Ratio Analysis at NSL

EXECUTIVE SUMMARY
Ratio Analysis is one of the techniques of financial analysis where ratios are used as a yardstick for evaluating the financial condition and performance of a firm. Analysis and interpretation of various accounting ratios gives a better understanding of financial condition and performance of firm. Trend ratios indicate the direction of change in the performance improvement, deterioration or constancy- over the year. Objectives of the study: . To help the management in its planning and forecasting activities. !. To evaluate operational efficiency, liquidity, and solvency of "#$. %. To help the management in having effective control over the activities of different departments. &. To compare the previous five years and present year performance of the company. '. To give suggestion and recommendation based on the study. (or the study "irani sugars $td, is considered. The ratio analysis is done using the )ncome statements and *alance #heets of the company between !++' to !++,. -ata )nterpretation on trend ratio analysis is carried out at "#$ at .ulali cross Tq/ 0udhol -ist/ *agalkot .arnataka #tate. (or study, of five years is considered and compared it1s performance over the period of five years. (or result analysis and 0# 23cel #oftware package are used. (rom the analysis, ) am able to indicate following finding of the firm . (rom the current ratio it is found that the ratio is not satisfactory because the 4 increase in current assets is less than the 4 increase in current liabilities during the year !++'-!++,.The highest ratio recorded is %.+& in !++' and the lowest ratio recorded is +.&! in the year !++5.And less than the standard ratio. !. (rom the gross profit ratio it is found that the ratio is satisfactory during the last three years from !++5 to !++,. The highest ratio recorded in the year !++6 is ! .7' and the lowest ratio recorded is +. in the year !++'.

%. (rom the operating profit ratio it is found that the ratio is highly satisfactory during the considered financial years. The highest ratio recorded is ++.+6 in the year !++5 and the lowest is 77.'7 in the year !++&.

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Ratio Analysis at NSL (inally study concluded by giving some suggestion in view of improving performance and efficiency of the company.

BABASAB PATIL

Ratio Analysis at NSL

INTRODUCTION
Ratio analysis is a technique of analy8ing the financial statement of industrial concerns. "ow a day this technique is sophisticated and is commonly used in business concerns. Ratio analysis is not an end but it is only means of better understanding of financial strength and and weakness of a firm. Ratio analysis is one of the most powerful tools of financial analysis which helps in analy8ing and interpreting the health of the firm. Ratio1s are proved as the basic instrument in the control process and act as back bone in schemes of the business forecast. ith the he!" of #$tio %e c$& dete#'i&e The ability of the firm to meet its current obligation. The limit or e3tent to which the firm has used its borrowed funds. The efficiency with which the firm is utili8ing in generating sales revenue. The operating efficiency and performance of the company . C!$ssific$tio& of R$tios Ratios can be classified into different categories depending upon the basis of classification. I( TRADITIONA) C)ASSI*ICATION Traditional 9lassification has been on the basis of financial statements, on which ratio may be classified as follows. . :rofit ; $oss account ratios. 2.g. <ross :rofit Ratio, "et :rofit Ratio, =perating Ratio etc !.*alance sheet ratio. 2.g. 9urrent Ratio, -ebt 2quity Ratio, >orking 9apital Ratio etc %. 9omposite?0i3ed ratio. 2.g. #tock Turnover Ratio, -ebtors Turnover Ratios, (i3ed Assets Turnover Ratio etc

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Ratio Analysis at NSL II( *UNCTIONA) C)ASSI*ICATION O* RATIOS (unctional ratios . $iquidity ratios a@ 9urrent Ratio b@ Auick Ratio !. $everage Ratios a@ -ebt-equity Ratio b@ 9urrent Asset to :roprietor1s fund Ratio III( +RO,A,I)ITY RATIOS a. <ross profit Ratio b. =perating profit Ratio c. Return on investment IV( ACTIVITY RATIO i. )nventory Turnover Ratio ii. Asset Turnover Ratio/ a. (i3ed Asset Turnover Ratio b. 9urrent Asset Turnover Ratio iii. >orking 9apital Turnover Ratio.

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Ratio Analysis at NSL

COM+ANY +RO*I)E

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Ratio Analysis at NSL

INDUSTRY +RO*I)E

The -isto#ic$! ,$c./#ou&d of the I&di$& Su/$# I&dust#y: The sugar industry is proud to be an industry, which spreads the taste of sweetness to the mankind. The history of origin of this industry is as old as the history of main him self. #ugar is generally made from sugarcane and beet. )n )ndia, sugar is produced mainly from sugarcane. )ndia had introduced sugarcane all over the worlds and is a leading country in the making sugar from sugarcane. B#aint Cishwamitra1 is known as the research person of the sugarcane in religious literature. >e can find the e3ample of sugarcane in Cedic literature also as well as sugarcane. >e can also find the reference of sugar and the sugarcane in :atanDali1s 0ahabashya and the treaty on the grammar of B:anini1. <reek traveler B"iyarchus1 and 9hinese traveler BTai-#ung1 have mentioned in their travelogue that the people of )ndia used to know the methods of making sugar and Duice from sugarcane the great 2mperor Ale3ander also carried sugarcane with him while returning to his country. Thus from different historical references and from some B:uranas1 it can be concluded that method of making sugar from sugarcane was known To the people of *ihar. The historical evidences of sugar industry prospering in ancient)ndia concrete and this has helped to develop and prosper the co-operative sugar movement in )ndia.

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Ratio Analysis at NSL N$tio&$! Sce&$#io Of Su/$# I&dust#y: The first sugar mill in the country was set up in ,+% in the Enited :rovinces. There are '77 installed sugar mills, of which &'% were in operation in the year !++!-+% and utili8ed ,&.& million ton of sugarcane F7,4 of total cane production@ to produce !+. & million tons of sugar. About ' lakhs workmen are directly employed in the sugar. About ' lakhs workmen are directly employed in the sugar industry besides many in industries, which utili8e by-products of sugar industry as raw material. )ndia is the largest consumer and second largest producer of sugar in the world. The )ndian sugar industry is the second largest agro-industry located in the rural )ndia. )ndian sugar industry has been a focal point for socio-economic development in the rural areas. About '+ million sugarcane farmers and a large number of agricultural laborers are involved in sugarcane cultivation and ancillary activities, constituting 5.'4 of the rural population. *esides, the industry provides employment to about ! million skilled?semi skilled workers and others mostly from the rural areas. The industry not only generates power for its own requirement but surplus power for e3port to the grid based on byproduct *agasses. )t also produces ethyl alcohol, which is used for industrial and potable uses, and can be used to the manufacture 2thanol, an ecology friendly and renewable fuel for blending with petrol. The sugar industry in the country uses only sugarcane as inputG hence sugar companies have been established in large sugarcane growing states like Ettar :radesh, 0aharashtra, .arnataka, <uDarat, Tamilnadu, and Andhra :radesh. )n sugar year !++%-+&, these si3 states contribute more than 6'4of total sugar production in the countryG Ettar :radesh, 0aharashtra, and .arnataka together contribute more than 7'4of total production. The government of )ndia licensed new units with an initial capacity of !'+ T9- up to the ,6+s and with the revision in minimum economic si8e to !'++ T9-, the <overnment issued licenses for setting up of !'++ T9- plants thereafter. The government de-licensed sugar sector in the year of .#eptember. ,66.

The entrepreneurs have been allowed to set up sugar factories of e3pand the e3isting sugar factories as per the techno-economic feasibility of the proDect. However, they are required to maintain a radial distance of ' kms from the e3isting sugar factory.

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Ratio Analysis at NSL After de-licensing, a number of new sugar plants of varying capacities have been set up and the e3isting plants have substantially increased their capacity. There are '77 installed sugar mills in the country as on 0arch % mills are located in 6 states of the country. The secto# %ise b#e$. u"0s $s fo!!o%s/ T$b!e &o12 #l. "o. . !. %. Total #ector :rivate :ublic 9o-operative "o of factories 6, 7! % ' '77
st

!++', with a

production capacity of 6+ lack 0Ts of sugar, of which only &'% are working. These

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Ratio Analysis at NSL

TIT)E: +RO3ECT ON RATIO ANA)YSIS AT NS)

Objectives of the study: 7. To help the management in its planning and forecasting activities. 5. To evaluate operational efficiency, liquidity, and solvency of "#$. 6. To help the management in having effective control over the activities of different departments. ,. To compare the previous five years and present year performance of the company. +. To give suggestion and recommendation based on the study. )IMITATION O* T-E STUDY @ The study is limited to few ratios because of non availability of detailed financial data. !@ The study is used on secondary data such as annual report of the company %@ The reliability and accuracy of calculation depends more on information found in profit and loss a?c and balance sheet. &@ The study is confined only to a period of ' years. MET-ODO)O4Y The study is conducted at "irani #ugars $td, 0udhol. TqG 0udhol, -ist/ *agalkot. #=ER92# =( -ATA 9=$$29T)=" The data is collected in two types @ :R)0ARI -ATA !@ #29="-ARI -ATA 25 +#i'$#y d$t$: )t will be collected with the help of interaction with the employee of "#$, and the internal guide. 65 Seco&d$#y d$t$:

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Ratio Analysis at NSL Through Annual Reports of the company, 0aga8ine etc.

COM+ANY +RO*I)E
"ame of the company Address / ")RA") #E<AR# $)0)T2-. 0E-H=$ / ")RA") #E<AR# $)0)T2-. C)"AIA. "A<AR, #I "=- 77 "2AR .E$A$) 9R=##, JA0A.HA"-) R=A-, 0E-H=$ '65% % -)#T/ *A<A$.=T Regd. =ffice / K !+'%, High :oint- )) &' :alace Road, *angalore '7+ ++ *ranch =ffice #tatus of 9ompany 9onstitution of the firm (inancial )nstitutions *ankers of the 9ompany / *iDapur / #ole trading concern. / Registered under companies act ,'7 / ..#.).-.9, )-*), *=), ..#.(.9 / ).9.).9.) *ank Jamakhandi #.*.) 0udhol *ranch. )ndian *ank $okapur. <rameen bank 0udhol. :roducts / #ugar F$%+, 0%+, #%+@ 0olasses, :ress 0ud, *agasse. 2lectricity. :ress 0ud ? (ilter cake #ugar #toring 9apacity / This is also another type of product. )t is sold for Rs.!'+ per Ton. / ! lakh *ags.

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Ratio Analysis at NSL

-ISTORY O* NIRANI SU4ARS )TD(

0?s. ")rani #ugars $imited F"#$@, a company incorporated on the 7 th -ec, ,,' under the 9ompanies Act, ,'7 has applied for Term $oan of Rs. '.,+ crores to #ugar -evelopment (undF#-(@ for meeting part of the capital cost of its proDect envisaging moderni8ation ; up-gradation of e3isting sugar factory with an installed capacity of !'+ T9- to %5'+ T9- with substantial investment at .ulali cross 0udhol Tq. -ist/ *agalkot, .arnataka #tate, "#$ has included in the scope of the proDect, the cogeneration of surplus power also at a total proDect cost of about Rs. ,5.++ crores. F#ugar unit Rs. '%.++ crores and cogeneration unit Rs. &&.++ crores@. Total 9ost of the :roDect, for the #ugar plant e3pansion Rs. '%++ $akhs,FRs. &!.++ 9rores for sugar and .++ crores loading from co-generation plant cost@ consisting of an 2quity 9ontribution of Rs. '.%+ 9rores :romoters, Rs. '.,+ crores equity from #ugar development fund of <ovt. of )ndia ; the balance of Rs. % .6+ crores funded through Term $oans from the (inancial )nstitutions?*anks. The funding for the cogeneration plant costing Rs. &&++.++ $akhs is envisaged by obtaining Rs. %+6+ $akhs from )R2-A, Rs &&+.++ $akhs from promoter1s contribution and Rs. 66+ $akhs from sugar development fund. 0?s. "irani #ugars $imited F"#$@ is a company registered under the )ndian 9ompanies Act, ,'7, initially as :rivate $imited 9ompany, vide registration certificate number +6? ,%&+ of ,,' dated +7. !. ,,' by the registrar of companies in .arnataka, *angalore, #ubsequently, the company has been converted into :ublic $imited 9ompany vide 9ertificate of )ncorporation dated '.+!.!++! by R=9, .arnataka, *angalore. The unit was originally established in the year ,,5-,6 as a modern .handasari #ugar unit with a crushing capacity of '++ tones of cane per day and later converted into white crystal sugar unit. This is one amongst the earliest .handasari unit in the country, which started with a new technology like/

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Ratio Analysis at NSL Fa@ High pressure boiler F%!.+ ATA@ Fb@ 0ultiple effect pressure evaporator system with falling film evaporator and also with captive power generation. #ubsequently making use of the <overnment of )ndia1s liberali8ed policy, vide <ovt. of )ndia notification -9#?#? &?-T- +!-+7- ,,6, which permitted .handasari sugar units to use vacuum system, they moderni8ed the unit quickly by adding vacuum pans and vacuum evaporators. The capacity of the plant was increased in stages to its present capacity of !'+ T9- during !++'-+7. The plant runs fairly efficiently and is self sufficient in fuel and power. )t has recorded an average sugar recovery of over during ,,,-!+++ crushing season. 0?s. "irani #ugar $itd. "ow proposes to e3pand the sugar factory from the present capacity of !'+ T9- to %5'+ T9- by adding a new plant of !'++ T9-, retaining the e3isting plant also. Also 7 0> 9ogen :ower :lant is part of the e3pansion. The proDect appraisal was done by 0ilton 9onsultancy #ervices $imited, :une. percent

,AC74ROUND O* +ROMOTERS The key promoter of the company also 9hairman of the company, 0r. 0urugesh R. "irani is 0ember of the $egislative AssemblyF0$A@, <overnment of .arnataka.

+ROMOTERS : 0?s. "irani #ugars $imited promoted by the following -irectors / . 0r. 0urugesh R. "irani, *.2., -.*.0 F0$A@ !. 0r. Hanumanth Rudrappa "irani, 0.9om $.$.* %. 0rs. .amala 0urugesh "irani, *.A. . 0r. 0urugesh R. "irani, aged about &+ years is the 9hief promoter and the 9hairman ; managing -irector of the company, is a Technical <raduate and is the sitting $egislator F0$A@ representing *ilagi constituency in Assembly of .arnataka, He hails from an agricultural family from *ilagi Taluk of *agalkot -istrict. He started his carrier as an industrialist by settling up a modern .handasari sugar plant at 0udhol. 0r. 0.R. "irani has also co-promoted a !'++

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Ratio Analysis at NSL T9- sugar plant at *adagandi village in *ilagi taluk vi8. *ilagi #ugars $imited in which he holds the position of 0anaging -irector. This unit has Dust successfully completed trial runs and started commercial operations Fduring January !++7@. 0rs. 0.R. "irani has also been recogni8ed and awarded *harat Edyog Ratna award from govt. of )ndia. He has the credit of taken over a sick mini cement plant of ++ T:- capacity at 0udhol and successfully put into commercial operation with an increased capacity of !++T:- within a short span of time. His social services contributed in setting up residential schools, -.2d. college at 0udhol. !. 0r. Hanumanth R. "irani, aged about &+ years is a post graduate in commerce and also a leading advocate in *ilagi Tq. He is the brother of 0r. 0urugesh R. "irani and is also actively involved in the day-to-day operations of the sugar plant. %. 0rs. .amala 0urugesh "irani aged about %! years is another director on the *oard of the company and is the wife of 0r. 0urugesh R. "irani, who associates 0r. 0urugesh R. "irani and 0r. Hanamanth R. "irani in company matters. As could be observed the company is a family concern and the overall management of the 9ompany rests with 9hairman #hri. 0urugesh R. "irani who is assisted by the other *oard of -irectors. *$cto#s ,ehi&d Est$b!ish'e&t . Abundant available of resources like raw materialFsugarcane@, labors Fskilled ; semi skilled@, transportation facilities, banking facilities, !. (ertile land with having irrigation facilities. F<$*9, .rishna River, <hataprabha river@ %. "o strong competitors. &. <ovt. #upport.

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Ratio Analysis at NSL

+RODUCT +RO*I)E
+#oduct +#ofi!e: 0ain product >hite 9rystal #ugar/ The main product of the sugar manufacturing process is white crystal sugar .This white crystal sugar is manufacturing in the following grades/ $-%+ L $arge si8e sugarM 0-%+ L 0edium si8e sugarM #-%+ L#mall si8e sugarM #!-%+ L Cery small si8e sugarM ,y8 +#oducts of Su/$# C$&e: The sugar mill produces many by-product along with sugar. A typical sugarcane comprising of '+++ tons capacity can produce %&' on of sugar, 6+++ liters alcohol % tons of yeast, ' tons of potash fertili8er, !' ton of press mud fertili8er and 5'+ kw of power from bagasse. Mo!$sses: 0olasses is the final effluent obtained in the preparation of sugar by repeated crystalli8ation. 0olasses still contains some quantity of sugar, but this sugar cannot be e3tracted by usual technology. )t is the end product from a refining process carried out to yield sugar. #ucrose and invert sugars constitute a maDor portion F&+ to 7+4@ of 0olasses. The yield of 0olasses per ton of sugarcane varies in range of %.'' to &.'4. 0olasses is mainly used for the manufacturing of ethyl alocoholFethanol@,Ieast and cattle feed "#$ produces alcohol from the molasses left after the e3traction of sugar from cane Duice cane be used both for portable purpose as well an industrial chemical. (urther this alcohol can be again purified to produce fuel alcohol that cane be blended with petrol. 2thanol is in turn used to produce portable liquor and down stream value added chemical such as acetone, acid, butanol, acetic anhydride, etc. face stiff competition form production through the petrochemical route.

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Ratio Analysis at NSL The government controls the e3pert of molasses through e3port license issued for every quarter. 0olasses and alcohol crop based industries were decontrolled in ,,% and being controlled by respective state government polices. "early 5+' of the alcohol produced is consumed by portable alcohol sector. The molasses prices that used to rule around !++ per ton during the yearly niceties shot up to Rs. &++ per ton as a result of decontrol crop in ,,7, the prices came down to Rs .&++ level. The increase in e3cise duty to specific rate of Rs.'++ per ton in ,,5 budget lend to sharp increase in molasses price. ,$/$sse: *agasse is a fibrous residue of cane stalk that is obtained after crushing an e3traction of Duice. )t consists of water, fiber an relatively small quantities of soluble solids, the composition of bagasse various based on the variety of sugarcane, maturity of cane, method of harvesting composition is given below. 9="T2"T 0oisture (iber #oluble solids RA"<2 )" 4 &7-'! &%-'! !-7 and the efficacy of the sugar mill, the usual bagasse

*agasse is usually as a combustible in the furnaces to produce steam, which in turn is used to generate power, it is also used as raw materials for production of paper and as feedstock for cattle. +o%e# 4e&e#$tio& +!$&t: :ower plant uses the fiber of the processed sugar cane Fbagasse@ as fuel to generate electrically in an environmentally responsible manner. An integarated .! 0> power generates and supplies electricity to the state grid produced for sugar cane waste used to rotate turbines !&0> power is utili8ed in the plant remaining power is supplied to .:T9$.

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Ratio Analysis at NSL A#e$ of o"e#$tio&84!ob$!9N$tio&$!9Re/io&$!: "#$ manufacture is originally from .arnataka. The head office of "#$ umbai,*agalkot sameerwadi plant is main manufacturing plant. 0udhol 0ahalingapur 0alapure #organvi Roogi Ettur Jamakhandi *asavanbagevadi #ameerwadi T$b!e of Su/$# C$&e C#ushed i& diffe#e&t ye$# #l."o ! % & ' 7 5 6 , Iear ,,,-!+++ !+++-!++ !++ -!++! !++!-!++% !++%-!++& !++&-!++' !++'-!++7 !++7-!++5 !++5-!++6 9ane 9rushed F)n $akhs@ &&'6,. '' ,+',5.6 ! 5&'&5.'% &'5%'.&% !5,'&.77 7%!%&. 7+ &5&&+.5%+ %&!67%.5'+ 6% ,+5.'&% Recovery 4 5.7 6.6 ,.5' ,.7 ,.6' 6.7 +.+, !. !.'7 -uration F-ays@ !++ ! ! 6% ! ,, '' 7% ! ! %

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Ratio Analysis at NSL

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Ratio Analysis at NSL

,o$#d of M$&$/e'e&t
. #ri. 0urugesh R. "irani !. #ri. #angamesh R. "irani %. #ri. Hanamanth R. "irani &. #mt. .amala 0. "irani 9hairman ; 0anaging -irector 23ecutive -irector. -irector. -irector.

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Ratio Analysis at NSL

*UNCTIONA) DE+ARTMENTS STUDY O* DE+ARTMENTS

Human Resource -epartment ! % & ' 7 5 0arketing -epartment :urchase -epartment 9ane -evelopment -epartment :roduction -epartment (inance -epartment #ales and -istribution -epartment

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Ratio Analysis at NSL

-UMAN RESOURCE DE+ARTMENT

The Human Resource department is the primarily concerned with the human constitution of an organi8ation. organi8ation. The Human Resource -epartment refers to the systematic approach to the problem of selection, training motivating and retaining personnel in any organi8ation. )t also consider with planning, organi8ing, directing the personnel functions in the organi8ation. )t is concerned with the manpower recruitment, remuneration, promotion, retirement etc., all related to human resource or labors of the

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Ratio Analysis at NSL The de"$#t'e&t is $!so co&ce#&ed %ith #ec#uit'e&t se!ectio& $&d "!$ce'e&t( -evelopment and training to the workers. ! % -evelopment evaluation of the workers. >age and salary administration.

)n "irani #ugars the personnel manager takes all the above responsibilities and undertakes the activities concerned with him. #uitable candidates are selected to a particular Dob according to their qualification and e3perience. There is no necessary to give training to the workers on separate machine other than actual production process. Hence training is given on the Dob only. 0anager and supervisor are continuously inspecting every worker ti access their performance and there is a better scope for hard workers.

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Ratio Analysis at NSL

TIME O**ICE
Time office is one of the important sections of administration department. This section maintains the attendance of workers. )t also shows records of a particular workers about his working hours, dit, etc. it evaluates the workers punctuality, discipline and uniforms and maintains documents and records for the future reference purpose. *UNCTIONS #howing the absenteeism report of H=-. ! To receive the attendance cards from the workers. % To put attendance of the workers in he muster role. )n time office there are & types of leaves. SIC7 )EAVE/- employees are eligible to take have on the sickness. 6 days sick leave shall be granted with full wages. CASUA) )EAVE/+ days casual leave shall be granted with full wages or pay

including -A to the every workman. +RIVI)E4ED )EAVE/- ' -ays privileged leave shall be granted with full wages or pay including -A to the every workman for every completed year. SECURITY O**ICE #ecurity officer also one of the important section of the administration department. There are totally %, guards

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Ratio Analysis at NSL

DUTIES O* SECURITY O**ICER

. 0aintain the silencing in the factory area. !. Time maintenance of workers. %. Raw materials are checked according to the voucher. &. )ncoming materials are checked, if they are right, they will records inward and seal the bill and leave inside. '. )f out going material from the industry that person must and should have got pass and it is entered in outwards. 7. )f goods are returnable, it will be entered in return A?9 book. 5. All times of A?91s are submitted to 0.-. daily. *ACI)ITY TO OR7ERS

. Availability of rest house with TC facility. !. Availability of quarters. %. :roviding ! wheelers for employees who are visiting the field to supervise and check the availability cane. &. 23ecutive levels are provided with & wheelers. '. >eekly one holiday of any in a week NATIONA) -O)IDAY The industry can give the leave for the national holidays, fair days of national holidays should be given to the employees, such as )ndependence day, Republic -ay, <andhi Jayanti etc. DUTIES O* TIME O**ICE 0aintenance of clock ! % & ' 7 5 #equencing the punching cards #iren maintenance F signal value @ =bservation of employees 0aintaining "otice *oard Accepting leave letter application =ver time requisition

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Ratio Analysis at NSL 6 Absent statement OR7IN4 )n a shift of 6 hours factory is providing & types of shifts/st

S-I*T

shift

& am ! pm ! pm 6 pm 6 pm & am 6.%+ am '.%+ pm

!nd shift %rd shift <eneral shift

The time office maintains register of muster role absenteeism, accident report file and leave letter file. O,3ECTIVES O* -UMAN RESOURCE DE+ARTMENT . To maintain good relation between employer and employees. !. To maintain good industrial relation. %. To select right person at right Dob. &. To cope with a chain. '. To develop employees in organi8ation. 7. To full utili8ation of human resource. *UNCTIONS O* -UMAN RESOURCE DE+ARTMENT Recruitment Job analysis and Dob description :romotion >ages and salary administration Training and development Records and incentives >elfare maintenance

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Ratio Analysis at NSL -( R( D NUM,ER O* OR7ERS

=fficers Regular Trainees -aily wages with order Total

!& 5! %' 5 '7&

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Ratio Analysis at NSL

II MAR7ETIN4 DE+ARTMENT

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Ratio Analysis at NSL

M$#.eti&/ +#ocess

The term marketing has been derived from the word 0AR.2T.

0arket is

generally understood as a place or geographical area where buyers and sellers meet and enter in to transactions involving transfer of ownership of goods, service, and securities. *e$tu#es of M$#.eti&/ )t is consumer oriented. ! % & ' 7 )t starts and ends with consumer. 0arketing is a system )t is a goal oriented. 23change process is the essence of marketing. )t is the guiding element of business.

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Ratio Analysis at NSL

MAR7ETIN4
0arketing is a social and managerial process by which individual and group obtains what they need and what through creating, offering and e3changing products of values with others. This marketing is important element in every organi8ation, which should be maintained compulsory in a systematic manner. This section will take care of all sale transactions like sale of sugar, molasses, *agasse and scrap material. This section works by 5 employees including sales manager. The factory has sold the sugar according to central government notification. The central government sends the notice to the factory every month regarding sale of sugar, without notice the sugar is not sold to anybody. The government is giving permission for a particular period, particular for sale of sugar. The sugar is sold to the buyer who quotes highest price. )n this section, some records like sale of sugar register, molasses register, *agasse registers and scrap material registers are maintained. +RODUCT O* SA)E The organi8ation undertakes selling activities in two methods/*REE SA)E/- free sale of sugar is being done to bulk purchases on the basis of tenders called, collected, negotiated and sold. ! )EVY SA)E/- This is being sold to the government of .arnataka on levy basis. The government then distributes the same to the public through public distribution outlets at predetermined reasonable price.

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Ratio Analysis at NSL

+URC-ASE DE+ARTMENT
:urchase success and failure of any company depends on the cost of materials, the proper buying of materials and procurement of materials at the right time from the right source is having greater importance in any business. There is a need for separate department for buying the materials known as :urchasing department. The purchase section also connected to administrative department. )n this section % workers are working including purchase officers. This section is purchasing all types of materials for the factory, plant and machinery. This department also maintains the quality of raw materials, by taking the sample of cane to laboratory test then if the raw material will below standard then will be reDected, otherwise the raw material will be purchased at the particular price. *UNCTIONS O* +URC-ASE DE+ARTMENT/ Receiving purchasing requisition -etermining the volume of materials to be ordered :lacing orders )nviting tenders and quotations from different suppliers 9hecking and passing bills for payment. Receiving and inspecting materials.

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Ratio Analysis at NSL

:UA)ITIES O* +URC-ASE MANA4ER

)n "irani )ndustry the purchase has to follow the following qualities. <ood knowledge of industry and material used in the industry. Administrative and organi8ing ability Honesty and integrity .nowledge and contract of law .nowledge of economic principles and demand and supply .nowledge of government policies

RES+ONSI,I)ITIES O* +URC-ASIN4 MANA4ER :urchasing of materials at right time and in proper way from right source. Receiving or matterials. #toring of materials. )ssuing of materials. Accounting of materials. .eeping proper records of material purchased. :roperly planned for material required. 9o-ordination and co-operation between different departments.

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Ratio Analysis at NSL

CANE DEVE)O+MENT DE+ARTMENT

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Ratio Analysis at NSL O,3ECTIVES O* CANE DEVE)O+MENT DE+ARTMENT To get high yield of sugarcane to the factory in right time. To improve variety of cane To develop the backward area To provide all facilities like seeds, fertili8ers, unloading and loading charges To maintain registration of cane, gang and plantation. To undertake seed distribution programme The soil of this area is varying alluvial fertile soil is there on the bank of .rishna and <hataprabha rivers. (urther upwards, there is a medium deep black soil, vary fertile well drained light to medium clay soil, which has received heavy application if from yard 0anu science last +- ! years also is presently in some parts. The main function of cane development department is to arrange for raw material, which is required to the factory. (or this the order is received by priority basis F that is growers who grows sugar cane first in his lead @. They also provide a loading gang with 6 to + members per village and also a bonded tractor for transportation. SU4AR CANE VARIETIES At present 9=9-75 , 9=9-6+ are very popular sugar cane varieties growing in this area. The factory had introduced a new variety of sugar cane that is 9=9 67+%! two years back. Here more than 6'4 of sugar cane is of variety 9=9 75 which is mainly grown in this area.

S()

NAME O* T-E VARIETY 9=-9-75

AREA IN -A ;+5 '% ha &6+ ha ,! ha

;R5 7+.+!4 !&.,,4 &.,,4

! %

9=-6+ 9=-67+%!

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Ratio Analysis at NSL +RODUCTION DE+ARTMENT The production department is center of the center organi8ation. function of the production department is (unctions/ To maintain close and co-ordinates relationship with all others. To upgrade the technical efficiency of the production. To flow up the daily production schedule of as per plan. To produce the future needs of the company and to promote the organi8ation. The main

O,3ECTIVES To plan and meet the production requirements as per customer specification through the continuous improvement in the planning processing and optimum utili8ation of resource. To identify control the customer supplied products. To produce for future needs and customers specification. This department is one of the core parts in every organi8ation and it plays a vital role in the organi8ation, smooth going, basically, in every sugar industry production is divided in to two sections. 2ngineering section 0anufacturing section

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Ratio Analysis at NSL

+RODUCTION +ROCESS
Ste" 2( weighing of sugar cane, it means, when the sugar cane comes to the factory. After weighing of sugar cane the unloaded carrier cane weigh bridge. Ste" 6( )n the ne3t step sugar cane go to the cane cutter machine and it cuts the fine pieces after that, there are % mills and ' mills tandem that is sequential mill. Ste" <( After the milling of sugar cane there is a separation of baggasse and Duice milk, baggasse will be used as a fuel. There are 5 boilers. They used as a fuel and there is production steam and steam is used to produce the electricity. Ste" =. The Duice, weighing takes place and there are mi3ing the Duice and there is addition of phosphoric. After heated of Duice milk 5' 9 that Duice is called as Raw Duice. Additional of milk of lime and #=! is called #ulfur and this again goes to Duice heater it heated up to +& 9. Ste" >. Then the ne3t step, the Duice sent to clarifier and in that there is a separation of dust and clear transferals Duice. 9lear Duice sends to N*hoomi $abhO. This is the produce fertili8er. 9lear Duice will be thick. )t calls as syrup. Again add to the milk and #=! then it is called syrup suplitation. Ste" ?. sulpitation comes to the pan boiling station and this there are % categories, A,* and 9 first of all the sulpitation goes to the NAO category. And the pan boiling directly goes to pan crystal. sugar crystal and molasses. Ste" @. )n this, the sugar crystal downs and passes through grass happer. )n the grass happer the sugar goes to the one place to another place. Raw sugar goes to the centrifugal machine routed to the high speed of around !++ rbm. )t will be separated

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Ratio Analysis at NSL After there is gradation, in that there are % grades. )t will be divide the % grades/- high grade, small grade, low grade. Ste" A. And then the sugar goes to the different vessels. )n that, package of sugar. )n this there are ! types packing e3porting and domestic is different. *INIS-ED +RODUCTS (inished product is sugar. There are % types of finished sugars, High Auality, 0iddle Auality and $ow Auality. These are % types of bye products 0olasses *agasse (ilters mud

EN4INEERIN4 SECTION This section is assisted by workshop. )t maintains all the work connected with plant and machinery. OR7S-O+:)n this workshop machinery work is done. The spares, materials are fabricated using the lather machines in the workshop, shaping like square cutting etc is also done in the workshop. (ollowing machines are used in this workshop. ! lathe machines for round Dob redial drilling machines for drilling hole shaping machine of %!P for right angle planning hacksaw machine for cutting grinding machine for tool grinding

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Ratio Analysis at NSL

MANU*ACTURIN4 SECTION The manufacturing section again divided in to % sub sections. $aboratory 0anufacturing process <o down

)A,ORATORY The factory has a separate well equipped laboratory. The main activity of the lab is to check the content of sugar in the sugarcane and also fi3ing the correct shape and si8e of sugar. The lab prepares hourly reports which advice on the addition of other chemicals in he production.

OT-ER CONCERNED ACTIVI4IES O* T-E )A,ORAORY )t determines the percentage of water content in the dilution of Duice. )t determines as well as maintaining the temperature of boiling Duice. 9hoice of color and si8e of sugar. To manage time and quality. )t decided the percentage and contents and chemicals to be added during production. To finds the :H of water through universal indicator.

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Ratio Analysis at NSL

C-EMICA) DE+ARTMENT

C-EMICA)S USED IN +RODUCTION 9austic #oda F #odium 9arbonate @ >ashing soda F #odium *icarbonate @ 9ommon salt F sodium 9hloride @ :hosphoric Acid F To maintain the :H @ Ammonium *i-fluoride (ormalin quality maintain and preservative 0ill sanitation chemical to prevent the generation of bacteria and germs Hydrous Ciscosity 0isopropile 9ommercial H9$ *leaching :owder $ed Acitate - #hining purpose -(or laboratory purpose - Esed for 9olor - Esed for reducer - Esed for Alcohol

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Ratio Analysis at NSL

+#ocess

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Ratio Analysis at NSL

*INANCE DE+ARTMENT

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Ratio Analysis at NSL

SA)ES AND DISTRI,UTION DE+ARTMENT

SA)ES MAN4EMENT +RACTICE O* NIRANI SU4ARS The marketing department of "irani #ugars is working in two ways. . (ree #cale !. $evy #cale The out put of the factory produced is sold to public and <overnment in the ratio of &+ / 7+ all the functions of marketing department are generally done by the sales manage who is in charge of assistant manager. The factory has big market area for sugar in *agalkot, *iDapur and *elgum -istricts. $ittle in local area covered by local sugar dealers. The bi-products is also sold in large volume to biscuits, chocolate and wine industries and also is used by distilleries. SA)ESMANS-I+ AT NIRANI SU4ARS )t is the duty of marketing manager to appoint sales representatives salesmanship is not necessary at "irani #ugar, because the reasons are *ecause their product is available at ever corner of the district As the product is not a lectury one so it is not necessary to appoint sales man. As the product is an essential one salesman are not required to approach the customers at their door step and induce them to purchase their product.

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Ratio Analysis at NSL

S OT ANA)YSIS

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Ratio Analysis at NSL

S
STREN4T-S

OT ANA)YSIS

The :romoter are young political background and have vast industrial e3perience in the field of #ugar and are having good relationship with the local farmers. This may help them in sugarcane procurement. "o difficulty is envisaged in availability of raw material i.e. sugar cane, as the proDect is coming up in the area of sugar cane growing belt with a good irrigation facilities and good recovery. The area will not suffer draught as the $ift irrigation system of Almatti -am as already implemented hence the #ugar recovery in the area is good. The co-generation of power of company. The by-product vi8. molasses will bring additional revenue as it will be sold to distillery units as raw material. EA7NESSES 9o-<en plant being capital intensive, economics of operations suffer in case of shortened season. <overnment policy of full decontrol of sugar during !++%-+&. #ugar imports will have bearing on the profit margins of the company. Any disturbance in the co-gen plant would interrupt sugar manufacturing operations totally. The cost of such interruptions can be e3tremely high on account of production loss, machine failure, spillage of Duice, sugar and quality degradation. The promoters are having political background and changing loyalties by the local farmers may affect them in sugarcane procurement. 7 0> will improve the profitability of the

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Ratio Analysis at NSL O++ORTUNITIES #etting up of further down stream proDects like manufacture of ethanol or a distillery for manufacture of liquor. T-REATS Raw material, cane, being a agricultural product its availability and prices are dependent upon vagaries of monsoon. Tough competition from other sugar factories. (ailure to adopt modern technology. Enable to satisfy the needs of workers, this might make them to leave the organi8ation.

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Ratio Analysis at NSL

Visio& of Ni#$&i Su/$#s )td(

. To establish production 5,'++ T.9.- at 0udhol. !. To produce &+ 0egawatt electricity. %. To produce !,+++ liters of distillery unit.. &. To produce +,+++ ton *io fertili8ers. '. To establish agricultural development and resource center at 0udhol. 7. :lan to establish "irani 2ducation )nstitution in *ilagi and 0udhol. 5. CiDaya 9o-operative 9redit society. CiDayanagar 0udhol. 6. To implement highly technical "irani 2ducational institutes 0udhol ; *ilagi

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Ratio Analysis at NSL MISSION >e will provide products of superior quality at competitive price and ensure sustained profitability and growth. >e will protect the interest of all concerned promoters, shareholders, customers, distributors, employees and community. >e believe in fair trade practice, standards and strive for total customer1s satisfaction, keeping the environment eco friendly. >e believe that our people are most valuable assets for personal and organi8ational growth. >e will treat our people with dignity and look after the safety and welfare of individuals and there families. >e provide electricity which is maDor necessity for the country. #ugar industries are providing ethanol which can be added in diesel and diesel is maDor requirement of the company. O,3ECTIVES O* NIRANI SU4ARS )TD(: . 0a3imum, effective and efficient utili8ation of available resources. !. To manufacture good quality sugar and bi-products. %. >elfare of agriculturists &. To provide comparative market rate to the farmers. '. :roper co-ordination and co-operation among its members. 7. To maintain proper means of transportation to the farmers during season. 5. :rovide modern techniques and methods and of cultivation and to supply seeds, fertili8ers to the farmers. 6. To undertake such other activities as are incidental and conductive to the development of society.

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Ratio Analysis at NSL

DATA INTER+RETATION B RATIO ANA)YSIS

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Ratio Analysis at NSL

INTRODUCTION
Ratio analysis is a technique of analy8ing the financial statement of industrial concerns. "ow a day this technique is sophisticated and is commonly used in business concerns. Ratio analysis is not an end but it is only means of better understanding of financial strength and and weakness of a firm. Ratio analysis is one of the most powerful tools of financial analysis which helps in analy8ing and interpreting the health of the firm. Ratio1s are proved as the basic instrument in the control process and act as back bone in schemes of the business forecast. ith the he!" of #$tio %e c$& dete#'i&e The ability of the firm to meet its current obligation. The limit or e3tent to which the firm has used its borrowed funds. The efficiency with which the firm is utili8ing in generating sales revenue. The operating efficiency and performance of the company . C!$ssific$tio& of R$tios Ratios can be classified into different categories depending upon the basis of classification. I( TRADITIONA) C)ASSI*ICATION Traditional 9lassification has been on the basis of financial statements, on which ratio may be classified as follows. 2( +#ofit B )oss $ccou&t #$tios( 2.g. <ross :rofit Ratio, "et :rofit Ratio, =perating Ratio etc 6(,$!$&ce sheet #$tio( 2.g. 9urrent Ratio, -ebt 2quity Ratio, >orking 9apital Ratio etc <( Co'"osite9MiCed #$tio( 2.g. #tock Turnover Ratio, -ebtors Turnover Ratios, (i3ed Assets Turnover Ratio etc

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Ratio Analysis at NSL II( *UNCTIONA) C)ASSI*ICATION O* RATIOS *u&ctio&$! #$tios 6( )iDuidity #$tios c@ 9urrent Ratio d@ Auick Ratio 6( )eve#$/e R$tios c@ -ebt-equity Ratio d@ 9urrent Asset to :roprietor1s fund Ratio III( +RO,A,I)ITY RATIOS a. <ross profit Ratio b. =perating profit Ratio c. Return on investment

IV( ACTIVITY RATIO i. )nventory Turnover Ratio ii. Asset Turnover Ratio/ c. (i3ed Asset Turnover Ratio d. 9urrent Asset Turnover Ratio iii. >orking 9apital Turnover Ratio.

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Ratio Analysis at NSL

ANA)YSIS B INTRE+RETATION
I( )iDuidity R$tio $iquidity ratio measures the ability of the firm to meet its current obligation Fliabilities@. )n fact analysis of liquidity needs the preparation of cash budget and cash and fund flow statement but liquidity ratio, by establishing a relationship between cash and other current asset to current obligation, to provide a quick measure of liquidity. A firm should ensure that it doesn1t suffer lack of liquidity and also that it dose not have e3cess liquidity. The common liquidity ratios are/2( Cu##e&t R$tio 9urrent ratio may be defined as the relationship between current asset and current liabilities. This is a measure of general liquidity ; is most widely used to make analysis of short-turn financial position or liquidity of firm. )t is calculated by dividing the total current assets by total current liabilities. 9urrent Ratio Q 9urrent Assets 9urrent $iabilities

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Ratio Analysis at NSL TA,)E82(2 Cu##e&t R$tio Ye $# !++&-+' !++'-+7 !++7-+5 !++5-+6 !++6-+, Cu##e&t Assets &%++57+,% %&%77'!,% %%7%6,%!7 & 56 !75 %&,%&'57 Cu##e&t )i$bi!ities & !+''&7 !!&5'6+%' 6+!67! + 676'%6 &+ 55&'%+, 6 %.+& .' +.&! +.&6 +.&' R$tio

CURRENT RATIO
3.5 3 2.5 RATIO 2 1.5 1 0.5 0 3.04 1.5 0.42 0.48 0.45 Ratio

2004-05 2005-06 2006-07 2007-08 2008-09 YEAR

INTER+RETATION The above table shows that "#$1s current ratio has decreased from %.+& to .' in the year !++' and !++7 and in the year !++5 it was drastically fluctuated to +.&! and then the year !++6 it raise to +.&6 but again decreased to +.&' in the !++, . The company had the fluctuation of !&.!+4 increase in current assets and 6. 64 in current liabilities. in the year !++, the current assets has decreased by 7.%64 and +.6!4 in current liabilities. An ideal current ratio is !/ for every one rupee of current liabilities, current assets of doable rupee are available. The current ratio determines margin of safety for creditors, there has been decrease in the ratio during !++, compared with !++6.

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Ratio Analysis at NSL 6( :uic. R$tio9Acid Test R$tio Auick ratio establishes relationship between quick or liquid assets ; current liabilities. )t is also known as acid test ratio. An asset is said to be liquid if it can be converted into case within short period of time without loss of value. The prepaid e3penses and stock were e3cluded. Auick ratio Q Auick asset 9urrent $iabilities TA,)E82(6 :uic. R$tio Iear !++&-+' !++'-+7 !++7-+5 !++5-+6 !++6-+, Auick Assets !6&!6,!6%5 55,,!,55 %6% %!57 !56 %5,% 5+5 6& 9urrent $iabilities & !+''&7 !!&5'6+%' 6+!67! + 676'%6 &+ 55&'%+, 6
QUICK RATIO
2.5 2 RATIO 1.5 1 0.5 0 200405 200506 2.01 0.79 0.17 200607 0.15 200708 0.22 200809 Ratio

Ratio !.+ +.5, +. 5 +. ' +.!!

YEAR

INTER+RETATION: The above table shows that the quick assets of "#$ has decreased from !.+ to +.5, in the year !++' and !++7 and had drastical fluctuation to +. 5 and +. ' in the year !++5 and !++6 and had slight raise to +.!! in the year !++,. The company had fluctuation 5.',4 decrease in quick asset and and 6. 64 increase in current liabilities and in the year !++, there was increase in quick asset %%.'74 and +.6!4 decrease in current liabilities.

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Ratio Analysis at NSL This ratio measures firm1s ability to serve short term liabilities. The ideal quick ratio is N O . a low quick ratio represents that firm1s liquidity poison is not good. II( )eve#$/e R$tios $everage ratios are also known as capital structure ratio. These ratios indicate mi3 of funds provided by owners ; lenders. As a general rule these should be appropriate mi3 debt ; owners equity in financing the firm1s assets. $everage ratios are calculated to Dudge the long long-term financial position of the company. #ome of the popular leverage ratios are/ a( Debt8EDuity R$tio -ebt-2quity ratio shows the relative contribution of creditors and owners. -ebt2quity also known as 23ternal-)nternal equity ratio. )t is calculated to measure the relative claims of outsiders against firm assets. -ebt-2quity Ratio Q Total -ebt "et >orth TA,)E86(2 Debt EDuity R$tio Iear !++&-+' !++'-+7 !++7-+5 !++5-+6 !++6-+, Total -ebt ''& +!&, "et >orth &%+'!&!, 7% 5 ,&5 '766!6+57 '5+ 666'6 '5 !77+65 +.7 +.7! +.'! +.6! +.,% Ratio

&,,!&7!,% '&5 767&5 '7'+,!577 7!5%,5 75

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Ratio Analysis at NSL

DEBT EQUITY RATIO

1 0.8 RATIO 0.6 0.4 0.2 0 2004-05 2005-06 2006-07 YEAR 2007-08 2008-09 0.82 0.61 0.62 0.52 0.93 Ratio

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Ratio Analysis at NSL INTER+RETATION The table shows that the total debt ratio of "#$ had increase in the year !++' and !++7 from +.7 to +.7! and had fluctuation to +.'! in the year !++5 and further increased to +.6! in the !++6 and +.,% in the year !++,. The company had increase in .+!4 and +. 664 in net worth. -ebt equity ratio measures ultimate solvency of the company.)t provides a margin of safety to creditors,thus when the ratio is smaller the creditors are more secured . An appropriate debt equity ratio is +.%%.A ratio higher than this is an indication of risky financial policies. the total debt by %.!54 and +.!%4 in net worth and in the year !++, the debt was increased by

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Ratio Analysis at NSL b( Cu##e&t Assets to +#o"#ieto#0s fu&ds #$tio This ratio is calculated by dividing total current assets by shareholders funds. )t indicates the e3tent to which proprietor funds are invested in current assets. There is no rule of thumb for this ratio ; depending upon the nature of the business there may be different ratios for different firms. 9A to :( ratio Q 9urrent Assets :roprietors (und TA,)E86(6 Cu##e&t Assets to +#o"#ieto#s *u&d

Iear !++&-+' !++'-+7 !++7-+5 !++5-+6 !++6-+,

9urrent Assets

:roprietors (und

Ratio .,5 .'6 .'' .,! .'7

&%++57+,% %&%77'!,% %%7%6,%!7 & 56 !7&

! 5%%'+++ ! 5&+++++ ! 5'%++++ ! 6+ 6&,' !!%,6%!5&

%&,%&'57

C/A TO PROPRIETARY RATIO

2.5 2 RATIO 1.5 Ratio 1 0.5 0 2004-05 2005-06 2006-07 2007-08 2008-09 YEAR 1.97 1.58 1.55 1.92 1.56

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Ratio Analysis at NSL INTER+RETATION The table of current assets to proprietory ratio shows that the ratio has been decreased by .,5 to .'6 in the year !++' and !++7 and .'' in the year !++5 and then raise to .,! in the year !++6 and then decreased to .'7 in the year !++,. There was raise in current asset by !&.!+4 in the year !++6 and proprietary fund by +.!!4 and further in !++, there was decrease by 7.%64 in current asset and there was increase by !.5%4 in proprietary fund This ratio indicates the e3tent to which proprietors fund are invested in current asset

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Ratio Analysis at NSL III(+#ofit$b!i!ity R$tios The primary obDective of a business undertaking is to earn profits. :rofit is the difference between revenue ; e3penses over a period of time. :rofit is output of a company ; company will have no further if it fails to make sufficient profit :rofits are thus a useful measure of overall efficiency of a firm. These ratios are calculated to measure the operating efficiency of the company. *eside management, creditors, owners are also interested in the profitability of the company. <enerally profitability ratios are calculated either in relation to sales or in relation to investment. The various profitable ratios are/

I $5

I& Re!$tio& to S$!es 4#oss +#ofit R$tio <.:.Ratio measures the relationship between gross profits ; salesG it is usually

represented in percentage. Thus <ross profit margin highlights the production efficiency at a concern <.:.RatioQ <ross :rofit #ales <.:.Ratio indicate the e3tent to which selling price of goods per unit may decline without resulting in losses on operations of firm. )t reflect efficiency with which firm produces the product. R ++

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Ratio Analysis at NSL TA,)E8<(2 4#oss +#ofit R$tio

Iear !++&-+' !++'-+7 !++7-+5 !++5-+6 !++6-+,

<ross :rofit %!+&66&7 ,,,!!%! 6 5' 7,

#ales !7,6&!&,' 7!!7567&! ',!'%!76, &'%&%' !% 5%7!+7,65

Ratio +. +. , %.6 ! .7' +.6

,6 '7&,5 5,'% 6,6

GROSS PROFIT RATIO

25 20 RATIO 15 10 5 0 0.11 0.19 2007-08 2008-09 YEAR 13.8 21.65 10.8 Ratio

2004-05 2005-06 2006-07

INRTE+RETATION The above table shows the gross profit ratio of "#$ the table indicates that the ratio in the year !++' was +. to +.6 in the year !++,. The company had fluctuated by increase of !+.+74 in gross profit and decrease by !%.&5 4 in the year !++6 and in the year !++, there is decrease in gross profit by 6.,54 and increase in sales by 7!.%74. The gross profit indicates the degree to which the selling price of goods per unit may decline without resulting in losses on operation of the firm .)t reflects the efficiency with which firm produces its products. and in the year !++7 it raised to +. ,.further it had drastical change in gross profit to %.6 in the year !++5 and ! .7' in the year !++6 ,but decreased

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Ratio Analysis at NSL b5 O"e#$ti&/ R$tio )t is the relation between cost of goods sold ; operating e3penses on one hand ; the sales on the other hand. )t measures the cost of operations per rupee of sales. =perating Ratio Q =perating 9ost #ales TA,)E8<(6 O"e#$ti&/ R$tio Iear !++&-+' !++'-+7 !++7-+5 !++5-+6 !++6-+, =perating 9ost 5,7!+!7+ &,6',+%%% ',!,,5'6% &&5!+++&, '&'% '%' #ales !7,6&!&,' 7!!7567&! ',!'%!76, &'%&%' !% 5%7!+7,65 Ratio 77.'7 6+.+5 ++.6 ,6.7! 5&.+& R ++

OPERATING RATIO
120 100 RATIO 80 60 40 20 0 2004-05 2005-06 2006-07 YEAR 2007-08 2008-09 66.56 80.07 100.8 98.62 74.04 Ratio

INTRE+RETATION The above table shows the firm1s operating ratio increasing drastically from 77.'7 in the year !++' to 6+.+5 and ++.6 in the years !++7 and !++5 but further fluctuating to ,6.7! in the year !++6 and 5&.+& in the year !++, . There is a decrease in operating cost by !&.'64 and ,!.%&4 in sales but in the year !++, there was increase by ! .,%4 in operating cost and 7!.%74 in sales. An increase in the ratio over a previous period is an indication of improvement in a operational efficiency of a concern the higher the ratio is more successful the business is ,but a lower ratio indicates large amount of manufacturing e3penses.

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Ratio Analysis at NSL 6( +#ofit$bi!ity i& #e!$tio& to I&vest'e&t $( Retu#& o& sh$#eho!de#s I&vest'e&t: Return on shareholders investments, popularly known as R=). )t is the relationship between net profit after ta3 ; shareholders funds. Thus this ratio is considered as affective indicator of the company1s profitability because it reflects the success of management in the efficient utili8ation of the owner1s investment. R=)Q. "et :rofit after Ta3 #hareholders fund R ++

TA*$2-%.% Return on shareholder investment Ye$# !++&-+' !++'-+7 !++7-+5 !++5-+6 !++6-+, S$!es !7,6&!&,' 7!!7567&! ',!'%!76, &'%&%' !% 5%7!+7,65 Cu##e&t Assets &%++57+,% %&%77'!,% %%7%6,%!7 & 56 !7& %&,%&'57 R$tio +.7! .6 .57 .+, !.

INTRE+RETATION:

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Ratio Analysis at NSL The above table reveals that there is increase in the return on investment from !+4 in the year !++' to !,4 in the year !++7 but fell down to 5.+ 4 in the year !++5 .(urther in the year !++6 there was a drastical raise to !&.& 4 but fluctuated to +.+&4 in the year !++,. Through the analysis we found that in the year !++, the net profit was decreased by ,,.6!4 and increased shareholders fund by +.5%. This ratio is used to measure the overall efficiency of a concern ,the higher the ratio the better the results will be as this ratio reveals how well the resources of a concern are being used.

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Ratio Analysis at NSL IV( Activity R$tios: (unds are invested in various assets in business to make sales ; earn profit. The efficiency with which assets are managed directly affects the volume of sales. The better the management of assets, the larger is the amount of sales ; the profit. Activity ratio measures the efficiency or effectiveness with which a firm manages its resources or assets. These ratios are also called turnover ratio because they indicate the speed with which assets are converted or turned over into sales. The various activity ratios are/ $( I&ve&to#y Tu#&ove# R$tio: )nventory turnover ratio indicates the number of times stock has been turned over during the period ; evaluates efficiency with which a firm is able manage inventory. The ratio is calculated by dividing the net sales divided by average inventory at cost. )TRQ "et #ales . Average )nventory at 9ost Average inventory should be taken for calculating stock turnover ratio. Adding the stock in the beginning ; at the end of period ; dividing it by ! to calculate average inventory.

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Ratio Analysis at NSL TA*$2-&. )nventory turnover ratio

Iear !++&-+' !++'-+7 !++7-+5 !++5-+6 !++6-+,

"et #ales !7,6&!&,' 7!!7567&! ',!'%!76, &'%&%' !% 5%7!+7,65

Average )nventory

Ratio .6 !.&& ., +.,& .,&

&,+&+''7 &&+&'5% % !7&++6+ &6&7!%+&& %5,% &&%&

INVENTORY TURNOVER RATIO

3 2.5 RATIO 2 1.5 1 0.5 0 2004-05 2005-06 2006-07 YEAR 2007-08 2008-09 2.44 1.81 1.9 0.94 1.94 Ratio

INTER+RETATION: The table shows the increase in the inventory turnover ratio from .6 to !.&& in the year !++' and !++7 .)n the year !++5 there was a fluctuation to ., and further to +.,& in the year !++6,but in the year !++, there was a drastical increase to .,&. The company had !%.&54 decrease in net sales and increase by ''.++4 in average inventory but in the year !++, there was increase in net sales by 7!.%74 and decrease by ! .5%4 in average inventory. )nventory turnover ratio signifies the liquidity of the inventory. A high ratio implies good inventory management ,a low ratio results in blocking of funds in inventory. The reference value of this ratio , and the ma3imum conversion period is %66.

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Ratio Analysis at NSL b( Assets Tu#&ove# R$tio: Assets are used to generate sales. Therefore a firm should manage its assets efficiency to ma3imum sales. Assets turnover ratio shows relationship between sales ; assets. The various assets turnover ratio are/MM i( *iCed Assets Tu#&ove# R$tio: This ratio establishes the relationship between the costs of goods sold and fi3ed assets. )t can be calculated by , (i3ed Assets Turnover Ratio Q #ales (i3ed Assets TA,)E : =(6 *iCed Assets Tu#&ove# R$tio Iear !++&-+' !++'-+7 !++7-+5 !++5-+6 !++6-+, #ales !7,6&!&,' 7!!7567&! ',!'%!76, &'%&%' !% 5%7!+7,65 "et (i3ed Assets '!%'6' %' '%!7,+',' '766!6757 '5+ 666'6 '5 !77+65 +.' . 7 .+& +.6+ .!, Ratio

F/A TURNOVER RATIO

1.4 1.2 1 RATIO 0.8 0.6 0.4 0.2 0 2004-05 2005-06 2006-07 2007-08 2008-09 YEAR 0.51 1.16 1.04 1.29 0.8 Ratio

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Ratio Analysis at NSL INTRE+RETATION: The table reveals that there is increase in fi3ed asset turnover ratio from +.' in the year !++' to . 7 in the year !++7 but decreased to .+& in the year !++5 and drastical fluctuation to +.6 in the year !++5 and raise in the year to .!, in the year !++,. The company had !%.&54 decrease in net sales and increase in fi3ed assets by +.!%4 in the year !++6 and further in the year !++, it had increase net sales by 7!.%74 and increase by +. 64 in fi3ed assets. =ne of the cautions to be kept in mind that when fi3ed assets are old and substantially depreciated the ratio tenders to be high,because,the denominator of the ratio will be low.

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Ratio Analysis at NSL ii( Cu##e&t Assets Tu#&ove# R$tio: This ratio is indicates how many net sales are made for every rupee of investment in current assets. 9urrent Assets Turnover Ratio TA,)E: =(< Ye$# !++&-+' !++'-+7 !++7-+5 !++5-+6 !++6-+, Net +#ofit &%+'!&!, 7% 5 ,&5 '!&',%6 ' +&'575 , &!% Q #ales 9urrent Assets Cu##e&t Assets Tu#&ove# R$tio Sh$#eho!de# *u&d ! 5%%'+++ ! 5&+++++ ! 5'%++++ ! 6+ 6&,' !!%,6%!5& R$tio !+4 !,4 5.+ 4 !%.& 4 +.+&4

C/A TURNOVER RATIO

2.5 2 RATIO 1.5 1 0.5 0 200405 200506 200607 200708 200809 0.62 1.81 1.76 1.09 2.11 Ratio

YEAR

INTRE+RETATION: The table reveals that the current ratio has drastical increase from +.7! the year !++' to .6 in the year !++7 but again there was a decrease to .57 in the year !++5 and .+, in the year !++6. *ut there was a drastical increase of ratio to !. in the year !++,.

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Ratio Analysis at NSL

The company had decrease of !%.&54 in net sales and increase in current assets by !&.!+4 . )n the year !++, there was increase in net sales by 7!.%74 and 7.%64 decrease in currents asssets. d( o#.i&/ C$"it$! tu#&ove# R$tio: A firm may also related net current assets to sales. >orking capital turnover ratio indicates the velocity of the utili8ation of net working capital. >orking 9apital Turnover RatioQ TA,)E:=(= Iear !++&-+' !++'-+7 !++7-+5 !++5-6 !++6-+, #ales "et 9urrent Assets o#.i&/ C$"it$! Tu#&ove# R$tio #ales !7,6&!&,' 7!!7567&! ',!'%!76, &'%&%' !% 5%7!+7,65 "et 9urrent Assets &'67&!&' .' 7!'!,%+7.& !!6665+'&5 6,+5!'6.' 5!7,+6'%.& Ratio .!! %.%5 +. ! '.!% 6. '

working capi a! "rno#$r ra io

9 8 7 6 5 4 3 2 1 0 8.15 5.23 3.37 1.22 0.12 2004- 2005- 2006- 2007- 200805 06 07 08 09 %$ar Ratio

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Ratio Analysis at NSL INTER+RETATION The table reveals that the working capital turnover ratio of "#$ in the year !++' was .!! and increased to %.%5 in the year !++7.but in the year !++5 there was a drastical fluctuation to +. ! in the year !++5 further there was a high increase in working capital turnover ratio to '.!% in the year !++6 and 6. ' in !++,. There is decrease in net sales by !%.&54 and ,&.6+4 in net current assets in the year !++6 and in the year !++, the net sales increased by 7!.%74 and decreased by %6.674 in net current assets. The assets turnover ratio measures the efficiency of a firm in managing and utili8ing the assets.Higher turnover ratio,more efficient is the management utili8ation of the assets while low turnover are indicative of under utili8ation of available resources and presence of idle capacity. )n operational terms, it implies that firm can e3pand its activity level without requiring additional capital investments.

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Ratio Analysis at NSL

*INDIN4S B SU44ESTIONS

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Ratio Analysis at NSL

*INDIN4S
I ( )I:UIDITY RATIO: . (rom the current ratio it is found that the ratio is not satisfactory because the 4 increase in current assets is less than the 4 increase in current liabilities during the year !++'-!++,.The highest ratio recorded is %.+& in !++' and the lowest ratio recorded is +.&! in the year !++5.And less than the standard ratio. !. (rom the quick ratio it is found that the ratio is not satisfactory because the ratios recorded during the year were less than the standard ratio.)n the year !++6 the ratio recorded is +. ' and the ratio recorded highest was !.+ in the year !++'.

II ( )EVERA4E RATIO: . (rom the debt equity ratio it is found that the ratio recorded during the year !++',!++7,; !++5 is satisfactory as the ratios are near to the standard ratio but during the year !++6;!++, it is not satisfactory as the ratios are very high compared to the standard ratio. !. (rom the current assets to proprietors fund ratio is not satisfactory as the proprietory funds invested in the current assets is less in the year !++, is less compared to previous years .The highest ratio recorded is .,5 in the year !++' and the lowest ratio recorded is .'' in the year !++5. III ( +RO*ITA,I)ITY RATIOS: . (rom the gross profit ratio it is found that the ratio is satisfactory during the last three years from !++5 to !++,. The highest ratio recorded in the year !++6 is ! .7' and the lowest ratio recorded is +. in the year !++'.

!. (rom the operating profit ratio it is found that the ratio is highly satisfactory during the considered financial years.The highest ratio recorded is ++.+6 in the year !++5 and the lowest is 77.'7 in the year !++&.

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Ratio Analysis at NSL %. (rom the return on investment it is found that the ratio calculated for the considered financial years is good . The ratio is satisfactory as the return on investment is effective and good,comparing the previous years. IV ( ACTVTY RATIOS : . (rom the inventory turnover ratio it is found that the ratio is not satisfactory as the inventory holding period is very high,compared during the financial years. !. (rom the fi3ed assets turnover ratio it s found that the ratio is satisfactory as the ratios are raising yearly during the comparative years.

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Ratio Analysis at NSL

Su//estio&
. The company may improve its current ratio by decreasing the current liabilities because in the year !++6-+, current assets are decreased and it may also improve its quick ratio. !. The company may decrease its total debt as there is increase in total debt the year !++6-+,. The company may increase its investment in current assets. %. $ong terms solvency of the company has to be improved by limiting amount invested by outsiders to the amount invested by the owner of the company . this can be achieved by purchasing the shares gradually. &. The proper management of the inventory can improve liquidity position and efficiency of the company.

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Ratio Analysis at NSL

CONC)USION
#tuday of ratio analysis of nirani sugars $td. Reveals the performance of the company in terms of financial aspects. )t is found that there is increase in sales gross profit during !++' to !++,. The cash balance is also increased for the above saied years this is due to company1s revised policy in debt collection. )t is also observed that the current ratio is not so satisfactory which creates chunks in the current assets in the form of sundry debtors and inventory.

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Ratio Analysis at NSL

Refe#e&ces
@. Annual reports of "irani sugars ltd. for !++', !++7, !++5, !++6, !++,. !@. J 0adegouda NAccounting for managersO %@. .han 0 and :... Jain N(inancial managementO

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