A PROJECT REPORT ON RATIO ANALYSIS

SUBMITTED BY

BHARAT D SHINDE ROLL.NO.51

SUBMITTED TO UNIVERSITY OF PUNE In the partial fulfillment of the requirements for the award of MBA

MARATHWADA MITRA MANDALS INSTITUTE OF MANAGEMENT EDUCATION RESEARCH AND TRAINING BATCH 2008-2010

DECLARATION

I, Mr. BHARAT D SHINDE hereby declare that this project is the record of authentic work carried out by me during the academic year 2008 2010 and has not been submitted to any other University or Institute towards the award of any degree.

BHARAT D SHINDE

ACKNOWLEDGEMENT I have pleasure in successful completion of this project work titled RATIO ANALYSIS.

The special environment at MMs IMERT , Pune that always supports educational activities, facilitated my work on this project.

I acknowledge the support, the encouragement for this study by Director Mr. DR.SHARAD JOSHI MMs IMERT, Pune.

I greatly appreciate the motivation and understanding extended for the project work by Mr. Birender Singh (Vice President), Mr. L. Subramaniyam (P&A), Mr. V.N.Srivastava (Finance and Commercial) ULTRATECH CEMENT

LIMITED and the staff of the business unit, who, responded promptly and enthusiastically to my requests for frank comments despite their congested schedules. I am indebted to all of them, who did their best to bring improvements through their suggestions.

I am very much thankful to Mr. T.V.Rao, Mr. K.P.Reddy ULTRATECH CEMENT LIMITED and Mrs. Anjali Vamburkar OF MANAGEMENT my project guide for their encouragement and guidance for this project work. I acknowledge the authors whose works gave me insight and information related to the subject. I am thankful to Library staff and Administrative staffs of MMs IMERT, Pune, who, directly or indirectly have all been helpful in one way or another.

CONTENTS

Sr. No. 1 2 3 4 5

Title INTRODUCTION ORGANIZATIONAL HISTORY FLOW SHEET OF ACW PROJECT METHODOLOGY INFORMATION PRESENTATION A) FORMULAE OF RATIOS B) ANALYSIS, PRESENTATION AND SIGNIFICANCE OF RATIOS FINDINGS BIBLIOGRAPHY

Page no. 6 15 18 20 22 26 43 45

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INTRODUCTION

Introduction Financial management in the small firm is characterized, in many different cases, by the need to confront a somewhat different set of problems and opportunities than those confronted by a large corporation. One immediate and obvious difference is that a majority of smaller firms do not normally have the opportunity to publicly sell issues of stocks or bonds in order to raise funds. The owner manager of a smaller firm must rely primarily on trade credit, bank financing, lease financing, and personal equity to finance the business. One therefore faces a much more severely restricted set of financing alternatives than those faced by the financial vice president or treasurer of a large corporation. On the other hand, many financial problems facing the mal firm are very similar to those of larger corporations. For example, the analysis required for a longterm investment decision such as the purchase of heavy machinery or the evaluation of lease buy alternatives, is essentially the same regardless of the size of the firm. Once the decision is made, the financing alternatives available to the firm may be radically different, but the decision process will be generally similar. One area f particular concern for the smaller business owner lies in the effective management of working capital. Net working capital is defined as the difference between current assets and current liabilities and is often thought of as the circulating capital of the business. Lack of control in this crucial area is a primary cause of business failure in both small and large firms.

Necessity of Financial Planning

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There is one simple reason to understand and observe financial planning in your business to avoid failure. Eight of ten new businesses fail primarily because of the lack of god financial planning. Financial planning affects how and on what terms you will be able to attract the funding required establishing, maintaining, and expanding your business. Financial planning determines the raw materials you can afford to buy, the products you will be able to produce, and whether or not you will be able to acquire to operate your business. It will be a major determinant of whether or not you will be able to make your hard work profitable.

What Is Financial Management? Very simply stated, financial management is the use of financial statements that reflect the financial condition of a business to identify its relative strengths and weaknesses. It enables you to plan, using projections, future financial performance for capital asset, and personnel requirements to maximize the return on shareholders investment.

Tools of Financial Planning

The tools required preparing a financial plan for our business development, including the following:

y Basic Financial Statements- the Balance Sheet and Statement Of Income y Ratio Analysis- a means by which individual business performance is compared to similar businesses in the same category y The Pro Forma Statement of Income- a method used to forecast future profitability y Break Even Analysis- a method allowing the small business person to calculate the sales level at which a business recovers all its costs or expenses y The Cash Flow Statement- also known as the budget identifies the flow of cash into and of the business y Pricing formulas and policies- used to calculate profitable selling prices for products and services y Types and sources of capital available to finance business operations

Welcome To Ratio Analysis! Financial ratio analysis is a fascinating topic to study because it can teach us so much about accounts and business. When we use ratio analysis we can work out how profitable a business is, we can tell if it has enough money to pay its bills and we can even tell whether its shareholders should be happy! Ratio analysis can also help us to check whether a business is doing better this year than it was last year; and it can tell us if our business is doing better or worse than other business doing and selling the same things. Ratio analysis is not just comparing different numbers from the balance sheet, income statement and cash flow statement. It is 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 might perform in the future. In addition to ratio analysis being part of an accounting and business studies syllabus, it is a very useful thing to know anyway! The overall layout of this section is as follows: we will begin by asking the question, what do we wan ratio analysis to tell us. Then what will we try to do with it? This is the most important question, funnily enough! The answer to that question hen means we need to make a list of all the ratios we might use: we will list them and give the formula for each of them. Once we have discovered all of the ratios that we can use we need to know how to use them, to answer the question we asked at the beginning? At this stage, we will have an overall picture of what ratio analysis is, who uses it and the ratios; and we will do that systematically, one by one.

By the end of his section, we will have used every ratio several times and we will be expert at using and understanding what they tell us. The question in ratio analysis is not only to get the right answer: For e.g. to be able to say that a business profit is 10% of turnover. We have to start working on ratio analysis with the following questions in our head: What are we trying to find out?

We can use ratio analysis to tell us whether the business

 Is profitable  Has enough money to pay its bills  Could be paying its employees higher wages  Is paying its share of tax  Is using its assets efficiently  Has a gearing problem  Is a candidate for being bought by another company or investor In addition, once we have decided what we want to know then we can decide which ratios we need to use to answer the question or solve the problem facing us.

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Limitations of Ratios Accounting Information Different Accounting Policies The choices of accounting policies may distort inter company comparisons. The valuations of assets are to be based on either revalued amount or at depreciated historical cost. The business may opt not to revalue its asset because by doing so the depreciation charge is going to be high and will result in lower profit.

Creative Accounting The businesses apply creative accounting in trying to show the better financial performance or position, which can be misleading to the users of financial accounting. Like mentioned above, if an asset is revalued and there is a revaluation deficit, it has to be charged as an expense in income statement, but if it results in revaluation surplus, the surplus should be credited to revaluation reserve. So in order to improve on its profitability level the company may select in its revaluation program to revalue only those assets that will result in revaluation surplus leaving those with revaluation deficits still at depreciated historical cost. Information Problems Ratios are not definitive measures Ratios need to be interpreted carefully. They can provide clues to the companys performance or financial situation. However, on their own, they cannot show whether performance is good or bad.
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Ratios require some quantitative information for an informed analysis to be made.

Outdated information in financial statement The figures in a set of accounts are likely to be at least several months out of date, and so might not give a proper indication of the companys current financial position.

Historical costs not suitable for decision-making Where historical cost convention is used, asset valuations in the balance sheet should be misleading. Ratios based on this information will not be very useful for decision-making.

Financial statements certain summarized information Ratios are based on financial statements that are summaries of the accounting records. Through which summarization some important information may be left out which could have been relevance to the users of accounts. The ratios are base on the summarized year-end information, which may not be true reflection of the overall years results.

Interpretation of the ratio

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It is difficult to generalize about whether the particular ratio is good or bad. For example, a high current ratio may indicate a strong liquidity position, which is good or excessive cash, which is bad. Similarly, Non current assets turnover ratio may denote either the firm that uses its assets efficiently or one that is under capitalized and cannot afford to buy enough assets.

Comparison of performance over time Price changes Information renders comparisons of results over time misleading, as financial figures will not be within the same levels of purchasing power. Changes in results over time may show as if the enterprise has improved its performance and position when in fact after adjusting for inflationary changes it will show the different picture.

Technology changes When comparing performance over time, there is the need to consider the changes in technology. The movement in performance should be in line with the changes in technology. For ratios to be more meaningful, the enterprise should compare its results with another of the same level of technology, as this will be a good basis measurement of efficiency. Changes in Accounting Policy Changes in accounting policy may affect the comparison between different accounting years as misleading. The problem with this situation is that the
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directors may be able to manipulate the results through the changes in accounting policy. This would be done to avoid the effects of an old accounting policy or gain the effects of a new one. It is likely to be done in a sensitive period, perhaps when the businesss profits are low.

Changes in accounting standard Accounting standards offers ways of recognizing, measuring and presenting financial transactions. Any change in standards will affect the reporting of an enterprise and its comparison of results over a number of years.

Impact of seasons on trading

As stated above, the financial statements are based on year-end results that may not be true reflection of results year round. Businesss that are affected bye seasons can choose the best time to produce financial statements so as to show better results

Inter firm comparison

Different financial and business risk profile

No two companies are same; even they are competitors in the same industry or market.

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Using ratios to compare one company with another could provide misleading information. Business within the same industry but having different financial and business risk. One company may be able to obtain bank loans at reduced rates and may show high gearing levels while as another may not be successful in obtaining chap rates and it may show that it is operating at low gearing level. To uninformed analyst he may feel like company two is better when in fact its low gearing level is because it cannot be able to secure further finding.

Different capital structure and size

Companies may have different capital structures and to make comparison of performance when one is all equity financed and another is geared company it may not be good analysis.

Impact of government influence

Selective applications of government incentives to various companies may also distort inter company comparison. One may be given a task holiday while the other within the same line of business not, comparing the performance of these two enterprises may be misleading.

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Window dressing

These are techniques applied bye an entity in order to show a strong financial position. For example, a company A can borrow on a two year basis, 10 lakes rupees on 28th December 2003, holding the proceeds as cash, then pay off the loan ahead on time of on 3rd January 2004 this can improve the current and quick ratios and make the 2003 balance sheet look good. However, the improvement was strictly window dressing as a week latter the balance sheet is at its old position.

Ratio analysis is useful, but analyst should be aware of these problems and make adjustments as necessary. Ratios analysis conducted in mechanical, unthinking manner is dangerous, but if used intelligently and with good judgment, it can provide useful insights in to the firms operations.

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ORGANISATIONAL HISTORY

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ORGANISATIONAL HISTORY UltraTech Cement Limited, a Grasim subsidiary has an annual capacity of 17 million tones. It manufactures and markets Ordinary Portland Cement, Portland Blast Furnace Slag Cement and Portland Pozzolana Cement. UltraTech has five integrated plants, five grinding units and three terminals two in India and one in Sri Lanka. These include an integrated plant and two grinding units of the erstwhile Narmada Cement Company Limited, a subsidiary, which has been amalgamated with the company in May 2006. UltraTech is the country's largest exporter of cement clinker. The company exports over 2.5 million tones per annum, which is about 30 per cent of the country's total exports. The Aditya Birla Group is India's first truly multinational corporation. Global in vision, rooted in Indian values, the Group is driven by a performance ethic pegged on value creation for its multiple stakeholders. A US$ 9.7 billion conglomerate, with a market capitalization of US$ 15 billion, it is anchored by an extraordinary force of 82,000 employees belonging to over 20 different nationalities. Over 23 per cent of its revenues flow from its operations across the world. The Group's products and services offer distinctive customer solutions. Its 74 state-of-the-art manufacturing units and sectoral services span India, Thailand, Malaysia, Laos, Indonesia, Philippines, Egypt, Canada, Australia, China, USA, UK, Germany, Hungary and Portugal.

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FLOW SHEET OF AWARPUR CEMENT WORKS

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Plant / Unit A Composite integrated plants Andhra Pradesh Cement Works Awarpur Cement Works Gujarat Cement Works Hirmi Cement Works Narmada Cement Jafrabad Works B Grinding units Arakkonam Cement Works Jharsuguda Cement Works Narmada Cement Ratnagiri Works Narmada Cement Magdala Works West Bengal Cement Works Total

Kiln capacity (tpd) 8000 9500 15000 8050 4350

Capacity (million tpa) 2.3 3.3 5.3 1.6 0.4 1.2 0.8 0.4 0.7 1.0 17.0

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PROJECT METHODOLOGY

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PROJECT METHODOLOGY

Method Used:

y Scientific method is used for the project. The reason behind using this method is that it is the systematic approach in seeking all the facts.

Source of Data:

y ULTRATECH CEMENT LIMITED- ADITYA BIRLA GROUP

Collection of Data:

y Balance Sheet of ULTRATECH CEMENT LIMITED y Detail discussion with financial executives of ULTRATECH CEMENT LIMITED

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FORMULAE OF RATIOS

LIQUIDITY RATIOS:23

y CURRENT RATIO LIABILITIES

= CURRENT ASSETS/CURRENT

y QUICK RATIO = CURRENT ASSETS-STOCK/CURRENT LIABILITIES

y A/C RECEIVABLE RECEIVABLE TURNOVER RATIO

= NET CREDIT SALES/Avg. ACCTS

y Avg. COLLECTION = 365/ACCTS RECEIVABLE TURNOVER PERIOD

y INVENTORY = NET SALES/Avg. INVENTORY TURNOVER

PROFITABILITY RATIOS:PROFITS IN RELATION TO SALES y GROSS PROFIT MARGIN RATIO = GROSS PROFIT/NET SALES

y NET PROFIT MARGIN RATIO

= NET PROFIT/ NET SALES

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PROFITS IN RELATION TO ASSETS y ASSETS TURNOVER = SALES / Avg. ASSETS RATIO

y EARNING POWER = EBIT/Avg. TOTAL ASSETS y RETURN ON EQUITY = NET INCOME (PAT)/Avg. EQUITY

OWNERSHIP RATIOS y EARNINGS PER SHARE (EPS) = NET INCOME (PAT)/No. OF SHARES

y PRICE EARNING = MKT PRICE OF THE SHARE/EPS RATIO

y CAPITALISATION = EPS/ MKT PRICE OF THE SHARE RATE LEVERAGE RATIOS y DEBT EQUITY = DEBT/EQUITY RATIO

y DEBT ASSET = DEBT/ASSETS RATIO

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y INTEREST COVERAGE = EBIT/INTEREST EXPENSE RATIO

y DIVIDEND YIELD = DIVIDEND PER SHARE/ MKT PRICE OF THE SHARE

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ANALYSIS, SIGNIFICANCE AND PRESENTATION OF RATIOS

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Ratio analysis of UltraTech Cement Ltd

(All values are in crores unless specified) **1) Gross profit Ratio = Gross Profit /Net Sales = (Sales Cost of goods sold)/Net sales
1] For 2005-2006: - ({2251.13-1190}/2251.13)*100 = 47.13%

2] For 2006-2007: - ({2606.9-1520.1}/ 2606.9)*100 = 41.68%

3] For 2007-2008: - ({3299.45-1752.72}/3299.45)*100 = 46.87%

48 46 44 42 40 38 2005-2006 2006-2007 2007-2008

Gross Profit means, margin left after meeting manufacturing expenses. Higher Gross Profit Ratio means higher margin to cover other expenses.

So it always important to have it on higher side.

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** 2) Net profit Ratio = Net Profit /Net Sales 1] For 2005-2006 - (38.83/2251.13) * 100 = 1.72% 2] For 2006-2007: - (2.85/2606.9) * 100 = 0.10% 3] For 2007-2008: - (229.76/3299.45) * 100 = 6.96%

7 6 5 4 3 2 1 0 2005-2006 2006-2007 2007-2008

This ratio shows the earnings left for shareholders (equity and preference) as a percentage of net sales. This ratio is very important for investors because it reveals the overall profitability of the concern. Higher the ratio, better it gives the idea of improved efficiency.

Net Profit Ratio UltraTech Cement Ltd has decreased in 06-07 but has increased tremendously in 2006-2007 and it is good sign for the company and encouraging for the investors.
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**3) Operating Profit Ratio = (Operating Net Profit)/Net Sales Operating Net Profit = EBIT/ Sales 1] For 2005-2006: - ({115.01+49.2}/2251.13) * 100 = 7.29% 2] For 2006-2007: - ({106.88+43.24}/2606.9) * 100 = 5.75% 3] For 2007-2008: - ({285.59+89.64}/3299.45) * 100 = 11.37%

12 10 8 6 4 2 0 2005-2006 2006-2007 2007-2008

This ratio establishes the relationship between operating profit and sales. Higher the ratio better it is for the company and the investors.

Operating profit ratio of UltraTech Cement Ltd has increased as compared to yr.2004-2005 so it is positive sign for the company.

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**4) other income as % of sales= other income/Total income 1] For 2005-2006: - 42.05/2303.73 = 1.82%

2] For 2006-2007: - 17.37/2648.88*100 = 0.66%

3] For 2007-2008: - 30.01/3375.57*100 = 0.88%

2 1.8 1.6 1.4 1.2 1 0.8 0.6 0.4 0.2 0 2005-2006 2007-2008 2007-2008

As we can eventually see that the percentage of the year 200-2005 but has decreased but has started increasing by the year 2005-06 so, we can say that company is performing its work very efficiently.

**5) Fixed Asset Turnover Ratio = Sales / Net Fixed Asset

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1] For 2005-2006: - (2251.13/2727.9) = 0.83

2] For 2006-2007: - (2606.9/2548.9) = 1.02

3] For 2007-2008: - (3299.45/2537.17) = 1.30

1.4 1.2 1 0.8 0.6 0.4 0.2 0 2005-2006 2006-2007 2007-2008

It is one of the indications of efficiency of using fixed asset in the company because ratio indicates the number of times fixed asset are being turned over during a particular period. A high ratio will indicate that fixed asset is contributing quite substantially in making sales.

For this company this ratio is increasing year by year and it shows that their fixed assets are being used efficiently and effectively.

**6) Return on Capital Employed = EBIT / Capital Employed

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Capital Employed = Reserve Surplus + Equity Capital 1] For 2005-2006: (164.21/{124.4+0.51+950.54})*100 = 15.26%

2] For 2006-2007: - (150.12/{124.4+942.73})*100 = 14.01%

3] For 2007-2008: - (375.23/{124.4+0.09+913.78})*100 = 36.13%

40 35 30 25 20 15 10 5 0 2005-2006 2006-2007 2007-2008

This ratio is considered very important one because it reflects the overall efficiency with which capital is used the ratio of particular business should be compared with other business firm in the same industry to find out exact position of that business.

This ratio has increased of UltraTech Cement Ltd as compared to yr 2004-2005 means its value in the market is gaining importanc

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**7) Current Ratio = Current Asset / current Liability 1] For 2005-2006: - 739.58/364.43 = 2.03

2] For 2006-2007: - 837.65/415.43 = 2.02

3] For 2007-2008: - 772.52/516.87 = 1.50

2.5 2 1.5 1 0.5 0 2005-2006 2006-2007 2007-2008

Usually the position is considered ideal if current asset are twice as compared to current liability. A very high current may not indicate a favorable position because it means that excessive investment in current asset is made. This will result in decrease in profitability because of large fund block in working capital.

We can say from above ratios that current assets are used at its possible way.

**8) Liquid Ratio = Liquid Asset / Current Liabilities

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= (Current Assets-Stock)/ Current Liabilities

1] For 2005-2006: - (739.58-223.17)/364.43 = 1.42

2] For 2006-2007: - (837.65-283.71)/415.43 = 1.33

3] For 2007-2008: - (772.52-379.57)/516.87 = 0.76

1.6 1.4 1.2 1 0.8 0.6 0.4 0.2 0 2005-2006 2006-2007 2007-2008

As regard the ability to honor day-to-day commitments, liquid ratio is better tool. An ideal liquid ratio is considered 1:1.

From the figures, we can infer that Liquid Ratio of UltraTech Cement Ltd was higher than one for 2005-2006, which means it was not using its liquid asset efficiently, but later started using it effectively and efficiently.

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**9) Working Capital Turnover Ratio = Net Sales /Net Working Capital Net Working Capital = Current Asset Current Liability

1] For 2005-2006: - (2251.13/{739.58-364.43}) = 6

2] For 2006-2007: - (2606.9/{837.65-415.43}) = 6.17

3] For 2007-2008: - (3299.45 /{772.52-516.87}) = 12.90

The higher the ratio the better is utilization of working capital as well as lower the investment in working capital however a very high working capital turnover ratio is sign of overtrading and a firm may face shortage of working capital

14 12 10 8 6 4 2 0 2005-2006 2006-2007 2007-2008

Increasing ratio for UltraTech Cement Ltd as compared to yr 2005-2006 shows that its working capital is used efficiently.

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**10) Total Capital Turnover Ratio = Net Sales /Capital Employed 1] For 2005-2006: - (2251.13/1075.45) = 2.09

2] For 2006-2007: - (2606.9/1067.13) = 2.44

3] For 2007-2008: - (3299.45 /1038.27) = 3.17

This ratio helps us to show that how many times capital is turned over sales. It also reflects the efficiency in the utilization of capital. Higher capital turnover is always in the interest of the company.

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

Increasing ratio for UltraTech Cement Ltd as compared to yr 2005-2006 shows that its total capital is used efficiently.
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** 11) Current Asset to Fixed Asset Ratio = Current Asset / Fixed Asset 1] For 2005-2006: - 739.58/2727.9 = 0.27

2] For 2006-2007: - 837.65/2548.9 = 0.32

3] For 2007-2008: - 772.52 /2537.17 = 0.30

0.32 0.31 0.3 0.29 0.28 0.27 0.26 0.25 0.24 2005-2006 2006-2007 2007-2008

This ratio varies from industry to industry and therefore no standard can be laid down. If this ratio decreases it may reveal that trade is slack. An increase in the ratio may reveal that inventories and debtors have unduly increased or fixed assets have been intensively used.

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Here this ratio has decreased as compared to yr 2006-2007.

**12)Return On Total Asset Ratio = Profit After Tax / Total Asset 1) For 2005-2006: - (38.83/3360.80)*100 =1.15%

2) For 2006-2007: - (2.85/3180.22)*100 =0.08%

3) For 2007-2008: - (229.76/3067.06)*100=7.49%

This ratio compares the Net Profit after Tax with the Total Asset. This ratio should be higher for any company.

8 7 6 5 4 3 2 1 0 2005-2006 2006-2007 2007-2008

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For UltraTech Cement Ltd this ratio is firstly decreasing then it is increasing so it is almost good for the company and investors.

**13) Return on Net Worth = PAT /Net Worth. 1) For 2005-2006: - (38.83/1057.53)*100 =3.67%

2) For 2006-2007: - (2.85/1057.02)*100 = 0.26%

3) For 2007-2008: - (229.76/857.7)*100 =26.78%

This ratio indicates the return generated on networth from the shareholders point of view. It also helps in assessing the performance of the company. Higher the ratio proves efficiency of the company.

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30 25 20 15 10 5 0 2005-2006 2006-2007 2007-2008

For UltraTech Cement Ltd the ratio has increased to a great extent to yr 20072008, so it proves the net worth of firm is being used properly.

**14) Debt Equity Ratio = Shareholders fund/Long term loan 1) For 2005-2006: - 1057.53/1635.64 = 0.65

2) For 2006-2007: - 1057.02/1531.38 = 0.69

3) For 2007-2008: - 857.7/1451.83 = 0.59

This ratio is calculated to judge the long-term financial policy of the business it establishes. The ideal debt equity ratio is accepted as 2:1.
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0.7 0.68 0.66 0.64 0.62 0.6 0.58 0.56 0.54 2005-2006 2006-2007 2007-2008

Higher debt equity ratio shows lesser margin for long-term lenders.

**15) Interest coverage ratio = PBIT/ Fixed interest charges (Interest)

1) For 2005-2006: - 164.21/115.01 = 1.42

2) For 2006-2007: - 150.12/106.88 = 1.40

3) For 2007-2008: - 357.23/89.64 = 4.18

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4.5 4 3.5 3 2.5 2 1.5 1 0.5 0 2005-2006 2006-2007 2007-2008

This ratio indicates that larger the coverage, greater the ability of the firm to payment of fixed interest and lower the coverage indicates excessive debt and inability to pay interest installments.

**16) Financial Leverage ratio = PBIT/PBT 1) For 2005-2006: - 164.21/49.2 = 3.33

2) For 2006-2007: - 150.12/43.24 = 3.47

3) For 2007-2008: - 357.23/285.59 = 1.31

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

This ratio shows the impact of interest cost on profits. This ratio if higher implies that interest costs are higher which in return will influence PBIT.

FINDINGS

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FINDINGS

From the employers point of view the decision to accept ratio analysis is a major one.

As we, all know the focus of RATIO ANALYSIS is on key figures in the financial statements and the significant relationship that exists between them.

It is found under ULTRATECH CEMENT LTD that the entire important ratios analyzed are under favorable condition. Thus, this favorable condition helps to show that the firm works under healthy condition. It uses all its resources in a very useful manner.

Apart from this, the entire firm earns profit in a continuous process, using all its resource in the best way.
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ANNEXURES

Balance sheet
Mar ' 08 Mar ' 07 Mar ' 06

Sources of funds
Owner's fund Equity share capital Share application money Preference share capital Reserves & surplus 124.49 0.77 2,571.73 982.66 124.49 124.40 0.09 1,639.29 913.78 1,151.25 1,221.93 47

Loan funds
Secured loans

Unsecured loans Total

Mar ' Mar ' 06 07 757.84 427.38 229.90 4,437.49 3,342.41 2,490.10 Mar ' 08

Uses of funds
Fixed assets Gross block Less : revaluation reserve Less : accumulated depreciation Net block Capital work-in-progress Investments 4,972.60 2,472.14 2,500.46 2,283.15 170.90 1,317.49 1,834.51 -517.02 4,437.49 4,784.70 4,605.38 2,267.42 2,068.21 2,517.28 2,537.17 696.95 141.03 483.45 172.39 972.13 781.95 1,327.40 1,142.44 -355.27 -360.49 3,342.41 2,490.10 483.45 172.39 1,942.56 685.42 1244.86 1243.99

Net current assets

Current assets, loans & advances Less : current liabilities & provisions Total net current assets Miscellaneous expenses not written Total

Notes:
Book value of unquoted investments 170.90 Market value of quoted investments Contingent liabilities 645.17 Number of equity sharesoutstanding (Lacs) 1244.86

Profit loss account

Mar ' 08 Mar ' 07 Mar ' 06

Income
Operating income 5,512.43 4,909.05 3,299.45 1,008.92 902.06 733.72 1,314.78 1,194.54 958.30 48

Expenses
Material consumed Manufacturing expenses

Mar ' 08 Mar ' 07 Mar ' 06 Personnel expenses 171.55 117.22 92.26 Selling expenses 1,143.02 1,137.66 843.99 Adminstrative expenses 160.03 133.93 109.57 Expenses capitalised -13.37 Cost of sales 3,784.93 3,485.41 2,737.84 Operating profit 1,727.50 1,423.64 561.61 Other recurring income 87.31 57.65 23.11 Adjusted PBDIT 1,814.81 1,481.29 584.72 Financial expenses 81.93 92.61 96.99 Depreciation 237.23 226.25 216.03 Other write offs Adjusted PBT 1,495.65 1,162.43 271.70 Tax charges 499.40 383.91 55.83 Adjusted PAT 996.25 778.52 215.87 Non recurring items 11.36 3.76 1.48 Other non cash adjustments 12.41 Reported net profit 1,007.61 782.28 229.76 Earnigs before appropriation 1,782.77 962.85 239.87 Equity dividend 62.24 49.79 21.79 Preference dividend Dividend tax 10.58 6.98 3.06 Retained earnings 1,709.95 906.08 215.02

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BIBLIOGRAPHY

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BIBLIOGRAPHY

Financial Management Author: Khan and Jain

Web links: www.adityabirla.com www.ultratechcement.com

ANNUAL REPORT OF ULTRATECH CEMENT LIMITED

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