A

PROJECT REPORT
ON
RATIO ANALYSIS
IN
UPPER DOAB SUGARMILL SHAMLI
For the partial fulfilment of the requirement for the degree of
MASTER OF BUSINESS ADMINISTRATION
(Session: 2014-16)
Under the guidance of:

Submitted by:

Abhishek Bagla

Harshita Jain

(H.O.D. of M.B.A. department)

(MBA 3rd Semester)

Roll no: 1433670011

Affiliated to Dr. A.P.J Abdul Kalam Technical University

Lucknow Formally UPTU
UPTU Code: 336

ACKNOWLEDGEMENT
In writing this report entitled UPPER DOAB SUGAR MILL, I have greatly benefited by
my visits to the company where I got the opportunity of studying the practical working of the
Human Resource department.

I would like to thanks our Director Dr. MAHENDRA SINGH RANA & members of Roorkee
Engineering and Management Technology Institute for giving me chance to work on this
project. I am also thankful to our Head of Department and internal guide, Mr. ABHISHEK
BAGLA, for their effective guidance regarding the project and support.

My sincere and deepest thanks to MR. RAJAT LAL (Managing Director, UPPER DOAB
SUGAR MILL)

Last but not least, I express my gratitude to my family and friends for providing me with all
the support during the study.

HARSHITA JAIN
ROLL NO. 1433670011

DECLARATION

I hereby declare that the project titled Ratio Analysis is an original piece of research work
carried out by me under the guidance and supervision of Mr. Abhishek Bagla. The
information has been collected from genuine and authentic sources. The work has been
submitted in partial fulfillment of MASTER OF BUSINESS ADMINISTRATION of Dr.
A.P.J Abdul Kalam Technical University Formally UPTU, LUCKNOW.

Place:

Harshita Jain

Date:

Roll No. - 1433670011

PREFACE
Beginning of a Finance project was entirely creative. Thus does not come all of a sudden but
it comes by result of discussion consultation and contemplation problem unsolved here can
never be a satisfactory elimination later. But when I completed my project I felt lot more
confident. Now I can do a new job more confidently and in a better way.
Practical Training is essential part of a theory study. It familiarize with the practical aspect in
the industry. And quality of the product in the industry.
Repairing this fact, I have thus industrial training report on RATIO ANALYSIS in
UPPER DOAB SUGAR MILL SHAMLI (U.P.).

EXECUTIVE SUMMARY

Theoretical knowledge is always incomplete without its practical implication like gun
without bullet. Seeing the necessity of the practical knowledge the MBA curriculum is
designed in such a manner so as to impart the opportunity to students for enough exposure to
the corporate world.

TABLE OF CONTENT

Company Profile.
Ratio Analysis.
Objective of Study.
Scope of Study.
Importance of study.
Limitation of study.
Need of study.
Research Methodology.
Data Analysis.
Annexure.
Summary and Suggestions.
Conclusion.
Bibliography.

COMPANY
PROFILE

BOARD OF DIRECTORS:

Shri Onke Aggarwal-Chairman

Shri Rajat Lal-Managing Director
Shri Vivek Viswanathan-Joint Managing Director
Shri Rahul Lal-Executive Director
Shri Hemantpat Singhania
Shri R.L. Srivastava
Shri R.C. Sharma
Smt. Radhika Viswanathan Hoon

COMPANY SECRETARY:

BANKERS:

Shri P.K. Goyal

State Bank of India

Punjab National Bank

AUDITORS:

Messrs. Basant Ram & Sons,

Chartered Accountants,
A-18, Nizamuddin East,
Murli Marg, New Delhi-110 013

REGISTERED OFFICE:

4-A, Hansalaya, 15, Barakhamba Road,

New Delhi-110 001

MANUFACTURING UNITS:

Upper Doab Sugar Mills,

Shamli-247 776 (U.P.)
Unn Sugar Complex,
Block Unn, Distt. Shamli (U.P.)
Shamli Distillery & Chemical Works,
Shamli-247 776 (U.P.)

MANAGERIAL STAFF
"Senior qualified and experienced professionals in their respective areas assist Board of
Directors." Details of Senior Management Personnel are as detailed below:

Sl No.
1.

Name

Designation

Shri P.K.Goyal CFO cum

Age

Qualifications

Experience

61

B.Sc., F.C.A., A.C.S.

36 Years

53

B.A. (Hons.) LLB, P.G.

30 Years

Company
Secretary
2.

3.

Shri S. Sen.

Vice President

Sharma

(Legal &

Diploma in Personal &

Administration)

Industrial Relations

Shri Sushil

Vice President

Garg

(Engineering)

60

B.Tech, B.O.E

27 Years

56

M.Sc., Ph.D.

28 Years

UDSM
4.

Dr. Pradeep

Vice President

Sachdeva

(Cane) (Unn
Sugar Complex)

5.

Shri Pankaj

General Manager 46

Agarwal

(Production)

B.Sc. ANSI

25 Years

B.Sc. ANSI

32 Years

UDSM
6.

Shri Atul Goel G.M.(Production) 53

Unn Sugar
Complex

7.

Shri Anil

General Manager 47

Gupta

(Engg.) Unn

B.Sc. Dip. In Mech. Engg. 28 Years

Sugar Complex
8.

9.

Shri

General Manager 41

R.S.Sahrawat

(Cane) UDSM

Shri S.P. Singh General Manager 61

Shamli Distillery

M.Sc. (Agronomy)

19 Years

M.Sc., DIFAT

38 Years

INTRODUCTION

Sir Shadi Lal Enterprises Limited was established in 1933 as a Corporate Body under the
name 'The Upper Doab Sugar Mills Limited' by the Rt.Hon'ble Sir Shadi Lal.

With the untiring efforts of all of them, the Company has become one of the efficient and
modern entities in Western Uttar Pradesh. All the working Directors of the Company are well
qualified and have an excellent understanding of the operation of the Company.

At present the Company has four manufacturing units comprising of two sugar units namely
Upper Doab Sugar Mills, Shamli (U.P.), Unn Sugar Complex, Unn (U.P.), and two distillery
units Shamli Distillery & Chemical Works, Shamliand Pilkhani Distillery & Chemical Works,
Pilkhani, District Saharanpur (U.P.)
Sir Shadi Lal Enterprises Limited started its business in the year 1933 with a Sugar Factory,
Upper Doab Sugar Mills with a cane crushing capacity of 600 TCD per day at Shamli (UP),
about 70 Kms. from Distt. Saharanpur (UP) and about 100 kms. from Delhi. The Company
has been constantly modernizing its plant & machinery in stages by adopting the latest
technology. As a result of constant modernization and expansion, the crushing capacity of the
Sugar Mill Plant at Shamli has increased to the present level of 6250 TCD per day. The
capacity utilization of the Plant for the last number of years has been more than 100%. Being
a seasonal industry, the Sugar Factory works for about 180200 days in a year.

In September 2007, Sir Shadi Lal Enterprises Limited further expanded its cane crushing
capacity by acquiring assets of Unn Sugar Complex at Unn, (U.P.) from Monnet sugar Ltd.
with a cane crushing capacity of 4000 TCD per day.

Shamli Distillery unit was installed at Shamli,(U.P.) in the year 1945 with an installed
capacity of 6.60 lakhs gallons per annum. Subsequently, the capacity was increased in stages
as detailed below to reach its present level of 16.20 lakhs gallons per annum. Since this
distillery is located adjacent to the Sugar factory, it has an inherent advantage of procuring
molasses from the Sugar unit through pipelines.

In the year 2001, to increase the production capacity of Country Liquor and Indian Made
Foreign Liquor, the Shamli Distillery Unit renovated their existing Bottling Hall, which can
now produce more than 2 Million cases per annum.

At present, the unit is producing Indian Made Foreign Liquor, Country Liquor, malt,
Rectified Spirit, Denatured Spirit, Anhydrous Alcohol & Extra Neutral Alcohol.
The major expansion projects taken up by the Company at various stages for the Sugar Mill
at Shamli are summarized below:-

Year

Expansion to (TCD)

1936-37

1200

1956-57

3000

1962-63

3810

1997-98

5000

2005-06

6250

As a result of constant modernization and expansion, the crushing capacity of the Sugar Mill
Plant at Shamli has increased to the present level of 6250 TCD per day. The capacity

utilization of the Plant for the last number of years has been more than 100%. Being a
seasonal industry, the Sugar Factory works for about 180-200 days in a year.

The segmentwise detailed management discussion and analysis is stated below:

Cane Price
U.P. Government has declared the State Advisory Price (SAP) for the season 201314 at Rs.
280/ per quintal for General variety, Rs. 290/ per quintal for early variety and Rs. 275/ per
quintal substandard variety. The FRP for the season 201314declared by the Central
Government was Rs. 210/ per quintal linked to basic recovery of 9.50% subject to premium
of Rs.2.21per quintal of every 0.1% increase in recovery. The Sugar Mills of U.P. State
opposed against the SAP in the season 201314 declared by the State Government and sent
notice for suspension of operation for the season 201314. Many representations were made
by the U.P. Sugar Mills Association and there arrived a settlement between the private sugar
Mills and U.P. Government, by which the State Government allowed a relief of Rs.11.03 per
quintal of cane in the shape of Purchase Tax Rs. 2/ per quintal of cane, on Entry Tax Rs.2.73
per quintal on Society Commission Rs. 6.30 per quintal of cane. The rebate of purchase of
Rs. 2/ per quintal was also given in the season 201213by the U.P. Government. The Entry
Tax is collected from Customer and deposited in Govt. Account. Therefore the actual relief

was only Rs. 6.30 per quintal on Society Commission, which also will be reimbursed after
two months of submission of claim. The U.P. Govt. has also agreed that the Sugar Mills will
make payment of Rs. 280/ per quintal in two instalments. Ist instalment of Rs. 260/ will be
paid immediately at the time of purchase of cane and 2nd instalment of Rs. 20/ per quintal,
after closureof the season 201314. It has also been informed by the U.P. Govt. that to review
the further relief of Rs. 8.97 per quintal of cane (Rs. 20 Rs. 11.03), the State Govt. formed a
Committee to determine the paying capacity of sugar mills. If the prices of sugar falls below
the level determined by the Committee then the entire amount of Rs. 8.97 per quintal will be
borne by the Govt. and if the prices of sugar rises above the level, determined by the
Committee, the industry will bear the entire burden of balance amount. As agreed by U.P.
govt. the Committee will give its report within 3 months. No report or recommendation for
balance amount of Rs. 8.97 has been given by the Committee so far.

Sugar Production & Consumption

Indian Sugar Mills Association (ISMA), the apex representative body of sugar industry has
revised the sugar production estimate to238 Lac tones from 250 Lac tones for the sugar
season 201314 (from October, 2013 to September, 2014). In the last sugar season201213
the sugar production was 254 Lac tonnes. Due consideration has been given to weather
conditions prevailing in the last several months including heavy rain fall in certain parts of
U.P., availability of water in Maharashtra and north Karnataka and less availability of water
in Tamil Nadu. Despite downfall a downward revision in the output of sugar, supply will
continue to be ample in the country as the country has started with an opening stock of 107
Lac tones in October, 2013. In the first half of the reaching sugar year the sugar mills have
dispatched 125 Lac tones sugar for sale in the domestic market, due to better lifting during
the last few months following the improvement in the market sentiments. The Cabinet

Committee of Economic Affairs has, in February, 2014; approved subsidy of Rs.3300/ per
MT on export of raw sugar till the end of March, 2014 to bail out the cash starved sugar
industry. The idea was to increase export, which would clear the massive sugar stock lying
with the sugar mills and would ease the pressure on the domestic price. The subsidy would be
given on export of 40 Lac tonnes of raw sugar over a period of two years and quantum of
subsidy would be recalculated periodically based on the dollar/rupee rate. In the hope of
export of sugar the prices of sugar have improved .While the mills were expecting good rates
of subsidy due to rupee/dollar fluctuations for the month of April & May, 2014 the Govt. cut
it down to Rs.2277/ per tonne in the month of May, 2014 after elections. This has adversely
affected the export of sugar. So far 4 Lac tones sugar has been exported which is just 10% of
the target and it is feared that with the consumption of approx.230235 Lactones the sugar
stock will be much on the higher side at the end of September, 2014. Industry is also pursuing
with the Government to raise the import duty of sugar from 15% to 40% to discourage the
import of sugar.

VISION

To establish an integrated sugar complex that would include the manufacture of sugar,
industrial & potable alcohol, ethanol, co-generation facilities and other related products.

MISSION
To achieve sustainable growth through:

By constant up-gradation and modernization of plant and machinery, and adapting

modern business tools and techniques to our business operations.

By creating an environment that fosters and encourages professional management. By

traversing the path from selling sugar as a commodity, to that of a branded product.

By increasing the capacity of our distillery.

By maximizing shareholders wealth.

PROCURMENT OF SUGARCANE
Sugarcane is broadly classified into three varieties - early,
general and unapproved. Cane is sowed during February
and October every year. The first seed growth is known as
the plant and subsequent growth after harvesting from the
stem is known as Ratoon. The early variety has more
sugar content than the general variety.

Cane Yard

Every farmer within the command area of the Mill is

provided with a calendar, which tells him when he can
expect a Mill Supply Ticket (Purchy), against which he
will deliver the sugarcane.
Cart-Weightment Cabin
He then harvests the cane and transports it either in a
bullock cart or tractor trolley to the mill. Cane is also
bought at the mill's own centers within the command area.
This cane is then transported in trucks or through rail to
the mill.
Trolley Weightment Cabin

MANUFACTURING PROCESS

The manufacturing of sugar begins when harvested cane is received at the mill gate, after
which cane is weighed on the platform type weighbridges. This has the weight recording
arrangement linked to a computer that records the gross and net weights as well as the price
payable to the farmers. Cart cane gets unloaded directly into the cane carrier and tractor
trolleys whereas truck cane is unloaded with the help of overhead traveling cranes. Cane is
weighed using an electronic weighbridge and unloaded into cane carriers. It is then prepared
for milling by knives and shredders. Sugarcane juice is then extracted by pressing the
prepared cane through mills.
Each

mill

consists

of

three

rollers:

1. Extracted juice mixed with water is weighed and sent to the boiling house for further
processing. Residual bagasse is sent to boilers for use as fuel for steam generation

2. This juice is heated and then treated with milk of lime and sulphur dioxide. The treated
juice is then further heated and sent to clarifiers for continuous settling. The settled mud is
filtered by vacuum filters and filtered juice is returned to be further processed while the oliver
cake

is

sent

out

3. The clear juice is evaporated to a syrup stage, bleached by sulphur dioxide and then sent to

vacuum pans for further concentration and sugar grain formation. Crystals are developed to a
desired size and the crystallized mass is then dropped in the crystallizers to exhaust the
mother liquor of its sugar as much as possible. This is then centrifuged for separating the
crystals

from

molasses.

The

molasses

is

re-boiled

for

further

crystallization.

Thus, the original syrup is desugarised progressively (normally three times) till finally, a
viscous liquid is obtained from which sugar can no longer be recovered economically. This
liquid, which is called final molasses, is sent to the distillery for making alcohol. The sugar
thus is separated from molasses in the centrifuge is dried, bagged (50 Kg and 100 Kg),
weighed and sent to storage houses. Sugar is made in different sizes and accordingly
classified into various grades i.e. large, medium and small.

BY - PRODUCTS OF THE SUGAR MAKING PROCESS

(i)Molasses
Molasses is the only by-product obtained in the preparation of sugar through repeated
crystallization. The yield of molasses per ton of sugarcane varies in the range of 4.5% to 5%.
Molasses is mainly used for the manufacture of alcohol, yeast and castle seeds.

Alcohol in turn is used to produce ethanol, rectified spirit, potable liquor and downstream
value added chemicals such as acetone, acetic acid, butanol, acetic anhydride, MEG etc.

The state government controls the export of molasses through export licenses issued every
quarter. Molasses and alcohol-based industries were decontrolled in 1993 and are now being
controlled by respective state government policies. Nearly the industrial alcohol
manufacturers consume 90% of molasses produced and the remaining 10% is consumed by
the potable alcohol sector.

Molasses Storage Tank

(ii)Bagasse

Bagasse is a fibrous residue of cane stalk that is obtained after crushing and extraction of
juice. It consists of water, fiber and relatively small quantities of soluble solids. The
composition of bagasse varies based on the variety of sugarcane, maturity of cane, method
of harvesting and the efficiency of the sugar mill.

Bagasse is usually used as a combustible in furnaces to produce steam, which in turn is used
to generate power. It is also used as a raw material for production of paper and as feedstock
for cattle.

By making use of bagasse sugar mills have been successful in reducing their dependence on
the State Electricity Boards, for their power supply as it can procure up to 90-95% of its
total power requirement through captive generation from steam turbines.

Bagasse Yard

(iii)Press-mud

Press mud, also known as oliver cake or press cake, is the residual output after the filtration
of the juice. It is mixed with spent wash from the distillery and cultivated to produce high

Bio-Composing Process

TREND IN DOMESTIC SUGAR PRICE

The sugar prices which were around Rs.3300/ per qtl. In February/March, 2013 came down
to Rs.2800/ per qtl. Upto mid-February, 2014. In the hope of export of sugar the prices of
sugar have improved in the month of March and April, 2014 and reached uptoRs.3200/ to
Rs.3250/ per qtl. Due to fall in the prices of sugar in the international market the prices of
sugar have come down toRs.3000/ per qtl. The present international sugar price is $475
480 per tonne. The average sugar realization in the financial year201314 in unit Upper Doab
Sugar Mills is Rs.2994.70 per qtl and in Unn Sugar Complex it is Rs.2968.70 per qtl.

COMPANY ETHICS & SOCIAL RESPONSBILITIES

The Management of this Company believes in ethical management practices and implements
them in true spirits. They are extremely sensitive towards their social commitment obligations
from the very beginning. Few years back, Company established a full-fledged Hospital with
adequate indoor beds and other equipments, like X-Ray Machine etc., at Shamli, known as
Sir Shadi Lal Memorial Hospital and the same was handed over to the State Government. A
big Community Hall costing more than Rs. 40 lakhs was built in the heart of the city of
Shamli and the Company contributed more than 50 per cent of the cost of construction.

The repair work of the roads of the command area is taken on a regular basis. Regular
donations are given to the various Voluntary Organizations and other welfare organizations,
for organizing Eye Camps, Family Planning Camps and other activities at Shamli. The
Company also undertakes on a regular basis recreational programmes at Shamli and the
Exhibition at Muzaffarnagar.

OUTLOOK AND CHALLENGES

Sugar Mills in U.P. have incurred heavy losses during the last few years. Even though the
Govt. has announced a few measures to assist the industry, the mills are still not able to
recover their cost. On one side cane price arrears of farmers have reached at an all-time high
while on the other side the sugar mills are defaulted in the payments of their loans leading
several mills becoming Non Performing Assets (NPA) or are filing Corporate Debt Restructuring (CDR). The Centre had come up with a scheme for the industry whereby banks
would extend soft loan of Rs.6600 Crores to help in clearing cane price arrears. Out of this
only Rs.3000 Crores has been disbursed so far. The banks are reluctant to lend anymore
because they fear that it would add to their list of Non-Performing Assets. The balance cane
price outstanding in UP are Rs.8, 754/ crores as on 29.05.2014. The Honble High Court at
Allahabad have directed the State Government vide its Judgement dated 30th May 2014 of
PIL filed by Shri. V.M. Singh that the entire cane price for the season 201314 be paid by
30th June 2014. Thereafter, the Cane Commissioner, UP has put pressure on the sugar mills
to pay the entire cane price in the month of June, 2014 by issuing Recovery Certificate and
lodging FIR against the sugar mills. Now on 1st July 2014 the Honble High Court Allahabad
have directed the State Government that the necessary steps shall be taken to ensure the
payment of balance amount of sugar cane dues to the farmers by 24th July 2014. The Honble
High Court has further directed the impleadment of the Union Government as a party
respondent to these proceedings and notice be issued to the Union Government. On 24th July,
2014, the court could not sit and the date of hearing was further extended.
Due to unreasonable cane price in U.P. which has aggravated by low sugar recovery and lack
of adequate opportunities to export sugar, the mills in U.P. continued to sink further in deeper
financial crisis. An independent report India Rating and Research (INDRA) published titled
as 2014 Outlook Sugar Sector Highlights that North south divergence (is) more distinct It
also mentioned that South based millers should stay afloat (and) north based millers to

slide. The outlook revision reflects the improvement in the credit profiles of millers based in
south India from financial year 2014 levels. However, UTTAR PRADESH (U.P.) based mills
will likely to continue to struggle with high leverages. The report suggests that better
opportunities and prospects that would be available in the next year would benefit only south
based sugar mills, while the north based mills including those in U.P. would still remain in
red. The main reason for that is extremely high cost of producing sugar in U.P. which at the
current cane price and sugar realization is Rs.3600/ per qtl. as compared to sugar producing
cost of around Rs.3000/ to 3200/ per qtl in Maharashtra and South India. With rationalized
sugar cane pricing policies being implemented by the respective State Governments of
Maharashtra and Karnataka, which produces almost 50% of the countrys sugar the U.P. sugar
Mills will suffer unless and until the cane pricing system is rationalized. The negative outlook
for north and U.P based sugar mills would change if linkage formula on cane pricing is
implemented. It is essential to implement a revenue sharing model for cane price
determination from the next sugar season. There is of course the overall euphoria that the new
regime of BJP led by Sh.Narendra Modi will be friendlier and could help the sugar industry.
The BJP led NDA Government has constituted a committee of Ministers to review the
problems of sugar industry to ensure the interest of consumers, cane farmers and sugar mills.
The committee has recommended further extend soft loan of Rs.4400crores to the sugar
industry to help in clearing the cane price arrears, increase in the import duty on import of
sugar from 15% to 40% to discourage the import of sugar and further continue subsidy of
Rs.3300 per MT on export of raw sugar and increase in the admixing of ethanol in petrol
from 5 % to 10 %. Of course these are the welcome steps taken by the Union Government
which could help the cash starved the sugar industry.

UNIT UPPER DOAB SUGAR MILLS, SHAMLI

The Crushing Season 201314 was started on 11.12.2013 and closed on 21.05.2014. We
crushed 8792035 quintals of cane at an average recovery of 9.02 % producing 7,92,886
quintals of sugar in 162 days of working. In the last Crushing Season 201213, Shamli Sugar
Unit started crushing on 22.11.2012 and closed crushing on 06.05.2013.The unit crushed
8653306 quintals of cane at an average recovery of 9.14% producing 790410 quintals of
sugar in 166 days of working. The average cost of Cane for the financial year 201314 is
Rs.284.22 per quintal as against Rs. 287.78 per quintal for the financial year 201213.
The average sugar realization during the financial year 201314 is Rs.2994.70 per quintal as
against Rs. 3222.99 per quintal during the last financial year 201213.

PARTICULARS

SUGAR SEASON (2013-14)

Gross Working days

162

Cane Crushed (Qtls.)

8792035

Average Cane Crush per Crop day (Qtls.)

54272

Manufacturing losses (%)

1.93

Steam Consumption cane (%)

53.06

Average Sugar recovery (%)

9.02

Total sugar produced (Qtls.)

792876

UNIT UNN SUGAR COMPLEX, UNN

The Crushing Season 201314 for Unn Sugar Unit was started on 08.12.2013 and closed on
30.04.2014, Unit has crushed 5176350 quintals of cane at an average recovery of 8.47%,
producing 438339 Quintals of sugar in 144 days of working. In the last Crushing Season
201213, Unn Sugar Unit started crushing on 23.11.2012 and closed crushing on 21.04.2013.
The Unit has crushed 5163073 quintals of cane at an average recovery of 9.00%, producing
464560 quintals of sugar in 148 days of working. The average cost of Cane for the financial
year 201314 is Rs.288.02 per quintal as against Rs. 293.82 per quintal for the financial
Year 201213.The average sugar realization during the financial year 201314 is Rs.2968.70
per quintal as against Rs. 3087.94 per quintal during the last financial year 201213.

PARTICULARS

SUGAR SEASON (2013-14)

Gross Working days

148

Cane Crushed (Qtls.)

5163073

Average Cane Crush per Crop day (Qtls.)

34793

Manufacturing losses (%)

2.03

Steam Consumption cane (%)

45.68

Average Sugar recovery (%)

9.00

Total sugar produced (Qtls.)

464560

UNIT SHAMLI DISTILLERY & CHEMICAL WORKS,

SHAMLI

In Shamli Distillery, the production is 7066191 BL during the year 201314 as against
7333632 BL during the last financial year 201213. During the year 201314, Fermentation
% was 89.04 as against 89.05 during 201213. Distillation % was 98.05as against 98.05
during last year. Overall % was 86.95 during 201314 as against 89.96 during the year 2012
13. During the year 201314, the recovery in AL was 21.80 as against 22.02 during last year.
Molasses rate was Rs. 388.03 per quintal during the year 201314 as against Rs.323.50 per
quintal during the year 201213. Shamli Distillery earned profit of Rs. 451.22 Lacs during
the year 201314 as against Rs. 350.42 Lacs during last year in 201213.

(ii) ALCOHOL & ETHANOL BLENDING

The Ethanol Blending Programme is primarily based on indigenously produced ethanol from
sugarcane molasses, which beside saugmenting fuel availability in the country would also
provide better returns for sugar cane farmers. The Indian Sugar industry has the capacity to
produce 250 crore Ltrs of alcohol annually and its major buyers are chemical industry with
demand of 60 crores Ltrs, Potable and Alcohol Industry which sources 110 crore Ltrs and Oil
companies need around 100crore Ltrs annually. The Governments ambitious plan to blend
petrol with 5% Ethanol has fallen far short of target, creating problems for sugar mills, which
supply the alcohol, and the chemical industry, which is complaining that there is a big
shortage in the market. Against the requirement of 105 crore litre of ethanol for mandatory
5% blending with petrol, oil companies have contracted just 62 crore litre, half of which is
yet to be lifted from depots. Ethanol Blending Programme was launched to promote green
fuel and reduce the oil import bill. The sugar industry has estimated that oil companies could

have easily saved Rs.370crore on their oil import bill if they had blended the 62 crore litre
supplied by sugar mills in the past year. While oil companies cite procedural delays in
lifting the Ethanol offered by the supplier sugar mills, the latter is unable to regularize its
ethanol production and supply due to non lifting by OMC. While the supply from the first
tender was purchased in the price band of Rs.3942 per litre, oil firms decided in January,
2014 that they would procure ethanol from only those bidders who match their benchmark
price of Rs.44/ per litre. On this basis, they also rejected 36 crore litre of ethanol supply
from sugar mills. In the meanwhile, the chemical industry filed three cases in the Competition
Commission of India (CCI). Two were quashed while one is with the Supreme Court. In its
appeal to the apex court, India Glycols has alleged cartelization by sugar mills and oil
companies and also submitted that with limited availability of molasses based ethanol in the
country, any diversion of ethanol shall adversely affect the very existence of the chemical
industry in India. The ethanol blending programme has faced hassles from all corners, be it
price issue with mills, procedural delays due to interstate policy mismatch and CCI case
filed by the chemical industry. As there is surplus sugar production, the Government should
take steps for increasing the mandatory ethanol blending from5% to 10%. This would divert
surplus sugar to the ethanol production and will reduce inventory level of sugar.

Human Resources initiatives and Industrial Relations

The Company has, as always, stood by its commitment of harnessing and developing its
people resources in the best possible manner for achievement of its business goals and
objectives. All through the year the level of people engagement has been
of the highest order, which has impacted the process of business growth and upgradation of
various systems in a significant way.

Training and Development of employees

The process of training and development has continued with a view to upgrading skills and
competencies of people. Employees across all levels including Senior, and Middle
Management have been through various developmental programs customized to meet the
individual and organizational needs. The organization has continuously worked towards
providing an enabling work environment, which encourages people to acquire newer skills
and knowledge so as to make them more effective, productive and tuned to the environmental
changes.

GENERAL SHAREHOLDERS INFORMATION

a) Annual General Meeting:

22nd September, 2014at 11.00 A.M

Next Annual General Meeting: P.H.D. House,
Opp. Asian Game Village, New Delhi 110 016.

b) Financial Calendar (20142015)

Financial reporting for the:

End of July, 2014

Quarter ending 30th June, 2014

Financial reporting for the quarter:

End of October, 2014

Ending 30th Sept., 2014

Financial reporting for the:

End of January, 2015

Quarter ending 31st Dec., 2014

Financial reporting for the:

30th May, 2015

Quarter ending 31st March, 2014

c) Date of Books closure:

16th September, 2014 to 22nd September, 2014

(Both days inclusive)

d) Dividend payment date:

e) Listing on Stock Exchange:

NIL

Delhi Stock Exchange Ltd.

DSE House, 3/1, Asaf Ali Road,
New Delhi110002

Bombay Stock Exchange Ltd.

25th Floor, P.J. Tower, Dalal Street,
Mumbai 400001.
The Company has paid the listing fee to both the Stock Exchanges for the financial year
201415.

f) Stock Code :

19174 of the Delhi Stock Exchange Ltd.

532879 of Bombay Stock Exchange Ltd

g) Corporate Identity Number :

Our Corporate Identity No. is L51909DL1933

PLC009509, allotted by the Ministry of Company
Affairs, Government of India and our Companys
Registration No. is 9509.

h) Market Price Data:

The Market Price Data and Volume from 1st April, 2013 to 31st March, 2014 on the Bombay
Stock Exchange Limited, Mumbai is given below:
MONTHS
APRIL,2013
MAY,2013
JUNE,2013
JULY,2013
AUGUST,2013
SEPTEMBER,2013

HIGH (RS.)
37.00
38.80
38.75
36.15
26.90
29.50

LOW (RS.)
29.80
33.75
35.65
28.30
23.75
23.55

NO. OF SHARES TRADED

6060
2407
442
751
144
6181

OCTOBER,2013
NOVEMBER,2013
DECEMBER,2013
JANUANRY,2014
FEBRARY,2014
MARCH,2014

24.50
24.00
24.70
24.95
23.90
26.20

20.35
20.00
22.45
22.40
19.75
20.00

3701
5173
552
13324
5562
14052

i) BSE Sensex, Crisis Index etc.: Performance of share price of your company in comparison
to BSE Sensex during the period 01.04.2013 to 31.03.2014

Plant Location:

i) Upper Doab Sugar Mills,

SHAMLI 247 776 (U.P.)
ii) Unn Sugar Complex,
Block Unn, Distt. Shamli (U.P.)
iii) Shamli Distillery & Chemical Works,
SHAMLI 247 776 (U.P.)

Address for Correspondence

REGISTERED OFFICE SHARE TRANSFER AGENT
4-A, Hansalaya,

M/s Alankit Assignments Ltd.,

15, Barakhamba Road,

Alankit House

NEW DELHI-110 001

2-E/21, Jhandewalan Extn.

NEW DELHI-110 055.

Telephones:

Telephones:

011-23316409

011-23541234

011-23310414

011-42541234

Fax: 011-23322473

Fax: 011-42540064

Shareholders holding shares in electronic mode should address all their correspondence to
their respective Depository Participants.

RATIO
ANALYSIS

RATIO ANAYSIS

Introduction

The analysis of the financial statements and interpretations of financial results of a particular
period of operations with the help of 'ratio' is termed as "ratio analysis." Ratio analysis used
to determine the financial soundness of a business concern. Alexander Wall designed a
system of ratio analysis and presented it in useful form in the year 1909.

Meaning and Definition

The term 'ratio' refers to the mathematical relationship between any two inter-related
variables. In other words, it establishes relationship between two items expressed in
quantitative form.

According J. Batty, Ratio can be defined as "the term accounting ratio is used to describe
significant relationships which exist between figures shown in a balance sheet and profit and
loss account in a budgetary control system or any other part of the accounting management."

Analysis or Interpretations of Ratios

The analysis or interpretations in question may be of various types. The following approaches
are usually found to exist:
(a) Interpretation or Analysis of an Individual (or) Single ratio.
(b) Interpretation or Analysis by referring to a group of ratios.
(c) Interpretation or Analysis of ratios by trend.
(d) Interpretations or Analysis by inter-firm comparison.

Principles of Ratio Selection

The following principles should be considered before selecting the ratio:

(1) Ratio should be logically inter-related.
(2) Pseudo ratios should be avoided.
(3) Ratio must measure a material factor of business.
(4) Cost of obtaining information should be borne in mind.
(5) Ratio should be in minimum numbers.
(6) Ratio should be facilities comparable.

Advantages of Ratio Analysis

Ratio analysis is necessary to establish the relationship between two accounting figures to
highlight the significant information to the management or users who can analyse the
business situation and to monitor their performance in a meaningful way. The following are
the advantages of ratio analysis:

(1) It facilitates the accounting information to be summarized and simplified in a required

form.

(2) It highlights the inter-relationship between the facts and figures of various segments of
business.
(3) Ratio analysis helps to remove all type of wastages and inefficiencies.
(4) It provides necessary information to the management to take prompt decision relating to
business.
(5) It helps to the management for effectively discharge its functions such as planning,
organizing, controlling, directing and forecasting.
(6) Ratio analysis reveals profitable and unprofitable activities. Thus, the management is able
to concentrate on unprofitable activities and consider to improve the efficiency.
(7) Ratio analysis is used as a measuring rod for effective control of performance of business
activities.
(8) Ratios are an effective means of communication and informing about financial soundness
made by the business concern to the proprietors, investors, creditors and other parties.
(9) Ratio analysis is an effective tool which is used for measuring the operating results of the
enterprises.
(10) It facilitates control over the operation as well as resources of the business.
(11) Effective co-operation can be achieved through ratio analysis.
(12) Ratio analysis provides all assistance to the management to fix responsibilities.
(13) Ratio analysis helps to determine the performance of liquidity, profitability and solvency
position of the business concern.

Limitations of Ratio Analysis

Ratio analysis is one of the important techniques of determining the performance of financial
strength and weakness of a firm. Though ratio analysis is relevant and useful technique for

the business concern, the analysis is based on the information available in the financial
statements. There are some situations, where ratios are misused; it may lead the management
to wrong direction. The ratio analysis suffers from the following limitations:
(1)Ratio analysis is used on the basis of financial statements. Number of limitations of
financial statements may affect the accuracy or quality of ratio analysis.
(2)Ratio analysis heavily depends on quantitative facts and figures and it ignores qualitative
data. Therefore this may limit accuracy.
(3) Ratio- analysis is a poor measure of a firm's performance due to lack of adequate
standards laid for ideal ratios.
(4)It is not a substitute for analysis of financial statements. It is merely used as a tool for
measuring the performance of business activities.
(5) Ratio analysis clearly has some latitude for window dressing.
(6)It makes comparison of ratios between companies which is questionable due to differences
in methods of accounting operation and financing.
(7)Ratio analysis does not consider the change in price level, as such, these ratio will not help
in drawing meaningful inferences.

CLASSIFICATION OF RATIOS

Accounting Ratios are classified on the basis of the different parties interested in making use
of the ratios. A very large number of accounting ratios are used for the purpose of
determining the financial position of a concern for different purposes. Ratios may be broadly
classified in to:
(1) Classification of Ratios on the basis of Balance Sheet.
(2) Classification of Ratios on the basis of Profit and Loss Account.

(3) Classification of Ratios on the basis of Mixed Statement (or) Balance Sheet and Profit and
Loss Account.

This classification further grouped in to:

I. Liquidity Ratios
II. Profitability Ratios
III. Turnover Ratios
IV. Solvency Ratios
V. Overall Profitability Ratios

These classifications are discussed here under:

1. Classification of Ratios on the basis of Balance Sheet:

Balance sheet ratios which establish the relationship between two balance sheet items.
For example, Current Ratio, Fixed Asset Ratio, Capital Gearing Ratio and Liquidity Ratio
etc.

2. Classification on the basis of Income Statements:

These ratios deal with the relationship between two items or two group of items of the
income statement or profit and loss account. For example, Gross Profit Ratio, Operating
Ratio, Operating Profit Ratio, and Net Profit Ratio etc.

3. Classification on the basis of Mixed Statements:

These ratios also known as Composite or Mixed Ratios or Inter Statement Ratios. The inter
statement ratios which deal with relationship between the item of profit and loss account and

item of balance sheet. For example, Return on Investment Ratio, Net Profit to Total Asset
Ratio, Creditor's Turnover Ratio, Earning Per Share Ratio and Price Earning Ratio etc.

Classification of Ratios by Statement

On the basis of
Balance Sheet

On the basis of
Profit and loss A/c

On the basis of
Profit and Loss Account
And Balance Sheet

1.

Liquid ratio

1. Gross Profit Ratio

1. Stock Turnover Ratio

2.

Absolute Liquid Ratio

2. Operating Ratio

2. Debtors Turnover

Debt Equity Ratio

3. Operating Profit Ratio

3. Payable Turnover

Proprietary Ratio

4. Net Profit Ratio

4. Fixed Asset Turnover

5.

Capital Gearing Ratio

5. Expense Ratio

5. Return on Equity

6.

Assets-Proprietorship Ratio

6. Interest Coverage Ratio

6. Return on Shareholder's

Ratio
3.
Ratio
4.
Ratio

Fund
7.

Capital Inventory to

7. Return on Capital

Employed
Working Capital Ratio
8.

8. Capital Turnover Ratio

Ratio of Current Assets to

9. Working

Capital
Fixed Assets

Turnover Ratio
10. Return on Total Resource
11. Total Assets Turnover

(I) LIQUIDITY RATIOS

Liquidity Ratios are also termed as Short-Term Solvency Ratios. The term liquidity means
the extent of quick convertibility of assets in to money for paying obligation of short-term

nature. Accordingly, liquidity ratios are useful in obtaining an indication of a firm's ability to
meet its current liabilities, but it does not reveal h0w effectively the cash resources can be
managed. To measure the liquidity of a firm, the following ratios are commonly used:
(1) Current Ratio.
(2) Quick Ratio (or) Acid Test or Liquid Ratio.
(3) Absolute Liquid Ratio (or) Cash Position Ratio.

(1) Current Ratio

Current Ratio establishes the relationship between current Assets and current Liabilities. It
attempts to measure the ability of a firm to meet its current obligations. In order to compute
this ratio, the following formula is used:

Current Ratio = Current Assets / Current Liability

The two basic components of this ratio are current assets and current liabilities. Current asset
normally means assets which can be easily converted in to cash within a year's time. On the
other hand, current liabilities represent those liabilities which are payable within a year. The
following table represents the components of current assets and current liabilities in order to
measure the current ratios:

Components of Current Assets and Current Liabilities

Current Assets
1. Cash in Hand

Current Liabilities
1. Sundry Creditor (Accounts Payable)

2. Cash at Bank

2. Bills Payable

3. Sundry Debtors

3. Outstanding and Accrue Expense

4. Bills Receivable

4. Income Tax Payable

5. Marketable securities

5. Short Term Advances

(Short-Term)
6. Other Short-Term Investments
7. Inventories:
(a) Stock of Raw Material
(b) Stock of Work In Progress
(c) Stock of Finished goods

6. Unpaid or Unclaimed Dividend

7. Bank Overdraft (Short-Term Period)

Interpretation of Current Ratio:

The ideal current ratio is 2: 1. It indicates that current assets double the current liabilities is
considered to be satisfactory. Higher value of current ratio indicates more liquid of the firm's
ability to pay its current obligation in time. On the other hand, a low value of current ratio
means that the firm may find it difficult to pay its current ratio as one which is generally
recognized as the patriarch among ratios.

Advantages of Current Ratios:

(1) Current ratio helps to measure the liquidity of a firm.
(2) It represents general picture of the adequacy of the working capital position of a company.
(3) It indicates liquidity of a company.
(4) It represents a margin of safety, i.e., cushion of protection against current creditors.
(5) It helps to measure the short-term financial position of a company or short-term solvency
of a firm.

Disadvantages of Current Ratio:

(1) Current ratios cannot be appropriate to all business it depends on many other factors.
(2) Window' dressing is another problem of current ratio, for example, overvaluation of
closing stock.
(3) It is a crude measure of a firm's liquidity only on the basis Of quantity and not quality of
current assets.

(2) Quick Ratio (or) Acid Test or Liquid Ratio

Quick Ratio also termed as Acid Test or Liquid Ratio. It is supplementary to the current ratio.
The acid test ratio is a more severe and stringent test of a firm's ability to pay its short-term
obligations as and when they become due. Quick Ratio establishes the relationship between
the quick assets and current liabilities. In order to compute this ratio, the below presented
formula is used:

Liquid Asset (Current Assets - Stock and Prepaid Expenses)

Liquid Ratio =
Current Liabilities

Quick Ratio can be calculated by two basic components of quick assets and current

liabilities.
Quick Assets = Current Assets - (Inventories + Prepaid expenses)
Current liabilities represent those liabilities which are payable within a year.

Interpretation:
The ideal Quick Ratio of 1:1 is considered to be satisfactory. High Acid Test Ratio is an
indication that the firm has relatively better position to meet its current obligation in time. On

the other hand, a low value of quick ratio exhibiting that the firm's liquidity position is not
good.

Advantages
(I) Quick Ratio helps to measure the liquidity position of a firm.
(2) It is used as a supplementary to the current ratio.
(3) It is used to remove inherent defects of current ratio.

II. PROFITABILITY RATIOS

The term profitability means the profit earning capacity of any business activity. Thus, profit
earning may be judged on the volume of profit margin of any activity and is calculated by
subtracting costs from the total revenue accruing to a firm during a particular period.
Profitability Ratio is used to measure the overall efficiency or performance of a business.

Generally, a large number of ratios can also be used for determining the profitability as the
same is related to sales or investments.

The following important profitability ratios are discussed below:

1. Gross Profit Ratio.
2. Operating Ratio.
3. Operating Profit Ratio.
4. Net Profit Ratio.
5. Return on Investment Ratio.
6. Return on Capital Employed Ratio.
7. Earning Per Share Ratio.
8. Dividend Payout Ratio.
9. Dividend Yield Ratio.
lO. Price Earning Ratio.
11. Net Profit to Net Worth Ratio.

(1) Gross Profit Ratio

Gross Profit Ratio established the relationship between gross profit and net sales. This ratio is
calculated by dividing the Gross Profit by Sales. It is usually indicated as percentage.

Gross Profit Ratio

Gross Profit / Net Salesx 100

Gross Profit

Sales - Cost of Goods Sold

Net Sales

= Gross Sales - Sales Return (or) Return Inwards

Higher Gross Profit Ratio is an indication that the firm has higher profitability. It also reflects
the effective standard of performance of firm's business. Higher Gross Profit Ratio will be
result of the following factors.

(1) Increase in selling price, i.e., sales higher than cost of goods sold.
(2) Decrease in cost of goods sold with selling price remaining constant.
(3) Increase in selling price without any corresponding proportionate increase in cost.
(4) Increase in the sales mix.
A low gross profit ratio generally indicates the result of the following factors:
(l) Increase in cost of goods sold.
(2) Decrease in selling price.
(3) Decrease in sales volume.
(4) High competition.
(5) Decrease in sales mix.

Advantages
(1) It helps to measure the relationship between gross profit and net sales.
(2) It reflects the efficiency with which a firm produces its product.
(3) This ratio tells the management, that a low gross profit ratio may indicate unfavourable
purchasing and mark-up policies.
(4) A low gross profit ratio also indicates the inability of the management to increase sales.

(2) Operating Ratio

Operating Ratio is calculated to measure the relationship between total operating expenses
and sales. The total operating expenses is the sum total of cost of goods sold, office and
administrative expenses and selling and distribution expenses. In other words, this ratio
indicates a firm's ability to cover total operating expenses. In order to compute this ratio, the
following formula is used:

Operating Ratio =

Operating Cost x 100/ Net Sales

Operating Cost =

Cost of goods sold + Administrative Expenses

+ Selling and Distribution Expenses

Net Sales

=Sales - Sales Return (or) Return Inwards.

(2) Operating Profit Ratio

Operating Profit Ratio indicates the operational efficiency of the firm and is a measure of the
firm's ability to cover the total operating expenses. Operating Profit Ratio can be calculated
as:

Operating Profit Ratio = Operating Profit / Net Sales x 100

Operating Profit

= Net Sales - Operating Cost

(Or)
= Net Sales - (Cost of Goods Sold + Office
And Administrative Expenses + Selling
And Distribution Expenses)
(Or)
= Gross Profit - Operating Expenses
(Or)
= Net Profit + Non-Operating Expenses
- Non-operating income

(3) Net Profit Ratio

Net Profit Ratio is also termed as Sales Margin Ratio (or) Profit Margin Ratio (or) Net Profit
to Sales Ratio. This ratio reveals the firm's overall efficiency in operating the business. Net
profit Ratio is used to measure the relationship between net profit (either before or after
taxes) and sales. This ratio can be calculated by the following formula:

Net Profit Ratio = Net Profit After Tax

100 / Net Sales

Net profit includes non-operating incomes and profits. Non-Operating Incomes such as
dividend received, interest on investment, profit on sales of fixed assets, commission
received, discount received etc. Profit or Sales Margin indicates margin available after
deduction cost of production, other operating expenses, and income tax from the sales
revenue. Higher Net Profit Ratio indicates the standard performance of the business concern.

Advantages
(1) This is the best measure of profitability and liquidity.
(2) It helps to measure overall operational efficiency of the business concern.
(3) It facilitates to make or buy decisions.
(4) It helps to determine the managerial efficiency to use a firm's resources to generate
income on its invested capital.
(5) Net profit Ratio is very much useful as a tool of investment evaluation.

(5)Return on Investment Ratio

This ratio is also called as ROL This ratio measures a return on the owner's or shareholders
investment. This ratio establishes the relationship between net profit after interest and taxes
and the owner's investment. Usually this is calculated in percentage. This ratio thus can be
calculated as:

Net Profit (after interest and tax)

Return on Investment Ratio =

100
Shareholders' Fund (or) Investments

Shareholder's Investments

Equity Share Capital + Preference Share

Capital + Reserves and Surplus
- Accumulated Losses

Net Profit

= Net Profit - Interest and Taxes

Advantages
(1) This ratio highlights the success of the business from the owner's point of view.

(2) It helps to measure an income on the shareholders' or proprietor's investments.

(3) This ratio helps to the management for important decisions making.
(4) It facilitates in determining efficiently handling of owner's investment.

(6)Return on Capital Employed Ratio

Return on Capital Employed Ratio measures a relationship between profit and capital
employed. This ratio is also called as Return on Investment Ratio. The term return means
Profits or Net Profits. The term Capital Employed refers to total investments made in the
business. The concept of capital employed can be considered further into the following ways:

(a) Gross Capital Employed

(b) Net Capital Employed
(c) Average Capital Employed
(d) Proprietor's Net Capital Employed

(a) Gross Capital Employed

= Fixed Assets

Current Assets.

(b)Net Capital Employed

= Total Assets - Current Liabilities

Opening Capital Employed + Closing
(c) Average Capital Employed = Capital Employed / 2
Or
= Net Capital Employed + 1/2 of Profit
after Tax
(d)Proprietor's Net Capital = Fixed Assets + Current Assets
Employed
- Outside Liabilities (both long-term and
short-term).

In order to compute this ratio, the below presented formulas are used:

Return on Capital Employed=Net Profit after Taxes

x 100

Gross Capital Employed

(Or)
= Net Profit after Taxes before Interest x 100
Gross Capital Employed
(Or)
= Net Profit after Taxes before Interest x 100
Average Capital Employed or
Net Capital Employed
(7) Earning Per Share Ratio
Earning per Share Ratio (EPS) measures the earning capacity of the concern from the
owner's point of view and it is helpful in determining the price of the equity share in the
market place. Earning per Share Ratio can be calculated as:

Earning Per Share Ratio =

Net Profit after Tax and Preference Dividend

No. of Equity Shares

Advantages
(1) This ratio helps to measure the price of stock in the market place.
(2) This ratio highlights the capacity of the concern to pay dividend to its shareholders.
(3) This ratio used as a yardstick to measure the overall performance of the concern.

(8) Dividend Payout Ratio

This ratio highlights the relationship between payment of dividend on equity share capital
and the profits available after meeting tax and preference dividend. This ratio indicates the
dividend policy adopted by the top management about utilization of divisible profit to pay
dividend or to retain or both. The ratio, thus, can be calculated as

Dividend Payout Ratio =

Equity Dividend
Net Profit after Tax and Preference Dividend
(Or)
=
Dividend per Equity Sharex 100
Earning Per Equity Share

(9) Dividend Yield Ratio:

Dividend Yield Ratio indicates the relationship is established between dividend per share and
market value per share. This ratio is a major factor that determines the dividend income from
the investor point of view. It can be calculated by the following formula:

Dividend Yield Ratio =

Dividend per Share

x 100
Market Value per Share

(10)Price Earnings Ratio

This ratio highlights the earning per share reflected by market share. Price Earnings Ratio
establishes the relationship between the market price of an equity share and the earning per
equity share. This ratio helps to find out whether the equity shares of a company are
undervalued or not. This ratio is also useful in financial forecasting. This ratio is calculated
as:

Price Earnings Ratio = Market Price per Equity Share

Earning Per Share
(11) Net Profit to Net Worth Ratio
This ratio measures the profit return on investment. This ratio indicates the established
relationship between net profit and shareholders' net worth. It is a reward for the assumption
of ownership risk. This ratio is calculated as:

Net Profit to Net Worth

= Net Profit after Taxes

x 100
Shareholders' Net Worth
Shareholder Net Worth = Total Tangible Net Worth
Total Tangible Net Worth = Company's Net Assets - Long-Term Liabilities
(Or)
= Shareholders' Funds + Profits Retained in
business
Advantages
(1) This ratio determines the incentive to owners.
(2) This ratio helps to measure the profit as well as net worth.
(3) This ratio indicates the overall performance and effectiveness of the firm.
(4) This ratio measures the efficiency with which the resources of a firm have been
employed.

III. TURNOVER RATIOS

Turnover Ratios may be also termed as Efficiency Ratios or Performance Ratios or Activity
Ratios. Turnover Ratios highlight the different aspect of financial statement to satisfy the
requirements of different parties interested in the business. It also indicates the effectiveness
with which different assets are vitalized in a business. Turnover means the number of times
assets are converted or turned over into sales. The activity ratios indicate the rate at which
different assets are turned over. Depending upon the purpose, the following activities or
turnover ratios can be calculated:
1. Inventory Ratio or Stock Turnover Ratio (Stock Velocity).
2. Debtor's Turnover Ratio or Receivable Turnover Ratio (Debtor's Velocity).
2 A. Debtor's Collection Period Ratio.
3. Creditor's Turnover Ratio or Payable Turnover Ratio (Creditor's Velocity).
3 A. Debt Payment Period Ratio.
4. Working Capital Turnover Ratio
5. Fixed Assets Turnover Ratio
6. Capital Turnover Ratio.

(1) Stock Turnover Ratio

This ratio is also called as Inventory Ratio or Stock Velocity Ratio.
Inventory means stock of raw materials, working in progress and finished goods. This ratio is
used to measure whether the investment in stock in trade is effectively utilized or not. It
reveals the relationship between sales and cost of goods sold or average inventory at cost
price or average inventory at selling price. Stock Turnover Ratio indicates the number of
times the stock has been turned over in business during a particular period. While using this

ratio, care must be taken regarding season and condition, Price trend, supply condition etc. In
order to compute this ratio, the following formulae are used:
(1) Stock Turnover Ratio =

Cost of Goods Sold

Average Inventory at Cost

Cost of Goods Sold = Opening Stock + Purchases + Direct Expenses - Closing Stock
(Or)
= Total Cost of Production + Opening Stock of Finished Goods
-

Closing Stock of Finished Goods.

Total Coast of Production = Cost of Raw Material Consumed + Wages + Factory Cost
(Or)
= Sales - Gross Profit

Average Stock

= Opening Stock + Closing Stock

2

(2) Stock Turnover Ratio =

Net Sales
Average Inventory at Cost

(3) Stock Turnover Ratio =

Net Sales
Average Inventory at Selling Price

(4) Stock Turnover Ratio =Net Sales

Inventory

Advantages
(1) This ratio indicates whether investment in stock in trade is efficiently used or not.
(2) This ratio is widely used as a measure of investment in stock is within proper limit or not.
(3) This ratio highlights the operational efficiency of the business concern.
(4) This ratio is helpful in evaluating the stock utilization.
(5) It measures the relationship between the sales and the stock in trade.
(6) This ratio indicates the number of times the inventories have been turned over in business
during a particular period.

(2)Debtor's Turnover Ratio

Debtor's Turnover Ratio is also termed as Receivable Turnover Ratio or Debtor's Velocity.
Receivables and Debtors represent the uncollected portion of credit sales. Debtor's Velocity
indicates the number of times the receivables are turned over in business during a particular
period. In other words, it represents how quickly the debtors are converted into cash. It is
used to measure the liquidity position of a concern. This ratio establishes the relationship
between receivables and sales. Two kinds of ratios can be used to judge a firm's liquidity
position on the basis of efficiency of credit collection and credit policy. They are (A)
Debtor's Turnover Ratio and (B) Debt Collection Period. These ratios may be computed as:
(1) Debtor's Turnover Ratio =Net Credit Sales
Accounts Receivable
(Or)
= Average Accounts Receivable
Net Credit Sales
= Total Sales - (Cash Sales + Sales Return)
Account Receivable
= Sundry Debtors or Trade Debtors + Bills Receivable
Average Account Receivable = Opening Receivable + Closing Receivable
2
It is to be noted that opening and closing receivable and credit sales are not available, the
ratio may be calculated as
Debtor's Turnover Ratio =

Total Sales
Accounts Receivable

2 (A) Debt Collection Period Ratio

This ratio indicates the efficiency of the debt collection period and the extent to which the
debt have been converted into cash. This ratio is complementary to the Debtor Turnover
Ratio. It is very helpful to the management because it represents the average debt collection
period. The ratio can be calculated as follows:
(a) Debt Collection Period Ratio

=Months (or) Days in a year

Debtor's Turnover
(Or)
(b) Debt Collection Period Ratio=Average Accounts Receivable x Months (or) Days(yr)
Net Credit Sales for the year

Advantages of Debtor's Turnover Ratio

(1) This ratio indicates the efficiency of firm's credit collection and efficiency of credit policy.
(2) This ratio measures the quality of receivable, i.e., debtors.
(3) It enables a firm to judge the adequacy of the liquidity position of a concern.
(4) This ratio highlights the probability of bad debts lurking in the trade debtors.
(5) This ratio measures the number of times the receivables are turned over in business during
a particular period.
(6) It points out the liquidity of trade debtors, i.e., higher turnover ratio and shorter debt
collection period indicate prompt payment by debtors. Similarly, low turnover ratio and higher
collection period implies that payment by trade debtors are delayed:

(3) Creditor's Turnover Ratio

Creditor's Turnover Ratio is also called as Payable Turnover Ratio or Creditor's Velocity. The
credit purchases are recorded in the accounts of the buying companies as Creditors to
Accounts Payable. The Term Accounts Payable or Trade Creditors include sundry creditors
and bills payable. This ratio establishes the relationship between the net credit purchases and
the average trade creditors. Creditor's velocity ratio indicates the number of times with which
the payment is made to the supplier in respect of credit purchases. Two kinds of ratios can be
used for measuring the efficiency of payable of a business concern relating to credit
purchases. They are: (1) Creditor's Turnover Ratio (2) Creditor's Payment Period or Average
Payment Period. The ratios can be calculated by the following formulas:

(1) Creditor's Turnover Ratio =

Net Credit Purchases

Average Accounts Payable

Net Credit Purchases

= Total Purchases - Cash Purchases

Average Accounts Payable

= Opening Payable + Closing Payable

2

(2) Average Payment Period = Month (or) Days in a year

Creditors Turnover Ratio
(Or)
= Average Trade Creditors x 365 / Net Credit Purchases

Significance: A high Creditor's Turnover Ratio signifies that the creditors are being paid
promptly. A lower ratio indicates that the payment of creditors are not paid in time. Also, high
average payment period highlight the unusual delay in payment and it affect the creditworthiness
of the firm. A low average payment period indicates enhancing the creditworthiness of the
company.

(4) Working Capital Turnover Ratio

This ratio highlights the effective utilization of working capital with regard to sales. This ratio
represent the firm's liquidity position. It establishes relationship between cost of sales and
networking capital. This ratio is calculated as follows:
Working Capital Turnover Ratio =

Net Sales
Working Capital

Net Sales

= Gross Sales - Sales Return

Work Capital

= Current Assets - Current Liabilities

Significance: It is an index to know whether the working capital has been effectively utilized
or not in making sales. A higher working capital turnover ratio indicates efficient utilization of
working capital, i.e., a firm can repay its fixed liabilities out of its working capital. Also, a lower
working capital turnover ratio shows that the firm has to face the shortage of working capital to
meet its day-to-day business activities unsatisfactorily.
(5) Fixed Assets Turnover Ratio
This ratio indicates the efficiency of assets management. Fixed Assets Turnover Ratio is used to
measure the utilization of fixed assets. This ratio establishes the relationship between cost of
goods sold and total fixed assets. Higher the ratio highlights a firm has successfully utilized the
fixed assets. If the ratio is depressed, it indicates the underutilization of fixed assets. The ratio
may also be calculated as:

Fixed Assets Turnover Ratio = Cost of Goods Sold

Total Fixed Assets
(Or)
=

Sales
Net Fixed Assets

Components of Fixed Assets (or) Non-Current Assets

(1) Goodwill

(11) Preliminary Expenses

(2) Land and Building

(12) Other Deferred Expenses

(3) Plant and Machinery

(13) Government or Trust Securities

(4) Furniture and Fittings

(14) Any other immovable Prosperities

(5) Trade Mark

(6) Patent Rights and Livestock
(7) Long-Term Investment
(8) Debt Balance of Profit and Loss Account
(9) Discount on Issue of Shares
(10) Discount on Issue of Debenture

(6) Capital Turnover Ratio

This ratio measures the efficiency of capital utilization in the business. This ratio establishes the
relationship between cost of sales or sales and capital employed or shareholders' fund. This ratio
may also be calculated as:
(1) Capital Turnover Ratio =Cost of Sale / Capital Employed
(Or)
= Sales / Capital Employed
Capital Employed

= Shareholders' Funds + Long-Term Loans

(Or)
= Total Assets - Current Liabilities

(2) Turnover Ratio

= Cost of Sales / Shareholders' Fund

(Or)
= Sales / Shareholders' Fund

Components of Capital Employed (Shareholders' Fund + Long-Term Loans)

(1) Equity Share Capital
(2) Preference Share Capital
(3) Debentures

(4) Long-Term Loans

(5) Share Premium
(6) Credit Balance of Profit and Loss Account
(7) Capital Reserve
(8) General Reserve
(9) Provisions
(10) Appropriation of Profit

IV. SOLVENCY RATIOS

The term 'Solvency' generally refers to the capacity of the business to meet its short-term and
long-term obligations. Short-term obligations include creditors, bank loans and bills payable etc.
Long-term obligations consist of debenture, long-term loans and long-term creditors etc.
Solvency Ratio indicates the sound financial position of a concern to carry on its business
smoothly and meet its all obligations. Liquidity Ratios and Turnover Ratios concentrate on
evaluating the short-term solvency of the concern have already been explained. Now under this
part of the chapter only the long-term solvency ratios are dealt with. Some of the important ratios
which are given below in order to determine the solvency of the concern:
(1) Debt - Equity Ratio
(2) Proprietary Ratio
(3) Capital Gearing Ratio
(4) Debt Service Ratio or Interest Coverage Ratio

(1) Debt Equity Ratio

This ratio also termed as External - Internal Equity Ratio. This ratio is calculated to ascertain the
Firms obligations to creditors in relation to funds invested by the owners. The ideal Debt Equity
Ratio is1: 1. This ratio also indicates all external liabilities to owner recorded claims. It may be
calculated as
(a) Debt - Equity Ratio = External Equities / Internal Equities
(Or)
(b) Debt - Equity Ratio = Outsider's Funds / Shareholders' Funds
The term External Equities refers to total outside liabilities and the term Internal Equities refers
to all claims of preference shareholders and equity shareholders' and reserve and surpluses.

(c) Debt - Equity Ratio = Total Long-Term Debt

Total Long-Term Funds
(Or)
(d) Debt - Equity Ratio = Total Long-Term Debt
Shareholders' Funds
The term Total Long-Term Debt refers to outside debt including debenture and long-term loans
raised from banks.

(2) Proprietary Ratio

Proprietary Ratio is also known as Capital Ratio or Net Worth to Total Asset Ratio. This is one of
the variant of Debt-Equity Ratio. The term proprietary fund is called Net Worth. This ratio shows
the relationship between shareholders' fund and total assets. It may be calculated as:

Proprietary Ratio

= Shareholders Fund
Total Assets

Shareholders' Fund = Preference Share Capital + Equity Share Capital

+ All Reserves and Surplus
Total Assets

= Tangible Assets + Non-Tangible Assets+ Current Assets

(Or)
All Assets including Goodwill

Significance: This ratio used to determine the financial stability of the concern in general.
Proprietary Ratio indicates the share of owners in the total assets of the company. It serves as an
indicator to the creditors who can find out the proportion of shareholders' funds in the total assets
employed in the business. A higher proprietary ratio indicates relatively little secure position in
the event of solvency of a concern. A lower ratio indicates greater risk to the creditors. A ratio
below 0.5 is alarming for the creditors.

(3) Capital Gearing Ratio

This ratio also called as Capitalization or Leverage Ratio. This is one of the Solvency Ratios.
The term capital gearing refers to describe the relationship between fixed interest and/or fixed
dividend bearing securities and the equity shareholders' fund. It can be calculated as shown
below:

Capital Gearing Ratio

Equity Share Capital

Fixed Interest Bearing Funds

Equity Share Capital

= Equity Share Capital + Reserves and Surplus

Fixed Interest Bearing Funds = Debentures + Preference Share Capital

+ Other Long-Term Loans

A high capital gearing ratio indicates a company is having large funds bearing fixed interest
and/or fixed dividend as compared to equity share capital. A low capital gearing ratio
represents preference share capital and other fixed interest bearing loans are less than equity
share capital.

(4) Debt Service Ratio

Debt Service Ratio is also termed as Interest Coverage Ratio or Fixed Charges Cover Ratio.
This ratio establishes the relationship between the amount of net profit before deduction of
interest and tax and the fixed interest charges. It is used as a yardstick for the lenders to know
the business concern will be able to pay its interest periodically. Debt Service Ratio is
calculated with the help of the following formula:

Interest Coverage Ratio = Net Profit before Interest and Income Tax
Fixed Interest Charges

100

V. OVERALL PROFITABILITY RATIO

This ratio used to measure the overall profitability of a firm on the extent of operating
efficiency it enjoys. This ratio establishes the relationship between profitability on sales and
the profitability on investment turnover. Overall all Profitability Ratio may be calculated in
the following ways:

Overall Profitability Ratio =Net Profit

Sales

Sales
Total Assets

DU Pont Control Chart (or) DU Pont Analysis

ROI indicates the efficiency of the concern which depends upon the working operations of
the concern. Net Profit Ratio and Capital Turnover Ratio, as often called is usually computed
on the basis of the chart represented by DU Pont. Thus it is known as "DU Pont Chart." This
system of control was applied for the first time by DU Pont company of the United States of
America. The DU Pont chart helps to the management to identify the areas of problems for

the variations in the return on investment so that actions may initiated to improve the
performance.

Return on Investment (ROI)

(Net Profit / Capital Employed)

Net Profit Ratio

Capital Turnover Ratio

(Net Profit / Sales)

(Sales / Capital Employed)

Operating Ratio
(Operating Cost / Sales)
Fixed assets turnover ratio
(Sales / Fixed Assets)
of Good
Sold

Office &

Turnover Ratio Cost

Selling &

Administration
Expenses

Working Capital

Distribution
Expenses

Working Capital
(Current Assets Current Liabilities)

OBJECTIVE OF
THE STUDY

OBJECTIVE OF THE STUDY

The major objectives of the resent study are to know about financial strengths and weakness
of UPPER DOAB SUGAR MILL through FINANCIAL RATIO.

The main objectives of resent study aimed as:

To evaluate the performance of the company by using ratios as a yardstick to measure the
efficiency of the company. To understand the liquidity, profitability and efficiency positions
of the company during the study period. To evaluate and analyze various facts of the financial
performance of the company. To make comparisons between the ratios

1. To study the present financial system at UPPER DOAB SUGAR MILL.

2. To determine the Profitability, Liquidity Ratios.
3. To analyze the capital structure of the company.
4. To offer appropriate suggestions for the better performance of the company.

5. To know whether the financial ratios of the company are ideal or not, which is the sign of a
healthy business enterprise.

SCOPE OF
THE
STUDY

SCOPE OF THE STUDY

The scope of ratio analysis can be explained with the help of following points

1. It is useful for inter firm comparison which implies that company compares its
performance with that of its industry peers.
2. It is useful in intra firm comparison which means that company will compare the
performance of various departments of the company so as to judge the best department within
the company.
3. It is useful in simplifying the accounting figures to make them understandable to a layman,
because it is easier to understand ratios then plain figures.
4. It is also useful in forecasting and planning for the future, also it helps in control by
comparing the actual performance with that of forecasted performance and looking for reason
for it.

5. It is also used for analysis of financial statements by various interested parties like bankers,
creditors, supplier etc. for taking future decision about the company.

IMPORTANCE
OF THE
STUDY

IMPORTANCE OF THE STUDY

1. It simplifies the financial statements.

2. It helps in comparing companies of different size with each other.
3. It helps in trend analysis which involves comparing a single company over a period.
4. It highlights important information in simple form quickly. A user can judge a
company by just looking at few numbers instead of reading the whole financial
statements.

LIMITATION
OF THE
STUDY

LIMITATION OF STUDY

Despite usefulness, financial ratio analysis has some disadvantages. Some key demerits of
financial ratio analysis are:
Ignorance of qualitative aspect
The ratio analysis is based on quantitative aspect. It totally ignores qualitative aspect which is
sometimes more important than quantitative aspect.
Ignorance of price level changes
Price level changes make the comparison of figures difficult over a period of time. Before
any comparison is made, proper adjustments for price level changes must be made.
No single concept
In order to calculate any ratio, different firms may take different concepts for different
purposes. Some firms take profit before charging interest and tax or profit before tax but after
interest tax. This may lead to different results.

Misleading results if based on incorrect accounting data

Ratios are based on accounting data. They can be useful only when they are based on reliable
data. If the data are not reliable, the ratio will be unreliable.
No single standard ratio for comparison
There is no single standard ratio which is universally accepted and against which a
comparison can be made. Standards may differ from Industry to industry.

Difficulties in forecasting
Ratios are worked out on the basis of past results. As such they do not reflect the present and
future position. It may not be desirable to use them for forecasting future events.

Different companies operate in different industries each having different

environmental conditions such as regulation, market structure, etc. Such factors are so
significant that a comparison of two companies from different industries might be
misleading.
Financial accounting information is affected by estimates and assumptions.
Accounting

standards

allow

different

accounting

policies,

which

impairs

comparability and hence ratio analysis is less useful in such situations.

Ratio analysis explains relationships between past information while users are more
concerned about current and future information.

NEED
OF
STUDY

NEED OF STUDY

1. The study has great significance and provides benefits to various parties whom directly or
indirectly interact with the company.

2. It is beneficial to management of the company by providing crystal clear picture regarding

important aspects like liquidity, leverage, activity and profitability.

3. The study is also beneficial to employees and offers motivation by showing how actively
they are contributing for companys growth.

4. The investors who are interested in investing in the companys shares will also get
benefited by going through the study and can easily take a decision whether to invest or not
to invest in the companys shares.

RESEARCH
METHODOLOGY

RESEARCH METHODOLOGY

Research is a systematic method of finding solutions to problems. It is essentially an

investigation, a recording and an analysis of evidence for the purpose of gaining knowledge.
A research methodology is a sample framework or a plan for study that is used as a
guide for conducting research . It is a blueprint that is followed in processing
research work. Thus in good research methodology the line of action has to be chosen
carefully from various alternatives

According to Clifford woody, research comprises of defining and redefining problem,

formulating hypothesis or suggested solutions, collecting, organizing and evaluating
data, reaching conclusions, testing conclusions to determine whether they fit the
formulated hypothesis

Objectives

To study the performance management system.

To determine the effectiveness of performance management system adopted.

To determine the satisfaction of employees towards the various criteria employed for
measuring and evaluating the employees performance by the organization.

DATA COLLECTION METHOD

According to the needed research for the project is both Primary and Secondary data
collection methods. We have used company website, annual report of UPPER DOAB

SUGAR MILL, SHAMLI some publications on the net and information related to
broacher for secondary data collection.

Primary Sources :
It refers to the statistical material which the investigator originates for himself for the purpose
of the enquiry in hand. In other words, it is one which is collected by the investigator for the
first time e.g. if the cost of living of workers in a city are to be computed, then the
information regarding the facts collected by the investigators or enumerators would be termed
as Primary data. In India there are various agencies which collect primary data e.g. National
Sample Survey (NSS), State Level Economic and Statistical Departments etc. When we use
primary data, it is called raw material. According to Wessel, "Data originally collected in the
process of investigation are known as primary data."
The use of primary sources is limited to interviews with some of the employees in the finance
department. The reason being, it is against the companys policies and procedures to reveal
the sensitive financial information.
ADVANTAGES

Degree of accuracy is quite high.

It does not require extra caution.

It depicts the data in great detail.

Primary source of data collection frequently includes definitions of various terms and
units used.

For some investigations, secondary data are not available.

Secondary Sources :
Secondary sources of data include annual reports of UPPER DOAB SUGAR MILL,
SHAMLI. Statement of changes in working capital for the past five years is done using the
data taken from these financial reports. Similarly time series analysis of operating cycle and
calculations of ratios is done. Apart from this, the website of UPPER DOAB SUGAR MILL,
SHAMLI is referred to know the products, product facilities, network etc.
It also contains charts & diagrams from the financial reports and annual reports which are
analyzed thoroughly in this report. Industry analysis is done based on the information
gathered from newspapers, websites of sugar mill.

Sources of secondary data:

1. Most of the calculations are made on the financial statements of the company provided
statements.
2. Referring standard texts and referred books collected some of the information regarding
theoretical aspects.
3. Method- to assess the performance of the company method of observation of the work in
finance department in followed.

Nature of Research

Descriptive research, also known as statistical research, describes data and characteristics
about the population or phenomenon being studied. Descriptive research answers the
questions who, what, where, when and how.
Although the data description is factual, accurate and systematic, the research cannot describe
what caused a situation. Thus, descriptive research cannot be used to create a causal
relationship, where one variable affects another. In other words, descriptive research can be
said to have a low requirement for internal validity.

Presentation of Data
The data are presented through charts and tables.

Tools and Techniques for Analysis

MS EXCEL is used to for analysis and interpretation of data.

SAMPLING PLAN
Method of data collection: -Primary & secondary
Research design: - Descriptive Research Design

Research Instrument: Annual Report

Sample: Factory Campus

DATA
ANALYSIS

LIQUIDITY RATIO

1. Current Ratio:
Current Ratio=

current assets
current liabilities

Where,
Current Assets = 2459836651
Current liabilities = 3638001385

Current Ratio=

2459836651
3638001385

0.68 :1

Interpretation:
The ideal current ratio is 2: 1. It indicates that current assets double the current liabilities is
considered to be satisfactory.
0.68:1 is very low current ratio which means that THE UPPER DOAB SUGAR MILL is not
able to pay its liabilities on time.

Chart

Ideal Ratio

Current Liabilities; 33%

Current Assets; 67%

Upper Doab Sugar Mill

Current Assets; 40%

Current Liabilities; 60%

2. Quick ratio:

Quick Ratio=

Quick assets
Quick liabilities

Where,
Quick assets=Current AssetsStockPrepaid Expense

= 2459836651-1995744832
= 464091819
Current liabilities = 3638001385

Quick Ratio=

464091819
3638001385

0.13 :1

Interpretation:

The ideal Quick Ratio of 1:1 is considered to be satisfactory.

0.13:1 is a low value of quick ratio which exhibiting that the UPPER DOAB SUGAR MILL
liquidity position is not good.

Chats

Ideal Ratio

Curren Liabilities; 50% Quick assets; 50%

Upper Doab Sugar Mill

Quick Assets; 12%

Current Liabilities; 88%

PROFITABILITY RATIO
1. Net Profit ratio:

Net Profit Ratio=

Net Profit
X 100
Net sales

Where

Net Profit

= (694092651)

Net Sales

= 4607695694

Net Profit Ratio=

(694092651)
X 100
4607695694

(0.15)

Interpretation

UPPER DOAB SUGAR MILL have in loss. It shows a negative net profit i.e. (0.15%) which
indicates that it does not have efficient management of the affair of business.

Chart

Net Profit Ratio

0.00%
2013-14

-0.02%
-0.04%
-0.06%

Net Profit Ratio

-0.08%
-0.10%
-0.12%
-0.14%
-0.16%

2. Gross Profit ratio:

Gross Profit Ratio=

Gross Profit
X 100
Net sales

Where

Gross Profit
Net Sales

Gross profit Ratio =

= 2802029193
= 4607695694

2802029193
X 100
4607695694

Interpretation
UPPER DOAB SUGAR MILL has 6% Gross Profit Ratio which indicates that it can meet its
operating expenses only and it is not in the position to meet its other expenses.

Chart

Gross Profit Ratio

7%
6%
5%
Gross Profit Ratio

4%
3%
2%
1%
0%
2013-14

3. Operating Profit ratio:

Operating Profit Ratio=

Where

Operating Profit
X 100
Net sales

Operating Profit

= (348514000)

And

Net Sales

Operating Profit Ratio=

= 4607695694

(348514000)
X 100
4607695694

(7.56)

Interpretation
UPPER DOAB SUGAR MILL shows a negative operating profit ratio i.e. (7.56)% which
indicates that sugar mill is not able to give reasonable return to their investors.

Chart

Operating Profit Ratio

0.00%
2013-14

-1.00%
-2.00%
-3.00%

Operating Profit Ratio

-4.00%
-5.00%
-6.00%
-7.00%
-8.00%

4. Return on investment:

Return on investment =

Net Profit [EBIT ]

X 100
Shareholder fund

Where

Net Profit [ EBIT ]

= (6940922651)

Shareholder fund

Return on Investment=

= 220368773

( 6940922651)
X 100
220368773

(314.97)

Interpretation
UPPER DOAB SUGAR MILL has a negative return on investment ratio i.e. (314.97%)
which indicates that the investment made by the shareholder is not utilised by the firm in
sound manner.

Charts

Return on Investment
0.00%
2013-14
-50.00%
-100.00%
Return on Investment

-150.00%
-200.00%
-250.00%
-300.00%
-350.00%

5. Earning Per Share Ratio:

Earning Per Share Ratio =

Where

Net Profit after tax preference dividend

X 10 0
Number of equity shares

Net Profit after tax preference dividend

Number of equity shares

= (425676912)

= 5250000

Earning Per Share Ratio =

(425676912)
X 100
5250000

(8108.13)

Interpretation
UPPER DOAB SUGAR MILL have a very low earning as compared to its investment or
capital which refer that equity shareholder of this firm suffer a loss in their investment.

Charts

Earning per share ratio

0.00%
-1000.00%

2013-14

-2000.00%
-3000.00%
-4000.00%
-5000.00%
-6000.00%
-7000.00%
-8000.00%
-9000.00%

6. Dividend Payment Ratio:

Dividend for
equity shares
Dividend Payment Ratio=
X 100
Earning per share

Where

Earning per share ratio

Dividend

For equity shares= 0

Earning per share

= (81.08)

Dividend Payment Ratio=

0
X 100
( 81.08)

nil

Interpretation
UPPER DOAB SUGAR MILL have a zero or nil dividend payout ratio which indicate that
firm is not able to pay dividend on a regular basis to its shareholders.

Chart

Dividend Payout Ratio

1
0.9
0.8
0.7
0.6

Dividend Payout Ratio

0.5
0.4
0.3
0.2
0.1
0
2013-14

ACTIVITY TURNOVER RATIO

1. Stock Turnover Ratio:

Stock Turnover Ratio =

Where,

Cost of Good Sold(COGS)

Average Investment

Cost of good sold= Sales - Gross profit

=4607695695694 282029193
= 2459836651
Average Investment= opening + Closing / 2
= 2592343359 +
1995744832 / 2
= 2294044096

Stock turnover Ratio=

2459836651
2294044096

2( .)

Interpretation
UPPER DOAB SUGAR MILL stock turnover ratio is less than 1 which indicate that firm
have a dull business, over investment in stock and unsalable goods too.

Charts

Stock Turnover Ratio

2.5
2
1.5

Stock Turnover Ratio

1
0.5
0
2013-14

2. Debtor Turnover Ratio:

Debtor Turnover Ratio=

Net Credit Sales

Average Account Receivable

Where,
Net Credit Sales = 4607695695694

Average Account Receivable = opening + Closing /

2
= 21287640 + 25055789 / 2
= 33815535

Debtor turnover Ratio=

4607695694
33815535

136( .)

Interpretation

UPPER DOAB SUGAR MILL has more efficient management of debtor and debtors are in
highly liquidity form.

Charts

Debtor Turnover Ratio

160
140
120
100

Debtor Turnover Ratio

80
60
40
20
0
2013-14

3. Creditor Turnover Ratio:

Creditor Turnover Ratio=

Net Credit Purchase

Average Trade Creditors

Where,
Net Credit Purchase = 3799313611
Average Trade Creditor = opening + Closing / 2

=
117806850+1921795863 / 2
= 1549932182

Creditor turnover Ratio=

3799313611
1549932182

3( .)

Interpretation
UPPER DOAB SUGAR MILL sales are not satisfactory which indicates that firm is not able
to pay its creditor immediately.

Charts

Creditor Turnover Ratio

3.5
3
2.5
Creditor Turnover Ratio

2
1.5
1
0.5
0
2013-14

4. Fixed Assets Turnover Ratio:

Net
Assets Turnover Ratio=

Net Sales
Assets

Where,
Net Sales = 4607695694

Net Fixed Assets = 1160358904

Assets turnover Ratio=

4607695694
1160358904

4( .)

Interpretation
The fixed assets turnover ratio is 4. It indicates that management is not able to utilise its fixed
assets on time.

Charts

Fixed Assets Turnover Ratio

4.5
4
3.5
3
Fixed Assets Turnover Ratio

2.5
2
1.5
1
0.5
0
2013-14

SOLVENCY RATIO
1. Debt Equity Ratio:

Debt Equity Ratio=

Where,

Total LongTerm Debt

Shareholder Fund

Total Long Term Debt = 202562943

Shareholder Fund = 220368773

Debt Equity Ratio=

202562943
220368773

23/25

Interpretation
UPPER DOAB SUGAR MILL have a sound long term financial as it had not taken too much
credit from outside and it does not depend on outsiders.

Charts

60

50

40

Shareholder Fund

30

Total Long Term Debt

20

10

0
2013-14

2. Proprietors Ratio:

Proprietors Ratio =

Where,

Proprietor Fund
Total Assets

Proprietors Fund = 220368773

Total assets = 3620195555

Proprietor Ratio=

220368773
3620195555

3/ 50

Interpretation

UPPER DOAB SUGAR MILL has a lower proprietor ratio which refer that the share of
owner fund is very less in relation to its assets.

Charts

60

50

40

Total Assets

30

Proprietor Fund
20

10

0
2013-14

3. Capital Gearing Ratio:

Equity Sharecapital
+ ReserveSurplus
Capital Gearing Ratio=
Preference Capital
+ Long Term Debt Bearing
interest

Where,

Equity Share capital + Reserve and surplus =

220368773
Total Long Term Debt = 202562943

Capital Gearing Ratio=

220368773
202562943

109/100

Interpretation
UPPER DOAB SUGAR MILL is said to be in low gear as its preference share capital and
other fixed interest bearing loans are less than the equity capital and reserve.

Charts

250

200

150
Total Long Term Debt
Equity Share capital +
reserve and Surplus

100

50

0
2013-14

ANNEXURE

BALANCE SHEET
AS AT 31st MARCH, 2014
As at March 31, 2014
(RS.)
EQUITY AND LIABILITIES
Shareholders funds
Share capital
Reserves and surplus
Non-current liabilities
Long - term borrowings
Other long term liabilities
Long-term provisions
Total non-current liabilities

5,25,00,000
(27,28,68,773)
(22,03,68,773)
14,22,32,000
1,23,03,683
4,80,27,260
20,25,62,943

Current liabilities
Short-term borrowings
Trade payables
Other current liabilities
Short-term provisions
Total current liabilities

1,42,43,96,365
1,92,17,95,863
20,63,76,937
8,54,32,220
3,63,80,01,385

Total

3,62,01,95,555

ASSETS
Non-current assets
Fixed assets
- Tangible assets
Non - Current Investments
Deferred tax assets (net)
Long - term loans and advances
Other non-current assets
Total non-current assets

64,90,88,800
20
49,85,55,769
59,29,150
67,85,165
1,16,03,58,904

Current assets
Inventories
Trade Receivables
Cash and cash equivalents
Short - term loans and advances
Other current assets
Total current assets

1,99,57,44,832
2,50,55,789
30,54,22,895
11,64,85,631
1,71,27,504
2,45,98,36,651

Total

3,62,01,95,555

STATEMENT OF PROFIT & LOSS

FOR THE YEAR ENDED 31 MARCH, 2014
As at March 31, 2014
(RS.)

Revenue from operations

Other Income
Total Revenue

4,67,36,07,747
2,76,11,173
4,70,12,18,920

Expenses
Cost of material consumed
Changes in Inventories of Finished goods,
Work in progress & Stock in trade
Employee benefits expense

3,79,46,84,467
59,68,94,087
32,62,44,809

Finance cost
Depreciation
Other expenses
Total Expenses

28,54,79,820
7,67,98,251
31,52,10,137
5,39,53,11,571

Loss before exceptional items and tax

Exceptional items
Loss before tax

69,40,92,651
4,23,08,992
65,17,83,659

Tax expense:
Current tax (Refund of Income Tax)
Deferred tax Assets
Loss for the year

(1,06,18,438)
(21,54,88,309)
42,56,76,912

Number of Shares

52,50,000

Earnings per equity share

Basic
Diluted

(81.081)
(81.081)

Figures in bracket ( ) denote minus figures.

CASH FLOW STATEMENT

As at March 31, 2014
(RS.)
A. CASH FLOW FROM OPERATING ACTIVITIES:
Net Profit/ (Loss) before tax and exceptional item as per Profit
& Loss Account
Adjustments for: Depreciation
Interest (Net)
Bad debts & claims written off (Net)
(Profit)/Loss on sale & Disposal of Fixed Assets (Net)
Prior period adjustment (Net)
Unclaimed Credit Balances Written Back
Stores Written off
Operating Profit before working capital changes
Adjustment for: Trade and other receivables
Inventories
Trade Payables

(6,940.93)
767.98
2,658.52
0.04
28.54
(2.03)
(3.46)
6.20
(3,485.14)
(1,056.01)
5,959.79
2,636.15

Cash generated from operations

Prior period adjustment (Net)
Interest paid
Direct tax paid (Net)
Net Cash from operating activities
B. CASH FROM INVESTING ACTIVITIES:
Purchase of fixed assets (net of advance)
Advance received against sale of Unit
Capital Advance
Sale of fixed assets
Exceptional item
Interest received
Net Cash used in investing activities
C. CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds from Fixed Deposit/Directors Loan
Proceeds from Term Loan/Repayment of Finance Liability
Dividend paid
Interest paid
Net Cash used in Financing Activities
Net increase in Cash and Cash equivalents
Opening balance of Cash and Cash equivalents
Closing balance of Cash and Cash equivalents

Note: Figures in bracket ( ) denote Cash Outgoing.

4,054.79
2.03
(2,551.65)
93.40
1,598.57
(103.72)
1,000.00
6.39
423.09
142.03
1,467.79
(631.09)
(737.04)
(3.87)
(318.40)
(1,690.40)
1,375.96
1,678.27
3,054.23

SUMMARY
&
SUGGESTIONS

SUMMARY & SUGGESTIONS

This study gives in detail the analysis of various financial ratios based upon the past as well
as the present performance of UPPER DOAB SUGAR MILL, SHAMLI expressed in
financial data. Based upon the results from these financial ratios conclusions are driven out
that whether the company has been earning profits or not and also that how much it has used
these results in its growth. So, the company can also manage each of its current assets namely
inventory management, cash management, accounts receivable management and also its
liabilities like creditors, loans, bills payables etc. so that it can maintain an identical financial
ratio for each of its business aspects like solvency ratios, turnover ratios, profitability ratios

etc. The research methodology adopted for this study is mainly from secondary sources of
data which includes annual reports of UPPER DOAB SUGAR MILL, and website of the
company. The use of primary sources is limited to interviews with few employees in the
finance department and also from the working process adopted in the company as
interviewed from employees. The study of financial ratio analysis has shown that UPPER
DOAB SUGAR MILL has a unhealthy base in meeting the identical financial ratios as well
as has increasing in loss from the past years. The company is face heavy losses. UPPER
DOAB SUGAR MILL sales position is also not good. Its bad performance is result in rise in
price of product and a bad financial as well as a profitable position in the market.
The operational areas of UPPER DOAB SUGAR MILL, SHAMLI and its performance has
been quite unsatisfactory only in some of the aspects it failed to achieve the ideal targets, so it
needs to look upon these areas and adopt certain measures which can be cost reduction,
efficient asset management, better inventory control, working capital management, managing
workforce, adopting suitable policies and there are other various sources also which can be
taken into consideration in order to enhance productivity as well as to increase the profits of
the firm by applying labour-intensive techniques or capital-intensive techniques which fits the
organization best. Also we know that, a single ratio in itself cannot be said to be good or bad,
in order to comment on the quality of a ratio it has to be compared with some standard or
benchmark.
These benchmark can be:
1. Past Ratio: A ratio could be compared or benchmarked with past years ratio. It is
popularly known as time-series analysis.

2. Ratio of similar firms or industry average: A ratio could be compared with the
ratios of similar firms in the same industry or by industry average in the same point of
time.
3. Rule of thumb: Certain rule of thumb based upon well proven conventions have
evolved over a period of time which can serve this purpose well.

CONCLUSION

CONCLUSION
Let us summarize our discussion on the structure and financing of current assets. The relative
liquidity of the firm's assets structure is measured by current to fixed assets or current asset to
total asset ratio. The greater this ratio, the less risky as well as the less profitable will be the
firm and vice versa. Similarly, the relative liquidity of the firm's financial structure can be
measured by short-term financing to total financing ratio. The lower this ratio the less risky as
well as profitable will be the firm and vice versa. In shaping its working capital policy, the
firm should keep in mind these two dimensions: relative asset liquidity (level of current
assets) and relative financing liquidity (level of short term financing of the working capital

management. A firm will be following a very conservative working capital policy if it

combines a high level of current assets with a high level of long term financing (or low level
of short term financing). Such a policy will not be risky at all but would be less profitable. An
aggressive firm on the other hand would combine low level of current assets with a low level
of long term financing (or high level of short term financing).

This firm will have high profitability and high risk. In fact, the firm the firm may follow a
conservative financing policy to counter its relatively liquid asset structure in practice. The
conclusion of all this is that the considerations of assets and financing mix are crucial to the
working capital management which is a major constraint in the working out of the financial
ratio analysis.

BIBLIOGRAPHY

BIBLIOGRAPHY

Reference:
Financial management

I.M. Pandey

Financial Management

R.K. Sharma & S.K. Gupta

Analysis of financial Statements

D.K. Goel, Rajesh Goel, Shelly Goel

Financial Accounting

Mohammed Hanif, Amitabha Mukherjee

Financial Accounting for

Ambrish Gupta

Management (4th edition)

Reports:

Annual Reports of UPPER DOAB SUGAR MILL

General Articles of UPPER DOAB SUGAR MILL
Audited financial reports of UPPER DOAB SUGAR MILL

Website:

www.sirshadilal.com
www.profit.ndtv.com
www.moneycontrol.com
en.wikipedia.org

Newspapers:

Times of India
Economic Times

The Hindu