NAME :

REGD. NO.

MUNJA SRIVATSAV GOUD

T-11044

MOBILE NO. 9533294445

MAIL ID :

srivatsavca1994@gmail.com

TOPIC :

RATIO ANALYSIS

COMPANY NAME

ADDRESS :

1-8-303/69/3 , Visaka Tower, SP Road ,

VISAKA INDUSTRIES LIMITED

Telangana 500003
Tel : 091 40 27813835 FAX : + 91-40-27891833
Website : www.visaka.in
Regd. Office & Works : Survey No. 315
Yelumala Village RC. Puram Mandal
Patancheru Taluq, Medak Dist. 502 300

WORK : Desk work

Secunderbad ,

INTRODUCTION
RATIO ANALYSIS:
Fundamental analysis has a very broad scope. One aspect looks at the general
(qualitative) factors of a company. The other side considers tangible and measurable
factors (quantitative). This means crunching and analyzing numbers from the financial
statements. If used in conjunction with other methods, quantitative analysis can produce
excellent results.
Ratio analysis isn't just comparing different numbers from the balance sheet, income
statement and cash flow statement. It's comparing the number against previous years,
other companies, the industry or even the economy in general. Ratios look at the
relationships between individual values and relate them to how a company has
performed in the past, and how it might perform in the future.
For example, current assets alone don't tell us a whole lot, but when we divide them
by current liabilities we are able to determine whether the company has enough money
to cover short-term debts.
In this tutorial, we'll show you how to use ratio analysis to analyze financial reports.
Comparing these ratios against numbers from previous years, other companies,
industry averages and the economy in general can tell you a lot about where a company
might be headed. Valuing a company is no easy task. This tutorial will shed some light
on how it can be done and, ultimately, help you to make more informed choices as an
investor.

NEED OF THE STUDY :

The purpose of inventory management is to keep the stock in such
way that neither there is over stocking nor under stocking will mean a
reduction of liquidity and starving of other production processes and
,under stocking on other hand ,will result in stoppage of work.
The investment in inventory should be kept in reasonable time.

OBJECTIVES OF THE STUDY :

To analyze whether inventory is managed efficiently and effectively in the

organization

To ascertain whether optimum level of inventory is maintained or not.

To classify select inventory as per ABC analysis.
To study of inventory management would be complete only if we are able to
learn and understand the types of inventories.
To study the various methods in the inventory management and its uses in
the company .
To know the quantity of the inventory maintained by the company.

SCOPE OF THE STUDY:

 The scope is limited to the operations of VISAKA INDUSTRIES LIMITED

The information obtained from the secondary data was limited to VIL.
The information was taken from various banks.

COMPANY PROFILE:

Visaka is a diversified Company incorporated in 1981 and

manfactures products that capitalise improvement in life style
standards in India and Abroad. The Company was started as a
joint venture company promoted by Dr.Vivekanand, a first
generation entrepreneur and the Andhra Pradesh Development
Corporation . In 1989, APIDC divested its holdings in favour of Dr.
G. Vivekanand.

Visaka Industries Limited was started in the year 1985.

Since it has become a multi- product / division company
engagedin the business of Buliding Products ( i.e. Asbestos
Cement sheets, Reinforced Building Boards and Sandwiched
Panels ) and Synthetic Blended Yarn.
Since inception, the company has been showing
consistent improvement in operational front and has also been
very consistent in paying dividend. A combination of aggression
and conservation translated into increased CAGR in companys
revenue at the rate of 12% in the last 5 years with a commanding
position in the industry.
The Companys shares are listed on mumbai and National Stock
Exchange and the market capitalization as on 30 th September
2013 in Rs. 117 Crores. It has corporte office in Secunderbad with
manfacturing units across India as listed below.

Plant Address
S. No
1.
A.C Division Plant 1

2.

Survey No. 315, Yelumala Village, R.C. Puram mandal,

Medak District, Andhra Pradesh 502 300
A.C Division Plant 2
Behind Supa Gas, Manickanantham Village, Paramanthi
Velur District , Tamil nadu 637 207

3.

A.C Division Plant 3

4.

Changsole Mouza , Bankibund, G.P No. 4, Salboni Block,

Midnapore West Bengal 721 147
A.C Division plant 4

5.

Survey No. 27/1, G. Nagenahalli Village, Kora Hobli,

TumkurTalak & District, Karnataka
A.C Division Plant 5

6.

Village Kaannawan, P.S. Bacharawan, Tehsil: MaharajGanj

Raibareli District, Uttar Pradesh - 229 301
A.C District Plant 6

7.

Servay No. 385 and 386, Near Kanchikarcharla, Jujjuru

( Village ), Veerula Padu Mandal, Krishna District , Andhra
Pradesh 521 181
A.C District Plant 7
Plot No. 2006, 1994 Khata No. 450, Survey No.179 & 180,
At-Manejwan,Navamunda Village , Sambalpur District,
Odisha- 768 200

8.

A.C Division Plant 8

9.

Gat.No. 70/3A/1B/1C, Sahajpur Industries Areas, Nandur

( Village ), Daund ( Taluk ), Pune ( District ) 410 202,
Maharastra
Textile Division

10.

Survey No. 179 & 180, Chiruva Village, Maudha Taluq,

Nagpur District, Maharastra
V Board Division 1
Survey No. 95 & 96, Gajalapuram Village, Near Miryalguda
P.O Pedadevullapally Mandal Tripuraram Adjacent to
Kukkadam Railway Station Nalgonda District, Andha
Pradesh 508 207

11.

V- Boards Division -2
Gatt No. , Delwadi Village, Daund Talaq, District Pune,
Maharastra.

In addition , it is in the process of setting up a 2.50 Mega Watt

Solar Plant at Miryalaguda.

PRODUCTS AND LOCATIONS :

Products

CEMENT
Asbestos
Products

Fibre cement
Flat board
Products
Textiles

MANFACTURING
LOCATIONS
Patancheru
( Andha
Pradesh )
Vijayawada
( Andhra Pradesh
)
Paramathi ( Tamil
Nadu)
Tumkur
( Karnataka)
Midnapur ( West
Bengal )
Rae Bareli ( Uttar
Pradesh )
Pune
( Maharastra)
Sambalpur
( Odisha )
Miryalguda
( Andhra Pradesh
)
Daund
( Maharashtra )
Nagpur
( Maharashtra )

NSTALLED
CAPACITY( MAR. 31ST
2014 )
7,520,000

1,29,750

31 MTS M/CS

ACHIVEMENTS AND REWARDS :

Divesified and implemented a totally new technology Air Jet Spinning
in the year 1991 and became the Worlds set up for manufacture of
Twin Air Jet Spun Yarn.

 Steady Growth Growth from a single product single locaton

company. The turnover of the company has grown from Rs. 5 crores
to Rs. 918 crores over a period of 28 years.
As social responsibility, C ompany established Charitable Trust to
support initatives that benefit the Society at large.
VISAKA now is the second largest in the Asbestos Cement Industry.
Highest productivity award from the government of Andhra Pradesh
for the year 1987.
Best Management award from the Government of Andhra Pradesh for
the year 1987.
Best Enrepreneur of the year award from theCouncil for Industrial and
Trade Development for the year 1990-91.
Highest Productivity award from the Council for Industrial and Traded
Development for the year 1995.
Best Industrial award from the Government of Tamil Nadu for the year
2000.
Best performance in large and Medium Sector for the year 200
awarded by All India Manufacturers Organisation , Andhra Pradesh
State Board.
A.P Distinguished Industrialist Award for the year 2003 awarded by
Exhibition Society.
Best Practices in Investor Relations in Fibre Cement Sheets Industry
Category 2012 by the IR Society.

INDUSTRY PROFILE :
FIBRE CEMENT SHEET :
VISAKAS high tech Fibre Cement plant is a fully automated factory
incorporating the latest and the most sophiscated technology, resulting in
consistency in physical properties and strength, which far exceeds the
standards prescribed by I.S.I.

MISSION AND VISSION STATEMENT OF THE COMPANY

MISSION :
Visaka stands for Integrity and disciplined hard work.
VISION :
To be the leader in building products and textile bt leveraging the
technology and by meeting the ever changing- needs of the customers.
REVIEW OF LITERATURE:
CONCEPTUAL FRAME-WORK.

RATIO ANALYSIS:

AnalysisorInterpretationsofRatios:
The analysis or interpretations in question may be of various types. The
followingapproachesareusuallyfoundtoexist:
(a)InterpretationorAnalysisofanIndividual(or)Singleratio.
(b)InterpretationorAnalysisbyreferringtoagroupofratios.
(c)InterpretationorAnalysisofratiosbytrend.
(d)InterpretationsorAnalysisbyinterfirmcomparison.

PrinciplesofRatioSelection:
Thefollowingprinciplesshouldbeconsideredbeforeselectingtheratio

(1)Ratioshouldbelogicallyinterrelated.
(2)Pseudoratiosshouldbeavoided.
(3)Ratiomustmeasureamaterialfactorofbusiness.
(4)Costofobtaininginformationshouldbeborneinmind.
(5)Ratioshouldbeinminimumnumbers.
(6)Ratioshouldbefacilitiescomparable.
.

AdvantagesofRatioAnalysis:
Ratio analysis is necessary to establish the relationship between two
accountingfigurestohighlightthesignificantinformationtothemanagementor
userswhocananalyzethebusinesssituationandtomonitortheirperformanceina
meaningfulway.Thefollowingaretheadvantagesofratioanalysis:
(1)Itfacilitatestheaccountinginformationtobesummarizedandsimplifiedin
arequiredform.
(2)Ithighlightstheinterrelationshipbetweenthefactsandfiguresofvarioussegments
ofbusiness.
(3)Ratioanalysishelpstoremovealltypeofwastagesandinefficiencies.

(4)It provides necessary information to the management to take prompt decision

relatingtobusiness.
(5)Ithelpstothemanagementforeffectivelydischargeitsfunctionssuchasplanning,
organizing,controlling,directingandforecasting.
(6)Ratioanalysisrevealsprofitableandunprofitableactivities.Thus,themanagement
is able to concentrate on unprofitable activities and consider to improve the
efficiency.
(7)Ratioanalysisisusedasameasuringrodforeffectivecontrolofperformanceof
businessactivities.
(8)Ratios are an effective means of communication and informing about financial
soundnessmadebythebusinessconcerntotheproprietors,investors,creditorsand
otherparties.
(9)Ratioanalysisisaneffectivetoolwhichisusedformeasuringtheoperatingresults
oftheenterprises.
(10)It facilitatescontrolovertheoperationaswellasresourcesofthebusiness.
(11)Effectivecooperationcanbeachievedthroughratioanalysis.
(12)Ratioanalysisprovidesallassistancetothemanagementtofixresponsibilities.
(13)Ratioanalysis helpstodeterminetheperformanceof liquidity,profitabilityand
solvencypositionofthebusinessconcern.

LimitationsofRatioAnalysis:
Ratio analysis is one of the important techniques of determining the
performanceoffinancialstrengthandweaknessofafirm.Thoughratioanalysisis
relevantandusefultechniqueforthebusinessconcern,theanalysisisbasedonthe
informationavailableinthefinancialstatements.Therearesomesituations,where
ratios are misused, it may lead the management to wrong direction. The ratio
analysissuffersfromthefollowinglimitations:
235

(1)Ratioanalysisisusedonthebasisoffinancialstatements.Numberoflimitationsof
financialstatementsmayaffecttheaccuracyorqualityofratioanalysis.
2)Ratio analysis heavily depends on quantitative facts and figures and it ignores
qualitativedata.
Thereforethismaylimitaccuracy.
(3)Ratio analysis isapoormeasureofafirm'sperformanceduetolackofadequate
standardslaidforidealratios.
(4)Itisnotasubstituteforanalysisoffinancialstatements.Itismerelyusedasatool
formeasuringtheperformanceofbusinessactivities.
(5)Ratioanalysisclearlyhassomelatitudeforwindowdressing.
(6)It makes comparison of ratios between companies which is questionable due to
differencesinmethodsofaccountingoperationandfinancing.
(7)Ratioanalysisdoesnotconsiderthechangeinpricelevel,assuch,theseratiowill
nothelpindrawingmeaningfulinferences.
CLASSIFICATIONOFRATIOS:
AccountingRatiosareclassifiedonthebasisofthedifferentpartiesinterested
inmakinguseoftheratios.Averylargenumberofaccountingratiosareusedfor
the purpose of determining the financial position of a concern for different
purposes.Ratiosmaybebroadlyclassifiedinto:
(1)ClassificationofRatiosonthebasisofBalanceSheet.
(2)ClassificationofRatiosonthebasisofProfitandLossAccount.
(3)ClassificationofRatiosonthebasisofMixedStatement(or)BalanceSheet
andProfitandLossAccount.
Thisclassificationfurthergroupedinto:
I .LiquidityRatiosII.ProfitabilityRatiosIII.TurnoverRatiosIV.Solvency
Ratios
V.OverallProfitabilityRatios
Theseclassificationsarediscussedhereunder:

1.ClassificationofRatiosonthebasisofBalanceSheet:Balancesheetratios
whichestablishtherelationshipbetweentwobalancesheetitems.Forexample,
CurrentRatio,FixedAssetRatio,CapitalGearingRatioandLiquidityRatioetc.
2.ClassificationonthebasisofIncomeStatements:Theseratiosdealwiththe
relationshipbetweentwoitemsortwogroupofitemsoftheincomestatementor
profit and loss account. For example, Gross Profit Ratio, Operating Ratio,
OperatingProfitRatio,andNetProfitRatioetc.
3.ClassificationonthebasisofMixedStatements:Theseratiosalsoknownas
CompositeorMixedRatiosorInterStatementRatios.Theinterstatementratios
whichdealwithrelationshipbetweentheitemofprofitandlossaccountanditem
ofbalancesheet.Forexample,ReturnonInvestmentRatio,NetProfittoTotal
AssetRatio,Creditor'sTurnoverRatio,EarningPerShareRatioandPriceEarning
Ratioetc.
chartforclassificationofratiosbystatementisgivenbelowshowingclearly
thetypesofratiosmaybebroadlyclassifiedonthebasisofIncomeStatementand
BalanceSheet.
METHODOLOGY :
To achieve aforesaid objective the following methodology has been
adopted. The information for this report has been collected through the
primary and secondary sources.

Primary sources.
It is also called as first handed information; the data is
collected through the observation in the organization and interview with
officials. By asking question with the accounts and other persons in the
financial department. A part from these some information is collected
through the seminars, which were held by Visaka Industries.

Secondary sources.
The secondary data have been collected through the various
books, magazines, brouches & websites.

 CHAPTERISATION:
General introduction to ratio analysis
Need of ratio analysis
Objectives of ratio analysis
Scope of ratio analysis
Profile of VISAKA INDUSTRIES
About the product ( fibre sheets )
Review of literature
Methodology
Primary data
Secondary data

BIBILOGRAPHY :

BOOKS REFERRED:

Cost and management accounting

Operation research of inventory management

WEBSITES:

WWW.INVESTOPEDIA.COM
WWW.GOOGLE.COM
WWW.VIL.NIC.IN