-21

107

100 90 80 70 60 50 40 30 20 10 0

1.C urrent Ratio 2.Quick Ratio 3.Debt Equity Ratio 4.Interest C overag e Ratio 5.P roprietary Ratio
Aarti In . d Tata C em h icals Un ited P osp oru h h s BOCIn ia d

6.Gross P rofit Ratio

CHART NO :-22 35 30 25 20 15 10 5 0 Aarti Ind. Tata C hem icals United Phos phorus BOCIndia

7 .Net Profit R tio a 8 eturnonE .R quity 9 a lT .C pita urnover R tio a 1 .WorkingC pita 0 a l T urnover R tio a 1 .T l As 1 ota sets T urnover R tio a 1 .Current Assets 2 turnover R tio a

CHART NO :23
25 20 15 10 5 0 Aa Ind. rti T ta a C hem a ic ls U nited Phos phorus B India OC
13.In tory Tu over Ratio ven rn 14.Eq ity Ratio u 15.C rren Assets to n worth Ratio u t et 16.S ellin $ Distrib tion exp ses Ratio g u en 17.Rate of Retu on total Assets Ratio rn 18.S n ry d tors Ratio u d eb 19.Op eratin p g rofit Ratio 20.Fixed Assets tu over ratio rn

Findings :108

 The net sales of the company are increasing continuously from the year 2005 to 2009 which shows the good sign for the company. The Debt equity ratio for the year 2005, 2006, 2007,2008 and 2009 is 1.09, 1.26, 1.30,1.52 and 1.41 respectively. Thus, it is continuously icreasing, which shows the satisfactory position of the company. But if the company increases debt equity ratio to 2:1 which is mostly acceptable so that company can reduce their tax liability and they can take advantage of trading on equity. Debtors turnover ratio indicates that company is very quick on collecting their customers. They have reduce their receivables days 2005 to 2009 Ratio Analiys Strategy of Aarti industris is Aggressive. Liquidity position of Aarti industries is not very Strong apart from 2007 Aarti industris had highest Net working capital of 1232.10 Cr. Rs in 2009 and thus had lowest net working capital turnover ratio of 15.22. Aarti industris had its lowest net working capital of 554.2 Cr. Rs. in 2005 due to this reason the working capital turnover Ratio of 2005 was 2.82 . On an average, only United Phosphorus Limited is having stronger liquidity position than Aarti Industries.s On an average, Aarti indusris is having better Working Capital Turnover Ratio than , among all companies included in research. On an average, Tata chemical is fastest in collection from Debtors. On an average, United Phosphorus. is having longest payment period.

CHAPTER NO :- 5

109

CONCLUSION :It can be concluded now that the over all profitability of the company is a matter of concerned to the management, its shareholders, its creditors, etc.The company is not considered solvent enough to invest in it. The effect of slowdown of chemical industry is seen clearly on Aarti industries limited. The pressure of rising prices of chemical has increased expenses of Aarti chemical thereby reduced the profits. The appreciation of Indian rupee is also a reason of reducing profits the slow down of U.S market, low demand has affected a lot to the company .The recession in the entire economy has a great impact on the company. The investors may withdraw their investment if this situation continues though the company present scenario is not healthy enough to rely on but its future seems to be brighter. As now the entire economy is on the line of recovery, chemical industries will also improve soon in fairly a short time period. Aarti industry is on the roads of modernization which will increase the exports & thus increasing the profit.

SUGGESTIONS :-

110

The company has to take steps to counter the rising input cost and domestic

competition through cost reduction, rationalization of products and distribution channels, judicious inventory management and research and development. The company can adopt the aggressive approach to finance current assets. In this

approach the firm finances a part of its permanent current assets with short term financing. This is more risky but may add to the return on assets. Hold Marketable Securities instead of Cash. Negotiate with your suppliers to gain more favorable credit terms for payment of

invoices, either increasing the amount of time allowed before payment is due or negotiating a discount for earlier payment. Aarti Industris limited is a growing company and is operationally efficient and can be a threat for company for the future course of time The company should carry on their efforts for continuous improvement.

CHAPTER NO :- 6
111

BIBLIOGRAPHY
Books:1. Pandey I. M., Financial Management , Vikas Publishing House Pvt. Ltd., New Delhi, Eighth Edition. 2. Khan M. Y. & Jain P. K., Financial Management (Text & Problems), Tata McGraw-Hill Publishing Co. Ltd., New Delhi, Third Edition. 3. Chandra Prasanna, Financial Management (Theory & Practice), Tata McGraw-Hill Publishing Co. Ltd., New Delhi, Fifth Edition.cvc 4. Ambrish Gupata Financial Accounting for Management New Delhi, Third Edition . Websites:5. www.aartigroup.com 6. www.Moneycontrol.com 7. www.indiainfoline.com Others:8. Office Document 9. Company Annual Report 10. Raw Material Ragisters

Annexues :112

(1) Financial Highlight

Particulars
Total Income Gross Profit Interest Depreciation Extraordinary Loss Profit Before Tax Profit After Tax Dividend % Payout Per Share Dividend Equity Capital Reserves & Surplus Net Worth Total Borrowing lock Less: Depreciation Net Block(Fixed Assets) Capital Work-inProgress Investments Current Assets Less: Current Liabilities Net Working Capital Face Value per Share(Rs.) Book Value per Share (Rs.) Earning per Share (Rs.) Bonus Share (Ratio)

TABLE NO:-24 Financial Year Ended on (Rs. In Lacs) 31/3/2005 31/3/2006 31/3/2007 31/3/2008 31/3/2009
68805.76 9183.19 1354.32 2006.19 Nil 5822.68 4425.30 101.00 1225.63 8.70 3640.47 16938.52 20395.84 22491.24 31102.58 12488.09 18614.49 1862.28 2433.11 33576.88 11629.72 21947.16 10.00 56.03 12.78 2:01 79095.60 11420.30 2040.04 2218.69 Nil 7161.57 5538.57 39.00 1420.00 2.80 3640.47 20040.85 23528.73 30041.62 37721.52 14768.02 22953.51 2797.52 2474.21 42825.12 14693.37 28131.75 5.00 32.32 6.74 Nil 76412.00 8928.90 2888.45 2563.40 Nil 3477.09 3290.00 16.00 582.47 0.80 3640.47 22029.41 25545.90 33744.59 45110.41 17376.69 27733.71 1797.76 2606.65 44949.98 14340.98 30419.57 5.00 35.08 3.60 Nil 96049.00 11950.44 3882.89 2749.61 Nil 5317.93 4362.08 30.00 1092.14 1.50 3640.47 24606.30 28151.41 42930.71 48403.24 20375.67 28027.57 3424.49 2618.48 56858.64 15879.97 40978.66 5.00 38.66 5.04 Nil 153804.05 24208.51 8936.32 3871.07 Nil 11401.12 8446.32 60 2194.91 3.00 3684.75 30345.01 34091.58 48257.41 62206.76 25530.65 36676.11 854.76 1527.79 64980.65 17169.59 47811.06 5.00 46.26 11.46 Nil

(2) Financial Results

Particular
Gross Sales: Less: Excise Duty Net Sales:

TABLE NO:-25 Rs. In Lacs 2008 09 2007 08

153575 8877 144698 95909 6276 89633

113

Less: ( Increase ) / Decreases in Stock Consumption of Raw Material Staff Cost Other Expenditure Total Expenditure: Operating Profit Before Interest, Depreciation & Tax Add: Other Income Less: Non Operating Expenses Profit Before Interest, Depreciation & Tax: Less: Interest Depreciation Profit Before Tax: Less: Provision Fund Taxation Current Provision for Taxation Deferred Profit after Tax Add: Profit Brought forward Previous Year Prior Years Adjustments Profit available for Appropriation Appropriations: Transfer to General Reserv 1st Interim Dividend 2nd Interim Dividend Proposed Dividend Tax on Dividend Balance Carried to Balance Sheet Earning per Share (Rs.)

423 75950 3017 41084 120474 24224 229 244 24209 8936 3871 11402 2401 554 8447 20911 (114) 29244 2000 850 1311 884 373 23826 11.46

(3197) 49055 2139 29768 77765 11868 140 57 11951 3883 2750 5318 956 695 3667 19665 3 23335 400 728 Nil 364 186 21657 5.04

(3) Profit & Loss A/c for the Year ended 31st March, 2009
Particular Masrch- 2009 15357482543 887699905 14469782638 22922532 (42314660) TABLE NO:-26 March-2008 9590941963 627614932 8963327031 14025061 319669774

Income
Gross Sales and Other Sales Income Less: Excise duty Net sales and sales Income Other Income Increase in Inventory

Total Expenditure
Manufacturing Expenses Purchase of goods Traded in Office and administrative Expenses Selling and Distribution Expenses Interest and Financial charges Non-Operating expenses and Losses

14450390510 9297021866
10154140340 922263333 136890704 791854996 893631929 24390415 6730377800 760187906 87108076 518593115 388289344 5710643

Total

12923171717 8490266884
114

Profit Before Depreciation Less: Depreciation

1527218793 387107062

806754982 274961270

Profit After Tax

1140111731

531793712

(4)

Balance Sheet at 31st March, 2009

TABLE NO:-27 Amt. in Rs. As at 31st As At 31st March, 2009 March, 2008

Particular Sources of Funds

SHAREHOLDERS FUND:

Share Capital Shares Capital Pending allotment upon Amalgamation Equity Share Warrants Reserve and Surplus Loans Funds:

364047120 4425245 10784125 3034500665 3413760155 4344047511 481693429 4825740940 452072942

364047120 Nil Nil 2460630806 2824677926 3881127539 411943626 4293071165 396707942

Secured Loans Unsecured Loans Deferred Tex Liability Total Application of Funds Fixed Assets: Gross Block Less: Depreciation
Net Block

8691574037
6220676300 2553064896 3667611404 85475800

7514457033
4840324072 12037567016 2802757056 339687366 115

Capital Work in Progress

Investments Current Assets Loans and Advances Less: Current Liabilities $ provision Net Working Capital Miscellaneous Expenditure: Pre-Operative Expenses Deferred Revenue Expenditure

152779169 6498370959 1717265087 4781105872 2761792 1840000

261848157 5685864106 1587997787 4097866319 2761792 9536343

Total

8691574037

7514457033

116