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SHANKARLAL AGRAWAL COLLEGE OF MANAGEMENT STUDIES, GONDIA

PRATAP MEMORIAL CHARITABLE TRUST

SHANKARLAL AGRAWAL COLLEGE OF MANAGEMENT STUDIES, GONDIA

PROJECT REPORT ON

DETAILED STUDY OF RATIO ANALYSIS OF SUNFLAG IRON AND STEEL CO.LTD


In Partial Fulfillment of the Degree in Bachelor of Business Administration R.T.M Nagpur University, Nagpur (M.S.)

Submitted by: Mr. Amitkumar Bhaisare

Guided by Mayur Trivedi

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SHANKARLAL AGRAWAL COLLEGE OF MANAGEMENT STUDIES, GONDIA

A PROJECT REPORT ON DETAILED STUDY OF RATIO ANALYSIS OF SUNFLAG IRON AND STEEL CO.LTD
- SUBMITTED TO A REPORT SUBMITTED TO R.T.M. NAGPUR UNIVERSITY IN PARTIAL FULFILMENT OF THE REQUIREMENT OF BACHELOR OF BUSINESS ADMINISTRATION (B.B.A) COURSE SPECIALISATION IN FINANCIAL MANAGEMENT FOR THE ACADEMIC SESSION 2013-2014

GUIDED BY Mr. MAYUR TRIVEDI

SUBMITTED BY AMITKUMAR G. BHAISARE

SHANKARLAL AGRAWAL COLLEGE OF MANAGEMENT STUDIES, GONDIA

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SHANKARLAL AGRAWAL COLLEGE OF MANAGEMENT STUDIES, GONDIA

SANKARLAL AGRAWAL COLLEGE OF MANAGEMENT STUDIES, GONDIA

CERTIFICATE GUIDE
This is citified that a AMITKUMAR GOMAJI BHAISARE student of B.B.A final year in the Department Bachelor of Business Administration, S.A.C.M.S Gondia for the season 2013-14. He has Completed his project work entitled. DETAILED STUDY OF RATIO ANALYSIS OF SUNFLAG IRON AND STEEL CO. LTD under my guidance on the subject approved by the department. This project is submitted to R.T.M.N.U. in the partial fulfillment of requirement for the degree of Bachelor of Business Administration.

Project Guide
Prof. MAYUR TRIVEDI Department of B.B.A S.A.C.M.S College Gondia.

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DECLARATION
I hereby declare that the project entitled
DETAILED STUDY OF RATIO ANALYSIS OF SUNFLAG IRON AND STEEL CO. LTD Is a bonafide record of work done by me under the supervision of Mr. MAYUR TRIVEDI on behalf of Shankarlal Agrawal College of Management Studies, Gondia. The project is entirely original and has not been submitted to any university for the award of any degree, Diploma or any similar title.

PLACE: GONDIA DATE:

AMITKUMAR G. BHAISARE Department of B.B.A S.A.C.M.S College Gondia.

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ACKNOWLEDGEMENT
The compilation of this dissertation in the present form has been possible only because of the valuable guidance encouragement and assistance of Mr. N.K. SHIL, DY.MANAGER (FINANCE) of Sunflag Iron & Steel Co.Ltd. Mr. N.K. SHIL is financially qualified and an experienced parson in Sunflag Ltd. gave his fullest co-operation and hands to me in carrying Out this research study. I am also thankful to Sunflag Iron & Steel Co. Ltd for giving me an Opportunity to study on Financial Ratio Analysis. I tend deep sense of gratitude to Mr. MAYUR TRIVEDI, my guide, for guidance given to me. Lastly, I thanks to all faculty members and others who directly or indirectly Helped me in completing this project.

PLACE: GONDIA DATE:

AMITKUMAR G. BHAISARE Department of B.B.A S.A.C.M.S College Gondia.

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SHANKARLAL AGRAWAL COLLEGE OF MANAGEMENT STUDIES, GONDIA

CONTENTS
Topics Introduction Need for Study Objectives Company Profile Research Methodology Data Analysis & Interpretation Conclusion Suggestion Limitation Bibliography
Page No.

7-13 14-15 16-17 18-21 22-29 30-47 48-49 50-51 52-55 56-57

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INTRODUCTION

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SHANKARLAL AGRAWAL COLLEGE OF MANAGEMENT STUDIES, GONDIA

INTRODUCTION
The Financial Statements i.e. Income Statement &The Balance Sheet report what has actually happened to the earnings during a specified period and presents a summary of [Financial] position of the company at a given position of time. The statement of retained earnings reconciles income earned during the year and any dividends distributed with the change in retained earnings between the start and the end of financial year under study. Ratio Analysis is a very powerful analytical tool useful for measuring performance of an organization. The ratio analysis concentrates on the inter relationship among the figures appearing in the aforementioned four financial statements. The ratio analysis helps the management analyze the past performance of the firm and to make the future projections. While interpreting the financial information, the analyst has to be careful in limitations imposed by the accounting concept and methods of valuation. Information of non financial nature will also be taken into consideration before a meaningful analysis is made. Ratio analysis is extremely helpful in providing valuable insight into a companys financial picture. Ratios normally pinpoint a business strengths and weakness in two ways: Ratio provide an easy way to compare present performance with the past Ratio depict the area in which particular business is competitively advantaged or disadvantaged through comparing ratio to those of other business of the same size within the same industry.

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DEFINITION:A study of the relationship between financial variables ratio of one firm are often compared with the same ratio of similar firm or of all firm in a single industry.

OR
An Accounting Ratio or Financial Ratio maybe defined as the mathematical expression of the relationship between two accounting figures but these figures must be related to each other to produce a meaningful and useful ratio.

Ratio can be expressed as:1. Percentage say, gross profit ratio is 20% of sales [calculated by dividing profit Rs. 20,000 by sates Rs. 1,00,000 and multiplying by 100]; 2. Proportion say, current ratio is 2:1 [calculated by dividing current assets Rs. 1,00,000 by current liabilities Rs. 50,000]; 3. Fraction say, net profit is one-tenth of sales [calculated by dividing net profit Rs. 1,00,000]; 4. Times say, capital turnover ratio is 5 times [calculated by dividing net sales Rs. 1,00,000 by capital employed Rs. 20,000]

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CLASSIFICATION OF RATIOS :
In the view of the requirements of the study, ratio are classified into the following four groups Liquidity or Short term Solvency Ratios Solvency Ratios or Long-term Solvency Ratios Activity Ratios Profitability Ratio

Liquidity or Short term Solvency Ratios :


Short-term Creditors are primarily interested in Liquidity or Short term Solvency of the enterprise since their claims are to be met in the short-run. Liquidity or Short term Solvency means the ability of the enterprise to meet short-term obligations as and when they become due. The main types of these ratios are current ratio and quick ratio.

Solvency Ratios or Long-term Solvency Ratios :


Longterm Creditors are primarily interested in long-term solvency of the enterprise since their claims are to be met in the long-run. Solvency ratio show the long-term financial solvency and measure the enterprise ability to pay the interest regularly and to repay the principal on maturity or in pre-determined installments at due dates. The main types of these ratios are debt-equity ratio, proprietary ratio, interest coverage ratio, etc.

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Activity Ratios:
Activity ratios measure the effectiveness with which a fire uses its available resources. These ratios help in commenting on the efficiency of the enterprise in managing its assets. These ratios are also called as Turnover Ratios. The main types of these ratio are stock/inventory turnover ratio, fixed assets turnover ratio, current assets turnover ratio, etc.

Profitability Ratio:
These ratios measure the management overall effectiveness as shown by the returns generated on sales and investment. The main types of these ratios are gross profit ratio, net profit ratio, return on investment or capital employed, etc.

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Importance Ratio Analysis


Ratio analysis stands for the purpose of determining and presenting the relationship of items and group of items in the financial statement. it is an important technique of financial analysis. It is a way by which financial stability and health of a concern can be judged. The following are the main points of importance of ratio analysis: Useful in financial position analysis: Accounting ratios reveal the financial position of any concern. This helps the banks, insurance companies and other financial institutions in lending and making investment decisions. Useful in simplifying accounting figures: Accounting ratios simplify summaries and systematize the accounting figures in order to make them more understandable and in a lucid form. They highlight the interrelationship which exists between various segments of the business as expressed by accounting statement. Often the figures standing alone cannot help them convey any meaning and ratio help them to relate with other figures. Useful in assessing the operational efficiency: Accounting ratios help to have an idea of the working of a concern. The efficiency of the firm becomes evident when analysis is based on accounting ratios. They diagnose the financial health by evaluating liquidity, solvency, profitability, etc. ties help the management to assess financial requirements and the capabilities of various business unit. Useful in forecasting purpose: If accounting ratios are calculated for a number of years, then a trend is established. This trend helps in setting up future plans and forecasting. For example, expenses as a percentage of sales can be easily forecasted on the basis of sales and expenses of the past years.

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o Useful in location the weak spots of the business: Accounting ratios are of great assistance in locating the weak spots in the business even though the overall performance may be efficient. Weakness in financial structure due to incorrect policies in the past or present are revealed through accounting ratio. For example, if a firm finds that increase in distribution expenses is more than proportionate to the result expected or achieved, it can take remedial steps to overcome this adverse situation. o Useful in comparison of performance. Through accounting ratios comparison can be made between one department of the firm with another of the same firm in order to evaluate the performance the of various department in the firm. Manager is naturally interested in such comparison in order to know the proper and smooth functioning of such departments. Ratios also help him to make any change in the organization structure.

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NEED FOR STUDY

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NEED FOR STUDY


A ratio analysis is one of popular tools of financial statement analysis to the firm. The ratio is a pure quality or variable taken form financial statement of a concern. It is a mathematical yardstick that measures the relationship between two financial figures it involves the breakdown for the examined financial report in to component part which them evaluated in relation to each other and to exogenous standards. Financial ratio expedite the analysis by reducing the large number of item involved to a relatively small set of readily comprehended and economically meaningful indicators. Further more many of the ratio tent to deal with different aspects of the same relation, and there is little point in calculating server ratio in order to investigate the same point. Experts have identify some ratio as significant and important since any through considerable light on the financial position of a concern.

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OBJECTIVES

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OBJECTIVES
The objectives of ratio analysis study are as follows:
To determine the financial condition and financial performance of the firm. To involves comparison for a useful interpretation of the financial statement. To help in finding solutions to unfavorable financial statement. To helps to take suitable corrective measures when the financial conditions and performance are unfavorable to the firm, in comparison to other firms in the same industry. To analyze the strength and weakness. To study whether the capital is utilized properly.

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COMPANY PROFILE

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COMPANY PROFILE
SUNFLAG IRON AND STEEL CO. LTD
Sunflag Iron and Steel Company ltd is a prestigious unit of Sunflag group was promoted by Sunflag UK. The Sunflag Group wasfounded by Satyadev Bhardwaj in Kenya in 1937. The Company incorporated in 1984 is engaged in the manufacture of steel products like Rolled products, Billets, Sponge Iron etc. with a present capacity of 150000 MT of Direct reduced Iron, 200000 MT and Alloy Steel Rolled Products and with

captive power plant capacity of 108 million Kwh

The company has set up a state of art integrated plant at Bhandara, India to produce 200000 tones per annum of high quality steel using iron ore and non-coking coal as basic inputs. The products are spring steel rounds flats, carbon steel and alloy steel. They are used by automobile leaf sprig manufacturers, engineering goods manufacturers and the forgings industry Spring steel forms 70% of the total production. The plant comprises a 1,50,000 tones per annum Direct Reduction plant, to produce sponge iron for captive consumption in the Steel Melting Shop. This shop comprises a 50/60 tones ultra. High power Electric is Furnace with Eccentric bottom arrangement; a Ladle auto mould level controller and electromagnetic stirrer. The billets produced at the steel melting shop are rolled at the
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Mannesmann Demag designed ultra modern 18 stand Continuous mill. This mill has a walking hearth reheating furnace, quick roll-changing facilities, a 65 meters long walk and wait type modern cooling bed and above all computerized process control linking and controlling the various

stages. The company came out with a rights issue in Feb 92 to partfinance the capital cost of a 15.5-MW wast heat recovery project to gain full use of waste gases and coal ash/fires generated in the process of making Sponge Iron. Installation of a new Captive Power Plant of 10 MW is under progress. The company has also started manufacturing high value stainless steel for which tremendous growth of domestic and international market is expected.

SUNFLAG IRON & STEEL CO.LTD 33 Mount Road, Sadar, Nagpur 440001.

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The people____________________________
An organization is known by its people. And here we would like to introduce you to the people behind Sunflag.

Our Founder- Shri Satyadev Bhardwaj Chairman-

Mr.P.B. Bhardwaj

Vice Chairman and Managing Director- Mr. Ravi Bhushan Bhardwaj Jt. Managing Director Mr. Pranav Bhardwaj Board of Director- Dr. E.R.C. Shekar (Director)

Mr. S. Gajendran (Director) Mr. CA Jayesh M Parmar (Director) Mr. Naresh Gwalani (Nominee Director) Mr. S.K. Gupta (Whole time Director)
Company Secretary-Mr. Mukesh D. Prakash

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RESEARCH METHODOLOGY

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RESEARCH METHODOLOGY
Research is a common parlance refers to search for knowledge. One can also define research as a scientific and systematic search for pertinent information on a specific topic. In fact, are search in an art of scientific investigation. It is a way to solve to systematically solve the research problem. Some people consider research as a movement from the known to unknown. It is actually a voyage of discovery.

Primary Sources: Primary sources being an integral part has me a lot


discussions were done with the executives of the company and chartered accountant. Based on the discussion my project work has been completed.

Secondary Sources: Besides primary sources a secondary sources has


me to complete my project work. The secondary sources used are Internet Financial journal, ad book

The combination of these two made it easy for me to collect the information and to work on accordingly.

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DEFINATION AND FORMULAE

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DEFINATION AND FORMULAE


A. Short-term Solvency Ratio 1. Current Ratio:
The Current Ratio is a financial ratio that measures whether or not a firm has enough resources to pay its debts over the next 12 month. It compares a firms current assets to its current liabilities. A current ratio should be in the form of 2:1 i.e. the ideal ratio. It means that current assets of a business should at least be twice of its current liabilities. Current Ratio = Current Assets__ Current Liabilities 2. Quick Ratio: The Acid-Test Ratio, Quick Ratio or Liquid Test Ratio measures the ability of a company to use its near cash or quick assets to extinguish or retire its current liabilities immediately. A quick ratio of 1:1 is considered to be a satisfactory ratio. Company having a quick ratio of less than 1 may be meeting its short-term obligations in time because of its very efficient inventory management. Quick Ratio = Quick Assets/ Current Assets-Inventories Quick Liabilities/ Current Liabilities
Note:- A. Current Assets = Cash Balance + Bank Balance + Debtors + Bills Receivable + Marketable Securities + Stock + TDS + Prepaid Expenses + Shortterm Loans & Advances. B.Quick Assets= Cash Balance + Bank Balance + Debtors+ Bills Receivable + Marketable Securities + Short- term Loans & Advances.

C.Current Liabilities= Creditors for Good + bill Payable + Creditors for


Expenses +Bank Overdraft + Provisions for Tax + Short- term Loans & Advances +Unclaimed Divident + Incomes received-in-advances

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B. Long Term Solvency Ratio 1. Debt Equity Ratio:


The Debt Equity Ratio (D/E) is a financial ratio indicating the relative proportion of share holders equity and debt used to finance a companys assets. The ratio is also known as Risk, Gearing or Leverage. Lower than 2:1 equity ratio provides sufficient protection to long-tern lenders

Debt Equity Ratio= Long-term Debt_____________ Share Holder Funds/Net Worth 3. Proprietary Ratio:
The Proprietary Ratio is used to measure the proportion of total assets financed by the Equity or Proprietors Fund. A high proprietary ratio indicates the larger safety margin for creditors and the enterprise is not taking the benefit of trading on equity and a low ratio indicates the greater risk to creditors and the enterprise is taking the benefit of trading on equity. A ratio of 1:4 is considered to be satisfactory.

Proprietary Ratio = Proprietors Funds/ Net Worth * 100 Total Assets 4. Interest Coverage Ratio:
The Interest Coverage Ratio is used to measure the debt servicing capacity of a firm so for far as fixed interest on long-term debt is concerned. It compares the net profit before tax and interest on long-term debt. Higher the ratio, greater the firms ability to pay interest.

Interest Coverage Ratio = Net Profit beforeTax and Interes Interest on Long-term Debt

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C. Profitability Ratio:

1. Return on Capital Employed / Return on Investment:


This ratio is to find out how efficiently the long-term funds supplied by the creditors and share holders have been used. This ratio measures on the comparisons of net profit before interest & tax and capital employed. Higher the ratio, more efficient the management and utilization of total assets.

ROI = Net Profit before Interest & Tax * 100 Capital Employed / Net Worth

2. Gross Profit Margin:


This ratio is used to determine the efficiency with production and/ or purchase operations and selling operations are carried on. It is used to compare profitability department-wise or product-wise. This ratio measures the relationship between gross profit and net sales. Higher the ratio, the more efficient the production and/ or purchase management.

Gross Profit Margin = Gross Profit * 100 Sale

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3. Net Profit Margin:


This ratio is used to determine the overall profitability due to various factors such as operational efficiency, trading on equity, etc. this ratio measures the relationship between net profit before/after interest & tax sales. Higher the ratio, greater is the capacity of the firm to withstand adverse economic conditions and vice versa.

Net Profit Margin= Net Profit before Interest and Tax * 100 Sale OR Net Profit Margin = Net Profit after Interest and Tax * 100 Sale 5. Return on Equity:
This ratio is used to find out how efficiently the funds supplied by all shareholders (Equity & Preference) have been used. This ratio measures the relationship between net profit after interest & tax and shareholders funds. Higher the ratio, the more efficient management and utilization of shareholders fund.

ROE = Profit after Interest and Tax * 100 Shareholders Funds / Net Worth

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D. Activity Ratio: 1. Inventory Turnover Ratio:


This ratio is used to determine the efficiency with which the inventory is converted into sales. This ratio establishes a relationship between costs sold and average inventory of finished goods. A firm should have neither a high nor a very low stock turnover ratio; it should have a satisfactory level.

Inventory /Stock Turnover Ratio = Cost of Goods Sold Average Stock 2. Fixed Assets Turnover Ratio:
This ratio is used to determine the efficiency with which the fixed assets are utilized. This ratio establishes a relationship between net sales and net fixed assets. Higher ratio, the more efficient the management and utilization of fixed assets and vice versa.

Fixed Assets Turnover Ratio = Net Sales Net Fixed Asset 3. Current Assets Turnover Ratio:
This ratio is used to determine the efficiency with which the current assets are utilized. This ratio establishes a relationship between net sales and current assets. Higher the ratio, the more efficient the management and utilization of current assets and vice versa.

Current Assets Turnover Ratio = Net Sales Current Assets

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DATA ANALYSIS AND INTERPRETATION

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DATA ANALYSIS AND INTERPRETATION


A. LIOUIDITY RATIOS: 1. Current Ratio:-

Current ratio = Current Assets___ Current Liabilities

Year 2010 2011 2012 2013

Current Assets 433.70 589.31 625.26 823.46

Current Liabilities 198.78 253.73 263.39 459.11

Current Ratio 2.18 2.32 2.37 1.79

Interpretation
The current ratio of the company is 1.79:1; hence the liquidity position of the company is satisfactory. These shows that the companys financial position is good and the company can run day-to-day operations.

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2. Quick Ratio:-

Quick ratio = Current Assets - Inventories Current Liabilities


Current Assets 433.70 589.31 625.26 823.46 Inventories 165.98 254.89 299.03 391.11 Current Current Liabilities Ratio 198.78 253.73 263.39 459.11 1.33 1.31 1.23 0.94

Year 2010 2011 2012 2013

Interpretation
The quick ratio of the company is satisfactory, it shows that company has good strength to fulfill its obligations and indicates that the company is not too much depends upon the short-term fund to finance current assets.

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B. Solvency Ratios: 1. Debt Equity Ratio:Debt Equity Ratio = Long Term Debt/Loans__________ Share Holders Fund or Net Worth

Year 2010 2011 2012 2013

Loans 312.39 328.82 437.08 531.11

Net Worth/ Shareholder Fund 328.19 413.60 474.70 494.07

Debt Equity Ratio 0.95 0.80 0.92 1.07

Interpretation
The debt equity ratio of the company is satisfactory; it shows that the company can secure the long-term lenders more securely. Ratio i. e. 1.07 provides sufficient to long-term lenders.

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2. Interest Coverage Ratio:Interest Coverage Ratio = Profit Before Tax Interest

Year 2010 2011 2012 2013

PBT 88.32 158.15 128.26 83.20

Interest 30.44 30.04 37.44 53.05

IC Ratio 2.90 5.26 3.42 1.57

Interpretation
These ratio shows that the profit is decreases in current year but average interest paid is normal ratio i. e. 1.63.

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3. Proprietary Ratio: Proprietary Ratio = Proprietor Fund/ Net Worth * 100 Total Assets

Year 2010 2011 2012 2013

Net Worth 328.19 413.60 474.70 494.07

Total assets 640.58 742.43 911.78 1,025.18

DE Ratio 51.2% 55.70% 52.06% 48.19%

Interpretation
These table shows that the company has a high proprietary ratio. The company has a high proprietary ratio, so that larger safety margin for creditors & the company is not taking benefit from the trading on equity.

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C. Profitability Ratios

1. Return on Investment: ROI = EBIT * 100__ Total Assets

Year 2010 2011 2012 2013

EBIT 88.32 158.15 128.26 83.20

Total assets 640.58 742.43 911.78 1,025.18

ROI 13.78% 21.30% 14.06% 8.11%

Interpretation
The ROI the fluctuations in the ratios of last four years. The table shows that the ratio is low, so the management not efficiently utilizes the capital employed.

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2. Return on Equity: -

ROI = Profit After Tax * 100 Net Worth

Year

Profit after Tax 43.60 94.90 70.53 19.37

Net Worth

ROI

2010 2011 2012 2013

328.19 413.60 474.70 494.07

13.28% 22.94% 14.86% 3.92%

Interpretation
The ROE show the fluctuations in the ratios of last four years. The table shows that the ratio is low, so the management not efficiently utilizes the share holders fund.

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3. Gross Profit Margin: -

Gross Profit Margin = Gross Profit * 100 Sale

Year 2010 2011 2012 2013

Gross Profit 83.37 153.18 122.66 77.92

Sale 1,102.47 1,349.63 1,544.07 1,618.18

Gross Profit Margin 7.56% 11.34% 7.94% 4.81%

Interpretation
The ratio indicates that the management of the company utilizing the fund efficiently and effectively and also efficient in the production &/or purchase management.

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4. Net Profit Ratio:-

Net Profit Ratio = Net Profit after Tax & Interest *100 Sale

Year 2010 2011 2012 2013

NPIT 43.60 94.90 70.53 19.37

Sale 1,102.47 1,349.63 1,544.07 1,618.18

Gross Profit Margin 3.95% 7.00% 4.55% 1.19%

Interpretation
The ratio indicate that the company may be withstand adverse economic conditions and vice versa.

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D. Activity Ratios 1. Inventory Turnover Ratio:-

Inventory Turnover Ratio = Cost of Goods Sold Average Stock


Year 2010 2011 2012 2013 Cost of Goods Sold 1,116.71 1,410.17 1,561.96 1,705.35 Average Stock 165.89 254.89 299.03 391.84 ITR 6.73 5.53 5.22 4.35

Interpretation
A high inventory ratio indicates that maximum sales turnover achieve the minimum investment in inventory the above table shows that during years 2009 ratio is high but after 1ward gradually decreases.

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2. Fixed Assets Turnover Ratio:-

Fixed Assets Turnover Ratio = Cost of Goods Sold Fixed Assets

Year

Cost of Goods Sold 1,116.71 1,410.17 1,561.96 1,705.35

Fixed Assets

FAT Ratio

2010 2011 2012 2013

640.58 742.43 911.78 1,025.18

1.74 1.89 1.71 1.66

Interpretation
A low fixed assets turnover ratio indicates that the fixed assets are turning. An above table shows that firm has an ability to generate sales per rupee of investment in fixed assets.

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3. Current Assets Turnover Ratio:-

Current Assets Turnover Ratio =

Net Sales______ Current Assets


CAT Ratio

Year

Sales

Current Assets

2010 2011 2012 2013

1,102.47 1,349.63 1,544.07 1,681.18

247.36 382.63 445.38 594.12

4.45 3.52 3.46 2.72

Interpretation
An above table shows that the firm has an ability to generate sales per rupee of investment in current assets.

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RATIO ANALYSIS
RATIO ANALYSIS Profitability Ratios Gross Profit Margin (%) Net Profit Margin (%) Return On Capital Employed (%) Return On Equity (%) liquidity Ratios Current Ratio Quick Ratio Solvency Ratios Debt Equity Ratio Proprietary Ratio (%) Interest Cover Ratio Activity Ratios Inventory Turnover Ratio Fixed Assets Turnover Ratio Current Assets Turnover Ratio 4.35 1.66 2.72 5.22 1.71 3.46 5.53 1.89 3.52 6.73 1.74 4.45 1.07 48.19 1.57 0.92 52.06 3.43 0.80 55.70 5.26 0.95 51.2 2.90 1.00 0.94 1.29 1.22 1.77 1.30 1.94 1.33 4.81 1.19 8.11 3.92 7.94 4.55 14.06 14.85 11.34 7.00 21.29 22.94 7.56 3.93 13.78 13.28 Mar,12 Mar,11 Mar,10 Mar,09

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Consolidated Balance Sheet

--------------- in Rs. Cr.---------------

Mar12 Mar11 Mar10 Mar10 12 mths 12 mths 12 mths 12 mths

BALANCE SHEET
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Net Block Total Share Capital

Sources of Funds

416.93 162.20

345.20 162.20

EquityWork Share Capital inCapital Progress Share Application Money Investments


Inventories

162.20 236.25 0.00 7.65


391.84

162.20 221.10 0.00 7.58 0.00 0.00 0.00 140.90 0.00 312.50 0.00 474.70 338.43 102.69 441.12 1.84 0.00 0.00 915.82 Mar11
299.03 12 mths

0.00 0.00 Preference Share Application Money 149.60 0.00 Sundry Debtors Employee Stock Option 0.00 Reserves 331.78 Revaluation Reserves 0.00 Net Worth 494.07 Secured Loans 448.55 Unsecured Loans 82.56 Total Debt 531.11 Minority Interest 0.00 Policy Holders Funds 0.00 Group Share in Joint Venture 0.00 Total Liabilities 1,025.18 Mar12
12 mths

Preference Share Capital Init. Contribution Settler

370.99 162.20 162.20 51.33 0.00 57.56 0.00 254.89 0.00 0.00 121.69 0.00 251.40 0.00 413.60 184.33 148.54 332.87 1.84 0.00 0.00 746.47 Mar10 12 mths

320.84 162.20 162.20 93.09 0.00 1.22 0.00 165.89 0.00 0.00 75.81 0.00 165.99 0.00 328.19 195.17 117.23 312.40 0.00 0.00 0.00 640.59 Mar10 12 mths

Application of Funds Gross Block Less: Accum. Depreciation

1,010.94 897.07 594.01 551.87

883.36 512.37

795.37 474.53

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Cash and Bank Balance Total Current Assets Loans and Advances Fixed Deposits Consolidated

52.68 594.12 229.34

38.85 478.78 131.77

9.22 385.80 168.53

5.79 247.49 161.70

Profit & Loss 0.00 Account


823.46

------------ in Rs. Cr.-----------0.00 25.23 19.33


610.55

Total CA Loans & Advances Deferred Credit Current Liabilities Income Provisions

PARTICULAR

Mar12

Mar11

579.56

Mar10

428.52

Mar09

0.00 12 mths 346.61 112.50 459.11 364.35 0.00 0.00 0.00 1,025.18 89.56 30.46

0.00 12 mths 188.11

0.00 12 mths 191.13 62.70

0.00 12 mths 100.70

Sales Turnover Excise Duty

1,778.86 71.29 1,689.77 160.68 145.70


259.40 351.15 0.00 0.00 0.25 917.70 183.59 29.27

1,445.35 98.08 1,235.47 104.72 132.99


198.78 229.74 0.00 -3.18 0.10 643.77 71.23 20.23

Total CL & Provisions Net Current Assets Minority Interest Group Share in Joint Venture Miscellaneous Expenses Total Assets Contingent Liabilities Book Value (Rs)

253.83 325.73 0.00 0.00 0.25 748.30 169.53 25.50

P&L ACCOUNT

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Net Sales Other Written Off Other Income Profit Before Tax Stock Adjustments Extra-ordinary items Total Income PBT(Post Extra-ord Items) Expenditure Tax Raw Materials Reported Net Profit Power & Fuel Cost Minority Interest Employee Share of P/LCost of Associates Other Manufacturing Net P/L After Minority Expenses Interest &Share of Associates Selling and Admin Expenses Miscellaneous Expenses Preoperative Exp Capitalized Total Expenses

1,618.18 1,544.07 1,349.63 1,102.48 0.00 0.00 0.00 0.00 5.28 5.60 4.96 4.95 30.15 90.82 128.10 57.88 81.89 0.00 55.58 9.28 1.81 -0.22 0.00 0.47 1,705.35 1,549.67 1,410.17 1,116.71 31.96 90.60 128.10 58.35 12.59 20.07 33.19 14.76 1,099.5270.53 1,031.35 94.90 820.34 43.60 765.70 19.37 140.99 0.00 0.00 107.57 0.00 66.38 0.00 0.00 71.64 0.00 83.05 0.00 59.65 0.00 46.23 0.00 60.41 70.75 263.23 94.90 51.25 43.13 27.23 62.64 62.62 0.00 1,497.82 Mar12
12 mths

PARTICULAR Operating Profit


Other Recurring Income PBDIT Interest PBDT Depreciation

0.00 49.27 0.00 1,381.77 Mar11


12 mths

110.10 9.66 0.00 1,158.57 Mar10


12 mths

73.18 9.45 0.00 988.16 Mar09


12 mths

120.36 5.28 125.64 53.05 72.59 42.44

162.30 5.60 167.90 37.44 130.46 39.64

191.06 4.96 196.02 30.04 165.98 37.88

114.31 4.95 119.26 30.44 88.82 30.94

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Total Value Addition Preference Dividend Equity Dividend Corporate Dividend Tax Per Share Data (ann.) Share in issue (lakhs) Earning Per Share (Rs) Equity Dividend (%) Book Value (Rs)

398.30 0.00 0.00 0.00 1,621.98 1.19 0.00 30.46

395.55 0.00 8.11 1.32 1,621.98 4.35 0.00 29.27

338.23 0.00 8.11 1.38 1,621.98 5.85 0.00 25.50

222.47 0.00 8.11 1.38 1,621.98 2.69 0.00 20.23

CONCLUSION

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CONCLUSION
Financial statements contain lots of information summarized in figures. Viewed on the surface, they do not provide enough information about the viability of the reporting entity. Thus, they need to be analyzed by means of financial ratios to unravel the mass of truth hidden in them, and to enhance decision-making.
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Ratio analysis helps to reveal, compare and interpret salient features of financial statements. When applied to a set of financial statements, financial ratios highlight significant aspects of the financial position and operational results of a business requiring further investigation. They help to identify the strengths and weaknesses of a business. In fact, ratio analysis helps to evaluate the past performance, the present condition, and the future prospects of a business. It enables us to ask the right questions about a business, and paves way to finding the useful answers. Such analysis therefore, aids planning, control, forecasting and decision-making.

SUGGESTION

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SUGGESTION
Technology policy is to be so designed by the government that it will generate the thirst to update the technology by the steel producers.*

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R&D focus is to be increased substantially. Expenditure on R&D by steel plants should be increased. With a strong R&D base, organizations will be able to assimilate the technology faster. Organizational adjustments must be made while adopting newer technologies. Effective human resource policy will help speedier technology adoption. Socio-economic aspects should be dovetailed while selecting a technology. As per the profitability ratio is not in increasing position. So as per my analysis, company must make more efforts for increasing the profitability ratio. The company must also make effort to increase the market value of shares. By making lots of efforts as per my data collection and calculations there is no need of any more suggestions as the company has sound business policy. Raw material holding period for the steel company should be least more than 25 days, so than in case of contingency like lack in supply of raw material, etc. The company production cycle will not be disturbed. Companies average collection period should not be more than 4 months.

LIMITATIONS

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LIMITATIONS
Ratio analysis is very important in revealing the financial position and soundness of the business. But in spite of its advantages. It has some limitations which restrict its use. These limitations should be kept in mind while making use ratio analysis for interpreting the financial statement. The following are the main limitations of accounting ratios:
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1. False results if based on incorrect accounting data. Accounting


ratios can be correct only if the data (on which they are based) are correct. Sometime, the information given in the financial statement is affected by window dressing, i.e. showing position better than what actually is. For example if inventory valued or depreciation is not charged on fixed assets, not only will have an optimistic view of profitability of the firm but also of its financial position. So the analyst must be on the lookout for sign of window dressing, if any.

2. No idea of probable happening in future. Ratios are an attempt


to make an analysis of the past financial statement; so they are historical documents. Now a days keeping in view the complexities of the business it is important to have an idea of the probable happenings in the future. 3. Variation in accounting methods. The two firms results are comparable with the help of accounting ratios only if they follow the same accounting methods or bases. Comparison will become difficult if the two concerns follow difficult methods of providing depreciation or valuing stock. Smartly if the two concerns are following two different standards or methods, an analysis by reference to the ratios would be misleading. Moreover utilization of inbuilt facilities and scale of operation would affect financial statement of different firms.

4. Price level changes. Changes in price levels make comparison for


various years difficult. For example, the ratio of sales to total assets in 2005 would be higher than in 2000 due to rising prices, fixed assets being shown at cost price and not at market price.

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5. Only one method of analysis. Ratio analysis is only the beginning


and gives just 2 fraction of information needed for decision making. So, to have a comprehensive analysis of financial statement, ratio should be used along with other methods of analysis.

6. No common standards. It is very difficult to lay down common


standard for comparison because circumstances differ from concern to concern and the Nature of each industry is different. For example, a business with current ratio of more than 2 : 1 might not be in position to pay current ratio of more than 2 : 1 might not be in a position to pay current liabilities in time because of an unfavorable distribution of current assets in relation to liquidity. on the other hand, another business with a current ratio of even less than 2 : 1 might not be experiencing any difficulty in making the payment of current liabilities in time because of its favorable distribution of current assets in relation to liquidity.

7. Different meaning assigned to the same term. Different firms


in order to calculate ratios may also assign different meanings. For example, profit for calculating a ratio may be taken as PBIT or PBT (after interest) or even PAT (after interest and tax). This may affect the calculation of ratios in different firms and such ratio when used for comparison may lead to wrong conclusions.

8. Ignores qualification factors. Accounting ratios are tools of


quantitative analysis only. But sometimes qualification factors may surmount the quantitative aspects. The calculation derived from the ratio analysis under such circumstances may get distorted. For example,
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though credit may be granted to a customer on the information regarding his financial position, yet the grant of credit ultimately depends on debtors character, honesty, past records and his managerial abilities.

9. No use if ratios are worked out for insignificant and unrelated figures. Accounting ratios may be worked for any two
insignificant or unrelated figures as ratio of sales and investment in government securities. Such ratio may be misleading. Ratios should not be calculated on the basis of cause and effect calculating a ratio between two figures.

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BIBLIOGRAPHY

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BIBLIOGRAPHY
Book Refers :
Financial Management Financial Management Financial Analysis by Dr. P. C. Tulsian by Dr. I. M. Pandey by James O Gill

Web site Visites


www.Sunflag.com www.Wikipedia.com www.Investopedia www.Google.com www.Monymarket.com

Sources of Data
Annual report of Sunflag Iron and Steel Company Ltd. for the year 20102013.

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